DALAM MAHKAMAH RAYUAN MALAYSIA
RAYUAN SIVIL NO. P-02-1300-2010
SAW CHONG TEOK QUARRY SDN. BHD. …. PERAYU
(NO. SYARIKAT : 4889-T)
AMALCON ENGINEERING SDN. BHD.
(NO. SYARIKAT: 75037-M) …. RESPONDEN
[DALAM PERKARA GUAMAN SIVIL NO. 22-192-2002 DALAM MAHKAMAH TINGGI MALAYA DI PULAU PINANG (MT 4)
AMALCON ENGINEERING SDN BHD …. PLAINTIF
(NO. SYARIKAT: 75037-M)
SAW CHONG TEOK QUARRY SDN BHD …. DEFENDAN]
(NO. SYARIKAT : 4889-T)
K.N. SEGARA, JCA AZHAR MA’AH, JCA LINTON ALBERT, JCA
GROUNDS OF DECISION
 The appeal and cross appeal arose from a contract between the appellant and the respondent for the extension of the appellant’s crusher plant at its quarry by the respondent which was to be completed by the respondent within a period of three months from 6.6.95. The respondent was to be paid RM800,000.00 by the appellant. The respondent commenced an action against the appellant for the sum of RM251,903.90 representing the balance of the contract sum of RM800,000.00 which remained unpaid together with interest therein at 12% per annum from 27.09.96 until full settlement. The appellant pleaded a set-off of an equivalent sum of RM 251,903.90 comprised largely of a claim for liquidated agreed damages for delay in completion attributed to the respondent amounting to RM196,000.00 representing 196 days’ delay calculated at the agreed rate of RM 1,000.00 per day.
The High Court allowed the respondent’s claim and part of the appellant’s set-off amounting to RM192,903.90 having disallowed the full 196 days delay claimed and allowing only 137 days’ delay. Hence the set-off allowed was RM59,000.00 less than the amount claimed by the appellant. The appellant appealed and the respondent cross appealed.
 The only issue to be determined was the imposition of interest on the outstanding sum claimed. Calculated up to the date of judgment excluding interest thereafter until full payment, the interest the appellant had to pay amounted to RM408,084.32. The appellant did not pursue its appeal on the quantum of the respondent’s claim which the High Court allowed. The respondent withdrew its cross appeal on the set-off.
 It is perhaps apt to begin by setting out the statement of the law on the full import of a set-off by the Federal Court in Permodalan Plantation Sdn. Bhd. v. Rachuta Sdn. Bhd.  CLJ (Rep) 242 an
authority cited by both counsel for the appellant and respondent respectively. It also determines the sole issue in the instant appeal. At P246, the Federal Court stated:
“A set-off is a cross-claim for a sum of money by a defendant against a plaintiff’s claim for another sum of money for which the defendant is being sued. A cross-claim is not necessarily a set-off, merely because the word used in the pleading is “setoff’. Whether or not the plea is a set-off it has to be determined as a matter of law and substance: Hanak v. Green  2 QB 9. A cross-claim which is accepted as a defence of set off has the effect of extinguishing either the whole or part of the plaintiff’s claim”. (emphasis added)
 With respect, it stood to reason that it was clearly wrong for the learned trial judge to impose interest on the amount claimed and allowed because having allowed a set-off by the appellant, what remained was RM59,000.00 because the set-off had extinguished RM192,903.90 out of the claim for RM251,903.90.
 In the circumstances and for the reasons aforesaid the appeal is allowed in part. The order of the High Court is set aside and substituted with an order that appellant pays the respondent the sum of RM251,903.90 claimed less the set-off of RM192,903.90 and interest
thereon at 12% per annum from 27.9.91 until full payment. There shall be no order as to costs and deposit to be refunded to the appellant. The cross appeal is also struck out with no order as to costs as agreed.
Dated: 20 September 2012
Judge, Court of Appeal Malaysia
For the Appellant : Wong Yee Chue and
Wong Jee Ming
Tetuan Wong-Chooi & Mohd. Nor Peguambela & Peguamcara No. 15, Lorong Mayang Pasir 5 Taman Sri Tunas 11950 Bayan Baru Pulau Pinang
For the Respondent : Chandran Nair and
Tetuan Nor Ashikin Alex & Rakan-Rakan Peguambela & Peguamcara No. 43-A (Tingkat satu) Jalan 52/18 46200 Petaling Jaya Selangor Darul Ehsan