Adjudication under CIPAA encompasses the concept of “pay now, argue later”. Consequently, the entire process if oftentimes seen to be favorable to the unpaid party.
For example, a contractor may claim for unpaid value of works done, and the employer may have a legitimate LAD deduction for delay. However, due to the stringency of Selva Kumar, and because an accusation of delay oftentimes needs to be considered in greater detail, an adjudicator may not be inclined to allow any LAD deductions. Therefore, the contractor would be successful in its CIPAA appeal despite having delayed the works and despite there being legitimate LAD due to be deducted.
Can the successful contractor petition for a winding-up of the employer on the basis of its adjudication “win”?
In Shaw v MFP Foundations and Piling, the successful party in adjudication sought to enforce payment by use of a statutory demand. The judge set aside the statutory demand for payment, saying that “(where) a statutory demand is founded on an adjudicator’s decision, if the debtor can show that he has a substantial cross-claim, the insolvency regime does not contemplate that he should be shut out from raising those matters in opposition to bankruptcy proceedings simply because he could have, or even unsuccessfully did, also raise those matters before the adjudicator“.
However, CIPAA also provides a mechanism for the enforcement of the adjudication decision by way of a High Court order. Once an enforcement order is granted, it would appear that the adjudication decision then carries the full force of a High Court order, and a non-paying party would be hard-pressed to resist any intended winding-up petition notwithstanding the CIPAA regime to “pay first, argue later”.
The non-paying party would then have to seek for a stay at the High Court of the enforcement, perhaps on grounds of mistake as envisaged by the Federal Court in View Esteem.
Kheng Hoe Advocates are construction dispute lawyers in Malaysia. A lot of our work revolves around CIPAA claims and defences. We can be contacted at email@example.com.