JUDGMENT

Hashim Yeop Sani CJ (Malaya):

The appellant company, Pembinaan KSY Sdn. Bhd. (KSY) were the contractors to Lian Seng Properties Sdn. Bhd. (the company) engaged for the development project of a property (now called K.L. Plaza) owned by the company.

The company had borrowed heavily from various financial institutions for the development project and by June 1986 the company owed KSY RM10,529,000 on account of unpaid architect's certificates. In fact work on the development project came to a standstill on account of the company's failure to pay and the banks refused to lend any more money to the company. After some negotiations which must have aborted KSY finally sued the company for the amount of RM10,529,000 in January 1987.

After various extensions of time granted by the Court for the company to file the defence KSY finally entered judgment in default on 31 March 1987 for the same sum and the company was duly informed of this fact.

On 22 April 1987 KSY and the company signed a lump sum agreement after negotiations with the various financial institutions where the company agreed that upon completion of the development project they would pay KSY a lump sum of RM26,050,000. KS