The Construction Industry Payment and Adjudication Act 2012 applies retrospectively, rendering conditional payment clauses void.

Headnote:This judgment interprets the applicability of Section 35 of the Construction Industry Payment and Adjudication Act 2012 (CIPAA) regarding conditional payment clauses in construction contracts. JIP pursued enforcement of an adjudicator's decision, while Bauer sought to set it aside based on the argument that CIPAA did not retroactively apply to their contract. The court found that the conditional payment provision in their contract was void under CIPAA Section 35 and held that CIPAA applies retrospectively to all construction contracts regardless of their date of execution, as long as no legal proceedings had commenced prior to the enactment. Consequently, Bauer's application was dismissed, and JIP's enforcement request was granted.

Table of Content
1. facts of the payment dispute under subcontract. (Para 1 , 2)
2. application and implications of cipaa. (Para 3)

Introduction And Background Facts

[1] By Letter of Award dated 16 March 2011, Bauer (Malaysia) Sdn Bhd (Bauer) appointed Jack-In-Pile (M) Sdn Bhd (JIP) as its sub-contractor for a project known as "Cadangan Membina 3 Blok 39 Tingkat 689 Unit Rumah Pangsa Kos Tinggi dan 23 Unit Kedai 2 Tingkat yang mengandungi Kemudahan Tadika, Dewan Serbaguna, Surau serta 4 Tingkat Podium Tempat Letak Kereta & Rekreasi dengan 1 Tingkat Basemen di atas Lot PT 3901, HS (D) 61423, Jalan Aman Fasa III (Kg Berembang), Mukim Ulu Klang, Daerah Gombak, Selangor Darul Ehsan - Subcontract for the Supply & Installation of Spun Piles (contract). The contract sum was RM1,850,000.00.

[2] Payment disputes arose in respect of progress claim no 8 which JIP contended was not certified and paid by Bauer. Adjudication proceedings pursuant to pursuant to Construction Industry Payment and Adjudication Act 2012 (CIPAA) were commenced by JIP. At the conclusion of adjudication proceedings, the adjudicator delivered his decision dated 23 November 2016 whereupon Bauer was to pay JIP the adjudicated amount of RM906,034.00, interest, cost of proceedings and JIP's legal fees, within 14 working days from the date of decision.

Applications Before The Court

[3] Pursuant to Originating Summons (OS) BA-24C-34-12/2016 JIP sought to enforce the adjudication decision. Pursuant to OS BA-24C-10- 02-2017 Bauer sought to set aside the adjudication decision. Both applications were heard together. This was because the grounds raised by Bauer in opposing the enforcement application and its setting aside were essentially the same.

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2017 MarsdenLR 624

HIGH COURT MALAYA SHAH ALAMJACK-IN-PILE (M) SDN BHD – AppellantVersusBAUER (MALAYSIA) SDN BHD – Respondent[Originating Summon Nos: BA-24C-34-12/2016 & BA-24C-10-02/2017]

The Construction Industry Payment and Adjudication Act 2012 applies retrospectively, rendering conditional payment clauses void.

HIGH COURT MALAYA SHAH ALAM
JACK-IN-PILE (M) SDN BHD – Appellant
Versus
BAUER (MALAYSIA) SDN BHD – Respondent
[Originating Summon Nos: BA-24C-34-12/2016 & BA-24C-10-02/2017]