Adjudication Decisions, Registration and Winding-Up Petitions: VKPT v LLC Infra

VKPT Sdn Bhd v LLC Infra Sdn Bhd [Civil Appeal No. W-02(NCC)(A)-171-02/2025, Court of Appeal, 7 July 2026]

Winning parties in statutory adjudication have often used statutory demands under section 466 of the Companies Act 2016 (“CA 2016“) and subsequent winding-up petitions to enforce a Construction Industry Payment and Adjudication Act 2012 (“CIPAA 2012”) adjudication decision.

In VKPT Sdn Bhd v LLC Infra Sdn Bhd, the Court of Appeal clarified that position. An adjudication decision that has not been registered under section 28 of CIPAA 2012 is a disputable debt for winding-up purposes. The term “registered” as stated by the Court of Appeal refers to enforcement applications pursuant to section 28 of CIPAA 2012.

Filing court or arbitration proceedings for final determination of the underlying disputes may amount to a genuine dispute on substantial grounds sufficient to oppose the winding up petition. Registration under section 28 of CIPAA 2012, not the adjudication decision itself, is what converts a disputable debt pursuant to an adjudicated decision into an indisputable judgment debt.

Background

VKPT Sdn Bhd (“VKPT”) engaged LLC Infra Sdn Bhd (“LLC Infra”) as sub-subcontractor for trackwork and power conductor rail installation works for an infrastructure project. After LLC Infra terminated the sub-subcontract in September 2022 (which VKPT disputed), VKPT commenced adjudication. The adjudicator dismissed VKPT’s claims in full and awarded LLC Infra costs of RM98,300.00, which went unpaid. With a further costs order of RM2,080 from LLC Infra’s intervention in VKPT’s judicial management proceedings, LLC Infra issued a statutory demand for RM100,380.00 and, on non-payment, presented a winding-up petition. LLC Infra did not register the adjudication decision under section 28 of CIPAA 2012. VKPT filed Suit WA-22C-81-11/2024 (“Suit 81”) seeking final determination of the construction disputes, but only after the petition had been presented and shortly before the hearing. The High Court made the winding-up order; the Court of Appeal set it aside.

The two questions

The appeal turned on an issue that has divided the CIPAA 2012 and winding-up regimes:

• Whether the temporary finality conferred by section 13 of CIPAA 2012 translate into the kind of indisputability that forecloses a debtor company’s right to raise a genuine dispute on substantial grounds under section 466 of CA 2016? And if the adjudicated sum is to be treated as indisputable for winding up purposes, by what process and at what point does that transformation occur, is it upon the delivery of the adjudication decision, section 28 of CIPAA 2012 registration, a curial intervention, or something else?
• Can the purported debtor company nonetheless resist the petition by asserting that it has a genuine dispute based on substantial grounds and or a cross-claim or set-off equal to or exceeding the adjudicated debt. What is needed to satisfy the genuine disputes based on substantial grounds test?

Likas Bay clarified

The Court held that the Court of Appeal decision in Likas Bay Precinct Sdn Bhd v Bina Puri Sdn Bhd [2019] 3 MLJ 244 has been widely overread. Likas Bay decided only that section 28 of CIPAA 2012 registration is not a procedural precondition to presenting a winding up petition. It did not decide that an unregistered adjudication decision is indisputable. Those two questions are distinct, and Likas Bay addressed only the first.

The Court based its reasoning from the structure of CIPAA 2012. If an adjudication decision carried the force of a judgment for all purposes the moment it was made, section 28 of CIPAA 2012 would be redundant. Its existence as a distinct enforcement step shows that registration is what separates a persuasive adjudicated debt from a conclusive one, much as an arbitral award must be registered under section 38 of the Arbitration Act 2005 before acquiring the force of a judgment.

The two-tier framework

The judgment sets out a two-tier framework that reconciles the previously conflicting authorities:

• Before section 28 CIPAA 2012 registration, the debt is not indisputable. It keeps its temporarily final, disputable character under section 13 CIPAA 2012. The debtor company may resist the petition by showing that the debt is genuinely disputed on substantial grounds, applying the standard endorsed by the Privy Council in Sian Participation Corp v Halimeda International Ltd [2024] UKPC 16 and adopted by the Federal Court in V Medical Services (M) Sdn Bhd v Swissray Asia Healthcare Co Ltd.
• After section 28 CIPAA 2012 registration, the debt becomes a judgment debt and is indisputable as to liability. The debtor may not re-open the underlying dispute. The only remaining avenue is a bona fide cross-claim or set-off on substantial grounds equalling or exceeding the registered sum.On this basis, the Court of Appeal decision of Bludream City Development Sdn Bhd v Pembinaan Bina Bumi Sdn Bhd [2024] 4 MLJ 67, often relied on for the proposition that an adjudicated debt is indisputable once delivered, is confined to its facts. The decision in Bludream had been registered and enforced under section 28 of CIPAA 2012, so its ratio is confined to the post-registration position and does not apply to an unregistered decision.

On this basis, the Court of Appeal decision of Bludream City Development Sdn Bhd v Pembinaan Bina Bumi Sdn Bhd [2024] 4 MLJ 67, often relied on for the proposition that an adjudicated debt is indisputable once delivered, is confined to its facts. The decision in Bludream had been registered and enforced under section 28 of CIPAA 2012, so its ratio is confined to the post-registration position and does not apply to an unregistered decision.

Adjudication costs orders

Further, a significant part of the judgment concerns the character of the adjudicator’s costs order, which was the debt the winding up petition was founded on. The court confined the High Court decision of Multazam Development Sdn Bhd v Felda Global Ventures Plantations (M) Sdn Bhd [2020] MLJU 606 to its facts:

• Where adjudication proceedings are withdrawn before any determination and the adjudicator makes only a costs order under section 17(2) of CIPAA 2012, that order is not an “adjudication decision” within section 13. It falls outside sections 13, 15, 16 and 28 of CIPAA 2012 and crystallises as a free-standing debt.
• Where the adjudicator determines the disputes on the merits, including a dismissal of the claims with costs as in VKPT, the costs order is an integral part of the adjudication decision. It is an adjudication decision within section 13 of CIPAA 2012, and is subject to a potential setting aside application under section 15 of CIPAA 2012, stay under section 16 of CIPAA 2012, registration under section 28 of CIPAA 2012, and extinguishment on final determination under section 13(c) of CIPAA 2012.

The court rejected the argument that the costs order would survive Suit 81 because a final determination of the contractual disputes would not deal with adjudication costs. Section 13(c) of CIPAA 2012 operates on the adjudication decision as a whole. Extinguishment on final determination is automatic, and the costs component stands or falls with the decision of which it forms part. A winding-up petitioner cannot treat the costs order as part of the decision for enforcement purposes yet separate from it for extinguishment purposes.

The genuine-dispute analysis and its limits

The court held that filing court or arbitration proceedings for final determination of the underlying disputes will ordinarily be enough to establish a genuine and substantial ground for disputing an unregistered adjudicated debt, provided that such a filing is not a mere tactical step but a genuine exercise of the statutory right preserved by section 13(c) of CIPAA 2012.

The winding-up court retains jurisdiction to examine whether the final determination proceedings were filed genuinely or as a device to stifle the winding up petition. Indicators of the latter include:

• close proximity in time between the commencement of the proceedings and the petition hearing;
• the absence of any earlier steps toward litigation or arbitration despite a long lapse of time since the dispute arose;
• claims that merely repeat those already advanced and dismissed in the adjudication, with no new basis or evidence; and
• any other conduct showing an absence of genuine intent to pursue the final determination to conclusion.

In the instant case, although Suit 81 was filed after the petition and shortly before the hearing, VKPT had already signalled its intention to challenge the adjudication outcome in its affidavit in opposition. The court held that this was enough to displace an inference of mala fides. This appears to be a generous application of the test.

Reading VKPT with KTCC Mall

VKPT should be read alongside the Court of Appeal’s recent decision in KTCC Mall Sdn Bhd v TCS Construction Sdn Bhd [Civil Appeals No. B-02(C)(A)-130-01/2024 and B-02(C)(A)-131-01/2024], which held that the section 30 of CIPAA 2012 direct payment mechanism yields to the pari passu principle once the contractor is wound up. Both decisions address the same issue, namely how far does the CIPAA 2012’s “pay now, argue later” policy extends when it conflicts with the insolvency regime. In both cases, the court declined to let CIPAA 2012 operate as a priority within the insolvency regime:

• KTCC Mall: a section 30 CIPAA 2012 direct payment cannot create a back-door priority over the general body of creditors of an insolvent contractor.
• VKPT: an unregistered adjudication decision cannot create a back-door indisputability that winds up a company with arguable defences that have not been tested on the merits.

CIPAA 2012 remains a cash flow statute, not an insolvency statute. In both cases, timing and formality of enforcement decided the outcome: in KTCC Mall the party who delayed until liquidation lost the section 30 of CIPAA 2012 remedy, and in VKPT the winning party who did not register under section 28 of CIPAA 2012 lost the petition.

Practical points

For unpaid winning parties. On a favourable adjudication decision, apply for section 28 of CIPAA 2012 registration before issuing any statutory demand. Registration converts the debt into an indisputable judgment debt and confines the debtor to a cross-claim defence. An unregistered decision now invites a genuine-dispute test that the petitioner may lose. The winding-up “short-cut” is effectively closed for unregistered decisions on determined merits, because a losing party willing to file or credibly foreshadow final determination proceedings can likely resist the same. Enforce early and formally while the paying party is solvent.

For main contractors and developers. Where the adjudication decision is unregistered, commencing genuine final determination proceedings under section 13(c) of CIPAA 2012 may ordinarily amount to a genuine dispute on substantial grounds. The shield is not unconditional: the mala fides indicators let petitioners attack late, repetitive or collusive filings, so commence, or take clear steps toward, final determination early and record the intention contemporaneously. After registration, only a bona fide cross-claim or set-off equalling or exceeding the judgment debt may suffice to resist the petition.

This article was authored by Shaun Tan (Partner) and Rachel Tan (Associate).

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Shaun Tan | Partner, Construction & Arbitration / Dispute Resolution