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2020 MarsdenLR 731
HIGH COURT MALAYA KUALA LUMPUR
MRCB ENGINEERING SDN BHD – Appellant
Versus
KUDDUS CONSTRUCTION SDN BHD – Respondent
[Originating Summons No: WA-24C-211-10/2019]
A wound-up company cannot initiate adjudication proceedings without the Official Receiver's prior sanction, rendering such proceedings null and void.
Headnote:(A) Construction Industry Payment and Adjudication Act 2012 [Act 746] – The onset of a novel legal issue regarding the need for a wound-up company to obtain approval from the Official Receiver before instigating adjudication proceedings - The court found that since the Defendant was wound up without sanction from the Official Receiver, adjudication proceedings were unauthorized and thus declared null and void. (Paras 1, 2, 18, 60)
(B) Jurisdiction - The Plaintiff asserted that the Adjudicator acted outside jurisdiction due to the Defendant's insolvency status without applicable sanction. The court concurred that the adjudicator was devoid of jurisdiction to rule on the dispute. (Paras 17, 62)
Facts of the case: The Plaintiff sought the annulment of an adjudication decision made in favor of the Defendant, a company that was deemed wound up prior to the adjudication proceedings, which were initiated without prior sanction from the Official Receiver. (Paras 1, 8, 60)
Findings of Court: The court ruled that the adjudication proceedings lacked necessary authorization and declared the awards made void due to the Defendant's status as a wound-up company. (Paras 2, 60)
Issues: Whether a wound-up company can commence adjudication proceedings without the Official Receiver's sanction and the validity of the adjudication decision given the Defendant's insolvency status. (Paras 1, 18)
Ratio Decidendi: The court concluded that an adjudication proceeding constitutes a 'legal proceeding' under the Companies Act, requiring compliance with statutory directives, which the Defendant failed to observe. (Paras 1, 18, 60)
Result: The court allowed the Plaintiff's application, declaring the adjudication decision null and void and awarding costs to the Plaintiff. (Paras 2, 64)
JUDGMENT
Introduction
[1] The Plaintiff's application by way of this Originating Summons ('OS') in encl 1 raises a novel issue as to whether a wound-up company can commence adjudication proceedings under the Construction Industry Payment and Adjudication Act 2012 [Act 746] ('CIPAA') without the sanction of the Official Receiver ('OR').
[2] On 28 February 2020, after full consideration of the evidence and submissions by the parties, this Court had allowed prayer (c) in encl 1 namely, the decision by the learned Adjudicator, Ir. Yong Hee Leong made on 5 July 2018 ['Adjudication Decision'; exhibit "LNH-4" in the Affidavit In Support ('AIS') affirmed by the Plaintiff's Director on 17 October 2019 (encl 2)] was declared as null and void and the Defendant was ordered to pay costs of RM7,000.00 to the Plaintiff, subject to allocatur.
[3] The Defendant did not file a Notice of Appeal against my decision until 3 July 2020. These are my full grounds of decision.
The Facts
[4] By a Letter of Award dated 16 April 2015 ('LoA'; exhibit "LNH-1" AIS), the Plaintiff appointed the Defendant as the sub-contractor for structural and architectural works in the project known as the "Proposed Construction of 30 Storey Jland Tower at Komtar JBCC, Jalan Wong Ah Fook, Johor Bahru, Johor for the sum of RM17,728,075,62.
[5] A payment dispute later arose between the parties and the Defendant initiated an adjudication proceeding against the Plaintiff pursuant to the CIPAA vide Notice of Adjudication dated 9 March 2018 (exhibit "LNH- 2" AIS) for the amount of RM3,676,452.44 allegedly as outstanding payments due from the Plaintiff to the Defendant for labour and materials costs. According to the "Summary Of Dispute" in the said Notice of Adjudication, "...The Claimant submitted Progress Claim No 3 for Labour Work, Final Claim for Labour Work and Final Claim for Purchase On Behalf for the total outstanding of RM17,728,075.62. The Claimant has not received payment to date.".
[6] The learned Adjudicator subsequently delivered his decision on 5 July 2018 in favour of the Defendant. The final determination is stated in para 14.3 of the Adjudication Decision as follows:
"(a) The Jurisdictional challenge by the Respondent be dismissed;
(b) The Contract was unlawfully terminated by the Respondent;
(c) The Back-Charge by the Respondent be dismissed;
(d) The Respondent shall pay the Claimant the sum of RM 2,937,391.64. This is hereby recorded as the Adjudicated Amount of this decision;
(e) The Adjudicated Amount shall be paid by the Respondent to the Claimant on or before 20 July 2018;
(f) The Respondent shall also pay to the Claimant interest on the Adjudicated Amount calculated at 5% simple interest per annum from 7 March 2018;
(g) The Respondent is also to pay the Claimant RM70,000.00, being the costs of the Adjudication proceedings including the Adjudication fees and expenses and also AIAC administrative fees (this amount is excluding the RM 24,915.60 to be paid by the Respondent to AIAC as the Advance Security Deposit). In the event that the Claimant pay on behalf of the Respondent the sum of RM 24,915.60 for the Respondent's portion of the Advance Security Deposit (for Adjudicator's fee and AIAC Administrative fee) to AIAC, then this cost, in addition to RM 70,000.00 stated above, shall also be borne by the Respondent.".
[7] However, the Adjudication Decision was issued only on 11 October 2019 because the Plaintiff did not pay their share of the Advance Security Deposit amounting to RM24,915.60 to the Asian International Arbitration Centre ('AIAC'). The Defendant then made the necessary payment on 26 September 2019 to enable the Adjudication Decision to be released to the parties [refer exhibit "A-2" in the Defendant's Affidavit in Reply ('AIR')].
[8] The Adjudication Decision was served on the Plaintiff on 14 October 2019. Three days later, this OS was filed by the Plaintiff seeking the following reliefs:
(a) A declaration that all proceedings between Plaintiff
