Ramly Ali J:

The plaintiff's claim is pursuant to a Subcontract No. TB/814/L&M/M&E/LIFT/056 dated 15 June 1990 wherein the plaintiff had agreed for the supply, delivery, testing, commissioning and maintenance during defects liability period of lifts and escalators including all accessories and incidental works as specified for the proposed International Class Luxury Hotel known as Hotel Istana.

Brief Facts

The defendants were the main contractors in a joint venture project involving the construction of a proposed hotel known as Hotel Istana. The plaintiff was a subcontractor to the defendants by virtue of a written subcontract dated 15 June 1990 for the supply, delivery, commissioning and maintenance during defects liability period of lifts and escalators including all accessories and incident works. The employer of the project was one Pernas One (KL). The employer employed Juruukur Bahan Malaysia (JUBM) as the Consultant Quantity Surveyors; Ranhill Bersekutu Sdn. Bhd. as the Mechanical and Electrical Consultants; and Daya Bina Arkitek (M) Sdn. as the architect for the project.

The terms of the subcontract, inter alia, are as follows:

(a) the contract price is for a sum of RM5,900,000;

(b) there shall be a retention sum of 5% from the contract price ie, RM300,000;

(c) the subcontract period shall be (72) weeks commencing on 18 Jun 1990;

(d) the progress payment will be made monthly at the rate of 75% of equipment on site or 90% of the valuation of completed works;

(e) one-half (2 1/2%) of the retention sum can only be released after the Certificate of Practical Completion (CPC) has been issued by the architect;

(f) the remaining one-half (2 1/2%) of the retention sum will be released to the subcontractor (plaintiff) upon issue of the Certificates of Making Good of Defects (CMGD) when all warranty obligations have been fulfilled; and

(g) payment in respect of any work, material or goods comprised in the subcontract shall be made within seven (7) days after receipt by the main contractor from the employer.

There is no dispute that the plaintiff has completed the works as stipulated under the Subcontract. However, Ranhill Bersekutu as the Mechanical and Electrical Consultant for the project appointed by the employer, complained that the lifts installed by the plaintiff has caused excessive harmonic distortions which as affected the electric flow system in the project. On that ground, Ranhill Bersekutu instructed Juruukur Bahan Malaysia, the Consultant Quantity Surveyors for the project appointed by the employer, not to release the last 2 1/2% of the retention sum amounting RM300,000 to the plaintiff. Consequently, Daya Bina Arkitect, the Architect for the project, also appointed by the employer, deducted the said sum of RM300,000 from the amount to be paid to the plaintiff.

The plaintiff denies the allegation made by Ranhill Bersekutu about the problem of excessive harmonic distortion. In any event, according to the plaintiff, the problem can be solved by the employer involving costs of RM167,500 only. Therefore, the plaintiff is claiming for the said sum of RM300,000 or in the alternative, the sum of RM132,500 (being the balance sum after deducting RM167,500); plus interest at the rate of 8% p.a. from the date of filing of this action until full satisfaction.

Plaintiff's Arguments

The plaintiff argues that by virtue of cl. 2.3 of the subcontract, the defendants are liable to pay the plaintiff when the plaintiff has completed the works. The plaintiff further argues that the defendants are under a duty of care to ensure that whatever deduction certified by the architect is correct and also to ensure that the balance of the retention sum after being correctly deducted be paid by the employer through the defendants to the plaintiff. According to the plaintiff, the plaintiff as a subcontractor has no privity of contract with the employer and any deduction made by the employer by way of Certificates of the Architects, is enti