Back
2022 MarsdenLR 2519
HIGH COURT MALAYA KUALA LUMPUR
ZETA LETRIK SDN BHD – Appellant
Versus
JAKS ISLAND CIRCLE SDN BHD – Respondent
[Original Summon No: WA-24C-193-11/2021]
The court mandated direct payment to the plaintiff under section 30 of the CIPAA, given the defendant's failure to serve required notice, establishing differences between 'due' and 'payable' statuses of debts.
Headnote:(A) Construction Industry Payment and Adjudication Act 2012 [Act 746] – Section 30 – Payment due under adjudication decision – Application for direct payment from principal for the adjudicated sum of RM6,160,776.36 granted – Mandatory written notice requirement not fulfilled by Defendant as principal – Failure to provide proof of payment to JAKS leads to direct obligation to pay Plaintiff. (Paras 30-31)
(B) Interpretation of 'due' and 'payable' - Terms denote different milestones of a debt - Obligations arise from debts that have accrued. (Paras 16, 35)
(C) Service of notice – Defendant's contention of improper service on JAKS rejected, as acknowledgment indicated valid receipt in accordance with CIPAA. (Paras 22-25)
Facts of the case: The Plaintiff sought payment directly from the Defendant as the principal of JAKS following an adjudication decision affirming payments owed for work performed under contract for a construction project, citing unpaid amounts and related claims. (Paras 1, 6, 8)
Findings of Court: The Defendant failed to serve a mandatory notice under s 30(2) of CIPAA, leading to a legal presumption requiring payment. The Defendant's claims of offsets for LAD were found unsubstantiated. (Paras 30-32, 40-43)
Issues: Whether the Defendant was liable to pay sums awarded under the adjudication decision despite claimed offsets for damages. The necessity of a valid prayer for enforcement of the adjudication decision was also assessed. (Paras 12, 14, 50)
Ratio Decidendi: Section 30 CIPAA imposes a statutory duty on the principal to fulfill payment obligations in the absence of proof of payment, irrespective of claims made against the contractor. The court emphasized the need for clarity in the interpretation of payment obligations under CIPAA. (Paras 30-33)
Result: Plaintiff's application granted; Defendant ordered to pay the adjudicated amount within 30 days and to cover costs of RM5,000.
JUDGMENT
Introduction
[1] The Plaintiff, vide the Originating Summons ('O.S.') dated 3 November 2021 in encl 1, had made an application pursuant to s 30 of the Construction Industry Payment and Adjudication Act 2012 [Act 746] ('CIPAA') and/ or the inherent jurisdiction of the Court for a declaration that the Defendant, as the principal to JAKS Sdn Bhd ('JAKS'), is liable to pay to the Plaintiff the sums due and payable under the Adjudication Decision dated 21 May 2021 ('AD') by Mr Mak Hon Pan in the adjudication proceedings between the Plaintiff and JAKS. The intitulement in the O.S. makes reference to O 7 r 2, O 69A r 1 and O 92 r 4 of the Rules of 2012 ('RoC 2012').
[2] In prayer 2 of the O.S., the Plaintiff prayed for an order that the Defendant shall pay to the Plaintiff, within 14 days from the date of the Order from the Court, the following sums which were awarded to the Plaintiff by virtue of the AD:
(a) Adjudicated Sum of RM6,160,776.36;
(b) Interest on the allowed claims at the rate of 6.40% per annum (based on Maybank Base Lending Rate plus 1%) to be calculated from the respective due dates of each heads of claim until full and final settlement;
(c) Adjudication Costs of RM50,350.00; and
(d) Advance Security Deposit paid by the Plaintiff in the sum of RM37,644.30.
[3] After hearing oral submissions by the learned counsels who represented the parties on 20 January 2022, and having considered the cause papers and written submissions, the Court had, on 15 February 2022, allowed only the prayer as stated in subpara 2(a) above with costs of RM5,000.00, subject to allocatur.
[4] I now provide my full reasons for the decision.
The Cause Papers
[5] The cause papers filed in respect of the Plaintiff's application in encl 1 are as follows:
(a) the Plaintiff's Affidavit in Support ('AIS') affirmed by its Executive Director, Mr Chang Min Yow on 3 November 2021 (encl 2);
(b) the Defendant's Affidavit in Reply ('AIR') affirmed by its Assistant General Manager (Project), Mr Wong Shaw Pin on 20 December 2021 (encl 4); and
(c) the Plaintiff's AIR affirmed by the same deponent on 31 December 2021 (encl 5).
Background Facts
[6] The Defendant is the employer/ developer of a project known as "Cadangan Membina Dua (2) Blok Pejabat 14 - 17 Tingkat, Tiga (3) Blok Pangsapuri Servis 25 - 34 Tingkat Dengan Sepuluh (10) Podium Yang Mengandungi Mezanin Kemudahan Pangsapuri, Ruang Perniagaan (33 Unit), Pejabat Dan Tempat Letak Kereta Berserta Empat (4) Aras Basemen Tempat Letak Kereta Di Atas Lot 141 (Pt16), Jalan 13/6, Seksyen 13, Bandar Petaling Jaya, Daerah Petaling, Selangor Darul Ehsan Untuk Tetuan Jaks Island Circle Sdn Bhd" ('Project').
[7] The Defendant appointed JAKS as the main contractor for the Project. Pursuant to the Letter of Award dated 12 November 2014 ('LoA'), JAKS then subcontracted to the Plaintiff the works for the "Installation of Electrical 11 KV & LV and Supply for Electrical Power for ACMV Services" ('Works') in relation to the Project.
[8] Payment disputes arose between the parties in connection with the Project and this led the Plaintiff to initiate an adjudication proceeding against JAKS under the CIPAA, claiming for amongst others, unpaid certified amount (Interim Certificate No 44 & Payment Valuation Recommendation No 45 - 50), uncertified work under Progress Claim No 64, retention sum, materials on site and Additional Variation Work. The Adjudicator decided in favour of the Plaintiff as set out in para 2 above.
[9] The Plaintiff's application to enforce the AD under s 28 CIPAA was allowed by this Court on 30 November 2021 whilst the applications by JAKS to set aside the AD pursuant to s 15(b) and/ or (d) CIPAA and to stay the AD under s 16(a) and/ or (b) CIPAA were dismissed.
[10] The Plaintiff issued a statutory demand under s 466 of the Companies Act 2016 [Act 777] to JAKS for payment of the sums awarded under the AD when JAKS failed to settle the sums awarded within the stipulated time. However, JAKS failed to make
