w-01ca-523-08-2024 — KINU SDN. BHD. v Kerajaan Malaysia (Jabatan Kerja Raya Malaysia)

Outcome

Having found merits in the appeal, we allowed the appeal and granted an Order in Terms of prayers 2 a. (adjudicated amount RM927,300.00), b. (interest as prayed for) and c. costs of RM43,487.02) in the OS (Enclosure 3 pages 33-37) for direct payment from JKR to KSB and costs of RM 20,000 here and below.

Quoted verbatim from the judgment of Court of Appeal (Mahkamah Rayuan) (w-01ca-523-08-2024). Read the full judgment on the official Malaysia Courts portal for the complete decision.

Catchwords

Section 30 of the Construction Industry Payment and Adjudication Act 2012 (CIPAA) - Direct payment from the principal to subcontractor after subcontractor has obtained adjudication decision in its favor against the main contractor - Whether the principal may refuse a direct payment under s.30 CIPAA on grounds that it did not consent to the main contractor appointing the subcontractor – Under PWD Form DB (Rev. 1/2010) - meaning of principal under s. 4 CIPAA and the meaning of a “chain of construction contracts” - whether contractual terms and administrative circulars of the principal may be allowed to modify the express contractual terms under CIPAA - whether the failure of the principal to comply with written notice under s.30(2) CIPAA is fatal in the circumstances of the case or whether an adverse inference may be drawn against the principal - whether there was “money due or payable” from the principal to the main contractor at the time of the subcontractor’s request for payment under s.30(1) CIPAA - whether retention sum or performance guarantee sum deducted from work done by the main contractor and retained by principal constitute “money due or payable” under s.30 CIPAA - whether an adverse inference may be drawn against the principal for failure to produce the certificate of termination cost after more than 14 months have lapsed since the termination of its main contractor – whether the retention sum or performance guarantee sum may be forfeited in full by the principal without proper accounting for it - whether the principal has discharged its evidential burden by a mere say so that it does not owe the main contractor without producing any supporting document for additional costs incurred in completing the balance 0.14% of the Works.

Practice Areas

Construction Law

Judges (3)

Ahmad Fairuz bin Zainol Abidin Coram Lee Swee Seng Delivered Wong Kian Kheong Coram

Parties (2)

KINU Sdn Bhd Appellant Kerajaan Malaysia (Jabatan Kerja Raya Malaysia) Respondent

Summary

Kinu Sdn Bhd, a subcontractor that obtained an adjudication decision against its main contractor, sought a direct payment order under s.30 of CIPAA from the Government (JKR) as the principal. The Court of Appeal addressed whether retention sums constitute 'money due or payable' under s.30 CIPAA and whether the Government's failure to produce a certificate of termination cost warranted an adverse inference.

Statutes Cited

Construction Industry Payment and Adjudication Act 2012

s 30

Contracts Act 1950 (Cap 136)

Evidence Act 1950 (Cap 56)

Rules of Court 2012

Cases Cited (25)

UK (2)

[1944] 2 All ER 293 [2016] EWCA Civ 130

MY (23)

[1985] 2 MLJ 35 [1988] 1 MLJ 434 [1988] 1 MLJ 444 [1997] 1 MLJ 94 [1998] MLJU 648 [2001] 6 CLJ 213 [2007] 2 MLJ 229 [2015] 5 MLJ 619 [2016] 8 CLJ 149 [2016] MLJU 691 [2017] 4 MLJ 339 [2017] 4 MLJ 813 [2017] MLJU 1953 [2019] 2 CLJ 723 [2020] MLJU 118 [2020] MLJU 2389 [2021] 2 AMR 601 [2021] 8 MLJ 347 [2021] MLJU 474 [2021] MLJU 520 [2023] 6 MLJ 176 [2024] 4 MLJ 29 [2024] 7 CLJ 1