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2025 MarsdenLR 4915
HIGH COURT MALAYA KUALA LUMPUR
PRIMUDI SDN BHD – Appellant
Versus
UNIVERSITI SAINS ISLAM MALAYSIA – Respondent
[Civil Suit No: WA-22C-57-08/2022]
The court upheld the validity of contract termination due to the plaintiff's failure to perform timely while confirming that the defendant's forfeiture of the performance bond was justified under contract terms.
Headnote:(A) Contract Law - Conditions of Contract - Termination - The Plaintiff, Primudi, engaged in a construction contract with the Defendant, USIM, was terminated for non-completion despite being only 27.38% complete by the Extended Completion Date after two extensions totaling 92 days. (Paras 3, 5, 10, 72)
(B) Performance Bond - The Defendant forfeited the Performance Bond after the contract termination, citing breaches by the Plaintiff as justification. (Paras 4, 72)
(C) Claims and Counterclaims - Both parties made claims against one another; the Plaintiff alleged wrongful termination and damages, while the Defendant counterclaimed for breach of contract and losses incurred to engage a third-party contractor. (Paras 5, 76)
Facts of the case:
The Plaintiff was contracted for the construction of a faculty building with an initial completion date of April 29, 2019. Two extensions were granted, but significant delays ensued, leading to a termination letter issued on August 6, 2019. The Plaintiff subsequently filed a suit claiming wrongful termination and losses, while the Defendant counterclaimed for damages.
Findings of Court:
The court found that the termination was valid due to the Plaintiff's failure to proceed with construction diligently, and the Plaintiff’s claims were dismissed, while some relief was granted to the Defendant.
Issues: The main issues discussed included the validity of the contract termination, the justification for the forfeiture of the Performance Bond, and the entitlement of both parties to their respective claims and counterclaims.
Ratio Decidendi: The court ruled that the Defendant's termination was valid as the Plaintiff failed to adhere to the contract terms regarding timely completion. The court underscored that the Plaintiff's delays and contractual breaches justified the Defendant's actions and that the forfeiture of the Performance Bond was proper under the existing contract.
Result: The Plaintiff's claims were dismissed, and the Defendant’s counterclaim for declarations regarding breach and termination was granted, while the counterclaim for damages and other monetary claims was dismissed.
| Table of Content |
|---|
| 1. overview of contract termination and claims (Para 1 , 2 , 3 , 4 , 5 , 6) |
| 2. defendant's termination validity contested (Para 9 , 10 , 11 , 12 , 14) |
| 3. plaintiff's entitlement to extensions of time (Para 67 , 68 , 71 , 72) |
| 4. defendant's counterclaim findings (Para 75 , 76 , 78 , 90) |
| 5. final orders and relief (Para 88 , 89 , 92) |
[1] The tale behind this action is as unspectacular as it is common. Despite two extensions of time, the Defendant employer terminated the Plaintiff contractor's engagement on a building contract on the grounds of non-completion. Sometime after that termination, the Defendant then brought this action for unlawful termination of the contract and for consequential loss and damage arising therefrom. The Plaintiff then counterclaimed against the Defendant for the loss and damage it incurred in having to engage a third party contractor to complete the works that the Defendant failed to. This Judgment is after the full trial of all of those claims and counterclaims.
Salient Facts
[2] By a Surat Setujuterima Tender dated 20 April 2017 supplemented by a formal contract signed two months later (collectively, "Contract"), the Defendant ("USIM") had appointed the Plaintiff ("Primudi") as the main contractor to construct its Bangunan Fakulti Pengajian Bahasa Utama ("Project"). The initial completion date was 29 April 2019 ("Completion Date").
[3] Despite two extensions of time ("EOT") totaling 92 days that extended the Completion Date to 30 July 2019 ("Extended Completion Date"), the Project was still only 27.38% completed by that Extended Completion Date. After no visible improvement after the Notis Untuk Tujuan Penamatan Pengambilan Kerja Kontraktor dated 23 July 2019 was given to Primudi, USIM then issued a Certificate of Non-Completion dated 30 July 2019 ("CNC") and followed that up by terminating Primudi's appointment by a letter dated 6 August 2019 ("Letter of Termination").
[4] Following the termination, on 2 October 2019 USIM confiscated the monies under the "Wang Jaminan Perlaksanaan ("Performance Bond") that Primudi had provided. It also appointed Punca Cergas Sdn Bhd ("Punca Cergas") as a substitute contractor to complete the Project, allegedly incurring additional costs of RM5,809,562.78.
[5] Almost three years later after the Letter of Termination, on 2 August 2022, Primudi filed this action to challenge the validity of that termination and to seek the following relief it set out in para 12 of its Re-Amended Statement of Claim:
"(a) A declaration that the Defendant has wrongfully terminated the agreement between the Plaintiff and the Defendant;
(b) A Judgment that the Defendant repay or return in full the Performance Bond to the Plaintiff/Execution Guarantee Money to the Plaintiff;
(c) A Judgment that the Defendant pay the amount of the Plaintiff's loss of profit as assessed by this Honourable Court;
(d) A Judgment that the Defendant pay the Plaintiff the damages assessed by this Honourable Court;
(e) Interest at the rate of 5% per annum from the date of filing of this action until its full settlement;
(f) Interest assessed by this Honourable Court from the date 6 August 2019 until the date of filing of this action;
(g) Cost; and
(h) Other reliefs and orders that the Court deems expedient."
[6] In para 68.1 of its Statement of Defence and Amended Counterclaim, USIM counterclaimed against the Plaintiff for:
"68.1 A declaration that the Plaintiff had breached the terms of the JKR 203A Amendment 1/2010 Conditions of Contract (Contract No: USIM/JPPF/NS/02/2017) dated 20 September 2017 (hereinafter referred to as the "said Contract")
68.2 A declaration that the termination of the said Contract through the Defendant's Contract Termination Notice dated 6 August 2019 is valid and proper;
68.3 A declaration that the Defendant's action in forfeiting the Performance Bond under cl 13.6 of the said Contract is valid and proper;
68.4 The sum of RM5,809,562.78, being the difference between the preparati
