Back
2025 MarsdenLR 4658
HIGH COURT MALAYA KUALA LUMPUR
MRCB BUILDERS SDN BHD – Appellant
Versus
SMM RESOURCES SDN BHD & ORS – Respondent
[Civil Suit No: WA-22NCvC-846-11/2019]
The court ruled that an oral contract existed despite the absence of a Letter of Award, emphasizing the importance of conduct and established relationships in determining contractual obligations.
Headnote:(A) Construction Law - Fraud - Conspiracy - Oral Contracts - The plaintiff's claim involved allegations of fraud and conspiracy regarding the appointment of a subcontractor without a Letter of Award. The court found that the conduct of the parties indicated the existence of an oral contract despite the lack of formal documentation. (Paras 71, 93)
(B) Agency and Authority - It was determined that the individuals who appointed the subcontractor lacked the authority to do so in accordance with the plaintiff's procedures. (Paras 19, 59)
Facts of the case:
The plaintiff, an engineering and construction company, alleged fraud against the subcontractor and its directors for appointing themselves without proper authorization, resulting in the plaintiff paying RM1,032,098.40 for unverified claims. (Paras 18-27)
Findings of Court:
The court concluded there was an oral contract between the parties, supported by communications and the fact that work was performed. The conspiracy allegations were dismissed as unfounded. (Paras 70, 99)
Issues: The court addressed whether a contract existed, whether the defendants conspired to defraud the plaintiff, and whether the 1st defendant was owed payment for labor and services. (Paras 53, 54)
Ratio Decidendi: The court emphasized the necessity of proving work done through supporting documents, the importance of the parties' conduct, and the impact of the lack of a formalized contract in adjudicating the claims made. (Paras 71, 100)
Result: Plaintiff's claim dismissed; 1st defendant's counterclaim dismissed. Costs awarded to the 2nd to 5th defendants. (Paras 146, 147)
| Table of Content |
|---|
| 1. overview of the dispute involving alleged fraud. (Para 1 , 2 , 8 , 10 , 20) |
| 2. procedural anomalies regarding subcontractor's appointment. (Para 3 , 4 , 5 , 6) |
| 3. claims against the subcontractor and alleged procedural breaches. (Para 18 , 19 , 24 , 25 , 26 , 27) |
| 4. defendant's assertions regarding valid appointments. (Para 29 , 30 , 41) |
| 5. no conspiracy established by the second defendant. (Para 42 , 44 , 49 , 50) |
| 6. lack of authority contested by the third defendant. (Para 46 , 47 , 48) |
| 7. directors implicated without substantial evidence. (Para 51 , 52) |
| 8. issues identified for trial and claims summary. (Para 53 , 54 , 99) |
| 9. the main claim's basis involves conspiracy allegations. (Para 56 , 57 , 58 , 59) |
| 10. existence of a contract inferred despite lack of formal documentation. (Para 70 , 71 , 131) |
| 11. evidence substantiating claims against the 1st defendant. (Para 76 , 140 , 142) |
| 12. final dismissal of claims and allocation of costs. (Para 146) |
Preliminary
[1] This dispute involves construction work that is allegedly tainted with fraud and conspiracy.
[2] A subcontractor has been accused not only of committing fraud against the main contractor but also of conspiring through its directors with the main contractor's key persons on the site of the project for financial gain at the expense of the main contractor.
[3] At first glance, everything appeared to be in order at the project site.
[4] There was, however, only one thing missing: the Letter of Award, which was not in place because the proper procedures for appointing the subcontractor were allegedly not followed.
[5] However, it is interesting to note that the subcontractor was already on site, working right under the main contractor's nose.
[6] In light of this, does this scenario constitute fraud or conspiracy?
[7] Soon, this will be unravelled.
An Overview Of The Background Surrounding The Case
[8] The plaintiff is a company that offers engineering and construction services throughout Malaysia and is involved in numerous construction projects.
[9] The 1st defendant is a general construction and investment holding company that provides unskilled and semi-skilled labour for the construction of architectural and structural civil work.
[10] The 1st defendant was originally a subcontractor hired by MRCB Engineering Sdn Bhd, a company associated with the plaintiff, to perform work for The Light Rail Transit Line 3 Project ("LRT 3 Project").
[11] That is the origin of the 1st defendant's relationship with the plaintiff's affiliated company.
[12] The 2nd defendant was employed on 5 January 2015 by MRCB Engineering Sdn Bhd.
[13] On 18 December 2014, Malaysian Resources Corporation Berhad ("MRCB"), the parent company of the plaintiff, initially appointed the 2nd defendant as Senior Project Manager of Job Grade 6, where the 2nd defendant was assigned to the Special Project (LRT, Package B-Mainline), Puchong, Selangor ("the LRT Project"). The LRT Project was carried out by one of MRCB's subsidiary companies, MRCB Engineering Sdn Bhd.
[14] On 31 March 2016, the 2nd defendant was then relocated from the LRT Project to the proposed Westin Desaru Resort at Desaru, Johor Darul Takzim for Corniche Hotel Sdn Bhd ("Westin Desaru Project") and re-designated from Senior Project Manager to Project Director.
[15] In addition, the 2nd defendant was appointed Project Director of the proposed "Desaru Conference Centre" at Desaru, Johor Darul Takzim ("Conference Centre Project").
[16] Meanwhile, the 3rd defendant was hired by MRCB Engineering Sdn Bhd on 24 August 2015. The 3rd defendant was also transferred from the LRT Project to the Westin Desaru Project on 30 June 2016.
[17] The 4th and 5th defendants are the directors and shareholders of the 1st defendant.
The Plaintiff's Case
[18] The 2nd and 3rd defendants, who were the number one and two main personnel at the site respectively, appointed and instructed the 1st defendant to carry out work at the Westin Desaru Project and
