Tera Va Sdn. Bhd. v Ayam Bintang Istimewa Sdn. Bhd. (B-02(C)(A)-1948-11/2023)

278.10 KWp was RM613,000.00. The performance of the Contract was divided into 2 Phases, Phase 1 for 168.3 KWp at RM393,000.00 and Phase 2 for 109.89 KWp at RM220,000.00. [6] TVA contended that ABI had breached the Contract for failing to pay for the work done for Phase 1 amounting to RM294,750.00. According to TVA, it had completed Phase 1 but was only paid RM98,250.00. [7] ABI countered that TVA had refused and/or omitted to fulfill/complete its duties and obligations in the Contract. In particular, it was said that TVA had failed to perform the duty of care during the installation and/or construction of the solar panel at the premise leading to structural damage to the zinc roof panels measuring the size of 20,565 square feet. Adjudication proceedings [8] On 16-12-2022, TVA issued its payment claim against ABI for unpaid work done of RM294,750.00. On 9-1-2023 TVA issued its notice of adjudication. [9] ABI issued its payment response dated 30-12-2022 and its adjudication response dated 12-5-2023. In its adjudication response, ABI had a set off/counterclaim for RM695,580.00 which included the cost to replace the existing damaged roofing. ABI said it had to engage its contractors to observe and rectify the damage suffered. [10] The adjudication decision was as follows (encl. 12/51): “Adjudicated Amount In the given circumstances, my decision is that the Claimant has not succeeded in their overall claim. The breakdown of my decisions is as follows: Item Description of Works Done Amount Total Amount

Outstanding work-done 294,750.00

Cross-claims a) Replacement of metal roofing works b) Supply materials and labours to repaint warehouse (286,780.00) (15,800.00) Outstanding amount due to Claimant (7,830.00) At the High Court [11] Arising from the adjudication decision, TVA filed its application to set aside and ABI filed its application to enforce, and thereafter TVA filed the subsequent appeals. [12] The grounds of judgment (GOJ) of the learned JC can be found in encl. 12/29-41. [13] With regard to the setting aside application, the learned JC stated it was premised on fraud and denial of natural justice as per section 15(a) and (b) Construction Industry Payment and Adjudication Act 2012 (CIPAA). [14] The learned JC considered the issue of fraud as alleged, namely that ABI had misled the Adjudicator into believing the entire roof had been damaged and that it had replaced the roof and paid for the cost. The learned JC found that the photographs which purported to show no replacement work and minimal damage, had not been proved. This was because the photographs were taken at an above eye-level with no clarity. There were also no digital dates marked on any photograph and the claim it was taken on 17-8-2023 was thus unsubstantiated. Refer to paragraphs 23 to 25 GOJ. [15] The other issue on fraud related to ABI not revealing that the premise did not belong to it but was in fact rented. The learned JC held as follows in encl. 12/36-37: “[27] Being a tenant of a property does not mean that one can cause damage to the property and not bear the responsibility for the same only because one does not own the property. A tenant will have to make good such damages at its own costs as there is a duty of care owed as per the terms and conditions of a Tenancy Agreement. As such, AB's response to this allegation is accepted by this court.” [16] The next ground for setting aside was the allegation of a denial of denial justice where the Adjudicator was said to have decided on a matter not submitted by the parties and had come to a conclusion without giving TVA the opportunity to address the matter. This matter concerned the rate for the cost of rectification. In paragraph 32 GOJ, the learned JC stated that since the rate was provided by ABI in the adjudication response, TVA could have responded in its adjudication reply. The Adjudicator had used all information made available to arrive at the conclusion that TVA was not denied the right to be heard. This was because the Adjudicator had deliberated on all the issues raised by parties and provided them their opportunities to state their case (paragraph 33 GOJ). In addition, the Adjudicator has power to inquisitorially take the initiative to ascertain the fact and the law required for the decision, as provided in section 25(1) CIPAA. [17] The learned JC further stated the following: “[34] I refer to the case of Bina Puri Construction Sdn Bhd v. Hing Nyit Enterprise Sdn. Bhd. [2015] 8 CLJ 728 where it was stated as follows: “...Section 15 has provided limited grounds on which the decision of the Adjudicator may be set aside. Since an application under s. 15 is not an appeal, the decision of the Adjudicator cannot be reviewed on merits.” [35] As such, whether the Adjudicator had assessed the issues raised correctly or not is not up to this court to determine as the decision of the Adjudicator cannot be reviewed on its merits.” [18] As TVA has failed to establish section 15(1) (a) and (b) CIPAA, the application to set aside was dismissed. [19] On the enforcement application, the learned JC was guided by the decision of this Court in Inai Kiara Sdn Bhd v Puteri Nusantara Sdn Bhd [2019] 2 CLJ 229 on the conditions to grant leave to enforce. These conditions are that the adjudication decision is in favour of the party applying to enforce; the party against whom the adjudication decision is made has failed to pay; and there is no prohibition on the court’s discretionary power to grant leave to enforce. The 3 conditions having been satisfied, and since the setting aside was dismissed, ABI’s application to enforce the adjudication decision was therefore allowed. Our decision [20] We do not propose to set out the submissions of TVA and ABI separately but will deal with them in the course of our decision. Appeal 1949 – setting aside [21] We will first consider Appeal 1949, which is the setting aside. [22] Section 13(a) CIPAA provides as follows: “Effect of adjudication decision 13. The adjudication decision is binding unless -

(a) it is set aside by the High Court on any of the grounds referred to in section 15;” (Emphasis added) [23] The application to set aside the adjudication decision was premised on section 15 (a) and (b) CIPAA which reads 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:

(a) the adjudication decision was improperly procured through fraud or bribery;

(b) there has been a denial of natural justice;” (Emphasis added) [24] These relate to an improperly procured adjudication decision being set aside on the grounds of being procured through fraud and denial of natural justice. Fraud [25] The two fraudulent acts are set out in paragraphs 2 and 3 of TVA’s Memorandum of Appeal (encl. 12/17 and 19). In paragraph 2 it was said as follows: “2. That the learned Judicial Commissioner erred in law and in fact in failing to consider that the Respondent (“ABI”) had concealed facts from the Adjudicator and these concealment amount to willful acts of dishonesty and are therefore fraudulent.

(a) ABI claimed a sum of RM302,580.00 for the roof of the factory for TRV’s negligence, but it did not disclose that it was not the owner of the factory.” [26] Paragraph 3 next sets out the following: “3. That the learned Judicial Commissioner erred in law and in fact in failing to consider that ABI had concealed facts from the Adjudicator and these concealment amount to willful acts of dishonesty and are therefore fraudulent. ABI had misled the Adjudicator by saying that it had replaced the roof and that it had incurred costs to do so.” [27] ABI contended that the arguments of TVA on this are tantamount to an appeal and a review of the merits of the case, which is not allowed in law. Reference was made to ACFM Engineering & Construction Sdn Bhd v Esstar Vision Sdn Bhd and another appeal [2016] 1 LNS1522 and Martego Sdn Bhd v Arkitek Meor & Chew Sdn Bhd & Another Appeal [2018] 2 CLJ 163, both of which are decisions of this Court. [28] In ACFM, it was said as follows: “[21] There were no complaints by the Appellant that the adjudicator had got the disputes on a completely wrong footing. In fact, no complaint was made at all and the adjudication process was carried out premised on those issues. If we were to consider the complaints of the Appellant, we would be looking into the merits of the decision of the adjudicator. In the context of section 15 of CIPPA 2012, it cannot be the function of the Court to look into or review the merits of the case or to decide the facts of the case. The facts are for the adjudicator to assess and decide on. The Court’s function is simply to look at the manner in which the adjudicator conducted the hearing and whether he had committed an error of law during that process. Such error of law relates to whether he had accorded procedural fairness to the Appellant. In the context of this case, the complaints of the Appellant were nothing but complaints of factual findings of the adjudicator which in our view cannot be entertained by us. … [24] This was simply a case where the losing party was not happy that it had obtained an unfavourable decision and tried its chance in the judicial system. The law as it exists now correctly limits the Court’s functions which expressly do not include to review the correctness of the adjudicator’s decision. As pointed by the learned judge, the Court’s intervention is only in very exceptional circumstances which are far and few in between. The prima facie view of the Court must be to affirm the adjudicator’s decision unless the losing party can show that it had complied with the thresholds listed in section 15 of CIPPA 2012.” (Emphasis added) [29] In Martego, the following was said at page 182: “[55] The courts’ power to set aside adjudicators’ decision is circumscribed by statute in s. 15 CIPAA 2012 and it is not a provision which allows the courts to sit in an appellate jurisdiction. The grounds which the courts can rely on to set aside the adjudicator’s decision are limited such that the courts are not allowed to look into the merits of parties’ case. The courts’ prima facie duty must be to uphold the adjudicator’s decision and not to look at it with a fine-tooth comb with the aim to find the faults in the adjudicator’s decision. As long as the learned adjudicator had approached his task by adhering to the due process of his adjudication, the courts will not interfere. Only with this approach by the courts, will the aim of CIPAA 2012 of providing a regime to alleviate the cash problem faced by contractors in the building industry be addressed and achieved.” (Emphasis added) [30] As noted in ACFM (per paragraph 24 of the judgment), there can be court intervention but in very exceptional circumstances where the prima facie view must be to affirm the Adjudicator’s decision unless the losing party can show it had complied with the thresholds listed in section 15. [31] We find that there is room for us to review the evidence and set aside the adjudication decision where the circumstances, exceptional they may be, warrants it. [32] In an instance of an allegation of fraud, it was said in SG South Ltd v King’s Head Cirencester LLP & Anor [2009] EWHC 2645 at paragraphs 20 and 21 that: “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.

(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 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) [33] KPF Niaga Sdn Bhd v Vigour Builders Sdn Bhd and another case [2021] MLJU 229 referred to SG South and said at paragraphs 62 to 65 as follows: “[62] …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. [63] It is my considered view that Vigour's conduct in concealing the fact that it does not possess a valid certificate of registration under the CIDB Act and selecting only parts of the WA Messages, which would otherwise prove that the correct amount of Claycrete was not used for the road, and yet submitting its claims to KPF for the CIDB Levy and the Claycrete Road, amount to wilful acts of dishonesty and are therefore fraudulent. [64] I further find that the fraudulent behavior, acts or omissions raised by KPF in this application fall under the category of fraudulent behavior, acts or omissions which were not raised as a defence in the adjudication but which emerge afterwards. In this situation, the question then is whether the fraud directly impacts on the subject matter of the said AD. [65] Hence, it is now necessary for the Court to scrutinise the findings and reasons of the Adjudicator as outlined in paras 153 to 202 in the said AD. The relevant conclusions made by the Adjudicator which are directly related to the issue at hand are as follows: …” [34] The allegation of fraud lies in concealment and 2 misrepresentations that are said to be made by ABI to the Adjudicator. Concealment that ABI was not the owner of the premise but a tenant [35] It is not disputed that ABI was not the owner of the premise but a tenant. This is evident from the land title (encl. 11/98) and the tenancy agreement (TA, encl. 11/100-102) between the landlord and ABI who is described as the tenant. According to TVA, this concealment is significant as ABI is claiming for damage to the premise which it does not own. The concealment goes towards ABI’s locus standi and lead to the Adjudicator allowing ABI’s cross-claim. The claim by ABI as tenant was a pure economic loss which was not allowed by law. [36] ABI raised the issue that this had not been raised during the adjudication and TVA is thus not allowed to raise this issue in the setting aside. It referred to the textbook Law, Practice and Procedure of Adjudication Vol 1 by Sundra Rajoo, Leong Hong Kit and Cindy Wong Xien Yee, LexisNexis at pages 68: “[19-85] Likewise, the aggrieved party in adjudication cannot raise a new argument to set aside an adjudication decision. … [19-87] However, parties are not allowed to raise new arguments in the setting aside application that had not been raised in the adjudication proceedings. The rationale being that no party should be allowed a second bite at the dispute. … [19-87] As such, a party is not allowed to further elaborate or improve its arguments in the setting aside application under Section 15 of CIPAA 2012.” [37] We are of the considered opinion that this issue can to be raised during the setting aside as locus deals with the right to sue and whether ABI can have the standing to bring the cross-claim. [38] However, we find the issue of ownership as opposed to tenancy to be irrelevant for the following reasons. [39] Firstly, the Adjudicator had allowed ABI’s cross-claim on the damaged roof premised on TVA having the duty of care towards ABI when installing the SPS at the premise. Reference may be made to the Adjudication Decision under the heading “To Replace …” paragraph c at encl. 12/50 as follows: “It is crucial to emphasize that the Claimant has a duty of care towards the Respondent’s property while carrying out the Contract works. Based on the aforementioned evidence, I have determined that the total affected area is 20,565 sft. Considering the limited information provided by the Claimant, I will adopt the rate provided by the respondent is adopted for the cost of the rectification. Therefore, I allowed the Respondent’s cross claim for the replacement of the new roof, insulation and the cost for dismantle and reinstate back the Solar Panels, amounting RM286,780.00.” [40] Further, we agree that ABI being the tenant has a duty under article 14 of the TA (encl. 11/101) to keep the premise in clean and good condition and at the end of tenancy, to restore it to the condition it was. This means that any damage arising in the course of tenancy has to be made good by ABI. [41] In any event, as tenant, it is trite that ABI has exclusive possession of the premise. In Steven Phoa Cheng Loon & Ors v Highland Properties Sdn Bhd & Ors [2004] 4 CLJ 508 it was stated at page 575: “Against the allegation of the 5th defendant causing nuisance, the first point raised by the 5th defendant is that the plaintiffs do not have sufficient interest in their properties to bring such a suit under this cause of action; the plaintiffs are not registered owners of the land on which their apartments are built and they do not possess strata title to their lot. … … As possession is the only criterion for this rule and not the requirement of being a registered owner then, the plaintiffs amply qualify. The plaintiffs certainly do have exclusive possession of their respective properties and thus, possess every right to bring this action for nuisance.” Hence possession carries with it the right to bring a cross-claim for cost of repairs to the damaged roof. [42] The fact that ABI was not the owner of the premise is thus irrelevant. Misrepresentation that ABI had incurred out of pocket expenses to repair the roof [43] The essence of this issue lies in paragraph 21.9 and 35 of ABI’s adjudication response where ABI “had to engage its contractors to observe and rectify the Damaged Area wherein the repair and rectification costs for the Damaged Area and the total losses suffered are…” and “… to the Claimant’s claim shall be deducted, set-off and/or zerorised for the out of pocket expenses incurred or to be incurred … comprising of the costs for repair and rectification at the Damaged Area … as well as the Investment Tax Allowance …”. TVA added that ABI used the words “out of pocket expenses incurred for the costs for repair and rectification of the roof and “to be incurred” for the investment tax allowance. [44] A perusal of those paragraphs would show no such misrepresentation where it essentially stated that contractors had to be engaged to observe and rectify where the costs are as stated. There is no suggestion that such out of pocket expenses had been expended. The words “incurred or to be incurred” does not amount to saying that “incurred” was for costs and repair and “to be incurred” was for investment tax allowance. Misrepresentation on the damage [45] This misrepresentation relates to how much of the roof had been damaged, 20,565 sq ft or 7,44275 sq ft (TVA’s version). [46] We need only refer to TVA’s own letter dated 5-10-2022 to ABI, and in particular paragraph 2, (encl. 11/110) as follows: This space is intentionally left blank [47] This letter clearly shows that TVA had itself stated that the total affected area which is the damaged roof was 20,565 sq ft. [48] TVA also attempted to produce some photographs taken on 19-8- 23 (encl. 11/77-96), after the adjudication decision to go as far as to show that the roof was never replaced and there was no damage as the roof was already in such a condition prior to the installation of the SPS. This was rightly dismissed by the learned JC who found that the validity of the photographs were not proved, there was no digital date and they were taken at an above eye level with no clarity. Every picture tells a story but not in this instance. The very fact of the letter dated 5-10-2022 negates what TVA says to be misrepresentation. [49] This Court had raised the issue whether there can be fraud to claim the cost of repair based on a quotation. Here, ABI had relied on the quotations in encl. 11/54-55. We find that this does not amount to fraud and refer to the Federal Court decision of Chong Nge Wei & Ors v Kamajuan Masteron Sdn Bhd [2022] 3 MLJ 135 where a quotation was accepted as proof of damages. At pages 150, 151 and 154, this was said: “[43] There is no question that the appellants must prove their losses and ‘it is not enough to write down the particulars, so to speak, throw them at the head of the court, saying: ‘This is what I have lost, I ask you to give me these damages’. They have to prove it’. (Bonham Carter v Hyde Park Hotel Ltd (1948) 64 TLR 177 at p 178). That is also trite law. But the appellants’ claim for damages does not suffer from that infirmity. They have provided proof of the damages by producing a quotation prepared by a building contractor to support their claims for the cost of replacing the flexcore with autoclaved aerated concrete building block. … [59] Applying the principles in the two cases to the facts of the present case, the appellants were prima facie entitled to the cost of replacing the flexcore with autoclaved aerated concrete building block as would put them in a position to have the building material they contracted for, and the quotation provided prima facie proof of the sum ‘which will meet the costs’ of the remedial works, which includes dismantling of the existing walls.” (Emphasis added) Breach of natural justice [50] The contention of TVA is that there been a breach of natural justice when the Adjudicator considered 3 issues which were not raised by either party and came to her conclusion. This allegedly deprived TVA of the opportunity to address the Adjudicator on these issues and amounted to a breach of natural justice. These issues relate to the thickness of the roof; insulation; and the length and brand of the roof. Ultimately this had a bearing on the rate of RM12 psf used by the Adjudicator which was that of ABI’s, instead of RM4 psf provided by TVA. [51] The essence of TVA’s submission is that its RM4 psf was dismissed as 0.35mm roof is not industry standard and the Adjudicator assumed it did not include insulation and accepted RM12 psf without knowing if it was for 0.35mm thickness or otherwise. The Adjudicator also considered length and brand when ABI’s quotation did not provide for length and neither quotation mentioned brand. [52] The adjudicator decision on this can be found in encl. 12/50 as follows: “To Replace the damaged metal roofing with new insulation RM286,780.00 a) I have taken note of the Claimant’s letter dated 5th October 2022, which is attached in the Annexure R14 of Respondent’s Bundle of Documents. In the letter, the Claimant agrees to repair/or replace the damaged roof at their own cost. The total affected area is determined to be 20,565 sft. Furthermore, On 1st November 2022, the Respondent notifies the Claimant that the cost of replacing the damaged roof as quoted by local vendor is RM12.00/sft. Additionally, the cost of dismantling and installing back the Solar Panels is states to be RM40,000.00. The quotations are attached in the Annexure R8 of the Respondent’s Bundle of Documents. b) I did not come across any letter issued by the Claimant to the Respondent on the quotation regarding the rectification rate and total affected area prior to the Adjudication proceeding. Additionally, the quotation attached by the Claimant in the Appendix 11 of the Adjudication Reply stated that metal roofing thickness is 0.35mm, which is rarely used for the industrial. The Rate RM4.00/sft mentioned in the quotation is specifically for metal roof without the insulation replacement. The Claimant did not dispute the dismantling and reinstate back the Solar Panel’s rate claimed by the Claimant. It is important to note that the rate of metal roof is not solely determined by the thickness but also considers the length of the metal roof and the brand which are factors in the overall cost. c) It is crucial to emphasize that the Claimant has a duty of care towards the Respondent’s property while carrying out the Contract works. Based on the aforementioned evidence, I have determined that the total affected area is 20,565 sft. Considering the limited information provided by the Claimant, I will adopt the rate provided by the respondent is adopted for the cost of the rectification. Therefore, I allowed the Respondent’s cross claim for the replacement of the new roof, insulation and the cost for dismantle and reinstate back the Solar Panels, amounting RM286,780.00.” (Emphasis added) [53] We now look at both rates submitted by ABI (encl. 11/54) and TVA (encl. 11/:57) ABI’s rate TVA’s rate [54] In its written submission dated 2-4-2024 (encl. 15), TVA submitted as follows in paragraph 4.43: “4.43 Had the Adjudicator given TRV an opportunity to present on these issues, TRV would have put forward evidence to clarify that the quote it had obtained was from the contractor who had originally installed the roof for the Premise, and that the original roof was 0.35mm thick and his quote included insulation, and more importantly, a substantial part of the roof originally were without insulation.” Note: TRV refers to TVA. [55] ABI’s rate was already available to TVA. As noted by the Adjudicator, ABI had notified TVA the cost of replacement was RM12 psf. The Adjudicator too had not come across any letter from TVA to ABI on any quotation prior to the proceeding. TVA had never in its adjudication claim and adjudication reply stated that the quotation was from the contractor who had originally installed the roof at the premise and failed to explain that the original roof was 0.35mm. It had also not explained that the quotation included insulation. This contrasts with that of ABI’s rate which clearly stated it included installation. Hence the Adjudicator stated that “Considering the limited information given by the Claimant, I will adopt the rate provided by the respondent as the cost of the rectification”. [56] This cannot be a breach of natural justice in the sense that the Adjudicator did not hear both sides of the dispute. Here the Adjudicator had not deprived both parties the right to adduce evidence and to submit on any issue. It is only after the adjudication proceeding that TVA is saying it should have been given the opportunity to explain further its rate when it did not address the adjudication that its quotation came from the original contractor. [57] In Ireka Engineering and Construction Sdn Bhd v PWC Corporation Sdn Bhd & anor appeal [2019] 1 LNS 51, it was said as follows: “[38] With respect, we disagreed. There are two limbs of the rules of natural justice, the first is that a man should not be the judge in his own cause (rule against bias) and the second is that the judge must hear both sides of the dispute (rule of audi alteram partem/right to be heard). Here we were concerned with the second limb which requires that both parties be accorded the opportunity to advance their case. In the context of section 15(b) of the CIPAA, the function of the court is to look at the manner in which the adjudicator conducted the hearing and whether he had accorded procedural fairness to the appellant …” [58] This essentially boils down to a dissatisfaction on the findings made by the Adjudicator which does not amount to a breach of natural justice. [59] We add that pursuant to section 25(d) CIPAA, the Adjudicator shall have the power to draw on his own knowledge and expertise. Conclusion on setting aside [60] In all the circumstances, we find that TVA has not proved that the adjudication decision was improperly procured through fraud (section 15(a) CIPAA) or that there has been a denial of natural justice (section 15(b) CIPAA). ABI’s cross-claim [61] The above finding does not end the matter as the effect is that TVA being the Claimant ends up being ordered to pay the Respondent in the adjudication proceeding. [62] In the adjudication decision, the 1st disputed issue was on whether ABI shall pay TVA outstanding work done in the sum of RM294,750.00. After perusing the various provisions in the Contract and CIPAA, the Adjudicator determined in paragraph 4.2.1 (encl. 12/49) that: “… Therefore, based on these provisions, the Claimant is entitled to claim the outstanding work done amounting to RM294,750.00.” (Emphasis added) [63] The Adjudicator then proceeded to decide the next disputed issue of whether ABI is entitled to file a cross-claim due to the damage caused by TVA in the construction work. The Adjudicator noted TVA’s contention that the cross-claim is not part of the Contract. With regard to the damage to the roof, the Adjudicator had allowed the claim and we have made substantive reference to it in our earlier paragraphs. At the end of the day, the Adjudicator’s decision on the adjudicated amount (encl. 12/51), which we reproduce again, was: “Adjudicated Amount In the given circumstances, my decision is that the Claimant has not succeeded in their overall claim. The breakdown of my decisions is as follows: Item Description of Works Done Amount Total Amount

Outstanding work-done 294,750.00

Cross-claims a) Replacement of metal roofing works b) Supply materials and labours to repaint warehouse (286,780.00) (15,800.00) Outstanding amount due to claimant (7,830.00) [64] Parties were directed to file supplementary submissions on 6 issues from which we find that it will suffice to deal with 2 of those issues. 1st sub issue - Whether ABI, being the respondent, in responding to TVA’s adjudication claim can file a cross claim and if so, whether the cross claim can exceed TVA’s claim thereby making ABI the substantive claimant [65] Both parties were on common ground that ABI can file a cross-claim to resist TVA’s claim. TVA added that this is as long as such a cross-claim is within the Adjudicator’s jurisdiction. [66] We find and agree that ABI can indeed file a cross-claim in responding to TVA’s claim. We refer to Construction Adjudication in Malaysia Second Edition by Lam Wai Loon and Ivan YF Loo, Sweet & Maxwell at pages 142 and 143: “WHAT DEFENCES MAY BE RAISED IN PAYMENT RESPONSE? [5.011] Generally, a non-paying party is entitled to advance any ground which would amount in law or in fact to defence of the payment claim under a construction contract. …In addition, the non-paying party may resist the payment claim by raising a set-off, cross-claim, deduction from the advance payment previously paid and/or abatement.” [67] In View Esteem Sdn Bhd v Bina Puri Holdings Bhd [2018] 2 MLJ 22, the Federal Court held that the defences in the form of set offs and cross-claims in the payment response can be considered as long as the adjudicator keeps within jurisdiction. At pages 31, 32 and 33, the following was said: “[56] In short, s. 27(1) of CIPAA refers to the subject matter of the claim under s. 5 of CIPAA, which is the "cause of action" identified by the claimant by reference to the applicable clause of the construction contract. Thus if the payment claim relates to Progress Claim No. 28 (as in the present case) the jurisdiction of the adjudicator is limited to this progress claim and nothing else. The payment response is likewise limited to an answer to Progress Claim No. 28. … [58] In contrast to jurisdiction, the “powers” of the adjudicator are listed in ss. 25 and 26 of CIPAA under the specific heading of “Powers of the Adjudicator”. It follows that an adjudicator may exercise all or any of the powers under ss. 25 and 26 of CIPAA so long as he keeps within his jurisdiction in adjudicating only the subject-matter referred to him pursuant to ss. 5 and 6 of CIPAA. … [62] Useful reference can also be made to the observation of learned authors of Lam Wai Loon and Ivan Y.F. Loo in Construction Adjudication in Malaysia (KL CCH Asia 2013) wherein they observe at p. 150 that the effect of s. 6(4) of CIPAA is that it does not prevent the respondent from submitting any defence available to him by way of an adjudication response. … [65] We are of the view that an adjudicator who wrongly rules out considering a defence presented to him would be in breach of natural justice. This point arose in Pilon Ltd. v. Breyer Group plc [2010] EWHC 837 (TCC) which like in our present case was concerned with progress claims that were cumulative in nature. The decision by Justice Coulson bears close reading. At [24-28] the learned judge observed: …

It is not uncommon for adjudicators to decide the scope of their jurisdiction solely by reference to the words used in the notice of adjudication, without having regard to the necessary implications of the words: that was, for example, what went wrong in Broardwell. Adjudicators should be aware that the notice of adjudication will ordinarily be confined to the claim being advanced; it will rarely refer to the points that might be raised by way of a defence to that claim. But, subject to questions of withholding notices and the like, a responding party is entitled to defend himself against a claim for money due by reference to any legitimate available defence (including set-off), and thus such defences will ordinarily be encompassed within the notice of adjudication.” (Emphasis added) [68] As to whether the cross-claim can exceed the claim we are of the view (subject to our conclusions in paragraphs 79,81, 83 and 84 herein) that the cross-claim can only reduce or zerorise TVA’s claim. We were referred to Mudajaya Corporation Bhd v KWSL Builders Sdn Bhd & other cases [2022] MLJU 1931 where at paragraph 29 the learned High Court Judge stated as follows: “[29] … Even if it is assumed that a respondent can set off and/or counterclaim against a claimant in an adjudication proceedings based on the same construction contract (which is the basis for the claim in the adjudication proceedings), I am of the view that the respondent, at the most, can only zeroise the claim but cannot counterclaim from the claimant for an amount which exceeds the sum claimed in the adjudication proceedings. My reasons are as follows:

(i) …