The court affirmed that the burden of proof lies with the party alleging defects, and failure to issue necessary documentation by the defendant invalidated its counterclaims for liquidated damages.

JUDGMENT

Aliza Sulaiman J:

Introduction

[1] This is an appeal by the Appellant against the decision of the learned Sessions Court Judge ('SCJ') on 1 June 2021 in:

(a) dismissing the Appellant's claim against the Respondent for a declaration that the defect works have been made good, the sum of RM215,367.58 being the 2nd retention sum with interest there on and costs [as per sub-paragraphs 15(i) - (iv) in the Statement of Claim ('SoC')]; and

(b) allowing the Respondent's counterclaim against the Appellant for the sum of RM1,308,888.00 as liquidated damages ('LD') with interest thereon and costs [as per sub-paragraphs (17)(a) - (c) of the Amended Statement of Defence ('Defence') and Counterclaim ('CC')]. However, as the parties have agreed to the jurisdiction of the Sessions Court, the final judgment allowed was confined to RM1 million inclusive of interest and cost.

[2] The appeal was heard via Zoom video conferencing and having given careful consideration to the Record of Appeal, oral and Written Submissions and clarification by the learned counsels, the Court on 17 March 2022 pronounced the decision that the Appellant's appeal was allowed whereby the Appellant's claim in sub-paragraphs 15(i) - (iii) in the SoC was allowed and the Respondent's counterclaim in sub-paragraphs (17)(a) - (c) of the Defence and CC was dismissed. The Respondent was ordered to pay costs of RM7,000.00 to the Appellant, subject to allocatur.

[3] The full reasons of the Court for the decision are elaborated below.

[4] The parties in this appeal shall be referred to as they were in the civil suit in the Sessions Court.

Salient Background Facts

[5] The Statement of Agreed Facts for purposes of the trial at the Court below is as follows:

"1. The Plaintiff is a private limited company incorporated under the Companies Act 1965 with its registered address at Unit-B-06-05, Floor 05, Block B, Dataran 32, No 2, Jalan 19/1, 46300 Petaling Jaya, Selangor.

2. At all material times, the Plaintiff is and was engaged in the business of renovation and interior fit-out works.

3. The Defendant is a private limited company incorporated under the Companies Act 1965 with its registered address and business address at Level 18, Wisma Mont' Kiara, No 1, Jalan Kiara, Mont' Kiara, 50480 Kuala Lumpur, Malaysia.

4. At all material times, the Defendant is and was engaged in the business of earthwork, civil, structural and building construction, and renting of construction plant and machineries.

5. By a Letter of Award dated 22 May 2013 ("the Letter of Award"), the Defendant appointed the Plaintiff as the nominated subcontractor to carry out the interior design package works ("the Works") for a project known as "Cadangan Pembangunan Bercampur Yang Mengandungi:-1. 1 Blok Pangsapuri Servis 35 Tingkat (246 unit) Dengan 5 Tingkat Tempat Letak Kereta Beserta 2. Kemudahan Rekreasi Dan Kolam Renang 3. 1 Blok Menara Pejabat 16 Tingkat Dengan 3 Tingkat Tempat Letak Kereta 4. 1 Blok Komersil 1 Tingkat Serta Ruang Niaga 5. 1 Tingkat Tempat Letak Kereta Besmen Kemudahan Asas Di Atas Lot PTD 166962, Mukim Pulai, Daerah Johor Bahru, Johor Darul Takzim untuk Tetuan UEM Land Berhad" ("the Project").

6. Subsequent to the Letter of Award, the Plaintiff and the Defendant further executed, inter alia, the Agreement and Conditions of PAM Sub-Contract 206 dated 17 May 2015 ("PAM Sub-Contract 2006") which constituted part of the contract documents (hereinafter collectively referred to as the "the Contract").

7. The material terms of the Contract were inter alia as follows:

(i) the Plaintiff was the nominated subcontractor;

(ii) the Defendant was the main contractor;

(iii) the provisional sum of the contract was RM9,000,000.00;

(iv) the retention sum was 5% of the contract sum; and

(v) the Plaintiff as the nominated subcontractor was entitled to the release of the retention sum (1st 2.5% and 2nd 2.5% of the retention sum) in accordance with the provision of the contract.

8. During the subsistence of the Contract, variation orde