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2025 MarsdenLR 1062
HIGH COURT MALAYA KUALA LUMPUR
AGILE PJD DEVELOPMENT SDN BHD – Appellant
Versus
CHINA CONSTRUCTION YANGTZE RIVER (MALAYSIA) SDN BHD – Respondent
[Originating Summons No: WA-24NCC-141-03/2024]
A Fortuna injunction requires a bona fide dispute over the debt, which was not established as the Plaintiff's claims were previously adjudicated and deemed insufficient.
Headnote:(A) Specific Relief Act 1950 - Sections 50 and 51(2) - Construction Industry Payment and Adjudication Act 2012 - The court addressed the standards for granting a Fortuna injunction, emphasizing that a bona fide dispute must exist regarding the debt. It found that the Plaintiff's counterclaims were previously adjudicated and thus not valid for dispute. (Paras 10-12, 18-19)
(B) Winding Up Proceedings - The court reiterated that an adjudication decision is binding unless set aside, and the Plaintiff's financial solvency was questioned due to insufficient assets against the adjudicated sum. (Paras 14-15, 19-20)
(C) Concurrent Remedies - The court confirmed that creditors may pursue multiple enforcement avenues simultaneously unless prohibited. (Paras 22-25)
Facts of the case:
The Plaintiff sought a Fortuna injunction against the Defendant's winding up petition following an adjudication decision ordering payment. The Plaintiff claimed substantial counterclaims and asserted commercial solvency.
Findings of Court:
The court found the Plaintiff failed to establish grounds for the injunction, as the adjudication decision was valid and counterclaims were insufficient.
Issues: The main issues included the existence of a bona fide dispute and the validity of the adjudication decision as a basis for winding up.
Ratio Decidendi: The court concluded that the Plaintiff's claims did not constitute bona fide disputes as they were either adjudicated or inadequately raised. The winding-up petition was deemed to have a chance of success.
Result: Application dismissed with costs.
[1] This was the Plaintiff's application for a Fortuna injunction to restrain the Defendant from filing a winding up petition based on a statutory notice of demand dated 29 February 2024 ("this Application").
[2] The statutory notice was founded upon the Corrected Adjudication Decision dated 20 February 2024 ("Corrected Adjudication Decision" or "Adjudication Decision". This Application was brought under ss 50 and 51(2) of the Specific Relief Act 1950 .
A] Salient Background Facts
[3] By letter of award dated 9 December 2016, the Plaintiff engaged the Defendant as the main contractor to carry out construction works for the Agile Mont Kiara Project ("the Project"). The Defendant completed the works on 10 July 2021, with the Certificate of Practical Completion ("CPC") issued on 15 July 2021. However, disputes arose regarding payment, with the Plaintiff alleging that the Defendant failed to complete the works satisfactorily and claiming substantial counterclaims and set-offs.
[4] Due to the Plaintiff's failure to pay, the Defendant issued a Payment Claim dated 3 October 2023 under the Construction Industry Payment and Adjudication Act 2012 ("CIPAA"). The Defendant subsequently commenced adjudication proceedings seeking RM89,333,051.89 or alternatively RM84,050,170.91 plus RM5,282,880.98.
[5] The Adjudicator delivered the Corrected Adjudication Decision on 20 February 2024, essentially ordering the Plaintiff to pay the Defendant:
i) RM59,304,233.53 as the principal adjudicated sum;
ii) 5% simple interest per annum from the date of the decision;
iii) Legal costs of RM30,000.00; and
iv) Further costs of RM59,184.14.
[6] When the Plaintiff failed to pay within the 21-day period, the Defendant issued the statutory notice of demand on 29 February 2024.
B] The Plaintiff'S Arguments
[7] The Plaintiff contended that a Fortuna injunction should be granted on the grounds that:
i) There is a bona fide dispute concerning the debt arising from substantial counterclaims and set-offs totalling RM79,616,815.86 (comprising liquidated damages of RM10,679,748.13, debit notes of RM2,194,713.29, payments on behalf amounting to RM8,246,945.40, direct payments to subcontractors of RM49,722,131.05, direct payments to nominated subcontractors of RM11,995,484.37, and additional costs for fire door defects of RM12,156,894.00).
ii) The Plaintiff is commercially solvent with total assets of RM80,740,003.00.
iii) The winding up petition, if presented, would cause irreparable damage to the Plaintiff.
iv) The petition would have no chance of success.
[8] The Defendant's concurrent pursuit of enforcement under s 28 CIPAA and winding up proceedings is contradictory and inconsistent. There are three relevant applications currently before the Courts:
i) The Defendant's Enforcement application filed via Originating Summons No WA-24C-20-02/2024 dated 23 February 2024, seeking an order that the Corrected Adjudication Decision be recognised as binding and enforceable as a judgment of the court ("Enforcement OS"). The Enforcement OS is scheduled for hearing on 19 July 2024.
ii) The Plaintiff's Setting Aside application filed via Originating Summons No WA-24C-37-03/2024 dated 20 March 2024, which is to be heard together with the Enforcement OS on 19 July 2024.
iii) The Plaintiff's Stay application filed via Originating Summons No WA-24C-39-03/2024 dated 20 March 2024, which is scheduled for hearing on 6 June 2024.
C] The Plaintiff'S Arguments
[9] The Defendant contended that:
i) An adjudication decision forms a valid basis for a statutory notice of demand and subsequent winding-up proceedings, relying on Sime Darby Energy Solution Sdn Bhd v. RZH Setia Jaya Sdn Bhd ; [2022] 1 MLJ 458; and Bludream City Development Sdn Bhd v. Pembinaan Bina Bumi Sdn Bhd (court of Appeal No B-02(NCC)(A)-2145-11/2022);
ii) Once a debt has been adjudicated, it is no longer disputable in winding up proceedings unless the adjudication decision has been set aside, stayed or overt
