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2025 MarsdenLR 5019
HIGH COURT MALAYA KUALA LUMPUR
BANK KERJASAMA RAKYAT MALAYSIA BERHAD – Appellant
Versus
SIEMENS MALAYSIA SDN BHD & ANOR – Respondent
[Civil Suit No: WA-22M-284-11/2021]
The court affirmed that an assignment of rights under a contract is absolute and binding, preventing set-offs by the defendants against assigned proceeds.
Headnote:(A) Contracts Act 1950 - Sections 79, 80, and 81 - Legal assignment of rights - Plaintiff entitled to total sum due under Form of Notice of Assignment and Deed of Assignment - Defendants' set-off claims rejected as contrary to assignment terms - Retention sum to be released to Plaintiff. (Paras 2.1, 2.2, 30 and 36)
(B) Assignment and set-off - Legal effect of assignment of rights - Form of Notice of Assignment does not permit set-off against assigned proceeds - Defendants bound by tripartite agreement acknowledging assignment. (Paras 14, 18, 31 and 32)
(C) Shariah compliance - Defendants' argument on Shariah non-compliance of financing facilities deemed irrelevant to Plaintiff's claims against Defendants. (Paras 34 and 36)
Facts of the case:
The Plaintiff sued the Defendants for amounts due under a contract for a construction project after Hisniaga Sdn Bhd assigned its rights to the Plaintiff. The Defendants claimed set-offs against the assigned proceeds and the retention sum.
Findings of Court:
The Plaintiff is entitled to the total sum due as per the assignment documents, and the Defendants' arguments regarding set-offs were not valid.
Issues: The main issues were the validity of the assignment, the entitlement of the Plaintiff to the claimed sums, and the Defendants' right to set off.
Ratio Decidendi: The court found that the assignment documents clearly transferred rights to the Plaintiff, and the Defendants were bound by their acknowledgment of the assignment. The set-off was improperly executed against the assigned proceeds.
Result: Plaintiff's claims allowed.
Introduction
[1] The issues to be decided by this Court were mainly as follows:
(i) Whether the Plaintiff is entitled to the total sum due to the Plaintiff pursuant to:
(a) the Form of Notice of Assignment To The Employer/Sponsor (Borang Notis Penyerahan Hak Kepada Majikan/Penaja) dated 30 January 2013 sent by Hisniaga Sdn Bhd to the Defendants and acknowledged and signed by the representatives of the Defendants ("Form of Notice of Assignment 30 January 2013"); and
(b) the Deed of Assignment of Contract Proceed (Surat Ikatan Penyerahan Hak Hasil Kontrak) dated 7 March 2013 signed between the Plaintiff and Hisniaga Sdn Bhd ("Deed of Assignment 7 March 2013");
(ii) If the answer is in the affirmative, whether the amount that the Plaintiff is entitled to the full sum (which the Plaintiff claimed to be RM27,216,580.23 as at 1 November 2016) or that the Plaintiff is entitled to only the balance sum after deducting the amount that the 1st and 2nd Defendants are entitled to claim/set off;
(iii) Whether the Plaintiff is entitled to the Retention Sum accrued to Hisniaga Sdn Bhd still held by the 1st and 2nd Defendants. If the answer is in the affirmative, whether the amount that the Plaintiff is entitled is the full sum (which the Plaintiff claimed to be RM 1,040,755.49) or that the Plaintiff is entitled to only the balance sum after deducting the amount that the 1st and 2nd Defendants are entitled to claim/set off.
[2] After a full trial, this Court had allowed the Plaintiffs claims against the Defendants and held:
2.1 the Plaintiff is entitled to the total sum due to the Plaintiff pursuant to the Form of Notice of Assignment 30 January 2013 and the Deed of Assignment 7 March 2013;
2.2 the Plaintiff is entitled to the full sum of the Retention Sum accrued to Hisniaga Sdn Bhd still held by the 1st and 2nd Defendants;
2.3 the actual sum that the Plaintiff is entitled for both items shall be determined at an assessment proceeding to be held separately.
[3] The Defendants appealed against the decision.
Background
[4] The background that led to this Suit is briefly as follows:
4.1 On 11 June 2012, the 1st and 2nd Defendants entered into a Consortium Agreement with Hisniaga Sdn Bhd ("Hisniaga") to form a consortium ("the Consortium").
4.2 The Consortium was formed to submit an offer to Mass Rapid Transit Corporation Sdn Bhd ("MRT Corp") a contract for the Engineering, Procurement, Construction, Testing and Commissioning of Depot Equipment and Maintenance Vehicles for the Klang Valley Mass Rapid Transit Project: Sungai Buloh - Kajang Line (KVMRT: SBK Line) ("the Project").
4.3 MRT Corp appointed MMC Gamuda KVMRT (PDP) Sdn Bhd ("PDP") as the development partner for the Project. PDP is the Consortium's customer.
4.4 Pursuant to a letter of acceptance dated 28 September 2012 issued by MRT Corp, the Project was awarded to the Consortium for the value of RM 418,813.910.00.
4.5 The Consortium Agreement, inter alia, provides that:
(a) each member of of the Consortium shall be responsible for their respective scope of work as set out in the Consortium Agreement and their own financing arrangements required for the same;
(b) the 1st Defendant, as the Consortium Leader, shall receive payments on behalf of the members of the Consortium in respect of the Contract and distribute payments to members of the Consortium in accordance with their respective portions, less applicable deductions;
(c) pursuant to art 8.10, procurement savings are to be proportionately shared and subtracted (ie deducted) from the amounts payable to the respective Consortium members;
(d) a steering committee composed of representatives of the members of the Consortium shall be established ("the Steering Committee"), where the Steering Committee shall inter alia be in overall control of the operations of the Consortium and ensure the administration of the Contract in accordance with the terms of the Consortium Agreement;
(e) the 1st Defendant, as the Consortium Leader, is author
