Introduction

[1] The facts of this case are undisputed and are relatively straightforward. The appellant was the main contractor for the renovation and extension of the Merlin Hotel, Subang (the said project). The owner was a private limited company known as Subang Jaya Development Hotel Sdn Bhd (owner). The owner was part of the Faber Group Berhad, a public listed company. The respondent was the nominated subcontractor of the appellant for the installation of air-conditioning and ventilation in the said project. The respondent was nominated by the owner and in the usual course of practice in the building industry accepted by the appellant. The pertinent part of the owner's consultant letter informing the appellant of this is as follows:

We have been instructed by our clie