Lift Subcontractor Recovers 100% of RM300k–400k Unpaid Invoices

Background

The claimant was a mechanical subcontractor. In late 2022 the respondent issued it three purchase orders on the same day for the same residential project in Kuala Lumpur. One of them, for the second phase of the work, was to supply, install and deliver lift equipment for seven lifts. Its sum was RM700k–800k.

The claimant delivered the works in stages and issued four invoices between 2023 and 2025, with delivery orders. Each invoice carried a 5% retention. The respondent paid the first invoice in full in 2023. A second payment of RM300k–400k in total had been made by late 2024.

Each invoice stated that overdue bills would carry a service charge of 1.25% per month after 30 days. The respondent never objected to that term.

The dispute

Three invoices remained unpaid. The claimant served a payment claim in mid-2025 for RM300k–400k. That was the full purchase order sum, less payments received, less the 5% retention, which the claimant did not claim because it only falls due after the defects liability period.

The respondent served no payment response. The claimant referred the dispute to adjudication and, in the adjudication, the respondent argued that:

• The payment claim was invalid because it had been issued by the claimant's representative, not by the claimant itself, and so sections 4, 5 and 7 of CIPAA were not complied with.
• All three purchase orders should be read together, and the claimant had not completed the works across them. It said the first phase was only 35% complete.
• The claimant had entered site without approval.
• The invoices and delivery orders were never acknowledged by the respondent, and were addressed to different individuals.
• The two payments were not an admission that the works were complete.

The respondent had also told the claimant in writing, before the claim, that the balance payable under this purchase order was the same sum the claimant later claimed. It also said it had not yet been paid by its own client.

Key issues and how they were argued

1. The preliminary objection. The claimant relied on section 8(3) of CIPAA and High Court decisions that a payment claim can be issued and served by a representative of the unpaid party. The adjudicator agreed and found no basis for the objection. Nothing in section 5 requires the unpaid party to serve personally.

2. Were the three invoices payable? Yes. The invoices were sent by WhatsApp or email and never disputed. The respondent's messages spoke of paying by instalments and of waiting for money to come in. The adjudicator read these as showing that the respondent did not dispute the invoices. For the last invoice, the respondent produced no evidence of any dispute.

3. One purchase order or three? The adjudicator held that each adjudication must arise from a single construction contract, relying on Ireka Engineering v PWC Corp. The respondent's own internal payment request forms gave each purchase order a separate reference and a different sum. It had treated them as three contracts.

4. Cross-contract set-off. The respondent had tried to deduct a sum of under RM100k said to be owed under the other purchase orders. Applying Jack-In Pile v Bauer, the adjudicator held that cross-contract set-off is not permitted. The respondent was also not claiming any deduction under this purchase order.

5. Incomplete works. The 35% figure related to the first phase, a different purchase order, and the adjudicator found no evidence for it. The respondent's own letter showed it had paid close to 90% of that purchase order. The phases were independent of each other. A "1st phase" wording on the delivery orders was a typographical error, as the contract reference and heading showed the second phase.

6. Acknowledgement and part payment. The respondent's letter confirming the balance payable showed it had received the invoices and delivery orders, so the lack of signed acknowledgement did not matter. The part payments were not treated as an admission that the works were complete. Two letters from the respondent's solicitors, marked "without prejudice", were not relied on.

The decision

• 100% of the claim (RM300k–400k) awarded across the three invoices
• Interest at 1.25% per month on each invoice from its due date until the decision
• Interest at 5% per annum on the adjudicated sum from the decision until full payment
• Costs of under RM100k under section 18 of CIPAA, with the claimed consultancy fee reduced as excessive for the complexity of the matter
• Payment within 14 days of the decision

Lessons for contractors

1. 1Claim one contract at a time. Where several purchase orders cover one project, the payment claim must rest on a single one. The other orders cannot be used by either side.
2. 2Put a late payment term on every invoice. The 1.25% monthly charge on the invoices was awarded because the respondent never objected to it.
3. 3Keep proof that invoices were sent. WhatsApp messages and emails showing delivery, and the replies to them, decided that the invoices were received and undisputed.
4. 4Prior admissions help. The respondent's own written statement of the balance payable became strong evidence.
5. 5"We have not been paid yet" is not a defence. The respondent's non-payment by its own client did not reduce what was owed to the subcontractor.

The unpaid invoices under the one purchase order were recovered through a CIPAA payment claim.

This case study is anonymised. Names, project details and exact figures have been removed or rounded. Shared with the client's consent.