It is common in adjudication proceedings for adjudicators to deny any request for oral hearings. Such practice has become so prevalent that it is almost a certainty for adjudication proceedings to proceed on a documents-only basis.
This situation may now change with the decision of the learned Judicial Commissioner in Sinlexion Construction & Decoration Sdn Bhd v BCB Berhad (2020).
Background facts
On 25 May 2015, BCB Berhad [BCB] appointed Sinlexion Construction & Decoration Sdn Bhd [SCD] to supply and install lift car finishes for its condominium project in Segambut. The work was completed on 15 July 2015 and Certificate of Practical Completion was issued on 30 October 2015. The dispute centred around an unpaid invoice of RM809,669.18 which was issued for variation works, as well as GST on the unpaid sum.
BCB disputed the variation works on the basis that:
- The variation works were unauthorised;
- The invoice was submitted out of time;
- In any case, the GST had been fully settled by BCB.
The invoice was in fact submitted 3 years after the work was completed.
The adjudication proceedings
SCD commenced adjudication proceedings against BCB on 14 January 2019. The specific issue with the said proceedings was the contention that SCD raised new arguments in its Adjudication Reply which were not raised in its Payment Claim or Adjudication Claim. Specifically, these new arguments were:
- Amendment of its claim to include GST;
- Introduction of new minutes of meeting in the Adjudication Reply; and
- Request for Adjudicator to award its claim based on quantum meruit.
BCB objected to such new points raised and requested the Adjudicator to fix an oral hearing date and allow written submissions. Specifically, BCB wanted to respond to the new arguments and raised a jurisdictional challenge against the Adjudicator deciding the matter on a quantum meruit basis.
On 31 March 2019, the Adjudicator wrote to BCB to state that:
- She would not consider an oral hearing until she has adequately reviewed the cause papers already submitted to her; and
- She would only review and evaluate submissions made in accordance with the provisions of the Construction Industry Payment and Adjudication Act 2012.
The Adjudicator then proceeded to decide in favour of SCD without accepting further submissions.
BCB’s complaint
BCB applied to set aside the adjudication decision on the basis that there had been a denial of natural justice. The instances leading to BCB’s complaint are that the Adjudicator:
- Dismissed BCB’s request to respond to the new arguments raised in the Adjudication Reply;
- Denied BCB’s request for oral hearing and written submissions;
- Failed to consider BCB’s jurisdictional challenge on the issue of quantum meruit and GST claim.
BCB further contended that the breaches by the Adjudicator were material, in that if BCB’s requests were allied, there was a real possibility that the Adjudicator may have reached a different conclusion.
SCD’s reply
SCD replied that the Adjudicator was well within her rights to conduct the proceedings as she deemed fit. Furthermore, the GST claim was not a new issue, having been referred to in the Payment Claim itself.
As for the minutes of meeting, these were included to rebut BCB’s claim that the instructions for variations were issued by third parties and not BCB.
Furthermore, the Adjudicator did not rely on the quantum meruit claim in making her decision.
The decision of the Court
The learned Judicial Commissioner considered whether the failure of the Adjudicator to allow an oral hearing and further submissions adversely affected BCB’s right to a fair hearing. Although admittedly the Adjudicator had wide discretion in law with regard to how she conducted the proceedings, nevertheless such discretion did not allow the requirements of natural justice to be eroded. In support of this principle, the learned Judicial Commissioner relied on Ahmed v HM Treasury (No 1) (2010).
The learned Judicial Commissioner goes on to say that since the issues raised by BCB in its request to be heard (by way of oral hearing and written submissions) were not frivolous, therefore the deprivation of such right by the Adjudicator effectively meant that BCB was deprived of the right to put up its case in breach of natural justice.
Such being the case, the Adjudication Decision was set aside.
Conclusion
In light of Sinlexion, Adjudicators would do well to take heed of the need to carefully consider requests for oral hearings and written submissions. A refusal of such hearings and submissions as Adjudicators are wont to do may well result in the adjudication decision itself being set aside in due course.
Adjudicators would be wise to take all necessary measures to ensure that justice is “seen to be done” when their decisions are eventually challenged in Court.
List of references:
- Ahmed v HM Treasury (No 1) [2010] UKSC 2
- Construction Industry Payment and Adjudication Act 2012
- Sinlexion Construction & Decoration Sdn Bhd v BCB Berhad [2020] MLJU 610
