Case Summary – Sun DB Construction Sdn Bhd v Perbadanan Kemajuan Negeri Selangor [2022] MLJU 1328

HIGH COURT (SHAH ALAM) – ORIGINATING SUMMONS NO BA-24C-84-11 OF 2021

WONG KIAN KHEONG J

20 June 2022

Facts:

The Defendant had appointed Koridor Padu Sdn. Bhd. (KP) as the main contractor for the construction of a service apartment at Dengkil, Selangor. KP in turn appointed the Plaintiff as its sub-contractor. Payment disputes arose between the Plaintiff and KP and the Plaintiff commenced statutory adjudication proceeding against KP.

The Plaintiff was successful in its adjudication proceeding but KP failed to comply with the Adjudication Decision to make payment of RM2,589,741.98 to the Plaintiff (“Adjudicated Sum”)

The Plaintiff then issued a letter pursuant to Section 30 of CIPAA 2012 on the Defendant as the principal on 29.10.2021. The Defendant failed to provide any response. Thereafter, the Plaintiff filed an application in the High Court seeking for payment of the Adjudicated Amount from the Defendant.

Issues before the High Court:

1. Whether Plaintiff can claim for the Adjudicated amount from the principal pursuant to s.30 of CIPAA?
2. What are the conditions for the application of s.30 of CIPAA?
3. Which party bears the burden of proof?
4. Whether the Defendant shall pay the Adjudicated Amount?

Decision

1. Under s.30 of CIPAA 2012, the party who obtained the adjudication decision in his favour may make a written request for Adjudicated Sum direct from the principal of the other party. Upon receipt of the written request, the principal shall make direct payment to the winning party and may recover the amount paid from the losing party as a debt or set-off. There was no dispute that the Defendant is the principal of KP pursuant to the Section 4 of CIPAA 2012. Further there was no reply from the Defendant to the Plaintiff’s letter. As such, the Plaintiff is entitled to make an application to order the Adjudicated Sum to be paid by the Defendant.

2. The Learned Judge laid out the conditions that one would need to satisfy the court or prove with regard to an application for direct payment pursuant to Section 30 CIPAA 2012, namely:

• That KP (the unsuccessful party in the adjudication) had failed to pay the Adjudicated Amount to the Plaintiff (successful party in the adjudication);
• That the Plaintiff had demanded a direct payment of Adjudicated Amount from the Defendant to the Plaintiff;
• That there is a sum of money “due or payable” from the Defendant to KP at the time of the receipt of the Plaintiff’s letter demanding payment by the Defendant (“Plaintiff’s Demand”); and
• the Defendant did not comply with the Plaintiff’s Demand by not paying directly the Adjudicated Amount to the Plaintiff.

3. With regard to the party which bears the burden of proving the above-mentioned conditions, the Learned Judge had adopted the approach in Chong Lek Engineering Works Sdn Bhd v PFCE Integrated Plant and Project Sdn Bhd and another appeal [2021] 2 AMR 601, whereby the Plaintiff has the burden of proof in a suit against the Defendant under s.30 CIPAA to proof the first, second and forth condition. As for the third condition which is within the knowledge of the Defendant, the burden of proof is upon the Defendant based on s.106 of Evidence Act.

4. On the facts of this case, the Court found that the Defendant has discharged the evidential burden to prove on a balance of probabilities that there was no sum of money “due or payable” from the Defendant to KP in connection with the Project on 29.10.2021. Referring to the evidence tendered by both parties, the Court accepted that KP had to pay the damages and loss to Defendant due to their delay in the Works, replacement of contractors and other defaults. As the exact amount of KP’s Debt to the Defendant cannot be ascertained at the time of the proceeding, the Learned Judge found that there was no proof on a balance of probabilities that the Retention Sum is due or payable by the Defendant to KP on 29.10.2021 (date of the Defendant’s receipt of the Plaintiff’s Demand) as understood in s. 30(5) CIPAA.

5. In view of the fact that the Defendant has discharged the evidential onus to prove KP’s Debt on a balance of probabilities, the Court found that that the Plaintiff has therefore failed to discharge the legal and evidential burden to prove the 3^rdCondition and consequently the Court dismissed the Plaintiff’s application with cost.