Lim Chong Fong JCA:

Introduction

[1] This is an appeal on the assessment of damages pursuant to a terminated construction contract.

[2] The Appellant, who is the defendant in the High Court, is a private limited company.

[3] The Respondent, also a private limited company, is the plaintiff in the High Court.

[4] We heard the appeal on 14 March 2025 and subsequently adjourned the decision to allow time for deliberation on the arguments presented by the parties.

[5] Now having done so, we hereby give our decision below together with our supporting grounds.

Background

[6] The Appellant was awarded the main contract by the Ministry of Education of the Federal Government of Malaysia ("Employer") to construct a school named Sekolah Menengah Kebangsaan Tandek 2, located in Kuala Marudu, Sabah, with a contract value of RM42,750,000.00 ("Main Contract Sum").

[7] The Appellant thereafter sub-contracted the carrying of the whole of the building works to the Respondent via a written sub-contract agreement dated 28 July 2009 ("Sub-Contract Agreement"). The sub-contract sum of the Respondent is determined at RM35,228,250.00 ("Sub-Contract Sum"), to wit, 85% of RM41,445,000.00 being the Main Contra