PERKASA JAUHARI SDN BHD (IN LIQUIDATION) v YS CHONG ENTERPRISE SDN BHD

Case Significance

Illustrates that a CIPAA adjudication decision has only temporary finality and is superseded by a court judgment, which can then found a winding-up petition, and confirms the appointment of a private liquidator on an established judgment debt.

This High Court decision at Johor Bahru concerns a winding-up petition presented by one company against another under the Companies Act 2016, together with an application to appoint a private liquidator. The petition was founded on section 465(1)(e), inability to pay debts, following a statutory notice of demand under section 466(1)(a), and the debt claimed, of some RM3.6 million, exceeded the statutory threshold for winding up. A significant feature was that the underlying entitlement had earlier been the subject of adjudication decisions under the Construction Industry Payment and Adjudication Act 2012 (CIPAA), which had then been overtaken by a High Court judgment in the petitioner's favour.

The court addressed the effect of the CIPAA adjudication decisions. Consistent with the statutory scheme, an adjudication decision has only temporary finality: it is binding until the dispute is finally resolved by the court or by agreement. Here the adjudication decisions had been superseded by the High Court judgment, which favoured the petitioner and established the debt. The respondent's defences, including a claim of set-off and allegations that the statutory demand was inaccurate, were rejected: the set-off did not defeat the debt, and the allegations about the demand were unsubstantiated, no evidence or particulars having been provided.

Satisfied that the debt was established, that it exceeded the minimum statutory threshold, and that the respondent was unable to pay, the court found this to be a fit and proper case for a winding-up order. It allowed the petition and ordered the respondent company to be wound up, and, on the unopposed application, appointed a private liquidator with the powers conferred by the Companies Act 2016 to manage the respondent's affairs. The judgment is a useful illustration of the temporary finality of CIPAA adjudication decisions once superseded by a court judgment, and of winding up founded on a judgment debt.