An adjudication decision under CIPAA 2012 is treated as an undisputed debt until set aside or stayed; injunctions against winding-up petitions require a bona fide dispute or substantial grounds for cross-claims.

Introduction

[1] Can a party who has obtained a favourable adjudication decision under the Construction Industry Payment and Adjudication Act 2012 ('CIPAA 2012') proceedings issue a statutory notice under s 466 of the Companies Act 2016 based on the same and to subsequently present a winding up petition against the debtor? Is the adjudication decision to be treated as an undisputed debt until it is set aside or stayed? Does the fact that the debtor has filed an application to set aside the adjudication decision or to stay the same mean that the debt is a disputable debt? Can the debtor rely on a cross-claim as a ground to restrain a winding up petition based on the adjudication decision?

[2] The above are questions that required the consideration of this Court in dealing with the plaintiff's application for a Fortuna Injunction under encls 1 and 7.

Background Facts

[3] The Defendant was appointed as the plaintiff's sub-contractor to carry out site clearance, earthwork and associated works ('Works') for a project in Shah Alam, Selangor ('the Project').

[4] By reason of the plaintiff's failure in making payment for Works carried out by the defendant, on 20 May 2022, the defendant served its Payment Claim dated 20 May 2022 under CIPAA 2012 on the plaintiff. In the Payment Claim, the defendant sought payment for the following:

(a) Claim No 9 which the plaintiff contended was not certified by the plaintiff; and

(b) Release of the 2nd moiety of the retention sum.

[5] The Defendant then commenced adjudication proceedings under the CIPAA 2012 against the plaintiff.

[6] In opposing the adjudication proceedings, the plaintiff stated, inter alia, the following:

(1) in relation to Claim No 9, the plaintiff took the position that it has already been certified;

(2) as for the retention sum, that the defendant had failed to make a written request for the issuance of the Certificate of Making Good Defects ('CMGD') to entitle the Defendant to the retention sum; and

(3) that there is a cross-claim for liquidated and ascertained damages ('LAD') in the sum of RM1,053,700.00.

[7] On 15 February 2023, the learned adjudicator, Loshini Ramarmuty ('Adjudicator') determined that the plaintiff is to pay the following to the defendant:

(1) the sum of RM207,503.37 ('Adjudicated Sum');

(2) Interest at the rate of 5% per annum on the sum of RM22,503.37 pursuant to the defendant's Claim No 9 from 11 December 2020 until the date of payment;

(3) Interest at the rate of 5% per annum on the sum of RM185,000.00 on the Retention Sum from 24 April 2021 until the date of payment; and

(4) Costs of the adjudication proceedings in the sum of RM48,593.13.

('the Adjudication Decision')

[8] In arriving at the Adjudication Decision, the Adjudicator, inter alia, made the following findings of facts:

(1) In relation to Claim No 9, there is evidence through the plaintiff's email correspondence to show that Claim No 9 was not fully certified;

(2) In relation to the retention sum, there is no mechanism in the contract for the release of the retention sum; and

(3) As for the LAD, there is no contractual provision entitling the plaintiff to impose or recover LAD for delay.

[9] Because the Plaintiff had failed to pay the sums under the Adjudication Decision, the defendant issued a statutory n