Bertam Development SDN BHD V R&C Cergas Teguh SDN BHD (2017) MLJU 1571 PDF

4/10/2020 Complimentary Public Access
Lexis Advance Malaysia

®
Sign Out More

Provided by LexisNexis® Malaysia
Document: Bertam Development Sdn Bhd v R&C Cergas Teguh Sdn Bhd [2017…
Bertam Development Sdn Bhd v R&C Cergas Teguh Sdn Bhd

[2017] MLJU 1571
Copy Citation
Malayan Law Journal Unreported
HIGH COURT (KUALA LUMPUR)

LEE SWEE SENG J
ORIGINATING SUMMONS NO WA-24C-55-03 OF 2017
13 October 2017
S Ashok (Leela A Sanghrajka & Assoc) for the plaintiff.

J S Lim (T G Lee & Assoc) for the defendant.
Lee Swee Seng J:

[1] The Plaintiff here, as Respondent in an Adjudication, has applied to set aside the Adjudication
Decision dated 19.2.2017. The Defendant here is the Claimant in the Adjudication conducted under the
Construction Industry Payment and Adjudication Act 2012 (“CIPAA”).
Project
[2] The Plaintiff as the developer and the Defendant as the main contractor had entered into a written
construction Contract consisting of a Letter of Award dated 18.4.2013 followed by the PAM Contract
dated 16.5.2013 that stipulated the original contract sum of RM29.2 million. The Contract was for the
following Works: Building, Infrastructure Works-Civil, Internal Electrical, SMATV and Telephone System
Installation and M&E Infrastructure Work Installation for a project to build 47 units of 2 ½ storey houses
on a piece of land in Langkawi (“the Project”).
[3] The said contract sum was revised subsequently on 1.7.2014 and by this revision, the contract sum
was then reduced to RM22 million with some omissions of Works. The Defendant was not required to
build 14 houses and hence only 33 houses were built. Further the Defendant was not required to do
landscape Works.
[4] The Defendant as Claimant was not paid for the Architect’s Interim Certificates No. 23, 24, 25, 26,
27 and 29 for a total certified sum of RM2,404,394.84. The Defendant also claimed that they were not
https://advance.lexis.com/documentpage/?pdmfid=1000516&crid=2aa525be-b332-404f-849a-dddc921b5f44&config=00JAA0ZGJkMDNiNC00ZmY4L… 1/12
paid a further sum of RM3,414,158.24 being Variation Works instructed by the Plaintiff and duly
completed by the Defendant but which the Architect had failed to certify. Hence the Defendant claimed
as Claimant in the Adjudication the sum of RM5,818,553.08 against the Plaintiff as Respondent together
with interests and costs.
Proceedings in Adjudication
[5] A Payment Claim to that effect was served by the Claimant as the Unpaid Party on the Respondent
as the Non-Paying Party under section 5 CIPAA on 4.7.2016. The due date for payment under the
various Interim Certificates issued was stated as 21.4.2016 or latest by 30.4.2016 (30 days from
Progress Claim No. 29).
[6] With respect to the claim for the Variation Works completed but not certified, it was stated that the
Certificate of Practical Completion (CPC) was issued on 23.10.2015 and the Defect Liability Period would
expire on 22.10.2017. The due date for payment was 21.4.2016 or latest by 30.4.2016 (30 days from
Progress Claim No. 29).
[7] There was no Payment Response filed. Under section 6(4) CIPAA the Plaintiff as the non-paying
Party is deemed to have disputed the entire Payment Claim.
[8] However in the Adjudication Response filed by the Plaintiff as Respondent in the Adjudication, the
Plaintiff had raised that the Variation Works were without the consent of the Architect or that the
Claimant failed to adhere to the sum fixed by the Respondent’s Architect. The Respondent also raised
the argument that the Variation Order was submitted late and that no extension of time was obtained
from the Architect for the late submission of the Variation Order.
[9] In addition the Respondent also submitted a cross/counter claim of RM1,937,000.00 being
Liquidated and Ascertained Damages (“LAD”) calculated from 1.6.2015 until 27.10.2015 being a delay
of 149 days at the rate of RM13,000.00 per day.
[10] The Architect had issued the Certificate of Non Completion on 10.6.2015 to the Defendant which
stated that there was a failure to complete by the extended completion date of 31.5.2015 and that the
Plaintiff was entitled under Clause 22.1 of the PAM Contract to LAD of RM13,000.00 per day until due
completion of the construction works by the Defendant and that such LAD sum would be a debt to be
deducted from monies due under the contract to the Defendant.
[11] The Respondent further cross claimed a sum of RM469,292.96 being damages for late delivery of
the 33 Purchasers pursuant to the Sale and Purchase Agreement entered into between the Respondent
and the 33 Purchasers.
Prayers
[12] The Adjudicator decided on 19.2.2017 inter alia as follows in his Adjudication Decision:
1. that the Plaintiff is liable to pay the Defendant a sum of RM4,657,267.73 consisting of:
(i) the amount of the unpaid interim certificates Nos. 23, 24, 25, 26, 27 & 29 for RM2,404,394.84
(“unpaid certified amount”) and
(ii) the amount for Works not certified but duly completed for the sum of RM2,252,872.89 (“the
uncertified amount”).
2. the Defendant is liable for LAD from 11.9.2015 until 23.10.2015 which is for a sum of
RM546,000.00.
3. in summary, the Plaintiff is liable to pay the Defendant the sum of RM4,111,267.73 (Adjudication
Sum) together with interest at the rate of 7.65% per annum based on Maybank Base Lending Rate
from 27.5.2016 until full payment of the Adjudication Sum and costs.
[13] The LAD amount was reduced by the Adjudicator to 42 days amounting to RM546,000.00 after
the Adjudicator had allowed the second Extension of Time (“EOT”) application that was rejected earlier
by the Architect.
[14] The Plaintiff sought to set aside the whole of the Adjudication Decision on ground of excess of
jurisdiction under section 15(d) CIPAA.
Principles
[15] Section 15 CIPAA under which the Plaintiff has made this application to set aside the Adjudication
Decision reads as follows:
“An aggrieved party may apply to the High Court to set aside an adjudication decision on
one or more of the following grounds:
(a) The adjudication decision was improperly procured through fraud or bribery;
(b) There has been a denial of natural justice;
(c) The adjudicator has not acted independently or impartially, or
(d) The adjudicator has acted in excess of his jurisdiction.”
(emphasis added)
[16] As the focus is on issues relating to the Adjudicator having acted in excess of jurisdiction under
section 15(d) CIPAA, this Court shall deal with these issues in the discussion below.
Whether the Adjudicator has exceeded his jurisdiction by invoking the default provision of
section 36 CIPAA with respect to the uncertified claims
[17] Learned counsel for the Plaintiff submitted that the Adjudicator had exceeded his powers with
respect to the uncertified claims for Variation Works when he had ignored the opening words of Section
36(1) of CIPAA that reads “unless otherwise agreed by the parties” and also that the default provision in
Section 36 of the CIPAA could only be invoked when contractual terms as to payment are not to be
found in writing.
[18] It was pointed out that the PAM written contract which had clearly set out the mechanism for
making payment to the Defendant, which the parties had contractually agreed. It was argued that the
Adjudicator could not determine the terms for payment as if such terms of payment were not found in
the PAM Contract. The Adjudicator therefore could not have invoked Section 36(1) of CIPAA when the
terms of payment were already found in the written contract of the parties as in the case before this
Court.
[19] The Plaintiff contended that the process by which the decision of assessing the uncertified amount
was done by the Adjudicator in reliance on section 36 of CIPAA was flawed and it was done in excess of
his jurisdiction.
[20] The Plaintiff said that the Defendant were bound by the PAM Contract and it was wrong to allow
the Defendant to resile from the agreed terms of certification of payment as agreed and provided under
the PAM written contract entered into with the Plaintiff. Learned counsel for the Plaintiff maintained that
the Defendant could not, as Claimant in the Adjudication, refer the uncertified amount to the
Adjudication when the Defendant had agreed to the payment mechanism to be determined as provided
under the PAM Contract. In other words, according to learned counsel for the Plaintiff, the Defendant
was bound to follow the terms of the PAM Contract to secure certification for payment for works done
through the mandate of the Architect.
[21] Learned counsel for the Plaintiff had summarized the terms for certification and payment as found
in Clause 30.1 of the PAM Contract as follows:
i) The right to certify payment was agreed to be done by the Architect under the said clause of the PAM
Contract.
ii) The interim certification could only be issued as and when the amount could be ascertained by the
Architect in the event where the Certificate of Practical Completion has been issued.
iii) This means it was contractually agreed that after the certificate of practical completion, interim
certificate could only be issued by the Architect when the Architect was able to ascertained the
amount payable as provided under the said clause of the PAM Contract.
[22] I must say that the above summary of what is contained in Clause 30.1 of the PAM is not quite
accurate. The relevant parts of Clause 30.1 of the PAM Contract reads:
“The Contractor shall submit a payment application at the Interim Claim Interval stated in
the Appendix with complete details and particulars, the Architect shall, within twenty one
(21) Days from the date of receipt of the Contractor’s application, issue an Interim
Certificate to the Employer with a copy to the Contractor, and the Employer shall thereafter
pay the amount certified to the Contractor within the Period of Honouring Certificates...”
[23] The above submission is completely misplaced. This is a case where the Architect had for reasons
best known to himself, failed to certify the amount outstanding under the Variation Works. Surely the
Architect and the Employer cannot rely on their own breach of Clause 30.1 to refuse to make payments
to the Main Contractor for the Variation Works done. Otherwise Employers and Architects could always
refuse to certify claims for Works done and then contend that until the Architect do certify, there is no
claim due and no payment need to be made!
[24] Little wonder that under the broad powers of an Adjudicator, he is empowered under section
25(n) CIPAA to decide or declare on any matter notwithstanding no certificate has been issued in
respect of the matter.
[25] This is also a case where the Architect had issued the CPC on 23.10.2015 and the Payment Claim
was only served on 5.7.2016. As the claim for uncertified Variation Works was duly made in the
Payment Claim and as there was no Payment Response filed, the Respondent in the Adjudication is
deemed to have disputed this Claim and thus it falls within the jurisdiction of the Adjudicator to decide
on whether the Claimant is entitled to the whole of the uncertified Variation Works or a part of it or none
at all.
[26] His jurisdiction is carved out by the Payment Claim served under section 5 CIPAA and the
Payment Response (none here) under section 6 CIPAA and he must confine himself to the matters
raised in the Payment Claim and Payment Response (none here) for these are the 2 documents that
confer jurisdiction on him. Section 27(1) CIPAA declares as follows:
“27. Jurisdiction of Adjudicator
1) Subject to subsection (2), the adjudicator’s jurisdiction in relation to any dispute is

limited to the matter referred to adjudication by the parties pursuant to sections 5 and 6.”
[27] This is not a case, as contended by the Plaintiff, where the Adjudicator had in assessing the
uncertified amount in the sum of RM2,252,872.89, re-written the contract between the parties. Where
the Architect has failed or refused to certify or has certified an amount that the Claimant is disputing, it
is open to the Adjudicator to harness and deploy his vast powers under section 25 CIPAA to decide the
dispute. Section 25(m) CIPAA as referred by the Adjudicator is also relevant. It reads that an
Adjudicator shall have the powers to:
“(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;” (emphasis added)
[28] Neither is it a case, as contended by the Plaintiff, where the Adjudicator has exceeded his
jurisdiction by altering the agreement of the parties found under Clause 30.1 of the PAM Contract.
Much less is it a case where the Adjudicator could only assume the function of the Architect if both
parties had mutually agreed to avoid the application of Clause 30.1 of the PAM Contract by submitting
as an agreed issue under Section 27(2) CIPAA.
[29] To be clear section 27(2) CIPAA provides as follows:
“(2) The parties to adjudication may at any time by agreement in writing extend the
jurisdiction of the adjudicator to decide on any other matter not referred to the
adjudicator pursuant to sections 5 and 6.” (emphasis added)
[30] As the issue of the validity of the claim for uncertified Variation Works is a matter referred to in
the Payment Claim and hence within the jurisdiction of the Adjudicator to decide, there is no need for a
further Agreement in writing of the parties to confer jurisdiction on the Adjudicator to decide as it were,
in place of the Architect. It is precisely because of non-certification by the Architect and with that no
payment by the Plaintiff as Employer that we have here a reference to Adjudication with respect to a
Payment Claim consisting of the amount certified in the various Interim Certificates of Payment and the
amount in the uncertified Variation Works.
[31] The uncertified amount for Variation Works comes within the meaning of a “Payment Claim” as a
“Payment” in section 4 CIPAA is defined as a claim for work done or services rendered under the
express terms of a construction contract.
[32] A “Payment Claim” under section 5(2) shall be in writing and shall include:
(a) The amount claimed and due date for payment of the amount claimed;
(b) Details to identify the cause of action including the provision in the construction
contract to which the payment relates;
(c) Description of the work or services to which the payment relates; and
(d) A statement that it is made under this Act.” (emphasis added)
[33] The presence or issuance of a Certificate of Payment is not a pre- requisite of a Payment Claim. It
was a finding of fact of the Adjudicator at para p) of page 27 of the Adjudication Decision that the
Architect’s Instruction (AI) No. 6 issued on 18.6.2015 is basically to reaffirm the Engineer’s Instructions
pertaining to the Variation Works. In addition to the AI No. 6, the Adjudicator also found few other
instructions were issued to the Contractor and copied to the Respondent’s Architect and he summarized
the 14 instructions of the Architect, M&E Engineer and Civil Engineer at pages 28-29 of the Adjudication
Decision together with the various dates of the instructions, the type of instruction and the description
of the instructions.
[34] The Adjudicator had also at para q) at page 29 of his Decision listed out the 8 submissions made
by the Claimant to the Respondent’s Architect on the estimated costs and time implication on Variation
Works arising out of the instructions issued by the Architect, M&E Engineer and Civil Engineer and the
dates of submission from 28.5.2014 to 8.11.2015.
[35] The Adjudicator found as a matter of fact at para r) of page 29 of his Decision that the Claimant
had been submitting diligently his estimation on the Variation works since 28.5.2014 and sufficient
notification had been provided to the Respondent’s Architect on the costs implication arising out of the
Variation Orders.
[36] In answer to the objection raised by the Respondent that the Contractor had failed to give his
written notice of his intention to claim for additional expenses within 28 days from the date of the AI or
CAI giving rise to his claim under Clause 11.7(a) and to submit particulars of his claim for such
Variations within 28 days of completing the Variations under Clause 11.7(b) and as such the Contractor
is deemed to have waive his rights to any such additional expenses, the Adjudicator made the following
finding of facts at para s) of the Decision at page 29 as follows:
“As such, the Adjudicator is able to CONCLUDE that the Claimant’s Variation Order
submission dated 8.11.2015 is not a NEWSUBMISSION arising out of the Architect’s
Instruction No. 6 dated 18.6.2015. The Claimant had already submitted the Variation
Orders on 28.5.2014, 26.1.2015 and 11.5.2015 to the Respondent’s Architect and the
Variation Order dated 8.11.2015, in particular the summary of Variation Order and the
summary of the Variation Order found in the Variation Order dated 11.5.2015 are
essentially the same. The Claimant in fact is just summarizing the previous Variation Order
dated 11.5.2015.”
[37] The Adjudicator concluded in para t) at page 30 of the Decision as follows:
“Hence, the Adjudicator CONCURS with the Claimant that sufficient notification on the
costs estimation arising out of the Variation Orders has been given to the Respondent’s
Architect in accordance with the Clause11.7 of PAM Agreement and therefore, the
Adjudicator accepts the fact that the Variation Orders were made in timely manner and
shall be payable in accordance with section 36(1)(c) subject to final valuation and approval
from the Respondent’s Architect as provided for under Clause 11.2 PAM Agreement.”
[38] The Adjudicator had properly relied on section 36(1)(c) CIPAA as the Respondent’s Consultants
appeared not to be able to agree on the rates for the Variation Works. The Adjudicator unknotted the
conundrum as follows, expressing his bewilderment, baffled as to the conduct of the various Consultants
at para i) of page 33 of his Decision:
“i) The intriguing questions are why the Respondent’s Consultants comprising M&E
Engineer, Civil Engineer and Architect did not raise any objections to the earlier
submissions if they have found that the Variation Orders are being overpriced as alleged by
the Respondent? And why did the Respondent’s Architect had to wait until 22.3.2016
before rejecting the Claimant’s Variation Order s submission made on 8.11.2015 and also
the previous submissions? Why did the Respondent’s Architect allow the Variation
Works to be continued by the Claimant upon realizing the unit rates are
unacceptable?” (emphasis added)
[39] These are fair questions to raise. The Adjudicator then undertook the arduous task of going
through meticulously each and every of the 16 Variation Orders at page 35 of his Decision with the
methodology employed at page 34 of his Decision as follows:
“m) After reviewing the Architect’s valuation report dated 22.3.2016, the Adjudicator finds
that the Civil Engineer has adopted JKR & JPS Rate Year 2015 which the Adjudicator has
no objection since the variation works were carried out during the same period of time.
As such, the Adjudicator also agrees with Civil Engineer’s method to establish build up
rates based on the JKR & JPS Rate for Year 2015 and to be adopted in the re-valuation.
Meanwhile, on the valuation done by the M&E Engineer, the Adjudicator finds the unit rates
adopted are much lower than the rates originally used in the contract. The Adjudicator
disagrees with the M&E Engineer method to adopt lower rates to calculate VO addition and
meanwhile using higher rates to calculate VO omission, despite the nature of works still
remain same.”
[40] It was thus an exercise of his powers under section 25(m) and (n) and falling back on the default
provision of section 36(1)(c) and 36(2)(b) CIPAA in arriving at a fair value on what was being disputed
with respect to the Variation Works; the dispute being not on the certified quantities of the Variation
Works but merely on the rates. As pointed out by the Adjudicator in para n) of page 34 of his Decision,
in carrying out this exercise of determining the reasonable rates or work he was also guided by Clause
11.6(a) & (b) of the PAM Contract as follows:
“11.6(a) where work is of a similar character to, is executed under similar condition as,
and does not significantly change the quantity of work as set out in the Contract
Documents, the rates and prices in the Schedule or Rates shall determine the valuation;
11.6(b) where work is of a similar character to work as set out in the Contract Documents
but not executed under similar conditions or is executed under similar conditions but there
is significant change in the quantity of work carried out, the rates and prices in the
Schedule of Rates shall be the basis for determining the valuation which shall include a fair
adjustment in the rates to take into account such differences;”
[41] The end result was that the Adjudicator allowed only a sum of RM2,252,872.89 out of the sum of
RM3,414,158.24 claimed. It is to be noted that the Architect had in his Report dated 22.3.2016
submitted a lower sum of RM1,004,686.18 as particularized at para [98] at page 30 of his Decision with
a comparison with the same items as submitted and claimed by the Claimant.
[42] Section 36 CIPAA reads as follows:
“36 Default Provisions in the Absence of Terms of Payment
(1) Unless otherwise agreed by the parties, a party who has agreed to carry out
construction work or provide construction consultancy services under a construction
contract has the right to progress payment at a value’ calculated by reference to—
(a) The contract price for the construction work or construction consultancy services;
(b) Any other rate specified in the construction contract;
(c) Any variation agreed to by the parties to the construction contract by

which the contract price or any other rate specified in the construction
contract is to be adjusted; and
(d) ...
(2) In the absence of any of the matters referred to in paragraphs (1)(a) to (d), reference
shall be made to:
(a) fees prescribed by the relevant regulatory board under any written law; or
(b) If there are no prescribed fees referred to in paragraph (a), the fair and
reasonable prices or rates prevailing in the construction industry at the
time of the carrying out of the construction work or the construction
consultancy services.
(3) The frequency of progress payment is:
(a) Monthly, for construction work and construction consultancy services; and
(b) Upon the delivery of supply, for the supply of construction materials, equipment or
workers in connection with a construction contract.
(4) The due date for payment under subsection (3) is thirty calendar days from
the receipt of the invoice.” (emphasis added)
[43] As can be seen, the provisions of Section 36(1)(c) and (2)(b) encapsulate the methodology and
principle captured by Clauses 11.6(a) and 11.6(b) of the PAM Contract in determining the rates of
Variation Works when parties cannot agree. This then is undisputedly a finding of fact and even if it be
wrong, that is to be corrected not in a setting aside under section 15 CIPAA for this is not an appeal on
merits but to be corrected in Arbitration if the parties are minded to proceed. There is singularly no
merits in the argument of the Plaintiff as Respondent in the Adjudication, that by deciding on the matter
of a dispute on the sum due under the uncertified Variation Works, the Adjudicator had exceeded his
jurisdiction.
Whether the Adjudicator had exceeded his jurisdiction by deciding on the number of days
that should have been granted following a Second Application for EOT
[44] Learned counsel for the Plaintiff submitted that the matter for determining the application for an
EOT was also agreed contractually to be determined by the Architect in the terms agreed under the said
PAM Contract, being the written contract of the parties. He further argued that on the one hand the
Adjudicator had ignored the fact that the matter of the second EOT application was not even an issue
that was agreed to be raised or referred to the Adjudicator under Section 27(2) of CIPAA. Learned
counsel for the Plaintiff pointed out that, on the other hand, the Adjudicator had wrongly exercised his
powers to review the second EOT application that was rejected by the Architect when the Adjudicator
had no power to do so under the provisions of the law in CIPAA unless it was agreed in writing to be an
issue to be referred pursuant to Section 27(2) of CIPAA, which provision was not complied with.
[45] Strictly speaking the Respondent’s Defence of a cross claim or Counterclaim raised as a set-off
should not even be considered as it was not raised in the Payment Response; there being no Payment
Response filed. The Claimant was right to have followed the dicta of Justice Mary Lim (now JCA) in View
Esteem Sdn Bhd v Bina Puri Holdings Sdn Bhd [2015] MLJU 695 where her Ladyship observed:
“[60] Subsection 27(1) limits the Adjudicator’s jurisdiction to the matters referred to
adjudication pursuant to sections 5 and 6; namely the claims in the Payment Claim and the
responses or defences in the Payment Response. This limitation is subject to subsection
27(2) which allows the parties to the adjudication to extend that jurisdiction by written
agreement to matters beyond or outside sections 5 and 6. In the absence of such
agreement, the Adjudicator’s jurisdiction does not extend to or include matters in the
Adjudication Claim and the Adjudication Response or even Adjudication Reply found in
sections 9, 10 and 11. It is obvious from subsections 27(1) and (2) that where the parties
feel that the Adjudicator’s jurisdiction is insufficient to deal with their particular dispute;
the parties can sit down and agree on extending that jurisdictional cover. In the present
case, the parties could have dealt with this through a written agreement amongst
themselves. There was no such effort; and the Court is not required to look into the
reasons for the lack of such an effort. View Esteem could easily have brought up these
three additional defences, responses or matters in its Payment Response; but it chose not,
for whatever reason it may have. Having exercised that option, it is not open to View
Esteem to now complain.”
[46] This proposition has the further support of Justice Ravinthran Paramaguru J in Bina Puri
Construction Sdn Bhd v Hing Nyit Enterprise Sdn Bhd [2015] MLJU 941 where it was ruled that because
the Respondent did not file a Payment Response to refer the issue of Counterclaim, the Adjudicator’s
jurisdiction is limited to the dispute raised in section 27(1) of CIPAA, hence the Adjudicator did not have
the jurisdiction to decide on the counter claim.
[47] However the Adjudicator had exercised his discretion to allow the Defence of set-off to be raised
even though there was no service of a Payment Response following an application by the Respondent
made on 22.12.2016 pursuant to section 26(1) and (2)(b)/(c) of CIPAA to deal with matters not raised
through a Payment Response. Specifically it was for the Respondent to raise the Cross/Counter Claim
No.1 of RM1,937,000.00 and Cross/Counter Claim No.2 of RM469,296.96.
[48] The Adjudicator took the cue from and found his courage in the dicta of the Court of Appeal in
View Esteem Sdn Bhd v Bina Puri Holdings Sdn Bhd [2016] 6 MLJ 717 in the dicta of Justice Prasad
Abraham JCA (now FCJ) with respect to the approach to be taken under a section 26 CIPAA application
as follows:
“[45] In any application made to the adjudicator under section 26 of CIPA, the approach in
my view to be taken would be akin with the methodology taken by the courts in its
approach to Order 2 Rules of High Court 1980 the predecessor of Rule of Court 2012 ...
...
[48] It is my view that Section 26(1) of CIPA is wide in terms and covers all aspects of the
act including adjudication proceedings. Section 26(2) deals specifically with non-
compliance in respect of adjudicator proceedings and the powers reserved to the
adjudicator are wide as set out in 2(a)(b) or (c).”
[49] The Adjudicator had set out the factors he took into consideration in allowing the set-off of the
LAD and claim for late delivery damages by third parties Purchasers to be raised in the Adjudication
Proceedings at para h) page 38 of his Decision. The Adjudicator derived his confidence in following this
approach from the comments made by Justice Prasad Abraham JCA (now FCJ) in View Esteem (supra)
at para 43 as follows:
“The Appellant should have moved the adjudicator formally to allow matters not raised
under the payment response pursuant to s 26(2)(b)/(c) of the said section. The
adjudicator would have had to deal with that question and rule accordingly and such a
ruling would not in my view be reviewable ...”
[50] Such an exercise of an Adjudicator’s discretion, as observed above, is cushioned from any
interference from the Court in a section 15 CIPAA application. Once that Defence of set-off is allowed to
be raised, then it is well within the Adjudicator’s jurisdiction to decide on whether the whole of the LAD
had been proved or that only so much of it should be allowed taking into consideration an EOT that
should be allowed.
[51] This is a case where to decide on one matter i.e. the LAD would inextricably relate to another
matter, the EOT that ought to be given. Thus the LAD claimed by the Respondent may be appropriately
reduced if the corresponding factor of an EOT ought to have been granted.
[52] Once the issue of an LAD claim is raised as a Defence of set-off then the Adjudicator would have
to consider the related issue of the application for EOT as that would invariably have an effect on the
number of days of LAD that the Respondent could claim. It is like the flip side of the same coin with one
impinging on and inextricably affecting the outcome of the other.
[53] It was held in Cantillon Ltd v Urvasco Ltd [2008] 117 ConLR 1 as follows:
“[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 the defence to the extent that it is
successful in so far as it impacts upon the fundamental dispute.” (emphasis added)
[54] It would be grossly unfair if the Respondent be allowed to raise the Defence of a set-off for the
first time in its Adjudication Response pursuant to an application under section 26 CIPAA but that the
Claimant cannot raise in its Adjudication Reply to be considered the reasons why its second EOT
application should be allowed.
[55] The Adjudicator had gone through with a fine toothcomb on the causes and effects of delays as
tabulated in events No.2.1 - 2.4 at pages 44-45 of his Decision. His conclusion is a finding of fact well
within his jurisdiction and a matter that I should not disturb as this is not an appeal on merits. He only
allowed an LAD at the rate of RM13,000.00 per day for late delivery by the Claimant of 42 days from
11.9.2015 until 23.10.2015 (date of CPC) amounting to RM546,000.00. The Respondent had claimed
LAD from 1.6.2015 (Completion Date after the first EOT) until 27.10.2015 (date of Certificate or
Completion and Compliance) of 149 days at the rate of RM13,000.00 per day amounting to
RM1,937,000.00.
[56] As stated, once a matter is within his jurisdiction, as this matter of an LAD Defence is, then he
can exercise all or any of his powers under section 25 to arrive at a fair and reasonable decision of
interim finality and in this case it was perfectly proper for him to exercise his powers under section
25(m) and (n) CIPAA for the legitimate purpose of deciding the dispute before him.
[57] His Adjudication Decision is not cast in concrete as it is provisional in nature and having the
element of temporary finality; regard being had to the overall justice of the case and perhaps even a
rough justice at that. Whilst the refined justice may be pursued in arbitration, in the meanwhile the
Adjudication Decision is to be respected.
[58] The Plaintiff as Respondent in the Adjudication is obviously not happy with the Decision of the
Adjudicator for they had claimed LAD for 149 days of days of delay from 1.6.2015 (Completion Date
after the first EOT) to 27.10.2015 (Date of Certificate of Completion and Compliance) amounting to
RM1,937,000.00.
[59] The Adjudicator had asked himself the right question with respect to how much of the LAD claim
raised as a set-off should be allowed. Even if he has given the wrong answer where quantum is
concerned, it is not for this Court to interfere and intervene on ground of excess of jurisdiction. That is
to be taken up in arbitration and parties must attune themselves to live with the Adjudication Decision
until it is fully and finally resolved in Arbitration or Litigation.
[60] It would be opportune to recall the dicta of the English Court of Appeal in Bouygues UK Ltd v
Dahl-Jensen UK Ltd [2000] EWCA Civ 507 where Lord Justice Chadwick observed as follows:
“27. The first question raised by this appeal is whether the adjudicator’s determination in
the present case is binding on the parties - subject always to the limitation contained in
section 108(3) and in paragraphs 4 and 31 of the Model Adjudication Procedure to which I
have referred. The answer to that question turns on whether the adjudicator confined
himself to a determination of the issues that were put before him by the parties.
If he did so, then the parties are bound by his determination, notwithstanding
that he may have fallen into error. As Knox J put it in Nikko Hotels (UK) Ltd v MEPC
PLC [1991] 2 EGLR 103 at page 108, letter B, in the passage cited by Buxton LJ, if the
adjudicator has answered the right question in the wrong way, his decision will
be binding. If he has answered the wrong question, his decision will be a nullity.
28. I am satisfied, for the reasons given by Buxton LJ, that in the present case the
adjudicator did confine himself to the determination of the issues put to him. This is not a
case in which he can be said to have answered the wrong question. He answered the right
question. But, as is accepted by both parties, he answered that question in the wrong way.
That being so, notwithstanding that he appears to have made an error that is manifest on
the face of his calculations, it is accepted that, subject to the limitation to which I have
already referred, his determination is binding upon the parties.” (emphasis added)
[61] In Macob Civil Engineering Ltd v Morrison Construction Ltd [1999] BLR 93 at page 97 the
provisional nature of an Adjudication Decision was explained as follows:
“It is clear that Parliament intended that the adjudication should be conducted in a manner
which those familiar with the grinding detail of the traditional approach to the resolution of
construction disputes apparently find difficult to accept. But Parliament has not abolished
arbitration and litigation construction disputes. It has merely introduced an intervening
provisional stage in the dispute resolution process. Crucially, it has made it clear that
decisions of adjudicators are binding and are to be complied with until the dispute is finally
resolved.”
https://advance.lexis.com/documentpage/?pdmfid=1000516&crid=2aa525be-b332-404f-849a-dddc921b5f44&config=00JAA0ZGJkMDNiNC00ZmY4… 10/12
[62] That was precisely why there is specifically provided for in section 13 CIPAA as follows:
“Effect of Adjudication Decision
The adjudication decision is binding unless—
(a) It is set aside by the High Court on any of the grounds referred to in section 15;
(b) The subject matter of the decision is settled by a written agreement between the
parties; or
(c) The dispute is finally decided by arbitration or the court.”(emphasis added)
[63] Parliament is well conscious of the fact that an Adjudication Decision might not be on all fours
with an Arbitral Award or a judgment of a Court after a full trial. It would be expecting too much for a
decision that is to be made within a tight time frame in Adjudication to have all the elements of a
masterpiece that might be expected of an Arbitral Award or a full Judgment of a Court, with every point
of law raised being considered from different perspectives and evidence being weighed and accorded
due weight; often after days and weeks and even months of hearing witnesses and a further
adjournment for Decision after clarification of written submissions. Depending on the quality of the
Adjudication, it may well approximate towards what is to be had in arbitration or litigation.
[64] Parliament in its wisdom has set out section 37 CIPAA, setting out the relationship between
Adjudication on the one hand and Arbitration and Litigation on the other so that there would be less
misapprehension and more ready acceptance of a process that is not perfect but serves a designed
purpose of easing cashflow for the unpaid party that has done the work and bore the brunt of the
burden and toil under the sun. Section 37 CIPAA reads:
“37. Relationship Between Adjudication and Other Dispute Resolution Process
(1) A dispute in respect of payment under a construction contract may be referred

concurrently to adjudication, arbitration or the court.
(2) Subject to subsection (3), a reference to arbitration or the court in respect of a dispute
which is being adjudicated shall not bring the adjudication proceedings to an end nor
affect the adjudication proceedings.
(3) An adjudication proceeding is terminated if the dispute being adjudicated is

settled by agreement in writing between the parties or decided by arbitration
or the court.” (emphasis added)
[65] The advice of Lord Justice Chadwick in the English Court of Appeal case of Carillion Construction
Ltd v Devonport Royal Dockyard Ltd [2005] EWCA Civ 1358 in the context of their compulsory
Adjudication under The Housing Grants, Construction and Regeneration Act 1996, which came into force
on 1st May 1998, should resonate well even under our scheme of statutory Adjudication under CIPAA:
“ 80 The objective which underlies the Act and the statutory scheme requires the
courts to respect and enforce the adjudicator’s decision unless it is plain that the
question which he has decided was not the question referred to him or the
manner in which he has gone about his task is obviously unfair. It should be only in
rare circumstances that the courts will interfere with the decision of an adjudicator. The
courts should give no encouragement to the approach adopted by DML in the present case;
which (contrary to DML’s outline submissions, to which we have referred in paragraph 66 of
this judgment) may, indeed, aptly be described as “simply scrabbling around to find some
argument, however tenuous, to resist payment”.
81 It is only too easy in a complex case for a party who is dissatisfied with the decision of
an adjudicator to comb through the adjudicator’s reasons and identify points upon which to
present a challenge under the labels “excess of jurisdiction” or “breach of natural justice”.
It must be kept in mind that the majority of adjudicators are not chosen for their expertise
as lawyers. Their skills are as likely (if not more likely) to lie in other disciplines. The task
of the adjudicator is not to act as arbitrator or judge. The time constraints within which he
is expected to operate are proof of that. The task of the adjudicator is to find an interim
solution which meets the needs of the case. Parliament may be taken to have recognised
that, in the absence of an interim solution, the contractor (or sub-contractor) or his sub-
contractors will be driven into insolvency through a wrongful withholding of payments
properly due. The statutory scheme provides a means of meeting the legitimate
cash-flow requirements of contractors and their subcontractors. The need to have
the “right” answer has been subordinated to the need to have an answer quickly.
The scheme was not enacted in order to provide definitive answers to complex questions.
Indeed, it may be open to doubt whether Parliament contemplated that disputes involving
difficult questions of law would be referred to adjudication under the statutory scheme; or
whether such disputes are suitable for adjudication under the scheme. We have every
sympathy for an adjudicator faced with the need to reach a decision in a case like the
present.
82 In short, in the overwhelming majority of cases, the proper course for the party
who is unsuccessful in an adjudication under the scheme must be to pay the
amount that he has been ordered to pay by the adjudicator. If he does not accept
the adjudicator’s decision as correct (whether on the facts or in law) , he can
take legal or arbitration proceedings in order to establish the true position. To
seek to challenge the adjudicator’s decision on the ground that he has exceeded his
jurisdiction or breached the rules of natural justice (save in the plainest cases) is likely to
lead to a substantial waste of time and expense - as, we suspect, the costs incurred in the
present case will demonstrate only too clearly.” (emphasis added)
Pronouncement
[66] For all the reasons given above, the Adjudication Decisions remains intact and unassailable. The
Adjudicator had acted well within his jurisdiction.
[67] This application to set aside the Adjudication Decision stands dismissed with costs of RM5,000.00
to be paid by the Plaintiff to the Defendant.

Copyright
© 2020
About Privacy Cookie Terms & Sign
LexisNexis.
LexisNexis® Policy Policy Conditions Out
All rights
reserved.

Bertam Development SDN BHD V R&C Cergas Teguh SDN BHD (2017) MLJU 1571 PDF

Încărcat de

Informații document

Titlu original

Drepturi de autor

Formate disponibile

Partajați acest document

Partajați sau inserați document

Opțiuni de partajare

Vi se pare util acest document?

Este necorespunzător acest conținut?

Drepturi de autor:

Formate disponibile

Bertam Development SDN BHD V R&C Cergas Teguh SDN BHD (2017) MLJU 1571 PDF

Încărcat de

Drepturi de autor:

Formate disponibile

4/10/2020 Complimentary Public Access

Lexis Advance Malaysia

Sign Out More

Bertam Development Sdn Bhd v R&C Cergas Teguh Sdn Bhd

Malayan Law Journal Unreported

HIGH COURT (KUALA LUMPUR)

S Ashok (Leela A Sanghrajka & Assoc) for the plaintiff.

Lee Swee Seng J:

(b) There has been a denial of natural justice;

(c) The adjudicator has not acted independently or impartially, or

(d) The adjudicator has acted in excess of his jurisdiction.”

“27. Jurisdiction of Adjudicator

1) Subject to subsection (2), the adjudicator’s jurisdiction in relation to any dispute is

“(m) Review and revise any certificate issued or to be issued pursuant to a

[29] To be clear section 27(2) CIPAA provides as follows:

(d) A statement that it is made under this Act.” (emphasis added)

[37] The Adjudicator concluded in para t) at page 30 of the Decision as follows:

[42] Section 36 CIPAA reads as follows:

“36 Default Provisions in the Absence of Terms of Payment

(b) Any other rate specified in the construction contract;

(c) Any variation agreed to by the parties to the construction contract by

(3) The frequency of progress payment is:

“Effect of Adjudication Decision

The adjudication decision is binding unless—

(c) The dispute is finally decided by arbitration or the court.”(emphasis added)

“37. Relationship Between Adjudication and Other Dispute Resolution Process

(1) A dispute in respect of payment under a construction contract may be referred

(3) An adjudication proceeding is terminated if the dispute being adjudicated is

S-ar putea să vă placă și