Wijadi Resources Sdn Bhd v 1. ) Mega System (M) Sdn Bhd (WA-22NCC-623-08/2023)

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PERBADANAN KEMAJUAN NEGERI SELANGOR DATUK ZAKARIA BIN MUHD DEFENDANTS GROUNDS OF JUDGMENT (DECISION AFTER TRIAL)

This is a case concerning the failed project that was awarded to the First Defendant by PKNS known as the Pasar Muhibbah project. The purpose of the said project is to build 440 units of two-storey shop lots at Section 24, 40200 Shah Alam, Selangor

The said works should have been completed by 30-6-2023.

The Plaintiff claims that it has completed parts of the work for the said project and should be paid for the said works. The Plaintiff also claims that the performance bond provided for the said project should also be returned to it.

The Plaintiff further claims that the performance bond provided for the said project was procured by fraudulent representations by the First and Fourth Defendants.

These were denied by the Defendants. It is to be noted that the Plaintiff had chosen to only continue the claim against the First and Fourth Defendants. The claim against the Second and Third Defendants were withdrawn. B. Summary of the Plaintiff’s Claim 6. The Plaintiff’s claim against the First and Fourth Defendants are summarized as follows: -

The allegation that the First Defendant had breached the terms of the Joint Venture Agreement based on the alleged failure to pay the full sums received from PKNS for the certified work.

(ii) The allegation that the First Defendant did fail to pay the sums agreed under clause 6.6 of the Joint Venture Agreement – the 1st Performance Bond returned by PKNS.

(iii) The allegation that the First and Fourth Defendants had committed fraudulent misrepresentation by the failure of the First Defendant to pay the 1st Performance Bond despite representations made in the letters dated 7-4-2023. This false representation caused the Plaintiff to agree to issue the new Performance Bond to PKNS on behalf of the First Defendant.

7.

As such, the Plaintiff claims the following reliefs (inter alia): - 1 Declaration that the First Defendant had breached the terms of the Joint Venture Agreement.

7.2 Damages against the First and Fourth Defendants for the sum of RM 1,018,248.31 and RM 46.,400.00 being the sums due under the Joint Venture Agreement / Subcontract.

7.3 The First and Fourth Defendants pay the Plaintiff the costs incurred for the acquisition of the new performance bond to the sum of RM 120,000.00 and RM5,615.00.

7.4 A declaration that the Fourth Defendant had committed fraudulent misrepresentation against the Plaintiff when it agreed to replace the 1st Performance Bond.

7.5 An order that the corporate veil be lifted and that the Fourth Defendant be liable for the above losses.

7.6 An order that the Defendants replace the Performance Bond and pay the Plaintiff the sum of RM 1, 053, 903.23 (new performance bond / 2nd performance bond).

7.7 A declaration that the Defendants had been unjustly enriched at the expense of the Plaintiff and that the said Defendants pay the damages suffered by the Plaintiff.

7.8 Costs. C. Defendants’ Defence 8. The Performance Bond issued by the Plaintiff through UOB Bank was made to ensure that the works undertaken by the Plaintiff and the First Defendant were securitized in accordance with the requirements of

It was the Plaintiff who wanted to issue a new performance bond. The First Defendant wanted to continue with the use of the previous performance bond issued with the assistance of SIC, but this was rejected by the Plaintiff.

The letter of undertaking and the letter of authorization dated 7-4- 2023 did say that the First Defendant shall pay the Plaintiff the sum of RM 1,053,903.23 from the previous Performance Bond if the said sums were received from Affin Bank. The Defendants did not promise that the said sums received from Affin Bank or from PKNS will be paid to the Plaintiff as claimed.

There was no promise or representation that the Performance Bond would be replaced by the First Defendant or that any damages shall be repaid to the Plaintiff. The terms of the Joint Venture Agreement state that the responsibility of issuing the new performance bond lies with the Plaintiff and this is to secure all the works for the said project. The Plaintiff is responsible for 90% of the project.

The Plaintiff is aware of and bound by the payment terms agreed with SIC as reflected in the terms of the Joint Venture Agreement. The Plaintiff is aware that the payment received from PKNS will be made directly to SIC who will then deduct the amounts that were due to SIC and pay the amounts due to the First Defendant.

The Plaintiff did breach the terms of the Joint Venture Agreement by failing:-

To complete the works in a timely and efficient manner.

(ii) The decision to stop work.

(iii) Failure to pay the agreed profit due to the First Defendant as required under the terms of the said Agreement.

(iv) Failure to pay the sum of RM 50,000.00 due to the First Defendant on 31-5-2023.

Failure to ensure that the required insurances were fully paid up as required by PKNS.

(vi) Failure to complete the works that the Plaintiff is responsible for (90% of the construction work). The First Defendant is only responsible for the firefighting equipment, lift and escalator equipment to be supplied for the said project. The Plaintiff is responsible for the all other works including mechanical, electrical, structural, infrastructure, preliminaries and provisional sums for the project (see Recital E of the Joint Venture Agreement).

The responsibility for the financing of the project, its management and for the costs of the performance bond lies with the Plaintiff.

The Plaintiff had failed to pay the costs incurred by its own sub-contractors including one Kacon Construction Sdn Bhd for works undertaken for the said project. As a result, the First Defendant had to pay the said Kacon the sum of RM 500,000.00 on 13-6-2023. D. Executive Summary of this Court’s Decision 16. After hearing the testimony of the witnesses, considering the evidence produced by the litigants and the submissions filed by the solicitors, I find: -

16.1 That the Plaintiff and the First Defendant did commit material breaches of the Joint Venture Agreement.

16.2 The Plaintiff and the First Defendant are to be blamed for the failure of the project and the termination of the works by PKNS.

16.3 The issuance of the new Performance Bond was not caused by any representation by the Defendants. The Plaintiff had issued the same based on its obligation that was agreed upon as it appears in clause 6.6 of the Joint Venture Agreement.

16.4 The First Defendant also had an obligation to pay the sums secured from the First Performance Bond to the Plaintiff as seen in clause 6.6 of the Joint Venture Agreement and the letter dated 7- 4-2023.

16.5 The Plaintiff had failed to comply with its obligations contained in the terms of the Joint Venture Agreement including failure to (i) to complete the project, (ii) finance the project, (iii) budget the project and (iv) pay the First Defendant the sum of RM 50,000.00 as claimed (among others).

16.6 The Plaintiff has failed to prove that the Fourth Defendant had committed fraudulent misrepresentation as alleged in the Statement of Claim.

16.7 That the Plaintiff has failed to prove that the corporate veil of the First Defendant should be lifted to justify imposition of personal liability against the Fourth Defendant.

16.8 That the Plaintiff is entitled to claim damages for the sum of RM 159, 769.00 against the First Defendant, being the sums that was released by SIC for the works undertaken during the lifetime of the said project.

16.9 That the Plaintiff did prove that the First Defendant had committed a breach of clause 6.6 of the Joint Venture Agreement and the First Defendant should be directed to pay the sum of RM 1, 053, 903.23 promised in the said clause and in the letter dated 7-4-2023.

16.10 The Plaintiff failed to prove any other form of damages claimable against the First Defendant. Under the terms of the Joint Venture Agreement, parties should have finalized the accounts of the project and its profitability or losses, in accordance with the portion agreed between the Plaintiff and the First Defendant (90/10) (clause 8 of the Joint Venture Agreement).

16.11 As this was not undertaken, the Plaintiff has failed to show any other financial losses that are claimable, if any, against the First Defendant. This includes the claims made related to costs incurred by the Plaintiff for sub-contractors. E. Backgrounds Facts 17. PKNS had appointed the First Defendant as the main contractor for the said Pasar Muhibbah project via PKNS’s letter dated 15-2-2022. Joint Venture between First Defendant and SIC (Second Defendant)

The First Defendant had subsequently entered into a Joint Venture Agreement with Selangor Industrial Corporation Sdn Bhd (SIC) dated 22- 7-2022.

Material terms of the said Joint Venture Agreement are as follows: - “3. CONDITIONS PRECEDENT This Agreement is conditional upon the approval of the directors of both MSMSB and SICSB being obtained at each respective board of directors meeting. The parties hereby agree that this Agreement shall be subject to the following Condition Precedents being fulfilled within fourteen (14) days commencing from the date of this Agreement or such further extension or extensions as may mutually be agreed by the parties hereto in writing (hereinafter referred to as “the Approval

Collateral for Bank Guarantee shall be paid by Selangor Industrial Corporation Sdn Bhd and any administration / service bank charges and other related charges shall be paid by MSMSB (the deposit minus the charges is refundable upon completion of the Project subject to terms and conditions by the Bank) if any;

(ii) A nominated guarantor shall guarantee the Bank Guarantee in the amount of RM 1, 053, 903.23.

(iii) MSMSB nominated guarantor shall guarantee the completion of the project.

(iv) The first payment amount of RM 316, 171.00 (30%) shall be disbursed in cash term while the remaining of RM 737, 732.23 (70%) shall be paid progressive equally up to maximum six (6) months as agreed by both parties; and

MSMSB shall renew and bear all cost for continuation insurance Coverage and the Bank Guarantee if the Project needs to be carried out after the Completion Date has lapsed. …….

MSMSB 1 MSMSB hereby agrees and covenants with SICSB that it shall: -

appoint SISCB as the project management consultant handling only the financial aspect of the Project, which entitles SICSB to a one point one nine per centum (1.19%) project management fees based on the Contract Sum (RM250,000.00) and RM 150,000.00 shall be paid progressively equally up to maximum of six (6) months and RM 100,000.00 to be deducted from collateral, pledge and deposit (fixed deposit);

(ii) to purchase all building materials and all related insurance coverage for the Project from SICSB as per prevailing market price minimum of RM 6,000,000.00 value of material at agreed market rate (whichever applicable work trade / SIC’s Vendor) with 60 days credit facility or terms;

12.4 MSMSB agrees and undertakes with SICSB that it shall issue an irrevocable letter of instruction to PKNS that all payments under the Contract shall be credited directly into the Escrow Account, which letter of instruction shall be duly acknowledged by PKNS.

12.5 MSMSB further agrees and undertakes that it shall issue an irrevocable standing instruction to the Bank to transfer a specific portion which will be determined by both Parties of the monies in the Escrow Account into SICSB’s bank account.

15.1 Pursuant to the Contract, the completion period for the Contract (inclusive of mobilization, all public holidays and off days) shall be three hundred six (306) days commencing from the date of site possession (the “Completion Date”).” Bank Guarantee / Performance Bond by Affin Bank in favor of PKNS

20.

The said Performance Bond (No. 1) was issued by Affin Bank and was securitized 70% by SIC. Affin Bank gave a continuing and irrevocable guarantee that they will pay the sum of RM 1,053, 903.23 upon demand being made by PKNS and that this guarantee shall be valid until 31-3-

Assignment of sums by First Defendant to SIC

The First Defendant had then entered into two (2) Deed of Assignments dated 10-1-2023 and 1-12-2022 with SIC. The First Defendant agreed to assign all monies due and payable to it for the works undertaken in the above project from PKNS as payment of the sums due to SIC and that this assignment was irrevocable. Letter of Award dated 5-1-2023 to the Plaintiff 23. The First Defendant had issued a letter of award dated 5-1-2023 to the Plaintiff for the construction work relating to the said project for the total sum of RM 19, 805, 914.57.

The works on the said project was to commence on 16-1-2023, which is to be completed by 30-6-2023.

Payment of any works done shall be submitted by way of progress reports due on the 14th and 28th of each month subject to the certification process by PKNS. Payments will be made directly by PKNS through a deed of assignment (DOA) to be entered with the First Defendant.

The Plaintiff also agreed that it will be liable for liquidated damages for any delays at the rate of RM 4,400.00 a day. Supplementary Agreement dated 6-1-2023 27. The Plaintiff and the Defendant had then executed a Supplementary Agreement dated 6-1-2023 which contained the following clauses: - “1. INTERPRETATION …….

(C) MEGA awarded the whole contract to Wijadi except Fire Fighting Services (refer to BOQ Item 3, BILL OF QUANTITIS FIRE PROTECTION which is amounting to RM1, 272, 150.00). The award price from MEGA to WIJADI is RM 19, 805, 914.57 (Ringgit Malaysia Nineteen Million Eight Hundred and Five Thousand Nine Hundred fourteen and Fifty-Seven Cents Only.

(D) Payment shall be made directly from PKNS to WIJADI via Deed of Assignment “DOA” from PKNS on the whole contract except Fire Fighting Services.

EFFECTIVE DATE AND TERM This Supplemental Agreement shall have effect from the date of this Supplemental Agreement and shall cease to have effect at 23:59 hours on the Expiry Date or earlier termination of the Contract.

ENTIRE AGREEMENT This Supplementary Agreement contains the whole agreement between the Parties with respect to the subject-matter herein and replaces all previous written or oral agreements relating to the subject matter herein.” Extension of Time by PKNS dated 24-3-2023 28. PKNS issued a letter 24-3-2023 to the First Defendant agreeing to extend the time for the completion of the project to June 2023 subject to the following conditions: -

Performance Bond must be extended.

(ii) The required insurance must be extended.

(iii) To ensure that the contract will be completed at 14.67% at each month and the project will be completed by June 2023. Letter of Undertaking dated 7-4-2023 and Letter of Instruction dated 7-4-2023 29. The First Defendant subsequently issued a Letter of Undertaking dated 7-4-2023 that contains the following: - “Pursuant to the terms in the joint venture agreement between us (Plaintiff and the First Defendant) in respect of the aforementioned Contract, we expressly, irrevocably and unconditionally agree to make payment to you the aforementioned bank guarantee sum within 3 days of our receipt of the said sum of the Bank. (The original PN No. 1 by Affin Bank) We further undertake that in the event that we fail to pay bank guarantee sum within the prescribed period, you shall have the liberty to take the necessary action against us including but not limited to pursuing this matter with the Principal and / or commencing legal action in court and all consequences as well as the impact on the overall completion of the Works shall be fully borne by us.”

The First Defendant also issued a Letter of Instruction addressed to Affin Bank dated 7-4-2023. The First Defendant instructed the bank to credit the amount of RM 1, 053, 903.23 to the Plaintiff, allegedly being the monies due to the Plaintiff upon the expiry of the Bank Guarantee. (Bank Guarantee No. 1).

It is important to note that the contents of the letter from the First Defendant to the Plaintiff are as follows: - “Pursuant to the terms in the joint venture agreement between us in respect of the aforementioned Contract, we expressly, irrevocably and unconditionally agree to make payment to you the aforementioned bank guarantee sum within 3 days of our receipt of the said sum from the Bank. We further undertake that in the event that we fail to pay the bank guarantee sum within the prescribed period, you shall have liberty to take the necessary action against us including but not limited to pursuing this matter with the Principal and / or commencing legal action in court and all consequences as well as the impact on the overall completion of the Works shall be fully borne by us.”

The terms of the aforementioned letter are important, as they set the tone for the Plaintiff's complaint in this claim. The Plaintiff also relies on the terms of this letter in its attempt to impose liability against the First Defendant for breach of Clause 6.6 of the Joint Venture Agreement and for fraudulent misrepresentation against both the First and Fourth Defendants. Joint Venture Agreement between the First Defendant and the Plaintiff 33. The Plaintiff and the First Defendant had executed a Joint Venture Agreement that contains the following clauses: - “Recitals

(B) MSSB and Selangor Industrial Corporation Sdn Bhd (Company No. 198101005851 (71965-K) (hereinafter referred to as “SIC”) have entered into an agreement dated 22nd July 2022 in relation to the Project the terms and condition are as stipulated therein (hereinafter referred to as “SIC Agreement”). Principally, SIC operates as the financial contributor to MSSB to progress and complete the Project.

(C) Pursuant to the arrangement between MSSB and SIC in Recital (B) above, PKNS consented to the direct payment from PKNS to SIC by way of a Deed of Assignment (security for direct payment from a third party) wherein SIC shall be disbursing the relevant certificated payment to MSSB in accordance to the terms set out in the SIC Agreement (hereinafter referred to as “Deed of Assignment”). For the avoidance of doubt, the Deed of Assignment to SIC is only for a sum equivalent to the 90% of the Contract Sum and the remaining 10% of the Contract Sum is directed to MSSB.

(D) MSSB and WRSB are desirous to be joint venture partners for the Project and to use their respective expertise and skills to complete the Project. ……

(F) By entering into this Agreement, the Parties agree to the overall structure and framework for the operational, administrative, managerial and other arrangements as agreed between the parties and the manner in which the conduct of the business and affairs of the MSSB’s Scope of Work and WRSB’s Scope of Works (collectively known as “the Works”) are to be regulated.

2.1 The joint venture is formed for the purpose of continuing with the Project in that each Party recognizes that the others are wiling and able to contribute capital, staff, worker and services for the operation of a successful completion of the Project.

2.2 This joint venture partners agree and declares that this collaboration is to achieve the completion of the Project (along with and to the extent of the prior agreement between MSSB and SIC) to create a joint profit sharing. The joint venture acknowledges that all Parties will continue to be involved in the implementation of this Project until its completion.

3.1 The Parties here agree that the following documents shall be construed as an integral part of this Agreement: -

The Letter of acceptance of tender from PKNS to MSSB dated 15th February 2022;

(ii) The conditions of the contract between PKNS and MSSB – PWD Form 203A (Rev. 1/2010); and

(iii) The SIC Agreement.

3.2 WRSB is deemed to have knowledge of the provisions and / or the arrangement set out in the above documents.

4.1 This Agreement shall be in force on the date of the execution and shall continue to be in force until the expiry of the duration specified in the main contract between PKNS and MSSB or any extension thereof as approved by PKNS unless terminated in accordance with the provisions in this Agreement and / or pursuant to the termination in the main contract.

4.2 MSSB acknowledges that WRSB undertakes that the period for WRSB to carry out and complete WRSB’s Scope of Works shall be from 16th January 2023 to 30th September 2023. For this purpose, MSSB undertakes to WRSB that MSSB shall procure the required extension of time up to 30th September 2023 from PKNS for the completion of the Project.

5.1 The Parties agree that the contract sum for Project after taking into account the payment by PKNS for the initial progress claims submitted by MSSB prior to the execution of this Agreement (hereinafter referred to as “PKNS’s Payment”) shall be RM 19, 142, 845.57 (hereinafter referred to the “Balance Contract Sum”).

(A) Payment pursuant to the Deed of Assignment

6.1 Based on the arrangement between SIC and MSSB, MSSB is to issue an authorisation letter (which shall not be withheld) to SIC authorising SIC to release the requisite payment to WRSB for the WRSB’s Scope of Works. For the avoidance of doubt, WRSB shall be made payment based on certification of work done by PKNS.

6.2 Further to the above, based on the arrangements between MSSB and SIC as set out in Recital (C) above, the direct payment from PKNS to MSSB for the amount equivalent to 10% of the Contract Sum shall be paid from MSSB to SIC in order for SIC to have the control over the full 100% of the certified claim for the purposes of payment disbursement to the parties. For the avoidance of doubt, it is mandatory for MSSB to pay and / or transfer to SIC the 10% payment received from PKNS.

(B) Deduction by SIC from the certified claim by PKNS

6.3 Prior to the execution of this Agreement, SIC advanced a sum equivalent to RM 1,115,000 to MSSB to operate and to progress with the Project (“hereinafter referred to as the “SIC’s Advance”) as set out hereto as Appendix 2.

6.4 WRSB agreed for the SIC’s Advance to be deducted from WRSB’s certified claim by PKNS progressively up to 5% of each certified claim until the SIC Advance is fully recouped by

(C) Performance Bond 6.5 MSSB represented to WRSB that the existing performance bond issued by Affin Islamic Bank Berhad for the sum of RM 1,053,

903.23 is jointly procured by MSSB and SIC (hereinafter referred to as the Ëxisting Performance Bond”). MSSB further represented that the Existing Performance Bond is expiring on 31st March 2023.

6.6 Upon the expiry of the Existing Performance Bond on 31st March 2023, WRSB shall at its own initiative and costs procure a fresh performance bond in the name of MSSB from any other financial institution of WRSB’s preference for the equivalent performance bond value in favour of PKNS to replace the Existing Performance Bond. Thereafter, MSSB shall procure the refund of the Existing Performance Bond a sum equivalent to RM 1, 053, 903.23 (“hereinafter referred to as “the Bond Sum”) from PKNS. Upon receipt of the Bond Sum from PKNS, MSSB shall disburse the entire Bond Sum to WRSB. WRSB further undertakes that the fresh performance bond shall be valid and subsisting until the completion and / or extended completion of the Project at WRSB’s own costs and expense.

7.1 Subject to this Agreement, the powers and obligations of the Parties throughout the continuance of this Agreement are as set out below. ……

7.3 WRSB (wrongly numbered as 7.1)

To ensure the validity of the Existing Performance Bond and / or a fresh performance bond in the name of MSSB is secured by any other financial institution of WRSB’s preference for the equivalent performance bond value is valid and subsisting from 31st March 2023 until the completion and / or the extended completion of the Project at WRSB’s own costs and expense.

To pay to MSSB a sum equivalent to RM 350,000 as set out below which will be deducted from the MSSB’s profit sharing entitlement after the completion of the Project.

To extend the validity of the Insurance (i) Workmen’s Compensation (WC) and (ii) Contractor’s All Risk (CAR) to ensure that the insurance issued by SIC is valid and subsisting to PKNS from 31st March 2023 until the completion and / or extended completion of the Project at WRSB’s own costs and expense.

To fully finance, manage and be responsible for the day-to-day site operation, administration and financial management of the Project save including all preliminaries such as payment utilities, machineries, Authorities Permi, worker and staff salary including previous payment by MSSB and except MSSB’s scope of works which are the responsibility of MSSB.

To monitor the budget of the Project and control the operational cash flow of the project.

To prepare all progress claims pertaining to WRSB’s Scope of Works on fortnightly basis.

To incorporate MSSB’s claim and to submit on behalf of MSSB to PKNS for certification and / or approval.

To prepare drawings, work programme and applications for extension of time pertaining to WRSB’s scope of works and to submit to PKNS on behalf of MSSB for certification and approval.

To negotiate, implement and execute agreements, contracts and other documents, pertaining to the management, administration and operation of the Project save and except in relation to MSSB’s Scope of Works.

To carry out WRSB’s Scope of Works diligently.

To use its best endeavors to complete the Project.

8.1 At the end of the completion of the Project and after deducting all the expenses in completing the Project, MSSB shall be entitled to ten (10%) of the net profit (subject to deduction of MSSB’s Payment made by WRSB as set out in Clause 7.1(b) above) while WRSB shall be entitled to ninety (90%) of the net profit derived from the Project.

8.2 For the avoidance of doubt, any imposition of liquidated and ascertained damages by PNKS shall be deemed to be part of the expenses of the Project. ……….

10.1 MSSB and WRSB hereby agrees and warrants that it shall at all times indemnify, save and hold each other harmless against all losses, damages, claims, proceedings, demands, action, penalties and expenses (including legal costs on a solicitors and client basis) that may be made or brought at any time by any party or parties against MSSB or WRSB in respect of the Project as a result of any actions or omissions of MSSB or WRSB arising from its negligence, willful default or which are illegal prior to or after the execution of this Agreement.

11.1 The parties subject to the right of seeking damages terminate this Agreement upon occurrence any of the following events: -

Fails to proceed and / or progress the Works regularly and diligently with the performance of the obligations pursuant to the contract. ……

If MSSB or WRSB omits, fails or breaches to observe or perform any of the terms and / or conditions, covenants, undertaking and obligations pursuant to this Agreement.

The main contract between PKNS and MSSB is terminated.

11.2 Save and except for the events set out in clause 10.1 above, the Party (hereinafter referred to as “the Non-Defaulting Party”) shall give the other Party (hereinafter referred to as “the Defaulting Party”) a notice to remedy the default and / or breach of any provisions of this Agreement seeking for remedy within seven (7) days from the date of such notice, failing which, the Non-Defaulting Party shall be at the liberty to terminate this Agreement with the right of seeking damages and losses against the Defaulting Party.

11.3 The termination of this Agreement shall not release any Party from any liability which at the time of such termination has already occurred or will thereafter accrue in respect of any act or omission prior to such termination. ………..

13.1 Subject to Clause 12, upon any Parties ceasing to be a partner for any reason, the provisions and benefits of this Agreement will cease to be applicable to such Party as if it were not a party to this Agreement, save for such rights, benefits and obligations as shall have accrued to it at the date of it ceasing to be a partner and save further that the right of any Party to claim damages by reason of any breach of this Agreement by any other party which had accrued prior to any Party so ceasing will not be affected.” Performance Bond issued by UOB in favor of PKNS dated 17-4-2023 34. The Plaintiff had caused the issuance of the new Performance Bond in favor of PKNS dated 17-4-2023 that expires on 31-12-2023.

UOB agreed to undertake and covenant with PKNS that it shall guarantee the due performance of the works undertaken by the Firstt Defendant. If PKNS issues a written demand to UOB, the Bank shall pay PKNS up to the sum of RM 1,053,903.23. The said guarantee constitutes a continuing guarantee and shall be irrevocable and shall remain in full force from 10-4-2023 to 31-12-2023. Dispute between the Plaintiff and the First Defendant – Non-payment and delay of works 36. The Plaintiff had issued the letter dated 20-4-2023 to the First Defendant notifying that: -

The Plaintiff did not receive payment from PKNS despite the certification of the works done (certificate no. 3 and no 4).

The advances paid by the Plaintiff to the First Defendant were not repaid from the payments allegedly due from PKNS.

The payments made by PKNS were paid directly to SIC in accordance with clause 6.3 and clause 6.4 of the Joint Venture Agreement.

The Plaintiff did issue the Performance Bond to PKNS as required.

As a result, the Plaintiff decided to issue the stop work order for the operations at the project dated 2-5-2023.

This caused the First Defendant to issue its response dated 15-5- 2023 to the Plaintiff. The Plaintiff was notified of its obligation to comply with its obligations as laid down in the Joint Venture Agreement:-

Failure to issue the Performance Bond to PKNS.

(ii) Failure to pay the sum of RM50,000.00 in accordance with clause 7.1 of the Joint Venture Agreement between parties.

(iii) Failure to update the progress of the works at the site and complained that the Plaintiff did not have the right to stop work from 21-4-2023 to 2-5-2023 without the approval from the 1st Defendant.

(iv) Failure to provide a copy of the Joint Venture Agreement.

This caused the issuance of the email dated 15-5-2023 by Gary Wong, a representative of the Plaintiff, to the First Defendant. Gary informed the First Defendant that: -

The Performance Bond to the value of RM 1,053, 903.23 was accepted by PKNS.

(ii) The sum of RM 50,000.00 will be paid to the First Defendant once the sums of RM 1,053, 903.23, being the 1st Performance Bond, is paid to the Plaintiff.

(iii) There were reasons why the Plaintiff decided to stop work.

(iv) There is a need to revisit the terms of the Joint Venture as the existing contract could not be complied with.

The First Defendant had again issued another letter dated 18-5- 2023 to the Plaintiff. The First Defendant reiterated that the Plaintiff had breached the terms of the Joint Venture Agreement in particular (i) the failure to provide the Performance Bond, (ii) the failure to issue the required insurance and (iii) the delay and cessation of works at the site.

The dispute between parties continued as seen in the letters dated 24-5-2023, 29-5-2023 and the letters dated 6-6-2023. The First Defendant eventually issued a notice to terminate the Joint Venture Agreement on 7- 6-2023. This Court also refers to the letters dated 13-6-2023, 14-6-2023, 16-6-2023 and 19-6-2023. The First Defendant justified the termination of the Joint Venture Agreement as seen in the letter dated 7-6-2023 as follows: -

That the Plaintiff failed to pay the sum of RM 50,000.00 due as of 31-5-2023 in accordance with the terms of the Joint Venture Agreement.

(ii) That the Plaintiff failed to issue the required insurance policies.

(iii) The delay in the work at the site and the stop works order.

Parties had attempted to amicably settle the dispute as seen in the notes of the meeting held 21-6-2023 and 23-6-2023. The meeting was mediated by PKNS but the negotiations failed as parties could not agree as to the terms of payment of the sums to be paid from the sums retained by SIC.

This Court also notes that the First Defendant paid Kacon Construction Sdn Bhd, a subcontractor of the Plaintiff, the sum of RM 500,000.00 being the works done by the said entity. A request for payment was made by Kacon to the First Defendant on 12-6-2023.

The First Defendant had also agreed to release the sum of RM 1, 053, 903.23 that were held by SIC, the refund of the First Performance Bond from Affin Bank, to (i) pay the sum of RM 687, 732.23 due to SIC from the First Defendant and (ii) the sum of RM 366, 171.00 due to Palco Engineering. This can be seen in the letter dated 19-6-2023 issued by the First Defendant to SIC.

According to the Plaintiff, it had caused the filing of the claims for the works done for the said project. PKNS had caused the issuance of payments certificates numbering 2 to 7 for the said project. The Plaintiff claims that it did not receive any such payments for the said project despite the confirmation of the works done by them.

PKNS decided to terminate the said contract with the First Defendant via letter 4-9-2023. The work should have been completed by 30-6-2023 but as of September 2023 only 28.8% of the works were completed. As a result, PKNS had called on the Performance Bond. The Plaintiff concedes that PKNS did impose liquidated damages since 1-1-

F. Trial of this Claim 46.

The following witnesses were produced by the parties: - 1 Plaintiff

Syahrun Anuar bin Ibrahim

(ii) Wong Hoong Nang, Gary

46.2 Defendant

Zakaria bin Muhd (4th Defendant)

(ii) Afham Syafiq bin Md Sahiq – representative of SIC G. Decision of this Court

Both Breached the Terms of the Joint Venture Agreement 47. As summarized earlier, I find that the Plaintiff and the First Defendant are in breach of their obligations under the terms of the Joint Venture Agreement. The Plaintiff and the First Defendant had committed breaches of the terms of the Joint Venture Agreement and are not free of blame.

It is trite law that this Court is not entitled to rewrite the terms that have been agreed to by the litigants and must interpret the terms of the Contract based on the terms that have been agreed upon.

I refer to the judgment of the Gopal Sri Ram FJ in the often-cited case of Berjaya Times Square Sdn Bhd v. M-Concept Sdn Bhd [2010] 1 CLJ 269 and the Court of Appeal in Lau Ngiik Ping & Anor v. Bank Pertanian Malaysia [1992] 3 CLJ 1437.

This Court must consider the following in deciding whether the position taken by the Plaintiff and the Defendants is correct:-

a Court interpreting a private contract must first look at the words that appear in the instrument and as a general rule it is bound by what parties agreed on.

(ii) a Court cannot rewrite the terms of the instrument.

(iii) however, if the terms of the contract are not clear and ambiguous, the Court may look beyond the four corners of the document and consider the background facts to determine the appropriate interpretation of what was agreed on.

(iv) this includes all material that was reasonably available to the parties.

the interpreting court must disregard any part of the background that is declaratory of subjective intent only.

(vi) the court should adopt an objective approach when interpreting a private contract.

After considering the terms and conditions as they appear in the Joint Venture Agreement, and the terms of the letter dated 7-4-2023, as produced at trial, I find that the obligation of the parties could be summarized as follows: -

(I). Plaintiff - WRSB

51.1 To undertake 90% of the work required by PKNS.

51.2 To complete the work within the time frame required by PKNS.

51.3 To undertake all paperwork required for the work and for any extension of time.

51.4 To prepare all invoices and paperwork proving work was undertaken for approval for PKNS.

51.5 To provide a replacement Performance Bond as required by PKNS.

51.5 To finance and manage the work for the project.

51.6 To pay the First Defendant the sum of RM 350,000.00 being advance of the profits of the project in accordance with the payment schedule stated in clause 7.1.

(II). Defendant - MSSB

51.7 To provide all reasonable assistance to the Plaintiff.

51.8 To assist and undertake all reasonable steps to obtain the extension of time for the work.

51.9 To ensure that all payments received for the work from PKNS will be paid to the Plaintiff subject to the right of SIC to deduct the sums that are due.

51.10 To complete 10% of the work (deliver firefighting equipment).

51.11 To pay the Plaintiff the sums received from PKNS when the First Performance Bond was released.

51.12 To pay the Plaintiff the sum of RM 1,053, 903.23 (the 1st Performance Bond) within 3 days of receipt of the sums from Affin Bank. If it does not do so, then the First Defendant may be liable if the said non-payment had any impact on the overall completion of the Works.

(III). Other Material Terms of the Joint Venture Agreement 51.13 The profit for the said project will be shared 90/10 (Plaintiff/ Defendant) at the completion and any liquidated damages shall be considered as part of the costs – clause 8.1 and clause 8.2.

51.14 Parties are partners and the terms of the previous contracts entered with PKNS and SIC are applicable to the terms of the Joint Venture Agreement.

(ii) Breaches by the Plaintiff 52. It is important that I reiterate that the Plaintiff is a partner to the First Defendant and not merely a subcontractor for the works done. The Plaintiff did agree to undertake and be responsible for 90% of the works. It must complete the works within its scope and within the agreed timeline.

The Plaintiff also agreed that it will (i) provide and finance the security for the performance bond and (ii) finance, manage and be responsible for the day-to-day site operation. The First Defendant is not allowed to interfere in areas within the scope of the Plaintiff’s duties. See recital E, clause 3 and clause 7.3 (wrongly numbered as 7.1) of the Joint Venture Agreement.

I also find that pursuant to clause 6 of the said Joint Venture Agreement, parties agreed that all payments will be made by PKNS to SIC and that SIC did have a right to deduct the sums that are due to it before any sums become due and payable to the two contractors. The terms of the previous agreements were made part and parcel of the Joint Venture Agreement and the Plaintiff is deemed to have knowledge and agreed to them.

I note that the Plaintiff and the First Defendant stated in clause 6.4 that only a 5% deduction shall be made from each certified claim until SIC’s advance is fully repaid

However, parties failed to obtain the consent of SIC before such a clause was agreed. As stated earlier, the parties agreed that the Joint Venture Agreement between SIC and the First Defendant remains part and parcel of their own agreement as seen in clause 3.1 and clause 3.2 of the Joint Venture Agreement.

As such, I opine that the Plaintiff did agree that it will be bound by the obligation of the First Defendant to SIC. Parties agreed that SIC did have a right to deduct the sums that are due to SIC before payments made by PKNS are released. I reproduce clause 3 of the said Joint Venture Agreement. “3. CONTRACT DOCUMENT

3.1 The Parties here agree that the following documents shall be construed as an integral part of this Agreement:

The Letter of acceptance of tender from PKNS to MSSB dated 15th

(ii) The conditions of the contract between PKNS and MSSB – PWD Form 203A (Rev. 1/2010); and

(iii) The SIC Agreement.

3.2 WRSB is deemed to have knowledge of the provisions and / or the arrangement set out in the above documents.”

The obligation to ensure that all sums received from PKNS for the works directly to SIC also appears in the Deed of Assignments. This arrangement was incorporated as part of the terms of the Joint Venture Agreement.

This agreement can be seen in the letter dated 20-4-2023 where the Plaintiff stated:-

“Based on the agreement signed: - Clause 6 – Payment not received as per work done and certified by Perbadanan Kemajuan Negeri Selangor (certificate 3 & 4).

Clause 6.3 – Advance from Mega System (M) Sdn. Bhd. to Wijadi Resources Sdn. Bhd. not completed and not paid.

Clause 6.4 – Due to clauses 6.3 above we can’t execute.

Clause 6.6 – Due to expired bond, WRSB has issued a copy of performance bond as attached.”

Therefore, the Plaintiff is not in a position to complain that the sums approved by PKNS were not received by it. SIC had the right to deduct the sums that were due and payable to it. The amounts released by PKNS were used to settle the sums owed to SIC, as confirmed by SIC’s witness, Afham Syafiq bin Md Sahiq

Being aware of the said requirement, the Plaintiff is not entitled to stop work. The Plaintiff is no longer a sub-contractor and as I found earlier, the said company chose to undertake the mantle of a partner with the Firstt Defendant and took all risks relating to the said project.

As stated in clause 8 of the said Joint Venture Agreement, the Plaintiff agreed that “MSSB shall be entitled to ten (10%) of the net profit … while WRSB shall be entitled to ninety (90%) of the net profit derived from the Project.” They are now partners and must complete the work within the time frame provided by PKNS.

Furthermore, the Joint Venture Agreement did not provide for any right of the First Defendant to stop work if no payment is received from PKNS or from the First Defendant. Instead, the Joint Venture Agreement states that it is the duty of the Plaintiff to: - “7.3 WRSB (wrongly numbered as 7.1)

To fully finance, manage and be responsible for the day-to-day site operation, administration and financial management of the Project save including all preliminaries such as payment utilities, machineries, Authorities Permi, worker and staff salary including previous payment by MSSB and except MSSB’s scope of works which are the responsibility of MSSB.

To monitor the budget of the Project and control the operational cash flow of the project.

To prepare all progress claims pertaining to WRSB’s Scope of Works on fortnightly basis.

To incorporate MSSB’s claim and to submit on behalf of MSSB to PKNS for certification and / or approval.

To prepare drawings, work programme and applications for extension of time pertaining to WRSB’s scope of works and to submit to PKNS on behalf of MSSB for certification and approval.

To carry out WRSB’s Scope of Works diligently.

To use its best endeavors to complete the Project. “

Therefore, it was wrong for the Plaintiff to stop the works in May

It should have continued the project and deliver the work within the time frame as laid down by PKNS.

I also find that as of the date of termination of the Joint Venture Agreement, the Plaintiff did not undertake the project in a timely manner.

No explanation is given why there was little progress at the work site and why the Plaintiff could not deliver the works within the time required by PKNS. Even if I were to accept that the delay was caused by the non-payment of the sums released by PKNS, this does not absolve the obligation of the Plaintiff.

The Plaintiff is bound by the terms of the Joint Venture Agreement it has agreed to, and cannot now resile on the same

I note that the Plaintiff contends that it could not have achieved completion of the project due to termination of the Joint Venture Agreement and the works by the Defendant. However, I do not find that the Plaintiff is free from blame.

The facts show that as of June 2023 only 28.8 % of the works was completed and it would have been impossible for the works to be completed even if the extension of time was procured from PKNS.

This is also seen in the notice issued by PKNS dated 9-9-2023. The Plaintiff having agreed to take on 90% of the works and be responsible for financing the project is responsible for this failure. This obligation appears in clause 7.1(d) of the Joint Venture Agreement.

The Plaintiff agreed that it will finance and manage the said project. This would have required that it took the financial risk for the 90% of the project and ensured that the works are completed on time. Therefore, the failure to complete the works and the decision to stop work proves that the Plaintiff did breach material terms of the Joint Venture Agreement.

It is trite law that parties cannot assume that they are entitled to stop work if payments for such works are not received. More so in this case, when parties agree that they are joint venture partners and will achieve the promises made to their ultimate employer, PKNS.

I refer to the decision of our Courts in Kah Seng Construction Sdn Bhd v. Selsin Development Sdn Bhd [1997] 1 CLJ Supp 448, China Communications Construction (M) Sdn Bhd v. Jiangsu Zhongnan Construction Group (Malaysia) Sdn Bhd [2024] MLJU 1341 and Martego Sdn Bhd v. Arkitek Meor & Chew Sdn Bhd & Another Appeal [2018] 2 CLJ 163.

The Plaintiff also argues that the failure to deliver the work is also caused by the Defendant’s failure to obtain the required extension of time from PKNS.

However, the Plaintiff fails to note that this obligation does not lie solely on the shoulder of the First Defendant. Before any extension of time is obtained, the required paper work must be prepared to justify the same. Under clause 7.3(i) of the Agreement, this lies on the shoulder of the Plaintiff. No evidence of such paper work was produced before this Court.

I also find that the Plaintiff did not provide any evidence that it could have completed 70% of the work within the said time frame even if an extension of time was obtained.

In addition to the above, I also do not find the failure to pay the First Performance Bond or the sums returned by SIC justifies the decision to stop work and the Plaintiff’s failure to complete the works within the time frame agreed.

As I said earlier, the Plaintiff agreed that it will finance the works and will complete 90% of the works required for the project. I repeat that the Plaintiff also agreed that SIC has the right to deduct payment for all sums due to it before any sums are payable to the Joint Venture Agreement.

It is clear to this Court that as of 7-7-2023, based on progress claim no. 7, the Plaintiff had only completed 10.2% of the work and as of 4-9- 2023, only 28.8% of the required work was completed. This can be seen in the letter issued by PKNS dated 4-9-2023 and the Progress of the Construction of the Work as seen in pages 337, 393, 428, 529, 574, 637 and 692 of the Common Bundle of Documents: - No Date Progress Claim Payment for Each Percentage of Contract Certified Claim (RM) 1 30-8-2022 No.1 310,000 1.47 2 5-12-2022 No.2 286,100 1.36 3 24-3-2023 No. 3 421,700 2.00 4 7-4-2023 No. 4 129,000 0.61 5 5-5-2023 No. 5 245,400 1.16 6 19-5-2023 No. 6 307,200 1.46 7 16-6-2023 No.7 207,500 0.98 8 7-7-2023 No.8 22,240 -

9.05%

In addition to the above, I also find that the Plaintiff failed to ensure that the required insurance as required by PKNS is renewed. This obligation lies with the Plaintiff as seen in clause 7.3 (c) of the Joint Venture Agreement.

I also find that the Plaintiff had failed to pay the sum of RM 50,000.00 that was promised to the First Defendant which should have been paid by 31-5-2023. The said obligation shall be paid by the Plaintiff to the First Defendant on the said date and this obligation is not dependent upon receipt of any sums from PKNS. I reproduce the said clause for convenience: - “7.3 WRSB (wrongly numbered as 7.1)

To pay to MSSB a sum equivalent to RM 350,000.00 (hereinafter referred to as the “MSSB” s payment as set out below which will be deducted from the MSSBs profit sharing entitlement after the completion of the Project. Payment No. Payment Date Amount (RM) 1 31st May 2023 50,000.00 2 30th June 2023 200,000.00 3 31st July 2023 100,000.00 Total RM 350,000.00

Furthermore, as correctly pointed out by the Defendant’s Counsel, clause 8.1 of the Joint Venture Agreement states that at the completion of the works, the net profit shall then be shared based on the proportion of the contract agreed. Even the liquidated damages chargeable by PKNS shall be considered as part of the costs.

This includes all liquidated damages even before the start of the Joint Venture as the Plaintiff was well aware that these existed. The Plaintiff is agreeable to the risk involved and accepts the contract value as agreed with PKNS by the First Defendant.

For the above reason, I find that the Plaintiff found itself in a venture that was not commercially viable. Realizing this, it tried to renegotiate the terms to rework the payment mechanism and the work for the said project. This can be seen in the letter dated 20-4-2023.

The Plaintiff then decided to stop work, in an attempt to wiggle out of this tough spot. This attempt was not successful. This Court cannot now allow the Plaintiff to change the terms of the Joint Venture that it has agreed with the First Defendant.

Therefore, I find that the Plaintiff did breach the terms of the Joint Venture Agreement as summarized in paragraph 16 earlier.

The above finding of breach of the Joint Venture Agreement on the part of the Plaintiff does not absolve the Defendants. The First Defendant had also failed to comply with the following terms of the Joint Venture Agreement.

to pay the sums received from SIC in accordance with the terms of the Joint Venture Agreement.

(ii) to pay the sum of RM 1, 053, 903.23, being the First Performance Bond / Affin Performance Bond released by PKNS, pursuant to clause 6.5 and 6.6 of the Joint Venture Agreement, to the Plaintiff.

(iii) to obtain the extension of time from PKNS (this failure lies with both parties. Failure to Pay the proceeds of the First Performance Bond 88. Firstly, I find the First Defendant did fail to pay sums that were received from the performance bond initially securitized by SIC, to the Plaintiff. The First Defendant did agree that it will do so in accordance with the terms of the letter dated 7-4-2023 and clause 6.6 of the Joint Venture Agreement.

This breach is evident in the letter issued by the First Defendant to SIC dated 19-6-2023. The First and Fourth Defendants knew of their obligations that these sums should have been paid to the Plaintiff but chose instead, even after deducting the sums due to SIC, to use the same to pay Palcon Engineering & Development Sdn Bhd, its subcontractor the sum of RM 366, 171.00.

The Defendants argue that the First Defendant need not pay the said sums. Learned counsel submits that the letter dated 7-4-2023 is not supported by consideration. However, I find that he has missed the point that the letter does not stand on its own. It supports and explains clause 6.6 of the Joint Venture Agreement. Therefore, the First Defendant is bound by what it has agreed to and must pay the sums received from the First Performance Bond in accordance with clause 6.6 of the Joint Venture Agreement. Failure to pay the sums received from SIC

In addition to the above, I find that the Plaintiff has shown that the First Defendant breached the terms of the Joint Venture Agreement by failing to pay the sums that were received from SIC.

SIC’s witness testified that the First Defendant received approximately RM 159,769.00. PKNS made full payment to SIC based on the certificate, and SIC deducted the amounts owed to it. SIC then paid the net sum of RM 159,769.00 to the First Defendant. However, the First Defendant failed to remit these funds to the Plaintiff, as confirmed by SIC’s representative

93.

It is important to note that at this juncture, the witness produced by SIC, explained that the said company is entitled to retain the full sums paid by PKNS and deduct the sums that were due from the First Defendant. Clause 3.1 and clause 6 of the Joint Venture Agreement expressly incorporate this requirement. This obligation was therefore consented to by the Plaintiff. It cannot now complaint.

Therefore, the First Defendant did commit a breach of clause 6.6 of the Joint Venture Agreement and the letter dated 7-4-2023. Failure to Obtain the Extension of Time 96. In addition to the above, I also find that the First Defendant had also failed to obtain the extension of time from PKNS as required under clause 7.2(c) of the Joint Venture Agreement.

However, as I have stated earlier, this obligation lies not solely with the First Defendant but also on the shoulders of the Plaintiff. Therefore, each is not without blame and both must bear the consequences of their actions. No Settlement Entered 98. I, however, do not agree with the Plaintiff’s argument that the Defendants had agreed to a settlement agreement that was mediated by PKNS. The notes produced of the meetings held on 21-6-2023 and 23-6- 2023 may appear to have resolved the dispute between parties but this was derailed as parties did not agree to any final written agreement.

This also appears in the letter dated 14-7-2023 issued by the Plaintiff to PKNS. I reproduce parts of the said letter to show that parties did not agree to a settlement as claimed in this suit:- “However, we also wish to state on record that despite various meeting and agreements reached between the parties, MSSB had not provided WRSB with the necessary documents to enable WRSB to draft the settlement agreement… In the circumstances, we appeal for your further assistance in hope to settle the dispute between the us and MSSB in respect of the outstanding payments from MSSB to WRSB.”

The denial of any form settlement is also seen in the letter issued by the First Defendant to the Plaintiff dated 14-6-2023. On this issue, I agree with the Defendants.

I have considered the pleaded case of fraudulent misrepresentation against the Fourth Defendant and the claim that the corporate veil should be lifted to impose personal liability for the losses suffered by the Plaintiff.

I find that the Plaintiff has not established fraudulent misrepresentation against the Fourth Defendant, nor demonstrated any circumstances warranting the lifting of the First Defendant’s corporate veil to impose personal liability on the Fourth Defendant. Alleged Fraudulent Misrepresentation against the First and Fourth

Defendants It is for the Plaintiff to prove each of the following: -

That the First Defendant and / or the Fourth Defendant made a representation that is false.

(ii) That the First Defendant and / or the Fourth Defendant knew that the representation was untrue, or that the Defendant was reckless as to its truth.

(iii) That the First Defendant and / or the Fourth Defendant intended that the representation would induce the Plaintiff to act or refrain from acting.

(iv) That the Plaintiff suffered losses as a result of the said representation.

See Victor Cham & Anor v. Loh Bee Tuan [2006] 3 CLJ 770 and Sim Thong Realty Sdn Bhd v. Teh Kim Dar [2003] 3 CLJ 227 and Takako Sakao v. Ng Pek Yuen & Anor [2010] 1 CLJ 381.

Also, refer to section 18 of the Contracts Act 1950 and the decision of the Court of Appeal in Yeohata Machineries Sdn Bhd & Anor v. Coil Master Sdn Bhd & Ors [2016] 2 CLJ 414

I am of the opinion that the Plaintiff has only shown that the First Defendant had breached the terms of the Joint Venture Agreement. It did not show any form of fraudulent misrepresentation by the Fourth Defendant.

The letter dated 7-4-2023 indicates that the First Defendant promised to comply with the Joint Venture terms, specifically ensuring that sums received from Affin (1st Performance Bond) would be paid to the Plaintiff. It further state that if these sums are not received, the Plaintiff may “take the necessary action against us including but not limited to pursuing this matter with the Principal and / or commencing legal action in court and all consequences as well as the impact on the overall completion of the Works shall be fully borne by us.”

I agree that the Plaintiff has demonstrated the First Defendant's failure to fulfil the specified obligation. However, this does not substantiate a claim of fraudulent misrepresentation concerning the letter dated 7-4-

The Plaintiff only proved that the First Defendant had promised that it would release the sums to Plaintiff and this did not fall with the realm of fraudulent misrepresentation.

Furthermore, for a claim of misrepresentation or a tort of deceit, it must relate to a statement of existing fact and not a promise to do something in the future. Refer to Sim Thong Realty Sdn Bhd v. Teh Kim Dar [2003] 3 CLJ 227.

Therefore, I cannot find that the Defendants had committed any form of actionable misrepresentation. The Plaintiff has only proven that the First Defendant had breached the terms of the Joint Venture Agreement. As I said earlier, the Plaintiff should also bear part of the responsibility for the failure of the said project.

Attempt to Lift the Corporate Veil I also do not find that the corporate veil of the First Defendant should be lifted to impose liability on the Fourth Defendant. I refer to Solid Investments Ltd v. Alcatel Lucent (Malaysia) Sdn Bhd [2014] 3 CLJ 73 where the Court held: - “….We also agree with the Court of Appeal that there must be evidence either of actual fraud or some conduct amounting to fraud in equity to justify the lifting of corporate veil. The position of the law on this subject had been clearly stated by Gopal Sri Ram JCA (as he then was) in Law Kam Loy v. Boltex Sdn Bhd [2005] 3 CLJ 355 at p 362 as follows: In my judgment, in the light of the more recent authorities such as Adams v. Cape Industries Plc, it is not open to the courts to disregard the corporate veil purely on the ground that it is in the interests of justice to do so. It is also my respectful view that the special circumstances to which Lord Keith referred include cases where there is either actual fraud at common law or some inequitable or unconscionable conduct amounting to fraud in equity... (emphasis added)”

I also refer to Dr HK Fong Brainbuilder Pte Ltd v. SG-Maths Sdn Bhd & Ors [2018] CLJU 773, Theta Edge Bhd v. Infornential Sdn Bhd [2017] 7 CLJ 53 and Janet Ooi Hui Ming v. STC Management Sdn Bhd & Anor [2021] 8 CLJ 952.

I am guided by the decision of the Federal Court in Ong Leong Chiou & Anor v. Keller (M) Sdn Bhd [2021] 4 CLJ 821 where Nallini Pathmanathan FCJ held: - “[46] I comprehend this paragraph as stating that:

The company's veil of incorporation might be lifted if it is being utilised for some relevant wrongdoing;

(ii) The first step is to identify such relevant wrongdoing. In this context, the interchangeable use of 'façade' and 'sham' is too vague and gives rise to confusion;

(iii) Two distinct principles lie behind the terms 'façade' and 'sham' respectively;

(iv) Where the wrongdoing relates to the abuse of the corporate personality as a 'façade', the principle to be applied is that of concealment. This principle does not entail the piercing of the corporate veil. The interposition of a company or perhaps several companies so as to conceal the identity of the real actors will not prevent the courts from identifying the real actors. There is no piercing because the court is not disregarding the façade but looking behind it to discover the facts which the corporate structure is concealing;

Where the wrongdoing relates to the abuse of the corporate personality as a 'sham', the principle to be utilised is that of evasion. In evasion the court may disregard the corporate veil if there is a legal right against the person in control of it which exists independently of the company's involvement and a company is interposed so that the separate legal personality of the company will defeat the right or frustrate its enforcement; and

(vi)

Many cases will fall into both categories.” I do not find any evidence that the Plaintiff has shown any of the circumstances identified by the Federal Court that justifies the lifting of the corporate veil.

For the above reasons, I find that this Court cannot impose personal liability for any of the losses claimed by the Plaintiff against the Fourth Defendant personally. The Plaintiff has only shown that the First Defendant had failed to comply with its contractual obligation, as identified earlier, to the Plaintiff and not fraudulent misrepresentation or any fraud as suggested by the Plaintiff. H. Damages Claimable by the Plaintiff for the alleged wrongs Damages caused by Failure to pay the Plaintiff the sums released by

SIC For the above reasons, I find that the Plaintiff should be compensated for the failure of the First Defendant to pay the sums that were paid by SIC. The First Defendant did not have any right to retain the said sums paid to the amount of RM 159, 769.00 by SIC.

I find that the above damages naturally arose in the usual course of the breach by the First Defendant. This is in accordance with section 74 of the Contracts Act 1950.

I also refer to Tan Sri Khoo Teck Puat & Anor v. Plenitude Holdings Sdn Bhd [1995] 1 CLJ 15, Datuk Mohd Ali Hj Abdul Majid & Anor v. Public Bank Bhd [2014] 6 CLJ 269 and Tekun Nasional v. Plenitude Drive (M) Sdn Bhd & Another appeal [2021] 10 CLJ 206.

I am aware that the Plaintiff is claiming for the full sums that were released by PKNS based on the work certified. However, as I have stated earlier, parties agreed that SIC shall have the first bite to the sums released by PKNS. SIC’s right remains part of the terms agreed between the Plaintiff and the Defendant. Therefore, the Plaintiff should only be paid the sums released by SIC to the First Defendant, which is the sum of RM 159, 769.00.

Damages for the Failure to Pay the First Performance Bond I also find that the First Defendant should be directed to pay the sum of RM 1, 053, 903.23. This was promised by the First Defendant to the Plaintiff and appears in clause 6.6 of the Joint Venture Agreement and in accordance with the contents of the First Defendant’s letter dated 7-4-

The First Defendant has not shown any valid reason why the said sum was legitimately withheld by the First Defendant. The obligation to pay the sum of RM 1,053, 903.23 is only conditional on receipt of the 1st performance bond from PKNS. This occurred and the First Defendant should have then complied with its promise. Other Damages Claimed by the Plaintiff – The Call on the Performance Bond by PKNS, Costs of the Performance Bond and other payments made to subcontractors

On the other hand, I cannot conflate the non-payment of the Affin Performance Bond with the losses suffered by the Plaintiff for the call of the 2nd Performance Bond by PKNS. The Plaintiff had agreed that the 2nd Performance Bond must be procured at the Plaintiff’s initiative and its own costs.

Furthermore, the terms of the Joint Venture Agreement clearly attribute the obligation to finance and provide the new Performance Bond is on the Plaintiff. To agree to such attribution of damages as suggested by the Plaintiff would rewrite the bargain as agreed and contained in the Joint Venture Agreement.

I repeat that the obligation to finance, financial management, budget and financial responsibility for the day-to-day operation of the works lies with the Plaintiff as seen in clause 7.3(d) and (f) (wrongly numbered as 7.1) of the Joint Venture Agreement. The obligation to finance the works was not on the Defendants. It lies solely on the shoulder of the Plaintiff.

Moreover, 90% of the Works fall within the scope of the Plaintiff’s obligations, which include monitoring the project, issuing all progress claims, preparing drawings and work programs, applying for extensions of time, and executing all operations related to the project. These obligations appear in Clause 7.3(a) to (l) of the Joint Venture Agreement.

I note the Plaintiff’s argument that it was wrong for the First Defendant to terminate the Joint Venture Agreement and its contention that the said Performance Bond should have been replaced by a new bond personally by the First Defendant.

Nevertheless, I find that the new Performance Bond issued by the Plaintiff is irrevocable and can only be terminated with the consent of PKNS. The said Performance Bond was also issued to cover the obligation of the Plaintiff and its work during the lifetime of the Joint Venture. The evidence shows that the Plaintiff did fail to deliver the works within the time line agreed upon and fixed by PKNS. As such, the Plaintiff is not entitled to have the said Performance Bond replaced despite the termination of the Joint Venture by the First Defendant.

As to whether the said termination is valid or otherwise, I decline to make the declaration sought by the Plaintiff. I find that both the Plaintiff and the First Defendant did breach their obligations under the terms of the Joint Venture Agreement. Therefore, each must bear their share of the losses, as proven at trial, and the award of damages herein is to reflect the said fact.

The Plaintiff had also failed to prove that it could have completed the works if not for the notice of termination of the Joint Venture issued by the First Defendant. As highlighted earlier, as of 7-6-2023 the progress of the work was dismissal to say the least. As seen in the table produced in paragraph 81 earlier, the works were far from complete. The Plaintiff did not produce any evidence that it had prepared all the papers required to extend time.

As provided in Clause 8.1 of the Joint Venture Agreement, the parties agreed that, upon project completion, the profits and losses would be compiled, calculated, and apportioned between the Plaintiff (90%) and the First Defendant (10%). There is no evidence that the Plaintiff undertook this exercise. The Performance Bond prepared by the Plaintiff is irrevocable and remains in force until 31 December 2023, as agreed.

Furthermore, I repeat that the new performance bond is to guarantee not only the works undertaken by the First Defendant but also by the Plaintiff. As said earlier, it agreed to undertake 90% of the works and cannot now resile from it. Despite the termination by the First Defendant, the Plaintiff must still be liable for his portion of the work. This is in accordance with clause 13.1 of the Joint Venture Agreement.

Therefore, when I consider the terms of the Joint Venture Agreement as a whole, I do not find that the First Defendant’s failure to pay the First Performance Bond sum to the Plaintiff automatically proves that the First Defendant should bear all losses that arise as a result of the failure of the project.

I repeat, both parties are at fault and each should bear their fair share of the losses in accordance with clause 8.1 and clause 8.2 of the Joint Venture Agreement. This also means that the Plaintiff must bear the consequences of failing to deliver 90% of the required works within time.

The Defendants did not file a Counterclaim for any losses suffered by it due to the breaches of the Joint Venture Agreement by the Plaintiff. Nevertheless, I shall deduct the sums that should have been paid by the Plaintiff to the First Defendant i.e. the sum of RM 50,000;00. I also deduct the sum of RM 500,000.00 paid by the First Defendant to the subcontractors of the Plaintiff, Kacon. The First Defendant did produce the payment made by it to Kacon and this was not disputed by the Plaintiff during the course of the trial.

For the reasons stated above, I deny the Plaintiff’s claim for payment of the sums forfeited by PKNS. The Plaintiff failed to deliver the project on time. As of the date of termination of the Joint Venture, the Plaintiff had not completed the works within the timeline provided by PKNS.

In addition to the above, I also do not find any form of unjust enrichment as claimed by the Plaintiff. At the end of the day, I find that the Plaintiff and the Defendants must share the blame for the failure of the project. The work was not completed and PKNS had the legitimate ground to call on the bond. Parties are bound to the terms that they have agreed to and must share their fair share of the losses in accordance with the terms of the contract. Please see Dream Property Sdn Bhd v. Atlas Housing Sdn Bhd [2015] 2 CLJ 453.

Concerning the Plaintiff’s claim for the payment of RM 300,000.00 and RM 46,460 to its subcontractors, I do not find that the Defendants should be made liable for the said sums. This falls within the scope of the Plaintiff’s obligation. Therefore, it must bear the consequences for the said works and for the failure to complete the works within the time frame required by PKNS.

Orders Entered Against the Defendants For the above reasons I find that the First Defendant should pay the Plaintiff the following: -

The sum of RM 159, 769.00 being the sums paid by SIC to the First Defendant.

(ii) The sum of RM 503, 903.23 that should have been paid from the First Performance Bond in accordance with clause 6.6 of the Joint Venture Agreement and after deducting the sums due to the First Defendant and the sums paid to Kacon.

Costs of RM 20,000.00 are to be paid by the First Defendant to the Plaintiff subject to the allocator. I have considered the complexity of this claim, the importance of the dispute to the clients and the seniority of counsels.

Claim against the Fourth Defendant is dismissed. No order as to costs against the Fourth Defendant. Dated 8th May 2025 Dato’ Indera Mohd Arief Emran bin Arifin Judge High Court of Malaya at Kuala Lumpur NCC5 Counsel: Simrenjeet Singh together with Nicholas Ng Tat Sun For the Plaintiff Simrenjeet, Tay & Co. Advocates & Solicitors NS Leong For the 1st & 4th Defendants NS Leong, Low and Andy