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2024 MarsdenLR 3402
COURT OF APPEAL PUTRAJAYA
KEMBANG SERANTAU SDN BHD – Appellant
Versus
PERBADANAN PUTRAJAYA & ANOTHER APPEAL – Respondent
[Civil Appeal Nos: W-01(NCvC)(W)-124-03-2022 & W-01(NCvC)(W)-167-03-2022]
A consent judgment must be interpreted as a contract, with clear conditions for payment, and parties are bound by the finality of judgments, preventing relitigation of settled issues.
Headnote:(A) Contract Law - Consent Judgment - Interpretation of contract terms and conditions - The court clarified that a consent judgment should be interpreted as a contract, with the intention of the parties being paramount - This includes the need for conditions precedent for payment and the validity of variation orders post-judgment. (Paras 24, 27, 33)
(B) Legal Errors - The court identified multiple legal errors made by the lower court in interpreting the consent judgment and allowing certain claims based on extrinsic evidence - The court emphasized the finality of judgments and the importance of adhering to the terms of the consent judgment. (Paras 21, 29, 37)
Facts of the case:
The Plaintiff and Defendant entered into a consent judgment regarding payment for works performed under a construction contract, leading to disputes over the validity of subsequent accounts and variation orders. (Paras 10, 18)
Findings of Court:
The court found that the consent judgment must be strictly adhered to and that the Defendant could not issue variation orders post-judgment. (Paras 33, 37)
Issues: The key issues included the interpretation of the consent judgment, the validity of variation orders after the judgment, and whether the Defendant was estopped from raising certain claims. (Paras 24, 31)
Ratio Decidendi: The court ruled that the consent judgment constituted a final determination of rights and obligations, and any subsequent claims or variations must comply with its terms. (Paras 27, 37)
Result: The appeals were allowed, the High Court's decision was set aside, and the Defendant was ordered to pay the Plaintiff the sum due under the consent judgment. (Paras 37)
JUDGMENT
A. Introduction
[1] The above two appeals (2 Appeals) discuss, among others, a novel question, namely, after an employer of a construction project (Employer) has entered into a consent judgment with the project's main contractor (Main Contractor) regarding their dispute concerning the works in the project, can the Employer lawfully issue to the Main Contractor a "variation order" in respect of the same works?
B. Background
[2] For ease of reference, we shall refer to parties as they were before the High Court.
[3] By way of a "Letter of Award" dated 6 May 2003 with the title "Cadangan Kerja-Kerja Penanaman dan Penyelenggaraan Spesies Pokok Hutan Termasuk Kerja-Kerja Infrastruktur dan Landskap untuk Taman Rimba Alam di Presint 14 & 15, Wilayah Persekutuan Putrajaya Untuk Perbadanan Putrajaya" (LA), the defendant (Defendant) accepted the tender from the plaintiff company (Plaintiff) to perform certain works (Works) in a project (Project) at a price of RM58,757,209.25 (Tender). According to the LA, among others -
(1) paragraph 2 − the Plaintiff and Defendant would execute a formal contract which would contain all the terms of the Tender (Contract);
(2) sub-paragraph 3(f) − the representative for the Defendant in the Contract is the Defendant's Town Planning Director (Defendant's Contract Representative); and
(3) sub-paragraph 3(i) − the Plaintiff was required to complete the Contract in 156 weeks (Contract Period).
[4] The Contract was executed on 28 October 2003. The Contract provided for, among others -
(1) "Special Provisions to the Conditions of Contract" (Special Conditions). According to cl 12.6 of the Special Conditions (Special Condition 12.6), among others:
(a) payments for all the plants in the Project [Total Payment (Plants)] would be paid progressively as follows:
(i) 40% of the Total Payment (Plants) shall be paid progressively by the Defendant to the Plaintiff if the Plaintiff fulfils its obligations to plant during the Construction Period;
(ii) 20% of the Total Payment (Plants) shall be paid progressively by the Defendant to the Plaintiff if the Plaintiff fulfils its obligations to maintain the plants during the "Pre-Maintenance" Period, namely, during the Construction Period and before the issuance of the "Certificate of Practical Completion" (CPC); and
(iii) 40% of the Total Payment (Plants) shall be paid progressively by the Defendant to the Plaintiff if the Plaintiff fulfils its obligations to maintain the plants during the "Post-Maintenance" Period, ie during the 24 months' "Maintenance Period' or "Defects Liability Period' (DLP); and
(b) the Note to Special Condition 12.6 stated that, among others, if the Plaintiff fails to maintain the plants in the Project during the Construction Period, the Defendant shall be entitled to deduct "pre-maintenance costs" from any sum due and payable by the Defendant to the Plaintiff; and
(2) "Conditions of Contract" (Conditions). The following Conditions are relevant -
(a) clause 4.1 of the Conditions states that, among others, the Plaintiff "shall also make good any defect, imperfection, shrinkage or any other fault whatsoever which may appear during" the DLP in accordance with cl 45 of the Conditions (Condition 45)
(b) clause 5.1 (i) of the Conditions provides that the Defendant's Contract Representative has the "absolute discretion" to issue "written instructions" [Instruction (Defendant's Contract Representative)] regarding variation of the Works as referred to in cl 24 of the Conditions (Condition 24). Condition 24.1 further provides that no variation required by the Defendant's Contract Representative shall vitiate the Contract;
(c) according to cl 5.2 of the Conditions, among others, the Plaintiff shall forthwith comply with all the Instructions (Defendant's Contract Representative);
(d) clause 25.1 of the Conditions provides that all variations authorised by the Defendant's Contract Representative shall be measured by the Defendant's Contract Representative
