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2024 MarsdenLR 2571
HIGH COURT (KUALA LUMPUR)
ALIZA SULAIMAN, J
Hong Xin Construction Sdn Bhd – Plaintiff
Versus
Rebana Maju Sdn Bhd – Defendant
ORIGINATING SUMMONS NO WA-24C-5-01 OF 2023
Gan Khong Aik (with Wilson Pang) (Gan Partnership) for the plaintiff.
Ong Swee Long (with Isaac Wong Ang Ke) (Armiy Rais) for the defendant.
Adjudicator's decisions must adhere to principles of natural justice, providing clear reasoning for findings, especially when determining jurisdiction and claims validity, which were disregarded in this instance.
Headnote:(A) Construction Industry Payment and Adjudication Act 2012 - Sections 15 and 18; Rules of Court 2012 - Orders to set aside and stay an adjudication decision; No jurisdictional excess found as the adjudicator satisfied statutory requirements. The plaintiff's claim was dismissed and set offs allowed based on pre-existing debts. (Paras 1-4, 18, 74)
(B) Natural Justice - Proof of denial must show substantial failure in procedural fairness; Adjudicator's failure to explain reasoning is grounds for setting aside. (Paras 56-66)
(C) Jurisdictional Issues - Adjudicator's jurisdiction depended on the validity of conditions prior to claims acknowledged; any decision on defect corrections must respect due procedure of contract. (Paras 67-73)
Facts of the case:
The plaintiff sought to set aside an adjudicator’s decision which dismissed their claims for payment under a construction contract, raising issues pertaining to set-offs, jurisdictional excess, and the denial of natural justice following a failed adjudication process. The parties engaged in a dispute involving the construction of a building awarded by the defendant to the plaintiff. The adjudicator concluded that the plaintiff did not justify their claims adequately. (Paras 1-11)
Findings of Court:
The setting aside application was allowed on grounds of both procedural justice and excess of jurisdiction. The plaintiff was found to be entitled to costs and interest based on the verdict that the adjudicator exceeded his powers. (Paras 74-75)
Issues: The key issues included whether the adjudicator exceeded their jurisdiction, whether there was a denial of natural justice stemming from inadequate reasoning in their decision, and the grounds for set-offs acknowledged against the plaintiff's claims. (Paras 18, 74)
Ratio Decidendi: The court reasoned that adjudicators must observe natural justice and provide clear reasoning for decisions, especially when definitive parties' rights could be impacted; it ruled that failure to adjudicate on jurisdictional grounds first, and excess in claims accepted led to the decision to set aside. (Paras 36-46, 70-73)
Result: The Setting Aside Application was allowed, with costs awarded against the defendant.
| Table of Content |
|---|
| 1. setting aside application overview (Para 1 , 2 , 4 , 5) |
| 2. background facts of the case (Para 7 , 8 , 9 , 10 , 14) |
| 3. plaintiff's grounds for setting aside (Para 18 , 21 , 28) |
| 4. court's observations on powers of adjudicator (Para 19 , 20 , 24) |
| 5. excess of jurisdiction by adjudicator (Para 39 , 46 , 72) |
| 6. conclusion and orders of the court (Para 74 , 75) |
Aliza Sulaiman J:
GROUNDS OF JUDGMENT
Introduction
[1]This is a case where the Plaintiff was the claimant in an adjudication proceeding and the learned Adjudicator, Mr. Ramdas Tikamdas (‘Adjudicator’) in his decision dated 6.1.2023 (‘AD’), had dismissed the Plaintiff’s claim.
[2]Not surprisingly, the Plaintiff then applied to set aside the AD (‘Setting Aside Application’, encl. 1). The provisions invoked by the Plaintiff were s 15(b) and (d) Construction Industry Payment and Adjudication Act 2012 Act 746] (‘CIPAA’) and O. 69A, rr. 2, 3 and 7 of the Rules of Court 2012RC 2012’).
[3]The Plaintiff also applied to stay the AD pending the determination of the Setting Aside Application pursuant to paragraph 16(1)(a) CIPAA and O. 69A, rr. 2 and 4 RC 2012Stay Application’, encl. 6). An Ad Interim Stay of the AD was granted by the Court after hearing brief oral submissions by the learned counsels who represented the parties. On a subsequent date, the learned counsels agreed with the Court that, in view of the wordings of prayer 1 in the Stay Application, there is no necessity for a hearing to be held. The Court accordingly granted the prayer for an order to stay the AD until disposal of the Setting Aside Application, with cost in the cause.
[4]After having considered the cause papers and submissions of the parties, I had allowed the Setting Aside Application in its entirety.
[5]The Defendant is aggrieved with the decision, and I now provide my full grounds for the same.
The Cause Papers
[6]Apart from encl. 1, the cause papers are as follows:
(a)the Plaintiff’s Affidavit In Support (‘AIS’) affirmed by its Chief Executive Director and Director, Low Hui Ying on 19.1.2023 (encls. 2 - 4);
(b)the Plaintiff’s Supplemental Affidavit affirmed by the same deponent on 31.1.2023 (encl. 10);
(c)the Defendant’s (‘AIR’) affirmed by its Director, Chang Hon Nyan on 13.2.2023 (encl. 13);
(d)the Plaintiff’s AIR affirmed by the same deponent on 21.2.2023 (encl. 16); and
(e)the Plaintiff’s Notice of Intention to Use Affidavit (encl. 10) dated 21.2.2023 (encl. 18).
Background Facts
[7]The Plaintiff is a private limited company with a registered address at No. 56, Jalan Kempas Utama 2/2, Taman Kempas Utama, 81200 Johor Bahru and a business address at No.11, Jalan Impian Emas 18, 81300 Skudai, Johor. The Plaintiff is in the contracting business.
[8]The Defendant is similarly a private limited company having its registered address at 15-11, Q Sentral, 2A, Jalan Stesen Sentral 2, KL Sentral, 50470 Kuala Lumpur and business address at Oval Damansara, Unit 13-11 & 12, Menara Permata Damansara, No. 685, Jalan Damansara, 60000 Kuala Lumpur. The Defendant is a property developer.
[9]By a Letter of Award dated 29.10.2018 (‘LoA’), Archiconic Sdn Bhd, on behalf of the Defendant, awarded the Plaintiff the contract for the construction and completion of the Main Building Works for the project known as “Cadangan Pendirian Bangunan Komersial 20 Tingkat Dan 1 Tingkat Separa Bawah Yang Mengandungi:
(a)25 Unit Kedai Di Tingkat Bawah
(b)50 Unit Pejabat Di Tingkat 1 Dan 2
(c)Ruang Konvensyen Di Tingkat 6
(d)111 Bilik Hotel Bajet (Jenis A, A1, B Dan C) Di Tingkat 6, 7 Dan 8
(e)8 Tingkat Tempat Letak Kereta Di Tingkat Separa Bawah Hingga Tingkat 6 Dengan Kemudahan Penduduk Di Tingkat Podium
(f)13 Tingkat 305 Unit Pangsapuri Perkhidmatan Di Podium Hingga Tingkat 19
Di Atas Lot 1259, Bandar Country Homes, Mukim Rawang, Daerah Gombak, Majlis Perbandaran Selayang, Selangor Darul Ehsan” (‘Project’).
[10]The contract sum is RM92,356,854.10 with RM56,115,454.10 to the Plaintiff, RM34,241,400.00 to the Nominated Sub-Contractors (‘NSC’) and a contin
