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2022 MarsdenLR 1396
HIGH COURT MALAYA KUALA LUMPUR
BOND M&E SDN BHD – Appellant
Versus
PALI PTP SDN BHD – Respondent
[Originating Summons No: WA-24C-121-06-2020]
Under the Construction Industry Payment and Adjudication Act, an adjudicated amount does not include interest and costs, and failure to comply with prescribed notice requirements is detrimental to the obligation defense.
Headnote:(A) Construction Industry Payment and Adjudication Act 2012 – Sections 30 and 31 – Plaintiff sought direct payment from the defendant under CIPAA following an adjudication decision – The plaintiff satisfied the conditions; however, the court ruled that the term 'adjudicated amount' does not include interest or costs, aligning with prior relevant judgments. (Paras 17, 19, 33-48)
Facts of the case:
Plaintiff, a sub-contractor, claimed amounts due under an adjudication decision against the principal company defendant, which contended no payment obligation existed due to disputed debts with the main contractor. (Paras 1-13)
Findings of Court:
The plaintiff was entitled to direct payment of RM3,387,425.44 and costs of RM10,000.00, as the defendant was the principal with obligations per the adjudication decision. (Paras 49)
Issues
: Whether the plaintiff was entitled to a direct payment under CIPAA and if the 'adjudicated amount' covers interest and costs.
Ratio Decidendi:
The court found that failure to issue notice as required under CIPAA by the defendant is fatal to their defense, and clarified that 'adjudicated amount' excludes interest and costs.
Result:
Application partially allowed.
JUDGMENT
Introduction
[1] This was an application by the plaintiff pursuant to ss 30 and 31 of the Construction Industry Payment and Adjudication Act 2012 [Act 746] ('CIPAA') and O 5, O 7, O 28, O 69A and/or O 92 r 4 of the Rules of 2012 ('ROC 2012') for an order that the defendant, as the principal company to JEKS Engineering Sdn Bhd ('JEKS'), pay directly to the plaintiff, the amounts which are due and owing to the plaintiff by JEKS, being the party against whom an Adjudication Decision by the learned Adjudicator, Mr Michael Teo Seng Siong, dated 3 January 2020 ('BOND AD') was made.
[2] Specifically, the plaintiff prayed for the defendant to be ordered to make direct payment of:
(a)the Adjudicated Amount of RM3,387,425.44 according to the BOND AD;
(b) the sum of RM42,404.08 being interest at the rate of 7.70% per annum (Maybank Base Lending Rate at 6.70% + 1%) calculated from the due date of each certificate (as claimed by the plaintiff) until 22 July 2019 (date of the Payment Claim);
(c)continuing interest at the rate of 7.70% per annum on the Adjudicated Amount calculated from 23 July 2019 until 3 September 2019;
(d)continuing interest at the rate of 7.70% per annum on the Adjudicated Amount calculated from 4 September 2019 until full settlement; and
(e) the sum of RM83,979.08 being the costs of the adjudication proceedings.
[3] After hearing oral submissions by Mr Deepak Mahadevan representing the plaintiff, and Mr Sivabalan Sankaran who appeared for the defendant, and giving due consideration to the cause papers and written submissions, the Court only allowed the prayer in sub-paragraph 2(a) above with costs of RM10,000.00, subject to allocatur.
[4] My full reasons for the decision are elaborated below for the purposes of the defendant's appeal against the aforesaid decision and the plaintiff's appeal against part of the decision where I did not allow the prayers as set out in sub-paragraphs 2(b) to (e) above.
The Cause Papers
[5] The cause papers filed in respect of the plaintiff's application in the Originating Summons dated 16 June 2020 (encl 1) are as follows:
(a) the plaintiff's Affidavit in Support ('AIS') affirmed by its Executive Director, Mr Ong Kok Wai on 11 June 2020 (encl 2);
(b) the defendant's Affidavit in Reply (1) ('AIR') affirmed by Mr Lam Wee Yeow in Singapore on 24 July 2020 (encl 4).
Mr Lam is the Director of Pan Asia Logistics Investments Pte Ltd, a company duly incorporated in Singapore and a subsidiary of Pan Asia Logistics Investments Holdings Pte Ltd ('PALI Holdings'). The defendant is wholly owned by PALI Holdings and it has authorised Mr Lam to affirm the AIR on the defendant's behalf; and
(c) the plaintiff's AIR affirmed by the same deponent on 5 August 2020 (encl 5).
Salient Background Facts
[6] The plaintiff is a private limited company incorporated in Malaysia with its business address at No 17, Jalan Angkasa Mas 5, Kawasan Perindustrian Tebrau II, 81100 Johor Bahru, Johor.
[7] The defendant is also private limited company incorporated in Malaysia with a business address at Jalan Tanjung A/6, Distripark A, Pelabuhan Tanjung Pelepas, 81560 Gelang Patah, Johor.
[8] The defendant is the owner/employer for the project known as "Cadangan Meroboh Dan Membina Semula Perindustrian Yang Mengandungi: (i) 1 Unit Gudang Sesebuah 2 Tingkat Berserta Pejabat 3 Tingkat Dan Tempat Letak Kenderaan Berbumbung Di Aras Bumbung; (ii) 2 Unit Pondok Pegawal; (iii) 1 Unit Pencawang Elektrik; (iv) 1 Unit Kebuk Sampah; (v) 1 Unit Rumah Pump; Dan (vi) 5 Unit Pondok Rehat Di Atas Lot DW1 & DW2 (Sebahagian PTD 2423), Jalan Tanjung A/2, Pelabuhan Tanjung Pelepas, Mukim Tanjung Kupang, Daerah Johor Bahru, Johor Darul Ta'zim" ('Project').
[9] Pursuant to a Letter of Award ('LOA') dated 14 February 2017, the defendant appointed JEKS, a private limited company incorporated in Malaysia and having its business address at C2-2F, Jalan Ampang Utama 1/1, Off Jalan Ampang, 68000 Ampang, Selangor Darul Ehsan, as its main contractor for
