Lee Swee Seng JCA:

JUDGMENT OF THE COURT

[1]This Judgment will explore once again the operation of s 30Construction Industry Payment and Adjudication Act 2012 (“CIPAA”)s 30(5)s 30(2) and (3)CIPAA

[2]Essentially s 30s 30CIPAA

Before the High Court

[3]In brief the subcontractor in its Originating Summons for Direct Payment under s 30CIPAA

[4]Whilst the principal does not dispute the contractual relationship of principal and main contractor and correspondingly the main contractor and the subcontractor, the principal denied that there is any debt owing or payable to the main contractor as the principal had terminated its contract with the main contractor for various breaches of the contract including wrongful suspension of works, failure to proceed with the works regularly and diligently and failure to complete the works within time.

[5]When the contract between the principal and the main contractor was terminated by the principal on 20.10.2020, invariably the contract between the subcontractor and the main contractor was terminated also. The principal said that there is a sum to the tune of about RM41.4 million due and payable from the main contractor to it under the heads of an LAD claim until termination, further additional costs of employing a new main contractor to complete the works, late delivery claims from purchasers of the various units in the project, additional overhead expenses and costs up to the actual completion of the project. It had a contemporaneous Quantity Surveyor Report of 12.1.2021 to justify the amount.

[6]The subcontractor on the other hand stated that s 30CIPAA

[7]The principal also argued that the subcontractor cannot stand in a better position than the main contractor where payment from the principal to the main contractor is concerned. The fundamental pre- condition that must first be met is the requirement of s 30(5)s 30(1)

[8]The High Court alluded to the fact that there was a previous original contract in 2015 between the principal and the main contractor which was terminated on 22.11.2019 and the parties were still finalising the account to determine whether there is any money due or payable to main contractor and thus at the time of receipt of the subcontractor’s demand by the principal, there was yet a sum of money “due or payable” from the principal to the main contractor CTMCC. See para [12] of the High Court’s GOJ.

[9]The High Court was satisfied on the balance of probabilities, that the subcontractor as the plaintiff had not discharged the overall burden of proving that there is money due and payable by the principal to the main contractor which sum should be the subject of a Direct Payment Order under s 30CIPAA

[10]Dissatisfied with the High Court’s decision in dismissing its claim, the subcontractor as appellant had appeal to the Court of Appeal. The plaintiff/appellant shall be referred to as the subcontractor and the defendant/respondent shall be referred to as the principal or employer. The main contractor shall be referred to sometime as CTMCC.

Whether s 30(5) CIPAA is a pre-condition to be met before a Direct Payment order can be made

[11]Whilst it is not denied that the whole purpose of the CIPAA is to facilitate cash flow for a contractor who had done the work, where enforcement of an adjudication decision is concerned, the requirements to be met for the various remedies available must be complied with.

[12]Thus, armed with an adjudication decision the subcontractor here may proceed under s 28CIPAA

[13]The subcontractor may activate s 29CIPAA

[14]The other option is to proceed under s 30CIPAAs 30(5)s 32CIPAA

[15]In fact, there is nothing preventing the subcontractor from proceeding with a winding up petition on ground of the main contractor’s inability to pay what is for the moment an undisputed debt until the adjudication decision is set aside, stayed or settled or overtaken by a court’s judgment or an arbitrator’s award. See s 13CIPAA

[16]Indeed, in this case a creditor Perfect Mix Portfolio Sdn Bhd