INTRODUCTION

The Court of Appeal had on 9.12.2022 decided in Pali PTP Sdn Bhd V Bond M & E Sdn Bhd (Civil Appeal No.: W-02(C)(A)-314-02/2021) (“Court of Appeal’s Decision”) that both interests and costs awarded in the adjudication decision are claimable under Section 30 CIPAA. The grounds of judgment of the Court of Appeal’s Decision are yet to be released.

In view of the Court precedents[1] which held that it would be impossible to determine a case’s ratio decidendi without the full grounds of judgment, it appears that the Court of Appeal’s Decision in Pali PTP Sdn Bhd may not be binding on the High Court until the release of the grounds of judgment.

As such, pursuant to the recent High Court decisions discussed below, only the adjudicated sum and interest on the adjudicated sum are claimable under Section 30 CIPAA 2012. The High Court has maintained that Adjudication Costs are not claimable under Section 30 CIPAA 2012.

CASE 1: ZEDELTA SDN BHD V MAYLAND SUPREME SDN BHD [2023] MLJU 77

Adjudicated Sum + Interest Claimable. Adjudication Costs NOT Claimable.

Brief Facts

The Defendant is the employer of a housing development project, who had appointed a company known as CR Sea (Malaysia) Sdn Bhd (“CR Sea”) as the Main Contractor to carry out the construction works. The Plaintiff was one of CR Sea’s Nominated Subcontractors for the Project.

Payment disputes arose between the Plaintiff and CR Sea in connection with the Project, and the Plaintiff commenced adjudication proceedings under CIPAA 2012 to seek for unpaid certified sums. The Adjudicator awarded the unpaid certified sum (“Adjudicated Sum”), interest, and costs to the Plaintiff (“Adjudication Decision”). However, CR Sea did not make any payments to the Plaintiff.

Subsequently, the Plaintiff commenced a Section 30 CIPAA 2012 action to seek for direct payment for the sums awarded in the Adjudication Decision from the Defendant as the principal of CR Sea.

The High Court decided in favour of the Plaintiff, and directed the Defendant to pay the Plaintiff the Adjudicated Sum, together with interest on the Adjudicated Sum to be calculated from the date of the High Court’s decision (24.11.2022) (“Interest on AD”), and costs of the application. The High Court did not allow the adjudication cost.

CASE 2: OTIS ELEVATOR COMPANY (M) SDN. BHD V. DESARU CONVENTION CENTRE SDN. BHD AND OTHERS (ORIGINATING SUMMONS NO: BA-24C-30-04/2022)

Adjudication Sum + Interest Claimable. Adjudication Costs NOT Claimable.

Brief Facts

The Plaintiff was appointed as the sub-contractor for 3 construction projects in Desaru by the main contractor of the construction projects, MRCB. The Plaintiff was not paid for works done under the construction projects and the Plaintiff had commenced 3 adjudication proceedings under CIPAA 2012 against MRCB and obtained adjudication decisions in its favour.

The Plaintiff then issued demand for payments under the adjudication decisions to the Defendants pursuant to Section 30 of CIPAA 2012 and the Defendants had, amongst others, informed that there was no money that was due and/or payable by the Defendant to MRCB under the main contract, that MRCB was liable to substantial damages to the breaches in the main contract and that the claims between the Defendants and MRCB are being arbitrated.

The main issues that arose in the originating summons were:

a. whether an employer may rely on a dispute resolution agreement (which stays all disputes) to resist an application by a sub-contractor under Section 30 of CIPAA 2012?;

b. whether Section 13(b) of CIPAA 2012 provides a defence for an employer to resist a Section 30 of CIPAA 2012 application?; and

c. whether there was any sum due or payable from the Defendants to MRCB?

The High Court held that a dispute resolution agreement cannot be relied upon to oppose the Section 30 CIPAA 2012 applications by the Plaintiff and that Section 13(b) of CIPAA 2012 cannot be used as a defence for an employer to resist a Section 30 of CIPAA 2012 application. The High Court found that the Plaintiffs have successfully discharged the legal and evidential burden to prove on a balance of probabilities that it is entitled to payment by the Defendants as the principals of MRCB, pursuant to Section 30 of CIPAA 2012.

The High Court held that the Defendants are only liable to the Plaintiff for the adjudication amounts with interest as stipulated in the 3 adjudication decisions and that the costs of the adjudication proceeding cannot be recovered from the Defendants.

.Comments

1) The recent High Court cases have taken a consistent approach that the words “adjudicated amount” in Section 30 CIPAA 2012 only include interest awarded in the Adjudication Decision, but expressly stated that the adjudication costs awarded in the adjudication proceedings are not recoverable under Section 30 CIPAA 2012.

2) Despite so, the question on whether the calculation of interest should run as stipulated in the adjudication decision or from the date of the High Court decision on a Section 30 application remains unclear.

3) Unless and until the Court of Appeal delivers a judgment to clarify on the position of the law on whether adjudication costs and interest awarded in an adjudication decision would be claimable under Section 30 CIPAA 2012, it appears that the words “adjudicated amount” in Section 30 CIPAA 2012 would still be open for interpretation by the High Court.

See also: May 2022 Empower Newsletter “Recent High Court Cases In Relation To The Application Of Section 30 Of CIPAA 2012”

[1] See Datuk Haji Harun Bin Haji Idris V Public Prosecutor [1977] 2 MLJ 155 (FC) and PNSB Water Sdn Bhd v Menteri Kewangan Malaysia (Ketua Pengarah Hasil Dalam Negeri, proposed intervener) [2022] MLJU 2800 (HC)

The Court of Appeal had on 9.12.2022 decided in Pali PTP Sdn Bhd V Bond M & E Sdn Bhd (Civil Appeal No.: W-02(C)(A)-314-02/2021) (“Court of Appeal’s Decision”) that both interests and costs awarded in the adjudication decision are claimable under Section 30 CIPAA. The grounds of judgment of the Court of Appeal’s Decision are yet to be released.