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2017 MarsdenLR 71

HIGH COURT MALAYA KUALA LUMPUR
BOND M & E (KL) SDN BHD – Appellant
Versus
ISYODA (M) SDN BHD; BRAMPTON HOLDINGS SDN BHD (THIRD PARTY) – Respondent


Judgement Key Points

Key Points: - Sub-contractor Bond M&E (KL) Sdn Bhd sued main contractor Isyoda (M) Sdn Bhd for RM1,271,043.96 outstanding under the Sub-Contract after partial direct payments from employer Brampton Holdings Sdn Bhd. (!) (!) (!) - Court held no "Direct Dealing & Payment Agreement" existed to release Isyoda from liability, as Bond was not a party to agreements between Isyoda and Brampton, and privity of contract principles apply. (!) (!) (!) (!) - Direct payments by Brampton to Bond were permitted under cl 30A of Main Contract conditions but did not create privity or absolve Isyoda's obligations. (!) (!) - Isyoda's letters affirmed the Sub-Contract remained binding and enforceable despite Bond's requests for direct payment. (!) (!) (!) - Back-to-back payment clause (cl 2.0 of Sub-Contract) was ineffective due to inconsistency with Settlement Agreement and did not void Isyoda's liability. (!) (!) (!) - Court rejected estoppel claims against Bond, finding Isyoda estopped from denying liability by its conduct and representations. (!) (!) (!) - Bond's claim was not time-barred due to Isyoda's acknowledgment via Final Account in October 2012 and last payment in June 2010. (!) (!) - Isyoda entitled to indemnity from Brampton under cl 12 of Settlement Agreement for the judgment sum, interest, and costs, as Brampton's breach defense was unsustainable. (!) (!) (!) (!) - Court granted judgment for Bond against Isyoda for RM1,271,043.96 plus 5% interest from writ date and RM50,000 costs; Isyoda against Brampton for same plus costs. (!) (!)

What is the effect of a direct dealing and payment agreement between a main contractor, employer, and sub-contractor on the main contractor's payment obligations under the sub-contract? [p_34][p_17][p_24]

What are the rights of a sub-contractor to claim payment from the main contractor despite direct payments from the employer? [p_1][p_12][p_27]

Is a "back to back" payment clause in a sub-contract enforceable to avoid liability? [p_126][p_60]


Table of Content
1. determining who a sub-contractor can claim payment from. (Para 1 , 4 , 12)
2. arguments regarding direct dealings and payment obligations. (Para 17 , 18 , 24 , 28)
3. court's reasoning on privity of contract and obligations. (Para 26 , 27 , 35 , 43)
4. direct dealings and their impact on liability are governed by contract law principles. (Para 36 , 58)
5. enforceability of indemnity clauses and obligations under agreements. (Para 59 , 67 , 70)
6. clarification of contractual obligations and third-party involvement in claims. (Para 84 , 105 , 107)

[1] This case explores the question of who a sub-contractor should sue for payment due to it under a Sub-Contract with its main contractor when there is a separate agreement between the main contractor and its employer that the employer would pay the sub-contractor direct. The sub-contractor is not a party to that agreement between the main contractor and its employer. There has been some previous direct payments from the employer to the sub-contractor.

[2] Here we have a curious case where when sued by the Plaintiff for an amount not disputed, the Defendant is saying they are not liable because the Third Party should be paying

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