RK Nathan JC:

The defendant filed an application to strike out the plaintiff's claim by way of Encl. 5. The learned Senior Assistant Registrar (SAR) dismissed the said application; hence this appeal before me.

Background Facts

The plaintiff is the owner and developer of 3 middle-cost apartment blocks at Lot PT4, Jalan Berhala, Section 72, Wilayah Persekutuan (the project). Pembinaan Gedong Sdn. Bhd. (Gedong) was engaged as turnkey contractor and Ingeback (Malaysia) Sdn. Bhd. (Ingeback) was engaged as the subcontractor for the project. The defendant entered into a Performance Bond on 14 December 1987 with the plaintiff and Gedong to guarantee the due performance of the said construction by Ingeback for the sum of RM29,849,443 (the Performance Bond). Based on this, Gedong entered into a Building Contract with Ingeback on 24 March 1988 for the construction of the project. Meanwhile, Gedong entered into a Deed of Assignment with the plaintiff on 28 June 1988 whereby Gedong absolutely assigned its rights to receive from the defendant, all monies payable under the Performance Bond. Ingeback however breached the provisions of the Building Contract and defaulted in its various obligations, the details of which need not be enumerated for the purposes of this appeal. Gedong therefore terminated the Building Contract by way of its letter dated 19 April 1990 (the first breach). The plaintiff and Gedong then by way of their solicitors' letter dated 23 April 1990 made a claim against the defendant on the Performance Bond.

On or around July 1990 Ingeback as plaintiff made an application through a writ of summons D5-22-1025-90 (1025-90 suit) to inter alia obtain an injunction to restrain the defendant from paying out on the Performance Bond without naming the plaintiff or Gedong as co-defendants. Such an order was granted on 6 July 1990. The plaintiff intervened in the 1025-90 suit for the purposes of dissolving the injunction and for claiming on the guarantee issued by the defendant. However procedural objections to the said application to dissolve the injunction were taken by the defence and the said application was dismissed with liberty to refile. There was no further application. Subsequently the 1025-90 suit was called up by this Court on a show cause notice and Ingeback through the Official Receiver withdrew the said suit with the implied consent of the present plaintiff and Gedong (the intervenor).

In any event even before this order was granted Gedong and Ingeback had agreed by way of a letter dated 26 June 1990 (Exh. WT0-5 to Encl. 6) that both parties had expressed the wish to complete the project and with this in mind Gedong had granted Ingeback an extension of time to complete the project. It was also agreed by the parties that:

On the current position of insurance guarantee, termination letter and whatever legal actions both parties are considering taking should be put on hold and be reviewed by both parties at a later date.

To further cement their desire to complete the Project, Gedong entered into an agreement dated 10 August 1990 with Ingeback (Supplemental Agreement) which agreement was supplemental to the Building Contract whereby inter alia Ingeback was allowed to recommence work in the project as subcontractors. In spite of extensions given, Ingeback was unable to complete the project and sought help from Gedong by way of its letter dated 12 June 1991 (Exh. WTO-6 to Encl. 6) to take over the management of the project up to completion. Accordingly Ingeback ceased all further involvement in the project.

However, their aforesaid breaches of contract had already caused a delay of more than one year to the project, thus incurring liability to Gedong as liquidated and ascertained damages under the Building Contract and Supplemental Agreement amounting to RM4,087,532.90 as averred in Encl. 6. This has not been denied by Renu Zechariah who affirmed an affidavit on behalf of the defendant, in response to Encl. 6.

W