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2021 MarsdenLR 1330
HIGH COURT SABAH & SARAWAK KUCHING
VILLAGE GROVE CONDOMINIUM MANAGEMENT CORPORATION – Appellant
Versus
YUNCO ENTERPRISE SDN BHD – Respondent
[Civil Case No: KCH-22NCVC-43-10-2018]
Parties in a construction contract must adhere to the contractual obligations regarding quality and timely completion of work; failure to rectify defects within the agreed period exposes the responsible party to claims for damages and rectification costs.
Headnote:(A) Conditions of Contract – Clauses 23 and 24 – Plaintiff claimed against defendant for defects resulting from poor workmanship, demanding RM1,104,955.47 after an independent contractor's quotation for rectification was incurred – Defendant argued it had made the necessary rectifications and claimed unpaid balance for work done – Court found that defendant failed to rectify defects during and after the Defects Liability Period, entitling plaintiff to recover rectification costs and liquidated damages – Extension of time granted was insufficient due to delays – Defects were documented, acknowledged by defendant, but left unaddressed post-DLP – Court allowed plaintiff's claims and dismissed defendant's counterclaim. (Paras 16, 42, 49, 148, 149)
(B) Liquidated Damages – The contractual right of plaintiff to collect RM228,000.00 as LAD for construction delays was affirmed, as the court acknowledged the defendant's failure to complete the work on time. (Paras 9, 28, 101)
(C) Warranties – The defendant's obligation to provide warranties as per the contract terms was upheld, countering the defendant's claims of withholding warranties for unpaid sums - the court found no contractual basis for such withholding. (Paras 18, 62, 65)
(D) Counterclaim – Defendant's counterclaim was dismissed due to insufficient evidence supporting the claims for balance sums due and costs associated with site delays. (Paras 116, 148, 149)
Facts of the case: The plaintiff engaged the defendant to renovate a condominium. Delayed completion and defective works led to the plaintiff's claims for liquidated damages and rectification costs. The defendant counterclaimed for unpaid balances, alleging poor site conditions caused delays.
Findings of Court: The court determined the defendant breached its obligations, failing to rectify defects and complete works timely, justifying the plaintiff's claims and dismissing the defendant's counterclaim.
Issues: The core issues included the existence of defects, duties regarding rectification during and after DLP, eligibility of liquidated damages, and the validity of counterclaims by the defendant.
Ratio Decidendi: The court ruled that obligations to remedy defects and complete contracts rested firmly on the defendant, who failed to meet the conditions set forth in the contract; hence the plaintiff was entitled to reliefs sought.
Result: Plaintiff's claims allowed, and defendant's counterclaim dismissed.
Introduction
[1] The plaintiff is the Management Corporation of the Village Grove Condominium ("VGC") incorporated under the Strata Titles Ordinance 1992 with its address at Lot 8061, Block 16, Lorong F, Kuching Central Land District, 93360 Kuching, Sarawak.
[2] The defendant is a limited company registered and incorporated under the Companies Act 1965 and having its registered address at Lot 712, Block 7, Demak Laut Industrial Park, 93050 Kuching, Sarawak.
[3] The plaintiff had engaged the defendant as its contractor to carry out the renovation works on the VGC.
Background Facts
[4] On 19 December 2014, the defendant submitted the revised tender dated the same to the plaintiff for a 'Proposed Renovation Work for Village Grove Condominium' ("the works") in relation to Block A, Block B, Block C, Block D, Block E, Pump House 1, Pump House 2, Guard House, Squash House and Club House of the VCG for the contract sum of RM1,980,000.00 ("the contract sum").
[5] By a Letter of Acceptance dated 22 December 2014, the plaintiff had accepted the said revised tender from the defendant for the works based on the contract sum.
[6] On or about 25 May 2015, the parties entered into a formal agreement (Contract Documents No 2015/VGCMC/1/ dated 25 May 2015) [CBOD Part B Vol 1 (pp 1-234)] for the execution and completion of the works by the defendant.
[7] The particulars of the works can be seen at pp 7-9 of CBOD Part B Vol 1 as part of the Contract Documents.
[8] Under the agreement, the plaintiff and the defendant agreed that the works would be supervised by the Supervising Officer ("SO") who had the power to issue instructions to the defendant. The SO appointed was Mr Ong Eng Choon @ Ong Ah Kui (PW2).
[9] The works were not completed according to the agreed date of completion on 3 July 2015. The defendant was, therefore, granted the extension of time ("EOT") of 60 days by the SO but the defendant had only completed the works on 15 April 2016. Thus, there was a delay of 288 days.
[10] After deducting the EOT of 60 days, the total number of delays is reduced to 228 days. Thus, the plaintiff claims the sum of RM228,000.00 (at the rate of RM1,000.00 per day) as part of its claim under Liquidated Ascertain Damages ("LAD"). This sum for LAD claim is shown and reflected in Payment Certificate No 9 issued by the plaintiff to the defendant.
[11] In fact, the defendant is using this Payment Certificate No 9 to sue and claim payment from the plaintiff in the sum of RM110,002.26 in Kuching Sessions Court No: KCH-B52C-1-11-2016 and the defendant had obtained judgment thereof including the claim for payment under Payment Certificate No 8 in the sum of RM358,849.01. The judgment sum was partially paid through the garnishing order of the Sessions Court.
[12] The plaintiff had discovered the defects to the works by the defendant during the defect liability period and after the defect liability period which the defendant refused to rectify. The plaintiff then obtained the quotation provided by BIHH Sdn Bhd in the sum of RM1,496,000.00 (pp 55-57 of CBOD Part C Vol 2) as estimated costs required to remedy the defects arising from the renovation works contracted and carried out by the defendant at VGC and in turn claimed this sum from the defendant pursuant to the agreement.
Defects Liability Period (DLP)
[13] The DLP for each block is different because the work for each block was not completed at the same time. The dates and the particulars of the work completion for each block can be seen from the Certificates of Practical completion ("CPC").
[14] The period of the DLP is 12 months from the issuance of the CPC as stated in item 2 of the "Appendix To Conditions of Contract" in Exh CBOD Part B Vol 1 (p 220).
[15] The Particulars of the CPC and the DLP for each block are adumbrated in Table 1 below:
The Plaintiff's Claims
[16] The plaintiff claims that the defects were due to the poor workmanship of the defendant in carrying the works. In breach of the agre
