Quantum Hyrdromech Sdn Bhd v Nine Hundred Builders Sdn Bhd (WA-24C-25-02/2024)

Quantum Hyrdromech Sdn Bhd (‘Quantum’) pursuant to ss 13, 15 and 16 of the Construction Industry Payment and Adjudication Act 2012 [Act 746] (‘CIPAA’) in Originating Summons No. WA- 24C-25-02/2024 (‘O.S. No. 25’) to set aside the Adjudication Decision dated 19.1.2024 (‘AD’) by the learned Adjudicator, Low Pei Voon (‘Adjudicator’) and to stay the AD pending the disposal of application to set aside the AD (‘Setting Aside Application’); and

Nine Hundred Builders Sdn Bhd (‘NHB’) pursuant to s 28 of the CIPAA in O.S. No. WA-24C-29-03/2024 (‘O.S. No. 29’) to enforce the AD (‘Enforcement Application’). [2] By consent of the parties, the prayer for a stay of the AD pending the disposal of the Setting Aside Application was allowed on the date of the hearing. [3] After having considered the affidavit evidence and the submissions of the parties, the Court had, on 15.8.2024, I had dismissed the Setting Aside Application and allowed the Enforcement Application. [4] The full grounds for the decision are set out in the succeeding part of this judgment. The Cause Papers [5] The cause papers for each application are as follows:

Quantum’s O.S. dated 26.2.2024 (encl. 1);

Quantum’s Affidavit In Support (‘AIS’) affirmed by its Director, Chong Set Tat on 26.2.2024 (encl. 2);

NHB’s Affidavit In Reply (‘AIR’) affirmed by its Director, Goo Kian Peng on 25.3.2024 (encl. 4); and

Quantum’s AIR affirmed by the same deponent on 8.4.2024 (encl. 5).

NHB’s O.S. dated 4.3.2024 (encl. 1);

NHB’s AIS affirmed by the same deponent on 4.3.2024 (encl. 2);

Quantum’s AIR affirmed by the same deponent on 25.3.2024 (encl. 3);

Quantum’s Notice of Intention to Use Affidavit in O.S. 25 (encl. 2) dated 25.3.2024 (encl. 4); and

NHB’s Notice of Intention to Use Affidavit in O.S. 25 (encl. 4) dated 9.4.2024 (encl. 5). Background Facts [6] Quantum is a private limited company incorporated in Malaysia with an address at C-8-5, Plaza Mont Kiara, No. 2, Jalan Kiara, Mont Kiara, 50480 Kuala Lumpur. [7] NHB is also a private limited company incorporated in Malaysia with an address at No. 144, Jalan PUJ 3/8, Taman Puncak Jalil, Bandar Putra Permai, 43300 Seri Kembangan, Selangor. [8] By the Letter of Award dated 6.3.2019 (‘LOA’), Quantum appointed NHB as the sub-contractor for the project known as “Design, Submission, Obtaining Approval from Authorities and Subsequently Supply, Delivery, Installation, Construction, Testing and Commissioning, and Maintenance of Proposed Upgrading Existing Sewage Treatment Plant Module 2 (Phase A) to Cater for Additional 20,000 P.E for Cadangan Pembangunan Perumahan Dan Perniagaan Di Atas Lot 934, 982, 1246, 1286, 1851 Dan 3513, Mukim Rawang, Daerah Gombak, Selangor Darul Ehsan” for a contract sum of RM4,200,000.00 (‘Project’). [9] On 28.7.2023, NHB issued the Payment Claim pursuant to s 5 CIPAA containing the following statements. [10] NHB claimed that it has completed its scope of works for the Project on 16.12.2019 and all the rectification works within the Defects Liability Period (‘DLP’) of 12 months i.e. by 15.12.2020. [11] On 26.3.2021, NHB submitted its Revised Final Claim for the value of permanent work done and materials on site, which included variation works, amounting to RM288,624.73. [12] Subsequently, on 12.5.2021, NHB issued an invoice for the sum of RM393,624.73 consisting of the Final Claim and 2nd moiety of the retention sum (RM105,000.00). [13] On 26.5.2023, Quantum issued the Sub-Contractor’s Work Done Certificate No. 12 (Final) (‘PC No. 12’) amounting to a negative sum of RM72,405.60 upon release of the 2nd moiety of the retention sum. [14] NHB contended that Quantum had under-valued and under-certified or wrongly certified NHB’s value of work done in PC No. 12. NHB claimed for the sum of RM393,624.73. [15] Quantum did not serve any Payment Response and is therefore deemed to have disputed the entire Payment Claim (see sub-s 6(4) CIPAA). [16] NHB, through its solicitors, served the Notice of Adjudication in accordance with ss 7 and 8 CIPAA on 24.8.2023. This was followed with the issuance of the Adjudication Claim on 17.10.2023, Adjudication Response on 3.11.2023 and Adjudication Reply on 14.11.2023. [17] In the AD, the Adjudicator determined that – “Pursuant to the CIPA Act 2012, I determine that: -

The amount RM 336,694.47 is recorded as the Adjudicated Sum to be paid by the Respondent to the Claimant no later than 18 February 2024.

(b)

Further 5% simple interest rate per annum on the Adjudicated Sum and Cost of Adjudication Proceeding, shall be payable to Claimant should the Respondent fail to make payment by 18 February 2024.

Costs of the adjudication proceedings in the sum of RM 50,412.58 including the Claimant's legal cost and disbursement to be borne by the Respondent pursuant to Section 18(1) of CIPA Act 2012.

The Respondent shall pay the adjudicated sum, together with interest and cost of adjudication proceeding in cash or cheque to the Claimant.”. I. The Setting Aside Application [18] The AD is binding on the parties unless it is set aside by this Court pursuant to the Setting Aside Application by Quantum, the subject matter of the AD is settled by a written agreement between the parties or the dispute is finally decided by arbitration or the court (see s 13 CIPAA). [19] Quantum relied on limbs (b) and (d) of s 15 CIPAA as the basis for the Setting Aside Application and these limbs read as follows: “Improperly procured adjudication decision

An aggrieved party may apply to the High Court to set aside an adjudication decision on one or more of the following grounds: …

there has been a denial of natural justice; …

the adjudicator has acted in excess of his jurisdiction.”. [20] Quantum cited the decisions in View Esteem Sdn Bhd v. Bina Puri Holdings Bhd [2019] 5 CLJ 479 and Guangxi Dev & Cap Sdn Bhd v. Sycal Bhd & Another Appeal [2019] 1 CLJ 592 for the legal principles that –

the Adjudicator has a duty under s 24(c) CIPAA to comply with the principles of natural justice;

to set aside the AD, Quantum has to demonstrate that the Adjudicator did not consider the defences which were raised by Quantum in the adjudication proceedings, which could constitute a breach of natural justice;

the breach of the rules of natural justice must be material and not peripheral; and

due to the said breach, there is a real possibility of a different conclusion being reached. [21] In relation to an application made under limb (b) of s 15 CIPAA, it is well established that the words “natural justice” as used therein refer to the second pillar of natural justice that the parties must be given adequate notice and opportunity to be heard. Basically, the line of enquiry which is undertaken by the courts in determining whether there is a denial of natural justice is to consider the manner in which the adjudicator conducted the hearing and whether he has accorded procedural fairness to the parties (see among others, ACFM Engineering & Construction Sdn Bhd v Esstar Vision Sdn Bhd and another appeal [2016] MLJU 1776, Bauer (Malaysia) Sdn Bhd v. Jack-In Pile (M) Sdn Bhd and Another Appeal [2018] 10 CLJ 293, Ireka Engineering and Construction Sdn Bhd v. PWC Corporation Sdn Bhd & Another Appeal [2019] 1 LNS 51, Meridian Contracts Sdn Bhd v Bauer (Malaysia) Sdn Bhd and another summon [2020] MLJU 1405, MRCB Sentral Properties Sdn Bhd v GSIB Sdn Bhd and another case [2021] MLJU 2249 and Hong Xin Construction Sdn Bhd v Rebana Maju Sdn Bhd [2024] MLJU 1907; see too, Construction Adjudication In Malaysia, Third Edition, Sweet & Maxwell, 2022 by the learned authors Lam Wai Loon and Ivan YF Loo at pp 365 - 409 and Law, Practice And Procedure Of Adjudication, Volume 2, Lexis Nexis, 2023 by Datuk Professor Sundra Rajoo, Leong Hong Kit and Cindy Wong Xien Yee at pp 1075 - 1146). [22] Meanwhile, the type of jurisdictional challenge pursued by Quantum under limb (d) of s 15 CIPAA is contingent jurisdiction where the existence of a valid jurisdiction is dependent on further compliance with the requirements of the CIPAA in that the dispute must be one falling within the matter raised in the Payment Claim and Payment Response (see Terminal Perintis Sdn Bhd v Tan Ngee Hong Construction Sdn Bhd and another case [2017] MLJU 242 and View Esteem (supra); see too, Construction Adjudication In Malaysia, Volume 1 (supra, at pp 430 - 471) and Law, Practice And Procedure Of Adjudication (supra, at pp 644 - 699). [23] Quantum submitted that the AD should be set aside because the

failed to consider that the variation claims do not constitute “payment for work done under the express terms of a construction contract” as defined by s 4 CIPAA; and

considered incorrect evidence in delivering the AD. 1st Ground: Whether the Adjudicator had acted in excess of jurisdiction by deciding on the variation claims [24] The summary of NHB’s claims in the Final Claim and Quantum’s certification in Payment Certificate No. 12 (Final) can be seen in paragraph 22 of the Adjudication Claim and paragraph H.9 at p 6 of the AD. [25] Based on the tabulation, the amount which was claimed by NHB in the adjudication proceedings included the sum for the following variation works:

VO No. 5 – Re-Painting Existing Building and Structure Tank as per comments by IWK during PDC 7 Inspection including Cleaning and Clearing Surface of Wall before applying Paint amounting to RM26,661.60;

VO No. 6 – Additional Works for the PDC 7 comments amounting to RM23,500.000;

VO No. 7 – Security at Site amounting to RM36,000.00; and

VO No. 8 – Operation and Maintenance of STP amounting to RM85,000.00. [26] Quantum retorted that the contract does not permit NHB to make the claims in VO Nos. 5 to 8 as they are not payment for work done under the express terms of a construction contract as defined in s 4 CIPAA (see paragraphs 37, 40, 45 and 51 of the Adjudication Response). [27] In the Adjudication Reply, NHB cited the case authorities of View Esteem (supra) and SKS Pavillion Sdn Bhd v Tasoon Injection Pile Sdn Bhd [2018] MLJU 884 for the legal principle that the Adjudicator’s jurisdiction is governed by s 27 CIPAA read together with ss 5 and 6 CIPAA. These provisions are quoted below for ease of reference: “Jurisdiction of adjudicator

27.

Subject to subsection (2), the adjudicator's jurisdiction in relation to any dispute is limited to the matter referred to adjudication by the parties pursuant to sections 5 and 6.

The parties to adjudication may at any time by agreement in writing extend the jurisdiction of the adjudicator to decide on any other matter not referred to the adjudicator pursuant to sections 5 and 6.

Notwithstanding a jurisdictional challenge, the adjudicator may in his discretion proceed and complete the adjudication proceedings without prejudice to the rights of any party to apply to set aside the adjudication decision under section 15 or to oppose the application to enforce the adjudication decision under subsection 28(1).”. “Payment claim

5.

An unpaid party may serve a payment claim on a nonpaying party for payment pursuant to a construction contract.

The payment claim shall be in writing and shall include –

the amount claimed and due date for payment of the amount claimed;

details to identify the cause of action including the provision in the construction contract to which the payment relates;

description of the work or services to which the payment relates; and

a statement that it is made under this Act.”. “Payment response

6.

A non-paying party who admits to the payment claim served on him shall serve a payment response on the unpaid party together with the whole amount claimed or any amount as admitted by him.

A non-paying party who disputes the amount claimed in the payment claim, either wholly or partly, shall serve a payment response in writing on the unpaid party stating the amount disputed and the reason for the dispute.

A payment response issued under subsection (1) or (2) shall be served on the unpaid party within ten working days of the receipt of the payment claim.

A non-paying party who fails to respond to a payment claim in the manner provided under this section is deemed to have disputed the entire payment claim.”. [28] In paragraph 39 of the Adjudication Reply, NHB stated that: “39. … a) The current payment dispute raised in this adjudication proceedings arose from the Claimant’s Final Claim dated 26.3.2021 for its actual work done under the Project/Contract. b) The Claimant had consistently submitted its claims for variation works since the beginning of the Project. In the event the Learned Adjudicator is satisfied that the additional physical work was actually done by the Claimant, this must be assessed and determined in the adjudication decision. The Respondent cannot be allowed to benefit from the additional work instructed for zero payments. c) Furthermore, these additional work are raised and/or arose from PDC 7 comments sometimes around November 2019. d) Clearly, the Claimant is entitled to make any claim in relation to extra or additional works to the original subcontract works under the Contract. The Respondent on the other hand had kept quiet about such claims, received monies from the Employer for the completion of the Project, refused to assess and/or pay the Claimant for the additional works. Further, the Respondent is now attempting to avoid making payment by relying on the argument that there is no VO clause in the contract. e) In fact, in the Claimant's letter dated 1.10.2019 (which forms part of the Contract) had expressly stated that any works outside the Claimant's scope of work, will constitute as an additional variation order. This is not disputed by the Respondent as stated at paragraph 6 of the Adjudication Response.”. [29] In the AD, the Adjudicator alluded to the above-mentioned arguments by the parties before embarking on her findings and reasons on the issues raised where in respect of the “Payment Claim for Variation Order”, she found as follows: “… b. The contract does not provide for the payment for variation order and variation work order was only mentioned under clause 5.0 DELAYS EXTENSION OF PERIOD FOR COMPLETION as shown below:

5.0 DELAYS AND EXTENSION OF PERIOD FOR

5.1 If you are delayed in the execution of the works:-

By any circumstances or occurrence (other than a breach of this contract by you), entitling us as the contractor to an extension of time for completion of the Works under the Main Contracts :- or

By the ordering of any variation of the works to which paragraph (a) of this sub-clause does not apply :- or

Any breach of this Contract by us Then, in any such event, we shall grant such extension of the period for completion of the works or any section thereof as may in all the circumstances be fair and reasonable. c. The order for the variation work came from IWK (Indah Water Konsortium) Operation Unit instead of instruction from the Respondent. The Claimant had submitted its quotation for the variation work order to the Respondent for consideration. d. There was no evidence of objection from the Respondent for the variation work order during the contract period, neither the Adjudication Response has indicated any objection to the need for such work to be carried out by the Claimant. e. In consideration that the Respondent had, both in the contract and Adjudication Response, demand and affirm the Claimant to fulfil its obligation to the satisfaction of IWK, these variation order works deem necessary for the completion of the Project and subsequently hand over to IWK. f. Although there was no official instruction from the Respondent, the Respondent and its client (IWK) had received the work carried out by the Claimant and the Claimant had requested for monies through its quotation. There is offer and consideration, hence both parties should fulfil their obligation. The Claimant is entitled to payment if variation work is done.”. [30] In this Court, Mr. Reno Nga submitted for Quantum that the Adjudicator contradicted her own decision by considering and allowing the variation claims, despite making the observations as above quoted in paragraph L.5(b), (c) and (f) of the AD. [31] Further, the learned counsel referred to NHB’s letter dated 1.10.2019 (‘1.10.2019 Letter’) wherein NHB acknowledged that any additional variation orders are subject to acceptance by both parties with an official letter. However, no such letter was issued by Quantum. [32] Hence, Quantum contended that there was no offer or acceptance by Quantum to accept the variation works, silence does not constitute acceptance and consideration must be at the desire of Quantum as the promisor (see Seloga Sdn Bhd v UEM Gynisys Sdn Bhd [2007] 7 MLJ 385 and s 2(d) of the Contracts Act 1950 [Act 136] which provides that “when, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration for the promise”). [33] Firstly, Quantum’s jurisdictional challenge on the variation claims were raised in the adjudication proceedings, except for the arguments in paragraph 32 above, and were addressed by the Adjudicator. Nevertheless, this does not bar Quantum from raising the same issue as a ground under s 15(d) CIPAA (see Tenaga Nasional Berhad v. Blocklink (M) Sdn Bhd & Another Case [2022] CLJU 2125). [34] Secondly, it is incontrovertible that the Adjudicator’s jurisdiction is governed by s 27 read together with ss 5 and 6 of the CIPAA. There being no Payment Response from Quantum, the Adjudicator’s jurisdiction is therefore limited to the matter referred to adjudication by NHB in the Payment Claim. [35] As outlined earlier, the claim in the Payment Claim is for the outstanding sum of RM393,624.73 for, not only the value of original works done, but also variation works as per NHB’s Final Claim. Hence, one of the matters which were referred to adjudication and on which the Adjudicator has the jurisdiction to adjudicate is the claim for variation works. [36] Thirdly, NHB’s position in paragraph 6 of the Adjudication Claim is that the LoA and the 1.10.2019 Letter constitute the “Contract” between the parties and this was not disputed by Quantum (see paragraph 6 of the Adjudication Response). The 1.10.2019 Letter states, among others, that: “… We wish to highlight and put as record on the following works which is NOT within our scope of works:

Refurbishment and replacement of existing mechanical and electrical equipment.

Dewatering and desludging of existing tanks.

Repair or painting of existing tanks and buildings.

To construct new perimeter drain / V-drain within the STP boundary.

Any new connection / construction of sewer-line or sewer pipe (incoming / outgoing). Any request to amend or construct of the above-said will constitute as an Additional Variation Order and subject to acceptance from both parties with an official letter.”. [37] The Adjudicator considered the fact that there was no official letter by Quantum for the additional works in VO Nos. 5 to 8, nonetheless, she was of the view that Quantum and Indah Water Konsortium (‘IWK’) had received the benefit from the works carried out by NHB and NHB is entitled to be paid for the same. [38] In addition, the Adjudicator considered the fact that NHB had submitted its quotation for the variation works for Quantum’s consideration; there was no evidence of any objection by Quantum for the variation works; and Quantum had affirmed that NHB must fulfill its obligation to the satisfaction of IWK and these variation works were necessary for the completion of the Project and subsequent handing over to IWK. [39] As submitted by Quantum in this Court, NHB’s claims for VO Nos. 1 to 4 were certified by Quantum. Hence, if Quantum truly insisted on the need for an official letter, this would have been raised from the time when NHB submitted its claim for VO No. 1. By raising it only in the adjudication proceedings and the Setting Aside Application, Quantum is refusing to make payment for VO Nos. 5 to 8 under the disguise of a jurisdictional challenge. [40] Moreover, in the Adjudication Response, Quantum concurred that the Adjudicator has wide power under s 25 CIPAA to review and revise a final certificate. Quantum further emphasised that the Adjudicator is entitled to examine the evidence presented by both parties to ascertain the actual value of work done by NHB and Quantum’s entitlement to impose set-off deductions (see paragraphs 89 and 90). [41] Quantum’s dissatisfaction with the Adjudicator’s findings of fact and/ or law is not a ground to set aside the AD. If a matter is within the jurisdiction of the Adjudicator, it does not become one where the Adjudicator had acted in excess of her jurisdiction merely because she made a finding of fact that Quantum disagrees with (see Kuasatek (M) Sdn Bhd v HCM Engineering Sdn Bhd [2018] MLJU 1919; see too, PJ Midtown Development Sdn Bhd v Pembinaan Mitrajaya Sdn Bhd [2020] MLJU 1432, Alpha Galaxy Sdn Bhd v Euro Destar (M) Sdn Bhd [2021] MLJU 767 and Naza Engineering & Construction Sdn Bhd v SSL Dev Sdn Bhd [2019] MLJU 1885). [42] In sum, it is my considered view that Quantum has not established the 1st Ground to set aside the AD, on a balance of probabilities. 2nd Ground: Whether there is a denial of the rules of natural justice when the Adjudicator considered incorrect evidence or failed to consider material evidence [43] Quantum raised six issues in respect of the 2nd Ground and these will be discussed in turn below.

Google Earth Satellite In the AD, the Adjudicator said that no hearing, meeting or site visit was carried out and she had used Google Earth to collect site information. This was further elaborated in reference to Quantum’s invitation for a joint inspection in August 2023 where the Adjudicator found that “… the STP has been significantly upgraded since the completion of the sub-contract works, via Google Earth satellite image. The subsequent upgrading works would have impacted on the STP works completed by the Claimant.” (see paragraphs K and L.22 at pp 40 and 56 of the AD). Quantum contended that there is a clear breach of the rules of natural justice as the evidence was not presented by the parties during the adjudication proceedings and the Adjudicator went on a frolic of her own by deciding a case based on factual bases not put forward by either side [see Setia Fontaines Sdn Bhd v Pro Tech Enterprise Sdn Bhd & Another Case [2022] CLJU 2782 where reference was made to Cantillon Ltd v. Urvasco Ltd [2008] EWHC 282 (TCC)]. Further, the method of using Google Earth for fact-finding is inaccurate, unreliable and constitutes hearsay evidence from an untrustworthy source. The Adjudicator herself lacks the specialisation, knowledge or expertise necessary to reach the decision as stated in paragraph L.22 of the AD. However, I accept NHB’s submission that the Adjudicator has the power draw on her own knowledge and expertise and inquisitorially take the initiative to ascertain the facts required for her to make a decision (see s 25(d) and (i) CIPAA), and the reliance on the Google Earth satellite image was merely on the issue as to Quantum’s invitation for a joint inspection and has nothing to do with the merits of the disputes. The issue of site inspection was not material to the disputed issues at hand. The Adjudicator had made her determination on the adjudicated sum at paragraph L.21 of the AD, including the VO claims, before she mentioned the issue of site inspection at paragraph 22. Furthermore, based on the position taken by NHB in the adjudication proceedings on when it had completed the works and submitted the Final Claim, it was no longer practicable for a joint valuation to be conducted at that time when Quantum made the request as four years have passed from the completion of the work and three years from NHB’s submission of the Final Claim. As no evidence was produced by the parties on the current condition of the water tank, the Adjudicator had relied on the Google Earth satellite image. NHB was engaged to execute the preliminaries, civil and structural, and mechanical and electrical works for the sewage water tank for the Project. It is logical for the tank to be upgraded over the years after NHB had completed the works. In Gipping Construction Ltd v Eaves Ltd [2008] EWHC 3134 (TCC), the court held that the adjudicator should not be criticised for deciding not to have a site visit when it is clear that the adjudicator believed in good faith that he had sufficient information for him to reach his decision within the fairly short period allowed by the parties. In summary, the Adjudicator’s reference to the Google Earth satellite image was an additional reasoning and even if there was a breach of the rules of natural justice, it was not a material breach that would have made a difference to the AD.

Testing & Commissioning Works (‘TCW’) Quantum’s next dissatisfaction is the allegation that the Adjudicator failed to consider the defence and evidence in its letter dated 11.7.2023 (‘11.7.2023 Letter’). The 11.7.2023 Letter was Quantum’s reply to NHB’s letter dated 26.6.2023 wherein Quantum stated that “… there is no under-certification. The reduction of RM4,750.00 is because of you did not carry out the testing and commissioning work. As such, we have certified 50%.”. In NHB’s claim for “Under-valuation of BQ item, Testing, Commissioning and Hand Over amounting to RM4,750.00” in the Adjudication Claim, NHB stated that: “23. At the outset, the Claimant states that during the 1st CIPAA proceeding, the Claimant had submitted that “based on the QS’s valuation 11 (for work done up to 3.12.2019) which is equivalent to the Claimant's Progress Claim No. 9 dated 20.11.2019 (for work done up to 20.11.20019), the QS has certified 50% which is consistent with the Claimant's claim in its Progress Claim No. 9 dated 20.11.2019 for work done up to 20.11.2019 (for the work done of PDC 7 T&C)”. The adjudicator in 1st CIPAA had accepted the QS's certification and granted 50% of the T&C work done to the Claimant.

In this relation, there is a remaining 50% of T&C work done yet to be certified by the Respondent. The Claimant submits that PDC 8 inspection was carried out on 9.7.2020 See Schedule 11 of CBOD. There was no further comments from IWK with regard to the Claimant's work done thereafter. In this relation, the Claimant is entitled for a sum of RM4,750.00 being the remaining 50% of T&C work done by the Claimant.”. Quantum countered in the Adjudication Response, among others, as follows: “14. … Item D.2 in the Bills of Quantities specifies that the Contractor is obligated to perform Testing and Commissioning (T&C) works to the satisfaction of IWK, a prerequisite for the handover process to IWK and the issuance of the ‘Surat Sokongan’. Without the ‘Surat Sokongan’ granted by IWK, the project cannot be handed over. The Claimant's responsibility for maintaining the works is of utmost importance to ensure the project’s suitability for its intended purpose once IWK takes over. …

The Respondent firmly states that there is no under-certification of the BQ item, Testing, Commissioning and Hand Over amounting to

As explained in the Respondent’s letter dated 11.07.2023, the reduction of RM4,750.00 is due to the Claimant’s failure to carry out the Testing and Commissioning Works, thus only 50% of works was certified. The Respondent is unable to certify in full the work carried out by the Claimant.

As a result, the Respondent then proceeded to complete the outstanding works and decided that the Claimant is not to be paid for this item. …

The Claimant's reliance on the 1st CIPAA, where the previous adjudicator accepted the QS’s certification of 50% completion to justify the balance 50% work done in paragraphs 23 and 24 of its Adjudication Claim, is without basis.”. In the Adjudication Reply, NHB narrated the events from the time PDC 8 was submitted to the IWK Certification Agency by Quantum’s consultant on 22.12.2019 and as there was no further comment from IWK with regards to this work upon PDC 8 inspection carried out on 9.7.2020 and the subsequent inspection on 2.9.2020, the remaining balance i.e. 50% of the TCW should be certified by Quantum (see paragraphs 27 - 34). The Adjudicator discussed the issue of the “Valuation for the remaining (50%) Testing and Commissioning (T&C) item in the Bill of Quantities (BQ) for the sum of RM4,750” in paragraph L.9(a) - (h) of the AD and found that NHB has fulfilled its obligation for item D.2 of the Bill of Quantities (‘BQ’). The Adjudicator said: “… e. However, the testing and commissioning exercise is deemed incomplete until the PDC 8 inspection with IWK representative is completed. The PDC 8 inspection should be led by the Respondent and its project consultant with Claimant's support. The Claimant has supported the Respondent with their participation in the PDC 8 inspections, which was carried out twice. IWK has issued the 'Surat Sokongan' subsequently. Therefore, the Claimant has fulfilled its obligation for item D.2 of the BQ. f. The Respondent has no evidence to supports its allegation that the Claimant has not fulfilled its obligation for item D.2 and that the Respondent has completed item D.2 on its own. g. It should also be noted that the STP has been operating since PDC 7 which is also an indication that the STP has been tested and commissioned, but has yet to obtain the Surat Sokongan. h. The Claimant is therefore entitled to the remaining cost of the Testing and Commissioning for the amount RM4,750.00. The total value of work done under the sub-contract is in the full amount of RM4,200,000.00.”. Although the Adjudicator did not expressly mention the 11.7.2023 Letter, she had alluded to the Adjudication Response in paragraph I of the AD and Quantum’s position on the TCW was set out in paragraphs I.17 - 20 of the AD. Specifically in paragraph I.17 of the AD, the Adjudicator stated that: “17. The Respondents firmly stated that there is no under-certification of the BQ item, Testing, Commissioning and Hand Over amounting to RM4,750.00. Respondent contends that the reduction of RM4,750.00 is due to the Claimant’s failure to carry out the Testing and Commissioning Works, thus only 50% of the works was certified.”, and later in paragraph L.9(c) of the AD that: “The Respondent’s contention for withholding the 50% cost for Testing and Commissioning is that the Claimant has not completed this work item and the Respondent has instead completed such work.”. Hence, the Adjudicator was aware of the contents of the 11.7.2023 Letter. Nevertheless, she made a finding of fact that, contrary to Quantum’s contention that NHB did not complete the TCW, NHB had indeed completed the TCW item in the BQ. Upon reading the AD as a whole, especially the reasoning by the Adjudicator in relation to the TCW, it is obvious that this is not a case of the Adjudicator having failed to consider Quantum’s defence and thereby breached the rules of natural justice, but rather one where Quantum is aggrieved with the Adjudicator’s finding of fact and on the merits of the issue in dispute.

Variation Works The VOs in question are the same ones as discussed under the 1st Ground, namely NO Nos. 5 to 8. The argument that the variation works under these VOs do not fall within the scope of the LoA and the need for an official letter to signify acceptance of the additional works shall not be repeated here in the light of my finding in respect of the 1st Ground. For the argument in respect of limb (b) of s 15 CIPAA, Quantum claimed that the Adjudicator failed to consider that NHB lacked supporting evidence to substantiate the VO claim. The only documentation provided consisted of letters, which do not indicate the progress of the works, and quotations submitted solely by NHB. It is trite that the Court cannot set aside the AD merely because undue weight has been given by the Adjudicator to any piece of evidence or that she has assessed erroneously the evidence which was presented to her. This issue brought by Quantum before this Court is yet another attempt to challenge the merits of the AD.

Payment of Caj Sambungan Pengguna (‘CSP’) In the Adjudication Claim, NHB stated that: “42. … on 22.10.2019, the Claimant has issued its invoice to the Respondent being payment for the CSP amounting to RM8,100.00 as billed by Tenaga Nasional Berhad on 11.10.2019. Accordingly, the Claimant has made payment for the same on 18.10.2019 via a cheque (UOB 126489) in order to ensure the smooth progress of the works on the site ... This CSP payment was paid by the Claimant on behalf of the Respondent for upgrading of power supply to STP plant.

… this payment for CSP has also been certified by the Respondent in Certificate No.9 dated 21.5.2020 as a variation order …

However, to-date, the Respondent has failed to make payment and/or failed to recognise its certification of RM8,100.00 in the Final Claim.”. Quantum’s response in the Adjudication Response is, inter alia, as follows: “53. … the CSP payment of RM8,100.00 is not work done or services rendered under the express terms of construction contract as defined in Section 4 of CIPAA 2012 as elaborated under the definition of “payment” … …

Considering that this payment cannot be for “work done or services rendered” and it is within the Claimant's scope of responsibility, the Claimant is not entitled to claim the payment for CSP.

Additionally, the Claimant's scope of works was to ensure the T&C is successful and it is within the Claimant's obligation to ensure that the STP had a sufficient power to complete the T&C works.

Hence, to avoid the temporary power supply to cause any damages to the equipment, the Claimant must get permanent power supply to conduct the T&C works.”. The Adjudicator dealt with the claim for CSP in paragraph L.15 as follows: “a. The CSP is the electricity connecting charge imposed by the TNB and bear by the owner of the building unless it is specified in the BQ that such rate is allowed in the contract sum. It is common that the contractor assists the client or owner in the application to TNB for connecting services and pay on behalf of the owner, such cost is reimburse to the contractor with submission of the actual billing and/or receipt. b. The CSP is not provided in the BQ and hence it is not to be borne by the Claimant. Claimant is entitled to get reimbursement from the Respondent.”. Quantum argued that the purpose of the CSP was to ensure a sufficient supply of electricity to the STP for it to function and facilitating the completion of the TCW. This obligation falls under NHB’s implied responsibility to bear costs as per Clauses 3.2 and 3.3 of the LoA which provide as follows: “3.0 BILL OF QUANTITY …

3.2 Any utility bill will be paid by sub-con (as per bill by client).

3.3 Your rates shall be cover for the following scope of works:

The accuracy of taking actual site measurement shall be entirely your own responsibility and that you shall make good at your own expenses to the satisfaction of IWK for any errors that may arise from any cause.

Temporary water and electricity needed during the execution of your works shall be borne by you.

Engage full time competent supervisor to ensure proper execution of the works by your workers and attend scheduled coordination meeting as and when informed.

All risks, liabilities and obligations set out or implied in this contract and all matters and things necessary for the proper execution of the sub-contract works.”. It was further argued that, since Quantum did not issue an official letter accepting responsibility for the CSP costs, Quantum is not liable for this expense. The Adjudicator is said to have imposed a contractual liability on Quantum without properly interpreting the terms of the LoA. Upon consideration of Quantum’s averments and submission in this Court, I am of the view that the Adjudicator had decided to accept NHB’s contention that CSP was not provided in the BQ and hence, the cost should not be borne by NHB and it is entitled to obtain a reimbursement from Quantum. Quantum’s arguments before me again goes to the merits of the Adjudicator’s findings. Even if the Adjudicator’s interpretation of the contractual provisions is incorrect, such erroneous interpretation is not a valid reason to set aside the AD.

Back charges Quantum contended that NHB refused to rectify the defective works and in the Payment Certificate No. 12 to NHB, back charges totaling RM282,405.60 were included. After offsetting this amount, NHB still owed Quantum the sum of RM72,405.60. It was additionally contended that is not for NHB to certify or confirm whether it has completed its work or otherwise. Approval should be provided by IWK through the Letter of Clearance as stipulated under Clause 6.4 of the LoA as follows: “6.0 PAYMENT AND RETENTION SUM …

6.4 All payment shall be subjected to ten percent (10%) with limit of five percent (5%) of the revised Sub-Contract Sum, aggregate of the Sub Contract Sum and all authorized Variations. This 2.5% amount of retention shall be released upon the Practical Completion Of the Main Contract or after you have made good all defects to our satisfaction whichever is the later. Another 2.5% shall be released Twelve

months from the date of Letter of Clearance (LOC) from IWK.”. The works which Quantum alleged it had done are as follows.

Rectification Work before PDC 8: RM55,183.40 The Adjudicator’s findings in paragraph L.17(d) and (e) of the AD are that: “d. From the findings, it is concluded that the Respondent had simply back charge cost for works unrelated to the sub-contract works, such as:- i. Works that are not part of the sub-contract which include rectification for existing STP, rectification for works not part of the sub-contract and new works; ii. Respondent’s own administrative work; iii. Housekeeping during the prolonged contract between January 2020 to September 2020, in which the Claimant’s is entitled to claim such housekeeping against the Respondent under EOT with cost. e. For works that are not related to the sub-contract work, the back charge by the Respondent are dismissed.”. Quantum submitted that ironically, the Adjudicator allowed NHB’s claims for variation works despite acknowledging in the AD that the LoA does not provide for such payments, the order came from IWK and not Quantum, and there was no official instruction from Quantum. Further, the Adjudicator failed to consider the letters dated 27.7.2020, 3.8.2020 and 23.9.2020 by Quantum to NHB instructing NHB to rectify the defects in the works before obtaining approval from the public authorities such as IWK. However, NHB failed to carry out the rectification work, resulting in Quantum having to bear the costs instead. These pieces of evidence were not alluded to nor considered by the Adjudicator in paragraph L.17 of the AD. In my opinion, Quantum’s complaints relate to the factual findings by the Adjudicator whereby she found that Quantum failed to discharge its burden to proof that it is entitled to set off or back charge against NHB. As regards the three letters as submitted by Quantum, the Adjudicator is not required to address each and every submission raised by the parties in the adjudication proceedings and to list out every single evidence or document in the AD (see Prestij Mega Construction Sdn Bhd v Personal Representative of Estate of Vinayak Pradhan Prabhakar (Decreased) & Ors and Another Cases [2021] MLJU 607. The Adjudicator had considered Quantum’s evidence and made a finding of fact that Quantum had simply back charged cost for works unrelated to the sub-contract work against NHB. This does not amount to a denial of the rules of natural justice.

(ii) TNB Bill & Water Bill Surchage before PDC 8 The Adjudicator found, in paragraph L.18(d) and (h) in the AD, that: “d. The adjudicated sum that the Respondent is entitled to back charge the Claimant is 50% of the December bill for the amount of RM3,529.68. … h. The adjudicated sum that the Respondent is entitled to back charge the Claimant for water bill is in the amount of RM4,687.45, for the period between May 2019 to December 2019.”. Quantum claimed that the Adjudicator had overlooked Clauses 3.2, 3.3 and 6.4 of LoA which imposed the responsibility on NHB to bear the utility costs and to rectify the defects at its expense, subject to IWK’s approval, and the works can only be considered completed if all the works are approved by IWK through the Letter of Clearance. Based on paragraph 69 of the Adjudication Response, Quantum had posited that IWK officially accepted the STP only on 25.9.2020. Consequently, the responsibility for maintaining the utility bills to support the STP still lies with NHB until the handover period in 2020. However, I am of the view that the Adjudicator has considered the parties’ submissions and she has reasoned and calculated Quantum’s entitlement to back charge NHB under this head of claim for the total sum of RM8,217.13. At the risk of repetition, Quantum’s dissatisfaction with the Adjudicator’s findings is not a valid ground to set aside the AD.

(iii) Spare Parts upon Handing Over PDC 8 The Adjudicator dismissed the back charge for spare parts for the reasons given in paragraph L.19 of the AD as quoted below: “i. The spare parts listed above are either certified BQ items or new spare parts which are considered variation order. … ii. The spare parts specified in the BQ have been fully certified by the Respondent in Payment Certificate No. 12 and the consultant QS in its Payment Certificate No. 9 to the Respondent. iii. The Claimant has submitted evidence of the delivery order and purchase order. The delivery order numbers are indicated in the table in sub-paragraph L. 18(c)(i) above. Since the Claimant has delivered these spare parts, the Respondent back charge is not justified and therefore dismissed. iv. Spare parts for item D.6, D.7, D.8 & D.10 are not specified in the contract, hence Claimant is not liable for the cost.”. Quantum contended that the Adjudicator contradicted her own findings by allowing NHB’s VO claims, even though they were not specified in the LoA, while dismissing Quantum’s back charges, labeling them as a VO. In addition, the Adjudicator is said not to have considered Quantum’s letter dated 9.10.2020 to NHB regarding NHB’s failure to rectify the defects and that Quantum may carry out the rectification works and back charge NHB. The Adjudicator also failed to acknowledge that the supply of spare parts was NHB’s responsibility as stated in the BQ. My reasons for finding that there is no merit to Quantum’s submission that there is a breach of its right to procedural fairness are the same as in subparagraph (e)(ii) above.

(iv) Rectification Works during DLP The Adjudicator dealt with this issue in paragraph L.20 whereby she found, among others, that: “d. … the Respondent had simply back charge cost for works unrelated to the sub-contract works, such as the new awning to the admin building and transportation cost for works not related the sub-contract. e. For works that are not related to the sub-contract work, the back charge by the Respondent are dismissed. f. The works that are highlighted in the table in paragraph L.20(c) cannot be verified and lacking evidence to support the back charge. Therefore, these claims are dismissed, also considering the Respondent's tendency of simply back charging unrelated cost.”. Quantum argued that the Adjudicator failed to consider Clause 1.2 of the LoA which reads as follows: “1.0 SCOPE OF WORKS …

1.2 Your works must be done to the approval and satisfaction of the Client, Consultant and Local Authorities.”. Hence, NHB has a contractual duty to meet the approval and satisfaction of Quantum as the client, the consultant, and the local authorities i.e. IWK. It was further argued that the Adjudicator failed to consider Clause 6.4 LoA before concluding that there is no provision for DLP in the LoA. Upon perusal of the adjudication papers, the issue pertaining to DLP and the purported rectification works have been addressed by NHB in Section D.1 of the Adjudication Reply and Section E.4 of the Adjudication Reply. NHB’s stance was that DLP is not expressly provided in the contract and therefore, there is no DLP for the Project. Alternatively, NHB’s position was that STP was a live plant and NHB’s equipment installation is subject to wear and tear during operation of the STP. Thus, the reasonable deduction would be that the DLP period shall follow NHB’s equipment warranty which was limited to 12 months from the date of installation. NHB averred that, despite numerous correspondence to Quantum on the issues of the Certificate of Practical Completion and DLP, there was no response or objection raised by Quantum on these matters. In these circumstances, the Adjudicator determined that the date of completion of work is 22.9.2020 and rejected this back charge item premised on the reason that Quantum had simply back charge cost for works unrelated to NHB. Quantum’s grievance is, yet again, with the findings of fact by the Adjudicator and the merits of the AD, which are not valid grounds to set aside the AD.

Late Payment Interest NHB made its claim for late payment interest in paragraphs 57 - 60 of the Adjudication Claim, citing, among others, s 25(o) CIPAA where the Adjudicator has the power to award interest on the adjudicated amount. The interest sought was at the rate of 5% per annum on the revised outstanding sum from the due date of the payment until the date of full settlement of the outstanding sum. Quantum resisted the claim for interest simply on the basis that there is no money due and payable to NHB (see paragraph 91 of the Adjudication Response). In paragraph L.23 of the AD, the Adjudicator decided that: “The Claimant is entitled to the interest for the payment owing to Claimant for work done after Works Completion and the release of the remaining retention sum. a. The value of work done at the Works Completion on 22 September 2020 is in the amount of RM231,694.47, while the second moiety is due 12 months after the Works Completion on 22 September 2021. … c. The payment for Works Completion is due on 22 October 2020 while the remaining of the retention sum is due on 22 October 2021. The interest is calculated from the respective due date to the date of this Adjudication Decision. d. The interest for the for the respective payments is calculated at %% and as shown below:- i. RM231,694.37 x 5% x (1184/365) days = RM37,578.94 ii. RM336,694.47 x 5% x (819/365) days = RM37,774,35 iii. Total interest award for the adjudicated sum = RM75,353.29”. Mr. Reno Nga submitted for Quantum that, by stating the works were completed on 22.9.2020 and not on 16.12.2019 as alleged by NHB, the Adjudicator essentially acknowledged that completion is contingent upon IWK issuing the Letter of Clearance. This being the case, Quantum questioned as to how could the Adjudicator then have allowed NHB’s claims without considering that the Letter of Clearance was issued only after Quantum had completed the rectification works. The learned counsel fervently submitted that the entire AD is contradictory as the Adjudicator approved NHB’s claims despite the absence of the Letter of Clearance and Quantum’s rectification work. In my opinion, there are no contradictory findings by the Adjudicator. The late payment interest was calculated based on the works completion on 22.9.2020 and 22.9.2021 (12 months after the completion of works for the 2nd moiety of retention sum). Whilst the Adjudicator accepted that the date of completion of the works was on 22.9.2020, this does not necessarily mean that NHB was responsible for the rectification works. The Adjudicator found that there is no evidence that the delay in completion of the works was caused by NHB, and Quantum was the main party in managing the requirement by IWK. Quantum had in fact delayed in issuing its instruction to NHB and in obtaining the Letter of Clearance. [44] In the upshot, even though Quantum made the general submission that, based on the guidelines in Cantillon’s case (supra), the vital pieces of evidence that the Adjudicator failed to consider in her decision-making process and the fact that she did take into account evidence that was not presented by either party during the adjudication proceedings all point to a breach of the rules of natural justice, a scrutiny of the six issues raised by Quantum shows otherwise. [45] Similar to the 1st Ground, it is my considered view that all the issues raised by Quantum in the 2nd Ground are in relation to the factual findings made by the Adjudicator and the legal principles in the cases as cited in paragraph 41 above would apply i.e. any failure by the Adjudicator to consider material evidence or by considering incorrect evidence are not valid reasons to set aside the AD. It is not the function of this Court in the Setting Aside Application to investigate into the merits of the dispute and the findings and conclusions of the Adjudicator to detect any errors as though this is an appeal against the decision of the Adjudicator. [46] In the final analysis, Quantum has not established any of the grounds put forth pursuant to limbs (b) and (d) of s 15 CIPAA and the Setting Aside Application must be dismissed. II. The Enforcement Application [47] NHB’s application was made pursuant to s 28 CIPAA which reads as follows: “Enforcement of adjudication decision as judgment

28.

A party may enforce an adjudication decision by applying to the High Court for an order to enforce the adjudication decision as if it is a judgment or order of the High Court.

The High Court may make an order in respect of the adjudication decision either wholly or partly and may make an order in respect of interest on the adjudicated amount payable.

The order made under subsection (2) may be executed in accordance with the rules on execution of the orders or judgment of the High Court.”. [48] The test on whether an adjudication decision should be enforced or otherwise was elucidated in Inai Kiara Sdn Bhd v Puteri Nusantara Sdn Bhd [2019] 2 MLJ 362 and applying the same to the instant application, –

the AD has been rendered in favour of NHB;

there has been non-payment of the Adjudicated Sum by Quantum to date; and

there is no prohibition to the grant of the order that is sought in that the AD has not been set aside or stayed, there is no written settlement of the subject matter between the parties or there is no final decision rendered on the Payment Claim whether made in arbitration or by a court of law. [49] As I have decided to dismiss the Setting Aside Application and NHB has fulfilled the criteria as set out in Inai Kiara (supra) as applied in a long line of cases by the courts of first instance and at the appellate level, it is inevitable that the Enforcement Application must be allowed. Conclusion [50] Premised on the aforesaid consideration, the Setting Aside Application was dismissed with costs of RM8,000.00 and the Enforcement Application was allowed with costs of RM3,500.00, both subject to allocator. Dated: 24 January 2025 (ALIZA SULAIMAN) Judge High Court in Malaya Kuala Lumpur Counsels/ Solicitors: For the Plaintiff in O.S. No. 25 and the Defendant in O.S. No. 29: Reno Nga Chee Leang (Ivan Tan with him) Messrs. Nga Chambers Advocates & Solicitors B-29-05, Residensi Rabung KL Timur (The Ridge KL East) No. 5, Persiaran Melati Kuarza 53100 Kuala Lumpur For the Defendant in O.S. No. 25 and the Plaintiff in O.S. No. 29: Felicia Lai Wai Kim Messrs. Harold & Lam Partnership Advocates & Solicitors Suite 32-5, 32nd Floor, Oval Damansara No. 685, Jalan Damansara 60000 Kuala Lumpur