The court affirmed that under Section 16 of the CIPAA, stays of adjudication decisions are permissible when justified by special circumstances, emphasizing financial assessments and the principles of justice and flexibility in interpretations.

Mohd Nazlan Mohd Ghazali JCA:

Introduction

[1] This is an appeal against the decision of the High Court which refused the appellant's application for a stay of the enforcement of an adjudication decision in favour of the respondent. After having heard the appeal which was conducted by way of a remote communication technology via Zoom we unanimously decided to allow the appeal and highlighted the broad reasons for the same. These grounds of judgment contain the full reasons for our decision.

Key Background Facts

[2] By way of a Letter of Award dated 26 September 2016 ("the Contract"), the appellant as the developer engaged the respondent as its main contractor to carry out piling works for a mixed development project consisting of seven blocks of serviced apartments in Kuala Lumpur for an original contract sum of RM280,000,000.00 ("the Project").

[3] The Contract incorporated the Agreement and Conditions of PAM Contract 2006 (With Quantities), with modifications and amendments (the "PAM Conditions of Contract"). The contractual completion date was on 7 January 2018 but parties extended the date to 7 April 2018. The parties then executed a PAM Contract dated 17 October 2017 incorporating the change in the contractual completion date.

[4] The appellant contended that the respondent was in breach of the Contract for its failure to perform the works as promised, causing substantial delay and non-completion of the Project by the extended completion date. The Project's architect, Arkitek L2CA Sdn Bhd had also issued a certificate of noncompletion dated 7 April 2018 to the respondent, informing of the imposition of the liquidated damages from the amount due.

[5] The case of the respondent is that it had submitted 24 progress claims to the appellant in respect of the works done, with the progress claims duly valued by the Project's quantity surveyor, and endorsed by the architect. These progress claims were then forwarded to the superintending officer ("SO") for approval and issuance of payment certificates for the progress claims The SO was also the executive director of the appellant company at the material time.

[6] Under the Contract, the SO was obliged to certify the respondent's progress claims within 30 days from the date of submission, and the appellant was to make payment of a payment certificate within 60 days from the date of issuance of the interim payment certificate.

[7] The respondent however asserted that the SO had wrongfully and without any justification withheld the approval and certification of progress claims No 16 onwards, even though these progress claims had been duly evaluated by the Project's quantity surveyor and endorsed by the architect.

[8] It is also of note that in respect of the last issued interim payment certificate no 15, despite the fact that the quantity surveyor had valued the works done under progress claim No 15 in the amount of RM9,721,145.14, the SO had unilaterally only certified RM1,031,622.54, representing an under-certification of an amount of RM8,689,522.60.

[9] The respondent reacted - by issuing, under the PAM Conditions of Contract, three notices of default alleging breach of contract against the appellant, dated 8 January 2019, 29 January 2019 and 25 February 2019, respectively. Although the first two notices of default had been subsequently retracted to facilitate negotiation for an amicable resolution of the disputes, attempts to achieve the same fell through.

[10] As a result, the respondent proceeded to commence adjudication proceeding under the Construction Industry Payment and Adjudication Act 2012 ("the CIPAA") (which came into force on 15 April 2014) against the appellant to claim for the sums valued by the Project's quantity surveyor and endorsed by the architect in respect of progress claims No 16 to No 24, as well as the under-certified sum under certificate No 15. The appellant on the other hand raised counterclaim and/or set-off in the form of liquidated damages and defects