CASE UPDATE: Non-Paying Party can only ‘zerorize’ claim and will not have a positive claim against Unpaid Party

Tenaga Poly Sdn Bhd v Crest Builder Sdn Bhd  Originating Summons No. WA-24C-44-06/2016

In this case, the High Court made a declaration that the Non-Paying Party can only ‘zerorize’ the Unpaid Party’s claim but not to the extent where the Unpaid Party would be made to pay the Non-Paying Party.

The High Court further declared that the Non-Paying Party may only raise LAD claim as a defence to the Unpaid Party’s claim and not a stand-alone counterclaim.

Significance:

As a result of the High Court’s declaration, the Non-Paying Party could not possibly have a positive claim against the Unpaid Party.

Any set-off, deduction or counterclaim introduced by the Non-Paying Party (such as LAD, rectification costs advance payment) can only operate to ‘zerorise’ the Unpaid Party’s claim.

The Unpaid Party would NOT be made to pay the Non-Paying Party in the CIPAA Proceeding even if the set-off, deduction or counterclaim is greater than the CIPAA Payment Claim amount.

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