A contractor can claim for unpaid work based on contractual progress payment terms, while counterclaims lacking evidence may be dismissed.

Perbadanan Kemajuan Negeri Selangor ("PKNS") had wanted to construct certain buildings in Selangor at Section 10, Kota Damansara. The project of construction was known as "Membina dan Menyiapkan 100 unit Pangsapuri 8 & 9 Tingkat (Blok A) dan sebuah Rumah Kelab beserta Iain-lain Kemudahan di Fasa 10/1B, Seksyen 10, Kota Damansara, Petaling Jaya, Selangor Darul Ehsan." The main contract was awarded to Kemudimas Property Sdn Bhd ("Kemudimas") which subsequently awarded the contract works to the defendant as the principal sub-contractor. The defendant in turn engaged the plaintiff as its sub-contractor to undertake a major portion of the main contract works relating to the civil and building works. The contract sum payable to the plaintiff was RM5.6 million but which was also described in the agreement as a "provisional contract with final measurement".

The plaintiff has now filed this suit alleging that the defendant has failed to pay them for work done. They are claiming a sum of RM 1,917.617.16 which they maintain was outstanding together with other amounts due for work done on a quantum merit basis. The defendant, on the other hand, denies that any sum is due and is instead counterclaiming for a sum of RM2,647.615.00 being monies allegedly owed to the defendant for costs incurred in completing the contract as well as for other reasons which will become apparent later in the judgment. In a nutshell, the broad issue in this case, as it so often happens in cases of breach of construction contracts, is who pays who and for how much.

The Salient Facts

It was a term of the contract that the contract sum of RM5.6 million was to be paid through progress payments as the works progressed. The way in which payments were to be made was set out in Clause 5.1 of the contract as follows:

"5.1. The sub-contractor shall submit progress claim, with back-up calculations, on/before 25th of every month and shall be verified by the SITE MANAGER. Payment will be honoured within thirty (30) days upon certification of the complete work to the Sub-Contractor."

Clause 5.2 of the same contract stated that 5% of the value of work done was to be retained upon any payment being made to the plaintiff and only complete and acceptable work was to be recommended for payment (Clause 5.4).

In order to seek payment, the plaintiff made their monthly claims through what was termed as Interim Statements. These interim statements were then used by the defendant and Kemudimas to submit their monthly claims to PKNS. These interim statements were all produced in evidence.

A notable feature of the way in which the defendant dealt with the plaintiff was that whilst they used the interim statements of the plaintiff to make their claims with PKNS, they never issued any certification to the plaintiff. What the defendant had were valuations which they claimed were for internal circulation. Nevertheless, they sought to use their Valuation No. 8 as their basis for defending this suit and for the counterclaim.

Be that as it may, it was common ground among the parties that the defendant had made payments to the plaintiff on five occasions for a total sum of RM580,000.00. Curiously though, the defendant treated these payments as advance payments. It was also not disputed that out of the said sum of RM580,000.00, a sum of RM160,000.00 was paid to the original sub-contractor called C&M Innovative Sdn Bhd ("C & M Innovative") from whom the plaintiff had taken over the sub-contract. There was some issue about the correctness of the plaintiff taking over the project from C&M Innovative since the letter of award was issued not to the plaintiff but to C&M Innovative. However, it appeared that the defendant had accepted the taking over of the contract by the plaintiff through their conduct of continued dealings with them until the relationship ended. Complaining about this issue at this