Marljaya (M) Sdn Bhd v 1. Kerajaan Malaysia; 2. Ketua Pengarah Jabatan Kerja Raya Malaysia; 3. Pengarah Jabatan Kerja Raya Melaka (21C-3-06/2015)

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1 IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR IN THE FEDERAL TERRITORY OF WILAYAH PERSEKUTUAN, MALAYSIA (CIVIL DIVISION) CIVIL SUIT NO: 21C-3-06/2015 BETWEEN MARL JAYA (M) SDN BHD ... PLAINTIFF

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SCHEDULE OF CLAIMS 1 (LOSS AND EXPENSES DUE TO EOT NO. 1) NO ITEMS QUANTUM ALLOWED 1 EPF RM 13,259.00 2 SOCSO RM 1,544.60 3 INSURANCE RM23,568.48 4 TELEPHONE BILLS NIL 5 PLANT AND MACHINERIES RM365,572.65 5

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SCHEDULE OF CLAIMS 2 (IDLING MACHINERIES COSTS) 6 MACHINERIES (MAY 2009) RM257,025.00 7 MACHINERIES (JUNE 2009) RM316,505.00 8 MACHINERIES (JULY 2009) RM434,805.00 9 (AUGUST 2009) RM314,507.00 10 (SEPTEMBER 2009) RM327,985.00 11 (OCTOBER 2009) RM169,483.00 TOTAL RM2,224,254.73 Prayer [10] The Defendants were dissatisfied with the quantum of damages as assessed by the Deputy Registrar and so appealed to this Court. [11] The parties shall be referred to the way they were referred at the assessment of damages before the Deputy Registrar as Plaintiff and Defendants. [12] The following issues were raised in this appeal: 6 1. Whether the Plaintiff is entitled to the damages since it fails to submit the Notice of Intention to Claim for losses pursuant to Clause 44 of the Contract; 2. Whether the Plaintiff has mitigated its losses; 3. Whether the EPF, SOCSO and Insurance can be considered as additional expenses due to the EOT No.1; 4. What will be the rate of the idling machineries; 5. Whether the Claimant's for idling machineries overlaps with the claim for plant and machineries under loss and expense. Principles Whether the Defendants can raise at the stage of assessment of damages that the Notice of Intention to claim for loss and expense was not duly served by the Plaintiff and as such the Defendants are not liable [13] The requirement of a Notice of Intention to claim for loss and expense arising out of an EOT is apparently found in Clause 44 of the Contract dated 13.4.2009. It reads: “44 Loss and Expense Caused by Delays 7 If the regular Progress of the Works or any part thereof has been materially affected by reason as stated under Clause 43 (c), (f) or (i) hereof (and no other), and the Contractor has incurred direct loss and/or expense for which he would not be reimbursed by a Payment made under any other provision in this Contract, then the Contractor shall within one (1) month of the occurrence of such event or circumstance give notice in writing to the S.O. of his intention to claim for such direct loss or expense together with an estimate of the amount of such loss and/or expense, subject always to clause 48 hereof.” [14] It is too late in the day for the Defendants to raise the issue of the non-service of the Notice of Intention to claim for Loss and Expense. By agreeing to a consent judgment on liability to be entered, the Defendant has also with it agreed that there is no further dispute on liability but only on quantum. The Defendants may not admit liability as recorded in the clarification of the consent judgment but that does not mean that liability is still an issue. In fact it has become a non-issue and the only issue is the quantum. [15] The Defendants by entering into and consent to a judgment being entered and agreeing to proceed with assessment of damages would mean 8 that they cannot now resile from that position. Indeed the Defendants are estopped from raising the issue of liability in that since the said Notice under Clause 44 of the Contract is not issued, then the Defendants are not liable. [16] If they had wanted to do that, then they should not have agreed to a consent judgment being recorded and then the parties would have the opportunity to lead evidence as to whether the Notice requirement had been met or waived. [17] I am in full agreement with the authority cited by learned counsel for the Plaintiff in the English case of New Century Media Limited v Makhlay [2013] EWHC 3556 (QB) which involved an assessment of damages after a judgment in default had been entered against the Defendant. Mrs Justice Carr observed astutely as follows: “23 One unsatisfactory aspect of this hearing has been the fact that the scope of issues had not been agreed or determined in advance and was materially in dispute. Specifically, it is Mr Makhlay's contention that, despite the judgment against him, it is open to him to advance the following arguments: 9 a) That he was entitled to terminate the contract due to a substantive (repudiatory) failure of performance on the part of NCM (“the repudiation issue”). On this basis, it was submitted that he was entitled to terminate the contract on 24th October 2012, which he did, giving rise to a liability only for debt or damages for a 4 day period (20th to 24th October 2012); b) That there was an implied term of the contract entitling him to terminate the contract on reasonable notice, said to be one month (“the early termination issue”). … 29 For the reasons set out below, I have reached the clear conclusion that Mr Makhlay's position is misconceived and that it is not open to him now to raise the repudiation and early termination issues. 30 A default judgment on liability under CPR Part 12 is a final judgment that is conclusive on liability. The Particulars of Claim are, in effect, a proxy for the judgment, setting out the basis of liability. Once judgment is entered, it is not open to a defendant to go behind it. Damages of course still have to be proved, and a 10 defendant can raise any issue which is not inconsistent with the judgment – see the White Book 2013 notes to CPR 12.4.4 . ... 36 Mr Makhlay had a full opportunity to defend the claim on liability. If he disagreed with an aspect of liability that was relevant to quantum, it was for him to challenge the claim at the liability stage. He chose not to do so. He has not sought to set the judgment aside. He cannot now “roam freely” across issues of liability as he wishes to do. ... 40 Mr Makhlay's approach is tantamount to an abuse of process by way of a back-door attempt to challenge the findings in the judgment. It offends not only a natural sense of justice, but also against the general rule that a party should not be allowed to litigate issues which have already been decided by a court of competent jurisdiction. 41 The consequences of Mr Makhlay's position being correct would be startling: a defendant would benefit from failing to lodge a defence on liability and by simply submitting to a judgment in default, 11 holding his powder dry until the quantum stage. He would then be able to mount, essentially unfettered, all and any arguments on liability at the quantum stage that he wished – probably, as has happened here, without any proper pleading or identification of the issues.” (emphasis added) [18] If the above principle applies to a default judgment it would a fortiori apply with greater force to a consent interlocutory judgment. [19] The High Court there had followed the principle enunciated in their Court of Appeal case of Lunnun v Singh and Another [1999] WL 477360 where it was held as follows: “In my judgment, the underlying principle is that on an assessment of damages all issues are open to a defendant save to the extent that they are inconsistent with the earlier determination of the issue of liability, whether such determination takes the form of a judgment following a full hearing on the facts or a default judgment. In this case the judgment was a default judgment.” [20] It is too late in the day and indeed the SFC, upon being confronted with these case, did not pursue further, the contention that no prior notice 12 was given on time under Cl 44 for the claim for loss and expense caused by delay. [21] If indeed that was the stand taken from the outset, then it should be clearly stated in the recording of the consent judgment. To allow the issue of the prior Notice of Intention to Claim to be raised at this stage of assessment would be to allow the Defendants to act inconsistently with the earlier consent interlocutors judgment entered where liability is no longer an issue and only quantum is to be resolved at the assessment of damages stage. [22] I agree with the approach taken by the learned Deputy Registrar in dismissing this issue raised by the Defendants as set out succinctly in his grounds of judgment as follows: “[15] …It should be noted that before the commencement of this assessment hearing, it was agreed by parties that only the quantum of claims (sic) to be assessed by Deputy Registrar. This agreement was recorded during a Case Management held on the 1st October 2015. It was further agreed by both counsels (sic) that the assessment would be done only in relation with (sic) the loss and expenses due to EOT 1 and also the idling machinery charges. Both 13 parties by consent had agreed that the assessment will not be dealing with the issue on liability. This was recorded before the court on the 29th February 2016.” [23] The SFC appearing for the Defendants agreed, though not without some reluctance, that it is too late in the day to raise the issue of Notice to Claim which has the effect of challenging the validity of the Plaintiff’s claim under the head of damages for “Loss and Expense”. It is the backdoor way of resurrecting what has been put to rest on the issue of liability; bringing to life what has been buried and reviving what has been interned! [24] At any rate I am more than satisfied that the Defendants had been given sufficient Notice of Intention to Claim and were fully aware of the loss and expense incurred from the correspondence between the parties, the Site Progress Reports and reports on the Critical Path Method and the Daily Site Report duly signed off by the Defendants’ representative. Whether the Plaintiff has proved the claims for EPF, SOCSO and Insurance under the head of “Loss and Expense” under EOT No. 1 [25] The claims allowed are basically under 3 heads. [26] First are the EPF and SOCSO and Insurance. For this claim I am satisfied that the evidence adduced substantiate the sum claimed. The 14 learned SFC said it should be part of the costs that the Plaintiff would have factored into the Preliminaries. I do not think so. This is the additional costs incurred during the EOT. [27] Learned counsel for the Plaintiff explained that they could have claimed for salaries during this period but as the Defendants’ Quantity Surveyor (“QS”) Perunding NFL Sdn Bhd (“NFL”) in its report did not allow for this but did allow for EPF, SOCSO and Insurance, out of deference to the QS report, the Plaintiff had confined their claim to just EPF, SOCSO and insurance. [28] As found by the learned Deputy Registrar the claim for EPF and SOCSO were made based on the Defendants’ own QS Report that of NFL dated 30.4.2013. [29] One would expect some measure of independence and neutrality as an independent professional though engaged by the Defendants. It there is any unconscious biasness towards its paymaster, though none is suggested, the Plaintiff is prepared to accept it. [30] In the QS Report is listed the names of the workers of the Plaintiff whose names appear in the Progress Reports and also the Minutes of the Meetings. The amount claimed was for the Payment for the period from 15 December 2010 until May 2011 which is the period that was extended by the Defendants. The learned Deputy Registrar was satisfied that the Plaintiff had to bear those costs at the material time due to EOT No.1. [31] As rightly observed by the learned Deputy Registrar, since the Defendants’ own QS had recognized these amounts, the Defendants cannot now dissociate and distance themselves from the QS treatment of these payments as additional expenses due to EOT No.1, much less to deny and dismiss it altogether. I have no good reason to disagree with the learned Deputy Registrar’s findings based on written documents substantiating the claims for EPF, SOCSO and Insurance and also based on the audio-visual advantage he had in assessing the credibility of the Plaintiff’s witness and Defendants’ witness. [32] As stated by the learned Deputy Registrar, evidence of employment of the workers can be seen in the documents compiled and marked as CBD B1. Their names could also be seen in the Site Progress Reports dated 27.12.2019 (CBD B1 p 49) and dated 15.3.2011 (CBD B1 p 152). Their names were recorded as the employee/representative of the Plaintiff. The learned Deputy Registrar was satisfied, on the balance of probabilities, that by looking at the documents, all the names listed were that of the Plaintiff’s employees. 16 [33] As the Site Progress Reports and the Minutes of Meetings were contemporaneous documents and the Defendants’ own QS had accepted these charges as additional expenses incurred, I see no good reason not to accept these documents and the QS Report as sound and safe to rely on for the assessment of the additional loss and expense incurred for the period of the EOT No.1. [34] The Defendants could have called their very own QS if there had been an error of classification or judgment or assessment but since the QS was not called, this Court should not allow doubts to be cast on the veracity and reliability of the QS Report on this head of claim. Whether the Plaintiff has proved the claim for Plant and Machineries of RM365,572.65 under Loss and Expense Claim due to EOT No. 1 [35] Second is the claim for the use of the Plant and Machineries during the period of EOT No.1. [36] There is a formula for calculating this as set out in page 324 of Volume 2 of the Appeal Record (“AR”). The formula is as follows: 1. Plant and Machineries Preliminaries 17 2. A/19/E Plant and Equipment RM1,503,598.14 3. Tempoh kontrak 104 minggu = 728 days 4. Tempoh Lanjutan Masa No. 1 177 HARI Pengiraan RM1,503,598.14 = RM2,065.38/hari 728 hari = RM2,065.38 x 177 hari = RM365,572.26 ============ [37] I am satisfied that this is a fair method of calculation based on the Defendants’ own formula and guidelines and also confirmed by the Defendants’ QS. [38] This is for the period during the EOT No.1 from December 2010 till May 2011 as can be seen in the Certificate of Delay and EOT No.1 at pages 537-539 AR Volume 2 and more specifically from 15.11.2010 till 10.5.2011. The basis of the claim is under Preliminary costs at page A/19/E 18 and at p 40 CBD B1. It covers machineries, Wilkie talkies, scaffoldings and other equipment for the whole Project. This claim had not been priced in the Preliminaries which only covered the period without the EOT No.1. This claim of RM365,572.62 is for the Loss and Expense incurred during the EOT No.1 period. I am satisfied that this is calculated pro-rated from the sum allocated under Preliminaries at A/19/E Plant and Equipment (p 40 CBD B1). Moreover the said calculation has been verified and approved by NFL the consultant for the Defendants. [39] I have no good reason to disturb this finding of fact of the learned Deputy Registrar supported as it is from contemporaneous documents and the reasonable explanation of the Plaintiff’s witness. Whether the claim idling of machineries overlaps with the claim for Plant and Machineries under EOT No.1 [40] Third there is the claim for idling costs of machineries. SFC said that this is overlapping with the claim for the same items during the EOT No.1. [41] I am satisfied that the claims are different and the machineries are a much longer list under the idling costs claim. The details are as set out in AR Volume 1 pp 277 -282. The rates of calculation based on the average rate of prices for each item are enumerated at pages 257-260 CBD B2. 19 [42] The sole witness for the Defendants had not given any alternative rates for the rental of the Plant and Machineries other than saying he did not agree to those rates. On the other hand the Defendants’ QS had accepted those rates in their Report of 30.4.2013. [43] It covers the period before the commencement of the works from May 2009 to October 2009 and so is different from that of the claim for Plant and Machineries for the period of the EOT No.1 from December 2010 till May 2011. This claim arose from the problems at the construction site when the machineries could not be used. It is supported by the Site Daily Reports from pages 548-727 of the AR Volume 3. There was also the evidence of Certificates of Payments made, payment vouchers and Bank-in slips at pages 745-921 AR Volume 3 to substantiate this claim. [44] Further at pages 278-283 AR Volume 1 are set out the details of the period of Claim, the items claimed, the period, quantities, rates per unit, and the supporting documents in the Daily Reports and the Average Schedule of Rates for the rental of the Equipment and Machineries. [45] The problems faced at the site included lack of access to site, change of piles for Block B5, infrastructure work for FSSR Workshop and problem with external sewerage system. 20 [46] I am satisfied that it is a claim allowed under Clause 44 of the Contract. There is no overlap for otherwise the Defendants’ own QS would not have approved it. Whether the Plaintiff had mitigated their losses [47] The learned SFC before the Deputy Registrar contended that the Plaintiff ought to have mitigated their losses by demobilizing the machineries that were not needed from the Site. There was no necessity to leave the trucks at the site which should have been deployed for use elsewhere. [48] The principle of mitigation of damages has been explained in a number of cases. In Millicent Limited v Malaysia-Europe Forum Berhad, Natasha Zulkifli & Another [2011] MLJU 452 the High Court held that a Plaintiff in a case of breach by the Defendant of a contract, has a legal duty or responsibility to avoid unnecessary losses. Failure to do so does not attract any liability on the part of the Plaintiff but reduces the damages payable by the Defendant. What this duty encompasses was explained in British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railways Co of London Ltd [1912] AC 673 in the speech of Viscount Haldane LC at p 689 as “…the duty of taking all 21 reasonable steps to mitigate the loss consequent on breach, and debars him from claiming any part of the damage which is due to his neglect to take such steps.” [49] I bear in mind the principle enunciated by the Federal Court in Akitek Tenggara Sdn Bhd v Mid Valley City Sdn Bhd [2007] 5 MLJ 697 as follows: “[58] …Subrahmanyan & Singhal in their book entitled Indian Contract Act (3rd Ed) Vol 2, in dealing with the basic principles of awarding compensation under the section, said at pp 144–145: Two important principles, governing the grant of damages, are — (1) that the claimant should not himself be guilty of any negligence or other improper conduct, and should have taken all the reasonable steps to minimise the loss to be suffered by him; and (2) that the amount of damages to be awarded should never exceed the loss actually suffered by him (the claimant), or, which he is likely to suffer, provided that his acts are lawful, 22 just, reasonable and not contrary to the law, rules or bye-laws duly enacted. These principles can be easily explained by considering the instances, where a person can have a legal right to sue for damages. For example, if A had made a contract with B for the supply of fuel-wood for running a brick-kiln and B fails to carry out the contract, it will not be open to A to close the brick-kiln and to claim damages to the extent of the profits which he could derive from the business, if the fuel-wood had been supplied. He must carry on the business by purchasing fuel-wood, or a similar fuel from the market at a reasonable rate, that is, at the market price, and claim the difference between the market price and contractual price as damages from B. But, if no such fuel was available, he will, of course, have to close the business, and, in these exceptional circumstances, he can claim damages to the extent of all kinds of losses suffered by him.” (emphasis added) [50] I agree with the learned Deputy Registrar that what is reasonable would depend on the facts of each case and that the onus as to reasonableness of the Plaintiff’s conduct lies on the Defendants. 23 [51] The Defendants had submitted that the machinery should have been demobilized from the site since the works could not be carried out. However PW 1 had given a reasonable explanation as to the impracticality of demobilization as it would cause them to incur more costs. The sole witness of the Defendant DW 1, on the other hand, had no idea how much it would cost the Plaintiff to demobilize the machinery. Thus I agree with the learned Deputy Registrar that the Defendant had failed to show that by demobilizing the machineries the Plaintiff would be able to reduce its losses. [52] The learned Deputy Registrar had noted that the Plaintiff had nevertheless willingly claimed for a lesser sum. The Plaintiff has made its claims in this action based on the Report and calculations of Perunding NFL Sdn Bhd, the QS appointed by the Defendant. In that calculation the charges that were incurred from November 2008 to April 2009 had not been included. The Plaintiff had agreed to this reduction even though they would end up with a claim for a lesser sum. The Plaintiff had thus claimed for the idling machineries for the period of May 2009 until October 2009 even though the machineries were idling as early as November 2008 and this evidence was not challenged by the Defendant. By so doing the Plaintiff had mitigated their losses. 24 Pronouncement [53] In the circumstances there is no good reason for me to disturb the quantum of damages as assessed as I am satisfied that the learned Deputy Registrar had proceeded on the right principles. [54] Therefore I had dismissed the appeal with costs of RM5,000.00. Dated: 18 August 2017. - signed - Y.A. LEE SWEE SENG Judge High Court Kuala Lumpur For the Plaintiff : PC Chew together with LL Lim (Messrs Kwong & Hwang) For the Defendants : Natassa Zaini (Senior Federal Counsel – AG’s Chambers) Dates of Decisions: 18 April 2017