A contract signed for a larger amount, intended to deceive a financier, is deemed a sham; the lower contract governs both parties' obligations.

[1] The defendant wanted to build a factory for its new business. It was that of processing white button mushroom. It was also to serve as a fertiliser factory. It had a piece of land big enough for such an enterprise. The dimension of the factory was about 90 feet by 220 feet. It decided to award the contract for its construction to the plaintiff being a local subcontractor with some experience. It engaged Koh Perunding as its superintending officer and its civil and structural consultant upon the recommendation of the plaintiff. Malaysian Industrial Development Finance Berhad (MIDF) was the financier of part of the construction costs.

[2] There was a contract signed with a summary of the tender price or perhaps two contracts signed, according to the defendant. At any rate there were produced in court two contracts dated the same date, one for RM7,910,936.50 and the other for RM15,821,873.00 which of course is double the amount. The plaintiff started construction and the project was mutually terminated with completion at 92%. The floor sank and after rectification, it sank again! What was worse was that it sank unevenly. Tension was in the air!

[3] The plaintiff was not paid for what it claimed was the balance due under the consultant's certification. The defendant said what was due was just half of the amount certified as parties knew all along that the bigger contract was just to satisfy MIDF so that it could give a bigger loan. The actual contract which the defendant said is the one binding is for half the amount and that the parties had in their dealings with each other conducted themselves consistent with that knowledge and understanding.

[4] The plaintiff contended that it was the bigger contract that was stamped and so binding on the parties. The plaintiff sued based on the bigger sum contract and later proceeded to sue for a return of the bigger sum retention amount. The defendant cried foul! It depended on an oral agreement of a 50% discount! Alternatively it was the understanding of the parties that the true contract between them was the first contract for half the amount. The problem was further compounded by the factory floor that sank a second time after rectification. So the defendant put in a set-off and counterclaim for over RM900,000.00 to the plaintiff's first suit being the amount to rectify the sunken floor.

[5] The refrain must have reverberated through them as they ruminate on how to resist each other's claims:

"O what a tangled web we weave when we devise to deceive."

Personalities And Preliminaries

[6] The plaintiff called three witnesses:

1. PW1, Koh Liong Boon, the Proprietor of Koh Perunding who was the Consultant and Superintending Officer under the contract,

2. PW2, Tan Chong Kang, a partner of the plaintiff.

3. PW3, Tan Chong Meng, a partner of the plaintiff and PW1's brother.

[7] The defendant called DW1, Chin Ivan Oi Fook, the Managing Director of the defendant.

[8] The following documents were marked for each of reference:

Bundle Of Pleadings A

Common Bundle of Documents 1 B1

Common Bundle of Documents 2 B2

Common Bundle of Documents Supplemental C

[9] By consent parties agreed that all documents in Part A and Part B are automatically accepted as exhibits and evidence subject only to weight to be attached. They shall be referred to by page numbering and Bundle Alphabet. All documents in Part C are to be marked in accordance with the admission of documents under the Evidence Act 1950 .

Prayer

[10] There are two suits that were consolidated and heard together in this trial. One is Suit 22-302-2009 being the plaintiff's claim for the balance amount due under the Certification albeit based on the bigge