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1 IN THE HIGH COURT IN MALAYA AT IPOH 5 IN THE STATE OF PERAK DARUL RIDZUAN CIVIL APPEAL NO: AA-12BNCvC-5-09/2023 BETWEEN OASIS SURIA SDN. BHD. 10 (COMPANY NO.:771431-M) …APPELLANT AND ULTIVICTORY SDN. BHD. (COMPANY NO.:351997-K) …RESPONDENT 15 IN SESSIONS COURT AT IPOH IN THE STATE OF PERAK DARUL RIDZUAN SIVIL SUIT NO.: AA-B52NCvC-36-11/2020 20 BETWEEN OASIS SURIA SDN. BHD. (COMPANY NO.:771431-M) …PLAINTIFF AND ULTIVICTORY SDN. BHD. 25 (COMPANY NO.:351997-K) …DEFENDANT JUDGMENT Introduction [1]. This appeal concerns a dispute over subcontract payments arising 30 from a decision of the Sessions Court. The plaintiff, Oasis Suria 10/10/2024 08:05:27 AA-12BNCvC-5-09/2023 Kand. 33 S/N o40WrGrjlUarV2jSgz7Dlw (“Appellant”), seeks the remaining balance of its contractual payment from the defendant, Ultivictory Sdn. Bhd. (“Respondent”), after the defendant received full payment for a construction project from the Public Works Department (“JKR”). 35 The defendant, however, refuses to pay the plaintiff, arguing that part of the work was performed by a third-party contractor, and therefore the plaintiff should not receive payment for that portion. The central issue in this appeal is whether the defendant is still obliged to pay the plaintiff the full balance as agreed, leaving the 40 plaintiff to resolve any claims with the third-party. This dispute centres on the interpretation of the subcontract terms and the defendant’s obligation to pay according to the contract. Background Facts [2]. The defendant was appointed by the JKR for a construction project 45 in Ipoh and subsequently appointed the plaintiff as a subcontractor on 19 May 2016. [3]. According to the agreement between the parties, the payment terms were structured such that the defendant would receive 2% of the total contract value, while the plaintiff would receive the 50 remaining 98%. The plaintiff completed their work, and a Certificate of Compliance and Completion (“CCC”) was issued and verified by JKR. JKR made full payment to the defendant for the contract. Insofar as what is said in this paragraph, the facts are not disputed by the parties. 55 [4]. Despite fulfilling their contractual duties, the plaintiff contends that the defendant still owed RM331,735.13 to the plaintiff. This amount S/N o40WrGrjlUarV2jSgz7Dlw includes the contract value, adjustments, and additional costs related to the project. The particulars of the plaintiff's claim are detailed as follows: 60 Description Amount (RM) Harga tender 17,895,000.00 Kenaan Cukai Barang dan Perkhidmatan (6%) 1,073,700.00 Harga kontrak 18,968,700.00 Jumlah bersih potongan (1,426,549.90) Harga kontrak muktamad 17,542,150.10 Tolak: Bayaran untuk Mekanikal dan Elektrikal (1,821,130.00) Tolak: Bayaran untuk G1 dan G2 (308,656.60) Nilai bersih kerja UVSB 15,412,363.50 Tolak: Bayaran untuk UVSB sebanyak 2% (308,247.27) Tolak: Bayaran untuk kontraktor IBS (1,735,546.91) 13,368,569.32 Tolak: Bayaran daripada UVSB (13,093,834.19) 274,735.13 Tambah: Pembekalan besi dan kerja-kerja berkaitan 37,000.00 Tambah: Bayaran pendahuluan kepada kontraktor IBS 20,000.00 JUMLAH YANG DITUNTUT 331,735.13 [5]. The defendant contested the plaintiff’s claim with a counterclaim of RM980,105.19, alleging that the plaintiff was overpaid for Industrialized Building System (“IBS”) specialised works not carried out by the plaintiff but by a third-party independent 65 contractor Corporate Builders Sdn. Bhd (“CBSB”), who had sued the defendant for specialised work done by them. As to why the CBSB sued the defendant and not the plaintiff, will be discussed later in this grounds. S/N o40WrGrjlUarV2jSgz7Dlw [6]. The plaintiff seeks to enforce a duly executed and stamped 70 agreement with the defendant. The agreement clearly stipulated the respective apportionment of the contract sum between the parties. The defendant refuses the plaintiff's entitlement on the basis that part of the contract for IBS specialised works was not carried out by the plaintiff but by a third-party independent 75 contractor i.e. CBSB, who had sued the defendant, for an outstanding sum owing for works done. The central issue between the parties is whether the defendant is bound by the terms of the contract with the plaintiff. Dispute 80 [7]. After reading the submissions and hearing the parties, it became evident to this court that the net contract sum paid by JKR to the defendant, minus preliminaries, is RM15,412,363.50. Both parties have clearly agreed that this is the net contract sum. However, the real dispute concerns the IBS work performed by the third-party 85 independent contractor CBSB. While the original contract sum for IBS work was itemised as RM2,965,000.00, the amount actually claimed by CBSB was RM1,735,546.91. The plaintiff claims that they have done the preliminary works for the IBS. Therefore, here lies the issue as to who gets to keep RM1,229,453.09 which is the 90 difference between RM2,965,000.00 and RM1,735,546.91. [8]. The plaintiff concedes that the amount claimed by CBSB should come out from the contract sum of RM15,412,363.50 to be paid to CBSB. The real dispute between the parties is regarding the IBS work carried out by the independent third-party contractor. 95 S/N o40WrGrjlUarV2jSgz7Dlw [9]. Therefore, the calculation according to the plaintiff to show its share of 98% by subtracting the defendant’s 2% entitlement and IBS works is as follows: Description Amount (RM) Net value of work (UVSB) 15,412,363.50 Less: Payment to UVSB (2%) (308,247.27) Less: Payment for IBS contractor (1,735,546.91) Total 13,368,569.32 [10]. The defendant, on the other hand, shows their calculation as 100 follows: Description Amount (RM) Main Contractor (UVSB) 15,412,363.50 IBS Contract (2,965,000.00) UVSB (2% Final Contract) (350,843.00) Payment from UVSB to Plaintiff (13,093,834.19) Design Guarantee Bond Roof Truss System 17,208.50 Excess Payment to Plaintiff for IBS scope (980,105.19) [11]. These differing calculations form the basis of the dispute between the parties regarding the payments and responsibilities related to the IBS work. The plaintiff relies on the contract which stipulates 105 themselves as the subcontractor including for IBS works. Therefore, for all intents and purposes, the agreed contract sum of RM15,412,363.50, less the defendant’s 2% (RM308,247.27) and less payment to IBS contractor RM1,735,546.91, the remaining amount must be paid to the plaintiff, which constitutes the contract 110 sum payable to the plaintiff according to the contract. S/N o40WrGrjlUarV2jSgz7Dlw Issue for Determination [12]. The issue for determination by this court is: ➢ What is the respective apportionment of entitlement between the plaintiff and the defendant? 115 ➢ Why the plaintiff is entitled to RM1,229,453.09 from the contract sum of CBSB? ➢ If the plaintiff is the Subcontractor and CBSB is the nominated subcontractor of the plaintiff, why was the plaintiff not made a party in the Sessions Court suit by the defendant? 120 What is the respective apportionment of entitlement between the plaintiff and the defendant? [13]. Parties are bound by the terms of the agreement. In the case of Perbadanan Kemajuan Negeri Selangor v. Selangor Country Club Sdn Bhd [2017] 1 MLRA 46; [2017] 2 MLJ 819; [2016] 8 125 CLJ 211, it was stated:- “[33] As a general rule, the words of an instrument must be construed according to their natural meaning. Where the language of a document is plain and unambiguous and applies accurately to existing facts then the intention of the parties to the 130 document should be gathered from the language of the document itself. No amount of acting by the parties can alter or qualify words which are plain and unambiguous: see s 94 of the Evidence Act 1950; North Eastern Railway Company v. Hastings [1900] AC 260 (PC). 135 S/N o40WrGrjlUarV2jSgz7Dlw [34] Accordingly, when a court is called upon to interpret a document, it looks at the language. If the language is clear and unambiguous and applies accurately to existing facts, it shall accept the ordinary meaning, for the duty of the court is not to 140 delve into the intricacies of the human mind to disclose one's undisclosed intention, but only to take the meaning of the words used by him, that is to say his expressed intentions: see Kamla Devi v. Takhatmal [1964] AIR Vol 51 a Supreme Court of India decision at p 386. 145 [37] In our view, this maxim applies to the words used in cl 3.1 of the 1999 Agreement and cl 18 of the 1994 Agreement. There is no word in either cl 3 or cl 18 to suggest that PKNS has undertaken to deliver up to SCCSB the document of title to the 150 Subject Land with the category of land use "bangunan" and express condition "bangunan perniagaan". It is not for the court to insert an implied term in a contract unless such term is made requisite by necessary implication either from the context or the surrounding circumstances.” 155 [14]. The present case involves a contractual dispute where the plaintiff, seeks to enforce payment based on a clear and an unambiguous agreement between the parties. The agreement between the parties was structured such that the defendant would receive 2% 160 of the total contract value, while the plaintiff would receive the remaining 98%. However, the defendant, contests that part of the work under the contract was done by a third-party contractor CBSB, not by the plaintiff. [15]. In the case of Perbadanan Kemajuan Negeri Selangor v. 165 Selangor Country Club Sdn Bhd (supra), the Federal Court S/N o40WrGrjlUarV2jSgz7Dlw affirms the principle that when interpreting a contract, the court must focus on the language of the document itself. If the words of the contract are clear and unambiguous, the court is bound to enforce the contract according to its natural meaning. This 170 approach is consistent with section 94 of the Evidence Act 1950, which prohibits the introduction of extrinsic evidence to contradict or vary the terms of a written contract. [16]. In the present case, the agreement between the plaintiff and the defendant was clear and unequivocal. The contract provided that 175 the defendant was entitled to 2% of the total contract value, while the plaintiff was entitled to 98%. Both parties agreed that the net contract sum after preliminaries was RM15,412,363.50. These terms were plain and unambiguous, and therefore the same must be enforced according to their natural meaning. 180 [17]. The defendant attempts to avoid paying the remaining balance by arguing that a portion of the work was performed by CBSB, an independent contractor goes against the terms of the agreement. There is no term in the agreement to suggests that the defendant’s obligation to pay the plaintiff is contingent on who performed the 185 work. The contract merely sets out the apportionment of the contract sum. The plaintiff, having fulfilled its contractual obligations, is entitled to payment as per the agreed terms. The defendant cannot introduce external considerations, such as the involvement of a third-party, to alter the clear terms of the contract. 190 [18]. The defendant has failed to provide any documentary evidence to show that the agreement between the parties was subject to S/N o40WrGrjlUarV2jSgz7Dlw change based on CBSB’s involvement. The fact that CBSB performed some of the work is irrelevant to the plaintiff’s entitlement under the contract. As stated in Perbadanan 195 Kemajuan Negeri Selangor v. Selangor Country Club Sdn Bhd (supra), where the language of the contract applies accurately to existing facts, the court must give effect to the expressed intentions of the parties. The court cannot insert implied terms or alter the contract's meaning to reflect the defendant’s subsequent claims. 200 [19]. The dispute between the parties hinges on the allocation of RM1,229,453.09, which is the difference between the IBS contract sum of RM2,965,000.00 and CBSB’s claim of RM1,735,546.91. The plaintiff has conceded that CBSB’s claim should be paid out of the contract sum, but this does not affect the plaintiff’s entitlement 205 to the balance of RM1,229,453.09. As per the contract’s clear terms, the plaintiff is entitled to 98% of the net contract sum, less the amount to be paid to CBSB. Therefore, the plaintiff is entitled to the remaining balance. [20]. In light of the principles established in Perbadanan Kemajuan 210 Negeri Selangor v. Selangor Country Club Sdn Bhd (supra), and the plain language of the contract between the parties, the plaintiff is entitled to the sum claimed. The defendant is bound by the contract's terms and must pay the plaintiff as agreed, regardless of any third-party involvement. The defendant’s refusal 215 to make payment is not supported by the contract or any legal principle that would allow them to withhold payment under these circumstances. Therefore, this Court rules in favour of the plaintiff and order the defendant to pay the remaining balance owed, S/N o40WrGrjlUarV2jSgz7Dlw amounting to RM331,735.13 or such sum after taking into account 220 the plaintiff's withdrawal of the claim of “supply of iron and related works amounting to RM37,000.00 and advance payment to CBSB amounting to RM20,000.00,” totalling RM57,000.00. Thus, leaving the sum claimed at RM274,735.13. Why the Plaintiff is Entitled to RM1,229,453.09 from the Contract Sum 225 of Corporate Builder Work [21]. The plaintiff was appointed as the subcontractor to execute all works under the main contract dated May 19, 2016. The plaintiff's responsibilities included ensuring the completion of the project as per the contractual agreement with the defendant. 230 [22]. The contract specified that the IBS work was valued at RM2,965,000. However, CBSB performed only part of this work, valued at RM1,735,546.91. [23]. During trial, Mr Ding Nai Sing from the plaintiff, explained that CBSB handled part of the IBS work, specifically beams and half of 235 the slab. The plaintiff has completed the remaining work by laying iron and concrete to create the full floor. He confirmed that out of the RM2,995,000 IBS contract sum, RM1.7 million went to Corporate Builders for their part, while the remaining RM1.2 million was for the plaintiff’s work. Mr Ding also clarified that the defendant 240 was responsible for paying Corporate Builders directly, with the RM1.7 million deducted from the plaintiff’s payments. He emphasised that the plaintiff was responsible for ensuring the proper execution of the IBS work. S/N o40WrGrjlUarV2jSgz7Dlw [24]. The balance sum of RM1,229,453.09 for the IBS work, the plaintiff 245 asserts they completed. This clarifies that not all IBS work was undertaken by CBSB, contrary to the defendant's assertions. The following contention and evidence proffered during the trial establish the plaintiff’s contention: a. During cross-examination, the defendant’s 250 witness, Alias, conceded that the total contract sum, including variations, was RM15,412,363.50 and that the IBS work was part of this sum. Furthermore, Alias acknowledged that the payment received by the defendant was based on 255 the actual completed work, reinforcing the plaintiff’s claim that they carried out the IBS work valued at b. The contemporaneous documents, such as the contractual agreement dated May 19, 2016, and 260 subsequent payment records, align with the plaintiff’s assertion. These records indicate that the plaintiff completed the IBS work alongside CBSB, as both parties received payments proportionate to their contributions. 265 c. Correspondence between the plaintiff and the defendant, including the defendant’s letter dated February 3, 2020, acknowledges the plaintiff’s claim and the corresponding deduction of RM308,247.27 as the 2% due to the defendant. 270 This letter, along with the attached invoices, S/N o40WrGrjlUarV2jSgz7Dlw confirms that the plaintiff was responsible for a significant portion of the IBS work. d. In their pleadings, the plaintiff consistently maintained that they undertook part of the IBS 275 work. This consistency strengthens their position and challenges the defendant’s contradictory claims. [25]. In view of the above, I accept the calculation by the plaintiff. After 280 paying the IBS contractor RM1,735,546.91, the remaining amount shall be owing to and payable to the plaintiff, which the plaintiff has duly claimed. If the Plaintiff was the Subcontractor and CBSB is the Nominated Subcontractor of the Plaintiff. Why was the Plaintiff not made a party 285 in the Sessions Court suit by the Defendant? [26]. The defendant’s failure to include the plaintiff as a party in the sessions court suit filed by CBSB is not the plaintiff’s fault. The defendant’s deliberate decision to exclude the plaintiff from the suit was intended to support their unjustifiable claim of 290 [27]. When CBSB sued the defendant for payment related to the IBS work, the defendant chose not to join the plaintiff as a party to that suit. This exclusion is significant and carries several implications: a. The defendant was fully aware that the plaintiff had 295 performed a substantial portion of the IBS work. S/N o40WrGrjlUarV2jSgz7Dlw Despite this knowledge, the defendant did not join the plaintiff in the legal proceedings with CBSB. It was within the defendant’s responsibility and capacity to include the plaintiff, ensuring that all 300 relevant parties were represented and that the court could make a fully informed decision. b. By not making the plaintiff a party in the sessions court suit, the defendant strategically aimed to secure a judgment against the plaintiff in this 305 present action initiated in the first instance court by showing the judgment by CBSB obtained against the defendant as proof that the IBS works were contracted between the defendant and CBSB. Therefore, the plaintiff cannot claim for the 310 c. The defendant’s exclusion of the plaintiff from the suit was not an oversight but a calculated decision to maintain their claim to RM1,229,453.09. This amount is part of the total IBS work valuation that 315 the plaintiff completed. The defendant's actions demonstrate a clear intent to unjustly enrich themselves at the plaintiff’s expense. [28]. The plaintiff submits that the defendant’s decision to exclude the 320 plaintiff from the sessions court suit filed by CBSB was a strategic move to support their unfounded claim of RM1,229,453.09. This exclusion is not the plaintiff’s fault but a deliberate act by the defendant to avoid accountability and unjustly enrich themselves. S/N o40WrGrjlUarV2jSgz7Dlw [29]. The learned sessions court judge erred in this respect, and this 325 court sees it fit to interfere on appeal to set aside the decision of the Sessions Court. In Stone Master Corporation Berhad v. Dato Koh Mui Tee & Ors [2024] MLRA 310, the Court of Appeal stated aptly on the law of appellate intervention: [87] It is trite that when a matter comes up on appeal, an 330 appellate court is required to determine whether the trial court had arrived at its decision or findings correctly based on the relevant law and established evidence. It is also trite that an appellate court will not generally intervene with the decision of a trial court unless the trial court is shown to be plainly wrong in 335 arriving at its decision. A plainly wrong decision happens when the decision of the trial court is arrived at without judicial appreciation of the evidence (see UEM Group Bhd v. Genisys Integrated Engineers Pte Ltd & Anor [2010] 2 MLRA 668; [2018] MLJ Supp 363; [2010] 9 CLJ 785, Chow Yee Wah & Anor v. Choo 340 Ah Pat [1978] 1 MLRA 461; [1978] 2 MLJ 41b; Watt or Thomas v. Thomas [1947] AC 484, Gan Yook Chin & Anor v. Lee Ing Chin & Ors [2004] 2 MLRA 1; [2005] 2 MLJ 1; [2004] 4 CLJ 309; [2004] 6 AMR 781, and Ng Hoo Kui & Anor v. Wendy Tan Lee Peng, Administrator of The Estates of Tan Ewe Kwang, Deceased & 345 Ors [2020] 6 MLRA 193; [2020] 12 MLJ 67; [2020] 10 CLJ 1).” (underline is emphasised) Conclusion [30]. In conclusion, the terms of the contract between the plaintiff and the defendant clearly dictate the apportionment of 2% to the 350 defendant and 98% to the plaintiff. Since both parties have agreed that the contract sum is RM15,412,363.50, this apportionment S/N o40WrGrjlUarV2jSgz7Dlw must be strictly adhered to by the parties. Furthermore, evidence provided during the trial confirms that the plaintiff undertook some of the works related to the IBS, despite the defendant's claims to 355 the contrary. [31]. Taking into account these facts and, most importantly, the express terms of the contract, judgment must be entered in favour of the plaintiff. The defendant's refusal to pay the plaintiff based on the involvement of a third-party, CBSB does not align with the 360 contractual terms, which remain clear and unambiguous. Therefore, the defendant's counterclaim must fail. [32]. In allowing the plaintiff's appeal, I hold that judgment is to be entered against the defendant after considering the plaintiff's withdrawal of claims for the "supply of iron and related works" 365 amounting to RM37,000.00 and the "advance payment to CBSB" amounting to RM20,000.00. This brings the total withdrawal to RM57,000.00, leaving the plaintiff's claim at RM274,735.13. The defendant is ordered to pay this amount, along with costs of RM5,000.00. 370 Date : 1 October 2024 Moses Susayan 375 MOSES SUSAYAN Judicial Commissioner High Court in Malaya 380 at Ipoh, Perak S/N o40WrGrjlUarV2jSgz7Dlw Counsel : 385 For the Appellant : Zaim Zhafri bin Azhar (together with Azief Hakimi) Advocates and Solicitors [Messrs Mior & Associates] Ipoh, Perak 390 For the Respondent : Hasanuddin bin Mohd Yusoff (together with Nur Farhana Afiqah binti Radzwan) Advocates and Solicitors 395 [Messrs Hasanuddin Shafarin & Ghazali] Ipoh, Perak (Notice: This Grounds of Decision is subject to official editorial revision) 400 Headnotes The appeal concerns a subcontract payment dispute with the 405 contractor – whether, regardless of third-party involvement in performing part of the work, compliance with the contract terms requires full payment to the subcontractor by the contractor. The court enforced the agreement, ordering payment according to the contract, and dismissed arguments based on extrinsic factors. The third party must seek payment from the 410 subcontractor for any work performed. S/N o40WrGrjlUarV2jSgz7Dlw