An unpaid successful party in adjudication proceedings can initiate winding-up based on the adjudication decision, which is binding and enforceable despite ongoing disputes.

Lim Chong Fong JCA:

Introduction

[1] This is an appeal against the decision to wind-up a company based on non payment ordered by an adjudication decision made under the Construction Industry Payment and Adjudication Act 2012 ("CIPAA").

[2] The Appellant here (Respondent in the High Court) is the developer of a service apartment located at the Mines Resort City, Selangor ("Project").

[3] The Respondent here (Petitioner in the High Court) is the construction works contractor engaged by the Appellant to construct and complete the building and infrastructure works of the Project.

[4] We heard the appeal on 24 November 2023 and thereafter reserved our decision to deliberate on the submissions advanced by the parties.

[5] Having so duly deliberated, we provide below our decision together with the supporting grounds thereof.

Background

[6] The Respondent on 17 July 2019 initiated CIPAA adjudication proceeding against the Appellant for unpaid interim certificate no 4R for work done in the Project amounting to RM5,510,197.91.

[7] After having gone through the adjudication proceeding, the adjudicator on 4 February 2020 made his decision ("Decision") in favour of the Respondent by ordering, amongst others:

(i) pay the Respondent the sum of RM5,510,197.91 ("Adjudicated Amount");

(ii) pay the Respondent simple interest on the Adjudicated Amount at the rate 5% per annum from 9 July 2019 until the Adjudicated Amount is paid; and

(iii) pay the Respondent the costs of adjudication proceeding of RM61,289.00.

[8] Consequently, the Appellant on 4 March 2020 instituted Shah Alam High Court Originating Summons No. BA-24C-27-03/2020 to set aside the Decision.

[9] The Appellant also in the same proceeding applied to stay the Decision.

[10] The Respondent thereafter on 11 August 2020 also instituted Shah Alam High Court Originating Summons No. BA-24C-76-08/2020 to enforce the Decision.

[11] On 13 August 2020, the Appellant's architect issued valuation report no. 37, interim certificate no. 37 and revised statement of final account. The Respondent was aggrieved and accordingly on 26 August 2020 commenced arbitration proceeding to have the dispute on interim certificate no 37 and revised statement of final account referred to arbitration. The Appellant cross referred its dispute on the final determination of the Decision to the same arbitration.

[12] The High Court on 10 December 2020 dismissed the Appellant's setting aside application as well as stay application and allowed the Respondent's enforcement application; see Bluedream City Development Sdn Bhd v. Pembinaan Bina Bumi Sdn Bhd.

[13] The Appellant appealed to the Court of Appeal against the decisions of the High Court but they were subsequently all dismissed on 19 May 2022.

[14] The Appellant thereafter sought for leave to appeal to the Federal Court against the decisions of the Court of Appeal but the Appellant's application was also dismissed on 20 October 2022.

[15] In the meantime, upon the High Court having made the decisions as stated in paragraph [12] above, the Respondent on 24 August 2021 served on the Appellant a statutory notice pursuant to ss 465(1)(e) and 466(1)(a) of the Companies Act 2016 demanding for payment of the sum of RM6,175,669.10 premised on the Decision. The Appellant however neglected to satisfy or pay the debt or any part thereof.

In The High Court

[16] The unpaid Respondent hence on 23 September 2021 instituted Shah Alam High Court Winding-up Petition No. BA-NCC-454-09/2021 ("Petition") to wind-up the Appellant.

[17] As a result, the Appellant applied to strike out the Petition, but that application was dismissed on 21 October 2021.

[18] Subsequently, the Appellant made another interlocutory application in the winding-up proceeding to seek a Fortuna injunction to restrain the Respondent from continuing with the winding-up proceeding against the Appellant but that application was also dismissed on 7 December 2021.

[19] Finally, the Petition was heard and accordingly allowed on 15 No