The Court of Appeal in
This article summarizes the decision of the
Background Facts
The background facts of
1.
2. Simultaneously with the adjudication proceedings,
3. In relation to the CIPAA proceedings, the Adjudicator decided in favour of
(a) The adjudicated sum of
(b) Legal costs in the sum of
(c) Costs of the adjudication proceedings in the sum of
(hereinafter collectively referred to as "the Adjudication Decision").
4. Four days after the delivery of the decision by the Adjudicator,
5. The statutory notice of demand informed
6.
7.
8. On 12.2.2020, the
Situations Restraining a Winding-up Petition
The Courts will generally intervene to restrain the presentation of a winding-up petition (or if presented, to restrain the advertisement of the petition presented) should there be an abuse of the process of the Court. The learned
-
Where the intended petition has no chance of success; or
- Where a claimant proposes to assert a disputed claim by a procedure, such as the presentation of a winding-up petition that would cause irreparable damage to a company, rather than by a suitable alternative procedure.
- Where the existence of the creditor's debt may not be disputed, but the company "genuinely claims on the substantial grounds to have a cross-claim equal to or exceeding the petitioner's debt".
- (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 theHigh Court . - (1) On an application in writing to the
High Court , an award made in respect of an arbitration where the seat of arbitration is inMalaysia or an award from a foreign State shall, subject to this section and section 39 be recognized as binding and be enforced by entry as a judgment in terms of the award or by action." - The statutory notice of demand was issued five (5) months before the order to enforce the adjudication was obtained. Accordingly, based on the fact that the statutory notice of demand was issued and the parties had already served their respective notices of arbitration, it must have been clear to
Econpile that disputes in relation to the subject matter of the Adjudication Decision were being brought to arbitration. -
The claims raised in
Econpile's notice of arbitration included payments awarded toEconpile under the Adjudication Decision. -
In
ASM Development's notice of arbitration, it sought for a declaration thatEconpile had unlawfully terminated the construction contract and claimed for, inter alia, the following:-
Liquidated ascertained damages ("LAD") claim of
RM142,222,574.84 at the rate ofRM49,840.00 /day based on an architect's certificate of non-completion dated 7.4.2018; -
Cost of rectification amounting to
RM3,459,480.00 and for all ongoing rectification works; -
Liquidated damages for end purchasers due to
Econpile's delay in completing the project, amounting toRM98,037,211.23 ; -
Rental of
RM496,584.00 which was incurred due toEconpile's alleged erroneous installation of a single storey portable site office on a neighbouring land; -
An omission to deduct from the payment due to
Econpile or to take into account a sum ofRM17,330,819.00 based on a Quantity Surveyor's valuation dated 30.1.2019; -
Repair costs of
RM3,755,500.00 andRM1,625,200.00 for leaks due to cracks; RM1,988,004.20 transportation of excavated rocks whichEconpile allegedly failed to transport;-
A sum of
RM1,524,735.62 allegedly owed under what was described as a Block Purchase Agreement dated25.8.2017 .
-
Liquidated ascertained damages ("LAD") claim of
-
The total amount claimed by
ASM Development exceeds the amount found to be due toEconpile under the Adjudication Decision. Econpile alleged thatASM Development , through the Supervising Officer, had interfered with or obstructed the issuance of interim certificates and thatASM Development had been in breach of the construction contract for failing to issue the relevant interim certificates within 30 days from its receipt ofEconpile's progress claims. Based on the above,Econpile issued the notice of termination dated13.3.2019 .ASM Development issued its own notice of termination dated23.4.2019 based on its allegation of breaches of contract byEconpile .-
The defences raised by
Econpile in relation toASM Development's claims.
When it comes to the issue of "irreparable damage", there are two possible situations when an injunction may be issued to restrain the presentation of a winding-up petition, which are as follows:
-
Where the petition is based on a debt that is genuinely disputed on substantial grounds; or
Is an adjudication decision which has been ordered to be enforced, disputable?
A valid judgment of the court is indisputable. In addressing the irreparable damage issue, the court in
The learned
"[29] ... A valid and enforceable judgment of the court as in the present case, (unless set aside or stayed) cannot be considered as a disputed debt. The law is settled on this point. Therefore, an order for injunction as prayed for by the appellant in the present case, also cannot be granted under this principle."
For an adjudication decision, the learned
"Enforcement of adjudication decision as a judgment
(2)
(3) The order made under subsection (2) may be executed in accordance with the rules on execution of the orders or judgment of the
The learned
Mode of Enforcement Allowed under Section 28 of CIPAA
Section 28 of CIPAA provides that a party may "... enforce the adjudication decision as if it is a judgment or order of the
"Recognition and enforcement
Accordingly, the
On the other hand, section 28 of CIPAA does not provide that an adjudication decision may be entered "as a judgment", rather, an application under section 28 of CIPAA "only provides for the enforceability or enforcement of an adjudication decision "as if it is a judgment". It does not go so far as to deem or to allow for an adjudication decision to be converted into a judgment of the Court."
A CIPAA decision enforced under section 28 of CIPAA is not a judgment of the Court, but section 28 provides for the enforceability or enforcement of the adjudication decision "as if it is a judgment by various modes of enforcement under Order 45 of the Rules of Court 2012 such as enforcement by way of a writ of seizure and sale, garnishee proceedings, an order of committal, charging orders and the appointment of a receiver".
However, it does not include a statutory right of enforcement by way of winding up proceedings simply because the presentation of a winding-up petition is not a mode of enforcement or execution under Order 45 of the Rules of Court 2012.
In light of the above, the
Distinguishing the case of Likas Bay
In the case of Likas Bay,
At the
In the case of
In light of the above, the decision of the
Conclusion
A successful claimant in an adjudication proceeding may still issue a statutory notice of demand for a debt due and owing based on an adjudication decision. However, an adjudication decision, regardless whether it is enforced, remains disputable and therefore, a statutory notice of demand based on such adjudication decision may still be subject to a Fortuna Injunction.
The case of
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Level 10-1, Tower B, Menara Prima, Jalan PJU 1/39
Dataran Prima, 47301 Petaling Jaya
Tel: 37887 2702
Fax: 37887 2703
URL: www.mahwengkwai.com
© Mondaq Ltd, 2021 - Tel. +44 (0)20 8544 8300 - http://www.mondaq.com, source