When a company is faced with a winding-up threat, the instinct is often to seek refuge
behind a Fortuna injunction — a court order to restrain such a petition. But as a recent
decision of the Kuala Lumpur High Court reminds us, that remedy is far from automatic.
A Legal Turning Point for CIPAA Enforcement
In Binastra Ablebuild Sdn Bhd v Kumkang Kind (M) Sdn Bhd [2024] MLJU 3910, the
Plaintiff sought to restrain Kumkang Kind from presenting a winding-up petition over a
CIPAA adjudicated sum of RM1.39 million. The Plaintiff argued that it had already
deposited the full sum into its solicitor’s client account pending appeal, and that any
winding-up action would cause “irreparable harm” as it was a subsidiary of a public-listed
company.
Our team, acting for Kumkang Kind (M) Sdn Bhd, successfully resisted the injunction.
The Court’s Reasoning
Justice Atan Mustaffa Yussof Ahmad rejected the application and reaffirmed key principles
under Malaysian insolvency and construction law:
• A pending appeal does not make a judgment debt “disputed.” Unless stayed or set
aside, an adjudication decision under the Construction Industry Payment and Adjudication
Act 2012 (CIPAA) remains binding and enforceable.
• Solvency is not a shield against winding-up. Even if a debtor proves solvency, a
continued refusal to pay a valid adjudicated sum still entitles the creditor to petition for
winding-up.
• Depositing funds into a solicitor’s account does not amount to payment. The Court
viewed such deposits as a tactical delay rather than compliance with a binding order.
Reinforcing Cashflow Certainty in Construction
The judgment underscores the core legislative intent of CIPAA 2012 — ensuring cashflow
continuity in the construction industry. Allowing companies to delay payment under the
guise of “pending appeals” would, the Court warned, frustrate that very purpose.
In dismissing the Plaintiff’s application, the Court ordered costs of RM10,000 in favour of
Kumkang Kind.
A Practical Reminder
For contractors and suppliers alike, the case serves as a timely reminder: when an
adjudication decision has been enforced by the courts, payment cannot be postponed

merely because an appeal is pending. The proper course is to pay first — and argue later.

Legal Focus
October 2024