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Document: Casmet Sdn Bhd v Nte Engineering Sdn Bhd and another suit [2017…

Casmet Sdn Bhd v Nte Engineering Sdn Bhd and another suit
[2017] MLJU 2382

Copy Citation

Malayan Law Journal Unreported

SESSION COURT (KUALA LUMPUR)

AZURA ALWI J
CIVIL SUIT NOS B52NCvC-320-08 OF 2015 AND B52NCvC-26-08 OF 2015
16 March 2017

Tan Meng Tze (Lee Kuan Mang & Co) in Civil Suit No B52NCvC-320-08 of 2015 for the plaintiff.
Daniel Siew (Shun Tai) in Civil Suit No B52NCvC-26-08 of 2015 for the plaintiff.
Andrew Davis (Zaitul Naziah with him) (Andrew Davis & Co) for the defendant.

Azura Alwi J:
GROUNDS OF JUDGMENT Background of facts

[1] The Defendant was appointed as the main contractor for a project known as “Cadangan
Pembangunan (Fasa 2) Yang Mengandungi 2 Blok Pangsapuri: (1) Blok A Pangsapuri 17 Tingkat (240)
Unit, (2) Blok B Pangsapuri 14 Tingkat (195 Unit) dengan Kemudahan Podium 4 Tingkat Tempat Letak
Kereta dan Kemudahan Penduduk di atas Lot PT 23171 dan Sebahagian Lot 40209, Taman Bullion
Mewah, Off Lebuhraya Kuala Lumpur-Karak, Mukim Batu, untuk Tetuan ECS Mutiara Sdn Bhd�?
(hereinafter referred to as “the Project�?).

[2] The Plaintiff in Suit 320 (hereinafter referred to as “NTE�?) was appointed as nominated sub-
contractor (NSC) through Letter of Acceptance dated 8.6.2011 to do the work for supply, delivery,
installation and commissioning of internal cold water and sanitary installation for the Project. The
amount of contract price was RM2, 200,000.00

[3] Whilst the Plaintiff in Suit 26 (hereinafter referred to as “Mega Mayang�?) was appointed as
nominated sub (NSC) through Letter of Acceptance also dated 8.6.2011 to supply, deliver, install, test,
commission and maintain security services inter alia, electrical services, general lighting and power
distribution system, lighting protection system, earthing system, telephone service, perimeter services
and SMATV services for the Project. The amount of contract price was RM5, 250, 000.00.

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[4] Tetuan ECS Mutiara Sdn Bhd (the Employer) appointed SK Tan Architect as Quantity Surveyor for
the Project and JY Consult as the Mechanical and Electrical (M&E) Consultant.

[5] Both Plaintiffs are claiming for the balance of the contract price allegedly not paid by the Defendant
i.e. RM447, 775.82 and RM561, 616.24 respectively.

[6] The Defendant had filed their defence and is also counter claiming for the amount RM945, 000.00
from each Plaintiff for losses and damages caused by the delay of the Plaintiffs in completing their
works for the Project.

[7] After the pleadings in both cases were closed and during case management the Plaintiff NTE
applied for both cases to be heard together in a joint trial pursuant to Order 4 rules 1 Rules of Court
2012. This Court allowed the application on 13.1.2016

[8] Bundles of documents were filed in court and marked as follows:

i) Ikatan Pliding - Bundle A;

ii) Ikatan Dokumen Bersama Bhg 1/3 - Bundle B1;

iii) Ikatan Dokumen Bersama Bhg 2/3 - Bundle B2;

iv) Ikatan Dokumen Bersama Bhg 3/3 - Bundle B3;

v) Ikatan Dokumen Bersama Tambahan - Bundle C;

vi) Ikatan Dokumen Tambahan Plaintif (Kes 26) - Bundle D;

vii) Ikatan Dokumen Tambahan Defendan - Bundle E;

viii) Ikatan Dokumen Tambahan Defendan (2) - Bundle F; and

ix) Ikatan Dokumen Plaintif (2) - Bundle G.

[9] All parties agreed to the Issues to be Tried, filed and marked as Enclosure 20. Likewise, the Agrees
Facts are as per Enclosure 19.

[10] The trial went on and witnesses from all parties gave their evidence. On 29 August 2016 this
Court allowed both Plaintiffs’ claims with interest and costs of RM30, 000. 00 to each Plaintiffs. The
Court however, dismissed the Defendant’s counter claim against both Plaintiffs, with cost to each
Plaintiff.

[11] Hence, this appeal by the Defendant.

Analysis of Facts, Findings and Grounds of Judgment

[12] The Plaintiffs had produced their witnesses as follows:

i) Foo Chee Tuck (SP 1) - Managing Partner/Sole Propreitor of EFCT Consult, a qualified and registered
Quantity Surveyors under the Board of Quantity Surveyors Malaysia and engaged by the Employer of
the Project (ECS Mutiara) as Quantity Surveyor of the Project. EFCT acts as an independent body to
measure and value work in progress, determine the value of works, contract management and advice
for pre-contract and post-contract stages.

ii) Yee Choon Kiat (SP 2) - a professional Engineer and principal of JY Consult (JYC), a company which
provides consultancy services in relation to mechanical and electrical matters (M&E). JYC was the
M&E Consultant of the Project employed by ECS Mutiara and SP 2 was the Engineer in charged of the
Project and assisted by another of his engineer.

iii) Teoh Kim Long (SP 3) - Director of NTE.

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iv) Jeff Yeo Shu Jin (SP 4) - the former Assistant Project Manager of Mega Mayang.

[13] The witnesses for the Defendant are as follows:

i) Ng Kah Fan (SD 1) - General Manager of the Defendant’s company who was in charged of the
Contract Department as a whole and also responsible for quantity surveying of the Project.

ii) Jaya Simbun Kumarasmy (SD 2) - Chief Operating Officer of the Defendant’s company and was in
charged of the Project.

[14] The parties agreed to the facts regarding the Projects, the parties involved, the Letters of
Acceptance to appoint the nominated sub- contractors (NSCs), the extension of the completion date for
the Project to 28.2.2013 and that the Certificate of the Practical Completion dated 6.9.2013 was issued
by SK Tan Architect. It is also not disputed that Agreement and Conditions of PAM Sub-Contract 2006
For Use Where the Sub-Contractor is Nominated Under the PAM Contract 2006 (hereinafter referred as
‘PAM Sub-Contract’) governed the contractual relationship between the Plaintiffs and the Defendant. All
parties are therefore bound by terms and conditions of the Letters of Acceptance and the PAM Sub-
Contract.

[15] Each Plaintiffs had listed down their own issues to be tried in each case. The Defendant had also
listed separate issues to be tried against each Plaintiffs. Upon perusal of the said Enclosure 19 and
finding some issues being overlapping this Court had to narrow down the issues into the following:

whether the Plaintiffs had completed their work and variation work under their respective Letters of
Acceptance for the Project;

whether the Plaintiffs are entitled to the amounts claimed for the work and variation work done by
them for the Defendant for the Projet under their respective Letters of Acceptance and whether the
Defendant is entitled to deduct the amount claimed;

whether the Plaintiff had breached the terms of contracts in the Letters of Acceptance, PAM Form
Contract and other relevant documents and caused the Defendant to suffer losses and damages of
RM945, 000.00;

whether the Defendant is entitled to apply simpliciter formula in calculating for liquidated ascertained
damages (LAD) of RM945, 000.00 to be claimed from the Plaintiffs due to their delay in completing
their work for the Project.

Whether the Plaintiffs had completed their work and variation work under their respective
Letters of Acceptance for the Project

[16] For Suit 320 the documentary evidence as follows was issued to show that the value of work done
for the Project was RM2, 581, 460.00:

i) Payment Certificate No. 17(A) dated 23.7.2013 (Exh. P2, p.131 Bundle B1) - issued by JYC, M&E
Consultant) - for column “Work Executed�? item “Estimated Value of Work To Date�? and item “Total
Valuation�?, amount RM2, 581, 400.00;

ii) Penultimate Certificate No. 32A dated 19.6.2014 (Exh. P6, p.58-67 Bundle B1) - issued by Architect,
for column “Adjusted Final Sum�? item No. 2 “Awarded to NTE Engineering Sdn Bhd�?;

iii) Final Payment Certificate (NSC) dated 20.9.2013 [Exh 14(B), p.54 Bundle B1] - sijil unilateral,
issued by the Defendant, not signed. Item No. 5 for “Total Workdone�? under column “Description
of Works�?, “Previous Work-Done�? and “Total Work-Done�?.

[17] Likewise for Suit 26 the following documents were issued:

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i) Certificate of Payment No. 18 dated 17.5.2013 (Exh. P4, p.778-800 @p.799 Bundle D) - issued by M&
Consultant, confirmed estimated value of works to date RM4, 893, 822.79;

ii) Final Account Statement (Electrical & Telephone Installation) dated 11.4.2014 (Exh. P5, p.212-214
Bundle B2) - by the Quantity Surveyor, confirmed Plaintiff’s Total Work Certified same as in
Certificate of Payment No. 18 @p.213;

iii) Statement of Final Account (p.195-196 Bundle B2) - signed by the Defendant on 23.4.2014. It was
also signed by the Employer, Architect, Quantity Surveyor and M&E Consultant.

[18] Based on those evidence this Court finds it is apparent that the total work done by the NSCs,
inclusive of the variation work had been verified for the purpose of payment by the M&E Engineer, the
Quantity Surveyor and the Architect appointed for the Project and acknowledged by the Defendant
themselves. As such, the issue of whether or not the works and variation works of the Plaintiffs had
been completed has been answered in the affirmative.

Whether the Plaintiffs are entitled to the amounts claimed for the work and variation work done by them
for the Defendant for the Projet under their respective Letters of Acceptance and whether the Defendant
is entitled to deduct the amount claimed;

[19] SD 1 and SD 2 confirmed the value of NTE’s work paid for the project was only RM2, 072, 322.81.
This also can be seen in Final Payment Certificate (NSC)/sijil unilateral, Exh. 14(B). As such the amount
claimed by NTE in this suit is left unpaid, or at least RM444, 046.81 as per Defendant’s own admission
in the said Final Payment Certificate (NSC)/sijil unilateral is still owing to NTE.

[20] The Total Work Certified for Mega Mayang under the said Certificate of Payment No. 18, Final
Account Statement (Electrical & Telephone Installation) and Statement of Final Account is RM4,
893,822.79. Mega Mayang admitted that RM4, 128, 604.12 was previously paid, a total debit note of
RM61, 895.55 was issued by the Defendant and 2.5% of 2nd Moiety totaling RM141, 706.88 should be
deducted from the Total Work Certified. Therefore, the amount of RM561, 616.24 is due and payable to
Mega Mayang.

[21] These evidence by NTE and Mega Mayang were not challenged by the Defendant. However, the
Defendant alleged that there is debit note of RM45, 200.94 and RM70, 585.56 issued by them to NTE
and Mega Mayang respectively and deductible from the Total Work Certified.

[22] However, the Defendant did not produce any debit note during the trial to support their
contention. They only produced a Debit Note Statement dated 25.9.2015 [Ekshibit D57(1), p.1 Bundle
E] that listed particulars of each debit note issued. SD 1 and SD 2 admitted during cross examination
that the Defendant do not have any debit note to produce before this Court. SD 1 also does not have
proof that the debit notes have been collected by the Plaintiff, which must be done on a weekly basis.

[23] Based on these this Court finds that the Defendant’s allegation regarding the debit note is
unsupported and baseless. Furthermore, the Debit Note Statement was prepared on 25.9.2015, after
the suits were filed by the Plaintiffs in August 2015. This invites inference of afterthought on the part of
Defendant and cannot be accepted by the Court. Therefore, the unilateral deductions by the Defendant
are wrong and unlawful

[24] In the case of Jetara Sdn Bhd v Maju Holdings Sdn Bhd [2007] 3 CLJ 41 at p.58 of the judgment
of the Court of Appeal:

“[24]……No details of the deduction had been produced by the respondent despite the
appellant’s contention that it was unauthorized.

[25] It was the appellant’s contention that the deduction was unauthorized as there was no
term in the Letter of Award allowing for such deduction ‘@ 2%’ to be made…..The

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respondent has not shown that it had the right under the agreement to make such
deduction.�?

[25] In the case of NTE, the Defendant also did not make payment for 1st Moiety totaling RM65,
090.38 after the Certificate of Practical Completion (CPC) was issued by the Architect as the Defendant’s
witnesses during cross examination admitted that the amount was unilaterally deducted from the value
of work done for the Project, for the purpose of Defendant’s counter claim.

[26] This Court agrees with NTE’s counsel submission that this is not pleaded by the Defendant and
therefore, should not be considered. The Defendant should make payment to NTE since the CPC has
been issued, inclusive payment for the 1st Moiety.

Whether the Plaintiff had breached the terms of contracts in the Letters of Acceptance, PAM Form
Contract and other relevant documents and caused the Defendant to suffer loss and damages of RM945,
000.00

[27] Through paragraphs 30-32 of their counter claim the Defendant pleaded that the Plaintiffs “telah
gagal ingkar atau cuai untuk menepati kewajipan kontraknya sebagai kontraktor kecil menurut terma-
terma Kontrak Kecil yang dimasuki olehnya. Ianya adalah terma nyata dan tersirat dalam perlantikan
Plaintif bahawa beliau mengamalkan kewajipan kontraktualnya dan menepati skop kerja menurut Surat
Penerimaan, PAM Form Contract dan lain-lain dokumen berkaitan dengan Projek tersebut. Atas
kemungkiran kegagalan dan perbuatan Plaintif yang diperihalkan di atas Defendan telah mengalami
kerugian dan kehilangan.�?

[28] It is undisputed facts that the date of completion for the Project was on 31.8.2012. It is also not
disputed that the date had been revised to 28.2.2012 via Certificate of Extension of Time dated
5.8.2013 (Exh. P22, p.41 Bundle B1). The Architect of the Project had issued Certificate of Non-
Completion (CNC) dated 20.6.2013 (p.4 Bundle C) and 6.8.2013 (Exh. P23, p.44-45 Bundle B1)
certifying that the works were not completed on 28.2.2013 and the works ought reasonably to have
been completed by the aforesaid date. Finally, the Certificate of Practical Completion (CPC) (Exh. P13,
p.172A of Bundle B1) was issued by the Architect to certify the Project was completed on 5.9.2013.

[29] It was the Defendant’s case that both the Plaintiffs had each delay of 189 days from 28.2.2013
(extended completion date via certificate of extension of time, Exh. P22, p.41 Bundle B1) till 5.9.2013
(date the Project was practically completed via CPC by the architect. It is the evidence of the Defendant
that the CNC had been issued to NTE and Mega Mayang via letters dated 4.7.2012 (Exh. P25, p.170-172
Bundle B1) and 12.9.2013 (Exh. P27, p.172B Bundle B1 & p.47 Bundle B1) but not disputed by them.
The Defendant also contended that since both NTE and Mega Mayang did not issue any Notice of
Completion for their works, they had delayed in their scope of works. Therefore, the Defendant submits
failure of the contractor to complete their works on 28.2.2013 should also include the failure of NTE and
Mega Mayang, tantamount to a breach and/or non- performance of the terms Letter of Acceptance
and/or the PAM Sub-Contract by the NSCs. The Defendant also submits that the CNC applies to the
overall Project without having to identify where, whose and which scope of work is delayed including
that of NTE and Mega Mayang.

[30] The Court agrees that there had been delay in completing the Project but the question is whether
the Plaintiffs are the ones responsible for the delay thus entitling the Defendant to claim “loss and
damages�? of RM945, 000.00 as per their Counter Claim. It is trite law that when a party is asking for
“loss and damages�? arising out a breach of contract, there is a duty on that party to prove the breach
and to show there is losses and damages arising from that breach.

[31] Clause 16.0 of the PAM Sub Contract is reproduced below and provides the following:

“If the Sub-Contractor fails to complete the Sub-Contract Works by the Sub-Contract
Completion Date(s), the Contractor shall issue a Certificate of Non Completion (with a copy
to the Architect and Consultant) stating that in his opinion, the Sub- Contract Works (or

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any section of the Sub-Contract Works) ought reasonably so to have been completed. The
Contract shall then be entitled to set-off a sum of any loss and/or expense suffered or
incurred by the Contractor, after taking into consideration the apportioning of liability
where the delays may also be caused by the Contractor and other Nominated Sub-
Contractors. As an alternative to loss and/or expense, the parties may agree to the
amount of Liquidated Damages stated in Appendix “A�?. The loss and/or expense or any
Liquidated Damages shall be set-off by the Contractor under Clause 26.13�?

[Emphasis is mine]

[32] NTE’s counsel cited the case of Seng Yong Engineering Construction Works Sdn Bhd v Ecometro
(M) Sdn Bhd [2011] MLJU 1459 for further support, where in his judgment Gunalan Muniandy JC
stated:

“[34] …..The evidence showed that various other works to be carried out by other
subcontractors after the installation had not been completed on schedule and thereby
could have caused the delay. There was no clear evidence to prove that the delay which
occasioned LAD being imposed on D* was actually caused by D*. Hence, the claim for P to
be held liable for LAD was not proved.�?

[*D should be read as P. Editorial typo mistakes were believed to have been made since
facts of this case showed LAD was a counter claim by the D).

[33] The facts are also the same in this case where there were other sub- contractors involved and
including the civil and structural work of the Defendant as the Main Contractor. The PAM Sub-Contract
which parties agree governs their contractual relation also provides for apportioning of liabilitity in case
of delay. In the circumstances this Court cannot accept the Defendant’s argument that the CNC applies
to the overall Project without having to identify where, whose and which scope of work is delayed thus
making NTE and Mega Mayang responsible for the delay and liable to pay losses and damages to the
Defendant. This is such an absurd and unfair argument! This Court would have to agree with the
Plaintiffs’ submission that before the Defendant is entitled to claim for the losses and damages they
would have to show that the delay was in fact caused by the Plaintiffs, not by anyone else.

[34] From the evidence the Court was informed of the following:

by SD 1 that NTE had delayed in piping work for Level 10 to 16 of Block A and level 18 onwards for
Block B, and also delayed in the work of water tanks for the rooftops of Block A and B. However, SD 1
and SD 2 admitted that there is no document to support these;

no minutes of meeting to show about the Plaintiffs’ delay or about any warning given to the Plaintiffs
regarding their delay;

aplications for extension of time never cited the Plaintiffs’ delay as reason to apply for extension of
time;

the Defendant did not issue CNC to the Plaintiffs pursuant to Clause 16 PAM Sub-Contract; and

SD 2 admitted that no notice and/or letter of warning and/or complaint issued regarding Plaintiff’s
delay.

[35] In addition, SP 1 and SP 2, independent witnesses testified that to their knowledge there was no
delay to NTE and Mega Mayang scope of works. Furthermore, during cross examination SP 2 said it was
not a common practice in construction industry for NSCs to issue Notice of Completion once their scope
of work is completed. The issue of Notice of Completion was also brought up by the Defendant only
after a letter of demand by the Plaintiffs was issued in 2015.

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[36] Therefore, based on the evidence this Court finds that the Defendant had failed to prove that the
Plaintiffs had delay in their scope of work and breached the terms of contracts in the Letters of
Acceptance, PAM Form Contract and other relevant documents. Pursuant to this the Defendant is not
entitled to the claim of loss of damages of RM945, 000.00.

[37] The Court shall deal with the issue of the amount of counter claim in the following paragraphs
together with the issue of LAD.

Whether the Defendant is entitled to apply simpliciter formula in calculating for liquidated ascertained
damages (LAD) of RM945, 000.00 to be claimed from the Plaintiffs due to their delay in completing their
work for the Project.

[38] SD 2 testified that the counter claim is in fact for LAD and that the pleadings had been wrongly
described. The CPC clearly shows that there was delay in completing the Project. The Defendant submits
that the CNC applies to the overall Project without having to identify where, whose and which scope of
work is delayed. Therefore, the Defendant viewed that NTE and Mega Mayang had failed to fulfill their
obligations under the Letters of Acceptance hence should be liable for all consequences flowing from the
breach by compensating the Defendant with LAD. The Defendant relied on Clause J of the Letters of
Acceptance to impose LAD at the rate of RM5000.00 per day on each Plaintiffs. Since the delay is for
189 days the Defendant is now claiming for LAD of RM945, 000.00 (RM5000.00 x 189 days) from each
Plaintiffs. This Court is also informed that the Defendant is claiming for similar amount of LAD from two
(2) other NSCs of the Project and this is not denied by the Defendant.

[39] The Court agrees with both the Plaintiff’s submissions that even if the Defendant’s counter claim
is based upon LAD, the Defendant’s counter claim is still governed by s 75 of the Contract Act 1950 as
decided by the Federal Court in the case of Selva Kumar a/l Murugiah v Thiagarajah a/l Ratnasamy
[1995] 1 MLJ 817 and followed by the High Court in the case of Setegap Berhad (in creditors’ voluntary
winding up) v Ranhill Engineers & Constructions Sdn Bhd [2011] 6 MLJ 684 which held:

“(4) From the evidence adduced at trial it was clear that the defendant had granted the
plaintiff two extensions of time. However, except for cl 8 of the contract, which was a
standard LAD clause, and showing that there was a delay, the defendant produced no
evidence to support its contention that it had suffered loss and damage in the sum of RM1,
409, 000.00. As it had failed to do so this court, which was bound by the construction
accorded to s 75 of the Contracts Act 1950 by the case law, found that the defendant was
not entitled to make a claim for LAD in the sum of RM1, 409, 000.00.

And further in the judgment at p. 698-699,

“[39] It appears to this court that the issue in question here is not whether the LAD clause
is a genuine pre-estimate or a penalty. The question that arises here is the primary issue
arising in Selva Kumar’s case, namely whether the claimant has proved that he has
suffered the loss he makes claim for….

[40] In the instant case, the defendant produced no evidence whatsoever in support of its
claim for LAD save for referring to the relevant cl 8 in the contract, and showing that there
was a delay. It produced no evidence at all to support its contention that it had suffered
loss and damage in the sum of RM1, 049, 000.00. Neither did the defendant provide any
basis for the contention that this claim fell into the category of cases outlined in Selva
Kumar’s case whereby there is no known measure of damages employable for the court to
assess damages.

[41] …..As it stands, cl 8 is a standard LAD clause, and in the light of the construction
accorded to s 75 in Selva Kumar’s case it is incumbent upon the defendant to produce
evidence to support its contention that it suffered loss.

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[42] As it has failed to do so, this court is bound by the construction accorded to s 75 in
Selva Kumar’s case and accordingly adopts and follows the same. In the absence of any
evidence to support the claim for loss and damage the defendant is not entitled to make
claim for LAD in the sum of RM1, 049, 000.00 and this head of claim is disallowed. �?

[40] The position in that case is somewhat similar to the position of our case. No documentary and/or
independent oral evidence was produced in Court to support the Defendant’s contention regarding their
claim for LAD, except for reliance on that Clause J of the Letters of Acceptance. This Court also finds
that it is very arbitrary for the Defendant to impose LAD simpliciter on the NSCs without informing them
which part of work they had delayed and without giving them any notice and/or warning regarding their
delay.

[41] There is also no evidence to show that the Defendant had paid the amount of RM945, 000.00. No
document was produced to support that the Defendant had paid to the Employer. Even SD 2 admitted
he cannot recall how much was paid to the Employer for the delay.

[42] The case of Jetara Sdn Bhd v Maju Holdings Sdn Bhd [2007] 3 CLJ 41 where the Court of Appeal
in the judgment at p.54 cited Keating on Building Contracts (4th Edition) to the following effect may
serve as a guidance:

“In his book Keating on Building Contracts (4th edn), Mr. Donald Keating QC, under the
sub-heading “Evidence supporting applicaton for summary judgment�? at p 279 says this:

…..Thus merely to allege the existence of defects in the works, or a claim for damages for
delay without in each case giving some reasonable amount of detail and of quantification is
unlikely to result in leave to defend.�?

If leave to defend was refused in such circumstances the same position should apply for counter claim
of LAD in this case.

[43] Futhermore, this Court also view the failure to call the Architect as the Defendant’s witness is
detrimental to their case and would warrant this Court to invoke s 114(g) Evidence Act 1950 against
them. It is only the Architect, as the Superintendent Officer of the project who can testify and verify
regarding the progress of the work, including delay by any party if any. However, the defendant elected
not to call the Architect to testify despite listing him as one of their witnesses earlier.

[44] Based on all reasons adumbrated the decisions to allow the Plaintiffs’s claims with costs and to
dismiss the counter claim with costs are just and reasonable.

 
 

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