IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR

IN THE FEDERAL TERRITORY OF KUALA LUMPUR, MALAYSIA

ORIGINATING SUMMONS NO: WA-24C-161-08/2018

In the matter of an Adjudication between

Kuasatek Sdn Bhd (Company No.
112253-X) and HCM Engineering Sdn
Bhd (Company No. 225387-M)

And

In the matter of an Adjudication Decision

dated 4.7.2018 given by Liow Si Khoon

And

In the matter of Section 28 of

Construction Industry Payment and
Adjudication Act 2012

And
In the matter of Inherent Jurisdiction of
this Honourable Court

BETWEEN

KUASATEK (M) SDN BHD

(Company No: 112253-X) ... PLAINTIFF

1
 AND

HCM ENGINEERING SDN. BHD.

(Company No: 225387-M) ... DEFENDANT

HEARD TOGETHER WITH

IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR

IN THE FEDERAL TERRITORY OF KUALA LUMPUR, MALAYSIA
ORIGINATING SUMMONS NO: WA-24C-164-08/2018

In the matter of an Adjudication Decision

dated 4.7.2018 under the Adjudication
Reference no. AIAC/D/ADJ-1567-2018

And

In the matter of Section 15(b) and

Section 15(d) of the Construction
Industry Payment and Adjudication Act
2012

And

In the matter of Order 5, Order 7, Order

28, Order 69A Rules 2 and 3, and Order
92 Rule 4 of the Rules of Court 2012

BETWEEN

2
HCM ENGINEERING SDN. BHD.
(Company No: 225387-M) ... APPLICANT

AND

KUASATEK (M) SDN BHD

(Company No: 112253-X) ... RESPONDENT

HEARD TOGETHER WITH

IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR

IN THE FEDERAL TERRITORY OF KUALA LUMPUR, MALAYSIA
ORIGINATING SUMMONS NO: WA-24C-165-08/2018

In the matter of an Adjudication Decision

dated 4.7.2018 under the Adjudication
Reference no. AIAC/D/ADJ-1567-2018

And

In the matter of Section 16 of the

Construction Industry Payment and
Adjudication Act 2012

And

In the matter of Order 5, Order 7, Order

28, Order 69A Rules 4, and Order 92
Rule 4 of the Rules of Court 2012

3
 BETWEEN

HCM ENGINEERING SDN. BHD.

(Company No: 225387-M) ... APPLICANT

AND

KUASATEK (M) SDN BHD

(Company No: 112253-X) ... RESPONDENT

THE JUDGMENT OF
Y.A. LEE SWEE SENG

[1] Kuasatek Sdn Bhd (“Kuasatek”) had filed an application for

enforcement of an Adjudication Decision dated 4.7.2018 under Section 28
of the Construction Industry Payment and Adjudication Act 2012 (“CIPAA”)
against HCM Engineering Sdn Bhd (“HCM”) (Enforcement Application).
[2] HCM had subsequently filed an application to set aside the
Adjudication Decision pursuant to Section 15(b) and 15(d) of the CIPAA
(Setting Aside Application) and another application to stay the Adjudication
Decision (Stay Application).
[3] All the three applications by way of three separate Originating
Summonses were heard together for they share the same substratum of
facts and the issues straddle one another.

4
[4] The parties are shall be referred to as Kuasatek or Claimant and
HCM or Respondent as they were so referred to in the Adjudication so as
to avoid confusion and for consistency.
Project
[5] HCM had appointed Kuasatek as the sub-contractor for a project
known as “The Design and Built Contract for the Proposed Addition of a 4
Storey Office Building With Basement Car Parking to the Existing Facilities
on Lot No. 38627 and Lot No. 36462, Bukit Jalil, Mukim Petaling, Daerah
Kuala Lumpur Malaysia for the Asian Football Confederation” for the
Contract Sum of RM9,500,000.00.
[6] The said appointment was vide a Letter of Appointment (“LA”) for
Mechanical and Electrical Works Packages (“the Works”) dated 15.3.2016.

Problem
[7] Disputes arose with respect to the Claimant’s final claim in the form of
Final Account submitted to the Respondent on 22.12.2017. In the Final
Account, the Claimant had claimed from the Respondent the sum of
RM3,085,504.91, based on the Contract Sum of RM11.5 Million.
[8] The Respondent said this is contrary to the Progress Claims
submitted by the Claimant which all along were based on the contract sum
stated in the said LA, being RM9.5 Million.
[9] The Respondent submitted that the Bills of Quantities for the contract
for the sum of RM11.5 Million is based on different rate or price as
compared to the said LA for the sum of RM9.5 Million.
[10] On 30.1.2018, the Claimant had vide their Solicitors served a
Payment Claim dated 30.1.2018 on the Respondent pursuant to Section 5
of the CIPAA. In the said Payment Claim, the Claimant had claimed the
sum of RM3,085,504.91 from the Respondent. The Respondent did not
serve any Payment Response.

5
Proceedings in Adjudication
[11] The Claimant followed through with the service of a Notice of
Adjudication and subsequently after the appointment of the Adjudicator, the
Claimant served their Adjudication Claim and the Respondent their
Adjudication Response. The Claimant then served their Adjudication Reply.
[12] The Adjudicator appointed had on 4.7.2018, handed down his
Adjudication Decision allowing part of the Claimant’s Claim as follows:
“The Respondent shall within 14 days from the date of this Decision
pay to the Claimant:
(a) the sum of RM2,959,490.44;
(b) interest at 5% per annum on RM2,758,156.61 from
22.1.2018 until the date of full payment;
(c) the adjudication cost of RM40,000.00; and
(d) the Adjudicator’s fee of RM41,114.43 together with 6%
GST of RM2,446.87, the AIAC administrative fee of
RM8,222.90 together with 6% GST of RM493.40, the cost
of registering the adjudication of RM265.00 and the cost
of appointing the Adjudicator of RM489.00.

Prayers
[13] In the Setting Aside Application the Respondent had invoked section
15 (b) and (d) of the CIPAA on the ground that there had been a denial of
natural justice and that the Adjudicator had acted in excess of his
jurisdiction.
[14] It was argued by the Respondent that the Adjudicator had gone off on
a frolic of his own when he decided that the value of work done is
RM10,921,219.00 and by so doing there had been a substantial denial of
natural justice to the Respondent and consequently he had also exceeded
his jurisdiction by deciding on what was not argued.

6
[15] The Respondent also contended that the Adjudicator had acted in
excess of his jurisdiction to allow claims for the Alleged Re-Engineering
Works Proposal and Finance Charges.
[16] Based on the above grounds the Respondent sought to persuade the
Court that the Setting Aside should be allowed or at the very least the
Decision should be stayed and that the Enforcement Application should be
dismissed.

Principles
[17] It must be stated at the outset that an application to set aside an
Adjudication Decision is not an appeal and the Court will not be reviewing
the finding of facts and the interpretation of law placed on those findings
unless it goes towards jurisdiction.
[18] Therefore if a matter is within the jurisdiction of the Adjudicator it does
not become one that the Adjudicator has exceeded his jurisdiction merely
because he had come to a finding of fact that a party does not agree with
or that his interpretation of the law is flawed or faulty.
[19] As is often pointed out it is not a cause for the Court to interfere if the
Adjudicator has asked himself the right question but that he has arrived at
the wrong answer. That correction would have to await the trial or
arbitration depending on whether or not there is an arbitration agreement. It
is only when the Adjudicator has asked the wrong question that the Court
would interfere. See the UK Court of Appeal decisions in Bouygues (UK)
Ltd v Dahl-Jensen (UK) Ltd [2001] 1 All ER (Comm) 1041, 73 ConLR
135, [2000] BLR 522 and C & B Scene Concept Design Ltd v Isobars
Ltd [2002] EWCA Civ 46, 82 ConLR 154, [2002] BLR 93.
[20] Based on the test as expounded by the Federal Court in View
Esteem Sdn Bhd v Bina Puri Holdings Berhad [2018] 2 MLJ 22,
if there is a clear, obvious and unequivocal error, then the Court might be

7
prepared to grant a stay of the Adjudication Decision pending a full
resolution of it at trial or arbitration.
[21] In PWC Corporation Sdn Bhd v Ireka Engineering & Construction
Sdn Bhd & Other Case (No. 2) [2018] 1 LNS 163 the Court followed the
exposition of the law on the meaning of denial of natural justice in the
context of Statutory Adjudication in Cantillon Ltd v. Urvasco Ltd [2008]
EWHC 282 (TCC) as follows:
“[33] Learned counsel for Ireka submitted that the Malaysian Courts
have consistently followed the guideline in relation to denial of natural
justice in adjudication cases as enunciated in Cantillon Ltd v. Urvasco
Ltd [2008] EWHC 282 (TCC); paragraph [57], as follows:
“[57] From this and other cases, I conclude as follows in relation
to breaches of natural justice in adjudication cases:
(a) It must first be established that the adjudicator failed
to apply the rules of natural justice;
(b) Any breach of the rules must be more than
peripheral; they must be material breaches;
(c) Breaches of the rules will be material in cases
where the adjudicator has failed to bring to the
attention of the parties a point or issue which they
ought to be given the opportunity to comment upon
if it is one which is either decisive or of considerable
potential importance to the outcome of the
resolution of the dispute and is not peripheral or
irrelevant;
(d) Whether the issue is decisive or of considerable
potential importance or is peripheral or irrelevant
obviously involves a question of degree;

8
 (e) It is only if the adjudicator goes off on a frolic of
his own, that is wishing to decide a case upon a
factual or legal basis which has not been argued
or put forward by either side without giving the
parties an opportunity to comment or, where
relevant put in further evidence, that the type of
breach of the rules of natural justice with which
the case of Balfour Beatty Construction
Company Ltd v. The Camden Borough of
Lambeth was concerned comes into play. It
follows that, if either party has argued a
particular point and the other party does not
come back on the point, there is no breach of
the rules of natural justice in relation thereto.
(emphasis added)
[22] As for a jurisdictional challenge to an Adjudication Decision there are
different ways of looking at it and the Federal Court in View Esteem
(supra) observed as follows:
“16. The term “jurisdiction” under CIPAA is not used in the
administrative or public law sense but in relation to matters within the
scope of CIPAA. On this point, in Terminal Perintis Sdn. Bhd. v. Tan
Ngee Hong Construction Sdn. Bhd. & Anor. [2017] MLJU 242, Lee
Swee Seng J. observed as follows (at para [70]):
“In the application of our CIPAA, we are free from the shackles
of the language of administrative law and judicial review. The
word ‘jurisdiction’ is used in section 15(d) as in the Adjudicator
having acted in ‘excess of his jurisdiction’ as a ground for
setting aside an Adjudication Decision. It is also used in section
27(1) with respect to an Adjudicator’s jurisdiction being limited

9
 to the matters raised in the Payment Claim and the Payment
Response. Then there is a reference to it in section 27(2) with
respect to extending his jurisdiction by way of agreement in
writing to deal with matters not specifically raised in the
Payment Claim and Payment Response. Finally there is the
reference to a ‘jurisdictional’ challenge, which when raised,
does not prevent the Adjudicator from proceeding and
completing the Adjudication without prejudice to the rights of
any party to set it aside under section 15 or to oppose its
enforcement under section 28 ... ... Issues as to whether there
is a valid cause of action, does not go towards jurisdiction but
rather to the merits of the claim...”
17. The learned judge also made note of the various types of
jurisdictional complaints within CIPAA which may be categorized as
core jurisdiction, competence jurisdiction and contingent
jurisdiction. The common feature in all of them is the presupposition
that CIPAA applies to determine if the adjudicator had kept within his
jurisdiction.”(emphasis added)
[23] The High Court in Terminal Perintis Sdn Bhd v Tan Ngee Hong
Construction Sdn Bhd and another case [2017] MLJU 242, [2017] 1 LNS
177, distinguished between the different types of jurisdictions as follows:
“[71] There are many senses in which the word “jurisdiction” may be
understood. We need only to differentiate between core jurisdiction,
competence jurisdiction and contingent jurisdiction.
[72] Core jurisdiction would be the question of whether the subject
matter of the dispute is one which the Act has conferred on the
Adjudicator. Thus if a contract is not a construction contract, but a
shipping or mining contract or a contract for legal fees with respect to
advice given in construction contract, or that the contract is with

10
 respect to construction of a dwelling house for a natural person, then
this Court will interfere if the Adjudicator got it wrong. It is a case
where the Adjudicator has no jurisdiction to begin with. So too if the
construction contract is carried out wholly outside Malaysia.
[73] If it is a question of the competence of the Adjudicator as in he
has not been properly appointed in that what purported to be a
Payment Claim, is not on the face of it a Payment Claim or that the
Payment Claim was not served or that it was not expressly stated as
a claim made under CIPAA, then this Court would be at liberty to set
aside the Adjudication Decision on ground of excess of jurisdiction.
This is not only because the Adjudicator cannot decide on his own
competence or capacity to adjudicate when the very validity of his
appointment is questioned but also that it is part of the legislative
intent that if there is non-compliance with a basic and essential
requirement of CIPAA with respect to a Payment Claim under Section
5, then the Adjudication Proceedings and the Decision made would
be a nullity.
[74] In a case of contingent jurisdiction, it would be a case where for
there to be jurisdiction, there must be further compliance with the
requirements of the Act as in that the dispute must be one falling
within the matters raised in the Payment Claim and the Payment
Response as provided for under section 27(1) CIPAA. In that
example the word “jurisdiction” is used in the sense of the scope of
the dispute that is before the Adjudicator for decision.......”
[24] Judging by the way the jurisdictional challenge is framed it appears
that the Respondent is proceeding on the fact of an excess of contingent
jurisdiction in that the matter decided upon must be within the scope of
reference in the Payment Claim or at least raised in the Adjudication Claim

11
and Adjudication Response and also the Adjudication Reply that was
served.

Whether there had been a denial of justice and an acting in excess of

his jurisdiction when the Adjudicator decided that the value of work
done is RM10,921,219.00
[25] Learned counsel for the Respondent submitted that the Adjudicator
had gone off on a frolic of his own to decide that the contract sum
applicable is RM10,921,219.00, which was neither the Claimant’s nor the
Respondent’s argued case.
[26] In the Payment Claim served by the Claimant, it was stated that
RM9.5 Million is the Original Contract Sum whereas RM11.5 Million is the
Revised Contract Sum. The Claimant further asserted that the re-
measurement of work is amounting to RM10,921,219.00, based on the Bill
of Quantities to the LA. For ease of reference, the material part of the
Payment Claim is reproduced as follow:

Description of Work / Services & Amount (RM)

Original Contract RM
Sum 9,500,000.00

Revised Contract RM
Sum 11,500,000.00

Add Omit

Remeasurement RM RM
of Works 10,921,219.00 11,500,000.00 (578,781.00)

12
Work Order and
variations

Work Order RM343,077.00

Cost of RM30,000.00
Production of Re-
engineering
works proposal

Sub-total RM373,077.00 RM373,077.00

Loss &
Expenses

Finance Charges RM37,348.30

Preparation of RM50,000.00
Documents

Claim RM230,000.00
Consultant’s Fees

Sub-total RM337,348.30 RM337,348.30

Final Contract RM11,631,644.30

Sum

Less:

13
Retention @ (237,500.00)
2.5% of Original
Contract Sum

Previous
Payments

Payment under RM
interim progress 8,029,962.39
claim

Direct Payment RM278,677.00

for Work Order

Sub-total RM (RM8,308,639.39)
8,308,639.39

AMOUNT CLAIMED RM3,085,504.91

6% GST 185,130.29

TOTAL 3,270,635.20

[27] Learned counsel for the Respondent pointed out that in the
Adjudication Claim served, the Claimant had asserted the following:
a) At paragraph 7 of the said Adjudication Claim, the Claimant
alleged that the Contract Sum of RM9.5 Million in the said LA
was accepted by the Claimant on the condition that the
Respondent was to undertake re-engineering exercise for all
the M&E Works. Otherwise, the consideration for the M&E
Works was RM11.5 Million [see page 333 of Exhibit KMW-6 in
the Respondent’s Affidavit in Support (“AIS”)];

14
b) The Claimant had relied on the following events in the formation
of the contract:
i) On 27th February 2015, the Claimant submitted their
tender (Ref: KMSB/TENDER/100/2-2015/HCM) for the
sum of RM13,043,986.00 (see page 369 to 371 of Exhibit
KMW-6 in the Respondent’s AIS);
ii) On 15th May 2015, the Claimant submitted their revised
tender (Ref: KMSB/TENDER/106/5-2015/HCM) for the
total sum of RM11,800,000.00 comprising of the
following:
a) RM7,820,000.00 for electrical works;
b) RM3,980,000.00 for mechanical works.
See page 373 of Exhibit KMW-6 in the Respondent’s AIS;
iii) On 7th October 2015, the Claimant submitted the tender
(Ref: KMSB/PRJ/1011/10-2015/HCM) which comprise of:
-
aa) Option 1 of RM11,500,000.00 based on the full
specifications as specified by the Employer, Asian
Football Confederation;
bb) Option 2 of RM10,908,036.00 based on 70%
compliance with the specifications provided whilst
30% to be changed to a different, but approved,
equivalent brands of material. The Respondent
undertake the responsibility to convince and prove
to the consultant of their acceptability.
See page 375 of Exhibit KMW-6 in the Respondent’s AIS.
c) At paragraph 8(v) of the said Adjudication Claim, the Claimant
had made the following allegations that:

15
 i) The Respondent had opted for Option 2 but wanted the
Contract Price to be stated at RM9,500,000.00;
ii) That the Claimant had informed the Respondent that they
were unable to undertake the M&E Works below
RM10,908,036.00 unless they were given the re-
engineering exercise of the M&E Works to which the
Respondent agreed.
d) The Claimant further asserted that the Claimant was not
awarded the re-engineering works despite the Claimant having
prepared the re-engineering works proposal drawings and there
was no substantial brand change (See page 385 of Exhibit
KMW-6 in Respondent’s AIS).
e) Accordingly, the Claimant relied back on Option 1 of
RM11,500,000.00 in the Adjudication Proceeding (see
paragraph 8(vii)(b), at page 336 of Exhibit KMW-6 in the
Respondent’s AIS);
f) In alternative, the Claimant had asserted that the said LA
agreed upon was on a “re-measurement basis”. The Claimant
contended in paragraph 20 of the said Adjudication Claim that
the works having been re-measured were valued at
RM10,921,219.00. The detailed breakdown and a summary of
the Bill of Quantities are attached in Appendix 15 of the
Adjudication Claim, at page 791 to 863 of Exhibit KMW-6 in the
Respondent’s AIS.
[28] Learned counsel for the Respondent submitted that the following can
be observed from the clear documents submitted by the Claimant in the
adjudication proceeding:
a) The Claimant’s allegation that the Respondent had opted for
Option 2 for the sum of RM10,908,036.00, with re-engineering

16
 works but wanted the Contract Price to be stated at RM9.5
Million is unsubstantiated by proof;
b) the Claimant alleged that the said LA was issued based on the
understanding that the Respondent had opted for option 2
stated in the letter dated 7.10.2015, with the Bills of Quantities
for option 2 (see page 375 of Respondent’s AIS);
c) Following the rejection of the re-engineering works, the
Claimant had by a letter dated 25.10.2016 to the Respondent,
sought to re-include the Preliminaries amounting to
RM350,000.00, so that the revised contract sum would become
RM9.85 Million. The Claimant had also submitted the proposed
rationalization of prices totaling to RM9.85 Million to the
Respondent (see page 385 to 386 in Exhibit KMW-6 of the
Respondent’s AIS). This is contrary to what was asserted by
the Claimant that the contract should be for RM11.5 Million;
d) At all material time, the contract based on Option 1 for the sum
of RM11.5 Million quoted in the letter dated 7.10.2015 had been
deserted by the Claimant and the said Option 1 is no longer on
the table;
e) However, the Claimant in the purported Final Account and
subsequently, in the adjudication proceeding sought to rely on
Option 1 to state that the Contract Sum is for RM11.5 Million. At
all material time, the alleged contract for the sum of RM11.5
Million had never been agreed by the parties and there was no
Bill of Quantities for the sum of RM11.5 Million when the said
LA was issued.
[29] Learned counsel for the Respondent submitted that it had always
been the Respondent’s case that the contract was for the sum of RM9.5
Million and there was no written contract for the alleged sum of RM11.5

17
Million. The allegation is inconsistent with the contemporaneous documents
(see paragraph 35, at page 916 of Exhibit KMW-7 in the Respondent’s
AIS). The Respondent had relied on the chronology of events, particularly
the following to show that the allegation is unsustainable:
a) Letter dated 25.10.2016 (see page 1068 of Exhibit KMW-7 in
the Respondent AIS) which showed that subsequent to the
rejection of any re-engineering work, the Claimant has sought
to re-include the sum of RM350,000.00. Nothing was said about
the alleged contract for the sum of RM11.5 Million;
b) As at 30.6.2017, the Claimant had submitted all Progress
Claims based on the contract sum of RM9.5 Million (see page
1750 of Exhibit KMW-7 in the Respondent’s AIS);
c) The Claimant only alleged the contract sum of RM11.5 Million
in the purported Final Account dated 22.12.2017 (see page 140
of Exhibit KMW-3 in the Applicant’s AIS).
[30] The Adjudicator, based on the competing submissions of the parties,
had arrived at the following findings:
a) At paragraph 108 of the Adjudication Decision (see page 34 of
the Respondent’s AIS), the Adjudicator found that from the
documentary trail, the Claimant had revised the pricing to
RM9.5 Million via letter dated 7.10.2015, and the Tax Invoice by
the Claimant was also based on RM9.5 Million. In the same
paragraph, the Adjudicator had also found that the said LA
reflected the contract sum of RM9.5 Million “or such other sum
may be ascertained in accordance with the Conditions of
Contract”;
b) At paragraph 109 of the Adjudication Decision (see page 34 of
the Respondent’s AIS), the Adjudicator found that as per the
Payment Claim and the Adjudication Claim, the computation of

18
 the amount claimed is based on the re-ameasured amount of
RM10,921,219.00 and not RM11,500,000.00;
c) At paragraph 112 of the Adjudication Decision (see page 35 of
the Respondent’s AIS), the Adjudicator had made a finding that
the Claimant is not basing their claim on RM11,500,000.00, but
on the re-measured sum of RM10,921,219.00;
d) At paragraph 114 of the Adjudication Decision (see page 36 of
the Respondent’s AIS), the Adjudicator had arrived with the
decision that the applicable contract amount between the
parties should be RM10,921,219.00.
[31] However it would not be fair to then say that he had gone off on a
frolic of his own merely because he had accepted neither the sum
conceded by the Respondent nor the sum claimed by the Claimant in the
main claim but instead had accepted the Claimant’s alternative claim based
on a re-measurement claim. The Adjudicator had made a finding of fact as
follows based on the evidence before him at paragraphs 109 and 112 of
the Adjudication Decision as follows:
“109. As per the Payment Claim, and the Adjudication Claim, the
computation is based on the re-measurement amount of RM
10,921,219.00 (as detailed in BQ calculations), and not
RM11,500,000.00.....
112. Back to the issue of the Contract Sum. It is noted that the
Claimant is not basing their claim on RM11.5 million, but on the
re-measured RM10,921,219.00. I observe that the re-measured
sum of RM10,921,219.00 at page 420 (CBD 3, Appendix 15) is
supported by the detailed BQ, and every Item from A to I are
individually supported by the BQ breakdown – appearing from
Pages 421 to 492 of CBD 3. In this regard, for the Respondent to
contend that there is no BQ in the LA (para 45 (c) Adjudication

19
 Response) is indeed unfounded – especially given that Appendix A
(Respondent’s Vol. 1, page 10) of the LA had clearly provided for the
summary of the BQ.” (emphasis added)
[32] It was clear to the Adjudicator that the Respondent had rejected the
Claimant’s re-engineering proposal and so the contract sum of RM9.5
million no longer applied.
[33] Though the Claimant had asserted that they should then be entitled
to the Contract sum in Option 1 of RM11.5 million, the Adjudicator
disagreed. It was also clear to the Adjudicator that the value stated in the
LA of RM9.5 million did not reflect the actual work done by the Claimant in
the Project.
[34] The Adjudicator reminded himself that Parties had already agreed to
this mechanism of price adjustment in paragraph 1 of the LA should the
pre-engineering proposal by the Claimant was rejected and it was rejected
by the Employer. It reads:
“1.0 AGREED PRICE
1. In consideration of Kuasatek (M) Sdn Bhd (Company No: 112253-
X) (hereafter referred to as The Sub-Contractor) to carry out the
above mentioned works, HCM ENGINEERING SDN BHD agree to
pay Kuasatek (M) Sdn Bhd the sum of RM9,500,000.00 (Ringgit
Malaysia: Nine Million Five Hundred Thousand only) excluding 6%
GST or such other sum may be ascertained in accordance with
the Conditions of Contract.” (emphasis added)
[35] The words in bold are not for decorative purpose or to introduce
uncertainty but rather to cater for a situation already contemplated in the
event the re-engineering proposals were rejected by the Employer.
[36] It was in that context that the Adjudicator decided that the contract is
a “re-measurement contract” and based on the Claimant’s re-measurement

20
supported by the BQ, the final amount arrived at was RM10,921,219.00
after taking into consideration the omission of works.
[37] That was the alternative claim which the Claimant settled for and
indeed had asserted that the said LA agreed upon was on a “re-
measurement basis”. See paragraph 15 and 27 of the Adjudication
Decision.
[38] It was the Claimant who contended in paragraph 20 of the said
Adjudication Claim that the works having been re-measured were valued at
RM10,921,219.00. The detailed breakdown and a summary of the Bill of
Quantities are attached in Appendix 15 of the Adjudication Claim and the
BQ was produced at pages 420-491 of the Adjudication Claim. In fact the
LA expressly states at paragraph 1.2 that “The breakdowns of the above
sum are in accordance with the Bills of Quantities in Appendix A to this
Letter.”
[39] The Adjudicator had before him 3 positions that the parties had
submitted on which is whether the sum claimed should be based on the
Option 1 Contract sum of RM11.5 million, or the sum stated in the LA of
RM9.5 million or the re-measured sum of RM10,921,219.00. See the
heading just before paragraph 107 of the Decision which reads:
“Whether the Contract sum should be RM9,500,000.00 or
RM10,921,219.00 or RM11,500,000.00.”
[40] The above are clear findings of fact and law and even if the
Adjudicator should have held that the contract is a lump sum contract of
RM9.5 million, that would not be a basis for setting aside the Adjudication
Decision. Suffice to say that natural justice does not mandate the
Adjudicator to agree with the Respondent’s contention. All that natural
justice requires is that the Adjudicator hears both sides and considers the
evidence presented by both sides and gives his reasons for his Decision.

21
[41] One may disagree with his reasons but that cannot be the subject of
a setting aside based on a denial of natural justice.
[42] In PWC Corporation Sdn Bhd v Ireka Engineering & Construction
Sdn Bhd & other case (No. 2) [2018] 1 LNS 163 it was held as follows:
“[33] …It is only if the adjudicator goes off on a frolic of his own, that
is wishing to decide a case upon a factual or legal basis which has
not been argued or put forward by either side without giving the
parties an opportunity to comment or, where relevant put in further
evidence, that the type of breach of the rules of natural justice with
which the case of Balfour Beatty Construction Company Ltd v. The
Camden Borough of Lambeth was concerned comes into play. It
follows that, if either party has argued a particular point and the other
party does not come back on the point, there is no breach of the rules
of natural justice in relation thereto”
[43] The Court of Appeal spoke of the legal threshold of “natural justice”
where in ACFM Engineering & Construction Sdn Bhd v Esstar Vision
Sdn Bhd and another appeal [2016] MLJU 1776 it held as follows:-
“[19] When one speaks of natural justice, it is nothing more than what
we call the concept of “procedural fairness” which needs to be
accorded to the parties in a dispute of a hearing. In this appeal
the Appellant’s complaint on the breach of natural justice is contained
in pages 15 - 19 of his written submission. We informed counsel for
the Appellant that it appeared that his complaint about the decision of
the adjudicator related substantially to the manner in which the
adjudicator arrived at his decision after evaluating the evidence
provided to him and that would only be questioning the findings of
fact by the adjudicator.”
….

22
 “[21] There were no complaints by the Appellant that the adjudicator
had got the disputes on a completely wrong footing. In fact, no
complaint was made at all and the adjudication process was carried
out premised on those issues. If we were to consider the complaints
of the Appellant, we would be looking into the merits of the decision
of the adjudicator. In the context of section 15 of CIPPA 2012, it
cannot be the function of the Court to look into or review the
merits of the case or to decide the facts of the case. The facts
are for the adjudicator to assess and decide on. The Court’s
function is simply to look at the manner in which the adjudicator
conducted the hearing and whether he had committed an error
of law during that process. Such error of law relates to whether he
had accorded procedural fairness to the Appellant. In the context of
this case, the complaints of the Appellant were nothing but
complaints of factual findings of the adjudicator which in our view
cannot be entertained by us.” (emphasis added)
[44] The issue was clearly stated as a matter for the Adjudicator to decide
and it cannot be a case where by deciding not to the satisfaction of the
Respondent then he is said to have exceeded his jurisdiction.
[45] This is not a case of the Adjudicator rewriting the contract for the
parties but one where he is confronted with opposing claims from the
parties and he had to decide on whether the Claimant’s main claim based
on RM11.5 million or the alternative claim based RM10,921,219.00 on a re-
measurement basis or the Respondent’s position that the contract is a lump
sum for RM9.5 million. The Respondent in their Adjudication Response had
submitted on the positions taken by the Claimant and maintained that the
contract was for a lump sum of RM9.5m and that there is no room for re-
measurement because there was no BQ.

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[46] The Adjudicator found this assertion of no BQ to be unfounded and
held that it is found at Appendix A (Respondent’s Vol. 1, page 10) of the LA
where it had clearly provided for the summary of the BQ.
[47] In the case of Joinery Plus Ltd (in administration) v Laing Ltd
[2003] EWHC 213 (TCC) Judge Anthony Thornton QC stated succinctly the
principles of law with respect to an error of law which may go towards
jurisdiction as follows:
“[51] The effect of the relevant decisions relating to errors by an
adjudicator is as follows: (1) The precise question giving rise to the
dispute that has been referred to the adjudicator must be identified.
(2) If the adjudicator has answered that referred question, even if
erroneously or in the wrong way, the resulting decision is both valid
and enforceable. If, on the other hand, the adjudicator has answered
the wrong question, the resulting decision is a nullity. (3) In
determining whether the error is within jurisdiction or is so great
that it led to the wrong question being asked and to the decision
being a nullity, the court should give a fair, natural and sensible
interpretation to the decision and, where there are reasons, to
the reasons in the light of the disputes that are the subject of the
reference. The court should bear in mind the speedy nature of the
adjudication process which means that mistakes will inevitably occur.
Overall, the court should guard against characterising a
mistaken answer to an issue that lies within the scope of the
reference as an excess of jurisdiction. (4) A mistake which
amounts to a slip in the drafting of the reasons may be corrected by
the adjudicator within a reasonable time but this is a limited power
that does not extend to jurisdictional errors or errors of law. (5) In
deciding whether an error goes to jurisdiction, it is pertinent to ask
whether the error was relevant to the decision and whether it caused

24
 any prejudice to either party. (6) A wrong decision as to whether
certain contract clauses applied; or whether they had been
superseded by the statutory scheme for adjudication; or as to
whether a particular sum should be evaluated as part of, or
should be included in the arithmetical computation of, the final
contract sum in a dispute as to what the final contract sum was
do not go to jurisdiction. (7) However, where the claim that was
considered by the adjudicator was significantly different in its factual
detail from the claim previously disputed and referred, the resulting
decision was one made by reference to something not referred, was
without jurisdiction and was unenforceable since the adjudicator had
asked and answered the wrong question.” (emphasis added)
[48] I am in full agreement with the position of law stated in the above
case and here the issue was very much at play and the parties have
submitted on the positions they had taken. The right questions had been
asked and even if the wrong answer had been given, that is to be corrected
and set right in the arbitration or trial.
[49] Likewise learned counsel for the Respondent submitted that the
Adjudicator had acted in excess of his jurisdiction in granting the following
claims, categorized by the Claimant as “loss and expenses” in the Payment
Claim:
a) At paragraphs 124, 125 and 126 of the Adjudication Decision,
the Adjudicator had allowed the alleged costs for preparing and
producing the re-engineering works drawings for the sum
RM30,000.00;
b) At paragraphs 127, 128 and 129 of the Adjudication Decision,
the Adjudicator had allowed part of the Finance Charges
amounting to RM35,844.43 by invoking section 25(o) of CIPAA

25
 2012 despite the Adjudicator has expressly acknowledged that
there is no provision as to contractual interest in the Contract.
[50] I do not see it as a matter that goes towards jurisdiction as the
Claimant’s overall claim is within the jurisdiction of the Adjudicator. Some
heads of claim may perhaps not be claimable as it may not strictly speaking
fall within the meaning of “payment” defined in section 4 of the CIPAA
which defines “Payment” as follows:
“Payment” means a payment for work done or services rendered
under the express terms of a construction contract.”
[51] The fact that some heads of claim and here it is a relatively small sum
of RM60,844.43 may not be under an express terms of a contract would
not cause the whole of the Adjudication Decision to be set aside for lack of
jurisdiction.
[52] As for the Finance Charges these are not provided for in the LA and
the Conditions of Contract where both documents are silent on the interest
component and the rate of interest. Finance Charges must first be provided
for in the contract in question before a claim may be made as it appears to
be an exception to the strict meaning of a “payment”.
[53] In the case of Syarikat Bina Darul Aman Bhd & Anor v
Government of Malaysia [2017] MLJU 673 it was observed as follows:
“[84] I have no problem associating with and adopting the views

expressed by the two seminal books on adjudication in Malaysia.

Based on the principles enunciated above, there is no good reason
why payments pertaining to "loss and expense claims" due to the
delay in completion of works cannot come within the ambit of CIPAA.
Indeed, "payment" under s. 4 CIPAA means "a payment for work
done or services rendered under the express terms of a
construction contract." Clauses 44 and 48(a) of the PWD 203A

26
 Standard Forms of Contract are the express terms under which
the payment claim was made.” (emphasis added)
[54] As no submission was made on whether a severance should be
allowed to sever this part of the amount allowed from the rest, I would
consider whether this is a fit case for a stay on the ground of a clear,
obvious or unequivocal error on the part of the Adjudicator.

Whether there should be a stay of the Adjudication Decision

[55] There is also the argument for stay but there is no evidence of the
Claimant’s impecuniosity or that they would not be able to pay back when it
is sought to be enforced in a court’s decision or Arbitral Award in favour of
the Respondent.
[56] The only ground for the Respondent asking for a stay of the Decision
is that they had served a Notice to Arbitrate on the Claimant. That is just
merely meeting the threshold condition for stay as stated in Subang
Skypark Sdn Bhd v Arcradius Sdn Bhd [2015] 11 MLJ 818.
[57] If at all there is any clear and obvious error, it is only narrowly
confined to the combined items of financial charges and preparation of
documents and research – under loss and expense – amounting to
RM60,884.43 which does not appear to be an agreed head of claim in the
contract in that there is no express terms in the contract providing for those
claims.
[58] The test as modified by the Federal Court in View Esteem Sdn Bhd
v Bina Puri Holdings Bhd [2018] 2 MLJ 22 is where there is a clear,
obvious and unequivocal error on the part of the Adjudicator as follows:
“[79]......Section 16 of CIPAA should be treated as one of the
safeguards to a likely wrongful adjudication decision and which
empowers the court to find a suitable middle ground in cases where
there has been clear and unequivocal errors.

27
 ......
[81] .....It therefore makes sense that applications for stay in other
jurisdictions are rarely granted. We are of the view that it is however
not right to rely on those decisions to justify restricting the statutory
power of stay in Malaysia simply on the financial status of the other
party. The CIPAA contains no such restrictions.
[82] We are in agreement with the contention of the appellant that a
more liberal reading of s 16 of the CIPAA would allow some degree
of flexibility to the courts to stay the award where there are clear
errors, or to meet the justice of the individual case. It is accepted
that a stay of the award ought not be given readily and caution
must be exercised when doing so....” (emphasis added)
[59] The only justification then for a stay of the Adjudication Decision is
with respect to the claim for costs for preparing and producing the re-
engineering works drawings for the sum RM30,000.00 and the Finance
charges amounting to RM35,844.43 for there are no provisions under the
express terms of the construction contract for such payments to be made.
There is no provision to say that these “loss and expense” claim may be
added to the contract sum or to the claim in the Final Account. See the
case of Syarikat Bina Darul Aman Bhd & Anor v Government of
Malaysia [2017] MLJU 673.
[60] The claims under both heads under Statutory Adjudication under the
CIPAA may be said to be a clear and unequivocal error.
[61] I would exercise my discretion and grant a stay of the Adjudication
Decision only with respect to the sum of RM65,884.43 arising from the
claim for re-engineering works drawings for the sum RM30,000.00 and the
Finance charges amounting to RM35,844.43.

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Pronouncement
[62] In the light of the reasons given I had dismissed the Setting Aside
Application and allowed a Stay of the Adjudication Decision only for the
above sum of RM65,884.43. Correspondingly the Enforcement Application
was allowed with a stay of the sum of RM60,884.43.
[63] As for costs, after hearing the parties, I had allowed RM5,000.00
each for the Setting Aside Application and the Enforcement Application in
favour of the Claimant and a sum of RM3,000.00 for the Stay Application
in favour of the Claimant.

Dated: 28 December 2018.

- signed -
LEE SWEE SENG
Judge
Construction Court
High Court of Malaya
Kuala Lumpur

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For the Plaintiff in :
WA-24C-161-08/2018 : James Ding and Ng Si Seng
and the Respondent in : (Messrs SS Ng & Lim)
WA-24C-164-08/2018 and :
WA-24C-165-08/2918 :

For the Defendant in :

WA-24C-161-08/2018 : Ben Lee Kam Foo and
and the Plaintiff in : Victor Pang Chee Siong
WA-24C-164-08/2018 and : (Messrs Gan & Zul)
WA-24C-165-08/2918 :

Date of Decision: 3 October 2018.

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