R.E Electrical & Construction Works v Mentari Plaza Sdn. Bhd. (KA-24C-3-06/2023)

The Plaintiff through this Originating Summons dated 20.06.2023 [Enclosure 1] prayed for direct payment for:

the sum of RM255,203.51 (“adjudicated Sum”) due to the Plaintiff pursuant to the Adjudication Decision dated 20.10.2022 (“the said Adjudication Decision”) by the adjudicator in the adjudication proceeding according to Construction Industry

the sum of RM3,146.34 to the Plaintiff being the interest at the rate of 5% per annum on yearly rest on the Adjudicated Sum from the date of service of Notice of Adjudication i.e 22 July 2022 until the date of the said Adjudication Decision,

20.10.2022;

the interest at the rate of 5% per annum on yearly rest on the said Adjudicated Sum from the date of the Adjudication Decision until the full payment of the Adjudication Sum;

The sum of RM35,521.14 being the costs of the adjudication proceeding;

That the Costs of this Originating Summons are paid by the

Any other relief that this Honorable Court deems fit, just and reasonable.

The application is supported by the Affidavit in Support in Encl. 2. The Defendant in opposition filed an Affidavit in Reply in Encl. 6 which the Plaintiff responded in Encl. 7. The Defendant then filed a Further Affidavit in Reply No. 2 in Encl. 14. The Plaintiff objected to this filing by raising a preliminary objection on Encl. 14 as it was not served in time and hence must be disregarded in the adjudication of the Plaintiff’s application herein. I will return and deal with this in due course.

Written submissions were subsequently filed by parties which are Encl. 19 [Plaintiff’s Written Submission] and Encl. 33 [Defendant’s Written Submission].

Having heard the parties and having carefully considered all the evidence before me, I upheld the Plaintiff’s preliminary objection and disregard Encl. 14. I then directed my mind on the merits of the application sans Encl. 14 and came to a decision wherein I allowed the Plaintiff’s application in Encl. 1 with cost.

Dissatisfied with my decision, the Defendant has since filed a notice of appeal dated 26.1.2026.

The following are my grounds in arriving at my decision.

The Plaintiff as a claimant, commenced an adjudication proceeding against CF Jaya Construction Sdn Bhd (“Main-Contractor”) as the Respondent under Construction Industry Payment and Adjudication Act 2012 (CIPAA 2012) claiming the outstanding sum for the works done under the Letter of Award dated 18.04.2018 (“the said Sub-Contract”). That claim was allowed by the adjudicator who published the Adjudication Decision in favor of the Plaintiff. The respondent in that adjudication, was directed to remit the outstanding sum of RM255,203.51 together with the interest and cost to the Plaintiff.

The respondent however, has failed or refused to make payments pursuant to the Adjudication Decision to the Plaintiff.

The Defendant is the employer and/or principal of the project under which the adjudication was commenced. Pursuant to section 30 of CIPAA, the Plaintiff issued a Notice for Direct payment to the Defendant on 6.03.2023.

The Defendant did not provide any response to the said notice for a period of five (5) months until the filling of Affidavit in Reply Encl. 6. Therefore, the Defendant has failed to show proof that it had issued a written notice to the respondent in accordance with section 30(2) of S/N XNmDnxpqe0m4S8xBh43vPQ the CIPAA and there is no proof of payment of the adjudicated sum obtained by the Defendant from the respondent.

On 6.09.2023, the Defendant filed a Notice of Application (Encl 10)

That the Affidavit in Reply affirmed by Low Kam Yoong on 29.8.2023 (Enclosure 7) be struck out and/or wholly expunged; or

Alternatively, that paragraphs 11(c) and (f), 13(b) and (c), 14(d), 15, 16(a), 17(b) and (d), 18(a), (c) and (d), 20, 22(g) and (i), and 23(d) of the Affidavit in Reply affirmed by Low Kam Yoong on 29.8.2023 (Enclosure 7) be struck out and/or expunged;

An order that the main action, including the filing of the Defendant’s AIR in response to the Affidavit in Reply affirmed by Low Kam Yoong on 29.8.2023 (Enclosure 7), be stayed pending the disposal of this application.

In Encl. 10 proceeding, the Defendant filed a Notice of Intention to rely on the Affidavit affirmed by Kang Hsuen Chiang on 7.08.2023 (Encl. 6) and the Defendant’s Affidavit (2) affirmed by Kang Hsuen Chiang on 12.09.2023 (Encl. 14) in relation to Encl. 10 in this action, as a response to the Affidavit affirmed by Low Kam Yoong (Encl. 18) in opposition to Encl. 10.

Encl. 10 was heard and came to be dismissed by the learned Dato’ Dr Arik Sanusi J on 27.02.2024. An appeal was preferred to the Court of Appeal which was subsequently dismissed by the Court of Appeal.

Returning to the preliminary objection, in the present proceeding, the Plaintiff raised a preliminary objection on the admissibility of Encl. for failure to comply with Order 32 rule 13(2)(c) of Rules of Court 2012 in that the Defendant has failed to comply with this Court’s direction to file and serve its Affidavit in Reply. Initially this Court directed the affidavit to be filed on or before 06.9.2023. An extension was later granted until 12.9.2023. Encl. 14 was only filed on 13.9.2023 and served by post on the Plaintiff. The Plaintiff asserted that it only received the affidavit on 18.9.2023.

The Plaintiff’s solicitor by a letter in Encl. 15 highlighted to the learned Senior Assistant Registrar that as of 14.09.2023 they have yet to receive any further affidavit and thus took the position that the Defendant does not intend to file any further affidavit as directed by the Court. Counsel for the Plaintiff further requested that it be recorded that they will proceed with the filing of written submissions without regard to any subsequent affidavit that the Defendant may file and serve.

By letter dated 15.09.2023 (Encl. 16) addressed to the Senior Assistant Registrar, the Defendant’s solicitors responded to the Plaintiff’s solicitors’ letter (Encl. 15) stating that the Defendant’s Affidavit in Reply (2) (Encl. 14) had been filed on 13.09.2023 and served on the Plaintiff via email on the same day, but the email was S/N XNmDnxpqe0m4S8xBh43vPQ returned. The Defendant’s solicitors further stated that they were in the process of effecting service of a hard copy of the said affidavit upon the Plaintiff’s solicitors by post.

As recorded by the Court, the Defendant’s counsel’s response regarding the status of the Defendant’s Affidavit in Reply (2) (Encl. 14) is as set out in their letter at Encl. 16, and the Defendant made no Submission in Reply in respect of the preliminary objection raised by the Plaintiff as contained in the Plaintiff’s written submissions (Encl. 19).

From the factual matrix outlined above, the issues requiring determination are as follows:

Preliminary Objection – Encl. 14 was filed and served out of time i.e. after 12.09.2023;

(ii) On merits whether there is money due and owing by the Defendant to the Main Contractor; and

(iii) On merits too, whether the Defendant has served a written notice on the Main Contractor for the Main Contractor to prove that payment has been made to the Plaintiff. S/N XNmDnxpqe0m4S8xBh43vPQ The case for the Plaintiff

The Plaintiff submits as follows:

Preliminary objection – Enclosure 14 to be disregard and not admitted as evidence.

(ii) Money is due and payable by the Defendant to CF Jaya Construction (“Main-Contractor”).

(iii) The Defendant has failed to discharge evidential burden to prove that there is no money due and payable to CF Jaya Construction (“Main-Contractor”).

(iv) The Defendant did not serve a notice pursuant to section 30(2) of CIPAA on CF Jaya Construction (“Main-Contractor”). The Case of the Defendant

The Defendant did not address the Plaintiff’s preliminary objection on Encl. 14 except in a letter addressed to the Senior Assistant Registrar dated 15.09.2023 (Encl 16) where the Defendant’s solicitors informed the Court that they have served Encl. 14 on the Plaintiff’s solicitors through email but without success and that they are in the process of serving a hard copy of Encl. 14 to Plaintiff’s solicitor via post. In fact, in the Defendant’s written submission Encl. 33, no reference was made to Encl. 14. Reliance was placed only on their Affidavit in Reply in Encl. 6.

For Encl. 1, the Defendant submitted as follows:

Owing to delays in the execution of the project, the Defendant had imposed liquidated damages upon CF Jaya Construction pursuant to Clause 25 of the Letter of Award, amounting to RM3,886,345.21.

(ii) Following the termination of CF Jaya Construction on 01.06.2019, defects were identified in the construction works. Based on Certificate of Payment No. 13, as at 30.12.2019, the Defendant incurred RM337,942.83 in rectification costs.

(iii) CF Jaya Construction wrongfully removed electrical and mechanical materials belonging to the Defendant, thereby causing losses quantified at RM81,426.80.

(iv) The Defendant remains liable for any damages that may be claimed by PR1MA under Clause 19.3 of the Letter of Award.

Taking into account the foregoing losses and/or costs, Certificate of Payment No. 13 issued by the Defendant to CF Jaya Construction reflects an overpayment in the sum of RM174,420.99.

On the preliminary objection on inclusion of Enclosure 14. The Court records as follows:

The Plaintiff’s AIR (Encl. 7) was duly filed and served upon the Defendant on 29.08.2023.

(ii) Pursuant to the directions of this Court, the Defendant was required to file its Affidavit in Reply, if any, on or before 06.09.2023. The parties were further directed to file their written submissions simultaneously on or before 20.09.2023, with reply submissions to be filed simultaneously on or before 04.10.2023.

(iii) By way of subsequent correspondence, the Defendant was granted an extension of time by the learned Senior Assistant Registrar to file its affidavit in reply on or before 12.09.2023.

(iv) At the e-review session for Encl. 10 on 13.09.2023, the learned Senior Assistant Registrar ordered the Defendant to file its affidavit in reply (2) (pertaining to Encl 1 (the main suit) on the same day. S/N XNmDnxpqe0m4S8xBh43vPQ

In respect of Encl. 10 (the Defendant’s application) together with the Supporting Affidavit (Encl. 12), the Plaintiff was granted leave to file its Affidavit in Response on or before 25.09.2023.

(vi) At the e-review for Encl. 10 held on 9.10.2023, it was duly recorded that the Plaintiff had complied with the Court’s directions by filing and serving its affidavit in response (Encl. 18) on 25.09. 2023.

(vii) The learned Senior Assistant Registrar thereafter granted the Defendant leave to file an Affidavit in Reply to the Plaintiff’s Affidavit in Response (Encl. 18) on or before 16.10. 2023.

(viii) At the subsequent e-review session of Encl. 10 on 16.10.2023, learned counsel for the Defendant informed the Court that no Affidavit in Reply would be filed. Instead, the Defendant filed a Notice of Intention to refer to the Defendant’s Affidavit in Reply (Encl. 6) together with the Defendant’s affidavit in reply (Encl. 14) as constituting the response to the Plaintiff’s affidavit in reply (Encl. 18). S/N XNmDnxpqe0m4S8xBh43vPQ

As stated earlier, Encl. 10 was dismissed by Dato’ Dr. Arik Sanusi J. The following was recorded: “Defendan telah gagal memfailkan sebarang Afidavit Balasan bagi menjawab Afidavit Jawapan Plaintif tersebut (Kandungan 18) dan hanya memfailkan Notis Niat untuk mengguna pakai Afidavit Defendan seperti di Kandungan 6 dan Kandungan 14 bagi menjawab Afidavit Jawapan tersebut. Pada pendapat Mahkamah ini, penggunaan Notis Niat oleh Defendan untuk menjawab Afidavit Jawapan tersebut adalah tidak mencukupi kerana ada fakta-fakta dan pernyataan Plaintif dalam Afidavit Jawapan tersebut yang tidak ada (not available) semasa Defendan mengikrarkan Afidavit Defendan seperti di Kandungan 6 dan Kandungan 14 tersebut dan Defendan telah gagal mencabar fakta-fakta dan pernyataan Plaintif dalam Afidavit Jawapan tersebut secara satu persatu.”

To reiterate, the decision of Dato’ Dr. Arik Sanusi J was upheld by the Court of Appeal.

Based on the Plaintiff’s submissions in support of the preliminary objection, and in the absence of any reply submissions from the Defendant save for explanation in their letter marked as Encl. 16, this S/N XNmDnxpqe0m4S8xBh43vPQ Court agrees with the preliminary objection raised by the Plaintiff. I find that the Defendant had failed to comply with the Court’s directions regarding the filing of its Affidavit in Reply, having only filed the same on 13.09.2023 but failed to serve it upon the Plaintiff on the same day. Furthermore, the Defendant did not seek any extension of time to serve upon the Plaintiff its second Affidavit in Reply (Encl. 14), which was filed outside the prescribed period.

Accordingly, I find merit in the Plaintiff’s objection that the Defendant’s has failed to comply with Order 32 rule 13(2)(c) of the Rules of Court 2012, and its failure to apply for an extension of time, renders such affidavit inadmissible as evidence. (See Leon Metal Sdn Bhd v. TMT Industry Sdn Bhd & Ors [2022] MLJU 212).

In the circumstances, I uphold the Plaintiff’s preliminary objection, and Encl. 14 shall be disregarded for the purposes of this proceeding.

I will now address the main issues pertaining to Encl 1. A plain reading of section 30(5) of CIPAA makes it evident that monies must be due and payable at the time the Defendant receives the request for direct payment.

It is incumbent upon the Defendant to demonstrate that no monies were due or payable as at the date of receipt of the Plaintiff’s request, namely 01.03.2023. In the absence of such proof, the Defendant’s reliance upon a document issued subsequently on 11.05.2023, for the purpose of imposing back charges or effecting any set-off, is nothing but a plain and a belated afterthought.

It is not disputed that upon receiving the Plaintiff’s Notice requesting direct payment on 06.03.2023, the Defendant failed to discharge its obligation under CIPAA 2012 by issuing a notice to the Main Contractor as required under section 30(2) of the Act. This omission was expressly admitted by the Defendant.

In the present proceedings, the Defendant has failed to adduce any evidence establishing that a written notice was issued to the Main Contractor in compliance with section 30(2) of CIPAA 2012, nor has the Defendant produced proof of any payment from the Main Contractor.

In CT Indah Construction Sdn Bhd v BHL Gemilang Sdn Bhd [2020] 1 CLJ 75, the Court of Appeal underscored that Section 30 of S/N XNmDnxpqe0m4S8xBh43vPQ CIPAA imposes an independent statutory obligation to make payment. The Court held: “Section 30 of the CIPAA creates an independent statutory obligation on the part of the respondent, as a principal in its own right, to pay the appellant and that this was a separate obligation to pay imposed by statute which existed in parallel with BHL Builder's obligation as the main contractor to pay the appellant under the adjudication decision. Despite BHL Builder's status as a bankrupt, the respondent was bound by statute i.e. s. 30(3) of the CIPAA, to make direct payment to the appellant of the adjudicated sum of RM9,065,335.67.”

The requirement in section 30 of CIPAA is given further clarification in HMN Nadhir Sdn Bhd v Jabatan Kerja Raya Malaysia & Ors [2018] 1 LNS 1938 where the Court held the following: “[21] It is abundantly clear that ‘may’ when used in section 30(1) denotes a discretion conferred on the successful Claimant with respect to making a request for payment from the Principal. The successful Claimant is not legally obliged to take this route for the Respondent might pay on their own accord or that there are other modes of execution which are quite effective against the Respondent. S/N XNmDnxpqe0m4S8xBh43vPQ [22] Contrast that with the use of the word "shall” in both sections 30(2) and (3). [23] It can only denote a mandatory meaning in that the Principal is legally required to follow up with the action prescribed. There are no two ways about it.”

A plain reading of Section 30(5) of CIPAA makes it evident that monies must be due and payable at the time the Defendant receives the request for direct payment. Reference is made to the judgment of See Mee Chun J (as she then was) in Murni Environmental Engineering Sdn Bhd v Eminent Ventures Sdn Bhd & Anor & Another Cases [2016] 1 LNS 805, wherein Her Ladyship held that: “16. Further section 30(5) of CIPAA does not require that the money due and payable by D2 as the principal to D1 being the party against whom the adjudication decision was made should be in reference to the claim made by Plaintiff to the progress claim in question. So long there is money due and owing by D2 to D1, that money shall be paid to Plaintiff and D2 may recover the said paid amount as a debt or set off from any money due or payable to D1 pursuant to section 30(4) CIPAA. 17. D2 had contravened the provision of section 30 of CIPAA by its failure to pay the said amount as stated in the adjudication decision dated 13-4-2015 to Plaintiff upon its request for payment. Plaintiff can S/N XNmDnxpqe0m4S8xBh43vPQ therefore seek to enforce the adjudication decision pursuant to the aforesaid section.”

The principle articulated in Murni Environmental Engineering was subsequently cited with approval in B Cor Geotechnics Sdn Bhd v Panzana Enterprise Sdn Bhd [2019] 1 LNS 1393.

The crux of this action lies in the Defendant’s obligation to establish that no monies were due or payable at the time the Plaintiff’s notice dated 01.03.2023, was received by the Defendant.

When the Defendant received the said Notice on 06.03.2023, it was evident that a retention sum of RM874,034.99 remained due and payable to the Main Contractor, as reflected in the Defendant’s purported Certificate of Payment No. 13. This is because the Main Contractor had been prematurely and wrongfully terminated by the Defendant on 01.06.2019, and the retention sum was required to be returned to the Main Contractor.

The Defendant’s alleged claim of overpayment amounting to RM174,420.99 did not exist as at the date of the said Notice, as it was S/N XNmDnxpqe0m4S8xBh43vPQ only raised subsequently on 11.05.2023 under the purported Certificate of Payment No. 13.

I find that there is no documentary evidence to substantiate the Defendant’s claim that the sum of RM337,942.83 existed as at the date of receipt of the said Notice. In truth, the Defendant could arbitrarily insert any figure into its purported Certificate of Payment No. 13, which was issued two months after receiving the Plaintiff’s Notice. The alleged sum of RM337,942.83 has not been proven by the Defendant through any supporting documentation.

Further, there is no documentary evidence to support the Defendant’s claim that the sum of RM81,426.80 existed as at the date of receipt of the said Notice. If, in fact, such materials had previously been paid for and subsequently went missing, the Defendant, as the party assuming ownership, ought to have lodged a police report for stolen goods to serve as a record and to facilitate any insurance claim. Instead, the Defendant delayed for approximately four years, from 2019 until the issuance of its purported Certificate of Payment No. 13, which was produced two months after receiving the Plaintiff’s Notice. The alleged sum of RM81,426.80 has not been substantiated by the Defendant with any supporting documentation.

The Defendant also has no right to impose liquidated ascertained damages (LAD) in the sum of RM3,886,345.21, as it is trite law that LAD may only be imposed for works carried out beyond the stipulated completion date, and not within the original contractual timeline. In this regard, the Defendant prematurely and wrongfully terminated the Main Contractor on 01.06.2019, prior to the actual completion date of 14.07.2019.

There is no documentary evidence to support the Defendant’s contention regarding the alleged loss and damages claimed by PR1MA against the Defendant, which remains a mere speculation to-date.

It is trite law that the failure to issue the mandatory notice upon receipt of the said Notice is fatal to any defence asserting that no sums are outstanding or payable to the Main Contractor. This is particularly so where the Defendant chose to issue its purported Certificate of Payment No. 13 only after defaulting on its obligation under section 30(2) of CIPAA.

In light of the foregoing, it is clear that the sum of RM874,034.99 was due and payable to the Main Contractor by the Defendant as at the date the said Notice was received on 06.03.2023.

I find that the defence advanced by the Defendant is devoid of merit and remains unsupported. It is both illogical and unlawful to impose liquidated ascertained damages (LAD) on the Main Contractor when the Defendant wrongfully terminated the contract before the original completion date. The Defendant has failed to justify the computation of LAD, including the basis, period, and entitlement to impose LAD prior to the lapse of the original completion date.

Since the wrongful termination of CF Jaya Construction on 01.06.2019, almost four years have passed without the Defendant issuing any notice, letter, or demand for additional costs. Instead, the Defendant remained silent and only raised substantial back charges through the purported Certificate of Payment No. 13, issued two months after receiving the Plaintiff’s Notice. The Defendant has provided no justification for the sudden issuance of Certificate of Payment No. 13, four years after the unlawful termination. Worse still, it has failed to disclose the total payments made to the Main S/N XNmDnxpqe0m4S8xBh43vPQ Contractor, rendering the computation in Certificate No. 13 novel, unsubstantiated, and incapable of proof.

Certificate No. 13, dated 11.05.2023, contains no LAD deduction, confirming that no LAD was imposed as of its issuance. As the certificate is designated as the final account, all deductions should have been captured therein. On its own terms, the Defendant’s claim amounts only to RM174,420.99, while it still owes CF Jaya Construction RM874,034.99 in retention monies. The Defendant has deliberately withheld disclosure of CF Jaya Construction’s final claim, leaving the actual claimed sum against Certificate No. 13 (Final Account) in Exhibit KHC-13 of Enclosure 6 indeterminable.

The computation of LAD is unilateral, unjustified, and unlawful, as it is based solely on the Defendant’s unexplained figures. No LAD can lawfully be imposed when the original completion date had not lapsed at the time of termination. Furthermore, the Defendant has tendered no evidence of any deduction or set-off issued to CF Jaya Construction prior to receipt of the Plaintiff’s Notice on 06.03.2023. There is clear evidence of RM874,034.99 in retention monies being withheld for almost four years after termination, yet no proof that this S/N XNmDnxpqe0m4S8xBh43vPQ sum has been released or paid, as shown in Certificate No. 13 (Final Account) dated 11.5.2023 (Exhibit KHC-14 of Enclosure 6).

In light of these circumstances, I find and hold that the Defendant’s defence is wholly unsustainable, lacking both legal and factual foundation.

I find that the four conditions laid down by the High Court in Cabnet Systems (M) Sdn Bhd v Dekad Kaliber Sdn Bhd & Anor [2020] 1 LNS 1938 have been satisfied in the present case. CF Jaya Construction, as the Main Contractor, has failed to pay the Total Adjudicated Amount to the Plaintiff. The Plaintiff’s Demand was duly issued, requiring the Defendant to make direct payment of the said amount. At the time of the Defendant’s receipt of the Plaintiff’s Demand on 06.03.2023, there was a sum of money due and payable from the Defendant to CF Jaya Construction under the Contract. Despite this, the Defendant failed to comply with the Plaintiff’s Demand and did not make direct payment of the Total Adjudicated Amount to the Plaintiff.

For completeness even if I am wrong in upholding the preliminary objection taken by the Plaintiff on Encl. 14, I find that taking into S/N XNmDnxpqe0m4S8xBh43vPQ account the matters raised in that Enclosure my decision on Enc. remains as the Defendant had neither placed any reliance nor referred to Encl. 14 in its submission. Taking the affidavits evidence as a whole I find that the Plaintiff have proved its case on the balance and thus so hold.

In the upshot I allowed the Plaintiff’s application in Enclosure 1.

I fixed costs of RM10,000.00 for the Plaintiff subject to allocator. Dated: 18 March 2026 (Mohd Aimi Zaini Bin Mohd Azhar) Judicial Commissioner High Court Malaya Alor Setar Kedah Darul Aman S/N XNmDnxpqe0m4S8xBh43vPQ Solicitors for the Plaintiff: Tan Wei Sheng (Saiffa Azween Binti Azmam @ Azman with him) Messrs. Liaw And Partners Solicitors for the Defendant: Helen Ng Su Vun Messrs. Kek Ooi & Lee Hong S/N XNmDnxpqe0m4S8xBh43vPQ