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CP VKPT Sdn Bhd v LLC Infra Sdn Bhd

VKPT Sdn Bhd v LLC Infra Sdn Bhd [2026] MLJU 2847 (Court of Appeal)

 

Background Facts

  1. The parties are VKPT Sdn Bhd (“Appellant/VKPT”) and LLC Infra Sdn Bhd (“Respondent/LLC”). LLC is the sub-subcontractor that VKPT engaged by a Letter of Award dated 26.7.021 for a sub-subcontract work, in connection with the LRT3 project (“Sub-Subcontract”). LLC terminated the Sub-Subcontract on 20.9.2022.
  2. Following the termination, VKPT commenced adjudication proceedings under CIPAA against LLC (“Adj 4939”). By an adjudication decision made (“AD 4939”), the adjudicator awarded full costs of the adjudication proceedings, including legal costs, in favour of the Respondent in the sum of RM98,300.00. VKPT did not apply to set aside AD 4939 under s. 15 of CIPAA. Notwithstanding repeated letters of demand from LLC, no payment of the adjudication costs was made. 
  3. Separately, shortly before Adj 4939 was commenced, VKPT had filed an ex parte application for a judicial management order in Kuala Lumpur High Court (“JM 7”). A judicial management order (“JMO”) was granted in favour of VKPT on 11.5.2023 and extended for a further six months on 9.11.2023. The JMO expired on 10.5.2024. On 8.1.2024, LLC applied for leave to intervene in JM 7 and for JM 7 to be struck out. On 20.5.2024 the High Court granted LLC leave to intervene and awarded costs of RM2,000.00 plus allocatur of RM80.00 against VKPT (“the JM7 Costs Order”).  
  4. LLC’s debt claim against VKPT therefore comprised two sums: (a) RM98,300.00 being the costs awarded under AD 4939 (“the Adjudication Costs”); and (b) RM2,080.00 being the costs and allocatur awarded under the JM7 Costs Order (“the JM7 Costs”), for a combined total of RM100,380.00 (“the Debt”). LLC did not register AD 4939 as a judgment of the High Court under s. 28 of CIPAA.
  5. On 9.8.2024 LLC issued a statutory demand for the Debt pursuant to s. 466(1)(a) of the CA 2016. VKPT does not dispute receipt of the statutory demand at its registered and business address. VKPT failed to satisfy the statutory demand within 21 days. On 23.9.2024, LLC presented the winding-up petition (“the Petition”) against VKPT.  
  6. On 12.11.2024 VKPT filed in Kuala Lumpur High Court (“Suit 81”), seeking a final determination of the underlying construction disputes between the parties, and served the same on LLC on 13.11.2024, shortly before the hearing of the Petition. On 26.11.2024 VKPT separately filed High Court, seeking a stay of the adjudication decision under s. 16 of CIPAA (“Section 16 Application”). VKPT also filed an application in the Petition proceedings to stay the winding-up petition (“the WU Stay”) pending the hearing of the Section 16 Application. The Section 16 Application was subsequently withdrawn by VKPT before this appeal is heard. 
  7. On 21.1.2025, the learned High Court Judicial Commissioner dismissed the WU Stay and allowed the Petition, making the winding-up order against VKPT (“the WU Order”). VKPT now appeals against the WU Order (“Appeal 171”).

 

Analysis

  1. Withdrawal costs are not an adjudication decision. Where adjudication proceedings are withdrawn before the adjudicator has determined the disputes, and the adjudicator makes only a costs order pursuant to s. 17(2) of CIPAA, that order is not an “adjudication decision” within s. 13. The adjudicator has exercised no adjudicative function on the payment claim and the costs order is a purely procedural consequence of the withdrawal. Such an order falls outside the scope of ss. 13, 15, 16 and 28 of CIPAA. It is an unreviewable “adjudication order” that crystallises as a free-standing debt obligation.
  2. A determined adjudication (including a dismissal with costs) produces an adjudication decision. Where the adjudicator has determined the disputes on the merits, whether by awarding the claimed sum, awarding a lesser sum, or dismissing the claim entirely with costs, the resulting award (including any costs component) constitutes an “adjudication decision” within s. 13 of CIPAA. The costs in such cases are an integral part of the adjudicative act, not a collateral procedural order. The award is accordingly subject to set-aside under s. 15, stay under s. 16, enforcement registration under s. 28, and extinguishment upon final determination under s. 13(c).
  3. An adjudication decision is disputable. An adjudication decision is of temporary finality. It is binding upon delivery, but its binding force is conditional and provisional. Its temporary character arises from the availability of three extinguishing events under s. 13: set-aside under s. 15; written settlement; and final determination by court or arbitration under s. 13(c). The existence of those avenues makes the adjudicated debt a disputable one as it is not conclusively established as a matter of substantive right until the possibility of those extinguishing events is exhausted.
  4. A winding-up petition on an unregistered adjudication decision may be challenged on genuine disputes based on substantial grounds. Since an unregistered adjudication decision is a disputable debt, a winding-up petition premised upon it may be resisted by demonstrating that the debt is genuinely disputed on substantial grounds. The filing of proceedings for final determination, or the making of a substantive set-aside application under s. 15, may constitute such a genuine disputes on substantial dispute. The decision in Bludream, which held that the debt was indisputable, is confined to its facts, which involved an adjudication decision that had been registered and enforced as a court order under s. 28. Bludream has no application to an unregistered adjudication decision.
  5. Registration under s. 28 confers indisputability. Once registered under s. 28 as if it were a judgment, the adjudication decision acquires the status of a judgment debt. A judgment debt is indisputable for enforcement purposes. The statutory “as if” formulation treats the adjudicated debt as a court judgment, thereby conferring upon it the indisputability that attaches to all court judgments. The s. 28 registration is the legal watershed between a disputable adjudicated debt and an indisputable judgment debt.
  6. A winding-up petition on a registered adjudication decision can only be challenged by a cross-claim. Where an adjudication decision has been registered under s. 28, the resulting judgment debt is indisputable as to liability. The debtor company may not re-open the underlying dispute to resist the winding-up petition. The only avenue available is a bona fide cross-claim or set-off on substantial grounds that equals or exceeds the registered judgment sum.
  7. Final determination extinguishes the adjudication decision. Once the court or arbitral tribunal makes a final determination of the underlying disputes, the adjudication decision ceases to be binding by operation of s. 13(c) of CIPAA, without any further application being required. This is a self-executing extinguishment. The adjudication decision (including any costs component forming part of it) is superseded. If the adjudicated sum is confirmed by the final determination, the parties’ positions are unaffected in substance, the judgment replaces the adjudication decision as the operative instrument. If the adjudicated sum is reversed or reduced, the extinguishment of the adjudication decision leaves the losing party at adjudication with a right to recover any overpayment made pursuant to it, whether by counterclaim in the court proceedings, restitution, or set-off.
  8. A winding-up order made on an adjudication decision may be stayed or annulled if the final determination reverses the adjudicated sum. Where a winding-up order has been made against a company based on an adjudication decision, and the court or arbitral tribunal subsequently makes a final determination reversing the adjudicated sum, the company (or its liquidator) may apply to stay and or terminate or annul the winding-up order. The winding-up order does not fall automatically, it remains in force until actively discharged. The court has power to grant the necessary relief under s. 492, 493 of the CA 2016 and its inherent jurisdiction. The jurisdictional foundation of the winding-up petition — the adjudicated debt — having been removed by the final determination, the winding-up order is susceptible to annulment on the application of any interested party.

Conclusion

For the reasons above, this appeal was allowed with costs fixed at RM30,000.00 subject to allocator. The High Court orders are set aside.

 

 

CP VKPT Sdn Bhd v LLC Infra Sdn Bhd | CP VKPT Sdn Bhd v LLC Infra Sdn Bhd – Master Builders Association Malaysia

CP VKPT Sdn Bhd v LLC Infra Sdn Bhd