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2016 MarsdenLR 2126
HIGH COURT (KUALA LUMPUR)
LEE SWEE SENG, J
BM City Realty & Construction Sdn Bhd v Merger Insight (M) Sdn Bhd and another case MLJU 1567 – Plaintiff
Versus
v Merger Insight (M) Sdn Bhd and another case MLJU 1567 – Defendant
ORIGINATING SUMMONS NOS WA-24C-11-04/2016 AND WA-24C-22-05/2016
KL Chan (PL Lim, KK Yap and BK Ong with him) (JB Lim & Associates) in Originating Summons No WA-24C-11-04/2016 for the plaintiff.
Ashok Kumar (Jocelyn Lim and Eg Kaa Chee with him) (Skrine) in Originating Summons No WA-24C-22-05/2016 for the plaintiff.
KL Chan (PL Lim, KK Yap and BK Ong with him) (JB Lim & Associates) in Originating Summons No WA-24C-22-05/2016 for the defendant.
Ashok Kumar (Jocelyn Lim and Eg Kaa Chee with him) (Skrine) in Originating Summons No WA-24C-11-04/2016 for the defendant.
The court held that statutory provisions of the Construction Industry Payment and Adjudication Act override conflicting contractual terms, ensuring payment obligations are enforceable despite contract termination.
Headnote:(A) Construction Industry Payment and Adjudication Act 2012 - Sections 15 and 28 - Dispute regarding payment certification and contractor termination under PAM Contract 2006 - Adjudicator's decision enforced despite claims of exceeding jurisdiction and breach of natural justice - Court found statutory provisions under CIPAA overriding contract terms on payment deferral. (Paras 11, 31, 37, 98)
(B) The court identified that payment obligations arise as per certified progress claims regardless of contract termination - The Adjudicator's jurisdiction to determine matters raised was affirmed; natural justice upheld, no independent failure found. (Paras 30, 34, 44, 92)
Facts of the case:
Disputes between a construction employer and contractor arose over non-payment for progress claims; the employer sought to set aside an adjudication decision that favored the contractor, citing jurisdictional excess and natural justice violations. (Paras 7, 16, 24)
Findings of Court:
The court enforced the adjudicator’s decision for a balance sum of RM2,339,312.38, including costs and adjusted interest, while recognizing statutory provisions under CIPAA effectively took precedence over conflicting contractual clauses. (Paras 98, 99)
Issues: The court addressed whether the Adjudicator exceeded jurisdiction in payment determinations post-contract termination and whether due process was violated. (Paras 17, 26, 83)
Ratio Decidendi: The court determined that the Adjudicator's decisions on certified payments were legitimate under CIPAA, affirming that statutory tenets prevent parties from deferring payments due to contractual termination conditions. (Paras 31, 37)
Result: Judgment entered for the adjusted balance sum; original adjudication decision varied and costs for both parties were declared as borne individually.
| Table of Content |
|---|
| 1. parties involved in the contracts. (Para 1 , 2 , 3 , 4 , 5 , 6) |
| 2. disputes arise from non-payment and contract termination. (Para 7 , 9 , 10) |
| 3. defences stated by bmcrc against misb's claims. (Para 15 , 16 , 17) |
| 4. architect’s role in certifying payment claims. (Para 18 , 19 , 20) |
| 5. bmcrc argues against adjuicator’s jurisdiction. (Para 25 , 26) |
| 6. cipaa provisions override contractual terms. (Para 31 , 35) |
| 7. natural justice concerns raised by bmcrc. (Para 45 , 46 , 49) |
| 8. evidence of payments must be presented in adjudication. (Para 55 , 56 , 57) |
| 9. adjudicator's discretion in awarding costs. (Para 77 , 78 , 79) |
| 10. set-off claims must be properly raised. (Para 83 , 84) |
| 11. independence and impartiality of the adjudicator. (Para 90 , 91) |
| 12. final judgment and costs ordered. (Para 98 , 99 , 100) |
Lee Swee Seng J:
JUDGMENT
Parties and the Project
[1]There are two Originating Summonses that are, by consent of the parties, heard together as one is the flip side of the other. The first Originating Summons (“the Setting Aside OS”) where BM City Realty &
Construction Sdn Bhd (“BMCRC”) is the Plaintiff and Merger Insight (M) Sdn Bhd (“MISB”) is the Defendant is with respect to BMCRC’s application to set aside the whole of an Adjudication Decision under s 15 Construction Industry Payment and Adjudication Act 2012 (“CIPAA”)
[2]The second OS (“the Enforcement OS”) is with respect to MISB’s application to enforce the Adjudication Decision under s 28CIPAA
[3]The parties shall be referred to as BMCRC and MISB and when reference is made to them in the Adjudication, as Respondent or Non- Paying Party and Claimant or Unpaid Party respectively.
[4]BMCRC as Employer under a PAM Contract 2006 (Without Quantities) had engaged MISB to be the Main Contractor to carry out a mixed development project in Seberang Perai (“Project”) for a contract sum of RM104,600,000.00.
[5]The Project consisted of a 23 storey building block complex comprising of shop offices, kiosks, motorcycles and car park, recreational facilities, swimming pool, jacuzzi and 3 blocks of business suites.
[6]The Contract between the parties consisted of:
(a)MISB’s submission of Tender dated 3 September 2013, Letter of Award dated 25 September 2013 to be read together with MISB’s letter dated 16 October 2013 and BMCRC’s Architect’s letter dated 18 October 2013; and
(b)Agreement and Conditions of PAM Contract 2006 Private Edition (Without Quantities) as adopted by the Parties.
Problem
[7]Disputes had arisen between the parties. MISB complained that it had not been paid on time for 3 Progress Claims and so pursued these as payment claims under the statutory adjudication scheme under CIPAA.
[8]MISB also submitted 6 Re-calculation of Quantity Interim Progress Claims based on the actual measurement of quantities as reflected in the Construction Drawings given by BMCRC to MISB.
[9]The Employer BMCRC on the other hand complained of the delay caused by MISB and terminated the employment of MISB as its Main Contractor by its letter of 11 April 2015. It cited the reason as that MISB had failed to proceed regularly and/or diligently with the Works and that pursuant to Clause 25.2 of the PAM Contract, the employment of MISB was forthwith determined and terminated.
[10]Essentially, the Adjudicator allowed MISB’s claim under Certificate No. 15, 16 and 17. He however dismissed the re-evaluated claims No. 1 to No. 6 and payment claims No. 15, 16, and 17 which were based on re-measurement and re-evaluated BQ items and the disputed, re-valued contract price as he found, inter alia, that he did not have the jurisdiction to determine the contract sum for the Contract without agreement from the parties to extend his jurisdiction and he did not have the power to review and revise any certificate or valuation of the parties under section 25(m)CIPAA
[11]The learned Adjudicator’s Decision delivered on 4 April 2016 with respect to the amounts payable is reproduced below in paragraph 52:
“52. Adjudication Determinatio
