MAJU HEALTHCARE SDN BHD v MERCU HARAPAN SDN BHD

Case Significance

Confirms that under CIPAA a party which is validly served but elects not to participate in an adjudication cannot later rely on breach of natural justice under section 15 to resist enforcement of the adjudicator's decision under section 28.

This High Court decision resolves two originating summonses heard together arising from a single construction adjudication under the Construction Industry Payment and Adjudication Act 2012 (Akta Pembayaran dan Adjudikasi Industri Pembinaan 2012, or CIPAA). In the first summons the contractor, Mercu Harapan Sdn Bhd, applied under section 28 of CIPAA to enforce an adjudication decision made in its favour; in the second, the employer, Maju Healthcare Sdn Bhd, applied under section 15(b), (c) and (d) of the same Act to set that decision aside. The two provisions are the recognised statutory gateways for challenging an adjudicator's award, covering denial of natural justice, an adjudicator acting in excess of jurisdiction, and an award procured by fraud or bribery.

The central complaint advanced by the employer was that it had been unaware of the adjudication and that the adjudicator's decision, reached without its participation, breached the rules of natural justice. The court rejected that characterisation on the facts. It found that the employer had been properly served with the adjudication claim, that ample opportunity had been given to it to defend the proceedings, and that it had instead chosen to remain silent and take no steps to appear, notwithstanding that it had obtained legal advice for the adjudication. On that footing the court held that the natural-justice challenge was "entirely untenable and must be disallowed", because it was the employer's own decision not to participate that had produced the one-sided record, and the adjudicator was correct to decide on the available evidence and documents before him.

The judgment is a useful illustration of how the High Court polices the narrow section 15 grounds for setting aside a CIPAA award: a party that elects not to engage with a validly served adjudication cannot later invoke natural justice to escape enforcement, and the court will give effect to the statutory pay-now-argue-later scheme by enforcing the decision under section 28.