SWEE SENG

THE JUDGMENT OF Y.A. LEE SWEE SENG

[1]Until people can travel by the “folding of space ” as a science fiction would have us imagine, it is still the transportation from one place to another by roads, rails, by sea and air transport. A reliable and efficient mode of public transportation in a capital city is important both for commerce and industry, for work and play, for its people and for tourists as well. It is part of the factors that go into determining how livable a city is - convenience, comfort and connectivity.

[2]There has been for some time now the Kuala Lumpur Monorail connecting some important locations in the Kuala Lumpur city from the connecting hub of KL Sentral through the iconic Jalan Imbi/Jalan Bukit Bintang and even passing by the nostalgic Chow Kit. The experience of being sardine-packed with only standing space during rush hours is a common one. It would not be an exaggeration to say that what started off as a system of seamless connectivity of transport is now bursting at the seams. Hence the move to expand the number of trains by 12 more four- coach trains and also extending the number of stations.

Project

[3]The Defendant and Scomi Rail Bhd on 3 June 2011, entered into the Kuala Lumpur Monorail Fleet Expansion Project Contract (“Principal Contract”) for the purposes of undertaking the engineering, procurement, construction and commissioning and provision of warranty (“Works”) for the Kuala Lumpur Monorail Fleet Expansion Project (“the Project”). On the same day, the Defendant, Scomi Rail Bhd and the Plaintiff entered into a Novation Agreement where all the rights and liabilities of Scomi Rail Bhd under the Principal Contract were novated to the Plaintiff. Along the way the Plaintiff and the Defendant (“the Parties”) entered into other agreements during the course of the Principal Contract with the aim of an orderly completion of the Works. The relevant agreements are the First Supplemental Agreement dated 16 April 2014 (“FSA”) and the Second Supplemental Contract dated 15 April 2015 (“SSC”). The Principal Contract, the FSA and the SSC are collectively referred to as the “Contract”.

Problem

[4]There were considerable delays in construction and commissioning of the Works. The Principal Contract being in June 2011, the Completion was supposed to be in July 2013. The Defendant has only delivered 5 out of 12 trains so far.

[5]The Defendant as Employer, issued a Notice of Termination dated 9 June 2016 to the Plaintiff as Contractor. It was a term of the Principal Contract in Clause 4.2.1.2 that the agreed Performance Bond must be kept valid until the completion of the Works and the remedying of any defects.

[6]The Plaintiff did not renew the Performance Bond in spite of reminders by the Defendant. The Defendant by its letter of 25 April 2016 requested the Plaintiff to renew the Performance Bond, failing which it would exercise its right under Clause 15.2 of the Principal Contract to terminate the Contract. However, instead of extending the Performance Bond which had expired on 25 April 2016, the Plaintiff wrote on 18 May 2016 to the Defendant requesting for a waiver of the requirement of the Performance Bond until 30 June 2016. This request was rejected by the Defendant pursuant to its letter dated 2 June 2016.

[7]The Defendant’s Notice of Termination to the Plaintiff was pursuant to clause 15.2.2 of the Principal Contract by virtue of the Plaintiff’s failure to comply with its obligation under clause 4.2.1.2 of the Principal Contract to maintain and renew the performance bond so that it remained in full force and effect until the Plaintiff has fully executed and completed the Works.

[8]The Plaintiff contended that the Defendant’s termination of the Contract was unconscionable and unlawful and that the Defendant was at all material time, estopped from terminating the Contract as the delay was attributable to the Defendant and further that parties were negotiating a fresh Remedial Plan for the completion of the