High Court (Kuala Lumpur) – Originating Summons No WA-24C-193-11 OF 2021
Aliza Sulaiman J
15 March 2022
Facts
The Defendant is the Employer and it has appointed JAKS Sdn Bhd (“JAKS”) as the main contractor for the Project. JAKS then appointed the Plaintiff as its subcontractor for the works of “Installation of Electrical 11 KV & LV and Supply for Electrical Power for ACMV Services” (‘Works’) in relation to the Project.
Payment disputes arose and the Plaintiff initiated an adjudication proceeding against JAKS under the CIPAA, claiming for inter alia, unpaid certified amount, uncertified work, retention sum, materials on site and additional variation work. The adjudicator decided in favour of the Plaintiff, but JAKS failed to make payment of the sums due and payable under the Adjudication Decision (“AD”). Hence, the Plaintiff issued a request to the Defendant as principal of JAKS for direct payment of the sums awarded (“Said Request”) pursuant to s. 30 of CIPAA. The Defendant failed to provide a response.
The Defendant contended that there are no monies due or payable because JAKS owed the Defendant LAD and the Defendant suffered massive losses due to delay in delivery. The Defendant also contended that the Said Request was served to JAKS instead of the Defendant. JAKS was not entitled to payment as there was no Interim Payment Certificate issued when the AD was issued or when the Said Request was made. The Defendant also argued that s. 30 CIPAA should be interpreted narrowly to protect an innocent employer who is not a party to the contract. Compelling a principal to pay from sums that are merely claimed but not properly due would defeat the accountability, potentially expose the principal to legal liability and would lead to a legal absurdity as well as injustice and unreasonableness.
The Plaintiff contended that this application should be allowed as the Defendant failed to issue the mandatory written notice pursuant to s. 30(2) CIPAA and this is fatal to the Defendant’s defence. Furthermore, JAKS contended that there was no LAD payable as an extension of time was granted to JAKS to complete the project and there are no other documents stating that there would be LAD payable after the final extended completion date on 31.11.2021. The Plaintiff also submitted that the delay in delivery is irrelevant for the present application.
Issues
- Whether the Said Request was served to JAKS instead of the Defendant?
- Whether there was money due or payable by the Defendant to JAKS?
- Whether s. 30 CIPAA should be interpreted narrowly to prevent unfairness to the employer?
- Whether there was LAD payable by JAKS to the Defendant?
Decision
The Court allowed the Plaintiff’s application for direct payment pursuant to s. 30 CIPAA 2012.
- Since the Defendant’s company and JAKS share the same business address, the acknowledgement of receipt by the representative of JAKS Resources Sdn Bhd indicates that the person has the authority to receive the Said Request on behalf of the Defendant. Hence, service of the Said Request has been effected in accordance with s. 38(a) and/ or (b) of the CIPAA.
- The Defendant did not serve the requisite notice in writing to JAKS under sub-s. 30(2) CIPAA and no reasons were provided. This failure is fatal to the defence that there is no money due or payable by the Defendant to JAKS at the time of the receipt of the Said Request. Therefore, the Defendant is compelled to make payment of the adjudicated amount in the AD to the Plaintiff.
- According to s. 30(5) CIPAA, the Defendant is only obliged to make direct payment if there is money due or payable, not due and payable. Hence, the Defendant’s contention that money in its hand can be caught by s. 30 CIPAA only when it is due to JAKS, and not when it is merely payable, is contrary to the express words in the said provision.
- Based on the evidence submitted by the parties, there is no LAD payable by JAKS to the Defendant as at the date of receipt of the Said Request on 21.9.2021, as the completion date for the Project had been extended to 30.11.2021.
