GRANSTEP DEVELOPMENT SDN. BHD. TAN CHONG HENG CONSTRUCTION SDN. BHD.

IN THE HIGH COURT OF MALAYA AT SHAH ALAM, SELANGOR DARUL EHSAN ORIGINATING SUMMONS NO: BA-24C-11-04/2021 BETWEEN GRANSTEP DEVELOPMENT SDN. BHD. (Co. No.: 769692-A) … PLAINTIFF AND TAN CHONG HENG CONSTRUCTION SDN. BHD. (Co. No.: 317954-P) … DEFENDANT (HEARD TOGETHER WITH) IN THE HIGH COURT OF MALAYA AT SHAH ALAM, SELANGOR DARUL EHSAN ORIGINATING SUMMONS NO: BA-24C-12-04/2021 BETWEEN GRANSTEP DEVELOPMENT SDN. BHD. (Co. No.: 769692-A) … PLAINTIFF AND TAN CHONG HENG CONSTRUCTION SDN. BHD. (Co. No.: 317954-P) … DEFENDANT (HEARD TOGETHER WITH) IN THE HIGH COURT OF MALAYA AT SHAH ALAM, SELANGOR DARUL EHSAN ORIGINATING SUMMONS NO: BA-24C-13-04/2021 BETWEEN TAN CHONG HENG CONSTRUCTION SDN. BHD. (Co. No.: 317954-P) … PLAINTIFF AND GRANSTEP DEVELOPMENT SDN. BHD. (Co. No.: 769692-A) … DEFENDANT 1 JUDGMENT (3 Originating Summonses) A. Introduction 1. This judgment concerns the following three originating summonses (3 OS): (1) Granstep Development Sdn. Bhd. (GD) has filed OS no. BA-24C-11-04/2021 (Setting Aside OS) against Tan Chong Heng Construction Sdn. Bhd. (TCHC) to set aside an adjudication decision made on 1.4.2021 (AD) by an adjudicator, Mr. Chan Kheng Hoe (Adjudicator), in favour of TCHC against GD; (2) OS no. BA-24C-12-04/2021 has been filed by GD against TCHC (Stay OS) for, among others, an order to stay the enforcement of the AD pending the outcome of an arbitration between GD and TCHC (Arbitration); and (3) TCHC has filed OS no. BA-24C-13-04/2021 for leave of court to enforce the AD against GD (Enforcement OS). B. Background 2. By way of “Letter of Award” dated 8.2.2018 (LA), GD appointed TCHC as a main contractor of a housing project in Ampang Jaya, Selangor (Project). 3. Clause 2 LA provided for, among others, the application of “Agreement and Conditions of PAM Contract 2006 (With Quantities)” (PAM Contract 2006) with certain amendments to the PAM Contract 2006 as agreed by GD and TCHC. 4. TCHC commenced work in the Project (Works) and had submitted 13 “Progress Claims” regarding the Works to the Project’s architect (Architect). The Architect had issued 13 “Interim Certificates of Payment” (13 ICP’s). 5. The Architect had granted an extension of time of 115 days (up to 14.11.2018) for TCHC to complete the Project (EOT). 2 6. On behalf of GD, the Architect had issued a notice on 12.11.2019 to TCHC (Default Notice) to remedy various defaults committed by TCHC regarding the Works within 14 days of the Default Notice and upon TCHC’s failure to remedy the defaults within the 14 days period, GD would terminate TCHC’s employment under the agreement between GD and TCHC (Agreement). 7. On 15.11.2018, the Architect issued a “Certificate of Non-Completion” regarding TCHC’s failure to complete the Project. 8. GD issued a notice to terminate TCHC’s employment under the Agreement on 29.11.2019 (Termination Notice). 9. After the Termination Notice had been issued - (1) a joint site inspection had been conducted by GD, TCHC and the Project’s Quantity Surveyor from 4.12.2019 to 16.12.2019; (2) on 18.12.2019, TCHC sent a letter to GD to dispute the validity of the Termination Notice; (3) TCHC submitted Progress Claim no. 14 on 30.12.2019 but the Architect did not issue any ICP regarding this Progress Claim; and (4) GD appointed a new main contractor to complete the Project. 10. TCHC claimed that GD did not pay for the Works which had been performed by TCHC (TCHC’s Claim). C. First adjudication 3 11. With regard to TCHC’s Claim, on 27.2.2020, TCHCH served a “Payment Claim” (PC) on GD (1st PC) pursuant to the Construction Industry Payment and Adjudication Act 2012 (CIPAA). 12. On 11.3.2020, GD served a “Payment Response” (PR) on TCHC (1st PR). 13. TCHC served on GD a “Notice of Adjudication” (NA) dated 13.3.2020 regarding TCHC’s Claim (1st NA). 14. On 12.5.2020, TCHC sent the following documents to the Director of Asian International Arbitration Centre (AIAC): (1) Form 3A (Notice to the Director of the AIAC to register the adjudication) [Form 3A has been prescribed in Schedule 1 to AIAC’s “Adjudication Rules and Procedure” (ARP)] (1st Form 3A); (2) Form 5 (Request to the Director of the AIAC to appoint an adjudicator) (1st Form 5); and (3) two cheques for AIAC’s registration fee and appointment of adjudicator’s fee (Appointment Fee). 15. AIAC sent a letter dated 21.5.2020 [AIAC’s Letter (21.5.2020)] which stated as follows, among others: (1) in view of the demise of AIAC’s then Director, Mr. Vinayak Pradhan, an adjudicator would only be appointed for TCHC’s Claim upon the appointment of a new Director of AIAC [Appointment (AIAC’s Director)]; (2) AIAC’s registration of TCHC’s Claim would only take effect upon the Appointment (AIAC’s Director); and 4 (3) if TCHC wished to “progress with the matter”, AIAC required a fresh Form 5 and AIAC would “account the present [Appointment Fee] towards the future submission of a fresh Form 5”. Alternatively, TCHC’s cheque for the Appointment Fee would be returned to TCHC. 16. TCHC replied to AIAC’s Letter (21.5.2020) by way of a letter dated on 27.5.2020 [TCHC’s Letter (27.5.2020)]. According to TCHC’s Letter (27.5.2020) - (1) TCHC intended to “proceed with the matter” and would file a fresh Form 5 upon the Appointment (AIAC’s Director); and (2) AIAC could bank in TCHC’s cheque for the Appointment Fee which would be accounted towards the future submission of a fresh Form 5. D. TCHC’s application to be placed under “judicial management” (JM) 17. On 3.3.2020, TCHC had filed an ex parte OS no. NA-24NCC-6-03/2020 [TCHC’s OS (JM)] to Seremban High Court (Seremban HC) to place TCHC under JM under s 404 of the Companies Act 2016 (CA). 18. In TCHC’s OS (JM), on 20.7.2020 - (1) GD applied successfully to Seremban HC to intervene as a defendant in TCHC’s OS (JM); and (2) GD obtained leave from Seremban HC [Leave (Seremban HC)] to - (a) commence proceedings against TCHC regarding any dispute which arose from the Agreement. Consequently, GD commenced the Arbitration against TCHC by way of a notice of arbitration dated 1.9.2020; 5 (b) institute legal proceedings in respect of TCHC’s breach of a friendly loan agreement dated 19.9.2019 between GD and TCHC (Friendly Loan Agreement); and (c) file any application concerning adjudication proceedings commenced by TCHC against GD. 19. On 8.3.2020, Seremban HC dismissed TCHC’s OS (JM) with costs [Seremban HC’s Dismissal (TCHC’s OS)]. TCHC did not appeal to the Court of Appeal against Seremban HC’s Dismissal (TCHC’s OS). E. Second adjudication 20. By way of a letter dated 16.6.2020 to GD [TCHC’s Letter (16.5.2020)], TCHC served a second PC dated 15.6.2020 (2nd PC). TCHC’s Letter (16.5.2020) stated that, among others, the 2nd PC had superseded the 1st PC. 21. According to the 2nd PC, TCHC claimed from GD a total sum of RM4,125,162.19 as follows: 1. Unpaid sums arising from IPC nos. 1 to 13 (Certified RM1,367,460.31 Works Claim) 2. Unpaid sum arising from Progress Claim no. 14 RM931,700.05 (Uncertified Works Claim) 3. Unpaid sums due to variation of Works in Progress RM198,211.91 Claim no. 14 (Uncertified Variation Works Claim) 4. Loss and expense incurred by TCHC due to EOT RM1,210,536.00 [Loss/Expense Claim (EOT)] 6 5. Claim for materials on site [Claim (Materials on Site)] RM417,25392 Total RM4,125,162.19 22. By a PR dated 26.6.2020 (2nd PR), GD disputed the entire amount claimed in the 2nd PC. GD further alleged in the 2nd PR that TCHC owed a total sum of RM13,132,954.82 to GD which consisted of, among others, liquidated damages (LD) and general damages in a sum of RM14,558,000.00. 23. TCHC issued a second NA to GD on 1.7.2020 (2nd NA) by way of a letter dated 1.7.2020 [TCHC’s Letter (1.7.2020)]. According to TCHC’s Letter (1.7.2020), the 2nd NA had superseded the 1st NA. 24. On 16.7.2020, TCHC sent to AIAC’s Director a second Form 3A (2nd Form 3A), a second Form 5 (2nd Form 5) and two cheques (for AIAC’s registration fee and Appointment fee). 25. On 4.12.2020, AIAC’s Director appointed the Adjudicator to adjudicate the 2nd PC. 26. GD’s solicitors, Messrs Rhiza & Richard (Messrs RR), sent a letter dated 15.12.2020 to the Adjudicator [Messrs RR’s Letter (15.12.2020)]. Messrs RR has acted for GD in TCHC’s OS (JM), these 3 OS and all other proceedings regarding TCHC. According to Messrs RR’s Letter (15.12.2020), among others, GD objected to the Adjudicator’s jurisdiction to adjudicate the TCHC’s Claim on the following two grounds (GD’s 2 Jurisdictional Objections): (1) as TCHC had not withdrawn the first adjudication commenced by way of the 1st PC (1st Adjudication), the second adjudication before the Adjudicator (2nd Adjudication) could not be lawfully commenced by TCHC (GD’s 1st Jurisdictional Objection); and 7 (2) TCHC cannot institute the 2nd Adjudication because of the “moratorium” effect of TCHC’s OS (JM) under s 410(c) CA (GD’s 2nd Jurisdictional Objection). 27. TCHC served its “Adjudication Claim” (AC) on 17.12.2020. Consequently, GD served its “Adjudication Response” on 30.12.2020 (AR). GD’s 2 Jurisdictional Objections were reiterated in the AR. 28. The Adjudicator delivered the AD as follows, among others: (1) GD shall pay to TCHC an adjudicated amount of RM2,104,964.44 (Adjudicated Amount); (2) GD shall be liable to TCHC for interest at the rate of 5% per annum on certain parts of the Adjudicated Amount from the dates stated in the AD until full payment of the same; and (3) GD shall pay costs of the adjudication, including AIAC’s registration fee, Appointment Fee, Adjudicator’s fee, AIAC’s administrative fee and TCHC’s costs of representation. F. GD’s suit against TCHC based on Friendly Loan Agreement 29. Pursuant to the Leave (Seremban HC), on 23.7.2020, GD filed a civil suit no. NA- 22NCVC-29-07/2020 in the Seremban HC to recover RM1,000,000.00 lent by GD to TCHC under the Friendly Loan Agreement [GD’s Suit (Friendly Loan Agreement)]. 30. In GD’s Suit (Friendly Loan Agreement), on 2.11.2020, the HC allowed GD’s summary judgment application against TCHC as follows [GD’s Judgment (Friendly Loan Agreement)]: (1) TCHC shall pay RM1,000,000.00 to GD [Judgment Sum (Friendly Loan Agreement)]; 8 (2) TCHC shall be liable for interest at the rate of 5% per annum on the Judgment Sum (Friendly Loan Agreement) from 10.3.2020 until full settlement of the Judgment Sum (Friendly Loan Agreement); and (3) costs of RM5,000.00 shall be paid by TCHC to GD. 31. TCHC has appealed to the Court of Appeal against GD’s Judgment (Friendly Loan Agreement) and this appeal is still pending at the time of the preparation of this judgment. G. GD’s suit to nullify 1st and 2nd Adjudications (2 Adjudications) 32. On 18.12.2020, GD filed Kuala Lumpur High Court OS no. WA-24C-247-12/2020 against TCHC [GD’s Suit (2 Adjudications)]. In GD’s Suit (2 Adjudications), GD had applied to Kuala Lumpur High Court (KL HC) for, among others, the following orders: (1) a declaration that, among others, by reason of TCHC’s OS (JM), the 2 Adjudications have no effect because TCHC was under a moratorium under s 410(c) CA; (2) a declaration that the 2nd Adjudication is invalid as the 1st Adjudication has not been withdrawn by TCHC pursuant to s 17(1) CIPAA; (3) a declaration that any adjudicator appointed in the 2nd Adjudication does not have jurisdiction to adjudicate because the adjudicator’s jurisdiction is derived from the 2nd PC which is invalid (as the 2nd PC purports to be a revision of the 1st PC); and (4) an injunction be granted to restrain TCHC from proceeding with the 2 Adjudications. 9 33. Aliza Sulaiman J has dismissed GD’s Suit (2 Adjudications) with costs on 17.3.2021 [KL HC’s Dismissal (GD’s Suit)]. GD has appealed to the Court of Appeal against KL HC’s Dismissal (GD’s Suit) [GD’s Appeal (GD’s Suit)]. 34. At the time this judgment is written, I do not have the benefit of the grounds of judgment regarding KL HC’s Dismissal (GD’s Suit). H. Proceedings in 3 OS 35. Both GD and TCHC had consented for the 3 OS to be heard together. 36. When the 3 OS were first heard by me, I had granted an interim stay of the enforcement of the AD under s 16(1)(a) CIPAA pending the disposal of the Setting Aside OS [Interim Stay (AD)]. 37. In the Setting Aside OS, GD has filed an application in court enclosure no. 9 (Enc. 9) to stay the 3 OS until the decision of GD’s Appeal (GD’s Suit). 38. I adopt the following approach: (1) the court will first decide Enc. 9. If I allow Enc. 9, the 3 OS will be stayed pending the outcome of GD’s Appeal (GD’s Suit); and (2) if Enc. 9 is dismissed - (a) I will consider the Setting Aside OS. If the AD is set aside - (i) the Stay OS will be struck out (not dismissed); and (ii) the Enforcement OS shall be dismissed; (b) if this court dismisses the Setting Aside OS, the Stay OS will be determined; (c) if the Stay OS is allowed, the Enforcement OS should be dismissed; and 10 (d) if I dismiss the Stay OS, the court will finally decide the Enforcement OS. I. Issues 39. The following questions will be decided in this case: (1) regarding Enc. 9 - (a) whether the court has a discretionary power to stay the 3 OS pending the disposal of GD’s Appeal (GD’s Suit) under - (i) s 73 of the Courts of Judicature Act 1964 (CJA) read with r 13 of the Rules of the Court of Appeal 1994 (RCA); or (ii) O 92 r 4 of the Rules of Court 2012 (RC); and (b) should the court exercise its discretion to stay the 3 OS until the outcome of GD’s Appeal (GD’s Suit), especially in view of the object of CIPAA [Object (CIPAA)]?; (2) in respect of the Setting Aside OS, whether the AD should be set aside on any one or more of the following grounds - (a) the Adjudicator had no jurisdiction or had exceeded his jurisdiction under CIPAA to adjudicate the 2nd PC when - (i) TCHC had not withdrawn the 1st Adjudication pursuant to s 17(1) CIPAA; (ii) the 2nd Adjudication had not been registered by the AIAC under r 2 ARP. This raises the issue of whether ARP [made by AIAC pursuant to ss 32(a) to (d), 33(1) and (2) CIPAA] constitute “law”, “written law” and “subsidiary legislation” as understood in Article 160(2) of the Federal Constitution (FC) read with the definitions of “law”, “written law” and “subsidiary legislation” in s 3 of the Interpretation Acts 1948 11 and 1967 (IA). Assuming ARP is a “subsidiary legislation”, is r 2 ARP inconsistent with relevant provisions of CIPAA so as to be invalid under s 23(1) IA?; and/or (iii) the 2nd PC could not supersede or revise the 1st PC. In this regard, was the 1st PC a “pleading” which could not be superseded or revised by the 2nd PC?; and (iv) TCHC could not proceed with the 1st Adjudication and could not institute the 2nd Adjudication because of the “moratorium” effect of the filing of TCHC’s OS (JM) under s 410(c) CA. This question also discusses whether s 410(c) CA stays commencement and/or continuation of, among others, suits, adjudication proceedings and applications to enforce adjudication decisions by companies which have applied for JM. I am not able to find any previous Malaysian case which has decided on the questions enumerated in the above sub-paragraph 2(a); and (b) did the Adjudicator breach the second rule of natural justice (2nd Rule) under ss 15(b) and 24(c) CIPAA when - (i) the Adjudicator dismissed GD’s counterclaim of LD [GD’s Counterclaim (LD)] on the ground that no “Certificate of Practical Completion” (CPC) had been issued; and (ii) GD had not been given a right to address the Adjudicator regarding the lack of CPC; (3) concerning the Stay OS, whether the court should exercise its discretion under s 16(1)(b) CIPAA to stay the enforcement of the AD on any one of the following grounds - (a) the Adjudicator had committed a clear error; and/or 12 (b) it is in the interest of justice to stay the execution of the AD pending the disposal of the Arbitration. In this regard, should the court exercise its discretion to stay the enforcement of the AD merely on the ground of TCHC’s commercial insolvency?; and (4) with regard to the Enforcement OS, should the court grant leave pursuant to s 28(2) CIPAA for TCHC to enforce the AD after deducting the sum due from TCHC to GD under the GD’s Judgment (Friendly Loan Agreement)? J. Object (CIPAA) and nature of adjudication proceedings 40. It is decided in Integral Acres Sdn Bhd v BCEG International (M) Sdn Bhd & Other Cases [2021] MLJU 1889, at [11] and [12], as follows: “[11] It is clear that the Object (CIPAA) is to ensure that parties who have performed “construction work” (as defined in s 4 CIPAA), are paid for the works and are not deprived of cash flow (the life- blood of the construction industry) - please refer to the Long Title to CIPAA (CIPAA is to “facilitate regular and timely payment, to provide a mechanism for speedy dispute resolution through adjudication, to provide for remedies for the recovery of payment in the construction industry”) (Long Title) and the judgment of the Federal Court delivered by Mohd. Zawawi Salleh FCJ in Martego Sdn Bhd v Arkitek Meor & Chew Sdn Bhd and another appeal [2019] 5 AMR 516, at [51]. [12] I am of the following view regarding the Object (CIPAA): (1) Part 1 of the Interpretation Acts 1948 and 1967 (IA) applies to CIPAA by virtue of s 2(1)(a) IA (CIPAA is enacted after 18.5.1967). According to s 17A IA (in Part 1 of IA), an Act of Parliament should be construed in a manner which would promote the object of the Act (Purposive Interpretation) - please see the Federal Court’s judgment in Palm Oil Research and Development Board Malaysia & Anor v Premium Vegetable Oils 13 Sdn Bhd [2004] 2 CLJ 265. Accordingly, a Purposive Interpretation should be applied for all the provisions in CIPAA so as to attain the Object (CIPAA); (2) according to s 13(c) CIPAA, an adjudication decision regarding a claim for payment for construction work is subject to a final decision of the court or arbitral tribunal (if parties have agreed to an “arbitration agreement”) regarding the same claim (Litigation/Arbitration) - please refer to MRCB Builders v Wazam Ventures [2020] 5 MLRH 138, at [13(1)(d)]. Hence, any injustice, error and/or omission in an adjudication decision is not fatal and may be remedied subsequently in a Litigation/Arbitration; (3) to achieve the Object (CIPAA), adjudication proceedings should be - (a) simple; (b) speedy (as stated in the Long Title); and (c) economical for claimants and respondents. The following reasons do not support a legalistic, cumbersome, technical and/or costly approach to be adopted in adjudication proceedings - (i) adjudicators are required to deliver adjudication decisions within the time periods stipulated in s 12(2)(a) or (b) CIPAA [unless the parties agree to an extension of time for the adjudicator to deliver the adjudication decision under s 12(2)(c) CIPAA]. Any non-compliance with s 12(2)(a) to (c) CIPAA will render the adjudication decision void - please see s 12(3) CIPAA. If adjudication proceedings are 14 legalistic, cumbersome and technical, adjudicators may have an onerous task to deliver their adjudication decisions within the strict time-lines prescribed by s 12(2)(a) to (c) CIPAA; (ii) by reason of s 12(9) CIPAA, the Evidence Act 1950 (EA) does not apply to adjudication proceedings. It is therefore clear that Parliament has intended for adjudication proceedings to be speedy and unencumbered by questions regarding admissibility and “relevancy” of evidence [as understood in s 5 read with Chapter 2 (ss 6 to 55) EA] which has been presented to adjudicators; and (iii) CIPAA does not require an adjudicator to be legally qualified. Nor does CIPAA require an adjudicator to have experience in legal practice regarding construction matters. As such, adjudicators who do not have legal qualification and legal experience in construction disputes, may face difficulties in conducting adjudication proceedings which are legalistic in nature; and (4) if adjudication proceedings are legalistic, cumbersome, technical and/or costly, this may impede, if not frustrate, the claimants’ statutory right to adjudicate their claims under CIPAA and this in turn may defeat the Object (CIPAA).” (emphasis added). K. Should court stay 3 OS pending disposal of GD’s Appeal (GD’s Suit)? 41. With regard to Enc. 9, GD’s learned counsel, Mr. Richard Kok Chi Wei, and learned counsel for TCHC, Mr. Ganesalingam A/L Vijayaratnam, have relied on s 73 CJA and r 13 RCA. 15 42. Section 73 CJA and r 13 RCA state as follows: “s 73 CJA An appeal shall not operate as a stay of execution or of proceedings under the decision appealed from unless the court below or the Court of Appeal so orders and no intermediate act or proceeding shall be invalidated except so far as the Court of Appeal may direct. r 13 RCA An appeal shall not operate as a stay of execution or of proceedings under the decision appealed from unless the High Court or the Court so orders and no intermediate act or proceeding shall be invalidated except so far as the Court may direct.” (emphasis added). 43. Firstly, s 73 CJA and r 13 RCA confer power on KL HC [which has heard GD’s Suit (2 Adjudications)] to stay the proceedings in GD’s Suit (2 Adjudications) pending the outcome of GD’s Appeal (GD’s Suit). Section 73 CJA and r 13 RCA do not confer any power on this court to stay the 3 OS pending the determination of GD’s Appeal (GD’s Suit). Furthermore, in view of KL HC’s Dismissal (GD’s Suit), there are no proceedings in GD’s Suit (2 Adjudications) to be stayed pursuant to s 73 CJA and r 13 RCA pending the decision of GD’s Appeal (GD’s Suit). 44. This court has a discretion under O 92 r 4 RC to stay the 3 OS pending the disposal of GD’s Appeal (GD’s Suit). I refer to the following judgment in Ramachandran A/L Meyappan & Ors v Chellapan A/L K. Kalimuthu & Ors [2019] 7 CLJ 788, at [15]: “[15] In Pacific Bunkers Pte Ltd v Owners of the ships or vessels “Geniki Sarawak” and “Geniki Johor” & another case (No. 1) [2015] 2 AMR 887 and Ambank (M) Bhd v Metal Reclamation (Industries) Sdn Bhd & Ors [2016] 10 CLJ 205, I have expressed the following: 16 (1) the Court has a discretionary power under O 92 r 4 RC and/or its inherent jurisdiction to stay the proceedings of a case pending the outcome of a certain event (Stay Order); and (2) an applicant for a Stay Order has the burden to satisfy the Court of the following two matters (2 Conditions) - (a) there exists special circumstances to justify the Stay Order (1st Condition); and (b) if the Stay Order is not granted, there will be an - (i) injustice to any party; or (ii) abuse of Court process (2nd Condition). The appeals to the Court of Appeal against both the above decisions have been dismissed.” (emphasis added). 45. O 92 r 4 RC provides as follows: “Inherent powers of the Court O 92 r 4 For the removal of doubt it is hereby declared that nothing in these Rules shall be deemed to limit or affect the inherent powers of the Court to make any order as may be necessary to prevent injustice or to prevent an abuse of the process of the Court.” (emphasis added). 46. I decline to exercise my discretion under O 92 r 4 RC to stay the 3 OS pending the outcome of GD’s Appeal (GD’s Suit) because - 17 (1) the 3 OS concern the AD which is purely monetary in nature. In other words, there are no special circumstances regarding the AD which support a stay of the 3 OS pending the determination of GD’s Appeal (GD’s Suit); (2) if this court has allowed Enc. 9, this will be contrary to the Object (CIPAA) (please refer to the above paragraph 40) as the Enforcement OS is further delayed. In this manner, TCHC will be deprived of cash flow and there will be an injustice to TCHC; (3) if Enc. 9 is dismissed, there is no injustice to GD due to the following reasons - (a) GD can still proceed with the 3 OS. It is to be emphasized that TCHC cannot enforce the AD without obtaining leave of court in the Enforcement OS; and (b) if GD’s Appeal (GD’s Suit) is subsequently allowed by the Court of Appeal, by virtue of s 69(4) CJA, GD may seek a consequential order from the Court of Appeal to invalidate any order which is made by this court in the 3 OS. Section 69(4) CJA states as follows - “The Court of Appeal may draw inferences of fact, and give any judgment, and make any order which ought to have been given or made, and make such further or other orders as the case requires.” (emphasis added); and (4) TCHC has not abused court process by filing the Enforcement OS. Premised on the above reasons, I have no hesitation to dismiss Enc. 9 with costs. 47. Mr. Kok has contended that if Enc. 9 is dismissed, there is a possibility that this court may decide in a manner which is at variance with KL HC’s Dismissal (GD’s Suit) 18 (Risk of Conflicting HC Decisions). Firstly, this court may not accept GD’s submission regarding the effect of s 410(c) CA and may therefore concur with KL HC’s Dismissal (GD’s Suit). More importantly, the reasons explained in the above paragraph 46, in my opinion, outweigh the Risk of Conflicting HC Decisions and persuade me to refuse Enc. 9 with costs. L. Whether Adjudicator had “jurisdiction” to adjudicate 2nd PC 48. The relevant parts of ss 5, 15, 24 and 27 CIPAA are reproduced below: “s 5 Payment claim (1) An unpaid party may serve a payment claim on a non- paying party for payment pursuant to a construction contract. … s 15 Improperly procured adjudication decision An aggrieved party may apply to the High Court to set aside an adjudication decision on one or more of the following grounds: … (b) there has been a denial of natural justice; … (d) the adjudicator has acted in excess of his jurisdiction. s 24 Duties and obligations of the adjudicator The adjudicator shall at the time of the acceptance of appointment as an adjudicator make a declaration in writing that - … (c) he shall comply with the principles of natural justice; … s 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.” (emphasis added). 19 49. In MKP Builders Sdn Bhd v PC Geotechnic Sdn Bhd [2020] MLJU 1927, at [13] and [14], I have explained that there are two different grounds to set aside an adjudication decision, namely - (1) an adjudicator has no “jurisdiction” to adjudicate a matter under CIPAA (Lack of Jurisdiction Argument); or (2) an adjudicator has “jurisdiction” to adjudicate a matter under s 27(1) read with ss 5 and 6 CIPAA but has exceeded his or her “jurisdiction” pursuant to s 15(d) CIPAA (Excess of Jurisdiction Argument). 50. I am of the view that the Adjudicator has “jurisdiction” to adjudicate the 2nd PC pursuant to s 5 read with s 27(1) CIPAA [Adjudicator’s Jurisdiction (2nd PC)]. M. Whether TCHC was required under CIPAA to withdraw 1st Adjudication 51. Mr. Kok has submitted that TCHC was required by s 17(1) CIPAA to withdraw the 1st Adjudication before TCHC could commence the 2nd Adjudication. Upon TCHC’s failure to withdraw the 1st Adjudication, according to Mr. Kok, the 2nd Adjudication was a nullity. A host of Malaysian High Court decisions has been advanced by Mr. Kok to support the above contention. Mr. Kok has also relied on statutory provisions in the following countries (Foreign Legislation): (1) ss 17A and 26 of New South Wales’ Building and Construction Industry Security of Payment Act 1999; (2) s 28 of Victoria’s Building and Construction Industry Security of Payment Act 2002; (3) s 66 of New Zealand’s Construction Contracts Act 2002; and (4) s 20 of Singapore’s Building and Construction Industry Security of Payment Act. 20 Reliance has also been placed by Mr. Kok on cases decided in Australia, New Zealand and Singapore (Foreign Cases) which have applied the above statutory provisions in the Foreign Legislation. For good measure, Mr. Kok has cited a United Kingdom’s (UK) High Court judgment in Caledonian Modular Ltd v Mar City Development Ltd [2015] EWHC 1855 regarding UK’s Housing Grants, Construction and Regeneration Act 1996. Based on the above submission, Mr. Kok has invited me to decide that the Adjudicator’s Jurisdiction (2nd PC) had been exceeded because the Adjudicator completed the 2nd Adjudication when TCHC had not withdrawn the 1st Adjudication pursuant to s 17(1) CIPAA. 52. Sections 8(1), (2), 9(1), 12(1) to (3), 17 and 21 CIPAA state as follows: “s 8 Initiation of Adjudication (1) A claimant may initiate adjudication proceedings by serving a written [NA] containing the nature and description of the dispute and the remedy sought together with any supporting document on the respondent. (2) Upon receipt by the respondent of the [NA], an adjudicator shall be appointed in the manner described in section 21. … Adjudication claim s 9(1) The claimant shall, within ten working days from the receipt of the acceptance of appointment by the adjudicator under subsection 22(2) or 23(2), serve a written [AC] containing the nature and description of the dispute and the remedy sought together with any supporting document on the respondent. … Adjudication and decision s 12(1) The adjudicator shall conduct the adjudication in the manner as the adjudicator considers appropriate within the powers provided under section 25. 21 (2) Subject to subsection 19(5), the adjudicator shall decide the dispute and deliver the adjudication decision within - (a) forty-five working days from the service of the [AR] or reply to the [AR], whichever is later; (b) forty-five working days from the expiry of the period prescribed for the service of the [AR] if no [AR] is received; or (c) such further time as agreed to by the parties. (3) An adjudication decision which is not made within the period specified in subsection (2) is void. … s 17 Withdrawal and recommencement of adjudication proceedings (1) A claimant may at any time withdraw an [AC] by serving a notice of withdrawal in writing on the respondent and the adjudicator. (2) The claimant shall bear the costs arising out of the withdrawal of the adjudication proceedings unless the adjudicator orders otherwise. (3) The claimant who has withdrawn the [AC] is free to recommence adjudication on the same subject matter by serving a new [NA] in accordance with section 8. (4) If an adjudicator dies, resigns or is unable through illness or any other cause to complete the adjudication proceedings - (a) the adjudication proceedings come to an end and the parties are free to recommence adjudication proceedings afresh; or 22 (b) the adjudication proceedings may be continued by a new adjudicator appointed by the parties and the adjudication proceedings shall continue as if there is no change of adjudicator. Appointment of adjudicator 21 An adjudicator may be appointed in the following manner: (a) by agreement of the parties in dispute within ten working days from the service of the notice of adjudication by the claimant; or (b) by the Director of the KLRCA - (i) upon the request of either party in dispute if there is no agreement of the parties under paragraph (a); or (ii) upon the request of the parties in dispute.” (emphasis added). 53. Firstly, I am of the view that adjudication proceedings can only commence upon the appointment of an adjudicator under s 21 CIPAA and not before. My reasons are as follows: (1) according to s 8(2) CIPAA, upon receipt of a claimant’s NA, “an adjudicator shall be appointed in the manner described in [s 21 CIPAA]”. Parliament has employed a mandatory term “shall” in s 8(2) CIPAA; (2) after an adjudicator has been appointed, s 9(1) CIPAA requires a claimant to serve an AC on the respondent within 10 working days from the claimant’s receipt of appointment of the adjudicator. Once again, an imperative word “shall” has been used by the legislature in s 9(1) CIPAA; (3) by reason of s 12(1) CIPAA, an adjudicator “shall conduct the adjudication in the manner as the adjudicator considers appropriate within the powers provided under [s 25 CIPAA]”. It has been decided in MRCB Builders v Wazam 23 Ventures [2020] 5 MLRH 138, at [13(1)(a)(i)], that s 12(1) CIPAA is a mandatory statutory provision. Without the appointment of an adjudicator, how can adjudication proceedings commence?; and (4) adjudicators have to deliver their adjudication decisions within the time period stipulated in s 12(2)(a) or (b) CIPAA [unless the parties agree to an extension of time for adjudicators to deliver adjudication decisions under s 12(2)(c) CIPAA]. According to s 12(3) CIPAA, any non-compliance with s 12(2)(a) CIPAA by an adjudicator will render the adjudication decision void. The strict time periods provided in s 12(2)(a) or (b) CIPAA can only take effect upon the appointment of an adjudicator and not before. 54. Mr. Kok has relied on s 8(1) CIPAA which provides that a claimant may “initiate adjudication proceedings” by serving a written NA on the respondent. In my opinion, that there is nothing in s 8(1) CIPAA which states that adjudication proceedings shall commence merely upon the service of a NA by a claimant on the respondent (without the appointment of an adjudicator). Mr. Kok’s contention that adjudication proceedings can be instituted by way of a NA under s 8(1) CIPAA without the appointment of an adjudicator, is inconsistent with the wording in ss 8(2), 9(1), 12(1), (2)(a), (b) and (3) CIPAA - please refer to the above paragraph 53. 55. Premised on the reasons explained in the above paragraphs 53 and 54, when an adjudicator has not been appointed, adjudication proceedings have not been instituted notwithstanding a claimant’s service of PC (on the respondent) and NA (on AIAC and the respondent). Consequently, it was not accurate to describe the 1st PC, 1st PR and 1st NA in this case as the 1st Adjudication. This was because no adjudication proceedings had been instituted with regard to the 1st PC, 1st PR and 1st NA (as an adjudicator had not been appointed for the 1st PC and 1st NA). To avoid confusion, I will continue to use the abbreviation of “1st Adjudication” in this judgment with the caveat that no adjudication proceedings had been instituted under CIPAA regarding the 1st Adjudication. 24 56. Secondly, I opine that a claimant can only withdraw adjudication proceedings after the appointment of an adjudicator. My reasons are as follows: (1) s 17(1) CIPAA provides that a claimant may at any time withdraw an AC by serving a notice of withdrawal in writing on the respondent and the adjudicator; (2) upon a claimant’s withdrawal of an AC before an adjudicator, s 17(2) CIPAA states that the claimant “shall” bear the costs arising out of the withdrawal of the adjudication proceedings unless the adjudicator orders otherwise [Costs (Withdrawal of Adjudication)]. It is necessarily implied in s 17(2) CIPAA that Costs (Withdrawal of Adjudication) can only be decided by an adjudicator (not by AIAC’s Director or the parties). Accordingly, if an adjudicator has not been appointed, there is no requirement for a claimant to withdraw an adjudication because there is no adjudicator to decide regarding who should bear the Costs (Withdrawal of Adjudication) and its quantum; and (3) as explained in Integral Acres, at [12(3)], adjudication proceedings should be simple, expeditious and economical so as to achieve the Object (CIPAA). If I have accepted Mr. Kok’s contention (TCHC was required by s 17 CIPAA to withdraw the 1st Adjudication before TCHC commenced the 2nd Adjudication), this may result in a cumbersome, technical and/or costly approach in adjudication proceedings which undermines the Object (CIPAA). 57. AIAC did not appoint an adjudicator for the 1st PC and 1st AC. Instead, the Adjudicator had been appointed for the 2nd PC and 2nd AC. Hence, as explained in the above paragraphs 53 to 56 - (1) adjudication proceedings had not been commenced by way of the 1st PC and 1st AC; and (2) TCHC was not required by CIPAA, in particular s 17(1) and (2) CIPAA, to withdraw the 1st Adjudication before commencing the 2nd Adjudication. 25 58. Thirdly, all the Malaysian cases cited by Mr. Kok did not concern two issues which arose in this case, ie. whether adjudication proceedings had commenced by way of the 1st PC and 1st AC (when no adjudicator had been appointed) and if so, whether TCHC was required by s 17(1) CIPAA to withdraw the 1st Adjudication before TCHC could commence the 2nd Adjudication. 59. I must commend Mr. Kok for referring this court to the Foreign Legislation and Foreign Cases. 60. The relevant provisions in the Foreign Legislation are different from ss 8(2), 9(1), 12(1), (2)(a), (b), (3), 17(1) and (2) CIPAA. Hence, I am not able to resort to the Foreign Cases in the construction of ss 8(2), 9(1), 12(1), (2)(a), (b), (3), 17(1) and (2) CIPAA. 61. Fourthly, the above submission by Mr. Kok is actually a Lack of Jurisdiction Argument and not an Excess of Jurisdiction Argument. This is because if this court has determined that TCHC was required by s 17(1) CIPAA to withdraw the 1st Adjudication before TCHC could commence the 2nd Adjudication, this means that the Adjudicator had no jurisdiction under CIPAA to adjudicate the 2nd Adjudication. 62. Lastly, I should state that GD had not been prejudiced in any manner by TCHC’s purported failure to withdraw the 1st Adjudication because GD had served the 2nd PR and AR (which contained GD’s 2 Jurisdictional Objections). In fact, to the Adjudicator’s credit, the Adjudicator had dismissed GD’s 1st Jurisdictional Objection in paragraphs 60 to 74 AD. N. Was TCHC required by r 2 ARP to register 2nd Adjudication with AIAC? 63. According to Mr. Kok, the 2nd Adjudication had not been registered by the AIAC under r 2 ARP. Hence, the Adjudicator had exceeded his jurisdiction in completing the 2nd Adjudication. 26 64. I reproduce below r 2(1) ARP, ss 32, 33 and 39 CIPAA, definition of “law” in Article 160(2) FC, definitions of “law”, “written law” and “subsidiary legislation” in s 3 IA - “r 2 ARP Commencement & Registration of Adjudication (1) The Claimant shall upon serving a [NA] on the Respondent pursuant to Section 8(1) [CIPAA] register the adjudication matter at the AIAC by serving a notice on the Director of the AIAC containing the following particulars and enclosing a copy of the [PC] and [PR] (if any) and the [NA]: … CIPAA s 32 Functions of KLRCA The KLRCA shall be the adjudication authority and shall be responsible for the following: (a) setting of competency standard and criteria of an adjudicator; (b) determination of the standard terms of appointment of an adjudicator and fees for the services of an adjudicator; (c) administrative support for the conduct of adjudication under this Act; and (d) any functions as may be required for the efficient conduct of adjudication under this Act. s 33 Policy directions (1) In carrying out its functions under section 32, the KLRCA shall obtain policy directions from the Minister charged with the responsibility for legal affairs. (2) The Minister charged with the responsibility for legal affairs shall consult the Minister before making any policy directions on the functions of the KLRCA under section 32. 27 s 39 Regulations The Minister may, upon considering the recommendation of the KLRCA, make regulations as may be expedient or necessary for giving full effect or the better carrying out of the provisions of this Act. Definition of “law” in Article 160(2) FC “law” includes written law, the common law in so far as it is in operation in the Federation or any part thereof, and any custom or usage having the force of law in the Federation or any part thereof; … Definitions of “law”, “written law” and “subsidiary legislation” in s 3 IA "law" has the meaning assigned by Article 160(2) [FC]; "subsidiary legislation" means any proclamation, rule, regulation, order, notification, by-law or other instrument made under any Act, Enactment, Ordinance or other lawful authority and having legislative effect; "written law" means - (a) the Federal Constitution and the Constitutions of the States and subsidiary legislation made thereunder; (b) Acts of Parliament and subsidiary legislation made thereunder; (c) Ordinances and Enactments (including any federal or State law styling itself an Ordinance or Enactment) and subsidiary legislation made thereunder; and (d) any other legislative enactments or legislative instruments (including Acts of Parliament of the United Kingdom of Great Britain and Northern Ireland and Orders in Council and other subsidiary legislation made thereunder) which are in force in Malaysia or any part thereof;” 28 (emphasis added). 65. I am of the opinion ARP are not “subsidiary legislation” made under s 39 CIPAA and have no legal effect. This view is premised on the following reasons: (1) s 39 CIPAA empowers the “Minister” (defined in s 4 CIPAA as the Minister charged with the responsibility for works) to make regulations. Pursuant to s 39 CIPAA, the Minister has made Construction Industry Payment and Adjudication Regulations 2014 which are enforceable as “law”, “written law” and “subsidiary legislation” under the definition of “law” in Article 160(2) FC read with the definitions of “law”, “written law” and “subsidiary legislation” in s 3 IA; and (2) unlike s 39 CIPAA, ss 32 and 33 CIPAA do not confer any power on AIAC to make regulations or subsidiary legislation. Consequently, ARP are not “law”, “written law” and “subsidiary legislation” according to the definition of “law” in Article 160(2) FC read with the definitions of “law”, “written law” and “subsidiary legislation” in s 3 IA. 66. As explained in the above paragraph 65, GD cannot rely on r 2(1) ARP which has no legal effect. Having said that, it is prudent for all claimants and respondents to comply with ARP. 67. Even if it is assumed that r 2(1) ARP constitutes subsidiary legislation, I am of the view that r 2(1) ARP is inconsistent with ss 8(2), 9(1), 12(1), (2)(a), (b), (3), 17(1) and (2) CIPAA (which provide that adjudication proceedings have not been instituted when an adjudicator has not been appointed - please see the above paragraphs 53 to 56). Consequently, by virtue of s 23(1) IA, r 2(1) ARP is void to the extent of its inconsistency with ss 8(2), 9(1), 12(1), (2)(a), (b), (3), 17(1) and (2) CIPAA. Section 23(1) IA provides as follows: “Any subsidiary legislation that is inconsistent with an Act (including the Act under which the subsidiary legislation was made) shall be void to the extent of the inconsistency.” 29 (emphasis added). The application of s 23(1) IA has been explained by Mohd. Zawawi Salleh FCJ in the Federal Court case of Pihak Berkuasa Tatatertib Majlis Perbandaran Seberang Perai & Anor v Muziadi Mukhtar [2020] 1 CLJ 1, at [81], as follows: “[81] It is trite that subsidiary or delegated legislation shall not be broader than the enabling legislation. This general principle of statutory interpretation is codified in s 23 [IA]. …” (emphasis added). 68. Before I decide Mr. Kok’s next contention, I reiterate that if I have accepted Mr. Kok’s reliance on r 2(1) ARP, this means that the Adjudicator had no jurisdiction under CIPAA to adjudicate the 2nd Adjudication. In other words, Mr. Kok’s submission based on r 2(1) ARP is a Lack of Jurisdiction Argument and not an Excess of Jurisdiction Argument. O. Could 2nd PC supersede 1st PC? 69. Mr. Kok has submitted at length that TCHC’s 2nd PC could not supersede or revise the 1st PC. 70. I am not able to accede to the above contention because a PC is not a “pleading” within the meaning of O 18 RC. I refer to the following judgment in Integral Acres, at [24] to [27]: “[24] Firstly, I acknowledge that Malaysian cases have used the term “pleadings” to describe PC’s [provided in s 5(1) and (2)(a) to (d) CIPAA] and PR’s [please refer to s 6(2) CIPAA]. [25] According to O 1 r 4(1) RC, a “pleading” does not include a notice of application or a preliminary act. 30 [26] I am of the respectful view that PC’s and PR’s are not “pleadings” as understood in O 18 RC. This opinion is based on the following reasons: (1) CIPAA does not provide that PC’s and PR’s are “pleadings” within the meaning of O 18 RC. Section 27(1) CIPAA merely states that the jurisdiction of adjudicators “is limited to the matter referred to adjudication by the parties” (emphasis added) pursuant to ss 5 (regarding PC) and 6 CIPAA (concerning PR). There is nothing in s 27(1) CIPAA which provides that an adjudicator’s “jurisdiction” to adjudicate a Claim (Works) and Loss (Interest) is limited to the sums claimed in the PC; (2) the Construction Industry Payment and Adjudication Regulations 2014 (CIPAR) do not state that PC’s and PR’s are “pleadings” under O 18 RC; (3) with effect from 1.3.2018, O 69A RC has been inserted into RC by the Rules Committee by way of the Rules of Court (Amendment) 2018 [P.U.(A) 24/2018]. There is nothing in O 69A RC which provides that PC’s and PR’s are “pleadings” in the context of O 18 RC. If the Rules Committee had intended for PC’s and PR’s to have effect as “pleadings” pursuant to O 18 RC, the Rules Committee would have expressly provided as such in O 69A RC; (4) as explained in the above paragraphs 11 and 12, a purposive interpretation of ss 5(1), (2)(a) to (d) and 6(2) read with s 27(1) CIPAA does not support the submission that PC’s and PR’s are “pleadings” as understood in O 18 RC. If I have accepted the above contention by Mr. Foo, this means a respondent in an adjudication proceedings may challenge the adjudicator’s 31 “jurisdiction” to adjudicate a claim merely on the ground that the amount of a particular claim in the AC is different from the sum claimed in the PC for the same claim. This is contrary to the simple, expeditious and economical nature of adjudication proceedings which is intended by Parliament to promote the Object (CIPAA); (5) if there is any discrepancy in the amounts alleged in the PC and AC, a respondent is not prejudiced in any manner by such a discrepancy because the respondent is entitled to serve an AR pursuant to s 10(1) CIPAA. In other words, there is no injustice to respondents if PC’s and PR’s are not “pleadings” within the meaning of O 18 RC; (6) if a PR is not a “pleading” under O 18 RC, a respondent is not bound by any sum of counterclaim and/or set-off raised by the respondent in the PR [Sum (Counterclaim/Set-Off)]. The respondent therefore may depart from the Sum (Counterclaim/Set-Off) alleged in the PR and may aver a different Sum (Counterclaim/Set-Off) in the AR; and (7) parties may not be represented by practising Advocates and Solicitors or non-practising lawyers in adjudication proceedings. It is therefore unjust for - (a) claimants to be penalised if there are discrepancies in the sums claimed in the PC and AC; and (b) respondents to suffer any adverse consequence merely because the Sums (Counterclaim/Set-Off) are different in PR and AR. 32 [27] Based on the reasons stated in the above paragraph 26, a PC is not a “pleading” within the meaning of O 18 RC. As such, BCEG could claim for a sum of Loss (Interest) in the 2nd AC which was higher than previously claimed in the PC.” (emphasis added). 71. As explained in Integral Acres, TCHC’s 2nd PC could supersede or revise the 1st PC. Hence, the Adjudicator did not exceed his jurisdiction as understood in s 15(d) CIPAA when he adjudicated TCHC’s Claim based on the 2nd PC. Moreover, GD had not been prejudiced by the 2nd PC because GD had responded to the 2nd PC by way of the 2nd PR. P. Whether filing of TCHC’s OS (JM) would stay 2 Adjudications under s 410(c) CA 72. Mr. Kok has invited this court to decide that TCHC could not proceed with the 2 Adjudications because of the “moratorium” effect of the filing of TCHC’s OS (JM) under s 410(c) CA. Mr. Kok has also relied on s 37 CIPAA and s 588 CA. 73. Sections 37 CIPAA, ss 404, 410 and 588 CA provide as follows: “CIPAA s 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. 33 (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. CA s 404 Application to Court for a company to be placed under judicial management and for appointment of a judicial manager An application for an order that a company should be placed under a judicial management and for an appointment of a judicial manager may be made to the Court by the company or its creditor if the company or its creditor considers that – (a) the company is or will be unable to pay its debts; and (b) there is a reasonable probability of rehabilitating the company or of preserving all or part of its business as a going concern or that otherwise the interests of creditors would be better served than by resorting to a winding up. s 410 Effect of application for a judicial management order During the period beginning with the making of an application for a judicial management order and ending with the making of such an order or the dismissal of the application - (a) no resolution shall be passed or order made for the winding up of the company; (b) no steps shall be taken to enforce any charge on or security over the company’s property or to repossess any goods in the company’s possession under any hire purchase agreement, chattels leasing agreement or retention of title agreement, except with leave of the Court and subject to such terms as the Court may impose; and 34 (c) no other proceedings and no execution or other legal process shall be commenced or continued and no distress may be levied against the company or its property except with leave of the Court and subject to such terms as the Court may impose. s 588 General penalty (1) A person commits an offence under this Act if he - (a) does that which by or under this Act he is prohibited to do; (b) does not do that which by or under this Act he is required or directed to do; or (c) otherwise contravenes or fails to comply with any provision of this Act. (2) A person who is guilty of an offence under this Act shall, on conviction, be liable to a penalty or punishment not exceeding the penalty or punishment expressly mentioned as the penalty or punishment for the offence, or if a penalty or punishment is not mentioned - (a) in the case of a person who is an individual, to a fine not exceeding fifty thousand ringgit or to imprisonment for a term not exceeding three years or to both; (b) in the case of a person other than an individual, to a fine not exceeding fifty thousand ringgit. (3) For the purposes of this section, "individual" means a natural person.” (emphasis added). 74. Firstly, Mr. Kok’s reliance on s 410(c) CA is a Lack of Jurisdiction Argument and not an Excess of Jurisdiction Argument. This is because if I have acceded to Mr. Kok’s contention based on s 410(c) CA, the Adjudicator did not have jurisdiction to make the AD in the 2nd Adjudication. 35 75. Secondly, I am unable to see how s 588 CA can advance the above contention by Mr. Kok. 76. I am of the following view regarding the effect of s 410(c) upon the filing of an application to the High Court [HC (JM Application)] for a company to be placed under JM (Applicant Company): (1) according to s 404(b) CA, the purpose of a JM application [Purpose (JM)] is to rehabilitate the Applicant Company and/or preserve all or part of the business of the Applicant Company as a going concern so that the interests of the Applicant Company’s creditors would be better served than by resorting to a winding up of the Applicant Company; (2) upon the filing of a JM application by the Applicant Company, by reason of s 410(c) CA - (a) no suit can be filed by any person (X) against the Applicant Company unless there is leave from HC (JM Application) (Court’s Leave) - please refer to the judgment of Hamid Sultan JCA in the Court of Appeal case of CIMB Islamic Bank Bhd v Wellcom Communications (NS) Sdn Bhd & Anor [2019] MLJU 148, at [4]; (b) no execution proceedings can be commenced by X against the Applicant Company (Execution Proceedings) unless there is Court’s Leave; (c) no distress may be levied by X against the Applicant Company and its property (Distress Proceedings) unless there is Court’s Leave; (d) no arbitral proceedings can be instituted by X against the Applicant Company (Arbitral Proceedings) unless there is Court’s Leave. In support of this opinion, I cite the following two cases, one from UK and the other from Singapore - 36 (i) Part 2 of UK’s Insolvency Act 1986 [IA (UK)] has introduced administration of companies which is similar to JM under our CA. In Bristol Airport plc & Anor v Powdrill & Ors (Re Paramount Airways Ltd) [1990] 2 All ER 493, UK’s Court of Appeal case had construed the then applicable s 11(1)(c) IA (UK) [which was similar to s 410(c) CA]. Nicolas Browne-Wilkinson VC (as he then was) has decided as follows in Bristol Airport, at p. 506 - “In my judgment the natural meaning of the words 'no other proceedings … may be commenced or continued' is that the proceedings in question are either legal proceedings or quasi-legal proceedings such as arbitration.” (emphasis added). Administration of companies in UK is now provided in s 8 and Schedule B1 to IA (UK); and (ii) in Electro Magnetic (S) Ltd (under Judicial Management) v Development Bank of Singapore [1994] 1 SLR 734, Singapore’s Court of Appeal has interpreted the previous s 227C(c) of the Companies Act of Singapore [which was in pari materia with our s 410(c) CA]. LP Thean JA held as follows in Electro Magnetic, at p. 742 - “In our opinion, the word ‘proceedings’ connotes a process initiated whether in court or by way of arbitration or a step in such process.” (emphasis added). 37 Presently, judicial management of companies in Singapore is provided in Part 7 of Insolvency, Restructuring and Dissolution Act 2018; (e) no adjudication proceedings can be commenced by X against the Applicant Company (Adjudication Proceedings) unless there is Court’s Leave. This view is premised on the following reasons - (i) X’s statutory right to institute Adjudication Proceedings against the Applicant Company under ss 5(1) and 27(1) CIPAA is subject to the specific and subsequent provision in s 410(c) CA. This construction accords with two maxims of statutory interpretation, namely “generalia specialibus non derogant” (a specific statutory provision should prevail over a general statutory provision) and “lex posterior derogat priori” (a subsequent statutory provision should be favoured over an earlier statutory provision); and (ii) if X is allowed to institute Adjudication Proceedings against the Applicant Company without Court’s Leave, this will defeat the Purpose (JM); and (f) if suits, Execution Proceedings, Distress Proceedings, Arbitral Proceedings and Adjudication Proceedings have been instituted by X against the Applicant Company and such proceedings are pending on the date of filing of a JM application (Pending Proceedings), the Pending Proceedings cannot be continued by X against the Applicant Company unless there is Court’s Leave; (3) s 410(c) CA does not bar the Applicant Company from filing or continuing with the following proceedings - (a) a suit or counterclaim against any person (Y); and 38 (b) Execution Proceedings against Y; (c) Distress Proceedings against Y; (d) Arbitral Proceedings against Y; (e) Adjudication Proceedings against Y; and (f) an application to court under s 28(1) and (2) CIPAA to enforce an adjudication decision in favour of the Applicant Company against Y [Applicant Company’s Enforcement Application (AD)]. Y may resist the Applicant Company’s Enforcement Application (AD) by filing - (i) an application pursuant to s 15(a) to (d) CIPAA to set aside the adjudication decision in favour of the Applicant Company [Y’s Setting Aside Application (AD)]; and/or (ii) an application under s 16(1)(b) CIPAA to stay the enforcement of the adjudication decision in favour of the Applicant Company pending the disposal of a suit or arbitration between Y and the Applicant Company [Y’s Stay Application (AD)]; and (4) the view expressed in the above sub-paragraph (3) is premised on the following reasons - (a) the express words of s 410(c) CA (no other proceedings and no execution or other legal process shall be commenced or continued and no distress may be levied against the company or its property) (emphasis added) - (i) only apply to proceedings by X against the Applicant Company; and (ii) do not apply to proceedings commenced by the Applicant Company against Y; 39 (b) there is a rebuttable statutory presumption that Parliament is deemed to know existing law - please refer to the Court of Appeal’s judgment delivered by Gopal Sri Ram JCA (as he then was) in Luggage Distributors (M) Sdn Bhd v Tan Hor Teng & Anor [1995] 1 MLJ 719, at 754. When s 410(c) CA is passed, our legislature is deemed to know existing law, namely the Applicant Company’s statutory right to adjudicate its claim under CIPAA. If Parliament had intended for s 410(c) CA to stay the exercise of the Applicant Company’s statutory right to adjudicate its claim under CIPAA upon the filing of a JM application, Parliament would have expressly stated as such in s 410(c) CA when Parliament passed s 410(c) CA. Parliament however did not do so; and (c) it is in the interest of the Applicant Company for the Applicant Company to commence or continue any proceedings against Y without being shackled by s 410(c) CA. Hence, the Purpose (JM) does not support the application of s 410(c) CA to proceedings commenced by the Applicant Company against Y. Y is entitled to resist the Applicant Company’s Enforcement Application (AD) by filing Y’s Setting Aside Application (AD) and/or Y’s Stay Application (AD) (collectively referred to in this judgment as “Y’s 2 Applications”). Y’s 2 Applications are not proceedings against the Applicant Company and/or the Applicant Company’s assets within the meaning of s 410(c) CA. Consequently, Y is not required by s 410(c) CA to apply for Court’s Leave to file Y’s 2 Applications. Nor is Y required to obtain Court’s Leave to oppose the Applicant Company’s Enforcement Application (AD). 77. As explained in the above sub-paragraphs 76(3) and (4), upon the filing of TCHC’s OS (JM), s 410(c) CA did not apply to the 2 Adjudications. Hence, GD could have resisted the 2 Adjudications without Leave (Seremban HC) under s 410(c) CA. 40 78. I have not overlooked s 37(1) CIPAA which has been cited by Mr. Kok. Section 37(1) CIPAA merely provides that a dispute regarding a payment under a construction contract may be referred concurrently to adjudication, arbitration or court. Section 37(1) CIPAA does not cater for a JM application. In any event, by virtue of the application of two rules of statutory construction, “generalia specialibus non derogant” and “lex posterior derogat priori”, the specific and subsequent provision in s 410(c) CA should prevail over the general and earlier provision in s 37(1) CIPAA. 79. Premised on the above reasons, I am not able to accept Mr. Kok’s reliance on s 410(c) CA. It is to be noted that the Adjudicator had also rejected GD’s 2nd Jurisdictional Objection (please refer to paragraphs 75 to 84 AD). The above decision is also supported by KL HC’s Dismissal (GD’s Suit). Q. Had Adjudicator breached 2nd Rule? 80. Mr. Kok has submitted that the 2nd Rule under ss 15(b) and 24(c) CIPAA had been breached by the Adjudicator when he dismissed GD’s Counterclaim (LD) on the ground that no CPC had been issued. As such, Mr. Kok has contended that GD had been deprived of its right to address the Adjudicator regarding the lack of CPC. 81. I should point out that the Adjudicator had adjudicated GD’s Counterclaim (LD) according to Sections 1 to 3 of the Project [“Section 1 (Project)”, “Section 2 (Project)” and “Section 3 (Project)”] - please refer to paragraphs 200 to 210 AD. 82. I am not able to accept the above contention by Mr. Kok due to the following reasons: (1) the Adjudicator had not deprived GD of its right to adduce all evidence and to submit on all the issues which arose in the Adjudication - please refer to the judgment of David Wong Dak Wah JCA (as he then was) in the Court of Appeal case of ACFM Engineering & Construction Sdn Bhd v Esstar Vision Sdn Bhd & another appeal [2016] MLJU 1776, at [20]; 41 (2) the Adjudicator was only required by the 2nd Rule to consider all the defences, counterclaim and set-off raised by GD in the Adjudication. It is decided in Prestij Mega Construction Sdn Bhd v Personal Representative of Estate of Vinayak Pradhan Prabhakar (Deceased) and other cases [2021] 11 MLJ 581, at, at [69], as follows - “[69] Firstly, View Esteem, at [65], [66] and [74], has decided that an adjudicator would have breached the 2nd Rule if the adjudicator did not consider a defence raised in the adjudication proceedings. View Esteem did not however decide that an adjudicator must address each and every submission made by parties in the AD. This is understandable because by virtue of s 12(2)(a) to (c) CIPAA, an adjudicator has to deliver an adjudication decision within a tight timeline. Furthermore, the Object (CIPAA) can only be attained if adjudicators deliver AD’s expeditiously so as to ensure that parties who perform construction work are not deprived of cash flow in the form of payment for their construction work.” (emphasis added). The Adjudicator had considered GD’s Counterclaim (LD) on Section 1 (Project) to Section 3 (Project). In fact, the Adjudicator had accepted GD’s Counterclaim (LD) regarding Section 2 (Project) amounting to RM188,000.00 - please see sub-paragraphs 210.4 to 210.8 AD; and (3) the Adjudicator had accepted the following defences raised by GD in the 2nd Adjudication - (a) in paragraph 109 AD, the Adjudicator had accepted GD’s sum of RM763,749.25 for Uncertified Works Claim regarding “General Conditions and Preliminaries” (not the amount of RM849,221.45 as claimed by TCHC); 42 (b) the Adjudicator had rejected Uncertified Variation Works Claim by TCHC in “Variation Order” nos. 12, 13, 18 and 19 (paragraphs 142, 143, 147 to 150, 155 and 156 AD); and (c) the Adjudicator had dismissed Loss/Expense Claim (EOT) of a sum of RM1,210,536.00 - please refer to paragraphs 159 to 176 AD. In view of the fact that the Adjudicator had accepted the above contentions by GD, I cannot give any credence to the submission that the Adjudicator had breached the 2nd Rule in the 2nd Adjudication. 83. Even if it is assumed that the Adjudicator had breached the 2nd Rule with regard to GD’s Counterclaim (LD) on Section 1 (Project) and Section 3 (Project) [Alleged Breach (2nd Rule)], nonetheless I will not exercise my discretion under ss 15(b) and 24(c) CIPAA to set aside the AD due to the following reasons: (1) premised on the Court of Appeal’s judgment delivered by Harmindar Singh JCA (as he then was) in Guangxi Dev & Cap Sdn Bhd v Sycal Bhd and another appeal [2019] 1 CLJ 592, at [32], there was no “real possibility” that without the Alleged Breach (2nd Rule), the Adjudicator would have reached a different decision in the 2nd Adjudication regarding parts of the AD which did not concern GD’s Counterclaim (LD) on Section 1 (Project) and Section 3 (Project) [AD (Parts Not Concerning LD)]; and (2) GD has not adduced any evidence in this case to show that the Alleged Breach (2nd Rule) is “decisive” or “material” to the AD (Parts Not Concerning LD) which warrants the court to set aside the AD (Parts Not Concerning LD) - please refer to the judgment of Mary Lim Thiam Suan J (as she then was) in the High Court in Ranhill E & C Sdn Bhd v Tioxide (M) Sdn Bhd [2015] 1 LNS 1435, at [82]. R. Court’s power under s 15 CIPAA 43 84. The nature of the court’s power under s 15 CIPAA has been explained in Alpha Galaxy Sdn Bhd v Euro Destar (M) Sdn Bhd [2021] AMEJ 614, at [26], as follows: “[26] This case serves as a reminder of the nature of the court’s power in deciding an application under s 15 CIPAA (Setting Aside Application). I am of the following view regarding a Setting Aside Application: (1) an adjudication decision is provisional under s 13(a) to (c) CIPAA. The High Court may set aside an adjudication decision - (a) if the adjudicator has no jurisdiction to adjudicate the matter - please refer to Uzma Engineering Sdn Bhd v Khan Co Ltd [2020] MLJU 1272, at [22]; and/or (b) there is proof of any one or more of the circumstances stipulated in s 15(a) to (d) read with s 13(a) CIPAA; and (2) a Setting Aside Application is not an appeal to the High Court against an adjudication decision. Nor is a Setting Aside Application a Judicial Review of an adjudication decision. Accordingly, the court in a Setting Aside Application cannot review the merits of an adjudication decision and cannot set aside an adjudication decision merely on any one or more of the following grounds - (a) an error of law has been committed by an adjudicator (unless the adjudicator has answered a “wrong” question of law which does not arise from the dispute to be adjudicated upon) - please see the judgment of Lee Swee Seng J (as he then was) in the High Court case of Econpile (M) Sdn Bhd v IRDK Ventures Sdn Bhd & another case [2016] 5 CLJ 882, at [71]; 44 (b) an adjudicator has interpreted erroneously a provision in the construction contract - Econpile, at [67]; (c) an adjudicator has misconstrued relevant documents; (d) relevant evidence has been wrongly excluded by an adjudicator; (e) an adjudicator has erroneously admitted irrelevant evidence; (f) an adjudicator has failed to attach due weight to relevant evidence, oral or documentary; (g) undue weight has been given by an adjudicator to any piece of evidence; (h) an adjudicator has assessed erroneously the evidence presented to the adjudicator; (i) a plain error regarding a finding of fact has been made by an adjudicator; (j) an adjudicator has omitted to make a finding of fact which can be adequately supported by evidence; (k) an erroneous finding of mixed fact and law has been arrived at by an adjudicator - please refer to Lee Swee Seng J’s decision in the High Court in Syarikat Bina Darul Aman Bhd & Anor v Government of Malaysia [2017] 4 AMR 477, at [60]; (l) an adjudicator has made a wrong inference from the evidence; (m) an adjudicator has erroneously omitted to make the right inference from the evidence; (n) errors have been made in the reasons given by an adjudicator in support of the adjudication decision; and 45 (o) an adjudicator has erred in his or her reasoning with regard to the adjudication decision. The above errors and omission by an adjudicator can be remedied by an arbitration or litigation (whichever the case may be) regarding the dispute in question [as provided in s 13(c) CIPAA] - Econpile, at [67].” (emphasis added). 85. Premised on Alpha Galaxy, I cannot set aside the AD pursuant to s 15 CIPAA based on any error or omission by the Adjudicator regarding the merits of the Adjudication [Alleged Adjudicator’s Error/Omission (Merits)]. Furthermore, by reason of s 13(c) CIPAA, any Alleged Adjudicator’s Error/Omission (Merits), including the Adjudicator’s rejection of GD’s Counterclaim (LD) on Section 1 (Project) and Section 3 (Project), can and should be corrected at the Arbitration. S. Outcome of Setting Aside OS 86. For the reasons expressed in the above Parts L to R, I unhesitatingly dismiss the Setting Aside OS with costs. T. Whether court should stay enforcement of AD 87. Section 16 CIPAA provides as follows: “Stay of adjudication decision 16(1) A party may apply to the High Court for a stay of an adjudication decision in the following circumstances: (a) an application to set aside the adjudication decision under section 15 has been made; or 46 (b) the subject matter of the adjudication decision is pending final determination by arbitration or the court. (2) The High Court may grant a stay of the adjudication decision or order the adjudicated amount or part of it to be deposited with the Director of the KLRCA or make any other order as it thinks fit.” (emphasis added). 88. In the Federal Court case of View Esteem Sdn Bhd v Bina Puri Holdings Bhd [2019] 5 CLJ 479, at [79] and [82], Zulkefli PCA has decided that the court may exercise its discretion under s 16(1)(b) CIPAA to grant a stay of the enforcement of an adjudication decision pending the disposal of a suit or arbitration between the parties in question when - (1) there is a clear and unequivocal error in the adjudication decision [1st Ground (View Esteem)]; or (2) it is in the interest of justice for the court to stay the execution of the adjudication decision [2nd Ground (View Esteem)]. T(1). Can GD rely on 1st Ground (View Esteem)? 89. As explained above, the Adjudicator did not make any clear error in the AD. In fact, I should commend the Adjudicator for a well-reasoned AD. T(2). Whether 2nd Ground (View Esteem) applies in this case 90. Mr. Kok has attempted to persuade this court to invoke the 2nd Ground (View Esteem) with the following submission: (1) Mr. Tan Soon Lin, a director of TCHC, had affirmed an affidavit on 3.3.2020 (TSL’s Affidavit) in support of TCHC’s OS (JM). According to TSL’s Affidavit, among others - 47 (a) since June, 2019, TCHC had faced difficulties in paying its creditors; (b) as at the date of affirmation of TSL’s Affidavit - (i) TCHC owed a sum of RM8,899,633.87 to its trade creditors; and (ii) an amount of RM3,758,184.90 was outstanding from TCHC to its bankers; (c) there were judgments entered against TCHC totalling RM1,305,942.89; (d) three notices of demand under s 466(1)(a) CA had been served on TCHC; and (e) two banks had filed suits against TCHC to recover credit facilities which had been extended to TCHC; (2) GD’s Judgment (Friendly Loan Agreement) had been obtained against TCHC; and (3) based on the above information, Mr. Kok contends that TCHC is commercially insolvent. Mr. Kok has relied on three High Court cases which have granted “conditional stay orders” of adjudication decisions (Conditional Stay Orders) due to the weak financial position of the parties against whom adjudication decisions have been made. According to the Conditional Stay Orders, the parties against whom the adjudication decisions were made, had to deposit the adjudicated amounts together with interest and adjudication costs into stakeholder’s bank account pending the disposal of the arbitrations in question. 91. It is decided in Uzma Engineering Sdn Bhd v Khan Co Ltd [2020] MLJU 1272, at [42] and [43]: 48 “[42] Firstly, the court has a discretion to grant an Unconditional Stay under s 16(1)(a) and/or (b) read with s 16(2) CIPAA - View Esteem. The court’s power to grant an Unconditional Stay is clear from the words of s 16(2) CIPAA (High Court may grant a stay of the adjudication decision). [43] Besides ordering an Unconditional Stay, the court also has a discretion to grant a Conditional Stay pursuant to s 16(2) CIPAA as follows: (1) the court may order that the adjudicated amount or a part thereof be deposited with the Director of the Asian International Arbitration Centre; or (2) a Conditional Stay may be granted on any term that the court “thinks fit”.” (emphasis added). 92. It is clear from Uzma Engineering that the court has a discretion to - (1) grant an absolute stay of the enforcement of an adjudication decision (Absolute Stay Order) under s 16(1)(b) and (2) CIPAA; (2) give a Conditional Stay Order pursuant to s 16(1)(b) and (2) CIPAA; or (3) dismiss an application under s 16(1)(b) CIPAA (Stay Application). The exercise of the court’s discretion pursuant to s 16(1)(b) and (2) CIPAA in any Stay Application is dependent on the particular facts of the Stay Application. Accordingly, each decision on a Stay Application does not constitute a binding legal precedent from the view point of the stare decisis doctrine. 49 93. I acknowledge that TCHC’s commercial insolvency (as stated in the above paragraph 90) is a relevant consideration for the court to take into account in deciding the Stay OS. Having said that, I exercise my discretion to dismiss the Stay OS with costs on the following grounds: (1) as explained below in paragraph 97, the court will only grant leave for TCHC pursuant to s 28(1) and (2) CIPAA to enforce an amount of RM1,246,747.97 (Enforcement Sum). The Enforcement Sum was derived as follows - (a) the total amount due from GD to TCHC under the AD as at 30.7.2021, the date of the oral decision of these 3 OS [GD’s Sum Due To TCHC (AD)], is computed; (b) the court then ascertains the total sum due from TCHC to GD pursuant to the Judgment Sum (Friendly Loan Agreement) as at 30.7.2021 [TCHC’s Sum Due To GD (Friendly Loan Agreement)]; and (c) the Enforcement Sum is the balance after TCHC’s Sum Due To GD (Friendly Loan Agreement) is deducted from GD’s Sum Due To TCHC (AD); (2) the Enforcement Sum is lower than the total of the performance bond (PB) of RM2,595,550.00 (which had been provided by TCHC to GD as a guarantee for TCHC’s due performance of the Works) and the retention sum of RM1,268,632.55 (Retention Sum) held by GD. Regarding the nature of retention sum, I cite a judgment of the Court of Appeal delivered by Zainun Ali JCA (as she then was) in Qimonda Malaysia Sdn Bhd (in liquidation) v Sediabena Sdn Bhd & Anor [2012] 3 MLJ 422, at [17], as follows: “[17] The retention monies are monies already earned by the respondents (as contractor) for the works already done under the contract. These monies are part of the progress payments claimed and certified for payment to 50 the respondents (as contractor) under cl 22 of the contract concerned. …” (emphasis added); (3) in view of the PB and Retention Sum, I accept the contention by Mr. Ganesalingam that it is only just for the Stay OS to be dismissed so as to enable TCHC to recover the Enforcement Sum (not the entire Adjudicated Amount with interest, costs and fees); and (4) the dismissal of the Stay OS does not prejudice GD in any manner because GD still has the benefit of the PB and Retention Sum. U. Should court grant leave to enforce AD? 94. Section 28(1) and (2) CIPAA provide as follows: “Enforcement of adjudication decision as judgment 28(1) A party may enforce an adjudication decision by applying to the High Court for an order to enforce the adjudication decision as if it is a judgment or order of the High Court. (2) The High Court may make an order in respect of the adjudication decision either wholly or partly and may make an order in respect of interest on the adjudicated amount payable.” (emphasis added). 95. In the Court of Appeal case of Inai Kiara Sdn Bhd v Puteri Nusantara Sdn Bhd [2019] 2 CLJ 229, at [24]-[26], Mary Lim Thiam Suan JCA (as she then was) has explained that the court may exercise its discretion to grant leave under s 28(1) and (2) CIPAA to enforce an adjudication decision if the following three conditions [3 Conditions (Enforcement)] are met: 51 (1) the adjudication decision has been made in favour of the party applying for leave [1st Condition (Enforcement)]; (2) the party against whom an adjudication decision is made, has failed to pay the adjudicated amount on the date specified in the adjudication decision [2nd Condition (Enforcement)]; and (3) there is no prohibition on the court’s discretionary power to grant leave to enforce the adjudication decision [3rd Condition (Enforcement)]. 96. It is not disputed that the 1st Condition (Enforcement) and 2nd Condition (Enforcement) have been fulfilled in this case. 97. As regards the 3rd Condition (Enforcement), it is only just for TCHC’s Sum Due To GD (Friendly Loan Agreement) to be deducted from GD’s Sum Due To TCHC (AD). Accordingly, this court exercises its discretion under s 28(2) CIPAA to grant leave to TCHC for the Enforcement Sum only. V. Court’s decision 98. Premised on the above evidence and reasons - (1) Enc. 9 is dismissed with costs; (2) both the Setting Aside OS and Stay OS are dismissed; (3) in respect of the Enforcement OS, the court only grants leave for TCHC to enforce the AD with regard to the Enforcement Sum only; and (4) there will be one set of costs for the 3 OS to be paid by GD to TCHC. 99. With the above decision, the Interim Stay has lapsed. WONG KIAN KHEONG 52 Judge High Court of Malaya Shah Alam, Selangor Darul Ehsan DATE: 8 NOVEMBER 2021 Counsel for GD: Mr. Richard Kok Chi Wei & Ms. Tan Ko Xin (Messrs Rhiza & Richard) Counsel for TCHC: Mr. Ganesalingam A/L Vijayaratnam (Messrs Ganesalingam Vijayaratnam & Aisha Jothilingam) 53