IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR

IN THE STATE OF WILAYAH PERSEKUTUAN, MALAYSIA

(CIVIL DIVISION)
ORIGINATING SUMMONS NO: WA-24C-109-10/2016

In the matter of Section 15 of the

Construction Industry Payment and
Adjudication Act 2012

And

In the matter of an Adjudication

Decision by Mr. Yapp Chu Chon @
Norbet Yapp made on 8th August
2016 pursuant to Adjudication
Proceedings between 1. Syarikat
Bina Darul Aman 2. Pembinaan Kery
Sdn Bhd and Government of
Malaysia (Adjudication Reference
No.: KLRCA/D/ADJ-0312-2016)

And

In the matter of Order 7 of the Rules

of Court 2012

And

In the matter of Order 28 of the Rules

of Court 2012

And

In the matter of Order 92 rule 4 of the

Rules of Court 2012

BETWEEN

1
1. SYARIKAT BINA DARUL AMAN BERHAD
2. PEMBINAAN KERY SDN BHD … PLAINTIFFS
[Collectively referred to as BDB-Kerry (Joint Venture)]

AND

GOVERNMENT OF MALAYSIA … DEFENDANT

THE JUDGMENT OF

YA LEE SWEE SENG

[1] The Plaintiff here is the Claimant in the Adjudication under the

Construction Industry Payment and Adjudication Act 2012 ("CIPAA").

The Plaintiff here had commenced Adjudication against the Defendant

who was the Respondent in the Adjudication.

Project

[2] The parties had entered into a contract in writing dated 23 January

2006, wherein the Defendant appointed the Plaintiff as the Contractor for

the construction and completion of Trans Eastern Kedah Interland

Highway, from Durian Burung to Kupang Kedah (Package A) ("the

Project") in Kedah for a contract sum of RM287,000,000.00 which was

subsequently varied bringing the total contract sum to

RM347,070,267.53.

2
[3] The Plaintiff subsequently awarded the construction of the whole

Works under the Contract to Bayu Melati Sdn Bhd (“Bayu Melati”) who in

turn subcontracted the Works to Ho Hup Construction Co Berhad (“Ho

Hup”). The Plaintiff stated that at all material times, the Defendant was

aware of the sub-contract arrangement between the Plaintiff, Bayu

Melati and Ho Hup. Nothing really turns in this subcontracting though it

might explain the nature of some of the documents produced by the

Claimant to substantiate its loss and expense claim in its Payment

Claim.

[4] The form of contract between the parties is the PWD 203A

Standard Form of Contract (Rev 10/83) which further incorporates 6

addenda and a “Special Provisions of the Conditions of Contract” which

itself incorporates the variation of price (“VOP”) provision (“the

Contract”).

[5] Pursuant the Contract, the Plaintiff had proceeded to perform the

Works commencing in August 2005. The Plaintiff was granted 5

extensions of time for reasons beyond its control, extending the Contract

commencement date of 20 August 2005 to 28 October 2010.

3
Problem

[6] Upon completion of the Works and vide a letter dated 26 January

2011, the Plaintiff submitted its claim pursuant to Clause 48(a) of the

Contract to the Defendant claiming the amount of RM22,188,726.00.

[7] The Defendant and PJS Consultants Sdn Bhd (“PJS”), the

Defendant’s engineering consultant, requested the Plaintiff to supply the

Defendant with the supporting documents to substantiate its claim

pursuant to Clause 48(a) of the Contract.

[8] There was a long waiting period after that and it was only by a

letter dated 5 January 2014 that the Defendant informed the Plaintiff that

they had made a Decision that only RM137,512.95 was due and owing

to the Plaintiff. The Plaintiff was unhappy with the amount claimed and

the paltry amount approved by the Defendant and so it asked vide its

letter of 13 January 2014 to provide details of the amount approved and

the reasons and supporting evidence as to why the amount it claimed

was not approved. The Defendant replied by its letter of 30 January

2014 stating that they were unable to provide details regarding the

Defendant’s Decision as it was confidential!

[9] The Plaintiff as Claimant proceeded with Adjudication. The

Plaintiff's Payment Claim was for the sum of RM24,061,739.29 due to it

4
under a Final Claim. The Superintending Officer SO only certified by way

of a Final Account the sum of RM137,512.95 which certified sum had

been duly paid to the Claimant before the commencement of the

Adjudication.

[10] The Respondent's defence as set out in the Payment Response

was that the payments were not due under the terms of the Contract and

that the said claims were not in accordance with the terms of the

Contract and as such the Respondent stated that the Claimant was not

entitled to each of the claims in the Payment Claim.

Prayers

[11] The parties shall be referred to as Claimant and Respondent as

they appeared in the Adjudication.

[12] The Adjudicator dismissed the whole of the Claimant's claim. The

Claimant, being dissatisfied with the Adjudication Decision, has applied

by this Originating Summons for the following orders:

a) The Adjudication Decision be set aside and/or declared a nullity

as:

i) the Adjudicator has acted in excess of his jurisdiction; and

ii) there has been a denial of natural justice.

5
b) The Plaintiff be entitled to re-commence Adjudication Proceedings

from the Notice of Adjudication dated 25th March 2016 with a new

Adjudicator to be appointed by the Director of KLRCA;

c) The Defendant pay the costs and expense of this Application;

d) Such further and other reliefs as this Honourable Court deems fit.

[13] Unlike most applications before this Court for setting aside of an

Adjudication Decision that are normally made by the Respondent who

has to pay the sum stated in the Decision, here there is no such

application because the Respondent was not made to pay any sum to

the Claimant. Likewise unlike most applications for enforcement of an

Adjudication Decision that would be made by a successful Claimant,

here there is none because the whole of the Claimant's Payment Claim

was dismissed.

[14] What we have is peculiarly the Claimant's application to set aside

the whole of the Decision which it said it is an "aggrieved party" within

the meaning of section 15 CIPAA even though it was not required to pay

any sum to the Respondent.

6
Proceedings in the Adjudication

[15] The Payment Claim served by the Claimant on the Respondent

under section 5 CIPAA was for the sum of RM24,061,739.29, particulars

of which are as follows:

Description of Work / Services Amount

(1) Total Contract Sum

(a) Original Contract Sum RM 287,000,000.00

(b) Total Variation confirmed/approved RM 60,070,267.53

TOTAL RM 347,070,267.53

WORKS CLAIMED AMOUNT DUE

(1) Total works claimed for Variation of Price RM 9,225,107.92

(VOP) for Diesel.

(2) Total works claimed for Excess Gunite RM 4,001,496.59

Thickness
RM 2,511,999.60
(3) Total works claimed for Geotechnical Work

(4) Total works claimed for Loss & Expense

pursuant to Extension of Time of 25 months RM 8,323,135.18
from 1.3.2008 to 30.3.2010

TOTAL DUE AMOUNT RM 24,061,739.29

[16] The Respondent served its Payment Response dated 21 March

2016 on the Claimant denying all the claims put forward by the Claimant

on grounds that the said claims were not in accordance with the terms of

7
the Contract and as such the Respondent stated that the Claimant was

not entitled to each of the claims in the Payment Claim.

[17] The Plaintiff served its Adjudication Notice on the Defendant on 25

March 2016, and consequently on 22 April 2016, the Kuala Lumpur

Centre for Arbitration (“KLRCA”) appointed an Adjudicator for the

dispute. The Claimant followed up with the service of the Adjudication

Claim and the Respondent with the service of its Adjudication Response.

An Adjudication Reply was also filed by the Claimant.

[18] The Claimant subsequently withdrew its claim for VOP for Diesel in

the sum of RM9,225,107.92, reserving its right to pursue this head of

claim against the Respondent in arbitration proceedings instead.

[19] Pursuant to the directions given by the Adjudicator, both parties

filed their respective written submissions with authorities on 24 June

2016. The Claimant subsequently filed its written submissions in Reply

on 29 June 2016 while the Defendant did not file any written

submissions in reply.

[20] The Adjudicator rendered his Decision on 8 August 2016 (“the

Adjudication Decision”), dismissing the Claimant's entire claim with cost

awarded to the Respondent. The Adjudicator held that the Payment

Claim was invalid as it had not been based on what was certified by the

8
SO which in any event had been paid and that to entertain the

Claimant's claim he would have to revise the Certificate issued and as

that was not prayed for, he does not have the jurisdiction to do so.

[21] He further stated that with respect to Claim No. 2 and No. 3, based

on the evidence adduced through the documents, the Claimant had not

proved its claim. As for Claim No. 4 the Adjudicator held that a claim for

"loss and expense" is outside the purview of CIPAA and that he has no

jurisdiction to adjudicate on the claim.

Principles

Whether the Claimant whose Payment Claim was disallowed by the

Adjudicator is an aggrieved party under section 15 CIPAA

[22] Under section 15 CIPAA, only an aggrieved party may apply to the

High Court to set aside an Adjudication Decision. The question is "Who

is an aggrieved party?"

[23] Generally it is the Respondent who is required to make a payment

to the Claimant under an Adjudication where the unpaid party is claiming

against a non-paying party, in a case where the Claimant is the

successful party. In such a case the aggrieved party who may apply to

set aside the Adjudication Decision is the Respondent who is required to

make payment to the Claimant.

9
[24] In the case where the Claimant is successful only in part or for far

less than what it claims, or as here, where the whole of its claim is

dismissed, is the Claimant then an aggrieved party even though it is not

required to make any payment to the Respondent/non-paying party?

[25] I would give a broad meaning to the words "aggrieved party"

consistent with what the Court of Appeal held in Wu Shu Chen (SOLE

EXECUTIVE OF THE ESTATE OF GOH KENG HOW, DECEASED) &

Anor v Raja Zainal Abidin bin Raja Hussin [1997] 2 MLJ 487 at

paragraph F of page 499:

“To my mind, the word ‘aggrieved’ must be given its ordinary

meaning. To be aggrieved means one is dissatisfied with or

adversely affected by a wrongful act of someone. An aggrieved

person is therefore a person whose legal right or interest is

adversely affected by the wrongful act or conduct of another

person or body. The category is never closed.” (emphasis added)

[26] The Claimant further referred to the Federal Court case of

Lembaga Tatatertib Peguam-Peguam v Hoo Lin Coin and Anor

[2008] MLJU 226, a case involving a party’s right to appeal within

section 103E of the Legal Profession Act 1976, where the Federal Court

in considering the definition of party aggrieved took guidance from the

English courts and inter alia held at pages 2 and 3 as follows:

10
 “The position in England has now changed. As Drost J observed

in College of Dental Surgeons v Findlay [2000] BCTC Lexis 1574:

"However, the law of England has changed since then. That

narrow interpretation of a 'person aggrieved' is no longer

accepted. The tide began to turn with the judgment of Lord

Denning in Attorney General of the Gambia v N'Jie [1961] 2

All ER 504, where, at p 511, he said:

'The words "person aggrieved" are of wide import and

should not be subjected to a restrictive interpretation.

They do not include, of course, a mere busy body who is

interfering in things which do not concern him; but they do

include a person who has a genuine grievance

because an order has been made which prejudicially

affects his interests'.”(emphasis added)

[27] In Punca Klasik Sdn Bhd v Abdul Aziz bin Abdul Hamid & Ors

[1994] 1 MLJ 136 at paragraph B of page 142, his Lordship James

Foong, J (later FCJ) with regard to interpretation of a Statutory

Instrument held:

‘A ‘person aggrieved’ must be a man who has suffered a legal

grievance, a man against whom a decision has been pronounced

11
 which has wrongfully deprived him of something, or wrongfully

refused him something, or wrongfully affected his title to

something.’

[28] I agree with the Claimant that an “aggrieved party” within the

context of CIPAA must be given its plain and ordinary meaning, that is to

say a party is aggrieved so long as the party has been adversely

affected or wrongfully deprived of its right to have its entitlement validly

and justly decided pursuant to CIPAA.

[29] Here the Claimant had his whole Payment Claim dismissed and so

is naturally an "aggrieved party". If Parliament had intended only "the

party against whom the adjudication decision is made" to be the only

party who could set aside an adjudication decision, it could expressly

have used that expression which was used in section 30(1) CIPAA with

respect to "Direct Payment from Principal".

[30] If Parliament had wanted to confine "the party who obtained an

adjudication decision in his favour" as the party who could enforce the

adjudication decision, it would also have stated so as such an

expression was used in section 30(1) CIPAA which is reproduced below:

"30. Direct Payment from Principal

12
 (1) If a party against whom an adjudication decision was

made fails to make payment of the adjudicated amount, the party

who obtained the adjudication decision in his favour may

make a written request for payment of the adjudicated amount

direct from the principal of the party against whom the adjudication

decision is made." (emphasis added)

[31] The Legislature must have intended a different meaning when

different words are used in the same statute; otherwise the same words

would be used for consistency of expression. One can surmise that "an

aggrieved party" is not necessarily "a party against whom an

adjudication decision was made." While it would certainly include such a

party, it is broad enough to cover a party that is dissatisfied with the

Adjudication Decision either because its whole Payment Claim has been

dismissed or that it was only given a part of several heads of Claim or

that it was given a sum less than what was claimed in its Payment

Claim.

[32] It would of course be a case where the "aggrieved party" would

have to set aside the whole of the Decision in its favour if it is minded to

apply to set aside the Decision unless it is a case where the heads of

claim without jurisdiction can be severed from those that are within

13
jurisdiction in which instance, only so much of the claim that is

erroneously excluded as being without jurisdiction needs to be set aside.

[33] In a case where it is not severable, then it would be very difficult if

not impossible to set aside part of the Decision on ground of excess of

jurisdiction or breach of natural justice for generally the whole of the

Decision would then have to be set aside.

[34] Presumably a Claimant who got much less than what was claimed

in the Payment Claim would have to set aside the whole of that Decision

if it can be shown that the Decision was procured through fraud or

bribery.

[35] It is generally understood that in an Adjudication under CIPAA, the

worst that a unpaid party/Claimant may suffer is to have its whole

Payment Claim dismissed and costs awarded against it and it would not

be a case where the Claimant has to end up paying the

Respondent/non-paying party other than costs.

[36] Conversely under section 28(1) CIPAA it is not necessarily a "party

who obtained the Adjudication decision in its favour" that is entitled to

enforce an Adjudication Decision though it would certainly include such

a party. It may well include a Respondent to whom costs has been

awarded and for which payment had not been made by the Claimant.

14
[37] All said, a Claimant whose Payment Claim has been dismissed is

certainly a party who is aggrieved with the Decision and in applying to

set aside the Decision, the Court may be minded to only set aside that

part of the Decision that was made when the Adjudicator erroneously

declined jurisdiction on ground that the Payment Claim is not a Payment

Claim within the meaning of CIPAA.

Whether the Adjudicator has jurisdiction to decide on the Claims

made in the Payment Claim as the Claimant had not prayed for the

Certificate to be revised

[38] The 3 Claims of the Claimant are set out in the Payment Claim and

the Respondent in its Payment Response had disputed and denied the

whole of the Payment Claim on ground that the Claims are not due

under the terms of the Contract and not in accordance with the terms of

the Contract.

[39] The matters raised in the Payment Claim and Payment Response

under section 5 and 6 respectively of CIPAA would confer and confine

the jurisdiction of the Adjudicator to matters raised there as stated in

section 27(1) CIPAA.

[40] The Adjudicator therefore has the jurisdiction to proceed to hear

the matters raised there by considering the evidence adduced in the

15
documents tendered. There was no oral hearings requested by the

parties and in any event, the Adjudicator had in his Decision stated that

there was no real need for an oral hearing.

[41] The Adjudicator had initially proceeded on a narrow sense of his

jurisdiction by stating that since it was not specifically pleaded by the

Claimant that he should exercise his powers under section 25 (m) to

review and revise the Certificate issued by the SO, then he has no

jurisdiction to decide on the Claims of the Claimant.

[42] In dealing with the issue on whether the Plaintiff was entitled to

seek a revision of the Final Certificate, the Adjudicator made the

following observations:

At paragraph 113 of the Adjudication Decision

“In any event, the Plaintiff did not seek for any remedy in its

Adjudication Claim for a revision of the Final Certificate. It is not

open to me to revise the Final Certificate on my own volition.

That would be an excess of jurisdiction.” (emphasis added)

At paragraph 118 of the Adjudication Decision

“It must be borne in mind that an Adjudicator does not step into

the shoes of the certifier named in the contract.” (emphasis added)

At paragraph 123 of the Adjudication Decision

16
 “If the Plaintiff is unhappy with the alleged under certification of its

Final Claim, then it should invoke the arbitration clause in the

Contract to refer the alleged under certification to arbitration.

CIPAA is not the proper course for this.” (emphasis added)

[43] Learned counsel for the Claimant submitted that the Adjudicator

had taken an erroneously restrictive view of his own jurisdiction under

section 25 CIPAA by deciding not to review or revise the Final

Certificate. The Claimant further argued that the Adjudicator has

misconstrued his powers under section 25(m) CIPAA which states:

"Section 25 (m)

Review and revise any certificate issued or to be issued pursuant

to a construction work contract, Decision, instruction, opinion or

valuation of the parties or contract administrator relevant to the

dispute.”

[44] In interpreting section 25(m) CIPAA, learned counsel for the

Claimant referred to the guidance laid down in the book Construction

Adjudication in Malaysia by Lam Wai Loon and Ivan Loo at page 212

where the Learned Authors had commented on section 25(m) CIPAA as

follows:

17
 “Pursuant to section 25(m) of CIPA Act 2012, the Adjudicator has

the power to review and revise any certificate issued or to be

issued pursuant to a construction contract, decision,

instruction, opinion or valuation of the parties or contract

administrator relevant to the dispute referred to him, which he

considers erroneous. With this power, the Adjudicator is

effectively put in the position of the certifier or the decision

maker or the person who possesses the power under the

construction contract to issue instructions, provide opinions or

conduct valuations relating to the subject matter of the

Adjudication.” (emphasis added)

[45] The Claimant further referred to the case of Vaultrise Ltd v Paul

Cook [2004] Adj.C.S. 04/06, where the Court held as follows:

“…that an adjudicator can consider whether or not a certificate

should have been issued and if a missing certificate was due

he could determine the sum. The adjudicator had found that a

final certificate should have been issued on or before the 30th July.

He went on to determine the amount and held that that sum was

due. There was no reason why a dispute in those terms, viz

whether or not a certificate should be issued and if so what it

18
 should contain, should not be referred to adjudication.”

(emphasis added)

[46] By the same token, an Adjudicator may declare and decide how

much is properly due under a correct Certificate if the Certificate issued

is an under-certification or over-certification.

[47] I derived some comfort from the observation made in Cantillon

Ltd v Urvasco Ltd [2008] 117 ConLR 1:

"[67] ... As the authorities established that the responding party

can put forward any arguable defence in adjudication, ... it must

follow that the adjudicator can rule not only on that defence but

also upon the ramifications of that defence to the extent that it

is successful in so far as it impacts upon the fundamental

dispute." (emphasis added)

[48] The powers under section 25 are vast powers granted to an

Adjudicator so that he can decide on a dispute effectively and efficiently.

Before he can exercise any of the powers given to him under section 25,

he must first have the jurisdiction to hear the dispute under section 27.

Once he has the jurisdiction, it is then within his powers to be exercised

at his discretion, to decide on whether the Claimant is entitled to the

whole or part of its Claims based on the evidence adduced. There is

19
nothing to state that he can only exercise his powers upon request of the

parties either in their Payment Claim as in this case when there was no

prayer for the Certificate to be reviewed or revised. For instance his

power under section 25(b) to order the discovery and production of

documents need not be premised upon an application by a party but that

he may on his own initiative do so consistent with his powers under

section 25(i) to inquisitorially take the initiative to ascertain the facts and

the law required for the decision.

[49] So too if he should decide that there should be an oral hearing and

order that any evidence be given on oath under section 25(l). In as much

as he could under section 25(n) CIPAA decide or declare on any matter

notwithstanding no certificate has been issued in respect of the matter, I

would say that he has the power to decide how much is due to the

Claimant even if a certificate has been issued which the Claimant felt is

an under-certification and more so here when there is no breakdown as

to what is the sum of RM137,512.95 consists of.

[50] The fact that he has the power to review and revise any certificate

issued would mean that if in the process of finding a higher sum is due

than what is stated in the Certificate, he is of course at liberty to review

and revise the Certificate. Such vast powers are granted to him when

parties have given him the jurisdiction to decide on the dispute; the

20
Claimant stating a certain sum is due and the reasons for it and the

Respondent stating nothing is due as anything due under the certificate

has been paid already.

[51] Here was a case where the Claimant had submitted the original

claims on 26 January 2011 and no reply was forthcoming from the

Respondent until 5 January 2014. Basically the Adjudicator would have

to decide whether the various sums claimed under the various heads of

claim are due and if so, how much.

[52] Whether the Adjudicator decides on the amount owing by way of

reviewing or revising the certificate is a matter left to him in the exercise

of his powers under section 25(m) CIPAA. To say that he has no

jurisdiction to decide on the Payment Claim because the Claimant had

not asked him to review and revise the certification of the SO would be

to take an unduly narrow and restrictive view of jurisdiction conferred on

him to decide on the Claimant's Payment Claim.

[53] Bearing in mind that a lot of Payment Claims are drafted by the

parties themselves at that stage and even at the Adjudication

proceedings the parties are allowed to represent themselves as provided

for under section 8(3) CIPAA, it behooves upon the Court not to take an

unduly technical and legalistic approach to procedural niceties.

21
[54] In support of the Claimant's contention, the Claimant relied on the

Singapore High Court case of Chip Hup Hup Kee Construction Pte

Ltd v Ssangyong Engineering & Construction Co Ltd [2009] SGHC

237, where Judith Prakash J (now CA) made the following observations:

“…the respondent had been advised that the Determination ought

to be set aside on the ground that the Adjudicator had no

jurisdiction to adjudicate on the application because:

(a) The claimant had failed to serve on the respondent a valid

payment claim under the SOP Act…

…The claimant, apart from making substantive arguments in

reply to the respondent, also raised the issue of whether the

respondent was entitled to challenge the Determination by

disputing the validity of the payment claim and/or the

adjudicator’s jurisdiction when these questions had not been

previously raised in either the adjudication proceedings or

before the AR. As this was a preliminary issue I had to consider

it first before proceeding to the substantive issues…

… The claimant, in responding to the respondent’s arguments,

drew to my attention various steps that the respondent had

22
taken in the prior proceedings before the Adjudicator and the

AR. These were:

(a) Payment Certificate No 5 and the Adjudication

Response did not dispute the validity of Progress Claim 5

(the respondent’s argument that Progress Claim 5 was an

invalid document was the basis of its contention that the

Adjudicator had no jurisdiction);

(b) In the adjudication proceedings, the respondent had

proceeded on the basis that Progress Claim 5 was valid and

the Adjudicator had jurisdiction to adjudicate the matter;

(c) The respondent did not dispute the validity of the

Payment Claim or the jurisdiction of the Adjudicator;

(d) The respondent had specifically raised the issue of

whether the Adjudicator could proceed with the adjudication

in view of the fact that the contract between the parties had

been terminated and by this submission, the respondent had

accepted that, apart from determination of the contract, the

Adjudicator did have jurisdiction

… The claimant paid particular attention to the positions taken

by the respondent in the first affidavit of Ahn Kook Jin which

23
 was filed in support of SUM 3242. It asserted that the

respondent had taken the following positions in the same:

(a) It acknowledged that the claimant had served its

payment claim dated 20 April 2008, which was the subject of

the adjudication;

(b) It acknowledged the validity of the payment claim in

conceding that it had to serve a payment response to the

claimant’s payment claim, and explained that its delay in

doing so was simply due to “other pressing issues”…

[55] Based on the above, Her Ladyship Judith Prakash J (now CA)

concluded at paragraph 32 by stating:

“I was satisfied on the above facts that the actions of the

respondent both before the Adjudicator and before the AR were

sufficient to establish a waiver of its right to challenge the

Adjudicator’s jurisdiction. This was because the facts

subsequently raised by the respondent to challenge the jurisdiction

(ie the alleged inadequacy of Progress Claim 5) must have been

known to the respondent and its legal advisers if not at the time

Progress Claim 5 was served then shortly thereafter. The question

24
 that I had to consider was whether such facts could be relied on in

law to constitute a waiver.”

[56] In coming to his conclusion, Her Ladyship Judith Prakash J (now

CA) had made reference to the Australian case of Parist Holdings Pty

Ltd v Wt Partnership Australia Pty Ltd [2003] NSWSC 365 where she

made the following observations:

“In Parist, the defendant sought a declaration that the plaintiff must

pay to it an adjudicated amount determined by an adjudicator in

adjudication proceedings under the NSW Act. The plaintiff

contended, inter alia, that the adjudicator had acted ultra vires in

carrying out the adjudication and in making the determination and

that therefore, the determination was a nullity. One ground of its

argument was that the defendant’s payment claim was invalid

because it did not comply with the requirements of the relevant

statutory provisions. The plaintiff submitted that as a consequence

of the invalidity of the payment claim, the initiation and conduct of

the statutory adjudication process was fatally flawed so as to

deprive the adjudicator of jurisdiction to determine the amount to

be paid. The plaintiff, however, had not put in issue the validity

of the statutory payment claim when it appeared before the

25
 adjudicator. It only raised this issue when it filed its summons

in the subsequent court proceedings.

The court held that because the plaintiff had not raised the

issue of jurisdiction earlier and had instead participated in the

adjudication process, it was no longer entitled to make this

argument...” (emphasis added)

[57] I find merit in the Claimant's submission that it is only now that the

Respondent has raised these issues and has enthusiastically agreed

with the position taken by the Adjudicator. If the Respondent had wanted

to raise the validity of the Payment Claim on ground that the Claims are

premature or that for some reasons the payment due dates are wrong, it

must be specifically pleaded and argued in the submissions.

[58] However, to be fair to the Adjudicator, he proceeded on an

abundance of caution and continued to determine the merits of the

Claimant's Payment Claim for Claims No. 2 and 3. At para 126 of the

Decision he stated this cautious approach as follows:

"Assuming that I was wrong in my finding that the Payment Claim

is invalid, what would be my findings on the existing 3 heads of

claim if the Claimant has satisfied the requirements of section 5? I

26
 will deal with them in the order that the Claimant has done in its

Adjudication Reply...."

[59] At para 133-136 of the Decision, the Adjudicator made a finding on

Claim No. 3 on Geotechnical Works as follows:

"133. Having examined the relevant clauses in the Contract, I

agree with the Respondent's contention that the Claim under this

head is based on erroneous clause under the Contract.

134. It is also my finding that since the Claimant had signed the

PHK No. 2 and PHK No. 14 (Certificate of Adjustment of Contract

Sum) valuation pertaining to the slope works, it is reasonable to

infer that the Claimant had agreed with the calculation by the

Respondent pertaining to the slope works. As to the Claimant's

contention that it had signed the 2 documents merely as

acknowledgment, I find it hard to believe because the signatures

on the said documents is not by a junior person like a clerk of the

Claimant but that of the Group Managing Director. Accordingly, I

find that the Claimant has waived its claim under Claim No. 3.

135. However, I make no finding as to the allegations whether the

slope failures were caused by the Respondent's design failure or

27
 the poor workmanship of the Claimant. This is beyond the

jurisdiction of the Adjudicator.

136. Hence, it is my finding that the Claimant has failed to

prove I its entitlement to payment under Claim No. 3."

(emphasis added)

[60] The Adjudicator having made a finding of mixed fact and law, it is

not for this Court to interfere on merits. This is not an appeal and the

Adjudicator having applied his mind to the clauses before him and the

documents, have come to a decision which he is entitled to. It is a

decision of temporary finality and it will be overtaken by the award in the

Arbitration if the Claimant in the Arbitration to be commenced is able to

persuade the Arbitrator that the Adjudicator had made a wrong finding of

mixed law and fact. It is not for this Court to enter into the realm of

sufficiency of evidence with respect to the findings arrived at unless

there is clear evidence of a lack of independence or impartiality which is

not the ground relied on by the Claimant to set aside the Decision. There

is also no evidence of a breach of natural justice in the Adjudicator

arriving at his Decision to dismiss this head of Claim for he heard both

sides before arriving at his Decision.

28
[61] So too with respect to Claim No.2 on Excess Guniting Works. The

Adjudicator had made a finding of mixed law and fact when he held as

follows:

"138. ...the Claimant has failed to prove the total slope area where

the gunite thickness was more than 100 mm thick. The Claimant

cannot claim for the total area where the gunite is more than 100

mm thick by using the average depth covering the area to prove

the total area where the guniting exceeded the 100 mm thickness.

In addition, the Claimant had signed the PHK No. 2 and PHK No.

14 (Certificate of Adjustment of Contract Sum) valuation pertaining

to the slope works. The Claimant's is estopped from claiming the

said item again."

[62] Again for the reasons given above, I would not disturb this finding

of mixed law and fact as to do so would be descending into the merits of

the Decision. As what was decided here is not in excess of jurisdiction or

in breach of natural justice, this head of claim must remain intact until it

is overtaken by an Arbitral Award.

29
Whether the "Loss and Expense Claims" is a valid Payment Claim

under CIPAA

[63] This is the main plank of the Claimant's complaint on the Decision

of the Adjudicator. I note that the Adjudicator had stated that "Loss and

Expense Claim" is not a valid claim to be initiated under CIPAA where

he made the following comments at para 130-131 of the Adjudication

Decision:

“130. ...Evaluating a loss and expense claim is a very tedious

exercise which requires some expertise. It cannot be done

within the short timelines given in CIPAA. In fact, in our present

case the claim has been evaluated by the S.O. and certified for

payment. It is just that the Plaintiff is dissatisfied with the

assessment and wants the Tribunal to reopen the matter, which I

am not prepared to do.

131. Accordingly, it is my finding that the loss and expense claim

is not a valid payment claim to be pursued in this adjudication

proceedings. I will refrain from expressing any views on the

merit of the said claim since the Plaintiff may still want to refer the

matter to arbitration.” (emphasis added)

30
[64] Having made such an observation and despite not making a

finding on the "Loss and Expense Claims", the Adjudicator at paragraph

139 of the Decision stated:

“In the premises, I have no choice but to dismiss the Plaintiff’s

claim in toto. I also struck out the Plaintiff’s Claim No.1 as it had

been withdrawn by the Plaintiff.”

[65] The Claimant submitted that based on the foregoing reasons, the

Adjudicator had acted in excess of his jurisdiction by dismissing the

Plaintiff’s claim in its entirety despite concluding he had no jurisdiction to

decide the matter.

[66] I agree that the Adjudicator should have struck out the Claim under

this head of the Payment Claim. To dismiss this head of the Payment

Claim would mean that the merits had been considered and found

wanting, resulting in a dismissal of the Claim.

[67] However what is more important is not the nomenclature but the

nub of the issue which is whether a "Loss and Expense Claim" in this

Contract is claimable as a Payment Claim.

[68] The Adjudicator's stand and stated position was that a "Loss and

Expense Claim" is not a Payment Claim under section 5 CIPAA in that it

is not "a payment for work done or services rendered under the express

31
terms of a construction contract" as "payment" is defined in section 4

CIPAA.

[69] My attention was drawn to the fact that the Adjudicator had, at

paragraph 97 of the Adjudication Decision, made the following

observation:

“No oral hearings were conducted nor was there any request from

the parties for me to hold an oral hearing. In any event, in light of

the nature and complexity of the disputes raised by the parties, it

would not have been practical to conduct a viva voce hearing

within the tight time frame stipulated under section 12 of CIPAA

2012.”

[70] A refusal to assume jurisdiction and decide on the matter

submitted to it on the erroneous understanding of his lack of jurisdiction

would be equally a breach of natural justice in that the Claimant's Claim,

in this case, under Claim No.4 for "Loss and Expense Claim" was not

heard at all when it has been properly submitted for Adjudication.

[71] As authority for this proposition, the Claimant referred this Court to

the case of Pilon Ltd v Breyer Group Plc [2010] EWHC 837 (TCC)

where the court held at paragraph 17 of the judgment as follows:

32
 “An Adjudicator can make an inadvertent mistake when answering

the question put to him, and that mistake will not ordinarily affect

the enforcement of his Decision: see Bouygues (UK) Ltd v Dahl-

Jensen (UK) Ltd [2000] BLR 49. If, on the other hand, he considers

and purports to decide an issue which is outside his jurisdiction,

then his decision will not be enforced: see the discussion in Sindall

Ltd v Solland [2001] 3 TCLR 712. But there is a third category,

which is where the adjudicator takes an erroneously restrictive

view of his own jurisdiction, with the result that he decides not

to consider an important element of the dispute that has been

referred to him. This failure is usually categorised as a breach

of natural justice.” (emphasis added)

[72] At paragraph 22 of the judgment, the Court stated that when an

Adjudicator erroneously takes a restrictive view of his own jurisdiction, it

is tantamount to a breach of natural justice:

“As a matter of principle, therefore, it seems to me that the law on

this topic can be summarised as follows:

22.1 The adjudicator must attempt to answer the question

referred to him. The question may consist of a number of

separate sub-issues. If the adjudicator has endeavoured

generally to address those issues in order to answer the

33
question then, whether right or wrong, his decision is

enforceable: see Carillion v Devonport.

22.2 If the adjudicator fails to address the question referred

to him because he has taken an erroneously restrictive view

of his jurisdiction (and has, for example, failed even to

consider the defence to the claim or some fundamental element

of it), then that may make his decision unenforceable, either on

grounds of jurisdiction or natural justice: see Ballast, Broadwell,

and Thermal Energy.

22.3 However, for that result to obtain, the adjudicator's

failure must be deliberate. If there has simply been an

inadvertent failure to consider one of a number of issues

embraced by the single dispute that the adjudicator has to

decide, then such a failure will not ordinarily render the Decision

unenforceable: see Bouygues and Amec v TWUL.

22.4 It goes without saying that any such failure must also be

material: see Cantillon v Urvasco and CJP Builders Limited v

William Verry Limited [2008] EWHC 2025 (TCC). In other

words, the error must be shown to have had a potentially

significant effect on the overall result of the adjudication:

34
 see Keir Regional Ltd v City and General (Holborn) Ltd [2006]

EWHC 848 (TCC).

22.5 A factor which may be relevant to the court's consideration

of this topic in any given case is whether or not the claiming

party has brought about the adjudicator's error by a misguided

attempt to seek a tactical advantage. That was plainly a factor

which, in my view rightly, Judge Davies took into account in

Quartzelec when finding against the claiming party.” (emphasis

added)

[73] On the issue of time constraint as highlighted by the Adjudicator in

the Adjudication Decision, I agree with the Claimant's submission that if

the circumstances render it impossible for the Adjudicator to fairly and

properly arrive at a conclusion within the permitted time period for

making the Decision, he ought to have exercised his powers under

section 25(p) CIPAA to extend the time period as reasonably required or

in the alternative, resign as an Adjudicator pursuant to section 17(4)

CIPAA. However, in the present case, the Adjudicator had failed to do

both and had gone on to make the following observations:

At paragraph 124 of the Adjudication Decision

35
 “Furthermore, I do not think the nature and quantum of the claims

is a suitable one to be dealt with under the provisions of CIPAA. I

am not prepared to nor do I think it is fair for me to carry out a

revaluation of the Final Claim within the tight timelines provided in

CIPAA. It would not be fair to the parties. I believe the Act does not

require me to reach a Decision if unable to do so within the time

limits imposed by the section.”

[74] I further agree with the Claimant that the Adjudicator must always

have in the forefront of his mind the intent and objective of CIPAA which

is to provide a mechanism for speedy dispute resolution through

Adjudication. The dicta of Coulson J in the case of Enterprise Managed

Services Ltd v Tony McFadden Utilities Ltd [2010] BLR 89, at

paragraph 93 of the judgment is instructive to all Adjudicators faced with

a seemingly tedious task:

“In such circumstances, where the sheer volume/size of a claim

may make it unmanageable in an adjudication, the course to be

adopted by the adjudicator is clear. As the same judge explained

in CIB Properties Limited v. Birse Construction Limited [2004]

EWHC 2365 (TCC), the adjudicator has to decide at the outset

whether or not he can discharge his duty to reach a decision

impartially and fairly within the time limit prescribed by the

36
 Act. If he cannot, he ought to resign. Thus, at the outset, the

adjudicator, Mr. Robert Shawyer of Always Associates, had to ask

himself that question. In arriving at the answer, he was of course

entitled to assistance from the parties.” (emphasis added)

[75] At paragraph 99 of the judgment, Coulson J continued as follows:

“In my judgment, the adjudicator ought to have taken more of a

grip on this adjudication at the start, and reached early views

both as to jurisdiction and as to whether it could be dealt with

fairly in the time period. Had he done so, I think it likely that for

one, or maybe even both, of these reasons he would have

concluded that the adjudication could not be properly or fairly

progressed and that the right course was resignation. That

would have obviously saved a good deal of time and money,

not least the costs of these Part 8 proceedings which, as I

understand it, are now put at the barely credible figure of

£240,000. The fact that, as a matter of practicality and fairness,

this claim was not suitable for the summary adjudication process

only supports my conclusion that the reference to adjudication was

inappropriate as a matter of law.” (emphasis added)

[76] I appreciate that whilst a "Loss and Expense Claim" may in some

instances be a claim for special damages arising out of breach by the

37
principal, there are cases where contractually such a claim is allowed to

be "added to the Contract Sum" or as in some cases like the present

PWD 203A Standard Form of Contract it is to be claimed under a Final

Account and hence payable as part of the amount claimable for the

additional costs incurred for work done.

[77] The learned author Lim Chong Fong (now Justice Lim Chong

Fong) in his book entitled The Malaysian PWD Form of Construction

Contract, at page 111 observed as follows:

"As soon as is practicable but not later than ninety (90) days after

practical completion of the Works, the Contractor shall submit full

particulars of all claims for direct loss or expense under clause

44.1 together with all supporting documents, vouchers,

explanations and calculations which may be necessary to enable

the direct loss or expense to be ascertained by the S.O. The

amount of such direct loss or expense ascertained by the S.O.

shall be added to the Contract Sum." (emphasis added)

[78] Clause 44 to the PWD 203A Standard Form of Contract signed by

the parties provides as follows:

38
 “44. Loss and Expense Caused by Delays

“If the regular progress of the Works or any part thereof has been

materially affected by reason as stated under Clause 43 (c), (f) or

(i) hereof (and no other), and the Contractor has incurred direct

loss and/or expense for which he would not be reimbursed by a

payment made under any other provision in this Contract, then the

Contractor shall within one (1) month of the occurrence of

such event of circumstance give notice in writing to the S.O.

of his intention to claim for such direct loss or expense

together with an estimate of the amount of such loss and/or

expense, subject always to Clause 48 hereof.” (emphasis added)

[79] Finally Clause 48(a) of the PWD 203A Standard Form of Contract

provides as follows:

"So soon as is practicable but not later than three (3) months after

practical completion of the Works, the Contractor shall submit full

particulars of all claims made by him under Clause 5(d) and/or 44

together with any documents, supporting vouchers and any

explanation and calculations including documents relating to the

accounts of Nominated Sub-contractors or Nominated Suppliers,

which may be necessary to enable the Final Account to be

39
 prepared by the S.O. provided always the Contractor had given the

notice of claim in writing within the stipulated time or times in the

said provisions."

[80] The learned authors Lam Wai Loon and Ivan Y F Loo of

Construction Adjudication in Malaysia, CCH a Wolters Kluwer

Business, drew support for the proposition that a claim for losses

incurred as a result of extension of time is claimable under a Payment

Claim from the New Zealand Court of Appeal decision in George

Developments Ltd v Canam Construction Ltd [2006] 1 NZLR 177,

CA. It was held that so long as such an entitlement is provided for under

the written contract between the parties, such a claim can be mounted. I

do appreciate that under section 19 Interpretation of the New Zealand

Construction Contracts Act 2002, “payment” means –

(a) a progress payment for construction work carried out under a

construction contract; or

(b) another type of payment under construction contract to which

a party who has agreed to carry out construction work under

the contract is entitled for, or in relation to, construction work

carried out by that party under the contract.

40
[81] In the New Zealand Court of Appeal case of George

Developments Ltd (supra), His Lordship Robertson J said at paragraph

55 of the judgement:

“On the inclusion of extension of time costs, we adopt the New

South Wales approach. The New South Wales Act is not identical

to the Act (as it requires that a payment claim identify the

construction work “or related goods and services” to which it

relates, in contrast to s 20(2)(c) of the Act), but we do not think the

difference is material in this context. Although the definition of

construction work in s. 6 of the Act refers to physical work, the

force and thrust of the Act cannot be limited to claims for

physical work actually done as opposed to costs which

inevitably arise from carrying out the work. This might include

insurance costs, interest, costs of preparing a programme or an

extension of time entitlement. As long as the construction

contract provides for the payee to be paid the claimed amount

in consideration for its performance of construction work

(whether or not entitlement is contingent on a factor such as an

extension of time being granted), the payee is entitled to make a

claim for payment in a payment claim. If the payer’s stance is

41
 vindicated, the particular amount will not have to be paid, but that

will not prejudice the entitlement of the payee to be paid the other

amounts claimed in the payment claim or invalidate the payment

claim as a whole.” (emphasis added)

[82] It is worth noting that the New Zealand Court of Appeal in

construing the New Zealand’s Construction Contracts Act 2002, with

which our CIPAA shares almost identical purpose and objectives, stated

the following in the same paragraph:

“It is not necessary that every amount claimed in the payment

claim can be directly linked to a physical task involved in the

construction of the building or structure. The Act was

specifically intended to avoid artificial distinctions. Cash flow was

intended to be protected by the Act and it is to be interpreted

so as to achieve its object of speeding up payments.”

(emphasis added)

[83] The same position was also propounded in the book Adjudication

of Construction Payment Disputes in Malaysia, LexisNexis, authored

by Chow Kok Fong, Lim Chong Fong and Oon Chee Kheng, wherein it is

stated that:

42
“[5.16] The items which are frequently tendered in a payment

claim may be conveniently considered under four broad

heads:

(1) The first relates to the permanent works. This is the

building, facility, structure or system which the contract

intends the contractor to construct or install and hand

over to the employer on completion.

(2) The second relates to variations which are changes

made to the design or the employer requirements.

Variations may take the form of an addition or omission

of work.

(3) The third component is described as temporary works.

These are items of work which are undertaken to

enable the permanent works to be carried out and

which are intended to be dismantled and removed from

the site upon completion of the works. Examples

include earth shoring systems and diaphragm walls

used during excavations, formwork for the casting of

concrete, scaffolding used for finishing work and

43
 temporary site buildings to house site personnel and

workers while the construction is in progress.

(4) The final category consists of costs associated with

expenses which are necessary for the organising

and execution of the works. These items are

sometimes referred to as site preliminaries and

include items such as insurance, bonds,

maintenance of site facilities, wages and utilities.

[5.30] It is clear from this quick survey of the authorities that the

widest berth is accorded by the HGCRA…While the

position in Australia and New Zealand are more

circumscribed, the thread of judicial comments

maintain quite consistently that the admissibility of a

claim is determined by reference to the contract – in effect

whether the contractual intention envisages that an item is

claimable as part of the contract price or on some basis

derived from or extrapolated from the contract price.

Thus in both New South Wales and New Zealand, it is

envisaged that items for site preliminaries and site

overheads will be clearly claimable where the contract

44
 clearly envisages such claims being made as part of the

progress payment process.

[5.32] In Malaysia, the expression ‘loss and expense’ typically

embrace items which fall to be described as site

preliminaries.

In these situations…it is considered that on the

authorities in the United Kingdom, Australia and New

Zealand they should properly form part of a payment

claim.” (emphasis added)

[84] I have no problem associating with and adopting the views

expressed by the two (2) seminal books on Adjudication in Malaysia.

Based on the principles enunciated above, there is no good reason why

payments pertaining to "Loss and Expense Claims" due to the delay in

completion of works cannot come within the ambit of CIPAA. Indeed,

“payment” under section 4 CIPAA means “a payment for work done or

services rendered under the express terms of a construction

contract." Clauses 44 and 48(a) of the PWD 203A Standard Forms of

Contract are the express terms under which the Payment Claim was

made.

45
[85] I am further fortified in my view having regard to section 29(4)(c)

CIPAA where under section 29(1) CIPAA a party may suspend

performance or reduce the rate of progress or performance of any

construction work if the adjudication decision has not been paid wholly

or partly after the receipt of the Adjudication Decision. Under section

29(4)(c) CIPAA the Claimant who has obtained an Adjudication Decision

in his favour is entitled to recover any loss and expenses incurred as a

result of the suspension or reduction in the rate of progress of

performance from the other party.

[86] Quite obviously the Payment Claim for this loss and expense is

made because the contract is still subsisting and there are further claims

due after the suspension of work because of further work done. It also

flows naturally from section 29(4)(b) CIPAA where the party who

exercises his right under section 29(3) CIPAA is entitled to a fair and

reasonable extension of time to complete his obligations under the

contract.

46
[87] As this is a case where the Adjudicator had erroneously held that

he had no jurisdiction under CIPAA to hear the Payment Claim, this

Court is at liberty to interfere with the decision made as it is a decision

that goes towards jurisdiction. Not to hear a dispute submitted for his

Adjudication is equally a breach of natural justice for the Adjudicator did

not hear the parties at all.

[88] As this head of Claim in Claim No.4 is severable from Claims No. 3

and 4 which had been decided on merits and for which I would not

interfere, I may set aside that part of the Decision that is affected.

Pronouncement

[89] For the reasons given, I had set aside only the part of the

Adjudication Decision wherein the Adjudicator had dismissed Claim No.4

with respect to the "Loss and Expense Claim".

[90] The Plaintiff/Claimant shall be entitled to re-commence

Adjudication Proceedings on Claim No.4 only from the Notice of

Adjudication dated 25 March 2016 with a new Adjudicator to be

appointed by the Director of KLRCA.

47
[91] In view of the peculiar circumstance of this case and the novelty of

the issue raised, I had exercised my discretion and made no order as to

costs.

Dated: 12 May 2017.

- signed -
Y.A. LEE SWEE SENG
Judge
Construction Court
Kuala Lumpur

For the Plaintiff : James Monteiro, K Kirubakaran together

with Suren Rajah
: (Messrs James Monteiro)

For the Defendant : Chandra Devi a/p Letchuman (SFC)

together with Firdaus Jamaludin (SFC)
: (Attorney General’s Chambers)

Date of Decision: 17 January 2017

48