Section 27(1) Construction Industry Payment and Adjudication Act 2012

ANAS CONSTRUCTION SDN BHD v. JKP SDN BHD & ANOTHER APPEAL [2024] 2 CLJ 665

(i) Section 27(1) of the Construction Industry Payment and Adjudication Act 2012 ('CIPAA') explicitly confines the adjudicator's authority to resolve disputes solely within the scope of sections 5 and 6 of the CIPAA. The adjudicator oversteps their authority when they make a decision based on a provision in a construction contract that was not referenced in the initial payment claim and adjudication request.

(ii) Failing to afford the parties an opportunity to discuss or present arguments regarding the cause of action under a particular clause before rendering a decision constitutes a violation of the principles of natural justice by the adjudicator.

The appellant was contracted by the respondent to oversee a construction project for RM67,994,500. During the project, the appellant hired independent consultants to assess cracked beams and safety concerns, incurring fees of RM855,074.21. Allegedly, the respondent failed to pay this amount, leading to adjudication under the Construction Industry Payment and Adjudication Act 2012 ('CIPAA'). The appellant's payment claim, based on clauses 28, 55, and 56 of the contract, was disputed by the respondent, citing clause 36.5. Despite this, the adjudicator awarded the appellant RM806,673.78, citing clause 36.6. The High Court upheld this decision, but the Court of Appeal overturned it, citing the adjudicator's reliance on unpleaded clauses and failure to invite submissions on clause 36.6 as breaches of jurisdiction and natural justice. The appellant appealed on three legal questions.

• Nordin Hassan FCJ (majority) held that the adjudicator's jurisdiction is limited to matters raised under sections 5 and 6 of the CIPAA, finding the adjudicator's reliance on clause 36.6 unjustified as it wasn't part of the original claim. Without consent from both parties, the adjudicator had no jurisdiction to consider clause 36.6 and failed to uphold natural justice by not allowing submissions on it.

• Mary Lim FCJ (dissenting) argued that strict pleading rules don't apply in adjudication, and the inclusion of clause 36.6 in the payment claim provided sufficient notice to the respondent. The adjudicator's exploration of clause 36.6 was within his powers and did not breach natural justice. She emphasized the importance of finality in adjudication decisions and the need for rare circumstances to warrant their overturning.

• Ultimately, the majority held against the appellant, maintaining the Court of Appeal's decision, while the dissenting opinion favored the appellant's arguments, emphasizing the adequacy of the adjudicator's exercise of powers and the importance of upholding adjudication decisions.
  

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