Zeta Letrik Sdn Bhd v Jaks Sdn Bhd (WA-24C-153-09/2021)

the application by JAKS Sdn Bhd (‘JAKS’) pursuant to s 15(b) and/ or (d) of the Construction Industry Payment and Adjudication Act 2012 [Act 746] (‘CIPAA’) read together with O. 7, O. 28 and O. 69A and O. 92, r. 4 of the Rules of Court 2012 (‘RC 2012’) in Originating Summons (‘O.S.’) No. WA-24C-174- 10/2021 to set aside the Adjudication Decision dated 21.5.2021 (‘AD’) by the learned Adjudicator, Mr Mak Hon Pan (‘Adjudicator’) (encl. 1; ‘Setting Aside Application’);

the application by JAKS pursuant to s 16(a) and/ or (b) of the CIPAA and O. 7, O. 28 and O. 69A and O. 92, r. 4 of the RC 2012 in O.S. No. WA-24C-172-10/2021 to stay the AD pending the final disposal of the Setting Aside Application or final disposal of the dispute between the parties through arbitration or court proceedings (encl. 1; ‘Stay Application’); and

the application by Zeta Letrik Sdn Bhd (‘Zeta’) pursuant to sub-s 28(1) of the CIPAA and/ or the inherent jurisdiction of the court in O.S. No. WA-24C-153-09/2021 to enforce the AD as if it is a judgment or order of the High Court (encl. 1; ‘Enforcement Application’). [2] After having considered the cause papers and submissions by the parties, both orally and in writing, I had dismissed the Setting Aside Application and the Stay Application with costs of RM5,000.00 and RM3,500.00, respectively, to be paid by JAKS to Zeta, subject to the standard allocatur. With this pronouncement, it naturally followed that the Enforcement Application was allowed, and JAKS was ordered to pay costs of RM3,000.00 to Zeta, also subject to allocatur. [3] JAKS, being aggrieved with the aforesaid decision, has since appealed against the same. My full grounds for the decision are elaborated below. The Cause Papers [4] The cause papers, excluding encl. 1 in each of the three suits, are as follows:

JAKS’s Affidavit In Support (‘AIS’) affirmed by its General Manager, Contract and Procurement Department, Tan Yee Chin on 1.10.2021 (encls. 2 - 5); and

Zeta’s Affidavit In Reply (‘AIR’) affirmed by its Executive Director, Chang Min Yow on 25.10.2021 (encl. 7).

JAKS’s AIS affirmed by the same deponent on 1.10.2021 (encls. 2 - 5); and

Zeta’s AIR affirmed by the same deponent on 25.10.2021 (encl. 7).

Zeta’s AIS affirmed by the same deponent on 2.9.2021 (encl. 2);

JAKS’s AIR affirmed by the same deponent on 28.9.2021 (encl. 4); and

Zeta’s AIR affirmed by the same deponent on 12.10.2021 (encl. 5). Background Facts [5] JAKS Island Circle Sdn Bhd is the employer (‘Employer’) of the project known as “Cadangan Membina Dua (2) Blok Pejabat 14 - 17 Tingkat, Tiga (3) Blok Pangsapuri Servis 25 - 34 Tingkat Dengan Sepuluh (10) Podium Yang Mengandungi Mezanin Kemudahan Pangsapuri, Ruang Perniagaan (33 Yunit), Pejabat Dan Tempat Letak Kereta Beserta Empat (4) Aras Basemen Tempat Letak Kereta Di Atas Lot 141 (PT16), Jalan 13/6, Seksyen 13, Bandar Petaling Jaya, Daerah Petaling, Selangor Darul Ehsan Untuk Tutuan Jaks Island Circle Sdn Bhd.” (‘Project’). The Employer appointed JAKS as the main contractor of the Project. [6] By the Letter of Award dated 12.11.2014 (‘LoA’), JAKS accepted Zeta’s tender for the “Electrical 11 KV & LV Installation & Electrical Power Supply for ACMV Services” (‘Works’) for the sub-contract fixed lump sum price of RM29,600,000.00 inclusive of a contingency sum of RM800,000.00. [7] The parties agreed that the Agreement And Conditions Of PAM Sub-Contract 2006 For Use Where The Sub-Contractor Is Nominated Under The PAM Contract 2006 (‘PAM Sub-Contract’) shall form part of the sub-contract documents. [8] The completion date for the Works is 31.12.2020. [9] According to Zeta, the process of certification and payment during the tenure of the sub-contract was that Turner & Townsend (‘Consultant’) would certify and issue their Payment Valuation Recommendation (‘PVR’) and JAKS would then issue the Certificate of Interim Payment (‘IPC’) by relying on the PVR. JAKS would subsequently make payment to Zeta based on the IPC. [10] Disagreements loomed ahead for the parties. On one hand, Zeta claimed that after the issuance of PVR Nos. 45 to 50 and IPC No. 44 on 27.2.2020, JAKS started to delay in making payments to Zeta. Zeta had sent letters dated 10.6.2020, 21.7.2020 and 16.10.2020 to JAKS to pay the outstanding amounts which were due between June and October 2020. Some part payments were made by JAKS to Zeta during this period. [11] On the other hand, JAKS had written a series of letters of its own to Zeta dated 5.6.2020, 15.6.2020, 22.6.2020 and 17.11.2020 to complain about, among others, Zeta’s sub-par performance of the Works and failure to ensure its supervisor is on site to supervise the Works, the need for defects rectification works and delay in completing the Works. [12] On 30.11.2020, Zeta issued its Progress Claim No. 64 for the sum of RM5,045,176.36. However, payment was not forthcoming from JAKS. Hence, on 16.12.2020, Zeta issued the notice under Clause 26.15 of the PAM Sub-Contract of its intention to suspend the execution of the Works (‘Notice To Suspend Works’) until such time when payment in the sum of RM1,608,001.51 is made. [13] A meeting was held on 17.12.2020 between the representatives from JAKS, Zeta, the Employer and the Consultant and as expected, the parties have different versions of the discussions which took place at the meeting. JAKS had prepared the Minutes of Meeting, and this was circulated to the parties who attended the meeting vide a letter dated 24.12.2020. In the third last paragraph of the said letter, JAKS said that it had on 21.12.2020, offered to pay RM500,000.00 by December and another RM500,000.00 by January 2021 hoping to move the progress of the Works but the offer was declined by Zeta. [14] On 22.12.2020, JAKS wrote to Zeta stating that, despite repetitive reminders, Zeta has failed to carry out the Works in respect of the Engineer’s Instruction (‘EI’) No. 69 and in order not to further delay the Project, JAKS will be taking over and engaging a third party to complete the Works. [15] Thereafter, Zeta sent its letter dated 24.12.2020 whilst JAKS responded vide letter dated 28.12.2020, to convey their respective positions on the proposed appointment of a third party, each asserting that the other is in breach of the PAM Sub-Contract. [16] Zeta then issued the letter dated 29.12.2020 to JAKS alleging that JAKS’ action amount to a fundamental breach of the sub-contract that goes to the root of the same and shows that JAKS have no intention to abide by the terms of the sub-contract. Zeta additionally claimed that JAKS’ action is a wrongful repudiation of the sub-contract, and it deemed the agreement between the parties was terminated (‘Notice of Termination’). [17] The representatives from JAKS, Zeta and the Consultant had conducted a joint inspection on 31.12.2020 (‘1st JI’) and a list of outstanding works by Zeta dated 6.1.2021 was prepared. A second joint inspection was conducted on 25.2.2021 (‘2nd JI’). [18] Meanwhile, Zeta submitted its Payment Claim pursuant to s 5 of the CIPAA on 2.2.2021 for the total claimed amount of RM6,654,238.23. This amount was subsequently reduced to RM6,604,238.23. [19] This was followed with the submission of the Payment Response, Notice of Adjudication, Adjudication Claim, Adjudication Response and Adjudication Reply on 17.2.2021, 19.2.2021, 6.4.2021, 20.4.2021 and 28.4.2021, respectively. [20] The Adjudicator, having considered the arguments of the parties, had determined in para 259 of the AD that: “(a) The Claimant’s claim against the Respondent for the sum of RM6,160,776.36 is hereby allowed with costs.

Interest is imposed on the claims allowed at the rate of 6.40% per annum (based on Maybank Base Lending Rate plus one (1) percent) to be calculated to begin from the respective due dates of each heads of claim until full and final settlement.

The Respondent shall reimburse the Claimant the amounts paid by the Claimant to the AIAC as advance security deposit for the AIAC’s administrative fees and expenses as well as the Adjudicator’s fees and expenses.

The Respondent shall pay to the Claimant the sum of RM50,350.00 as the Claimant’s costs, including the associated claim preparation costs including legal fees in this adjudication proceedings.

My fee as the adjudicator in this adjudication shall be borne by the Respondent.

My expenses, comprising the costs for photocopying, printing, travelling for delivery of documents, and miscellaneous file charges, incurred by me as the Adjudicator in this proceeding in the amount of RM500.00 shall be borne by the Respondent.

The abovementioned sums are to be paid by the Respondent to the Claimant by way of banker’s cheque or any method to be agreed by the Claimant within 7 days from the date of this Adjudication Decision.”. [21] Zeta then served the Notice pursuant to s 466 of the Companies Act 2016 [Act 777] dated 31.5.2021 on JAKS upon the due date for payment of the Adjudication Sum. JAKS reacted by filing O.S. No. WA- 24NCC-289-06/2021 dated 20.6.2021 to apply for a Fortuna Injunction against Zeta to restrain Zeta from presenting a winding-up petition against JAKS pursuant to the s 466 Notice (‘Fortuna Injunction Suit’). On 27.7.2021, the High Court dismissed the Fortuna Injunction. [22] JAKS had also filed a suit against Zeta vide Kuala Lumpur High Court Summons No. WA-22C-48-06/2021 (‘Suit 48’) seeking, inter alia, a declaration that Zeta is in breach of the sub-contract for its refusal to complete the Works and that the termination of the sub-contract by Zeta is unlawful. JAKS also sought a refund of the alleged overpaid sum of RM2,011,280.57. [23] Zeta made an application on 9.7.2021 under s 10 of the Arbitration Act 2005 [Act 646] to stay Suit 48 and to refer the parties to arbitration. This application was allowed by the High Court on 1.10.2021. [24] JAKS has since commenced arbitration proceedings through the Notice of Arbitration dated 5.8.2021. I. O.S. No. WA-24C-174-10/2021: Setting Aside Application [25] JAKS, as an aggrieved party, has applied to this Court to set aside the AD on the grounds that there has been a denial of natural justice and/ or that the Adjudicator has acted in excess of his jurisdiction pursuant to limbs (b) and (d) of s 15 CIPAA. [26] In determining whether the Adjudicator has acted in breach of the second pillar of natural justice viz. whether JAKS has been given the opportunity to be heard, this Court will have to look at the manner in which the Adjudicator has conducted the hearing and whether he has accorded procedural fairness to both JAKS and Zeta. This inquiry, as can be seen in the growing number of decisions on s 15 CIPAA, is facts sensitive and requires a holistic consideration of the AD (see, inter alia, ACFM Engineering & Construction Sdn Bhd v. Esstar Vision Sdn Bhd & another appeal [2016] 1 LNS 1522, Ireka Engineering and Construction Sdn Bhd v PWC Corp Sdn Bhd and another appeal [2019] MLJU 35, Hiform (M) Sdn Bhd v TSR Bina Sdn Bhd and another summons [2020] MLJU 808, Globalcon Holding (M) Sdn Bhd v DMC Builder Sdn Bhd [2020] MLJU 1644, Genting Malaysia Berhad v PLM Interiors Sdn Bhd and another case [2020] MLJU 344 and Meridian Contracts Sdn Bhd v Bauer (Malaysia) Sdn Bhd and another summon [2020] MLJU 1405). [27] With regards to the challenge under s 15(d) CIPAA, in Samado Sdn Bhd v. Kerajaan Malaysia & Another Case [2020] 5 MLRH 165, this Court said: “[26] As for the challenge on the ground of excess of jurisdiction, the Federal Court in View Esteem Sdn Bhd v. Bina Puri Holdings Bhd [2018] 2 MLJ 22 at p 33 observed that the term “jurisdiction” under CIPAA is not used in the administrative or public law sense but in relation to matters within the scope of CIPAA. The apex court then referred to the judgment of Lee Swee Seng J (now JCA) in Terminal Perintis Sdn Bhd v Tan Ngee Hong Construction Sdn Bhd (and Another Originating Summons) [2017] 7 AMR 887. At pp 913 - 914 of that case, His Lordship explained that “There are many senses in which the word “jurisdiction” may be understood.” and His Lordship went on to identify and describe three categories of jurisdiction in the following passages: “[72] Core jurisdiction would be the question of whether the subject matter of the dispute is one which the Act has conferred on the Adjudicator. … It is a case where the Adjudicator has no jurisdiction to begin with. So too if the construction contract is carried out wholly outside Malaysia. [73] If it is a question of the competence of the Adjudicator as in he has not been properly appointed in that what purported to be a Payment Claim, is not on the face of it a Payment Claim or that the Payment Claim was not served or that it was not expressly stated as a claim made under CIPAA, then this Court would be at liberty to set aside the Adjudication Decision on ground of excess of jurisdiction. This is not only because the Adjudicator cannot decide on his own competence or capacity to adjudicate when the very validity of his appointment is questioned but also that it is part of the legislative intent that if there is non-compliance with a basic and essential requirement of CIPAA with respect to a Payment Claim under section 5, then the Adjudication Proceedings and the Decision made would be a nullity. [74] In a case of contingent jurisdiction, it would be a case where for there to be jurisdiction, there must be further compliance with the requirements of the Act as in that the dispute must be one falling within the matters raised in the Payment Claim and the Payment Response as provided for under section 27(1) CIPAA. In that example the word “jurisdiction” is used in the sense of the scope of the dispute that is before the Adjudicator for decision. ….”. [27] As observed by the Federal Court in View Esteem, the common feature in the above mentioned three categories of jurisdiction is the presupposition that CIPAA applies to determine if the adjudicator had kept within his jurisdiction (see too, the Court of Appeal in Ideal City Development Sdn Bhd v. PWC Bina Sdn Bhd & Other Appeals [2019] 2 CLJ 615). [28] Both the learned SFC and counsel for SSB also relied on View Esteem as it is now established that section 15(d) CIPAA embraces jurisdictional grounds in the sense that the adjudicator has the jurisdiction to adjudicate the dispute referred to him but he had decided on matters which were beyond his jurisdiction.”. [28] It is observed that JAKS has launched a two-pronged attack based on a denial of natural justice and excess of jurisdiction in respect of each ground submitted to set aside the AD. As for the latter, JAKS however made no effort to identify the type of jurisdiction which is in question, whether it is core, competent or contingent jurisdiction within the meaning as laid down in Terminal Perintis Sdn Bhd v Tan Ngee Hong Construction Sdn Bhd and another case [2017] MLJU 242 and approved in View Esteem Sdn Bhd v Bina Puri Holdings Bhd [2018] 2 MLJ 22. [29] Furthermore, there are several glaring errors in JAKS’ Written Submission (encl. 10) as to the references to “JAKS”, “ZETA”, “Adjudication Response” and “Adjudication Reply” (see, among others, paras 40(c), 46, 47(a) and 50) to which JAKS’ counsel did not, at any time throughout the hearing, apply to make an oral application to correct the same (on the date of decision, the learned counsel admitted that she only realised the mistakes after the hearing). Nevertheless, in all fairness to JAKS, my deliberations on its submissions were undertaken on the basis that the correct references had been made. 1st Ground: Whether the Adjudicator acted in excess of his jurisdiction and in breach of natural justice in allowing Zeta’s claim against JAKS despite the evidence showing that there is no amount due to Zeta [30] JAKS main arguments may be summarised as follows:

that there is a denial of natural justice when the Adjudicator –

failed to take into account sufficiently, or at all, as to the outcome of the 1st JI and the 2nd JI and relied heavily on Zeta’s statements in the Adjudication Reply pertaining to payment made by JAKS to Zeta and the authenticity of PVR No. 51 (Rev 1) and PVR No. 51 (Rev 2) without giving JAKS the opportunity of addressing these matters; and

(ii) failed to call a witness from the Consultant to give evidence in respect of the 1st JI, the 2nd JI, PVR No. 51 (Rev 1) and PVR No. 51 (Rev 2) by way of an oral hearing; and

that the Adjudicator acted in excess of jurisdiction in finding that PVR No. 51 (Rev 1) and PVR No. 51 (Rev 2) issued by the Consultant is not genuine and was issued with the intention to defeat Zeta’s claim, when this is a new dispute which was raised for the first time in the Adjudication Reply. [31] Zeta’s claim as per its Payment Claim was tabulated by the Adjudicator in para 9 of the AD as follows:

Unpaid Certified amount (Interim certificate No. 44 & PVRs 45 – 50) 1,608,001.51 2. Uncertified work under Progress Claim No. 64 3,437,174.85 3. Retention Sum 1,480,000.00 4. Additional variation work 50,000.00 5. Materials On Site 79,061.87 TOTAL 6,654,238.23 [32] Through its Payment Response, JAKS disputed the entire amount and cross claimed for the sum of RM2,477,709.34. The supporting documents were attached to the Payment Response as Schedules 1 to 10. [33] By para 7 of the Adjudication Claim, Zeta withdrew its claim for item 4 as shown above. This brings Zeta’s claim in the adjudication proceedings against JAKS to be in the sum of RM6,604,238.23. In paras 8 to 13 of the Adjudication Claim, Zeta sought to justify its claim for the unpaid certified amount under IPC No. 44 and PVR Nos. 45 to

With regards to the IPC Nos. 45 to 49 as exhibited in Schedule 10 of the Payment Response, Zeta stated that none of these IPC were given by JAKS and that they were manufactured fraudulently and for the purpose of defeating Zeta’s claim. [34] JAKS retorted in the Adjudication Response by mentioning the meeting held between the parties in the presence of the Employer and the Consultant on 17.12.2020 where the claims as per items 1 and 2 in the table in para 31 above were discussed extensively, however, the parties were unable to agree on the amount of work done as claimed by Zeta. As a result, the 1st JI was carried out and the Consultant issued PVR No. 51 (R1) dated 18.1.2021 based on the 1st JI with a negative value recorded. JAKS then issued IPC No. 49 dated 25.1.2021 with the same negative value being recorded. [35] Further, JAKS stated that another meeting was held on 10.2.2021 following Zeta’s disagreement with PVR No. 51 (R1) whereby Zeta was asked to provide the documents to support its challenge on PVR No. 51 (R1). A meeting was agreed to be fixed on 18.2.2021 to review Zeta’s documents but none were forthcoming. This led to the 2nd JI.

in para 42, the Adjudicator has expressed that: “42. I have perused all evidence, documents, materials and arguments before me. In this adjudication, the documents which I find as relevant and crucial in my adjudication decision will appear in my analyses and findings below. The documents which do not appear in my analyses below have also been considered, even though they are not specifically mentioned in my decision below.”;

the respective contentions of the parties in the Adjudication Claim, Adjudication Response and Adjudication Reply are set out in paras 56 to 129;

the Adjudicator’s analysis and findings on the issue as to whether PVR No. 51 (R2) and IPC No. 50 is within his jurisdiction can be seen in paras 131 to 136. The Adjudicator took the view that he was bound by the decisions of the High Court in Mecomb (supra) and Emerald Capital (supra) and he accordingly concluded that PVR No. 51 (R2) and IPC No. 50 are matters that took place after the Notice of Adjudication was issued and therefore, these documents are not within his jurisdiction to consider in the adjudication. Having accepted Zeks’ primary argument, the Adjudicator went on to analyse and decide on Zeks’ secondary or alternative argument that these documents together with PVR No. 51 (R1) and IPC No. 49 do not support JAKS’ arguments that Zeta’s works are defective (see paras 140 to 151) and that JAKS has overpaid Zeta (paras 140 to 162). It is in this context that the Adjudicator had made references to PVR No. 51 (R2) and IPC No. 50 when he decided that –

“Neither does PVR 51 r1, PVR 52 [sic] r2 or Payment Certificates No. 40 and 50 show the co-relation between these alleged defects and their alleged deduction.” (para 145 AD);

(ii) JAKS has failed to be consistent in respect of the amount that was allegedly overpaid by JAKS to Zeta when JAKS relied on, among others, PVR No. 51 (R2) and IPC No. 50 (para 158(e) and (f) AD);

(iii) he was convinced by Zeta’s submission “… that there is a very significant dropped for variation between PVR 50 and PVR 51 r2 (-RM2,389,107.77). …” (para 160 AD); and

(iv) he accepted Zeta’s analysis that “… the table provided in PVR 51 r2 shows 3 clear cut errors as set out in paragraph 23 of the Adjudication Reply. I reject PV 51 r2 in totality.” (para 161 AD). The Adjudicator finally concluded that JAKS had failed to prove that Zeta’s works were discovered to be so defective in June 2020 to December 2020 thereby requiring a major revision in the PVR (para 151) and that JAKS has failed to prove on a balance of probabilities that it has overpaid Zeta and further, that the circumstances surrounding the allegation of overpayment, including the timing of it being raised after Zeta’s notice of suspension of the Works, shows that it is an afterthought. It is clear as day that JAKS was the party which had first raised PVR No. 51 (R2) and IPC No. 50 with the negative values as a defence against Zeta’s claims. Zeta then challenged JAKS’ statements by its two-pronged attack, both of which were considered and decided upon by the Adjudicator. In the light of the above, it is my considered view that JAKS’ contentions of there being an inconsistency in the AD and that the Adjudicator acted in excess of jurisdiction in making findings on a new dispute which was raised for the first time in the Adjudication Reply are fallacious;

by addressing his mind to PVR No. 51 (R1) and PVR No. 51 (R2), the Adjudicator would invariably have been aware that these are the outcome of the 1st JI and the 2nd JI. The Adjudicator referred to JAKS’ submissions on the 1st JI and the 2nd JI in paras 100, 101, 103 and 105 of the AD. Hence, JAKS’ submission that the Adjudicator failed to take into account sufficiently, or at all, as to the outcome of the 1st JI and the 2nd JI and this amounts to a denial of natural justice, is misconceived;

JAKS’s complaint that the Adjudicator should have called the Consultant to explain about the 1st JI, the 2nd JI, PVR No. 51 (Rev 1) and PVR No. 51 (Rev 2) is unmeritorious as -

JAKS did not submit any request to the Adjudicator for the Consultant to give evidence by oral hearing;

(ii) although there is no requirement for such a prior request to be made by JAKS before the Adjudicator can exercise any of his powers under s 25 CIPAA, the Adjudicator is not obliged to do so. The matters outlined in paras (a) to (p) in s 25 CIPAA pertain to powers, and not to the duties of an adjudicator (see Ann Joo Integrated Steel Sdn Bhd v Lim Chuan Hock & Sons Sdn Bhd [2017] MLJU 1552). The Adjudicator was evidently able to make a finding on the competing arguments of the parties without the need to conduct any hearing or to order for evidence to be given on oath under s 25 of the CIPAA. Based on para 160 of the AD, it appears that to the Adjudicator, if there is any explanation on the massive deductions for variation, this would have been conveyed by the Consultant in the PVR prior to PVR No. 51 (Rev 2). The Adjudicator accepted Zeta’s argument that JAKS had never given any particulars in the previous PVRs; and

(iii) the failure on the part of the Adjudicator to conduct an oral hearing does not amount to a breach of natural justice as there is no evidence to show that JAKS was denied the opportunity to be heard or to submit on any issue raised in the adjudication (see Seal Properties (KL) Sdn Bhd v Wabina Constructions & Engineering Sdn Bhd [2021] MLJU 1045, Mei He Development Sdn Bhd v Eosh Industries Sdn Bhd and another case [2021] MLJU 519 and Dekinjaya Builder Sdn Bhd v Chong Lek Engineering Works Sdn Bhd and another case [2020] MLJU 2455); and

JAKS’s contention that the Adjudicator went on a frolic of his own in deciding that PVR No. 51 (Rev 1) and PVR No. 51 (Rev 2) were issued with an intention to defeat Zeta’s claim is baseless because it was JAKS that first raised regarding these PVRs and IPC No. 50. If the Adjudicator did not consider JAKS’ submissions on the issues as raised in the Adjudication Response, it is highly probable that JAKS would then accuse the Adjudicator of not having considered all its defences as he is obligated to do based on the decision of the apex court in View Esteem (supra). Having brought PVR No. 51 (Rev 1) and PVR No. 51 (Rev 2) into the picture, Zeta was perfectly entitled to respond to these documents as it deems fit. In accordance with his duty to comply with the principles of natural justice as provided in s 24(c) CIPAA, it is incumbent on the Adjudicator to address the points as submitted by both parties in the adjudication proceedings, which he did. [41] In the premises, is it the conclusion of this Court that JAKS has not established its case to set aside the AD on the 1st Ground pursuant to limbs (b) and/ or (d) of s 15 of the CIPAA. 2nd Ground: Whether the Adjudicator acted beyond his jurisdiction and in breach of natural justice in allowing Zeta’s claim which portrays as if the work is 100% completed despite the actual work progress is only 92.8% [42] JAKS’ complaint is with regards to the Adjudicator’s findings on the issue as to whether Zeta is entitled to the payment of RM3,437,174.85 being payment for Progress Claim No. 64 (see paras 166 to 171 AD). The Adjudicator had allowed Zeta’s claim for Progress Claim No. 64 except for VOs Nos. 22 and 23 for the sum of RM237,500.00 and RM127,000.00, respectively. This brings the amount that was allowed to RM3,072,674.85. [43] JAKS extrapolated that in support of Zeta’s claim, Zeta had relied on, among others, PVR No. 50 which shows the value of outstanding works is merely RM1,957,057.31. Then, vide Progress Claim No. 64, Zeta claimed for the sum of RM3,437,174.85, which is way beyond the value of outstanding works in PVR No. 50. Based on PVR No. 50 and Progress Claim No. 64, Ms. Masturina submitted that Zeta’s claim for uncertified works under Progress Claim No. 64 suggests that Zeta has completed all the Works whereas the documentary evidence such as the Notice To Suspend Works, JAKS’ letters about taking over the outstanding works and Zeta’s notice to JAKS not to proceed with such intention, the list of outstanding works issued after the 1st JI and PVR No. 51 (R1) and PVR No. 51 (R2), all show otherwise. [44] It was contended that by allowing Zeta’s claim of RM3,072,674.85, the Adjudicator has wrongfully certified the works done by Zeta as if 100% of the works has been completed, contrary to the available evidence before the Adjudicator. [45] Mr. Terrence Yeap argued for Zeta that the Estimated Final Contract Sum in PVR No. 50 of RM1,957,057.31 is an estimation by the Consultant and hence, cannot be used as a foundation to contend that the remaining uncertified work done is RM1,957,057.31 only. Instead, the claims under Progress Claim No. 64 show the correct actual balance of work done which has yet to be certified by the Consultant/ JAKS. [46] I have considered the 2nd Ground and I find that JAKS has not shown how, by allowing the claim in the sum of RM3,072,674.85, the Adjudicator has acted in excess of his jurisdiction. In the same vein, JAKS has not established that it was not accorded with procedural fairness by the Adjudicator in the assessment of the issue as to whether Zeta is entitled to the payment of RM3,437,174.85. If anything at all, JAKS’ grievance is that the Adjudicator had perhaps misconstrued relevant documents, wrongly excluded relevant evidence and/ or admitted irrelevant evidence, failed to attach due weight to relevant evidence, given undue weight to a piece of evidence and/ or assessed erroneously the evidence presented to him. [47] It is trite that any error on the part of the Adjudicator in his finding, whether of fact and/ or law or of mixed fact and law, which is said to be contrary to the evidence before him, is not a valid ground to set aside the AD. If indeed there is such error, it can only be rectified in the arbitration proceedings (see s 13(c) of the CIPAA, Ireka Engineering (supra), Hiform (supra), Naza Engineering & Construction Sdn Bhd v SSL Dev Sdn Bhd [2020] 9 MLJ 499, TRT Engineering (M) Sdn Bhd v Hansol KNM Greentech Sdn Bhd and another case [2020] MLJU 148 and Alpha Galaxy Sdn Bhd v Euro Destar (M) Sdn Bhd and another case [2021] MLJU 767). 3rd Ground: Whether the Adjudicator acted in excess of his jurisdiction and in breach of natural justice in deciding that JAKS’ offer to pay the sum of RM1 million to Zeta is evidence of JAKS’ indebtedness to Zeta [48] JAKS took issue with the following part of the AD where the Adjudicator found as follows: “156. Whatever the reason may be, the facts remains that the Respondent has offered to make substantial payment of RM1,000,000.00 to the Respondent on 21.12.2020. This renders questionable the Respondent’s allegations in the adjudication that there was an overpayment of RM2,053,937.11.

If indeed it is true that the Respondent has overpaid the Claimant by RM2,053,937.11, it does not accord well with business common sense that the Respondent will further offer to pay another RM1,000,000.00 to the Claimant, thereby substantially increasing the overpayment and indebtedness by the Claimant. Any commercially sensible businessman would not do so in the circumstances.”. [49] Ms. Masturina submitted that the Adjudicator went on a frolic of his own to decide on a matter without affording any opportunity to JAKS to comment. [50] However, I find that this is again a situation where it is JAKS that had first brought up the offer of payment of RM1 million in December 2020 and January 2021. In para 5.19 of the Adjudication Response, and after referring to the meeting held on 17.12.2020, JAKS stated that: “Further, the Respondent also on 21.12.2020 as a gesture of good will offered to pay a sum of RM500,000.00 by December 2020 and another RM500,000.00 by January 2021 in the hope to assist the Claimant to move the progress and to catch up with the works in order to avoid the issuance of PVR with negative value.”. [51] Zeta accordingly responded by asserting, inter alia, that JAKS’ contention that the offer of RM1 million was made in good faith is “contrary to common sense and bordering absurdity” in view of JAKS’ allegation that it has overpaid Zeta by a whopping RM2,053,937.11, which is more than double what JAKS offered to pay (see subparas 20(c) and (d) and subpara 22(c) of the Adjudication Reply). [52] The Adjudicator had addressed his mind to the positions taken by both parties, and he chose to accept Zeta’s version of the facts while giving reasons premised on business common sense or the process of logical thinking. [53] In sum, I am not persuaded that JAKS has established the 3rd Ground as a justifiable basis to set aside the AD. 4th Ground: Whether the Adjudicator acted in excess of his jurisdiction and in breach of natural justice in deciding on a matter arising out of his jurisdiction in dismissing JAKS’ counterclaim against Zeta [54] JAKS’ submission in relation to the allegation that the Adjudicator acted in excess of his jurisdiction is the same as the submission in respect of the 1st Ground, namely that, despite finding PVR No. 51 (R2) and IPC No. 50 are matters that are beyond his jurisdiction to consider in the adjudication, the Adjudicator still investigated and decided on the matter by rejecting PVR No. 51 (Rev 2) in totality. [55] Similarly, JAKS’ argument on a purported breach of natural justice is repetitive of the 1st Ground i.e. the Adjudicator decided on a matter which was raised for the first time by Zeta in the Adjudication Reply without calling for an explanation from JAKS or the Consultant. [56] The reasonings of the Court have been dealt with under the 1st Ground and shall not be replicated here. Suffice to say that there is a measure of truth to Zeta’s submission that JAKS is blowing hot and cold in contending, on one hand, that the Adjudicator had exceeded his jurisdiction and, on the other hand, that there is a denial of natural justice. 5th Ground: Whether the Adjudicator acted in excess of his jurisdiction and in breach of natural justice in allowing ZETA’s claim in the sum of RM1,608,001.54 for IPC No. 44 and PVR Nos. to 50, RM3,072,674.85 for Progress Claim No. 64, RM1,480,000.00 retention sum and RM79,061.87 for material on site [57] According to JAKS, the Adjudicator had relied solely on Zeta’s submission and had failed to consider the following:

Zeta was in breach of the sub-contract when it refused, failed and/ or neglected to re-commence the Works for the Project after issuing the Notice To Suspend Works despite the explanation given during the meeting held on 17.12.2020;

Zeta has intentionally delayed the completion of the Project by issuing the Notice To Suspend Works merely two weeks before the completion date on 31.12.2020;

applying Clause 23.5 of the PAM Sub-Contract, and following the termination of the Sub-Contract by Zeta vide its letter dated 29.12.2020, no further payment shall be made by JAKS to Zeta pending the issuance of the Final Account; and

Zeta’s claim for payment under IPC No. 44 and PVR Nos. 45 to 50 is pre-mature and in contradiction to Clause 26.6. of the PAM Sub-Contract Agreement which requires Zeta to submit its whole claim to JAKS for preparation of the Final Account. [58] Upon closer reading of JAKS’ 5th Ground, it is apparent that this is basically a potpourri of grounds being thrown in – breach of natural justice, excess of jurisdiction and error in the decision of the Adjudicator. It is additionally obvious that, by raising all these matters, JAKS was inviting this Court to review the merits of the case or to decide the facts of the case. JAKS had couched the 5th Grounds as though the Setting Aside Application is an appeal when it is firmly established in a plethora of cases that an application under s 15 CIPAA is not an appeal whereby the court will not review the merits of an adjudication decision (see, among others, ACFM Engineering (supra) and MKP Builders Sdn Bhd v PC Geotechnic Sdn Bhd and another case [2020] MLJU 1927). [59] It is on this consideration that the 5th Ground must be rejected outright. [60] In closing, with regards to the Setting Aside Application, there is no merit whatsoever to JAKS’ attempt to set aside the AD pursuant to s 15(b) and/or (d) of the CIPAA. II. O.S. No. WA-24C-172-10/2021: Stay Application [61] JAKS’ application for a stay of the AD was made pursuant to limb (a) or (b) of s 16 of the CIPAA as it believes it has fulfilled the threshold requirements as provided under these limbs, namely, it has applied to set aside the AD under s 15 CIPAA and the subject matter of the AD is pending final determination by arbitration. Sub-s 16(2) CIPAA provides that in such circumstances, “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.”. [62] By virtue of s 37 of the CIPAA, there is no bar for a dispute in respect of payment under a construction contract to be referred concurrently to adjudication, arbitration or the court. [63] The leading case which has elucidated on the legal principles in the determination of an application of this nature is, of course, the oft quoted decision of the Federal Court in View Esteem where it was held that a stay of the enforcement of an adjudication decision may be allowed where there are clear and unequivocal errors in the said decision or in order to meet the justice of the individual case (see para 82 of the judgment). [64] Among the cases which have discussed how the tests of clear and unequivocal errors and justice of the case are to be applied in the exercise of the discretion of the court whether to grant a stay or otherwise are EA Technique (M) Sdn Bhd v. Malaysia Marine And Heavy Engineering Sdn Bhd [2020] 1 LNS 1851, Maju Holdings Sdn Bhd v. Spring Energy Sdn Bhd [2020] 1 LNS 1194 and [2021] 1 LNS 367, Pinnacle Supreme Sdn Bhd v. DSG Projects Malaysia Sdn Bhd [2021] 1 LNS 852, Sun Plaza Development Sdn Bhd v. Hejingkang Sdn Bhd [2021] 1 LNS 629 and CRCC Malaysia Bhd v M101 Entity Sdn Bhd and other cases [2021] MLJU 1305. [65] In CRCC Malaysia (supra), this Court said: “[56] In Maju Holdings Sdn Bhd v Spring Energy Sdn Bhd and other cases [2020] 7 AMR 147 at p 153, the High Court stated as follows as regards the View Esteem case: “[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. [57] As for the phrase “to meet the justice of the individual case”, this Court in Genbina Sdn Bhd v. Bina Puri Construction Sdn Bhd and another appeal [2020] 2 MLRH 101 at p 111 said that the determination as to what is right and fair must necessarily be dependent on the factual matrix and circumstances arising in each case whilst in EA Technique (M) Sdn Bhd v Malaysia Marine and Heavy Engineering Sdn Bhd [2021] 1 AMR 594 at p 603, Lim Chong Fong J expressed the following view: “[27] Furthermore in the View Esteem case, it is also stated that the financial status is not the sole factor in determining the grant of the stay. The stay may be allowed to meet the justice of the individual case aside from clear error. They seem to be disjunctive as explained in the Leap Modulation case. Justice of the case is of course even more subjectively objective. It involves the exercise of discretion. However in light of the caveat of caution mentioned in the View Esteem case, I am also only minded to grant the stay if my conscience is pricked in the special circumstances of the case. Beyond that, it is incapable of definition or illustration. [28] The bottom line is that considerations of both clear error as well as justice of the individual case to justify the stay of an adjudication decision have to be stringently applied as this would otherwise defeat the statutory intent of the CIPAA to ensure cash flow in the construction industry; see Subang Skypark Sdn Bhd v Arcradius Sdn Bhd [2015] 1 CLJ 801.”. [66] This Court is also mindful of the reminder in View Esteem’s case that a stay of an adjudication decision should not be given readily, and caution must be exercised. In this regard, one must not lose sight of the underlying philosophy of the CIPAA which is to alleviate payment problems and assist cash flow in the construction industry through the process of adjudication where speed is central to the achievement of the noble objectives of the statute (see, among others, UDA Holdings Bhd v Bisraya Construction Sdn Bhd & Anor and another case [2015] 11 MLJ 499 and MRCB Builders Sdn Bhd v Southern Builders (J) Sdn Bhd [2018] MLJU 1426). [67] Turning now to the arguments put across by JAKS in support of the Stay Application, it was contended that the AD ought to be stayed for the following reasons:

JAKS has filed the Setting Aside Application;

JAKS has filed Suit 48 against Zeta and the High Court has allowed Zeta’s application under s 10 of the Arbitration Act 2005 [Act 646] to stay Suit 48 and to refer the parties to arbitration. JAKS has since commenced arbitration proceedings through the Notice of Arbitration dated 5.8.2021; and

there are clear and unequivocal errors in the AD. [68] I have considered the above said grounds and, in my assessment, –

merely fulfilling the threshold requirements of limbs (a) and (b) of s 16 of the CIPAA in that the Setting Aside Application has been filed and there is a pending arbitration does not equate to an automatic granting of a stay of the AD. There is a long line of cases which have laid down and applied this legal principle, including pronouncements by this Court, for example, Subang Skypark Sdn Bhd v Arcradius Sdn Bhd [2015] 11 MLJ 818, Pasukhas Sdn Bhd v Empire Multiple Sdn Bhd [2019] 1 LNS 757, Genbina Sdn Bhd v Bina Puri Construction Sdn Bhd and another appeal [2019] MLJU 1933 and Puncak Niaga Construction Sdn Bhd v Mersing Construction & Engineering Sdn Bhd and other cases [2021] MLJU 1824; and

the basis upon which JAKS claims that there are clear and unequivocal errors in the AD are essentially a repetition of the grounds in respect of the Setting Aside Application. These grounds have been considered in the foregoing part of this judgment and in the end, were rejected. Even if the Adjudicator had erred, as posited by JAKS in respect of the 2nd Ground, these pertain to the Adjudicator’s findings of fact and/ or law and they do not constitute errors that, to borrow the expression in Maju Holdings (supra), “pricked my conscience” in the circumstances of this case. [69] No other grounds to support the Stay Application were put forth by JAKS which could be said to amount to special circumstances and justifying a decision in its favor. In the upshot, this is an obvious case where the Stay Application must be dismissed. III. O.S. No. WA-24C-153-09/2021: Enforcement Application [70] The AD is binding unless it is set aside by this Court pursuant to the Setting Aside Application or the dispute is finally decided by arbitration (applying s 13(a) and (c) of the CIPAA; limb (b) is not applicable in the present case). [71] Since I have decided to dismiss the Setting Aside Application and the Stay Application, Zeta’s Enforcement Application is next to be considered. Sub-s 28(1) CIPAA allows a party which is successful in an adjudication to apply to the High Court for an order to enforce an adjudication decision as if it is a judgment or order of the High Court. The High Court may, under sub-s 28(2) and (3), make an order in respect of the adjudication decision either wholly or partly, and in respect of interest on the adjudicated amount payable, and such order may be executed in accordance with the rules on execution of the orders or judgment of the High Court. [72] Having reviewed the affidavit evidence and submissions by the parties, it is my finding that Zeta has established the elements for an order to be made as sought as –

there is an AD that has been rendered in Zeta’s favor and there has been non-payment of the Adjudication Sum by the date specified in the AD;

there is no prohibition to the grant of the order sought in the Enforcement Application since the Setting Aside Application and Stay Application are dismissed; and

there is no written settlement of the subject matter between the parties and nor is there any final decision rendered on the Payment Claim, whether made in arbitration or by the court as at the date of the hearing and decision of the Enforcement Application (see the decision of the Court of Appeal in Inai Kiara Sdn Bhd v. Puteri Nusantara Sdn Bhd [2019] 1 MLRA 207). Conclusion [73] Premised on all the abovesaid considerations, the Setting Aside Application and the Stay Application were accordingly dismissed with costs and the Enforcement Application was allowed with costs. Dated: 7 October 2022 (ALIZA SULAIMAN) Judge Construction Court 2 High Court Kuala Lumpur Counsels/ Solicitors: For the Applicant in O.S. No. WA-24C-153-09/2021 and the Defendant in O.S. No. WA-24C-172-10/2021 & O.S. No. WA-24C-174-10/2021: Terrence Yeap Messrs. Vin & Isaac Lee Advocates & Solicitors A-07-08, Empire Tower, Empire Subang Jalan SS16/1 47500 Subang Jaya Selangor For the Respondent in O.S. No. WA-24C-153-09/2021 and the Plaintiff in O.S. No. WA-24C-172-10/2021 & O.S. No. WA-24C-174-10/2021: Masturina Binti Mohamad Rodzi Messrs. Edwin Lim & Suren Advocates & Solicitors Suite 12-10, 12th Floor, Wisma UOA II No. 21, Jalan Pinang 50450 Kuala Lumpur Cases, legislation and other sources referred to in the submissions by learned counsels and in the Grounds of Judgment: Cases: ACFM Engineering & Construction Sdn Bhd v. Esstar Vision Sdn Bhd & another appeal [2016] 1 LNS 1522 Alpha Galaxy Sdn Bhd v Euro Destar (M) Sdn Bhd and another case [2021] MLJU 767 Ann Joo Integrated Steel Sdn Bhd v Lim Chuan Hock & Sons Sdn Bhd [2017] MLJU 1552 Bovis Lend Lease Ltd v Triangle Development Ltd 86 ConLR 26 Brodyn Pty Ltd (Trading as Time Cost And Quality) v Davenport [2004] NSWCA 394 Bumimetro Construction Sdn Bhd v Mayland Universal Sdn Bhd and another case [2017] MLJU 1993 Cantillon Ltd v Urvasco Ltd 117 ConLR 1 CRCC Malaysia Bhd v M101 Entity Sdn Bhd and other cases [2021] MLJU 1305 Dekinjaya Builder Sdn Bhd v Chong Lek Engineering Works Sdn Bhd and another case [2020] MLJU 2455 EA Technique (M) Sdn Bhd v. Malaysia Marine And Heavy Engineering Sdn Bhd [2020] 1 LNS 1851 Econpile (M) Sdn Bhd v ASM Development (KL) Sdn Bhd and another summons [2020] MLJU 1146 Emerald Capital (Ipoh) Sdn Bhd v Pasukhas Sdn Bhd and another appeal [2018] MLJU 440 Genbina Sdn Bhd v Bina Puri Construction Sdn Bhd and another appeal [2019] MLJU 1933 Genting Malaysia Berhad v PLM Interiors Sdn Bhd and another case [2020] MLJU 344 Globalcon Holding (M) Sdn Bhd v DMC Builder Sdn Bhd [2020] MLJU 1644 Hiform (M) Sdn Bhd v TSR Bina Sdn Bhd and another summons [2020] MLJU 808 Inai Kiara Sdn Bhd v. Puteri Nusantara Sdn Bhd [2019] 1 MLRA 207 Ireka Engineering and Construction Sdn Bhd v PWC Corp Sdn Bhd and another appeal [2019] MLJU 35; [2019] 1 LNS 51 Maju Holdings Sdn Bhd v. Spring Energy Sdn Bhd [2020] 1 LNS 1194 and [2021] 1 LNS 367 Martego Sdn Bhd v Arkitek Meor & Chew Sdn Bhd [2016] MLJU 1051 Martego Sdn Bhd v Arkitek Meor & Chew Sdn Bhd and another appeal [2018] 4 MLJ 496 McAlpine PPS Pipeline Systems Joint Venture v Transco plc 96 ConLR 69 Mecomb Malaysia Sdn Bhd v VST M&E Sdn Bhd [2018] 12 MLJ 446 Mei He Development Sdn Bhd v Eosh Industries Sdn Bhd and another case [2021] MLJU 519 Meridian Contracts Sdn Bhd v Bauer (Malaysia) Sdn Bhd and another summon [2020] MLJU 1405 MKP Builders Sdn Bhd v PC Geotechnic Sdn Bhd and another case [2020] MLJU 1927 MRCB Builders Sdn Bhd v Southern Builders (J) Sdn Bhd [2018] MLJU 1426 Naza Engineering & Construction Sdn Bhd v SSL Dev Sdn Bhd [2020] 9 MLJ 499 Pasukhas Sdn Bhd v Empire Multiple Sdn Bhd [2019] 1 LNS 757 Pinnacle Supreme Sdn Bhd v. DSG Projects Malaysia Sdn Bhd [2021] 1 LNS 852 Puncak Niaga Construction Sdn Bhd v Mersing Construction & Engineering Sdn Bhd and other cases [2021] MLJU 1824 Samado Sdn Bhd v. Kerajaan Malaysia & Another Case [2020] 5 MLRH 165 Seal Properties (KL) Sdn Bhd v Wabina Constructions & Engineering Sdn Bhd [2021] MLJU 1045 Subang Skypark Sdn Bhd v Arcradius Sdn Bhd [2015] 11 MLJ 818 Sun Plaza Development Sdn Bhd v. Hejingkang Sdn Bhd [2021] 1 LNS 629 Terminal Perintis Sdn Bhd v Tan Ngee Hong Construction Sdn Bhd and another case [2017] MLJU 242 TRT Engineering (M) Sdn Bhd v Hansol KNM Greentech Sdn Bhd and another case [2020] MLJU 148 UDA Holdings Bhd v Bisraya Construction Sdn Bhd & Anor and another case [2015] 11 MLJ 499 View Esteem Sdn Bhd v Bina Puri Holdings Bhd [2018] 2 MLJ 22 W Y Steel Construction Pte Ltd v Osko Pte Ltd [2013] 3 SLR 380 Legislation: Arbitration Act 2005, s 10 Companies Act 2016, s 466 Construction Industry Payment and Adjudication Act 2012, ss 13, 15, 16, 24 & 28 Rules of Court 2012, O. 7, O. 28, O. 69A and O. 92, r.