BP ENGINEERING SDN BHD v 1. ) Jabatan Kerja Raya Malaysia 2. ) KEMENTERIAN KERJA RAYA MALAYSIA 3. ) Kerajaan Malaysia

Case Significance

Illustrates the operation of the direct-payment mechanism under section 30 of the Construction Industry Payment and Adjudication Act 2012, including whether retention sums are money "due or payable" despite the defects-liability period, the effect of a section 30(2) notice, and the evidential burden on a principal resisting a direct-payment claim to prove actual remittance.

This High Court decision in the construction list at Kuala Lumpur concerns an application under section 30 of the Construction Industry Payment and Adjudication Act 2012, by which a party that has obtained an adjudication decision in its favour may seek direct payment from the principal of money the principal owes to the party against whom the decision was made. The applicant sought to invoke that mechanism against the principal, which included the public-works authorities and the Government, and the dispute raised a series of questions about how section 30 operates. The court had to consider whether a sworn averment of non-payment is sufficient proof, or whether a prior demand to the main contractor must first be made before section 30 can be invoked; and whether the issuance of a notice under section 30(2), together with the absence of any proof of payment, establishes non-payment. A central question concerned retention sums: whether they constitute money "due or payable" notwithstanding that their release is subject to the defects-liability period or a certificate of making good defects, and whether the status of the main contract as ongoing or terminated affects the characterisation of retention sums under section 30(5). The court also considered whether a principal that has itself issued a section 30(2) notice is thereby precluded from asserting that no money is due or payable, and whether the mere production of payment certificates and ledgers, without proof of actual remittance, discharges the principal's evidential burden of showing that it has in fact paid. The recurring theme is that a principal cannot both trigger the direct-payment machinery and then deny that anything is owed without producing evidence that payment has actually been made. The judgment is a useful illustration of the operation of the direct-payment mechanism under section 30 of the Construction Industry Payment and Adjudication Act 2012, and in particular of the treatment of retention sums and the evidential burden on a principal that resists a direct-payment claim.