CASE UPDATE: Non-Compliance with the Basic and Essential Requirement of Payment Claim is Fatal

SKS Pavillion Sdn Bhd v Tasoon Injection Pile Sdn Bhd [2019] 9 MLJ 396

This High Court’s decision highlighted the importance for an Unpaid Party to strictly comply with the requirement of CIPAA in the filing of a CIPAA Payment Claim.

The High Court set aside the CIPAA Adjudication Decision as the Payment Claim did not state the due date of payment.

Background Facts

In this case, the Contractor had mounted a CIPAA claim against the Owner of the Project.

The Adjudication Decision was rendered in the Contractor’s favour.

Subsequently, the Owner of the Project sought to set aside the CIPAA Adjudication Decision on the ground that the Adjudicator did not have jurisdiction as the Payment Claim did not state the due date of payment in accordance with Section 5(2) of CIPAA.

The High Court agreed with the contentions and held that the since the Contractor has not included these basic and essential requirement in the payment claim, the payment claim is invalid and the adjudicator does not have jurisdiction.

Importantly, the High Court also state that the requirement of a Payment Claim stipulated in Section 5(2) of CIPAA is mandatory in the light of the word ‘shall’.

Significance:

It is extremely crucial for an Unpaid Party to strictly observe and comply with the requirement of Section 5(2) CIPAA.

The failure to do so will go to affect the jurisdiction of the Adjudicator and may result in either:

  1. The Adjudicator refuses to deal with the Payment Claim as he/she is not clothed with the jurisdiction to do so; OR
  2. If the Adjudicator proceeds to deal with the Payment Claim, the Adjudication Decision is liable to be set aside.

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