A bona fide dispute over a debt must be substantial for a Fortuna injunction to restrain winding-up proceedings; mere admission of debt negates grounds for such injunction.

Gunalan Muniandy JCA:

Introduction

[1] This is an appeal by the appellant/defendant against the decision of the Learned Judicial Commissioner ("LJC") dated 4 June 2020 in granting an injunction to restrain the appellant from filing a winding-up petition against the respondent/plaintiff based on 31 December 2019 Statutory Notice.

Background Facts

[2] The respondent was the main contractor appointed by Jabatan Pengairan dan Saliran Malaysia to execute construction works for a project at the Melaka River. In turn, the respondent appointed the appellant as a subcontractor to execute certain parts of the works.

[3] The appellant commenced adjudication proceedings against the respondent under the Construction Industry Payment and Adjudication Act 2012 ("CIPAA 2012"). The appellant claims a total amount of RM3,483,025.06 comprising:

(1) Balance of certified claim Nos 1 to 16;

(2) Non-certified Progress Claims Nos 17 and 18;

(3) Revised Progress Claim No 19;

(4) Variation Order;

(5) Remeasurement works and other miscellaneous items

[4] In the adjudication, the respondent contended that although there was an unpaid certified amount of RM1,255,794.63 and variation of RM80,631.76, the claims were disputed because there was delay of 535 days in the appellant's completion of the subcontract works, and after a set off and cross-claim of RM5,180,000.00 as Liquidated and Ascertained Damages ("LAD"), there was no amount payable to the appellant.

[5] The adjudicator delivered his adjudication decision dated 31 October 2019 in favour of the appellant in the amount of RM1,806,538.76 under the said Adjudication Decision ("AD").

[6] In November 2019, the appellant commenced Shah Alam High Court Originating Summons No BA-24C(ARB)-8-11/2019 applying for registration of the said AD as a Court judgment and for enforcement of the same. The respondent had filed its Affidavit in Reply dated 13 December 2019 to contest the enforcement suit. The respondent had also taken steps to refer the dispute to arbitration. On 12 December 2019, the respondent filed an Originating Summons to set aside the said AD.

[7] On 3 January 2020, the respondent was served with a notice dated 31 December 2019, described by the appellant as a statutory notice under s 466(1) (a) of the Companies Act 2016 , demanding for RM1,806,538.76 being:

(a) RM48,765.24 as reimbursement of security paid in advance for the adjudication; and

(b) RM1,782,156.14 as adjudication sum awarded by the adjudicator in the said AD.

[8] The respondent filed an Originating Summons for an injunction to restrain the appellant from filing or continuing any winding-up petition against the respondent based on the notice dated 31 December 2019.

[9] On 22 January 2020, the High Court Judge granted an ex parte interim injunction to restrain the appellant from filing any winding-up petition.

[10] In April 2020, the respondent also filed Originating Summons No BA- 24C-32-04/2020 to stay the adjudication decision pending the arbitration.

Findings Of The High Court

[11] On 4 June 2020, the LJC decided that an injunction be granted to restrain the appellant from filing a winding-up petition against the respondent based on the 31 December 2019 notice.

[12] The LJC held that consistent with CIPAA's objective, it is appropriate for the beneficiary of a CIPAA adjudication decision to resort to ss 28 to 31 of CIPAA 2012 by applying to the Court for registration of the adjudication decision as a Court judgment and thereafter enforce the Court judgment for recovery of money according to one or more modes of execution of judgment under Orders 45 to 51 of the Rules of 2012. Such modes of execution of judgments are more compatible with the CIPAA 2012's objective of facilitating cashflows for contractors and service providers in the construction industry.

[13] A just and equitable balance has to be struck between the rights of a successful litigant in adjudication proceedings in collecting his cashflow expeditiously pursuant to s 28 to 31 of