The failure to deliver a constructed vessel constitutes breach of contract, validating the claim for damages based on wasted expenditure.

Introduction

[1] On 1 March 2017, after a period of pre-contractual negotiations, the Plaintiff and the 1st Defendant entered into an agreement for the construction of a new vessel ("Agreement"). The subject vessel was identified as "Build Number: 002, Hull Identification No AU-SBR 125120617" ("Vessel").

[2] The Agreement contained the terms governing the relationship between the parties. The parties included the 3rd Defendant who signed on behalf of the 1st Defendant and also in his personal capacity as a guarantor for the 1st Defendant's performance. The 3rd Defendant is a director of the 1st Defendant.

[3] The Plaintiff sued the Defendants in this action for various relief because the 1st Defendant failed to deliver the Vessel that the Plaintiff had contracted for and paid the 1st Defendant to build. The 1st Defendant had allegedly sold the partially built Vessel to the 2nd Defendant.

[4] The 1st Defendant counterclaimed for outstanding payments and storage charges. According to the 1st Defendant, the delays in construction were caused by the Plaintiff and that the partially built Vessel was sold to mitigate losses.

[5] The cause of action discernible from the pleaded case of both parties appear to be breach of contract. The Plaintiff additionally pleaded money had and received in relation to the proceeds of the sale of the Vessel and conversion of the Vessel.

[6] During post-trial submissions on 4 December 2024, counsel for the Plaintiff informed the Court that the Plaintiff would not be pursuing prayers (1) to (6) of the claim, essentially those prayers for specific relief relating to specific performance of the Agreement and the taking of possession of the Vessel.

Issues For Determination

[7] Based on the pleadings of the parties and the aforesaid abandonment of relief by the Plaintiff, the following are the issues for determination:

(1) What is the legal consequence of the pleaded delay events in the construction of the Vessel?

(2) Whether the 1st Defendant was entitled to stop construction and/or claim storage charges.

(3) Whether the Plaintiff had fully paid for the Vessel including variation works and whether there was total failure of consideration.

(4) Whether the 1st Defendant was entitled to sell the Vessel and/or whether the 1st Defendant committed conversion.

(5) Whether the 3rd Defendant is personally liable as a guarantor under the Agreement.

(6) Whether the Plaintiff is entitled to the liquidated quantum of damages sought from the 1st and 3rd Defendants.

Interpretation Of Foreign Law Contract

[8] Before I deal with the issues, it is noted that the parties made an express choice of law in the Agreement ie Australian law. Thus Australian law is the proper law applicable to interpret the Agreement and the performance of obligations arising from it.

[9] As neither party pleaded or proved the application of any Australian law in this case, there is a presumption that the applicable Australian law is identical to Malaysian law. See European Profiles Ltd v. Sentinel Steel (Malaysia) Sdn Bhd 1993 MarsdenLR 485 ; ; [1993] 2 AMR 3144 .

Analysis And Findings

Delays In Construction

What Is The Legal Consequence Of The Pleaded Delay Events In The Construction Of The Vessel?

[10] It is not disputed that according to cl 5.1 of the Agreement, it was co