Case Summary – Bond M & E v Pali PTP Sdn Bhd [2022] MLJU 364

High Court (Kuala Lumpur) – Originating Summons No WA-24C-121-06 of 2020

Aliza Sulaiman J

28 February 2022

Facts

This is an application by the Plaintiff pursuant to ss. 30 and 31 of the Construction Industry Payment and Adjudication Act 2012 (‘CIPAA’) for an order that the Defendant, as the principal company to JEKS Engineering Sdn Bhd (‘JEKS’), to pay directly to the Plaintiff, the amounts which are due and owing to the Plaintiff by JEKS, being the party against whom an Adjudication Decision dated 3.1.2020 (‘BOND AD’) was made. It is pertinent to note that the JEKS has also commenced an adjudication proceeding against the Defendant, where a sum of RM8,512,737.03 was awarded in favour of JEKS (‘JEKS AD’), which was subsequently partly set aside by the High Court. As a result of which, the sum of RM8,512,737.03 was reduced to RM3,368,919.69.

The Defendant resisted the Plaintiff’s application based on two broad grounds, namely that,

1. there is no money due and owing by the Defendant to JEKS as the provision does not cover payments due under the JEKS AD and ought to be limited to debts arising from the construction contract between the Defendant and JEKS. The Plaintiff’s corresponding right should only be exercised when there is a conclusive debt between the Defendant and JEKS.
2. Ss. 30(1) and (3) CIPAA only allows for payment of the “adjudicated amount”, and this does not include interest and costs as prayed by the Plaintiff in paras (b) to (e) in enclosure.

The Plaintiff on the other hand contended that: –

1. it has satisfied the requirements of s. 30 CIPAA by issuing the said Notice to the Defendant and proving that there is money due and owing by the Defendant to JEKS, by virtue of the JEKS AD, at the time that the Defendant received the said notice.
2. the Defendant failed to comply with Section 30(2) CIPAA in that, upon receipt of the said Notice, the Defendant did not serve a written notice to JEKS to request proof of payment made to the Plaintiff.

Issues

1. Whether there is money due or payable by the Defendant to JEKS at the time of receipt of the said Notice on 17.2.2020?
2. Whether the term “adjudicated amount” in s. 30 of the CIPAA includes interest and costs as awarded in the BOND AD?

Decision:

1. The Defendant is a party which has contracted with JEKS as its main contractor, and is liable to make payment to JEKS by virtue of the JEKS AD, and JEKS has contracted with, and is liable to make payment to, the Plaintiff by virtue of the BOND AD. The Court was therefore satisfied that for purposes of s. 30 CIPAA, the Defendant is a “principal” within the meaning of s. 4 CIPAA and that there are sums payable by the Defendant to JEKS at the time when the Defendant received the said Notice.
2. With regard to the second issue, it was held that the expression “adjudicated amount” in ss. 30(1) and (3) CIPAA does not include interest and adjudication costs. The Court referred to the case of CT Indah Construction Sdn Bhd v BHL Gemilang Sdn Bhd [2020] 1 CLJ 75, [2018] 1 LNS 380, [2019] MLJU 1215, where the Court of Appeal held that the principal was bound by statute to make direct payment of the principal sum only, excluding interest and costs. Further, if interest and cost were intended to be included within the meaning of “adjudicated amount” in ss. 30(1) and (3) CIPAA, express words to that effect would have been inserted in the sub-sections as the terms “interest” and “costs” are used in the other parts of the CIPAA.