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2025 MarsdenLR 4920
Antah Schindler Sdn Bhd – Plaintiff
Versus
Ssangyong Engineering & Construction Co Ltd – Defendant
Subcontractors are entitled to payment without conditional terms based on payments from employers; summary judgment is granted when there's no substantial question left to be tried.
Headnote:(A) High Court Rules 1980 - Order 14 - Appeal against summary judgment - Contractual interpretation - Subcontractor's right to payment - The plaintiff, a subcontractor, claimed RM1,219,104 against the main contractor for unpaid sums. The High Court's conditional payment terms were found inconsistent with clear clauses in the subcontract. The court held that the subcontractor’s right to payment could not be conditional on prior payment from the employer, as there is no bar to pursuing the claim. (Paras 4, 10, 11, 19)
(B) Summary Judgment - Principles - Summary judgment should be granted when issues are clear, preventing unjust delays to entitled parties. Conditions that unfairly restrict access to judgment undermine statutory and common law protections. (Paras 21, 25)
Facts of the case:
The plaintiff, a subcontractor, was owed RM1,219,104 from the defendant, the main contractor, for works executed under the subcontract related to the Menara Landmark Johor Bahru Project. The defendant delayed payment based on 'pay when paid' terms related to the primary contract with the employer, which led to the initial unfavourable ruling from the High Court.
Findings of Court:
The court determined that the subcontractor was entitled to the unpaid balance without the conditions of the defendant receiving payment from the employer, as it imposed unduly restrictive terms contrary to clear contractual obligations and established legal principles.
Issues: The main issues centered on the interpretation of payment terms in the subcontract, the rights of a subcontractor to claim payment, and the appropriateness of conditional judgments.
Ratio Decidendi: The court held that the subcontract clearly provided for payment without the need for prior payment from the employer and that 'pay when paid' clauses must be unambiguous to impose conditions on payment rights. Summary judgment was warranted due to the absence of substantial issues to be tried.
Result: Appeal allowed with costs here and below.
Suriyadi JCA (delivering judgment of the court):
On 26 March 2007, the panel had allowed the appeal filed by the appellant plaintiff (‘the plaintiff’) with costs at the Court of Appeal level and below. This was a matter pursuant to O 14 of the Rules of the High Court 1980 which was initially heard by the senior assistant registrar. The latter had refused the application, on the premise that it was not such a straight forward case, leading subsequently to a successful appeal being filed before the judge in chambers. Regretfully the High Court judge had made an order, which had dissatisfied the successful plaintiff, in that it contained conditional terms within it.
To appreciate the reasons why we allowed this appeal, by necessity, we need to lay down some of the salient facts. The plaintiff was a subcontractor whilst the respondent defendant (‘the defendant’) the main contractor. The latter was appointed by Yetcome Investment, hereinafter referred to as the employer, to install lifts in respect of the Menara Landmark Johor Bahru Project. The plaintiff then had dutifully carried out its part of the bargain. In relation to this case, founded on interim certificates numbered 332 (dated 15 July 1998), 333 (dated 16 August 1998), 343 (dated 25 January 2000) and 344 (dated 19 December 2000) as certified by the project architect, were promptly partially paid except a balance sum of RM1,219,104. The balance unpaid sum came from certificates 332, 333 and 343.
In relation to any payment, the plaintiff had submitted that the contractor shall apply for the architect’s certificates and payments made from those certificates, which inevitably represent the total value of work done by the plaintiff, to be paid forthwith within 14 days. According to the plaintiff, this term was pursuant to cl 11(b) of the subcontract agreement and it reads:
(b)within fourteen days of the receipt by the Contractor of any certificate or duplicate copy thereof from the Architect the Contractor shall notify [2008] 3 MLJ 204 at 208 and pay to the Sub-Contractor the total value certified therein in respect of the Sub Contract Works and in respect of any authorized variations thereof and in respect of any amounts ascertained under cl 8(c) hereof less:
(i)retention Money, that is to say the proportion attributable to the Sub Contract Works of the amount retained by the Employer in accordance with the Main Contract; and
(ii)the amounts previously paid.
The defendant read their contractual relationship differently. Its defence was simple in that apart from the subcontract, the main contract with the employer was also incorporated in the contractual relationship between them. It makes commercial sense for a main contractor to incorporate in subcontracts condition precedents, in relation to its responsibility to pay the subcontractor, in that payment is made only after payments have been received from the employer. How can the contractor not be concerned when the architect’s certificate is conclusive as to the date and amount of payment? On the other hand, subcontractors too are not without strength. Backed by their respective strength, parties will thereafter conclude their discussions, with their intentions being crystallised into written agreements.
As affirmed in its defence, since the commencement of the project in 1996, it was mutually agreed and understood that payments to the plaintiff would be made after the defendant had received payments from the employer. The defendant submitted that the format of payment must be as that provided for in cl 27(a)(vii) of the main contract, read together with sub-cl 2 of cl 19 of the Nominated Sub-Contractors (Special Condition of the said Subcontract). Clause 27(a)(vii) reads:
That payment in respect of any work, materials or goods comprised in the sub-contract shall be made within 14 days after receipt by the Contractor of payment from the Employer against the architect’s certificate under clause 30 of these Conditions which states as d
