A power of attorney can create binding subcontractor appointments, even in the presence of conditional clauses, and plaintiffs must substantiate their claims for damages to exceed nominal amounts.

Proceeding:

The plaintiff's claim against the 1st, 2nd and 3rd defendant is for the sum of RM1,519,980.00 being loss of preliminary expenses and loss of profits which otherwise the plaintiff could have earned should he be allowed to exercise his right under a subcontract to implement a project known as 'Rancangan Tebatan Banjir Bandaran Sabah Sg Tabanak, Lahad Datu'. Judgments in default of appearance against the 2nd and 3rd defendant had been obtained. As for the 1st defendant, his defense is that the subcontracts are ineffective.

Background facts:

The 1st defendant had applied for and was awarded the tender for the Lahad Datu project on 11.8.2006. On 26.8.2006 the 1st defendant gave a Power of Attorney to the 2nd Defendant (1st PA), one of its term is to appoint a subcontractor on behalf of the 1st defendant to implement the Lahad Datu project and sign all documents on behalf of the 1st defendant. Pursuant to that power of appointment, the 2nd defendant on 12.9.2006 appointed the plaintiff as the sub-contractor of the 1st defendant to implement the Lahad Datu project.

Sensing that the 2nd defendant may be in financial problem, the 1st defendant on 21.12.2006 gave another Power of Attorney to the 3rd defendant (2nd PA) containing substantially similar terms as the PA given to the 2nd defendant. Pursuant to the power of appointment, the 3rd defendant on 21.11.2006 appointed the plaintiff as the subcontractor for the 1st defendant for the implementation of the Lahad Datu project. On the 27.12.2006, a substitution of power of attorney was executed between the 3rd defendant and the plaintiff. On 8.8.2007, a deed of assignment (assigning all monies due under the Lahad Datu project to the plaintiff) was executed between the 3rd defendant on behalf of the 1st defendant and the plaintiff.

Relying on the above documents, the plaintiff contends that he is the rightful sub-contractor of the 1st defendant to implement the Lahad Datu project. The 1st defendant however contends that the subcontracts signed by the 2nd and 3rd defendant are ineffective as the 2nd and 3rd defendant did not have the authority to execute the documents with the plaintiff on the ground that the 1st defendant's power of attorney to the 2nd and 3rd defendant had not become effective. Hence the 1st defendant refused to allow the plaintiff to take over the implementation of Lahad Datu project, resulting in this suit.

Issues:

From the pleadings and evidence adduced in court plus the submissions from counsel the core issue in my view is this:

Whether the plaintiff had been properly appointed as the subcontractor of the 1st defendant by the 2nd and 3rd defendant to undertake the implementation of Lahad Datu project?

Counsel for the 1st defendant from the outset submits that the appointment of the plaintiff as sub-contractor cannot be valid as the 1st PA and 2nd PA had not become effective. This contention is premised on the presence of the 2 clauses in the 1st and 2nd PA. These clauses read as follows:

'And whereas only in the event that the Donee (2nd and 3rd defendant) shall be successful to secure the award of the proposed project shall this power of attorney take effect' - Recital

'It is resolved that the authorization by the company (1st defendant) is only confined to projects successfully lobbied by Donee (2nd and 3rd defendant). - Clause 11 and 13

It is the submission of counsel for the 1st defendant that these clauses are conditional precedent and unless and until they are satisfied the 1st and 2nd power of attorney are ineffective. Counsel for the 1st defendant also suggested that this issue of fact as to whether the Lahad Datu project was awarded to the 1st defendant due to the successful lobbying of the plaintiff, 2nd or 3rd defendant must be determined first.

The request by counsel is a reasonable one as it may sub