YS Chong Enterprise Sdn Bhd (In Liquidation) v Perkasa Jauhari Sdn Bhd (In Liquidation)

Appellant(s): Ys Chong Enterprise Sdn Bhd

Respondent(s): Perkasa Jauhari Sdn Bhd (In Liquidation)

• YA Datuk Seri Mohd Firuz Bin Jaffril
• YA Dato' Ong Chee Kwan
• YA Tuan Dean Wayne Daly

• A sub-contractor obtained an adjudication decision under CIPAA against the main contractor for unpaid claims, enforced it as a High Court judgment under s. 28 of CIPAA, and successfully wound up the main contractor on that basis in 2019.
• Parallel High Court litigation between the same parties over the same underlying payment dispute proceeded to a full trial, and in 2020 the court ruled entirely in favour of the main contractor (now in liquidation), reversing the outcome of the adjudication decision; this judgment was upheld on appeal and leave to the Federal Court was ultimately withdrawn.
• When the main contractor's liquidator later petitioned to wind up the sub-contractor for failing to pay the sums due under the 2020 judgment, the sub-contractor resisted by claiming the adjudicated debt (as confirmed by the earlier winding-up order against the main contractor) as a set-off, reducing the debt owed.

• Whether a winding-up order founded on an adjudication decision under CIPAA, once made, transmutes that decision into a permanent debt immune from subsequent extinguishment under s. 13(c) of CIPAA when the underlying dispute is finally decided by the court in the debtor's favour.
• The proper construction of "the dispute is finally decided by arbitration or the court" in s. 13(c) of CIPAA — specifically, whether this refers to the delivery of a final decision on the merits by the first-instance court/tribunal, or only once all appellate avenues are exhausted.
• Whether a winding-up order made on the strength of an enforced adjudication decision gives rise to res judicata or issue estoppel protecting that adjudication decision from being later extinguished by a final court determination, and whether the resulting debt could still be relied upon as a mutual set-off under s. 526 of the Companies Act 2016.

• The Court held that a dispute is "finally decided by arbitration or the court" under s. 13(c) of CIPAA from the moment the first-instance court (or arbitral tribunal) delivers a decision on the merits, irrespective of pending appeals; this uniform construction avoids asymmetry between the arbitration and litigation limbs of the provision and better serves CIPAA's policy of "temporary finality".
• The Court held that a winding-up order is not an adjudication on the merits of the underlying debt and therefore cannot found res judicata or issue estoppel protecting an adjudication decision from later extinguishment; once the first-instance judgment in the parallel suit was delivered, the adjudication decision and its enforcement order ceased to be binding and lost their status as a "judgment" for enforcement purposes under s. 28 of CIPAA.
• As there was no longer any subsisting mutual debt owed by the winding-up petitioner, s. 526 of the Companies Act 2016 could not operate to allow a set-off; the Court accordingly affirmed the winding-up order and the appointment of the liquidator, dismissing both appeals with costs.