a
(a) the 1st Defendant was very close to Tan Sri Tee Hock Seng (TST), the chairman of the 4th Defendant;
/akn/my/judgment/court-of-appeal/2018/ec97f8b6-aad6-4006-a17b-a1fa8394f65b
Court of Appeal of Malaysia17 Jan 2018RAYUAN SIVIL NO. W-01(C)(W)-375-02/2017 didengar bersama RAYUAN SIVIL NO. W-01(C)(W)-376-02/2017
The written judgment as the court issued it, with the coram, case number, and source links. Every paragraph has its own anchor.
Text
1 DALAM MAHKAMAH RAYUAN MALAYSIA (BIDANGKUASA RAYUAN) RAYUAN SIVIL NO. W-01(C)(W)-375-02/2017 ANTARA
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1. ONG LEONG CHIOU (NO.KP:741009-14-5475)
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2. PERFECT SELECTION SDN BHD … PERAYU-PERAYU DAN
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1. KELLER (M) SDN BHD (NO. SYARIKAT: 24057-T)
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2. BINA PURI HOLDINGS BERHAD
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3. PS BINA SDN BHD (NO. SYARIKAT: 1064980-U) … RESPONDEN-RESPONDEN DIDENGAR BERSAMA DALAM MAHKAMAH RAYUAN MALAYSIA (BIDANGKUASA RAYUAN) RAYUAN SIVIL NO. W-01(C)(W)-376-02/2017 ANTARA BINA PURI HOLDINGS BERHAD … PERAYU DAN 2
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1. KELLER (M) SDN BHD (NO. SYARIKAT: 24057-T)
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2. ONG LEONG CHIOU (NO.K/P: 741009-14-5475)
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3. PS BINA SDN BHD (NO. SYARIKAT: 1064980-U)
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4. PERFECT SOLUTION SDN BHD (NO. SYARIKAT: 622301-K) … RESPONDEN-RESPONDEN [Dalam Mahkamah Tinggi Malaya di Kuala Lumpur (Bahagian Sivil) Guaman Sivil No.: 22C- 28-07/2015 Antara Keller (M) Sdn Bhd (No. Syarikat: 24057-T) … Plaintif Dan
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1. Ong Leng Chiou (No. K/P: 741009-14-5475)
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2. PS Bina Sdn Bhd (No.Syarikat:1064980-U)
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3. Perfect Selection Sdn Bhd (No. Syarikat: 622301-K)
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4. Bina Puri Holdings Sdn Bhd (No. Syarikat: 2017184-X) … Defendan-Defendan] (An appeal against the decision of YA Dato’ Lee Swee Seng High Court Judge, High Court at Kuala Lumpur on 26.1.2017) 3 CORAM: HAMID SULTAN BIN ABU BACKER, JCA ABANG ISKANDAR BIN ABANG HASHIM, JCA HASNAH BINTI DATO’ MOHAMMED HASHIM, JCA JUDGMENT OF THE COURT [1] There are two appeals emanating from one judgment. The appeals are W-02(C)(W)-375-02/2017 (“Appeal 375”) and W-02(C)(W)-376-02/2017 (Appeal 376”). The appeals by the Appellants are against the decision of the High Court dated 27.1.2017 after a full trial. Appeal 375 is the appeal by the 1st and 3rd Defendants and Appeal 376 is the appeal by the 4th Defendant. [2] We had on 17.1.2018, after perusing the Records of Appeal and hearing submissions from learned counsel for the Appellants as well as the Respondent unanimously dismissed the appeals. We set out below our reasons. [3] For ease of reference, in this judgment, the parties will be referred to as they were in the High Court. 4 Background Facts [4] The Plaintiff is part of the Keller Group, an independent ground engineering specialist. The 1st Defendant is a director and shareholder of the 2nd Defendant and 3rd Defendant, holding 40% in the 2nd Defendant and 50% in the 3rd Defendant. He is described as the de facto controller of the 2nd and 3rd Defendant. The 2nd Defendant is a building contractor and the 3rd Defendant is a general building sub-contractor. [5] The 4th Defendant was appointed by Sime Darby Capitalmalls Asia Sdn Bhd as the main contractor to construct the Melawati Shopping Mall (“the Project”). [6] It is the Plaintiff’s pleaded case that sometime in 2013 the 1st Defendant made the following representations to the Plaintiff to induce the Plaintiff to enter into an agreement with the 1st Defendant:
a
(a) the 1st Defendant was very close to Tan Sri Tee Hock Seng (TST), the chairman of the 4th Defendant;
b
(b) due to close relationship, the 1st Defendant was part of or was an agent of the 4th Defendant and/or any of the subsidiaries companies; 5
c
(c) the 1st Defendant would be able to secure from the 4th Defendant through TST the sub-structure works for the Project. TST would be the sleeping partner of the1st Defendant’s company or companies that would be awarded the substructure works;
d
(d) the Plaintiff would not be able to contract directly with the 4th Defendant for the sub structure works or any part thereof. It would be beneficial for the Plaintiff to go through the 1st Defendant’s company;
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(e) the payments from the 4th Defendant for the sub-structure works will be placed in a ‘special account’ in the 1st Defendant’s company; and
f
(f) one Mr. Chang Sin Fai (“Chang”) will be authorised by the 1st Defendant to represent the 1st Defendant to liaise with the Plaintiff. [7] On 13.9.2013 it is alleged that Chang emailed to the Plaintiff through a company known as CTF Build Sdn Bhd (“CTF”) inviting the Plaintiff to submit a quotation for contiguous bored piles works (“CBP Works”) - one of the sub-structure works for the Project. In the Invitation to Quote, two blank bills of quantities (“BQ”) were attached:
i
(i) Bill No. 2 for CBP Works to enable the Plaintiff to quote; and
subparagraph
(ii) Bill No. 4 for bored piles works not related to the CBP Works. 6 [8] On 19.9.2013, in response to the Invitation To Quote, the Plaintiff sent its quotation to CTF for the CBP Works based on the information of the works contained in the Blank Bill No.2. A Letter of Award dated 21.10.2013 was issued by the 2nd Defendant, not the 3rd Defendant nor CTF, appointing the Plaintiff to carry out the CBP Works for a provisional sum of RM17,6000,000.00. [9] The 1st Defendant explained to the Plaintiff the reason the 2nd Defendant issued the Letter of Award was because the 1st Defendant owns and control the 2nd Defendant and to facilitate banking transaction. The 1st Defendant assured the Plaintiff that in reality the Plaintiff will be dealing with the 1st Defendant and/or the 4th Defendant. [10] Subsequent to the execution of the CBP Works contract, it is alleged by the Plaintiff that the 1st Defendant and/or with Chang persuaded the Plaintiff to carry out bore piling works for the foundation (“FBP Works”). The Plaintiff submitted its quotation on 4.11.2013 to the 2nd Defendant for the attention of the 1st Defendant. The quotation was based on the information as set out in the Blank Bill No.4.The said quotation was then revised from RM13,627,510.40 to RM13,125,000.00 on 9.11.2013 as the Final Commercial Proposal. As the FBP Works would substantially increase the 7 Plaintiff’s risk exposure, the Plaintiff wanted the 1st Defendant and/or the 2nd Defendant to secure a guarantee from the 4th Defendant for the payment of work done. [11] By a Letter of Award dated 12.11.2013, the 2nd Defendant accepted the Plaintiff’s the Final Commercial Proposal for the FBP Works. The Plaintiff entered into a contract with the 2nd Defendant for the FBP Works. [12] The Plaintiff was asked to carry out ground anchor works (“GA Works”) and on 12.12.2013 the Plaintiff submitted its quotation for the GA Works to the 2nd Defendant. The said quotation was also revised on 10.1.2014. The Plaintiff also requested for a guarantee from the 4th Defendant to secure payment for work done. [13] A draft Letter of Award dated 7.2.2014 was issued by the 2nd Defendant accepting the Plaintiff’s revised quotation for the GA Works for the provisional sum of RM7,200,000.00. The Plaintiff accepted and entered into contract with the 2nd Defendant to carry out the GA Works by amending the draft Letter of Award. [14] The CBP Works, the FBP Works and the GA Works are collectively referred to as “the Works”. It is Plaintiff’s pleaded case that the Plaintiff was 8 led to believe by the 1st Defendant that the 2nd Defendant will enter into a contract with the 4th Defendant for the Works. The Plaintiff subsequently discovered that the 4th Defendant had in fact entered into contract with the 3rd Defendant instead. However, in full reliance of the assurance and representation given by the 1st Defendant as well as the 2nd and 3rd Defendants the Plaintiff proceeded with the Works. [15] Sometime on 11.3.2014, after the commencement of the FBP Works and the GA Works the Plaintiff received letters from the 2nd and 3rd Defendants dated 6.2.2014 referring to a previous letter dated 7.3.2014 from the 4th Defendant agreeing to pay direct payment up to the limit of RM2 million to the Plaintiff provided that there the amount is certified as due and payable to the 3rd Defendant. [16] It is the Plaintiff ‘s pleaded case that the 1st Defendant and/or the 2nd Defendant and/or 3rd Defendant breached the representations made, in particular, the 2nd Defendant breached clauses 23 and 26 of the FBP Contract and the GA Contract as follows: a) In respect of the FBP Contract, the guarantee was not in line with the Plaintiff’s intended guarantee by the 4th Defendant; and 9 b) In respect of the GA Contract, the 4th Defendant did not provide any guarantee whatsoever. [17] On 16.10.2014 the guarantee was increased to RM3.5 million and confirmed by the 4th Defendant vide a letter dated 27.10.2014. Up to 15.1.2015, the 4th Defendant agreed to issue further letter of guarantee for the retention sum of RM1,913,080.25. However, the 2nd Defendant failed to pay the Plaintiff for the Empty Bore Works or the FBP Works amounting to RM7,462,720.19 and to secure guarantee from the 4th Defendant. By reason of the breach the Plaintiff suffered loss and damages including loss and expense in excess of RM2,000,000.00. [18] The Plaintiff contended that the 3rd Defendant and/or the 4th Defendant had benefitted from the Empty Bore Works carried out and completed by the Plaintiff. The costs of the Empty Bore Works is RM7,462,720.19. The 4th Defendant is liable to pay to the Plaintiff the sum of RM717,721.96 being part of the RM3.5 million agreed as guarantee (of which the sum of RM2,782,278.04 has been paid) and the retention sum of RM1,913,080.25. [19] The reliefs sought by the Plaintiff are summarised as follows: a) Against the 1st, 2nd and 3rd Defendants :- 10
i
(i) The sum of RM7,462,720.19 for the unpaid Empty Bore Works;
subparagraph
(ii) The sum of RM1,913,080.25 for the retention sum deducted by the 2nd Defendant;
subparagraph
(iii) Loss and expense amounting to RM2,000,000.00 or a sum to be assessed;
subparagraph
(iv) Aggravated Damages;
v
(v) Interest at 5 % per annum; and
subparagraph
(vi) Costs b) Against the 4th Defendant :-
i
(i) Jointly and/or severally with the rest of the Defendants for items a) (i) (ii) and (vi);
subparagraph
(ii) Alternatively, RM717,721.96 being part of the RM3.5million agreed as guarantee (the sum of RM2,782,278.04 has been paid) and to pay the retention sum of RM1,913,080.25;
subparagraph
(iii) An injunction to restrain the 4th Defendant from releasing any monies or retention sum relating to the Works;
subparagraph
(iv) Interest at 5%; and
v
(v) Costs. 11 [20] The 4th Defendant denied the claim on the basis that there is no contractual relationship between the 4th Defendant and the Plaintiff. The 4th Defendant does not owe the Plaintiff any obligation to provide the guarantee under the FBP Contract and the GA Contract. The 4th Defendant agreed to paid as a matter of goodwill and subject to following conditions:
i
(i) The amount must be certified due and payable by the 4th Defendant to the 3rd Defendant;
subparagraph
(ii) The limit of such direct payment is RM3.5 million; and
subparagraph
(iii) The arrangement does not create a contractual obligation between the 4th Defendant and the Plaintiff. [21] The 2nd Defendant filed a Counterclaim against the Plaintiff for the sum of RM1,324,868.11 for defective works. The High Court Decision [22] After full trial, the learned trial judge found, inter alia, as follows:
i
(i) The Plaintiff has proved on the balance of probabilities, the sum of RM7,462,720.19 as the amount outstanding based on the various Interim Progress Claims and Certificates before the unilateral reversal by the 2nd Defendant; 12
subparagraph
(ii) The 2nd Defendant has proved the counterclaim of RM1,324,868.11, this sum to be deducted from the Retention Sum of RM1,913,080.25; and
subparagraph
(iii) The 2nd Defendant is liable to pay the Plaintiff the sum of RM8,050,932.33 with interest of 5% from the date of the writ until realisation. [23] In respect of whether the 1st Defendant and 3rd Defendant can be made jointly and severally liable with the 2nd Defendant, the trial judge found:
i
(i) The 3rd Defendant knew of the terms of contract with the 4th Defendant that the Empty Bore Works would not be paid even before the execution of the contract between the Plaintiff and the 2nd Defendant. The 1st Defendant had used his influence with TST to secure the contract between the 3rd and 4th Defendants and persuaded the Plaintiff to accept the 2nd Defendant as the party to enter into the FBP Contract;
subparagraph
(ii) The 1st, 2nd and 3rd Defendants knew of the fact that contractually the 2nd Defendant had to pay the Plaintiff for the shortfall of RM7 million plus the Empty Bore Works; 13
subparagraph
(iii) That on the balance of probabilities there was a concerted effort to conceal and delay the reversal of the certification of the certifications for the Empty Bore Works; and
subparagraph
(iv) The 1st, 2nd and 3rd Defendants are jointly and severally liable to the Plaintiff for the sum of RM8,050,932.33 together with interest at 5% per annum from the date of writ. [24] The 4th Defendant shall pay the sum of RM717,721.96 to the Plaintiff together with interest at 5% per annum from date of writ to realisation. The learned judge further ordered the 3rd Defendant to pay the said sum with interest to the 4th Defendant. Our Consideration and Decision [25] We are mindful of the limited role of the appellate court in relation to findings of facts made by the court of first instance. The general principle is that the conclusion of a trial judge is a finding of fact on the oral evidence based on the demeanour and credibility of the witnesses before him or her. Generally, such finding ought not be disturbed unless the appellate court is convinced that it is plainly wrong. It would not be sufficient to warrant any interference merely because the appellate court entertains doubt whether 14 such finding is right (See: Lee Ing Chin & Ors v. Gan Yook Chin [2003] 2 CLJ 19, Gan Yook Chin & Anor v. Lee Ing Chin & Ors [2004] 4 CLJ 309). [26] The appellate court must be slow to interfere with the findings made by the trial court unless if it be shown that there was no judicial appreciation of the evidence adduced before it. [27] Having set out the legal principles underlying appellate intervention, we now turn to the facts of the present case. [28] In Appeal 375 the 1st Defendant and the 3rd Defendant sought to set aside the part of the High Court Judgment that the 1st, 2nd and 3rd Defendants are jointly and severally liable to the Plaintiff for the sum of RM8,050,932.33. By lifting the corporate veil of the 2nd Defendant the learned trial Judge found that 1st and 3rd Defendants were liable. Lifting of the corporate veil [29] It is the submission of learned counsel for the 1st and 3rd Defendants that the transaction between the Plaintiff and the 2nd Defendant was purely contractual and that there was no fraud on the part of the 1st and/or 3rd Defendants. It is further argued that the 2nd and 3rd Defendant did not operate as a single economic unit. Therefore, the learned judge erred in lifting the 15 corporate veil to hold the 1st and 3rd Defendants liable (Law Kam Loy & Anor v. Boltex Sdn Bhd & Ors [2005] 3 CLJ 355 (CA). [30] This Court in Tenaga Nasional Bhd. Irham Niaga Sdn Bhd & Anor [2017] 5 CLJ 488 summarised the principles of law on the lifting of the corporate veil which could be distilled into the following: “(a) the corporate veil could be lifted/pierced in exceptional circumstances; and
b
(b) those exceptional circumstances must involve:
i
(i) actual or equitable fraud; and
subparagraph
(ii) the use of the company whose corporate veil was to be lifted as the means to conceal the true facts behind the façade of the company.” [31] In addressing the issues of a single economic unit and lifting of the corporate veil the learned Judge found, based on the evidence before him, that the 2nd Defendant was specifically incorporated to link with the 3rd Defendant as the 3rd Defendant has substantial assets, funding and a good track record. The 2nd Defendant, on the other hand, has no track record and other projects to its name. The 2nd Defendant was to absorb losses that were anticipated from its inability to pay for the Empty Bore Works. The 2nd Defendant contended it had a contract from 3rd Defendant for works from GA Land. However, in a letter dated of 4.10.2013, the 3rd Defendant referred to the 2nd Defendant‘s tender. We agree with the learned High Court Judge 16 that this is rather peculiar and highly improbable as the 2nd Defendant was incorporated on the same date, that is on 4.10.2013 [32] The learned High Court Judge in his Grounds of Judgment explained: “[130] Looking back then in retrospect, the actions of D1, D2 and D3 taken together as a whole, is such that they were acting in concert to try to avoid and evade their legal obligation to pay for the EBW. In doing so they acted fraudulently. The veil of incorporation of D2 must be lifted and when so lifted, it exposed D1 as the master of the various moves to structure a deal where D2 would be allowed to fall but that the Works are completed nevertheless and D3 would be distanced from the fall out as it is not a contracting party with the Plaintiff. By that time the remaining Works had not been completed yet and CPC had not been issued.” [33] Justice Abdul Malik Ishak (JCA) in the case of Mackt Logistics (M) Sdn Bhd v. Malaysian Airline System Bhd [2014] 5 CLJ 851 in his judgment explained: “Once a company is incorporated, a veil is cast over the true controllers of the company, through which the law will not usually penetrate. There was no standard principle to guide the courts in piercing the corporate veil. However, there are statutory as well as common law exceptions to the principle enunciated in Salomon v. Salomon & Co, and once a case comes within one of the exceptions, the courts may lift the veil of incorporation. In piercing the corporate veil, the facts of the case must be examined and it must be clearly pleaded that the veil should be lifted.” [34] The Federal Court decision of Gurbachan Singh Bagawan Singh & Ors v. Vellasamy Pennusamy & Other Appeals [2015] 1 CLJ 719 held: 17 “[96] But in the event that we should, we are of the view that it is now a settled law in Malaysia that the court would lift the corporate veil of a corporation if such corporation was set up for fraudulent purposes, or where it was established to avoid an existing obligation or even to prevent the abuse of a corporate legal personality. [97] As to what constitutes fraudulent purposes, it has been described as to include actual fraud or fraud in equity. And fraud in equity occurred in '... cases where there are signs of separate personalities of companies being used to enable persons to evade their contractual obligations or duties, the court would disregard the notional separateness of the companies...” [35] After having read the grounds of judgment of the learned Judge, in the context of the totality of the evidence, we find that the findings of the learned Judge were arrived at after a thorough judicial appreciation of the facts and law. In our view, the learned Judge had meticulously dealt with every issues raised by the Appellants and gave reasons for his findings. The actions of the 1st, 2nd and 3rd Defendants taken together as a whole, clearly show that that they were acting in concert to try to avoid and evade their legal obligations. The learned Judge had applied the correct principles and based on both oral and documentary evidence he had correctly lifted the corporate veil. [36] In Appeal 376 the 4th Defendant is seeking to set aside the part of the High Court Judgment which allowed the Plaintiff’s claim against the 4th 18 Defendant in the sum of RM717,721.96 with interest at the rate of 5% per annum from the date of the writ to the date of realisation and ordered the 4th Defendant to pay the Plaintiff the aforesaid sum. [37] Before us learned counsel had canvassed the following issues:
i
(i) There are clear and unambiguous written terms restricting such payments to be made;
subparagraph
(ii) The learned High Court Judge failed to consider the evidence sufficiently and applied the relevant legal principles. If he had, he would have found that:
a
(a) there was no amount due and payable by the 4th Defendant to the Plaintiff;
b
(b) there was no agreement or understanding of such arrangement, that is, the 4th defendant would pay the Plaintiff directly for the Earth Bore Works; and
c
(c) the Plaintiff’s claim for RM717,721.96 for the Earth Bore Works was not within the scope of the Direct Payment Arrangement. Empty Bore Works [38] Learned Counsel for the 4th Defendant argued that the direct payment arrangement arose from a series of discussions between the parties. By a 19 letter dated 7.3.2014 the 4th Defendant had agreed to make direct payments to the Plaintiff based on the following conditions:
i
(i) the amount to be paid is certified as being due and payable by 4th Defendant to the 3rd Defendant; and
subparagraph
(ii) the limit of the direct payment shall be in the sum of RM2 million. This limit was subsequently increased to RM3.5 million. [39] The 2nd and 3rd Defendant authorised the direct payment vide a letter dated 6.2.2014 with conditions (See: Common Core Bundle, Volume10; pg 2915): 20 [40] The 3rd Defendant then issued a letter dated 6.2.2014 to the 4th Defendant to make direct payments to the Plaintiff on behalf of the 3rd Defendant as follows: [41]
preamble
Pursuant to the agreed arrangement, the 4th Defendant made direct payments to the Plaintiff totaling RM2,782,278.04: 21
i
(i) RM 2,145,360.35 as per Certificate No.10; and
subparagraph
(ii) RM 636,917.69 as per Certificate No.11. [42] It is the submission of the learned counsel for the 4th Defendant that the High Court Judge had misdirected himself in law in allowing the Plaintiff’s claim as there are clear and unambiguous terms restricting such payments to be made as stipulated under the Contract for Empty Bore Works between the 3rd and 4th Defendants: “UNCONCRETED (EMPTY) BORE The unit rate of the pile shall be deemed to include whatever empty bore above the cut-off level of the pile. No claims will be considered for any empty bore due to his (sic) sequence of construction.” (See: Common Core Bundle Volume 10; page 2763). [43] Furthermore, the direct payment arrangement for payments by the 4th Defendant to the Plaintiff is subject to the amounts duly certified as due and payable by the 4th Defendant to the 3rd Defendant. The Progress Payment Certificate No.25 dated 20.1.2016 confirmed that there are no sums due and payable to the 3rd Defendant by the 4th Defendant. Thus, it is the submission of learned counsel for the 4th Defendant that the learned Judge erred in law and fact in allowing the claim for RM717,721.96. 22 [44] Learned Counsel for the Plaintiff in response argued that there was decertification of certain Certificates that were previously certified, such as Certificate No.8.The amount due for the Empty Bore Works in respect of the FBP Contract is RM7,462,720.19 and the decertification of the sums due was only made after the completion of the works under the FBP Contract. It was only after the decertification that it was discovered by the Plaintiff that by the terms of the contract between the 3rd and 4th Defendants, the 3rd Defendant would not be paid for the Empty Bore Works. [45] In respect of the terms of the contract and the decertification evidence was led on this issue by both side. The learned High Court Judge had scrutinised the terms of the contracts between the parties together with the oral evidence, and in our judgement, he had correctly concluded that the 1st and 3rd Defendants was aware of the terms of the contract with the 4th Defendant that the Empty Bore Works would not be paid, even before the execution of the contract between the Plaintiff and the 2nd Defendant on 12.11.2013.Yet, the 1st Defendant had leveraged his influence with TST to secure the contract between the 3rd Defendant and the 4th Defendant and persuaded the Plaintiff to accept the 2nd Defendant as the contracting party for the FBP Contract. The learned High Court Judge’s reasons are as stated in his grounds of judgment: 23 “[52] If indeed the terms between D3 and D4 was initially that D4 had agreed to pay D3 for the EBW, then surely D3 could have called TST as witness. The witness that came on behalf of D4, one Mr Png Choon Yam as DW 4 did not testify to this effect. [53] On the balance of probabilities I would say that D3 knew of the terms of the contract with D4 that the EBW would not be paid, even before the execution of the contract between the Plaintiff and D2 on 12.11.2013 and with that, D1 too, for it was D1 that leveraged his influence with TST to secure the contract between D3 and D4 and who persuaded the Plaintiff to accept D2 as the contracting party for the FBP Contract. [54] D1's fingerprints and footprints are all over D2 and D3, being companies and vehicles controlled by him in the overall scheme of executing the works for this Project. D1 is effectively the Managing Director of both D2 and D3 and a substantial and major shareholder as well in both D2 and D3. In the business card given by D1 to PW1, D1 described himself as the Managing Director of D3. See page 30 PBOD 4. [55] Even assuming for a moment that D3 was unaware of this before the execution of the contract with D4, D3 certainly knew about this that the EBW would not be paid by D4 when the contract was executed on 9.12.2013. As pointed out by learned counsel for Plaintiff that was the same date when the Plaintiff had started work on the EBW. See page 149 of PBOD1. On 30.12.2013 the Plaintiff had written to say that there would be around RM4.8 million worth of empty bore estimate and that EBW are payable (pages 566-68 PBOD3). There was surprising silence from D2 and by extension D1 and D3 as well; the kind of silence that speaks volume of D2's culpable conduct, with full knowledge of D1 and D3.” 24 [46] The 4th Defendant aware of the terms of contract with the 3rd Defendant, nevertheless after series of meetings with the 1st, 2nd and 3rd Defendants, gave an undertaking to pay the Plaintiff up to the limit of RM3.5 million. [47] Based on the above appreciation of the evidence, we found that the learned trial Judge was correct in finding that the Plaintiff has proved on the balance of probabilities, the sum claimed of RM7,462,720.19 as the amount outstanding based on the various Interim Progress Claims and Certificates issued before the unilateral reversal or decertification by the 2nd Defendant. Retention Sum [48] Learned Counsel for the 4th Defendant argued that the Retention Sum was neither due nor certified to be payable by the 4th Defendant to the 3rd Defendant. Clause 35.3 of the Contract between the 3rd and 4th Defendants set out the terms for the release of the Retention Sum. Since the Certificate of Practical Completion of the Main Contract has not been issued the 3rd Defendant is not entitled to any release of the Retention Sum. Learned Counsel for the 4th Defendant submitted that the Plaintiff is also not entitled to the Retention Sum under the direct payment arrangement. 25 [49] Learned counsel for the Plaintiff however, contended that at a meeting held on 15.10.2015, the 4th Defendant agreed to release the Retention Sum to the Plaintiff subject to the 2nd Defendant and 3rd Defendant’s consent. This was further confirmed in writing by a letter dated 17.1.2015: 26 [50] The Retention Sum is held by the 4th Defendant. Based on the terms of the Contract executed expressly authorising the 4th Defendant to issue direct payments to the Plaintiff on the condition that there are amounts due and certified to be owing by the 4th Defendant to the 3rd Defendant. [51] Clause 35.3 stipulates as follows: “35.3….. The balance of the retention money shall be released to the Sub-Contractor subject to the issuance of certificate of completion of making good defects under the Main Contract and the submission of Statutory Declaration that all wages owing to employees have been paid.” [52] The learned Judge found that there was no evidence of early release of retention direct to the 4th Defendant to the Plaintiff. At the time of the claim the 3rd Defendant was not entitled to the release of the retention sum, if any. The Plaintiff is therefore not entitled to the said monies under the direct payment arrangement. Conclusion [53] In conclusion, after having heard the Parties at length and upon careful perusal of the records of appeals, we were of the considered opinion that appellate intervention was not warranted. 27 [54] For the foregoing reasons, we unanimously dismissed both Appeal 375 and Appeal 376 with costs. For Appeal 375 we ordered costs of RM20,000.00 and Appeal 376 we ordered costs of RM10,000.00. Both costs subject to payment of allocatur fee. We also ordered that the deposits be refunded to the Appellants. Sgd (HASNAH BINTI DATO’ MOHAMMED HASHIM) Judge Court of Appeal, Malaysia Putrajaya Date: 7.1.2019 28 Counsel for the Appellant in Appeal W-01(C)(W)-375-02/2017 Peter Ling Ng Thiam Lai Mohd Haire Messer Ng & Tina Advocates and Solicitors 2-37A1, Jalan Desa 1/1, Desa Aman Puri, 52100, Kuala Lumpur. Counsel for the 1st Respondent Richard Kok Elaine Yap Winnou Chung Messer Rhiza & Richard Advocates and Solicitors M-2-7& M-3-7 Plaza Damaz, No.60, Jalan Sri Haratmas1, 50480 Kuala Lumpur. Counsel for the 2nd Respondent Foo Joon Liang Lye Ca-Ryn Messer Gan Partnership Advocates and Solicitors D-32-02, Menara SUEZCAP 1, KL Gateway, 2, Jalan Kerinchi, 59200 Kuala Lumpur. 29 Counsel for the Appellant in Appeal W-01(C)(W)-376-02/2017 Foo Joon Liang Lye Ca-Ryn Messer Gan Partnership Advocates and Solicitors D-32-02, Menara SUEZCAP 1, KL Gateway, 2, Jalan Kerinchi, 59200 Kuala Lumpur. Counsel for the 1st Respondent Richard Kok Elaine Yap Winnou Chung Messer Rhiza & Richard Advocates and Solicitors M-2-7& M-3-7, Plaza Damaz, No. 60, Jalan Sri Haratmas1, 50480 Kuala Lumpur. Counsel for the 2nd and 3rd Respondents Peter Ling Ng Thiam Lai Mohd Haire Messer Ng & Tina Advocates and Solicitors 2-37A1, Jalan Desa 1/1, Desa Aman Puri, 52100, Kuala Lumpur.
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