FORTUNE FACADE TREATMENT SDN BHD v 1. ) PUNG TIONG GEE 2. ) Pung Tiong Cheng

Case Significance

Illustrates the natural-justice limb of section 15 of CIPAA: an adjudication decision will be set aside where a party is denied a fair opportunity to file its response or the adjudicator fails to consider a properly raised defence such as res judicata, since the speed of statutory adjudication does not excuse a breach of the rules of natural justice.

This High Court decision, sitting in the Construction Division at Kuala Lumpur, concerns a successful application to set aside an adjudication decision under the Construction Industry Payment and Adjudication Act 2012 (CIPAA) on natural-justice grounds. The plaintiff company had been the paying party in a statutory adjudication brought by a partnership trading in aluminium works, and it applied under section 15 of CIPAA to set aside the adjudication decision, while the successful claimants applied to enforce it. Unlike the many cases in which a setting-aside application merely re-argues the merits and fails, here the challenge went to the fairness of the adjudication process itself. The court's concern was that the plaintiff had not been allowed to refile its supplementary adjudication response, or to refile its adjudication response, and that the adjudicator had not considered the plaintiff's defence of res judicata. A denial of the opportunity to put a party's case, and a failure to consider a substantive defence properly raised, engage the natural-justice ground for setting aside under section 15, because CIPAA's summary process, though designed for speed, must still be conducted fairly. The court was satisfied that the process had miscarried in these respects and granted the plaintiff's application, making an order in terms of the relevant prayers to set aside the adjudication decision, while dismissing the claimants' related enforcement summons. Delivered by Nadzarin Wok Nordin J, the judgment is a useful illustration of the natural-justice limb of section 15 of CIPAA: an adjudication decision will be set aside where a party has been denied a fair opportunity to file its response or where the adjudicator has failed to consider a properly raised defence such as res judicata, since the speed of statutory adjudication does not excuse a breach of the rules of natural justice. The decision stands in contrast to the many section 15 applications that fail because they do no more than dispute the adjudicator's conclusions, and it shows that the setting-aside jurisdiction, though narrow, has real content where the adjudicator has shut out a party's response or overlooked a defence that could have determined the outcome.