Wh Electrical Marketing (M) Sdn Bhd v Skyworld Development Sdn Bhd (WA-22NCC-630-11/2022)

The plaintiff filed this action under section 71 of the Contracts Act 1950 (“CA 1950”), claiming that the defendant was unjustly enriched by the delivery of electrical equipment by the plaintiff.

The court dismissed the plaintiff’s claim. The reasons for this decision are set out below. S/N eO5cKeym6Ei4rxjxsRr2wA **Note : Serial number will be used to verify the originality of this document via eFILING portal 2

The plaintiff’s claim relates to the following projects: a. Cadangan pembangunan bercampur (kondominium mampu milik) (1095 unit) di atas sebahagian lot 29787 (lot asal 28372), Jalan Usahawan 6, Air Panas, Mukim Setapak, Kuala Lumpur (“Sky Awani 3”); and b. Cadangan pembangunan bercampur (kondominium mampu milik) (1095 unit) di atas sebahagian lot 29787 (lot asal 28372), Fasa 3, Jalan Usahawan 6, Air Panas, Mukim Setapak, Kuala Lumpur (“Sky Awani 4”). Sky Awani 3 and Sky Awani 4 shall be collectively referred to as the “Projects”.

The parties involved in the Projects are: a. The defendant, the owner and developer of the Projects; b. Sri Binaraya Sdn Bhd (“SBSB”) and Burnaby Resources Sdn Bhd (“BRSB”), the main contractor for the Projects (collectively, the “Main Contractors”); S/N eO5cKeym6Ei4rxjxsRr2wA **Note : Serial number will be used to verify the originality of this document via eFILING portal 3 c. Damai Electrical Engineering Sdn Bhd (“Damai”), a sub-contractor appointed by the Main Contractors; and d. The plaintiff, a sub-contractor appointed by Damai.

The plaintiff claimed that between 1 October 2021 to 20 September 2022, Damai and/or its agents had ordered a total of RM2,858,029.18 worth of electrical equipment (“Electrical Equipment”) from the plaintiff for the Projects.

The plaintiff has not been fully paid for the supply of the Electrical Equipment.

The parties involved in the Projects had exchanged several documents pertaining the delivery of the Electrical Equipment, and the amount due to the plaintiff following the delivery.

By a letter dated 12 April 2022, the defendant irrevocably undertook to guarantee payment to the plaintiff of up to RM1,000,000, in the event Damai failed to pay the plaintiff within 90 days from the date of delivery of the Electrical Equipment to the Sky Awani 4 site. The cut-off date for delivery of the Electrical Equipment was 30 May 2023. The letter was subsequently amended by a letter dated 25 May 2022, due to a typographical error. S/N eO5cKeym6Ei4rxjxsRr2wA **Note : Serial number will be used to verify the originality of this document via eFILING portal 4

Thereafter, the following agreements were executed between the defendant, the Main Contractors and Damai: a. A tripartite agreement dated 21 June 2022 between the defendant, SBSB and Damai, on the settlement of the amounts due and owing from SBSB to Damai (“First TA”). Attachment A of the First Schedule of the First TA provides that Damai is required to make payment totalling RM1,345,436.44 to the plaintiff, for Sky Awani 4; and b. A tripartite agreement dated 5 July 2022 between the defendant, BRSB and Damai, on the settlement of the amounts due and owing from BRSB to Damai (“Second TA”). Attachment A of the First Schedule of the Second TA provides that Damai is required to make payment totalling RM272,467.16 to the plaintiff, for Sky Awani 4.

The plaintiff claimed it only received RM1,000,000 under the First TA, and RM140,373.60 under the Second TA.

After the First TA and the Second TA were executed, the following documents were exchanged: a. A letter dated 13 July 2022, pursuant to which the letters dated 12 April 2022 and 25 May 2022 were rescinded. This letter dated 13 July 2022 contains the same terms as the letters dated 12 April 2022 and 25 May 2022, save that the guarantee provided by the defendant was S/N eO5cKeym6Ei4rxjxsRr2wA **Note : Serial number will be used to verify the originality of this document via eFILING portal 5 increased to RM2,000,000, and the cut-off date for delivery of the Electrical Equipment was changed from 30 May 2023 to 30 October 2022; b. A letter dated 26 July 2022 from Damai to the plaintiff. In this letter, Damai informed the plaintiff that the plaintiff had not complied with instructions to deliver the 16 mm black and green cables required for submarine cable works since 21 June 2022, despite payments to the plaintiff. Damai also noted that the plaintiff had adhered to the defendant’s instructions and delivered only 1.5 mm,

2.5 mm and 4 mm cables. This resulted in the credit limit breaching the RM1,000,000 guarantee provided by the defendant, leaving no room for the delivery of the 16 mm cables in accordance with the delivery schedules; and c. A letter dated 1 August 2022 from the plaintiff to Damai, informing Damai that any delivery of the Electrical Equipment would first need to be approved by the defendant, as Damai was unable to pay. The letter also stated that the 16 mm cables had been delivered in June 2022. [12] By a letter dated 1 September 2022, the plaintiff sought the sum of RM132,039.56 from the defendant, based on “the understanding between the parties”. However, the defendant responded with a letter dated 12 September 2022, stating that it did not have any obligation to S/N eO5cKeym6Ei4rxjxsRr2wA pay the sum to the plaintiff, and that the understanding between the parties is governed by the First TA and the Second TA. The plaintiff’s claim [13] The plaintiff filed this action, seeking the amount of RM1,717,655.58 from the defendant, pursuant to section 71 of the CA

The plaintiff alleged that the defendant was unjustly enriched by the plaintiff’s supply of the Electrical Equipment for the Projects, which the plaintiff had not been paid for. [14] In its defence, the defendant contended that as the plaintiff was appointed by Damai, a sub-contractor of the Main Contractors, the plaintiff’s recourse for non-payment of the amount outstanding is against Damai. As the plaintiff did not pursue a claim against Damai for the amount outstanding, the plaintiff cannot rely on section 71 of the CA 1950 to commence this action against the defendant. C. Considerations and Findings [15] The main issue for the court’s determination is whether section 71 of the CA 1950 applies to this case, and if so, whether the conditions set out under the section have been met. [16] Section 71 of the CA 1950 reads: “Where a person lawfully does anything for another person, or delivers anything to him, not intending to do so S/N eO5cKeym6Ei4rxjxsRr2wA gratuitously, and such other person enjoys the benefit thereof, the latter is bound to make compensation to the former in respect of, or to restore, the thing so done or delivered.” [17] Section 71 allows a person who does an act for another, to be compensated by that other person (the beneficiary), for the act done. The relationship between the person and the beneficiary may not be contractual. What is essential is that so long as the person can show that the beneficiary benefited from the act, the beneficiary is bound to compensate the person for the act done. [18] For the reasons explained below, I am of the view that a claim under section 71 of the CA 1950 cannot apply in a situation where the relationship between the parties is set out by way of various contractual arrangements. In this regard, I am guided by the case of Seloga Jaya Sdn Bhd v UEM Genisys Sdn Bhd [2010] 3 MLJ 721 where the Federal Court highlighted the peculiarities of the building industry, involving the nomination and appointment of sub-contractors, and the legal implications arising from arrangements where the employer does not have a contractual relationship with the sub-contractor: “[21] But such arrangement has various legal consequences. Since there is no privity of contract between the employer and the subcontractor, going by the general principle of the law of contract, the subcontractor cannot seek redress against the employer in the event of the main contractor failing to pay the subcontractor for the job done after the S/N eO5cKeym6Ei4rxjxsRr2wA main contractor had collected payment from the employer. Or what would happen if there is a dispute between the main contractor and the employer unrelated to the subcontract resulting in the employer withholding payment to the main contractor who in turn refused to pay the subcontractor. There might also be a situation where the employer only made partial payment to the main contractor giving rise to a dispute as to a fair amount for distribution to the subcontractor. These are only some of the problems. There may be many others. This list is not exhaustive.” (emphasis added) [19] Based on the above reasoning, a sub-contractor cannot claim against the employer in the event of non-payment by the main contractor of work completed by the sub-contractor. [20] Further, it was held in Bauer (M) Sdn Bhd v Vision Construction Sdn Bhd [2015] MLJU 2320 and Spring Max Capital Sdn Bhd v Johari bin Hasan (trading under the name and style of Gemilang MK Enterprise) [2020] MLJU 399, that a claim under section 71 of the CA 1950 can only be made where there is no valid contract that can be enforced. [21] In the present case, the plaintiff had delivered the Electrical Equipment in the total value of RM2,858,029.18, for the purpose of the Projects. The sale, order and delivery of the Electrical Equipment were made between Damai and the plaintiff. The delivery orders and invoices, which were issued between Damai and the plaintiff, created a contractual S/N eO5cKeym6Ei4rxjxsRr2wA relationship between them (see Pernas Trading Sdn Bhd v Persatuan Peladang Bakti Melaka [1979] 2 MLJ 124). [22] It is also important to note that the delivery orders and invoices do not make any reference to the defendant, who is not privy to the contractual arrangement between Damai and the plaintiff. [23] There is a clear contractual relationship between Damai and the plaintiff. Yet, instead of pursuing an action against Damai under the contract, the plaintiff elected to pursue a claim against the defendant, a party with whom the plaintiff did not have any contractual nexus. I am of the view that section 71 of the CA 1950 cannot be utilised for this purpose. The provisions of section 71 of the CA 1950 are not suited for the facts of this case, where the rights and liabilities of the parties have been embedded in a contract between them. Section 71 cannot apply to take precedence over a written contract. [24] Also of importance to the consideration of a claim under section 71 of the CA 1950 is whether the party against whom the claim is made has been unjustly enriched by the acts or works done by the party making the claim. [25] The test of unjust enrichment is set out by the Federal Court in Dream Property Sdn Bhd v Atlas Housing Sdn Bhd [2015] 2 MLJ 441: “[117] … in the context of the present case, a cause of action in unjust enrichment can give rise to a right to restitution where it can be established that: S/N eO5cKeym6Ei4rxjxsRr2wA

the plaintiff must have been enriched;

the enrichment must be gained at the defendant's expense;

that the retention of the benefit by the plaintiff was unjust; and

there must be no defence available to extinguish or reduce the plaintiff's liability to make restitution.” [26] I find that the test has not been met in this case. [27] The defendant’s payment obligations to parties involved in the Projects are set out in the First TA (executed between the defendant, SBSB and Damai) and the Second TA (executed between the defendant, BRSB and Damai). Under these agreements, once SBSB and BRSB have settled amounts due and owing to Damai, Damai is required to make payments to the plaintiff. [28] There is no evidence before the court that the defendant had not fulfilled its payment obligations under the First TA and the Second TA. As the defendant had made payments under the First TA and the Second TA, it therefore cannot be said that the defendant had been unjustly enriched by the delivery of the Electrical Equipment for the Projects. The fact that the plaintiff did not receive payments from Damai is irrelevant to the defendant. S/N eO5cKeym6Ei4rxjxsRr2wA [29] Based on the considerations set out above, I am of the view that section 71 of the CA 1950 does not apply to this case. [30] Notwithstanding my finding on the non-applicability of section 71 of the CA 1950, I have nonetheless considered the requirements to be met in proving a quantum meruit claim. These requirements, set out by the Privy Council in Siow Wong Fatt v Susur Rotan Mining Ltd [1967] 2 MLJ 118 are as follows: “The doing of the act or the delivery of the thing referred to in the section:

must be lawful

must be done for another person

must not be intended to be done gratuitously

must be such that the other person enjoys the benefit of the act or the delivery. In their Lordships’ judgment these matters must be answered at the time that the act is done or the thing delivered and this, their Lordships think, is of fundamental importance.” (emphasis added) S/N eO5cKeym6Ei4rxjxsRr2wA [31] As such, to prove a claim under section 71 of the CA 1950, the plaintiff must show that: a. The plaintiff had lawfully delivered the Electrical Equipment for the defendant; b. The delivery of the Electrical Equipment was not intended to be done gratuitously; and c. The defendant enjoyed the benefit of the delivery of the Electrical Equipment. [32] In respect of the first requirement, from evidence before the court, there was a lawful act done by the plaintiff, in delivering the Electrical Equipment in the total value of RM2,858,029.18, for the purpose of the Projects. However, the Electrical Equipment was delivered for Damai, in accordance with the contract between Damai and the plaintiff. [33] The second requirement is that the delivery of the Electrical Equipment was not intended to be done gratuitously. As there exists a contractual relationship between Damai and the plaintiff on the delivery of the Electrical Equipment, it cannot be disputed that the plaintiff did not intend to deliver the Electrical Equipment gratuitously. [34] However, I find the final requirement – that the defendant must have enjoyed the benefit of the delivery of the Electrical Equipment – has not been met. It was Damai, and not the defendant, who enjoyed the S/N eO5cKeym6Ei4rxjxsRr2wA benefit of the delivery of the Electrical Equipment, in accordance with the contract between Damai and the plaintiff. [35] To support its argument that the defendant had benefited from the delivery of the Electrical Equipment, the plaintiff relied on Tanjung Teras Sdn Bhd v Kerajaan Malaysia [2015] MLJU 2161 and Mega Mayang M&E Sdn Bhd v Utama Lodge Sdn Bhd [2018] MLJU

These cases involve claims under section 71 of the CA 1950 against project developers, which were allowed by the Court of Appeal. [36] In Tanjung Teras (supra), the Court of Appeal found that the defendant, who had commenced a quantum meruit claim against the plaintiff by way of a counterclaim, had met all conditions to prove its claim, including that the plaintiff had benefited from works done by the defendant. The defendant was appointed by the main contractor to construct “super structure works” for the project, and although the main contractor was terminated by the plaintiff, a new contractor had taken over the project to completion. As such, the Court of Appeal found that the plaintiff could not deny that it had benefited from the works completed by the defendant. The defendant’s counterclaim against the plaintiff was allowed, notwithstanding the absence of a contractual nexus between the plaintiff and the defendant. [37] I am of the view that the facts of Tanjung Teras (supra) are distinguishable from this case. In Tanjung Teras (supra), payments were made to the defendant on a back-to-back basis, i.e. the defendant would be paid when the main contractor was paid. The termination of the main contractor by the plaintiff had resulted in the defendant not receiving S/N eO5cKeym6Ei4rxjxsRr2wA payments for works it had completed, while the plaintiff had benefited from and was unjustly enriched by the works. In the present case, there was no unjust enrichment by the defendant, as the defendant had complied with its payment obligations under the First TA and the Second TA. [38] In Mega Mayang (supra), a claim under section 71 of the CA was made by the appellant sub-contractor against the respondent, who was the developer of the project. From the reasoning of the Court of Appeal in paragraphs [32] to [44] of the judgment, the claim was allowed because the respondent – who was responsible for issuing payment cheques for works completed by the appellant – had wrongly set-off monies due to the appellant, which the respondent claimed were owed to it by the main contractor. Further, the Court of Appeal held that the respondent had always been in direct control of the appellant: “[44] The unflinching evidence led at trial showed that the respondent was always in direct control and influence over the appellant. Not only did the respondent supervise the appellant’s work, it assessed and paid for the appellant’s work. Although there was no contract between the parties, it is quite evident to us, that the appellant’s work was always to be paid for by the respondent, the party that benefited from the appellant’s work. Not only was there no evidence that the appellant carried out its works with no intention or expectation of being paid for such works, there was not even a suggestion that the appellant ever did its work gratuitously. The appellant’s work involved payment; the only question who was to be the S/N eO5cKeym6Ei4rxjxsRr2wA paymaster. In our view, it is clear that it was by the respondent and for the reasons as relied on by the appellant.” (emphasis added) [39] In the present case, the defendant did not have direct supervision over the plaintiff’s works, and obligations to make payments for works completed by the plaintiff were imposed on Damai. The defendant’s involvement in making payment guarantees by way of various letters issued in April and May 2022, which ultimately culminated in the execution of the First TA and the Second TA, only arose as a result of Damai’s failure to make payments to the plaintiff. Further and in any event, the First TA and the Second TA only gave rise to obligations between the defendant, the Main Contractors and Damai. The plaintiff is not privy to the agreements. [40] Based on the above, I find that it was Damai (and not the defendant) who had benefited from the delivery of the Electrical Equipment, pursuant to Damai’s contractual relationship with the plaintiff. The final requirement under section 71 of the CA 1950 has not been met.

[41] With the court’s finding that section 71 of the CA 1950 does not apply, the plaintiff’s claim must necessarily fail. The court therefore dismissed the plaintiff’s claim, with costs. S/N eO5cKeym6Ei4rxjxsRr2wA Dated 9 February 2026 ADLIN ABDUL MAJID Judge High Court of Malaya Kuala Lumpur Counsel: Plaintiff : Pavendeep Singh A/L Gurbachan Singh (together with Mohd Salehin Mastor) of Messrs. Paven & Co Defendant : Ooi Chih-Jen (together with Shee Shu Min and Wong Chee Wai) of Messrs. Chang.Haryaty S/N eO5cKeym6Ei4rxjxsRr2wA