WAH LOON (M) SDN BHD

v.

ICON CITY DEVELOPMENT SDN BHD

High Court Malaya, Kuala Lumpur

Contract: Building contract – Retention sum held by employer – Whether retention sum payable by way
of contract – Whether retention sum payable based on estoppel – Whether retention sum payable
pursuant to s 71 of Contracts Act 1950 – Whether retention sum payable under unjust enrichment

The Defendant was the developer a project which was part of the proposed Icon City development
(‘Project’). The architect appointed by the Defendant to supervise as well as administer the contracts
relating to the Project was SN Low & Associates Sdn Bhd ("Architect"). The Defendant originally
appointed Sara Timur Sdn Bhd ("ST") as the main contractor to carry out and complete the Project based
on the PAM Agreement and Conditions of Main Contract (2006 ed.). The Defendant notified the
Architect that the Defendant accepted the Plaintiff as the nominated sub-contractor to carry out and
complete the electrical and telecommunication services for the Project ("Works") at the contract sum of
RM10,468,560.00. Consequently, ST was duly instructed by the Architect and ST by a letter of award
dated 20 February 2013 ("Sub-Contract") accordingly appointed the Plaintiff as its nominated sub-
contractor for the Works. During the execution of the Works, the Plaintiff was progressively paid by way
of the Defendant's cheques made in favour of the Plaintiff as valued and certified by the Defendant's
M&E Engineer, Squire Mech Sdn Bhd pursuant to the Sub-Contract ("M&E Engineer"). The Architect
informed the Plaintiff that ST's employment under the main contract had been determined by the
Defendant and the Plaintiff's employment under the Sub-Contract would forthwith also automatically
determined. The Defendant thereafter appointed HHCT as the replacement main contractor to re-carry
out and complete the Project also based on the PAM Agreement and Conditions of Main Contract (2006
ed.). After meeting with the M&E Engineer on 28 August 2015, the Plaintiff wrote to the Defendant of its
willingness to again be nominated as the nominated sub-contractor of the replacement main contractor.
The Defendant notified the Architect that the Defendant accepted the Plaintiff as the nominated sub-
contractor to carry out and complete the balance of the Works at the contract sum of RM970,341.97.
Accordingly, the replacement main contractor HHCT was duly instructed by the Architect and HHCT by a
letter of award dated 1 September 2015 appointed the Plaintiff as its nominated sub-contractor for the
balance of the Works ("Residual Sub-Contract") on terms of payment and retention sum therein as per
the Defendant's letter of nomination dated 28 August 2015. The Architect then certified that s 1A and s
1B of the Project which included the Works achieved practical completion respectively. The Plaintiff
attended to the making good of all defects in the Works that arose during the defect liability period.
Subsequently, the Architect certified that the making good of defects in respect of s 1A as well as s 1B
and 2 of the Project were satisfactorily completed respectively. However, due to the Defendant’s failure
to release the retention sum, the Plaintiff instituted this suit.
Held (allowing the claim with costs):

(1) There was no evidence adduced that there was a clear and unequivocal express or implied promise
by the Defendant to pay the Plaintiff directly per se or based on transfer of the retention sum from
the Sub-Contract to the Residual Sub-Contract. This promise as alleged was also not seen in the
express provisions of the Residual Sub-Contract. Additionally, there was no cogent evidence adduced
that the Defendant had in 2018 assured the Plaintiff that the Defendant would pay the Plaintiff the
retention sum as so alleged. (paras 46—47)

(2) The M&E Engineer had no authority to waive and/or modify the contractual provision on retention
sum in its valuation and certification of payments without the express agreement of both the
Defendant and HHCT. Moreover, the M&E Engineer was not called as a witness at trial to explain his
actions. Consequently, the M&E Engineer's representation in the valuation and certification of
payments was of no probative evidential value to constitute an estoppel on the part of the
Defendant. It was therefore irrelevant or immaterial that the Defendant paid the Plaintiff against the
progress certificates without any objection or protest. The Defendant/HHCT was in fact entitled to
impose and withhold further retention sum based on the provision of the Residual Sub-Contract but
that was not done at its own detriment. (paras 57—58)

(3) There was no dispute that the Plaintiff had carried out the Works, which benefitted the Defendant
as. It should not matter that there was no money due or payable by the Defendant to ST. In fact, it
was only the Defendant's assertion here that there was no money due and payable based on the
final accounts produced pursuant to the cl 30.6(b) of the PAM Conditions of Main Contract (2006 ed)
and this was significantly due to the set off made by the Defendant for its loss and damage allegedly
sustained as the result of the determination of the main contract. There was however no evidence
that ST's liquidator had accepted or agreed to the final accounts. In any event, the final accounts
were still presently provisional unless and until the accounts had been agreed by ST's liquidator or
determined by an arbitrator or the court of law. Thus, if the Defendant was ordered to pay the
retention sum to the Plaintiff, the final accounts might still be adjusted to account and reflect the
pay-out as ordered. (paras 68—69)

Case(s) referred to:

Boustead Trading (1985) Sdn Bhd v. Arab-Malaysian Merchant Bank Berhad [1995] 1 MLRA 738; [1995] 3
MLJ 331; [1995] 4 CLJ 283; [1995] 3 AMR 2871 (refd)

Butler Machine Tool Co Ltd v. Ex-Cell-O Corp (England) Ltd [1979] 1 WLR 401 (refd)

Cosmos Infratech Sdn Bhd v. Melati Evergreen Sdn Bhd [2020] 6 MLRH 532 (refd)

Dato' Gopal Sri Ram v. Dato' C Vijaya Kumar & Ors [2006] 6 MLRH 7; [2006] 6 MLJ 328 (refd)

Deutsche Bank (Malaysia) Bhd v. MBF Holdings Bhd & Anor [2015] 6 MLRA 583; [2015] 6 MLJ 310; [2015]
8 CLJ 1068; [2015] 6 AMR 717 (refd)
Janagi v. Ong Boon Kiat [1971] 1 MLRH 360; [1971] 2 MLJ 196 (refd)

KGN Jaya Sdn Bhd v. Pan Reliance Sdn Bhd [1996] 1 MLRA 178; [1996] 1 MLJ 233; [1996] 2 CLJ 611;
[1996] 1 AMR 839 (refd)

KL Eco City Sdn Bhd v. Tuck Sin Engineering & Construction Sdn Bhd & Anor [2020] MLRHU 330 (refd)

Koh Han Boon v. Impower Sdn Bhd & Anor; Richard Tseng [2003] 1 MLRH 303; [2003] 2 CLJ 648; [2003] 4
AMR 36 (refd)

Krass Solutions Sdn Bhd v. Konsesi Kota Permatamas Sdn Bhd [2018] 4 MLRA 70; [2018] 6 MLJ 202;
[2018] 9 CLJ 26; [2018] 3 AMR 790 (refd)

Masai Tat Construction Sdn Bhd v. Redison Builders Sdn Bhd & Anor [2020] MLRHU 586 (refd)

Mega Mayang M & E Sdn Bhd v. Utama Lodge Sdn Bhd [2018] MLRAU 506 (refd)

Pembinaan Lagenda Unggul Sdn Bhd v. Geohan Sdn Bhd & Another Appeals [2018] MLRAU 59 (refd)

Petowa Jaya Sdn Bhd v. Binaan Nasional Sdn Bhd [1987] 2 MLRH 464; [1988] 2 MLJ 261 (refd)

Siow Wong Fatt v. Susur Rotan Mining Ltd &Anor [1967] 1 MLRA 53; [1967] 2 MLJ 118 (refd)

Tanjung Teras Sdn Bhd v. Kerajaan Malaysia [2015] MLRAU 468; [2015] 9 CLJ 1002 (refd)

Wisma Puncak Emas Sdn Bhd v. Dr Donal R O' Holohan [1986] 1 MLRA 562; [1987] 1 MLJ 393 (refd)

Yew Wan Leong v. Lai Kok Chye [1990] 1 MLRA 327; [1990] 2 MLJ 152; [1990] 1 CLJ (Rep) 330 (refd)

Legislation referred to:

Contracts Act 1950, s 71