By:
Bryan Lui (Co-Managing Partner) [bryan_lui@luibhullar.com]
Harneshpal Karamjit Singh (Co-Managing Partner) [harnesh_bhullar@luibhullar.com]
Upholding Fairness: Denial of Natural Justice in CIPAA 2012 and the Ssangyong v Oxley Case
Introduction
The Construction Industry Payment and Adjudication Act 2012 (CIPAA 2012) aims to expedite payment disputes in Malaysia's construction sector. However, the integrity of CIPAA adjudication hinges on procedural fairness and adherence to natural justice principles. Section 15 of CIPAA allows for adjudication decisions (ADs) to be set aside, notably under Section 15(b) for denial of natural justice. The case of Ssangyong Engineering & Construction Co Ltd v Oxley Rising Sdn Bhd exemplifies this crucial aspect.
Facts of the Case
Oxley Rising Sdn Bhd (Oxley) engaged Ssangyong Engineering & Construction Co Ltd (SSY) for a major mixed development project. Disputes arose concerning project delays and payment issues. Oxley terminated the contract, while SSY pursued adjudication under CIPAA 2012. The Adjudicator ruled in favor of SSY. Oxley challenged the AD, citing denial of natural justice, among other grounds. The High Court set aside the AD based on this ground alone.
Analysis: Denial of Natural Justice
The High Court found a denial of natural justice when the Adjudicator relied on an Expert Report submitted by SSY without affording Oxley an opportunity to respond.
Key Issues and Court Observations:
Expert Report's Significance: The report, submitted as part of SSY's Adjudication Reply, was deemed a comprehensive document intended to influence the adjudication outcome, not merely a response to Oxley's submission.
Adjudicator's Reliance: The Adjudicator heavily relied on the Expert Report, particularly regarding issues like the Movement Control Order (MCO), extension of time (EOT), and the validity of Oxley's contract termination.
Procedural Fairness: The court emphasized that Oxley's inability to comment on the Expert Report before the Adjudicator's decision constituted a material breach of natural justice.
Adjudicator's Duty: Adjudicators must ensure procedural fairness and uphold the right to be heard (audi alteram partem). The Adjudicator should have provided Oxley with an opportunity to address the Expert Report, regardless of the CIPAA timeline.
Implications and Conclusion
The Ssangyong v Oxley case underscores the critical importance of procedural fairness in CIPAA adjudication. Reliance on expert evidence without affording both parties equal opportunity to respond undermines the process's integrity. A breach of natural justice can lead to an AD being set aside.
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