Statutory obligations under CIPAA supersede contract liabilities regarding payments, asserting that payments made by a principal do not constitute undue preference in liquidation contexts.

Wong Kian Kheong J:

A. Background

[2] For the Project, the 1st defendant had appointed Synergycentric Sdn Bhd (SSB) as a subcontractor for "ICT and Security Works Package" (Subcontract).

[3] On 18 July 2017, the plaintiff company (plaintiff) entered into a "Sale and Purchase Agreement" (SPA) with SSB whereby for the purpose of the Project, the plaintiff had agreed to sell to SSB, deliver, install, test and commission "CCTV" (Closed-Circuit Television), "ACS" (Access Control System) and "PA" (Public-Address System) (collectively referred to as the "Equipment").

[4] Pursuant to the SPA, the plaintiff had supplied, delivered, tested and commissioned the Equipment for the Project.

[5] According to the plaintiff, SSB had only paid RM3,449,302.48 to the plaintiff for the Equipment and there was an outstanding sum of RM1,120,718.96 (plaintiff's Claim).

[6] The plaintiff's Claim was referred to adjudication under the Construction Industry Payment and Adjudication Act 2012 (CIPAA) and the adjudicator, Mr Loo Chun Kok, made an adjudication decision on 10 November 2018 (AD). The AD provided as follows, among others:

(1) SSB shall pay RM1,077,326.36 (Adjudicated Sum) to the plaintiff;

(2) a sum of RM34,546.84 as late payment interest on the Adjudicated Sum (up to 11 July 2018) shall be paid by SSB to the plaintiff (Pre-AD Interest);

(3) interest at the rate of 5% per annum on the Adjudicated Sum shall be paid by SSB to the plaintiff from 12 July 2018 until full payment of the Adjudicated Sum (Post-AD Interest); and

(4) SSB shall pay a total sum of RM44,000.90 to the plaintiff for the fees and expenses of the Adjudicator and Asian International Arbitration Centre (Adjudication Costs).

[7] On 21 August 2019, the Kuala Lumpur High Court (Winding-Up Court) wound up SSB (Winding-Up Order). The Winding-Up Order has appointed the Official Receiver (OR) as an interim liquidator for SSB.

[8] Pursuant to s 30 CIPAA, the plaintiff's solicitors had served a demand dated 27 November 2018 on the 1st defendant [plaintiff's Demand (1st defendant)] to pay the total sum awarded in the AD (Total Adjudicated Sum) within 14 days from the date of the plaintiff's Demand (1st defendant).

[9] The 1st defendant replied to the plaintiff's Demand (1st defendant) by a letter dated 10 December 2018 [1st defendant's Letter (10 December 2018)]. According to the 1st defendant's Letter (10 December 2018), among others:

(1) the 1st defendant, SSB and the 2nd defendant had entered into a novation regarding the Subcontract (Novation); and

(2) the plaintiff was "advised" to write directly to the 2nd defendant regarding the plaintiff's claim for the Total Adjudicated Sum.

[10] The plaintiff's solicitors had requested for a copy of the Novation from the 1st defendant by way of two letters dated 18 December 2018 and 10 January 2019 (plaintiff's two requests) but to no avail.

[11] The plaintiff's solicitors sent a demand dated 18 December 2018 to the 2nd defendant [plaintiff's Demand (2nd defendant)] for the 2nd defendant to pay the Total Adjudicated Sum within 14 days from the date of the plaintiff's Demand (2nd defendant). The 2nd defendant did not accede to the plaintiff's Demand (2nd defendant).

B. This Originating Summons (OS)

[12] The plaintiff filed this OS for the following orders against the 1st and 2nd defendants (collectively referred to as the "defendants"), among others:

(1) a declaration that the 1st defendant and/or the 2nd defendant is liable as the "principal of SSB to pay to the plaintiff the Total Adjudicated Sum under the AD; and

(2) an order that the 1st defendant and/or the 2nd defendant as SSB's "principal" shall pay to the plaintiff the Total Adjudicated Sum under the AD.

C. Issues

[13] This OS raises the following questions:

(1) based on the Novation and s 63 of the Contracts Act 1950 [ CA (1950)], is the 2