Whether the Construction Industry Payment and Adjudication Act 2012 deals with the issue of under certification of interim certificates?
MRCB BUILDERS SDN BHD V SOUTHERN BUILDERS (J) SDN BHD  2 MLRA 640
MRCB Builders Sdn Bhd was the main contractor of a construction project (“MRCB”).
- MRCB subcontracted part of the works of the project in the sum of Ringgit Malaysia Thirty Three Million Forty Five Thousand and Five Hundred (RM33,045,500-00) to Southern Builders (J) Sdn Bhd (“Southern Builders”) through a letter of award.
- Southern Builders had initiated adjudication proceedings under the Construction Industry Payment and Adjudication Act 2012 (“CIPAA”), claiming the sum of RM9,492,841-77, being monies due from MRCB as a result of MRCB’s under-certification of its progress claims numbers 1 to 7 and under-certification and non-payment of progress claims numbers 8 and 9 together with variation claims.
- MRCB denied Southern Builders’ claim in its entirety and claimed that there were elements of inflated claims, that Southern Builders had been notified of numerous set-offs and deductions and there was a sum of RM6,998,666-65 owing instead from Southern Builders to MRCB.
- The adjudicator rendered his decision in favour of Southern Builders and MRCB appealed to the High Court.
- The High Court dismissed MRCB’s appeal.
- MRCB appealed to the Court of Appeal, arguing that there was no dispute for the adjudicator to decide given that MRCB had paid up all monies as certified in the payment certificates and therefore, Southern Builders was not an unpaid party within the meaning of section 4 CIPAA.
COURT OF APPEAL DECISION – APPEAL DISMISSED!
The Court of Appeal dismissed the appeal and held that the application of CIPAA extended to claims for payment which arose due to under-certification, as is in the present case. Therefore the adjudicator can look into the alleged under-certification of certificates of payment.