The failure to consider a third extension of time application invalidates contract termination, impacting liability for damages.

[1] This is an appeal by the appellant (the defendant in the High Court) against the decision of the High Court dated 22 April 2016 made after a full trial, which allowed the plaintiffs claim against the defendant and a nominal sum of RM50,000.00 for loss of reputation as a result of being blacklisted with costs of RM100,000.00.

[2] We heard this appeal on 29 January 2018 and on 21 February 2018 and reserved our decision. After perusing the Records of Appeal, the written submissions filed by the respective learned counsel and upon hearing learned counsel, we adjourned the matter for our consideration and decision.

[3] We now give our decision and the reasons for the same.

[4] For ease of reference in this judgment, the parties will be referred to as they were in the High Court.

Background Facts

[5] The relevant background facts of the case have been set out in detail by the learned trial judge and are as follows. By a process of tender the plaintiff was awarded by the defendant to carry out works for a project described as "Pembinaan Bangunan Tambahan Ibu Pejabat Polis Kontijen (IPK) Johor" ("the Project"). The contract sum for the Project is the sum of RM103,556,694.84. The plaintiff was awarded the contract to carry out and complete the works within 88 weeks commencing from 28 December 2010 ("the Contract Period"). The scheduled date of completion for the project was on 3 September 2012 (See: para 5 Statement of Claim).

[6] The parties entered into a contract and the terms and conditions of the contract is in accordance with JKR 203A (Rev. 2007) Standard Form of Contract ("the Contract"). However, the plaintiff could not complete within the contract period and had requested a total of three extension of time (EOT). The defendant granted two EOTs but rejected the third (3rd) EOT applied by the plaintiff. On 10 February 2014, the defendant terminated the contract.

[7] The plaintiff challenged the termination as being unlawful. The plaintiff contended that the defendants own decisions prevented the plaintiff from completing the works as scheduled.

Decision Of The High Court

[8] The High Court, after a full trial and having analysed the evidence sustained the claim of the plaintiff. In the Grounds of Judgment, the learned Judge gave her reasons why she found the plaintiffs case proved on a balance of probabilities. Her Ladyship set out her reasons which essentially can be summarised as follows:

(i) the 3rd EOT was never considered by the defendant and such non consideration or failure to consider the 3rd EOT renders the defendant in breach of cl 43.1;

(ii) even if the Court were to accept that the defendant was entitled to not consider the 3rd EOT the defendant was still in breach of cl 43.1 when it did not inform the plaintiff of its decision;

(iii) when the defendant failed to consider the 3rd EOT time was no longer of the essence of the contract. Time was at large and the plaintiff was entitled to complete the project within reasonable time;

(iv) the Certificate of Non-Completion (CNC) issued on 17 July 2013 was prematurely issued; and

(v) until and unless the application of extension is decided the defendant cannot issue the CNC or impose LAD.

The 3rd EOT

[9] The learned High Court Judge was of the opinion that the events leading to the application of the 3rd EOT are relevant to determine whether the plaintiff has valid grounds for the application for extension. Her Ladyship considered the pleadings and the evidence before her