Cautionary Tale for Companies Sharing Place of Business
By Chu Ai Li and Shobha Sritharan, Azman Davidson & Co.
Companies within the same corporate group frequently share a place of business. It is not an uncommon occurrence for the letters which are directed to a company within the group to be acknowledged as received by a different company within the group. A company who shares a business address with other companies should take heed that the receipt of notices issued under the Construction Industry Payment and Adjudication Act 2012 (“CIPAA”) on its behalf by another company would be regarded as valid service on it for purposes of the Act.
In the case of Zeta Letrik Sdn Bhd v JAKS Island Circle Sdn Bhd [2022] MLJU 392, the learned High Court Judge held that a notice issued by a sub-contractor under Section 30(1) of CIPAA which was directed to the project employer was validly served on the project employer even though the notice was not accepted by the project employer but was instead accepted by the project employer’s related company.
JAKS Island Circle Sdn Bhd (“JAKS Island Circle”) is the developer of a mixed development project located in Selangor. JAKS Island Circle is the employer of the main contractor for the project, JAKS Sdn Bhd. JAKS Sdn Bhd sub-contracted the electrical works for the project to Zeta Letrik Sdn Bhd (“Zeta Letrik”).
Zeta Letrik commenced CIPAA adjudication proceedings against the main contractor JAKS Sdn Bhd and obtained an adjudication decision in its favour. JAKS Sdn Bhd failed to pay Zeta Letrik the sums awarded in the adjudication decision. Zeta Letrik’s solicitors then issued a notice dated 21 September 2021 to JAKS Island Circle (as the principal of JAKS Sdn Bhd) to request direct payment from JAKS Island Circle of the sums awarded in the adjudication decision (“CIPAA Direct Payment Notice”) pursuant to section 30(1) of CIPAA1.
The CIPAA Direct Payment Notice was addressed to JAKS Island Circle at its business address. A person by the name of Priya at the Legal Department of a company named “JAKS Resources Sdn Bhd” acknowledged receipt of the CIPAA Direct Payment Notice. In the grounds of judgment for the case of Zeta Letrik Sdn Bhd, the learned High Court Judge found that the acknowledgement by the representative of JAKS Resources Sdn Bhd on the CIPAA Direct Payment Notice which was addressed to JAKS Island Circle indicated that the person had the authority to receive the said notice on behalf of JAKS Island Circle. The learned Judge went on to hold that the CIPAA Direct Payment Notice was validly served on JAKS Island Circle under Section 38(a) and/or (b) of CIPAA2.
In the grounds of judgment for the Zeta Letrik Sdn Bhd case, the learned Judge referred to her previous decision in the case of Ban Soon Aik Construction Sdn Bhd v Berjaya Land Development Sdn Bhd [2019] MLJU 1232. In the case of Ban Soon Aik Construction Sdn Bhd, a notice of adjudication which was issued by the contractor (Ban Soon Aik Construction Sdn Bhd) to initiate CIPAA adjudication proceedings against its employer (Berjaya Land Development Sdn Bhd) was sent to the business address of the employer where it was acknowledged receipt by way of handwritten initial and date and a stamp of a company chop with the name “Berjaya Land Berhad”. Berjaya Land Berhad is the parent holding company of Berjaya Land Development Sdn Bhd. The learned Judge dismissed Berjaya Land Development Sdn Bhd’s contention that it did not receive notice of adjudication, and held that the said notice had been validly served on it. The learned Judge held that when different companies share the same business address, the sender has no control over the arrangement among the companies on the matter concerning acknowledgement of receipt of letters and documents (refer to paragraph [38] of the grounds of judgment).
The High Court decisions in Zeta Eletrik Sdn Bhd and Ban Soon Aik Construction Sdn Bhd offer a cautionary tale for those companies who share a common business address with other companies.
1 Section 30(1) of CIPAA provides as follows:
“(1) If a party against whom an adjudication decision was made fails to make payment of the adjudicated amount, the party who obtained the adjudication decision in his favour may make a written request for payment of the adjudicated amount direct from the principal of the party against whom the adjudication decision is made.”
2 Section 28(a) and (b) of CIPAA provide as follows:
“Service of a notice or any other documents under this Act shall be effected on the party to be served –
(a) By delivering the notice of documents personally to the party;
(b) By leaving the notice or document at the usual place of business of the party during the normal business hours of that party; …”