The court upheld the contract interpretation that deferred payments and LAD should reflect the stipulated timelines, dismissing related claims.

Introduction

[1] Pursuant to a design and build contract entered into between Imej Warisan Sdn Bhd (the plaintiff in the court below) and the Government of Malaysia (the defendant in the court below), the plaintiff sued the defendant for (i) late payment interest of RM1,511,386.84; (ii) damages in the sum of RM685,225.71 for wrongful deduction of liquidated ascertained damages ('LAD') of 27 days; and damages of RM3,420,320.96 for loss and expense suffered by the plaintiff in respect of the delay in the completion of the project.

[2] After a full trial at the Kota Kinabalu High court, the learned judge allowed the plaintiff's claim and made the following orders, inter alia:

a) The defendant to pay the plaintiff late payment interest of RM1,021,932.18 together with interest at 4% per annum from date of judgment until realisation;

b) The defendant is entitled to impose LAD of 24 days only amounting to RM609,089.52 and not RM685,225.71 and the defendant to refund to the plaintiff the difference of RM76,136.19; and

c) The plaintiff's claim for RM3,420,320.96 for loss and expense is dismissed.

[3] Dissatisfied, the defendant appealed against the whole of the decision whilst the plaintiff cross-appealed against part of the decision relating to the late payment interest and deduction of the LAD.

[4] On 17 January 2017 after hearing of submission of counsel for the parties we arrived at a unanimous decision to allow the defendant's appeal and dismiss the plaintiff's cross-appeal. We now set out our reasons below. In this judgment, the parties shall be referred to as they were in the court below.

Brief Account Of The Salient Facts

[5] Pursuant to a contract dated 18 November 2005, the defendant appointed the plaintiff to design and build the project known as 'Cadangan Merekabentuk, Membina dan Menyiapkan Sekolah Menengah Teknik Beaufort, Sabah dan 150 unit Kuarters Institusi Pendidikan' for the contract price of RM96,865,377.00.

[6] The contract was for a period of 30 months calculated from 26 August 2004 and due for completion on 25 February 2007. Oscabumi Sdn Bhd was appointed as the project management consultant for the project ('the PMC').

[7] A total of four certificates of delay and extensions of time (EOT) for the completion of the project were granted to the plaintiff. The particulars are as follows:

[8] The Occupation Certificate was issued by the Beaufort District Council on 12 February 2009. According to the certificate of practical completion, the project was completed on 16 February 2009.

The Plaintiff's Claim

[9] The plaintiff's claim for late payment interest relates to interim certificates No 2 to 39 which were paid after the timeline of 30 days for due payment pursuant to cl 50.3 of the contract.

[10] The plaintiff's claim for damages for wrongful deduction of LAD of 27 days is predicated on the fact that there are no grounds for imposing LAD. The delay was caused by the Beaufort District Council in the issuance of the Occupation Certificate.

[11] The plaintiff's claim for damages in the sum of RM3,420,320.96 due to late payment of the interim certificates is in respect of financial charges (RM1,363,419.26) and loss and expense incurred (RM2,083,901.70) due to the delay of 12 months.

Findings Of The High court

[12] The findings of the learned judge on the three principal issues may be summarised as follows:

a) Whether the plaintiff is entitled to late payment interest under cl 50.4 of the contract?

i. Three of the four EOT showed that the delays were due to circumstances beyond the control of the plaintiff. The defendant had agreed with the reasons by giving EOT1, 2 and 4. EOT3 was due to late approval and instruction from KPM. Up to 21 October 2008, the delays were not due to the fault o