Final Claims are Adjudicatible under CIPAA 2012

Summary:

1. Adjudication decisions under the CIPAA 2012 need not be registered and enforced as a Court judgment before a winding-up notice and proceedings starts.
2. However, if the winning party of the adjudication decision intends to pursue other forms of execution proceedings (e.g. writ of seizure and sale, garnishee proceedings), then enforcement of the adjudication decision as a Court’s judgment would still be necessary.

Factual Background:

Martego Sdn Bhd (“Martego”) appointed Arkitek Meor & Chew Sdn Bhd (“Architect”) for architectural services, specifically contract administration of a multi-storey development project in the centre of Kuala Lumpur known as “Cecil Central Residence”. Martego subsequently terminated the Architect’s services and the Architect resorted to adjudication in respect of their claim of balance professional fees payable for services rendered.

The Architect obtained a favourable decision under adjudication that was challenged by Martego. One of the issues raised was whether adjudication under CIPAA 2012 applied to both interim and final claims (which would include claims under a final account).

The High Court dismissed Martego’s setting aside application. The Court of Appeal, by a majority, dismissed Martego’s appeal.

Court’s / Tribunal’s Reasoning:

The plain wording of the provisions under CIPAA 2012 makes no distinction between an “interim” claim or “final” claim. Thus, so long as it is a payment claim relating to a construction contract defined under section 4 of CIPAA 2012, it will be within the ambit and applicability of CIPAA 2012.

The Federal Court reasoned that if final claims (or a claim under a final account) was to be excluded from adjudication under CIPAA 2012, the Act itself should plainly so say.

The Federal Court further reiterated that adjudication under CIPAA 2012 is a quick stop-gap measure to alleviate cashflow problems in the construction industry. This serves as a timely reminder to all players in the adjudication process from over-legalising issues.

Given the temporary finality of adjudication decisions, the aggrieved party is still able to resort to litigation or arbitration to fully and finally determine the dispute.