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2021 MarsdenLR 447
SESSIONS COURT KUALA LUMPUR
CARIMIN BINA SDN BHD – Appellant
Versus
BGMC CORPORATION SDN BHD & ANOR – Respondent
[Civil Suit No: WA-A52C-26-07/2020]
The retention sum under a contract is binding on the parties, requiring employer approval for its release. The court cannot alter contractual terms, and the burden of proof is on the plaintiff to establish entitlement.
Headnote:(A) Construction Industry Payment And Adjudication Act 2012 – Claim for release of retention sum – The court held that the retention sum is subject to the conditions set in the contract, specifically the approval of the employer for its release, and since such approval was not demonstrated, the claim was denied. (Paras 19, 20, 26-42, 54-56)
(B) Law of Contract – Parties' obligations and terms – The retention sum is defined within the contractual terms and the court is not to interfere with clear contract stipulations. The plaintiff failed to prove sufficient grounds for release, as they did not meet the necessary preconditions. (Paras 26, 28, 34-36)
(C) Burden of proof – The evidential burden lies with the plaintiff to substantiate their claims as per contractual stipulations. The court found that the necessary evidence to support the claim for retention release was not properly presented. (Paras 34, 42, 88)
Facts of the case: The plaintiff worked as a subcontractor for the main contractor D1. They claimed a retention sum after a series of progress claims, which D1 had only partially paid. Following D1’s termination of the main contract, the plaintiff sought adjudication to recover the unpaid amounts. (Paras 6-20)
Findings of Court: The court found that there was no reasonable cause of action against D1, and the retention sum could not be released without the employer’s approval, as prescribed by the contract terms. (Paras 34, 96)
Issues: The court examined whether a cause of action existed against D1 and the status of the contract following its alleged termination. (Paras 25, 47)
Ratio Decidendi: The retention sum was determined to be strictly conditioned on the employer’s approval of works as per clause 5 of the contract, which was not established in the plaintiff's case. The court observed that it is not the role of the judiciary to alter the terms of a contract that are clear and unambiguous. (Paras 28, 34)
Result: Plaintiff's claim dismissed with cost RM17,000. (Para 97)
JUDGMENT
Salient Facts
[1] Today is for judgment. This Court is appreciative of the submissions duly filed by the learned solicitors of the parties. This is the full judgment in writing.
[2] Tetuan Seriemas Development Sdn Bhd. is the employer for a construction project known as "Proposed Earthworks, Soil Improvement Works, Instrumentation Works and Its Associated Works (Package 1) for Cadangan Pembangunan Industri Di Atas Lot PT 32113, PT 32115 & PT 32134, Mukim Tanjong Dua Belas, Daerah Kuala Langat, Selangor Darul Ehsan untuk Tetuan Seriemas Development Sdn Bhd."
[3] Tetuan Seriemas [the employer] has appointed the first defendant [D1] as the main contractor for the project.
[4] The consultant for the project is EDP Consulting Group Sdn Bhd.
[5] On 20 March 2018, D1 issued a letter of award [the contract] to the plaintiff and appointed the latter as sub-contractor. The contract contains various terms and conditions and is signed by Dato' Teh Kok Lee for D1 and Lim Yew Hoe for the plaintiff respectively.
[6] Under the contract, the parties have agreed the total amount of the project is RM4,057,000-00 and the plaintiff is obligated to install Prefabricated Vertical Drains (PVD) along the road area which includes labour, materials and machinery for the project.
[7] 3 April 2018, D1 applied for credit facility in relation to the project to the plaintiff.
[8] On the same date, a letter of guarantee for the above facility was issued by the second defendant [D2] to the plaintiff. It is signed by Dato' Teh Kok Lee on behalf of D2. Under the letter of guarantee, D2 agrees to be the guarantor for the credit facility based on the terms and conditions stated therein.
[9] In April 2018, the plaintiff commenced the works.
[10] After the works had been progressively done, between 30 April 2018 and 23 November 2018, the plaintiff issued seven [7] progress claims to D1.
[11] Between 14 May 2018 and 18 December 2018, D1 issued six [6] certificates of payment to the plaintiff.
[12] Upon the receipt of the certificates of payment, between 01 June 2018 until 31 December 2018, the plaintiff issued six [6] respective invoices to D1.
[13] D1 paid to the plaintiff only four [4] out of all the invoices in respect of the six [6] certificates.
[14] The two invoices which D1 did not pay are in respect of the certificate dated 12 October 2018 amounting RM579,248-78 and dated 18 December 2018 amounting RM227,640-07 [certificate No. 4 and 6 respectively]. The total amount of both certificates is RM806,888-85.
[15] For the certificate No. 4, the sum RM579,248-78 is derived from the total value of work done to date which is RM1,753-650-54 minus the total deductions RM1,174,401-76. Among the amounts deducted out of the total deductions is the retention sum RM87,682-53. See certificate No. 4 at page 19, Common Bundle of Documents [CBD].
[16] For the certificate No. 6, the sum RM227,640-07 is derived from the total value of work done to date RM2,314,394-64 minus the total deductions RM2,086,754-57. Among the amounts deducted is the retention sum RM115,719-73. See certificate No.6 at page 21 CBD.
[17] In the early 2019, the plaintiff was informed by D1 that D1's main contract was terminated by the employer.
[18] On 16 July 2019, the plaintiff filed an adjudication proceeding against D1 under the Construction Industry Payment And Adjudication Act 2012 [CIPAA] with regards to the latter's failure to effect payment of RM806,888-85 from the two certificates.
[19] On 15 January 2020, the plaintiff succeeded in the proceeding and was awarded the sum RM806,888-85.
[20] In the present suit, the plaintiff prays for the release of retention sum of RM115,719-13 which is for the certificate No. 6 only.
[21] For the purpose of convenience, this Court reproduces the prayers pleaded in the statement of claim as follows:
"25. Oleh yang demikian, Plaintif kini memohon suatu penghakiman terhadap Defendan-Defendan seperti berikut:
(a) Pelepasan dan/atau pembayaran wang tahanan berj
