A subcontractor's failure to perform can justify termination by the contractor if not rectified within specified time after notice, impacting claims for owed sums.

Lee Swee Seng J:

Parties And Project

[1] The defendant had entered into a contract with Daelim (Malaysia) Sdn Bhd ("Daelim") for construction of the Mechanical Work Package 2 for Fast Track Project 3A in Manjung (the "Main Contract").

[2] The defendant in turn entered into a sub-contract with the plaintiff as subcontractor, dated 22 December 2015 for Piping Works for the said Project (the "Sub-Contract") (pp 36-164 CBOD 1). The welding and installation of pipes are with respect to P92 pipes which have high chromium content and welders working on it need to be specially skilled to do the works. The value of the Sub-Contract is RM6,345,000.36.

[3] It is not disputed that prior to the execution of the Sub-Contract there were meetings held between the plaintiff and the defendant on 14 August 2015, 9 September 2015, 16 October 2015 and 19 October 2015 and that the minutes of meetings were incorporated as terms of the said Sub-Contract. The Sub-Contract also incorporated "Contractor's Scope of Works", "Work Program", HSE Obligations for the defendant's Contractor/Subcontractor (OFC) and Pricing Schedules and Bill of Quantities.

[4] The plaintiff's scope of work covered 10 main areas, including the following as stated in the Addendum to the RFQ Documents (pp 62-73 CBOD 1):

a) Installation of Pipe (Fabrication and Erection of Pipe and its supports, Receiving, Launching, Marking, Fit-up, Welding, Reporting, Testing and Commissioning, Final Document Submission);

b) Supply of Manpower for commissioning activities;

c) Provide accommodation and food for the workers; and

d) Provide Consumables and Transport.

[5] It was provided in cl 2 of the Sub-Contract that the plaintiff shall commence the Sub-Contract works and shall complete the works within the Master Work Schedule. (p 137 CBOD 1).

[6] The work commencement date pursuant to the contract is on 16 October 2015 and the completion date is on 15 September 2016 (p 57 CBOD 1). However the actual commencement date was on 17 October 2017 but nothing turns on this.

Problems

[7] The plaintiff contended that its Sub-Contract Works were delayed because of delay attributed to the defendant as follows:

a) Delay in the supply of materials by the defendant;

b) Failure of the defendant to provide sufficient trailers and cranes to shift the materials;

c) Mistake in the fabrication of the spools received from Daelim.

[8] According to the defendant there were numerous complaints, reminders on the shoddy and slow work of the plaintiff which was consistently falling behind schedule. A notice of default dated 12 May 2016 had earlier been issued by the defendant in the light of the continuing lagging behind in the Master Work Schedule that had the snowballing effect of a breach of the plaintiff's obligation to proceed with the Sub-Contract Works expeditiously and without delay. The defendant terminated the Sub-Contract on 26 May 2016 as the plaintiff had failed to proceed expeditiously to complete the piping systems as specified in the Master Work Program Schedule of the Sub-Contract.

Prayers

[9] The plaintiff maintained that the premature termination of the Sub-Contract by the defendant was unlawful and in breach of the Sub-Contract. The plaintiff claimed damages against the defendant for breach of the Sub-Contract as summarised in para 9.4 of its Statement of Claim as follows:

a) Balance payment due for invoices for work done until May 2016 of RM2,027,955.34;

b) Expenses and costs for Idle Man Power from June 2016 until September 2016 due to the early termination of the contract for the sum of RM1,522,328;

c) Direct and indirect expenses including Housing Deposit, Utili