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2021 MarsdenLR 1581
HIGH COURT MALAYA PULAU PINANG
ISTAY HOTEL MACALISTER SDN BHD – Appellant
Versus
TARGET STYLE SDN BHD – Respondent
[Civil Appeal No: PA-12BNCC-5-04-2019]
A verbal contract can be enforceable if its terms are sufficiently clear, yet claims based on quantum meruit require comprehensive pleading and substantiation.
Headnote:(A) No specific laws or sections cited.
(B) Contract formation – Verbal contracts can be formed and are enforceable based on the parties' identification of terms, price, and duration – An agreement to agree does not create a binding contract.
(C) Application of quantum meruit – In the context of existing contracts, claims for quantum meruit must be properly pleaded with necessary particulars.
Facts of the case: The defendant engaged the plaintiff to renovate premises into a budget hotel. Disputes arose over variations and purported quotations leading to a legal claim and counterclaim for payments and repairs.
Findings of Court: The trial court found for the plaintiff based on a disputed quotation but overlooked critical evidence offered by the defendant.
Issues: The validity of the contract sum, the existence of an enforceable contract, and the application of quantum meruit.
Ratio Decidendi: The appellate court determined that the trial judge misapplied the law regarding acceptance of quotations and failed to appreciate critical evidence, leading to a flawed ruling.
Result: The appeal was allowed in part, ordering the plaintiff to pay the defendant for outstanding claims related to the renovation work.
JUDGMENT
[1] The appellant (defendant) appealed against the learned Sessions Court Judge's ("SCJ") decision in allowing the respondent's (plaintiff) claim and dismissed its counterclaim. The learned SCJ awarded the respondent a sum of RM105,000.00 with costs. Upon hearing the parties I allowed the appeal in part with costs and set aside the order of the SCJ. For ease of reference the parties are referred to as they were in the Court below.
[2] Briefly the facts are as follows. The defendant engaged the plaintiff to renovate the premises he was renting to turn it into a budget hotel and to apply to the City Council for the necessary permits/licences. In April 2014 the plaintiff gave a quotation in the sum of RM567,524.00 ("1st quotation") to which the defendant disagreed. Both parties then negotiated and the defendant fixed a ceiling cost of RM400,000.00.
Thereafter the plaintiff gave a revised figure of RM436,109.00 ("2nd quotation") in June 2015. Both parties met again and further negotiated the work and cost which was eventually reduced to RM334,000.00 (exhibit D16) and ceiling cost of RM400,000.00 was still maintained.
[3] All work to be completed within three months beginning July 2015. The defendant planned to start operating its budget hotel by October. During the course of the renovation work some changes and additional work were done subject to the agreed ceiling cost. However, the plaintiff failed to meet the target date of completion. In December 2015 the defendant paid RM368,000.00 as requested by the plaintiff. Suddenly not long thereafter the plaintiff sent another quotation ("3rd quotation"/exhibit P4) in the sum of RM468,527.00 and additional RM60,000.00 for electrical work and demanded the defendant to pay up. The defendant disagreed and disputed the same which caused the plaintiff to stop work.
[4] Before Chinese New Year 2016 the plaintiff asked for RM20,000.00 to recommence work and the defendant paid the said sum. Nevertheless the plaintiff never resumed the work instead demanded the defendant to pay the sum quoted in the 3rd quotation. The defendant refused to make further payment and the plaintiff abandoned the work.
[5] In the Sessions Court the plaintiff claimed the outstanding balance (after some deductions) in a sum of RM55,000.00 and RM60,000.00 for the electrical work, alternatively, damages for work done based on quantum meruit. The defendant filed a counterclaim in total a sum of RM635,287.00 for the completion of the unfinished work, repairs, etc.
Decision of the Sessions Court
[6] In allowing the plaintiff's claim the learned SCJ found that the 3rd quotation (P4) was the contract sum between the parties. He arrived at this finding based on the evidence of SP1 and that there were some variation/additional works which were not denied by the defendant. And the learned SCJ was satisfied that the plaintiff had completed the job as listed in both the quotations based on the photographs. He also accepted the evidence of SP1 that the plaintiff was willing to repair the defects. He was satisfied that 90% of the renovation work was completed and the defendant could not pay any further payment as requested as they were in financial difficulty. It was also found that the delay in completing the renovation work was attributed to the defendant particularly in supplying the materials for the variation/additional works. The learned SCJ further held that he allowed the plaintiff's claim based on quantum meruit as there was no evidence of any breach of contract by the plaintiff.
[7] The defendant's counterclaim was dismissed. The learned SCJ in disallowing any claim for the expenses spent on the application to the City Council, opined that this was not mentioned in the scope of work based on the 2nd and/or 3rd quotation. As regards the defects, the learned SCJ was of the view that the repairs should have been carried out by the plaintiff and not by any other 3rd party contractors. According to t
