Mohamed Dzaiddin Abdullah SCJ:

[1] This is an appeal from the decision of Haidar J made on 14 October 1991 in consolidated garnishee proceedings, refusing to make absolute the appellants' garnishee orders nisi against the respondents.

[2] The four appellants were the nominated sub-contractors of the judgment debtor under a written contract made on 18 August 1984 (the said contract) between the respondents/garnishee and the judgment debtor in respect of interior decoration works, fabrication, supply and installation of furniture and fittings to the Kuching Holiday Inn Hotel extension project. As a result of nonpayment for work done, the appellants respectively sued the judgment debtor and obtained judgment for a total sum of RM320,720.98 which had remained unsatisfied. They then proceeded with garnishee actions against the respondents/garnishee, the employer of the judgment debtor, to garnish the retention money in the hands of the respondents/garnishee which was due to the judgment debtor under the said contract. The respective garnishee orders nisi were served on the respondents/garnishee on 13 January 1987, 13 February 1991 and 3 May 1991.

[3] At the trial before the learned Judge, the common issue between the parties was simply whether there was any money due or accruing due to the judgment debtor from the respondents/garnishee at the time the respective orders nisi were served on the latter. It was contended on behalf of the respondents/garnishee that there was no money to be attached at the time the orders nisi were made because the retention fund of RM217,607.84 held by the respondents/garnishee had been utilised to pay for the cost of rectification of defects (RM50,373.10) and for liquidated damages (RM180,000) to account for 36 days' delay in completion of the works as shown in the final certificate of payment issued by the design consultants dated 23 May 1989.

[4] Cik Christina Eng, Counsel for the appellants, informed the learned Judge that the appellants had no quarrel with the payment of RM50,373.10 being cost for rectification of defects, but would be challenging the validity of the final certificate of payment in respect of the imposition of 36 days' liquidated damages amounting to RM180,000, and indicated that in the event of the Court holding that the final certificate was valid, then there would not be any moneys to be garnished. On that basis, the learned Judge proceeded to consider the validity of this final certificate.

[5] In his grounds of decision, the learned Judge stated at p 5:

The final certificate was issued on 23 May 1989 and it would seem to show that there was no money due toand in factowed KHSB a sum of RM349.26 (pp 66-69 of D1). It is not disputed that there is a 5% retention fund of the contract held by KHSB for the due performance of the contract. The retention fund is RM217,607.84. KHSB contended that by virtue of the costs of rectification for defects (RM50,373.10) and the imposition of the liquidated and ascertained damages for 36 days of delay byas provided in the contract, the amount of which is RM180,000, the retention fund of RM217,607.84 is thereby extinguished. This is allegedly reflected in the final certificate issued on 23 May 1989 (p p 66 - 69 of D1). Therefore KHSB further contended that they were entitled to deduct the cost of rectification of defects in the sum of RM50,373.10 and the imposition of liquidated and ascertained damages in the sum of RM180,000 from the retention sum of RM217,607.84. Is KHSB entitled to deduct the said sums from the retention money held by KHSB? According to cl 22 and cl 28(i)(a) of the contract (see pp 13 and 16 of P5) KHSB claimed that they were entitled to so deduct the said amount due tofrom the retention sum. In my view KHSB is not wrong on their claim as such claim is supported by the view expressed by Dennis F Tunner in "Building Contracts - A Practical Guide" (3rd edn,) at pp 21-23 and pp 234 - 235. Towards this end at p 235 of the book un