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MALAYSIA

IN THE HIGH COURT IN SABAH & SARAWAK AT KOTA

KINABALU

[ORIGINATING SUMMONS NO. BKI-24-39/5-2019]

BETWEEN

BORNEO HIGHWAY PDP SDN BHD … PLAINTIFF

(1164231-M)

AND

INTAN MARUDU SDN BHD (350749) … DEFENDANT

CONSOLIDATED AND HEARD TOGETHER WITH

ORIGINATING SUMMONS NO. BKI-24NCvC-88/5-2019 (HC2)

BETWEEN

INTAN MARUDU SDN BHD (350749) … APPLICANT

AND

BORNEO HIGHWAY PDP SDN BHD … PLAINTIFF

(1164231-M)

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GROUNDS OF DECISION

Brief background

[1] In April 2016, the Government of Malaysia and the Sabah State
Government appointed BORNEO HIGHWAY PDP SDN BHD
(BORNEO HIGHWAY) as the Project Delivery Partner to carry
out the implementation of Phase 1 of the Pan Borneo Highway
Sabah project.

[2] In June 2016, BORNEO HIGHWAY engaged INTAN MARUDU

SDN BHD (INTAN MARUDU) as contractor to carry out and
complete part of the Phase 1 of the Pan Borneo Highway Sabah
project known as “Projek Menaiktaraf Jalan Tawau-Semporna
(Tawau Sandakan) Kepada Jalan Dua Hala, Tawau, Sabah (Pakej
1, Fasa 2)” under Contract No. BHP/JTSMP15lCO2l2016” (the
said Project).

[3] Payment disputes arose between the parties and in November

2018, INTAN MARUDU started adjudication proceedings under
Construction Industry and Adjudication Act, 2012 (CIPAA) for
various payment claims which adjudication action was
registered with Asian International Arbitration Centre as
Adjudication (AIAC) [formerly Kuala Lumpur Regional Centre
For Arbitration (KLRCA)] Reference No. AIAC/D/ADJ-
21742019.

[4] The parties went through the adjudication resolution process.

The appointed adjudicator, R. Jayasingam A/L Ratnasingam by
his Adjudication Decision dated 26-4-2019 (the said
Adjudication Decision), allowed that part of the INTAN
MARUDU’s claims for additional/variation works for tree
cutting under Bill of Quantities (BQ) item 5.2 made under

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Progress Claim No. 4 (the claim for tree cutting) which was not
certified or under-certified. For the said claim, the adjudicator
ordered BORNEO HIGHWAY to pay within 14 days the sum of
RM2,811,560.00, interest and costs.

Applications before the Court

[5] On 10-5-2019, BORNEO HIGHWAY as Plaintiff took out

Originating Summons No. BKI-24-39/5-2019 against INTAN
MARUDU as the Defendant, applying to set aside and
alternatively, to stay the said Adjudication Decision allowing
the claim for tree cutting (the setting aside/stay application).

[6] On 21-5-2019, INTAN MARUDU also filed Originating

Summons No. BKI-24NCvC-88/5-2019 as Plaintiff against
BORNEO HIGHWAY as the Defendant, applying to enforce the
said Adjudication Decision as judgment of the Court (the
enforcement application).

[7] On 21-6-2019, the Court ordered (Encl. 13 in Originating

Summons No. BKI-24NCvC-88/5-2019) that both the
setting/stay application and the enforcement application be
consolidated and heard together.

[8] For good sense, both parties are ad idem that the setting
aside/stay application should be heard first followed by the
enforcement application as was done in the case of Skyworld
Development Sdn Bhd v. Zalam Corporation Sdn Bhd & Other
Cases [2019] 3 MLRH 143.

[9] To avoid confusion, I will refer the parties in both applications

by their names as abbreviated before.

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The Setting aside/stay application - the preliminary objections

[10] Firstly, INTAN MARUDU raised a preliminary objection to the

setting aside/stay application of BORNEO HIGHWAY on the
grounds that:

(a) BORNEO HIGHWAY has not stated the full name of the
Adjudicator in the intitulement of their Originating
Summons for the setting aside/stay application. BORNEO
HIGHWAY only stated in the intitulement, the name of the
Adjudicator as “R. Jayasingam” instead of his full name,
“R. Jayasingam A/L Ratnasingam”; and

(b) The intitulement Originating Summons for the setting

aside/stay application has not stated or made reference to
Order 69A of the Rules of Court, 2012 under which the
application was made;

(c) BORNEO HIGHWAY has not specified in their setting

aside/stay application, the respondents on whom it is to be
served and their respective role as required under Order
69A, rule 2(1) (f) of the Rules of Court, 2012; and

(d) BORNEO HIGHWAY has filed the setting aside/stay

application prematurely in breach of Order 69A, rule 4 of
the Rules of Court, 2012.

[11] I do not need to deal with the ground (d) of the preliminary
objects as counsel for INTAN MARUDU in his submission
informed that he is not pursuing on this ground in view of the
Federal Court decision in View Esteem Sdn Bhd v. Bina Puri
Holdings Bhd [2018] 1 MLRA 460. Federal Court in that case
decided that it is not improper for application to stay an

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adjudicator’s award to be made together with an application to

set aside his award in an Originating Summons.

[12] In respect of the failure to state the full name of the

Adjudicator, the intitulement in the Originating Summons has
stated the reference number of the adjudication proceedings
registered with AIAC. The date of the Adjudication Decision
was also stated.

[13] INTAN MARUDU was not alleging there were other payment
disputes adjudicated by different adjudicators whether on the
same or different dates and whether in the same adjudication
proceedings so as to render it confused and unable to ascertain
which adjudication decision and by which adjudicator this
setting/stay application is concerning.

[14] From the intitulement of the Originating Summons for the

setting aside/stay application, it is not reasonable to harbour any
doubt that it concerns the Adjudication Decision dated 26-4-
2019 in the adjudication proceedings registered with AIAC with
a Reference No. AIAC/D/ADJ-2174-2019 and who was the
appointed adjudicator.

[15] In respect of the objection based on failure to state and made

reference to Order 69A of the Rules of Court, 2012, the
intitulement of the Originating Summons for the setting
aside/stay application did state that it is a matter under Sections
12(4), 15 & 16 of CIPAA 2012 which is concerning application
to set aside and for stay of the adjudication decision.

[16] INTAN MARUDU was also not alleging that they are confused
as to what the application is about and misled in anyway. Thus, I
do not find the failure to state Order 69A of the Rules of Court,
2012 in the intitulement of the Originating Summons for the

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setting aside/stay application prejudiced INTAN MARUDU or

caused them any injustice.

[17] I do not find BORNEO HIGHWAY to have intentionally chosen

not to comply with the rules of the Court in this respect.

[18] Having regards to Order 1A and Order 2 rule 1 of Rules of

Court, 2012, I also do not find the requirement to state Order
69A of the Rules of Court, 2012 in the intitulement of the
Originating Summons mandatory as contended so that mere non
compliance of which would warrant its dismissal of the
application without considering its merits.

[19] In respect of the contention of failure to comply with Order

69A, rule 2(1) (f) of the Rules of Court, 2012 in specifying the
respective role of the parties concerned, upon perusal of the
grounds as enumerated in the Originating Summons for the
setting aside/stay application, particularly, paragraphs 5 to 13
therein, I do not find any substance in the objection.

[20] I therefore, overrule the preliminary objections of INTAN

MARUDU and proceed to consider the merits of the setting
aside/stay application of BORNEO HIGHWAY.

BORNEO HIGHWAY’s grounds for the application to set aside

the Adjudication Decision

[21] Section 15 of CIPAA provides that:

An aggrieved party may apply to the High Court to set aside an

adjudication decision on one or more of the following grounds:

(a) the adjudication decision was improperly procured through

fraud or bribery;

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(b) there has been a denial of natural justice;

(c) the adjudicator has not acted independently or impartially;

or

(d) the adjudicator has acted in excess of his jurisdiction.

[22] BORNEO HIGHWAY is seeking to set aside the Adjudication

Decision on the grounds that there has been a denial of natural
justice under Section 15 (b) and/or that the Adjudicator has
acted in excess of his jurisdiction under Section 15(d) of CIPAA
2012.

[23] BORNEO HIGHWAY contended that this was because the

Adjudicator has failed to given reasons in the Adjudication
Decision to award INTAN MARUDU with a sum of
RM2,811,560.00 against INTAN MARUDU for the claim for
tree cutting.

Contention of the failure of the adjudicator to give reasons for

the Adjudication Decision

[24] BORNEO HIGHWAY contended that the Adjudicator has given

his reasons in respect of the issues (issue No. 1, 2 and 4)
concerning the other parts of INTAN MARUDU’s payment
claims which the Adjudicator has correctly dismissed.

[25] However, BORNEO HIGHWAY contended that when dealing

with and deciding the issue (issue No.3) in respect of the claim
for tree cutting, the adjudicator allowed INTAN MARUDU’s
claim for the sum of RM2,811,560.00 failing to give reason for
his decision and thus, there has been a denial of natural justice
by the Adjudicator.

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[26] BORNEO HIGHWAY also contended that the Adjudicator has

failed to comply with Section 12(4) of CIPAA which requires
Adjudication Decision to contain reasons when requirement was
not dispensed with by the parties.

[27] By failing to give reasons, BORNEO HIGHWAY contended that

the adjudicator has thus also exceeded his jurisdiction relying on
the decision of the Supreme Court of Queensland, Australia in
Sierra Property Qld Pty Ltd v. National Construction
Management Pty Ltd & Ors [2016] QSC 108.

[28] Counsel for INTAN MARUDU however contended that as the

adjudicator has in the Adjudication Decision listed the issues
that he identified (paragraph 45 of the Adjudication Decision)
and the submissions of both parties in respect of the claim for
tree cutting (paragraph 55 and 56 of the Adjudication Decision),
these showed that the adjudicator has read the submissions of
both parties.

[29] Counsel for INTAN MARUDU contended that it was because

the adjudicator has rejected the BORNEO HIGHWAY’s
interpretation of item 5.2 of the BQ that he came to the
conclusion that INTAN MARUDU was entitled to the claim for
tree cutting.

[30] Counsel for INTAN MARUDU also contended that BORNEO

HIGHWAY’s complaints are complaints on the factual findings
of the adjudicator, the merits of which were not for the Court to
review based on decided cases. (See: Bouygues (UK) Ltd v.
Dahl-Jensen (UK) Ltd. [2000] EWCA Civ. 507; ACFM
Engineering & Construction Sdn. Bhd. v. Esstar Vision Sdn. Bhd
& anor. [2016] 1 LNS 1522 (Court of Appeal); and Econpile (M)
Sdn. Bhd. v. IRDK Ventures Sdn. Bhd. & anor [2016] 5 CLJ
882).

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The requirement to give reasons and the extent of the reasons

required

[31] Section 12(4) of the CIPAA does impose a duty upon an

adjudicator to give reasons for his/her Adjudication Decision
when the requirement was not dispensed with by the parties.
However, what is the extent of the reasons statutory required of
the adjudicator for his/her decision?

[32] The adequacy or sufficiency of the reasons of decision of the

adjudicator depended on the legislative context of CIPAA.
Section 12(c) of CIPPAA imposed a strict timeline for the
adjudicator to decide the dispute and deliver the adjudication
decision. Section 12 (d) of CIPAA rendered the adjudication
decision void if the timeline was not met.

[33] However, the legislature has not by any express provisions in

CIPAA, made the adjudication decision void for not containing
reasons or failure to give reasons for the adjudication decision.

[34] The strict timeline as provided under Section 12 (c) and 12(d) of
CIPAA for the adjudicator to deliver his/her decision shows the
legislative intention on the speed required of the adjudicator to
deliver his/her decision and to make such decision enforceable
in the interim for resolving the payment disputes of the parties
in a construction contract pending the final determination of the
payment disputes by arbitration, litigation or agreement.

[35] Given the strict and restrictive legislative timeline to deliver the
adjudication decision, the adjudicator cannot be expected to give
reasons for the adjudication decision with the
comprehensiveness as expected of judgment made by Court or
award of arbitrator.

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[36] Thus, on the adequacy or sufficiency of the reasons required of

the adjudicator for the adjudication decision, Justice Mary Lim
Thiam Suan in Ranhill E & C Sdn Bhd v. Tioxide (Malaysia) Sdn
Bhd & Other Cases [2016] 5 MLRH 472 stated that:

“[69] Subsection 19(5) deals with payment of fees and

expenses of the adjudication which the adjudicator may
require the parties to pay in full before the adjudication
decision is released to the parties. However, it is clear
from subsection 12(2) that the adjudication decision
must be a decision on the very matter, issue or dispute
referred. The disputing parties need to be able to read
the adjudicator’s decision and know exactly what it is
that the adjudicator has decided in relation to their
dispute. In other words, it has to be intelligible. It is no
use if the parties referred a dispute about subject
matter “A” and the decision is about subject matter
“B”.

[70] Subsection 12(4) further requires the decision to be in

writing. It must also contain “reasons for such decision
unless the requirement for reasons is dispensed with by
the parties”. I would not construe the requirement of
“reasons” here to be one that must be full as one
would generally see in judgments of the court or even
arbitration awards. What would be required is, at the
very least, a statement of the adjudicator’s reasons for
coming to the decision reached. Brevity is not a reason
for complaint. The reasons may be succinct, enough or
sufficient to show that the adjudicator has dealt with
the very issues remitted to him and what his
conclusions are on those issues. The reasons may be
wrong on the facts or even the law but I do not believe

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that is enough cause to interfere. The courts must

exercise considerable restraint when invited to set
aside an adjudication decision reached in very
exacting circumstances and conditions. So that it will
only be in rare and extreme circumstances that the
reasons, brief or otherwise, are found wanting.”
(emphasis added)

[37] The principles that can be discerned from that case for
determination of the adequacy or sufficient of reasons given the
adjudicator are:

(a) The reasons for the decision must be intelligible in respect

of the issues referred to the adjudicator;

(b) The reasons for the decision need not be as comprehensive

and in the standard of a Judgment of the Court or
arbitration award,

(c) The reasons given may be succinct and they are enough or
sufficient when they show that the adjudicator has dealt
with the very issues remitted to him/her and what his/her
conclusions are on those issues;

(d) Recognition must be had that adjudication decision are

reached in very exacting circumstances and conditions.
Only in rare and extreme circumstances that the Court is to
hold the reasons of the adjudicator given for his/her
decision as not adequate or sufficient.

Parties’ respective case before the adjudicator in respect of the

claim for tree cutting
- INTAN MARUDU’s case

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[38] Based on the documents as exhibited for the setting aside/stay

application, briefly, INTAN MARUDU’s case before the
Adjudicator for the claim for tree cutting was based on item 5.2
of Bills of Quantities (provisional items) (page 340 of exhibit
“MF-12” of the Affidavit In Support of Muhammad Fadzil Bin
Abdul Hamid affirmed on 10-5-2019 [Encl.2]) as
variation/additional works.

[39] INTAN MARUDU’s case was that BORNEO HIGHWAY’s

representative had instructed it to carry out the works for the
claim for tree cutting under clause 22 of the conditions of
contract (page 262 of exhibit “MF-12” of the Affidavit In
Support of Muhammad Fadzil Bin Abdul Hamid affirmed on 10-
5-2019 [Encl.2]).

[40] INTAN MARUDU’s case was that BORNEO HIGHWAY’s

representative had also signed, verified and accepted records of
the sizes and number of trees cut by the documents known as
“Pengesahan Ukuran Bulatan Pokok-Pokok Di Kawasan” (page
415 to 466 of exhibit “MF-12” of the Affidavit In Support of
Muhammad Fadzil Bin Abdul Hamid affirmed on 10-5-2019
[Encl.2]). This was consistent with Clause 25 of the conditions
of contract (page 262 of exhibit “MF-12” of the Affidavit In
Support of Muhammad Fadzil Bin Abdul Hamid affirmed on 10-
5-2019 [Encl.2])

[41] INTAN MARUDU’s case was that the claim for tree cutting as
the additional or variation works totalling RM2,811,560.00 was
calculated based on the rates as provided under item 5.2 of the
BQ for felling trees (provisional items). BORNEO HIGHWAY
had requested the claimant to transport these trees to the port
designated and obtained possession of them and thus, BORNEO

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HIGHWAY was estopped from denying the works done by the

INTAN MARUDU and refused to make payment.

BORNEO HIGHWAY’s case

[42] However, BORNEO HIGHWAY’s case, briefly, was that the

works for the claim for tree cutting were part of the Claimant’s
responsibilities and obligations under item 5.1 of the Bill of
Quantities (B.Q) (page 340 of exhibit “MF-12” of the Affidavit
In Support of Muhammad Fadzil Bin Abdul Hamid affirmed on
10-5-2019 [Encl.2]).

[43] This was as defined under item 2.1.1.1 (Site Clearing) in Section
2 - Earthworks, the Standard Specification of the Contract of the
contract documents (page 351 of exhibit “MF-12” of the
Affidavit In Support of Muhammad Fadzil Bin Abdul Hamid
affirmed on 10-5-2019 [Encl.2]). BORNEO HIGHWAY
contended that they were not additional or variation works and
could not be claimed as such.

[44] BORNEO HIGHWAY contended that INTAN MARUDU had by

its letter dated 22.11.2016 admitted that it was not entitled to
claim payment for the felling of trees (page 513 of exhibit “MF-
13” of the Affidavit In Support of Muhammad Fadzil Bin Abdul
Hamid affirmed on 10-5-2019 [Encl.2]).

[45] The records of measurement of the trees felled as prepared by

BORNEO HIGHWAY’s representative (“Pengesahan Ukuran
Bulatan Pokok-Pokok Di Kawasan” at page 415 to 466 of exhibit
“MF-12” of the Affidavit In Support of Muhammad Fadzil Bin
Abdul Hamid affirmed on 10-5-2019 [Encl.2]) were merely for
record purposes.

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[46] In any event, BORNEO HIGHWAY contended that the number

of trees that were felled and which the INTAN MARUDU was
claiming was incorrect and grossly exaggerated. BORNEO
HIGHWAY contended that they included palm trees provided
for under item 5.1.2 of the B.Q (page 340 of exhibit “MF-12” of
the Affidavit In Support of Muhammad Fadzil Bin Abdul Hamid
affirmed on 10-5-2019 [Encl.2]) and could not be claimed by
INTAN MARUDU.

[47] The parties have put up different interpretations to the related

provisions in the contract documents on the matter, particularly
items 5.1.2 and 5.2 of the B.Q. which they relied on to advance
their respective case before the Adjudicator in this case.

Analysis of the Adjudication Decision

[48] In his Adjudication Decision dated 26-4-2019 (exhibit MF-11”

of the Affidavit In Support of Muhammad Fadzil Bin Abdul
Hamid affirmed on 10-5-2019 [Encl.2]), the Adjudicator has set
out the particulars of the parties, their contractual relationship
and construction contract documents involved (paragraphs 1 to 7
of the Adjudication Decision).

[49] The Adjudicator has also stated the nature of INTAN

MARUDU’s claims, the non response from BORNEO
HIGHWAY, the reference for adjudication made by INTAN
MARUDU and his appointment as the Adjudicator in the matters
(paragraphs 8 to 12 of the Adjudication Decision).

[50] The Adjudicator has stated in his Adjudication Decision that he

had read in full and carefully considered all points/issues arising
from in INTAN MARUDU’s Adjudication Claim, BORNEO
HIGHWAY’s Adjudication Response and INTAN MARUDU’s

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Adjudication Reply and notwithstanding that he only set out

certain salient points in the Adjudication Decision (paragraphs
13 to 46 therein).

[51] The Adjudicator in this case identified four (4) issues he set out
(See: paragraph 47 therein) including Issue No.2 in respect of
the claim for tree cutting for his determination.

[52] The Adjudicator stated he had directed the exchange of written

submissions by the parties and read these written submissions
and considered the case law authorities provided (paragraphs 47
and 48 therein).

[53] In respect of the claim for tree cutting (Issue No.3) and after
setting out the summary of the rival contentions of the parties
(paragraphs 55 and 56 therein), the adjudicator then stated in
paragraph 57 of the Adjudication Decision, that:

“I have carefully considered the specific paragraphs in the

Adjudication Clam, the Adjudication Response and the
Adjudication Reply, and having perused extensively all
documents in the various bundles, I agree with the
Claimant (INTAN MARUDU) and allow the Claimant’s
(INTAN MARUDU’s) claim for the 214 trees of girth : 0.5
- 1m (unit rate RM200.00), 651 trees of girth : 1 2m (unit
rate RM300.00) and 4437 trees of girth : 2 - 5m (unit rate
RM580.00). I am not persuaded by the Respondent’s
interpretation of ltem 5.2 of the BQ nor the alternative
calculations provided in paragraph 23 of the
Adjudication Response”.

[54] Thus, in paragraph 62 of the Adjudicator Decision, he

determined that BORNEO HIGHWAY pay INTAN MARUDU
the sum of RM2,811,560.00 for the claim trees cutting and

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interest at the rate of 50% per annum on yearly rest thereon

calculated from 1-2-2019 until full payment to be paid by
BORNEO HIGHWAY to INTAN MARUDU within 14 days from
the date of the Adjudication decision and also determine that
BORNEO HIGHWAY pay for the full Adjudicator’s fee and
expenses in the total sum of RM54,363,55 and costs of INTAN
MARUDU which the adjudicator determined to be the sum of
RM20,000.00 to be paid by BORNEO HIGHWAY to INTAN
MARUDU.

[55] Counsel for the BORNEO HIGHWAY contended the

Adjudicator had not given any answers on whether the claim for
tree cutting by INTAN MARUDU under Issue No.3 was under
item 5.1 or 5.2 of BQ; how did he interpret these two items with
the specifications for the contract; whether claim under item 5.2
required the issuance of Variation Order; whether he found any
documentary evidence of Variation Order or otherwise, any
refutation of issuance of Variation Order by BORNEO
HIGHWAY’s solicitor’s letter; effect of admission by INTAN
MARUDU’s solicitor’s letter, whether INTAN MARUDU was
entitled to claim for palm oil tree felled and whether the number
of trees claimed by INTAN MARUDU for the claim for tree
cutting was correct or justified.

[56] Counsel for BORNEO HIGHWAY submitted that the

Adjudicator had not given any answers to these questions. It was
not possible to decipher the reasons process or route taken by
the Adjudicator in arriving at his decision.

[57] On the other hands, Counsel for BORNEO HIGHWAY conceded

that the Adjudicator was not obliged to consider each and every
related issue.

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[58] However, from the INTAN MARUDU’s Adjudication Claim

(exhibit “MF-4”), BORNEO HIGHWAY’s Adjudication
Response (exhibit “MF-5”), INTAN MARUDU’s Adjudication
Reply (exhibit “MF-6”), INTAN MARUDU’s submission
(exhibit “MF-7”), BORNEO HIGHWAY’s submission (exhibit
MF-8”, INTAN MARUDU’s submission in reply (exhibit “MF-
9”) and BORNEO HIGHWAY’s submission in reply (exhibit
“MF-10”) presented to the Adjudicator, both parties have
canvassed with all relevant documents put forth to the
Adjudicator, their respective versions of the case to related
issues.

[59] In my view, the adequacy or sufficiency of the reasons given by

the said Adjudicator is to be judged by what the said
Adjudicator had stated in the context of all the documents,
issues and submissions of the respective parties presented to
him.

[60] The Adjudicator had indeed stated that he was not persuaded by
the BORNEO HIGHWAY’s interpretation of item 5.2 of the BQ
nor the alternative calculations it provided in the Adjudication
Response. It is apparently that he preferred INTAN MARUDU’s
version of the case and their interpretation of the related items
of BQ and reasoning or found them more probable.

[61] In other words, the adjudicator adopted INTAN MARUDU’s

version of the case and their interpretation of the related items
of BQ and thus, the reasons he allowed INTAN MARUDU for
the claim for tree cutting under Issue No.3.

[62] BORNEO HIGHWAY could not reasonably be heard to say that

it did not know the issues which this Adjudication Decision was
concerned in respect of the claim for tree cutting.

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[63] BORNEO HIGHWAY could not be reasonably be heard to say

that it also did not know the nature or basis of INTAN
MARUDU’s contentions and reasoning advanced before the
Adjudicator for the claim for the tree cutting, which BORNEO
HIGHWAY had dealt with in their submission before the
Adjudicator. Whether BORNEO HIGHWAY viewed them as
sustainable or not are beside the point.

[64] That being the case, BORNEO HIGHWAY’s cannot reasonably

be heard to say that the reasons as given by the Adjudicator
were not intelligible when he stated he was not persuaded by the
BORNEO HIGHWAY’s version of the case and preferred
BORNEO HIGHWAY’s version of the case.

[65] In SKS Pavillion Sdn Bhd v. Tasoon Injection Pile Sdn Bhd
[2019] MLJU 1051, similarly, the adjudicator had preferred and
accepted the defendant’s version of the case in respect of an
item of claim for loss and expense under a construction contract.
The plaintiff in case also sought to set aside the adjudication
decision on the ground that the reasons given by the adjudicator
were incoherent and unintelligible. The Court held the
plaintiff’s grounds to be without substance and that the
plaintiff’s should not be allowed to vent its dissatisfaction on
the pretext that the adjudicator’s reasons were unintelligible.

[66] Counsel for BORNEO HIGHWAY also contended that the

Adjudicator gave no reasons why he was not persuaded with the
BORNEO HIGHWAY’s interpretation of item 5.2 of BQ or the
alternative calculations provided in paragraph 23 of the
Adjudication Response.

[67] I do not think the object of giving reasons as required of the

adjudicator for the Adjudication Decision is to show how the

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adjudicator reached his/her decision in a “watch me think”

fashion. It is to show why the adjudicator made the decision.

[68] I am not persuaded by the decision of the Supreme Court of

Queensland, Australia in Sierra Property Qld Pty Ltd v.
National Construction Management Pty Ltd & Ors [2016] QSC
108 which counsel for BORNEO HIGHWAY relied on to hold
that there was a failure on the part of the Adjudicator to give
reasons for the decision in respect of the claim for tree cutting
in this.

[69] Firstly, in Sierra Property Qld Pty Ltd v. National Construction

Management Pty Ltd & Ors (Supra), there was complete failure
on the part of an adjudicator to give reasons which the court
held to constitute jurisdictional error.

[70] Secondly, Justice Jackson in that case also held that:

“39. The requirement to include reasons in the decision in

writing is also informed by the fact that the questions in
dispute upon a payment claim served or purportedly served
under the Payments Act (Building and Construction
Industry Payments Act 2004 (Qld)) may vary greatly.
Therefore, there is no necessary list of matters that must
be considered in the reasons. Conversely, there is no list
of matters that if considered will in every case satisfy the
requirement to include the reasons for the written
decision. To some extent, each case must depend on its
own facts.” (emphasis added).

[71] Thirdly, in so far as Justice Jackson has in Sierra Property Qld

Pty Ltd v. National Construction Management Pty Ltd & Ors
(Supra) propounded a more extensive duty imposed on the part
of the adjudicator to give reasons than as imposed by the

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principles as enunciated by Justice Mary Lim Thiam Suan in

Ranhill E & C Sdn Bhd v. Tioxide (Malaysia) Sdn Bhd & Other
Cases (supra), I am not inclined to follow Sierra Property Qld
Pty Ltd v. National Construction Management Pty Ltd & Ors
(Supra).

[72] This is because there are legislative differences in Building and

Construction Industry Payments Act 2004 (Qld) (Queensland
BCIPA) and our CIPAA. To name a few, our CIPAA has
provision in Section 15 for aggrieved party to apply to set aside
improperly procured Adjudication and in Section 16 for stay of
Adjudication decision whereas Queensland BCIPA has no such
provision.

[73] The challenge to the Adjudicator Decision made under

Queensland BCIPA in Sierra Property Qld Pty Ltd v. National
Construction Management Pty Ltd & Ors (Supra) is by way of
Judicial Review. Sections 15 and 16 of our CIPAA cannot be
interpreted to be equated with the process of Judicial Review
based on cases as decided in Malaysia.

[74] There are stringent provisions concerning the qualification of

persons who may be adjudicator BCIPA (by Sections 56 to 97
Queensland BCIPA) whereas our CIPAA does not have (see:
Section 32 of CIPAA). This perhaps justifies imposition of more
extensive duty on the adjudicator appointed under Queensland
BCIPA to give reasons for the adjudication decision.

[75] Thus, applying the principles as enunciated by Justice Mary Lim

Thiam Suan in Ranhill E & C Sdn Bhd v. Tioxide (Malaysia) Sdn
Bhd & Other Cases (supra), I find the reasons of the
Adjudicator in allowing INTAN MARUDU’s the claim for tree
cutting in the sum of RM2,811,560.00 in the Adjudication

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Decision (in respect of Issue No.3) intelligible and sufficient to

satisfy the statutory requirement under Section 12 (4) of CIPAA.

[76] That being the case, I do not find any substance in BORNEO
HIGHWAY’s grounds that there were a denial of natural justice
under Section 15 (b) and/or that the Adjudicator has acted in
excess of his jurisdiction under Section 15(d) of CIPAA 2012 to
sustain BORNEO HIGHWAY’s application to set aside the
Adjudication Decision.

BORNEO HIGHWAY’s grounds for the alternative application

to stay the Adjudication Decision (without or with conditions)

[77] Section 16 of CIPAA provides that:

“(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

(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.”

[78] BORNEO HIGHWAY has indeed made application to set aside

which I am disapproving for the reasons given in the earlier part
of this ruling. There is no dispute that the BORNEO HIGHWAY

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has commenced arbitration proceeding for determination of the

matters in dispute.

[79] In View Esteem Sdn. Bhd. v. Bina Puri Holdings Bhd [2019] 5
CLJ 479, the Federal Court held that it is not right to restrict
exercise of the statutory power to stay Adjudication Decision by
confining consideration on the financial status of the other
party.

[80] Federal Court was also in agreement that Section 16 of CIPAA

should be read more liberally to allow “some degree of
flexibility to the courts to stay award where there are clear
errors, or to meet the justice of the individual case”.

[81] Federal Court also accepted that a stay of the adjudication award
ought not to be given readily and caution must be exercised
when doing so.

[82] The burden is on BORNEO HIGHWAY to demonstrate that

based on the evidence presented, the circumstances justify the
exercise of discretion by the Court to grant a stay or conditional
stay of the Adjudication Decision it applied for.

[83] For its application for stay or alternatively a conditional stay

under Section 16 of CIPAA, BORNEO HIGHWAY relied, firstly
on the same ground that it has relied on for its application to set
aside the Adjudication Decision, that is, failure of the
adjudicator to give reasons. Secondly, BORNEO HIGHWAY
also alleged that INTAN MARUDU is in poor financial state.
BORNEO HIGHWAY believed that if the stay as applied for is
not granted, any payment made by BORNEO HIGHWAY to
INTAN MARUDU in respect of the Adjudication Decision
would be rendered irrecoverable.

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[84] In view that I have found to be without substance earlier,

BORNEO HIGHWAY’s contention that there was failure to give
reasons on the part of the Adjudicator, I give this ground little
weight in considering whether discretion should be exercised in
favour of granting the stay applied for.

[85] On the second ground relied on by BORNEO HIGHWAY for the

stay, there must be evidence put forth to show the INTAN
MARUDU is in such a poor financial state to reasonably justify
the belief that any payment made by BORNEO HIGHWAY to
INTAN MARUDU for the award made in the Adjudication
Decision would be irrecoverable in the event of the final
determination of disputes by the arbitral tribunal in favour of
BORNEO HIGHWAY.

[86] BORNEO HIGHWAY put forth the Corporate Information in

respect of INTAN MARUDU issued on 8-5-2019 by Companies
Commission of Malaysia (exhibit “MF-2” to the Affidavit In
Support of Muhammad Fadzil Bin Abdul Hamid affirmed on 10-
5-2019 [Encl.2]) to show that INTAN MARUDU is in a poor
financial state.

[87] The Corporate Information in respect of INTAN MARUDU

issued on 8-5-2019 by Companies Commission of Malaysia
contained a summary of the financial information of INTAN
MARUDU. By Section 606 of the Companies Act, 2015, I have
to accept the information as prima facie of the matters as
specified in the information. A bare denial by INTAN MARUDU
would not be sufficient to rebut the prima facie evidence.

[88] The summary of the financial information contained in

Corporate Information in respect of INTAN MARUDU shows
that its “current liabilities” (RM143,693.00) exceeded its
“current assets” (RM18,243.00) by RM125,450.00. It also

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reveals that INTAN MARUDU had suffered a loss after tax of

RM373,147.00 and that INTAN MARUDU is heavily indebted to
Bank Perusahaan Kecil & Sederhana Malaysia Berhad in excess
of RM3 Million.

[89] Counsel for BORNEO HIGHWAY relied on HSBC Bank

Malaysia Berhad v. CS Metal Industries (M) Sdn Bhd [2005] 5
MLRH 790; Pioneer Concrete (Malaysia) Sdn Bhd v. Celini
Corporation Sdn Bhd [1998] 3 MLRH 744; and United Asian
Bank Bhd. v. Hong Huat Realty (M) Sdn. Bhd [1986] 2 MLRH
61 to contend that INTAN MARUDU is insolvent or in poor
financial state.

[90] However as stated in summary of the financial information

contained in Corporate Information in respect of INTAN
MARUDU, the information was as at “Financial year end : 31-
12-2015” before INTAN MARUDU was engaged by BORNEO
HIGHWAY to carry the works in the said project.

[91] There is nothing to suggest that the presumption of continuity of

the financial standing of INTAN MARUDU as in 2015 should
apply. i.e. just because INTAN MARUDU’s “current liabilities”
exceeded its “current assets” in 2015, it must also be the case
for all following years.

[92] I don’t think adverse inference should be drawn against INTAN

MARUDU for not producing its accounts as evidence to
demonstrate it is on sound financial standing.

[93] In Farrelly (M & E) Building Services Ltd. v. Byrne Brothers

(Formwork) Ltd [2013] EWHC 1186 (TCC), Justice Ramsey
held that:

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“On the basis of the evidence I do not consider that there

are grounds for imposing a stay. As I stated in O’Donnell
v. Build Ability, there is no general obligation on a party
when seeking enforcement to disclose to the other party
confidential information of its financial and business
position so that the other party can consider whether there
are grounds for applying for a stay of any judgment. If
there were such an obligation it would mean that parties
could gain the benefit of that confidential information
which in the competitive construction industry would have
serious consequences in relation to the ability of
contractors and subcontractors when tendering or dealing
with disputes.”

See also: O’Donnell Developments Limited v. Build Ability

Limited [2009] EWHC 3388 (TCC) at [61].

[94] In the premises, I found insufficient evidence for me to conclude

that INTAN MARUDU is insolvent or in such poor financial
state now to reasonably justify the belief that any payment made
by BORNEO HIGHWAY to INTAN MARUDU for the award
made in the Adjudication Decision would be irrecoverable in the
event of the final determination of disputes by the arbitral
tribunal in favour of BORNEO HIGHWAY.

[95] Even if the evidence presented by BORNEO HIGHWAY

suggested that it is probable that INTAN MARUDU is insolvent
or in poor financial state, it is still not justifiable to grant a stay
of the Adjudication Decision, when (a). INTAN MARUDU’s
financial position is the same or similar to its financial position
at the time that the relevant contract between them was made in
respect of the said project and (b). INTAN MARUDU’s financial
position is due, either wholly, or in significant part, to the

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BORNEO HIGHWAY’s failure to pay those sums which were

awarded by the adjudicator. (See: Mecomb Malaysia Sdn Bhd v.
VST M&E Sdn Bhd [2018] 8 CLJ 380; Sazean Engineering &
Construction Sdn Bhd v. Bumi Bersatu Resources Sdn Bhd
[2016] 1 LNS 1356; Econpile (M) Sdn Bhd v. LRDK Ventures
Sdn Bhd [2016] 1 LNS 581; and Subang Skypark Sdn Bhd v.
Arcradius Sdn Bhd [2015] 10 CLJ 801).

[96] Based on the evidence as presented, there is no material for me

to make an assessment and determination in this respect.

[97] BORNEO HIGHWAY has also not demonstrated any clear or

unequivocal errors or any kind of errors so glaring that cannot
be ignored that were made by the Adjudicator in the
Adjudication Decision.

[98] In the circumstances, what remains to be applied are the

principles that effect must be given to the object of Adjudication
under CIPAA rather than to defeat it. The object is to ensure a
speedy and inexpensive interim resolution of payment dispute in
construction contract pending final determination of the dispute
by arbitration or by the Court.

[99] It is intended to ensure that the successful claimants are paid

and paid promptly and thus, the adjudicators’ decisions are
intended to be enforced summarily and the successful claimant
should not generally be kept out of the money awarded in
adjudication. (See: Econpile (M) Sdn Bhd v. LRDK Ventures Sdn
Bhd [2016] 1 LNS 581; and Subang Skypark Sdn Bhd v.
Arcradius Sdn Bhd [2015] 10 CLJ 801).

[100] Based on the evidence as presented and the reasons stated

earlier, I found no justifiable ground to exercise the discretion
in favour of the BORNEO HIGHWAY in granting a stay or a

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conditional stay of the Adjudication Decision in this case so as

to deny INTAN MARUDU the right to be paid promptly the
award made in the Adjudication decision under CIPAA.

The enforcement application

[101] In view of my findings in respect of setting aside/stay

application of BORNEO HIGHWAY, there is no reason to deny
INTAN MARUDU an order for it to enforce the Adjudication
Decision under Section 28 of CIPAA.

Conclusion and Orders

[102] Therefore, I dismiss the setting aside/stay application of

BORNEO HIGHWAY in Originating Summons No. BKI-24-
39/5-2019. Taking into consideration the INTAN MARUDU’s
unsuccessful preliminary objection therein, I allowed costs of
RM3,000.00 subject to allocatur to be paid by BORNEO
HIGHWAY as unsuccessful Plaintiff therein to INTAN
MARUDU as the successful respondent in that action.

[103] In respect of the enforcement application of INTAN MARUDU

in Originating Summons No. BKI-24NCvC-88/5-2019, I order
that INTAN MARUDU may enforce the said Adjudication
Decision dated 26-4-2019 of R. Jayasingam A/L Ratnasingam in
Adjudication Reference No. AIAC/D/ADJ-2174-2019 under
Section 28 of CIPAA. I order BORNEO HIGHWAY as
unsuccessful respondent to pay INTAN MARUDU as successful
Plaintiff in that action, costs in the sum of RM5,000.00 subject
to allocatur.

Dated: 6 JANUARY 2020

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(WONG SIONG TUNG)

Judicial Commissioner

High Court
Kota Kinabalu

Date of Grounds of Decision : 6 JANUARY 2020

Date of Delivery of Decision : 6 JANUARY 2020

Date of Hearing : 11 DECEMBER 2019

COUNSEL:

For the plaintiff - Alicia Wong; M/s Raj & Co

Advocates & Solicitors
Kota Kinabalu

For the defendant - Norbert Yapp; M/s Norbert Yapp & Associates
Advocates & Solicitors
Kota Kinabalu

Notice: This copy of the Court’s Grounds of Decision is subject to

amendment and editorial revision.

Case(s) referred to:

Skyworld Development Sdn Bhd v. Zalam Corporation Sdn Bhd &

Other Cases [2019] 3 MLRH 143

View Esteem Sdn Bhd v. Bina Puri Holdings Bhd [2018] 1 MLRA 460

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Sierra Property Qld Pty Ltd v. National Construction Management

Pty Ltd & Ors [2016] QSC 108

Bouygues (UK) Ltd v. Dahl-Jensen (UK) Ltd. [2000] EWCA Civ. 507

Engineering & Construction Sdn. Bhd. v. Esstar Vision Sdn. Bhd &
anor. [2016] 1 LNS 1522

Econpile (M) Sdn. Bhd. v. IRDK Ventures Sdn. Bhd. & anor [2016] 5
CLJ 882

Ranhill E & C Sdn Bhd v. Tioxide (Malaysia) Sdn Bhd & Other Cases
[2016] 5 MLRH 472

SKS Pavillion Sdn Bhd v. Tasoon Injection Pile Sdn Bhd [2019] MLJU
1051

View Esteem Sdn. Bhd. v. Bina Puri Holdings Bhd [2019] 5 CLJ 479

Sierra Property Qld Pty Ltd v. National Construction Management

Pty Ltd & Ors [2016] QSC 108

United Asian Bank Bhd. v. Hong Huat Realty (M) Sdn. Bhd [1986] 2
MLRH 61

HSBC Bank Malaysia Berhad v. CS Metal Industries (M) Sdn Bhd

[2005] 5 MLRH 790

United Asian Bank Bhd. v. Hong Huat Realty (M) Sdn. Bhd [1986] 2
MLRH 61

Mecomb Malaysia Sdn Bhd v. VST M&E Sdn Bhd [2018] 8 CLJ 380

Sazean Engineering & Construction Sdn Bhd v. Bumi Bersatu

Resources Sdn Bhd [2016] 1 LNS 1356

Econpile (M) Sdn Bhd v. LRDK Ventures Sdn Bhd [2016] 1 LNS 581

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Subang Skypark Sdn Bhd v. Arcradius Sdn Bhd [2015] 10 CLJ 801

Econpile (M) Sdn Bhd v. LRDK Ventures Sdn Bhd [2016] 1 LNS 581

Subang Skypark Sdn Bhd v. Arcradius Sdn Bhd [2015] 10 CLJ 801

Legislation referred to:

Rules of Court, 2012, O. 1A, O. 2 r. 1, O. 69A, r. 2(1) (f)

Construction Industry and Adjudication Act 2012, ss. 2, 12 (4)(c)(d),

15 (d)(b), 16, 32

Companies Act 2016, s. 606

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