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2024 MarsdenLR 463
COURT OF APPEAL KUALA LUMPUR
CHE MOHD RUZIMA GHAZALI, JCA
INTISARI MULIA ENGINEERING SDN BHD – Appellant
Versus
TUV SUD (MALAYSIA) SDN BHD & ANOTHER APPEAL – Respondent
[Civil Appeal Nos: W-02(C)(A)-538-04/2023 & W-02(C)(A)-539-04/2023]
The court established that a construction contract must be in writing to invoke jurisdiction under CIPAA, and a liberal interpretation of what constitutes such a contract is permissible.
Headnote:(A) Construction Industry Payment and Adjudication Act 2012 - Section 2 - Jurisdiction of Adjudicator - The court found that TUV's claim lacked a formal written contract, failing to meet the requirements of Section 2. The Adjudicator's decision was deemed to have acted beyond jurisdiction. (Paras 62, 63, 66)
(B) Interpretation of 'Construction Contract Made in Writing' - The court endorsed a liberal interpretation of the phrase, allowing for purchase orders and invoices to constitute a valid contract under CIPAA. (Paras 34, 41)
Facts of the case:
TUV SUD (Malaysia) Sdn Bhd claimed unpaid amounts from Intisari Mulia Engineering Sdn Bhd for services rendered under two projects, yet no formal written contract was established. (Paras 7-12)
Findings of Court:
The court determined that the Adjudicator exceeded jurisdiction due to insufficient proof of a valid construction contract and related construction work. (Paras 62-68)
Issues: The main issues were whether a written contract existed and if the Adjudicator had jurisdiction to hear the case without one. (Paras 5, 11)
Ratio Decidendi: The court ruled that the Adjudicator lacked jurisdiction as TUV failed to prove a construction contract made in writing and that the works claimed were related to construction work as defined in CIPAA. (Paras 62, 63)
Result: Appeals allowed, and the High Court’s orders were set aside.
Key Points: - The court adopts a liberal/expansive interpretation of "construction contract made in writing" to include purchase orders, invoices, and contemporaneous documents, not limited to a formal written contract. (!) (!) (!) - The CIPAA requires two elements for jurisdiction: existence of a construction contract made in writing and that the contract relates to construction work; the court found the Adjudicator lacked jurisdiction due to insufficient proof of a valid contract and its relation to construction work. (!) (!) (!) - The Appeals Court set aside the High Court’s enforcement and set aside the Adjudicator’s decision, allowing Intisari’s Appeal 539 and TUV’s Appeal 538, with costs as specified. (!) (!) (!)
What is the meaning of "construction contract made in writing" under CIPAA as interpreted in this judgment?
What is the court's stance on whether a written contract is required for CIPAA jurisdiction when purchases orders and invoices may suffice?
What are the grounds for setting aside the Adjudication Decision and how did the Court address jurisdiction and related issues?
Introduction
[1] By consent of the parties, the High Court heard two separate applications together. First, the application by TUV SUD (Malaysia) Sdn Bhd (TUV) pursuant to s 28 of the Construction Industry Payment And Adjudication Act 2012 (CIPAA) in Originating Summons No WA-24C-12906/2022 (OS 129) to enforce the Adjudication Decision (AD) dated 27 May 2022 (Enforcement Application) by the learned Adjudicator (LA) and second, the application by Intisari Mulia Engineering Sdn Bhd (Intisari) pursuant to paragraph 15(b), (c) and/or (d) CIPAA via OS No WA-24C146-07/2022 (OS 146) to set aside the AD (Setting Aside Application).
[2] After having considered the cause papers and written submissions by the parties, the learned High Court Judge (LHCJ) dismissed Intisari's Setting Aside Application via OS 146 with cost of RM6,000.00 and allowed TUV's Enforcement Application via OS 129 with cost of RM4,000.00. Aggrieved by the aforesaid decisions, Intisari appealed. Appeal against OS 129 decision for Enforcement Application is registered as Appeal Case No: W-02(C)(A)538-04/2023 (Appeal 538) and Appeal against OS 146 decision for Setting Aside Application is registered as Appeal Case No: W-02(C)(A)539-04/2023 (Appeal 539).
[3] Before us, both Appeal 538 and Appeal 539 were heard together and decided together.
Brief Background Facts
[4] The background facts for TUV's Enforcement Application and Intisari's Setting Aside Application as narrated by the LHCJ in her Grounds of Judgment (GOJ) are as follows:
[7] Aker Solutions Malaysia Sdn Bhd ('Main Contractor 1') had appointed TUV for the "Supply of manpower, equipment & consumables for NDT Inspection Services for Aker Solutions (M) Sdn Bhd at PFKZ Port Klang, Selangor" ('Project 1'). Intisari then appointed TUV as its sub-contractor for the works in respect of Project 1.
[8] Apart from that, Air Products Malaysia Sdn Bhd ('Main Contractor 2') had also appointed TUV for the "Supply of manpower & equipment UTTG & MPI for Air Products Malaysia Sdn Bhd" ('Project 2). Similarly, Intisari subsequently appointed TUV as its sub-contractor for the works for Project 2.
[9] The contracts between TUV and Intisari were claimed to be founded on Purchase Orders dated 22 May 2018 for Project 1 and Purchase Orders dated 21 July 2020 and 7 March 2020 for Project 2, respectively.
[10] According to TUV, the parties had agreed that Intisari would send invoices to Main Contractor 1 and Main Contractor 2 for the works done by TUV. Upon receipt of the payments for work done, Intisari would remit 95% out of the same to TUV and retain 5% as its commission.
[11] TUV claimed that it has completed the works for Main Contractor 2 whilst for Main Contractor 1, works commenced in September 2018 and was completed on a stage-by-stage basis, both in accordance with the instructions of Intisari and the Main Contractors, respectively, from time to time.
[12] TUV sent several invoices to Intisari for payment of 95% of the total value of works done, however, it did not receive any payment from Intisari.
[13] This led TUV to issue a Payment Claim on 4 October 2021 claiming the total sum outstanding as at that date ie RM1,703,148.97. The Payment Claim was served on Intisari at its registered address on 7 October 2021 (see para 2 in the Notice of Adjudication and para 15 in the Adjudication Claim) but it chose not to submit a Payment Response.
[14] On 1 November 2021, TUV issued a Notice of Adjudication and this was followed with several correspondences between TUV's solicitors and the Asian International Arbitration Centre ('AIAC') as to the existence of a "construction contact made in writing relating to construction work" within the meaning of s 2 CIPAA.
[15] For present purposes, suffice to say that, on 17 February 2022, Mr. Sivabalan Sankaran accepted the appointment as the Adjudicator.
[16] TUV then issued the Adjudication Claim on 7 March 2022. Intisari did not submit an Adjudication response as it too
