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2019 MarsdenLR 2411

FEDERAL COURT PUTRAJAYA
MARTEGO SDN BHD – Appellant
Versus
ARKITEK MEOR & CHEW SDN BHD AND ANOTHER APPEAL – Respondent
[Civil Appeal Nos: 02(f)-2-01-2018(W) & 02(f)-3-01-2018(W)]



Petitioner Advocates:M Nagarajah,Tanya Lopez ,Respondent Advocate: Sivabalan Sankaran,Tharmini Paramasivan

The court confirmed that CIPAA 2012 applies to both interim and final payment claims, rejecting the appellant's limitations and affirming the adjudicator's jurisdiction.

Headnote:This judgment analyzes the interpretation of the Construction Industry Payment and Adjudication Act 2012 (CIPAA 2012). It is determined that CIPAA 2012 applies to final payments despite the appellant's claim that it should only apply to interim claims. Suggestions made that disputes regarding architects' fees must be adjudicated under CIPAA 2012 were upheld, with findings reflecting that the court affirms the prior judgments and dismisses the appeals with costs.

Table of Content
1. interpretation of cipaa 2012 (Para 1 , 2 , 3)
2. arguments on jurisdiction and application of cipaa (Para 4 , 5 , 11 , 26 , 27)
3. submission stressing that a valid claim under cipaa needs an operational construction contract. (Para 9 , 10 , 12)
4. court observations on adjudicator's powers and statutory interpretation (Para 13 , 14 , 30 , 31 , 39 , 47)
5. ruling on applicability of cipaa to final claims (Para 17 , 36)
6. cipaa's fundamental aim is to facilitate timely payments in the construction industry. (Para 56)
7. jurisdiction of adjudicators encompasses issues post-termination of contracts under cipaa. (Para 71)

[1] This appeal concerns the interpretation of the Construction Industry Payment and Adjudication Act 2012 ("CIPAA 2012"). On 2 January 2018, this court granted leave to appeal on four questions as follows:

(i) Whether an adjudicator acts within his jurisdiction in deciding on a matter referred to him under CIPAA 2012 when, at the time of service of the payment claim pursuant to s 5(1) of CIPAA, the construction contract had been terminated and the termination was accepted by both parties and the claim was for determination of sums finally due to the unpaid party?;

(ii) Whether CIPAA applies to final payments when the mischief which CIPAA intends to cure, based on its Explanatory Statement and Preamble, was the timely payment for work related to progress payments and not final accounts?;

(iii) Whether the rule laid down by this Honourable court in Akitek Tenggara Sdn Bhd v. Mid Valley City Sdn Bhd , 2007 MarsdenLR 840 that disputes between an architect and his client is to be resolved by the specific provision enacted for such purpose ie r 21 of the Fourth Schedule to the Architect Rules 1973 (as amended in 1986) is still good law?;

(iv) If question (iii) is answered in the affirmative, whether the object of CIPAA to 'pay first and argue later' applies to disputes between architects and clients, since adjudication under CIPAA in this regard: (a) dispenses with the rules of evidence, discovery and the trial process; (b) is contrary to natural justice where it concerns final payments; (c) may impinge adversely on the public purse as Federal and State entities may be affected as employers of construction contract; (d) elevates the adjudicator nominated by the KLRCA as a supreme decision maker, without the possibility of supervision by the courts; and (e) on the basis of the common law principle "interest reipublicae ut sit finis litium" (in the interest of society as a whole, there must be an end to litigation)?

[2] The parties agreed to summarise the above questions as follows:

(a) Whether CIPAA 2012 is applicable to disputes pertaining to interim claims only or is it also applicable to disputes relating to final claims?; and

(b) Whether CIPAA 2012 should prevail over Architect's Act 1973?

The Factual Background And The Antecedent Proceedings

[3] The factual background and the antecedent proceedings which are relevant and germane for disposal of this instant appeal may be shortly stated as follows:

3.1 Martego ("the appellant") is a private limited company carrying on business in property investment, while Architect Meor & Chew Sdn Bhd ("the respondent") is a private limited company providing architectural consultancy services.

3.2 The appellant engaged the respondent as a project architect for a multi-storey development project in the centre of Kuala Lumpur known as "Cecil Central Residence", consisting of three towers of 43-storey deluxe residential units and one tower of 19-storey deluxe residential units vide a Letter of Appointment dated 22 August 2014 ("construction contract"). The respondent's scope of services was for "contract administration" and it included, but was not limited to, recommending the list of contractors and sub-contractors for tender and issuing progress claim certificates the contractors upon consultation with the appellant.

3.3 On 7 August 2015, the appellant terminated the responden

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