MAYFAIR VENTURES SDN BHD v SETIAKON BUILDERS SDN BHD

Case Significance

Instructive on the jurisdictional limits of an adjudicator under the Construction Industry Payment and Adjudication Act 2012, holding that a stand-alone late-payment interest claim on settled certificates falls outside the definition of a 'payment' and that setting aside under section 15 is confined to jurisdiction and natural justice.

This Court of Appeal decision concerns the jurisdiction of an adjudicator under the Construction Industry Payment and Adjudication Act 2012 and, in this appeal, an application to set aside an adjudication decision under section 15 of the Act. The appellant, Mayfair Ventures Sdn Bhd, appealed against the High Court's dismissal of its originating summons to set aside an adjudication decision obtained by the respondent, Setiakon Builders Sdn Bhd, the main contractor under a letter of award incorporating a PAM form of contract. This appeal was heard together with a related appeal concerning enforcement of the same adjudication decision, and the two were decided in a single judgment. The central question was whether the adjudicator had acted in excess of jurisdiction by allowing a component of the respondent's claim, in circumstances where an adjudicator's jurisdiction under section 27(1) is limited to the matter referred to adjudication, and a payment claim must fall within the definition of 'payment' in section 4 of the Act. The court, comprising Azmi bin Ariffin, Mohd Firuz bin Jaffril and Ong Chee Kwan JJCA, distinguished two parts of the respondent's claim. The first was a claim for pure late-payment interest on work done under certificates that had already been fully settled; the court held that a claim for late-payment interest standing alone does not fit the definition of a 'payment' under section 4, so that by allowing it the adjudicator had exceeded her jurisdiction. The second part, a claim for work done and interest under other certificates, disclosed no appealable error. Emphasising that at this stage the court was not concerned with the merits of the adjudicator's decision, which could be set aside only on the grounds of excess or lack of jurisdiction or a denial of natural justice under section 15, the court allowed the appeal in part, deducting the sum of RM1,610,732.87 from the amount awarded, so that the respondent was to refund that sum plus interest of RM95,176.42, with costs of RM20,000. The judgment is instructive on the jurisdictional limits of adjudication and on whether a stand-alone late-payment interest claim falls within the statutory definition of a payment.