GEO HILL CONSTRUCTION SDN BHD v PESAT BUMI SDN BHD PIHAK TERKILAN 1. ) LEONG POH HONG 2. ) JUN YIN CAPITAL SDN BHD 3. ) GEO METAL SDN BHD 4. ) Rangkai Bintang (M) Sdn Bhd

Case Significance

A winding-up petition granted on an indisputable CIPAA-adjudicated construction debt of over RM15 million, confirming the petitioner's ex debito justitiae entitlement to the order.

This High Court decision concerns a winding-up petition presented against a company on the ground that it was unable to pay its debts, under sections 465(1)(e) and 466 of the Companies Act 2016. The petitioning creditor had served a statutory demand under section 466 for an outstanding sum of RM15,429,864.05, the debt being founded on two adjudication decisions obtained under the Construction Industry Payment and Adjudication Act 2012 (CIPAA). The respondent company resisted the petition and applied for a stay, and opposing creditors sought to dismiss or stay the petition.

The decisive question was whether a debt established by a CIPAA adjudication can be treated as disputable in winding-up proceedings. CIPAA creates a statutory scheme of interim, "pay now, argue later" adjudication designed to preserve cash flow in the construction industry, and an adjudication decision is binding and enforceable unless and until it is set aside, stayed or finally resolved by litigation or arbitration. Bound by Court of Appeal authority, the Court proceeded on the footing that an adjudicated construction debt is indisputable for the purposes of a winding-up petition, so that a company served with such a demand and unable to satisfy it cannot manufacture a bona fide dispute merely by contesting the underlying construction claim. Where the debt is indisputable and unpaid, the petitioner is entitled to a winding-up order ex debito justitiae — as of right.

The Court granted the petition and made the winding-up order. In consequence, the respondent's application for a stay and the opposing creditors' application to dismiss or stay the petition were rendered academic, and were expressly dismissed to enable those parties to appeal. The judgment is a useful illustration of the potency of a CIPAA adjudication decision as the foundation of a winding-up petition, and of the principle that an indisputable adjudicated debt entitles the petitioner to a winding-up order as of right.