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2021 MarsdenLR 106
HIGH COURT MALAYA KUALA LUMPUR
ELITE ALLIANCE ENGINEERING SDN BHD – Appellant
Versus
VISI NUSAJAYA SDN BHD – Respondent
[Civil Appeal No: WA-12AC-24-05/2021]
Under the Construction Industry Payment and Adjudication Act, conditional payment clauses are void; an unissued certificate of practical completion does not bar a claim when sufficient evidence of completion exists.
Headnote:(A) Construction Industry Payment and Adjudication Act 2012 – Section 35 – Summary judgment for retention money claim – Appellant completed works under Sub-Sub Contract but Respondent failed to issue completion certificate – Court deemed completion certificate as issued and ordered release of retention sums based on elapsed time. (Paras 26, 30, 31, 33)
(B) Non-trial appeal – Court reviews summary judgment application afresh, not bound by lower court's findings; duty to assess presence of triable issues. (Paras 22, 34)
Facts of the case: Appellant claimed retention sums after completing work under Sub-Sub Contract for a project but faced refusal from Respondent due to lack of certificate of practical completion.
Findings of Court: Appellant is entitled to the release of both tranches of retention money due to deemed completion of works and invalid conditional payment clauses.
Issues: Whether the Appellant's lack of a practical completion certificate precludes claim for retention money; whether Respondent's conditions for payment are valid.
Ratio Decidendi: A certificate of practical completion is not a condition precedent if its non-issuance is without valid reason; conditions of payment reliant on third-party receipts are void.
Result: Appeal allowed.
JUDGMENT
Introduction
[1] This is an appeal against the decision of the Sessions Court in refusing to grant summary judgment in respect of release of retention monies pursuant to a construction sub-sub contract.
[2] The Appellant/Plaintiff is a private limited company involved in pipe jacking work business.
[3] The Respondent/Defendant is also a private limited company involved in specialised civil and engineering construction business.
Salient Facts And Preliminary
[4] The Government of Malaysia appointed Pembinaan SPK Sdn Bhd as the design and build contractor to carry out and complete the works at Pakej D-54 - Cadangan Pembinaan Rangkaian Paip Pembentungan bagi Upper Kerayong, Selangor (Reka dan Bina) (No Kontrak KeTTHA/JPP/D54/GKL/NR/14/K4)("Project").
[5] The Respondent was appointed by Pembinaan SPK Sdn Bhd as its sub-contractor to carry out a portion of the Project works.
[6] By a letter of award dated 7 March 2017 (Sub-Sub Contact"), the Respondent appointed the Appellant as its sub-contractor to carry out the pipe jacking works of the Respondent's portion of the Project works.
[7] The material terms of the Sub-Sub Contract wherein the Appellant and Respondent are names as Subcontractor and Main Contractor respectively are as follows:
21. Retention
All payment made to the Subcontractor under cl 20 above shall be subject to retention as per Appendix C. Upon completion and successful handing over the Subcontract Works by the Subcontractor, the first half moiety shall be released interest free and the balance shall also be released interest free twenty four (24) months thereafter, always subject to period of honouring payment provided under Appendix C or upon the issuance of the release of the said sum from the Employer to the Main Contractor, whichever is later.
30. Defects Liability Period
The Subcontract is subject to a "Defects Liability period (DLP)" which shall commence immediately upon the issuance of the "Certificate of Practical Completion (CPC)" by the Main Contractor and practical completion of the Subcontract Works and the expiry of the defects liability period of the Subcontract which is as per Appendix C. The Subcontractor shall at its own costs and expenses rectify and make good all defects, damages, shrinkages and faults in the Subcontract Works which appears during this period according to the Main Contractor's instruction.
[8] In Appendix C, the period of honouring payment and defect liability period are stated as 30 days and 24 months respectively.
[9] According to the Appellant, it has completed its works under the Sub-Sub Contract on 5 January 2018 and approved by the Respondent on 6 January 2018 as evidenced by the joint measurement sheet of completed work reproduced below:
[10] By the failure of the Respondent to thereafter issue its certificate of practical completion, the Appellant by letter dated 2 April 2018 wrote to the Respondent to request for the issuance of the certificate of practical completion.
[11] However, the Respondent failed, refused and/or neglected to do so. In addition, the Respondent did not remit to the Appellant both the first moiety as well as second moiety of the retention money despite written reminders from the Appellant dated 6 July 2020, 16 July 2020 and 15 September 2020.
[12] Finally, the Appellant via its solicitor's letter dated 7 October 2020 demanded from the Respondent for the release of the whole retention sum amounting to RM145,614.98.
[13] The Respondent ignored the Appellant's solicitor's demand and relied on its written response dated 9 July 2020 to the Appellant stating the retention money would only be released upon the issuance of the release of the said sum from the employer to the main contractor as per cl 21 of the Sub-Sub Contract.
[14] As the result, the Appellant on 7 December 2020 commenced its writ action in the Sessions Court and thereafter on 27 January 2021 filed its summary judgment application ("Application") praying as follows:
(i) Jumlah sebanya
