HONGLER ENTERPRISE SDN BHD v CHAI HON SANG (berniaga sebagai HOCK SENG TRADING & CONSTRUCTION)

Case Significance

Confirms that naming a party with no separate legal personality in a construction adjudication deprives the adjudicator of jurisdiction and renders the proceedings void ab initio under the Construction Industry Payment and Adjudication Act 2012, a defect that consent or waiver cannot cure.

This Court of Appeal decision, comprising two appeals heard together, concerns the correct naming of parties in adjudication proceedings under the Construction Industry Payment and Adjudication Act 2012 and the jurisdictional consequences of getting it wrong. The dispute arose from a construction adjudication in which a company had obtained an adjudication decision; one party then sought to enforce that decision under section 28 of the Act, while the other sought to set it aside under section 15. A central question was whether the respondent, a business carried on by a sole proprietor, had been properly named in the adjudication, given that the proceedings had been brought against the trading name of the firm, and whether an action could validly be taken against a business that has no separate legal status. The Court examined whether the adjudicator was clothed with jurisdiction where the respondent had not been properly named, and whether such a jurisdictional defect could be raised in subsequent enforcement or setting-aside proceedings. It held that a firm or business name with no legal personality cannot properly be made a party, that the resulting defect went to the adjudicator's jurisdiction, and that the adjudication proceedings were void ab initio. The Court emphasised that a want of jurisdiction of this kind cannot be cured by the consent or waiver of the parties, nor, on the facts, by amending the cause title, distinguishing an earlier decision in which the court had been able to amend the intitulement. Finding no merit in either appeal, the Court dismissed both, affirmed the decisions of the High Court, and ordered each party to bear its own costs. The judgment is significant for its treatment of proper parties in construction adjudication and for confirming that a jurisdictional defect arising from misnaming a party cannot be waived. The decision is a caution to parties in construction adjudication to name the correct legal person, since a jurisdictional defect of this kind is incurable and renders the entire adjudication, and any decision founded on it, a nullity regardless of the merits of the payment claim.