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2021 MarsdenLR 4198
HIGH COURT MALAYA SHAH ALAM
ERA KEMUNCAK JAYA (M) SDN BHD – Appellant
Versus
TENAGA SWITCHGEAR SDN BHD – Respondent
[Civil Suit No: BA-22C-61-12-2018]
A defendant is liable for unpaid completed works and materials under the construction contract, with due damages awarded for delay and wrongful termination.
Headnote:(A) Construction Industry Payment and Adjudication Act 2012 – Adjudication – Binding nature of adjudication decision under Section 13(c) – Defendant liable to pay defendant's completed works, materials on site, idling costs, loss of profit and additional works as per findings in adjudication and trial – EOT granted to plaintiff and the defendant's termination held unlawful. (Paras 1-75)
(B) Contract Law – Breach of contract – Defendant failed to prove timely payment for the completed works and request of additional works, leading to contractual breaches – The plaintiff discharged from further performance of works. (Paras 21-72)
(C) Pre-judgment and post-judgment interest – Awarded for various claims at 2.4% per annum from specified dates until full settlement. (Paras 53-75)
A. Background
[1] The defendant company (defendant) and its joint venture partner, Toshiba Transmission & Distribution Systems Asia Sdn Bhd (Toshiba), had been appointed by Tenaga Nasional Bhd (TNB) as the main contractors of a project known as "Supply, Erect and Commissioning of 275 kV GIS, 132kV AIS, 2X240 MVA Autotransformers and Ancillary Equipment, Complete with Associated Work for PMU 275/132KV" in Kangkar Tebrau, Johore (Project).
[2] The plaintiff company (plaintiff) sent a letter dated 19 May 2015 to the defendant which offered to perform Civil Works in the Project for a total sum of RM11,059,200.00 (plaintiff's Offer). Attached to the plaintiff's Offer was a list regarding the plaintiff's scope of works (plaintiff's Scope of Original Works).
[3] The defendant replied to the plaintiff's Offer in a "Letter of Intent" dated 25 May 2015 (LOI). According to the LOI, among others:
"... This offer shall be based on the following Terms and Conditions:
Terms & Conditions
1. This [LOI] is subject to the final acceptance of Letter of Award (LOA)/ Contract/Purchase Order (PO) from [defendant] and confirmation of acceptance as civil contractor by TNB [T&C 1 (LOI)].
2. The final total price shall be as describe[sic]in our Letter of Award (LOA)/Contract/Purchase Order (PO). The price shall be held firm for the whole duration of the Contract without any fluctuations of prices whatsoever [T&C 2 (LOI)]. The final total price shall be as describe[sic]in our Letter of Award (LOA)/Contract/Purchase Order (PO). The price shall be held firm for the whole duration of the Contract without any fluctuations of prices whatsoever [T&C 2 (LOI)].
..."
[Emphasis Added]
[4] By way of a Letter of Award dated 30 June 2015 (LA), the defendant appointed the plaintiff for the Supply of Civil Works in the Project (Original Works). I reproduce below the relevant parts of the LA:
(1) cl 1.2 LA provides as follows:
"The contract details shall be read with the following:
a. Relevant email - dated 19 September 2014 and 26 June 2015.
b. TNB Specification for Civil Works.
c. Supplier Code Practice.
d. Safety & Health Declaration."
[Emphasis Added];
(2) cl 2.1 LA states as follows:
"This contract covers the supply and complete works of the Civil Works as mentioned in your offer and Bill of Quantities."
[Emphasis Added];
(3) according to cl 2.6 LA if there is any delay in the Original Works due to the plaintiff, the defendant has the right to engage third party to complete the delayed portion of the Original Works after the end of the time period given by the defendant's notice to the plaintiff and all cost of completing the delayed portion shall be at the plaintiff's expense;
(4) cl 4.1(a) LA states that payment for the Original Works "shall be in accordance with TNB payment terms and condition: (a) 90% progressively based on works completion." Clause 4.2 LA further states that payment "shall be paid progressively based on the actual works completion at [the Project] within 30 days upon received [sic] [of the plaintiff's] official invoices and verified by [the defendant's] Project Engineer";
(5) Clause 6.1 LA provides that, among others, the defendant "shall have the right to terminate" the plaintiff's appointment if the plaintiff has breached any provision stated in the LA or has failed to remedy any default within the required period given in writing;
(6) Clause 10.1 LA states that time is the essence of this contract. According to cl 10.2 LA, if the plaintiff fails to complete the Original Works in accordance with the "schedule/milestones" as agreed in the LA, the defendant reserves the right to deduct "Liquidated and Ascertained Damages" (LAD) from the total contract price. The rate of LAD is provided in cl 10.3 LA;
(7) according to cl 11 LA, any additional work by the plaintiff "must" obtain the defendant's approval for submission to TNB and if otherwise, the defendant is not liable for such additional work; and
(8) Clause 17 LA has provided for full compli
