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2020 MarsdenLR 1687
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 term 'ensure' in a contract does not create a binding obligation for payment unless explicitly stated, preserving the primary debtor's responsibilities.
Headnote:(A) Companies Act 1965 - Breach of Contract - Tri-Party Agreement - The Plaintiff's claim against the Second Defendant for RM2,850,360.12 under the Sub-Contract was dismissed. The court found that the word 'ensure' in the Tri-Party Agreement did not impose an obligation on the Second Defendant to make payments on behalf of the First Defendant. The obligations for payments remained with the First Defendant, thus constituting a double payment if enforced against the Second Defendant. (Paras 33, 35, 49, 84)
(B) Amendment Application - The Plaintiff's request to correct the name of the Second Defendant was allowed on the basis that the error was trivial and did not change the nature of the claim. (Paras 21-30)
Facts of the case:
The Plaintiff initiated a breach of contract claim against the Second Defendant following a winding up order against the First Defendant. A Tri-Party Agreement was executed to facilitate payments but was disputed regarding its obligations. (Paras 1-9)
Findings of Court:
The court concluded that the Plaintiff cannot claim payment from the Second Defendant as it conflicts with the principle of pari passu in winding up scenarios. (Paras 71, 84)
Issues: The key issues were whether the Tri-Party Agreement created an obligation for the Second Defendant to pay the Plaintiff and the implications of a double payment and pari passu principle. (Paras 17-18)
Ratio Decidendi: The court reasoned that the term 'ensure' did not constitute a binding obligation to pay and highlighted the importance of the original contractual terms among all parties involved. (Paras 35, 49, 81)
Result: Claim dismissed with costs to be paid to the Second Defendant.
| Table of Content |
|---|
| 1. breach of contract details. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9) |
| 2. plaintiff's claim for payment obligations. (Para 10 , 11 , 12 , 13 , 14 , 15 , 16) |
| 3. court allows amendment of defendant's name. (Para 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28 , 29 , 30 , 31) |
| 4. interpretation of tri-party agreement obligations. (Para 33 , 34 , 35 , 36) |
| 5. issue of double payment addressed. (Para 62 , 65 , 66 , 67 , 68) |
| 6. pari passu principle in insolvency considered. (Para 69 , 71 , 73 , 74) |
| 7. judgment dismisses plaintiff's claim. (Para 84 , 85) |
[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 pay the Plaintiff for the works completed thereunder. The Second Defendant also submitted that the Sub-Contract does not contain any terms imposing an obligation, contractual or otherwise on the Second Defendant to pay for and/ or on behalf of the First Defendant for works carried out under the said contract.
[14]Hence, it is the Second Defendant’s c
