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2020 MarsdenLR 2441
COURT OF APPEAL PUTRAJAYA
YUK TUNG CONSTRUCTION SDN BHD – Appellant
Versus
DAYA CMT SDN BHD – Respondent
[Civil Appeal Nos: W-02(C)(W)-462-03/2018 & W-02(C)(W)-519-03/2018]
The failure to comply with contractual provisions regarding extension of time negates claims for relief, affirming the need for adherence to contract terms in construction agreements.
Headnote:(A) Construction Contracts – Terms of Contract – Principal Subcontract – The case involves a breach of contract dispute over a construction project between the Principal Subcontractor and Main Contractor, where the validity of termination and applications for extension of time were central – The termination was held valid and liquidated damages were enforceable for delays caused by the subcontractor's inefficiencies. (Paras 5, 74, 80)
(B) Extension of Time – Default and Termination – The Court found the subcontractor was not entitled to additional extensions beyond what was granted, and that the termination was lawful given subcontractor's failure to proceed diligently. (Paras 19, 74)
Facts of the case: The plaintiff filed for breach of contract, claiming wrongful termination and substantial damages, while the defendant counterclaimed for costs due to delays and termination. (Paras 2, 4)
Findings of Court: The validity of the termination was upheld, with a determination that the claims and counterclaims of both parties for additional costs were only partially granted. (Paras 78, 87)
Issues: The primary issues revolved around the delay in project completion and the validity of the termination of the contract by the defendant. (Paras 24, 74)
Ratio Decidendi: The court reinforced the principle that timely extensions must be applied for and the failure of the contractor to comply with contractual terms negates claims for extensions or remedies. (Paras 61, 70)
Result: Appeals were allowed and damages assessed in favor of the defendant, with costs awarded. (Paras 88)
[1] There are two appeals before us. They arise from a decision by the High Court at Kuala Lumpur given on 30 January 2018. The plaintiff and the defendant at the High Court had each filed their respective appeals. The appeals were ordered to be heard together.
[2] In the High Court, the plaintiff, Daya CMT Sdn Bhd ("Daya"), had filed a suit for breach of contract, amongst others, against the defendant, Yuk Tung Construction Sdn Bhd ("YTC"), for a total sum of RM105,388,169.39. The main assertion by Daya was that there had been a wrongful termination of the contract by YTC. YTC in turn counterclaimed for a total sum of RM72,678,720.33.
[3] The disputes arose out of a construction contract between YTC (as the Main Contractor) and Daya (as the Principal Subcontractor) for the construction and completion of a mixed development project known as the "Central Residence" located in Kuala Lumpur ("the Project"). The Principal Subcontract sum was RM270 million with the original completion date being 14 November 2014 which was later extended to 27 December 2014.
[4] It turned out that Daya was unable to complete the works by the extended completion date. On 3 December 2015, a Default Notice was issued to Daya. On 22 December 2015, YTC terminated the contract on the ground that Daya failed to proceed with the works regularly and diligently. The result not surprisingly was the filing of the instant suit by Daya which was followed by the counterclaim by YTC.
[5] After a full trial which took 62 days, the High Court made certain findings as to liability and quantum. In respect of liability, the learned Judge held, inter alia, that Daya was not entitled to any further extension of time beyond the extended completion date. The High Court also held that the termination was valid and lawful and that YTC was entitled to impose liquidated damages and/or deduct liquidated damages as a result of Daya's delay. The High Court further held that the valuation of termination costs vide the Certificate of Termination Costs dated 20 June 2016 was valid, binding and conclusive.
[6] In respect of quantum, the High Court allowed Daya's claim in part to the extent of RM31,534,895.18 together with interest at 5% per annum. Likewise, YTC's counterclaim was allowed in part to the extent of RM17,252,015.13 together with interest at 5% per annum. Both parties were dissatisfied with this decision. Hence the present appeals.
[7] We heard the appeals on 26 and 27 February 2020. After careful consideration of the written submissions filed by all parties and the oral arguments that followed, we delivered our unanimous decision on 6 March 2020 with broad grounds of decision. We had indicated to the parties that we will provide the full reasons for our decision in due course. We do so now and it would constitute the judgment of the Court.
The Background Facts
[8] The background facts are well presented in the judgment of the learned Judge and we need only set out certain salient facts. The Project, as alluded to earlier, consisted of 3 Blocks of 28 storey buildings of apartment units and shop offices together with the car parks.
[9] It was originally an abandoned project that was taken over by the developer of the Project, Yuk Tung Land Sdn Bhd ("YTL"), to be revived as a mixed commercial and residential development. It was located adjacent to both the KL-Seremban Highway as well as the Besraya Highway. YTL appointed YTC as the Main Contractor for the entire works in the Project ("the Works"). The Main Contract sum was RM310,925,200.00. The completion period was on 14 November 2014 with liquidated and ascertained damages for delay.
[10] Following a tender exercise, Daya was awarded the Principal Subcontract for the construction and completion of the entire Works in the Project. As noted earlier, the Principal Subcontract Price was RM270 million. The completion period was 30 months from site possession on 15 May 2012 until completion on 14 Novem
