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2025 MarsdenLR 3533
COURT OF APPEAL PUTRAJAYA
MS ELEVATORS ENGINEERING SDN BHD – Appellant
Versus
FAIRVIEW INTERNATIONAL SCHOOL NUSAJAYA SDN BHD – Respondent
[Civil Appeal No: W-02(NCVC)(W)-18-01/2022]
A defendant's breach of contractual obligations regarding timely completion and safety of works allows a plaintiff to claim liquidated damages and rectification costs, notwithstanding disputes over payment.
Headnote:(A) Contract Law - Breach of Contract - Liquidated Ascertained Damages (LAD) - The defendant failed to complete installation of lifts as stipulated in the Letter of Award, resulting in delays beyond the stipulated six months, leading to claim for RM940,000.00 in LAD at RM10,000.00 per day (Paras 20, 21, 48).
(B) Contractor's Obligations - The defendant's refusal to address identified defects or hand over lifts led to plaintiff’s engagement of third-party contractors for rectification, thus the plaintiff was justified in seeking reimbursement for rectification costs of RM70,294.80 (Paras 84, 86).
(C) Claim for Loss of Income - The court awarded a nominal amount of RM35,000.00 for loss of potential student enrolment due to the lifts being non-operational (Paras 40, 44).
Facts of the case:
The respondent operates an international school and engaged the appellant to supply and install lifts. Delay occurred, defects noted, and numerous complaints made leading to significant disruptions in school operations (Paras 3, 5, 9).
Findings of Court:
The court found the appellant breached the contract by not completing works and ruled in favour of the plaintiff concerning LAD and rectification costs, while rejecting the appellant’s counterclaim (Paras 22, 36, 82).
Issues: The court addressed whether the appellant breached the contract, entitlement to LAD, damages for loss of student enrolment, and refusal by the appellant to complete lift installation (Paras 57, 70).
Ratio Decidendi: The Letter of Award stipulates clear completion timelines, and the defendant’s failure to perform its contractual obligations warranted the claims by the plaintiff (Paras 55, 79).
Result: Appeal dismissed; the High Court's ruling affirmed with costs awarded to the respondent (Paras 88).
| Table of Content |
|---|
| 1. overview of the case facts and claims. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15 , 16) |
| 2. defendant's defense and counterclaims presented. (Para 17 , 18) |
| 3. relevant clauses of the contract. (Para 19) |
| 4. summary of high court decision. (Para 20 , 21 , 22) |
| 5. conclusion on the defendant's counter claims. (Para 39) |
| 6. court's final ruling on the lad. (Para 48) |
| 7. details of the completion timeline and safety concerns. (Para 56 , 57 , 58 , 59 , 60 , 61 , 62 , 63 , 64 , 65) |
| 8. engagement of third-party contractors for rectifications. (Para 66 , 67 , 68) |
| 9. reaffirmation of lad calculations. (Para 69 , 70) |
| 10. clarification on extension of time and its relevance. (Para 71 , 72) |
| 11. consideration of the defendant's arguments on delay. (Para 73 , 74) |
| 12. rectification costs and their justification. (Para 75 , 76 , 77) |
| 13. discussion around loss of income and damages. (Para 78 , 79 , 80) |
| 14. defendant's counterclaim and its dismissal. (Para 81 , 82 , 83) |
| 15. final evaluations and court's ruling. (Para 84 , 85 , 86) |
| 16. importance of certification for payments. (Para 87) |
Introduction
[1] Enclosure 103 dated 4 January 2022 is the appellant / defendant notice of appeal to this Honourable Court against the Kuala Lumpur High Court decision (after a full trial) given on 24 December 2021 in allowing the respondent / plaintiff's claim with the following's orders:
(a) Jumlah gantirugi tertentu (LAD) sebanyak RM940,000.00 untuk kelewatan 94 haripada kadar RM10,000.00 sehari;
(b) Gantirugi nominal sebanyak RM35,000.00 bagi kehilangan yuran pelajar;
(c) Kos rektifikasi sebanyak RM70,294.80;
(d) Tuntutan balas Defendan bagi gantirugi khas sebanyak RM387,908.60, gantirugi am, faedah dan kos ditolak;
(e) Defendan membayar kepada plaintiff kos tindakan ini sebanyak RM60,000.00, tertakluk kepada fi alokatur; dan
(f) Defendan membayar kepada plaintiff faedah pada kadar 5% setahun ke atas jumlah penghakiman dari tarikh pemfailan writ sehingga penyelesaian sepenuhya.
[2] For ease of reference, we will refer to the parties according to their positions in the High Court.
The Plaintiff's Claim
[3] The respondent / plaintiff operates an international school in Johor Bahru and is part of a group of companies which operate international schools around the country under the name 'Fairview International School'.
[4] The plaintiff engaged the defendant to supply, deliver, install, test, commission and maintain three (3) units of lifts at the plaintiff's new campus in Johor Bahru.
[5] The defendant signed and accepted the letter of award of ("LOA") dated 1 July 2014 on 2 September 2014 for a contract worth RM566,000.00. Among the salient terms of the letter of award (cl 4) are:
(i) The total completion period shall be six (6) months, governed by the date of completion in the contract and certified acceptance by Department of Occupational Safety and Health ("JKKP") (clause 6). The LOA also provided for extension of time to be sought by the defendant in accordance with the Perakuan Kelayakan Mesin Angkat ("PMA") Form of Contract.
(ii) LAD shall be RM10,000.00 per day of delay (clause 16).
[6] The completion date was mutually accepted to be on 28 February 2015, six (6) months from the date of signing of the LOA.
[7] The plaintiff paid the defendant the sum of RM84,900.00, being 15% down payment. No payment was made thereafter.
[8] The defendant did not complete the installation, testing and commissioning of the three (3) lifts by 28 February 2015.
[9] On 2 June 2015, JKKP's issued three (3) PMA certificates with respect to the 3 lifts. As such, the plaintiff calculated liquidated ascertained damages ("LAD") on the basis of delay of 94 days (calculated from 28 February 2015 to 2 June 2015) at a rate of RM10,000.00 totalling RM940,000.00.
[10] However, even after certification, the 3 lifts could not be used due to numerous defects as well as safety issues. Among the incidents which raised the ire of the plaintiff were as follows:
(a)
