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)] …DEFENDANTS GROUNDS OF JUDGMENT (Enclosure 1 & 29) Introduction [1] The 2nd Defendant, Pena Builders Sdn. Bhd. (“D2”) had applied under enclosure 29 (Enclosure 29) for inter alia an Order pursuant to Order 2 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] The grounds relied on by D2 in support of enclosure 29 are that: - a. there is no valid cause of action against D2 who is merely the nominated sub-contractor (“NSC”) in the Project. b. there is no privity of contract between the Plaintiff and D1. c. D2 has not benefitted from nor maintained any relationship with the Plaintiff. Salient Background Facts [3] By virtue of the Appointment Letter dated 10.2.2020, Qingjian Hodong Group (M) Sdn. Bhd. formally appointed the 2nd Defendant as the Nominated Subcontractor for the “interior Fit Our Work for Mock-Up Unit and Serviced Suite Guest Rooms (“Interior Fit-Out Works”) for a 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.” (“Project”). [4] Subsequently, pursuant to the Letter of Award dated 22.3.2022 (“LOA”), the 2nd Defendant formally engaged Mixmax Marketing Station Sdn Bhd (MMSSB) as the subcontractor, entrusting them with the responsibility to supply, fabricate, deliver, and install the carpentry and joinery works for 210 Guest Room units as part of the Project. [5] An illustration of the relationships between the relevant parties in the Project is as below: Employer of the Project President Hotel Sdn. Bhd. (1st Defendant in the present suit) [6] The Plaintiff’s claim against the D2 is founded on the assertion that the D2 is a direct beneficiary of the work the Plaintiff allegedly performed in connection with the Project. Main Contractor (appointed via Deed of Novation) President Hotel Sdn. Bhd. (1st Defendant in the present suit) Nominated Sub-Contractor (appointed via Deed of Novation) Pena Builders Sdn. Bhd. (2nd Defendant in the present suit) Sub-Contractor (Hired by 2nd Defendant) Mixmax Marketing Station Sdn. Bhd. (MIXMAX) Sub-Sub-Contractor (Hired by MIXMAX) High Point Furnishing Sdn. Bhd. (Plaintiff in the present suit) [7] The Plaintiff asserts that it fully completed the work in accordance with its contract with MMSSB, yet it has not received the outstanding payment for the work done from MMSSB. [8] Consequently, the Plaintiff has commenced these legal proceedings under Section 71 of the Contracts Act 1950 and/or the principle of unjust enrichment, demanding the full recovery of the alleged outstanding sum of RM1,127,066.28, along with interest and costs. Analysis & Findings Is There A Cause Of Action Against D2 [9] On the issue of whether there is a cause of action against D2, I have found after looking at the documents before me that there is no privity of contract between the Plaintiff and D2. There is nothing before this Court to show that D2 had engaged the Plaintiff to perform any work under the Project. [10] I refer to 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.” [11] Here before me, D2 is only the NSC and thus only have a direct contractual relationship with the Main Contractor. [12] The above is corroborated by the evidence before me which shows that there is: -

12.1 a Letter of Appointment dated 10.2.20120 at exhibit A 1 in enclosure 30 and found that the same was between one Qingjian Hodong Group (M) Sdn. Bhd. (Qingjian), appointing D2 as the NSC for Work for Mock Up Unit and Serviced Suite Guest Rooms.

12.2 a Letter of Award dated 22.3.2022 from D2 to Mixmax Marketing Station Sdn. Bhd. (“MMSSB”) as the sub- contractor to supply off and on-site fabrication, delivery and installation, carpentry and joinery works to 210 units guestrooms for the Project. [13] I have further seen no evidence of D2 having any knowledge of or was privy to or involved in the sub contract between MMSSB and the Plaintiff and thus in my view the allegation that the Plaintiff has lawfully completed works under its contract with MMSSB and had purportedly not received the balance of payment for work done from MMSSB, is an unfounded cause of action against D2. [14] For the above, I will rely on 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 are normally defined separately as between the employer and the main contractor, and the main contractor with its subcontractor.” [15] I have observed that the Plaintiff had at paragraph 6 of its Statement of Claim asserted and therefore acknowledge that D1 had awarded the contract works to D2 and D2 awarded the Works to MMSSB. [16] From the facts and evidence presented to me 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. [17] I have further found from the facts and the pleadings before this Court, that it was pleaded by the Plaintiff that MMSSB had on 22.3.2022 via a Letter of Award (“LOA”) hired the Plaintiff as the sub-sub-contractor to carry out part of the Interior Fit Out Works based on the LOA for the Project. [18] Thus, from all of the above it is clear that D2 only maintained a contractual relationship with the Main Contractor and D2’s sub-contractor MMSSB. Consequently, there can be no obligation on the part of D2 to make any payments to the Plaintiff. [19] I have also found that there is no viable cause of action against D2 under section 71 of the Contracts Act 1950 which provides: “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.” [20] Premised on Siow Wong Fatt v Susur Rotan Mining Ltd & Anor [1967] 2 MLJ 118 the Privy Council had held to establish a claim under section 71 of the Contracts (Malay States) Ordinance, 1950. the doing of the act or the delivery of the thing referred to in the section

must be lawful, (2) must be done for another person, (3) must not be intended to be done gratuitously, and (4) 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. [21] Based on the non-existence of any contractual relationship between the Plaintiff and D2 which this Court has found as stated above, and although D2 would ultimately derive the benefit of the work done, the 4 elements mentioned in Siow Wong Fatt (supra) to establish an unjust enrichment action pursuant to section 71 of the Contracts Act 1950 against D2 has not been met as it is clear here, at the risk of repetition, that the relevant contractual relationships and allocation of risks thereto have been clearly spelt out in the entire chain of construction contracts in this matter. Any contractual claim made by the Plaintiff must be against MMSSB with whom the Plaintiff has a contractual relationship. [22] I have also in coming to my decision observed at D2’s Additional Affidavit and taken into consideration that D2 had obtained an Arbitration Award on 5.12.2024 against MMSB for the sum of back charges amounting to RM106,417.55 to pay D2 which in my view shows that D2 was not unjustly enriched but had in fact suffered losses in the Project. [23] From all of the above I hold that it is evident that there is no contractual relationship between the Plaintiff and D2 and thus the Plaintiff’s claim against D2 demonstrates no cause of action by the Plaintiff against D2 and has no basis. [24] Accordingly, I hold that the cause of action against D2 is an abuse of process as well as being scandalous, frivolous and vexatious and I hereby allowed prayer 1 and for prayer 2 costs of RM5,500.00 under Enclosure 29. Dated: 21st day of April 2025 sgd. NADZARIN WOK NORDIN HIGH COURT JUDGE CONSTRUCTION COURT 1 COUNSEL FOR THE PLAINTIFF: Kai Chi Theng (Messrs Gurmit Sodhi Chambers] COUNSEL FOR THE 2nd DEFENDANT: Yeoh Leng Yang (Messrs YY Chin & Co.]