Ketua Setiausaha Kementerian Kemajuan Luar Bandar dan Wilayah v Aspes Mechanical Sdn Bhd (KA-12BNCvC-6-06/2024)

KETUA SETIAUSAHA

KERAJAAN MALAYSIA APPELLANT

ASPES MECHANICAL SDN BHD (Comp No. 905949-P)

BAKTIJAYA RESOURCES SDN BHD (Comp No. 360035-W) RESPONDENT Dalam Mahkamah Sesyen Di Alor Setar Dalam Negeri Kedah Darul Aman, Malaysia Guaman Sivil No: KA-B51NCvC-1-02/2020 Between ASPES MECHANICAL SDN BHD (Comp No. 905949-P) …Plaintiff

BAKTIJAYA RESOURCES SDN BHD (Comp No. 360035-W)

KETUA SETIAUSAHA

KERAJAAN MALAYSIA …Defendan-Defendan 26/01/2026 17:56:22 KA-12BNCvC-6-06/2024 Kand. 31 GROUND OF JUDGMENT

This appeal arises from the decision of the Sessions Court in Alor Setar delivered on 30.05.2024. At the trial, proceedings were confined to the Plaintiff and the 2nd and 3rd Defendants. Upon conclusion, the learned Sessions Court allowed the Plaintiff’s claim against the 2nd and 3rd Defendants. Dissatisfied with that outcome, the 2nd and 3rd Defendants—now the appellants—lodged the present appeal, which has come before me.

The appellants, namely the 2nd and 3rd Defendants, contended that the learned Sessions Judge had erred, asserting that the decision reached was plainly wrong. They accordingly sought for the judgment to be set aside. The respondent, who was the Plaintiff in the court below, endeavoured to uphold the findings of the learned Sessions Judge. His submissions—which I shall address in the later part of these grounds—spanned a range of arguments urging that the appeal be dismissed.

Having given the matter my most anxious consideration, and considering the factual matrix of this case, I am compelled to hold that the Sessions Court had fallen into plain error. In such circumstances, it is incumbent upon this appellate court to intervene and wholly set aside the decision below. I have accordingly done so. I had earlier indicated that full grounds would be furnished upon appeal. What follows are my detailed grounds of decision.

For convenience the parties will be referred to as they were in the court below.

The Plaintiff was, for all intent and purposes a sub-contractor. The 1st Defendant, Baktijaya Resources Sdn Bhd, (who is named as the 2nd Respondent in this appeal) was the main contractor. By a contract numbered KKLW/BALB/B1/3/2017 entered into on 23.5.2017 the 3rd Defendant appointed the 1st Defendant as the main contractor for a project known as Bekalan Air Luar Bandar (BALB) di Daerah Padang Terap, Kedah-Pakej C or the Rural Water Supply Project (BALB) in the district of Padang Terap, State of Kedah (Package C) [hereinafter referred to as ‘the Project’]. The Project was at material time was placed under the Ministry of Rural and Regional Development for which the 2nd Defendant is named as a party.

By a Letter of Acceptance dated 15.03.2018, the Defendant appointed the Plaintiff as the Electrical Works Subcontractor for the Project. The contract sum under the said Letter of Acceptance was RM1,497,820.00 but was reduced to RM1,341,503.00 by the agreement between the Plaintiff and 1st Defendant. Subsequently, the Plaintiff and the 1st Defendant entered into a Deed of Assignment (“DOA”) dated 23.03.2018 whereby they agreed, inter alia, that all payments for the electrical subcontract works carried out by the Plaintiff in the Project would be made directly to the Plaintiff by 2nd and 3rd Defendants who consented to the DOA and gave their written agreement dated 14.05.2018.

The Plaintiff has received payments in the sum of RM604,588.00 from the Defendants for the works carried out by the Plaintiff in respect of the Project. However, the Plaintiff alleges that the Defendants, jointly and/or severally, have failed to make the outstanding balance payment of RM736,915 to the Plaintiff for the works duly completed.

The Plaintiff then commenced the action against the Defendants claiming the outstanding sum of RM736,915.00. This was based on the contract value in the Letter of Acceptance, which had been revised and agreed between the Plaintiff and the 1st Defendant at RM1,341,503.00, less the amount already received by the Plaintiff, in the sum of RM604,588.00, leaving a balance of RM736,915.00.

I must state a critical part of the case where upon the conclusion of the trial and the testimony of witnesses, the Plaintiff in their written submissions dated 16.11.2023 proposed an alternative sum of RM927,376.50 as the agreed contract value for the trial court to consider thereby reducing the Plaintiff’s claim to that of RM322,788.50 only.

The learned Sessions Court Judge allowed Plaintiff’s claim in the sum of RM322,788.50.

For completeness, it must be noted that the 1st Defendant did not participate in the trial, as judgment in default had already been entered against it. The 1st Defendant was thereafter wound up. The Plaintiff thus proceeded with the action against the 2nd and 3rd Defendants only. Although the 1st Defendant was formally named as a party to this appeal, the proceedings in substance were between the Plaintiff and the 2nd and 3rd Defendants.

In their joint Memorandum of Appeal, the 2nd and 3rd Defendants advanced nine grounds in support of sustaining this appeal. I do not consider it necessary to reproduce those grounds verbatim. No prejudice will be occasioned to counsel if I were instead to summarise the appellants’ grounds of appeal in the following manner:

That the learned judge in the court below has effectively re-written the contract between the Plaintiff and the 1st Defendant and had accordingly fostered onto the 2nd and 3rd Defendant the new terms.

(ii) That in substance, the contract for the Project between the 1st Defendant and the 3rd Defendant was a construction contract, the hallmark of which lies in price adjustments based on site measurements, occurring throughout the duration of the contract. Put differently, the 2nd and 3rd Defendants contend that the total contract sum represents merely a ceiling price, and that while interim payments may be made, they remain subject to measurement. Accordingly, the straightforward arithmetic of deducting the sums already paid from the total contract value to determine the outstanding balance is not, in their submission, the correct formula.

(iii) That the learned Sessions Judge has misread and misunderstood the terms of the DOA given that on the one hand finding that the 2nd and 3rd Defendant could not vailed themselves of the terms thereof but on the other found the 2nd and 3rd Defendants liable based on the terms of the DOA.

(iv) That the learned judge has wrongly applied the principles of unjust enrichment when it was not pleaded and was raised for the first time during closing submissions.

That the learned judge has over emphasised the effect of the judgment in default recorded against the 1st Defendant to fix liability on the 2nd and 3rd Defendant. The Plaintiff’s Case in the court below

Before turning to the grounds advanced by the 2nd and 3rd Defendants, it is appropriate at this stage to briefly summarise the Plaintiff’s claim against the Defendants. The claims were premised on the following straightforward basis:-

That there was a contract between the Plaintiff and the 1st Defendant for an initial sum of RM1,497,820.00 which was later revised to RM1,342,503.00;

That by virtue of the Deed of Assignment (DOA), the 1st Defendant assigned to the Plaintiff all payment rights under the main contract relating to the electrical works to be carried out. Pursuant thereto, the 2nd and 3rd Defendants were obliged to effect direct payment to the Plaintiff.

That the Plaintiff has received payments in the sum of RM589,252.90 leaving a balance of RM752,250.10 which was particularised at paragraph 10 of the Statement of Claim: - The 2nd and 3rd Defendant’s Defence to the Plaintiff’s claim

In gist the 2nd and 3rd Defendants denied liability and pleaded the following: -

That the electrical works for the Project was initially stated to be in the sum of RM927,378.50. This was subsequently adjusted by agreement of the 1st Defendant to RM520,866.50;

That whatever agreement which was reached between the Plaintiff and the 1st Defendant in respect of value of sub-contract was ultimately between them and does not bind the 2nd and 3rd Defendants;

That the 2nd and 3rd Defendants will only be liable for the payments actually due to the 1st Defendant and if the 1st Defendant actually agreed to pay over and above the sum agreed between the 2nd and 3rd Defendant, the 1st Defendant then is directly liable to the Plaintiff;

That full payment has been made to the 1st Defendant under the main contract and there is nothing due to be paid; THE DECISION OF THE SESSION COURT

The Court accepted that the original contract value was RM1,497,820, which had been reduced to RM1,341,503 as the contract price or ceiling value. Following adjustments made together with 1st Defendant, the amount was further reduced to RM927,376.50, as reflected in exhibit P7.

Exhibit P7 was further supported by exhibit D16 (revised summary tender), which shows that 1st Defendant, 2nd and 3rd Defendants had agreed to fix the contract value at RM927,376.50. This valuation was made after adjustments as testified by SD1 and SD2. Moreover, the Plaintiff was the sole subcontractor appointed to carry out the electrical works as directed by 1st Defendant, the main contractor of the Project at the material time.

The learned Session Court Judge accept the facts that 2nd and 3rd Defendants were satisfied with the works carried out by the Plaintiff without any complaint or indication of dissatisfaction. The Court agreed that after deducting the sum of RM604,588.00 already paid to the Plaintiff, the outstanding balance to be settled by 2nd and 3rd Defendants amounted to RM322,788.50 (being the contract value of RM927,376.50 less RM604,588.00 = RM322,788.50).

The Court rejected the contention of 2nd and 3rd Defendants that the project value did not exceed RM520,886.50 (a reduction of 44% from the original contract sum), as such reduction was made without the consent, knowledge, information, or notification to the Plaintiff or 1st Defendant, notwithstanding that 2nd and 3rd Defendants knew, or were aware, that the Plaintiff was the sole subcontractor engaged for the electrical works in the Project.

It was also found that 2nd and 3rd Defendants were not privy to the terms of the DOA (exhibit P3) as it only involved the Plaintiff and 1st Defendant, and therefore 2nd and 3rd Defendants cannot rely on the provisions therein, particularly clause 8.

The Session Court was of the view that it would be unjust to the Plaintiff, who had completed the Project without any complaint or dissatisfaction, to not be fully paid for the works completed, whilst at the same time 2nd and 3rd Defendants had enjoyed the benefit of the Project completed through the Plaintiff’s works.

Accordingly, the Plaintiff is entitled to a claim of RM322,788.50.

An appellate court will not interfere with the findings of fact made by a trial court unless it is satisfied that the trial court has plainly gone wrong. Where the trial court has failed to properly evaluate the evidence, or has altogether omitted to consider material evidence, then the appellate court is not only entitled but is duty-bound to intervene. This principle was articulated by Gopal Sri Ram JCA (as he then was) in Lee Ing Chin @ Lee Teck Seng v. Gan Yook Chin & Anor [2003] 2 CLJ 19, where His Lordship observed: ‘Very recently, this Court in Arab Malaysian Finance Bhd v. Steven Phoa Cheng Loon & Ors [2003] 1 CLJ 585 CA, reviewed some of the leading authorities on appellate intervention and identified the general rule of appellate non-interference. We also considered some of the categories in which appellate interference is warranted. We find it unnecessary to repeat what we there said. Suffice to say that we re-affirm the proposition that an appellate court will not, generally speaking, intervene unless the trial court is shown to be plainly wrong in arriving at its decision. But appellate interference will take place in cases where there has been no or insufficient judicial appreciation of the evidence. It is, we think appropriate that we say what judicial appreciation of evidence involves. (Emphasis added)

In subsequent cases the apex court had further clarified the role and function of an appellate court.

In Abdul Ravuff Datuk AS Dawood & Ors v. Dr Abdul Rahiman Datuk AS Dawood & Other Appeals [2022] 5 CLJ 829 FC the Federal Court stated:- [35] It is settled law that an appellate court can reverse a lower court's findings on evidence under the plainly wrong test, if there was no proper judicial appreciation of the evidence by the lower court and where the court had ignored cogent contemporaneous documents. In our view, the instant case revolved not merely on credibility of witnesses but more on agreed issues of law as well as contemporaneous documents.

An inadequate appreciation of the evidence is itself a relevant consideration in determining whether the lower court has erred in a manner that is plainly wrong – see Gan Yook Chin & Anor v. Lee Ing Chin & Ors [2004] 4 CLJ 309 FC.

The development of the “plainly wrong test” and its edifice was admirably taken by the Federal Court in Ng Hoo Kui & Anor v. Wendy Tan Lee Peng, Administrator Of The Estates Of Tan Ewe Kwang, Deceased & Ors [2020] 10 CLJ 1 FC which serves as a lighting guide on this aspect. It is unnecessary for me to either try to summarise the principles or to supplant it with other passages.

Accordingly, in determining whether the lower court had made a proper findings, the appellate court bears the responsibility of scrutinising the evidence adduced through the oral testimony of witnesses, documentary evidence, and the grounds of judgment of the Sessions Court Judge (“SCJ”), in order to ascertain whether there exists any manifest error (plainly wrong) in the SCJ’s findings of fact.

In his judgment, the learned SCJ agreed with the Plaintiff that the original contract value was RM1,497,820, which had been reduced to RM1,341,503, representing the contract ceiling price. Following adjustments made with Defendant 1, this amount was further reduced to RM927,376.50. This finding is based on exhibit P7 and supported by exhibit D16 (revised summary tender). I must say that this finding fails to give sufficient attention to the following stipulations in the documentary evidence which established that the contract value is not fixed. In the Letter of Acceptance dated 15.3.2018 exhibit P2 (refer to p. 05 RR C J2), the following were stated: -

Further in the Recital of the DOA , the following was stated:-

Thus, the finding of the learned SCJ that the reduction of the contract price stopped at RM927,376.50 is not supported by the evidence.

I am of the further view that this finding of fact is erroneous, as there is another document which was not referred to, namely the Bill of Quantity (see p.111 RR C J2) under the heading Re-measurement of Provisional Quantities (KKS) No. 1 – Nami Water Treatment Plant (Electrical Works), section R1 (see p.112 RR C J2). There is a reduction from RM927,376.50 to RM883,966.50. Furthermore, there is a further reduction of RM189,100.00, bringing the contract value to RM694,866.50. (RM883,966.50 – RM189,100.00 = RM694,866.50) (see p.112 RR C J2).

The reduction of RM189,100.00 is consistent with paragraph 5 of the Progress Payment (Interim Certificate) in the Letter of Acceptance for the Electrical Sub-Contract Works at the Nami Water Treatment Plant dated 15.3.2018 (refer to exhibit P2, p. 05 RR C J2), whereby the Plaintiff’s progress payments are subject to the approval of 2nd and 3rd Defendants.

Furthermore, the learned SCJ erred in failing to refer to the further exclusions in respect of the Telemetry System works under section R1.60 valued at RM120,000.00 and R1.61 valued at RM54,000.00 (refer to p.118 RR C J2), which works were carried out by the 1st Defendant and not by the Plaintiff.

It is clear that the contract price entered into between the Plaintiff and the 1st Defendant at RM1,497,820.00 was not the actual contract price, and that the final price would be determined based on re-measurement at site. This is expressly stated in paragraph 1 – Tender Price of exhibit P2 (see p.5 RR C J2).

Further, paragraph 2 – Scope of Works provides that the Plaintiff must comply with the scope of works as set out in the Bill of Quantities (BQ) and must adhere to all instructions issued by the Superintending Officer (S.O.), whether involving variations, reductions, or additions to the original scope of works (see p.6 RR

Paragraph 5 – Progress Payment (Interim Certificate) stipulates that progress payments to the Plaintiff are to be made by way of a Deed of Assignment. The method is that 1st Defendant will submit claims to 2nd and 3rd Defendants in the same manner as the Plaintiff submits claims to 1st Defendant. It is expressly provided that the value of such claims is subject to the approval of the Consultant and the Representative of the Superintending Officer (S.O.). The quantities to be paid are based on the quantities approved by the Superintending Officer (refer to p.6 - 7 RR C J2).

Exhibits P2 and P3 reflect the maximum or ceiling value of the contract. The actual sum claimable is determined by the precise measurements taken at site.

Consequently, there is no foundation for the claim amounts, whether RM736,915.00 or RM322,788.50. This is because contractual entitlements are governed by the actual quantities of work executed, rather than by reference to the overall contract value.

On the other hand, the Deed of Assignment (DOA) operates as an instrument providing for direct payment from the employer—namely the 2nd and 3rd Defendants—to the subcontractor, namely the Plaintiff. Under this arrangement, the 1st Defendant is the assignor, while the Plaintiff is the assignee.

I find that the learned SCJ erred in holding that the 2nd and 3rd Defendants were not privy to the contract between the Plaintiff and the 1st Defendant, and in further concluding that clause 8 of the DOA could not be relied upon as their defence. The issue in truth is not one of privity of contract. Rather, the Plaintiff has no direct contractual nexus with the 2nd or 3rd Defendants. Under the terms of the DOA, any outstanding sums (if any) must be pursued against the 1st Defendant, since all work claims are channelled through the 1st Defendant to the 2nd and 3rd Defendants, subject to verification of site quantities by them. The arrangement merely simplified the payment mechanism by providing direct payment through assignment.

In sum, upon a proper appreciation of the evidence, the Plaintiff ought to have been found not to have discharged its burden of proof in establishing that any outstanding payment was due from the 2nd and 3rd Defendants. The contrary finding of the learned SCJ is erroneous and must accordingly be set aside.

On the issue of unjust enrichment, it is evident that the matter was not pleaded. The learned Sessions Court Judge acknowledged as much but nevertheless proceeded to hold that it would be unjust to deny the Plaintiff’s claim, particularly since the 2nd and 3rd Defendants had benefited from the works completed by the Plaintiff. On this point, I agree with the submissions of the 2nd and 3rd Defendants, which I uphold: parties are bound by their pleadings, and unjust enrichment, if it is to be invoked, must specifically be pleaded – see Iftikar Ahmed Khan (As the Executor of the Estate of Sardar Mohd Roshan Khas (deceased) v Perwira Affin Bank [2018] 2 MLJ 292; and Tenaga Nasional Berhad v Ichi-Ban Plastic (M) Sdn Bhd and other appeals [2018] 3 MLJ 141.

Accordingly, the appeal is allowed, and the decision of the learned Session Judge is hereby set aside. In the result the Plaintiff’s claim is dismissed.

The Plaintiff/Respondent is to bear cost of RM10,000.00 to be paid to the 2nd and 3rd Defendants/Appellants subject to the payment of allocator. Dated: 22 January 2026 (Mohd Aimi Zaini Bin Mohd Azhar) Judicial Commissioner High Court Malaya Alor Setar Kedah Darul Aman Solicitors for the Appellant: Nurul Wahida Abd Rahman Jabatan Peguam Negara Pejabat Penasihat Undang-Undang Negeri Kedah Solicitors for the Respondent: Chang Chen Choong (Gavin with him) Messrs. Syarikat Ng & Anuar