High Court (Penang) – Originating Summons No PA-24C-1-01 OF 2022 and PA-24C-2-01 of 2022
QUAY CHEW SOON J
20 June 2022
Facts
The Defendant together with LG CNS Malaysia Sdn Bhd (“LG CNS”) entered into a (“Principal Contract”) under Contract No. PRASARANA/GCS/CTT/2.0574/2015, of a construction project appointed by Prasarana Malaysia Bhd (“Prasarana”). The Defendant subsequently engaged the Plaintiff as the subcontractor for a contract price of RM1,614,380 inclusive of GST. A further optional sum of RM1,350,000 was claimable by Plaintiff from Defendant subject to approval of Prasarana.
Pursuant to the Project, payment disputes arose between the Parties with regard to the Plaintiff’s VO and EOT expenses claim, and the Plaintiff commenced adjudication proceedings against the Defendant, where a sum of RM3,673,483.85 with interest at 5% from 22.1.2022 until full payment, and costs was awarded in the Plaintiff’s favour on 10.1.2022 (“Adjudication Decision”).
Whilst the Plaintiff sought to enforce the Adjudication Decision pursuant to Section 28 of CIPAA, the Defendant commenced a suit against the Plaintiff, a setting aside application and alternatively stay application pending the determination of the suit.
The High Court dismissed the setting aside application, allowed the enforcement of the Adjudication Decision but also granted a conditional stay of the enforcement of the Adjudication Decision pending the determination of the suit. The conditional stay was subject to the condition that the Defendant deposits the awarded adjudicated sum with the Plaintiff’s solicitors as stakeholder and to be placed in an interest-bearing account pending the determination of the ongoing suit.
The Defendant appealed against the decision by the court in granting a conditional stay.
Decision
In an application for stay pursuant to Section 16 CIPAA 2012, the court reaffirmed the principles set out in View Esteem Sdn Bhd v Bina Puri Holdings Berhad [2018] 2 MLJ 22 whereby the burden lies with the Defendant to show that there have been clear and unequivocal errors, or that the justice of the instant case warrants a stay of the enforcement of the Adjudication Decision.
With regard to whether there was “clear and equivocal error”, the Learned High Court Judge was of the view that the Defendant failed to satisfy the court that there were any. Contrary to the Defendant’s contention, the court found that the Learned Adjudicator did consider the Defendant’s argument concerning the ‘back-to-back’ treatment of the invoices. It is only that the Learned Adjudicator had arrived at a different conclusion from that advocated by the Defendant.
The Court, however, exercised its discretion to grant a conditional stay based on the special circumstances of the case, namely:
- Prior to the hearing of this originating summons for a stay pending the determination of the suit, the defendant had previously applied for an interim stay pending the hearing of the defendant’s setting aside application. Although the interim stay application was ultimately withdrawn, it was on the basis that the Defendant had given its assurance that they would not execute the adjudicated sum pending the hearing of the setting aside and enforcement applications;
- Prior to the withdrawal, during a case management of the interim hearing, the Defendant had sought for an ad interim stay pending the disposal of the interim stay application and the court had proposed that the adjudicated sum be paid to the defendant’s solicitors in the meantime. This was not objected to by the Plaintiff but it was the Defendant’s solicitors that informed the court that they needed time to seek their client’s instruction. At the next case management, the court was then informed by the Defendant’s counsel that the Defendant company was unable to furnish the adjudicated sum and hence the defendant withdrew the interim stay application without liberty to file afresh.
- Further, the financial information of the Plaintiff obtained via SSM search suggest that it may not be in a strong position and the Plaintiff did not provide any evidence that its financial position has improved. The Defendant expressed its concern that the adjudicated sum may not be recovered in the event the Defendant succeeds in the suit. The Court was of the view that this concern can be addressed if the said sum be paid to the solicitors as stakeholder.
With regard to the Defendant’s setting aside application, although there was no appeal against the decision to dismiss the setting aside application, the Learned High Court Judge set out his grounds for dismissing the said application as follows:
a. There was no breach of natural justice as contended by the defendant as the Learned Adjudicator did have regard to the defendant’s request for a brief response and written submission and decided that she did not require any other submission from either party after having considered the pleadings. The Learned Adjudicator advised both parties that their respective submissions were clear and that she did not require any further information. This decision was entirely within the exercise of her powers under Section 25 of CIPAA 2012.
b. The Defendant’s grievance was essentially that the Learned Adjudicator reached a conclusion that was not desired by them but the Defendant had been heard and accorded a fair hearing. The alleged incorrectness of the decision is not a denial of procedural fairness.
