XXXX v Fairview International School Nusajaya Sdn Bhd (W-02(NCvC)(W)-18-01/2022)

Jumlah gantirugi tertentu (LAD) sebanyak RM940,000.00 untuk kelewatan 94 hari pada kadar RM10,000.00 sehari;

Gantirugi nominal sebanyak RM35,000.00 bagi kehilangan yuran pelajar;

Kos rektifikasi sebanyak RM70,294.80;

Tuntutan balas Defendan bagi gantirugi khas sebanyak RM387,908.60, gantirugi am, faedah dan kos ditolak;

Defendan membayar kepada plaintiff kos tindakan ini sebanyak RM60,000.00, tertakluk kepada fi alokatur; dan

Defendan membayar kepada plaintiff faedah pada kadar 5% setahun ke atas jumlah penghakiman dari tarikh pemfailan writ sehingga penyelesaian sepenuhya. [2] For ease of reference, we will refer to the parties according to their positions in the High Court. The Plaintiff’s Claim [3] The respondent / plaintiff operates an international school in Johor Bahru and is part of a group of companies which operate international schools around the country under the name 'Fairview International School'. [4] The plaintiff engaged the defendant to supply, deliver, install, test, commission and maintain three (3) units of lifts at the plaintiff’s new campus in Johor Bahru. [5] The defendant signed and accepted the letter of award of (“LOA”) dated 1 July 2014 on 2 September 2014 for a contract worth RM566,000.00. Among the salient terms of the letter of award (clause 4) are:

The total completion period shall be six (6) months, governed by the date of completion in the contract and certified acceptance by Department of Occupational Safety and Health (“JKKP”) (clause 6). The LOA also provided for extension of time to be sought by the defendant in accordance with the Perakuan Kelayakan Mesin Angkat (“PMA”) Form of Contract.

(ii) LAD shall be RM10,000.00 per day of delay (clause 16). [6] The completion date was mutually accepted to be on 28 February 2015, six (6) months from the date of signing of the LOA. [7] The plaintiff paid the defendant the sum of RM84,900.00, being 15% down payment. No payment was made thereafter. [8] The defendant did not complete the installation, testing and commissioning of the three (3) lifts by 28 February 2015. [9] On 2 June 2015, JKKP’s issued three (3) PMA certificates with respect to the 3 lifts. As such, the plaintiff calculated liquidated ascertained damages (“LAD”) on the basis of delay of 94 days (calculated from 28 February 2015 to 2 June 2015) at a rate of RM10,000 totalling RM940,000.00. [10] However, even after certification, the 3 lifts could not be used due to numerous defects as well as safety issues. Among the incidents which raised the ire of the plaintiff were as follows:

On 2 June 2015, during an event on the top floor of the school, the lifts were unable to function and guests and dignitaries were forced to take the stairs to the 7th floor of the building;

The lifts could not be utilised during the School Honours Day function on 16 June 2015; and

On 29 September 2015, two (2) children were trapped in one of the lifts. [11] Numerous complaints were made by the plaintiff to the defendant over a period of several months including during a joint inspection on 28 October 2015. However, the defendant not only refused to officially hand over the lifts to the plaintiff but also refused to attend to the plaintiff’s complaints and suspended work on the site, citing non-payment from the plaintiff. [12] The plaintiff informed the defendant that no certification of payment had been issued or sent to the plaintiff by the defendant or the consultants, Perunding YGL and therefore the plaintiff’s obligation to pay did not arise. [13] Upon refusal by the defendant to rectify outstanding issues with the lifts, the plaintiff, upon giving notice to the defendant, appointed third party consultants and contractors (C-Elevator and Swasta Sekutu Sdn Bhd) to identify the defects and essentially to make the lifts fit and safe to be utilised by the children in the plaintiff’s school. [14] The third-party contractors rectified all identified issues and defects and handed over possession of the lifts on 21 March 2016 to the plaintiff. [15] Until the rectification works above were carried out by C-Elevator and Swasta Sekutu Sdn Bhd, the plaintiff could not utilise the higher floors of the school building, and thus was unable to take in its students for the period as the lifts could not be used safely. [16] As such, the plaintiff commenced this action against the defendant seeking as follows:

LAD at a rate of RM10,000 per day for 94 days (28 February 2015 to 2 June 2015) totalling RM940,000.00;

(ii) Damages for loss of student intake: RM35,000.00;

(iii) Cost of repairing defects with the lifts: RM70,294.80; and

(iv) Interests and costs. The Defendant’s Defence [17] The defendant raised the following defences: [a] The payment for the contract works are to be in accordance with the terms of the Letter of Award, the "Agreement and Conditions of PAM Sub-Contract 2006". [b] The plaintiff to make payment to the defendant within seven (7) days of receipt of the valuation report from the Consultants (based on the PAM Subcontract 2006). [c] A valuation report No. PYGL/13/58/VR/01 dated 20 April 2015 issued by YGL Consultants to the plaintiff to make payment for works done amounting to RM263,374.90. [d] The defendant has completed the supply and installation of the lifts, when it had obtained the JKKP certification on 24 May 2015 for all lifts but the plaintiff still refuses to pay the remaining RM481,100.00 to the defendant. The plaintiff only paid 15% down payment totalling RM84,900.00 pursuant to clause 4 of the General Conditions of Sale which is part of the contract between the parties. [e] The defendant’s claimed that they cannot complete the works because of the failures on the part of the plaintiff itself which are as follows:

The lift shaft was only handed over by the plaintiff and its main contractor on 27 January 2015 i.e. one month before the completion date. Hence, installation, testing and commissioning works can only be done after that date;

(ii) The lift shaft did not have a hoisting hook which had delayed works and that the height of the lift doorway was less than the height of the lifts, requiring certain adjustments to be made;

(iii) The plaintiff failed to provide sufficient electrical supply for testing purposes and compounded by the problem that there was water ingress into the lift shaft, which contributed to the delay of the lift works;

(iv) The height of the lift doorway was less than the height of the lifts, requiring adjustments to be made;

There was insufficient electrical supply for testing purposes; and

(vi) There was water ingress into the lift shaft, purportedly resulting in delay to the lift works. [f] The defendant therefore sought an extension of time until 30 April 2015, which was allowed. [g] JKKP issued the Perakuan Kelayakan Mesin Angkat on 2nd June 2015 thereby confirming the lifts to be safe for use. [h] The defendant denies that the lifts were unsafe for use and states that there were some minor defects pointed out during the joint inspection on 28 October 2015. [i] During the joint inspection held on 28 October 2015, the defendant had alerted the plaintiff of the minor defects found but the lifts were safe for use. Certification was obtained from the Consultants YGL and that up to 19 August 2015, the defendant had completed certified works up to 88.53%, and hence payment of RM387,906.60 was due to the defendant. [j] The defendant only permitted the plaintiff to use the Bomba Lift, pending payment and that works to repair all defects will only continue upon payment. [k] The plaintiffs cannot claim for LAD because the plaintiff had granted an extension of time to the defendant twice, the first being until 30 April 2015 and second until 27 May 2015. [l] The plaintiff cannot claim LAD from 1 March 2015 because the defendant was not responsible for the delays. [m] There was no cogent reason for the plaintiff to bring in other contractors (third party) to repair and rectify the purported defects to the lifts. [n] The plaintiff’s claim for loss of student intake should not be allowed because such claim amounts to unjust enrichment to the plaintiff. The Defendant's Counterclaim [18] A counterclaim was made against the plaintiff for payment of RM387,908.60 for works completed by the defendant based on allegations of breach of the terms of the letter of award, the PAM Subcontract 2006 and for general damages. Relevant Clauses of the LOA executed on 2 September 2014 & Other Provisions. [19] They are:

Clause 3 of the LOA which reads as follows: The work shall comply fully to the tender Specifications, Conditions of Contract, tender drawings and all other additional requirements required by the Employer, Architects and Engineers and confirmed by you.

Clause 6 of the LOA which reads as follows: The delivery of equipment shall be 19 weeks from the date of this letter. However, the period for installation, testing and commissioning shall be on maximum 9 weeks from the handing over of the lift motor room and hoist way to the Lift Contractor by the Main Contractor. The total completion period shall be 6 months governed by the date of completion in the contract and certified acceptance by JKKP.

Clause 8 of the LOA which reads as follows: The following documents also form part of this contract.

Tender submission dated 22rd April 2014.

(ii) Letter No.: MS/E14/22/JB109540/NKP/Ihl dated 22nd May 2014.

(iii) Letter reference No. MS/E14/22/JB109672/NKP/lhl dated 4 June 2014. In the event of any discrepancies between the above submission letters and the PAM Form of Contract, this Letter of Award shall take precedence.

Clause 16 of the LOA which reads as follows: Liquidated and Ascertained Damages (LAD) charge per day shall be Ringgit Malaysia: Ten Thousand Only (RM 10,000.00). Defects Liability Period and Interim Progress Payment terms etc. shall be as per the

General Conditions of Sales and Provisions by Others.

L & AD Maximum amount of L & AD shall be limited to 5% of Contract Value.

Tender Documents provide that: Guarantee and After Sales Services “We guarantee the material and workmanship of the equipment furnished under this Contract and will make good any defects due to normal usage, but not due to improper use, which may develop within one year from the date of approval by Factories and Machineries Department."

PAM Contract 2006 (Without Quantities) provides as follows:

23.0 Determination of Sub-Contractor's Employment By

23.1 The Contractor may determine the employment of the Sub Contractor if the Sub Contractor defaults in any of the following:

23.1(a) if without reasonable cause, he fails to commence the Sub Contract Works in accordance with the Sub-Contract;

23.1(b) if without reasonable cause, he wholly or substantially suspends the carrying out of the Sub-Contract Works before completion;

23.1 (c) if he fails to proceed with the design (to the extent required by the Sub-Contract) and/or proceed regularly and/or diligently with the Sub-Contract Works;

23.1 (d) if he persistently refuses or neglects to comply with an

23.1 (e) if he fails to comply with the provisions of Clause 18.0;

23.1(f) or if he has abandoned the Sub-Contract Works. Summary of High Court Decision [20] The plaintiff had successfully proved its claims on a balance of probabilities. [21] The defendant has committed a breach of the terms of the LOA and consequently the plaintiff was entitled to the LAD. [22] Under the LOA, the timeline for completion was six (6) months as manifested in clause 6 of the LOA and it falls on 28 February 2015. The defendant failed to complete the lift works on the said date. [23] The defendant’s letter dated 6 March 2015 was not meant to grant any extension of time (until 30 April 2015 and later until 27 May 2015) but to bind the defendant to a cut-off date for completion of the lift works, and to secure the plaintiff’s right to claim the LAD. The Court ruled that the plaintiff was entitled to the LAD effective 28 February 2015. [24] There are two (2) levels of completion within the six-month period i.e. JKKP Certification and completion as per the contract between parties as per the letter of award which could require certification of completion by the Consultants. [25] Certification by JKKP does not mean the date of merely securing an inspection by JKKP but ensuring that the lift was duly certified by JKKP (see clause 6 LOA) which was obtained on 2 June 2015 when the three (3) PMA certification were issued. The defendant also admitted and accepted that the certification was obtained on 2 June 2015 which would necessarily mean that the number of delays up to 2 June 2015 would be 94 days. Hence the amount of LAD payable by the defendant to the plaintiff for delay in completion of the lift works would be RM10,000.00 per day x 94 days (from 1 March 2015 to 2 February 2015) = RM940,000.00. [26] After JKKP's inspection and certification on 2 June 2015, the lifts were however found to be defective and unsafe for use. It was rectified by third parties who upon completion handed over to the plaintiff on 21 March 2016. [27] Hence, can the plaintiff claim for those rectification works completed by the third parties? [28] After the JKKP inspection and thereafter certification on 2 June 2015, the plaintiff discovered several defects which culminated into many safety issues warrant rectifications which the Court termed as the second part of completion (albeit done by third party) as in the terms of the contract. [29] Several incidents have occurred which have caused grave concern about the quality and completion of works carried out by the defendant where the lifts could not be fully and safely utilized. On 22 September 2015 inspection that was carried out had identified several safety issues. [30] However, due to the defendant’s reluctance to address the safety issues, the plaintiff had no choice but to consider appointing an independent consultant (Swasta Sekutu Sdn Bhd) to assess the problems with the lifts and an independent contractor (C-Elevator Sdn Bhd) to repair the defects. Upon completion of all the repairs and works, C-Elevator Sdn Bhd handed over the lifts to the plaintiff on 21 March 2016. [31] Defendant never disputed or strongly challenged the contemporaneous documents produced by the plaintiff about the existence of the defects which affected the safety and usage of the lifts. The defendant made it clear that it would only act if the plaintiff made payment to them. [32] The defendant’s defence was merely an afterthought and the defendant should be estopped from denying them (because it lacks probative value in law), when they failed to dispute the contemporaneous correspondences at the material time. [33] The defendant’s failure to deliver the lifts which are safe for use and fit for purpose amounts to a breach of its obligations under the contract (tender documents and LOA). Based on the reports received from Perunding YGL and Swasta Sekutu Sdn Bhd, it was clear that the defendant had breached the terms and obligations as stipulated in the contract between parties. [34] Hence, the court ruled that the plaintiff’s action in engaging a Third Party to complete the rectification and safety works on the lifts are justifiable and claimable. [35] On a balance of probabilities, the Court held that the plaintiff was entitled for the LAD claims and for the claim on the rectification works done by the Third Party. It further follows that the defendant's counterclaim was disallowed as the completed work (“as per the contract") was done by the Third-Party Contractors engaged by the plaintiff. [36] The Court also ruled that the defendant is not entitled to suspend its work for non-payment. The Court took cognisance that these lifts are primarily installed for the convenience (and safety) of the students of the school especially for those classes suited at the upper floors. [37] The Court took cognizance that vide clause 3 of the LOA where the defendant was contractually required to complete the works as per the contract as well as repair the defects as part of its obligations under the LOA. [38] It was also in evidence that not only did the defendant had suspended the lift works but they also had refused to hand over possession of the lifts to the plaintiff at all material times, until the plaintiff had made payment. The Court ruled that the defendant was not entitled to suspend the lift works and thereafter "abandoned them", and that the lift works were not completed as per the contract. [39] As the defendant had not completed its work as per the contract, the defendant was not entitled to suspend its works and insist on payment. It follows that the defendant is not entitled for the remaining payments. Hence, its counterclaim for RM387,908.60 was dismissed but the plaintiff’s claim for the rectification and safety works which was completed by the third party should be allowed. The defendant’s claim that the plaintiff had breached the LOA (in the counter claim) is unsustainable. [40] The plaintiff has claimed for loss of potential student fees of RM16,600,000.00 based on RM41,500.00 x 400 students for the one year that the lifts were not operational (from June 2015 to March 2015), i.e. when the lift was fully rectified by third parties and handed over by "C-Elevator" to the plaintiff. The Court ruled that this amount is very exorbitant and an unfair enrichment. The Court awarded a nominal amount of RM35,000.00 only. [41] On the issue of whether the PAM Form of Contract applied, the Court observed that the LOA does not state that the "PAM Form of Contract" is part of the contract between parties, the LOA did mention about the applicability of the "PAM Form of Contract" only on 2 instances:

In relation to extension of time whereby clause 6 states: “any extension of time granted by the Architects as per the

In relation to which terms take precedence - Clause 8 states: "In the event of discrepancies between the above submission letters and the PAM Form of Contract, this Letter of Award shall take precedence." [42] Hence, the Court ruled that “PAM Form of Contract" is only applicable in relation to application for extension of time only, and only for purposes of identifying any discrepancies in the tender documents, in which case the LOA was to take precedence. [43] On the issue of whether the plaintiff had caused the delay and disentitled of the claim, it is evidently clear vide clause 6 of the LOA that the "total completion period" is six (6) months and not 28 weeks as contended by the defendant. [44] The defendant should be wary of these strict timelines as any delayed works done after the 6 months period (after 28 February 2015) will attract penalties. The defendant should have done the needful regarding the same and cannot blame the plaintiff for its own delay. [45] The Court took cognizance that according to the LOA, the defendant should deliver the equipment to the site by 13 January 2015 i.e. 19 weeks from the LOA being effective i.e. on 2 September 2014 and complete the installation, commissioning etc. on or before 28 February 2915. These the defendant failed to do. [46] The Court observed that the defendant did not make any efforts to "mitigate" the delay penalty for example by making an application for an extension of time. The Court had already made a finding of fact earlier that at no time did the defendant make an application for an extension of time. [47] On the issue of whether the LAD should be capped at a maximum of 5% of the contract sum (i.e. maximum of RM28,300.00) or at RM10,000.00 per day of delay, the Court ruled that Clause 16 of the LOA which provides that LAD shall be RM10,000.00 per day applies and hence, the LAD to be RM10,000.00 per day. [48] Finally, the High Court concluded the followings:

the defendant had breached the LOA when it failed to complete the lift works by 28 February 2015 as per the terms in the LOA. As it was only “completed" vide JKKP Certification on 2 June 2015 - i.e. 94 days after 28 February 2015, hence the plaintiff is entitled for LAD of RM940,000.00 calculated at RM10,000.00 per day.

as the lift was fully completed as per the contract by the Third Party and not by the defendant, the plaintiff is hence entitled for RM70,294.00 for the lift works done by the Third Party to complete them.

as the defendant had breached the LOA by not fully completing the work, as per the contract, the defendant is hence not entitled for the remaining payment from the plaintiff of RM387,908.00. Further there was no certification of "the works being completed as per the contract" issued by Perunding YGL or the Architect. It follows that the defendant’s counter-claim for the same amount was hence dismissed.

the plaintiff’s is entitled for a nominal loss of students' fees for RM35,000.00 only.

costs of RM60,000.00 to be paid to the plaintiff. Memorandum of Appeal [49] The Respondent's Claim

The Learned Judge had erred in fact and law when His Lordship had failed to appreciate that the Appellant is given 9 weeks from the handover of the lift shafts by the Respondent to the Appellant to complete the lift works with Jabatan Keselamatan dan Kesihatan Pekerjaan Malaysia (hereinafter referred to as "JKKP") Certification pursuant to the Contract between the Appellant and the Respondent (hereinafter referred to as "the Contract").

The Learned Judge had erred in fact and law when His Lordship had failed to appreciate that the lift shafts were handed over to the Appellant on 27.1.2015, whereby the Appellant had until 31.3.2015 (9 weeks) to complete the lift works pursuant to the Contract.

The Learned Judge had erred in fact and law when His Lordship had failed to appreciate that the Commencement Date for liquidated ascertained damages (“LAD") is 1.4.2015 instead of 1.3.2015, as the Appellant had until 31.3.2015, to complete the lift works pursuant to the Contract.

The Learned Judge had erred in fact and law when His Lordship had failed to consider that the JKKP certification for the lifts were obtained by the Appellant on 24.5.2015, which is the date the lifts were inspected, and not the date of the issuance of the certificate which was on 2.6.2015.

The Learned Judge had erred in fact and law when His Lordship had failed to consider that the maximum amount of LAD that can be claimed by the Appellant is limited to 5% of the contract value which amounts to RM28,300.00.

The Learned Judge had erred in fact and law when His Lordship had failed to consider that the Appellant had granted an extension of time to the Respondent until 30.4.2015 to complete the lift works. This has effectively moved the Commencement Date for LAD to 1.5.2015.

The Learned Judge had erred in fact and law when His Lordship awarded RM35,000.00 to the Respondent as nominal damages for loss of student enrolment as the Respondent has offered no evidence whatsoever to substantiate such losses.

The Learned Judge had erred in fact and law in allowing the Respondent's claim for rectification costs amounting to RM70,294.80 paid to a third-party contractor to rectify minor defects. This is because the Respondent had not adhered to the Contract to make payment to the Appellant in order for the Appellant to rectify the minor defects.

The Learned Judge had erred in fact and law when His Lordship failed to appreciate that the Respondent's allegation in relation to the lifts possessing major defects that render them not fit for purpose and unsafe to be used is not true and inconsistent with the Respondent's own independent consultant who declares that the lifts do not possess major defects.

The Learned Judge had erred in fact and law when His Lordship failed to consider that the issuance of the JKKP Certificates signify that the lifts are fit for purpose and are safe to be used, and that the Respondent's contention that the defects rendered the lifts unusable and unsafe is an afterthought.

The Learned Judge had erred in fact and law when his Lordship did not appreciate the handing over of the lift shafts to the Appellant on 27.1.2015, was not as per the requirements of the contract. His Lordship had failed to appreciate that upon handing over of the lift shafts, the Appellant ought to have uninterrupted use of the lift shafts in order to complete its works within the time stipulated.

The Learned Judge had erred in fact and law when His Lordship had failed to appreciate the evidence that the Appellant's lift works were constantly interrupted and delayed by the Respondent. [50] The Appellant's Counterclaim

The Learned Judge had erred in fact and law when His Lordship dismissed the Appellant's counterclaim of RM387,908.60, general damages, interest and costs notwithstanding that the Appellant had completed its works pursuant to the contract when the Appellant had obtained JKKP certification on 24.5.2015 for all the lifts.

The Learned Judge had erred in fact and law when his Lordship did not appreciate that the Mechanical & Electrical (M & E) Engineer gave evidence in Court that he has personal knowledge of both Payment Certificates No.1 and No.2 which certified that the amount to be paid by the Respondent to the Appellant is RM387,908.60.

The Learned Judge had erred in fact and law when His Lordship did not set off the Respondent's claim of RM940,000.00 for LAD against the Defendant's counterclaim of RM387,908.60. The Issues for Determination [A] In relation to the plaintiff’s claim:

whether the defendant has committed a breach of the terms of the LOA;

whether the plaintiff is entitled to LAD;

whether the plaintiff is entitled to damages for loss of student enrolment;

whether the plaintiff is entitled to appoint a third-party contractor and claim damages for rectification works carried out by the contractor;

whether the plaintiff delayed in the delivery of the lift shaft and hoistway, resulting in the defendant being unable to complete works according to the LOA;

whether the purported insufficient supply of electricity and water ingress into lift shaft delayed the completion of works by the defendant;

whether the PAM Subcontract 2006 is part of the contract between parties;

whether the plaintiff had caused the delay, and disentitled it of the claim; and

whether the LAD should be capped at a maximum of 5% of the contract sum (i.e maximum of RM28,300.00) or at RM10,000.00 per day of delay? [B] In relation to the defendant’s counterclaim:

whether the plaintiff had breach of the terms of the LOA when it failed to pay the defendant; and

whether the amount of RM387,908.60 is due and owing to the defendant. The Law on Appellate Intervention [51] An appellate court should be slow in disturbing the findings of facts arrived by the trial court who had the advantage of seeing and hearing the witnesses, unless there are substantial and compelling reasons for disagreeing with the finding. [52] In Ming Holdings (M) Sdn Bhd v. Syed Azahari Noh Shahabudin & Anor [2010] 6 CLJ 857, the Federal Court held as follows: "...[41] Before we leave this subject and move on to the next two questions, we feel a need to remind that a trial judge has the advantage over an appellate court in hearing the witness and observing his demeanour. Thus, unless the trial judge is plainly wrong in his finding, the appellate court should not reverse a finding of fact by the trial judge.” [53] In Ng Hoo Kui & Anor v. Wendy Tan Lee Peng, Pentadbir Kepada Harta Pusaka Tan Ewe Kwang, Simati & Ors [2020] 12 MLJ 67 the Federal Court held that: “[33] It was a long-settled principle, stated and restated in domestic and wider common law jurisprudence, that an appellate court should not interfere with the trial judge's conclusions on primary facts unless satisfied that he was plainly wrong' (the Supreme Court of United Kingdom in McGraddie v. McGraddie and another [2013] 1 WLR 2477).

The 'plainly wrong' test operated on the principle that the trial court had had the advantage of seeing and hearing the witnesses on their evidence as opposed to the appellate court that acted on the printed records. The 'plainly wrong' test was not intended to be used by an appellate court as a means to substitute its own decision for that of the trial court on the facts. As long as the trial court's conclusion could be supported on a rational basis in view of the material evidence, the fact that the appellate court felt like it might have decided differently was irrelevant. In other words, a finding of fact that would not be repugnant to common sense ought not to be disturbed. The trial judge should be accorded a margin of appreciation when his treatment of the evidence was examined by the appellate courts (see paras 34, 76 & 148)." Our Decision

(A) LAD Claim [54] The crucial issues which lies at the heart of this appeal is whether the plaintiff is entitled to claim for LAD. [55] The Letter of Award (LOA) dated 1 July 2014 executed on 2 September 2014 was signed by the parties. [56] The salient terms of the LOA are as follows:

tender sum of RM566,000.00 for the supply, delivery, installation, testing, commissioning and maintenance of three (3) lift services in Block B.

the total completion period of the works was 6 months, within which the lifts would have to be certified by JKKP. Any extension of time would have to be granted by the Architect.

the tender documents and subsequent clarifications by the defendant also form part of the contract between the plaintiff and defendant. In the event of any discrepancies, the terms of the LOA take precedence.

LAD is RM10,000.00 per day of delay.

The delivery of equipment shall be within 19 weeks from the date of the LOA (1 July 2014). [57] The completion date was agreed to be 6 months i.e. by 28 February 2015. Although the lifts were finally certified by JKKP on 2 June 2015 when the three (3) PMA certificates were issued, the lifts were defective and unsafe for use. Email and letters were sent to the defendant expressing plaintiff’s disappointment at the situation. However, there was no response from the defendant. [58] The site inspection by JKKP was carried out on 24 May 2015. While the lifts were able to move up and down, there were still defects and incomplete works. [59] JKKP issued the Certificate of Fitness and Inspection (PMA Certificate) on 2 June 2015. Although JKKP had issued the PMA Certificate, the lifts were still incomplete, defective and unsafe for use. The defendant had not officially delivered possession of the lifts to the plaintiff. [60] The School was scheduled to have an open day on 16 June

Plaintiff solicitors issue a letter to the defendant demanding that possession of all three (3) lifts in full working order be delivered to the plaintiff by 10 June 2015. The keys to the lift were given to the plaintiff on 14 June 2015, 2 days before the Honours Day. However, the 3 lifts were not in working order and could not be used. Dignitaries, parents and grandparents had to take the open-air staircase to go to the multipurpose hall on Level 6 for the event. The guests had to climb seven floors to the rooftop of the building [61] On 22 September 2015, another joint inspection was held and the consultant identified specific problems and defects during the inspection and stated that there were serious safety issues with the lifts. [62] On 6 October 2015, plaintiff wrote a reminder letter to the defendant to resolve all the lift problems before the commencement of the new school term on 12 October 2015. However, there was still no response from the defendant. [63] No rectification was carried out by the defendant as they refused to do so. In fact, the defendant was hostile and had locked the elevators and hence the plaintiff was unable to use the elevators. [64] On 28 October 2015, another site inspection was carried out. At this inspection, several defects were identified as set out in the letter from the consultant i.e. Swasta Sekutu Sdn Bhd, to advise them on the lifts. The representative from Swasta Sekutu Sdn Bhd who was present at this inspection identified several other defects such as automated rescue device for the lifts not functioning, dented landing doors, oil lubricator covers cracked and sharp edges on the landing doors (see letter dated 30 October 2015 from Perunding YGL and Minutes of Joint Inspection dated 9 November 2015). This was further supported by the Preliminary Survey report prepared by Swasta Sekutu Sdn Bhd. The learned counsel for the defendant also admitted when question by us that the existence of the defects affected the safety of the lifts. [65] Despite having the various safety issues being brought to its attention repeatedly, the defendant did nothing. The defendant still refused to remedy the safety issues solely due to the outstanding payment and instead suspended all work on the lifts unilaterally and insisted that plaintiff make payment to the defendant for the lifts. The defendant also failed to hand over the lifts to the plaintiff. Plaintiff explained to the defendant that they had not received any payment certificates from the consultant for payment to be made. The defendant claimed that they would only act or rectify all these works if the plaintiff made payment to them. [66] In Kah Seng Construction Sdn Bhd v. Selsin Development Sdn Bhd [1996] MLJU 359112, the plaintiff (the contractor) contended it was entitled to suspend works because of non-payment of a certificate. Low Hop Bing J (as he then was) held as follows: "In my opinion, in the absence of a specific provision in the contract, a contractor has no automatic right to suspend works simply because one or two of his certificates have not been paid: See Keating on Building Contracts (5th Ed) [1991] at p.

… In my judgment, it is trite law that a contractor can only terminate his contract with his employer (at common law, as opposed to the exercise of an express termination clause) if he shows, inter alia, a repudiatory breach by the employer in the sense that the employer has evinced an absolute refusal not to perform his side of the contract. There is no intermediate right in a building contract to suspend works. If the contractor insists on the continued performance of the contract i.e. he affirms the contract, he must himself continue to perform his primary obligations under the contract i.e. to continue performing the contract works. This is why suspension of the works by the contractor i.e. not continuing with his primary obligations, becomes itself a repudiatory breach by the contractor. Even if the Plaintiff can establish that the Defendant is in repudiatory breach of the contract, the Plaintiff would have no right to suspend works, but instead would have had to elect to either terminate the contract or insist on due performance. By suspending works without valid legal cause, the Plaintiff has in fact repudiated its contractual obligations.... As there was no provision in the rudimentary contract between parties conferring a right to suspend works for non-payment of certified sums, the Plaintiff's admitted suspension was wrongful." [67] Due to the defendant’s reluctance to address and entertain the safety issues (which they are not entitled to do so as per the contract) and to resolve the problem quickly, the plaintiff then consulted independent consultants Swasta Sekutu (M) Sdn Bhd to inspect and assess the condition of the lifts. Swasta Sekutu (M) Sdn Bhd was present at the joint inspection meeting on 28 October 2015. Based on the Preliminary Survey Report by Swasta Sekutu (M) Sdn Bhd, the plaintiff then appointed C-Elevator Technology (M) Sdn Bhd to carry out rectifications works on the lifts. C-Elevator submitted a quotation for the amount of RM77,358.80 for rectification of the defects. [68] On 21 March 2016, the fully functioning lifts were handed over by C-Elevator to the plaintiff and been working well and are fully utilised by the School. [69] Now coming back to the plaintiff’s claim for LAD, as we have said that the lifts have to be completed by 28 February 2015. However, defendant failed to complete on or before the deadline. Hence, the amount of LAD to be paid is based on the Letter of Award up to the date of JKKP certification (see clause 6 LOA). This would be a period of 94 days calculated from 1 March 2015 to 2 June 2015 (and not on the day of JKKP inspection i.e. on 24 May 2015 as alleged by the defendant). [70] Clause 16 of the LOA provides for LAD of RM10,000 per day (and not limited to 5% of the contract value which amounts to RM28,300.00 as argued by the defendant based on Clause 7 of the General Conditions of Sales which was never pleaded by the defendant in its defence). Clearly there is a discrepancy between Clause 7 GCS and Clause 16 of the LOA. Clause 8 of the LOA provides that in the event of any discrepancy between the LOA and other documents, the LOA will take precedence. Therefore Clause 16 would prevail. [71] As such, the total LAD due up to the date of JKKP certification is RM940,000.00 (even though the lifts were not fit or safe to be used). The defendant also did not apply for extension of time to the Architect, in accordance with the terms of the LOA for failure to complete the lift installation within the 6 months period. [72] According to the defendant, the plaintiff granted an extension of time until 30 April 2015 for the defendant to complete the installation testing and commissioning of the lifts is untrue and unsupported by any documentary evidence. The defendant relies on a letter issued by the plaintiff on 6 March 2015. In this letter, reference is made to a discussion between parties on 4 March 2015, wherein the plaintiff was informed by the defendant that work could only be completed by 30 April 2015. However, in this letter, the plaintiff also makes the following statements very clear: "Notwithstanding the above, we reserve our rights to damages due to the delay on delivery and installation with approvals of all 3 lifts as per letter of award as the completion date was to be 28/2/2015." [73] In relation to Extension of time, Clause 23.0 of the PAM Contract 2006 (Without Quantities) provides as follows:

23.0 Extension of Time

23.1 If the Contractor is of the opinion that the completion of the Works is or will be delayed beyond the Completion Date by any of the Relevant Events stated in Clause 23.8, he may apply for an extension of time provided always that:

23.1(a) the Contractor shall give written notice to the Architect his intention to claim for such extension of time together with an initial estimate of the extension of time he may require supported with all particulars of the cause of delay. Such notice must be given within twenty-eight (28) Days from the date of the Al, CAl or the commencement of the Relevant Event, whichever is earlier. The giving of such written notice shall be a condition precedent to an entitlement of extension of time; and

23.I(b) within twenty-eight (28) Days of the end of the cause of delay, the Contractor shall send to the Architect his final claim for extension of time. duly supported with all particulars to enable the Architect to assess any extension of time to be granted. If the Contractor fails to submit such particulars within the stated time (or within such longer period as may be agreed in writing by the Architect), it shall be deemed that the Contractor has assessed that such Relevant Event will not delay the completion of the Works beyond the Completion Date. [74] Based on the above evidence presented, we found that there was no written notice given by the defendant for extension of time in accordance with Clause 23.0 of the PAM Contract 2006 (Without Quantities). Neither was there any extension of time given by the plaintiff to the defendant. [75] If the defendant felt that any act or omission by the plaintiff had delayed its work and hence, they could not complete the works by 28 February 2015 due to the plaintiff delay in providing the lift shaft, lack of a hoisting hook, insufficient electricity supply for testing and water ingress as per the LOA, and hence, the LAD is not payable nor due, however we found it rather strange why the defendant did not exercise its contractual right to apply for extension of time to complete the works (except one application for extension of time by way of letter dated 24 April 2015 which was rejected by the Consultants by way of letter dated 30 April 2015). Thus, defendant cannot now turn around and blame the plaintiff for its own unwarranted delay. The defendant should live with the consequences of their own fault. [76] In addition, the plaintiff’s letter dated 6 March 2015 was not in response to any application for extension of time under the PAM Form of Contract (as stated in Clause 6 of the LOA) nor was it issued by any supervising officer or architect. Hence, the can be no doubt that the plaintiff is entitled to claim the LAD of RM940,000.00.

(B) Rectification Costs [77] As for rectification costs, as mentioned earlier the plaintiff appointed C-Elevator Sdn Bhd to repair the defects and problems with the lifts as identified by Swasta Sekutu Sdn Bhd and Perunding YGL during the Joint Inspection on 28 October 2015. [78] Upon completion of all the repairs and works, C-Elevator handed over the lifts to the plaintiff on 21 March 2016. [79] The plaintiff paid Swasta Sekutu Sdn Bhd the following amounts:

RM5,500.00 for the Preliminary Survey Assessment in October 2015 (see Invoice, letter from Plaintiff and exhibit P14 (bank statements showing payment)

(ii) RM8,000.00 for its services in evaluating the works carried out by C-Elevator Technology (M) Sdn Bhd (see acceptance of fee proposal, payment voucher and online payment extract and evidence of SP3). [80] The plaintiff paid C-Elevator Technology (M) Sdn Bhd the following amounts for the repair and rectification works carried out:

RM30,943.52 being 40% deposit on confirmation of services - paid on 29 February 2016 (see acknowledgment receipt at Exhibit P6(a)) and evidence of Aw Hon Yong confirming receipt of payment.

(ii) RM22,492.56 being part payment for works carried out and completed - paid on 18 August 2016 (see acknowledgment and cheque and receipt (Exhibit P6(b)) and evidence of Aw Hon Yong confirming receipt of payment.

(iii) RM3,358.72 being final balance paid on 25.04.2018 (see online transfer extract and receipt at Exhibit P 6(c)) and evidence of Aw Hon Yong confirming receipt of payment. [81] As such the total amount paid by the plaintiff for the repair and rectification works was RM70,294.80, comprising of:

RM13,500.00 to Swasta Sekutu Sdn Bhd; and

(ii) RM56,794.80 to C-Elevator Technology (M) Sdn Bhd. [82] In relation to a claim for damages for breach, section 74(1) Contracts Act 1950 provides as follows: "When a contract has been broken, the party who suffers by the breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from the breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it." Illustration (f) for the same provision provides the following explanation: "A contract to repair B's house in a certain manner, and receives payment in advance. A repair the house, but not according to the contract. B is entitled to recover from A the cost of making the repairs conform to the contract." [83] Hence, we agree that the learned trial judge had not erred in fact or in law when he held as follows: “As the lift was fully completed as per the contract by the Third Party and not by the Defendant, the Plaintiff is hence entitled for RM70,294.00 for the lift works done by the Third Party to complete them.”

(C) Loss of Income from Student Intake [84] On this issue, we agree with the finding made by the learned trial judge when he held as follows: “[67] The Plaintiff has claimed for loss of potential student fees of RM16,600,000.00 based on RM41,500.00 x 400 students for the one year that the lifts were not operational (from June 2015 to March 2015), ie when the lift was fully rectified by Third Parties and handed over by "C-Elevator" to the Plaintiff. This Court ruled that this amount is very exhorbitant and an unfair enrichment. This Court awarded a nominal amount of RM35,000.00 only.” [85] There is no cross-appeal filed by the plaintiff with regard to this award.

(D) Defendant’s Counter-Claim [86] On the defendant’s counter-claim for payment of a total of RM387,908.60, which claim was the value of certified works of 88.53%, the learned trial judge rejected the defendant’s counter-claim and held as follows: “[66] As the Defendant had not completed its work as per the contract, as mentioned earlier, the Defendant was not entitled to suspend its works and insist on payment. It follows that the Defendant is not entitled for the remaining payments because of the breach and the suspension of the lift works as the work was completed by the Third Party. Further, there was no actual and signed valid certificate ever issued to the Plaintiff for payment contrary to SD5's witness statement. Hence, its counterclaim for RM387,908.60 was dismissed but the Plaintiff's claim for the rectification and safety works which was completed by the Third Party should be allowed as mentioned earlier. It further follows that the Defendant's claim that the Plaintiff had breached the LOA (in the counter claim) is unsustainable.” [87] The question here is whether the consultants in this case, Perunding YGL, had issued a valid certification to the plaintiff to entitle the defendant to the payment. In this regard, we agree with the learned trial judge that there was no certification of the works lifts being completed as per the contract issued by Perunding YGL to the plaintiff. The issuance of a valid payment certificate certainly must be a condition precedent to entitle the defendant to payment. If the consultant did not certify as indicated, what payment do plaintiff need to make to defendant which means to say that the work is not done accordingly by the defendant.

(E) Conclusion [88] Having regard to all the foregoing reasons and after a careful scrutiny of the notes of proceedings of the trial and the submissions made, we find no merits in this appeal. The decision by the High Court is affirmed. Costs of RM25,000.00 to be paid by the appellant to the respondent subject to allocatur. Date: 4 August 2025 - sgd - Azmi bin Ariffin Judge Court of Appeal Malaysia Counsel For the Appellant : David A/L Samuel [Chambers of Firdaus] For the Respondent : Jessica Ram Binwani (Together with Tashalini Kopal) [Kanesh Sundrum & Co.]