Peh Swee Chin J:

This matter raises a point of considerable controversy, all involved in a number of cases pending that such controversy should at least be laid to rest at least at the level of this Court.

The controversy concerns retention money held frequently by an employer of a contractor, or a person in the shoes of such an employer of such a contractor in connection with the usual building contracts which provide in each case, for a small percentage of value for work done by the contractors to be deducted and retained by the employer in order to have recourse to it later usually for making good any defect in such work.

The controversy turns on the question as to whether such retention sum in the hands of the employer is attachable at the instance of a judgment-creditor of the contractor (the judgment-debtor), by way of garnishee proceedings.

The facts are that the plaintiff (hereafter called judgment-creditor) has obtained judgment for sum of RM83,786.20 against the defendant (hereafter called judgment-debtor) for work done. The judgment-debtor was at all material times a contractor of the garnishee by virtue of a building contract in respect of 30 units of 2-storey terrace-houses at Taiping.

Clause 30 of the Building Contract provides as follows:

30(1) At the period of Interim Certificate named in the appendix to these conditions the architect shall issue a certificate stating the amount due to the contractor from the Employer, and the contractor shall, on presenting any such certificate to the Employer, be entitled to payment therefor within the period for honouring certificates named in the appendix to these conditions. Interim valuations shall be made whenever the architect considers them to be necessary for the purpose of ascertaining the amount to be stated as due in an interim certificate.

(2) The amount stated as due in an interim certificate shall, subject to any agreement between the parties as to stage payments, be the total value of the work properly executed and of the materials and goods delivered to or adjacent to the works for use thereon up to and including a date not more than seven days before the date of the said certificate less any amount which may be retained by the employer (as provided in sub-clause [3]of this condition) and less any instalments previously paid under this condition. Provided that such certificate shall only include the value of the said materials and goods as and from such time as they are reasonably, properly and not prematurely brought to or placed adjacent to the works and then only if adequately protected against whether or other casualties.

(3) The Employer may retain the percentage of the total value of the work, materials and goods referred to in sub-clause (2) of this condition which is named in the appendix to these conditions as percentage of certified value retained. Provided always that when the sum of the amounts so retained equals the amount named in the said appendix as limit of retention fund or that amounts as reduced in pursuance of Clause 16(f) and/or Clause 27(e) of these Conditions, as the case may be, no further amounts shall be retained by virtue of these sub-clauses.

(4) The amounts retained by virtue of sub-clause (3) of this condition shall be subject to the following rules:

(a) The employer's interest in any amounts so retained shall be fiduciary as trustee for the contractor (but without obligations to invest) and the contractor's beneficial interest therein shall be subject only to the right of the employer to have recourse thereto from time to time for payment of any amount which he is entitled under the provisions of this contract to deduct from any sum due or to become due to the contractor.

(b) On the issue of the Certificate of Practical Completion the architect shall issue a certificate for one moiety of the total amounts then so retained and the contractor shall, on presenting any such certificate to the employer, be entitled to payment of the sai