GRAND DYNAMIC BUILDERS SDN. BHD. v DAMAI CITY SDN. BHD.

Case Significance

The companion CIPAA ruling confirming, from the contractor's side, the enforceability of an adjudication decision and the confined grounds for setting aside under sections 15(b) and (d) and for a stay under section 16(1)(b), the paying party's challenge being dismissed with costs.

This High Court (Kuala Lumpur) decision is the companion originating summons, heard together with the related matter, concerning an adjudication decision made under the Construction Industry Payment and Adjudication Act 2012 (CIPAA) in favour of the contractor, Grand Dynamic Builders Sdn Bhd, against Damai City Sdn Bhd. The adjudication decision dated 20 August 2024, issued by the appointed adjudicator, was the subject of parallel applications: an application by the employer to set it aside under sections 15(b) and (d) of CIPAA and to stay it under section 16(1)(b), and this related summons brought under Order 7, Order 28 and Order 69A of the Rules of Court 2012, in which the contractor's position as adjudication claimant was in issue.

The court considered the applications against the statutory purpose of CIPAA, namely to provide a rapid adjudication mechanism that secures cash flow for a contractor who has carried out its work and is out of pocket. It reiterated that the grounds for setting aside under sections 15(b) and (d) are confined, addressing excess of jurisdiction and breach of natural justice, and that a stay under section 16(1)(b) does not follow automatically from the making of an application.

Dismissing the challenge, the court held that treating a section 16(1)(b) application as automatically staying the adjudication decision would be tantamount to a backdoor mechanism to denude and deplete the decision of its efficacy, stultifying and stymieing the purpose of CIPAA. It found no merit in the contentions raised against the adjudication decision, quoting the English Court of Appeal in Carillion Construction Ltd v Davenport Royal Dockyard Ltd to the effect that the resisting party was, with respect, scrabbling around to find some tenuous argument to resist payment. The applications were dismissed with costs. From the contractor's standpoint, the judgment confirms the enforceability of the adjudication decision and the limited scope for a paying party to set aside or stay it under CIPAA.