1. ) MIX Target (M) Sdn Bhd v 1. ) Najcom Sdn Bhd (WA-22C-79-11/2016 & WA-22C-28-02/2017)

Balance progress claim due and owing by Najcom in the sum of RM2,650,360.10;

Losses and damages as a result of the premature, wrongful and invalid termination of Mix Target’s contract in the sum of RM532,600.00;

Interest; and

Costs. [12] The losses of RM532,600.00 by Mix Target consisted of the following:

Machinery cost which included grooving machine, threaded machine, tower crane and fork lift in the sum of RM125,000.00;

Mobilization and demobilization of machineries and workers in the sum of RM55,000.00;

Coordination work carried out by Mix Target in the sum of RM35,000.00;

Relocation and additional work due to inaccurate coordination by Najcom in the sum of RM185,000.00;

Administration work including preparation of documents for consultant’s approval in the sum of RM27,800.00; and

Legal costs in the sum of RM72,400.00; and

Cost of valuation and certification by third party in the sum of RM32,400.00. 5 [13] The Defence of Najcom was that Mix Target had over claimed for the Works done as they had unilaterally changed the rationalized rates by heavy front loading such that their rates were materially out of sync with the rates between UNJV and Najcom for the same Fixed Lump Sum Contract of RM9.9 million. [14] Najcom maintained that the termination was valid and also counterclaimed for the extra costs incurred in engaging another rescue Subcontractor to finish the Works and for the costs incurred in rectifying the Works completed by Mix Target. Proceedings [15] Itagres called one witness who is Kelvin Chew Weng Keong in the 2017 Suit. Mix Target witnesses in both the 2017 Suit and 2016 Suit were:

Zainal Abidin Bin Mamat – “PW-1”; and

Ahmad Fitri Bin Zainal Abidin – “PW-2”. [16] Najcom’s witnesses in the 2016 Suit were as follows:

Khow Kok Aun – “DW-1”;

Ng Ean Bah – “DW-2”;

Norazla Bin Badaruddin – “DW-3”

Hezry Huzir Bin Mohd Khalid – “DW-4”;

Izzati Syazwani Binti Idris – “DW-5”;

Chew Hoong Yew – “DW-6”;

Zulkifli Bin Abu Bakar – “DW-7”; and

Haja Najmudeen Bin KPM Abd Kader – “DW-8”. [17] Both Mix Target and Najcom did not execute a PAM Contract after the LoA and at the trial learned counsel for Mix Target informed the Court 6 that he was not proceeding under the premise that the terms of the PAM Contract should apply. Principles Whether Itagres had proved the balance sum of RM731,000.00 owing by Mix Target for the labour and materials supplied [18] Mix Target appointed Itagres to supply labour for the installation of the Fire Fighting System Works. The appointment was contained in the following documents: a. Letter of Acceptance dated 13.10.2014 (see pages 1 to 6 of CBOD 7); b. Purchase Order dated 13.10.2014 (see pages 7 to 9 of CBOD 7). Item 1: To supply labour to install sprinkler, Hose Reel and Wet Riser System from Level 1 to Level 11 including bracket, rod and paint – RM2,690,000.00; Item 2: To supply labour and material including conduit and cabling excluding equipment for fire alarm system, wet chemical and clean agent – RM820,000.00 Less RM310,000.000 [Note: see Purchase Order dated 13.10.2014 at page 7 of CBOD 7] [19] Itagres was appointed on 13.10.2014 and they started supplying workers commencing 1.11.2014 (see page 18 of CBOD 8) until 31.3.2015, when Mix Target’s appointment was terminated by Najcom. As a result of this termination Itagres had to stop work and vacate the site effective 31.3.2015. [20] Itagres’ total Progress Claims amounted to RM879,291.15. As at 7 31.3.2015 Mix Target had paid a sum of RM148,000.00 and so Itagres said there is a balance amounting to RM731,000.00 for which they sued Mix Target in this action consisting of the following particulars: Progress Claim Progress Claim Date Progress Claim Amount (RM) Cummulative and after adjustments for payment already made Progress Claim 1 (see page 93 & 94

31.10.2014 RM53,500.24 Progress Claim 2 (see page 95 & 96

01.12.2014 RM104,813.55 Progress Claim 3 (see page 97 & 98

05.01.2015 RM211,127.34 Progress Claim 4 (see page 99 & 100 of CBOD 7)

05.03.2015 RM478,117.10 Progress Claim 5 (see page 93 & 94

30.03.2015 RM731,291.15 (adjusted after receipt of payment amounting to RM148,000.00) 8 [21] Mix Target did not deny receiving the various Progress Claims as can be seen in paragraph 2.1 of Mix Target’s Statement of Defence. Therefore Itagres had claimed against Mix Target for:

Mix Target do pay Itagres the sum of RM731,000.00; and

Mix Target do pay interest at the rate of 5% per annum on RM731,000.00 from 22.9.2016 till full settlement. [22] Mix Target’s pleaded defence is that their obligation to pay is based on what is certified by Najcom and since Najcom only certified 11% of Mix Target’s claim, Itagres is correspondingly entitled to only 11% of its progressive claims, that is to say RM96,722.03; see para 2.9 of the statement of defence. [23] As Itagres is not a party to the contract between Mix Target and Najcom, and neither has Itagres agreed to the claims as may be submitted by Mix Target and as may be approved by Najcom, this Claim has to be decided based on the terms of payment agreed between Itagres and Mix Target as provided in the Purchase Order dated 13.10.2014 which reads as follows: “Term & Condition

…

…

Bayaran: By progress (45 days-60 days)

…” [24] I agree with learned counsel for Itagres that this contention is untenable. There is no term of payment that states that the payment is conditional upon the certification of Mix Target’s claim by Najcom. Mix Target therefore cannot argue that it was the intention of the parties that the payment to Itagres is made conditional upon certification of Mix 9 Target’s Claim by Najcom. I agree with Itagres that if this was the intention, the provision in the Purchase Order would not have provided that payment is made progressively within 45 to 60 days. [25] The evidence showed that Mix Target made payment irrespective of Najcom’s certification of Mix Target’s work. Learned counsel for Itagres summarized the following evidence to establish that Itagres’ payment is not subject to Mix Target’s claim being certified by UNJV or Najcom and that Mix Target intended it to be so as follows: a. Itagres made the first claim on 31.10.2014 for RM53,500.24. Mix Target then made its claim to Najcom on 30.11.2014 encompassing Itagres’ claim (see page 216 of CBOD 1). Najcom claimed from UNJV thereafter. UNJV certified the claim on 1.12.2014 (COP 7 at page 16 and 17 of CBOD 4). NOTE: If Itagres’ payment is only due after Mix Target’s claim is certified then it should mean that Itagres would only get paid after Mix Target’s claim is certified, that is after 1.12.2014. This was not the case. i. First, Mix Target certified Itagres’ first claim on 14.11.2014 without waiting for Najcom or UNJV’s certification (see Mix Target’s certification of the 1st claim at page 598 of CBOD 2). UNJV only certified Mix Target’s claim on 1.12.2014; ii. Secondly, if UNJV certification of Mix Target’s claim is considered it would be obvious that only RM84,812.00 out of RM911,060.00 was certified (see Certificate of Payment 7 at page 16 and 17 of CBOD 4). This would be equivalent to 10% of the claim. If Itagres’ entitlement to 10 payment is based on Najcom’s certification of Mix Target’s claim, then how is it possible for Mix Target to approve Itagres’ claim amounting to RM48,000.00 out of RM53,500.24 (a percentage approval of 90%)?; b. Itagres made its third claim after the second claim went unpaid. The third claim was dated 5.1.2015 (see page 97 and 98 of CBOB 7). The value of the third cumulative claim (including the 2nd claim) is RM211,127.34. Mix Target subsequently submitted their claim encompassing the 3rd claim in January 2015 (see page 547 of CBOD 2). Mix Target’s claim based on this claim is RM978,222.88. Najcom claimed from UNJV thereafter. UNJV certified the claim on 22.1.2015 (COP 7 at page 72 to 74 of CBOD 4). NOTE: Based on UNJV’s certification they certified a sum of RM357,650.00 out of RM978,222.88. This would be 36% of the claim. Following from this if Itagres’ claim is subject to UNJV’s certification of Mix Target’s claim then 36% of Itagres’ claim would be RM77,190.00 out of RM211,127.34. This is not the case. i. First, Mix Target certified almost all of Itagres’ 3rd claim amounting to RM209,876.50 (95%) (see page 597 of CBOD 2). If Itagres’ claim is subject to UNJV certification of Mix target’s work then only 36% of Itagres’ claim should be certified, that is to the tune of RM76,005.80. This was not the case. ii. Secondly, Mix Target certified Itagres’ 3rd claim as early as 2.2.2015 (this date is taken to be the date of the payment voucher (see page 599 of CBOD 2) for 11 RM100,000.00 as this payment is reflected on the certificate in page 597 of CBOD). The significance of this date is that UNJV only certified Mix Target’s claim on 9.2.2015. If Itagres’ entitlement to payment is based on Najcom’s certification of Mix Target’s claim, then how is it possible for Mix Target to approve Itagres’ claim even before UNJV had approved Mix Target’s claim? [26] Learned counsel for Itagres submitted that the intention of the parties is deduced from the words used in the written contract. Construction of a document is an issue of law. Further, the object in the construction of documents is to ascertain the true intentions of the parties as manifested by the language they have employed in the document and not by their subjective intentions. That is to say the meaning accorded shall be based on the meaning of the words used and not based on what the parties would want it to mean. [27] Learned counsel for Itagres referred to the case of Hotel Anika Sdn Bhd v Majlis Daerah Kluang Utara [2006] 4 CLJ 981 at paras [20] to [35] which provided a useful summary of the applicable principles in the interpretation and construction of contracts and specifically at para [31] & [32] as follows: "[31] ... In The Royal Selangor Golf Club v Anglo-Oriental (Malaysia) Sdn Bhd [1990] 1 CLJ 995, Lim Beng Choon J summarised the general principles as follows: In considering the disputes of the parties I must first of all bear in mind the general principles of construction of contract as enunciated in the National Coal Board v Wm Neill & Son (St Helen) [1984] 1 All ER 555 where it is said at p 560: 12 The first two issues involve the construction of the contract. I bear in mind the principles of construing a contract. The relevant ones for the purpose of this case are: (1) construction of a contract is a question of law; (2) where the contract is in writing the intention of the parties must be found within the four walls of the contractual documents; it is not legitimate to have regard to extrinsic evidence (there is, of course, no such evidence in this case); (3) a contract must be construed as at the date it was made: it is not legitimate to construe it in the light of what happened years or even days later; (4) the contract must be construed as a whole, and also, so far as practicable, to give effect to every part of it. In Central Bank of India v Hartford Fire Insurance Co Ltd AIR 1965 SC 1288, the Supreme Court of India lays stress on the second principle advocated in the Wm Neill & Sons (St Helens) Ltd case when it says at p 1290: Now it is commonplace that it is the court’s duty to give effect to the bargain of the parties according to their intention and when that bargain is in writing the intention is to be looked for in the words used unless they are such that one may suspect that they do not convey the intention correctly. If those words are clear, there is very little that the court has to do. The court must give effect to the plain meaning of the words however much it may dislike the result. 13 [32] But the two most important and comprehensive rules of general application in construing a written instrument are: (i) that it shall, if possible, be so interpreted ut res valeat potius quam pereat; and, (ii) that such a meaning shall be given to it as to carry out and effectuate to the fullest extent the intention of the parties. Put together, benigne faciendae sunt interpretationes ut res magis valeat quam pereat, the rule is that a liberal construction should be put upon written instruments, so as to uphold them, if possible, and carry into effect the intention of the parties. Every document ought to be construed, if possible, so as to make it operative. ‘It boils down to this. Where a contract is couched in unambiguous language, the court must give effect to it. But where the terms of a contract are ambiguous then the court may imply a term in order to uphold the transaction’ (see Datuk Yap Pak Keong v Sababumi at p 53, per Gopal Sri Ram JCA)." (emphasis added) [28] It would be fair to say that giving the words used its natural and ordinary meaning, it is clear that Mix Target intended to pay and Itagres expected to receive payment progressively and not subject to certification of Mix Target’s claim by Najcom/UNJV. [29] This was further confirmed by the conduct of Mix Target issuing certificates of payment and making payments even before Najcom/UNJV issued their certifications. [30] It is pertinent to note that during cross examination, PW1 Zainal Abidin Bin Mamat, as the Managing Director of Mix Target, admitted that Mix Target owes Itagres the sum as claimed in Progress Claim 1 to Progress Claim 5 set out above. 14 [31] PW2 Ahmad Fitri Bin Zainal Abidin, the Project Director of Mix Target, also admitted that the work stated in Progress Claim 1 to Progress Claim 5 above were indeed completed by Itagres. [32] This is a clear departure from Mix Target’s Defence wherein they had pleaded that there were repeated delays in the Works and that at the point of termination Najcom had only certified 11% of what Mix Target had claimed. Mix Target stated that they had only been paid RM324,675.00 by Najcom as at the date of termination. [33] As a defendant can at any time in a trial makes admission of a plaintiff’s claim, this Court had no difficulty accepting the admission of Mix Target. However Mix Target was not prepared to have a consent judgment or a judgment by admission recorded as they now said that what they owed Itagres would be dependent on what is finally certified and paid by Najcom. [34] Itagres had submitted a claim for RM879,291.15 when in reality they should only be entitled to about 11% of RM879,291.15 which is RM96,722.03 if what Najcom contended is correct. Mix Target stated that they had thus overpaid Itagres. [35] If Mix Target was serious on the overpayment this was not reflected at all in their Defence filed as there was no set-off or Counterclaim pleaded together with the Defence. [36] An admission is an admission and it cannot be a denial if Mix Target should fail in their claim against Najcom or that a much lesser claim is allowed. Mix Target cannot hope to strategically enhance their claim against Najcom by admitting to Itagres’ claim but then hinging it on if they were to succeed against Najcom. [37] Itagres had contracted with Mix Target not on the basis of what would be certified, approved and paid by Najcom. If that was the basis then it 15 should be written into the contract between Itagres and Mix Target. Itagres’ contract was for a pure supply of labour save for some supplies of conduits and cabling. There was no “pay when paid clause” or a “back to back” payment from Najcom before Mix Target needed to make payments to Itagres. At any rate it was not pleaded by Mix Target as such. It was thus too late for the two father and son witnesses in PW 1 Encik Zainal Abidin Bin Mamat and PW 2 Encik Ahmad Fitri Bin Zainal Abidin to say in Court that the obligation of Mix Target to pay Itagres was after Mix Target has been paid. [38] It would be different if the Works had been rejected by Najcom for defects and as would be seen later in the Claim by Najcom against Mix Target this Court had dismissed their claim for defective works as not having been proved. Mix Target here had not pleaded that Itagres’ Work was defective or that they had incurred costs to rectify defective works. [39] There is no set off or Counterclaim on any defective works that needed rectification. This is in spite of Najcom having claimed in their Counterclaim against Mix Target the costs of rectification works. [40] The problem in the disparity in billing was because in Mix Target’s claim against Najcom there had been front loading which Najcom did not agree. This is a risk which Mix Target had undertaken but which Itagres had not for Itagres’ contract is based on work done based on materials supplied. Mix Target cannot hope to improve their claim against Najcom by admitting to Itagres’ claim against them. [41] Be that as it may, this Court can accept the admission made by Mix Target at the trial and enter judgment accordingly against Mix Target for what was essentially not disputed except that Mix Target now said that Itagres’ claim is subject to Najcom’s approval, certification and payment. 16 [42] There is no express term on that and as for implied term, it is not pleaded. Neither is it a Defence of or a Counterclaim for misrepresentation, whether innocent, negligent or fraudulent that Mix Target had pleaded against Itagres. [43] Contemporaneous police report made by Mix Target after termination by Najcom lends credence to the fact that Mix Target admitted to owing Itagres the sum of RM731,000.00. The police report made by Mix Target dated 7.5.2015 at page 592 of CBOD 2 reads as follows: “Setelah memasuki tapak berserta dengan pekerja-pekerja kami, peralatan, mesin-mesin kerja, material dan barangan kerja dan terus menjalankan kerja-kerja tersebut dengan penat lelah, pihak kami telah mencapai progress kerja sebanyak RM2,975,035.10…. Dengan tidak semena-menanya, pada dan sekitar 01/04/2015, pihak saya telah ditamatkan kontrak oleh main contractor iaitu Najcom Sdn Bhd melalui surat penamatan yang ditandatangani oleh Mr.Eng Ean Bah secara paksa kononnya berdasarkan prestasi kerja syarikat kami yang perlahan dan ketidakmampuan pihak kami walhal pekerja-pekerja saya dengan sepenuh tenaga dan usaha sentiasa menjalankan kerja di tapak dan walhal banyak ‘material’ dan kos upah kerja yang telah banyak dibelanjakan. Dengan penamatan kontrak tersebut, pihak syarikat kami telah mengalami kerugian yang besar dan saya sebagai majikan terpaksa menanggung beban kos diantaranya: kos pembelian barangan melalui kad kredit CIMB sebanyak RM106,319.28, kos tuntutan bagi upah kerja dari sub kontraktor dibawah jagaan saya sebanyak RM1,047,232.04, kos pengurusan dan pentadbiran …” (emphasis added) 17 [44] To bind Itagres to the percentage of work as certified by the consultants of UNJV would be to introduce terms into the contract between Itagres and Mix Target which are not there and it would be exposing Itagres to a risk that they did not assume in the contract to provide labour to the Mix Target. [45] With respect to evidence of their workers having done the work for which Itagres had claimed, general worker’s wage sheet and wage payment voucher’s were produced and they are in CBOD 8. In summary Itagres supplied workers as follows: a. In the month of October 2014 (15th to 31st) Itagres supplied 6 workers; b. In the month of November 2014 Itagres supplied 7 workers; c. In the month of December 2014 Itagres supplied 9 workers; d. In the month of January 2015 Itagres supplied 8 workers; e. In the month of February 2015 Itagres supplied 21 workers; and f. In the month of March 2015 Itagres supplied 24 workers. [46] The supply of workers was also corroborated by the site daily report found in PBOD 1 and at pages 122 to 177 of CBOD 8 are found the general workers wages sheet. [47] It was confirmed by DW 7 that as at January 2015 80% of the sprinkler system work was completed for Level 2. It was also confirmed that Mix Target was requested to commence work at Level 3 and Level 4 and for this at the request of Mix Target, Najcom had arranged for UNJV to purchase the required materials for and on behalf of Mix Target. [48] The materials for Level 3 and Level 4 were delivered on 5th, 6th and 7th of February 2015 according to DW 8 Haja Najmudeen, the Managing Director of Najcom (Q&A 23 of his Witness Statement). Najcom in their 18 letter dated 17.3.2015 (page 789 CBOD 3) had confirmed that the materials supplied before the date of the letter had been used or installed. Mr Kelvin Chew, the Managing Director of Itagres, testified that all the materials delivered to site had been installed by them and they were waiting for Mix Target to supply further materials for the Works to be expedited. [49] Based on the reasons given above, I had allowed judgment to be entered by Itagres against Mix Target for the sum of RM731,000.00 together with interest at 5% per annum from the date of the Statement of Claim to realization with costs of RM20,000.00 to be paid by Mix Target to Itagres. Whether Mix Target had proved the value of the Work done of RM2,975,035.10 [50] The amount claimed by Mix Target against Najcom is for the balance of RM2,269,072.68 after deducting RM324,675.00 being payment received from Najcom. [51] In the course of executing the Works Mix Target had submitted 6 Progress Claims and a Final Claim after termination for the cumulative sum of RM2,269,072.68 which is about 30% of the Contract Sum. They are tabulated below with the relevant pages in Mix Target’s Core Bundle (“CB”) as follows: Date Amount claimed

1.

22.10.2014 219,830.00 1 – 65 CB-1 19 2.

19.11.2014 911,060.00 66 – 135 CB-1 3.

04.12.2014 928,297.88 136 – 198 CB-1 4.

04.12.2014 978,222.88 199 – 262 CB-1 5.

22.01.2015 1,222,240.00 263 – 318 CB-2 6.

23.02.2015 1,964,441.80 319 – 367 CB-2 7.

26.03.2015 2,269,072.68 368 – 425 CB-2 [52] Between Najcom and the Employer the following are the relevant Certificates of Payment: No. Certificate Dated Bundle Page 1. 7 01-12-2014

8 31-12-2014

9 22-01-2015

11 19-03-2015 CBOD 5 1~2

12 16-04-2015

13 08-05-2015 CBOD 5 10~12

14 26-05-2015 CBOD 5 17~18 20 [53] Najcom’s evidence was that they relied and indeed are bound by the Certificates of Payment issued by the Employer and that Mix Target was aware that payments to them would be based on those Certificates issued for finally the Fire Fighting System Works must be assessed, verified and accepted by the Main Contractor and the Employer as stated in the LoA with Mix Target. [54] It is against that backdrop that I would not place so much emphasis on the fact that Mix Target’s Progress Claims were not rejected by Najcom but rather that Mix Target knew for a fact that whatever may be the amount claimed under their Progress Claims must be certified by the Main Contractor and Employer. [55] That explains why there was no written complaint from Mix Target if indeed they were waiting for Najcom’s certification that did not come or that they were paid less than the amounts claimed. Najcom themselves admitted that they did not have any consultants to certify the progress of the Works done but rather relied on and are bound by the certification done by the independent consultants engaged by the Employer and DW 6 and DW 7 were part of the consultants team that were subpoenaed by Najcom to come to Court and give evidence. [56] Najcom disagreed with the amount claimed. Take for example Progress Claim No.1 dated 22.10.2014 wherein Mix Target had claimed RM219,830.00 as at 22.10.2014 for the Sprinkler System done for Level 2. [57] The Senior Project Manager in DW 2 said the Defendant did not accept this sum claimed but rather is bound by the Certification done by the consultant of the Main Contractor that only certified the Works done by Mix Target as at end of 30.10.2014 for RM49,812.00 in Payment Certificate No.6. 21 [58] As the Subcontract for the Firefighting System Works between UNJV and Najcom is for the same sum of RM9.9 million under a Fixed Lump Sum Contract and the entire Works is subcontracted by Najcom to Mix Target, there is a basis for comparison of the billing and the assessment, verification and certification. Under the LoA Mix Target is required to execute and complete the Works to enable Najcom to discharge their obligation under their contract with the Main Contractor. Mix Target is also deemed to have knowledge of the terms of the Main Contract between Najcom and UNJV. Further Mix Target is to follow, execute and comply with all the terms in the Main Contract with respect to Najcom’s Works in the Fire Fighting System. [59] According to DW 2, Mix Target had accepted the Certification of the UNJV’s Consultant and had asked for financial assistance from Najcom by making advance payment to them. This Najcom did by making payment of RM105,400.00 to Mix Target which represented an over payment of RM55,588.00. [60] As for Progress Claim No. 2 dated 19.11.2014 a sum of RM911,060.00 was claimed and this corresponded with Payment Certificate No.7 certifying RM35,000.00 and materials at site of RM88,390.00 as at 30.11.2014. [61] Then Progress Claim No. 3 and No. 4 were made on the same day of 4.12.2014 for RM 928,297.88 and RM 978,222.88 respectively which Najcom said were wild Claims as the Main Contractor only certified RM100,000.00. [62] Then there were Progress Claims No.5,6 and 7 for RM1,222,240.00, RM1,964,441.80 and RM 2,269,072.68 respectively; the last Progress Claim in Claim No.7 being the cumulative claim after termination. The final 22 claim after the termination and joint inspection signed off by the M&E Consultants of the Employer, the Main Contractor and Najcom is RM442,275.00 for which Mix Target refused to sign off. [63] Certificate of Payment No.12 Tab 17 CBOD 5, page 8 is the certification for the period ending March 2015 and at page 12 (Certificate of Payment No.13 Tab 18 is certification for the period ending April 2015). [64] The breakdown reflects that work done for the said Fire Protection System Works as at 15.3.2015 and 15.4.2015 were respectively valued by the consultants at RM442,275.00 showing no progress of work after the date of termination and the value of work remained the same consecutively for 2 months. [65] Under cross-examination both DW 6 Ir Chew Hoong Yew from the Employer’s Consultant and DW 7 Ir Zulkifli Abu Bakar the Resident Engineer maintained the certification to be correct and final. This Court did not detect any patent or grave error to justify intervention or setting aside the Certifications by the Employer’s consultants. [66] It can be clearly seen that to justify the sum claimed, Mix Target had unilaterally revised upward by some three times certain items in a clear heavy front loading in their rationalizing of rates after the initial rationalization had been agreed. That cannot be justified and more so when Mix Target knew or at least were deemed to have known the rates between Najcom and the Main Contractor as the Fixed Lump Sum is the same and Najcom has subcontracted the whole of the Works to Mix Target. [67] Mix Target said their Claims were supported by among others shop drawings wherein the area which the work has been completed is highlighted in yellow (Refer page 437–442 CB-2). Mix-Target had reduced values for items which they are not claiming and increased the value for 23 items which they are claiming (highlight in yellow at sidebar) as seen in Tab T in the further submission of Najcom. [68] After Progress Claim No.1-4 Mix Target had from Progress Claim No.5-7 submitted their claim based on their unilateral increase in the BQ in the items claimed without the consent of Najcom. See Tab T in the Further Submission of Najcom. [69] The understanding of rationalization and the need for it in a Fixed Lump Sum Contract of this nature was explained by DW 6 Ir Chew Hoong Yew, the Consultant Engineer of the Employer, who was a subpoenaed witness, as follows to a question from the Court: “YA : What do you understand by rationalised here? CHEW : What we do is because when you award the contract what they come up with BQ is usually maybe they awarded at 9.9 million, maybe they came in at 11 million. So you’ve got to make the figures spec down to 9.9. At the same time also you check and make sure it’s not really front loaded. Front loaded means, let’s say the contract is 9 million, you start work by doing piping, at the end only you do the pumps. So maybe the pumps are of high value. So instead of putting the true value for the pumps, you know that you’re going to do the pipes first you put the high value on the pipes so then when you do the work you claim actually more than what is worth. So normally what we do is just to adjust it, make sure that that doesn’t happen as well.” 24 (emphasis added) (page 1615, Jilid 7 of the Notes of Evidence) [70] Learned counsel for Mix Target offered the explanation that the front loading/adjustment was due to the re-engineering, namely the change of design from 2 parallel pipes into 1 single pipe (Main Item A, Sub-Item M and Sub-Item O). [71] However as highlighted by Najcom the explanation by Mix Target ought to be rejected as can be seen clearly from the summary (Tab T), such front loading exercise was done by Mix Target across the whole BQ and adjustment was not merely done on Main Item A, Sub-Item M and Sub-Item O. [72] As can be seen some items were increased by 2 or 3 times. I agree that Mix Target should not make a double claim for a single item, as the common and logical sense dictates that the changing from 2 parallel pipes into 1 single pipe naturally reduced the quantities of pipes to be installed followed by the reduced quantities of the fittings as well as manpower. [73] I agree with Najcom that Mix Target had not raised any objection to Certificates issued by the consultants of the Employer throughout the Works and that they only raised the objection after the termination and when they refused to sign off the joint Valuation. [74] I agree with learned counsel for Najcom that in the particular matrix of this case in the chain of contracts, the parties ought to and shall apply the BQ that was rationalized and approved by the Employer which summary of the value of the rationalized BQ is also provided in Tab T of Najcom’s Further Submissions. Otherwise there would definitely be diverging differences that would not be reconcilable as the Works claimed to be completed by Mix Target would not be the Works as verified and certified 25 by the Employer with the consequence that the Main Contractor and subsequently Najcom would be paid based on such a certification. [75] It must also be noted that for Progress Claims No.2, 3 and 4 at pages 217, 287 and 349 respectively of CBOD 1 Mix Target had included an amount for total material claimed at site for respectively the amount of RM664,320.00, RM670,117.88 and RM670,177.88. Hence, their total alleged material claim had been alleged as RM670,188.88. [76] However, Mix Target had failed to prove or show any documentary evidence that they had purchased materials for the sum of RM670,188.00. They further said that they purchased materials in the sum of RM780,080.00 throughout the Works to carry out the subcontract work (Refer page 443 – 472 CB-2). [77] Mix Target was reluctant to show the invoices indicating their costs in purchasing these materials on ground that by disclosing them their profit margin would have been known to Najcom. [78] In any event the contract between Najcom and Mix Target is a fixed lump contract of RM9.9 million to carry out the construction, completion, testing and commissioning of the Fire Fighting System wherein Mix Target are to supply tools, equipment, materials and labours for the performance of the same. There is no place to claim the costs of materials for Works not done yet with respect to the materials bought and delivered to site. [79] In Lembaga Pembangunan Industri Pembinaan Malaysia v Konsortium JGC Corp & Ors [2015] 6 MLJ 612 the Federal Court held as follows at page 626: “[50] Generally, under a lump sum contract a lump sum contract price is agreed upon by parties before the works begin. In a lump sum construction contract it is a single whole construction 26 contract as opposed to a divisible contract. The Major Law Lexicon (by P Ramanatha Aiyar) (4th Ed) Vol 4 defines a lump sum contract as a type of contract under which the contractor agrees to undertake and complete constructional works for a given price, and if costs exceed price, the loss is borne out by the contractor. If the extra work carried out is with the principal’s approval (subject to any extra conditions) that extra cost may be recoverable (Sharpe v San Paulo Railway Company (1873) LR 8 Ch App 597; Coker v Young

2F & F98). [51] When discussing the issue of extra payments, Keating on Construction Contracts (9th Ed) at p 105 wrote: A lump-sum contract is a contract to complete a whole work for a lump sum eg to build a house for [a3]60,000. If the house is completed in every detail required by the contract the contractor is entitled to [a3]60,000. And if extra work was carried out it may be able to recover further payment.”(emphasis added) [80] In Airsquare Sdn Bhd v Eng Keat Seng and another appeal [2013] 5 MLJ 526, the Court of Appeal held as follows at page 530: “[6] ... A lump sum contract has been defined to be a contract whereby the employer becomes liable to pay the contractor a fixed sum, irrespective of the contractor’s as-built costs.” (emphasis added) [81] Therefore all the cost involved specifically the material costs have been included in the BQ and as such Mix Target cannot make a separate claim on the materials in the Progress Claims against Najcom. PW 1 Encik Zainal Abidin Bin Mamat who is the Managing Director of Mix Target admitted this under cross-examination though not without some reluctance. 27 [82] I further agree with learned counsel for Najcom that the consultants when doing the inspection had inspected the work done by Mix Target which included the material and fittings that have been installed. The consultants of the Employer value such work into percentage and subsequently convert the percentage into monetary value against the rationalised BQ. There is thus no justification for including costs of materials into the Progress Claims. [83] For the sake of argument and assuming that there is a basis for factoring in the price of materials to gauge the percentage of the Works done, I do not accept that confidentiality as a good reason for not disclosing for how else is the Court to determine if the amount is reasonable. In claiming for loss of profit which generally is an available remedy to a contractor like Mix Target in the event of a wrongful termination the contractor would still have to disclose his costs and profit margin. [84] In CBOD 2, pages 592-596 Tab 9 is a police report lodged by PW 1 on 7.5.2015 at page 593, PW 1 in his report at paragraph 2, line 8 alleged that “kos pembelian barangan melalui kad kredit CIMB Bank sebanyak RM106,319.28”. [85] With respect, this amount in the police report is clearly in stark contradiction of the material claim for RM670,177.88 as earlier contended. Further, PW 1 had failed to produce any bank statement to show or support his allegation that Mix Target had spent RM106,319.28 for the purchase of such material using credit card. [86] Mix Target admitted that they had requested Najcom to purchase materials on their behalf to the sum of RM653,086.40 whereby as at 31.3.2015, RM404,054.35 had already been delivered on site. (Refer page 473 CB-2). Altogether, Mix Target said the materials purchased to carry out 28 the work as at the date of termination is RM1,184,134.30. Najcom through their Managing Director DW 8 said the sum advanced on Mix Target’s behalf for the purchase of materials on 26.1.2015 was RM694,614.11. [87] As at the date of termination, Najcom had paid Mix Target a total sum of RM324,675.00, details of which are as follows: Date Amount 1.

26.11.2014

18.12.2014

26.1.2015

26.2.2015 RM53,460.00 Total RM324,675.00 [88] Both Mix Target and Najcom have accepted in practice that the Mechanical and Electrical Consultant, Mesra Associates Sdn Bhd, shall perform the monthly inspection of Mix Target’s Works which is part of the Mechanical Works component of the Project. The consultants employed by the Employer, namely Quantity Surveyor (Ir. Chew Hong Yew DW 6 from Mesra Associates Sdn Bhd) and Resident Engineer (Ir. Zulkefli Abu Bakar DW 7) were subpoenaed and they came to Court to give evidence. The evidence given is that every month the consultants from the Employer would have a joint inspection together with all the relevant parties namely 29 representatives from Najcom and Mix Target for the purpose of monthly certification. Mix Target did not raise any objection against valuation done by the consultants from the Employer until to-date as seen in the evidence of DW-8 (Jilid 8, page 1877 of the Notes of Evidence). [89] Learned counsel for Mix Target referred this Court to the case of ISO Technic Electrical Sdn Bhd v Calibre M&E Sdn Bhd [2017] 1 LNS 212 where it was observed as follows: “[22] What can be seen is that the Defendant would not make the full payment on each Progress Claim received but instead would pay a reduced amount. [23] There is no mechanism in the Letter of Award that the Progress Claim must be certified by the Defendant or an independent Consultant before the payment may be made. It is not then for the Defendant to say that they had not certified the Progress Claims and as such the amount claimed is open to dispute. Learned counsel for the Plaintiff referred to Homewest Sdn Bhd v. Vision Returns Sdn Bhd [2016] 5 CLJ 922; [2015] 11 MLJ 327 which is relevant to the issue of non-certification when certification is not a term of the contract. As summarized in the headnotes: "(7) It was not disputed that the defendant and the architect had received progress claims No. 6-7 and the architect had not certified them. The architect's evidence in not approving the claims was that there were no consultant reports to support the claims. This was an internal arrangement between the architect, the defendant and the consultants. The plaintiff had complied with the requirements of cl 3.6 in submitting progress claims No. 6-7 to the defendant and architect. Non-certification 30 by the architect was not fatal to the plaintiff's claim (see paras 23 & 26)." (emphasis added) [24] The Plaintiff had every expectation that as there was no objection, query, protest or dispute raised on the Progress Claims, it will be a case where the Progress Claims will eventually be paid by the Defendant. The Plaintiff would reasonably have thought that this is one of those cases where delay in payment is not unusual because of the delay in the Defendant being paid by the Employer In fact that was the understanding given by PW-3, the Plaintiff's Managing Director, Mr Wong Keh Voon. He explained it thus in his Answer to Question 18 of his Witness Statement marked PW-3 - WS:

Q: Did you ever question the Defendant as to why the Defendant is not making payment as claimed by you in the Progress Claim? A: I have been an electrical contractor for many years; in my experience it is normal for the Main Contractor in this case the Defendant to make partial payment. This may be because the Main Contractor has yet to receive payment from the Owner or that the Main Contractor apportions the payment that he has received from the Owner to all the subcontractors of which the Plaintiff is one of them." [25] The Plaintiff had every reason to believe that if there were any defects in its Works or any difference in the scope and value of the Works completed, the Defendant would be the first to raise this in writing and to explain why they had paid a lesser amount than the respective Progress Claims. The fact is there is 31 not a single contemporaneous objection, query or protest in writing throughout the period of the Progress Claims. That being the case, the Plaintiff is entitled to rely on the fact that the Progress Claims have been accepted as partial payments were made towards each Progress Claim. Under the current circumstance the Defendant is estopped from disputing the amounts claimed under the 24 Progress Claims unless there is evidence to the contrary of works not completed by the Plaintiff which if proved, may be deducted from the Plaintiff's claim.” (emphasis added) [90] The factual matrix in the above case is different from the present case. In the present case there was a monthly valuation done by UNJV’s consultants in DW 6 and the Resident Engineer DW 7 from the Employer together with the representatives of Najcom and Mix Target. [91] Whilst in ISO Technic’s case (supra) no one from the Employer MRCB was called to give evidence and to confirm the actual value of the Works done, here the consultants from UNJV the Employer in DW 6 and the Resident Engineer DW 7 from the Employer were subpoenaed by Najcom and they came to Court to testify on their valuation of the Works done. [92] Mix Target themselves said there was conspiracy between Najcom and the consultants engaged by the Employer but I find no evidence of that. Mix Target also said that they had engaged a third party consultant to do the verification of the Works done for which they paid RM32,400.00 as can be seen in the witness statement of PW 1 I. Q&A 20 at item G. [93] One would have thought that Mix Target would have called the said consultant to testify in Court on their own independent valuation of the Works done. For reasons best known to Mix Target the said third party 32 Consultant was not called and so their Progress Claims remained self-serving Documents bereft of an independent corroboration. See the cases of Arensi-Marley (M) Sdn Bhd v Middy Industries Sdn Bhd and others [2009] MLJU 667 and Vee Seng Development Sdn Bhd and others v Datuk Seri Panglima Mohd Sari bin Datuk HK. Nuar [2005] MLJU 454 where Courts would not be inclined to place much probative value on self-serving documents unless independently corroborated. [94] Learned counsel for Najcom also referred to the case of Liew Soo Hoi & Anor v Waja Resort Sdn Bhd & Ors [2014] 2 MLRH 37 where it was held as follows in the headnotes: “(3) Despite disputing the actual contract price, the defendants did not appoint their own Quantity Surveyor to challenge the Quantity Surveyor’s valuation of the plaintiffs’ works. Accordingly, in determining the actual contract price of the project, the Quantity Surveyor’s valuation report on the total value of the plaintiffs’ works was the best available evidence. The said report was consistent with the contemporaneous documents before the court, and undisputedly supported the plaintiffs’ claim of the defendants’ indebtness to the plaintiffs for the outstanding sum claimed. Therefore, the valuation report and documentary evidence adduced before the court rendered sufficient corroborative testimony to the plaintiffs’ claim for works done pursuant to the contract. (paras 22 & 25) (emphasis added) [95] For a variance of RM 2 million one would not have spent RM32,400.00 only without calling the consultant to testify in support of one’s claim and I find merits in Najcom’s argument that this Court should 33 invoke an adverse inference under section 114(g) of the Evidence Act 1950 which provides that the court may presume that evidence which could be and is not produced would, if produced, be unfavorable to the person who withholds it. [96] I agree with learned counsel for Najcom that between the evidence of Najcom corroborated by the independent testimony of DW 6 and DW 7 from the Employer and that of Mix Target which evidence of PW 1 was based on the Progress Claims prepared by his son PW 2, I would be inclined to believe the evidence of Najcom for the following reasons:

the consultant are independent and impartial from Najcom and

Mix Target agreed and accepted the involvement of the consultant from the Employer to do evaluation where Mix Target did not protest nor raise objection against the monthly evaluation done by the consultant from the Employer;

Mix Target did not request for a third party consultant to do the evaluation of work, although Mix Target was dissatisfied with the evaluation done by the consultant from the Employer;

Mix Target also did not request for re-evaluation or re-joint inspection to be carried out, although Mix Target was dissatisfied with the evaluation done by the consultant from the Employer. [97] The joint inspection was done by the Resident Engineer of the Employer Ir Zulkifli DW 7 and assisted by Norazlan DW 3 from Najcom and in the presence of PW 2 Encik Ahmad Fitri. He was a subpoenaed witness and his evidence was as follows: 34 Jadi masa inspection dibuat, ianya dibuat bersama dengan tadi pihak-pihak yang dimaklumkan, Azlan dan projek manager, adakah ianya semua jalan bersama untuk check inspection atau macam mana? ZULKIFLI Jalan bersama. Jalan bersama, tingkat secara tingkat? Apa yang berjalan bersama? Maksud saya ialah En Zul dengan projek manager daripada Mix Target dan Azlan jalan bersama buat inspection. ZULKIFLI Join the inspection. Jadi semua jalan bersama tingkat secara bertingkat. ZULKIFLI Betul. Ok, untuk buat inspection. Jadi hanya buat inspection pada Level 1, 3 dan 4 sahaja? 35 Yang lain tak ada buat sebab tak ada kerja dipasangkan? ZULKIFLI Betul. 1, 3 dan 4? Yes. Yang lain tak ada kerja buat, jadi tak payah inspect? ZULKIFLI Yes, betul. Kalau yang lain ada mechanical coupling, kenapa hanya peratusannya ada yang kurang macam 10%, 20%. Kalau mechanical coupling, berapakah peratusannya sepatutnya dicapai? ZULKIFLI Hanya 2% sahaja, 1 or 2% saja. Maksudnya? ZULKIFLI Peratusannya terlalu kecil. Terlalu kecil. So kalau dia sudah buat dengan mechanical coupling, berapakah peratus akan dicapai? 36 ZULKIFLI Maksud you untuk tingkat mana? Ok, kita rujuk kepada muka surat sama, 1012 ok.

Yes, you are seeing one of the nota there, ok. Di sini ok, katakan lah kalau… 1012. Ok katakan L-4 kalau dia buat dengan mechanical coupling, berapakah percentage yang akan capai? ZULKIFLI Mungkin boleh tambah dalam 2% sahaja. Boleh tambah dalam 2% sahaja. So total akan menjadi 22%, atau maksudnya macam mana? Menjadi 22%? ZULKIFLI Kita boleh bagi tambahan untuk 2% saja, from the piping yang kita pasang. So macam mana boleh capai 100%? 37 ZULKIFLI Banyak lagi yang perlu pasang. Branch paip, main branch, you ada upright, you ada pendant, you ada sprinkler head. (Jilid 8, page 1705~1706 of the Notes of Evidence) [98] There was also another subpoenaed witness, Khaw Kok Aun from Kejuruteraan Union Fire Langkasi Sdn Bhd (DW-1) who was the rescue contractor engaged by Najcom to take over from where Mix Target had stopped when they were terminated. He had also given evidence on the percentage of the Work that is similar to those evaluated by the consultants from the Employer despite the fact that DW 1 had never seen the results of the joint inspection report. [99] Whilst Mix Target may refuse to sign on the statement of final accounts showing their objection to it, they must indicate which part of the measurement of the Works done they did not agree or that their own consultant would do a valuation for them seeing that they did not trust the consultants of the Employer. [100] There is of course the danger of an inference argument from Mix Target that based on the value of materials delivered to site the valuation of the Works done is not reasonable. To begin with the price of material has no bearing on the percentage of the Works certified as having been done. It is the agreed BQ rates that is used for the assessment of the value of the certified Works done. [101] How then is the Court to determine the amount of the Works done and to justify payment? [102] We have Najcom’s own document at page 1033 CBOD 3 wherein Najcom had acknowledged that the Total Material used to generate Progress Claims is RM404,054.35 based on the BQ rates as approved. 38 Though not dated it is in all probability prepared after the termination for it is entitled Final Accounts. [103] There is evidence to show that the labour portion expanded is about 25% of the costs of material as can be seen from Certificate No.12 at Tab 17 of Najcom’s Core Bundle in item 13. So 25% of RM404,054.35 at pg 1033 CBOD 3 = RM101,013.58. [104] I would state that this is a reasonable amount for the work done between February 2015 and 31.3.2015 which is the termination date. I say this because the Certification at end of February 2015 in Certificate No.11 at Tab 13 Najcom Core Bundle showed an amount of RM442,275.00. The Certification at end of March 2015 in Certificate No.12 at Tab 17 CBOD 5 showed the amount to be the same which is RM442,275.00. [105] However there is some evidence of work done in March 2015 when Najcom had confirmed in their letter dated 14.3.2015 (Refer page 532– 533 of CB-2) that installation of pipes was carried out at Level 3 and 4 in March 2015 and the same was also confirmed by UNJV personnel in the site daily reports from early March to the 30th of the same month. (Refer page 553- 578 of CB-2). This figure remained constant in Certificate No.13 for period ending April 2015 Tab 18 Najcom Core Bundle for the same sum; termination was on 31.3.2015. [106] The Certificate after Termination i.e. Certificate No.14 for period ending May 2015 showed however a different sum of RM1,029,446.95 which cannot be attributed to Mix Target because they had already been terminated and a new rescue contractor had been engaged to do the balance of the Works. There is credible evidence in the Tax Invoices exhibited by the rescue contractor in DBOD 1 and DBOD 2 in respect of materials purchased by them between 21.4.2015 and 21.5.2018. It is 39 consistent with the evidence of DW 2 Mr Khaw of the rescue contractor that prior to the execution of the Letter of Award on 22.5.2015 which is for the purpose of formalization, the rescue contractor had purchased materials as well as had incurred costs of mobilization of labour amounting to a total sum of RM1,039,211.36 (inclusive of GST). [107] I am prepared to accept that the amount certified as RM442,275.00 had not taken into account the materials delivered to site on 5.2.2015 and 7.2.2015 and for which UNJV had paid directly to Mix Target for Mix Target to pay the suppliers. This Court must then allow the reasonable sum of RM101,013.58 as assessed above as the additional value of work done just before termination for the month of February and March 2015. [108] Therefore the sum of RM442,275.00 should be added to RM101,013.58 = RM543,288.58. [109] Both Mix Target and Najcom agreed at para 6 of Mix Target’s Statement of Claim the sum of RM324,675.00 had been paid so far by Najcom to Mix Target. [110] Therefore the balance that Mix Target can claim is RM218,613.58 and I allowed judgment to be entered for this sum. Interest shall be 5% per annum from date of Statement of Claim till realization. Whether the termination of Mix Target by Najcom was valid and lawful in the circumstances of the case [111] I agree with Najcom that throughout the execution of the Works by Mix Target, Najcom had sent several reminder letters to Mix Target raising numerous issues of breaches of the LoA as follows:

in failing to commence jointing of sprinkler pipes;

inability to follow instructions and specifications; 40

progress of work that has dwindled considerably;

outstanding items, workers either idle or absent on site;

warning to submit catch up schedule and determination of their contract;

failure to submit contractual deliverable; and

lackadaisical attitude. [112] These letters were all acknowledged received by Mix Target’s site engineer known as Mohd Faizal and are listed below as follows: Letter Dated Bundle Page 1. 12-12-2014 CBOD 3 726 2. 16-12-2014 CBOD 3 727 3. 17-12-2014 CBOD 3 728 4. 24-12-2014 CBOD 3 731 5. 30-12-2014 CBOD 3 732 6. 02-01-2015 CBOD 3 733 [113] These various letters of reminders of breaches of the LoA culminated in the agreement between Mix Target and Najcom in Appendix 1 (CBOD 3, pages 738- 740) in the letter of 16.1.2015 issued by Najcom and signed by PW 2 Encik Ahmad Fitri as the Project Manager for Mix Target, acknowledging Mix Target’s acceptance of the terms. The Plaintiff’s witness, Zainal Abidin Bin Mamat (PW-1) agreed with the letter in the form of an Undertaking, and had admitted during cross-examination that Najcom would have the right to terminate the contract if Mix Target should fall behind the time deadline set. 41 [114] The salient terms of this agreement are as follows: “Item 4 – Mix-Target was required to have full-time qualified and competent representative on site. Item 5 – Mix-Target was instructed to expedite the work progress in level 3, scheduled completion by 15th February 2015 and level 4, scheduled completion by 30th February 2015 Item 6 – Mix-Target is required to complete the wet riser system by 30th February 2015 as defined in the clause (protection to the building during construction period) Item 7 – Subject to Item 5 and 6, in the event that the actual rate of progress has fallen behind or does not meet the set target, Najcom will without further notice, move to inter-alia Terminate Mix-Target;…” (emphasis added) [115] Subsequent to this agreement between parties, numerous reminders and warnings were issued from 19.1.2015 to Mix-Target prior to the termination on 31.3.2015. As submitted by learned counsel for Najcom these reminders and warnings were concerning several work issues such as:

submission of work schedule, material approval, delivery schedule and method statement;

no activity at site, site engineer (Encik Faizal) was absent at site;

delay in progress of work;

manpower shortage;

reminders that it was prestigious hospital project to serve the public in general despite financial assistance and payments 42 more than the certified amount, Mix Target had failed to deliver in accordance to the terms of Appendix 1;

failure to submit work plan;

failure to complete work according to last target completion date despite extension of time granted to Mix Target; and

failure to achieve Mix Target’s own work’s plan submitted to Najcom and failure to make sure the delivery of all materials paid on behalf by the said Contractor. [116] As pointed out by Najcom, after the agreement between parties, and prior to the termination letter issued on 31.3.2015, there were numerous letters and reminders all of which are acknowledged received by Mix Target’s site engineer (Mohd Faizal) which are as listed below: Letter Dated Bundle Page 1. 19-01-2015 CBOD 3 745 2. 22-01-2015 CBOD 3 754 3. 26-01-2015 CBOD 3 755 4 28-01-2015 CBOD 3 756 5. 30-01-2015 CBOD 3 757 6. 31-01-2015 CBOD 3 759 7. 09-02-2015 CBOD 3 771 8. 10-02-2015 CBOD 3 772 9. 12-02-2015 CBOD 3 773 43 Letter Dated Bundle Page 10. 14-02-2015 CBOD 3 774 11. 25-02-2015 CBOD 3 775 12. 27-02-2015 CBOD 3 776 13. 06-03-2015 CBOD 3 777~778 14. 11-03-2015 CBOD 3 782~783 15. 12-03-2015 CBOD 3 784 16. 14-03-2015 CBOD 3 785~786 17. 16-03-2015 CBOD 3 787~788 18. 17-03-2015 CBOD 3 789~790

19-03-2015 CBOD 3 791~792 [117] Amongst the litany of complaints by Najcom as compiled by their learned counsel were that Mix Target’s works were executed unsatisfactorily, poor site management was noticed, slow progress and/or no site activities, failure to take instructions to observe and comply with the contract requirements, no materials at the site including failure to ensure the materials that have been paid by Najcom and UNJV on their behalf were delivered in a timely and orderly manner and had also failed, neglected and/or refuse to observe and comply with their own work schedule as reflected in their letter dated 7.3.2015 (Pages 779 to 781). [118] In the Bill of Quantities at page 42 Mix Target had clearly under (Item B) promised that they would provide “Acceleration of works for Wet 44 Riser system installation and commissioning works including tanks, pump sets, electrical works, pipe works, landing valves, hoses, etc in order for system to be active and provide protection to the building during construction period as required by the Uniform Building By Law required.” (emphasis added). [119] By laws 52 and 232 of the Uniform Building By Laws 1984 state as follows: By law 52: In buildings which are designed to exceed 18.3 metres in height to the top most full floor, rising mains in accordance with by-law 232 shall be installed as soon as the building exceeds that height to provide firefighting facilities during the various stages of construction. By law 232(1): Where either wet or dry riser system is required, at least one riser shall be installed when the building under construction has reached a height of above the level of the fire brigade pumping inlet with connections thereto located adjacent to a useable staircase. By law 232(2): Such riser shall be extended as construction progresses to within two floors of the topmost floor under construction and where the designed height of the building requires the installation of a wet riser system fire pumps, water storage tanks and water 45 main connections shall be provided to serve the riser. [120] Najcom’s sober submission was that Mix Target had failed, neglected and/or refused to execute the mandatory Uniform Building By-Laws 1984 (UBBL) requirements. More than that Mix Target had clearly exposed their own inability to execute the promises they have made in accordance with the agreement. The safety of the whole site had been compromised exposing others to unnecessary risk. [121] Najcom gave their final reminder by their letter dated 6.3.2015 reminding Mix Target to rectify the complaints made including the following:

To rectify all the promises made under the letter of undertaking to accelerate the wet riser system;

To attend to the many complaints made against Mix Target;

To rectify the lackadaisical attitude towards the project;

To deliver the bargain Mix Target has made when Mix Target has sought for financial assistance;

To rectify their unsatisfactory work progress so that others will not suffer financial losses due to their inability to execute their works with promptitude;

To mitigate the existing financial losses that have been impacted onto others;

To work in a more efficient, attentive and productive towards their works to earn the necessary value to return its debts to

To rectify his incompetence site agent who is not only inexperience and has no technical knowledge with regard to the

To take instruction to resubmit and rectify the necessary shop drawings to reflect the Works to the consultant for approval 10. To rectify the anticipatory breach of further delay to the project to achieve substantial completion;

To submit a catch-up work schedule that is capable of acceptance to rectify all the issues that have been highlighted and brought to his attention in the above paragraphs failing which Najcom will not hesitate to determine the contract the parties had entered into. [122] While patience and forbearance are undoubtedly a virtue, there is a limit where one has deadlines and timelines to meet with LAD claims hanging over one’s head like the sword of Damocles! This is a case where the patience of Najcom had come to an end and a drastic action had to be taken for otherwise Najcom would themselves be in trouble with the prospect of being terminated by the Main Contractor. [123] What is disquieting and even distressing is that Mix Target did not reply to any of these allegations and warnings. This is the kind of silence that would lead one to conclude that if there had been any dispute on all these letters, Mix Target would surely have replied to these letters. Under such a circumstance one is entitled to rely on the principle stated in David Wong Hon Leong v Noorazman bin Adnan [1995] 4 CLJ 155 at page 159 as follows: “In this context, we recall to mind the following passage in the judgment of Edgar Joseph Jr. J. in Tan Cheng Hock v. Chan Thean Soo [1987] 2 MLJ 479-487: In Wiedemann v. Walpole [1891] 2 Q.B. 534, 537 an action for breach of promise of marriage, it was held, that the mere fact 47 that the defendant did not answer letters written to him by the plaintiff in which she stated that he had promised to marry her, was no evidence corroborating the plaintiff’s testimony in support of such promise. Lord Esher M.R., in his judgment, remarked: Here, we have only to see whether the mere fact of not answering the letters, with nothing else for us to consider is any evidence in corroboration of the promise.’ (Emphasis added). Earlier, in his judgment, he said, ‘Now there are cases business and mercantile cases in which the Courts have taken notice that, in the ordinary course of business, if one man of business states in a letter to another that he has agreed to do certain things, the person who receives that letter must answer it if he means to dispute the fact that he did so agree. (The emphasis is mine) [124] The allegations are serious enough and when taken together would justify termination of the LoA. Yet Mix Target did not see it fit to respond and the only reasonable inference is that the allegations must be true. [125] If Encik Mohd Faizal the site Engineer of Mix Target had not received those letters then surely Mix Target must subpoena him to give evidence for otherwise an adverse inference would be drawn against Mix Target. It is trite that under section 114(g) of the Evidence Act 1950 the Court may presume that evidence which could be and is not produced would, if produced, be unfavorable to the person who withholds it. [126] There was the telling evidence from Mix Target’s site daily reports wherein Mix Target had candidly recorded their work activities as follows:

Mix Target’s Works were carried out sporadically, insufficient workers and materials; 48 For the installation of distribution and range pipes at level 3 and 4 2. As of 16-03-2015, the installation of distribution and range pipes at Level 3 at Zones B1, B2, B3, B4, E2.1, D1, D2, D3 and D4 have not commenced and remain incomplete.

As of 16-03-2015, the installation of distribution and range pipes at Level 4 at Zones B1, B3, B4, B5, C1, E2,1, C2, C3, D1, D2, D3 and D4 have not commenced and remain incomplete.

As of 31-03-2015, the installation of distribution and range pipes at Level 3 at Zones B3, B4, E2.1, D1, D2, D3 and D4 have not commenced and remain incomplete.

As of 31-03-2015, the installation of distribution and range pipes at Level 4 at Zones B1, B3, B4, E2.1, D1, D2, D3 and D4. For the installation of pipe coupling works 6. As of 21-03-2015, the installation of the pipe coupling works at Level 3 at Zones B1, B2, B3, B4, B5, C1, E2.1, C2, C3, C4, D1, D2, D3 and D4 have not commenced and remain incomplete.

As of 21-03-2015, the installation of the pipe coupling works at Level 4 at Zones B1, B2, B3, B4, B5, C1, E2.1, E1.3, C2, C3, C4, D1, D2, D3 and D4 have not commenced and remain incomplete. 49 Essentially, At Level 3 and Level 4, there was no Works that have been carried out to the pipe coupling Works. For all the remaining installation works at Level 3 and 4

As of 31-03-2015, all the remaining installation works at Level 3 and Level 4 at Zones A1, A2, A3, E1.1 and E1.2 have not commenced and remain incomplete. For the Installation of Main Distribution Pipe for the Wet Riser System 9. As of 31-03-2015, the wet riser system at Level 1 at Zones B1, B2, B3, B4, B5, E2.1, C2, C3, C4, D1, D2, D3 and D4 have not commenced and remain incomplete. For the Installation of Conduit for Fire Alarm System at Level 2 and Level 3 10. As of 31-3-2015, the Conduit for Fire Alarm System at Level 2 and at Zones B1, B2, B4, B5, C1, E2.1, E1.3, C2, C3, C4, D1, D2, D3 and D4 have not commenced and remain incomplete.

As of 31-03-2015, the Conduit for Fire Alarm System at Level 2 and at Zones B1, B2, B4, E1.3, D1, D2, D3 and D4 have not commenced and remain incomplete. [127] Mix Target’s argument was that even if their work progress was slow, they still had another 19 months to complete the subcontract work. As such, to terminate Mix Target 5 months into the subcontract on the ground of delay and inability to complete the Works is certainly unfair and wrong. 50 [128] It is not the law that one must wait until after completion date or close to completion date before one can terminate one’s contractor on ground of inability to complete the works. If that were true then one would have to suffer the agonizingly slow progress in the works with no ability to terminate against the sure certainty that the contractor would not be able to complete, short of a miracle! [129] The Court is entitled to look at the cumulative conduct in this case of Mix Target and their failure to meet the work schedule that had been set for them and to which they have agreed. The whole completion on time is the sum total of the completion of the various floors on time and the Court is entitled to look at the overall physical and financial completion to gauge whether it is reasonable for Najcom to conclude that Mix Target would be unable to complete the Works on time. [130] Learned counsel for Mix Target cited the case of Kerajaan Malaysia v Ven-Coal Resources Sdn Bhd [2014] 5 CLJ 186 where it was held at page 210 that: “[54] Delay alone did not amount to repudiation unless coupled with an intention not to complete the Project which was not the case here. .... [55] The plaintiff has failed to prove on a balance of probabilities that the defendant shall fail to meet the completion date. Even if that failure is probable, there is no good reason why the plaintiff should not be mitigating its loss by invoking the LAD clause against the defendant.” (emphasis added) [131] The same case also held that at page 209: 51 “[52] There would of course be circumstances where it is nigh impossible for the Contractor to complete the Contract within the Completion Date or even way past the Completion Date. By no means am I suggesting that the Contractor can buy time for themselves and insulate themselves against any termination on account of delay by insisting that the LAD can always be invoked.” [132] From the evidence of Mr Khaw DW 1 the rescue contractor, he inspected on the 1st week of April 2015 the Project’s site and thereafter had mobilized manpower and purchased materials prior to the execution of the Letter of Acceptance on 22.5.2018. In summary, in cross examination DW 1 gave evidence that only 43% of the works at Level 3 and Level 4 were done and this inspection was sometime around 1st week of April 2015. [133] Mix Target had failed to honor its promise to expedite and complete the work which was originally scheduled for completion respectively by 15.2.2015 and by the end of February 2015 where Level 3 and Level 4 were concerned. [134] The evidence of joint inspection after the termination (CBOD 3, pages 1010-1015) clearly showed as at 3.4.2015, Level 3 and Level 4 were not completed. In fact it can be seen at page 1012, there were only 20% works done at all the departments at Level 4, despite being aware this was an important project serving the public of Malaysia. [135] I agreed with Najcom that because of the slow progress and the various breaches, Mix Target had evinced its inability to complete the works despite numerous extensions of time. Indeed the combined breaches and non-compliance pointed inexorably to Mix Target having repudiated the contract as shown in their inability to render substantial performance of the agreement. 52 [136] Moreover Mix Target did not have the capacity, resources and commitment to complete the Works as exhibited in the following disabilities:

Lack of financial capacity to purchase material and equipment;

Inability to pay its subcontractor;

Inability to provide the necessary performance bond to Najcom,

Inability to produce the necessary shop drawings, to submit plans and coordinate its interfacing Works with others,

Inability to delivery the necessary contractual deliverables as required under the agreement to be approved by the consultants,

Inability to provide competent site agents to supervise and coordinate its own works at the site, unable to take site instruction,

Inability to observe and comply with the project work schedule including its own rectification schedule to catch up with the Works,

Inability to manage the delays which were all within their control. [137] Mix Target’s combined debilitating conduct would justify Najcom invoking Section 40 of the Contracts Act 1950 which provides as follows:

“Effect of refusal of party to perform promise wholly When a party to a contract has refused to perform, or disabled himself from performing, his promise in its entirety, the promisee may put an end to the contract, unless he has signified, by words or conduct, his acquiescence in its continuance.” 53 [138] Najcom had no alternative but to terminate Mix Target and thereafter sought services of the New Contractor to complete the said Fire Protection System Works. [139] Najcom through a letter dated 31.3.2015 to Mix Target terminated the Contract as the effective paragraph reads as follows: “With reference to the above, our numerous letters of reminders and meetings with regards to your inability to carry out the Project as required by the contract, therefore, we hereby terminate your contract (Ref: NSB/LA/WACH/MTSB/001/2014 dated 17.9.2014) with us with immediate effect.” [140] I would uphold the said termination as been justified against the backdrop of repeated delays and falling behind time in spite of repeated reminders to rectify the breaches referred to above. [141] Having held that the termination was valid and lawful Mix Target’s Claim for losses arising out of unlawful termination would therefore have to be dismissed. Whether Najcom had proved the costs of rectification works of RM155,544.40 [143] I now deal with Najcom’s Counterclaim for rectification works of RM155,544.40. The evidence of DW 1 Mr Khaw from Union Fire Langkawi, the rescue contractor, is that the Rectification Works in CBOD 6 pg 43-44 is RM155,544.40. [144] However as pointed out by Mr Zayd, learned counsel for Mix Target, Mr Khaw DW 1 admitted that coring works are uncompleted works and not rectification works and that amount is captured at pg 47 CBOD 6 of 54 RM57,854.80. Therefore being not rectification but forming part of the uncompleted works this sum cannot be claimed as rectification works. [145] Also at pg 98 CBOD 6 there is a claim for hacking of RM30,591.60 which is necessary to complete the balance works. This hacking is not because of defective works by Mix Target. Therefore I would dismiss this head of claim for rectification works. Then at pg 45 and 46 CBOD 6 there is a claim for Clashing and Relocation works of RM67,098.00. It was argued by Mix Target that the clashing was because the shop drawings on which the pipes were laid was not approved by UNJV. Therefore Mix Target said they cannot be faulted. [146] However Najcom pointed out in the letter at Tab 23 of Najcom Core Bundle dated 22.1.2015 warning that the drawings and method statement were still pending at pg 754. In the letter dated 11.3.2015 at CBOD 3 pg 782 Najcom wrote to Mix Target to state that Mix Target had failed to submit the work plans for Level 3 and 4 and shop drawings. [147] There is also now 2 pipes to be done because of the change back to parallel piping causing a likelihood of clashing with aircon ducts. [148] There was no written rejection by Najcom and the M&E consultant of the Works carried out by Mix Target. Najcom or the M&E consultant also had not issued any non-compliance report or notice to rectify any defect in respect of Mix Target’s work to Kejuruteraan Union Fire Langkawi Sdn Bhd as confirmed by DW-1 during cross examination. On the balance of probabilities this cannot be attributed to Mix Target as their fault. Whoever is supervising the work from UNJV should have exercised greater caution in the supervision. 55 [149] Therefore on the balance of probabilities I find that the clashing and relocation works cannot be because of defective works done by Mix Target and so I dismiss this head of claim for rectification works. [150] The result is that the whole of the rectification Counterclaim is dismissed. Whether Najcom had proved its Claims for losses arising out of lawful termination of the contract with Mix Target [151] The new contract dated 13.4.2015 in CBOD 3 pg 796 between Najcom and Kejuruteraan Union Fire Langkawi Sdn Bhd, the rescue contractor was for the same contract sum of RM9.9 million. [152] Granted it is for the balance works but the question is what is the additional costs incurred in completing the Works arising out of the lawful termination of Mix Target. [153] Najcom has not shown that the balance Works to be completed by their rescue contractor is the same Works that had been awarded to Mix Target. In the event that there are extra costs arising out of additional works or variation works, these cannot be charged to Mix Target. Najcom referred to DBOD 2, pages 563-578 whereby DW 1 had provided bank-in slips and bank statements of receiving total amount of RM11,142,601.09. [154] It would reflect that there is evidence that Najcom had made payments of a total sum of RM11,142,601.09 but then this included variation works as well, as submitted by learned counsel for Najcom. As there is no clear evidence of what constituted the variation orders and how much was the variation works it is impossible to compare like with like and to determine the additional costs incurred by Najcom to complete the balance Works. 56 [155] There is also no evidence that UNJV has charged Najcom for any LAD arising out of the delay caused by Mix Target or that Najcom had failed to obtain any extension of time from UNJV. [156] On the balance of probabilities, Najcom has not been able to prove the loss suffered as a result of any extra costs incurred in finishing the balance Works under the rescue contractor. Pronouncement [157] To recapitulate, I had allowed judgment for the sum of RM731,000.00 to be entered by Itagres against Mix Target together with interest at 5% per annum from the date of the Statement of Claim to realization with costs of RM20,000.00 to be paid by Mix Target to Itagres. [158] With respect to the various claims and counterclaims of Mix Target and Najcom against each other in the 2016 Suit, I had allowed Mix Target the sum of RM218,613.58 being the balance sum due to them for work done for Najcom and so I had allowed judgment to be entered for this sum. [159] Interest shall be 5% per annum from date of the Statement of Claim to realization. All the other heads of claims of Mix Target were dismissed. [160] I had also dismissed the counterclaims of Najcom as having not proved. 57 [161] After hearing parties on costs I had allowed only nominal costs of RM15,000.00 to be paid by Najcom to Mix Target as this matter clearly could have been disposed of in the Sessions Court. Dated: 14 December 2018. - signed - LEE SWEE SENG Judge Construction Court High Court, Kuala Lumpur For the Plaintiff in : M. Muthuraman Muthu WA-22C-28-02/2017 : (Messrs Muthu & Partners) For the Defendant in : WA-22C-28-02/2017 : Ahmad Zayd bin Ahmad Zuber and the Plaintiff in : (Messrs Yoon & Partners) WA-22C-79-11/2016 : For the Defendant in : Jeff Sia and Ravin Woodhull WA-22C-79-11/2016 : (Messrs Adrian, Syuhada, Sia & Associates) Date of Decision: 16 July 2018.