Koh Lek Construction & Renovation Sdn. Bhd. v Smartech International Sdn. Bhd. (WA-24C-64-04/2023)

2.1 The Plaintiff is the Main-Contractor of the Project appointed by the Project’s Employer, i.e. Tunjong Galleria Sdn Bhd;

2.2 On or thereabout 24-08-2016, the Plaintiff had determined their employment in respect of the Project and/or terminate the Contract between the Plaintiff and the Project’s Employer, and consequently, the Sub-Contract between the Plaintiff and the Defendant had been automatically determined forthwith.

2.3 After the aforesaid determination / termination, the Defendant did not bring any action whatsoever against the Plaintiff for the alleged retention sum amount of RM231,250.00 and the alleged GST amount of RM13,875.00 within the limitation period of 6 years as provided for by the Limitation Act 1953; and it was alleged that the Defendant’s current action, more than 6 years later, is now time-barred and/or statute-barred under Section 6 Limitation Act 1953. Factual Background [3] The Plaintiff is the main Contractor of the Project [4] By way of a Letter of Award dated 28-01-2015, Tunjong Galleria Sdn Bhd (as the Project’s Employer) awarded the Works of the Project to the Plaintiff (as the Main-Contactor); and subsequently, the Project’s Employer and the Plaintiff signed and executed a Formal Contract dated 11-01-2016 incorporating the Agreement and Conditions of PAM [“Pertubuhan Arkitek Malaysia”] Contract 2006 (With Quantities)[“Main-Contract”]. [5] By way of a Letter of Award dated 20-07-2015, the Plaintiff (as the Project’s Main-Contractor) appointed the Defendant as Nominated Sub-Contractor in respect of the “Supply, Installation, Testing and Commissioning of Air-Conditioning & mechanical Ventilation Services” for the Project; and subsequently the Plaintiff and the Defendant signed and executed a formal contract incorporating “Agreement and Conditions of PAM Sub-Contract 2006” [“Sub-Contract”]. [6] On or thereabouts 04-08-2016, the Plaintiff, via its Solicitors, Messrs Andrew – David Wong & Ong’s letter dated 01-08-2016, duly gave a Notice of Default to the Projects’ Employer; and upon the Project Employer’s failure, refusal and/or neglect to rectify the defaults as stated therein, the Plaintiff, via its Solicitors letter dated 23-8-2016, duly gave a Notice of Termination to the Project’s Employer, and determined the Plaintiff’s employment in respect of the Project and/or terminated the Main-Contract between the Plaintiff and the Project Employer. [7] It is alleged that the aforesaid Plaintiff’s determination of their own employment and/or termination of the Main-Contract had forthwith automatically determined the Sub-Contract between the Plaintiff and the Defendant in accordance with Clause 25.2 of the PAM Sub-Contract Conditions in the Sub-Contract. [8] It is further alleged that at all material times, the Defendant was well aware of the aforesaid Plaintiff’s determination of their own employment and/or termination of the Main-Contract vide the Plaintiff’s letter dated 05-09-2016, which the Defendant had acknowledged receipt thereof vide the Defendant’s letter dated 07- 10-2016. [9] On or thereabouts 16-02-2023, the Defendant’s Solicitors served the Plaintiff with a Payment Claim dated 16-02-2023 for a total sum of RM245,125.00 comprising of an alleged retention sum amount of RM231,875.00 and an alleged “Goods and Service Tax” [“GST”] amount of RM13,875.00 in respect of the Sub-Contract for the Project. [10] However, after the aforesaid determination/termination, the Defendant had never brought any action whatsoever against the Plaintiff for the alleged retention sum amount of RM231,250.00 and the alleged GST amount of RM13,875.00 within the limitation period of 6 years as provided for by the Limitation Act 1953. Findings of this Court [11] The Plaintiff had contended that the purported reference of disputes to adjudication vide its Notice of Adjudication dated 3.3.3023 registered under ‘AIAC/D/ADJ-4619-2023’ (Notice of Adjudication) is time barred and/or statute barred under section 6 (1) LA. [12] To the above the Plaintiff submits that the sum of RM245,125 currently claimed by the Plaintiff in the Payment claim dated 16.2.2023 is comprised of the alleged retention sum and the GST of RM13,875 in respect of the Sub Contract. For this I have examined the Notice of Adjudication exhibit LAL 8 in enclosure 3 and confirm that it was expressly stated therein that “The dispute involves the sum of RM245,125 comprising the 6% retention sum of RM231,250 and 6% GST of RM13,875.” [13] From the facts before this Court, the Plaintiff had appeared to determine their employment contract between the Plaintiff and its Employer, Tunjong Galleria Sdn Bhd, on 23.8.2016 as shown in exhibit LAL 3 of enclosure 2, vide their Solicitors, Messrrs Andrew – David Wong & Ong’s letter of even date. [14] It is thus argued by the Plaintiff that due to the aforesaid termination of the Main Contract, the Sub Contract between the Plaintiff and the Defendant was forthwith automatically determined. [15] I have observed that in accordance with clause 25.1 and 25.2 of the PAM Sub Contract Conditions between the Plaintiff and the Defendant at exhibit LAL 2 of enclosure 2, it is provided that: “25.1 If the employment of the Contractor is determined by the employer under clause 25.0 of the Main Contract Conditions, then the employment of the sub contractor under the Sub Contract shall be forthwith automatically determined and the provision of clauses 23.6 and 23.7 of the Sub contract shall apply.

25.2 If the Contractor determines his own employment under Clause 26.0 of the Main Contract Conditions, then the employment of the Sub-Contractor under the Sub-Contract shall be forthwith automatically determined. The Sub-Contractor shall supply all necessary information to the Contractor in order that the Contractor an include a record of works executed by the Cub-Contractor in order that the Contractor can include a record of works executed by the Sub-Contractor to be followed by the final account to be submitted to the Employer as required under Clause 26.4 and 26.5 of the Main Contract Conditions.” [16] From the above terms as specified in clause 25.1 of the PAM Sub Contract Conditions between the Plaintiff and the Defendant, I find that the Sub Contract between the Plaintiff and the Defendant would in normal circumstances, be automatically determined when the Plaintiff has determined his own employment with its Employer. [17] It is also in evidence that the Defendant was aware of the Plaintiff’s determination of their employment contract between the Plaintiff and its Employer vide the Plaintiff’s letter dated 5.9.2016 as shown by exhibit LAL-4 of enclosure 2. [18] Any cause of action in respect of the Sub Contract should normally accrue from the Plaintiff’s determination of their employment contract between the Plaintiff and its Employer wherein the Plaintiff’s Sub Contract would in normal circumstances automatically also be determined. That being the case, the final date of any action on the Sub contract in accordance with the Limitation Act would prima facie be either 22.8.2022 or 4.9.2022 which is 6 years from the date the cause of action accrues as section 6 (1) Limitation Act 1953 states: “(1) Save as hereinafter provided the following actions shall not be brought after the expiration of six years from the date on which the cause of action accrued, that is to say-

actions founded on a contract or on tort;

actions to enforce a recognisance;

actions to enforce an award;

actions to recover any sum recoverable by virtue of any written law other than a penalty or forfeiture or of a sum by way of penalty or forfeiture.” Retention Sum & Disputes [19] Be that as it may, in respect of the Retention Sum it is my decision that the same is in law the Defendant’s money and is a debt which is existing until any defects have been satisfactorily rectified, see ABB Transmission and Distributions Sdn Bhd v Sri Antan Sdn Bhd & Anor [2009] 7 MLJ 644 where the court held: “[125] Retention money is usually a sum of money set aside and held by the employer until all defects have been satisfactorily rectified, (see Chow Kok Fong, Law and Practice of Construction Contracts, (3rd Ed), at p 3441. But retention money is the contractor's money. It is held on trust by the employer usually until defects liability period had ended. According to Peh Swee Chin J (as he then was) in Lee Kam Chun v Syarikat Kukuh Maju Sdn Bhd (Syarikat Perumahan Pegawai Kerajaan Sdn Bhd Garnishee) [1988] 1 MLJ 444, retention sum is an existing debt and one cannot lose sight of the fact also that the retention sum was deducted from value of work already and actually done and materials already and actually supplied. [126] Retention money is held on the basis that the contract is on foot. If the contract in question has been repudiated, both parties are discharge from further performance of the contract and the retention money held which is trust money has to be paid back to its rightful owner. In this regard, that would be the plaintiff.” [20] The Plaintiff however alleges that the said Retention Sum was deducted from the value of work done and material supplied and that the Defendant sat on its rights to claim the same and that the purported Certificate of Practical Completion dated 8.3.3017 (CPC) in exhibit D 2 of enclosure 8, which coincidentally was issued by the Project Engineer and not the Project Architect as alleged, has nothing to do with the Defendant. [21] The Plaintiff further submits that the Sub Contract having been terminated is no longer applicable but the Defendant vehemently disputes the same. On this I must add that it is trite that a contract which is terminated only puts an end to the future rights therein but not the past rights or obligations under the said contract, see the Federal Court case of Berjaya Times Squares Sdn Bhd (formerly known as Berjaya Ditan Sdn Bhd) v M Concept Sdn Bhd [2010] 1 MLJ 597. [22] The Defendant on the other hand states that the CPC had been issued with regards the sub contract works which it says is evidence that the said works had been completed and that possession was delivered on 7.3.2017. The Defendant thus submits that half of the entire Retention Sum is accordingly to be repaid to the Defendant on 8.3.2017 and the balance when the Defect Liability Period has expired as per clause 26.6 of the Sub Contract Conditions. [23] It is also submitted by the Defendant that there is nothing in the PAM Sub Contract that states that in the event the Defendant is terminated as a sub contractor, the Retention Sum is to the immediately paid to the Defendant and that the balance Retention Sum is due when the Defect Liability Period ends on 6.3.2019 as specified in the CPC. [24] From the facts before this Court, the Defendant had then issued a letter on 22.12.2022 via its solicitors to claim for the retention sum of RM245,125 and the GST of RM13,875 in respect of the works under the Sub Contract. [25] Thereafter based on the chronology of events before this Court, the Defendant had then sent the Payment Claim dated 16.2.2023 for the total sum of RM245,125 on 16.2.2023 as evidenced by exhibit LAL 5 of enclosure 2. [26] From all of the above , I find that there are factual disputes existing, with regards inter alia (i) whether the Sub Contract has been terminated and the effect thereto, (ii) the dates for release of the Retention Sum and (iii) the validity as well as the effect of the CPC which was issued by the Project Engineer as opposed to the Project Architect vis a vis in the purported reference of disputes to the adjudication vide the Defendant’s Notice of Adjudication dated 3.3.3023 registered under ‘AIAC/D/ADJ-4619-2023’. All of the said factual disputes may have a bearing on the period when the cause of action may accrue and thereby have an effect on when the limitation period expires or is statute barred. [27] In making a declaratory order it was held in Caxton (Kelang) Sdn Bhd V Susan Joan Labrooy & Anor [1988] 2 MLJ 604 that: “..P.W. Young in his book on Declaratory Orders, 2nd Ed., defines a declaratory judgment as one that does not involve a cause of action in the usual sense and that six factors must be present before there can be a declaratory order. These are:[1988] 2 MLJ 604 at 606

(1)There must exist a controversy between the parties.

(2)The proceedings must involve a "right".

(3)The proceedings must be brought by a person who has a proper or tangible interest in obtaining the order, which is usually referred to as "standing" or " locus standi".

(4)The controversy must be subject to the court's jurisdiction.

(5)The defendant must be a person having a proper or tangible interest in opposing the plaintiff's claims.

(6)The issue must be ripe, i.e. it must not be of academic interest, hypothetical or one whose resolution would be of no practical utility.” [28] Based on the facts before this Court, I am unable to hold from the above factual findings that the limitation period for any cause of action by the Defendant against the Plaintiff pertaining to the Sub Contract would arise from the Plaintiff’s determination of their employment contract between the Plaintiff and its Employer on 23.8.2016 or at the very latest on 5.9.2016 which is the date the Defendant was notified of the same due to the aforementioned disputes. [29] I hold that to make any decision on the declaratory orders sought that any disputes between the parties herein arising from the Project are time barred and/or statute barred under section 6 (1) Limitation Act 1953 including that the Notice of Adjudication is time barred under section 6 (1) LA and is of no effect and/or invalid and/or void based on affidavit evidence alone, is at this stage highly improper and that the same can only be finally decided when the entire evidence and factual issues are argued including possibly viva voce evidence being adduced and presented in full at either a different Court proceedings or at arbitration, as the case maybe. [30] To determine the matter in dispute purely on affidavit evidence on issues of facts which are disputed would be to pre determine matters or the dispute without having gone through the entire factual circumstances which would be unfair and unjust to the parties. Injunction [31] I have taken note of the principles regarding the granting of an injunction in Keet Gerald Francis Noel John v Mohd Noor Bin Abdullah & Ors [1995] 1 MLJ 193. [32] Thus, considering the facts and the events which have transpired, I find that the justice of the case requires that an injunction not be granted against the Defendant as the harm that would be occasioned against the Plaintiff in refusing the injunction would in my view be less than the harm to the Defendant of not being able to pursue its claim against the Plaintiff and deprive the Defendant of its day in Court to prove its case. [33] As CIPAA was also meant as a summary dispute of a payment claim due and to alleviate cash flow issues by providing an effective and economical mechanism, it would be prejudicial and indeed be unfair to make any declaration as well as an injunction order with regards the purported reference of disputes to adjudication vide the Notice of Adjudication dated 3.3.3023 registered under ‘AIAC/D/ADJ-4619- 2023’ as being time barred under section 6 (1) LA and to bar or restrain the Defendant from pursuing or proceeding with any action against the Plaintiff for any disputes in relation to the sub contract for the Project including the Adjudication registered as ‘AIAC/D/ADJ- 4619-2023’ Decision [34] For the reasons I have enumerated above that there are real and triable factual disputes between the parties, it is my decision that the declarations sought that any disputes between the parties herein arising from the Project are time barred and/or statute barred under section 6 (1) Limitation Act 1953 as well as the declaration that the dispute vide the Notice of Adjudication herein which is based on the alleged retention sum of RM231,250 and GST of RM13,875 should not currently be declared as time barred until the said disputes are to be finally determined at a different court proceedings or an arbitration proceedings as the case maybe. [35] I am therefore for the above reasons dismissing prayers (a), (b) and

in enclosure 1 hereof with costs to be paid to the Defendant. Dated: 31st day of July 2023 sgd. NADZARIN WOK NORDIN HIGH COURT JUDGE CONSTRUCTION COURT 1 COUNSEL FOR THE PLAINTIFF: Kong Chee Wah (Messrs Lim Fung Yin & Co.] COUNSEL FOR THE DEFENDANT: Lua Ai Siew and AiliAlef Hamima binti Aznan [Messrs Soo Thien Ming & Nasrah]