Back
2021 MarsdenLR 3341
HIGH COURT MALAYA KUALA LUMPUR
PEMBINAAN BLT SDN BHD – Appellant
Versus
NAZARIN (NBM) SDN BHD & ORS – Respondent
[Civil Suit No: WA-22C-13-02/2019]
A contractor is liable for payments to nominated sub-contractors, but liability cannot be recovered from the contractor if direct payments to sub-contractors are established in contractual agreements.
Headnote:(A) Civil Law Act 1956 – Section 11 – Construction Industry Payment and Adjudication Act 2012 – Disputes regarding overpayment to sub-contractors; Plaintiff claimed overpayment from First and Fifth Defendants, based on contractual agreements and professional duties; Both Defendants contested liability, citing Plaintiff's failure to follow procedures and limitation defenses. (Paras 26-66)
(B) Contractual Obligations – Responsibility of contractors for nominated sub-contractors; Contractor liable for acts of nominated sub-contractors; Provisions must be clearly stipulated to allow for recovery of overpayments made to sub-contractors directly by the Plaintiff. (Paras 68-76)
Facts of the case: The Plaintiff engaged multiple defendants for construction of a police facility; disputes arose over payments and responsibilities after an audit revealed overpayments to sub-contractors.
Findings of Court: The Fifth Defendant not liable as it adhered to prescribed methodologies; Plaintiff’s claim against both First and Fifth Defendants dismissed.
Issues: Whether the First and Fifth Defendants are liable for overpayments made by the Plaintiff and the implications of contractual obligations regarding direct payments made to subcontractors.
Ratio Decidendi: The court found the Plaintiff had limited recourse for recovery against the First Defendant due to contracts that ensured direct payments to subcontractors, retaining liability solely with the Plaintiff.
Result: Plaintiff's claims against the First and Fifth Defendants dismissed.
JUDGMENT
Introduction
[1] This is another similar suit on construction final account disputes involving the construction of a police station and its associated works that came before me after PBLT Sdn Bhd v. Prestasi Reka Sdn Bhd & Ors.
[2] The Plaintiff is a private limited company involved in the business of development of building quarters and facilities for the Royal Malaysian Police.
[3] The First Defendant is a private limited company involved in the business of construction of general works.
[4] The Second Defendant is a private limited company involved in the business of electrical works installation.
[5] The Third Defendant is a private limited company involved in the business of lift installation.
[6] The Fourth Defendant is a private limited company involved in the business of interior finishing works.
[7] The Fifth Defendant is a firm of registered professional mechanical and electrical engineers pursuant to the Registration of Engineers Act 1967.
[8] The Sixth Defendant is a private limited company of registered quantity surveyors pursuant to the Quantity Surveyors Act 1967.
Background
[9] The Plaintiff is the developer for a project known as "Cadangan Pembangunan Semula Ibu Pejabat Polis Daerah Selama, 1 Unit Kuarters Kelas C, 4 Unit Kuarters Kelas D, 6 Unit Kuarters Kelas E, 140 Unit Kuarters Kelas F, Kemudahan-Kemudahan Lain Dan Kerja-Kerja Infrastruktur Di Atas Lot 5419, Lot 3200 Dan Lot 3743, Mukim Selama, Perak Darul Ridzuan (No. Kontrak: PBLT/CON/2007/Z-2/854)" ("Project").
[10] By a letter of appointment dated 3 October 2007 and memorandum of agreement dated 11 December 2007 ("Engineer's Memorandum"), the Plaintiff engaged the Fifth Defendant as its consulting mechanical & electrical engineer ("Consulting Engineer") to provide professional services in connection with the design and supervision of mechanical and electrical works of the Project.
[11] By a letter of appointment dated 10 July 2007 and memorandum of agreement of the same date ("QS Memorandum"), the Plaintiff engaged the Sixth Defendant as its consulting quantity surveyor ("Consulting QS") to provide professional services in connection with the Project.
[12] By a letter dated 17 June 2008, the Plaintiff engaged the First Defendant as the main contractor for the Project. Subsequently on or around 26 March 2009, the Plaintiff and the First Defendant executed the Articles of Agreement and Conditions of Contract (Standard Form of contract to be used where Bills of Quantities Form Part of the Contract, PWD Form 203A, Rev. 10/83) ("Conditions of Contract"). Under the Conditions of Contract, the Plaintiff is referred to as "the Government" and the First Defendant is referred to as "the Contractor' respectively. The said letter dated 17 June 2008, the Conditions of Contract and other documents constituted the contract documents between the Plaintiff and the First Defendant ("Main Contract"). The superintending officer ("SO") named under the Main Contract is the managing director/chief executive officer of the Plaintiff.
[13] Pursuant to the Main Contract, the First Defendant by a sub-contract dated 4 October 2010 ("Electrical Sub-Contract") engaged the Second Defendant as the nominated sub-contractor for the electrical works for the Project.
[14] Furthermore, the First Defendant by a sub-contract dated 25 October 2010 ("Mechanical Sub-Contract") engaged Rim Engineering Services (M) Sdn Bhd ("RES") as the nominated sub-contractor for the mechanical works for the Project.
[15] The First Defendant also by a sub-contract dated 30 December 2010 ("Lift Sub-Contract") and a sub-contract dated 5 October 2010 ("the Interior Finishing Sub-Contract") engaged the Third Defendant and the Fourth Defendant as the nominated sub-contractor for the lift and interior finishing works for the Project respectively.
[16] During the course of the construction of the Project, the Second Defendant on or about September 2010 intimated its intention to withdraw as the sub-contract
