Whether supporting documents accompanying Notice of Adjudication a mandatory requirement under CIPAA 2012?

by Karen Ng Yueh Ying, Partner, Messrs. Yatiswara, Ng & Chan

The High Court recently in the case of Wah Loon (M) Sdn Bhd v China Construction Yangtze River (M) Sdn Bhd and Another Case [2021] MLJU 2561 discussed the issue as to whether supporting documents accompanying Notice of Adjudication are a mandatory requirement under the Construction Industry Payment and Adjudication Act 2012 (“CIPAA 2012”).

Brief Facts

1. Payment disputes arose between China Construction Yangtze River (M) Sdn Bhd (“CCYR”) and Wah Loon (M) Sdn Bhd (“WL”) WL in respect of two progress claims made under a sub-contract. WL then issued a payment claim against CCYR under section 5 of CIPAA 2012.

2. WL subsequently commenced adjudication proceedings against CCYR by issuing its notice of adjudication against CCYR. The notice of adjudication issued by WL was not accompanied by supporting documents. An adjudicator was eventually appointed by the Asian International Arbitration Centre. The adjudicator decided in favor of WL in its Adjudication Decision, whereby CCYR was ordered to pay WL an Adjudicated Amount of RM 392,541.64 together with costs.

3. CCYR did not pay WL as ordered under the Adjudication Decision. WL therefore filed an application at the High Court to enforce the Adjudicator’s Decision (OS 1). In response, CCY instituted a separate application at the High Court to set aside the Adjudication Decision (OS 2).

4. The two applications (OS1 and OS2) were heard together by the High Court.

Main issue

CCYR contended, among others, that the Adjudication Decision ought to be set aside because the Notice of Adjudication issued by WL was defective as it did not comply with section 8 of CIPAA 2012 on the grounds that it was not accompanied by supporting documents intended to be relied upon by WL in the adjudication.

Section 8 of CIPAA 2012 reads:

“8. Initiation of adjudication

(1) A claimant may initiate adjudication proceedings by serving a written notice of adjudication containing the nature and description of the dispute and the remedy sought together with any supporting document on the respondent.

(2) Upon receipt by the respondent of the notice of adjudication, an adjudicator shall be appointed in the manner described in section 21.

(3) A party to the adjudication proceedings may represent himself or be represented by any representative appointed by the party.”

CCYR relied on the Explanatory Statement to the CIPAA bill tendered in the Parliament to assert that the requirement of supporting documents is mandatory. Consequently, CCYR contended that it was mandatory for WL to attach supporting documents, including the contract document, unpaid progress claims and invoices to its Notice of Adjudication. This was, however, not done.

Clause 8 of the Explanatory Statement of the CIPAA Bill reads:

“Clause 8 sets out the provisions relating to the initiation of adjudication proceedings by the service of the notice of adjudication. The notice of adjudication must be in the form and manner prescribed in the clause. This clause further requires the parties to appoint or request to appoint an adjudicator in the manner described in clause 21 upon receipt of the notice of adjudication and the parties to the adjudication can be represented by any representative of their choice.”

Findings of the Court/ Principles

1. The Court held that the explanatory statement in the Parliamentary Bill cannot be relied upon to interpret a provision in a statute, unless where there is ambiguity or uncertainty in the interpretation of the provision. The Court held that the requirement to have supporting documents accompany the notice of adjudication is not mandatory but

2. The Court further held that even if supporting documents are mandatorily required to accompany the notice of adjudication, non-compliance with section 8 of CIPAA is merely an irregularity that does not nullify the adjudication proceedings or the Adjudication Decision, pursuant to section 26 of CIPAA.

3. Section 26 of the CIPAA 2012 reads:

“26. Power of adjudicator not affected by non-compliance

(1) Subject to subsection (2), the non-compliance by the parties with the provisions of this Act whether in respect of time limit, form or content or in any other respect shall be treated as an irregularity and shall not invalidate the power of the adjudicator to adjudicate the dispute nor nullify the adjudication proceedings or adjudication decision.

(2) The adjudicator may on the ground that there has been non-compliance in respect of the adjudication proceedings or document produced in the adjudication proceedings-

(a) set aside either wholly or partly the adjudication proceedings;

(b) make any order dealing with the adjudication proceedings as the adjudicator deems fit; or

(c) allow amendment to be made to the document produced in the adjudication proceedings.”

4. In conclusion, the Court held in this case that the requirement to have supporting documents accompany the notice of adjudication as provided under Section 8 of the CIPAA 2012 is not mandatory. Even if it is mandatory, non-compliance of the same is merely an irregularity that does not nullify the adjudication proceedings or Adjudication Decision by virtue of Section 26(1) of the CIPAA 2012.