Case Update: One Day Late, Adjudication Decision Void

The recent High Court decision Skyworld Development Sdn Bhd v Zalam Corporation Sdn Bhd (see the grounds of judgment dated 8 February 2019) stresses the critical importance of the statutory timelines under the Construction Industry Payment and Adjudication Act 2012 (CIPAA). This is more so when the adjudication papers can be served electronically.

In this case, the Adjudicator had issued his Adjudication Decision one day out of time and this rendered the decision void.

Brief Facts

Zalam had served a payment claim on Skyworld to claim for the sum of approximately RM11.7 million. This was payment for work done by Zalam under a construction contract. Skyworld disputed the entire amount in the payment claim.

After that, Zalam served a notice of adjudication on Skyworld and the adjudication proceedings began.

The appointed Adjudicator issued the necessary Form 6, and it included certain directions. One of the directions was on the mode of service of documents in the adjudication proceedings. It was stated that service of documents could be effected by way of email.

The critical point was when the Adjudication Reply was sent by email on 21 May 2018 at 7.11pm, and where it was stated that the hard copy would be delivered the next day. The Adjudicator acknowledged receipt of the email at 7.26pm on 21 May 2018.

The Adjudicator then delivered his Adjudication Decision on 26 July 2018. The Adjudication Decision must be delivered within 45 working days (see section 12(2)(a) of CIPAA).

Skyworld applied to set aside the Adjudication Decision for breach of delivering the decision with the statutorily specified period. This was the primary issue in this decision, along with other ancillary issues.

Key Issue

The key issue for determination was:

  1. Was the Adjudication Reply served on 21 May 2018? If so, then the last date for the delivery of the Adjudication Decision was on 25 July 2018. Parties agreed this date would be 45 working days from 21 May 2018. This would mean the Adjudication Decision was one day late.
  2. Alternatively, was the Adjudication Reply served on 22 May 2018? Then the last date for the delivery of the Adjudication Decision was on 26 July 2018. This would mean the Adjudication decision was issued on time.

Zalam argued against the setting aside. It argued that the email enclosing the Adjudication Decision was served after normal business hours on 21 May 2018. The Adjudicator was a partner of a law firm and that law firm’s letterhead set out that the normal business hours was up to 6pm. On the other hand, the Adjudicator’s directions in the Form 6 did not spell out any restrictions on the business hours.

In the end, the High Court Judge interpreted the phrase “working day”. This meant “calendar day” excluding weekends and public holidays. This would mean a day of 24 hours and anything done within any time on that day is considered done on that day. Therefore, 45 working days after the service of the Adjudication Reply on 21 May 2018 would be on 25 July 2018. The Adjudication Decision, delivered on 26 July 2018, was out of time. It is void under section 12(3) of CIPAA.

 

 

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