Alasan Penghakiman NO: 22-920-2001
DALAM MAHKAMAH TINGGI MALAYA DI SHAH ALAM
(BAHAGIAN SIVIL)
GUAMAN SIVIL NO: 22-920-2001
ANTARA
CHUNG NYAP YOON SDN BHD
…
PLAINTIF
…
DEFENDAN
DAN
CYPARK SDN BHD
ALASAN PENGHAKIMAN
OLEH YANG ARIF HAKIM
DATO’ TENGKU MAIMUN BINTI TUAN MAT
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Alasan Penghakiman NO: 22-920-2001
The
plaintiff’s
claim
against
the
defendant
is
for
RM1,894,720.49. The defendant has a counterclaim for the sum of
RM42,000.00
THE BACKGROUND FACTS
The defendant was appointed by Setia Haruman Sdn Bhd as
the turnkey contractor for ‘Cyber Park Development Project Phase 1
(the project). The defendant then appointed the plaintiff as its subcontractor for the construction of Bulk Earthworks to finish platform
level covering the Oval, Main Plaza, VIC Platform and Permanent
Car Parks for the project for a contractual sum of RM5.2 million.
For this purpose, the defendant issued letters of instruction
dated 2.10.1999 for works up to RM1.5 million, 2.11.1999 for works
up to RM1.2 million and 2.3.2000 to the plaintiff for works up to
RM1.1 million. These letters of instructions, the Bill of Quantities,
the working earthworks drawings and technical requirements
formed part of the contract between the plaintiff and the defendant.
The relevant contractual provisions are as follows:(i)
The earthworks shall be carried out according to the
design and specifications at the agreed rates in
accordance to the working drawings and based on
the submitted Bill of Quantities.
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Alasan Penghakiman NO: 22-920-2001
(ii) Records of labour, plant and materials necessary to
carry out these works will be maintained by the
plaintiff.
(iii) Invoices for work completed shall be submitted at the
end of the working month and will be processed on a
back to back basis with Setia Haruman. Issuance of
payment shall be within 2 weeks of the defendant
receiving the same from Setia Haruman.
Pursuant to the award, the method to be used by the plaintiff
in carrying out the earthworks was the ‘replacement method’. But
soon after the plaintiff commenced work at the site, it was
discovered that the ground condition of the site makes the
replacement method ineffective. Parties therefore agreed that the
method be changed to ‘displacement method’. Without going into
the specifics of the actual work involved in these two methods,
suffice it to state that they involved different work processes.
The change of method was confirmed by a letter dated
25.11.1999 from the defendant’s consultant. The letter reads:“CYBERPARK DEVELOPMENT PHASE 1
-
Subsoil Improvement Works for Road, Oval Roundabout and
Carpark Areas
We refer to the meeting held at PLB office on 24th November 1999 …
and would like to confirm the following which was discussed and
agreed:i)
The current adopted method of displacing the peat with sand shall
be used for the rest of the areas.
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Alasan Penghakiman NO: 22-920-2001
ii)
Suitable materials which were used for displacing peat below
ground water table shall be removed and replaced with sand.
iii)
After completion of peat displacement, additional soil investigation
shall be carried out to determine the actual improved ground
condition. Surcharging will then be designed in order to comply with
the allowable post-construction settlement.
iv)
Settlement plates and ground settlement markers shall be installed
to monitor the settlements of the fill. Settlement rates shall reduce
to an acceptable value before the surcharge fill above the formation
level be removed and road pavement constructed.
We would like to remind you to exercise great care in the filling works to
avoid pockets of soft material/peat being trapped within the fill.
We will amend the earthwork drawings based on the above.”
THE EVIDENCE
Insofar as the documents are concerned, parties agreed that
the documents in Part B of the Bundle of Documents be admitted as
evidence.
The oral and documentary evidence led by the plaintiff shows
the following:(i)
that the Bill of Quantities provides for replacement
method;
(ii)
that after the instruction to change the method in
November 1999, the plaintiff carried out the earthworks
using the displacement method;
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Alasan Penghakiman NO: 22-920-2001
(iii)
that the plaintiff submitted its claim no. 1 up to No. 6 to
the defendant based on the rates in the Bill of
Quantities;
(iv)
that the defendant had approved the claim and had
made payments to the plaintiff back-to-back with the
payment it received from Setia Haruman and had made
part payment amounting to RM2,852,407.16 to the
plaintiff;
(v)
that vide letters dated 8.6.2000 and 14.6.2000 the
plaintiff
informed
the
defendant
that
they
have
completed the whole works as instructed.
(vi)
that the plaintiff submitted claim No. 7 on 25.6.2000 and
that the defendant did not protest or make any
adjustment to the contents of this claim (see pg 112 B2);
(vii) that a reminder on claim No. 7 was issued to the
defendant dated 30.6.2000 (see pg 116 B2);
(viii) that on 12.8.2000 the plaintiff wrote to the defendant
confirming that parties agreed in a meeting that the final
certificate would be prepared by 15.8.2000 based on the
original Bill of Quantities;
(ix)
that on 7.9.2000 the defendant proposed the final claim in
the
sum
of
RM4,715,827.65.
Of
this
amount,
RM4,477,127.65 is for Bill No. 2 and RM240,000.00 for
preliminary works. The plaintiff accepted the figure of
RM4,477,127.65 but disputed the sum of RM240,000.00.
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Alasan Penghakiman NO: 22-920-2001
(x)
that by a letter dated 2.10.2000 the defendant agreed to
increase the figure of RM240,000.00 to RM270,000.00.
The plaintiff was not paid for claim No. 7, hence this suit. It is
the plaintiff’s case that they had completed the contracted works in
April 2000 in the value of RM4,747,127.65. Given that the defendant
had made payment of RM2,852,407.16 the plaintiff contends that
the amount of RM1,894,720.49 is still due and outstanding from the
defendant.
The defendant’s case is that the Bill of Quantities sets out a
replacement method where the scope of work involves 3 steps i.e.
excavation, backfilling and importing suitable material but the actual
work done by the plaintiff through the displacement method involves
only 2 steps; that by reason of the difference in methods, the
quantity of filling material became different from that as set out in
the Bill of Quantities; that the original Bill of Quantities based on the
replacement method is no longer applicable; that the plaintiff’s claim
for the balance of the contract sum amounting to RM1,894,720.49
based on the Bill of Quantities is erroneous and baseless.
The defendant is counterclaiming against the plaintiff for the
sum of RM42,000.00. The defendant alleged that due to the
plaintiff’s defective work, a 3rd party contractor, Sungai Suasa Sdn
Bhd was engaged to stabilize the soil and RM42,000.00 was the
amount paid to Sungai Suasa.
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Alasan Penghakiman NO: 22-920-2001
DW1, the defendant’s CEO testified among others that:-
(i)
the change of method was accepted by the
defendant subject to re-measurement of the actual
quantity of the work done in the final accounts stage
after completion of the work;
(ii) the defendant has received full payment from the
client for the project on 3.11.2004 for the works as a
whole;
(iii) based on the methodology adopted by the plaintiff,
the defendant had paid the plaintiff in accordance
with the re-measurement of the work done pending
the final accounts, but the final accounts stage was
not reached due to this legal suit;
(iv) to date the plaintiff is unable to satisfy the defendant
as to the fair value of work done based on the
displacement method.
On the counterclaim, the evidence of DW1 is that the plaintiff
has failed to perform the works in accordance with the terms and
conditions of the contract; that the Consultant engaged by the
defendant has not accepted some of the works which required
subsequent rectification to stabilize the soil; that due to the plaintiff’s
failure to carry out the rectification works, the plaintiff had to appoint
the 3rd party contractor, Sungai Suasa Sdn Bhd to do the
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Alasan Penghakiman NO: 22-920-2001
rectification work to stabilize the soil and that the defendant had
paid Sungai Suasa the amount of RM42,000.00.
An independent quantity surveyor (DW6) testified that the
effect of the changes on the method rendered the rates in the Bill of
Quantities no longer applicable. DW6 opines that the remeasurement and valuation of the plaintiff’s works has to be done
by way of establishing the actual work physically carried out by the
plaintiff on site and that in order to estimate the costs of the work
carried out by the plaintiff, the plaintiff has to furnish the following
information:-
(i)
The records of the number of lorry loads of sandy
materials brought in; and
(ii)
The records of the heaved peat brought out.
FINDINGS
I do not think that there is any real issue on the agreed
contractual terms in respect of the earthworks to be carried out by
the plaintiff. The method and the rates have been set out and the
mode of payment had been agreed.
The main issue to be considered is whether the change in the
method from replacement to displacement has rendered the Bill of
Quantities inapplicable and consequently whether the plaintiff’s
claim based on the Bill of Quantities is erroneous and incorrect.
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Alasan Penghakiman NO: 22-920-2001
I agree with learned counsel for the defendant that the method
of valuation of the works constructed based on the displacement
method was not stated in any of the documents. However, having
tested
the
oral
testimony
of
the
witnesses
against
the
contemporaneous documents, I find that even after the change of
the method, parties still conducted themselves according to the Bill
of Quantities.
Whether the Bill of Quantities is still applicable in light of the
change of method of works from replacement to displacement
Before going into this issue, it must be highlighted that there
was no response from the defendant to the plaintiff’s letter informing
the defendant about the completion of the work for the full contract
value of RM5.2 million.
On whether the Bill of Quantities is still applicable, vide a letter
dated 12.8.2000, the plaintiff wrote to the defendant as follows:“CYBERPARK DEVELOPMENT – PHASE 1
Re:
SITE CLEARANCE AND EARTHWORKS ..
Final Certificate
Reference to the above, it was agreed at the meeting in your office in the
presence of Encik Mohamad Ariffin Karim, Encik Suhairi bin Ramly and
Mr. Oh Boon Kuang that the Final Certificate would be prepared based
on the original BQ by 15th August 2000.”
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Alasan Penghakiman NO: 22-920-2001
The letter was acknowledged receipt by the defendant. There
was no denial from the defendant of the meeting and of the
agreement that the final certificate would be based on the original
Bill of Quantities.
The plaintiff again wrote to the defendant dated 7.9.2000
(addressed to DW1) stating:“CYBERPARK DEVELOPMENT – PHASE 1
-
SITE CLEARANCE AND EARTHWORKS TO CYBERPARK,
CYBERJAYA
Re:
Final Statement of Progress Claim
Thank you for your fax on the proposed final claim amounting to
RM4,715,827.65 (as per copy attached).
We confirm our acceptance of Bill No. 2 amounting to
RM4,477,127.65 but Bill No. 1 has deviated from the original
tender which is not acceptable by us.
Please be informed that we have arranged for a meeting with
your office on Monday, 11th September 2000 at 3.00 pm to
finalize the above and the schedule of payment.”
DW1 in his evidence denied that he had faxed the proposed
final claim amounting to RM4,715,827.65 to the plaintiff. Instead he
said he had expected the plaintiff to send him the proposed final
claim computed based on the displacement method. I find the
evidence inherently improbable.
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Alasan Penghakiman NO: 22-920-2001
If there wasn’t any proposal by the defendant, then the
acceptance by the plaintiff is misplaced as the issue of acceptance
does not arise. Yet, the defendant in their reply dated 2.10.2000 did
not address the issue of Bill No. 2 amounting to RM4,477,127.65 by
either denying any proposal on the final claim and/or dismissing the
plaintiff’s acceptance on the ground that the same does not arise or
that the plaintiff’s claim is erroneous or baseless (see Wong Hon
Leong David v Noorazman bin Adnan [1995] 3 MLJ 283).
This is how the defendant responded by their letter dated
2.10.2000:“CYBERPARK PHASE 1
SITE
CLEARANCE
AND
EARTHWORK
TO
CYBERPARK,
CYBERJAYA
We refer to the discussion held in our office between your
representatives and our representatives today in respect of the above
captioned matter. Listed below are items agreed in the meeting:i)
To allow the additional preliminaries from the original of
RM240,000 to RM270,000.00
ii)
For October 2000, Cypark is to undertake to pay M/S Chung
Nyap Yoon Sdn Bhd the amount of RM500,000.00 if CNY could
successfully secure payment of RM1.2 million from our client
(M/S Setia Haruman Sdn Bhd) by 15/10/00.
iii)
After the month of October, the balance of the outstanding
amount from the above will be paid RM150,000 a month until the
amount is fully paid.”
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Alasan Penghakiman NO: 22-920-2001
In respect of the above letter, DW1 said that it was an interim
arrangement pending the submission of the proposed final claim by
the plaintiff. The document does not support his position. His letter
to the plaintiff categorically listed out the items agreed in the
meeting without any qualification. Nowhere did he state in the letter
dated 2.10.2000 that the agreement was subject to the submission
of proposed final claim by the plaintiff or subject to re-measurement
and/or that the plaintiff must provide records of lorry loads of sand
poured in and the records of number of dump trucks used in
connection with the disposal of the heaved peat. Neither did the
defendant state that the work must be verified by a licensed land
surveyor or quantity surveyor before the plaintiff can be paid.
It must be noted that the subject of the plaintiff’s letter dated
7.9.2000 is the final statement of progress claim. The plaintiff
had, vide the said letter requested for a meeting to “finalize the above
and the schedule of payment” and the defendant’s letter dated
2.10.2000 referred to a meeting.
It cannot be denied that item (i) in the defendant’s letter
relates to Bill No. 1 in the plaintiff’s letter dated 7.9.2000 wherein
vide the same letter the plaintiff has confirmed acceptance of Bill
No. 2 amounting to RM4,477,127.65. There cannot be an
acceptance by the plaintiff unless there was a proposal by the
defendant.
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Alasan Penghakiman NO: 22-920-2001
I respectfully echo Zulkefli Makinudin JCA (as his Lordship
then was) in Fawziah Holdings Sdn Bhd v Metramac Corp Sdn Bhd
[2006] 1 MLJ 505 where he said at page 537:“.. it is too late for the defendant to set the clock back. The law is clear
that if parties to a contract had construed a contract as operating in a
particular way and acted on it, they are both bound by the meaning they
had given to the contract .”
(See also Boustead Trading (1985) Sdn Bhd v ArabMalaysian Merchant Bank Bhd [1995] 3 MLJ 331).
There is also the plaintiff’s letter dated 17.10.2000 to the
defendant (which was acknowledged receipt by the defendant)
which states among others:“We refer to your letter dated 2nd October 2000 concerning the
discussion held in your office ..
Your Encik Suhairi Bin Ramly has given the undertaking to release the
Final Certificate to us by 4th October 2000 but to today, despite our
numerous reminders, we are still waiting for the Certificate.
You need to release the relevant documents to us so that we can help
you to secure RM1.2 million from your Client, M/s Setia Haruman Sdn
Bhd.”
The plaintiff followed up with a letter dated 8.11.2000 (also
acknowledged receipt by the defendant) stating as follows:-
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Alasan Penghakiman NO: 22-920-2001
“CYBERPARK DEVELOPMENT – PHASE 1
Re:
Final Certificate
Referring to our letter …. and a further meeting in your office on 2 nd
October 2000 on the above, we are still waiting for the Final Certificate
which you had agreed to issue to us by 4th October 2000.”
DW1 said that as far as he knows, the defendant did not give
any undertaking to the plaintiff as to the release of the Final
Certificate to the plaintiff by 4.10.2000. Again I find the testimony of
DW1 inherently improbable. If indeed there was no undertaking to
release the Final Certificate or that the contents of the plaintiff’s
letter is not true, then it is reasonable to expect the defendant to
deny the plaintiff’s letter. But there was no such response.
In the circumstances I am not able to accept the defendant’s
position that plaintiff’s claim No. 7 is only an estimate. The
statement has been finalized by the parties hence the schedule of
payment listed by the defendant. And given paragraphs (ii) and (iii)
of the defendant’s letter dated 2.10.2000 setting out the mode of
payment, I find that there had been an agreement on the amount to
be paid to the plaintiff. This is a proper case where the defendant
should be estopped from taking a different position from their earlier
stand as shown by the documentary evidence.
Having regard to all the above, I therefore find that the Bill of
Quantities is still applicable despite the change of method. There is
clear evidence that the total agreed sum of the plaintiff’s work is in
the amount of RM4,747,127.65. This amount comprises of
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Alasan Penghakiman NO: 22-920-2001
RM4,477,127.65 as proposed by the defendant and accepted by the
plaintiff vide its letter dated 7.9.2000 and RM270,000.00 as agreed
by the defendant vide its letter dated 2.10.2000. Taking into account
the payment that has been received from the defendant in the sum
of
RM2,852,407.16,
the
plaintiff
is
entitled
to
be
paid
RM1,894,720.49, more so when the defendant has received full
payment from Setia Haruman.
Is the sum prematurely claimed in this suit?
It is not specifically pleaded by the defendant that the
plaintiff’s claim is premature. Vide paragraph 10 of the amended
statement of defence and counterclaim, the defendant pleads “In
addition, even if the Plaintiff’s claim is valid, which is denied, the obligation of
the Defendant to pay the Plaintiff, which is also denied, only arises if the
Defendant has been paid by the Client.”
This issue on premature claim was raised by learned counsel
for the defendant in his written submission after the trial. From the
testimony of PW2, the Head of Legal and Corporate Services of
Setia Haruman, the defendant’s client, it came to light that the
defendant was paid for the earthworks on 30.4.2002 whilst the suit
was filed in December 2001. It was thus the submission of learned
counsel for the defendant that the plaintiff’s claim is premature and
incompetent as the defendant is only obliged to pay the plaintiff if
the defendant correspondingly receives the same from Setia
Haruman. As at the date of filing of the writ, learned counsel argued,
the cause of action has yet to accrue. Simetech (M) Sdn Bhd v
Yeoh Cheng Liam Construction Sdn Bhd [1992] 1 MLJ 11; Pernas
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Alasan Penghakiman NO: 22-920-2001
Otis Elevator Co Sdn Bhd v Syarikat Pembenaan Yeoh tiong Lay
Sdn Bhd & Anor [2004] 5 CLJ 34 and AsiaPools (M) Sdn Bhd v IJM
Construction Sdn Bhd [2010] 2 CLJ 28 were cited in support
thereof.
For the plaintiff it was submitted that the plaintiff did have a
valid cause of action against the defendant as at the date of the
commencement of this suit. Learned counsel referred to pg 64 of
Bundle B6 which shows that the defendant has been paid in full by
Setia Haruman on claim No. 7 on 12.9.2000 i.e. prior to the
commencement of this suit and that pursuant to the back-to-back
arrangement, the defendant ought to have paid the plaintiff 14 days
after 12.9.2000.
My view is that this defence of premature claim is not valid.
Looking at the evidence, that the plaintiff’s claim is premature is not
the reason why the defendant refuted the plaintiff’s claim. From the
evidence, the reason for non-payment by the defendant is the issue
of valuation. Even in the defendant’s solicitors’ letter dated 2.2.2001
replying to the plaintiff’s letter of demand, there was no issue that
the defendant’s obligation to pay has not arisen under the back-toback agreement.
The defendant’s counterclaim
Besides the bare statement of DW1, there is not a single
document to support his testimony that the Consultant has not
accepted some of the works of the plaintiff; that the plaintiff has
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Alasan Penghakiman NO: 22-920-2001
been asked to and has failed to do the rectification works and that
Sungai Suasa was engaged by the defendant to do the rectification
works.
The defendant sought to rely on a letter of award dated
16.11.2001 to Sungai Suasa to show the appointment of Sungai
Suasa for the soil stabilization works. The letter of appointment was
for main bridge and piled embankment. It makes no reference to
rectification works or soil stabilization as alleged. Absent any proof
of rectification works done by Sungai Suasa, I find that the
defendant has failed to prove its counterclaim.
To conclude, judgment is entered against the defendant for
RM1,894,720.49 with interest at the rate of 4% per annum from the
date of judgment until realization and costs. The defendant’s
counterclaim is dismissed with costs.
(DATO’ TENGKU MAIMUN BINTI TUAN MAT)
HAKIM
MAHKAMAH TINGGI MALAYA
BAHAGIAN SIVIL
SHAH ALAM
Dated 10th January 2012
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Alasan Penghakiman NO: 22-920-2001
Cik Soo San San bersama
Cik Elaine Gan bagi pihak Plaintif
Tetuan Paul Ong & Associates
Peguambela dan Peguamcara
Unit No. B-2-8, Blok B Tingkat 2
Megan Avenue 1
No. 189 Jalan Tun Razak
50400 Kuala Lumpur.
Encik Lim Chong Fong bersma
Cik Karen Ng Yueh Ying bagi pihak Defendan
Tetuan Azman Davidson & Co.
Peguambela dan Peguamcara
Suite 13.03, Tingkat 13
Menara Tan & Tan
207 Jalan Tun Razak
50400 Kuala Lumpur.
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