High Point Furnishing Sdn Bhd v President Hotel Sdn Bhd (WA-22C-36-04/2024)

PRESIDENT HOTEL SDN BHD [NO. SYARIKAT: 196501000537 (6325-U)]

PENA BUILDERS SDN BHD [NO. SYARIKAT: 200301023058 (625478-P)]…DEFENDAN-DEFENDAN GROUNDS OF JUDGMENT (Enclosure 8) [1] Before this Court, President Hotel Sdn Bhd being the 1st Defendant, (“D1”) had applied under enclosure 8 (Enclosure 8) inter alia pursuant to Order 18 rule 19 (1) (a), (b) and/or (d) to dismiss High Point Furnishing Sdn Bhd (“Plaintiff”) Writ of Summons and Statement of Claim against it under this Suit. [2] Amongst the grounds relied on by D1 in support of Enclosure 8 are that: - a. there is no privity of contract between the Plaintiff and D1. b. the Plaintiff has failed to establish a claim for quantum meruit under section 71 of the Contracts Act. c. D1 was not unjustly enriched at the Plaintiff’s expense. [3] Both D1 and the Plaintiff had filed written submissions in respect of Enclosure 8 and I had heard the respective counsels submit orally before me on Enclosure 8 on 17.9.2024 after which I had decided in favour of D1 and granted an order to strike out the Plaintiff’s claim against D1. [4] The plaintiff being unhappy with my aforesaid decision has now lodged an appeal to the same and herewith are my written grounds to support my decision. Background Facts [5] The First Defendant /D1 is a private limited company and is the Employer of the project known as “Proposed Additions and Alteration Involving: I) Reconstruction Of 1 Block 24-Storey Hotel ‘Serviced Suites’ With Banquet Hall At Level 2 And Hotel Facilities At Level 24 II) Partial Renovation To Internal Layouts At Basement 1, Lower Ground Level, Ground Level And Level 2 On The Existing Podium On Lot 1132, 1133, 1134, 1135, 1136, 1137, 1138 Dan 1240, Seksyen 67, Jalan Sultan Ismail, Kuala Lumpur, Wilayah Persekutuan Untuk Tetuan President Hotel Sdn Bhd (“the Project”) (“Main Building Contract”). [6] A timeline of the material events relating to the Project is set out as follows: - a. By way of a Letter of Award, the First Defendant appointed Qingjian Holding Group (M) Sdn Bhd (“Qingjian”) as the main building contractor for the Project. b. By way of a Letter of Appointment, Qingjian subsequently appointed the Second Defendant as the Nominated Sub-contractor for “Interior Fit-out Work for Mock-up Unit and Serviced Suite Guest Rooms” (“Guestroom Interior Fit-out Works”) (“Subcontracting Works”). c. By way of a Deed of Novation between D1, Qingjian and CNQC Engineering & Construction (Malaysia) Sdn Bhd (“Main Contractor”), Qingjian assigned and novated all its rights and obligations under the Main Building Contract to the Main Contractor (“Deed of Novation”). d. The Plaintiff filed the Civil Suit herein alleging that Mixmax Marketing Station Sdn Bhd (“MMSSB”), being D2’s sub-contractor, had awarded the Sub-Contracting Works to the Plaintiff but failed to make payment upon completion. Consequently, the Plaintiff now seeks to inter alia recover alleged outstanding claims of RM1,127,066.28 arising from said works directly from D1 and/or D2. Analysis & Findings Is There Any Privity Of Contract Between The Plaintiff And D1 [7] On D1’s contention that there is no privity of contract between the Plaintiff and D1, it was submitted by D1 that: -

7.1 there was no relationship, contractual or otherwise with the Plaintiff.

7.2 D1 had never engaged directly or indirectly the Plaintiff to undertake any works under the Project.

7.3 they have never been privy to the subcontracting arrangement between MMSSB and the Plaintiff. [8] Thus, in the matter before me I had looked at the Letter of Award dated 6.2.2018 at exhibit LSY 1 in enclosure 9 and found that the same was between the Plaintiff, as the Employer and one Qingjian Holding Group (M) Sdn Bhd (“Qingjian”) the Main Contractor. [9] I had further noted that the Plaintiff’s Statement of Claim had at paragraph 6 stated that the works contract for the Project had been awarded by D1 to D2 and that D2 had awarded the said contract to MMSSB. [10] It has also been shown to me by learned counsel for D1 at enclosure 9 that there was a Deed of Novation dated 10.9.2023 (“Novation”), at exhibit LSY-3 in D1’s Affidavit in Support of Enclosure 8, between D1 as the Employer and Qingjian as the Contractor and one CNOQ Engineering and Construction (Malaysia) Sdn Bhd (“CNOQ”) as the Substitute Contractor, whereby Qingjian’s rights, interest and title to the Main Contact, which is defined as the Letter of Award, Contract Form, Correspondences, Schedule of Works Architectural and Structural Works & Miscellaneous and drawings stipulated in the Main Building Contract, and Qingjian’s full benefits, obligations and liabilities were assigned, novated and transferred to CNOQ as the Substitute Contractor. [11] From the Novation it can clearly be seen that CNQC was thus now the Main Contractor undertaking the works for D1 albeit as the Substitute Contractor. [12] Based on the documents before this Court, the facts then show, as exhibited in LSY-2 of enclosure 9, that Qingjian had by way of another Letter of Appointment dated 10.2.2020 appointed Pena Builders Sdn Bhd, the 2nd Defendant herein (“D2”) as the Nominated Sub Contractor (“NSC”) for the Interior Fit Out Work for Mock Up Unit and Serviced Suite Guest Rooms. [13] This Court has also examined the Letter of Award dated 22.3.2022 from D2 to the Plaintiff at exhibit HCW 1 of the Plaintiff’s Affidavit in Reply at enclosure 12 for the Works. [14] After reading and considering all of the abovesaid documents, I find that D1 is not in any way involved vis a vis D2’s Letter of Award dated 22.3.2022 to the Plaintiff and that there is no evidence before me that they knew of the Plaintiff’s evidence. There is thus clearly no contractual nexus between the Plaintiff and D1. In other words, there is no privity of contract between the Plaintiff and D1. [15] I rely on the authority which have been provided to me by learned counsel for D1 to support my decision on the issue of the non-existence of the privity of contract between the Plaintiff and D1 which are University of Malaya V FBSM Ctech Sdn Bhd [2018] 5 MLJ 397 where the Court of Appeal held “[14] What we found clear is that there is no contractual nexus between the plaintiff and the first defendant. The relationship between the parties in this case in fact, is a classic example of a contractual arrangement, where the employer appointed the main contractor, and the main contractor appointed a subcontractor to undertake a particular project of the employer. The contractual relationship is normally defined separately as between the employer and the main contractor, and the main contractor with its subcontractor.’ [16] In the circumstances, it is in my decision herein that there is no cause of action by the Plaintiff against D1 and in the circumstances herein, the Plaintiff cannot seek redress from D1. Reliance is placed by me on Seloga Jaya Sdn Bhd v UEM Genisys Sdn Bhd [2010] 3 MLJ 721; [2010] MLJU 42; [2010] 5 CLJ 745 where James Foong FCJ speaking on behalf of the Federal Court held: “But such arrangement has various legal consequences. Since there is no privity of contract between the employer and the subcontractor, going by the general principle of the law of contract, the subcontractor cannot seek redress against the employer in the event of the main contractor failing to pay the subcontractor for the job done after the main contractor had collected payment from the employer.” Quantum Meruit [17] This Court will now turn to the issue of the quantum meruit claim by the Plaintiff against D1. Such a claim will be subject to section 71 of the Contracts Act 1950 which reads: Where a person lawfully does anything for another person, or delivers anything to him, not intending to do so gratuitously, and such other person enjoys the benefit thereof, the latter is bound to make compensation to the former in respect of, or to restore, the thing so done or delivered. [18] To this the Plaintiff must establish certain conditions as laid down in Siow Wong Fatt v Susur Rotan Mining Ltd & Anor [1967] 2 MLJ 118 where the privy Council had held: “four conditions must be satisfied to establish a claim under s 71 of the contracts (malay states) ordinance 1950. the doing of the act or the delivery of the thing referred to in the section: (a) must be lawful; (b) must be done for another person; (c) must not be intended to be done gratuitously; (d) must be such that the other person enjoys the benefit of the act or the delivery. these matters must be answered at the time that the act is done or the thing delivered and thus is of fundamental importance. as to the first condition, it was clearly in the contemplation of both parties that the first respondent should do this work.” [19] From the chain of contracts before this Court, it has not been established that D1 had appointed or entered into any contract with the Plaintiff for the Works. Instead what the facts show is, at the risk of repetition, is that D1 had appointed Qingjian as its Main Contractor who in turn novated its contract to CNOQ; whereas for the Interior Fit Out Work for Mock Up Unit and Serviced Suite Guest Rooms, Qingjian had appointed D2 as the Nominated Sub Contractor (“NSC”). [20] From the same it can thus be seen that there was no gratuitous work done by the Plaintiff for D1 for which the Plaintiff could claim for quantum meruit. Although it is D1 who ultimately obtained or derived the benefit of the works done by the Plaintiff, this by itself is not sufficient to come within the provision of section 71 of the Contracts Act 1950 as the other conditions mentioned in Siow Wong Fatt (supra) at the time that the act is done or the thing delivered have not been established by the Plaintiff. [21] In this respect I have also considered in coming to my decision the case of Tanjung Teras Sdn Bhd v Kerajaan Malaysia [2015] MLJU 2161 where the Court of Appeal held: “[35] Liability under section 71 is not based on any existing contract between the parties. Rather it is based on the equitable principle of conscionable conduct and restitution to prevent unjust enrichment by one party at the expense of another party …” [22] I however do not find that there has been any unconscionable conduct on the part of D1 which has been shown by the Plaintiff to exist in the case before me. The fact that D1 ultimately benefitted from the works undertaken by the Plaintiff is by itself insufficient for this to be an issue of an unconscionable conduct on the part of D1. [23] I will on this issue rely on what Lim Chong Fong J (as His Lordship then was) held in Cosmos Infratech Sdn Bhd v Melati Evergreen Sdn Bhd [2020] MLJU 890 which involved a case of where the concessionaire of the Projek Penswastaan Lebuhraya Bertingkat Sungai Besi-Ulu Kelang Package SUKE CB2 (Construction and Completion of Mainline and Other Associated Works from Ch. 15000 to Ch. 16700) (“Project”) is Turnpike Synergy Sdn Bhd (“Turnpike”). In turn, Turnpike contracted the execution of the Project to Zelan Hasrat Sedaya Consortium which in turn sub contracted a part of it to Zelan Construction Sdn Bhd (“ZCSB”). Accordingly, ZCSB sub contracted to the Defendant the carrying out of the bored piling works for piles no. P18-P22 and P7-P9 (“Works”), and where the Plaintiff then sent to the Defendant its final claim for the Works dated 10 May 2018 followed by a letter of demand. [24] Lim Chong Fong J then held: “[48] It is the Plaintiff’s contention that the Defendant benefitted from the Plaintiff’s work and submitted its progress claims to ZCSB based on the Plaintiff’s claim estimation. As a result, the Defendant has been or would be paid for it by ZCSB. Although it sounded attractive at first blush, I am of the view that the Plaintiff could not resort or avail itself on a quantum meruit or restitutionary claim against the Defendant unless there is no contractual avenue to recover. In this case, the Plaintiff has the contractual avenue to recover from TPSB in contradistinction with the case of Mega Mayang M & E Sdn Bhd v Utama Lodge Sdn Bhd (supra) where there is a quasi-contract arrangement by way of direct payment by the person who also indirectly enjoyed the benefit.’ [25] Similarly, in the case before me I do find that the Plaintiff has the contractual avenue to recover from the Plaintiff and as such I am not inclined to hold that there is any quantum meruit claim by the Plaintiff herein against D1 based on the facts before me. To conclude the proper remedy for the Plaintiff is to make a claim against D2 only. [26] For the record, I also do not find any substantial injustice being occasioned on the Plaintiff as alleged by them as there is the avenue of the claim against D2 which takes into account the allocation of risks by virtue of the respective contracts / Letters of Awards mentioned. Unjust Enrichment [27] As to the issue of unjust enrichment, I find that the Plaintiff has not demonstrated that D1 had unjustly enriched itself. The test for an unjust enrichment claim was determined by the Federal Court in Dream Property Sdn Bhd v Atlas Housing Sdn Bhd [2015] 2 MLJ 441 where in delivering judgment of the said Apex Court, Tan Sri Azhar Mohamed FCJ stated after going through the development of the law on unjust enrichments both here and in the UK that: “[117] The above passages from the judgments of the House of Lords are instructive and are significant contribution to the development of law of unjust enrichment. The principle underlying the cases of Banque Financiere de la Cite v Parc (Battersea) Ltd and Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v IRC is that, in the context of the present case, a cause of action in unjust enrichment can give rise to a right to restitution where it can be established that:

the plaintiff must have been enriched;

the enrichment must be gained at the defendant’s expense;

that the retention of the benefit by the plaintiff was unjust; and

there must be no defence available to extinguish or reduce the plaintiff’s liability to make restitution.” [28] Consequently, I cannot accept such a contention as being proven albeit prima facie before this Court due to a lack of particulars in its Statement of Claim on this specific issue. In any event it is my decision that all that D1 has done is to legally act in accordance with the contractual arrangements between itself and Qingjian and MMSSSB as mentioned. [29] I also cannot accept the Plaintiff’s argument that D1 knew or ought to have known as the Employer of the Project that the Plaintiff was carrying out the sub-contracting works would support the Plaintiff’s claim for unjust enrichment against D1. With respect I find this contention wholly untenable as knowledge, if any, is irrelevant. Knowledge per se on the part of the Plaintiff of D1 carrying out the sub-contracting works, does not in my view justify a claim for unjust enrichment. What the Plaintiff has to establish, at least at this juncture, is that all the elements mentioned in Dream Property Sdn Bhd (supra) has been prima facie shown to be satisfied. See also the observation of Tee Geok Hock JC (as he then was) on this issue of ‘knowledge’ in PROFESSIONAL ELEMENT SDN BHD V YFG ENGINEERING SDN BHD & ANOR [2021] MLJU 1355.

[30] In conclusion I therefore hold that the facts before this Court shows that D1 did not enter into any contractual arrangement with nor did it appoint the Plaintiff to carry out the works in question. [31] The law on striking out under Order 18 rule 9 is clearly set out in BANDAR BUILDER SDN BHD & ORS V UNITED MALAYAN BANKING CORPORATION BHD [1993] 3 MLJ 36; [1993] 4 CLJ 7; [1993] 2 AMR 1969 where the Supreme Court held the principles upon which the court acts in exercising its power under any of the four limbs of O 18 r 19(1) of the Rules of the High Court 1980 are well settled. It is only in plain and obvious cases that recourse should be had to the summary process under this rule and the summary procedure can only be adopted when it can clearly be seen that a claim or answer is on the face of it ‘obviously unsustainable’. It cannot be exercised by a minute examination of the documents and facts of the case in order to see whether the party has a cause of action or a defence. [32] Following from the legal proposition as set out above in Bandar Builder Sdn Bhd (supra) and all of my above grounds, I hold that the Plaintiff’s claim against D1 is obviously unsustainable and ought to be struck out. [33] I had therefore in the matter before me granted Order in Terms for prayers (10, (and (2) of Enclosure 29. Dated: 17th day of September 2024 sgd. NADZARIN WOK NORDIN HIGH COURT JUDGE CONSTRUCTION COURT 1 COUNSEL FOR THE PLAINTIFF: Kai Chi Theng (Messrs Gurmit Sodhi Chambers] COUNSEL FOR THE 1st DEFENDANT: Loshini Ramarmuthy (Messrs Skrine] COUNSEL FOR THE 2nd DEFENDANT: Yeoh Leng Yang (Messrs YY Chin & Co.]