Goodwill Division Sdn Bhd v LIM Boon Hai (J-02-(C)(W)-2294-11/2017)

This is an appeal against the whole decision of the High Court where the respondent’s claim for payment of his fees for professional services rendered was allowed. Upon hearing both learned counsel, the decision in this appeal was reserved.

These are the salient background facts to the dispute between the parties.

The respondent is a professional engineer registered with the Board of Engineers Malaysia. He practices as a registered Consulting Engineer under the name and style of “Perunding BCA”. The appellant, on the other hand, is a property developer. In this dispute, the parties were involved in the development of service apartments known as “Carlton Seaview 3 Residences” located at PTD 211016 [formerly HS(D) 506541] Lot 190088, Taman Megah Ria, Mukim Plentong, Daerah Johor Bahru, Negeri Johor [“the said Project”].

By letter of proposal dated 23.2.2012, the respondent offered to render professional services in relation to the said Project on inter alia the payment of RM110,000 as his professional fees. This sum was to be paid progressively over the duration of the said Project. By letter dated 8.3.2012, the appellant agreed to the terms and conditions of the appointment, and the respondent was duly appointed as the consulting engineer for the said Project. However, instead of paying the agreed professional fee of RM110,000.00 over the course of the said Project, the appellant paid the whole sum in one full sum immediately upon the appointment.

Some few months into the said Project, on or about 8.7.2012, the respondent was orally instructed by the appellant’s General Manager, one Richard Ong Li Tak, to “render this professional services as the mechanical and electrical Consulting Engineer for the said Project based on the plot ratio of 1:6 in relation to the design density for the said Project, notwithstanding the fact that the gazette area for the said Project at the material time was only for the plot ratio of 1:4.”

It is the respondent’s claim that it was an express, or alternatively implied term of the contract between the parties that he should be paid a reasonable fee for his Mechanical and Electrical Services rendered from July 2012 to when he left the said Project. As from July 2012, the respondent claimed that his services were all based on the new plot ratio of 1:6 while the 4 initial plot ratio was 1:4. The respondent relied on in particular, several Client-Consultant meetings, and a soft launch of the said Project on 4.8.2012, as evidence of the services rendered on the new plot ratio.

The respondent claimed that on or about early August 2012, the appellant had, without the prior consultation or consent of the respondent or the architect, commenced piling works for the said Project. At that material time, the necessary planning permission had yet to be procured from the local authorities. As a consequence, the architect for the said Project, Messrs. CP Architect, issued a warning letter to the appellant. Notwithstanding such warning, the respondent claimed that the appellant illegally continued with the construction works.

The respondent claimed that notwithstanding numerous requests and/or reminders, the appellant had failed, refused and/or neglected to confirm his professional fees for performing the Mechanical and Electrical Services on the new plot ratio. So, on 5.11.2012, he decided to pull out from the said Project, claiming that he had informed Richard Ong Li Tak of his decision to terminate his services.

The respondent’s further and/or alternative claim is based on quantum meruit, that he had rendered his services with no intention of doing so gratuitously. Since the appellant had enjoyed the benefit of his services, the respondent claimed that he should be paid a reasonable remuneration in accordance with the Board of Engineers Malaysia scale of fees. The reasonable remuneration was worked out at paragraph 20 of the Statement of Claim as RM2,877,698.32. 5

In defence, the appellant maintained that the agreed fee for the respondent’s services was the sum of RM110,000.00, and that the said sum had already been paid in full. However, since the respondent had walked out of the said Project prematurely thus not rendering the services he had committed himself to, the appellant claimed a refund of that payment.

The High Court identified the key issue for disposal was whether the respondent was bound by the terms of the written contract for the sum of RM110,000.00 or did the scale fees as provided under the Registration of Engineers Act 1967 [Act 138] apply.

After a full trial where both sides called witnesses and documentary evidence was adduced and submissions were made, the learned Judge decided in the respondent’s favour; and judgment for the sum as claimed was entered together with interest and costs. The learned Judge found that the existing agreement did not apply as it was based on a different plot ratio; and since there was no agreement between the parties for the rate of the respondent’s professional services rendered between July 2012 and 5.11.2012 based on the new plot ratio, the claim would be allowed on the basis of quantum meruit founded under section 71 of the Contracts Act 1950.

The learned Judge opined that section 71 was based on the equitable principle of conscionable conduct and restitution to prevent unjust 6 enrichment by one party at the expense of another, as decided by the Court of Appeal in Tanjung Teras Sdn Bhd v Kerajaan Malaysia [2015] 9 CLJ 1002; or where a contractor carries out work or renders services under a contract which is subsequently found to be void, as was decided in Syarikat Bina Utara Jaya (a firm) v Koperasi Serbaguna Sungai Gelugor Bhd [2009] 2 MLJ 546.

The High Court accepted the respondent’s submission that the Notification of Scale of Fees is an express recognition of a claim for quantum meruit; that section 7A(1) of the Registration of Engineers Act 1967 read together with Part B of the Notification of Scale of Fees allows the respondent to recover his professional fees based on the stage of work completed, on a quantum meruit basis. The learned Judge was satisfied that the respondent had proven the professional services rendered for the material period, such evidence being in the form of: i. Form C1, the Planning Authorisation dated 13.12.2012 where the confirmations of no objections from Suruhanjaya Komunikasi dan Multimedia and Tenaga Nasional Berhad were procured on 17.10.2012, during the tenancy of the respondent’s appointment; ii. various emails dated 8.3.2012, 20.7.2012, 21.7.2012, 24.7.2012,

26.7.2012, 3.8.2012, 6.8.2012, 8.8.2012, 3.9.2012, together with drawings and other mechanical and electrical requirements confirming action by the respondent based on the changed plot ratio; 7 iii.

Minutes of meetings dated 27.7.2012, 10.8.2012, 7.9.2012,

10.2012, 11.10.2012, 18.10.2012 which confirmed the respondent’s attendance at such meetings and where inter alia the new plot ratio was discussed; iv. Architectural drawings which when compared, showed different plot ratios. [15] The High Court then proceeded to apply the scale of fees as prescribed by the Registration of Engineers Act 1967 [Act 138] which is based on total construction costs of the said Project, finding that such scale would provide “a fair and acceptable basis” for the payment of the respondent’s services. Accepting that the estimated construction cost of the said Project was RM201,506,000.00, the High Court held that “the scale is between the range of 3.25% (minimum) to 3.55% (maximum)”; that the respondent’s claim at the rate of 3.28% (pro rata) [full 20% for the preliminary stage and partial 21% (out of the maximum 35%) for the design stage (i) which is provided for at paragraph 3 of Part B of the Notification”, “is a reasonable remuneration for the Plaintiff’s professional services rendered to the Defendant.” The amount as claimed by the respondent was thus allowed. Our Decision [16] First, there is the existing written agreement found in the two letters exchanged between the parties. This written agreement underpins and regulates the rights and obligations of both parties. The authenticity and 8 validity of this agreement is not in question. In any case, the Court does not rewrite the terms in that written agreement, and it has no intention of doing so. The agreement in the present appeal is no exception. Where there are ambiguities, the Court always strives to interpret and construe the agreement in such a way as to uphold the contractual bargain so as to keep the parties to their respective rights and obligations, as opposed to construing the agreement with a view to striking it down. The decisions of the apex Court and of this Court have consistently maintained that approach and there is no reason in the least to depart from those fundamental principles. [17] The principles of construction and interpretation of agreements have been well-laid down in the Federal Court’s decision in SPM Membrance Switch Sdn Bhd v Kerajaan Negeri Selangor [2016] 1 CLJ 177. After reviewing the “ICS principles” as pronounced in the House of Lords decision in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896, the Federal Court cautioned that “there are reservations to a wholesale adoption and approval” of those principles specially vis-à-vis the question of rectification of contracts, the remaining principles, “are good law”. The ICS principles were summarized in Berjaya Times Square v M-Concept Sdn Bhd [2010] 1 CLJ 269 as follows: “Here it is important to bear in mind that a contract is to be interpreted in accordance with the following guidelines. First, a Court interpreting a private contract is not confined to the four corners of the document. It is entitled to look at the factual matrix which forms the background to the transaction. Second, the factual matrix which forms the background to the transaction includes all material that was reasonably available to the parties. Third, the interpreting Court must 9 disregard any part of the background that is declaratory of subjective intent only. Lastly, the Court should adopt an objective approach when interpreting a private contract.” [18] The words used should be given their natural and ordinary meaning reflecting thus a common sense approach to interpretation. However, where the natural meaning is not clear, a construction which enables the Court to objectively determine the meaning which the contract or document would convey to a reasonable person having all the factual background matrix available to the parties, would be used. [19] In addition, the Federal Court reminded in SPM Membrance of the “almost banal” canon of construction, that contracts must be read holistically, not reading each term in isolation with a detailed and semantic parsing of words. Where there are two possible constructions, the Court is entitled to prefer the construction which is consistent with commercial or business common sense and to reject the other, an approach expounded in Prenn v Simmons [1971] 1 WLR 1381 and adopted in Rainy Sky SA v Kookmin Bank [2011] WLR 2900; mindful though that this may not be done where the language used is plain and clear. Once the terms and intention are ascertained, the Court’s function is to simply give effect to the clear and plain meaning of those agreed terms. [20] Applying those principles to the present appeal, these are the terms of the underlying written agreement between the parties. In the first letter dated 23.2.2012, the respondent proposed the following terms for the engagement of his professional services as a consultant engineer: 10 Our Ref: 1112/06/Q/Goodwill Division/1 Date : 23 February 2012 GOODWILL DIVISION SDN BHD No. 6, Jalan Cenderai 27, Taman Perindustrian Kota Puteri Masai Johor ATTN: Mr. Thong Dear Sir CADANGAN MEMBINA SEBUAH SERVICES APARTMENT & DOUBLE STOREY PENT HOUSE (529 UNIT KEDIAMAN) YANG MENGANDUNGI 1) 6 TINGKAT RUANG LETAK KERETA 2) 23 TINGKAT SERVICES APARTMENT & DOUBLE STOREY PENT HOUSE (529 UNIT KEDIAMAN) 3) 7 UNIT DOUBLE STOREY SHOP OFFICE 4) 2 UNIT KEDIAMAN LOBI 5) 1 UNIT RUANGAN FACILITY 6) 2 UNIT PONDOK PENGAWAL 7) 1 UNIT PENCAWANG TNB 8) 1 UNIT RUMAH SAMPAH DI ATAS LOT PTD 190088, TAMAN MEGAH RIA, MUKIM PLENTONG, DAERAH JOHOR BAHRU UNTUK TETUAN GOODWILL DIVISION SDN BHD Fee Proposal For Mechanical & Electrical Engineering Consultancy Services THE PROJECT We understand the project is a service apartment building consists of the above requirement located in Megah Ria. SCOPE OF WORK The scope of our Services is as detailed below. Mechanical & Electrical Engineering 1.0 Consultancy Services To Be Provided a. LV Installation; b. Utility outlet points including Electrical Distribution System; c. Fire Fighting and Prevention System; d. Air Conditioning and Ventilation System; e. Stand-by Generating Plant Including Acoustic Treatment (if any); 11 f. Telephone and Telecommunication System; g. Lightning Protection System; h. Swimming Filtration System; i. Hydraulic Services k. Lift Services PROFESSIONAL FEE Based on the Scope of Professional Services, our proposed professional fees shall be RM110,000.00 (One Hundred and Ten Thousand only). The above fee excludes full time site supervision of Resident Engineer and Clerk of Works, contribution and submission fees to the Authorities and 6% Government Service Tax.

3.1 Mode of payment shall follow the Board of Engineers’ rules, being: a) Preliminary Stage/Submission of plans and designs to Local Authorities 15% b) Obtaining approval from the relevant Authorities 25% c) Tender Stage 20% d) Construction Stage i) 50% progress of work on site 20% ii) 100% progress of work on site 10% e) Vacant possession and obtaining CCC 10% ==== 100% ==== We will be happy to discuss this fee proposal further to arrive at a mutual acceptable and satisfactory conclusion. We believe we have the necessary experience, expertise and resources to undertake this project and to support you fully during all stages of the project. We are very keen to work with your company and would look forward to your favorable reply. Kindly contact the undersigned if you need further information or clarification. Thank you. Yours faithfully, Perunding BCA 12 Sgd. ………………… LIM BOON HAI Director 012-2832972 [21] This was the response from the appellant: Our ref: CSR/M&E/BCA/01_0308 Your ref: 1112/06/Q/Goodwill Division/1 Date: 08 March 2012 PERUNDING BCA Level 4, IT Plaza, 04-18A, Skudai Parade, Jalan Skudai, 81300 Skudai, Johor. Tel: 07-5542211 Fax: 07-5587848 Attention: MR. LIM BOON HAI PERMOHONAN

The total professional sum of M&E is RM110,000.00 (Ringgit Malaysia One Hundred Ten Thousand Only)

The contract documents are being prepared and shall notify you soonest of the date when it is ready for your signature. This letter is sent in duplicate. Please return the original duly signed and witnessed where indicated to this office and to retain the copy. Thank you. Yours faithfully, Sgd. ………………………. Richard ONG LI TAK General Manager [22] It is plain from these two letters that the parties had agreed on the following: i. engagement of the respondent for mechanical & electrical engineering consultancy services; ii. those services are to be rendered in respect of a service apartment building located in Taman Megah Ria, Mukim Plentong, Daerah Johor Bahru; iii. the scope of the mechanical and engineering consultancy services to be rendered by the respondent are spelt out in 1.0 (a) to [sic] (k) of his proposal; 14 iv. based on the scope specified by the respondent, the respondent proposed his total professional fees to be RM110,000.00; v. although these fees exclude certain full time supervision and GST, that sum of RM110,000.00 was the total cost or fee for the respondent’s professional services; vi. that the full fee of RM110,000.00 was to be paid [mode of payment] according to the Board of Engineer’s rules, which is according to the progress of works or 5 identified milestones or stages of preliminary stage/submission of plans and designs to local authorities; obtaining approval from the relevant authorities; tender; construction; and vacant possession and CCC. [23] It is also plain from the written agreement that all the terms and conditions of engagement of the respondent are as contained in these two letters; and that would include any qualification or particular term to or in the respondent’s appointment and engagement of his professional consultancy services. [24] What is most pertinent to note from the terms and conditions of the agreement is that nowhere is there any mention of the design density of the said Project, that the drawings, specifications or input of the respondent is specifically for the ratio of 1:4 and that it will not be applicable for any other ratio; or that the ratio or density of the said Project is a material factor to the cost or value of his professional services. 15 [25] Instead, what is plain is that the respondent has materially and specifically spelt out the scope of his consultancy services, that he has agreed to provide mechanical and engineering consultancy services in respect of LV Installation; Utility outlet points including Electrical Distribution System; Fire Fighting and Prevention System; Air Conditioning and Ventilation System; Stand-by Generating Plant Including Acoustic Treatment (if any); Telephone and Telecommunication System; Lightning Protection System; Swimming Filtration System; Hydraulic Services; and Lift Services. These services would be rendered for the service apartment building consisting of the captioned requirements and located at Megah Ria. [26] We agree with the submissions of the appellant that the written agreement contains all the terms and conditions of the respondent’s appointment; that if the term concerning the plot ratio was material and critical to the scope or even to his appointment, viewed objectively, it would have made good commercial or business common sense to specify the same. Since there is none, that it is the list of matters or nature of the works outlined as comprising the scope of his services, the natural and ordinary meaning to be accorded is that the parties must have only intended those terms and conditions to be material and relevant in determining the scope of the respondent’s services. The change of density is immaterial or irrelevant to the respondent’s appointment. Regardless the density, the scope of the respondent’s services remained very much the same. [27] This conclusion is supported by the respondent’s own conduct. Although the respondent had captioned his proposal as one in respect of a 23-storey service apartment together with a double-storey penthouse (529 16 units), the appellant had captioned its acceptance as for a 22-storey service apartment with 530 units. Yet, the respondent did not correct or make any issue out of this. It is now too late to suggest otherwise as the parties agree that there was a concluded agreement in these letters exchanged. The respondent signed on the appellant’s acceptance and had worked on the basis of a 22-storey building. This is further evident from TM’s reply to the respondent’s submission for a development approval under section 21 of the Town and Country Planning Act 1976 (Act 172) – see page 58 of CBD 2. [28] The respondent’s treatment of this written agreement is also insightful. He made no plea and did not acknowledge its existence in his Statement of Claim until it was raised by the appellant and the respondent referred to it in his Reply and Defence to the Counterclaim. His claim starts with him being given oral instructions on 8.7.2012 by the appellant’s General Manager to render professional services as mechanical and electrical consultant engineer for the said Project on the plot ratio of 1:6 in relation to the design density for the said Project, notwithstanding that the gazette area at the material time was only for a plot ratio of 1:4 – see paragraph 4 of the Statement of Claim, as if there was no agreement at all in existence between the parties. He then explained that his services rendered at the preliminary stage comprised the matters spelt out at paragraph 4.1. At paragraph 6, he pleaded that it was an express or alternatively implied term of the contract that he was to be paid a reasonable fee for those services rendered. The respondent then went on to plead the services rendered before alleging that there was a failure or refusal to pay causing him to decide “to pull out from the said Project”. 17 [29] To these claims, the appellant pleaded that the respondent’s claim is baseless, that there is in existence the written agreement, the terms of which have already been set out above. It was the appellant’s specific plea that the written agreement encapsulated the agreement between the parties, that the services rendered were not based on any plot ratio but on the scope of services identified and for the total consideration of RM110,000.00, and that the sum had been settled by way of two invoices. [30] It was following this plea that the respondent then raised the irrelevancy of the written agreement; that the written agreement is in respect of a different plot ratio and for services rendered prior to July 2012 while his claim was in respect of services rendered from July to November 2012. Up until this point, the respondent took the position that the written agreement was irrelevant to his claim and this is reflected in his Statement of Claim where he makes no reference at all to its existence. [31] This was generally agreed to by the learned Judge which with respect, is erroneous. We appreciate the learned Judge had to treat the written agreement in that manner so as to allow for the application of the principle of quantum meruit. But, even before that, the learned Judge must address the validity of the written agreement first. To disregard it on the basis of irrelevancy in our view, is erroneous; especially where the respondent himself then saw fit to terminate this very agreement and “pull out from the said Project.” The incongruous position becomes more obvious when it is appreciated that the existing written agreement deals with the whole tenancy or duration of the said Project, until it is completed and CCC is obtained. The respondent made no submissions as to how the new agreement or terms 18 were to interface with the existing agreement, whether there was then a fresh or new agreement or that the written agreement had been rendered invalid or for any other reason unenforceable. [32] There cannot be in existence two agreements dealing with the appointment of the same respondent for the same services, distinguished only by the density, as claimed. There is only room for one agreement. More importantly, the services or the scope of the respondent’s services remained the same. It is still the same services as specified in his proposal, which proposal was accepted by the appellant, and to which the respondent has been fully paid. [33] Until the position of the written agreement is addressed, and with respect, it cannot be disregarded just on the basis of irrelevancy as was so treated by the learned Judge, the principle of quantum meruit cannot and does not apply. As explained in Tanjung Teras Sdn Bhd [supra] and held in the decisions of Syarikat Binaan Utara Jaya (a firm) v Koperasi Serbaguna Sungai Glugor Bhd [2009] 2 MLJ 564; Aneka Melor Sdn Bhd v Seri Sabco (M) Sdn Bhd & Another Appeal [2016] 2 CLJ 563 and Ch’ng Ghee Weng & Another v Lee Khoon Eng T/A Prestige Construction [2018] 10 CLJ 189, a claim based on quantum meruit cannot succeed where there is an existing contract between the parties. [34] In his evidence, the respondent explained that the period from 8/7/2012 to 5/11/2012 “is significant as my professional services rendered during this period were different from my services rendered prior to 8/7/2012. From the first day of my appointment on 7/3/2012 until 8/7/2012, my services 19 were based on the original plot ratio of 1:4 for the said Project. On 8/7/2012 at the Defendant’s sales office at Lot 21101, Jalan Kempas 14, Taman Megah Ria, 81750 Masai, Johor, Mr. Richard Ong Li Tak, the General Manager of the Defendant, had orally instructed me to render my professional services for the said Project based on the plot ratio of 1:6. From 8/7/2012 onwards, all my professional services were based on plot ratio 1:6. The Defendant’s instructions on 8/7/2012 had resulted me to start all over again as my previous drawings, designs and M&E comments cannot be used for plot ratio 1:6.” [35] Until the respondent can show that he had performed work outside the contract where it may be implied that he was expected to be remunerated, the respondent must be taken to be still performing work within the terms and conditions of the written agreement. From the respondent’s submissions, the respondent’s work on the new plot ratio meant that he had to do his work all over again; but it was still within the same scope of services for which he had given his proposal and for which he had already been paid. [36] Further, until and unless the respondent can show that the parties had agreed on the plot ratio which forms a material term in that underlying agreement and which plot ratio has now changed, there is no valid reason in law for reliance and for the application of section 71 of the Contracts Act

The doctrine of quantum meruit applies where there is no contract or agreement in existence; there is one here. And, since there is, and that agreement does not treat the matter of the density of the said Project as a material term, the terms of that underlying agreement must continue to apply. 20 [37] In other words, the respondent is required to perform his professional services in respect of the said Project regardless the density. The underlying agreement is plain and clear that the fee for such professional services is RM110,000.00. That sum was supposed to be paid over the duration of the said Project; the appellant chose to pay the full sum. In my view, that payment does not alter the fact that the sum of RM110,000.00 is for payment of the various types of services rendered. [38] Further, despite the respondent’s terms on the mode of payment, that the total professional fees of RM110,000.00 is to be paid progressively according to the 5 identified stages of progress culminating in the final payment being made only when the said Project is completed and the Certificate of Completion has been issued, the appellant was paid the whole sum even before the full scope of services had been rendered. That payment was also accepted by the respondent without issue. [39] It would be timely to now consider the application or otherwise of the Board of Engineer’s Scale of Fees. Paragraph 4(1)(d) of the Registration of Engineers Act 1967 [Act 138] provides that amongst the functions of the Board of Engineers is the function to fix from time to time with the approval of the Minister the scale of fees that may be charged by registered engineers and engineering consultancy practices for professional engineering services rendered. Pursuant to paragraph 4(1)(d) of the Act, those fees have been fixed by way of a Notification of Scale of Fees (P.U. (B) 548) [Scale Fees]. [40] Despite the availability of these Scale Fees, the respondent chose not to quote on that basis. He chose instead to only adopt the mode of payment 21 of his total fees according to the Scale Fees; that he should be paid according to the progress of his works. The details of his proposal have already been set out; and as pointed out by the appellant, his proposal was accepted by the appellant. More than that, although the respondent expected to be paid progressively according to the stage of his work, he was paid in full through two invoices on 11.7.2012 and 29.8.2012. In other words, he was paid for work he had yet to do under the agreement, or described by the appellant, as “regretfully not performed at all”. [41] It is pertinent to note that the respondent was paid in full through the two payments after he was purportedly asked to do work on the new ratio; and the respondent had accepted such payment without reservation or protest. [42] Now, under the Scale Rules, it is provided in Rule 3 that if after completion under inter alia sub-subparagraph 1(1)(a) of Part A, any design whether completed or in progress or any specifications, drawings or other documents prepared in whole or in part by the consulting engineer is required to be modified or revised by reason of instructions received by the consulting engineer from the client, or by reason of circumstances which could not reasonably have been foreseen, the consulting engineer shall be paid an additional payment by the client as provided in subparagraph 1(2) of Part B calculated in accordance with paragraph 2 of Part B together with appropriate reimbursements for making the modifications or revisions. 22 [43] Sub-subparagraph 1(1)(a) of Part A refers to the preliminary stage of works whereas subparagraph 1(2) of Part B refers to payment of inter alia the salary cost times the multiplier in respect of the times spent in providing the services by partners, consultants, and technical supporting staff. The respondent is not claiming additional payment but is seeking to bring his entire fee scale below the Rules. [44] The difficulty we have with the respondent’s claim is that given that the sum of RM110,000.00 was for the whole duration of the said Project, and the respondent has already been paid in full but the completion of the said Project was still a long way off in the distance, we are unable to see how rendering anew the same preliminary services calls for a completely different basis of calculation. If there is to be payment again for such services, then the respondent should only be paid the same sum that he himself had quoted for that portion or stage of the services rendered. [45] If we have erred in relation to the application of the principle of quantum meruit, we are of the judgment that since the respondent himself had only referred to and relied on the Board of Engineer Rules for the purposes of determining the mode of payment of his fees; that it was not for the purpose of determining the quantum of his fees, the same should still hold true for the determination of reasonable remuneration of his services. [46] In the matter of the quantum of the remuneration for his services rendered, the respondent himself had seen it fit and reasonable to quote a sum irrespective and entirely outside the Board of Engineers Rules. What is evident is that the parties have, by the letters exchanged and by their conduct 23 shown that they never intended the Scale Fees to apply. In our view, this is not altered by the fact that the claim is now on the basis of section 71 or quantum meruit. The language in the respondent’s proposal points to the clear fact that the Scale Fees only apply or are relevant only for the purpose of determining the mode and not the quantum. [47] In this regard, the respondent quoted that he should be paid 15% of the total sum of RM110,000.00 as his fees for that stage of the works. That, if at all, should be the sum awarded. And, not a completely whole reference to something outside the contemplation of the parties. [48] As for the appeal on the counterclaim, the irrefutable fact is that the respondent pulled or walked out of the said Project. For the appellant to succeed in reclaiming the full sum paid, the appellant will have to prove total failure of consideration. In this appeal, it is quite evident that that was not established. There was only established breach of agreement. In such circumstances, the appellant is entitled to damages. [49] Although it may be argued that the respondent had only completed the preliminary stage of the works for which he should only be paid 15% of the RM110,000.00 that was paid, the fact is that the appellant chose to pay the respondent the sum in full and not according to the five stages of the works. No reason was proffered. Be that as it may, there is no evidence of the appellant’s loss in which case, the counterclaim was rightly dismissed, though for different reasons. 24 [50] For all the forgoing reasons, we would allow the appeal in part. The High Court’s decision allowing the respondent’s claim is set aside, while the decision of the High Court dismissing the counterclaim is affirmed. Under these conditions, costs is appropriately to be borne by each party. Deposit to be refunded. Dated: 4TH SEPTEMBER 2019 signed (MARY LIM THIAM SUAN) Judge Court of Appeal Malaysia 25 Counsel/Solicitors For the appellant: G. Ravi (Aida Hassan with him) Tetuan G. Ravi No. 88, Jalan Layang 2 Taman Perling 81200 Johor Bahru Johor For the respondent: Tan Vincent (Azmi bin Azahar with him) Tetuan Tan Vincent & Azmi No. 181A, Jalan NB2 2/2 Taman Nusa Bestari 2 79150 Nusa Jaya, Johor