Mzhr Resources v Fizz Associates Sdn Bhd (MC-A72-1-02/2024)

This case involves a claim brought by the Plaintiff against the Defendant for the sum of RM28,790.00, along with interest, allegedly owed by the Defendant to the Plaintiff in connection with a renovation project. The Defendant had engaged the Plaintiff to carry out the necessary works for the project.

However, the Plaintiff's failure to complete the project within the stipulated two-month period caused the Defendant to hire a third party and incur additional costs for the incomplete work. Therefore, the Defendant has also filed a counterclaim against the Plaintiff for RM19,911.90, along with interest.

There were four witnesses who testified during the trial, as follows, where the Plaintiff and the Defendant respectively called two witnesses:- Plaintiff’s case a) PW1: En. Mohamad Zulhilmi, director/scaffolding inspector for the Plaintiff; b) PW2: En. Mohd @ Mohamad, monitoring the work at the site as requested by the Plaintiff and representative of Vertigo Tech; Defendant’s case c) En. Muhammad Shazwan, projek manager of the Defendant; and d) En. Abdul Wahab, projeck manager of Merak Signature.

After the full trial, this court dismissed the Plaintiff’s claim and allowed Defendant’s counterclaim with costs.

The Plaintiff was appointed by the Defendant to carry out works related to a renovation project for a period of two months, commencing on 16/08/2023, at Malaysian Refining Company Sdn Bhd (MRCSB) office in Sungai Udang, Melaka (hereinafter referred to as “the Project”). The scope of work and mutual agreement between both parties included the following: a) The Plaintiff was to provide general workers/helpers for the renovation works under the direction of the project/site manager and in accordance with the agreed-upon methods; b) The general workers/helpers were required to work according to the specified hours and days, based on the timeline of the Project; and c) The Plaintiff was responsible solely for supplying necessary safety equipment and ensuring that the general workers/helpers had access to safe tools, while also complying with the terms and conditions of the project site regulations.

At all material times, the Defendant issued three Purchase Orders dated 11.08.2023, 09.09.2023, and 10.10.2023. The Plaintiff also made purchases of materials for the Project as per the invoice dated 15.11.2023. However, as of the filing of this writ of summons and statement of claim until to date, the Defendant has failed to make payments for the works completed by the Plaintiff for the Project, despite the fact that the works were completed in accordance with the parties’ agreement.

The Plaintiff averred that the details of the work and/or equipment supplied by the Plaintiff for completing the Project were as follows:- a) Supply of manpower (helpers) and/or labor; b) Supply of hand tools, such as hand drills, extension cables, grinders, fan blowers, and DB 240V; c) Provision and completion of electrical works, including the demolition of electrical cables and other related electrical works, as specified in the Defendant's Purchase Order dated 10.10.2023; and d) Procurement of materials for the Project.

Although the Defendant has made 80% payment for the Plaintiff’s labor supply and truck services, the Defendant has, to date, failed to pay the remaining 20% of the total labor cost. Additionally, the Defendant has failed and/or neglected to make payments for the Purchase Orders it had issued.

The Plaintiff alleged that the outstanding amounts owed by the Defendant for the Plaintiff’s work throughout the Project are as follows: - No.

The remaining 20% balance for the supply of manpower and truck services provided by the Plaintiff under the Purchase Order dated 11.08.2023

The cost of supplying hand tools as per the Purchase Order dated 09/09/2023

The cost of fully completed electrical works under the Purchase Order dated 10.10.2023;

The cost of purchasing materials for the Project, as invoiced by the Plaintiff on 15.11.2023 RM690.00 TOTAL:

As a result of the Defendant’s failure to make payments to the Plaintiff, the Plaintiff has also faced difficulties in settling payments to suppliers, vendors, subcontractors and other parties involved in the execution of the Project. The Plaintiff has made several attempts to contact the Defendant to request payment of the outstanding balance, but the Defendant has failed to do so to this day. As such, the Plaintiff claims from the Defendant the following, which includes, special damages in the sum of RM28,790.00, being the full payment due under the Purchase Orders issued by the Defendant that remains outstanding for the completed works of the Project; general damages for the delay in settling the outstanding payment for the Project, aggravated/exemplary damages, and interest.

The Defendant, in its defence, has pleaded that the Plaintiff failed to complete and/or deliver the Project within the stipulated time frame and in accordance with the agreed scope of work assigned to the Plaintiff. The Defendant further pleaded that two Purchase Orders which were issued by the Defendant to the Plaintiff, namely: i. The Purchase Order dated 11.8.2023 for the “Engagement of General Workers for Construction" amounting to RM67,000.00 (“First Purchase Order”); and ii. The Purchase Order dated 10.10.2023 for electrical works, specifically “Demolish cable electrical” and “Supply new cable and installation”, amounting to RM17,000.00 (“Second Purchase Order”); where both Purchase Orders were subject to specific terms and conditions (Bundle G, pages 3-4 referred for the first Purchase Order and pages 6, 1 and 2 referred for the second Purchase Order).

The Defendant asserted that the Plaintiff failed to complete the Project under the first Purchase Order in accordance with the specifications and requirements set by the Defendant, thereby entitling the Defendant to withhold the remaining payment for the Project. Due to the Plaintiff’s failure to rectify the defective carpet installation and complete the work within the stipulated time, the Defendant was compelled to engage a third party (Merak Signature) and incurred a cost of RM19,911.90 (before discount) to rectify the deficiencies, as outlined in the Defendant’s Counterclaim.

As for the second Purchase Order, the Plaintiff agreed to carry out electrical works on 10.10.2023 whilst the Defendant had agreed to appoint the Plaintiff for the works, with all arrangements and payments being made directly to the Plaintiff. A deposit payment of RM6,800.00 was made to the Plaintiff (See: Bundle G, page 77, proof of online transfer to the Plaintiff’s account). However, the Defendant asserted that the Plaintiff appointed a third party, Vertigo Tech Sdn Bhd to execute the electrical works, which commenced on 12.10.2023, which was the same day the Defendant marked the floor to facilitate the Plaintiff and/or the Vertigo Tech’s work (See: Bundle G, page 77, WhatsApp conversation between DW1 and PW2). Thereafter, the Defendant found the work carried out by the Plaintiff and/or the Vertigo Tech unsatisfactory and did not meet the required standards, for instance, the breaking of the floor to lay cables from the floor box power to designated locations was not properly cemented, affecting the finishing of the flooring, which included vinyl and carpet installation (See: Bundle G – page 78, images of incorrect and substandard installation): - a) After the installation of furniture at the Project site, the Defendant discovered that the cables were not laid according to the designated markings on the floor. It resulted that not all furniture had access to power points. As such, the Defendant had to rectify this issue. For the additional cabling work, the Vertigo Tech requested a progress payment of RM5,000.00 from the Defendant. The Defendant initially informed the Vertigo Tech (its representative which was called as PW2 during the trial) that all payments had been or would be made to the Plaintiff. However, PW1 informed the PW2 that the Plaintiff would not interfere in any discussions with the Defendant regarding the additional work as above-mentioned, hence the Defendant ultimately paid the Vertigo Tech directly (See: Bundle G, page 77, proof of payment of RM5,000.00 to PW2’s associate on 18.11.2023); b) The Defendant asserted that the payment made was for progress payment/claim no. 2 under the second Purchase Order and was not an additional payment, as there should not have been any defects or extra costs since the floor markings had been provided by the Defendant on 12.10.2023. Since the Plaintiff failed to properly complete the electrical works under the second Purchase Order, the Defendant is entitled to withhold the remaining balance under the second Purchase Order, as the Plaintiff’s pro forma invoice did not reflect the actual work performed. As such, the Defendant stated that a total of RM11,800.00 has already been paid under the second Purchase Order comprising RM6,800.00 paid to the Plaintiff on 10.10.2023 and RM5,000.00 paid to the Vertigo Tech (Maybank Account under the name of Ayesha Engineering as requested by PW2 via WhatsApp conversation at page 77, Bundle G) on 18.11.2023. Therefore, the Plaintiff’s claim for RM10,200.00 is redundant.

Since the Plaintiff failed to complete the Project and rectify the defective installation of carpet, skirting and vinyl, the Defendant was forced to engage a third party and hire additional workers to complete the Project. As a result, the Defendant incurred a cost of RM18,761.90 to the Third Party. In the pleading, the Defendant was requested to make payment to Merak Signature for rectifying the carpet installation, with a quoted amount of RM5,319.20. After applying a discount, the final amount was RM4,169.20. Additionally, the Defendant incurred additional labor costs for completing the skirting, carpet tiles, vinyl and cementing the unfinished flooring under the second Purchase Order, totalling RM14,592.70. The total cost amounted to RM18,761.90 after a discount of RM1,150 from the original amount of RM19,911.90. In the premise, the Defendant further claims for interest at a rate of 5% per annum on the sum of RM18,761.90 from the date of judgment until full settlement; general damages for the delay in the Plaintiff’s delivery of the Project; and costs.

The salient issues in the current suit before this court are as follows: i. First Issue: Whether the Plaintiff completed the works under the first Purchase Order; ii. Second Issue: Whether the Plaintiff completed the works under the second Purchase Order; and iii. Third Issue: Whether the Plaintiff is entitled to claim RM27,290.00 and general damages from the Defendant for the work carried out under the Project as alleged. E. EVALUATION AND FINDINGS BY THIS COURT First Issue: Whether the Plaintiff completed the works under the first Purchase Order?

This project involved two main purchase orders namely the first Purchase Order and the second Purchase Order. Pursuant to the first Purchase Order, the payment terms agreed by the parties are as follows can be seen at page 3, Bundle G: a) 30% of the contracted price payable after 5 days of work; b) 60% of the contracted price payable after 45 days of work; and c) 10% of the contracted price payable upon 5 days job completed.

PW1 acknowledged understanding these terms during cross-examination by the Defendant’s counsel. PW1 also admitted during cross-examination that the Plaintiff did not complete the Project, particularly the installation of carpet, vinyl and skirting. Furthermore, PW1 stated under cross-examination that he had no interest in continuing with the project beyond the two-month period. Once the two-month manpower period ended, PW1 refused to proceed and conveyed this decision in a conversation with DW1. PW1 also admitted that no formal notice was sent to terminate the work, instead, only the WhatsApp message was sent to DW1 stating that the two-month period had ended.

Meanwhile, DW1 testified that he came to know PW1 through a recommendation. At that time, the Defendant had been awarded the office renovation project for MRCSB, which required a contractor with a MRCSB certification to work within the MRCSB premise. Therefore, the Defendant contacted PW1 and informed him of the scope of work, which included providing skilled and general labor as well as ready-to-use tools.

Based on the witness statement of PW1 [WS(SP1)], it is evident that PW1 himself confirmed receiving the project’s terms and conditions on 11.8.2023, along with the first Purchase Order, which required the Plaintiff to provide manpower to complete the project. However, the Plaintiff only commenced work on 29.8.2023. This court agrees with the Defendant’s counsel’s submission highlighting that PW1 explicitly stated he would only work on the project for two months and did not care whether the works were fully completed. Once the two-month period ended, the Plaintiff abandoned the site. Such conduct by the Plaintiff is deemed illogical, unprofessional and unethical. Furthermore, when asked about the completion date of the project, the Plaintiff relied solely on the Defendant’s document (Work Completion Certificate) at Bundle G, page 62. PW1 himself was uncertain about the exact completion date, as it is evident that the Plaintiff never officially handed over the Project to the Defendant.

In other words, the Plaintiff failed to complete the works under the Project as well as under the first Purchase Order, citing insufficient funds to purchase materials and pay workers, despite the Defendant having already paid the Plaintiff a total of RM53,600.00 as of 2.10.2023 (the total amount of the first Purchase Order is RN67,000.00). There is no dispute regarding the terms and conditions outlined on page 4 (Appendix 1), Bundle G of the first Purchase Order, which constitute the agreement between the Plaintiff and the Defendant. The interpretation of these documents falls within the jurisdiction of this court, and the views or opinions of the parties or witnesses on how these documents should be interpreted are irrelevant (Gopal Sri Ram JCA in NVJ Menon v The Great Eastern Life Assurance Co [2004] 3 MLJ 38, CoA).

Interestingly, the Plaintiff’s claim that he was unaware of the scope of work upon receiving the First Purchase Order is merely an excuse to evade responsibility, as it is explicitly stated in the terms that: “The Vendor shall provide skilled and general workers...”(page 4, Appendix 1, Bundle G). Furthermore, the Defendant had also informed PW1 the same via WhatsApp on 7.9.2023 and 1.10.2023 (Bundle G, pages 67 & 83). This Court has also examined the letter from Pioneer Ranex Sdn Bhd dated

21.8.2023 (at page 28, Bundle G), which confirmed that the workers were only loaned from 21.8.2023 to 21.9.2023 to perform preliminary tasks, such as clearing project site debris, cleaning the site and installing safety signage. After this period, the Plaintiff did not provide any further documentation listing skilled workers nor took timely action to find skilled workers for the installation of carpet, vinyl and skirting.

In the considered view of this Court, it is evident that the Plaintiff violated a fundamental term of the first Purchase Order by failing to provide skilled workers for the commencement of work as stipulated. It is obvious that the agreement explicitly mentions skilled workers in the terms and conditions. In such situation, this court finds that the requirement for skilled workers is an inherent aspect of safety and quality standards that the Plaintiff was reasonably expected to fulfill (Wijaya Gemilang Trading Sdn Bhd v Crec Geotechnical Engineering (M) Sdn Bhd [2020] MLJU 1021, Sessions Court).

After thoroughly assessing the evidence as above-mentioned, this court is satisfied that the Plaintiff had breached the agreement. This court agrees that workmanship quality, including the eligibility and competency of skilled workers, is a crucial term. As a result, the Report of Chronology Evidence prepared by the Defendant at pages 71–88 of the Bundle G, along with information obtained from the Defendant’s workers on-site, revealed the following defects: a) The installed carpet did not match the designated design and some areas were misaligned; b) The vinyl planks had noticeable gaps, likely due to the use of improper or unsuitable adhesive; and c) The skirting was improperly cut using incorrect tools, causing poorly aligned joints that appeared untidy.

The Defendant stated that they attempted to discuss and requested PW1 to rectify the defective carpet, vinyl and skirting installations. However, PW1 refused to do so. It is crystal clear that the Plaintiff failed to rebut the fact that the carpet installation was defective. The agreement explicitly required the Defendant to terminate the engagement immediately in cases of underperformance or breach of terms.

In the premise, this court found that the Plaintiff breached the terms and conditions of the first Purchase Order as the Plaintiff did not complete the works under the first purchase order. Second Issue: Whether the Plaintiff completed the works under the second Purchase Order?

26.

The Defendant argued that the Plaintiff’s claim for invoice of the second Purchase Order amounting to RM10,200.00 is redundant because the Defendant had already paid more than the value of such invoice specifically RM11,800.00, for the works required under the Second Purchase Order. Since the Plaintiff did not complete the works under the second Purchase Order, the Defendant is not liable to pay any further amount to the Plaintiff.

The Defendant engaged the Plaintiff to demolish the electrical cables and supply new cables along with their installation. The Defendant made a 40% payment of RM6,800 to the Plaintiff on 10.10.2023 (payment proof at page 77, Bundle G). In an effort to assist the Plaintiff, DW1 personally marked the floor to indicate the designated pathways for electrical cabling and floor boxes for installation at the workstation tables. However, after the furniture installation at the Project site was completed, the Defendant discovered that the cables were not laid according to the marked pathways on the floor. As a result, parts of the workstation furniture sustained damage, particularly affecting the fabric partitions. Unfortunately, this court found that it was the Defendant who had to rectify these deficiencies.

For the cables that were not installed by the Plaintiff in the meeting rooms, the subcontractor (PW2) from Vertigo Tech, who was engaged under the Plaintiff, requested payment directly from the Defendant. PW2 stated that PW1 was no longer involved in the project, leading to a direct payment of RM5,000 being made to Ayesha Engineering (PW2’s associate) on 18.11.2023. A total payment was made in the sum of RM6,800 and RM5,000 at the material time.

Furthermore, the Plaintiff failed to comply with the second Purchase Order, as they merely installed an extension cable with a socket head, when in fact, the requirement was to supply a new cable directly from the distribution board. Upon reviewing the second Purchase Order and the pro forma invoice at page 34, Bundle G, it is evident that the Plaintiff failed to fulfil the required scope of work. Since the contractual relationship between the Plaintiff and Defendant was based solely on the Purchase Orders, and given that the Defendant had already paid RM11,800.00, the Plaintiff’s claim for RM10,200.00 is redundant.

Based on the foregoing, this court concluded that the Plaintiff has breached the terms and conditions of the second Purchase Order and failed to complete the required works as stipulated therein. Third Issue: Whether the Plaintiff is entitled to claim RM27,290.00 and general damages from the Defendant for the work carried out under the Project as alleged?

Based on the first Purchase Order, the Plaintiff is claiming a remaining sum of RM13,400.00 despite not completing the works. Additionally, as for the second Purchase Order, the Defendant had already paid more than the invoiced amount specifically RM11,800.00 for the incomplete works.

Furthermore, regarding invoice no.(iii) which refers to the Defendant’s another Purchase Order dated 9.9.2023 (at Bundle G, page 5), it is clear that the payment terms were 100% after 3 days of job completion. During cross-examination, when questioned about the RM3,000.00 invoice, PW1 admitted that the works for the Project were not completed. PW1 was also unable to specify when the Plaintiff had completed the works and failed to provide any evidence proving that the works had been fully completed.

This Court took cognisance that, during cross-examination, PW1 relied on the date when the Defendant completed the project with MRCSB rather than the date when the Plaintiff allegedly completed the work. It was found that PW1’s response was highly unprofessional and unethical, demonstrating a lack of responsibility and ownership over the works awarded to the Plaintiff by the Defendant. Since the Plaintiff itself could not provide a completion date, the Defendant is not liable to pay the RM3,000.00 invoice. This is because the Defendant had to resume and complete the unfinished work left by the Plaintiff. It is noteworthy that the Plaintiff failed to prove when it handed over the project to the Defendant. The only document available is the Work Completion Certificate issued by MRCSB to the Defendant, confirming that the project was handed over to MRCSB on 1.12.2023.

Meanwhile, regarding invoice no. (iv) amounting to RM690.00, which was for carpet and vinyl glue, the Plaintiff failed to support the invoice with any purchase receipts when requested. Furthermore, the KY-WHT Glue 4kg was an unsuitable adhesive for the project and thus PW1 agreed that RM60.00 should be deducted from the invoice (Refer to Bundle G, page 33 regarding the invoice amounting to RM690.00).

In considering the submissions of both parties, this court found that the Plaintiff is clearly not entitled to claim special damages amounting to RM27,290.00 [sum of RM13,400.00 (the first Purchase Order) + RM10,200.00 (the second Purchase Order) + RM3,000.00 (third Purchase Order) + RM690.00 (invoice no. iv)] because the Plaintiff failed to complete the Project within the stipulated two-month period. Apart from that, the Plaintiff also never applied for an extension of time to complete the Project from the Defendant.

Moreover, based on the evidence presented, this court found that the Plaintiff did not suffer any hardship, especially since the Plaintiff failed to complete the work according to the agreed scope and no handover to the Defendant occurred. Therefore, the Plaintiff's claim for general damages is hereby dismissed by this court.

As this court has discussed earlier, the works were never completed by the Plaintiff, as admitted by the Plaintiff. Accordingly, deductions must be made for the works that were never performed by the Plaintiff. Despite this, the Defendant had already made 80% of the payment for labor and transport services provided by the Plaintiff. Therefore, this court found that the Plaintiff had breached the express terms of the Purchase Orders concerning the scope of works and descriptions as required by the Defendant in the Purchase Orders. Since the Plaintiff failed to prove its claim before this court on the balance of probabilities for the total amount claimed under the Purchase Orders; in other words, the Plaintiff failed to prove that it had completed and handed over the works as agreed, this court has no hesitation to dismiss the Plaintiff’s claim (Blue Ocean Frontier Sdn Bhd v Aston Villa Sdn Bhd [2022] MLJU 3562, HC). F. Counterclaim by the Defendant 39. This court acknowledged of the fact that the Defendant had to appoint Merak Signature to rectify the installation of carpets, vinyl and skirting that had been done by the Plaintiff. In the circumstance, the Defendant had paid Merak Signature a total of RM4,169.20 (where the original price before discount was RM5,319.20, as stated on pages 41-42, Bundle G). Additionally, the Defendant had to hire other workers to complete the electrical work, skirting, carpet tiles, vinyl and unfinished cement flooring under both Purchase Orders from 1.11.2023 to 30.11.2023 and paid a total sum of RM14,592.70 (as shown on pages 43-46, Bundle G concluding the sum of RM8,796.70 + RM5,796). The carpet installation to repair the existing skirting, vinyl, and carpet was also confirmed by DW2 during the trial.

Having regard to the foregoing, the Plaintiff was aware of the specific requirements regarding the description and scope of work for the renovation of the MRCSB office before it was handed over to the Defendant. However, the Defendant claimed that the carpet installation works and electrical installation supplied by the Plaintiff did not meet the required scope and description, thus rendering the work incomplete.

In the considered view of this Court, it was found that the Defendant had made reasonable efforts to contact PW1 for rectification work. However, PW1 displayed an indifferent attitude towards the Project’s progress and did not even request an extension of time from the Defendant to complete the Project. DW1 had in fact contacted PW1 from time to time and eventually dealt directly with PW2 for a payment of RM5,000, even though PW2 was only a subcontractor of PW1. The attempt by PW2 to rectify the defective electrical work was ignored by PW1.

In short, the Plaintiff refused to rectify the incorrect and poorly executed vinyl carpet installation, as a result of engaging unskilled workers. This situation is different from the case of HQC Engineering Malaysia Sdn Bhd v Mac Piping Materials Sdn Bhd [2023] MLJU 1305, HC, where the Plaintiff in HQC’s case could have avoided the issue of non-conforming fittings if the Plaintiff’s representative who had visited the Defendant’s factory should have decided not to proceed with the purchase after discovering that the Defendant was unable to produce certain required fittings (including carbon steel fittings, stainless steel fittings, and alloy fittings), and therefore the Plaintiff was not entitled for the refund. However, in the instant case, the Defendant had informed the Plaintiff before the completion deadline and requested discussions on rectifying the issues before a breach of the Purchase Order terms occurred, but this request was ignored by the Plaintiff.

There was express term that the goods must be of merchantable quality. This Court found that, as the said works were defective, the Plaintiff had breached this term and was liable to compensate the Defendant. Clause 3 of the Terms and Conditions, on page 1 of Bundle G clearly states that the client (Defendant) has the right to reject or revoke acceptance if the condition of the goods is defective, which constitutes an event of default.

Apart from that, PW1 himself admitted liability for the defective carpet installation when he gave up on installing the carpet vinyl, acknowledging that carpet installation required skilled workers (Atico Overseas Ltd v Procast Furniture Industry Sdn Bhd [2014] 1 MLJ 15, HC). PW1 also informed PW2 that he did not want to be involved in rectifying the defective electrical wiring and told PW2 to deal with the Defendant directly. To conclude so, this court is satisfied that the Defendant had successfully proven its counterclaim on the balance of probability. For the reasons stated above, this Court take the considered view that the Defendant’s counterclaim be allowed with costs of RM6,000.00.

Having carefully reviewed the evidence, examined the documents, and thoroughly considered the submissions from both parties, this court arrives at decision as follows:- a) the Plaintiff’s claim is dismissed; and b) the Defendant’s counterclaim is allowed with costs of RM6,000.00. Dated this 28 February 2025 SGD ------------------------------ (TEOH SHU YEE) MAGISTRATE MAGISTRATES’ COURT AT ALOR GAJAH FOR THE PLAINTIFF : Pn. Sasha Maisarah, Pn. Insyirah & En. Husni, TETUAN SASHA SAPIZAN & CO., KELANTAN FOR THE DEFENDANT : Pn. Ros Shimah & Pn. Ida Zali,