Samsung C&T Corporation Uem Construction Jv Sdn Bhd v Eversendai Construction (M) Sdn Bhd (WA-24C-133-08/2024)

2.1 the Adjudicator having acted in excess of his jurisdiction and/or there has been a denial of natural justice in that the Adjudicator a. failed to afford an oral hearing for SUJV to address the Adjudicator on the issue of res judicata in connection with ECSB’s claims; b. took into consideration new issues raised in the Adjudication Reply without affording SUJV any opportunity to respond; c. failed to address the issue of res judicata or was manifestly incoherent in addressing the issue with regards res judicata; d. addressed the wrong issue with regards res judicata i.e whether the claim in the Adjudication includes retention sum. S/N mKtH59tOzEigst9Qpcc/ww 4 2.2 It was further argued that the AD was improperly procured through fraud as ECSB had deliberately misled the Adjudicator with regards the issue of res judicata and this coupled with the Adjudicator depriving SUJV of an opportunity to present its case at an oral hearing assisted in the fraud perpetrated by ECSB. [3] Originating Summons No. WA-24C-133-08/2024 (OS 133) is SUJV’s application to stay inter alia the OS 133 proceedings including any winding up proceedings and payments under section 30 CIPAA pursuant to section 16 (1)(b) of CIPAA until final disposition of the matter in an Arbitration. [4] OS 133 is supported by inter alia the following grounds:

4.1 there are clear and manifest errors in the AD;

4.2 in the event the Adjudication Sum is paid to ECSB and SUJV does not succeed in the application to stay the AD, it will be difficult to recover the Adjudication Sum from ECSB, given that ECSB is facing financial difficulties as:

ECSB is in poor financial health;

There is no evidence to show that ECSB’s financial position has improved since the Stay Pending Arbitration was determined; and

Notwithstanding the above, SUJV has obtained an independent assessment report on ECSB from Pricewaterhouse Coopers Advisory which S/N mKtH59tOzEigst9Qpcc/ww amongst others state that ECSB is at high risk of being unable to pay the Adjudication Sum back to SUJV should it be required to do so in the event SUJV prevails in the Arbitration. [5] OS 150 on the other hand is ECSB’s application before this Court to enforce the AD pursuant to section 28 CIPAA. Background Facts [6] By way of a subcontract signed on 1.5.2016 (Reference No.: SSUEM/201512/DSC/8) (“Subcontract”), the SUJV engaged the ECSB as Subcontractor to carry out works in relation to “connection design, supply and installation of steel structure and decking” (“Subcontract Works”) in a project known as ‘CADANGAN MEMBINA 1 BLOK BANGUNAN PERDAGANGAN BERCAMPUR 118 TINGKAT, DI ATAS LOT 795, 796, 799, 800 & SEBAHAGIAN LOT 746 DAN BESMEN LETAK KERETA, DI ATAS LOT 354, 355 & 742, MUKIM BANDAR KUALA LUMPUR, DAERAH KUALA LUMPUR, WILAYAH PERSEKUTUAN’ (“Project”). [7] Over the course of the Subcontract Works, significant differences and disputes between the SUJV and the ECSB arose relating to, amongst others, the following issues:-

7.1 The ECSB’s inability to meet the original Interim Milestones and Subcontract Time for Completion; S/N mKtH59tOzEigst9Qpcc/ww 6 7.2 The ECSB submitted claims for extension of time and loss and expense which were lacking in merit, justification and substantiation and grossly exaggerated;

7.3 Various design changes which constituted Subcontract Variations under the Subcontract which resulted in the substantial reduction in the tonnages of the steel structures and consequent reduction in the Subcontract Price (“Design Changes”); and 7.4 The SUJV has, during the course of the Subcontract Works, rendered various forms of financial assistances to the ECSB, including making advance workdone payments and/or on account payments exceeding the ECSB’s entitlement based on its actual work progress and/or direct payments to the ECSB’s subcontractors and/or suppliers and procuring materials on behalf of ECSB. [8] In light of the issues and differences, the parties subsequently executed Supplemental Agreement No. 1 dated 5.11.2020 (“SA No. 1”) 3 wherein, amongst others, the following matters were agreed:-

8.1 The Revised Interim Milestones and Revised Subcontract Time for Completion were as follows:- Description Revised Date Interim Milestone 1 – Completion of the South Canopy Related Steel Structure Works 30.11.2020 S/N mKtH59tOzEigst9Qpcc/ww Interim Milestone 2 – Completion of the Tower Steel Structure Works up to Roof and Top of

8.2 The Subcontract Price was increased by RM37,293,000.00 (“SA No.1 Sum”) wherein:-

8.2.1 RM13,400,000.00 being the amount for Commercial Resolution Items enlisted in Appendix A to SA No. 1; and 8.2.2 RM23,893,000.00 being the additional payment to take into account the revised Interim Milestones and the Subcontract Time for Completion. [9] By way of a Notice of Adjudication dated 7.4.2022, ECSB commenced an adjudication against the SUJV (“CIPAA 1”). In essence, ECSB in CIPAA No. 1 claimed that it had achieved substantial completion of all Subcontract Works, and was therefore entitled to the full payment of the Subcontract Price plus the SA No. 1 Sum.6 ECSB claimed for the purported outstanding sum of RM31,674,475.28, being the difference between the cumulative amount in Progress Claim (“PC”) No. 59 and Interim Payment Certificate (“IPC”) No. 59 as follows:- S/N mKtH59tOzEigst9Qpcc/ww Description Claimaed Amount (#59 Rv.1) Certified Amount (#59) Balance Subcontract Lump Sum 328,492,236.09 280,986,210.89 47,506,025.20 [SA No. 1] Variations 13,400,000.00 13,400,000.00 [SA No. 1] Milestone 23,893,000.00 22,593,000.00 1,300,000.00 48,806,025.20 Less Retention (17,131,549.92) TOTAL 31,674,475.28 [10] On 18.8.2022, the adjudicator in CIPAA 1 issued an Adjudication Decision (“AD No. 1”), determining amongst others as follows:-

10.1 With regards to the ECSB’s purported entitlement to 100% of the original Subcontract Price of RM328,492,236.09, it was determined that the ECSB was entitled to 99.69% of the Subcontract Price, amounting to RM327,473,910.15;

10.2 With regards the ECSB’s purported entitlement to 100% of the SA No. 1 Sum, it was determined that the ECSB was entitled to the same; and 10.3 Premised on the above, and having made the following deductions, it was determined that the ECSB was entitled to be paid the adjudicated sum of RM25,457,990.03 as follows:- Description Work Done Certified (59) Balance Amount (RM) Lump Sum Subcontract work 327,473,910.15 280,986,210.89 [SA No. 1] Variations 13,400,000.00 13,400,000.00 [SA No. 1] Milestone 23,893,000.00 22,953,000.00 1,300,000.00 Less Retention (17,131,549.92) Less On Account Payments (5,175,013.54) Less Back Charges (23,145.77) TOTAL 25,457,990.03 S/N mKtH59tOzEigst9Qpcc/ww [11] On 11.11.2022, the ECSB through its solicitors, issued the Notice of Arbitration requiring the disputes and differences arising from the Subcontract to be referred to arbitration. On 11.1.2023, the SUJV through its solicitors, issued a Response to the Notice of Arbitration13, wherein the subject matter of AD No. 1 and the present Adjudication Decision are part of the issues which has been referred to arbitration and currently pending final determination by arbitration. [12] By way of an Originating Summons No. WA-24C-15-02/2023 dated 10.2.2023, the SUJV made an application to the High Court, for amongst others, an Order that AD No. 1 and/or all execution proceedings arising from and/or in relation to AD No. 1, be stayed, whilst the subject matter of AD No. 1 is pending final determination by way of arbitration (the “Stay of AD No. 1 Pending Arbitration”). [13] On 7.9.2023, the High Court allowed the Stay of AD No. 1 Pending Arbitration, on the condition that the Adjudicated Sum be held in the ECSB’s solicitor’s stakeholder’s account until the disposal of the arbitration proceedings. [14] The ECSB filed an appeal against the Order of the High Court dated 7.9.2023. [15] In respect of the Adjudication proceeding:-

15.1 ECSB, by way of the Payment Claim dated 18.3.2024, claimed for the sum of RM20,175,499.29, said to be pursuant to IPC Nos. 60 to 69; S/N mKtH59tOzEigst9Qpcc/ww 10 15.2 The SUJV, by way of the Payment Response dated 2.4.2024, amongst others, denied that there is any payment due to ECSB pursuant to IPC Nos. 60 to 69;

15.3 Following this, ECSB commenced the Adjudication by serving a Notice of Adjudication dated 3.4.2024. Mr. Foo Joon Liang was subsequently appointed as the Adjudicator; and

15.4

The SUJV and the ECSB accordingly filed the following before the Adjudicator:-

4.1 Adjudication Claim dated 13.5.2024 (“CAC”);

15.4.2 Adjudication Response dated 28.5.2024 (“RAR”); and 15.4.3 Adjudication Reply dated 5.6.2024 (“CAR”). [16] The brief facts of the dispute and the Adjudication are, amongst others, as follows:-

16.1

ECSB alleged that the sums sought in the Adjudication were either:-

1.1 Under certified in IPC Nos. 60 to 69;

16.1.2 Non-certified in IPC No. 63.

16.2

The SUJV denied the entirety of ECSB’s claim premised on, amongst others, the following:-

2.1 The claims in the Adjudication had been raised and determined in CIPAA 1. The claims were an attempt to correct an error made in CIPAA 1, where retention monies were deducted from the alleged under-certified sums claimed in CIPAA 1 that had already S/N mKtH59tOzEigst9Qpcc/ww factored in the retention. The claims ought to have been dismissed due to res judicata.

16.2.2 Should res judicata not apply in the Adjudication, the SUJV’s alternative contention was that it was entitled to raise similar issues and arguments which had been previously raised and decided in CIPAA 1. Further as a stay of AD No.1 had been granted, the said decision ought not to be binding on the parties.

16.2.3 ECSB was not entitled to the claims due to the following reasons:

16.2.3.1 In light of Design Changes, ECSB is not entitled to the full Subcontract Price and the SA No. 1 Sum in the sum of RM365,785,236.09;

16.2.3.2 The SUJV was entitled to certify the value of the Subcontract Works and Subcontract Variations as per IPC Nos. 60 to 69;

16.2.3.3 The SUJV was entitled to deduct and/or set off the advance work done payments and/or on account payments in the sum of RM3,965,165.66;

16.2.3.4 The SUJV was entitled to back charge ECSB for the defects and/or various non-conformances in the sum of RM11,549,462.28;

16.2.3.5 The SUJV was entitled to impose LAD in the sum of RM32,849,223.61;

16.2.3.6 The SUJV was entitled to overpayments in the sum of RM25,457,990.03; and S/N mKtH59tOzEigst9Qpcc/ww 12 16.2.3.7 The SUJV was entitled to a further retention of RM1,439,380.68. [17] The SUJV by way of letters dated 10.6.202423, 12.6.202424 and 14.6.202425 to the Adjudicator, among others:-

17.1 Requested and provided reasons for an oral hearing to address the Adjudicator on the issue of res judicata in connection with the ECSB’s claim; and 17.2 Submitted that new issues were raised in the Adjudication Reply, which should not be taken into consideration. Otherwise, the SUJV should be allowed the opportunity to respond to the same. [18] By way of an e-mail dated 15.6.202426, the Adjudicator rejected the

SUJV’s request for an oral hearing:- 1 In respect of the oral hearing, the Adjudicator found that it was not necessary. Instead, the Adjudicator directed further written submissions to be made by both parties. In this regard, parties filed the following:-

18.1.1 The Respondent’s Written Submissions dated 20.6.2024;

18.1.2 The Claimant’s Reply Submissions dated 24.6.2024; and 18.1.3 The Respondent’s Written Submissions in Reply dated 27.6.2024. S/N mKtH59tOzEigst9Qpcc/ww 13 18.2 In respect of the new issues raised in the CAR, since the Adjudicator did not proceed to allow the SUJV the opportunity to respond, it was submitted that the Adjudicator should not have taken into consideration the said new issues. [19] Subsequently on 31.7.2024, the Adjudicator posed 3 queries to the parties primarily on the amounts which have been paid by the SUJV to ECSB. The parties had addressed the same by way of ECSB’s solicitors’ letter dated 2.8.202431 and the SUJV’s “Respondent’s Response to the Adjudicator’s Email dated 31.7.2024” dated 2.8.2024. [20] On 9.8.2024, the Adjudicator delivered his Adjudication Decision wherein it was determined amongst others that within thirty (30) days from the date of the Adjudication Decision:-

20.1 The SUJV shall pay to ECSB the sum of RM14,868,425.70;

20.2 The SUJV shall pay to ECSB interest on the RM14,868,425.70 at the rate of one percent point (1%) above the Malayan Banking Berhad’s Base Lending Rate from the due date for payment of each IPC until full and final payment;

20.3 The SUJV shall pay to ECSB RM158,370.52 as cost for the Adjudication; and 20.4 All other claims of the ECSB and cross claims, deductions or set-offs of the SUJV are not allowed. Court’s Analysis & Findings Issue Of Res Judicata & Issue On Failure to Afford An Oral Hearing S/N mKtH59tOzEigst9Qpcc/ww [21] It was submitted by SUJV on the issue of res judicata that ECSB had claimed for the sum of RM31,674,475.28 being the difference between the amounts in PC No. 59 and IPC No.59 and that ECSB had claimed that they had achieved substantial completion of all Sub contract Works and was therefore entitled to the full payment of the Subcontract price. [22] To the above ECSB argued that notwithstanding the above, IPC No. 59 dated 20.1.2022 was received with an assessment of a total amount due of RM0 (nil) which led ECSB to commence Adjudication Proceedings No. AIAC/D/ADJ-4233-2022 (“CIPAA 1”) against SUJV wherein Mr Ivan Loo Yew Fook was appointed as Adjudicator. [23] SUJV states that in respect of CIPAA 1, ECSB’s claim pursuant to PC No. 59 was for:

RM328,492,236.09 being 100% of the Subcontract Price;

(ii) RM37,293,000.00 being 100% increase in the Subcontract Price pursuant to SA No.

and that for ECSB’s claim pursuant to IPC No. 59 was for:

(iii) the cumulative amount certified to the contract works was RM280,986,210.89;

(iv) the cumulative total certified for SA No. 1 was in the sum of RM35,993,000.00. and thus ECSB’ claim in CIPAA 1 consists of: S/N mKtH59tOzEigst9Qpcc/ww a. the difference of RM328,492,236.09 and RM280,986,210.89 between PC No. 59 and IPC No. 59 amounting to RM 47,506,025.20; b. the difference of RM37,293,000.00 and RM35,993,000.00 between PC No. 59 and IPC No. 59 amounting to RM1,300,000.00; c. after deducting a sum of RM17,131,549.92 said to be the retention sum, ECSB’s claim in CIPAA 1 was RM31,674,475.28. [24] ECSB on the other had submits that CIPAA 1 dealt with its entitlement to IPC No.59 for the Subcontract Works and nothing else and that Subcontract Variations were not subject to CIPAA 1. [25] From the facts before me, the Adjudicator in CIPAA 1 had consequently awarded the sum of inter alia RM25,457,990.03 in favour of ECSB. According to SUJV this sum consisted of the deduction of the retention sum, the account payments that was determine to be due to SUJV and back charges due to SUJV and in essence the Adjudicator in CIPAA 1 determined that ECSB was entitled to:

25.1 99.69% of the Subcontract Price; and 25.2 100% of the increase in the Subcontract Price pursuant to SA No.1. S/N mKtH59tOzEigst9Qpcc/ww [26] ECSB submits that for CIPAA 2, its claim was for Interim Payment Certificates Nos. 60 to 69 for a total sum of RM20,175,499.29 being:

26.1 the balance of 0.31% of the Sub Contract Works due and owing; and 26.2 SUJV’s underpayment, under certification and /or non certification of Subcontract Variations. [27] ECSB also contends that the matters submitted in CIPAA 2 were completely fresh and distinct from CIPAA 1. [28] I have observed from the AD in CIPAA 2 that the Adjudicator had awarded amongst others the sum of RM14,868,425.70 consisting of IPC Nos. 60, 61, 62, 63, 64, 65, 66, 67, 68 and 69 based on the due dates for payment of each of the same. Issue Of Oral Hearing [29] I will firstly address the issue of the failure to afford an oral hearing for SUJV to address the Adjudicator on the issue of res judicata in connection with ECSB’s claims, I hold that pursuant to section 25 CIPAA, the Adjudicator has the power not to grant an oral hearing on this issue. Section 25 CIPAA is clear that the Adjudicator can conduct the Adjudication proceedings as he thinks fit and I quote section 25

of CIPAA which states: “The adjudicator shall have the powers to:-

(a)… ….

conduct any hearing and limiting the hearing time;” S/N mKtH59tOzEigst9Qpcc/ww [30] To the above I also find authority in and agree whole heartedly with Geoforce East Sdn. Bhd. v Melati Evergreen Sdn. Bhd. And Another Summons [2020] MLJU 1063 where the Court held: “[28] In this regard, sub-s 12(1) CIPAA provides that the adjudicator shall conduct the adjudication in a manner as the adjudicator considers appropriate within the powers set out in s 25 CIPAA. The legal principles that can be distilled based on the case authorities submitted by Geoforce on the powers of an adjudicator as provided under s 25 CIPAA are summed up as follows:

(a)CIPAA does not demand a certain method of process of adjudication. The main requirement is that both sides are accorded the opportunity to advance their case by way of written submissions or by hearing oral evidence. The choice is for the adjudicator to make and in the exercise of his discretion, he is not obliged to utilise all or any of the powers under s 25 CIPAA or to be dictated by any party to the adjudication; and

(b)the refusal by an adjudicator to allow an application by one party for extension of time to submit an adjudication pleading or to conduct an oral hearing does not automatically equate to a breach of natural justice.” [31] I have observed that in the AD, the Adjudicator had on this issue stated, after going through various letters namely SUJV’s letter of 10.6.2024 after which the Adjudicator immediately seeked S/N mKtH59tOzEigst9Qpcc/ww clarification from SUJV’s counsel and afforded parties an opportunity to respond to the same, SUJV’s further letters of 12.6.2024, and 14.6.2024, rejected SUJV’s request for an oral hearing on the grounds that he: “...could not discern …any distinct advantage of an oral hearing on the res judicata argument. Such an argument would be premised on (1) specific issues that were referred to the CIPAA No.1 adjudication and (2) the specific determination of such issues. These would be documented.….” [32] From the AD, I then noted that the Adjudicator did however allow SUJV to submit on the issue of res judicata in its written submissions and thereafter both parties had put in their written submissions on this issue. From the AD it is also observed that the Adjudicator had invited the response of both parties via hos email of 31.7.2024 to 3 queries on inter alia the sums in the Payment Claim in CIPAA 1 and to clarify the sums in CIPAA 2. [33] Based on all of the above findings, I do hold that the Adjudicator did properly consider all the documents and submissions before him on this issue before the Adjudicator concluded that ECSB did not claim for certified sums that were not yet paid in CIPAA 1. Res Judicata [34] I will now address SUJV’s claim that res judicata applies as ECSB’s claim herein in CIPAA 2 is for the difference between the amounts S/N mKtH59tOzEigst9Qpcc/ww certified and paid by SUJV which should have been brought in CIPAA 1. [35] I have after reading the AD, found that the Adjudicator hadspecifically addressed this issue in the AD under the heading “Res Judicata – unpaid certified sums as at IPC No 59”. [36] I find that the Adjudicator had carefully considered and analyzed the Payment Claim in CIPAA 1, as well as the objective evidence before the proceedings, IPC No. 60 and the parties respective written submissions including the authorities relied on by each party before holding that in CIPAA 1, ECSB had claimed for under certified sums and for sums certified but not yet paid as of IPC No. 59. [37] The Adjudicator had also taken into consideration all previous paid amounts less retentions sums and found that res judicata did not apply as the Adjudicator was of the view that claims not yet brought in a prior adjudication though it had already arisen and could have been brought, are not prevented by res judicata as the claim in CIPAA 2 was not yet paid as at IPC No. 59 and no claims were made in CIPAA and not decided. [38] I am thus of the view and agree with counsel for ECSB that that the Adjudicator had addressed his mind to the issue of res judicata. Accordingly, this ground of contention by SUJV has to fail as it is untenable. Retention Sums S/N mKtH59tOzEigst9Qpcc/ww [39] As to the Retention Sums and the issue of res judicata which SUJV submits in CIPAA 2 that ECSB was intending to correct an error made in CIPAA 1. I have after reading the documents before this Court found that the said Retention Sums were not claimed in CIPAA 1 and this appears to be the same finding made by the Adjudicator in CIPAA

[40] The Adjudicator in CIPAA 2 found that the Adjudicator in CIPAA 1 did in awarding the sum of RM25,427,990.03 therein deducted the Retention Sum in coming to the aforesaid figure. [41] After taking into account both parties arguments on this point, the Adjudicator held that the issue of res judicata on the Retention Sum did not arise as ECSB’s claim in CIPAA 1 did not include the same. [42] Further the Adjudicator had in the AD stated that he disagreed with SUJV that the under certified sum of RM 48,806,025.20 claimed in CIPAA 1 had factored in the Retention Sum as that figure

42.1 was made up of the difference between what was claimed by

ECSB as the full value of the Subcontract Works (including all variations) 2 the sums certified by the SUJV and that the Retention Sum was already deducted as of IPC No 43 42.3 no further deductions were made in subsequent IPC’s 42.4 that there was no double deduction or an error in so far as the deduction of the Retention Sum in CIPAA 1 S/N mKtH59tOzEigst9Qpcc/ww 21 42.5 that the real issue in CIPAA 2 includes the Retention Sum which he held did not as ECSB’s claim herein is net of the Retention Sum. [43] I therefore in the circumstances hold that the Adjudicator did not act in excess of his jurisdiction based on the above finding by the Adjudicator which was arrived at after the Adjudicator had considered all the relevant material before him. It appears to me that this is a form of challenge by SUJV to the merits of the Adjudicator’s decision on this point which the law on this is settled in that the merits of the decision cannot be challenged and does not form part of any ground under section 15 of CIPAA. Purported New Issue [44] Another point raised by SUJV was that the Adjudicator had taken into consideration new issues raised in the Adjudication Reply without affording SUJV any opportunity to respond. [45] I have after perusing the Form 9 i.e the Adjudication Reply, found that Appendices 1 to 3 therein, which were referred to in paragraph 44 of the Adjudication Reply was in fact a rebuttal to the deductions sought to be made in the Adjudication Response and was a reproduction of the arguments raised in CIPAA 1 relating to SUJV’s entitlement of the Total Adjusted Subcontract Lump Sum Amount and rebuttal to the Back charges and LAD sought to be imposed by SUJV. [46] This Court has also noted the Adjudicator in the AD had taken into account that a stay was granted for the decision in CIPAA 1 pending S/N mKtH59tOzEigst9Qpcc/ww arbitration but that the decision therein continues to bind the parties. Hence, I hold after looking at the AD that SUJV’s allegations that new issues raised in the Adjudication Reply without affording SUJV any opportunity to respond is entirely misconceived as there were in fact no new issues raised by ECSB in its Adjudication Reply. Was The AD Improperly Procured Through Fraud [47] On the issue of whether the AD was improperly procured through fraud, it was submitted by SUJV that:

47.1 ECSB had purportedly misled the Adjudicator by stating that its claims were completely fresh and there was no error made in CIPAA 1 in deducting the Retention Sum; and 47.2 The Adjudicator deprived SUJV an opportunity to present its case at an oral hearing and thereby assisted in the fraud. [48] I have after going through the respective parties submission on the issue of fraud and the AD itself hold that no fraud has been committed by the Adjudicator or ECSB as alleged based on my grounds aforesaid on amongst others the issue of res judicata. [49] In Gumi Asli Elektrikal Sdn Bhd v Dazzling Electrical (M) Sdn Bhd [2020] MLJU 314 a decision of Wong Khian Keong J (as he then was) which was followed by Aliza Sulaiman J in KPF Niaga Sdn Bhd S/N mKtH59tOzEigst9Qpcc/ww v Vigour Builders Sdn Bhd And Another Case [2021] MLJU 229, the Court in Gumi Asli Elektrikal Sdn Bhd (supra) had held: “[15] I am not able to find any Malaysian case which has interpreted the scope of the court’s power under s 15(a) CIPAA to set aside an AD which has been “improperly procured through fraud”. I am of the following view:

(1)a party (X) applying to set aside an AD on the ground that the AD has been improperly procured through fraud under s 15(a) CIPAA has to prove the following two matters cumulatively -

(a)fraud has been committed. In this respect, the fraud in question need not be committed by the party in whose favour the AD is given (Y). Section 15(a) CIPAA does not require fraud to have been committed by the adjudicator. Nor is it required to be proven that Y or the adjudicator is complicit in the fraud; and

(b)the AD has been “improperly procured” through fraud, either directly or indirectly. On the wording of s 15(a) CIPAA, even if X can prove the commission of fraud but if X cannot prove that an AD has improperly procured through fraud, the court should not exercise its discretion to set aside the AD. Having said that, if fraud has been committed, the court should not exercise its discretionary power to grant leave to Y to enforce the AD under s 28(2) CIPAA - please see paragraphs 19 and 20 below;

(2)the word “fraud” is not defined in CIPAA. Section 108(1) of United Kingdom’s (UK) Housing Grants, Construction and Regeneration Act 1996 (HGCRA) allows a party to a “construction contract” [defined in s 104(1), (2) and (3) HGCRA] to refer a “dispute” [which includes a “difference” according to s 108(1) HGCRA] regarding the S/N mKtH59tOzEigst9Qpcc/ww construction contract to adjudication under a procedure provided by the Scheme for Construction Contracts (England and Wales) Regulations 1998 [s 108(5) HGCRA]. In UK, a party can enforce an AD by filing a suit and thereafter apply for summary judgment based on the AD (Summary Judgment Application). The following UK cases have explained the scope of “fraud” as a ground to resist a Summary Judgment Application based on an AD -

(a)in SG South Ltd v King’s Head Cirencester LLP & Anor [2009] EWHC 2645, at [19]-[21], Akenhead J decided as follows in the High Court - “19 So far as fraud is concerned, it is or may be, depending on the facts, a defence in adjudication proceedings as it is in court or arbitration proceedings. There is nothing in [HGCRA] to limit any type of dispute “arising under” the construction contract in question being referred to adjudication (see Section 108). Thus, it might be a defence, for instance, for a defending party to assert that the contract was induced by fraudulent misrepresentation or that the certificate on which the claiming party relies was procured by fraud. It is perhaps more arguable that a claiming party may not be able to refer a claim for the tort of fraud or deceit to adjudication (depending on the wording of the contractual adjudication clause); it might be arguable that such a claim does not arise “under” the contract as such. I do not have to decide that point, even more so because I have not heard full argument on the point. Obviously it may well properly be a defence to an adjudication claim for work done and materials and plant supplied for the defending party to argue that the work, materials or plant said to have been provided was not in fact provided; part S/N mKtH59tOzEigst9Qpcc/ww of that defence may be that on the evidence some of the claim is based on forged invoices or on some other criminal or fraudulent behaviour; that may be the “cut and thrust” of some types of construction dispute.

(b)20 Some basic propositions can properly be formulated in the context albeit only of adjudication decision enforcements:

(a)Fraud or deceit can be raised as a defence in adjudications provided that it is a real defence to whatever the claims are; obviously, it is open to parties in adjudication to argue that the other party’s witnesses are not credible by reason of fraudulent or dishonest behaviour.

(b)If fraud is to be raised in an effort to avoid enforcement or to support an application to stay execution of the enforcement judgement, it must be supported by clear and unambiguous evidence and argument.

(c)A distinction has to be made between fraudulent behaviour, acts or omissions which were or could have been raised as a defence in the adjudication and such behaviour, acts or omissions which neither were nor could reasonably have been raised but which emerge afterwards. In the former case, if the behaviour, acts or omissions are in effect adjudicated upon, the decision without more is enforceable. In the latter case, it is possible that it can be raised but generally not in the former. S/N mKtH59tOzEigst9Qpcc/ww

(d)Addressing this latter case, one needs to differentiate between fraud which directly impacts on the subject matter of the decision and that which is independent of it. Examples of the first category are where it is later discovered that the certificate upon which an adjudication decision is based is discovered to have been issued by a certifier who has been bribed or by a certifier who has been fraudulently misled by the contractor into issuing the certificate by a fraudulent valuation. Examples of the second category are fraud on another contract or cross claims arising on the contract in question which can only be raised by way of set off or cross claim. Whilst matters in the first category can be raised, generally those in the second category should not be. The logic of this is that it is the policy of [HGCRA] that decisions are to be enforced but the Court should not permit the enforcement directly or at least indirectly of fraudulent claims or fraudulently induced claims; put another way, enforcement should not be used to facilitate fraud; fraud which does not impact on the claim made upon which the decision was based should not generally be deployed to prevent enforcement. 21 In formulating and applying these propositions, courts need to be aware and take into account what goes on construction sites up and down the country. On numerous occasions, contractors and subcontractors and even consultants will submit bills or invoices which are or are believed by the recipient to overstate the entitlement. Whilst there are some “cowboy” and fraudulent builders S/N mKtH59tOzEigst9Qpcc/ww who prey on the public, it will only rarely be the case that one can presume fraud to have taken place where an invoice or bill is overstated. The claiming party may believe that it is entitled to what it is claiming; there may be a simple and honest mistake in the formulation of the claim; the claim may be based on a speculative but arguable point of law or construction of the contract. In none of these cases can it be said that there was fraud on the part of the claiming party. The Court should be astute and cautious on adjudication enforcement applications in assessing pleas of fraud by the party against whom the adjudication decision has been made. I doubt very much whether there will be any significant number of challenges to enforcement on the basis of fraud.” (emphasis added); and

(3)the above judgment in SG South has been -

(i)approved by Jackson LJ in the Court of Appeal case of Speymill Contracts Ltd v Eric Baskind [2010] EWCA Civ 120, at [36] and [37]; and

(ii)followed by Ramsey J in the High Court in GPS Marine Contractors Ltd v Ringway Infrastructure Services Ltd [2010] EWHC 283, at [80] and [84]. In construing the word “fraud” in s 15(a) CIPAA, I accept the above judgment by Akenhead in SG South;

(4)X has the legal burden to satisfy the court that an AD has been improperly procured through fraud. Y has no legal onus to prove that the AD has not been improperly procured through fraud; and S/N mKtH59tOzEigst9Qpcc/ww

(5)X is only required to prove that an AD has been improperly procured through fraud on a balance of probabilities (not beyond all reasonable doubt) - please see the Federal Court’s judgment delivered by Richard Malanjum CJ (Sabah & Sarawak) (as he then was) in Sinnaiyah & Sons Sdn Bhd v Damai Setia Sdn Bhd [2015] 1 MLJ 1, at [48]-[53].” [50] With respect, after adopting the decisions in the aforesaid cases and an examination of the matter in its entirety before me, it is my view the Adjudicator had acted transparently and in a manner which was appropriate and as such I reject SUJV’s arguments as being misconceived and baseless that ECSB had purportedly misled the Adjudicator and that the Adjudicator had deprived SUJV an opportunity to present its case at an oral hearing and thereby assisted in the fraud. [51] I further hold that the decision and findings made by the Arbitrator in the Adjudication proceedings were within his ambit and jurisdiction to do so. Law Decision Relating To Natural Justice [52] In essence this Court has not found any breach of natural justice as decided in Samado Sdn Bhd v Kerajaan Malaysia [2020] MLJU 274, where Aliza Sulaiman J had held with regards the rules of natural justice that: S/N mKtH59tOzEigst9Qpcc/ww “[23] The principles relating to the rules of natural justice applied in the context of adjudication have been dealt with in an innumerable number of cases, some of which are discussed by the learned authors Lam Wai Loon and Ivan YF Loo in Construction Adjudication in Malaysia, Second Edition, 2018, Sweet & Maxwell (see Chapter 9 on “Duties and Obligations of an Adjudicator” – “Adherence to the principles of natural justice” and Chapter 15 on “Setting Aside of Adjudication Decision” – “Section 15(b): Breach of Rules of Natural Justice”). The illustrations of fact situations where a failure to adhere to the two pillars of natural justice - nemo judex in causa sua and audi alteram partem - are placed in these clusters by the learned authors: Deprivation of, or inadequate opportunity to present case fully or to respond; Unilateral communication with one of the parties to the adjudication; Application of the adjudicator’s own knowledge/findings without consulting the parties; Receiving new evidence during adjudication; Failure to give reasons; Failure to consider a party’s submission or give proper weight to the evidence; Failure to consider previous adjudication decision; and the adjudicator erroneously taking a restrictive view of his own jurisdiction.” Law Relating to Excess of Jurisdiction [53] I have also on the facts before me found that the Adjudicator ahd not acted in excess of his jurisdiction and for this the law on excess of jurisdiction is also trite and can be seen in cases such as Terminal Perintis Sdn Bhd v Tan Ngee Hong Construction Sdn Bhd And S/N mKtH59tOzEigst9Qpcc/ww Another Case [2017] MLJU 242 and View Esteem Sdn Bhd V Bina Puri Holdings Bhd [2018] 2 MLJ 22. Stay of Proceedings [54] In respect of the application for a Stay of Proceedings, I have noted that the ‘special circumstances’ relied on by SUJV in respect of their OS 133 are in essence that: a. there are clear errors in the CIPAA 2 decision; b. there is a stay of CIPAA 1; c. ECSB’s purported financial impecuniosity. [55] From all of my aforesaid grounds herein in respect of this Court’s decision not to set aside the CIPAA 2 decision, I therefore hold that there are no clear errors in the CIPAA 2 decision. [56] It is also my decision that the Stay on the CIPAA 1 decision does not equate to this Court finding that it is a ‘special circumstance’ to grant a Stay of the CIPAA 1 decision as section 13 of CIPAA is explicit that the CIPAA 2 decision is binding unless set aside. Section 13 reads: The adjudication decision is binding unless:-

it is set aside by the High Court on any of the grounds referred to in section 15; S/N mKtH59tOzEigst9Qpcc/ww

the subject matter of the decision is settled by a written agreement between the parties; or

the dispute is finally decided by arbitration or the court. [57] With regards ECSB’s purported financial impecuniosity, I do not find any evidence that ECSB is not an ongoing business and I am cognisant of the fact that ECSB’s financial difficulties may have been attributed to SUJV not making the payments due to ECSB and I for one do not thinks that SUJV should benefit from their own breach. [58] It must be remembered that the purpose of CIPAA is for amongst others cash flow to facilitate timely payments in the construction industry and provide a mechanism for resolving payment disputes. This intent by Parliament would surely be lost if a stay was granted in the circumstances herein. See the decision of the Court of Appeal in Sime Darby Energy Solution Sdn Bhd (Formerly Known As Sime Darby Offshore Engineering Sdn Bhd) v RZH Setia Jaya Sdn Bhd [2022] 1 MLJ 458. [59] In any event I have perused the independent report by UHY Advisory (KL) Sdn Bhd on the financial capacity of ECSB as well as the report by Price Waterhouse Coopers advisory on behalf of SUJV. After comparing the 2 said reports I have on the balance of probabilities found prima face amongst others that the Eversendai group has projects worth more than RM1 billion and that ECSB’s holding company is in the midst of finalising a financial restructuring plan to improve ECSB’s cash flow as well as the fact that the independent financial auditors of the Eversendai group have not expressed any S/N mKtH59tOzEigst9Qpcc/ww concerns over it being a going concern and that ESB does not pose an insolvency risk or being unable to repay the Adjudicated Sum if required to do so. [60] In the circumstances, I do not find that ECSB is financially impecunious or that SUJV has satisfied this Court that there exists any ‘special circumstances’ to justify this Court in granting a stay.

[61] To surmise, I hereby dismiss OS 132 and OS 133 with costs. Accordingly, I grant Order In Terms for prayers 1, 2(i) to (iii) of and prayer 3 of enclosure 1 of OS 150. Dated: 23rd day of June 2025 NADZARIN WOK NORDIN HIGH COURT JUDGE CONSTRUCTION COURT 1 COUNSEL FOR THE PLAINTIFF (OS132, 133 & 150): T Kuhendran, Esther Tan, Delvin Singh Mangat & Clement Ling (Messrs Zul Rafique & Partners] COUNSEL FOR THE DEFENDANT (OS132, 133 & 150): James Monteiro, Vishal Kumar and Ban Qiao Hui (Messrs James Monteiro) S/N mKtH59tOzEigst9Qpcc/ww