PCS VISION SDN BHD v R.M. LEOPAD SDN BHD

Case Significance

Confirms the narrow grounds for setting aside an adjudication decision under section 15 of the Construction Industry Payment and Adjudication Act 2012, holding that an adjudicator's costs power derives from sections 18 and 25 of the Act and that the court does not review the merits of the adjudication.

This High Court decision concerns an application to set aside an adjudication decision made under the Construction Industry Payment and Adjudication Act 2012, and the limits of the court's supervisory role over an adjudicator. The applicant had engaged the respondent as a subcontractor for scaffolding works on a light-rail project through a series of purchase orders, and was later terminated from the project. The respondent served a payment claim under section 5 of the Act for an unpaid sum exceeding RM4 million; the applicant issued no payment response, so that under section 6(4) it was deemed to dispute the whole claim, and the respondent commenced adjudication. The applicant filed an adjudication response disputing the claim as over-certified and excessive, and urged the adjudicator to revise the certificates and to allow various set-offs and deductions, including for dismantling and rental charges attributable to a former subcontractor. The adjudicator decided in the respondent's favour, and the applicant applied under section 15(b) and (d) of the Act to set the decision aside, contending among other things that the adjudicator had acted in excess of jurisdiction, including in the award of costs. The court held that the adjudicator derives her powers and jurisdiction from the Construction Industry Payment and Adjudication Act 2012, not from the Rules of Court 2012, and that the power to award costs is conferred by sections 18 and 25 of the Act, so that the adjudicator had not exceeded her jurisdiction in awarding costs. It held that what the applicant was in truth asking the court to do was to review the merits of the adjudication, which is not the function of the court on a setting-aside application, and that the applicant had failed to establish any excess of jurisdiction. The court dismissed the application to set aside the adjudication decision with costs. The judgment is a useful illustration of the narrow grounds for setting aside an adjudication decision and of the principle that the court does not review the merits.