Kerajaan Malaysia (Jabatan Kerja Raya) v Global Globe (M)

[2019] 1 MLJ Sdn Bhd (Hasnah Hashim JCA) 281

A Kerajaan Malaysia (Jabatan Kerja Raya) v Global Globe (M)

Sdn Bhd

B COURT OF APPEAL (PUTRAJAYA) — CIVIL APPEAL

NO W-01(C)(A)-190–05 OF 2016
DAVID WONG, ABANG ISKANDAR AND HASNAH HASHIM JJCA
3 SEPTEMBER 2018

C Contract — Building contract — Extensions of time (‘EOT’) — Contractor

could not complete project despite being granted two EOTs by employer
— Employer kept mum when contractor applied for third EOT — Employer
terminated contract — Whether employer’s failure to consider and make decision
on third EOT application rendered termination unlawful and caused time to be no
D longer of essence of the contract — Whether contractor thereby entitled to complete
project within reasonable time — Whether grounds to support third EOT
application same as that raised for second EOT application — Whether
contractor’s gross delay allowed employer to terminate — Whether employer’s
issuance of certificate of non-completion (‘CNN’) one day before extended
E completion date under second EOT expired did not render CNN bad — Whether
contractor far behind completion schedules and could not have achieved extended
completion target even if CNN issued a day later

The appellant had awarded the respondent a tender to carry out a building
F contract (‘the contract’). Two extensions of time (‘EOT’) were granted to the
respondent to complete the contract. When the respondent asked for a third
EOT (‘EOT 3’), the appellant did not make any decision on it and terminated
the contract one day before the extended completion date under the second
EOT (‘EOT 2’) expired. The respondent challenged the termination as being
G unlawful contending that it was the appellant’s own actions that had prevented
the respondent from completing the works as scheduled. After a trial, the High
Court allowed the respondent’s claim. The instant appeal was against that
decision. In allowing the claim, the trial judge held, inter alia, that: (a) the
appellant’s failure to consider and make a decision on the application for
H EOT 3 breached cl 43.1 of the contract and rendered the termination of the
contract invalid; (b) the respondent had valid and reasonable grounds to ask for
EOT 3 including delay in obtaining possession of the work site and delay in
obtaining approval to a change it had suggested to the Integrated Building
System (‘IBS’); (c) the appellant’s failure to consider the EOT 3 application
I rendered time to be no longer of the essence of the contract thus entitling the
respondent to complete the project within a reasonable time; (d) the appellant’s
issuance of a certificate of non-completion (‘CNC’) — a pre-requisite to claim
for liquidated and ascertained damages (‘LAD’) — was premature; (e) without
making a decision on the EOT 3 request, the appellant could not issue the
282 Malayan Law Journal [2019] 1 MLJ

CNC or impose LAD. In its statement of defence, the appellant averred that A
although no decision on the EOT 3 application was formally communicated to
the respondent, the latter knew informally that it would not be approved
because the grounds raised in respect of EOT 3 were the same as that raised to
obtain EOT 2. The appellant also averred that the respondent knew that it was
not achieving the monthly work progress targets that it had promised to meet. B

Held, allowing the appeal and setting aside the decision of the High Court:
(1) The appellant’s failure to inform the respondent of the rejection of the
third EOT application pursuant to cl 43 did not render the termination C
of the contract invalid. The appellant was not contractually required to
give any notice in writing as to whether the third EOT application was
being considered or that it had been granted or rejected. To require it to
do so would amount to rewriting the agreed terms of the contract. Even
if the third EOT application was not considered, it did not prejudice the D
appellant’s right in any way whatsoever to elect to terminate the contract
(see paras 60 & 73).
(2) The appellant was legally entitled to terminate the contract due to the
respondent’s poor progress and failure to complete the project despite E
being given two extensions of time. If the respondent failed to proceed
diligently and execute the works in accordance with the contract, it was
mandatory upon the appellant to give a written notice specifying the
default and requiring the respondent to remedy such default (see cl 51.1).
This was duly done by the appellant and when the respondent failed to F
complete the works, the contract was terminated in accordance with its
terms (see paras 60 & 82).
(3) The parties had corresponding obligations under the contract. When a
time for completion was specified, and unless expressed otherwise, it was G
deemed to be of the essence of the contract. The contractor’s obligation
was to endeavor to complete the project within the stipulated completion
date. The failure to meet the date gave the appellant the right to treat the
contract as at an end. In the instant case, as the completion date of the
project had been rescheduled twice pursuant to two EOTs, the delay H
could be described as being critical (see paras 39–40 & 42).
(4) The respondent contended that one of the reasons for the slow progress
in the completion of the works was the delay in obtaining possession of
the site. The appeal records, however, showed no evidence of any delay on
I
the appellant’s part in giving possession of the site. If delay in getting
possession was critical to the respondent’s progress of works, it should
have invoked cl 38 at the earliest possible time but the respondent did not
do so (see paras 61, 63 & 65).
 Kerajaan Malaysia (Jabatan Kerja Raya) v Global Globe (M)
[2019] 1 MLJ Sdn Bhd (Hasnah Hashim JCA) 283

A (5) The documentary evidence showed that the delay in approving the IBS
system was due to the respondent’s own conduct when it proposed a
change to the system after the contract had been awarded. The
respondent then delayed appointing the independent checker and in
submitting the relevant documents to the consultant engineer for
B approval. The appellant had notified the respondent by letter dated
20 June 2011 that the respondent could not use the delay in the approval
of the IBS as a ground to apply for any EOT (see paras 58 & 71).
(6) The trial judge erred in holding that the CNC was invalid because it was
C issued one day before the extended completion date under EOT 2
expired. The respondent was granted two EOTs and was contractually
bound to complete the project on or before the expiry of the second
extended completion date (18 July 2013). But as at 30 May 2013, the
progress of works achieved by the respondent was only 53.3% when it
D should have been almost 100%. Since the respondent could not complete
by the second extended completion date, the appellant had to issue the
CNC pursuant to cl 40 of the contract in order to impose LAD. The
contract value in this case was of a staggering amount and any delay in
completion of the project meant increased costs not only for the
E respondent but also for the appellant. Accordingly, on the facts and
evidence, the appellant had correctly exercised its rights under the
contract to issue the CNC without waiting to issue it only after the
second extended completion date had expired (see paras 78 & 80–81).

F [Bahasa Malaysia summary

Perayu telah mengawardkan responden tender untuk menjalankan kontrak
pembinaan (‘kontrak’). Dua lanjutan masa (‘EOT’) diberikan kepada
responden untuk menyiapkan kontrak. Apabila responden meminta untuk
EOT ketiga (‘EOT 3’), perayu tidak membuat apa-apa keputusan ke atasnya
G dan menamatkan kontrak sehari sebelum tarikh penyiapan lanjutan di bawah
EOT 2 tamat. Responden mencabar penamatan tersebut sebagai salah dari segi
undang-undang dengan berhujah bahawa ia adalah tindakan perayu sendiri
yang telah menghalang responden daripada menyiapkan kerja-kerja seperti
yang dijadualkan. Selepas perbicaraan, Mahkamah Tinggi membenarkan
H tuntutan responden. Rayuan ini adalah terhadap keputusan tersebut. Dalam
membenarkan tuntutan tersebut, hakim perbicaraan memutuskan, antara lain,
bahawa: (a) kegagalan perayu untuk mempertimbangkan dan membuat
keputusan atas permohonan bagi EOT 3 melanggar klausa 43.1 kontrak dan
membuatkan penamatan kontrak tak sah; (b) responden mempunyai
I alasan-alasan yang sah dan munasabah untuk meminta EOT 3 termasuk
kelewatan dalam mendapatkan milikan tapak kerja dan kelewatan dalam
mendapatkan kelulusan untuk penukaran yang dicadangkannya kepada
Sistem Pembinaan Bersepadu (‘SPB’); (c) kegagalan perayu untuk
mempertimbangkan permohonan EOT 3 membuatkan masa bukan lagi inti
284 Malayan Law Journal [2019] 1 MLJ

pati kontrak dengan itu memberikan responden hak untuk menyiapkan projek A
tersebut dalam masa yang munasabah; (d) pengeluaran sijil perakuan tak siap
kerja (‘CNC’) perayu — pra syarat untuk menuntut ganti rugi tertentu dan
ditetapkan (‘LAD’) — adalah pra matang; dan (e) tanpa membuat keputusan
ke atas permohonan EOT 3, perayu tidak boleh mengeluarkan CNC atau
mengenakan LAD. Dalam penyataan pembelaannya, perayu berhujah bahawa B
walaupun tiada keputusan atas permohonan EOT 3 secara rasmi diberitahu
kepada responden, responden mengetahuinya secara tak rasmi yang ia tidak
akan diluluskan kerana alasan-alasan yang dibangkitkan berkaitan EOT 3
adalah sama seperti yang dibangkitkan untuk mendapatkan EOT 2. Perayu
C
juga berhujah bahawa responden mengetahui yang ia tidak mencapai sasaran
kemajuan kerja bulanan yang ia telah dijanji untuk capai.

Diputuskan, membenarkan rayuan dan mengetepikan keputusan Mahkamah

Tinggi: D
(1) Kegagalan perayu untuk memberitahu responden mengeni penolakan
permohonan EOT ketiga berikutan klausa 43 tidak menyebabkan
penamatan kontrak tak sah. Perayu tidak secara kontraktual dikehendaki
untuk memberi apa-apa notis bertulis sama ada permohoan EOT ketiga
dipertimbangkan atau ia telah diberikan atau ditolak. Untuk E
mengkehendakinya berbuat sedemikian akan merupakan kepada
menulis semula terma-terma kontrak yang dipersetujui. Walaupun
permohonan EOT ketiga tidak dipertimbangkan, ia tidak memprejudis
hak perayu dalam apa jua cara untuk memilih menamatkan kontrak
(lihat perenggan 60 & 73). F
(2) Perayu secara sah berhak untuk menamatkan kontrak akibat kepada
kelembapan kemajuan responden dan kegagalan untuk menyiapkan
projek tersebut meskipun diberikan dua kali pelanjutan masa. Jika
responden gagal untuk meneruskan dengan tekun dan G
menyempurnakan kerja-kerja mengikut kontrak tersebut, ia adalah
mandatori ke atas perayu untuk memberikan notis bertulis dengan
menyatakan keingkaran tersebut dan mengkehendaki responden untuk
meremedikan keingkaran tersebut (lihat klausa 51.1). Ini dilakukan
dengan sewajarnya oleh perayu dan apabila responden gagal untuk H
menyiapkan kerja-kerja tersebut, kontrak ditamatkan mengikut
terma-termanya (lihat perenggan 60 & 82).
(3) Pihak-pihak mempunyai tanggungjawab yang sama di bawah kontrak.
Apabila masa untuk penyiapan ditetapkan, dan kecuali dinyatakan
sebaliknya, ia dianggap menjadi inti pati kontrak. Tanggungjawab I
kontraktor adalah untuk berusahan menyiapkan projek tersebut dalam
masa tarikh penyiapan yang ditetapkan. Kegagalan untuk mencapai
tarikh memberikan perayu hak untuk menganggap kontrak telah tamat.
Dalam kes ini, memandangkan tarikh penyiapan projek telah
 Kerajaan Malaysia (Jabatan Kerja Raya) v Global Globe (M)
[2019] 1 MLJ Sdn Bhd (Hasnah Hashim JCA) 285

A dijadualkan semula sebanyak dua kali berikutan kedua-dua EOT

tersebut, kelewatan boleh diterangkan sebagai kritikal (lihat
perenggan 39–40 & 42).
(4) Responden berhujah bahawa salah satu sebab untuk kemajuan adalah
B perlahan dalam menyiapkan kerja-kerja tersebut adalah kelewatan dalam
mendapatkan milikan tapak tersebut. Rekod rayuan, walau
bagaimanapun, menunjukkan tiada keterangan mengenai apa-apa
kelewatan oleh pihak perayu dalam memberi milikan tapak tersebut. Jika
kelewatan dalam mendapatkan milikan adalah kritikal kepada kemajuan
C kerja responden, ia sepatutnya membangkitkan klausa 38 pada masa
yang paling awal mungkin tetapi responden tidak berbuat sedemikian
(lihat perenggan 61, 63 & 65).
(5) Keterangan dokumentar menunjukkan bahawa kelewatan meluluskan
D
system SPB tersebut adalah akibat tingkah laku responden sendiri apabila
ia mencadangkan penukaran kepda system tersebut selepas kontrak telah
diawardkan. Responden kemudiannya lewat melantik Pemeriksa Bebas
dan dalam menyerahkan dokumen-dokumen relevan kepada jurutera
perunding untuk kelulusan. Perayu telah memberitahu responden
E melalui surat bertarikh 20 Jun 2011 bahawa responden tidak boleh
menggunakan kelewatan dalam meluluskan SPB tersebut sebagai alasan
untuk memohon bagi apa-apa EOT (lihat perenggan 58 & 71).
(6) Hakim perbicaraan tersilap dalam memutuskan bahawa CNC adalah tak
sah kerana ia dikeluarkan sehari sebelum tarikh penyiapan lanjutan di
F
bawah EOT 2 tamat. Responden diberikan dua EOT dan diikat secara
kontraktual untuk menyiapkan projek tersebut pada atau sebelum tarikh
penyiapan lanjutan (18 Julai 2013). Tetapi pada 30 Mei 2013, kemajuan
kerja-kerja yang dicapai oleh responden adalah hanya 53.3% apabila ia
G sepatutnya mencapai hampir 100%. Memandangkan responden tidak
dapat menyiapkan pada tarikh penyiapan lanjutan kedua, perayu perlu
mengeluarkan CNC berikutan klausa 40 kontrak untuk mengenakan
LAD. Nilai kontrak dalam kes ini adalah jumlah berperingkat dan
apa-apa kelewatan dalam menyiapkan projek tersebut bermaksud
H penambahan kos bukan sahaja untuk responden tetapi juga untuk
perayu. Oleh itu, atas fakta dan keterangan, perayu telah secara betul
menjalankan haknya di bawah kontrak untuk mengeluarkan CNC tanpa
menunggu untuk mengeluarkannya hanya selepas tarikh penyiapan
lanjutan kedua telah tamat (lihat perenggan 78 & 80–81).]
I
Notes
For cases on extensions of time, see 3(3) Mallal’s Digest (5th Ed, 2018 Reissue)
paras 4310–4311.
286 Malayan Law Journal [2019] 1 MLJ

Cases referred to A
Berjaya Times Squares Sdn Bhd (formerly known as Berjaya Ditan Sdn Bhd) v M
Concept Sdn Bhd [2010] 1 MLJ 597; [2010] 1 CLJ 269, FC (folld)
City Investment Sdn Bhd v Koperasi Serbaguna Cuepacs Tanggungan Bhd [1985]
1 MLJ 285; [1985] CLJ Rep 77, FC (refd)
B
Hawl-Mac Construction v Campbell River (1985) 60 BCLR 57 (refd)
Investors’ Compensation Scheme Ltd v West Bromwich Building Society, Investors’
Compensation Scheme Ltd v Hopkin & Sons (a firm), Alford v West Bromwich
Building Society, Armitage v West Bromwich Building Society [1998] 1 WLR
896, HL (folld) C
Lion Engineering Sdn Bhd v Pauchan Development Sdn Bhd [1996] MLJU
275; [1997] 4 AMR 3315, HC (refd)
Octoesse LLP v Trak Special Projects Ltd [2016] EWHC 3180 (TCC) (refd)

Appeal from: Civil Suit No 21C-2–09 of 2014 (High Court, Kuala Lumpur) D
Ruzaimah M Ridzuan (Natassa Zaini with her) (Senior Federal Counsel, Attorney
General’s Chambers) for the appellant.
Cyrus Das (Renu Zechariah and G Ragumaren with him) (G Ragumaren & Co)
for the respondent.
E
Hasnah Hashim JCA (delivering judgment of the court):

[1] This is an appeal by the appellant (the defendant in the High Court)
against the decision of the High Court dated 22 April 2016 made after a full F
trial, which allowed the plaintiff ’s claim against the defendant and a nominal
sum of RM50,000 for loss of reputation as a result of being blacklisted with
costs of RM100,000.

[2] We heard this appeal on 29 January 2018 and on 21 February 2018 and G
reserved our decision. After perusing the records of appeal, the written
submissions filed by the respective learned counsel and upon hearing learned
counsel, we adjourned the matter for our consideration and decision.

[3] We now give our decision and the reasons for the same. H

[4] For ease of reference in this judgment the parties will be referred to as
they were in the High Court.
BACKGROUND FACTS I

[5] The relevant background facts of the case have been set out in detail by
the learned trial judge and are as follows. By a process of tender the plaintiff was
awarded by the defendant to carry out works for a project described as
 Kerajaan Malaysia (Jabatan Kerja Raya) v Global Globe (M)
[2019] 1 MLJ Sdn Bhd (Hasnah Hashim JCA) 287

A ‘Pembinaan Bangunan Tambahan Ibu Pejabat Polis Kontijen (IPK) Johor’ (‘the
project’). The contract sum for the project is the sum of RM103,556,694.84.
The plaintiff was awarded the contract to carry out and complete the works
within 88 weeks commencing from 28 December 2010 (‘the contract period’).
The scheduled date of completion for the project was on 3 September 2012
B (see: para 5 statement of claim).

[6] The parties entered into a contract and the terms and conditions of the
contract is in accordance with JKR 203A (Rev 2007) standard form of contract
(‘the contract’). However, the plaintiff could not complete within the contract
C period and had requested a total of three extension of time (‘EOT’). The
defendant granted two EOTs but rejected the third EOT applied by the
plaintiff. On 10 February 2014 the defendant terminated the contract.

[7] The plaintiff challenged the termination as being unlawful. The

D plaintiff contended that the defendant’s own decisions prevented the plaintiff
from completing the works as scheduled.
DECISION OF THE HIGH COURT
E [8] The High Court, after a full trial and having analysed the evidence
sustained the claim of the plaintiff. In the grounds of judgment, the learned
judge gave her reasons why she found the plaintiff ’s case proved on a balance of
probabilities. Her Ladyship set out her reasons which essentially can be
summarised as follows:
F
(a) the third EOT was never considered by the defendant and such non
consideration or failure to consider the third EOT renders the defendant
in breach of cl 43.1;
(b) even if the court were to accept that the defendant was entitled to not
G consider the third EOT the defendant was still in breach of cl 43.1 when
it did not inform the plaintiff of its decision;
(c) when the defendant failed to consider the third EOT time was no longer
of the essence of the contract. Time was at large and the plaintiff was
H entitled to complete the project within reasonable time;
(d) the certificate of non-completion (‘CNC’) issued on 17 July 2013 was
prematurely issued; and
(e) until and unless the application of extension is decided the defendant
I cannot issue the CNC or impose LAD.
288 Malayan Law Journal [2019] 1 MLJ

The third EOT A

[9] The learned High Court judge was of the opinion that the events
leading to the application of the third EOT are relevant to determine whether
the plaintiff has valid grounds for the application for extension. Her Ladyship
considered the pleadings and the evidence before her and concluded that the B
defendant’s decision was erroneous and unacceptable under the terms of cl 43.1
of the contract. The High Court judge opined that it is implicit that cl 43.1
imposes a corresponding obligation on the defendant to examine the
notification of delay together with the supporting documents once it received
C
the said notification. The purpose according to Her Ladyship is to form an
opinion:
(a) whether the completion of the works is likely to be delayed or has been
delayed beyond the relevant date for completion; and/or
D
(b) whether the extension of time should be granted.

[10] The plaintiff must provide a cogent and valid reason with supporting
documents when applying for extension of time and the defendant is expected
to formulate and reach an opinion on whether the application should be E
granted. Under cl 43.1 the defendant is obliged to consider the application.
Her Ladyship concluded that by not considering EOT three time of
completion is now at large and when that happens the defendant is not at
liberty to terminate the contract on the grounds of non-completion by the
extended date and to impose LAD. F

[11] The High Court judge concluded that by not considering the
application for the third EOT before the expiry of the extended completion
date of 18 July 2013, the time of completion will be at large. The defendant is
G
not at liberty to terminate the contract on the ground of non-completion by
the extended date and any decision to terminate made under such
circumstances would be invalid. Her Ladyship relied on the case of Lion
Engineering Sdn Bhd v Pauchan Development Sdn Bhd [1996] MLJU
275; [1997] 4 AMR 3315 where an extension of time was considered and the H
High Court judge in that case stated that the failure of the architect to comply
with the procedural requirements in cl 22 of the PAM contract rendered the
exercise of the power conferred upon the architect invalid as it was not exercised
within the reasonable time frame as allowed under that clause.
I
[12] The learned High Court judge was also of the considered view that the
failure to consider and inform the plaintiff as required under cl 43.2 amounts
to a breach by the defendant and renders the decision to terminate invalid.
 Kerajaan Malaysia (Jabatan Kerja Raya) v Global Globe (M)
[2019] 1 MLJ Sdn Bhd (Hasnah Hashim JCA) 289

A [13] The grounds relied upon by the plaintiff for the third EOT were
considered by the High Court and are as follows:
(i) delay in the approval of the super-structural and sub structural plans and
instructions on various level of work including invert levels of drainage,
B that is delay in approving the design drawings; and
(ii) delay in site possession.

[14] Her Ladyship considered the evidence before her and made the
following findings:
C
(a) the plaintiff may rely on the same grounds relied on the second EOT;
(b) the first ground relates to the change to the Integrated Building System
(‘IBS’) and related approvals. The plaintiff proposed the IBS in June
D 2011.The court found that is neither material nor relevant that it was
the plaintiff who submitted the proposal for change. The plaintiff had
submitted all the required documents including the drawings to the
defendant for approval. Upon submission, the defendant not only
approved the change to the IBS but also approved the drawings before
E the construction of Block A commenced. The approval of the defendant
vide letter dated 5 August 2011 and 25 December 2012 are sufficient for
the plaintiff to proceed with the works. The IBS change is a material
change and therefore the plaintiff had relied on prime and cogent
reasons for the extension of time sought;
F
(c) from the time IBS was proposed in June 2011 and until it was approved
in May 2012, a period of one year had lapsed. The defendant did not
give due consideration of this when considering the application for the
third EOT;
G (d) the plaintiff has valid and reasonable grounds for the application for
extension of time. The issuance of CNC, imposition of the LAD and its
decision to terminate are all invalid; and
(e) there was a delay in the handing over of the project site. The defendant
H is in breach and the termination invalid and unenforceable.

THE PLAINTIFF’S SUBMISSION

[15] It is the plaintiff ’s pleaded case that the CNC and the termination are
I invalid and unlawful because the defendant did not assess nor respond to the
application for the third EOT. The defendant is duty bound to assess the
application and is not at liberty to terminate the contract as the final date had
yet to be crystallised.
290 Malayan Law Journal [2019] 1 MLJ

OUR DECISION A

[16] In our view, the central issue in this appeal relates to the following
questions:
(a) whether on a true construction of cl 43 of the contract, the defendant B
had considered the grounds relied on by the plaintiff in the application
for the third EOT;
(b) whether the defendant had validly issued the CNC pursuant to cl 40 of
the same contract; and
C
(c) whether the termination of the contract by the defendant is valid.

WHETHER ON A TRUE CONSTRUCTION OF CL 43 OF THE

CONTRACT THE DEFENDANT HAD CONSIDERED THE
GROUNDS RELIED ON IN THE APPLICATION FOR THE THIRD D
EOT

[17] In holding that termination of the contract is invalid the learned judge
took the approach that the failure of the defendant to consider and inform the
E
plaintiff as required under cl 43.2 of the contract amounts to a breach by the
defendant and renders the decision to terminate invalid.

[18] It would be useful to examine the background of the case in particular

the terms of the contract, the minutes of the site meetings as well as the F
correspondences between the parties to appreciate the reasons taken by the
defendant to terminate the contract.

[19] According to the terms and conditions of the contract, the project’s
completion period is 88 weeks commencing from 28 December 2010. the G
project was closely monitored by the Superintending Officer (‘SO’) and regular
monthly site meetings were held to discuss progress as well as problems faced by
the plaintiff. The monthly site meetings were attended by representatives of the
plaintiff as well as the defendant.
H
THE MONTHLY SITE MEETINGS

[20] In most construction projects site meetings are regularly held in order to
monitor the progress of the works.It provides a forum for both the contractor
I
and the employer to raise any problem or issue they may have with regards to
the construction works which may delay or hamper the due progress and/or
completion of the project according to the agreed schedule.
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[2019] 1 MLJ Sdn Bhd (Hasnah Hashim JCA) 291

A [21] In this instant appeal the first site meeting was held on 22 February
2011 chaired by the Pengarah Kerja Raya JKR Johor. The representatives of the
plaintiff and the defendant attended the meeting. The plaintiff alleged in para 6
of the SOC that the defendant failed to give to the plaintiff possession of the
site of the project as agreed. It is the plaintiff ’s pleaded case that they were not
B given possession of the site of the whole project on the date as stipulated in the
contract:
6. Ianya juga di peruntukkan dibawah Kontrak tersebut bahawa pemilikan
keseluruhan tapak tidak diberikan kepada plaintiff sepanjang jangka masa Kontrak,
maklumat-maklumat selanjutnya berkenaan akan dibutirkan dibawah ini.
C

[22] The defendant denied that it failed to give full possession of the project
site. Paragraph 2 of the statement of defence (‘SOD’) states:
2. Perenggan 6 Pernyataan Tuntutan adalah dinafikan. Mengikut Fasal 38.2
D Kontrak tersebut dan Pernyataan Awal yang terkandung di dalam Bahagian A
Kerja-Kerja Awalan, Defendan tidak perlu menyerahkan milikan kosong
keseluruhan tapak projek kepada Plaintif.

[23] At that first site meeting the plaintiff, however, did not raise any issue or
E
problem it faced with regards to the failure of the defendant to give possession
of the site. This fact is confirmed through the minutes of the meeting of the first
site meeting. In fact, at the subsequent monthly site meetings the plaintiff did
not raise the issue of delay in possession of site at all.
F
EXTENSION OF TIME (‘EOT’)

[24] EOT is a common feature in a construction contract. The date for

completion of construction works is generally spelt out in the contract
G particulars. If for some reasons the works are not completed within the agreed
stipulated time then the contractor may request for an extension of completion
date, and if extension is granted the date of completion will be rescheduled.
When there is a probability,or a possibility that there is likely to be, a delay that
could merit an extension of time, the contractor will apply by way of a written
H notice to the contract administrator or the SO identifying the cause of the delay
and request for an extension of time according to the terms of the contract.

[25] The purpose of submitting an application for EOT is to reduce or avoid

the imposition of liquidated ascertained damages (‘LAD’) that could arise
I during the extended period. An EOT would inevitably relieve the contractor
for damages for delay in the from of LAD and reprogramming of the schedule
of the works. For the employer it will establish a new completion date and
prevents the time for completion to be at large, which at the end of the day may
prove to be costly.
292 Malayan Law Journal [2019] 1 MLJ

[26] If a contractor seeks to rely on late instructions as entitlement for A

extension of time and at the same relevant time the contractor is also delayed by
events for which it is responsible, the contract administrator/SO will need to
satisfy himself that the delay caused by the late instruction was the dominant
cause of the delay in order to award an extension time. If the contract
administrator/SO is satisfied that the delay was caused by good reasons then an B
extension of time may be granted and the completion date will be adjusted
accordingly.

THE FIRST EOT

C
[27] On 16 December 2011 the plaintiff applied for the first EOT. The
reasons given for the 1st EOT were as follows:
1.0 Kelewatan Penerimaan Kelulusan Kebenaran Mula Kerja Awal
2.0 Perubahan lokasi dan Rekabentuk Stesen Suis Utama (SSU) D
3.0 Kerja-kerja Pengalihan Utiliti di dalam Tapak
4.0 Perubahan Rekabentuk disebabkan oleh keperluan ‘Fire Escape’ dari pihak
Bomba & TNB
(a) Tangga di Bangunan Trafik dan Siasatan Jenayah E
(b) Dewan Serbaguna di Bangunan Menara Block A
5.0 Perubahan Rekabentuk disebabkan oleh Keperluan ‘Kitchen Specilaist
Equipment’ di kafeteria
6.0 Tabunan hujan melebihi Kebiasaan. F

[28] The application for the first EOT was for an extension of 172 days until
22 February 2013. The defendant was satisfied that there were justified reasons
for extension and granted the extension rerquested. A certificate of delay and
extension of time was issued and the date of completion of the project was G
rescheduled.

THE SECOND EOT

[29] Subsequently, due to its inability to complete the project on the date H
extended by the first EOT the plaintiff on 16 October 2012 applied for the
second EOT of 420 days.The extension period was from 22 February 2012–18
April 2014. However, on 3 December 2012 the plaintiff submitted an amended
application of the second EOT requesting an extension of 221 days
commencing from 22 February 2013–30 September 2013. I

[30] The main reason for the extension was due to the delay of the approval
of the change to the IBS System.Through its letter letter dated 17 December
2012 the plaintiff gave the following reasons for the delay:
 Kerajaan Malaysia (Jabatan Kerja Raya) v Global Globe (M)
[2019] 1 MLJ Sdn Bhd (Hasnah Hashim JCA) 293

A (a) Kelewatan WBLFL dan struktur bangunan Blok A tidak dapat dilakukan
atas sebab kerja mengeringkan tapak dari takungan air di atas factor hujan
dan pemasangan komponen ‘precast’ yang tidak dilakukan pada waktu
malam diatas sebab hujan pada waktu bekerja
(b) Penutupan Kilang Pre cast di Bukit Kulai dan Perpindahan Kilang ke
B Cyberjaya Sepang, Selangor
(c) Kelewatan mendapat pengesahan Lubang Ducting untuk peralatan
lapang sasar di Lapang Sasar
(d) Kelewatan Memperoleh Kelulusan Bagi Menguna Sistem IBS
C
(e) Kelewatan mendapat Pemilikan Penuh Tapak Bina Padang Kawad dan
Padang Bola.

[31] Similar with the first EOT application, the grounds for the second EOT
D was the delay of approval of the IBS system as well as the delay of the possession
of site,in particular ‘… Kelewatan mendapat Pemilikan Penuh Tapak Bina
Padang Kawad dan Padang Bola’.

[32] The second EOT of 146 days was granted. By the said extension the
E completion date of the project was rescheduled to 18 July 2013, a delay of
slightly more than a year. Unfortunately, despite the second EOT the plaintiff ’s
progress of work was not according to the schedule and the plaintiff was unable
to complete the works as targeted.
F THE THIRD EOT

[33] A week before the expiry of the second extended completion date the
plaintiff submitted the third EOT application and applied for a further
G
extension of 271 days. This is the application for an extension of time which is
the subject of dispute between the parties.

[34] The plaintiff contended that the delay was one which was beyond their
control. The reasons for the delay as set out by the plaintiff through its letter
H dated 8 July 2013 are as follows,
2.1 Kelambatan kelulusan Pelan Superstruktur
2.2 Kelambatan perincian Struktur di Aras Bawah
2.3 Kelambatan perincan Aras Satu
I 2.4 Kelambatan perincan Aras Dua
2.5 Kelambatan perincan Aras Tiga
2.6 Kelambatan perincan Aras Tiga (Lapang Sasar dan tempat letak kereta)
2.7 Kelewatan perincan Aras Empat
294 Malayan Law Journal [2019] 1 MLJ

2.8 Kelewatan percanggahan Rekabentuk dan Situasi tapak pada Jambatan A

Penghubung diantara Blok A dan Blok B
2.9 Kelewatan percanggahan rekabentuk dan situasi tapak berkenaan Invert level
sistern pengaliran di dalam kawasan Black Maria
2.10 Kelewatan percanggahan cerun dan longkang di kawasan belakang Blok E
B
(Kafeteria)
2.12 Kelambatan memberimilikan sebahagian tapakbina’

[35] It is the plaintiff ’s pleaded case that the defendant failed to consider the
third EOT and that the failure to consider the third EOT renders the C
defendant’s decision to terminate the contract invalid. The plaintiff argued that
the it was incumbent on the defendant to respond to the application for the
third EOT. The fact that the grounds for the third EOT are similar with the
second EOT is not a valid reason for not responding to the said application.
D
[36] The defendant in its defence explained that the plaintiff knew that the
application for the third EOT will not be considered as the reasons for the
extension are the same as the reasons given in support of the second EOT.
Despite the delays the plaintiff was still allowed to continue with the works on E
site. In fact technical and site meetings were held on a regular basis attended by
the plaintiff and representatives of the defendant to discuss the issues causing
the delay and to resolve the delay.

[37] The learned High Court judge having examined the relevant clause, F
cl 43.1, was of the view that it is implicit that the said clause imposes a
corresponding obligation on the defendant once the plaintiff notified the
defendant of the delay and requested for an extension of time of the completion
date. That corresponding obligation is to examine the application for extension
of time together with its supporting documents upon receipt of the said G
application. The defendant is obliged to form an opinion on the following
issues:
(a) whether the completion of the works is likely to be delayed or has been
delayed beyond the relevant date for completion; and
H
(b) whether the extension of time should be granted.

[38] In her judgment Her Ladyship concluded that the defendant is under
obligation to consider the application for extension of time and the failure to
consider the application renders the termination of the contract invalid. The I
learned judge in para 70 of her grounds explained her reasons as follows:
[70] Therefore, in answer to the questions posed in respect of EOT 2, this court
finds that EOT 3 was never considered by the defendant; that such
non-consideration or failure by the defendant to consider EOT 3 renders the
 Kerajaan Malaysia (Jabatan Kerja Raya) v Global Globe (M)
[2019] 1 MLJ Sdn Bhd (Hasnah Hashim JCA) 295

A defendant in breach of cl 43.1. Even if the court were to accept that the defendant
was entitled not to consider EOT 3 to the extent of rejecting or not granting the
extension sought, the defendant was still in breach of cl 43.1 when it did not inform
the plaintiff of its decision. It is also the court’s finding that when the defendant
failed to consider EOT 3, time was no longer of the essence of the contract. Time
B was at large and the plaintiff was entitled to complete the project within reasonable
time.

[39] With respect we do not agree with the learned judge for the following
reasons. Under the contract the parties have corresponding obligations.
C However, these corresponding obligations are as defined by the terms of the
contract. When a time for completion is specified, and unless expressed
otherwise, it is deemed to be of the essence of the contract. The contractor must
endeavor to complete the project within the stipulated completion date.
D
[40] The plaintiff ’s obligation under the contract is to diligently carry out
and complete the works in accordance to the terms of the contract. Therefore,
the failure to meet the date gives the employer the right to treat the contract as
being at an end. As the contractor the plaintiff has the contractual obligation to
E diligently proceed with the works, to use its best endeavor to prevent or
mitigate any delay in the progress of the works, and to prevent the completion
of the works from being delayed beyond the completion date.

[41] In Hudsons’ Buildings and Engineering Contracts (Atkins Chambers)

F (12th Ed) at p 919 delay in a construction project is described as follows:
Delay analysis is the forensic investigation into what caused delay to completion of
the works. Primarily the investigation is concerned with what has caused critical (as
opposed to non-critical) delay. Critical delay is delay which delays the completion
date. It is any delay to any activity which is on the critical path of the project, that
G is to say, the sequence of activities through a project network from start to finish, the
sum of whose duration determines the overall project duration. Non-critical delay
is any other delay which affects progress but does not delay overall
completion.There may be be any number of delays suffered on a project but many
will nbot cause any critical delay, that is to say , delay which results in a delay to
H overall completion.Usually, it is only those events which cause critical delay to any
activity on the critical path and hence cause critical delay to the projecta s a whole
which are relevant to any assessment of the Contractor’s entitilement to an
extension of time.

I [42] In the instant appeal the completion date of the project was rescheduled
twice therefore the delay can be described as being a critical delay. Prior to the
application the third EOT, the defendant had considered and granted two
extensions of time and the completion date was rescheduled twice. The
plaintiff argued that the delay in approving the IBS and the possession of site
296 Malayan Law Journal [2019] 1 MLJ

had greatly hampered the progress of the works according to schedule and A
ultimately delayed the progress of the project.

[43] The learned High Court judge stated in para 51 of her grounds of
judgment that the pleaded defence of the defendant that it was not in breach
when it did not consider the third EOT and justified for not doing so, are not B
sustainable from a proper reading of cl 43.1.The failure to discharge that
obligation according to Her Ladyship amounts to a breach of that clause by the
defendant.
C
[44] The learned High Court judge arrived at that conclusion based on the
statement of defence of the defendant wherein it was stated that the third EOT
was not considered at all by the defendant. The defendant had pleaded in
para 24 as follows:
(a) Plaintiff sememangnya mempunyai pengetahuan bahawa permohonan D
EOT No 3 tidak akan dipertimbangkan kerana alasan yang dikemukakan
untuk permohonan EOT No 3 adalah ulangan alasan-alasan EOT No 2
saperti yang dinyatakan dalam perenggan 21 Pernyataan Tuntutan dan
alasan-alasan ini telah di tolak. Tambahan pula, Plaintif boleh
meneruskan kerja-kerja tanpa perlu menunggu sebarang jawapan E
daripada Defendan.
(b) Melalui beberapa siri mesyuarat dan perbincangan di peringkat mesyarat
teknikal, mesyuarat pemantauan bersama pelanggan (Kementerian
Dalam Negeri) dan mesyuarat bersama pengurusan tertinggi Defendan
yang turut dihadir oleh Plaintif, Plaintif telah dimaklumkan bahawa F
permohonan mencapai kemajuan kerja di tapak sekurang-kurangnya 4%
sebulan seperti yang dijanjikan oleh Plaintif sendiri. Walau
bagiamanapun, Plaintif gagal mencapai kemajuan kerja yang telah
dijanjikan.
G
[45] At the technical meeting held on 26 June 2013, before the third EOT
application by the plaintiff, the progress of the project was as follows:
i. Kemajuan sebenar: 55%
ii. Kemajuan mengikut jadual: 99% H
iii. Lewat — 44%.
(See: pp 2906–2911 common core bundle Vol 2).

[46] It is undisputed that even after the third EOT application was I
submitted, the plaintiff was closely monitored by the defendant and the
plaintiff continued with the works with the objective to complete the project.

[47] Clause 43 stipulates as follows:

 Kerajaan Malaysia (Jabatan Kerja Raya) v Global Globe (M)
[2019] 1 MLJ Sdn Bhd (Hasnah Hashim JCA) 297

A 43.0 DELAY AND EXTENSION TIME

43.1 Upon it becoming reasonably apparent that the progress of the Works is
delayed, the Contractor shall forthwith give written notice to the officer named in
Appendix as to the causes of delay and relevant information with supporting
documents enabling the said officer to form an opinion as to the cause and
B calculation of the length of delay. If in the opinion of the said officer named in
Appendix the completion of the Works is likely to be delayed or has been delayed
beyond the Date for Completion stated in Appendix or beyond any extended Date
for Completion previously fixed under this Clause due to any or more of the
following events:
C (a) force majeure as provided under clause 57;
(b) exceptionally inclement weather;
(c) suspension of Works under clause 50;
(d) directions given by the SO, consequential upon disputes with
D neighbouring owners provided the same is not due to any act, negligence
or default of the Contractor or any sub-contractor, nominated or
otherwise;
(e) SO’s instructions issued under clause 5 hereof, PROVIDED THAT such
instructions are not issued due to any act, negligence, default or breach of
E this Contract by the Contractor or any sub-contractor, nominated or
otherwise;
(f) the Contractor not having received in due time instructions in regard to
the nomination of sub-contractors and/or suppliers provided in this
Contract, necessary instructions, drawings or levels for the execution of
F the Works from the SO due to any negligence or default of the SO
PROVIDED THAT the Contractor shall have specifically applied in
writing on a date which having regard to the Date for Completion stated
in Appendix or to any extension of time then fixed under this clause, was
neither unreasonably distant from nor unreasonably close to the date on
G which it was necessary for him to receive the same;
(g) delay in giving possession of the Site as provided under clause 38.4 hereof
other than claim in effecting insurance and Performance Bond;
(h) delay on the part of artists, tradesmen or others engaged by the
H Government in executing work not forming part of this Contract;
(i) the Contractor’s inability for reason beyond his control and which he
could not reasonably have foreseen at the date of closing of tender of this
Contract to secure such goods, materials and/or services as are essential to
the proper carrying out of the Works; or
I (j) delay on the part of the Nominated Sub-contractors and/or Nominated
Suppliers to perform their works, due to reasons as stated above in
sub-clauses (a) to (i),
then the officer named in Appendix may if he is of the opinion that the extension of
time should be granted, so soon as he is able to estimate the length of the delay
298 Malayan Law Journal [2019] 1 MLJ

beyond the date or time aforesaid issue a Certificate of Delay and Extension of Time A
giving a fair reasonable extension of time for completion of the Works.
PROVIDED THAT all such delays are not due to any act, negligence, default or
breach of contract by the Nominated Sub-contractor and/or Nominated Supplier
and/or the Contractor, or any of the servants or agents of such Nominated
Sub-contractor or Nominated Supplier or the Contractor. B
PROVIDED ALWAYS that the Contractor has taken all reasonable steps to avoid or
reduce such delay and shall do all that may reasonably be required to the satisfaction
of the SO to proceed with the Works.
PROVIDED FURTHER that the Contractor shall not be entitled to any extension C
of time where the instructions or acts of the SO are necessitated by or intended to
remedy any default of or breach of contract by the Contractor.

[48] The officer named in the Appendix is the Pengarah Kerja Raya Negeri
Johor (‘the officer’). Clause 43.1 makes it mandatory upon the plaintiff, if it D
wishes to extend the completion date of contract, to submit a written notice to
the defendant as to the causes of delay and the relevant information with
supporting documents. This will enable the officer to form an opinion as to the
cause of the delay in the completion of the project and also the calculation of
the length of delay. In order to form an opinion, the officer must of course E
consider all the relevant factors that had attributed to the delay and decide
whether the extension of time applied is justified or not.

[49] If the officer is of the opinion that the extension of time should be
F
granted, as soon as he is able to estimate the length of the delay beyond the date
or time, a certificate of extension of time giving a fair reasonable extension of
time for completion of the works will be granted. The contractor is expected to
take all reasonable steps required to the satisfaction of the officer and proceed
with the works with the ultimate objective to complete the works on or before G
the new completion date.

[50] Clause 43 of the contract does not expressly provide that the officer
must give a response in writing notifying that the application for extension of
time is being considered. As we have alluded, once the application is submitted H
the officer will either grant or refuse the application. It is also not expressly
provided under the said clause that if the application is rejected the officer must
notify the contractor of the rejection in writing.

[51] In interpreting an agreement or contract, the general rule is that words I

ought to be given their ordinary and natural meaning and that the intention of
the parties must be considered. The meaning which the document would
convey to a reasonable person having all the background knowledge which
would reasonably have been available to the parties in the situation in which
 Kerajaan Malaysia (Jabatan Kerja Raya) v Global Globe (M)
[2019] 1 MLJ Sdn Bhd (Hasnah Hashim JCA) 299

A they were at the time of the contract (see: Chitty on Contracts (29th Ed)
para 12-043).

[52] Mohd Azmi FCJ in the judgment of the Federal Court in City
Investment Sdn Bhd v Koperasi Serbaguna Cuepacs Tanggungan Bhd [1985] 1
B MLJ 285; [1985] CLJ Rep 77, held at p 288 (MLJ); p 82a-c (CLJ):
The general principle of construction of contract applies to all contracts whether
they are building contracts or not and in each case the meaning of any clause in a
particular contract has to be ascertained by looking at the contract as a whole and
C giving effect so far as possible to every part of it ...

[53] The principles of Lord Hoffmann in the landmark case of Investors’

Compensation Scheme Ltd v West Bromwich Building Society, Investors’
Compensation Scheme Ltd v Hopkin & Sons (a firm), Alford v West Bromwich
D Building Society, Armitage v West Bromwich Building Society [1998] 1 WLR
896, 912–913 were summarised in Berjaya Times Squares Sdn Bhd (formerly
known as Berjaya Ditan Sdn Bhd) v M Concept Sdn Bhd [2010] 1 MLJ
597; [2010] 1 CLJ 269 where Gopal Sri Ram FCJ, who delivered the leading
judgment of the court stated:
E
Here it is important to bear in mind that a contract is to be interpreted in
accordance with the following guidelines. First, a court interpreting a private
contract is not confined to the four corners of the document. It is entitled to look at
the factual matrix which forms the background to the transaction. Second, the
factual matrix which forms the background to the transaction includes all material
F that was reasonably available to the parties. Third, the interpreting court must
disregard any part of the background that is declaratory of subjective intent only.
Lastly, the court should adopt an objective approach when interpreting a private
contract.

G
[54] Guided by the above established principle, we had therefore carefully
examined the documents that were placed before us to ascertain if the learned
High Court judge had arrived at her decision correctly on the basis of the
relevant law and evidence before her. The terms of the contract between the
H plaintiff and the defendant must be considered in totality taking into
consideration the factual matrix of the case and both oral and documentary
evidence. There were series of technical and site meetings attended by both
representatives of the plaintiff and the defendant to resolve the issue of delay by
the plaintiff.The outcome of all the meetings are detailed in the respective
I minutes of meetings.

[55] With regards to the third EOT application,the defendant’s witness

(DW4) who was the superintending officer of the project, explained in his
answer to Q/A 14 of his witness statement that:
300 Malayan Law Journal [2019] 1 MLJ

A: Keputusan rasmi tidak disampaikan tetapi Plaintif telah maklum akan keputusan A
ini yang telah disampaikan kepadanya secara lisan dalam
perbincangan-perbincangan teknikal dan taklimat kemajuan projek bersama
pengursan tertinggi Jabatan Kerja Raya dan di peringkat Kementerian Kerja Raya.
Tambahan pula tarikh permohonan penyiapan projek kerap berubah.
B
[56] During cross-examination, he reiterated that the plaintiff was told of
the status of the third EOT application:
… even though it was not responded officially by letters but it has (sic) mentioned
to the Plaintiff in many meetings up to the Ministerial level because the Plaintiff
C
keep on changing their completion date …

[57] Even if assuming the third application for the EOT was not considered
it does not necessarily mean that the termination of the contract was invalid.
Before any extension is granted the defendant must be satisfied that the D
plaintiff had made progress in carrying out the works and can successfully
complete the project.

[58] It is not expressly provided under the contract and specifically under
cl 43.1 that the defendant is obliged to inform the plaintiff that the application E
for the third EOT was considered, or that the application would be granted or
rejected. Under the contract if no extension of time is granted the defendant
can, pursuant to cl 51 give notice to the the plaintiff to remedy and to terminate
if the plaintiff failed to remedy the default. The plaintiff knew that the delay
caused by the delay in the approval of the IBS cannot be a basis for any F
extension of time. This was communicated to the plaintiff vide a letter dated
20 June 2011 (see: pp 225–226 common core bundle of document):
3. Dukacita turut dimaklumkan bahawa sehingga kini pihak tuan masih belum
mengemukakan Surat Niat untuk permohonan pertukaran struktur system IBS G
kepada pejabat ini walupun perkara tersebut telah dimaklumkan semasa Mesyuarat
Pra-Pembinaan yang telah diadakan di JKR Johor pada 4hb Januari 2011 dan yang
terbaru pada Mesyuarat Pembentangan Sistem IBS oleh Global Prefab Sdn Bhd di
pejabat Tapak pada 17hb Jun 2011.
4. Oleh yang demikian, adalah diingatkan bahawa kelewatan untuk mendapatkan H
kelulusan pertukaran struktur IBS tidak wajar di jadikan sebagai asas untuk
permohonan lanjutan masa akan datang. (Emphasis added.)

[59] In the case of Hawl-Mac Construction v Campbell River (1985) 60

BCLR 57 relied upon by Her Ladyship the contractor encountered a delay I
caused by the owner’s engineer and, as a result, the contractor requested a time
extension. While an extension was eventually granted, it was not granted until
after the original completion date, and, even with the extension, the contractor
was unable to complete the works.
 Kerajaan Malaysia (Jabatan Kerja Raya) v Global Globe (M)
[2019] 1 MLJ Sdn Bhd (Hasnah Hashim JCA) 301

A [60] We cannot agree with respect, that the failure to inform the plaintiff by
the defendant of the rejection of the third EOT pursuant to cl 43 render the
termination of the contract invalid.The terms of the contract are explicit that
the defendant is not contractually required to give any notification in
writing.To do so would amount to rewriting the agreed terms of the contract.
B In the event the plaintiff fails to proceed diligently and execute the works in
accordance with the terms of the contract it is mandatory upon the defendant
to give a written notice specifying the default and requiring the plaintiff to
remedy such default (see: cl 51.1). This was duly done by the defendant and
when the plaintiff failed to complete the works the contract was terminated in
C
accordance with the terms of the contract.

DELAY IN POSSESSION OF SITE

D
[61] It was contended by the plaintiff that one of the reasons for the slow
progress in the completion of the works was due to the delay of possession of
site by the defendant to the plaintiff. Clause 38.3 of the contract provides as
follows:
The ‘date of completion’ of the works as referred to under clause 39 hereof shall be
E calculated forn the ‘Date of Possession’. PROVIDED ALWAYS that the possession
of the Site may be given in section or in parts and any other restrictions upon
possession of the Site shall be stated in the Appendix to these Conditions or in the
Contract Documents.

F [62] If there is any delay of the possession of site the defendant may issue an
instruction and the date of completion would then be revised (see: cl 38.4). In
the event that the possession of the site is delayed beyond 90 days the defendant
shall issue a written notice to the plaintiff of the causes of delay.Upon the
receipt of the said notice, the plaintiff may inform the defendant in writing of
G its decision within 14 days of receipt of such notice either to agree to proceed
with the works when the site is made available or to terminate the contract
(see: cl 38.5).

[63] We have perused the records of appeal before us and we find that there
H was no evidence that there was a delay in the possession of site and the plaintiff
had taken steps pursuant to cl 38 due to the delay in the possession of site. At
the seventh site meeting held on 3 January 2012, the defendant notified the
plaintiff that the ‘… pejabat sediada PDRM di kawasan tapak cadangan padang
bolasepak tidak boleh dirobohkan bagi tujuan pembinaan sehingga Blok A siap
I dibina’.

[64] This was followed by the Ninth Site Meeting held on 26 April 2012
where the issue of moving the ‘Pejabat PDRM di Blok Menara Pentadbiran’
was rasied. According to the minutes of meeting:
302 Malayan Law Journal [2019] 1 MLJ

5.3.1 Mesyuarat mengambil maklum bahawa mengikut perancangan asal, pihak A

kontraktor perlu menyiapkan pembinaan Blok A lebih awal iaitu selewat-lewatnya
pada Disember 2012 bagi membolehkan pihak ‘end user’ mengosongkan bangunan
sedia dan berpindah ke bangunan baru.
…
B
5.3.3 Walaubagaimanapun, dari perkembangan semasa pihak kontraktor utama
memaklumkan bahawa Blok A tidak dapat disiapkan saperti yang dirancang dan
hanya boleh disiapkan pada bulan Februari 2013 … (Emphasis added.)

[65] Block A was only completed on 23 November 2012 but the issue of C
delay was addressed by the second EOT that was subsequently granted. If the
delay of possession was critical to the plaintiff ’s progress of works, then the
plaintiff should have invoked cl 38 at the earliest possible time. This the
plaintiff failed to do so.
D
THE IBS

[66] One of the main complaints of the plaintiff is the delay in approving the
IBS component. With regards to the IBS, the problem of approval was only
raised at the third site meeting where it was highlighted by the representative of E
JKR that the plaintiff had proposed to change the IBS component thus there
would be adjustment to the contract sum. This is reflected in the minutes of
meeting of the third site meeting held on 28 June 2011:
7.0 Pertukaran Struktur Sistem IBS
F
7.1 Pn Shahrom memaklumkan sekiranya kontraktor bercadang untuk menukar
komponen IBS maka pelarasan harga kontrak akan berlaku. Jika terdapat
pertambahan kos maka ianya adalah di bawah tanggungan kontraktor dan
sekiranya terdapat pengurangan kos maka potongan harga akan dilaksanakan.
Tindakan: Global GlobeS/B, JB Bergabung, Juru Ukur Bahan.
G

[67] The change to IBS system could only be approved subject to the
approval of the Head of Design Team (HODT). By a letter dated 15 June 2011
JKR had notified the plaintiff that as the contractor of the project must appoint
an independent checker (‘IC’) as well as obtain the necessary approval from the H
Cawangan Akitek JKR. The cost of the IC must be borne by the plaintiff.

[68] As early as in June 2011 the defendant reminded the plaintiff by a letter
dated 20 June 2011 that the delay in appointing the IC and obtaining the
necessary approval from Cawangan Akitek JKR to change to the IBS system I
should not be a basis for extension of time.

[69] The defendant reminded the plaintiff to appont the IC as required

under the need statement and to submit all the structural designs to the IC for
 Kerajaan Malaysia (Jabatan Kerja Raya) v Global Globe (M)
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A verification and certification before works can commence on the site (see: letter
dated 20 July 2011 from Ketua Penolong Pengarah Kanan, Bahagian Struktur
(Unit Keselamatan) Cawangan Kejuruteraan Awam, JKR; common bundle of
document). By a letter dated 5 August 2011 the defendant informed the
plaintiff that it had no objection to the change in the IBS as proposed by the
B plaintiff as long as it did not involve any change to the architect’s scope and
complies with the IBS score.The defendant had also informed the plaintiff that
‘Status kelulusan Sistem IBS bagi displin strucktur secara dasar telah di
persetujui semasa Mesyuarat Semakan Rekabentuk IBS yang telah diadakan
pada 8.8.2011. Manakala kelulusan pertukaran system IBS oleh pihak arkitek
C
adalah berdasarkan surat dari Cawangan Arkitek …’.

[70] The defendant then informed the plaintiff that the method statement
was submitted to the Consultant Engineer, OMK Jurutera Perunding Sdn Bhd
D on 19 April 2012 for approval. On 25 November 2011 the defendant wrote to
the plaintiff reminding them to submit the report by the IC:
2. Seperti tuan sedia maklum melalui surat di atas, pejabat ini telah bersetuju
dengan calon penyemak bebas yang dikemukakan oleh tuan. Walau bagiamana
pun, sehingga kini pihak kami masih belum menerima sebarang laporan penyemak
E bebas daripada pihak tuan seperti yang telah dipersetujui semasa Mesyuarat
semakan Rekabentuk IBS yang telah diadakan pada 8/8/2011 dipejabat ini.

[71] Therefore, based on the documentary evidence it is evident that the

delay in approving the IBS system was due to the plaintiff ’s own conduct when
F they proposed the change of the IBS component after the contract was
awarded. There was delay with regards to the appointment of the IC and the
submission of the relevant documents by the plaintiff to the consultant
engineer for approval.
G
[72] The plaintiff ’s case hinges on the fact that the delay was due to the
defendant’s inaction of approving the IBS and of giving possession. Upon
perusal of the evidence we find no evidence of such inaction by the defendant.
Instead there were clear attempts by the defendant throughout the contract
H period to assist the plaintiff to achieve its targeted completion date. Despite all
these the plaintiff failed to complete the project as originally scheduled and also
by the extended dates. To say that the 3rd EOT application was not considered
is not quite correct as the application was discussed and considered at the
‘Mesyuarat Projek Sakit’ and Mesyuarat Jawatankuasa Kelambatan Lanjutan
I Masa (see: pp 3151–3153 rekod rayuan Jld 2(13) Bahagian C).

[73] Upon our perusal of the evidence that the defendant had at all material
time assisted the plaintiff to achieve its targeted completion dates. Contrary to
the learned High Court judge’s findings we are of the view that even if the third
304 Malayan Law Journal [2019] 1 MLJ

EOT application was not considered it does not prejudiced the defendant’s A
right in any way whatsoever in electing to terminate the contract

THE CERTIFICATE OF NON COMPLETION (CNC)

[74] The next issue that we have considered pertained to whether the B
defendant had validly issued the CNC pursuant to cl 40 of the contract.The
general rule is that as a contractor the plaintiff is bound by the terms of the
contract to complete the work by the original date for completion as stipulated
in the contract. If the plaintiff fails to do so under the terms of the contract the
plaintiff will be liable for liquidated damages. C

[75] As a prerequisite to claiming liquidated and ascertained damages the

defendant must issue a certificate of non completion (CNC) to the plaintiff.
The CNC gives formal written notice to the plaintiff that they have failed to D
complete the works by the completion date that was last agreed. The defendant
may then deduct LAD from the plaintiff. Generally, contractors may challenge
claims for LAD if the procedures and the notice periods set out in the contract
have not been followed.
E
[76] When LAD is imposed and subsequently deducted the correct
contractual procedures must be adhered to. In the case of Octoesse LLP v Trak
Special Projects Ltd [2016] EWHC 3180 (TCC) Justice Jefford held that
Octoesse was not entitled to deduct liquidated damages as they had agreed to
an extension of time after a certificate of non completion had been issued. As F
Octoesse had not issued a further certificate of non completion, they were not
entitled to deduct liquidated damages.

[77] Clause 40 of the contract reads as follows:

G
40.1 If the Contractor fails to complete the Works by the Date for Completion or
within any extended time granted pursuant to clause 43, the SO shall issue a
Certificate of Non-Completion to the Contractor. Prior to the issuance of the
Certificate of Non-Completion, the SO shall issue a notice to the Contractor
informing the Contractor the intention of the Government to impose Liquidated H
and Ascertained Damages to the Contractor fails to complete the Works by the Date
for Completion or within any extended time granted.
40.2 Upon the issuance of the Certificate of Non-Completion, the Government
shall be entitled to recover from the Contractor Liquidated and Ascertained
Damages calculated at the rate stated in Appendix from the period of the issuance of I
the Certificate of Non-Completion to the date of issuance of Certificate of Practical
Completion or the date of termination of this Contract. The SO may deduct such
damages from any money due or to become due to the Contractor failing which
such damages shall be recovered from the Performance Bond or as a debt due from
the Contractor. The SO shall inform the Contractor in writing of such deduction.
 Kerajaan Malaysia (Jabatan Kerja Raya) v Global Globe (M)
[2019] 1 MLJ Sdn Bhd (Hasnah Hashim JCA) 305

A [78] With respect we do not agree with the learned High Court judge that
the CNC issued by the defendant is invalid given that the date of completion
had yet to pass at the time of issuance for the following reasons. The plaintif was
granted two EOT and therefore was contractually bound to complete the
project on or before the expiration of the second extended date. Since the
B plaintiff failed to complete by the second rescheduled completion date the
defendant must issue the CNC pursuant to cl 40 of the contract. The issuance
of the CNC serves as a notice to the plaintiff that LAD will be imposed due to
the failure to complete the project according to schedule.
C
[79] The defendant issued the CNC on 17 July 2013. The progress of the
project as at May 2013 was as follows:

[80] The table shows that the progress of the works was only at 53.3% as at
H 30 May 2013 when it should be almost 100%. The CNC was issued a day
before the scheduled completion date, ie 18 July 2013. If CNC is not issued
then the defendant will not be able to deduct LAD. The defendant possessed
the contractual right to issue the CNC if the plaintiff fails to complete the
works by the date for completion or by the extended time granted. Thus, the
I issuance of the CNC a day before the expiry of the second extended date of
completion is in accordance with the contractual terms.

[81] This is not a small project involving a miniscule sum. The contract sum
is a staggering RM103,556,694.84. Therefore,any delay would have far
306 Malayan Law Journal [2019] 1 MLJ

reaching consequences. The delay in the completion of the project means an A

increase in the costs not only to the plaintiff but also to the defendant.
Accordingly, based on the facts and evidence we find that the defendant had
correctly exercised its rights under the contract to issue the CNC and need not
wait to issue the CNC after the expiry of the extended completion date. The
learned judge erred when she said that the CNC issued before the expiry of the B
extended completion date was invalid.

WHETHER THE TERMINATION OF THE CONTRACT BY THE

DEFENDANT IS VALID
C
[82] The contract was terminated due to the poor progress and failure to
complete the project despite being given two extensions of time. It was
communicated to the plaintiff that the delay in the approval of the IBS must
not be the basis for any extension of time. This was because it was the plaintiff
that had proposed the change after the contract was awarded to them. D
Therefore, since the plaintiff failed to complete the project within the extended
time granted, it was within the defendant’s legal rights to terminate the
contract.

CONCLUSION E

[83] Had the learned High Court judge considered the evidence in their
proper perspective she could not have come to the conclusion that the
termination by the defendant was invalid.
F
[84] In conclusion after having heard the parties at length and upon careful
perusal of the records of appeals, we are of the considered opinion that this is a
case in which appellate intervention is warranted. For the foregoing reasons, we
unanimously allow the appeal with costs. The decision of the learned judge is
therefore set aside. We ordered costs of RM50,000 here and below subject to G
the payment of allocator.

Appeal allowed; High Court decision set aside.

Reported by Ashok Kumar H