Brief Facts
Adjudication proceedings were initiated by the Defendant to claim for work done under a construction project. Upon obtaining a favourable decision, the Defendant issued a notice under section 466(1)(a) of the Companies Act 2016 (“CA 2016”) to demand for payment.
An OS was then filed by the Plaintiff and it raised the following three questions:
- Whether the Plaintiff company can file a “hybrid” OS which applies for:
- an order under section 16(1)(b) of the Construction Industry Payment and Adjudication Act 2012 (“CIPAA”) to stay the adjudication decision pending the disposal of arbitration proceedings; and
- a Fortuna Injunction to restrain the Defendant from winding up the Plaintiff based on the adjudication decision i.e is the Defendant a creditor under section 464(1)(b) CA 2016 who is entitled to present a winding up petition against the Plaintiff based on the adjudication decision?
- Whether the court should exercise its decision to stay the adjudication decision under section 16(1)(b) CIPAA; and
- If the court dismisses the stay application, does the court have the discretion to grant the Fortuna Injunction and, if yes, should it so exercise its discretion favourably in this case.
Judgment
In answering the first question in the affirmative, the Court noted that there is nothing in the CA 2016, CIPAA, or Rules of Court 2012 (“ROC”) to prevent a hybrid OS. The ROC must be applied by the court with the overriding interest to justice and requiring the filing of two OS would not serve the overriding interest of justice.
Next, the court found that the Defendant is entitled to wind up the Plaintiff based on the adjudication decision from a reading of sections 28 and 31 CIPAA as well as sections 464(1)(b) and 465(1)(e) CA 2016. The Court found that on the authority of Likas Bay Precinct Sdn Bhd v Bina Puri Sdn Bhd1 , the Defendant is a creditor within the meaning of section 464(1)(b) CA 2016 and is entitled to present a winding up petition.
Section 28(3) makes it clear that an adjudication decision may be executed in accordance with the rules of execution of the orders of the High Court and that the statutory right of a creditor to wind up a company is not equivalent to an execution of a court order or judgment following the case of Maril-Rionebel (M) Sdn Bhd v Perdana Merchant Bankers Bhd2 .
However, the Court declined to stay the adjudication decision pending the disposal of the arbitration as, inter alia, the Plaintiff has not satisfied the Court that the adjudicator made a clear error in making the decision.
Notwithstanding this, the Court found that it has the discretionary power to grant a Fortuna Injunction as it is distinct from the Court’s power to stay an adjudication decision under section 16(1)(a) and (b) CIPAA. The purpose of a Fortuna Injunction is to prevent an abuse of the court process by the defendant filing a winding up petition against the plaintiff.
On the facts, the Court decided not to grant a Fortuna Injunction as the Defendant was entitled to rely on the adjudication decision to present a winding up petition and an exercise of the Defendant’s rights under sections 464(1)(b) and 465(1)(e) CA 2016 cannot amount to an abuse of the court process.
The OS was dismissed.