Es Hvac Sdn Bhd v Miracle Asset Builder Sdn Bhd (J-02(IM)(NCVC)-1444-07/2018)

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1 IN THE COURT OF APPEAL, MALAYSIA AT PUTRAJAYA (APPELLATE JURISDICTION) CIVIL APPEAL NO: J - 02(IM)(NCVC) - 1444 - 07/2018 BETWEEN ES HVAC SDN BHD … APPELLANT AND MIRACLE ASSET BUILDER SDN BHD … RESPONDENT (In the High Court in Malaya at Johor Bahru Civil Suit No: JA - 22NCVC - 15 - 02/2018 Between MIRACLE ASSET BULDER SDN BHD … PLAINTIFF And ES HVAC SDN BHD … DEFENDANT) CORAM: VERNON ONG LAM KIAT, JCA HARMINDAR SINGH DHALIWAL, JCA HAS ZANAH BINTI MEHAT, JCA 2 JUDGMENT OF THE COURT [1] This appeal emanates from the Johor Bharu High Court Order dated 28 June 2018. The learned High Court Judge had granted the respondent’s application for summary judgment under Order 14 of the Rules of Court 2012 (“ROC 2012”) for the sum of RM6,768,000.00 on its claim for liquidated and ascertained damages (“LAD”). [2] Aggrieved with this decision, the appellant appealed to this Court. After hearing the parties and taking into consideration the written submissions, we allowed the appeal and set aside the order of the High Court. Our reasons for doing so now follow and will constitute the judgment of the court. Salient Facts [3] The salient facts giving rise to the civil suit appear in the grounds of judgment and in the submissions of the parties. The facts can be restated as follows. Through a Letter of Award dated 23 April 2015 (“the Main Contract”), the respondent was appointed by Distinctive Properties Sdn Bhd (“the Employer”) to undertake and complete the Balance of the Works in the project (“the Works”) as stipulated therein. The respondent had in 3 turn awarded part of the Works known as “air conditioning and ventilation works (“the Aircon Works”) to the appellant vide a Letter of Award dated 9 June 2015. [4] Under the Main Contract, the contract sum for the Works was RM116,856,000.00. The Works was to be "commenced, carried out and completed in Sections" within a period of 372 days from the Date of Commencement. The Date of Commencement and Possession of Site was stated as 25 April 2015. The Completion Date for the whole Works was stated as 30 April 2016. The respondent had also agreed to appoint various nominated sub-contractors as listed in Appendix B ("the NSCs") and was required to enter into formal sub-contract agreements with each and every of the them. It appeared that the appellant was only one of six NSCs and was tasked under the Sub-contract with undertaking the Aircon Works for the contract sum of RM5,245,506.50, the value of which worked out to be 4.5% of the total contract sum for the Works. [5] Meanwhile, under the Sub-contract for the Aircon Works, the contract sum for the Works, as stated earlier, was RM5,245,506.50. The Date of Commencement was to follow the Main Contractor's schedule. The Date for Completion was also to follow the Main Contractor's schedule. It was also stipulated that the completion period shall be scheduled according to the Main 4 Contractor's work program and the NSC was required to plan and work along with the main program. Importantly, should the appellant fail to complete the Aircon Works by the Date for Completion or any extension of time granted in the Main Contract, then LAD of RM29,000.00 per calendar day and RM78,000.00 per calendar day would be imposed on the appellant for Section 1 and Section 2 Works respectively. Nevertheless, pursuant to a letter from the Employer's Architect dated 18 May 2017, an extension of time (EOT) was granted with the revised date of completion of 5 May 2016 for Section 1 work and 4 September 2016 for Section 2 work. [6] The respondent’s case was that the appellant only completed the Section 2 work on 3 January 2017 as evident from the Certificate of Completion and Compliance (“CCC"). Due to the appellant's delay, the respondent suffered loss and damages. The Employer by letter dated 7 June 2017 imposed on the respondent RM7.3 million as LAD. The respondent contended that based on the terms of the Sub-contract the appellant was contractually and legally liable to pay to the respondent the sum of RM6.786 million as agreed LAD for the 87 days delay it took to complete its works for Section 2. [7] The learned Judge agreed with these assertions and granted summary judgment. A compelling factor in the reasoning of the learned Judge was that since there was no affidavit in reply, all the assertions of the respondent must be accepted. In actual fact, there was an affidavit filed in opposition by the appellant but this was 5 struck out by the learned SAR during case management on the ground that it was filed out of time. Curiously, no appeal was filed by the appellant who was at that time represented by its previous solicitors. The appellant was therefore confined to relying on its Defence which was filed earlier as well as showing cause based on the respondent’s affidavit and documents filed. The Instant Appeal [8] Before us, the appellant raised various issues to show that there were indeed triable issues. The crux of the appellant’s argument was that apart from producing the CCC, the document referred to in Clause 7 of the Sub-contract known as the Certificate of Practical Completion (“CPC”) was not produced. It was contended that all the Works including the Air-con Works would have been completed earlier in point of time even before the CCC could be issued. So when the Works were actually completed is a triable issue. [9] It was also argued that the Works were actually broken down into many parts to be respectively undertaken by the 6 NSCs as well as the respondent itself. Apart from showing that there was a delay in the completion of the Works as a whole, there was no evidence of which part of the Works undertaken by which NSC that had actually caused or contributed to the delay and if at all, the length of such delay as well as its extent of responsibility. 6 [10] Further, if delay was cumulatively caused or contributed by more than one party, be it the NSCs and/or the respondent, then the length of delay caused by each of these parties ought to have been clearly identified and ascertained in order to determine the extent of their responsibilities respectively. To be fair, the respondent could have produced the Master Schedule of Works evidencing the sequence of various works respectively undertaken by the NSCs as well as the respondent itself. [11] It was further argued that even from the respondent's own document, the issue of liability and quantum on LAD amongst the respondent and the various NSCs was still open and undecided. This can be seen from the Employer’s letter dated 7 June 2017 wherein it was stated: "You are most welcome to discuss with your nominated subcontractors on the LAD issues. In the interim, we have requested our consultants to finalise the final account for the said contract by mid June 2016 irrespective of whether your company and your nominated sub contractors have submitted their final claims for the purposes of final account. You and your nominated sub contractors are advised to discuss with our consultants on your claims and additional variation orders if any". 7 [12] Now, the law with respect to summary judgment is fairly trite. The general rule is that a plaintiff must prove its case in a trial. The Order 14 jurisdiction is only to be exercised in very clear cases. The intention was not to shut out defendants from their day in court (see Malayan Insurance

(M) Sdn Bhd v Asia Hotel Sdn Bhd [1987] 2 MLJ 183). Even in the absence of a statement of defence or affidavit, the application for summary judgment can be resisted by relying on the plaintiff’s own documents (see Noh Hyoung Seok v Perwira Affin Bank Bhd [2004] 2 MLJ 203). In any event, the jurisprudence under Order 14 rule 3 of ROC 2012 is clear. Even if the defendant was not able to point to a specific issue which ought to be tried, but nevertheless satisfied the court that there were circumstances that ought to be investigated, then the words “there ought for some reason to be a trial” would be invoked (see United Merchant Finance Bhd v Majlis Agama Islam Negeri Johor [1999] 1 MLJ 657. [13] In our view, the issues raised by the appellant constituted triable issues such that the Court had no jurisdiction to grant summary judgment. In particular, the merits of the following questions must be examined fairly and justly at a trial:

(a) Whether the appellant did in fact delay in the execution and completion of the Aircon Works; 8

(b) If so, whether such delay had caused and/or contributed to the delay in the overall completion of the Works; and

(c) If so, to what extent the appellant ought to be held responsible from the overall delay. [14] We note that the appellant had pleaded all these issues in the Defence and Counterclaim and had stipulated that the Works were completed in accordance with the Sub-contract and within the time frame agreed. A remarkable feature in the instant case is that after the completion of the Works, the LAD claim against the appellant of RM6,768,000.00 far exceeds the contract sum of RM5,245,506.50. [15] It is also unusual that the whole of the LAD claim by the employer against the respondent by the letter of 7 June 2017 is now to be paid by only one of the NSCs when there were five others, excluding the respondent, who could have possibly contributed to the delay. After all, the appellants’ Works amounted to only 4.5% of the value of the whole Works. In our view, these unusual features ought to be investigated at a full trial as they are a classic example of the words "there ought for some other reason to be a trial of that claim" found in Order 14 rule 3 ROC 2012. 9 Conclusion [16] For these reasons, we were persuaded that the High Court had no jurisdiction to grant summary judgment as there were issues raised which merited a trial. As such, this was a fit and proper case for appellate intervention. Accordingly, the appeal was allowed and the order of the High Court was set aside. The matter was remitted to the High Court for a full trial. Costs here and below of RM7,500.00 was ordered to be paid to the appellant within 14 days subject to payment on the allocator. Deposit, if any, to be refunded. Dated: 26 February 2019 Signed (HARMINDAR SINGH DHALIWAL) Judge Court of Appeal Malaysia Counsel/Solicitors: For the Appellant: Lee Chan Leong (with him Siew Ee Mei) (M/s Chan Leong & Co) For the Respondent: R Paramanandan (with him Clarence Edwin) (M/s Clarence Edwin Law Offices)

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Es Hvac Sdn Bhd v Miracle Asset Builder Sdn Bhd (J-02(IM)(NCVC)-1444-07/2018)

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Es Hvac Sdn Bhd v Miracle Asset Builder Sdn Bhd (J-02(IM)(NCVC)-1444-07/2018)

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