“ntract shall be RM5,000.00 (Ringgit Malaysia : Five Thousand Only) per day inclusive of any public holidays without having the Contractors to show any proof of damages.” [41] Under section 75 of the Contracts Act, 1950, when a contract has been broken, if a sum is named in the contract as the amount to be paid in case”
Refers toEvidence ActExternal
“ach party had proved their respective case against the other. [27] It is settled law that the burden of proof rests throughout the trial on the party who asserts that the facts exist (section 101 of Evidence Act). Where a party on whom the burden of proof lies has discharged that burden, then the evidential burden shif”
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Page 1 of 15 IN THE COURT OF APPEAL OF MALAYSIA AT KOTA KINABALU CIVIL APPEAL NO: S-02(NCVC)(W)-2408-11/2017 BETWEEN SO LIAN YEE (NRIC NO....
Page 1 of 15 IN THE COURT OF APPEAL OF MALAYSIA AT KOTA KINABALU CIVIL APPEAL NO: S-02(NCVC)(W)-2408-11/2017 BETWEEN SO LIAN YEE (NRIC NO. 531125-08-6243) … APPELLANT (Trading in the name and style of Goldwell Trading) PEMBINAAN JAYA TIMURAN SDN BHD (Company No. 486913-X) … RESPONDENTS [IN THE HIGH COURT IN SABAH AND SARAWAK AT KOTA KINABALU SUIT NO: BKI-22NCVC-90/8-2015 BETWEEN SO LIAN YEE (NRIC NO. 531125-08-6243) … PLAINTIFF (Trading in the name and style of GOLDWELL TRADING) … 1st DEFENDANT PEMBINAAN JAYA TIMURAN SDN BHD (Company No. 486913-X) … 2nd DEFENDANT … THIRD PARTY] Page 2 of 15 CORAM VERNON ONG LAM KIAT, JCA ABDUL RAHMAN BIN SEBLI, JCA STEPHEN CHUNG HIAN GUAN, JCA JUDGMENT OF THE COURT The Appeals [1] The Appellant filed an action against the 1st and 2nd Respondents for (i) a sum of RM571,506.22 being the final claim for work done under a subcontract with interest thereon at a rate of 5% per annum from the 11.6.2009 to the date of full payment; (ii) a sum of RM318,871.16 being the retention sum payable under the subcontract with interest thereon at the rate of 5% per annum from the 9.12.2014 to the date of full payment; and (iii) costs. [2] The 1st Respondent denied the Appellant’s claims and filed a counterclaim for a sum of RM3,075,828.52 being the costs of rectification of defective works under the subcontract and liquidated ascertained damages (LAD) with interest of 5% per annum on the sum of RM3,075,828.52 from 26.01.2015 till the date of full payment and costs. [3] The 2nd Respondent denied the Appellant’s claims and averred that there was no joint-venture agreement between the 1st and 2nd Respondent and filed a Third Party action against the 1st Respondent. [4] After a trial, the learned trial judge found that the Appellant had failed to prove his claims against the 1st and 2nd Respondents and dismissed the Appellant’s claims with costs. As for the counterclaim, Page 3 of 15 the learned trial judge ruled that the 1st Respondent had proved its case and allowed the counterclaim of RM3,075,828.52 in full with interest and costs. [5] In respect of the Third Party proceedings, he found that from the facts it was clear that the 2nd Respondent was not a party to the subcontract and there was no necessity to deal with the issue in the third party proceeding brought by the 2nd Respondent against the 1st Respondent and for each party to bear their own costs. [6] The Appellant filed an appeal against the whole decision of the learned trial judge whereas the 2nd Respondent filed a cross-appeal. [7] After hearing submissions, the Appellant applied to withdraw the appeal against the 2nd Respondent, with no objection, and the 2nd Respondent accordingly applied to withdraw the cross-appeal. The appeal against the 2nd Respondent was struck out and the cross-appeal was struck out. Therefore it was not necessary for us to deal with the appeal against the 2nd Respondent and the cross-appeal of the 2nd Respondent in our grounds. The background facts [8] The Appellant traded in the name and style of Goldwell Trading. The 1st Respondent was established by China Railway Group Limited (CRGL) in 2001 to undertake railway construction projects in Malaysia. [9] The 1st and 2nd Respondent entered into a joint-venture agreement as the contractor to undertake a project known as "Cadangan Pemulihan dan Pembangunan lnfrastruktur Keretapi Page 4 of 15 Negeri Sabah" awarded by the Ministry of Transport, Malaysia to Suria Capital Holdings Berhad (SCHB) as the main contractor. [10] By a letter dated 9.3.2007 with a bill of quantities, the Appellant applied to be a sub-contractor. By a letter of award, dated 12.3.2007, the Appellant was appointed as a subcontractor to construct earthworks, soil improvement, drainage and pipe culverts from Kinarut-Papar (KM20-KM39) for the project for a sum of RM5,034,302.80 commencing 18.3.2007 and to be completed by 31.8.2007 with defect liability period of 24 months. Clauses 7.0 and 8.0 of the subcontract agreement dated 6.4.2007 provides for variations and under clause 9.0 the retention sum shall be equivalent to 10% of the interim progress payment but subject to a maximum of 5% of the subcontract sum. There were 17 variation orders. With the variations included, the subcontract sum amounted to RM6,377,423.15. [11] Prior to the subcontract, the 2nd Respondent withdrew from the joint-venture. The Appellant said that he was unaware of the 2nd Respondent’s withdrawal from the project and it was the duty of the 1st Respondent to inform him whereas the 1st Respondent argued that the Appellant knew as early as May 2007 of the 2nd Respondent’s withdrawal. [12] The Appellant contended that he had completed the works and had been paid RM5,487,045.77 but the 1st Respondent refused to pay the balance contract sum of RM890,377.38 which comprised of RM571,506.22 and the retention sum of RM318,871.16. The Appellant argued that he was entitled to the sums. Page 5 of 15 [13] The 1st Respondent however contended that the Appellant failed to complete the works and there were defective works to be rectified which required the 1st Respondent to incur costs and expenses to remedy the works resulting in delays to the project. The 1st Respondent claimed for the costs and expenses and for the LAD. The Appellant’s submission [14] The Appellant submitted that it had completed the subcontract works in January 2008 and on 28.4.2009 it had submitted the final claim for RM1,174,408.91. The Appellant relied on a letter dated 11.6.2009 issued by the joint-venture to the Appellant a final calculation certifying the final payment of RM571,506.22 as due and payable. [15] The Appellant submitted that as at 11.06.2009 there were no complaints from Respondents or that the Appellant had failed to complete the subcontract works or had failed to rectify any alleged defective works. [16] The Appellant submitted that the settlement or finalization of accounts between the parties had taken into account any and all defective works that might be attributed to the Appellant after the engineers' review and the certificate of practical completion (CPC) issued by the Government of Malaysia to the main contractor SCHB and that the final accounts superseded any defective and non-completion works based on the complaints of the Respondents. [17] The Appellant submitted that the learned trial judge had misdirected himself that the Appellant did not take any steps to Page 6 of 15 produce credible evidence to show otherwise that defective works were completed and had failed to established his case. [18] The Appellant submitted that the learned trial judge in his grounds of judgment had not alluded to nor found any complaints of defective and non-completion works still unperformed by the Appellant after 11.6.2009 and therefore failed to consider that the Appellant had rectified all the works. It was submitted that he ought to have found that the Appellant had proven his claims on a balance of probability by the settlement/finalization of accounts between them as at 11.06.2009 and entitled to judgment. [19] The learned trial judge erred in fact and in law in allowing the counterclaim against the Appellant for the sum of RM3,075,825.52 because clause 15 of the contract required the Respondents to prove the actual loss and damage before any compensation could be awarded to warrant any recovery of LAD. The submission of the 1st Respondent [20] It is trite that the burden of proof to establish the case at all times lies on the Appellant. The 1st Respondent submitted that the Appellant merely relied on the 1st Respondent’s letter dated 11.6.2009 to assert that he had completed the subcontract works and that there was an admission of liability on the part of the 1st Respondent to pay the sum of RM890,377.38 to him. However DW3 had been consistent and maintained his position that the letter dated 11.6.2009 did not contain any admission of liability and the purpose of writing the said letter was to correct the wrong calculations by the Appellant. According to DW3 the sum of RM890,377.38 was the balance of the contract amount and Page 7 of 15 not the value for work done which would be released to the Appellant had he completed all the subcontract works but the Plaintiff had failed to do so. [21] It was submitted that the Appellant had taken different positions on his claims and ought to have called his alleged accountant to come to Court to prove his claim but the Appellant did not bother to adduce any documentary evidence to support his claims. In the absence of any documentary evidence, the Appellant failed to discharge the burden. [22] It was submitted that despite the Appellant’s contention that he had purportedly completed his work in January 2008, he admitted during cross-examination that there were variation orders issued after January 2008 which the 1st Respondent argued that the Plaintiff had failed to complete and failed to rectify the defective work as per the subcontract. [23] The 1st Respondent contended that there was no certificate of completion issued by the 1st Respondent to the Appellant and as such, the defects liability period had not commenced. It was submitted that as the Appellant had failed to complete his work under the subcontract, there was no handing over of the subcontract works or delivery of full vacant possession by the Appellant to the 1st Defendant. [24] The 1st Respondent submitted that its counterclaim arose out of the Appellant’s non-completion of the work as well as his failure to rectify the defective work and as a result, the 1st Respondent had suffered loss and damage. It was submitted that the witnesses (DW1, Page 8 of 15 DW2 and DW4) were called to confirm the authenticity and contents of the documents supporting the 1st Respondent's counterclaim and that it had adduced evidence, both oral and documentary, to prove its counterclaim against the Appellant. [25] The 1st Respondent referred to clause 15 of the subcontract agreement which provides for LAD at RM5000.00 per day. The 1st Respondent submitted that the completion date was 31.8.2007 and there was a delay of 507 days from 1.9.2007 to 20.1.2009 which amounted to RM2,535,000.00 in total (507 days x RM5,000.00). The 1st Respondent contended that it had established the loss and damage it had suffered due to the Plaintiff's delay and non-completion of work. The decision of the Court [26] Based on the record of appeal and the submissions, both written and oral, the contentions of the parties very much centered on whether each party had proved their respective case against the other. [27] It is settled law that the burden of proof rests throughout the trial on the party who asserts that the facts exist (section 101 of Evidence Act). Where a party on whom the burden of proof lies has discharged that burden, then the evidential burden shifts to the other party. However, if the party on whom the burden of proof lies fails to discharge it, the other party need not call any evidence: Hong Yik Trading v Liziz Plantation Sdn Bhd [2017] 5 MLJ 398. [28] The crux of the Appellant’s case against the Respondents pleaded in paragraphs 8 to 11 of his statement of claim was that he had completed the subcontract works in January 2008 and on Page 9 of 15 28.4.2009 he submitted the final claim under the subcontract in the sum of RM1,174,408.91. The Appellant contended that by a letter, dated 11.6.2009, the Respondents issued final calculation certifying and admitting that final payment in the sum of RM571,506.22 was due to him and also certified and admitting that one-half of the retention sum of RM318,871.16 would be released to him upon the issuance of the certificate of practical completion and the other half upon expiry of the defects liability period within two years. The burden was on the Appellant to prove his case. [29] On evidence, the Appellant argued that he had completed the subcontract works in January 2008 and relied on his final claim dated 28.4.2009 for the sum of RM1,174,408.91. He did not attach a general summary of claim or any supporting document that as at January 2008 the works had been completed. In his progress claim No. 10 dated 22.1.2008 for RM1,087,303.74 due, it was supported by a general summary of claim showing current progress of 100%. However, based on the payment certificate No.10, certified on 19.3.2008, the current progress was 93.98% only. The Appellant did not complain that the certification was wrong. This contradicted his claim that the works had been completed. [30] The Appellant explained that based on his calculation it should be 97.85% and the works were therefore practically completed. He was asked and he admitted that after January 2008 he had received letters from the 1st Respondent complaining of defective and non-completion works. In a letter dated 29.5.2008 the Appellant was required to rectify the existing issues on formation level, formation width and slope. In another letter dated 18.6.2008, it stated that during Page 10 of 15 inspection of survey engineer that the width formation at KM27.080 to KM27.260 and KM27.405 to KM 27.650 did not achieve to the requirement of design level and required the Appellant to rectify and complete as soon as possible to avoid possible delay for next work. There were many such letters of complaint up to end of December 2008 for the Appellant to improve and complete all remaining works. These again contradicted his claim that he completed the works in January 2008. [31] Prior to his final claim of 28.4.2009, the Appellant had submitted his final claim, dated 31.10.2008, 26.11.2008 and 30.12.2008 respectively, for RM1,679,126.58 which was for a different sum. He then submitted another final claim dated 28.8.2009 for RM571,506.22 plus the retention sum of RM318,377.38. The 1st Respondent complained that the Appellant had taken varying positions on his claim. There was no explanation for the different sums claimed. [32] His final claim, dated 28.8.2009, was based on the final calculation list attached to the letter dated 11.6.2009 which he received from the 1st Respondent. The Appellant argued that by this letter the 1st Respondent had certified and admitted that final payment in the sum of RM571,506.22 was due and payable plus the retention sum. [33] DW3 testified that the 1st Respondent never admitted liability in the letter. Looking at the final calculation list, it showed the confirmed value of work at RM6,377,423.15 and RM5,487,045.77 as paid before leaving RM890,377.38 as amount unpaid. He explained this did not mean that this amount would be paid to the Appellant because the Page 11 of 15 Appellant did not complete and did not rectify the works complained of causing delay to the project. He testified that the 1st Respondent had appointed third party contractors to rectify the works in the sum of RM313,339.16, RM287,266.74, RM710,600.00 and RM120,000.00 to be set off against the sum of RM890,377.38 and the claim for LAD of RM2,535,000.00 (see letter dated 4.7.2011 from solicitors of 1st Respondent to solicitors of Appellant). [34] The learned trial judge found that by January 2008 the Plaintiff had yet to complete its subcontract works. He ruled that although the Appellant insisted that all the defects raised by the 1st Respondent had been completed and that there was an admission, the Appellant opted not to call any evidence to show that he had completed the works and the learned trial judge found that the evidence was insufficient to contradict the evidence adduced by the 1st Respondent. [35] Based on the appeal record, since 11.6.2009, there was no letter and the Appellant did not produce any letter addressed to the 1st Respondent stating that the 1st Respondent had admitted that the said sums were due and payable and therefore suing on the admission or alleged settlement. Since then the Appellant did not take any step to demand payment of the sums although he alleged that the 1st Respondent had admitted that the sums were due and payable until he filed the suit in 2014. Based on the contemporaneous documents in the record of appeal, there was no such admission in the 1st Respondent’s letter dated 11.6.2009 and there was no admission by the 1st Respondent that the sum of RM571,506.22 and the retention sum of RM318,871.16 were due and payable to the Appellant. The evidence led by the Appellant failed to establish the admission or the Page 12 of 15 existence of an alleged enforceable settlement between the parties: see Syarikat Kemajuan Timbermine Sdn Bhd v Kerajaan Negeri Kelantan Darul Naim [2015] 3 MLJ 609. [36] At the end of the trial the learned trial judge dismissed the claims of the Appellant against the Respondents. These were based on findings of facts by the learned trial judge who had the audio and visual advantage of watching and listening the witnesses during the trial. An appellate court would be slow to disturb the findings of facts of the learned trial judge unless he was plainly wrong. Therefore we were unanimous in our decision that the learned trial judge had not erred in dismissing the Appellant’s claims against the Respondents. [37] In respect of the counterclaim, the 1st Respondent claimed the sum of RM3,075,828.52 which comprised of RM540,828.52 after setting off for costs and expenses incurred to rectify the works not done by the Appellant and LAD of RM2.535,000.00. [38] The witnesses for the 1st Respondent had testified on the incomplete works and the works carried out by third party subcontractors to remedy the defective works of the Appellant and these witnesses had produced documents in support of the claims during the trial. We have referred to these figures above. At the end of the trial, the learned trial judge allowed the 1st Respondent’s counterclaim against the Appellant. The Appellant submitted that the learned trial judge had misdirected himself on the evidence and had erred in allowing the counterclaim. Page 13 of 15 [39] In his judgment, the learned trial judge ruled that the Appellant did not put up a serious challenge on the evidence that was adduced to support the counterclaim and that the court ought to accept the evidence of the 1st Respondent and allowed the counterclaim in full as pleaded. We have scrutinized the appeal record. We agreed that the learned trial judge did not err in allowing the 1st Respondent’s claim for the sum of RM540,828.52. [40] However, we were unable to agree with his decision in allowing the 1st Respondent’s claim for LAD of RM2,535,000.00. The LAD was calculated at RM5,000.00 per day times 507 days. In allowing the LAD, the learned trial judge relied on clause 15.0 of the subcontract agreement which states that “The Liquidated Ascertained Damages for the subcontract shall be RM5,000.00 (Ringgit Malaysia : Five Thousand Only) per day inclusive of any public holidays without having the Contractors to show any proof of damages.” [41] Under section 75 of the Contracts Act, 1950, when a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for. [42] The apex court had dealt with the words “whether or not actual damage or loss is proved to have been caused thereby” in section 75 of the Act where it was held that despite the words in question, a Page 14 of 15 plaintiff who is claiming for actual damages in an action for breach of contract must still prove the actual damages or the reasonable compensation in accordance with the settled principles in Hadley v Baxandale (1854) 9 Exch 341; [1843] All ER Rep 461. Any failure to prove such damages will result in the refusal of the court to award such damages. In every case the court must determine what is the reasonable compensation: Selva Kumar a/l Murugiah v Thiagarajah a/l Retnasamy [1995] 1 MLJ 817. [43] The 1st Respondent submitted that the completion date for the subcontract was 31.8.2007 and there was a delay of 507 days from 1.9.2007 to 20.1.2009. Because of the Appellant’s delay, the performance bond and insurance had to be extended and the total costs of this extension was RM360,996.38. It was submitted that due to the defective works and delay, the 1st Respondent had to charter shuttle buses to ferry passengers between the affected routes and had to pay RM2,137,642.00 to two bus companies. These two sums amounted to RM2,498,638.38. It was submitted that the LAD of RM2,535,000.00 was justifiable as it had suffered loss and damage well in excess of this sum. The 1st Respondent did not claim the aggregated sum of RM2,137,638.38 as costs and expenses incurred. It did not claim this sum as reasonable compensation for the LAD. Instead it claimed the sum of RM2,535,000.00 as LAD based on clause 15.0 of the subcontract agreement. [44] The 1st Respondent failed to prove the LAD under section 75 of the Act. The learned trial judge in his judgment in allowing the LAD did not deal with the assessment of damages to determine the reasonable compensation to be paid for breach of contract. In doing so he fell into Page 15 of 15 error in relying on clause 15.0 of the subcontract agreement to award the LAD of RM2,535,000.00: see Tekun Nasional v Plenitude Drive
m
(M) Sdn Bhd and other appeals [2018] 4 MLJ 567. For the reasons given, the appeal was allowed in part and the award of RM2,535,000.00 for LAD was set aside. The counterclaim for the sum of RM540,828.52 was affirmed. No order as to costs. Costs of RM5,000.00 to the 2nd Respondent. Dated: 4th January 2019 signed STEPHEN CHUNG HIAN GUAN (delivering judgment of the court) Court of Appeal Judge Putrajaya For Appellant : Lim Pitt Kong Messrs. P K Lim & Co For 1st Respondent : Wong Heu Fun and Alvin Leong Yin Yuan Messrs. Leong & Wong Advocates For 2nd Respondent : S. Vanugopal Messrs. S. Vanugopal & Partners
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