ISTAY HOTEL MACALISTER SDN BHD v TARGET STYLE SDN BHD
CaseAnalysis
| [2021] MLJU 2106
Istay Hotel Macalister Sdn Bhd v Target Style Sdn Bhd [2021] MLJU 2106
Malayan Law Journal Unreported
HIGH COURT (PULAU PINANG)
ABD MAJID HAMZAH J
RAYUAN SIVIL NO PA-12BNCC-5-04/2019
21 October 2021
(Kanesh Sundrum & Co) for the appellant.
(K Thanges & Assoc) for the respondent.
Abd Majid Hamzah J:
ALASAN PENGHAKIMAN
[1]The appellant (defendant) appealed against the learned Sessions Court Judge’s (“SCJ”) decision in allowing the
respondent’s (plaintiff) claim and dismissed its counterclaim. The learned SCJ awarded the respondent a sum of
RM105,000.00 with costs. Upon hearing the parties I allowed the appeal in part with costs and set aside the order
of the SCJ. For ease of reference the parties are referred to as they were in the court below.
[2]Briefly the facts are as follows. The defendant engaged the plaintiff to renovate the premises he was renting to
turn it into a budget hotel and to apply to the City Council for the necessary permits/licences. In April 2014 the
plaintiff gave a quotation in the sum of RM567,524.00 (“1st quotation”) to which the defendant disagreed. Both
parties then negotiated and the defendant fixed a ceiling cost of RM400,000.00.
Thereafter the plaintiff gave a revised figure of RM436,109.00 (“2nd quotation”) in June 2015. Both parties met
again and further negotiated the work and cost which was eventually reduced to RM334,000.00 (exhibit D16) and
ceiling cost of RM400,000.00 was still maintained.
[3]All work to be completed within three months beginning July 2015. The defendant planned to start operating its
budget hotel by October. During the course of the renovation work some changes and additional work were done
subject to the agreed ceiling cost. However, the plaintiff failed to meet the target date of completion. In December
2015 the defendant paid RM368,000.00 as requested by the plaintiff. Suddenly not long thereafter the plaintiff sent
another quotation (“3rd quotation”/exhibit P4) in the sum of RM468,527.00 and additional RM60,000.00 for electrical
work and demanded the defendant to pay up. The defendant disagreed and disputed the same which caused the
plaintiff to stop work.
[4]Before Chinese New Year 2016 the plaintiff asked for RM20,000.00 to recommence work and the defendant paid
the said sum. Nevertheless the plaintiff never resumed the work instead demanded the defendant to pay the sum
quoted in the 3rd quotation. The defendant refused to make further payment and the plaintiff abandoned the work.
[5]In the Sessions Court the plaintiff claimed the outstanding balance (after some deductions) in a sum of
RM55,000.00 and RM60,000.00 for the electrical work, alternatively, damages for work done based on quantum
meruit. The defendant filed a counterclaim in total a sum of RM635,287.00 for the completion of the unfinished
work, repairs, etc.
Decision of the Sessions Court
[6]In allowing the plaintiff’s claim the learned SCJ found that the 3rd quotation (P4) was the contract sum between
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the parties. He arrived at this finding based on the evidence of SP1 and that there were some variation/additional
works which were not denied by the defendant. And the learned SCJ was satisfied that the plaintiff had completed
the job as listed in both the quotations based on the photographs. He also accepted the evidence of SP1 that the
plaintiff was willing to repair the defects. He was satisfied that 90% of the renovation work was completed and the
defendant could not pay any further payment as requested as they were in financial difficulty. It was also found that
the delay in completing the renovation work was attributed to the defendant particularly in supplying the materials
for the variation/additional works. The learned SCJ further held that he allowed the plaintiff’s claim based on
quantum meruit as there was no evidence of any breach of contract by the plaintiff.
[7]The defendant’s counterclaim was dismissed. The learned SCJ in disallowing any claim for the expenses spent
on the application to the City Council, opined that this was not mentioned in the scope of work based on the 2nd
and/or 3rd quotation. As regards the defects, the learned SCJ was of the view that the repairs should have been
carried out by the plaintiff and not by any other 3rd party contractors. According to the learned SCJ the plaintiff was
not given the opportunity to do the remedial works. He was further of the view that the defendant had additional
works done which were outside the job scope given to the plaintiff. As regards loss of income the learned SCJ held
that there was no supporting document.
Submissions
[8]The submission of the defendant may be summarised as follows:
8.1 the defendant never agreed with P4 as representing the contract sum as the defendant had maintained throughout the
trial that the contract sum was RM334,000.00 with a ceiling of RM400,000.00 (D16);
8.2 the alleged variation or additional works had not been agreed upon and there was no supporting documents showing
those works being done;
8.3 there was no delay on the part of the defendant in supplying the materials instead the plaintiff had delayed in
completing the renovation work;
8.4 the doctrine of quantum meruit was not properly pleaded as there were no particulars apart from it being pleaded as an
alternative relief;
8.5 there was in fact a contract and the plaintiff was in breach,
therefore the doctrine of quantum meruit was not available;
8.6 the claim for electrical works were not substantiated and no reasons were given for allowing such claim based on
quantum meruit;
In respect of the counterclaim:
8.7 the evidence adduced by the defendant on the repairs was not considered;
8.8 the loss of income suffered by the defendant when the renovation work was not completed within three months was not
considered;
8.9 the notice dated 5.4.2016 requesting the plaintiff to rectify the defects and complete the renovation work was ignored;
and
8.10 the fact that the plaintiff had submitted a wrong application to the City Council where instead of getting the approval for
a budget hotel, the plaintiff applied to convert the status of premises to a restaurant. Hence, the defendant had to engage
an architect to submit a fresh application.
[9]The submission of the plaintiff may be summarised as follows:
9.1 P4 is the final quotation agreed by both parties;
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9.2 the plaintiff having received the notice dated 5.4.2016 had agreed to repair the defects therefore the defendant should
not have appointed other contractors to repair the defects;
9.3 the defendant had not gotten the approval to operate a budget hotel and therefore the defendant was not entitled to the
sum of RM54,800.00 as the whole cost for the approval;
9.4 the contract sum as reflected in P4 had included the variation/additional works requested by the defendant and that if
the defendant disagreed, the defendant should not have allowed the plaintiff to carry out the works;
9.5 the defendant failed to deliver the materials required for the variation/additional works which caused the delay in
completing the renovation within three months;
9.6 the defendant having completed the work was entitled to the balance sum amounting to RM115,000.00 inclusive of the
electrical works before commencing the repairs which the plaintiff was unable to meet;
9.7 the plaintiff was not responsible for applying to convert the status of the premises and further it was not listed in P4; and
9.8 the defendant was not entitled to the claim for loss of income since exhibit D83 is not a financial statement of the
defendant.
Decision
[10]It is trite that the findings of the learned SCJ as trier of facts should be accepted unless they are plainly wrong.
And in considering this appeal I am guided by the pronouncement by the Federal Court in Gan Yook Chin (P) &
Anor v. Lee Ing Chin @ Lee Teck Seng & Ors [2005] 2 MLJ 1 Steve Shim CJSS said at pp.10-11:
“In our view, the Court of Appeal in citing these cases had clearly borne in mind the central feature of appellate intervention,
i.e. to determine whether or not the trial court had arrived at its decision or finding correctly on the basis of the relevant law
and/or the established evidence. In so doing, the Court of Appeal was perfectly entitled to examine the process of
evaluation of the evidence by the trial court. Clearly, the phrase ‘insufficient judicial appreciation of evidence’ merely related
to such a process. This is reflected in the Court of Appeal’s restatement that a judge who was required to adjudicate upon a
dispute must arrive at his decision on an issue of fact by assessing, weighing and, for good reasons, either accepting or
rejecting the whole or any part of the evidence placed before him. The Court of Appeal further reiterated the principle
central to appellate intervention, i.e. that a decision arrived at by a trial court without judicial appreciation of the evidence
might be set aside on appeal. This is consistent with the established plainly wrong test.”.
And in Tob Weng Keong & Anor v. Tob Chee Hoong [2019] 10 CLJ 150 at pp.168-169 Vernon Ong Lam Kiat JCA
(as he then was) said:
“[45] At the hearing of an appeal, it is the appellant who must convince the court that his appeal should be allowed. Whilst
an appeal is by way of rehearing, it must be appreciated that the Court of Appeal is not rehearing the witnesses; nor is it a
retrial of the issues. An appeal is heard on the printed record of the trial. It is a rehearing on the printed record in the sense
that the Court of Appeal only reads the printed record and rehears counsel whose arguments are limited to the printed
record.
[46] Where the appeal relates to questions of fact, the principles on appellate intervention are well settled. An appellate
court is always slow to interfere with the findings of fact by the trial court unless it had seriously misapprehended the facts
to the prejudice of the party against whom the findings were made. The party attacking such findings bears the burden of
convincing the appellate court that the misapprehension of the facts had resulted in a grave miscarriage of justice, and not
just any error that does not go to the root of the matter or issue in question.
[47] Where there is no question of misdirection by the trial court, an appellate court which is inclined to arrive at a different
conclusion on the printed evidence, should not do so unless it is satisfied that any advantage enjoyed by the trial court by
reason of having seen and heard the witnesses, could not be sufficient to explain or justify the trial court’s conclusion
(Chow Yee Wah & Anor v. Choo Ah Pat [1978] 1 LNS 32; [1978] 2 MLJ 41b (PC)). Put another way, however much an
appellate court may be in an equal position with the trial court as to the drawing of inferences, it ought not to reverse the
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findings of fact unless it can be shown that the finding of fact is plainly wrong and that the decision ought to have been the
other way.”.
[11]The defendant raised a number of issues with the findings of the learned SCJ in his grounds of judgment which
I have summarised earlier.
[12]A contract can be formed either in writing or verbal. Here, it was not disputed that there was none reduced in
writing. The defendant maintained that based on their discussion on exhibit D16 and the ceiling cost of
RM400,000.00 a contract was formed. The plaintiff on the contrary contended that owing to the request for
variation/additional works the plaintiff came up with exhibit P4 and this was agreed by the defendant. The plaintiff
did not dispute that there was a contract for renovation of the said premises.
[13]It was clear that the parties, the object or purpose, the terms and the duration were identified as well as the
price. In Charles Grenier Sdn Bhd v. Lau Wing Hong [1996] 3 MLJ 327 Gopal Sri Ram JCA speaking for the
Federal Court at p.335 had this to say,
“An agreement to make an agreement does not result in a contract. It is for the court in each case to construe the
correspondence exchanged between the parties and to say whether that is the result intended by the parties. If the court
reaches an opposite conclusion, then there is an enforceable contract.”.
Further at p.336, the learned judge held,
“They have identified the parties to the transaction with sufficient clarity. So too the property, the price and the terms they
considered essential. Such an agreement is termed as an ‘open contract’. It is enforceable as if it was embodied in a
document with all the attendant solemnity. In order to give it effect, the law will – acting out of necessity (see Liverpool City
Council v Irwin [1977] AC 239) – imply terms into the contract for sale in order to make it work. See Rojasara Ramjibhai
Dahyabhai v Jani Narottamdas Lallubhai [1986] 3 SCC 300, where it was held that there was to be implied in a contract for
the sale of land, a covenant on the part of the vendor to do all things necessary to give effect to the agreement.
Dr Geoffrey Cheshire in the 10th edition of his work, The Modern Law of Real Property, describes an open contract as
follows:
If a contract for sale specifies merely the names of the parties, a description of the property and a statement of
the price, it is called an open contract. When this form of contract is made, the parties are bound by certain
obligations implied by the law.
The phrase ‘subject to the sale and purchase agreement’ relied on by counsel for the appellant does not, in our judgment,
point to an intention that no contract was to come into existence until a formal sale and purchase agreement had been
prepared and executed. Rather, it is, when read in the context of the correspondence and the objective aim of the
transaction – and this is how we read them – indicative of an intention to merely formalize the agreement already concluded
between the parties. We therefore entertain no difficulty whatsoever in rejecting the argument advanced by Mr Abraham
upon the first issue.”.
I have no doubt that there is a contract between the plaintiff and the defendant to renovate the said premises which
was to be completed within three months.
[14]The issue was whether it is P4 or D16. The learned SCJ held as follows:
“[20] Selepas beberapa siri perbincangan di antara Plainitf dan Defendan, sebut harga yang baru bertarikh 30/12/2015
yang mengambil kira kerja- kerja variasi tambahan dan kekurangan telah dipersetujui (eksibit P4). SP1 juga menyatakan
bahawa sebut harga bertarikh 25/5/2014 (eksibit D16) bukanlah sebut harga yang muktamad oleh kedua-dua pihak kerana
eksibit D16 kerana tidak mengambil kira beberapa perubahan dalam skop kerja Plaintif disebabkan Defendan sering
membuat pertukaran dalam skop kerja yang telah dipersetujui. Oleh yang demikian, Mahkamah berpendapat P4 adalah
sebut harga yang muktamad.”.
The defendant took exception with this finding as the defendant never at anytime agreed with P4. It was pointed out
that the plaintiff in fact had agreed that the amount stated in D16 was the agreed quotation and this is reflected at
p.606 RR Jilid 2(3) –
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“KTR: Ok right, This is D16 yes. Now Mr Lim, in this quotation, alright, show me where … is this a contract entered between
you and the plaintiff?
LIM: Agreed, yes it’s.
KTR: So this is the contract between you and the Plaintiff, right? LIM: This is the agreed quotation.”.
[15]In D16 the amount before being reduced was RM436,109,10. Having discussed, both parties agreed to deduct
certain items and the figure of RM334,400.00 was arrived at. SD1 admitted that that figure was not finalised as
some items were not included like air conditioners, lightings, bathroom fittings, water heaters, etc but the total cost
should not exceed RM400,000.00 and the defendant would revert with a fresh quotation. After several repeated
queries by the defendant, the plaintiff came up with P4 in December the same year which the plaintiff did not agree.
Nowhere in the evidence showing that the defendant agreed with P4. In fact the plaintiff admitted that the defendant
did not agree with P4. Therefore I find that here the learned SCJ had made a finding which was not supported by
the evidence adduced before him and he had ignored the evidence of SD1 where SD1 agreed that the total cost
should not exceed RM400,000.00.
[16]Further, there was no challenge to the evidence of SD3 (SD1’s wife) who testified that the plaintiff during one of
the discussions they had sometime in late 2015 where the plaintiff told them not to worry and the cost was still
within RM400,000.00 when the defendant expressed concern over the budget. She was not cross-examined on this
statement of hers. In Aik Ming (M) Sdn Bhd & Ors v. Chong Ching Chuen & Ors [1995] 2 MLJ 770 the Court of
Appeal held that such evidence cannot be disputed if the opponent failed to cross-examine the said witness. Gopal
Sri Ram JCA (as he then was) at p.794 stated,
“It is essential that a party’s case be expressly put to his opponent’s material witnesses when they are under crossexamination. A failure in this respect may be treated as an abandonment of the pleaded case and if a party, in the absence
of valid reasons, refrains from doing so, then he may be barred from raising it in argument. It is wrong to think that this rule
is confined to the trial of criminal causes. It applies with equal force in the trial of civil causes as well.”.
Therefore, it was wrong for the learned SCJ to hold that the figure in P4 was the agreed contract sum as the plaintiff
could no longer rely on P4 when he failed to dispute or challenge this piece of evidence. If he had given sufficient
consideration to this evidence the learned SCJ would not, in my mind, come to make such conclusion. The learned
SCJ in this respect failed to appreciate the admission by the plaintiff that D16 was the agreed quotation.
[17]There was no dispute that there were variations/additional works requested by the defendant but the overall
cost should not exceed RM400,000.00. The defendant complained that the plaintiff did not provide any proof to
support the extras with invoices or bills but slapped him with P4 instead. The fact that the variation/additional works
had not been finalised as regards the works and the cost was acknowledged by the plaintiff as pleaded in
paragraph 8 of the statement of claim. There was also no dispute that the plaintiff did not produce any invoices to
support the claim for the additional and the electrical works which amounted to RM115,000.00. However, this claim
was allowed by the learned SCJ under quantum meruit.
[18]The defendant argued that the claim based on quantum meruit was not properly pleaded. The learned counsel
referred to Ch’ng Ghee Weng & Anor v. Lee Khoon Eng T/A Prestige Construction [2018] 10 CLJ 189 where Mary
Lim JCA (as she then was) at p.202:
“[28] Whether the plaintiff’s claim for quantum meruit is based in contract or in restitution must therefore be properly and
clearly spelt out. In either case, it is absolutely vital that the basis and material facts upon which the quantum meruit is
premised must be properly pleaded; otherwise how is the court to make a proper decision on the applicable law and on the
facts.
[29] The material facts and basis are those that would meet the elements of s. 71 of the Contracts Act 1950, as determined
in the Privy Council decision of Siow Wong Fatt v. Susur Rotan Mining Ltd & Anor [1967] 1 LNS 161; [1967] 2 MLJ 118,
which decision was followed in Tanjung Teras. There are four elements or conditions that the plaintiff must meet in order
that its claim under s. 71 may be considered, that is, the doing of the act or the delivery of the goods:
(i)
must be lawful;
(ii)
must be done for another person;
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(iii) must not be intended to be done gratuitously; and
(iv) must be such that the other person enjoys the benefit of the act or the delivery.
[30] From the statement of claim as set out earlier, save for seeking the liquidated sum of RM1,267,652.82 under the
principle of quantum meruit, the plaintiff does not make any averments that meet the requirements stipulated in Siow Wong
Fatt. There is no plea anywhere in the statement of claim of the essential elements that must be proved in a claim founded
on quantum meruit. The one and only time that a plea of quantum meruit is made is in prayer (a) of the reliefs sought,
where the plaintiff claims the total sum of RM1,267,652.82 for works under the original contract and for variation works
which it had carried out be awarded on a quantum meruit basis.
[31] We are of the view that there must be pleas in the statement of claim that signify these essential elements – see Bullen
& Leake & Jacob’s Precedents of Pleadings (pp. 369-371, vol. 1, 16th edn, Thomson Sweet & Maxwell). A plea of quantum
meruit in the remedy sought from the court, that the plaintiff be awarded a specific sum of money on the basis of quantum
meruit, does and cannot, without more, mean that the claim is a genuine quantum meruit claim. We are of the view that it is
not and it is gravely insufficient to place the issue before the court for determination.”.
[19]The only reference to quantum meruit in the statement of claim is subparagraph 22(e) which states:
“(e) Atau secara alternative Plaintif menuntut bayaran untuk kerja-kerja yang telah dihabiskan selaras dengan terma-terma
dan syarat-syarat di antara Plaintif dan Defendan atas dasar prinsip Quantum Meruit.”.
This is the alternative relief sought by the plaintiff here similarly in Ch’ng Ghee Weng (supra) which the Court of
Appeal held to be insufficient. Based on the above authority the learned SCJ therefore clearly had misdirected
himself as to the law in allowing the said claim. Quantum meruit has no application here. There was an existing
contract and the balance sought by the plaintiff was based on that contract.
[20]In allowing the plaintiff’s claim, the learned SCJ relied on P4 which listed the job to be performed by the plaintiff
and found that the work was 90% completed based on the photographs tendered not by the plaintiff but by the
defendant which purpose was to support the allegation on the defects and the need to do repair works. In Popular
Industries Ltd v. The Eastern Garment Manufacturing Co. Sdn Bhd [1990] 2 CLJ (Rep) 635 at p.648 Edgar Joseph
Jr J (as he then was) referred to the dictum of Lord Goddard in Bonham-Carter v Hyde Park Hotel [1948] WN 89
which was approved by Thomson HB (as he then was) in Lee Sau Kong v Leow Cheng Chiang [1961] MLJ 17,
stated as follows:
“Plaintiffs must understand that if they bring actions for damages it is for them to prove their damage; it is not enough to
write down the particulars, and so to speak, throw them at the head of the court, saying, ‘This is what I have lost, I ask you
to gives me these damages’. They have to prove it.”.
[21]Thus it is incumbent on the plaintiff to produce proof of the works which had
were no invoices, bills or receipts produced by the plaintiff except exhibits P4 and
think these two exhibits would constitute proof of the works done and capable
plaintiff. I am in agreement with the defendant that the learned SCJ fell into
RM105,000.00 (after deducting a discount of RM10,000.00).
been carried out. As said there
P6 (notice of demand). I do not
of supporting the claim by the
error in allowing the claim for
[22]Turning to the defendant’s counterclaim, the learned SCJ held that the defendant was not entitled to sum of
RM54,000.00 as there was no receipt produced in support thereof. He also held that this was not listed in P4 or
D16. Apparently the learned SCJ ignored the averment in the plaintiff’s reply to the defence and defence to the
defendant’s counterclaim in particular paragraph 3 which reads:
“3. Merujuk kepada perenggan 2(c) Plaintif hanya bersetuju bahawa sebahagian dari skop kerjannya adalah hanya meliputi
untuk membantu sahaja Defendan untuk memohon menukar premis tersebut dari kategori kediaman ke perniagaan dan
mengemukakan pelan ubahsuai yang akan disediakan oleh Jurulukis berdaftar (Registered Draftsman) yang dilantik oleh
Defendan kepada pihak berkuasa (Majlis Bandaraya Pulau Pinang).”.
By ignoring this averment, I am of the view that the learned SCJ had misdirected himself. The reply to the defence
and defence to the defendant’s counterclaim is part of the pleadings. Hence, the plaintiff cannot assert otherwise
and this averment ought not to be ignored.
[23]Further the plaintiff did not deny that he submitted the application to the City Council. The City Council replied
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via exhibit P7. The title clearly shows that the application was to change the use of the premises from residential to
a restaurant on the ground floor instead of a budget hotel. This resulted in the defendant appointing Syarikat
Adriana Aziz to make a fresh application and three payments had been made for this purpose amounting to
RM38,360.00 to the said company. The defendant produced the receipts – exhibits D74, D91 and D99. This
evidence was not considered by the learned SCJ. A non-direction is a misdirection which warrants appellate
intervention.
[24]The learned SCJ in dismissing the defendant’s counterclaim for the repairs held as follows:
“[26] Dengan tindakan Defendan tersebut, ia seolah-olah menutup ruang untuk Plaintif merektifikasi (rectify) kecacatan
yang dialami oleh Defendan dan Plaintif tidak seharusnya dipersalahkan oleh Defendan dalam isu ini. Defendan juga gagal
memberi sebarang notis berkenaan dengan tindakan beliau itu yang sekaligus menunjukkan Defendan telah tidak bertindak
wajar dalam hal ini.”.
Here again the learned SCJ failed to consider exhibit P5 where the defendant had given notice to the plaintiff to
recommence work failing which 3rd party contractors would be engaged to complete the work and the repairs.
[25]The defendant responded to the said notice (exhibit P6) and requested the defendant to pay up a sum
amounting to one third of the balance sum of RM115,000.00 before work can be recommenced to which the plaintiff
refused since the plaintiff never agreed to P4 and had paid in total a sum of RM388,000.00.
[26]In P5 paragraph 2.f. the defendant alleged that upon payment of RM20,000.00 the plaintiff assured that work
would be resumed. In P6 the plaintiff while denying other paragraphs in P5, did not deny paragraph 2.f. in P5. It was
not disputed that after RM20,000.00 was paid the plaintiff still refused to recommence work. Hence I am of the view
that the plaintiff had breached the contract with the plaintiff.
[27]The defendant called witnesses in respect of the incomplete work and defects e.g. in the lobby area (SD11),
paint work (SD3), exhaust fans (SD10), leakages (SD6), wiring (SD12) and that the defendant had to engage them
to carry out rectification works. I am satisfied that the learned SCJ did not give sufficient consideration to these
evidence. Evidence was adduced as to the cost of repairs amounting to RM55,487.00.
[28]Based on the reasons discussed, I set aside the decision of the learned SCJ and allowed this appeal in part
with costs. It was ordered that the plaintiff to pay the defendant – (a) RM38,360.00 for the fresh application to the
City Council , (b) RM55,487.00 for the cost of the repair works, (c) interest of 5% from the date of the judgment until
full realisation and costs of RM10,000.00.
End of Document