A cross-claim in construction adjudication can only reduce or zeroize the claimant's claim and cannot exceed it; the adjudicator's decision is binding unless set aside on limited grounds.

See Mee Chun JCA:

Introduction

[1] This appeal arises out of an adjudication claim where the Appellant was the claimant in an adjudication proceeding against the Respondent. However, the Respondent filed a cross-claim and this resulted in the Appellant being ordered to make payment to the Respondent. This therefore raises the question whether the Respondent in this appeal, in responding to the Appellant's adjudication claim, can file a cross-claim and if so, whether the cross-claim can exceed the Appellant's claim thereby making the Respondent the substantive claimant.

[2] There are two appeals which were heard together, namely Civil Appeal No B-02(C)(A)-1948-11/20123 ("Appeal 1948") and Civil Appeal No B-02(C)(A)-1949-11/20123 ("Appeal 1949"). The Appellant in both appeals are the Plaintiff (Tera Va Sdn Bhd/TVA) while the Respondent is the Defendant (Ayam Bintang Istimewa/ABI).

[3] For the purpose of these appeals, the Appellant will be referred to as "TVA" while the Respondent will be referred to as "ABI". All references to enclosures are to Appeal 1949, unless otherwise indicated.

[4] Appeal 1948 is the appeal against the decision of the learned Judicial Commissioner (JC) to allow the application by ABI to enforce the adjudication decision dated 6 June 2023. Appeal 1949 is the appeal against the decision of the learned JC to dismiss the application by TVA to set aside the aforesaid adjudication decision.

Background Facts

The SPS Contract

[5] ABI had appointed TVA to supply, deliver and install a Solar Photovoltaic Solution (SPS) at a factory in Kuantan Pahang (the premise). This was pursuant to an agreement embodied in 2 quotations signed by ABI on 11 August 2021 (the Contract) wherein the total contract sum with 278.10 KWp was RM613,000.00. The performance of the Contract was divided into 2 Phases, Phase 1 for 168.3 KWp at RM393,000.00 and Phase 2 for 109.89 KWp at RM220,000.00.

[6] TVA contended that ABI had breached the Contract for failing to pay for the work done for Phase 1 amounting to RM294,750.00. According to TVA, it had completed Phase 1 but was only paid RM98,250.00.

[7] ABI countered that TVA had refused and/or omitted to fulfill/complete its duties and obligations in the Contract. In particular, it was said that TVA had failed to perform the duty of care during the installation and/or construction of the solar panel at the premise leading to structural damage to the zinc roof panels measuring the size of 20,565 square feet.

Adjudication Proceedings

[8] On 16 December 2022, TVA issued its payment claim against ABI for unpaid work done of RM294,750.00. On 9 January 2023 TVA issued its notice of adjudication.

[9] ABI issued its payment response dated 30 December 2022 and its adjudication response dated 12 May 2023. In its adjudication response, ABI had a set off/counterclaim for RM695,580.00 which included the cost to replace the existing damaged roofing. ABI said it had to engage its contractors to observe and rectify the damage suffered.

[10] The adjudication decision was as follows (encl 12/51):

"Adjudicated Amount

In the given circumstances, my decision is that the Claimant has not succeeded in their overall claim. The breakdown of my decisions is as follows:

At The High Court

[11] Arising from the adjudication decision, TVA filed its application to set aside and ABI filed its application to enforce, and thereafter TVA filed the subsequent appeals.

[12] The grounds of judgment (GOJ) of the learned JC can be found in encl 12/29-41.

[13] With regard to the setting aside application, the learned JC stated it was premised on fraud and denial of natural justice as per s 15(a) and (b) Construction Industry Payment and Adjudication Act 2012 (CIPAA).

[14] The learned JC considered the issue of fraud as alleged, namely that ABI had misled the Adjudicator into believing the entire roof had been damaged and that it had replaced the roof and paid for the cost. The learned JC found that the photographs which purported to show no r