Parties must adhere to contractual dispute resolution mechanisms, upholding the terms agreed in their contract.

Introduction

[1] This appeal relates to a claim by the respondent, Alpharich Sdn Bhd, (plaintiff in the High Court) under a building contract for payment under an interim certificate and for additional works. It also involves a counterclaim by the appellant, Juara Serata Sdn Bhd (defendant in the High Court) for damages for defective workmanship and for making good the construction defects, and liquidated and ascertained damages for delay in the completion of the project.

[2] The High Court allowed the plaintiff's claim for the amount of RM1,202,500.00 under the interim certificate with interest thereon, but dismissed the claim for additional works. The High Court also dismissed the defendant's counterclaim.

[3] On 15 October 2012 the Court of Appeal dismissed the defendant's appeal.

[4] Leave to appeal was granted to the defendant by this Court on 3 July 2013 on the following questions of law:

Question 1

"Whether the Federal Court has jurisdiction to consider/review the decision of the Court or courts below based on the erroneous ground that a defence has not been pleaded and in the result refused to consider the same: and/or where the defence has been fully canvassed in Court despite an arbitration agreement but refused to consider the same?";

Question 2

"Whether the Court can review the validity of a certificate or decision made by a contract administrator relating to a dispute or difference arising between the parties to a construction contract, pursuant to a provision contained therein which provides that such a certificate or decision shall be final and binding between the parties unless referred to arbitration?"

Question 3

"Whether a provision requiring a contractor to make good defective works within a specified Defects Liability Period in a construction contract precludes the recovery of damages by the employer under the common law and/or the Contracts Act 1950 ?"

[5] We heard the appeal on the 21 May 2015 and adjourned the matter for decision. We now give our decision and reasons for the same.

Background Facts

[6] The background facts have been sufficiently set out in the judgment of the High Court, the Court of Appeal and fully expanded in the submissions of the parties. For the purpose of this appeal, it suffices to outline merely in summary from the salient major facts bearing on this dispute.

[7] By a letter of award dated 22 September 2004 ("letter of award"), the defendant was appointed by the Ministry of Defence (MINDEF) as a camp operator for the National Service Program at the Proposed Pusat Latihan Khidmat Negara, Kem Unity at 32nd Mile, Jalan Kuching, Serian Sarawak (Unity Camp). The appointment required the defendant to prepare all the infrastructure, training elements and facilities, tools and instruments as per the Schedule of Compliance for the Unity Camp.

[8] By an agreement between the defendant and the plaintiff dated 28 March 2005 ("agreement"), the defendant appointed the plaintiff as the sole and exclusive contractor to construct and complete the Unity Camp in accordance with the terms and conditions therein on a turnkey basis with a completion date of 31 May 2005. Under the agreement, the defendant as the employer was to pay the plaintiff a consideration sum of RM4,950,000.00 "upon certification by the Client that the Works have been duly completed" (cl 2 of the agreement).

[9] Being a turnkey project, the plaintiff as the contractor was obliged to design as well as to construct the project. An architect was appointed by the plaintiff as required under the agreement.

[10] On 11 July 2005, the architect pursuant to cl 7.1 of the agreement, duly certified, vide Certificate of Practical Completion, that the works were practically completed on the 7