ENGINEERING & LAW
INGENIEUR
Adjudication : Failure to Cite the Correct Clause in Pleadings Proves to be Fatal
By Ooi Hui Ying Senior Associate , Arbitration , Construction & Engineering Disputes Harold & Lam Partnership
In the recent Court of Appeal decision of JKP Sdn Bhd v Anas Construction Sdn Bhd and another appeal [ 2022 ] MLJU 2124 , the Court of Appeal of Malaysia examined the consequence of a party ’ s failure to comply with the requirements set out in Section 5 ( 2 ) of the Construction Industry Payment and Adjudication Act 2012 (“ CIPAA ”).
Pursuant to a construction contract , the Appellant (“ JKP ”) had appointed the Respondent (“ ACSB ”) as the main contractor for a project known as “ Cadangan Membina dan Menyiapkan Satu ( 1 ) Blok Pangsapuri 24 Tingkat Rumah Pangsa Kos Sederhana ( 392 ) Unit ) di atas Tanah Tebusguna Kerajaan , Kampung Pisang Awak , Seksyen 4 , Bandar Jelutong , Daerah Timur Laut , Pulau Pinang ” (“ the Contract ”).
Disputes arose between the parties regarding the construction works , and the Contract was ultimately terminated . ACSB commenced several adjudication proceedings under CIPAA against JKP for payments under the Contract .
In one of the adjudication proceedings ( No : AIAC / D / ADJ-2469-2019 ), ACSB claimed from JKP the reimbursement of professional fees and charges payable to its consultants , MSY Engineering Consultant and ZNA Engineering Consultant amounting to RM855,074.21 .
In the Payment Claim (“ PC ”) and the Adjudication Claim (“ AC ”), ACSB specifically pleaded clauses 28 , 55 and 56 of the Contract as the basis of its claim against JKP . In the Contract , Clause 28 provides for the payment to the contractor and interim certificates , Clause 55 provides for the events and consequences of default by the employer , and Clause 56 provides for the certificate of termination costs .
JKP , on the other hand , in its Adjudication Response (“ AR ”), contended that the most relevant provision in the Contract pertaining ACSB ’ s claim would be Clause 36.5 . It was JKP ’ s case in the adjudication proceeding that ACSB did not invoke said provision to support its claim .
The adjudicator eventually delivered an Adjudication Decision (“ AD ”) in favour of ACSB and allowed a sum of RM795,013.78 to be paid by JKP to ACSB . Essentially , the adjudicator in the AD agreed that ACSB ’ s claim could not be sustained under clauses 28 , 55 and 56 of the Contract . However , the adjudicator further decided to allow ACSB ’ s claim based on Clause 36.6 of the Contract . According to the adjudicator , Clause 36.6 of the Contract was most applicable in ACSB ’ s claim . It is pertinent to note that Clause 36.6 of the Contract was not relied upon by ACSB in the PC or the AC .
Dissatisfied with the AD , JKP filed an application in the High Court to set aside the AD . At the same time , ACSB filed an application to enforce said AD .
High Court Findings
In the High Court , JKP sought to set aside the AD on the grounds that the adjudicator had acted in excess of jurisdiction , had not acted independently or impartially , and that there had been a denial of natural justice . In essence , the High Court allowed ACSB ’ s application to enforce the AD , and dismissed JKP ’ s application to set aside the AD . The learned High Court Judge found that the adjudicator had not acted in excess of his jurisdiction because :
“ 21 . Walaupun klausa 36.5 dan klausa 36.6 ini tidak diplidkan ianya tidak mencacatkan kes
70 VOL 93 JANUARY-MARCH 2023