Introduction
The construction industry is often described as an industry that runs on cash flow. Contractors, subcontractors, suppliers and consultants operate within a chain of payments where delays at one level can quickly affect every party further down the line. Payment disputes can have severe consequences, particularly where contractors continue to shoulder operational costs while waiting for lengthy court proceedings to conclude which often take years to reach final determination. During that time, contractors remain liable to pay employees, suppliers, financiers and other creditors. The upshot of this is that a contractor may face insolvency before the dispute is ever resolved.
It was against this backdrop that Parliament enacted the Construction Industry Payment and Adjudication Act 2012 (“CIPAA“), with the primary objective of facilitating regular and timely payment for work and services in the construction industry through a fast-track adjudication mechanism. CIPAA seeks to ensure that cash continues to flow through the industry while parties reserve their right to challenge the merits of a dispute in arbitration or litigation at a later stage, i.e. “pay now, argue later”. CIPAA was designed to provide an effective solution by allowing unpaid parties to obtain a binding adjudication decision and recover payment, via enforcement of the adjudication decision, without the lengthy process of a full trial.
Enforcement Beyond Adjudication
Section 31(2) of CIPAA, preserves a successful claimant’s entitlement to pursue any other remedy available under written law. Accordingly, where an adjudicated sum remains unpaid, a successful claimant may rely on sections 465 and 466 of the Companies Act 2016 to issue a statutory notice based on the Adjudication decision and subsequently present a winding-up petition against the debtor company.
Historically, attempts have been made to resist winding-up proceedings on the basis that adjudication decisions only possess “temporary finality” and therefore do not conclusively establish the debt. Such arguments inevitably create further delays and undermine the objective of speedy payment resolution under CIPAA. This was a point of issue raised in the recent High Court decision in Boilermaster Sdn Bhd v Tandex Chemicals Sdn Bhd [2026] MLJU 822 which provides important clarification and reinforces the role of winding-up as a legitimate enforcement mechanism following a successful adjudication pursuant to previously established case laws.
The Dispute in Boilermaster Sdn Bhd v Tandex Chemicals Sdn Bhd [2026] MLJU 822
The dispute arose after Tandex Chemicals Sdn Bhd (“Tandex”) obtained a favourable adjudication decision against Boilermaster Sdn Bhd (“Boilermaster”) under CIPAA. Tandex subsequently obtained an enforcement order from the High Court. Boilermaster who filed an appeal against the enforcement order, failed to obtain a stay of execution and did not make payment of the adjudicated sum. Tandex then issued a statutory notice, indicating its intention to commence winding-up proceedings. In response, Boilermaster sought a quia timet injunction to restrain Tandex from enforcing the adjudication decision and from filing a winding-up petition.
Boilermaster’s position was essentially that winding-up proceedings should not be permitted while an appeal and other related proceedings remained pending. The High Court rejected this argument in its entirety. Leong Wai Hong J held that the application was misconceived and that there was no actionable wrong on the part of Tandex. The court observed that Tandex had obtained a valid adjudication decision, had successfully enforced that decision in court, and was merely exercising its legal right to pursue winding-up proceedings after the debt remained unpaid. As such, there was no basis for a quia timet injunction. The court ultimately dismissed the application and described Boilermaster’s case as frivolous.
An Adjudicated Debt Cannot be Considered a Disputed Debt
Perhaps the most significant aspect of the judgment lies in its treatment of adjudicated debts. The Boilermaster case reaffirms the Court of Appeal’s reasoning in both Bludream City Development Sdn Bhd v Pembinaan Bina Bumi Sdn Bhd [2024] 3 MLRA 909 and Sime Darby Energy Solution Sdn Bhd v RZH Setia Jaya Sdn Bhd [2021] 6 MLRA 485. Once a payment dispute has been adjudicated under CIPAA and a decision has been rendered in favour of the claimant, the debt ceases to be merely disputed for the purposes of winding-up proceedings. The debt has already been independently determined by a neutral adjudicator and, unless the adjudication decision is stayed or set aside, it remains binding and enforceable.
Temporary Finality Does Not Mean Temporary Enforceability
It is a core understanding that Adjudication decisions are of temporary finality. Temporary finality however, does not mean temporary enforceability. This was a misunderstanding that was fuelled by previous High Court authorities such as ASM Development (KL) Sdn Bhd v Econpile (M) Sdn Bhd [2020] MLRHU 1417 which appeared to support the position that adjudication decisions possessing only temporary finality are therefore inherently disputable. This position was subsequently rejected by the Court of Appeal which held it to be bad in law. An adjudicated debt is to be paid first whilst any arguments to reclaim debt sum can be raised after. The High Court in Boilermaster correctly recognised this and went further, affirming that even ongoing substantive disputes in arbitration or litigation do not change the fact that the adjudicated debt remains enforceable in the meantime. The purpose of CIPAA would be defeated if debtor parties are allowed to delay payment by starting multiple proceedings.
The High Court in Boilermaster also highlighted the limited circumstances in which winding-up proceedings may be restrained. The law continues to recognise the availability of a Fortuna injunction in appropriate cases but maintains a high threshold. A Fortuna injunction generally requires the debtor to demonstrate either that the proposed winding up petition has (1) no reasonable prospect of success or (2) that the petition is based on a genuinely disputed debt. In the context of a valid and enforceable adjudication decision, these requirements are often difficult to satisfy. The Court of Appeal in Sime Darby Energy Solution had already observed that an unproven cross-claim is insufficient to restrain a winding-up petition founded upon an adjudication decision. Instead, any bona fide dispute must be raised against the petition and supported by substantial grounds.
Conclusion
The practical implications of Boilermaster are significant for both claimants and respondents.
For debtor companies, the decision underscores the risks of refusing to satisfy an adjudicated sum. Unless a stay or setting-aside order is obtained, the adjudication decision remains enforceable and may expose the company to winding-up proceedings. From a commercial perspective, the safer approach may often be to make payment under protest and pursue recovery through the appropriate dispute resolution process thereafter.
For successful claimants, Boilermaster provides welcome certainty. The decision confirms that winding-up is not merely a theoretical remedy available after adjudication but a legitimate and effective enforcement tool that supports the broader objectives of CIPAA. By reaffirming that adjudicated debts are capable of sustaining winding-up proceedings, the court has strengthened the effectiveness of the statutory adjudication regime and reinforced the principle that payment disputes in the construction industry should not be used as a means of withholding cash flow indefinitely.
The message is clear, unless an adjudication decision is stayed or set aside, the successful party is entitled to be paid, and winding-up remains a powerful tool for ensuring that payment is made.
Published Date: 11 June 2026
Authors:
- Ow Kai Wing
- Sarah Shahabudin
