[2015] 1 LNS 1115 Legal Network Series

IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR

IN THE STATE OF WILAYAH PERSEKUTUAN, MALAYSIA
(CIVIL DIVISION)
[CIVIL SUIT NO: 22C-59-10/2014]

BETWEEN

MARSHIVA HIGH TECH SDN BHD ... PLAINTIFF

(COMPANY NO: 973836-X)

AND

NOXEL ASIA SDN BHD ... DEFENDANT

(COMPANY NO: 873589-W)

CONTRACT: Building contract - Claim for work done - Claim for work
done till date of termination of subcontract - Whether plaintiff had to
provide evidence of work done - Whether plaintiff completed works in
accordance with purchase orders and letters of award - Whether defendant
was entitled to withhold payment on basis of delay and poor quality of
work when no complaint on plaintiff's works were made by defendant
earlier

CONTRACT: Building contract - Lump sum contract - Contracts merely

provided for value of relevant works under particular letter of award but
payments due would be for work done according to purchase orders and
invoices - Whether contract concluded was in nature of lump sum contract
- Whether plaintiff was entitled to be paid even though work scope had not
been completed

CONTRACT: Building contract - Damages - Claim for damages by party

who terminated subcontract - Claim for liquidated and ascertained

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damages and for costs of hiring a new contractor to complete works -
Absence of any reason for termination - No issue of delay and defective
works raised by defendant before termination of subcontract - Whether
termination of subcontract was valid - Whether a party who terminated
contract unlawfully was entitled to damages

[Plaintiff’s claim allowed with costs. Defendant’s counterclaim

dismissed with costs.]
Case(s) referred to:
Bolton v. Mahadeva [1972] 2 All ER 1322 (refd)

CM Indah Sdn Bhd v. UB Ushabina Sdn Bhd [2006] 4 CLJ 733 HC (refd)

Other source(s) referred to:

Keating on Building Contracts [Fifth Edition, Sweet & Maxwell, 1991,
Chapter 4]
Robert Fenwick Elliot of Building Contract Litigation

GROUNDS OF DECISION

Salient facts

[1] The Defendant is the nominated sub-contractor for electrical works

[lighting and power points] at Best Western Melaka. They were appointed

by PKV Consulting Engineering Sdn Bhd vide two separate letters dated

14.3.2013 and 3.12.2013. The first letter was for Blocks A, B, C and D

whereas the second letter was for Block E — Package 2 [electrical low

voltage system].

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[2] The Defendant in turn sub-contracted certain of those works to the

Plaintiff through five separate letters of award. Those five letters are as
follows:

i. letter dated 8.7.2013: to supply, install and termination electrical

work at Best Western Melaka, M131 Part 1 [3 rd to 6 th floor) (Ref
No. NXA-M10050713) - Blocks A, B, C & D

ii. letter dated 8.7.2013: to supply, install and termination electrical

work at Best Western Melaka, M131 Part 1 [7 th to 10 th floor)
(Ref No. NXA-M10050713/2)

iii. letter dated 13.9.2013 for ICT Work: to supply, install TEL, TV
and Speaker Point Work at Best Western Melaka, PJ #M158
(Ref No. NXA-0401300913)

iv. letter dated 11.9.2013: to supply, install and termination

electrical work at Best Western Melaka, Block E M161 (Ref No.
NXA-0401290913)

v. letter dated 20.12.2013 for ICT Work: to supply, install TEL, TV

and Speaker Point Work at Best Western Melaka, PJ #M158
(Ref No. NXA-04013261213)

[3] The five letters of award had different dates for site possession but
generally the period of the contract was to be “until completion of the

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project which is estimated 1 year” although in the case of the last three
letters of award, the estimation of one year was “dependent on the Main
Contractor’s progress”.

[4] The Plaintiff claimed that it did various works for which invoices were
issued and partial payments were made by the Defendant. On 11.3.2014,
the Defendant terminated all the contracts “rendering all the letters of
award null and void”. No reasons were given in the letter of termination.
The Plaintiff claimed that the first time the Defendant listed the Plaintiff’s
failures which purportedly gave rise to the termination was in the
Defendant’s solicitors’ letter dated 9.4.2014.

[5] The Plaintiff’s suit is for the outstanding sum of RM999,914.50 being
monies due for work done till the date of termination which the Plaintiff
claims was unlawful.

[6] In Defence, the Defendant denied that any monies are due. The
Defendant claimed that the Plaintiff had been notified about the termination
at a meeting on 6.3.2014. The Defendant further alleged that the contracts
awarded to the Plaintiff were lump sum value contracts where payments
were only due and payable upon the proper completion of the works in its
entirety.

[7] According to the Defendant, proper completion of the relevant works

were achieved only when the Plaintiff had carried out commissioning and
testing works, completed reports and handed over the works in approved
working condition to the Defendant. Further, the Defendant claimed that

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payments were only upon delivery of invoices and subject to joint

determination as to the correctness, accuracy and/or compliance with the
scope of works, fitness for purpose, quality and correctness of materials
used accompanied by the testing and commissioning reports and handing
over of the relevant works in approved working condition to the Defendant.
Since the Plaintiff had failed to complete the works in its entirety, the
Defendant say the Plaintiff was not entitled to make any claims whatsoever.
The Defendant also claimed that apart from the fact that the Plaintiff had
failed to complete the works in time that is, by January 2014, the Plaintiff
had also abandoned the works.

[8] For all these various breaches the details of which can be found at
paragraph 11 of the Defence, the Defendant claimed that it had to engage
third parties to carry out rectification works and complete the works.
Consequently, the Defendant counterclaimed a sum of RM1,999,303.06 for
project labour and materials to complete the project. The Defendant also
claimed a refund of the advances that it made to the Plaintiff from time to
time which is for a sum of RM579,373.00. All these were denied by the
Plaintiff.

Issues

[9] Five issues were identified for determination:

i. Whether contracts as found in the five letters of award were

lump sum contracts;

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ii. Whether the Plaintiff is entitled to payment even though the

works had not been completed;

iii. Whether the Plaintiff had completed the works in accordance

with the purchase orders;

iv. Whether the Plaintiff is liable to pay damages to the Defendant

in the form liquidated and ascertained damages and for costs of
hiring a new contractor to complete the works;

v. Whether the payments received by the Plaintiff are advances or

part payments for completed works and that the payments were
to be refunded to the Defendant if the Plaintiff did not complete
the works.

Findings and determination of the Court

[10] I shall take the first two issues together since they are inter-related.
However, it is undeniable that the determination of the first issue has
ramifications on the other issues; especially the second and the last issue.

i. Lump sum contracts & entitlement to payment

[11] It is the Defendant’s case that the Plaintiff is not entitled to payment
because all five contracts under the letters of award were lump sum value
contracts. Until and unless the Plaintiff completed the works as agreed and
as instructed in the relevant purchase orders, the Defendant maintained
that the Plaintiff was not entitled to payment. All payments received must

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now be returned to the Defendant because the works were not fully
completed, not properly completed, were defective and were delayed.

[12] The Defendant pointed out that the scope of each of the Plaintiff’s
works stated that it “shall comprise proper completion of Supply, Install and
Termination of Electrical Work” [or ICT work in the case of two of the letters
of award]. This meant that the Plaintiff had to complete the entire scope of
the works as detailed in the Letters of Award under the POs before the
Defendant was liable to pay.

[13] The Defendant’s Managing Director, Alireza Vajdi Jahromi [DW2]

pointed out that the Defendant were nominated sub-contractors for
electrical works at Best Western Melaka and the Defendant had sub-
contracted to the Plaintiff. The Defendant’s contracts with the main
contractor were lump sum and that “meant that we have to complete the
entire works at the value agreed”. DW2 testified that this arrangement that
it had with the main contractor was also the arrangement that the
Defendant had with the Plaintiff; that the five contracts were lump sum
contracts wherein the Plaintiff was required to complete the entire works as
per value stated in the Purchase Orders [PO] issued by the Defendant
under the respective letters of award. DW2 pointed out the relevant POs
which the Defendant issued can be found in the bundles of documents filed
and marked for trial.

[14] It is also the Defendant’s case that these POs further evidenced the
existence and understanding of lump sum contracts. In the POs, there
were itemizations of “job descriptions, quantity, unit price and eventually

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the total amount” together with the price. The provision of a “pre-agreed
price” further leaves no room for any argument that the Plaintiff’s payment
was on a measurement of the value of works done basis as contended by
the Plaintiff. Instead, this pre-agreed price is the price to be paid when the
Plaintiff properly complete the supply, installation and termination of the
electrical works. In the case of the ICT works, this would involve the proper
completion of supply and install Tel, TV and speaker points. According to
the Defendant, all this indicates that the parties had agreed on a lump sum
contract where the Plaintiff would carry out the proper completion of the
appropriate works at the price as stated in the letters of award and the
POs. If the Plaintiff failed to do so, it would not be entitled to demand for
payment as was the case in Bolton v. Mahadeva [1972] 2 All ER 1322.

[15] One of the Plaintiffs directors, Raman Perumal [PW3], testified on

behalf of the Plaintiff. As far as he understood the terms of the five
contracts, the agreed arrangements between the parties were that the
Plaintiff was to be paid against invoices issued for work done under the
relevant purchase orders or ‘POs’. The Plaintiff claims that the first time
that it was aware of such an intention as suggested by the Defendant was
when the letter of demand was issued to the Defendant. Up until the time
of the letter of demand, the Defendant had paid progressively against
invoices issued by the Plaintiff.

[16] As for the question of completion or rather non-completion of the full

works in accordance with the POs, the Plaintiff’s explanation was simple -
it was prevented from completing the works by the Defendant’s termination.

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The Plaintiff was required to leave the site immediately on 11.3.2014

because the termination was effectively immediately on that same day.

[17] The Plaintiff also pointed out that there were clear notifications in all
its invoices requiring and disputes on invoices or claims to be raised within
30 days. The Defendant never raised any in which case, the Plaintiff
contended that the Defendant was estopped from denying their obligation
to pay the Plaintiff. The Plaintiff suggested that the allegation of delay by
the Plaintiff was an afterthought because the Defendant’s evidence showed
that the Defendant was actually facing difficulties in making payment.

[18] To this, the Defendant responded that the non-dispute of invoices

cannot mean that the work was properly done. That matter can only be
determined when the works are tested and commissioned. Until then, the
Defendant claimed that the question of whether the works had been
properly done was still open.

[19] This is the Court’s view. In its true sense, a “lump sum contract” is a
contract to complete a whole or entire work for a lump sum. The liability to
pay that sum only arises when the entire work is completed in every detail.
The entire contract is indivisible and the fulfillment of all the obligations
under the contract is required before there is an obligation to pay. Parties
who enter into such contracts generally do not contemplate any breach.
Arguably, a party who has done work will not be entitled to any payment
until and unless there is full completion; and this is regardless the fact that
that party may have expended time, labour and costs.

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[20] Whether a contract is an entire lump sum contract is a matter of

construction. In Keating on Building Contracts [Fifth Edition, Sweet &
Maxwell, 1991, Chapter 4], the author acknowledged at page 69 that:-

“...subject to provisions on installments:

(1) most lump sum contracts are entire contracts in the sense that
“the builder can recover nothing on the contract if he stops work
before the work is completed in the ordinary sense - in other
words abandons the contract”; but

(2) most lump sum contracts are not entire contracts in the sense
that they are construed as excluding the principle of substantial
performance.”

[21] If the contractor has the right to enforce rights to installments before
the completion of the entire works, arguably such contracts are not entire
lump sum contracts. Then, there is also the question of the employer
recovering monies paid over where the contractor fails to complete. Such
recovery generally is on the basis of money had and received on a total
failure of consideration. This would be difficult to establish especially
where the employer has received some benefit from the contractor’s
performance of the works. At best, the employer may sue for damages for
breach of contract; the computation would be on the basis of loss.

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[22] Keating further comments that in ordinary lump sum contracts, the
employer cannot refuse to pay “merely because there are few defects and
omissions. If there is substantial completion he must pay the contract price
subject to a deduction by way of a set-off or counterclaim for the defects”.

[23] These views are shared by another author, Robert Fenwick Elliot of
Building Contract Litigation and whose views were cited with approval by
the Court of Appeal in CM Indah Sdn Bhd v. UB Ushabina Sdn Bhd
[2006] 4 CLJ 733, 739, as follows:-

“Lump sum contracts are contracts whereby the contractor agrees for
a pre-agreed price to execute certain defined building works (the
building undertaken by the contractual obligation is usually called the
Works’). In principle, the contract is very simple but in practice there
are many complicating factors.

The general rule in ordinary lump sum contracts is that the contractor
is entitled to be paid the pre agreed lump sum as and when he
substantially completes the Works (Hoenig v. Isaacs [1952] 2 AER
176). Substantial completion does not necessarily entail the perfect
execution of every detail of the Works, and if the Contractor is guilty
only of only comparatively minor defects and/or omissions then he is
entitled to be paid the lump sum less a set off in respect of his failings

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Although the lump sum is always a starting point; it is comparatively

rare for the price the contractor is entitled to receive at the end of the
day to be exactly the same as the lump sum. The lump sum is
usually subject to adjustment for extra work, fluctuations,
subcontractors, and so on;”

[24] In this case, whether the letters in question provide for lump sum
arrangements is a question of fact and law. The answer to this issue
depends on the terms of the contract; the intention of the parties, and to a
limited extent, the conduct of the parties. The presence or absence of
terms to this effect does not necessarily resolve the question and certainly
not conclusively.

[25] From the evidence before me, especially the five letters of award, it is
the finding of this Court that these are not lump sum contracts. Certainly,
these are not lump sum entire contracts where there is no payment even of
a pre-agreed price until and unless there is completion of the entire or
whole works. These five contracts effectively are contracts where a sum or
price is agreed in advance, but the work is against Purchase Orders or POs
issued; and payment is against progressive claims or invoices
subsequently made. There are several reasons for saying so.

[26] First, there are no express stipulations to that effect anywhere in the
five letters of award. What we do have amongst the terms and conditions
of each contract is a requirement that the Plaintiff prepare its work based
on the client’s drawings unless otherwise required by client before
commencement of any physical works. If required, the Plaintiff is to supply

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the project material based on purchase orders, invoices and delivery

orders. The amount delivered “shall be deducted from Sub-Contractor
Lump Sum Value. Sub-Contractor shall notify the Client in 1 week advance
if such requirement required.”

[27] I do not accept the Defendant’s interpretation and construction of the

Plaintiffs scope of works; that because of the description, the contracts are
all lump sum contracts where no payment is due until all works had been
properly completed. In my view, the details of the Plaintiff’s scope of works
are provided in clause 2.1 of each letter of award. This clause has to be
read with clause 2.1.7 which states that the “Work Scope as agreed as per
the Quotation”. Therefore, the Plaintiff must have quoted on the scope of
works. The details as seen at clause 2.1 state:

“The Scope of Work to be performed under this Sub-Contract shall

comprise proper completion of Supply, Install and Termination of
Electrical Work in Block A, B, C & D at Best Western Melaka
M131. The detail Scope of Work is as per Client below listed POs.”

[26] Each letter of award carries the relevant details of the POs such as
the number of the purchase order, description of work and the amount in
Ringgit. There were 8 POs issued for the first letter of award, 8 POs under
the 2 nd letter of award, and 10 POs issued under the 3 rd letter of award. In
the case of the ICT works, 7 POs under the letter of award dated
20.12.2013 and 9 POs issued under the letter of award dated 13.9.2013.

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[29] I cannot see how this description of the Plaintiff’s scope of works
carries the meaning and conclusion that the Defendant has suggested to
the Court. All that may be said is that each of the Plaintiff’s scope of works
is as described; that such work entails the supply, installation and
termination of the relevant materials and work. The Plaintiff is expected to
carry out every respect of this scope. Further, the suggestion that payment
is dependent on the completion of all three respects cannot hold given the
provision of clause 3, which is that the Defendant is to pay the Plaintiff
upon issuance of invoices. At clause 3, the parties had agreed on the
terms of payment:

3.1. Noxel Asia Sdn Bhd shall pay the Sub-Contractor upon receipt
the undisputed Invoices/claims within 30 days.

3.2. Noxel Asia Sdn Bhd shall retain 10% from every claims and the
total amount will be reimbursed to Sub-Contractor upon due

date of 1 year defect liability period.

3.3. Any additional or extra work done shall be under VO and Sub-
Contractor shall notify Client with Invoice upon work
completion.

[30] These terms and conditions are repeated in all five letters of award
with the necessary modifications.

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[31] As seen from the above, there is some reference to deductions of the
amounts delivered from “Sub-Contractor Lump Sum Value”. But, that is
contrastingly different from providing and agreeing that all or any of the
letters of award were intended to be and are lump sum value contracts in
the sense that the Plaintiff is not entitled to any payments until the entire
works have been completed. A comparison with the Defendant’s own two
letters of award by PKV Consulting Engineers Sdn Bhd SLR dated
14.3.2013 and 3.12.2013 [pages 16 and 19 respectively] readily illustrate
this. At clause 2 of both letters, it is expressly provided that-

“This is a lump sum contract.”

[32] In both letters of award to the Defendant, there are clear and express
terms providing for the contracts to be lump sum value contracts. Similarly,
when the Defendant appointed Hexatech Building Services Sdn Bhd by
letter dated 22.7.2014 [page 22], the Defendant’s letter of award expressly
provided for the existence of a lump sum value contract:

1.1. The contract sum shall be a lump sum of RM...

[33] Although in neither of these cases does it conclusively mean that the
contracts are lump sum value contracts, such evidence goes a long way to
establishing or assist in establishing that the parties intended the contract
to be a lump sum contract. Contrast those express terms with those found
in the five letters of award and it can be deduced that the parties had not

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made provision for any lump sum contractual arrangements under these
five letters of award.

[34] While the Plaintiff’s scope of works are as described by the

Defendant, that it “shall comprise proper completion of Supply, Install and
Termination of Electrical Work”; and in the case of the ICT works, the
appropriate ICT works, that is far from saying that this description renders
the contracts lump sum contracts where payments are not due until and
unless the whole works have been completed, which is what the Defendant
is contending is the case for all five letters of award. In my view and as
pointed out earlier, these descriptions merely describe the scope of works;
that the Plaintiff is to properly complete the list of works as described. In no
way does that serve to determine the character of the contract in the sense
suggested by the Defendant.

[35] In any event, I do not see how this reference to the “Sub-Contractor
Lump Sum Value” aids the Defendant’s case. This reference really was
only in relation to the deduction of the materials that may be supplied by
the Defendant. This supply of project material is where the Plaintiff
requires such supply. Where this happens, the parties had agreed that the
amount delivered will be deducted from the “lump sum value”. However,
clause 2.1.4 requires the Plaintiff to notify the Defendant one week in
advance “if such requirement required”. There is no evidence of any
reliance on this sub-clause during the course of the works.

[36] Instead, the evidence presented in Court reveals that as the works
under all five letters of award progressed, the Plaintiff issued invoices to the

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Defendant. The Defendant paid against those invoices which were never
disputed by the Defendant. These invoices reflected work done at the
material time which the Defendant paid after having satisfied itself that the
work had indeed been done. After all, the Defendant had its Project
Engineer, Mr. Nivash regularly at the site. The Court can only deduced that
such payment must have been on work that had been properly done.

[37] Therefore, it is the Court’s findings and conclusion that the five
contracts are not lump sum contracts of the understanding claimed by the
Defendant. The contracts have merely provided for the value or price of
the relevant works under the particular letter of award; but the payments
due would be for work done according to purchase orders and invoices.
Each of the claims submitted was for work done as per purchase order and
each claim was according to the progress of works. The payment was also
for the same reasons.

[38] Related to this is the second issue of whether the Plaintiff is entitled
to be paid even though the work has not been completed. Since the five
contracts are not lump sum contracts, the Plaintiff is entitled to be paid
even if the work has not been completed.

[39] However, the Plaintiff is only entitled to be paid for work already
done; subject to proof. The Plaintiff is not entitled to payment for work that
it is yet to do; which actually does not arise here as that is not the Plaintiff’s
claim. So, implicitly, the Plaintiff has to provide evidence of work done, and
that would be in the form of at least, the relevant purchase orders, invoices
and claims submitted at the relevant time. Once these conditions are met,

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according to clause 3, the Plaintiff is entitled to expect payment within 30

days “upon receipt of the undisputed invoices/claims”.

ii. Whether the Plaintiff had completed the works in

accordance with the purchase orders

[40] Following from the above, the ensuing question really is whether the
Plaintiff has completed the works in accordance with the relevant purchase
orders such as to be entitled to payment.

[41] It is the Plaintiff’s case that it has completed all works instructed by
the Defendant and as found in the purchase orders. Whatever it did not
complete was due to the termination by the Defendant.

[42] As for the Defendant, these were its arguments. On the question of
whether the Plaintiff had actually completed all the works, the Defendant
went through all the progressive claims made by the Plaintiff for each of the
POs issued under the relevant letters of award; and there were many POs
issued under each of them. Upon examination and certain observations
and comparisons, the Defendant drew conclusions which it now relies on to
answer this issue. Its answer being that the Plaintiff cannot be said to have
completed the works according to the purchase orders since the Plaintiff,
on its own documents, was only claiming at the most, up to 80% of the
value of the relevant works, and that there was delay between each
progress claim. The Defendant submits that this indicates delay on the part
of the Plaintiff’s work which disentitles the Plaintiff to any payment.

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[43] For example, there were 8 POs issued for the letter of award for
M131 (3 r d to 6th floor) and another 8 POs issued for levels 7 to 10. The
Plaintiff made progress claim on the formula of first 40% of PO value upon
completion of the laying of conduit piping; second 40% of PO value upon
completion of the laying of the cables; and the balance 20% upon testing
and commissioning. The time lapse or interval between one progress claim
and the next progress claim is said to show delay on the part of the
Plaintiff; that the Plaintiff failed to carry out the works properly; and that the
Plaintiff had failed to complete all the works. This exercise was repeated
for all five letters of award: 3 for the electrical works contract package
which involved supplying, installing and termination of electrical works; and
2 for the ICT works.

[44] The Defendant relied on the testimony of Sures Kumar a/l Ganesan
[DW1], its Operation Manager. DW1 testified that he was approached by
DW2 to take over the works in February 2014 because the Plaintiff was
said to have insufficient manpower and had difficulties meeting the
projected targeted completion date. He then visited the site and noticed
that:

i. the floor layout for cabling “not tallied at as per site”

ii some cabling works “not complied with specifications”

iii. some method of installation do not comply with IEE and

authorities requirements

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iv. insufficient manpower, no site supervisor, no test report for

work done area

[45] He also gave a fairly detailed explanation of what was “defective

work”. At Q&A 7 of his witness statement, he said:

Q&A7: Coming to the defective works, what was it?

Joining of cables, wrong material used, laying of conduits, slanting

and taking short cuts, no termination which means in this case
visual view is 4 mm cable connected to hidden cable which is only
2.5 mm cable.

The cable should be 4mm all the way for lets say air conditioning.

Further for ICT work the method of cable installation is wrong.

Following IEE procedures we cannot include power cable with co-
axial cable due to the voltage frequently differentiation. This also
violates Bomba code of practice.

As a sub-contractor Marshiva High Sdn Bhd should provide a

competent person to supervise site progress of the works from time
to time to ensure that the works are carried our properly and all the
risers dimensions are sufficient to fit in all the equipment.

There was no supervisor at the site.

On inspection of site I notice that all the risers and small are no
riser opening for structure cabling works.

All this cause delay to the project and the main contractor was
unhappy with the works and had complaint to Noxel as noted in the
minutes of meeting.

Due to the delay main contractor had proceeded closed to the

ceiling.

It cost back charges. As in this case plastering, tiling and others

finished works had to be hacked and repaired.

Further the cables laid by Marshiva cannot be used because it did

not follow the specifications and no testing report from Marshiva.

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Marshiva is required to provide the report and obtain the approval

from the Consultant.

Marshiva did not do this and therefore the cabling works had to be
rejected and the laying of cables had to redone by us.

We have to remove Marshiva’s cables and the same have been

kept in our store.

[46] DW1 said that he had also checked the details found in the Schedule
prepared by the parties for use at trial; and he confirmed that the “remarks
therein is true and accurate for Noxel’s position”.

[47] On the other hand, there is the evidence led by the Plaintiff in the
person of PW2. PW2 is Silbaraju a/I Punaiayah, the Plaintiff’s Site
Supervisor for the project. He testified that the parties conducted site
inspections to determine whether the electrical wiring installation work was
done “up to par”. He personally attended these site inspections and it was
his evidence that there was never cause for concerns. There were no
complaints from the Defendant; certainly none in the nature that are made
in this trial.

[48] PW2 also told the Court that he met the Defendant’s Project
Engineer, a certain Mr. Nivash regularly during the course of the works. In
fact, he would meet Mr. Nivash as often as twice a day; once in the
morning and the second time, in the evening at 5.30 p.m., before leaving.
PW2 told the Court that Mr. Nivash never complained that the Plaintiff’s
work was not in order although the Defendant occasionally revised the
drawings and instructed the Plaintiff to follow the revised drawings; which
the Plaintiff did. There is no issue over such revisions. According to PW2,

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the Defendant never raised any complaints on the Plaintiff’s work in respect
of installations and/or its quality during the inspections conducted by Mr.
Nivash together with the Plaintiff.

[49] PW2 also testified that he sometimes met with Mr. Rizal, the
Defendant’s “boss”. Mr. Rizal had raised the issue of “kerja ada lambat
sikit” to which the Plaintiff stepped up work. In March 2014, the Plaintiff’s
progress of the works was according to schedule and not in delay.

[50] On this issue of whether the Plaintiff had completed the contracted
works and whether the Plaintiff’s work was defective or not according to the
purchase orders, I must find for the Plaintiff. The Plaintiff has produced
satisfactory evidence to this effect. Not only do I find the Plaintiff’s
witnesses credible and believable in this regard, I find their evidence
corroborated by the Defendant’s own actions.

[51] The Defendant had never raised any complaint about the Plaintiff’s
works, whether from the aspect of delay or quality. There is also the silent
affirmative conclusions that one can readily draw about this certain Mr.
Nivash. His existence is not denied by the Defendant. But, contrary to the
Defendant’s claim that Mr. Nivash was attending only to quantitative
matters and therefore his evidence is to be rejected, I do not find this
convincing on the facts and certainly not in law. It would be reasonable to
expect a Project Engineer to be familiar and responsible for matters of
quality and not just quantitative matters. Mr. Nivash was the Defendant’s
Project Engineer and he attended to the daily operations on behalf of the
Defendant. The Defendant does not suggest the presence of some other

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individual. Mr. Nivash was not called by the Defendant. I can and must
conclude that PW2’s testimony is truthful of the matters raised; that the
Plaintiff’s work was in order with the relevant purchase orders at the
material time. Any matter that needed attending to was dealt with [in fact
according to PW2, they were attended to on the same day]; and there is
nothing outstanding such as to deprive the Plaintiff of its right to be paid for
the work done and for which it has invoiced the Defendant. I accept the
Plaintiff’s witnesses’ testimony that the site inspections do not record any
objections or complaints; especially from the Defendant leaving the Court
with the irresistible inference that there were in fact none because there
were no complaints to begin with.

[52] I must state that I do not accept the evidence of any of the
Defendant’s witnesses on this matter for a simple reason - both DW1 and
DW2 never visited the site at the relevant time. They were never involved
in the site inspections. All these were attended to by Mr. Nivash or the
Defendant’s behalf.

[53] Further, DW1 could not have possibly made his conclusions on the
matters that he had told the Court from just his visits to the site which he
did without the presence of the Plaintiff; even then the visits were with the
objective of taking over from the Plaintiff. He would have his own interests
to protect. His evidence is therefore partial and not believable. DW2 had
further testified that the Defendant sought the assistance of DW1 in
February 2014. Since the termination was only in March 2014, it would
appear that DW1 was hired even before the Defendant had terminated the

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contracts with the Plaintiff. This suggests the lack of good faith on the part
of the Defendant.

[54] Further, the Plaintiff has also accounted for the hacking etc seen in
the photographs. PW2 explained that the various hacking etc were all
upon the instructions and approval of the Defendant, through Mr. Nivash.
PW3 also confirmed that all hacking was either upon instruction or approval
of the Defendant as seen from the VOs which are not in contention.
Further, any “defects” that required rectification had also been attended to
according to PW3. I accept the evidence of both PW2 and PW3 in this
regard. Furthermore, there is no counter-evidence whether through Mr.
Nivash or anyone else; as well as the silent but un-controvertible evidence
of the Defendant’s change in drawings and the issue of variation orders
that must have necessitated the hacking and other similar work.

[55] The evidence shows that the Plaintiff has been issuing the relevant
invoices and claims; and that payment thus far had been against such
progress claims. The outstanding claims are against similar progress
claims. I do not see any claims in those progress claims for work which
has yet to be done; or work that it had not done.

[56] In almost all the invoices issued by the Plaintiff, and I shall cite just
two of the invoices as examples [see page 3 of Bundle Al which is an
invoice dated 23.7.2012 for Block AB 3rd Floor — Tel /TV & SPK Point; and
pages 10 and 11 which is an invoice dated 23.7.2012 for Electrical Work at
Best Western Melaka (Block CD 7th Floor)], the following can be found
respectively:

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Page a

INV AND P/O AMOUNT - RM44,240.00

1ST PROGRESSIVE CLAIM 40% - RM17,696.00
2ND PROGRESSIVE CLAIM 40% - RM17,696.00
BALANCE AMOUNT - RM8,848.00

Pages 10 & 11

INV AND P/O AMOUNT - RM83,300.00

1 ST PROGRESSIVE CLAIM 40% - RM33,320.00

BALANCE AMOUNT - RM49,980.00

[57] Some of the invoices had only one progressive claim while some
were for the specific job. For example, see pages 11, 13, 15; and pages
40, 61 and 81 which detailed VO works in which case there was no
mention of percentage of progress claims. As testified by PW1, Nirmalah
a/p Superamaniam, the Plaintiff’s Accounts Executive, there was an
outstanding sum of RM999,914.50 still to be paid by the Defendant.

[58] PW1 testified on how the invoices were issued, that she was verbally
informed of the relevant progress by the project manager and “her boss”.
The project manager is Mr. Silbaraju [PW2] while her “boss” is Raman
Perumal [PW3]. The Plaintiff keeps a “big schedule” in its office where
each morning, PW2 and PW3 would “come and mark at the meeting room.
So we have the instruction from Malacca to our Kajang office. From there
we will issue the payment invoice.” I do not find this manner of keeping
tabs on the progress of the works unusual or wrong; in fact, it is
commonplace and practical.

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[59] Further, as I understand the Defendant’s real response to the

Plaintiff’s claim is one of defective work and that the Plaintiff’s work
progress was in delay. It is not the Defendant’s case that the Plaintiff did
not do work for which it is now making its claim. DW2 testified to a list of
complaints over the Plaintiff’s work including the lack of test results or test
reports of the Plaintiff’s work.

[60] With respect, aside from my earlier findings as to the existence of

alleged defective work, I cannot agree with the Defendant on this matter of
lack of test reports. The Defendant’s argument is that the Plaintiff is not
entitled to payment until testing and commissioning have been done. This
argument is not tenable given that the Plaintiff is not claiming for such work.
The Plaintiff had not done that aspect of the work before the contracts were
terminated.

[61] Therefore, the answer to this question must be in the Plaintiff’s

favour. The Plaintiff had completed the works as required under the
relevant purchase orders and letters of award.

iii. Is the termination lawful? If so, is the Plaintiff liable to pay

damages to the Defendant in the form liquidated and
ascertained damages and for costs of hiring a new
contractor to complete the works?

[62] Since there are no defective works to begin with, and certainly no
outstanding defective work at the time of termination in March 2013, there

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is actually no ground for termination. As for delay, I also find that the
Defendant cannot rely on this as a ground for termination.

[63] From all five contracts as evidenced in the five letters of award, I note
that the completion date was one year from the date of possession, and in
the case of the last three contracts, it was further dependent on the
completion of the main works. There is no evidence that the time of one
year was up by the time of termination, that is, in March 2014. As the
Plaintiff was only appointed on 8 July 2013 and various dates in September
and December 2013, the date of completion was not even due. The right
to terminate for reason of delay in completion therefore does not even
arise.

[64] In any event, even if there was delay on the part of the Plaintiff, time
was not of the essence of any of the five contracts where a failure to
complete by the agreed dates gave the Defendant the right to terminate all
the contracts. If at all there was any delay, and I do not find any, the only
remedy would have resounded in damages and not in the concurrent right
to terminate any or all of the five contracts.

[65] The Defendant had suggested that there was adequate notification
given prior to the termination. I disagree. First, there is no express
provision on the giving of notice. This does not mean that notification is
dispensed with; certainly not dispensation of notice with regard to requiring
the Plaintiff to remedy the relevant event or cause of breach failing which
the Defendant would terminate the contract. Evidence of such notification
must be produced.

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[66] On the facts, there is no evidence that it is the Plaintiff’s work which is
defective, that the Plaintiff had been told to rectify or remedy those works;
that it did not do so despite being told to do so and had been given
adequate time to do but did not; that the Plaintiff was given notice of
intention to terminate in the event remedial or rectification works were not
carried out; and that termination then ensued. I do not see any evidence of
the Defendant informing and requiring the Plaintiff to remedy. In any case,
I do not find a notification three days before the termination to be adequate
notice.

[67] The Defendant further claimed that the Plaintiff was aware of the
complaints of delay and defective work and it relied on the minutes of site
meetings in support. From my careful examination of those minutes, aside
from the Plaintiff testifying that it was never told to attend meetings, the
records show that it was the Defendant that did not attend meetings; not
the Plaintiff. It is the Defendant that is seen often absenting itself from
those meetings “with apologies”; and not the Plaintiff. There is no record of
the Plaintiff even being required to be present. Further, the Plaintiff’s
absence from meetings have been adequately explained and accounted
for.

[68] In this regard, it would be fair to expect evidence of the Defendant

informing the Plaintiff to attend meetings; or that it had attended these site
meetings together with the Defendant and that the Plaintiff was fully aware
of the matters complained of at the meeting; and that the Plaintiff was

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required to rectify and that it did not do so. There is no such contention or
evidence to this effect.

[69] The Defendant has instead sought to invite the Court to infer that
because there were these complaints at the meetings, this necessarily
means that the complaints must have arisen or be related solely to the
Plaintiff’s work. With respect, that cannot be right. For a start, it does not
appear to be the case that the Defendant sub-contracted the whole works
to the Plaintiff; that this is a matter of simple inference; or that the matters
brought up at the meeting were solely related to the Plaintiff’s work. In any
case, the Plaintiff has explained that it was instructed by Mr. Nivash to
carry out the various hacking etc. and that the defects that required
rectification had been attended to. I accept both PW2 and PW3’s
explanation and evidence on this and there is no evidence to the contrary.

[70] The reason for the non-payment by the Defendant actually has
nothing to do with the Plaintiff’s work; and everything to do with the
Defendant’s own internal financial problems. There is evidence that the
Defendant was experiencing financial problems and that it was not paid by
the main contractor. That, however, is neither here or there insofar as the
validity of the Plaintiff’s claim is concerned.

[71] Finally, the Court observes that if there were indeed these defects
and delay that the Defendant now tells the Court, it is reasonable to see
this readily reflected in the letter of termination. The letter of termination is
bereft of details, especially the reason for the termination. This gives
serious doubt as to the sincerity of the reason now told to the Court. The

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Defendant’s contemporaneous action and conduct do not support the

Defendant’s claim. The Court is more incline to agree with the Plaintiff’s
proposition that this line of argument is more in the nature of an
afterthought. Therefore, the termination was invalid.

[72] Since the termination was invalid, the Defendant has no right to claim
for LAD and for costs of completion by third parties.

iv. Whether the payments received by the Plaintiff are

advances or part payments for completed works and that
the payments were to be refunded to the Defendant if the
Plaintiff did not complete the works

[73] In this last issue, the Defendant is counterclaiming for a refund of the
advances made. However, in his evidence, at Q&A 20, DW2 testified that
the payments to the Plaintiff were to assist the Plaintiff financially.
Nowhere does DW2 say that the payments were intended to be advances.
At Q&A 22, the Defendant’s claim for a refund of RM589,153.00 is because
the Defendant alleges that the Plaintiff has failed to complete the entire or
substantial works.

[74] Both PW1 and PW3 testified that the Defendant’s payments were
payments against invoices issued for work done. I accept the Plaintiff’s
evidence; there is no evidence that the payments were intended to be
advances which must be returned in the event the Plaintiff did not complete
the works. What the Plaintiff has done is to credit those payments towards
the payments due to the Plaintiff for its work. There is plenty of evidence of

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work done by the Plaintiff which was accepted by the Defendant or by its
personnel on its behalf. There is no evidence that the Plaintiff intended the
Defendant to receive the work for free. The Plaintiff is therefore entitled to
keep that payment. As the Plaintiff was prevented from completing the
works by the Defendant’s termination which the Court has found to be
invalid, the Defendant is not entitled to a refund of the monies paid. The
monies paid shall remain as monies paid for work done.

[75] I must add that there is no evidence of abandonment on the part of

the Plaintiff. I agree with the Plaintiff that if indeed the Plaintiff had
abandoned the works in January 2014, it would be reasonable for the
Defendant to have alluded to this or relied on this reason in their letter of
termination; or that the Defendant terminated the contracts for this reason
as early as January 2014. The fact remains that the Defendant did not.
Instead, the Defendant’s letter terminating the contracts was not issued
until 8 March. The issue of abandonment is therefore without merit.

[76] The Defendant is therefore not entitled to its counterclaim.

Conclusion

[77] Consequently, I am satisfied that the Plaintiff has proved its case on a
balance of probabilities and is therefore entitled to and is allowed its claim
as prayed in paragraphs 9 (iii) and (iv) of the Statement of Claim. As for
the Defendant’s Counterclaim, I am not satisfied that the claims have been
proved on a balance of probabilities. The Defendant’s Counterclaim is
therefore dismissed with costs.

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[78] The parties have made their respective submissions on costs. I am

of the view that a sum of RM50,000.00 is suitable and reasonable as costs
to the Plaintiff. The Defendant is therefore further ordered to pay the
Plaintiff costs of RM50,000.00.

DATED: 23 JULY 2015

(MARY LIM THIAM SUAN)

JUDGE
HIGH COURT KUALA LUMPUR

Counsel:

For the plaintiff - Ganesarajah Nadarajah (Wan Nur Amalina Al-Bakri Wan
Bakri with her); M/s Ganes & Partners

For the defendant - Ho Wee Keong; M/s Sabaruddin Othman & Ho

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