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2022 MarsdenLR 176
COURT OF APPEAL PUTRAJAYA
PUNCAK NIAGA CONSTRUCTION SDN BHD – Appellant
Versus
MERSING CONSTRUCTION & ENGINEERING SDN BHD – Respondent
[Civil Appeal No: W-02(C)(A)-98-01/2021]
Adjudicator has jurisdiction to decide on rectified claims as refinements of previous claims; validity of claims is determined by compliance with CIPAA requirements.
Headnote:(A) Construction Industry Payment and Adjudication Act 2012 – Section 4, 5, 6, 15, 25, 27 – Jurisdiction of adjudicator in construction payment claims – Appellant contested validity of interim rectified claims submitted by respondent which had not been previously certified, arguing that such claims bypassed contractually required verification – Court affirmed the Adjudicator's jurisdiction, stating that rectified claims were not new claims but refinements of previously submitted claims – Adjudicator fully empowered to review interim claims under law. (Paras 49, 60, 64)
Facts of the case: The appellant contested claims made by the respondent for payments that were not previously certified due to errors in the amounts submitted in earlier progress claims, which were later rectified. The contract required verification of claims by the main contractor.
Findings of Court: The court found that the Adjudicator had the requisite jurisdiction to adjudicate the payment claims, which included adjustments of previously submitted claims.
Issues: Whether rectified claims constituted new claims and whether the Adjudicator exceeded his jurisdiction in considering them.
Ratio Decidendi: The court noted that corrections of previously submitted claims do not invalidate the Payment Claim and fall within the adjudicator's authority as per the Act.
Result: Appeals dismissed.
JUDGMENT
The Issue
[1] In Appeal No W-02(C)(A)-98-01/2021 ("Appeal 98"), Puncak Niaga Construction Sdn Bhd ("Puncak Niaga") is appealing against the decision of the Learned Judge ("Judge") dated 24 December 2020 dismissing Puncak Niaga's application under s 15(d) of the Construction Industry Payment and Adjudication Act 2012 ("CIPAA") to set aside the decision of the learned Adjudicator ("Adjudicator") dated 4 August 2020 made in favour of Mersing Construction & Engineering Sdn Bhd ("Mersing")(Adjudication Ref No AIAC/D/ADJ-3070-2020) ("Adjudication Decision") via Originating Summons No WA-24C-181-08/2020 ("OS 181"). The application to set aside the Adjudication Decision was predicated on the grounds that the Adjudicator had exceeded his jurisdiction.
[2] In this case, Mersing's Payment Claim under CIPAA consisted of inter alia, interim claims which had been previously submitted to Puncak Niaga as per the terms and conditions of the construction contract between Mersing and Puncak Niaga for certification and payment. But, the said interim claims were not certified and not paid by Puncak Niaga. Mersing then discovered that there were errors in the interim claims They unilaterally rectified the amounts stated in the interim claims without re-submitting them to Puncak Niaga for verification/certification as per the terms and conditions of the underlying construction contract.
[3] Puncak Niaga contends that Mersing cannot by-pass the claims verification/certification process as per the terms and conditions of the construction contract and pursue these claims as part of the Payment Claim under CIPAA. Puncak Niaga contends that since Mersing had by-passed the claims verification/certification process as per the terms and conditions of the construction contract, these claims are "premature" and are therefore not due. As such, Mersing is not an "unpaid party" and Puncak Niaga is not an "non-paying party" as defined in s 4 CIPAA.
[4] There is another appeal before us, namely, Civil Appeal No W-02(C)(A)-100-01/2021 ("Appeal 100") by which Puncak Niaga is appealing against the decision of the High Court dated 24 December 2020 in Originating Summons No WA-24C-182-08/2020 ("OS 182") in allowing the application by Mersing and granting an order to enforce the Adjudication Decision. It follows that if Appeal 98 is dismissed, then Appeal 100 shall likewise be dismissed, and vice-versa.
[5] Based on the Adjudication Claim, the Adjudicator decided that:
(a)Puncak Niaga is to pay to Mersing:
(i)the sum of RM2,549,140.57 ("adjudication amount"); and
(ii)the cost of the adjudication proceeding comprising an amount of RM19,205.73 for the adjudicator's fee and expenses, Asian International Arbitration Centre's ("AIAC") administrative fee and sales and service tax and RM10,000 being Mersing's cost of preparation for the adjudication; and
(b)the adjudication amount and the cost of the adjudication proceeding ("adjudicated sum") shall be paid by Puncak Niaga to Mersing on or before 18 August 2020.
[6] The Judgment of the High Court pertaining to the Judge's decision to dismiss OS 181 and in allowing OS182 is reported as Puncak Niaga Construction Sdn Bhd v. Mersing Construction & Engineering Sdn Bhd (and 2 Other Originating Summonses), [2022] 1 AMR 249 (HC).
[7] On 8 August 2022, we dismissed Appeal 98 with costs of RM20,000.00. Consequently, we also dismissed Appeal 100. We made no order as to costs in respect of Appeal 100. These are our reasons for dismissing Appeal 98. For convenience, we shall refer to the Appellant and Respondent in Appeal 98 as "Puncak Niaga" and "Mersing" respectively.
The Facts
[8] Pursuant to a Letter of Award dated 30 August 2016 ("LOA"), Puncak Niaga appointed Mersing as a Sub-Contractor under a project known as "Pakej D44 - Pembinaan Rangkaian Paip Pembetungan di Bunus, Kuala Lumpur" ("the Project") for an original contract sum of RM74,691,666.34 and which was adjusted to RM75,017,396.34 through a Certificate of Variati
