The Court held that an Adjudicator's erroneous refusal to exercise jurisdiction over set-off claims can result in a partial adjustment of the adjudicated amount.

[1] The main issue for determination that straddles these three Originating Summonses ("OS") is whether the Adjudicator had rightly declined jurisdiction to hear the set-off pleaded by the non-paying party in the Adjudication and the related issue as to whether this Court may allow part of the set-off that should have been heard by the Adjudicator and so reduce the Adjudicated Sum accordingly.

[2] There is also the issue as to whether the Adjudicator could interpret clause 25.4(iv) PAM 1998 Contract to allow for payments to be made to the unpaid party for Interim Payment Certificates not paid yet at the point of determination of the Contract.

Prayers

[3] The first OS WA-24C-170-12/2016, in chronological sequence of point of filing, is the OS filed by the Claimant in the Adjudication, PCP Construction Sdn Bhd ("PCP") to enforce the Adjudication Decision under s 28 of the Construction Industry Payment and Adjudication Act 2012 ("CIPAA").

[4] The second OS No WA-24C-8-01/2017 filed by the Respondent in the Adjudication, Leap Modulation Sdn Bhd ("Leap Modulation") is to stay the Adjudication Decision pending the disposal of the application to set aside and the arbitration between the Claimant and the Respondent.

[5] The third OS WA-24C-9-01/2017 filed by Leap Modulation is for setting aside the Adjudication Decision.

[6] By consent and for good reason, the 3 OS were heard together as the decision in one will affect the other two.

Project

[7] Leap Modulation had appointed PCP as the main contractor via the Letter of Award dated 30 April 2014 for a project known as Contract No LM/MO/14/0007 entitled "Proposed Construction of 1 Commercial Block of 29 storeys consisting of: (i) 22 floors of office units (473) and 1 floor of facilities, (ii) 5 podium floors of car parks, (iii) 2 floors of basement car parks, (iv) 1 floor for mechanical on Lot 41096, Jalan Aman Damai, Mukim Petaling, Kuala Lumpur.

[8] The contract sum was for RM65 million. The Contract Documents comprise of the Letter of Award, the Articles of Agreement and Conditions of Building Contract (PAM 1998)(With Quantities) ("COC") and the Amendments to the COC, collectively called the "Contract".

[9] The parties shall be referred to as Claimant and Respondent as they were in the Adjudication and sometimes as PCP and Leap Modulation respectively.

Proceedings In Adjudications

[10] The unpaid party, PCP, as Claimant in the Adjudication had claimed for payment under Interim Certificates No 17R and No 18 for the sum of RM1,821,680.60 under the said Contract. They served on the non-paying party, Leap Modulation a Payment Claim on 22 January 2016.

[11] The non-paying party, Leap Modulation, served their Payment Response. Though not drafted elegantly in legal language, they briefly stated that they are entitled to compensation from the Claimant for all losses caused by them arising from the Respondents determination of the Contract as a result of the Claimants default in failure to proceed regularly and diligently with the work and for failure to comply with architects instructions and also for expenses for rectification work and to complete the work. True no specific amount is mentioned here except in the Adjudication Response served subsequently in answer to the Claimants Adjudication Claim as required under s 10(1) CIPAA.

[12] After the appointment of the Adjudicator by the KLRCA, the Claimant served