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2021 MarsdenLR 2195
HIGH COURT MALAYA SHAH ALAM
LIANMARK SDN BHD – Appellant
Versus
AL-AMBIA SDN BHD – Respondent
[Civil Suit No: 22C-2-01-2017]
Breach of innominate term in a contract does not justify termination if the benefits of the contract are still realized, and notice for defects is required to support counterclaims.
Headnote:(A) Contracts Act 1950 – Clause 7 (Payment Terms) – Clause 8 (Retention Sum) – Clause 6 (Liquidated Damages) – Plaintiff completed Works but failed to verify 23 Progress Claims as required by LA, leading to breach of Clause 7 – Court held that Clause 7 is an innominate term and breach did not deprive Defendant of substantial benefit under LA – Defendant's counterclaim for LAD and Rectification Costs denied due to lack of evidence and notice requirements – Plaintiff entitled to payment of Claimed Sum and Retention Sum – Counterclaim allowed partially for RM75,200. (Paras 27, 33, 37, 58, 73)
Facts of the case: The Plaintiff executed plumbing services as part of a project and claimed outstanding payments while the Defendant counterclaimed alleging poor workmanship and incomplete Works. Both Original Action and Counterclaim were heard together.
Findings of Court: Plaintiff's claims substantiated; Defendant failed to provide notice for alleged defects and did not prove claims for countercharges.
Issues: Whether Plaintiff's non-verification of Progress Claims constituted a breach justifying termination by Defendant? Whether counterclaims for LAD and other charges were valid?
Ratio Decidendi: Breach of Clause 7 was not material enough to terminate the contract, while Defendant's inaction to provide notice or evidence eroded its counterclaims.
Result: Original Action allowed; Defendant to pay RM1,364,190.83 to Plaintiff; partial allowance of Counterclaim.
A. Background
[1] Alpha Astral Sdn Bhd (Developer) had appointed defendant company (defendant) for a project (Project) to build, among others, serviced suites and studio apartments (Units).
[2] The defendant entered into a joint venture agreement with Mesa Engineering Sdn Bhd (MESB) to carry out the Project.
[3] By way of a letter of award dated 24 August 2012 (LA), defendant appointed plaintiff company (plaintiff) to perform plumbing and sanitary services in the Project (Works).
[4] Throughout the Works:
(1) Plaintiff had submitted 23 Progress Claims (PC) to defendant; and
(2) Defendant had paid a total sum of RM2,744,292.17 to plaintiff (defendant's Payments) by way of 20 Payment Vouchers (PV).
[5] On 7 April 2015, defendant's employee, Ms. Queh Lee Mei, sent an email to plaintiff [defendant's Email (7 April 2015)]. Attached to the defendant's Email (7 April 2015) was defendant's "Interim Payment Certificate No 21" (IPC No 21). According to IPC No 21, among others:
(1) Defendant had previously issued 20 IPC's (IPC Nos. 1 to 20) for which the Defendant had paid a total sum of RM2,932,269.33 to Plaintiff; and
(2) Plaintiff owed a total sum of RM481,395.49 to Defendant as stated in 28 Debit Notes (DN) for, among others:
(a) construction materials for the Project which had been supplied by defendant to plaintiff (defendant's Materials Cost); and
(b) Works performed by defendant on behalf of plaintiff (defendant's Works).
[6] The plaintiff alleged that the Works had been completed. On 21 July 2015, plaintiff submitted a "Final Claim" to defendant (plaintiff's Final Claim). According to plaintiff's Final Claim, there was still an outstanding sum of RM1,439,390.83 due from Defendant to plaintiff for the Works (Plaintiff's Claimed Sum).
[7] The Plaintiff's solicitor sent to defendant a letter dated 19 August 2015 which demanded for payment of plaintiff's Claimed Sum [Demand (plaintiff's Solicitor)]. The Defendant did not reply to the Demand (plaintiff's Solicitor).
B. Legal Proceedings
[8] The plaintiff filed this suit against the Defendant for the plaintiff's Claimed Sum (Original Action).
[9] The defendant denied the Original Action on the following grounds:
(1) the Works was of poor workmanship;
(2) Plaintiff had failed to carry out the Works in accordance with the LA;
(3) Plaintiff had not completed the Works as stipulated in the LA;
(4) Plaintiff had failed to carry out rectification works as provided in the LA (Rectification Works); and
(5) Plaintiff had not provided supervision of the Works as required by the LA.
[10] In this case, Defendant had counterclaimed from plaintiff for the following, among others (Counterclaim):
(1) Defendant's Materials Cost;
(2) Defendant's Works;
(3) Defendant's direct payments to authorities on behalf of plaintiff [defendant's Payments (Authorities)];
(4) Rectification Works performed by Defendant and third parties appointed by the defendant (defendant's Rectification Cost);
(5) cost of machinery for the Project which had been provided by Defendant to plaintiff (defendant's Machinery Cost);
(6) cost of Defendant's supervision of the Works (defendant's Supervision Cost);
(7) cost for replacing defective water pumps and parts (defendant's Replacement Cost);
(8) liquidated and ascertained damages to be paid by plaintiff to Defendant due to the defendant's delay in the completion of the Works (LAD); and
(9) "provisional cost" for labour employed by Defendant to perform Rectification Works.
[11] The Original Action and Counterclaim were heard together.
[12] The Plaintiff has called the following witnesses to testify in this case:
(1) Mr Thee Hon Fei (SP1), the plaintiff's Quantity Surveyor (QS);
(2) Mr Foong Chee Kien (SP2), the plaintiff's Project Director;
(3) Encik Mohd. Afiq Bin Abu Bakar (SP3), the plaintiff's Site Supervisor; and
(4) Mr Tan Ka Lian (SP4), the plaintiff's Managing Director.
[13] The following witnesses gave evidence for the defendant:
(1) Mr Hong Eng Hock (SD1), an executive director of the
