Winding-Up Based on a CIPAA Decision

An Adjudication Decision is of temporary finality, subject to the final decision of an arbitrator or judge. Can a successful party in adjudication rely on such a decision to petition for the winding-up of the non-paying party?

In Maju Holdings Sdn Bhd v Spring Energy Sdn Bhd (2020), Maju Holdings Sdn Bhd [Maju] appointed Spring Energy Sdn Bhd [SESB] to undertake pavement works for Lebuhraya Putrajaya to KLIA (MEX II).

Maju did not pay a total in excess of RM8 million under Interim Payment Certificates Nos 2 to 7. Consequently SESB commenced adjudication proceedings under the Construction Industry Payment and Adjudication Act 2012 [CIPAA], culminating in an Adjudication Decision in its favour.

SESB then applied for an enforcement order pursuant to s.28 CIPAA. This was allowed by the High Court. Following the s.28 CIPAA order, SESB issued a statutory notice pursuant to s.466(1) Companies Act 2016 claiming the total adjudicated sum including interest and costs in excess of RM9 million, failing which SESB threatened to wind-up Maju.

Maju applied for a Fortuna injunction to restrain the intended winding-up. In hearing the Fortuna injunction, the learned High Court judge had to decide whether SESB ought to be permitted to petition to wind-up Maju based on the enforced Adjudication Decision.

The learned judge took note of but disagreed with ASM Development (KL) Sdn Bhd v Econpile (M) Sdn Bhd (2020) which distinguished between a High Court order pursuant to s.28 CIPAA and other High Court orders. The judge in the Maju case found no basis to distinguish between a s.28 CIPAA order and other High Court orders, and held that a successful claimant with a s.28 CIPAA order can petition for the winding-up of the non-paying party.

However, a Fortuna injunction was granted based on the facts of the case.

With two High Courts expressing two different views as to whether a s.28 CIPAA order may permit the presentation of a winding-up petition, it will be up to the Court of Appeal to eventually resolve this discrepancy.