Back
2020 MarsdenLR 1216
HIGH COURT (KUALA LUMPUR)
AHMAD KAMAL BIN MD. SHAHID, J
Masai Tat Construction Sdn Bhd – Plaintiff
Versus
Redison Builders Sdn Bhd & Anor – Defendant
GUAMAN SIVIL NO: JA-22NCVC-259-12/2017
Danny Ng (Lim Man Yong with him) (Sing, Lim & Low) for the plaintiff.
Muhammad Faisal Moideen (Maximilian Tai Kim Sen and Cik Krishanthini Devi Jeeva Kumar with him) (Moideen & Max) for the second defendant.
The court ruled that 'ensure' in the Tri-Party Agreement does not create a payment obligation on the Second Defendant, maintaining that the duty to pay remains solely with the First Defendant, especially given the context of insolvency.
Headnote:(A) Contracts - Breach of Contract - Tri-Party Agreement - The Plaintiff claimed RM2,850,360.12 from the Second Defendant under a Sub-Contract with the First Defendant - Court held that the word 'ensure' in the Tri-Party Agreement does not impose an obligation on the Second Defendant to pay the Plaintiff - The obligation to pay remains with the First Defendant. (Paras 33, 49, 84)
(B) Legal Interpretation - Intent of Parties - The intention of the parties must be gathered from the language used in the contract which should be given its ordinary meaning. (Paras 37, 50)
(C) Insolvency - Pari Passu Principle - The court ruled that the Plaintiff cannot be prioritized over other creditors of the First Defendant due to the company being wound up - Ordering payment to the Plaintiff would contravene Section 528 of the Companies Act 2016. (Paras 70-84)
| Table of Content |
|---|
| 1. breach of contract details (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9) |
| 2. plaintiff's and defendant's legal claims (Para 10 , 11 , 12 , 13 , 14 , 15 , 16) |
| 3. amendment of defendant's name allowed (Para 18 , 20 , 21 , 22 , 23) |
| 4. standards for allowing amendments (Para 24 , 25 , 26 , 27 , 28 , 29 , 30 , 31) |
| 5. interpretation of tri-party agreement obligations (Para 33 , 34 , 35 , 36 , 37 , 38 , 39 , 40 , 41 , 42) |
| 6. no obligation for second defendant to pay (Para 43 , 44 , 45 , 46 , 47 , 48 , 49) |
| 7. court refuses to address unpleaded claims (Para 58 , 59 , 60) |
| 8. risk of double payment (Para 62 , 63 , 64 , 65 , 66 , 67) |
| 9. pari passu principle application (Para 68 , 69 , 70 , 71 , 72 , 73 , 74) |
| 10. principal of undue preference violation (Para 75 , 76 , 77 , 78 , 79 , 80 , 81 , 82 , 83) |
| 11. court dismisses plaintiff's claim (Para 84 , 85 , 86) |
Ahmad Kamal bin Md. Shahid J:
JudgmentIntroduction
[1]This is a case on breach of contract in respect of the contracts entered between parties.
[2]Pursuant to a Winding Up Order dated 1.11.2017, the First Defendant had wound up on 1.11.2017 and the Plaintiff has subsequently withdrawn its action against the First Defendant.
[3]The Plaintiff’s claim against the Second Defendant is for the sum of RM2,850,360.12 allegedly outstanding under the Sub-Contract which was entered between Plaintiff and the First Defendant.
Brief Facts
[4]The Plaintiff is a company incorporated in Malaysia under the Companies Act 1965 with a registered business address at No. 6, Jalan Cenderai 23, Kawasan Perindustrian Kota Puteri, 81750 Masai, Johor.
[5]The First Defendant is a company incorporated in Malaysia under the Companies Act 1965 with a registered address at No 308, Blok A (3rd Floor), Kelana Business Centre, 97 Jalan SS7/2, Kelana Jaya, 47301 Petaling Jaya, Selangor and its business address at Block D-3-13A, Block D, Oasis Square 2A, Ara Damansara, 47301 Petaling Jaya, Selangor.
[6]The Second Defendant is a company incorporated in Malaysia under the Companies Act 1965 with a registered address at M5C-15, 2nd Floor, Jalan Pandan Indah 4/1, Pandan Indah, 55100 Kuala Lumpur and its business address at No 294, Jalan Sri Jati 2, Taman Sri Jati, Off Jalan Puchong, 58200 Kuala Lumpur.
[7]By way of a letter of Award dated 28.6.2014 (the Main Contract), the Second Defendant had appointed the First Defendant as the Main Contractor for the Project called ‘Cadangan Projek Ladang Buah Berskala Besar di atas sebahagian PTD 2730 di Kg Tuah She, Mukim Sedili Besar, Daerah Kota Tinggi, Johor’ (The Project) amounting to RM7,718,000.00 (the Main Contract Works).
[8]By way of a letter of Award dated 2.11.2015 (the Sub-Contract), the First Defendant had appointed the Plaintiff as Subcontractor for the part of the work of the said Project amounting to RM3,869,000.00 (the sub contract works).
[9]The said Sub-Contract was executed on 2.11.2015 and on the same day also, the First Defendant, the Second Defendant and the Plaintiff had executed a Tri-Party Construction Agreement dated 2.11.2015 (Tri Party-Agreement) to ensure the payment of the Contract Sum under the Sub-Contract to the Plaintiff.
The Plaintiff’s Case
[10]It is the Plaintiff’s contentions that the Tri-Party Agreement does impose an obligation and liability on the Second Defendant to pay on behalf of the First Defendant for monies due and owing under the Sub-Contract entered between Plaintiff and the First Defendant.
[11]The Palintiff submitted that the word ‘ensure’ stated in clause 3 of the said Tri-Party Agreement does impose an obligation on the Second Defendant to make payment on behalf of the First Defendant for the alleged outstanding sum owed under the Sub-Contract.
The Second Defendant’s Case
[12]It is the contention of the Second Defendant that the Second Defendant is not a party or privy to the Sub-Contract entered between the Plaintiff and the First Defendant.
[13]The Second Defendant submitted that under the term of the Sub-Contract, the First Defendant is liable to
