Retention sums in subcontract agreements are not automatically subject to trust without clear intent or express clauses indicating such an arrangement.

[1] The present appeals arise out of common issues of law in relation to actions brought by two different plaintiffs against the same defendant. The cases related to these appeals were heard together before the first instance court and the court of Appeal. Each court rendered one judgment respectively. Thus, the appeals before us are Appeal No 130 and Appeal No 131 again heard together due to the common issues of law involved.

Appeal No 130

[2] The appellant in Appeal No: 130 (plaintiff at the High court) was the respondents (defendant at the High court) sub-contractor for a mixed development project in Sungai Buloh, Selangor for the sum of RM9,789,815.00. Pursuant to cl 16.3 of the subcontract between the parties, a sum of RM489,490.75 was retained by the respondent as retention monies. The retention monies were to be released by the respondent to the appellant in two tranches: firstly, upon the issuance of the Certificate of Practical Completion ("CPC") of the Main Contract and secondly, upon the expiry of the Defect Liability Period ("DLP").

[3] Although the CPC was issued on 30 May 2013 and the DLP lapsed on 30 August 2015, the respondent did not release the first and the second tranches of the retention monies to the appellant.

Appeal No 131

[4] The appellant in Appeal No 131 (plaintiff at the High court) was engaged as the respondents (defendant at the High court) subcontractor for a project in Johor for the sum of RM17,734,455,55. As in Appeal No 130, cl 16.3 of the sub-contract between the appellant and respondent in Appeal No 131 provided for a sum of RM886,723.00 to be retained as retention monies where the first moiety was to be released by the respondent upon the issuance of the CPC and the second moiety was to be released upon the issuance of the Certificate of Making Good Defects ("CMGD") of the Main Contract Works.

[5] For Appeal No 131, the retention monies were never released to the appellant as well.

[6] On 2 November 2015, a creditors meeting was held and a special resolution was passed for the voluntary winding-up of the respondent.

[7] Based on the statement of affairs on the respondent as at 8 October 2015:

(i) the total debt owed to the unsecured creditors of the respondent was RM91,878,716.62;

(ii) the estimated net realisable value of the assets of the respondent was RM18,857,298.00 with cash at bank at RM547,786.00;

(iii) the respondents liabilities exceeded assets by RM73,019,479;

(iv) there are about 250 creditors, out of which around 128 are creditors claiming retention sums; and

(v) the total amount owed to creditors for retention monies was RM8,230,087.61. This included the total amount of retention sums owed to the two appellants in the present appeals.

[8] The respondent did not open any bank account for the retention monies including those for the appellants in these appeals. For convenience, in this judgment both the appellants in these two appeals are collectively referred to as the appellants.

Before The High court

[9] As alluded to above, the appellants respectively instituted an action at the High court seeking leave to commence and proceed with court, arbitration and/or adjudication proceedings against the respondent and for the respondent to be ordered to preserve the retention sums in a separate account pending the final determination of the arbitration and/or adjudication proceedings.

[10] Relying on the co