IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR (COMMERCIAL DIVISION)
SUIT NO. D-22-NCC-44-2009
NARINDERA PALL SINGH
A/L SURJEET SINGH … PLAINTIFF
ECOFIRST CONSTRUCTION SDN. BHD. … DEFENDANT
GROUNDS OF DECISION (Enc. 11)
BEFORE HIS LORDSHIP TUAN ANANTHAM KASINATHER JUDGE HIGH COURT MALAYA
KUALA LUMPUR IN CHAMBER
The Plaintiff commenced a claim for RM 432, 270.77 pursuant to a sub-contract with the Defendant for inter alia the supply, execution, completion and maintenance of Soft and Hard Landscape Works. These works were for a project for Tetuan SEG International Berhad wherein the main contractor was Wawasan R&R Builders Sdn. Bhd. and the landscape architect Ms. Shah, PK & Associates Sdn. Bhd. In my written grounds of judgment dated 25th February 2010, I granted leave to the Plaintiff to sign final judgment for the sum claimed in the statement of claim.
The statement of defence filed by the Defendant included a Counter-claim. In paragraph 44 of its defence and Counterclaim read with paragraphs 12-15 of its defence, the Defendant alleged that due to the Plaintiff’s delay in completing the works sub-contracted to it, the Defendant had suffered losses. The losses, according to the Defendant, took the form of Agreed, Liquidated and Ascertained Damages (LAD) in the amounts and for the period stated below;
a) 1 st January 2007 – 31st March 2007 – RM 364,000
b) 16th December 2006 – 21st February 2009 – RM 2,786,000 (see paragraph 15 of Enc. 4);
c) Rectification costs – RM 241,000 (see prayer [b] of Counter-claim)
d) Costs in respect of suit no. D-22-NCC-44-2009
The LAD was computed at the rate of RM 35,000 per day.
The basis of the Defendant’s claim for the LAD is the subcontract. Clause 5 of the sub-contract contemplated a commencement date of 15th August 2006, and a completion date of 15th December 2006 for the works undertaken by the Plaintiff pursuant to the sub-contract.
Since the whole foundation of the Defendant’s Counterclaim is based on clause 5, I set out below this clause in full:
5.0 Period of Completion
The overall completion period for the above work inclusive of mobilization period, all festival and public holiday shall be sixteen (16) weeks commencing from the date of commencement:
Date of Commencement is on : 15th August 2006
Date of Completion will be on : 15th December 2006
5.1) You have to strictly adhere to the schedule and give full cooperation to the Main Contractor’s site management to ensure smooth progress of the Work;
5.2) Time for completion is of major importance under the Main Contract. Therefore, you must ensure to complete the work within the Main Contractor’s Work Programme;
5.3) Should your works be delayed, you have to arrange additional workers, plants, equipment,
etc. and carry out overtime to expedite the work without any extra costs;
5.4) In the event of any delay to the completion of the Main Contract which is caused by your failure to complete the Sub-Contract scope-of-work within the specified completion period, you shall be liable to pay the Main Contractor the Liquidated and Ascertained Damages which sum equivalent to any loss or damage suffered or incurred by the Main Contractor and shall limit to a maximum of RM 35m000.00 per day for each delay inclusive of festive holidays.
5.5) in the event that you is not the sole defaulting party, the amount of Liquidated and Ascertained Damages stated herein shall be apportioned based on the extent of default to each of the defaulting parties.
Enc. 11 is an application by the Plaintiff to strike out the Counter-claim under O18r19 (a), (b) or (d) of the RHC. Learned Counsel for the Defendant sought to strike out the application on the technical ground that this application cannot be made pursuant to paragraphs (a), (b) or (d) of this rule. According to
Counsel, these paragraphs are disjunctive and not cumulative and that an application under paragraph (a) cannot be supported by affidavit, as is the case here. Based on the case of Pegasus Engineers Bhd. v Sambhu (M) Sdn Bhd. (1998) 1 LNS 310,
Counsel contended that the filing of the affidavit (Enc. 10), was fatal to the Plaintiff’s application. I dismissed the objection as the case of Pegasus was decided before the introduction of order 2 r1A, in our rules. In my judgment, following the introduction of order 2 r1A, the duty of the Court is to do justice by deciding all applications on their merits unless the procedural defect causes injustice. There is no suggestion, here, that the reading of the affidavit will result in any injustice to the Defendant.
After a perusal of the Counter-claim and the written submissions of Counsel, I allowed Enc. 11 with costs on 29th February 2010. My grounds for allowing the application is simply that the Counter-claim does not plead a cause of action based on clause 5 of the sub-contract, set out in full earlier. It is, in my opinion, evident from an examination of clause 5.4 of the subcontract that it is not every delay in the completion of the subcontract that will give rise to a cause of action for LAD in favour of the Defendant. Clause 5.4 makes it abundantly clear that an LAD claim against the Plaintiff will only arise, if the delay in the completion of the works by the Plaintiff sub-contractor, in turn,
caused a delay ‘to the completion of the main contract’. I am fortified in this interpretation of clause 5.4 as clause 5.5 further provides that if the delay to the main contract is not caused solely by the Plaintiff, then, the LAD payable by the Plaintiff shall be apportioned accordingly. A careful perusal of the Counterclaim filed by the Defendant will reveal that there is no plea therein, that the completion of the main contract was delayed, less still, that the delay in the completion of the main contract was caused solely by the Plaintiff. In my judgment, in the absence of this plea, the facts pleaded in the Counter-claim do not fall within paragraph 5.4 of the sub-contract so as to entitle the Defendant to sue for LAD under clause 5.4 of the sub contract. Furthermore, any LAD payable by the Plaintiff is due to the main contractor and not the Defendant under clause 5.4. Accordingly, in my judgment, the Counter-claim ought to be struck out on this ground alone.
Apart from this fatal defect in the Counter-claim, in my judgment, the Counter-claim is defective in several other respects. First, there is ample evidence that the Plaintiff was unable to commence its contract works by the commencement date due to the delay on the part of other sub-contractors to hand over the site. Additionally, the architect did issue variation orders even after the completion date. This is evident from the minutes of the site meetings, as well, as, letters originating from
the architects (see Exh. NPS 3&5 to Enc. 7). Secondly, the minutes of the meeting of the 8th January 2007 reveal that the architect had granted an extension of time to the main contractor to at least, up to 31st January 2007 (see Exh. NPS 5 to Enc. 7). Thirdly, LAD is invariably dealt with by the architect in the certificate for final payment. The certificate for final payment contains no mention whatsoever of the Plaintiff having incurred any LAD (see Exh. NPS 2 to Enc. 7). Against this background facts, the Defendant’s Counter-claim for LAD is totally devoid of any foundation. Fourthly, the certificate of practical completion was issued by the architect on 14th July 2007 (see exh. NPS 1 to Enc. 7), certifying that all works including the Plaintiffs were completed on 1st July 2007. This certificate was preceded by the ‘Sijil Kelayakan Menduduki Bangunan’ issued by the Majlis Bandaraya Petaling Jaya on 24th April 2007. In the face of these two documents, the Defendant’s Counter-claim for LAD up to 21st February 2009 is bizarre, to say the least. In my opinion, the Defendant’s Counter-claim arises from a basic misunderstanding of the difference between completion and the period set aside for rectification works. A perusal of the certificate of practical completion will reveal that the defects liability period was to terminate on 31st December 2008. It is not in dispute that the Plaintiff refused to undertake the rectification works during the defects liability period, purportedly because the Defendant had not paid the amount certified as being due to it under the
certificate of final payment. Be that as it may, the costs of the rectification works was valued by the architect at RM 59,900.00 (see Exh. NPS 6 to Enc. 7). There is no doubt that the Defendant would have a good claim for this amount but for the fact that the Plaintiff gave credit for this amount in the computation of its claim in the statement of claim. The Defendant without regard to Exh. NPS 6 seeks to recover RM 241,000.00 for rectification works. The Defendant’s Counter-claim for RM 241,000 is based on the allegation that the Plaintiff’s valuation ‘is an inaccurate computation as all defects and further defects have all not been taken into account’ (see paragraphs 21 & 22 of the statement of defence). With respect this allegation is far from correct as the valuation of the costs of rectification was determined by the architect and not the Plaintiff (see Exh. NPS 6 to Enc. 7). As the proper person to value the costs of the rectification works is the consultant, the Defendant’s Counterclaim based, as it is, on its own valuation is without foundation (see clause 14.1 of the sub contract). Finally, as regards the claim for costs, it is trite, that costs when taxed, can upon the issuance of the allocatur be enforced by conventional execution modes without the necessity to sue. Paragraph 46 of the Counter-claim provides no basis for the inclusion of this claim for taxed costs in this suit, when the Defendant can resort to execution, without any further order from this Court.
Accordingly, I allow Enc. 11 and order the Defendant to pay costs of RM 10,000 to the Plaintiff by way of lump sum costs in lieu of taxation.
(Y.A Tuan K. Anantham)
Pesuruhjaya Kehakiman Mahkamah Tinggi Kuala Lumpur
Date of Decision: 29th March 2010
Dato’ Rabinder Singh Mr. B. Inderjit Ms. Rosmah
(Tetuan Rabinder Budiman & Assoc) … for the Plaintiff
Ms. Deborah Kaur
(Tetuan Soraya Jabid, Deborah & Co) … for the Defendant