Construction Contracts Made in Writing: No Letter of Award? No Problem.

In the Malaysian construction industry, it is not uncommon for parties to carry out works based on informal arrangements, oral agreements, or loosely documented terms such as quotations, purchase orders, invoices, or chains of correspondence. While commercial realities often drive projects forward without a formal, detailed contract, this practice frequently becomes fertile ground for disputes — especially where payment issues arise.

As part of Parliament’s legislative intent to address payment issues in the construction industry, the Construction Industry Payment and Adjudication Act 2012 ("CIPAA") was enacted to provide, among others, an alternative dispute resolution mechanism through statutory adjudication. This mechanism is aimed at offering unpaid parties with speedy resolution of payment disputes, thereby promoting better cash flow within the industry.

However, the scope of CIPAA is clear: it applies only to construction contracts in writing. This raises an important question — what exactly constitutes a "construction contract made in writing" within the meaning of Section 2 of CIPAA?

This issue was addressed in the recent High Court decision of Costwin Construction Sdn Bhd v. Teh Chong Ping & Another Case [2025] CLJU 71 (“Costwin Construction”), providing clarity on the matter.

Brief Facts

The summary of facts in Costwin Construction are as follows:

• CJV Trading Enterprise ("CJV") supplied temporary sheet piles to Costwin Constructions Sdn Bhd ("CCSB") for a railway project;

  
  

• although there was no formal written contract between the parties, there were, however:

(i) CJV’s quotation to CCSB;

(ii) correspondence such as WhatsApp conversations and messages;

(iii) a delivery order and return note;

(iv) progress claims;

(v) a payment certificate; and

(vi) the final claim.

• disputes arose between the parties whereby CJV, among others, commenced adjudication proceedings against CCSB for the sum of RM625,362.80, which was opposed by CCSB;

• on 25.1.2023, the adjudicator delivered the adjudication decision allowing CJV’s claim in part in the sum of RM431,331.10 with interest and costs;

• CCSB subsequently filed an application to set aside the adjudication decision under Section 15(b) and (d) CIPAA 2012 and CJV applied to enforce the same under Section 28 CIPAA 2012; and

• ultimately, the High Court dismissed the setting aside application and allowed the enforcement of the adjudication decision.

One of the arguments made by CCSB in contending that the adjudication decision ought to be set aside was that premised on Section 2 of CIPAA 2012 the adjudicator had acted in excess of his jurisdiction by proceeding to hear the adjudication despite that there was no written contract.

This argument failed premised on the following reasons:

(i)          Wide and liberal meaning

The High Court noted the AIAC Circular No.: 3 gives a wide and liberal meaning to the words “contracts made in writing” under Section 2 of CIPAA.

"[61] Counsel for CJV brought to my attention the AIAC Circular No. 3 where it states:

'Construction Contract in Writing'

(1) There is a contract in writing:-

(a) if the contract is made in writing (whether or not it is signed by the parties);

(b) if the contract is made by exchange of communications in writing; or

(c) if the contract is evidenced in writing.

(2) Where parties agree otherwise than in writing by reference to terms which are in writing, they make a contract in writing.

(3) A contract is evidenced in writing if a contract made otherwise than in writing is recorded by one of the parties, or by a third party, with the authority of the parties to the contract.

The KLRCA Guideline on Construction Contract in Writing shall apply to all adjudication cases commenced under CIPAA. A copy of the KLRCA Guideline can be found at: www.klrca.org.my

...

[62] The AIAC Circular gives a wide and liberal meaning to the words "contract made in writing". If that were the case it would include the documents stated by CJV as part of the written contract between the parties."

In this respect, the High Court acknowledged that judicial pronouncements in Malaysia support this view, citing in approval the High Court case of Zana Bina Sdn Bhd v Cosmic Master Development Sdn Bhd and another case [2017] CLJU 185; [2017] MLJU 146. The High Court in Costwin Construction quoted the following passages, among others, from the case of Zana Bina:

[56] Clearly an expansive and generous interpretation is to be given to the meaning of a ''contract made in writing" in line with the purpose of CIPAA which is captured to some extent by its long title...

[57] It must be borne in mind that generally it is the Employer that would rely on the fact that there is no construction contract in writing to defeat or delay a Payment Claim for work done. The Claimant/Contractor on the other hand has a limited time frame to complete the works and it cannot be that if he does the work, he is damned if there is no concluded contract in that further documents are to be signed! Conversely, if he does not commence work, as in this case when completion date is from the date of site possession which had already been given, he runs the risk of late completion and be damned with LAD claims!

[58] When the Respondent here had every opportunity to stop the Claimant from starting the balance Works until those further Contract Documents are signed, it must mean that the Respondent had waived that requirement or is otherwise estopped from contending otherwise by their very conduct.

[59] The Justification for that becomes more understandable when, as here, it is the Architect and QS appointed by the Respondent that had certified the Interim Progress Claims.

[60] I would therefore hold that there is a construction contract in writing from which a dispute has arisen and that the Adjudicator has jurisdiction to hear the dispute and decide accordingly."

(ii)         Judicial Precedent

The High Court held that is now trite that the absence of a formal construction contract does not necessarily entail that the adjudicator would be in excess of jurisdiction and thereby act in breach of Section 2 of CIPAA 2012. It was also held that proof of written construction contracts may be adduced by documentary evidence that need not be in the form of formal contracts.

In this regard, the High Court referred to the following cases:

• Inovatif Engineering (M) Sdn Bhd v. Nomad Engineering Sdn Bhd [2016] CLJU 1454; [2016] MLJU 1351 – certificates of work done and purchase orders constituted a contract in writing;

• Poly Ritz Ventures Sdn Bhd v. Vestland Resources Sdn Bhd And Another Case [2020] CLJU 1853; [2020] MLJU 2061 – the work order was found to be a written contract within the meaning of Section 2 of CIPAA;

• Ong Teik Beng (t/a MJV Construction) v. Wow Hotel Sdn Bhd and another case [2021] CLJU 1359; [2022] 8 MLJ 10 – a detailed quotation of works to be carried out, supported by the fact that works were done and part payments were made on invoices issued based on the said quotation, was held to be a written contract; and

  
  

• TUV SUD (Malaysia) Sdn Bhd v. Intisari Mulia Engineering Sdn Bhd – exchange of correspondence, purchase orders, invoices and partial payments constituted a written contract under Section 2 CIPAA 2012.

(iii)       Rejection of UK Authorities

The High Court rejected CCSB’s argument in relying on UK authorities that there was no construction contract as defined by Section 2 of CIPAA. These were the cases of:

• RJT Consulting Engineers Ltd v. DM Engineering (Northern Ireland) Ltd [2002] EWAC Civ 270; 

• Hart Investments Ltd v. Fidler & Anor [2006] EWHC 2857(TCC); and 

• Mott Macdonald Ltd v. London & Regional Properties Ltd [2007] EWHC 1055 (TCC).

The High Court noted that these authorities were based on Section 107 of the Housing Grants, Construction and Regeneration Act 1996 which had been repealed in 2011.

Further it was acknowledged that these same authorities and arguments were also rejected in the cases of Ong Teik Beng; TUV SUD (Malaysia) Sdn Bhd; and Euroland & Development Sdn Bhd v. Tack Yap Construction (M) Sdn Bhd [2018] CLJU 896.

Commentary

Costwin Construction reaffirms the Malaysian courts’ expansive and generous interpretation of the phrase "construction contract made in writing" under CIPAA. The absence of a single, formally executed contract document does not necessarily preclude adjudication proceedings from being brought, provided that there is sufficient documentary evidence which may demonstrate contractual terms and obligations agreed between parties. Bearing such interpretation, it would appear that our courts seek to promote the objective of CIPAA 2012 in facilitating regular and timely payments in the construction industry — by focusing on substance over form.