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2021 MarsdenLR 1095
HIGH COURT MALAYA KUALA LUMPUR
IT MAX ENGINEERING SDN BHD – Appellant
Versus
PROPEL SYNERGY SDN BHD & ANOTHER CASE – Respondent
[Originating Summons No: WA-24C-158-09/2019 & WA-24C-160-09/2019]
Section 30 of the CIPAA mandates direct payment from the principal to the successful party in adjudication when conditions are met, irrespective of prior related rulings.
Headnote:(A) Construction Industry Payment and Adjudication Act 2012 – Section 30 – Applications by successful parties for direct payment from principal due to adjudication decisions made under CIPAA.
(B) The court found that ITME and LMW met all prescribed conditions under Section 30 for direct payment, which is mandatory.
(C) PS's failure to issue proof of payment notice left no grounds for disputing adjudicated sums.
Facts of the case: Two companies, ITME and LMW, sought payment under adjudication awards from a principal company (PS) that had failed to pay.
Findings of Court: Both OS1 and OS2 were allowed as PS was obligated under the CIPAA to make direct payment.
Issues: The court addressed whether payment requests under section 30 of CIPAA were valid and enforceable against PS.
Ratio Decidendi: The court emphasized the mandatory nature of section 30, and that past Federal Court rulings did not retrospectively affect previously adjudicated amounts.
Result: Applications for direct payment are allowed.
JUDGMENT
Introduction
[1] These are applications to seek direct payment from the principal based on adjudication decisions made under the Construction Industry Payment and Adjudication Acts 2012 ("CIPAA").
[2] The Plaintiff in KLHC Originating Summons No WA-24C-158-09/2019 ("OS1) is a private limited company in the electrical system business ("ITME") and the Plaintiff in KLHC Originating Summons No WA-24C-160-09/2019 ("OS2") is also a private limited company involved in cladding and curtain wall system business ("LMW").
[3] The Defendant ("PS") in both OS1 and OS2 is a private limited company involved in real estate development business.
Background
[4] PS appointed a Vistasik Sdn Bhd ("V") as the contractor to construct a proposed 21 storey hotel comprising Block A (17 storeys), Block B (21 storeys) and hotel facilities on Lot 210, KBXXXIX Taman Melaka Raya, Daerah Melaka Tengah, Melaka ("Project").
[5] By a sub-contract dated 18 June 2012, V appointed LMW to carry out the design, engineering, testing, fabrication, delivery and installation of the aluminium cladding and curtain walling system of the Project ("Cladding and Curtain Walling Sub-Contract"). Moreover by a sub-contract dated 30 March 2013, V appointed ITME to carry out the supply delivery, installation, testing, commissioning and maintenance of extra low voltage services for the Project ("Electrical Works Sub-contract").
[6] In the carrying of the work in respect of both the Cladding and Curtain Walling Sub-Contract and the Electrical Works Sub-Contract, there were disputes that arose between V and LMW as well as V and ITME respectively.
[7] As the result, both LMW and ITME commenced adjudication proceedings respectively against V under the CIPAA.
[8] In respect of the adjudication proceedings pertaining to the Cladding and Curtain Walling Sub-contract, the adjudicator, Loke Mun Kit on 26 March 2018 decided as follows:
"17 ADJUDICATION DECISION
17.1 I have carefully considered the evidence and arguments submitted to me in this adjudication proceedings. Based on the evidence and argument, the following is my decision under CIPAA 2012.
17.2 The adjudicated amount is in Malaysian Ringgit: One Million, Five Hundred Thousand, Two Hundred Eighty and Cents Seventy-Seven Only (RM1,515,280.77)
17.3 The adjudicated amount shall be paid in full to Claimant within thirty (30 days from the sate of Adjudication Decision and in the form of a banker cheque.
17.4 Pursuant to subsection 25(o) of CIPAA, the Respondent shall pay to the Claimant simple interest on the adjudicated amount of RM1,515,280.77 calculated at the rate of 5% p a from thirty days after the date of Adjudication Decision and continuing until the Adjudicated Amount is fully paid.
17.5 Pursuant to subsection 18(1), CIPAA, and in accordance with the principle that the costs follow the event, the Respondent shall pay the balance costs of the adjudication proceedings amounting to RM65,669.63. The Costs of the adjudication proceedings include the Adjudicator's fees and expenses, the KLRCA's fees and expenses and Claimant's legal/professional fees incurred. The costs of the adjudication proceedings shall be paid in full within 30 days from the date of Adjudication Decision and by banker cheque."
[9] As to the adjudication proceedings in respect of the Electrical Works Sub-Contract, the adjudicator, Ir Arvind Menon on 24 April 2018 decided as follows:
"O. DETERMINATION
78. This decision is made on 24 April 2018 in accordance with s 12 of the Construction Industry Payment Adjudication Act 2012.
79. I determine that:
a) The Respondent shall pay to the Claimant the sum of RM197,989.71. This is hereby recorded as the adjudicated sum.
b) The Respondent shall bare 100% of the costs of the adjudication pursuant to s 18(1) of the CIPA Act 2012, which includes the Adjudicator's fees, expenses and KLRCA's administrative fees. As each party has paid 50% of Advance security Deposit, the Respondent shall have to pay the Claimant's portion o
