2026 MarsdenLR 483

MAHKAMAH TINGGI MALAYA SEREMBAN
MOHAMAD HALDAR ABDUL AZIZ, J
ONE-BUILTWELL ASSOCIATES (M) SDN BHD – Appellant
Versus
SEREMBAN SPECIALIST HOSPITAL SDN BHD – Respondent
[Guaman Sivil No: NA-22C-1-01/2022]

A contractor who fails to dispute a final account after being put on notice is deemed to have accepted it. Additionally, a partial assignment of construction works to a sub-contractor does not discharge the principal contractor from their primary liability and contractual obligations toward the employer.

Headnote:(A) Contract Law - Building Construction Contract - Performance Bond - Retention Sum - Set-off - Clauses of contract providing for set-off - Construction contract contained provisions under which the employer was entitled to set off amounts payable by the contractor for defects and project completion costs against the performance bond and retention sum (Paras 26-29).

(B) Contract Law - Final Account - Conclusiveness - Waiver of right to object - Where a contractor fails to object to a final account following a final reminder, the account is deemed accepted and becomes a binding debt; failure to dispute such account at the earliest opportunity renders subsequent challenges an afterthought (Paras 35, 38, 41).

(C) Contract Law - Assignment - Effect of Deed of Assignment - A deed of assignment transferring remaining works to a third party does not absolve the primary contractor of their overall contractual obligations, duties, and liabilities toward the employer as the principal contractor (Paras 49, 51-53).

Facts of the case:
An employer appointed a contractor for a hospital construction project. Throughout the contract period, there were significant delays, leading to extensions of time and the eventual issuance of certificates of non-completion. A deed of assignment was signed to transfer remaining works to a third party, but the contractor remained the principal party. Upon final completion, the employer issued a final account showing a substantial balance due from the contractor. The contractor failed to respond or dispute this account. The contractor subsequently sued for the recovery of the performance bond and retention sum, while the employer counterclaimed for the amount due under the final account.

Findings of Court:
The court found that the contractor failed to dispute the final account, which became a binding debt under the contract. The employer was entitled to set off the final account debt against the performance bond and retention sum. Furthermore, the deed of assignment did not release the contractor from primary liability regarding project defects and overall contractual obligations.

Issues: The main issues were whether the contractor's claims for the performance bond and retention sum were defeated by the set-off in the final account, and whether the contractor remains liable under the principal contract despite assigning part of the work to a third party.

Ratio Decidendi: The court held that contractual provisions for set-off are enforceable. A final account that is not disputed after reasonable notice is deemed accepted and constitutes a crystallized debt. An assignment of works does not inherently release a principal contractor from their overarching contractual obligations unless expressly stated otherwise in the instrument.

Result: Plaintiff's claim dismissed with costs; Defendant's counterclaim allowed with costs.