INTRODUCTION
The Court of Appeal in YS Chong Enterprise Sdn Bhd (In Liquidation) v Perkasa Jauhari Sdn Bhd (In Liquidation) & Another Appeal [2026] 6 MLRA 61; [2026] MLJU 2959 held that a subsequent final determination of the underlying dispute brings the adjudication decision’s binding effect to an end.
The Court also held that “finally decided” under Section 13(c) of the Construction Industry Payment and Adjudication Act 2012 (“CIPAA”) means a final decision on the merits. The parties need not exhaust all appeals before that provision takes effect.
BACKGROUND FACTS
Perkasa Jauhari Sdn Bhd (“Perkasa”) engaged YS Chong Enterprise Sdn Bhd (“YS Chong”) as a subcontractor for the MRT Sungai Buloh–Kajang project by a Letter of Award dated 27.11.2015. The fixed maximum contract sum was RM4,541,670.00, of which Perkasa paid RM4,302,875.82.
A final-account dispute arose. YS Chong claimed a further RM2,504,810.67 for additional quantities of structural steel work. Perkasa claimed, among other sums, RM2,795,000.00 in liquidated ascertained damages (“LAD”) for delay.
On 15.3.2018, YS Chong commenced adjudication.
On 13.4.2018, Perkasa commenced court proceedings over substantially the same payment
and LAD dispute in the Kuala Lumpur High Court. The suit was later transferred to the Johor Bahru High Court (“JBHC Suit”).
On 1.8.2018, the adjudicator allowed YS Chong’s claim and dismissed Perkasa’s LAD claim. YS Chong relied on RM2,458,513.54, including subsequent interest and costs, while Perkasa put the principal adjudicated sum at RM2,363,028.92.
Perkasa failed to pay. On 21.11.2018, YS Chong obtained an enforcement order under Section 28 of CIPAA, which Perkasa did not appeal.
On 25.2.2019, YS Chong presented a winding-up petition and obtained an order winding up Perkasa on 5.8.2019. Perkasa appealed that order but withdrew its appeal on 2.3.2021.
The JBHC Suit continued despite Perkasa’s liquidation.
On 21.7.2020, after a full trial, the High Court allowed Perkasa’s claim and dismissed YS Chong’s counterclaim, with costs of RM40,000.00 (“JBHC Judgment”). The result was the opposite of the adjudication decision.
YS Chong’s appeal against the dismissal of its counterclaim was struck out for want of leave to proceed against Perkasa in liquidation. Its remaining appeal against Perkasa’s successful claim was dismissed on 30.3.2022.
YS Chong withdrew its further application for leave to appeal to the Federal Court on 31.10.2022. It had also failed to comply with a conditional stay dated 15.9.2022 requiring a RM1,000,000.00 deposit.
On 17.10.2022, Perkasa’s liquidator served a statutory demand for RM3,600,325.18 under the JBHC Judgment and related costs orders. YS Chong did not satisfy the demand.
On 21.11.2022, Perkasa presented a winding-up petition and the High Court wound up YS Chong on 11.3.2025. A private liquidator was subsequently appointed. YS Chong appealed both orders.
YS Chong maintained that Perkasa still owed it RM2,599,443.65, including interest and costs, under the earlier adjudication decision and enforcement order. It sought to set off that sum under Section 526 of the Companies Act 2016 (“CA 2016”).
It also relied on the earlier winding-up order, its proof of debt and the creditors’ meeting report as support for the continued debt.
Pursuant to a later conditional stay order dated 13.10.2025, YS Chong paid RM1,000,881.53 into court, being the net balance it said remained payable after set-off.
ISSUES BEFORE THE COURT OF APPEAL
The Court examined the following issues:
- 1. when a dispute is “finally decided” under Section 13(c);
- 2. whether the Section 28 enforcement order survived as an independent judgment debt; and
- 3. whether the earlier winding-up order created res judicata or issue estoppel protecting the adjudicated debt.
These questions determined whether any debt remained available for set-off under Section 526 of the CA 2016.
FINDINGS OF THE COURT OF APPEAL
A Final Decision on the Merits Is Sufficient
Under Section 13 of CIPAA, an adjudication decision remains binding unless it is set aside under Section 15, the subject matter is settled in writing, or the dispute is finally decided by arbitration or the court. Any one of these events ends its binding force.
A final determination of the same dispute does not require a separate order setting aside the adjudication decision.
“Finally decided” describes a final decision on the merits, rather than a decision against which no further appeal is possible. Section 13(c) therefore takes effect when the court of first instance or arbitral tribunal delivers its final decision on the dispute referred to adjudication. The parties need not exhaust their appeals.
The Court gave the phrase the same meaning for litigation and arbitration. An arbitral award is final and binding upon delivery, subject to the limited grounds of challenge under the Arbitration Act 2005.
Requiring litigation to pass through every level of appeal would make the same words operate differently according to the forum. Once the underlying dispute has been finally determined on fuller evidence and argument, CIPAA’s temporary finality has served its purpose.
The adjudication decision therefore ceased to bind on 21.7.2020, when the JBHC Judgment was delivered, rather than 31.10.2022, when YS Chong’s appellate avenues were exhausted.
The Enforcement Order Did Not Preserve an Independent Debt
The Section 28 order allowed enforcement of the adjudication decision as if it were a High Court judgment. Its judgment effect depended on the adjudication decision remaining binding under Section 13.
Once the JBHC Judgment engaged Section 13(c), that effect ended. The enforcement order could not survive as an independent judgment debt, even though Perkasa had not appealed it.
The Earlier Winding-Up Order Remained in Force
The winding-up court decided whether the statutory conditions for winding-up were met and did not finally determine the underlying payment and LAD claims.
The order therefore created no res judicata or issue estoppel preserving the adjudicated debt.
Perkasa’s withdrawal of its appeal on 2.3.2021 left the winding-up order standing but did not revive the extinguished adjudication debt.
The extinguishment operated prospectively from 21.7.2020. Earlier acts and orders, including Perkasa’s winding-up order, were not thereby rendered void. That order remained in force unless discharged, stayed, set aside or annulled by a further court order.
No Debt Remained Available for Set-Off
Section 526 requires an account of qualifying mutual credits, debts or dealings subsisting between the company and creditor at the commencement of winding-up. Once its statutory conditions are met, set-off is mandatory and only the balance may be claimed or paid.
By the time Perkasa presented its petition against YS Chong, no binding or enforceable debt remained under the adjudication decision or enforcement order. There was therefore nothing under those instruments to set off, and the statutory demand correctly claimed RM3,600,325.18.
The Court dismissed both appeals and affirmed YS Chong’s winding-up and the appointment of its liquidator. It ordered the RM1,000,881.53 paid into court to be released to Perkasa or its liquidator within 14 days of its order, in part-satisfaction of the debt, without prejudice to recovery of the balance. It awarded RM30,000.00 in costs for the winding-up appeal, subject to allocatur, and made no costs order for the liquidator-appointment appeal.
CONCLUSION AND KEY TAKEAWAYS
Creditors and liquidators should check and keep track of whether the same dispute has been finally determined before relying on an adjudication debt in a statutory demand, proof of debt or set-off.
An enforcement order alone does not preserve the adjudicated debt after the same dispute has been finally determined.
Disclaimer: This article is for general information only and does not constitute legal advice or legal opinion. It should not be relied upon as a substitute for specific legal advice. No person should act (or refrain from acting) based on this article without obtaining advice on the specific facts and circumstances. Halim Hong & Quek does not accept responsibility or liability for any loss or damage arising from reliance on this article. Halim Hong & Quek reserves the right to update, amend or withdraw this article at any time. All rights reserved.
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About the authors
Chew Jin Heng
Principal Associate
Dispute Resolution
Halim Hong & Quek
jhchew@hhq.com.my
