Lucksoon Metal Works Sdn Bhd v 1. ) Esamegah Sdn Bhd (WA-22C-43-06/2020)

ESAMEGAH SDN. BHD. (Company No.: 700728-P)

PROPEL SYNERGY SDN BHD (Company No.: 733406-P) ... DEFENDANTS GROUNDS OF JUDGMENT Introduction [1] This suit involves a claim by Lucksoon Metal Works Sdn. Bhd., the sub-contractor (‘Plaintiff’) in the development of a hotel in Melaka known as the Straits Hotel & Suites, against the 1st Defendant, Esamegah Sdn Bhd who is the main contractor (‘D1’), and the 2nd Defendant, Propel Synergy Sdn Bhd as the employer (‘D2’) of the project, for the sum of RM1,073,188.06 being the balance amount which was allegedly outstanding for the aluminium cladding and curtain walling systems works performed by the Plaintiff. [2] Judgment in default of appearance was entered against D1 on 18.8.2020. [3] On the part of D2, it denied any obligation to pay the claimed amount to the Plaintiff on the ground that it has not entered into a contract with the Plaintiff. D2 alleged that there were defects in the Plaintiff's works i.e. “Plate Glass Crack” which affected 239 rooms of the Straits Hotel & Suites, but the Plaintiff failed to repair the said defects. D2 counterclaimed against the Plaintiff for the cost to rectify the defects and all losses arising therefrom estimated at RM1,500,000.00 and for damages to be assessed, if D2 is found liable for the Plaintiff's claim. [4] After a full trial and having given full consideration to the pleadings, the oral and documentary evidence, the written submissions and clarifications by the learned counsels, the Court allowed the Plaintiff’s claim against D2 for the sum of RM730,851.25 with interest at the rate of 5% per annum on the said sum calculated from the date of filing of the Writ and Statement of Claim (‘SoC’) i.e. 3.6.2020 until full settlement. The Court also allowed D2’s counterclaim for damages in the sum of RM1,771,200.00 with interest at the rate of 5% per annum on the said sum calculated from the date of filing of the Counterclaim i.e. 14.7.2020 until full settlement. [5] In the light of the decision as pronounced, the Court proposed that costs should be borne by the respective parties. The learned counsels who represented the parties, namely Mr. Muhammad Khairuddin Bin Anuar for the Plaintiff and Mr. Joseph Yeo for D2, agreed with the suggestion and accordingly, the Court ordered that costs are to be borne by each party. [6] The Plaintiff is aggrieved with part of the decision of the Court where D2’s counterclaim was allowed. The full reasons for that part of the decision of the Court are set out below. Background facts and the parties’ pleaded case [7] For purposes of the trial, the following facts were agreed by the parties:

(a) The Plaintiff is a company incorporated under the Companies Act 1965 [Act 125] and having its business address at No. 33, Jalan Putra Mahkota 7/8D, Putra Heights, 47650 Subang Jaya, Selangor Darul Ehsan.

(b) D2 is a company incorporated under the Act 125 and having its registered address at Level 18, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur and its business address at Suite A-08-09, Level 8, Empire Subang, Jalan SS16/1, 47400 Subang Jaya, Selangor Darul Ehsan.

(c) By the Letter of Award (‘LoA’) dated 31.3.2014, D1 has appointed the Plaintiff as a sub-contractor to design, engineer, test, fabricate, deliver and install the Aluminium Cladding System and Curtain Walling System (‘Aluminium Cladding and Curtain Walling Systems’) for the project for the Sub-Contract sum of RM4,408,776.00 (‘SA1’) whereby the Plaintiff has carried out and completed all these works.

(d)

(a) the terms and conditions of the PAM Contract 2006 does not change D2’s obligation to make balance payment to the Plaintiff as agreed between the Plaintiff, D1 and D2;

(b) D2, by conduct, has intervened in the contract between the Plaintiff and D1, and has allowed D2 to take over the obligation to pay to the Plaintiff and D2 has an obligation to make direct payment directly to the Plaintiff;

(c) there is no serious defect in the Sub-Contract Works and even if there is defect, the defect in the Plate Glass Crack, if any, is under D1’s responsibility and is merely a minor defect in which the Plaintiff has repaired and rectified the same within the Defects Liability Period (‘DLP’); and

(e) D2 has no right to a set-off or counterclaim against the Plaintiff and D2’s counterclaim is mala fide, misconceived and an abuse of court process to gain unjust enrichment. The Trial and Issues To Be Tried [21] The trial took two days and only one witness was called to testify for the Plaintiff whilst four witnesses gave evidence for the Defendant. The particulars of the witnesses are as shown below: [22] The Issues To Be Tried (‘ITBT’) against D2 as agreed by the parties are as follows:

(i) Whether D2 has made progress payments directly to the Plaintiff for the works done under SA1 and SA2;

(v) Whether the Plaintiff is liable to rectify the defect in the work done;

(a) Whether D2 has made progress payments directly to the Plaintiff for the works done under SA1 and SA2 This question is answered in the affirmative because D2 did not dispute the fact that it had made progress payments directly to the Plaintiff for the Sub-Contract Works under SA1 and SA2.

(b) Whether D2, by conduct, has intervened in the contract between D1 and the Plaintiff and become the paramount paymaster of the Plaintiff Based on the evidence adduced at the trial, the Court is of the considered view that, based on the Plaintiff’s and D2’s conduct, it can be inferred that they have agreed that the issues of outstanding payments to the Plaintiff and rectification works are to be resolved between them despite the absence of a written contract. In D2’s Response To Issues Raised By Court, D2 agreed that by virtue of the Plaintiff’s and D2’s conduct as evidenced in the correspondence and the acts of the parties, it can be inferred that the Plaintiff and D2 agreed the issues of outstanding payments to the Plaintiff and rectification works are to be sorted out between them irrespective of the fact that they have not entered into any written work. Therefore, the second issue is answered slightly differently from that as posed in the ITBT as the Court finds, after listening to the oral evidence and reading the documentary evidence, that the words “intervene” and “paramount paymaster” are not an accurate reflection of the facts.

(c) Whether D1 and/ or D2 is liable to pay the balance of progressive claim in the total sum of RM1,073,188.06 to the Plaintiff It follows from the analysis in respect of the second issue that D2 is liable to pay the balance of the progress payments that remain outstanding. DW1 testified that D2 had given RM100,000.00 to the Plaintiff as an advance to enable the Plaintiff to commence rectification works but this amount will be deducted from the sum that is owing to the Plaintiff once the Plaintiff completes the rectification works. In so far as the Plaintiff and D1 is concerned, whilst they had entered into a settlement arrangement for final account on 9.5.2017 as evidenced by the Acknowledgment of Agreement at p 254, B1, however in the letter dated 9.4.2018 to D1 and D2, the Plaintiff referred to the latest discussion between the three parties and the fact that the Plaintiff had taken into consideration the back charge cost of rubbish collection and total discount offered for the final sum of the works to arrive at the balance sum due of RM830,851.25 (p 256, B1). Subsequently, in the letter dated 19.6.2019 (p 267, B1), the Plaintiff demanded the sum of RM730,851.25, after considering the sum of RM100,000.00 which had been paid by D2. Furthermore, PW1’s testimony during the trial supports a finding that the outstanding amount is RM730,851.25. [24] The findings of the Court in relation to the issues in subparas 22(iv) to

(a) D1's letters dated 11.12.2015 and 9.1.2016 to the Plaintiff titled “New Balcony Glass Cracked” and the reminder to rectify the cracked glass railings at the balconies of several units on Levels 5 to 12 and 15 to 22 (pp1 - 6, B2);

(b) the Service Complain Form dated 28.4.2017, with the Summary Report and photographs attached, issued by D2 to the Plaintiff regarding the Plate Glass Crack for 239 units of hotel rooms which have not been repaired or replaced (pp 249 - 51, B2);

(c) DW3's e-mail to Akitek KHP dated 4.5.2017 attaching the Summary of Defects and photographs of the defects in each of the affected units (pp 7 - 53, B2);

(d) the Plaintiff’s Method Statement On Glass Railing Replacement Works dated 11.7.2018 wherein the Plaintiff set out the Work Methodology and Work Sequence (pp 258 -260, B1);

(e) DW2’s e-mail to DW3 dated 5.10.2018 referring to the discussion which was held with the Plaintiff on 4.10.2018 where the Plaintiff gave its commitment that the work will be completed within seven days. However, DW2 had doubts that this could be done in view of the actual progress as of 5.10.2018 when no work was carried out except for “a bit of hacking in the room 2203” (p 261, B1);

(f) D2’s letter to the Plaintiff dated 8.10.2018 referring to the Special Meeting held at D2’s office on 4.10.2018 in the presence of PW1, DW2, DW3 and the Plaintiff’s sub-contractor (‘Special Meeting’) following the incident which occurred on 26.9.2018 when broken glass fragments caused by the Plaintiff’s work had fell on the roof of the Straits Hotel Restaurant and swimming pool areas resulting in complaints lodged by the hotel guests (‘26.9.2018 Incident’). D2 pointed out that the DLP expired on 14.5.2017 and the long delay in making good of the defects has affected the hotel operations and sales. The Plaintiff was put to notice that, subject to satisfactory completion of all rectification works on the 22nd floor within seven days at a standard of workmanship acceptable to D2, the Plaintiff shall not be permitted to carry out any further work on the premises and D2 reserves its right to engage third parties to complete the balance of the rectification works on the Plaintiff's behalf and to charge all expenses in connection thereto to the Plaintiff (pp 262 - 263, B1);

(g) DW2’s e-mail to DW3 dated 11.10.2018 with five photographs attached to report his finding on that morning where glass pieces were scattered above the Amalaka Restaurant’s acrylic roof and Novotel pool deck from the 22nd floor. DW2 immediately contacted PW1 to stop all works and not to continue the works on the other side unless safety precautions to prevent falling debris are taken. DW2 expressed his disappointment in the e-mail with the Plaintiff's professionalism in handling the matter with no safety precautions being implemented after the reminder which was given after the first incident (pp 54 -55, B2);

(h) DW3's e-mail to PW1 dated 30.10.2018 enquiring as to when the Plaintiff will send the new glass replacement drawing and install method (p 264, B1);

(i) DW3’s e-mail to PW1 dated 26.2.2019 enquiring as to the Plaintiff's work schedule to replace the room balcony plate glass with new installation method which has to be e-mailed to D2 before the Plaintiff proceeds with any work (p 265, B1);

(j) DW2’s e-mail to DW1 dated 15.5.2019 as to works on the 20th floor which could not proceed because the workers were waiting for the supply of glass, sealant and painting from the Plaintiff. The situation is said to be contrary to the agreement between D2 and the Plaintiff that the works will be completed within three weeks from 14.4.2019 (p 266, B1); and

(k) D2’s letter dated 14.8.2019 to the Plaintiff recapitulating some of the earlier correspondence between D2 and the Plaintiff (pp 268 - 269, B1) and in particular that: “… On the contrary, ……our records show that you have persistently failed to honour your contractual obligation to make good your outstanding construction defects and in this regard we intend to seek recourse to recover our loss and expenses. The practical completions of your works were certified in 15/05/2015 and all the Defects Liability Period for the same expired on 14/05/2017. On 28/04/2017 we notified you that one or more pieces of the balcony glass panels in 239 Hotel Suite rooms were found to be cracked. This was in spite of the many complaints the Main Contractor of the works, Esamegah Sdn Bhd, have informed you throughout the Defects Liability Period. … Under the contract provisions, we could have already employed a third party to undertake the rectification works on your behalf. Taking into consideration however third party costs were normally exorbitant and the issue of product warranty we decided nevertheless to permit you to carry on with the works. The premises concerned were in business since 2015 and you were directed to liase with the hotel management for an agreeable works schedule, with working time and safety rules constraints, on a floor by floor basis. Regrettably you have continued to fail to perform as hitherto not one floor of rectification works has been completed satisfactorily for acceptance by the hotel management. The usual complaints we gathered were insufficient no. of workers during the working hours, insufficient materials for the workers to work on and your worker's neglect of safety measures on the hotel premises. … The gist of the whole matter is your reluctance to carry on the rectification works required of you. In this regard, we have obtained two (2) quotations from third party contractors with the intention to undertake the task on your behalf. We enclose herewith a copy each of Quotation from Tiong Huat Aluminium & Glass Enterprise dated 31/07/2019 for the amount of RM1,477,060.00 and Quotation from Milan Décor Sdn Bhd dated 01/08/2019 for the amount of RM1,284,400.00 to make good the outstanding defective works on your behalf for your reference. We are in the process of negotiation with the third party contractors about the terms of engagement. All costs and expenses concerned will be charged to your account.”. [28] DW1 testified that D2 did not complete the rectification works as the Plaintiff informed D2 that it has funding problems and appealed for assistance. D2 agreed to assist the Plaintiff and had advanced the sum of RM100,000.00 which was to be recouped from the final account balance payable to the Plaintiff after the completion of the rectification works. [29] DW1 also explained that, at the time the Plaintiff received the RM100,000.00, there was no outstanding Certificate of Payment issued by Akitek KHP notifying D2 about a sum that was due and payable to D1 and nor any letter from D1 to D2 requesting an amount due and payable to be released directly to the Plaintiff on D1’s behalf. [30] However, the Plaintiff still did not complete the repairs and refused to proceed further despite its promise after D2 had advanced the sum of RM100,000.00. [31] The facts relating to the letters, e-mails and Special Meeting were pleaded in para 11 of the Defence and Counterclaim under the Particulars Of Set-Off. Hence, there is no issue of D2 raising facts which were not pleaded, and none was taken by the Plaintiff at the trial either. [32] From the cross-examination and re-examination of PW1, it is established that D2 has paid RM100,000.00 to the Plaintiff to enable the Plaintiff to commence rectification works for three floors as the Plaintiff was having financial problems and was unable to purchase the materials to do the rectification works. PW1 claimed that the Plaintiff had completed the rectification works to three floors and needed another RM100,000.00 to continue remedial works on another three floors. However, the Plaintiff was unable to secure further monies and to continue the rectification works. [33] PW1 admitted that the Plaintiff was still rectifying defects in July and October 2018, which is after the DLP has ended, and that the rectification works were not completed even in August 2019. [34] It is observed that if the Plaintiff's contentions about the defects being minor and that they are D1’s responsibility, and that the Plaintiff had rectified the same within the DLP out of goodwill are true, the Plaintiff would have put across its position or response to the numerous letters and e-mails as listed in para 27 above accordingly. In AB Latef & Associates (M) Sdn Bhd v Govindasamy a/l Suppiah [2016] 5 MLJ 508 the Court of Appeal held, among others, that: “[14] ... The relevancy and reliability of contemporaneous evidence without doubt holds true and can be of great assistance to a judge in ascertaining the truth of the matter. The relevant excerpts from the judgment of Chang Min Tat FJ in Tindok Besar Estate Sdn Bhd v Tinjar Co [1979] 2 MLJ 229 clearly postulated the legal position as follows: For myself, I would with respect feel somewhat safer to refer to and rely on the facts and deeds of a witness which are contemporaneous with the event and to draw the reasonable inferences from them than to believe his subsequent recollection or version of it, particulary if he is a witness with a purpose of his own to serve and if it did not account for the statements in his documents and writings. Judicial reception of evidence requires that the oral evidence be critically tested against the whole of the other evidence and the circumstances of the case. Plausibility should never be mistaken for veracity.”. During the trial, the Plaintiff did not produce even a single document to support its version of the events. [35] The evidence given by DW2 and DW3 basically corroborates DW1’s evidence although in the Plaintiff’s submission after the trial, Mr. Muhammad Khairuddin quoted an excerpt from DW3’s evidence to support the argument that D2 does not know whether the crack on the glass is due to the Plaintiff’s default. [36] As can be seen during his testimony and from the Notes of Evidence, DW3 was unable to comprehend some of the questions posed by the Plaintiff's counsel during cross-examination and appeared to be easily confused. This was partly contributed by the manner in which Mr. Muhammad Khairuddin framed his questions and the speed that questions were thrown to DW3 such that the Court had advised the learned counsel to ensure that the questions can be heard clearly and to adjust the pace of cross-examination. [37] The learned counsel for the Plaintiff suggested to DW3 that the Plaintiff was unable to carry out the rectification works because there was no approval by D2 on the Method Statement. DW3 did not agree to this suggestion and in any event, during re-examination, DW3 clarified that the Plaintiff carried out the rectification works after it submitted the Method Statement. [38] Overall, the Plaintiff did not succeed in casting doubt over DW3’s evidence in his Witness Statement concerning the Plaintiff's defective works, the 26.9.2018 Incident, the Special Meeting and the fact that the Plaintiff did not complete the rectification works. [39] In so far as the allegation that the issues of defective works and the Plaintiff’s failure to carry out rectification works were raised by D2 as an afterthought following the Plaintiff’s letter to D2 dated 9.4.2018 seeking the balance payment due for the sum of RM830,851.25, the evidence at the trial has exposed the falsity of this contention. [40] Clause 1.5 in SA1 and SA2 provides that the DLP shall be 24 months for all equipment and systems installed for the entire Project upon issuance of the Certificate of Practical Completion from the Architect. The 21-storey hotel suites and the 17-storey hotel were certified practically completed on 15.5.2015 and 15.9.2015, respectively (see the answer to Q. 20 in WS-DW1). [41] D1 had sent letters to the Plaintiff about the cracked glass as early as 11.12.2015 and 9.1.2016, which is within the DLP. Since the defects arose during the DLP, the Plaintiff is clearly liable to rectify the same. [42] Based on the overwhelming evidence adduced by D2 at the trial, the answers to the 1st Issue and 2nd Issue are undoubtedly in the affirmative as D2 has proven on a balance of probabilities, that there are defects in the Sub-Contract Works and that the Plaintiff is liable to rectify the defects. 3rd Issue: Whether D2 has the right to set-off the cost of rectification works from the Plaintiff and what is the amount 4th Issue: Whether D2 is entitled to claim any losses arise from the Plaintiff due to the defective works [43] At the outset, it must be made clear that, notwithstanding D2’s pleading in para 11(8) in the Defence and Counterclaim that “As a result of the Plaintiff’s default, the operations of the Straits Hotel & Suites were disrupted and several floors had to be closed for rectification works. The Second Defendant has suffered losses in the operation of its hotel as a result of the said default to be assessed at the trial of the Plaintiff’s claims.”, in D2’s submissions, it conceded that it has not adduced evidence of any other loss, apart from the claim for the costs of rectification, arising from the Plaintiff's failure to make good the defects. [44] Therefore, D2’s counterclaim was confined to the sum of RM1,771,200.00 as per the quotation dated 4.7.2020 from MDSB (see the answer to Q. 39 in WS-DW1). - The right of set-off [45] In Bukit Cerakah Development Sdn Bhd v. L’Grande Development Sdn Bhd [2008] 2 CLJ 645, Gopal Sri Ram JCA in delivering the judgment of the Court of Appeal said that: “[6] The starting point is the general law regarding the defence of set off in the context of a building contract. It is a principle of general application that both an employer and a builder have a right of set off against each other in the absence of a contrary intention expressed by the parties. Such a contrary intention may appear from express words used by the parties or by clear implication from what they said or did. See, Pembenaan Leow Tuck Chui & Sons Sdn Bhd v. Dr Leela’s Medical Centre Sdn Bhd [1995] 2 CLJ 345. …”. [46] In the Response To Issues Raised By The Court, D2 clarified that the basis for D2’s claim to the right of set-off is found in Clause 15.5 CoC of the LoA between D1 and D2 which reads: “Notwithstanding Clause 15.4, the Architect may at any time during the Defects Liability Period issue an AI requiring any critical Defects which need urgent rectification to be made good within a reasonable time specified by the Architect at the Contractor’s cost. If the Contractor fails to attend to such Defects within the time specified by the Architect, the Employer may employ and pay other Person to rectify such Defects and all costs incurred shall be set-off by the Employer under Clause 30.4.”. [47] It was further submitted that the provisions of the main contract between D1 and D2 applies to the Sub-Contract between the Plaintiff and D1 by virtue of para 1.1 of the LoAs dated 31.3.2014 which stipulate that: “1.0 Your Letter of Award shall incorporate the following terms and conditions:-

1.1 In addition to the Consultant’s Specification, Scope of Sub-Contract and Conditions of Sub- Contract, the following documents shall be read and construed as part of the Sub-Contract:- a) This letter of nomination; b) Lucksoon Metal Works Sdn Bhd’s letter ref: LMW/PSSB/CKH/2014-053 dated 3rd March 2012 to DK-QS Sdn Bhd; c) Provision of Main Contract; d) PAM Sub Contract 2006.” (emphasis added). [48] The Plaintiff countered, on the authority of Dataran Rentas Sdn Bhd v. BMC Construction Sdn Bhd [2007] 6 CLJ 613 that, in the absence of any set-off provision in the LoAs and any agreement between the Plaintiff and D2 regarding the right to set-off, D2 cannot assert the right to the same. [49] The Plaintiff further relied on the case of Pembenaan Leow Tuck Chui & Sons Sdn. Bhd. v. Dr. Leela's Medical Centre Sdn. Bhd. [1995] 2 CLJ 345 where it was reported that the Federal Court held, inter alia, that: “[3] In a building contract of this nature, the ordinary common law right of set-off applicable is that, when the person for whom the work has been done is sued by the contractor for the price, it is open to the defendant, in the absence of a provision in the contract to the contrary, to defend himself by setting off against the amount claimed, any damages which he has sustained as a result of the plaintiff’s breach of the contract. However, on the basis of expression unius principle, the express enumeration of permitted set-offs in a building contract can imply that a defendant builder or main contractor, as the case may be, is limited to making such deductions from the amounts claimed as fall strictly within the scope of the permitted set-offs, and nothing else. [4] In the present case, there are seven express provisions in the contract whereby the employer has the right of set-off but none of them is relevant to its alleged right to make the set-off for which it contends. Therefore, regard being had to these provisions of the contract, and applying the expressio unius principle, there is a clear implication that, so far as claims for payment on certificates are concerned, the ordinary common law rights of set-off was to be extinguished. In the event, the appellant is entitled to full payment of the sum certified to be due and payable to it under the Penultimate Progress Payment Certificate.” (emphasis added). [50] In view of D2’s position in the submission subsequent to the clarification session, D2 is clearly relying on a contractual right of set-off. This then calls for a closer examination of Clause 30.4 of the CoC between D1 and D2 which provides that: “The Employer shall be entitled to set-off all cost incurred and loss and expense where it is expressly provided under

Clauses 2.4, 4.4, 5.1, 6.5(e), 6.7, 14.4, 15.3(b) 15.3(c), 15.4, 5, 19.5 and 20.A.3. No set-off under this clause may be made unless:

30.4(a) the Architect or Quantity Surveyor (on behalf of the Employer) has submitted to the Contractor complete details of their assessment of such set-off; and

30.4(b) the Employer or the Architect on his behalf has given the Contractor a written notice delivered by hand or by registered post, specifying his intention to set-off the amount and the grounds on which such set-off is made. Unless expressly stated elsewhere, such written notice shall be given not later than twenty eight (28) Days before any set-off is deducted from any payment by the Employer. Any set-off by the Employer shall be recoverable from the Contractor as a debt or from any monies due or to become due to the Contractor under the Contract and/or from the Performance Bond. If the Contractor after receipt of the written notice from the Employer or the Architect on his behalf, disputes the amount of set-off, the Contractor shall within twenty one (21) Days of receipt of such written notice, send to the Employer delivered by hand or by registered post a statement setting out the reasons and particulars for such disagreement. If the parties are unable to agree on the amount of set-off within a further twenty one (21) Days after the receipt of the Contractor’s response, either party may refer the dispute to adjudication under Clause 34.1. The Employer shall not be entitled to exercise any set-off unless the amount has been agreed by the Contractor or the adjudicator has issued his decision.”. [51] Assuming for a moment that the Court accepts D2’s submission as to its entitlement to a right of set-off based on the provisions it has cited, D2 has, however, not produced any evidence to show that it has fulfilled the requirements under Clause 30.4 of the CoC. This, in my view, is fatal to D2’s claim to a right of set-off. The 3rd Issue is thus answered in the negative. - The Counterclaim [52] The Court has considered D2’s pleadings in paras 11, 13 to 16 of the Defence and Counterclaim and is of the view that D2 is entitled to be compensated for the damages suffered as a result of the Plaintiff’s failure to complete the rectification works. In other words, D2 has established its counterclaim as pleaded in paras 14 and 15 and the prayer for damages to be assessed in subpara 16(2). [53] The Court has earlier canvassed the evidence which proves that D2 has repeatedly informed D1 and the Plaintiff of the defects in the Sub-Contract Works and that the Plaintiff has failed to complete the rectification of the defects. D2 has given ample notice to the Plaintiff that, in the event the Plaintiff fails to complete the rectification works, D2 will engage third parties and all expenses incurred in connection thereto shall be borne by the Plaintiff. [54] Although, Mr. Muhammad Khairuddin argued for the Plaintiff that there is no actual loss in the sense that D2 has yet to incur any sum of money to rectify the defects, the existence of defects is a proven fact and D2 will have to engage a third party to carry out and complete the rectification works. [55] As alluded to earlier, the agreement or contract between the Plaintiff and D2 as to the rectification of defects was formed by way of conduct of the parties and significantly, by D2’s act in advancing the sum of RM100,000.00 to the Plaintiff to enable the Plaintiff to start the rectification works. [56] In this regard, s 74 of the Contract Act 1950 [Act 136] provides that: “Compensation for loss or damage caused by breach of contract

(1) When a contract has been broken, the party who suffers by the breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from the breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it.

(a) DW1 had testified that the estimate sum of RM1,500,000.00 is based on the quotation per se and there is no rectification works carried out to date by the third party; and

(b) DW4's evidence is that there is no instruction from D2 for MDSB to carry out any rectification works, D2 has given notice to the Plaintiff vide the letter dated 14.8.2019 that it has obtained quotations from two contractors for the rectification works which the Plaintiff failed to complete, namely from Tiong Huat Aluminium & Glass Enterprise for the sum of RM1,477,060.00 and from MDSB for the sum of RM1,284,400.00. [59] In WS-DW4, it was stated that DW4 had submitted another quotation dated 4.7.2020 to the Plaintiff for the sum of RM1,771,200.00 (see pp 56 - 58, B2) to repair the defects by dismantling “… the current laminate clear glass, supply and install new tempered clear glass for the balcony railing which includes hacking works to the surrounding walls and concealing new U-Channel Cement Wall &Plastering.”. According to DW4, these works will take approximately six to nine months to complete. [60] When cross-examined, DW4 explained that for the first quotation of RM1,284,400.00, he did not go to each room/ unit where there are defects to take measurements, but this was done in respect of the second quotation of RM1,771,200.00. [61] The Plaintiff contended that the quotations obtained by D2 are excessive. However, the Plaintiff itself did not produce any quotations at the trial to counter the quotations as submitted by D2. Hence, the Plaintiff’s complaint that the amounts quoted are “too high” is a bare assertion. [62] D2 relied on the following case where the court allowed the claims for the costs of rectification even though the rectification works have not been carried out by any third party:

(a) In Lianbang Ventures Sdn Bhd v. Jurukur Perunding Services Sdn Bhd & Anor [2020] 6 MLRA 716, the Court of Appeal said: “[52] The plaintiffs had produced the quotation on fees to be charged. The defendant did not produce rebuttal quotation against the plaintiffs’ quotation. Therefore, in our view, any complaint/protest on the plaintiffs’ said quotation is a bare assertion (Cheong Fatt Tze Mansion Sdn Bhd v. Hotel Continental Sdn Bhd [1996] 2 MLRH 905 and Melandas Manufacturing Sdn Bhd v. Star CMS Security Services Sdn Bhd [2013] MLRHU 1007). Even if it is assumed that the plaintiffs’ claims were exaggerated, there is no evidential basis proffered by the defendant to find that the claims were grossly or substantially exaggerated (Wong Cheong Kong Sdn Bhd v. Prudential Assurance Sdn Bhd [1997] 4 MLRH 294). [53] It is well accepted in law that loss or damages need not be calculated to a point of mathematical certainty. The fact that damages cannot be assessed with certainty does not relieve the wrong doer of the necessity of paying damages. A pecuniary loss may itself occasionally be difficult to assess although it is clear that it has been incurred. If the judge was entitled to accept the evidence on which he relied as sufficient evidence of value, then no one can doubt that he was required to do his best. In other words, there could be other evidence in lieu of precise evidence. For example, approximation or estimation may be used provided it is reasonable and fair. (See: McGregor On Damages (19th edn) at para 10-002, under the chapter on ‘Certainty of Damages’ and Tenaga Nasional Berhad v. Ichi-Ban Plastic (M) Sdn Bhd & Other Appeals [2018] 3 MLRA 1). … [55] In the circumstances, the amount allowed to the plaintiffs is reasonable and justified. ...” (emphasis added).

(b) In Shabiru (1990) Sdn Bhd v Goh Aik Chin [2019] MLRHU 1033, the third defendant had challenged the quotation produced by the plaintiff as being a single quote; that, at best, it was only an estimate; that in a case of special damage claim, it must be strictly proved; and that the assessment was done two years after the damage caused. Similar to the instant case before this Court, the defendants in that case did not produce evidence of an alternative quote. In the appeal to the High Court, the learned Judge remarked in para 74 that “Assessment of damages is an art and not science and that approximation and estimation may be used in some instances.”. His Lordship then referred to the decision of the Federal Court in Tenaga Nasional Berhad v. Ichi-Ban Plastic (M) Sdn Bhd & Other Appeals [2018] 3 MLRA 1 as authority for the proposition that “…there could be other evidence in lieu of precise evidence. For example, approximation or estimation may be used provided it is reasonable and fair. This would depend on the quality of the evidence adduced in court to support that approximation or estimation …”. In the present case, DW4 testified that he has gone to the site and taken actual measurements before the second quotation was prepared.

(c) In Village Grove Condominium Management Corporation v Yunco Enterprise Sdn Bhd [2021] 3 MLRH 345, the Kuching High Court found that the plaintiff had adduced overwhelming evidence to prove the fact that the defects were still in existence; and had not been remedied by the defendant. As such, the plaintiff was entitled to employ another contractor to rectify the defects and the cost of rectification works shall be borne by the defendant pursuant to the contract. The court held that the plaintiff was entitled to claim for the cost of rectification of defects from the quotation which was prepared by a third-party company. [63] On a final note, the case of Poratha Corporation Sdn Bhd v. KNM Ogpet (East Coast) Sdn Bhd [2014] 1 LNS 1671 which was relied upon by the Plaintiff can be distinguished on its facts because in that case, the defendant failed to show that there was defective work on the part of the plaintiff. Furthermore, the defendant did not give any notification to the plaintiff that the defendant had engaged an independent party to rectify the alleged defects. The court rightfully took the view that “...should there be defects works it should have been communicated to the Plaintiff by providing the list of all the defects and the request to require the Plaintiff to rectify such defects. ...”. [64] The Court, being satisfied that D2 has proven its counterclaim for damages on a balance of probabilities, therefore ruled in its favor. Pronouncement [65] Premised on the aforesaid reasons, D2’s counterclaim for damages was allowed in the sum of RM1,771,200.00 with interest at the rate of 5% per annum on the said sum calculated from the date of filing of the Counterclaim i.e. 14.7.2020 until full settlement. Dated: 23 May 2023 (ALIZA SULAIMAN) Judge Construction Court 2 High Court Kuala Lumpur Counsels/ Solicitors: For the Plaintiff: Muhammad Khairuddin Bin Anuar Messrs. Yoon & Partners Advocates & Solicitors B3-06-09, Solaris Dutamas No. 1, Jalan Dutamas 1 50480 Kuala Lumpur For the 2nd Defendant: Joseph Yeo (Khoo Kah Yong with him) Messrs. Joseph Yeo Advocates & Solicitors 7th Floor, Wisma Tan Kim San No. 518A, 3rd Mile, Jalan Ipoh 51200 Kuala Lumpur Cases, legislation and other sources referred to in the submissions by learned counsels and in the Grounds of Judgment: Cases referred to: AB Latef & Associates (M) Sdn Bhd v Govindasamy a/l Suppiah [2016] 5 MLJ 508 Awangku Muhammad Murshyid bin Pg Hj Ali & Anor v Makrami bin Hj Md Noor and another appeal [2010] 4 MLJ 662 Bukit Cerakah Development Sdn Bhd v. L'Grande Development Sdn Bhd [2008] 1 MLRA 22; [2008] 2 CLJ 645 Charles Grenier Sdn. Bhd. v. Lau Wing Hong [1997] 1 CLJ 625; [1996] 3 MLJ 327 Cosmos Infratech Sdn Bhd v. Melati Evergreen Sdn Bhd [2020] 6 MLRH 532 Dataran Rentas Sdn Bhd v. BMC Construction Sdn Bhd [2007] 6 CLJ 613 Desa Samudra Sdn Bhd v. Bandar Teknik Sdn Bhd & Ors [2012] 1 CLJ 429 Development & Commercial Bank Berhad v. Aspatra Corporation Sdn. Bhd. & Anor. [1996] 1 CLJ 141 Floral Trends Ltd v. Li Onn Floral Enterprise (M) Sdn Bhd [2006] 6 CLJ 525 K.E.P. Mohamed Ali v K.E.P. Mohamed Ismail [1981] 2 MLJ 10 Kelana Megah Development Sdn Bhd v. Kerajaan Negeri Johor & Another Appeal [2016] 8 CLJ 804 LKPP Property Sdn Bhd v. Kemuncak Laksana Sdn Bhd [2023] 1 LNS 34 Lianbang Ventures Sdn Bhd v. Jurukur Perunding Services Sdn Bhd & Anor [2020] 6 MLRA 716 Pembenaan Leow Tuck Chui & Sons Sdn. Bhd. v. Dr. Leela's Medical Centre Sdn. Bhd. [1995] 2 CLJ 345 Permodalan Plantations Sdn Bhd v. Rachuta Sdn Bhd [1984] 1 MLRA 494 Poratha Corporation Sdn Bhd v. KNM Ogpet (East Coast) Sdn Bhd [2014] 1 LNS 1671 Shabiru (1990) Sdn Bhd v. Goh Aik Chin & Anor [2019] MLRHU 1033 Tenaga Nasional Berhad v. Ichi-Ban Plastic (M) Sdn Bhd & Other Appeals [2018] 3 MLRA 1 Village Grove Condominium Management Corporation v. Yunco Enterprise Sdn Bhd [2021] 3 MLRH 345 Legislation referred to: Contracts Act 1950, s 74