Samsung C&T Corporation Uem Construction Jv Sdn Bhd v Global Wall (Malaysia) Sdn Bhd (WA-24C-198-10/2022)

of the Construction Industry Payment and Adjudication Act 2012 And In the matter of Order 69A rule 2 and Order 69A rule 3 of the Rules of Court 2012 And In the matter of Order 92 rule 4 of the Rules of Court 2012 S/N rixt8yqkAkOpbgaYYvGYCw BETWEEN SAMSUNG C&T CORPORATION UEM CONSTRUCTION JV SDN BHD (Company No: 201501039352 (1164670-T)) …PLAINTIFF AND GLOBAL WALL (MALAYSIA) SDN BHD (Company No: 199601000943 (373288-V)) …DEFENDANT GROUNDS OF JUDGMENT (Enclosure 3)

By way of enclosure 3 (Application), the Plaintiff herein had applied to this Court to stay the Adjudication Decision dated 23.9.2022 (Decision) which awarded the Defendant the sum of RM 20,356,764.78 pending the determination of the Plaintiff’s Setting Aside application under section 15 of the Construction Industry Payment and Adjudication Act 2012 (CIPAA).

The Plaintiff had filed a Certificate of Urgency for the Application to be heard on an urgent basis, for which this Court had fixed the same on 25.10.2022. After hearing the learned counsels submit on the Application on 25.10.2022, albeit the Defendant not yet filing their Affidavit in Reply to the same, I had pending the full determination of S/N rixt8yqkAkOpbgaYYvGYCw the Application which was then fixed on 8.11.2022, agreed to (Interim

grant an ad interim stay of the Decision on the condition that the sum of RM7,714,745.81 be paid by the Plaintiff to the

that the Defendant was entitled to suspend performance of the Sub contract works until such further Order; and

the Interim Order applies to the defendant’s Notice dated 12.10.2022 under section 30 CIPAA

I had thereafter on 8.11.2022 after all the relevant affidavits and written submissions, as directed by this Court, had been done, heard the respective learned counsels and thereafter dismissed the Application with costs in the cause and made a further order that the said Works continue to be suspended until disposal of the Originating Summons filed herein (8.11.2022 Order).

The Plaintiff being dissatisfied with both the Interim Order and the 8.11.2022 Order since appealed against both my said decisions, and herewith are my written grounds for the said decisions made.

By an agreement in writing and dated 28.3.2017 (the Contract), the Plaintiff agreed to perform certain works, more particularly described as BP03 main contract works for cadangan membina 1 blok bangunan perdagangan bercampur 118 tingkat, di atas lot 795, 796, 799, 800 dan sebahagian lot 746 dan basmen letak kereta, di atas lot S/N rixt8yqkAkOpbgaYYvGYCw 354, 355 dan 742, Mukim Bandar Kuala Lumpur, Daerah Kuala Lumpur, Wilayah Persekutuan (the Works), for PNB Merdeka Ventures Sdn Bhd.

By an agreement in writing and dated 8.2.2018 (the Subcontract), the Defendant agreed to perform the BP05 tower, podium façade & mock-up works (the Subcontract Works), which form part of the Works, for PNB Merdeka.

By an agreement writing and dated 28.2.2018 (the Novation Agreement), the Plaintiff, the Defendant and PNB Merdeka agreed that the Plaintiff shall take over from PNB Merdeka all of PNB Merdeka’s rights and obligations under the Subcontract and that PNB Merdeka is released and discharged from further performance of the Subcontract. The Defendant agreed to release and discharge PNB Merdeka upon the novation of PNB Merdeka’s rights, interests, benefits, obligations and liabilities under the Subcontract to the Plaintiff.

A dispute arose as to payment and the Defendant commenced a claim under CIPAA via a Payment Claim on 9.2.2022 which was resisted by the Plaintiff. The hearing was conducted after various objections in the said CIPAA Proceedings were made and which culminated in the Adjudication Reply dated 22.7.2022 being filed by the Defendant and a request by the Plaintiff for a Rejoinder being dismissed.

The Adjudicator subsequently then delivered his Decision on 23.9.2022. S/N rixt8yqkAkOpbgaYYvGYCw

It was contended by the Plaintiff in support of their application that:

the Decision was improperly procured

(ii) the Decision is infra petite as the Adjudicator had failed in his mandate to decide on all issues in contention between the Plaintiff and the Defendant

(iii) there has been a denial of natural justice

(iv) the defendant is insolvent and would be unable to repay the adjudicated amount to the Plaintiff in the event that the Plaintiff is successful in setting aside the Decision

In the Affidavit in Support of the Application at enclosure 4, the grounds relied on by the Plaintiff were apart from the above and amongst others in summary as follows:-

the Adjudicator has exceeded his jurisdiction, where inter alia the Plaintiff claims was not in accordance with section 5(2) (a)(b) CIPAA and should have been simultaneously referred to

the Adjudicator had denied the Plaintiff an additional 10 days to file its Adjudication Response together with its expert report as well as denying it its right to file the Adjudication Rejoinder

the issues in the Adjudication Proceedings were very complicated and could not be determined in the time line under CIPAA

there were clear and unequivocal errors in the Decision S/N rixt8yqkAkOpbgaYYvGYCw

The relevant provision in respect of a Stay Application under CIPAA is section 16 thereto which reads:

A party may apply to the High Court for a stay of an adjudication decision in the following circumstances:

an application to set aside the adjudication decision under section 15 has been made; or

the subject matter of the adjudication decision is pending final determination by arbitration or the court.

The High Court may grant a stay of the adjudication decision or order the adjudicated amount or part of it to be deposited with the Director of the KLRCA or make any other order as it thinks fit.

The legal requirements needed for the Application can be found in View Esteem Sdn Bhd v Bina Puri Holdings Bhd [2018] 2 MLJ 22 where the Federal court held “[82] We are in agreement with the contention of the appellant that a more liberal reading of s 16 of the CIPAA would allow some degree of flexibility to the courts to stay the award where there are clear errors, or to meet the justice of the individual case. It is accepted that a stay of the award ought not be given readily and caution must be exercised when doing so.’

Bearing the above principles and the relevant legal provision in mind, I now turn to my decision on the issues raised by the Plaintiff. S/N rixt8yqkAkOpbgaYYvGYCw

In having considered whether the Decision was improperly procured, the Decision is infra petite or there has been a denial of natural justice, the Plaintiff must provide cogent or credible evidence to back the said allegations, and how the discretion is to be exercised in their favour under section 16 of CIPAA, see Subang Skypark Sdn Bhd V Arcadius Sdn Bhd [2015] 11 MLJ 818.

It was contended by the Plaintiff that the evidence of the Defendant’s email 4.10.2022 and letter 5.10.2022 show that the Defendant had actively concealed in the Adjudication proceedings that the Plaintiff had in fact made payment to the Adjudicated Amount where the Plaintiff submits that RM20,356,764.80 in the Decision at paragraph 227(a) has been accounted for as follows:

RM7,920,071.12; paid between notices no 57 to 64

RM4,721,947.84; deducted between notices 57 to 64

RM7,714, 745.81; paid pursuant to the ad interim stay Order made on 25.190.2022

The Plaintiff submits that the Defendant now concedes that at least RM4,555,159.79 has been paid as per their affidavit at enclosure 53 and thus section 15 of CIPAA in that “(a) the adjudication decision was improperly procured through fraud or bribery”, which is one of the grounds to set aside the Decision under CIPAA, has been established.

I have after carefully considering the Plaintiff’s argument on this issue of whether payment has been made by the Plaintiff to the Defendant, S/N rixt8yqkAkOpbgaYYvGYCw found that the alleged failure vis a vis the alleged concealment of the payment by the Defendant to bring this issue up at the Adjudication proceedings cannot amount to an active concealment on the part of the Defendant as the issue of whether there was payment from the Plaintiff, from the facts before me, was in fact raised in the Adjudication Proceedings itself and that the Adjudicator had then considered and decided, as can be seen at paragraphs 69, 88(i) and 97 of the Decision, on this point. The question of whether this was proven at the Adjudication Proceedings is quite separate from the fact of whether this point was raised at all at the said Adjudication Proceedings. From the documents before me, the payment from the Plaintiff was only discovered by the Defendant and emerged after the Adjudication Proceedings had been completed and the Decision delivered.

I agree with counsel for the Defendant, and I must add at least at this stage of the Application, that the Defendant should not be punished for coming clean on this point, and that for an Application revolving around a stay of an adjudication decision, it is not the courts function nor role to interfere in the merits of the case as it is the Adjudicator who has to decide on this issue which was brought before him, which he had so decided and determined.

In any event, what I have to decide in the application herein is not whether the decision should be set aside under section 15 of CIPAA but whether a stay should be granted under section 16 of CIPAA. Under section 16(2) it is clear that this court has a discretion to grant a Stay and that the Stay is not necessarily given just because there is; S/N rixt8yqkAkOpbgaYYvGYCw

an application to set aside the adjudication decision under section 15; or

the subject matter of the adjudication decision is pending final determination by the court.

The considerations to be taken by the Court in a section 16 CIPAA application is different from that to be exercised under section 15 of CIPAA in that in the former the Court has to, as per View Esteem Sdn Bhd (supra), at this stage, decide whether there are clear errors in the Decision, or whether the justice of the individual case supports a stay of the adjudication decision being given.

In Maju Holdings Sdn Bhd v Spring Energy Sdn Bhd [2020] MLJU 1162, Justice Lim Chong Fong had held: “[17] Clear error has not been defined. Obviously, it is fact sensitive depending on the circumstances of each case as to how the adjudicator reasoned his findings in the adjudication decision. In my view, the error must be so grave that it pricks my conscience if I left it unrectified. In a way, it is subjectively objective.”

It would be wrong for this court to pre determine the issues on the specific requirements under section 15 of CIPAA, when the section 15 application has yet to be heard on either of the following grounds as per section 15 being:

the adjudication decision was improperly procured through fraud or bribery; S/N rixt8yqkAkOpbgaYYvGYCw

there has been a denial of natural justice;

the adjudicator has not acted independently or impartially; or

the adjudicator has acted in excess of his jurisdiction.

I have also considered KPF Niaga Sdn Bhd v Vigour Builders Sdn Bhd [2021] 1 LNS 141 which I find can be distinguished from the case before me where in that case, the facts showed that Vigour had clearly edited and/ or excluded the What’s App (WA) conversation which was attached to the Adjudication Reply dated 18.7.2019 so as to mislead the Adjudicator and procure the said AD improperly through fraud. KPF contended that although Vigour had possession and control of the entire WA conversation, Vigour chose to show only the messages between Abrizan and Brian dated 10 and 21 September 2018 and between KPF and Vigour dated 15.10.2018 to support the statement that Vigour had carried out the works using the required amount of Claycrete. With respect, at the risk of pre-judging the matter, no such situation of active concealment, editing and/or exclusion appears to have occurred in the matter before me where the issue of whether payment has been made by the Plaintiff to the Defendant was in fact, albeit with not the full facts before him, being considered by the Adjudicator.

I accept and apply the test of fraud in a CIPAA situation as stated by Justice Aliza Sulaiman in KPF Niaga Sdn Bhd (supra) where Her Ladyship had considered Justice Wong Kian Kheong’ decision in Gumi Asli Elektrikal Sdn Bhd v. Dazzling Electrical (M) Sdn Bhd & Another Case [2020] 1 LNS 189 who in construing the word S/N rixt8yqkAkOpbgaYYvGYCw "fraud" in s. 15(a) CIPAA, accepted the judgment by Akenhead in SG South Ltd King's Head Cirencester LLP and another [2009] AII ER (D) 120 (NOV); [2009] EWHC 2645 (TCC), and who had commented as follows:- “(3) 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

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] 7 CLJ 584; [2015] 1 MLJ 1, at [48]-[53]. ". [62]Section 17 of the Contracts Act 1950 [Act 136 ] ('CA 1950') describes the acts that could be committed by a party to a contract or by his agent so as to amount to "fraud " and which renders a contract voidable under sub-s 19(1) at the option of the party whose consent was caused by such fraud. However, for purposes of s. 15 (a) CIPAA, "fraud " has a distinctive meaning as compared to the definition in the context of contract law as set out in s. 17 CA 1950. In the circumstances, this Court is very much assisted by the legal principles as propounded in SG South which can be applied to the present application.”

In the circumstances and based on the facts before me and for the purpose of the Application filed herein, I hold that there has been no clear error in the Decision as there is nothing before me which ‘pricks my conscience’ in the said Decision. I hold that the Decision on this S/N rixt8yqkAkOpbgaYYvGYCw issue, has not been proven, on a balance of probabilities, to have been improperly procured through fraud at this stage. I must add that the question as to whether fraud exists is a question of fact to be decided upon the circumstances of each particular case.

I further hold that the other main grounds in the Plaintiff’s Application are all also the exact same grounds before the Court in the section 15 CIPAA Application and is more suited to be decided there and to decide on the same in the Application before me now is in my view pre mature in light of the said section 15 CIPAA Application having yet to be considered. Thus, the only main grounds which I find should be considered by me in this Stay Application are (i) the alleged failure of the Defendant to bring the issue vis a vis the alleged concealment of the payment by the Plaintiff at the Adjudication proceedings and (ii) the Defendants alleged weak financial position.

With regards the Defendants alleged weak financial position, it is this court’s findings that the Companies Commission Search Report dated 5.10.2022 at exhibit P-2 in enclosure 17 that:

the Defendant has a revenue of RM 84,554,806

(ii) the Defendant has a profit after tax of RM1,720,569

(iii) the Defendant’s non current assets of RM 2,096,961 exceeds its non current liabilities of RM 24,283

I have considered the amount of RM20,356,764.80 in the Decision at paragraph 227(a) which the Plaintiff alleges has now been accounted S/N rixt8yqkAkOpbgaYYvGYCw for, and the Defendant’s position that RM 8,085,859.18 is still due and payable to them which is as per the table below-. SUJV’s case Global Wall’s case Bil No Description Adjudication

(CIPAA) Net Paid Amount (Out of CIPAA Determination Amount) Remaining Determination Amount Certified in IPC 64 Remaining To Be Paid to Global Wall Bill 4 Podium (L1- L7) – Lump Sum 5,635,465.53 4,144,926.93 1,490,538.60 4,144,920.00 1,490,545.53 Bill 7 Atrium (L8- L43) – Lump Sum 322,176.43 323,176.43 - 323,176.43 - Bill 10 Façade Lighting – Provisional Sum 1,605,664.53 834,896.05 770,768.48 255,583.27 1,350,081.26 Contract Workdone Subtotal (RM) 7,564,306.49 5,302,999.41 2,261,307.08 4,723,679.70 2,840,626.79 03 BMU Door L41 & L97 1,292,767.14 - 1,292,767.14 - 1,292,767.14 19 CD-20 – Revised panel Configuration 243,846,19 - 243,846.19 - 243,846.19 20 Site Damages 1,749,084.77 - 1,749,084.77 - 1,749,084.77 34 CD-81 – Modifications for Observation Deck 2,297,209.27 129,468.64 2,167,740.63 22,239.69 2,275,969.58 Variation Order Subtotal (RM) 5,582,907.37 129,468.64 5,453,438.73 21,239.69 5,561,667.68 Material Off Site 7,209,550.92 7,209,550.92 0.00 7,209,550.92 0.00 S/N rixt8yqkAkOpbgaYYvGYCw 20 Site Damages 1,749,084.77 - 1,749,084.7 7 - 1,749,084.77 V O 34 CD-81 – Modifications for Observation Deck 2,297,209.27 129,468.64 2,167,740.6 3 22,239.69 2,275,969.58 Variation Order Subtotal (RM) 5,582,907.37 129,468.64 5,453,438.7 3 21,239.69 5,561,667.68 Material Off Site 7,209,550.92 7,209,550.92 0.00 7,209,550.92 0.00 Total 20,356,764.7 8 12,642,018.9 7 7,714,745.8 1 11,954,470.3 1 8,402,294.47 Back Charges (7,398,310.52 ) (7,398,310.52 ) Grand Total 4,556,159.79 15,800,604.9 9 UOB Cheque No. 360344 dated 26.10.2022 (7,714,745.81 ) OUTSTANDING SUM (excluding interest and costs) 8,085,859.18

From the above and the details as per the Search Report dated 5.10.2022, I find that the Defendant’s overall current financial position although not in the strongest position, would still be sufficient to repay the adjudicated amount to the Plaintiff in the event that the Plaintiff is successful in setting aside the Decision. S/N rixt8yqkAkOpbgaYYvGYCw

I therefore hold that the allegation that the Defendant is in a weak financial position as being baseless and untenable. I do also accept that any weakness in the Defendants weak financial position is contributed by the failure of the Plaintiff to pay for the work done by the Defendant.

I quote Martego Sdn Bhd v Arkitek Meor & Chew Sdn Bhd and Anor appeal [2020] 6 MLJ 224 where it was held by the Federal Court amongst others that the interpretation expounded by the majority of the Court of Appeal in that case was consistent with the purpose and structure of the adjudication process outlined in the CIPAA 2012. It was clear from the Preamble, the Explanatory Notes to the Bill and the speech of the Deputy Minister when tabling the CIPAA Bill that the primary objective of the CIPAA 2012 was to alleviate cash flow issues by providing an effective and economical mechanism.

This Court further relies on Ceylon Builders Sdn Bhd v Ultimate Pursuit Sdn Bhd and another appeal [2018] MLJU 1918 and adopts the same reasoning here where Lee Swee Seng J (as he then was) held: “[23] I agree with learned counsel for the Claimant that the Respondent’s grounds for resisting the enforcement is centered on the merits of the dispute and findings by the Adjudicator which ought not to be dealt with by this Court in an enforcement application as long as the Adjudicator had acted within the jurisdiction conferred on him pursuant to section 27 of the CIPAA. This is not the appropriate forum for the Respondent to vent their S/N rixt8yqkAkOpbgaYYvGYCw complaint against the validity the Adjudication Decision when the issue has nothing to do with the jurisdiction of the Adjudicator to hear the dispute arising as it is under a construction contract.”

For the record, my grounds and reasonings herein are applicable for both the Interim Order and the 8.11.2022 Order.

After due and careful considerations of the learned counsels respective written and oral submission made, I find that there has been no exceptional circumstances to justify a stay of the Decision nor am I able to hold that the justice of this case before me supports a stay of the adjudication decision being given based on the grounds and the facts before me. I therefore dismissed Enclosure 3 with costs in the cause. Dated: 9th day of January 2023 sgd. NADZARIN WOK NORDIN JUDGE CONSTRUCTION COURT 1 KUALA LUMPUR COUNSEL FOR THE PLAINTIFF: T Baskaran and Yong Shu Shan [Messrs Baskaran] S/N rixt8yqkAkOpbgaYYvGYCw COUNSEL FOR THE DEFENDANT: Darshendev Singh, Joanne Teo and Lim Wei Peng (pupil) [Messrs Lee Hishammuddin Allen & Gledhill] S/N rixt8yqkAkOpbgaYYvGYCw