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2011 MarsdenLR 5008
HASNAH MOHAMMED HASHIM
BRIDGECON ENGINEERING SDN BHD & ORS – Appellant
Versus
UNIPHONE TELECOMMUNICATIONS BERHAD – Respondent
Final judgment must adjudicate parties' ultimate rights; unrectified defects create a plausible counterclaim leading to trial consideration.
Headnote:(A) Contract Law - Deed of Assignment, Sale and Purchase Agreement - Legal principles of issue estoppel and res judicata established - Court reaffirmed that final judgment must adjudicate ultimate rights of parties, and defects arising must be resolved under contractual terms - Importance of Goodwill and Fairness in contractual obligations (Paras 20).
(B) The court found a plausible counterclaim due to unrectified defects, highlighting the tripartite nature of Deed of Assignment linked to SPA and Turnkey Contract - Obligations set forth in the contracts must be evaluated at trial.
Facts of the case:
Plaintiffs awarded a contract to build a business park; disputes on defects and payment obligations arose upon the assignment of debt under Deed of Assignment, with clarification needed regarding obligations of the parties resulting in an application for stay of execution.
Findings of Court:
There was no final judgment on the counterclaim as issues concerning defects reside with the Developer rather than the Plaintiffs.
Issues: Whether the Learned High Court Judge’s statement creates issue estoppel or res judicata and the obligations for rectifying defects.
Ratio Decidendi: The High Court clarifies that defects must be addressed as per SPA terms with the Developer, not directly with Plaintiffs, determining finality in disputes regarding contractual obligations is crucial.
Result: Application for stay allowed with costs.
Enclosure 60 is an application by the Defendant for a stay of execution of the High Courts Orders and Judgment dated 18.1.2010 pending the full and final disposal of the Defendants counterclaim.
By a Letter of Award dated 15.06.1996, the Plaintiffs were awarded a turnkey contract ("Turnkey Contract") by Gaya Kombinasi Sdn. Bhd. ("Developer") to build the Mines Waterfront Business Park ("Building") for RM70,500,000.00.
On or about 4.12.1996, Developer entered into a Sale and Purchase Agreement ("SPA") with Defendant. By this SPA, Developer Sold to Defendant the land on which the Building was being developed, and the Building to be erected thereon.
On or about 12.02.1999, the Plaintiffs, the Developer and the Appellant, executed a Deed of Assignment ("DOA"). By this DOA, Developer assigned RM15,000,000.00, payable to Developer by Defendant under the SPA, to Plaintiffs to be paid in the following manner:
(i) RM7,000,000.00 to be paid by Defendant upon execution of the DOA; and
(ii) The balance of RM8,000,000.00 to be paid by Defendant 18 months after the Certificate of Practical Completion ("CPC"). This corresponds with the sum payable under item 7 of the 2nd Schedule to the SPA, at the end of the Defect Liability Period. In other words, the Developer assigned a future debt to the Respondents.
In the recitals the DOA records, among others that outstanding works are to be executed by sub-contractors nominated by the Defendant under the supervision of the Respondents.
The DOA expressly preserved all the terms and conditions of the SPA and Turnkey Contract. In particular, the DOA preserved all obligations to make good defects arising during the Defect Liability Period. It further expressly stipulated that the DOA was intended to operate fairly and not to the detriment of the interests of any party. It was understood that since the DOA could not cover every situation, any problems that arose were to be resolved upon principles of goodwill, fairness and equity.
Plaintiffs also expressly agreed to:
(i) complete works timeously and practically complete works by 21.04.1999; and
(ii) fulfill its obligations to rectify defects appearing within 18 months of the CPC ie, within the Defect Liability Period. In this connection, it is pertinent to note that Plaintiffs would not be entitled to payment by Developer under the Turnkey Contract if the defects are not duly rectified.
A document purporting to be the CPC was issued on 21 April 1999. It should be noted that the alleged CPC does not contain the confirmatory sign-off of Developer at the appropriate place.
Numerous defects have appeared in the Buildings and these defects have not been rectified by Plaintiffs or Developer. The quantum of the incomplete and defective works on the Building is in excess of RM17 million. The Defendant has already incurred and spent RM856,481.70 to rectify certain defects.
According to the Defendant a sum of RM16,349,005.77 would have to be incurred by Defendant to complete and remedy the outstanding works.
The Defendant by way of its former solicitors letter of 17.5.2001 informed the Plaintiffs solicitors of the said expenditure and estimates. The Plaintiff however does not dispute that there are defects to the Building. Pursuant to Clause 8.9 of the DOA both the Developer and the Plaintiffs has an obligation to rectify any damage or defects appearing within the period of 18 months from the new CPC date.
The chronology of events is set out as follows:
(a) By way of a Summons in Chambers dated 25.5.2001, the Plaintiffs applied to this Honourable Court for a Summary Judgment to be entered against the Defendant under Order 14 of the Rules of the High Court 1980("Enclosure 11");
(b) On 25.10.2002, the Learned Senior Assistant Registrar dismissed Enclosure 11 with costs ("SARs decision");
(c) On 18.1.2010, the Plaintiffs appeal to Judge In Chambers against the SARs decision was allowed with costs, and summary judgment was entere
