effect of progressive payment on lad, interim payment certificates

[2012] 1 LNS 720 Legal Network Series

DALAM MAHKAMAH TINGGI MALAYA DI MUARDALAM NEGERI JOHOR DARUL TAKZIM

[GUAMAN SIVIL NO: 23-47-2008]

BETWEEN

CAMELLIA VIEW SDN BHD ... PLAINTIF

AND

ENVIPRO SDN BHD ... DEFENDEN

[GUAMAN SIVIL NO: 22-98-2008]

ANTARA

ENVIPRO SDN BHD ... PLAINTIF

DAN

CAMELLIA VIEW SDN BHD ... DEFENDAN

(dipindahkan dari Mahkamah Sesyen Batu Pahat dan digabungkanmelalui Perintah bertarikh 31 haribulan Mac 2009)

1


CONTRACT: Breach - Contract for work done and material supplied- Whether defendant breached its obligation by changing pilingmaterial without consent of plaintiff - Whether plaintiff entitled todifference in costs for unilateral change of piling material - Whetherit was defendant's fault in building the sewage treatment plant (STP)out of position - Whether defendant depended on the accuracy ofplaintiff's demarcation of the site of the STP - Whether plaintiffestopped from denying that it had knowledge of the error and signedthe Amended Plan in order to have it submitted to relevant authorityfor approval

CONTRACT: Breach - Delay - Damages - Whether defendantdelayed in completing and handing over the STP on or before31.12.2005 - Whether plaintiff entitled to liquidated ascertaineddamages (LAD) - Whether fact that plaintiff made progress paymentsto defendant meant that plaintiff waived its rights to claim LADagainst defendant

CONTRACT: Building contract - Progress payments - Pegasusinformally engaged by plaintiff as superintending engineer - WhetherPegasus's role purely that of an employee of plaintiff or its"agent" for purposes of Contract - Whether basic principlespertaining to role of a superintending engineer or architectapplicable to Pegasus - Whether role included issuance ofCertificate of Practical Completion (CPC) - Whether it waspremature of Pegasus to have issued CPC - Whether progresspayments made by plaintiff to defendant vis Progress PaymentCertificates Nos. 5 to 7 prevented plaintiff from challenging decisionof Pegasus - Whether plaintiff was estopped from disputing CPC -Whether CPC should have been issued much later - Whether CPCwas wrongly issued by Pegasus and therefore invalid

2


[For the 2008 case, special damages comprising of deductions in costof piling material at RM4,952.00 and LAD of RM240,000.00 allowed;general damages as a result of the encroachment into the buffer zonedisallowed; a declaration that the CPC issued by Pegasus on 2.1.2006was null and void allowed with interest and costs; For the 2009 case,RM129,998.00 is payable by Plaintiff to Defendant which shall beset-off from sums due from Defendant to Plaintiff in the 2008 Casewith interest and costs.]

Case(s) referred to:Hiap Hong & Co Pte Ltd v. Ong Huat Development Co (Pte) Ltd[2001] 2 SLR 458 (refd)Ooi Yoke In (F) and Anor v. Public Finance Bhd [1993] 2 CLJ 464 (refd)Sakinas Sdn Bhd v. Slew Yik Hau & Anor [2002] 5 MLJ 497 (refd)Serangoon Garden Estate Ltd v. Marian Chye [1959] 25 MLJ 113 (refd)Syarikat Ong Yoke Lin Sdn. Bhd. v. Giant Cash and Carry Sdn Bhd &Ors [2000] 4 CLJ 733 (HC) @ 759 (refd)

Legislation referred to:

Contracts Act 1950, s. 75

Evidence Act 1950, s. 114(g)

Other source(s) referred to:

Hudson's Building And Engineering Contract , 12 th Edition, Sweet andMaxwell, 2010, under the sub-heading of Design and BuildContracts, at pages 522, 523, 524 paragraph 3-130

Nigel M Robinson , et al, Construction Law in Singapore andMalaysia, Second Edition, Butterworths Asia, 1996, pg. 301-302, 344-346

3


GROUNDS OF JUDGMENT

A. PRELIMINARIES:

[1] For the purposes of these actions, the Court will refer the parties

as in Civil Suit No. 23-47-2008 (the 2008 Case) as the Plaintiff and the

Defendant respectively.

[2] The Defendant had commenced an action against the Plaintiff at

the Batu Pahat Sessions Court for the sum of RM129,998.00 being the

balance of payment due under several Progress Payment Certificates;

whilst the Plaintiff had commenced an action (being the 2008 Case)

against the Defendant at the Muar High Court as remedies sought by

the Plaintiff involved higher amounts than being within the jurisdiction of

the Sessions Court. The Sessions Court case was then transferred to

the Muar High Court and re-registered as Civil Suit No. 22-98-2009 (the

2009 Case). Both the 2008 Case and the 2009 Case were

consolidated on 6.3.2012.

4


B. THE 2008 CASE:

[3] In the 2008 Case, the Plaintiff claimed against the Defendant for:-

3.1. special damages comprising of:-

3.1.1. deductions in cost of piling material for the sum of

RM12,963.20;

3.1.2. liquidated and ascertained damages (LAD) of RM289,500.00;

3.2. general damages, including loss and damage suffered as a result

of the encroachment by the Defendant into the buffer zone;

3.3. a declaration that the Certificate of Practical Completion (CPC)

issued by Pegasus Engineers Sdn. Bhd. (Pegasus) on 2.1.2006

is null and void;

3.4. interest and costs.

C. THE 2009 CASE:

[4] In the 2009 Case, the Defendant claimed against the Plaintiff for

the sum of RM129,998.00 together with interest and costs in respect of

7 Progress Payment Certificates issued by Pegasus.

D. THE FACTS:

[5] The Plaintiff is a company carrying on the business as a housing

5


developer. The Defendant is an environmental engineering company

which specialises in the building of sewage treatment plants.

[6] By letters dated 7.4.2005 and 28.6.2005 between the Plaintiff and

the Defendant forming the contract between them (the said Contract),

the Plaintiff had engaged the Defendant to execute and complete a

sewage treatment plant (the STP) on Lot 9254 situated within the

Plaintiff's housing development area called Taman Flora Utama in

Mukim Simpang Kanan, Batu Pahat Johor in accordance with the Site

Plan for an Extended Aeration Process System for 6500 PE dated July

2005 (page 37, B), (the Site Plan).

[7] The essential terms of the said Contract were:-

7.1. the contract sum was RM1,350,000.00;

7.2. the said Contract was a design and build contract where the

Defendant was responsible for, amongst other things, all

authorities submissions, approval, inspection and handing over to

the authorities upon completion;

7.3. the date of site possession was 1.7.2005;

7.4. the date of completion of the whole works was 31.12.2005; and

7.5. the LAD was fixed at RM1,500.00 per day.

6


The Plaintiff's Case

[8] The Plaintiff alleged that in breach of the said Contract, the

Defendant had used bakau piles instead of reinforced concrete piles for

the piling works of the main tank. Hence it was the contention of the

Plaintiff that it was entitled to retain the actual savings that had resulted

from the change in the piling material amounting to RM12,963.20 .

[9] The Plaintiff alleged that in breach of the said Contract, the

Defendant had constructed the STP in such a manner that its outer

boundary wall had encroached into the buffer zone of the STP of

approximately 7.8 metres between the outer boundary wall of the STP

and the row of shop houses (namely Lot PTD 39455), and

approximately 8.8 metres between the outer boundary wall of the STP

and the row of double-storey terrace houses (namely Lots PTD 39412,

PTD 39413, PTD 39414 and PTD 39415) wherein the buffer zone must

at least be 12 metres wide. As a result of the said encroachment the

Plaintiff was initially unable to sell Lot PTD 39455 and had only

succeeded in selling the said Lot for a lower sum of RM390,000.00.

Similarly, the Plaintiff only succeeded in selling the double-storey terrace

houses at a lower price of RM266,800.00. The Plaintiff had therefore

suffered losses and damages as a result of the Defendant 's breach.

7


[10] The Plaintiff alleged that the Defendant had only completed and

handed over the STP to the Sewerage Service Department on

13.7.2006, thus incurring a delay of 193 days. The Plaintiff therefore

claimed LAD of RM289,500.00 against the Defendant.

[11] As the Plaintiff alleged that the Defendant had only completed the

whole works on 13.7.2006, the Plaintiff's superintending engineer,

Pegasus, had erroneously issued the CPC certifying that the Defendant

had practically completed the works on 31.12.2005. The Plaintiff

therefore sought for a declaration that the CPC was null and void.

The Defendant's Case.

[12] The Defendant in essence denied the Plaintiff's claim against it.

With regard to the Plaintiff's claim to the savings in respect of the use of

bakau piles, it was the Defendant's contention that the bakau piles were

used at the Plaintiff's request resulting in the said Contract price was

reduced from RM1,350,000.00 to RM1,345,048.00.

[13] As for the Plaintiff's allegation that the Defendant had constructed

the STP in a manner where the boundary wall of the STP had

encroached into the buffer zone, the Defendant denied the allegation

8


and instead alleged that even if there had been encroachment, it was

due to the Plaintiff's submission of the Amended Plan to the authorities

in December 2005 by Pegasus and which was approved on 23.1.2006.

That the construction of the STP was in accordance with the Amended

Plan. Further, the Plaintiff had sold the double-storey houses Lot PTD

39412 and Lot PTD 39413 without incurring any loses whilst the buffer

zone vis Lot 39415 had not changed from 12 metres wide,

[14] The Defendant alleged that there was no delay in completing the

works since it was by the Plaintiff's own action vis its superintending

engineer Pegasus which had caused the Plan to be amended and

consent to the amendment of the Plan was only obtained on 23.1.2006 .

The Defendant alleged that the Plaintiff had waived the date of

completion since the Plaintiff had made payments to the Defendant to

the sum of RM1,215,050.00 under the said Contract.

[15] It was the Defendant's contention that the CPC was issued by the

Plaintiff itself vis Pegasus and therefore the Plaintiff was estopped from

disputing the CPC.

9


[16] Instead the Defendant claimed that the Plaintiff owed it the sum of

RM129,998.00 as per the Defendant's claim in the 2009 Case.

E. THE ISSUES:

[17] The parties had agreed to 11 issues to be tried. However I have

adopted the 4 main issues as proposed by the Plaintiff's counsel, with

some modifications, in his submission as well as 1 issue in respect of

the Defendant's claim against the Plaintiff. They are:-

17.1. whether the Defendant had breached its obligation by changing

the piling material without the consent of the Plaintiff;

17.2. whether the Defendant was at fault in the STP being built not in

accordance with the Site Plan;

17.3. whether the Defendant had delayed in completing and handing

over the STP on or before 31.12.2005;

17.4. whether the superintending engineer Pegasus had erroneously

issued the CPC dated 2.1.2006; and

17.5. whether the Plaintiff owed the Defendant the sum of

RM129,998.00, being the balance of the said Contract sum

remaining unpaid.

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F. Whether the Defendant had breached its obligation by

changing the piling material without the consent of the

Plaintiff.

[18] It was submitted for the Plaintiff that the Defendant had without its

knowledge and consent unilaterally changed the piling materials of the

main tank from reinforced concrete piling to bakau piling which was a

cheaper alternative in contravention of Clause 6.7.1 of the Defendant's

Quotations (page 3, B). The Plaintiff had never at any material time

consented to such changes.

[19] That the Defendant's second witness, SD2, had stated in his

Witness Statement D2, Q & A 25, 26, 27, 28 that the Plaintiff had agreed

to the quotation stated in the Projected Cost of Piling Work at pge 3, C,

(Projected Cost) which was RM95,048.00. It thus reduced the contract

sum from RM1,350,000.00 to RM1,345,048.00. When SD2 was cross-

examined that the Plaintiff could not have agreed for the use of the

bakau piles at the cost of RM95,048.00 in June or July as the quotation

was dated 17.9.2005, SD2 had denied the matter (page 47, Notes of

Evidence). SD2 had admitted that the quotation in the Projected Cost

was for the actual costs of bakau piling after completion of piling works

11


(page 47, Notes of Evidence). Therefore, it was submitted that SD2's

testimony that the quotation was agreed to in June 2005 cannot be

accepted as in June he would not have actual costs of construction

using bakau piles to obtain the Plaintiff's agreement. There was

therefore no such estimation being presented to the Plaintiff for the

Plaintiff's approval. Moreover, SD2 had also admitted under cross-

examination that, with reference to page 58, B, the Defendant had as at

15.8.2005 already gone ahead to order bakau piles without obtaining the

Plaintiff's consent and that there was no written letter from the Plaintiff to

agree to the use of bakau piles (pages 46-48, Notes of Evidence).

[20] In view of these facts, it was submitted by the Plaintiff that it should

be compensated with a minimum sum of RM12,963.20 being the

difference in costs for the unilateral change of the piling material.

[21] It was submitted by the Defendant that the Plaintiff had raised this

issue as an after thought seeing that vide Envipro's letter to Pegasus

dated 12.1.2006, carbon copied to the Plaintiff, on pages 56-57, B,

clearly showed the Plaintiff's knowledge and consent to the use of the

bakau piles for all piling works after a discussion and soil test was done.

Moreover, the Plaintiff had not at any time disputed nor objected to the

12


use of the bakau piles for all piling works especially in respect of all

payments made after 12.1 200& It was the Defendant's contention that

the document on page 3, C, proved that the Plaintiff had agreed and

consented to the Defendant using the bakau piles.

[22] After a close perusal of SD2's testimony, I find that the learned

counsel for the Plaintiff had been mistaken in stating that SD2 had

testified that the Plaintiff had agreed to the quotation stated in the

Projected Cost in June 2005 when the Projected Cost was dated

17.9.2005. What SD2 stated in his Answers 25, 26 and 27, D2, was that

in the month of June, July 2005 after soil tests were carried out, there

was a discussion held in early August 2005 wherein the Plaintiff had

directed the Defendant to use bakau wood for all piling in the

construction of the STP and whereby the new contract price for the STP

was RM1,345,048.00 with the cost of the bakau wood being agreed at

RM95,048.00 as per the Projected Cost on page 3, C. I quote at length

below the Q & A 25 - 27 of SD2 for a better understanding:-

S25: Minta jelaskan samada harga kontrak RM1,350,000.00 itu dikekalkan

atau terdapat perubahan kepada harga kontrak itu.

J25: Pada bulan Jun, Julai 2005 selepas menjalankan ujian tanah (soil test)

satu perbincangan telah diadakan pada awal bulan Ogos 2005 di

13


mana Camellia mengarahkan Envipro menggunakan kayu bakau untuk

semua piling untuk pembinaan loji tersebut di mana jumlah harga

kontrak pembinaan loji baru adalah RM1,345,048.00.

S26: Adakah Envipro mengeluarkan sebut harga untuk bakau piling yang

diarahkan oleh Camellia?

J26: Ada, kos untuk bakau piling adalah sebanyak berjumlah RM95,048.00.

Minta lihat muka surat 3 Ikatan Dokumen Tambahan Defendan.

S27: Minta jelaskan pembezaan di antara harga asal RM1,350,000,00

dengan harga baru RM1,345,048.00 yang berjumlah RM4,952.00.

J27: Pada awalnya Camellia bersetuju RC Piling dengan harga

RM70,000.00 dan bakau piling dengan harga RM30,000.00 berjumlah

RM100,000.00 seperti di revised quotation Envipro di muka surat 3

Ikatan Dokumen Bersama. Selepas kajian tanah pada Jun, Julai 2005

Camellia mengarahkan Envipro menggunakan kayu bakau untuk

semua piling dengan harga yang dipersetujui RM95,048.00. Ini

terdapat perbezaan RM4,952.00 apabila ditolak daripada harga

asal RM100,000.00. Justeru, harga baru kontrak menjadi

RM1,345,048.00,

[23] Even though I find learned counsel for the Plaintiff was mistaken, I,

however, find that he was correct in saying that SD2 had stated the

agreed price for the bakau piles was RM95,048.00 as quoted by the

Defendant in the Pro jec ted Cos t on page 3 , C , which was da ted

14


17.9.2005, which could not be the case seeing that the purported

agreement by Mr Wong / SP1 of the Plaintiff of the new price had

purportedly taken place some time in early August 2005.

[24] This issue was further complicated when SD2 attempted to explain

during cross-examination the discrepancy between the date of the

quotation in the Projected Cost on page 3, C, that is, 17.9.2005 and the

ability of the Plaintiff agreeing with that quotation in Jun, July 2009. In

giving his explanation, SD2 had contradicted his earlier testimony during

examination-in-chief by referring to a letter written by him for the

Defendant dated 5.8.2005 on pages 39-42, B, to the Plaintiff purportedly

giving the Plaintiff / SP1 the estimated cost of bakau piles for all

estimated to be at RM109,898.00 including the cost of the soil

investigation. SD2 then stated that once SP1 had agreed with

Appendix E (on page 42, B), the Defendant had proceeded with the

bakau piling (page 47 Notes of Evidence). In so stating, I find once

again SD2 had contradicted himself when he later admitted during

cross-exmination that, with reference to page 58, B, the Defendant had

as at 15.8.2005 already gone ahead to order bakau piles without

obtaining the Plaintiff's consent (page 48, Notes of Evidence) and that

15


there was no written letter from the Plaintiff to agree to the use of bakau

piles

[25] As for the Defendant's letter dated 12.1.2006, purportedly carbon

copied to the Plaintiff, I am at a loss to understand how this letter could

be said to clearly show the Plaintiff's knowledge and consent to the use

of bakau piles for all piling works. In the first place, this letter was dated

12.1.2006 when the bakau piling works had already been completed. In

the second place, the intent of this letter was to ask Pegasus's consent

for the extension of time to complete the STP works; failure on the

Defendant's part to obtain Pegasus's consent would mean that the

Defendant had delayed completing the works on time as per the

contracted date of 31.12.2005. In the third place, the contract between

the parties was a design and build contract which meant that once the

Plaintiff had agreed to the terms of the said Contract the Defendant was

left to ensure the performance of the said Contract to this completion.

[26] In view of these material contradictions in SD2's evidence and no

documentary evidence to prove that the Plaintiff / SP1 did agree to the

use of bakau piles for all the construction of the STP, I find that the

Defendant had breached its contractual obligations by changing the

16


piling material, namely the R.C. piles for the main tank to bakau piles,

without the consent of the Plaintiff. A perusal of the Defendant's letter

dated 5.8.2005 (page 39, B,) to the Plaintiff showed very clearly there

was no attempt made by the Defendant to obtain the consent of the

Plaintiff on the use of the bakau pile in spite knowing that the said

Contract was a design and build one. Instead, the said letter was written

to the Plaintiff by stating as a fact that:-

With reference to the above-mentioned matter, please be informed that

the projected cost of bakau piling work as per latest consultant design is

RM109,898.00. Kindly refer to Appendix E and drawing No.

ESB1152/2005/RC-005 for details .

[27] The Plaintiff had proposed to the Court to grant it the sum of

RM12,963.00, being the difference in costs for unilateral change of piling

material. I find the said amount as not justifiable because the original

Contract sum was RM1,350,000.00 whereas the revised quotation

taking into account the use of bakau piles wholly was RM1,345,048.00.

This meant that the difference in price, or cost savings was RM4,952.00.

In the circumstances I do so grant the said sum of RM4,952.00 to the

Plaintiff as being appropriate damages suffered by the Plaintiff.

17


G. Whether the Defendant was at fault in the STP being built not

in accordance with the Site Plan.

[28] It was not in dispute that the Site Plan was designed by the

Defendant and accepted by the Plaintiff and approved by the relevant

authorities. It was also not in dispute that the STP was built out of

position from that found in the Site Plan. The questions therefore arose

whether it was the Defendant's fault in building the STP out of position

and whether the defence of estoppel applied against the Plaintiff.

[29] The Defendant chose to deal with this issue, as well as other

issues raised by the Plaintiff, by taking the position that the Plaintiff was

estopped from raising it. According to the Defendant, the Plaintiff itself

had prepared the Amended Plan as contained in page 53, B, and which

was approved on 23.1.2006 by the relevant authorities. That the Plaintiff

had never raised any objection to the change in the position of the STP

until the Defendant filed the 2009 Case in the Sessions Court. Neither

did the Plaintiff raise any objection when it made progress payments to

the Defendant. Learned counsel for the Defendant urged the Court to

invoke the adverse inference against the Plaintiff under section 114(g)

Evidence Act 1950 (Evidence Act) for the Plaintiff's failure to call as its

18


witness the expert surveyor who had surveyed the Site. Further,

pursuant to Clauses 9.6 and 9.7 of the said Contract (pages 1-7, B) it

was submitted that the burden of proof was on the Plaintiff to prove the

terms and conditions stipulated therein and that it was not the

responsibility of the Defendant to survery the site of the STP.

[30] The Defendant submitted that it was mere speculation on the part

of the Plaintiff when the Plaintif submitted that even if the Plaintiff was

told about the shift of the STP the Plaintiff had no choice but to accept

the construction as it was and to sign the Amended Plan and submit to

the authorities for approval. Otherwise it would mean that the Defendant

would have to re-construct the STP according to the Plan, which in turn

would not be viable for the Plaintiff as the Plaintiff needed to handover

32 units of double storey shop houses to the purchasers by early March

2006.

[31] As for the losses suffered by the Plaintiff under this issue, the

Defendant submitted that the burden of proof was on the Plaintiff to

prove specifically its claims for losses and compensation and the

Plaintiff was precluded from submitting that the Defendant's counsel had

19


not specifically cross-examined the Plaintiff's sole witness on this

aspect.

[32] It was the submission of the Plaintiff that the Defendant's position

that the demarcation of the STP site was to be provided by boundary

stones and that the Defendant's reliance on Clause 9.6 of the so-called

Revised Quotation (pages 1-9, B) was wrong, as according to SD1

Clause 9.6 implied that the demarcation was provided by boundary

stones. Whereas, and as submitted by the Plaintiff, this Clause had no

relation to the boundary stones on the Site but relate to the demarcation

of the STP reserve on the layout plan for the entire housing project. The

Plaintiff's contention was supported by the testimony of SD1, who had

designed the original plan of the STP. SD1 had testified that Clause 9.6

meant that the specific place where the STP would be built would have

been disclosed to the Defendant in the layout plan itself and that the

demarcation on the layout plan had allowed SD1 of the Defendant to

design the STP (page 22, Notes of Evidence).

[33] It was further submitted that the Defendant knew from day one the

requirement for a buffer zone and had prepared the Site Plan. The

Defendant therefore should have done a survey according to the Plan

20


prepared by it to ascertain the proper boundary for the STP and cannot

now blame the Plaintiff by saying that the Plaintiff had provided a wrong

demarcation of the STP reserve to it when no such demarcation by way

of boundary stones was ever given.

[34] It was the Plaintiff's position that the wrong positioning of the STP

was done by the Defendant from day one. SD2 had admitted that he did

not discover the error until December 2005, which was toward the end of

the contract term. The Defendant did not inform the Plaintiff specifically

about the mistake; neither was there a letter indicating to the Plaintiff

that the STP had been built out of its original location.

[35] As for the signing of the Amended Plan by SP1, being the

Defendant's strong point in invoking the principle of estoppel against the

Plaintiff, it was submitted by the Plaintiff that SD2 had on or about

15.12.2005 come to see the Plaintiff's Managing Director / SP1 and

represented to him that there were documents which needed to be

signed in order to facilitate submissions and approval from the relevant

authorities. SD2 then left with the signed Amended Plan. However,

SD2 denied he had anything to do with the signing of the Amended Plan

and taking it back. But as SD1 had testified that the Amended Plan was

21


received by her directly from SD2, and as SD2 had admitted that there

was no covering letter from the Plaintiff enclosing the Amended Plan

back to the Defendant, it was submitted by the Plaintiff that this went to

support and corroborate the Plaintiff's contention that the Defendant did

misrepresent to the Plaintiff's Managing Director / SP1 in getting the

latter to sign the Amended Plan.

[36] As SP1 testified that the Plaintiff had never received a copy of the

letter at page 45, B, (which explained about the reduction of buffer

zones of the STP) and as SD1 had testified that she had prepared the

same by using the letter head of Pegasus, it was submitted by the

Plaintiff that this showed the Plaintiff had no knowledge of the changes

to the buffer zone at this point in time and had never agreed to the

changes. Therefore, the Plaintiff argued that the principle of estoppel

was not applicable to the Plaintiff.

[37] Under Clauses 9.6 and 9.7 (page 4, B) of the Revised Quotation,

which fall under the heading in Clause 9.0 General Assumptions, the

parties had agreed to these two assumptions as follows:-

9.6. Demarcation of Sewage Treatment Plant reserve will be available.

22


9.7. STP reserve, setback and buffer zone comply with requirement by

authorities.

As there are no other provisions in the said Contract which could throw

any light on the responsibilities of both parties in respect of the Site

issue, I will have to decide the issue based on these 2 Clauses. I rule

that based on these 2 Clauses, it was the responsibility of the Plaintiff to

demarcate the site of the STP on the ground taking into account the

measurement of the STP reserve, set back and buffer zone as approved

by the authorities. It was not good enough for the Plaintiff to merely

provide the Defendant with the demarcation for the Site Plan purposes;

the Plaintiff was also required to provide the boundary stone on the

ground for the STP reserve and the buffer zone. My finding of fact is

corroborated by the testimony of SP1 himself when he stated as follows

(page 10, Notes of Evidence):-

Pages 1-7, B referred.

Q: Refer page 4, B, item 9.0 especially 9.6 explain what is this Clause

9.6 is about? Is it the duty of the Plaintiff under this clause to provide the

demarcation of the STP to be made available?

A: By 9.6, it means for the Plaintiff to see what is the shape of the land where

the STP is supposed to be built upon because if don't show him where the

STP is, they would not know where the STP is to be.

23


Surely, SP1 could not have meant literally just to see the site and the

Defendant would know what to do. I had scrutinised the Revised

Quotation agreed to by the Plaintiff and I do not find any item of work

and costs pertaining to the need of the Defendant to cause the survey of

the Site for the location of the STP and its buffer zone before starting

construction works. Such an absence, and in view of Clauses 9.6 and

9.7, can only mean that it was the responsibility of the Plaintiff to

demarcate the site for the STP and its buffer zone, it being the

assumption of both parties that this was the case. Further, during cross-

examination, and with reference to page 45, B, SD1 had agreed to the

Plaintiff's counsel's suggestion that penandaan batu sempadan rezab

meant it was the stone marker setting out the corner of the land on

which the STP plant was to be built (page 43, Notes of Evidence). On

further questioning, SD2 had this to say about the demarcation stones

(page 44, Notes of Evidence):-

Q: When before you start the piling would you not engage a surveyor to

peg the location of the buildings?

A: Normally we'll not hire a surveyor because the Plaintiff had already

given us the boundary stone or rather Plaintiff has already done the

demarcation of the STP reserve. We only do the necessary internal set

back.

24


. . .

Q: Where boundary stones are concerned you stated they are at the

corner of the property?

A: Yes.

Q: If boundary stones are placed at the corners of the property one would

have to engage a surveyor to ensure the line are straight?

A: I disagree. It is unnecessary because the Plaintiff already hired

surveyor to mark out the STP area.

[38] I'm fortified in my finding by referring to the authoritative textbook

on building contracts entitled Hudson's Building And Engineering

Contract, 12 th Edition, Sweet and Maxwell, 2010, under the sub-

heading of Design and Build Contracts, at pages 522, 523, 524

paragraph 3-130, entitled (iv) Responsibility for accuracy of information

as to the site and its effect on design where it is stated as follows:-

One of the key sources of Employer - supplied information affecting the

efficacy of the design and build Contractor's design is the accuracy and

completeness of information as to the site. Unforeseen site conditions are

a fertile source of dispute in all building and engineering contracts. If price

certainty and single point responsibility are the prime factors in a design

and build project, the scope for additional cost, delay and ultimately failure

of the project arising from conditions encountered at site which adversely

25


affect construction because they fail to comply with the parameters or

bases of the design cannot be underestimated.

.. .

The provision of information about the site and underground

conditions is generally the responsibility of the Employer.

Nonetheless, the importance of site conditions to the success of a design

gives rise to particular issues in the context of design and build contracts.

Particular issues that arise with respect to design and build contracts are:

(a) the extent to which the Contractor is required to obtain or verify site

information for itself or may rely only on that provided by the

Employer, (b) the responsibility of the Contractor for inaccuracies or

incompletness of site information, and (c) the placing of the risk of

unforeseen conditions.

. . .

Most standard form contracts do not place the burden of site conditions

quite so clearly upon the Contractor. Generally the Employer remains

responsible for the accuracy of the information i t provides and

the Contractor is responsible for the appropriate interpretation of that

information.

[Tekanan ditambahkan.]

[39] In this regard, the Plaintiff's reference to SD1's testimony that

Clause 9.6 referred to the demarcation in the layout plan of the Plaintiff

26


the specific place where the STP would be built would contradict what

SP1 himself had said, that is, if the Plaintiff did not show the Defendant

where the STP was on the ground, the Defendant would not know where

the STP was to be. In any case, that was the view expressed by SDI. I

agree with SD1's testimony in the sense of the Plaintiff was responsible

for the demarcation in the layout plan of the Plaintiff the specific place

where the STP would be built, but disagree with her testimony that that

was all that was provided for under Clause 9.6.

[40] In view of my finding that it was the responsibility of the Plaintiff to

demarcate the STP and its buffer zone, and since the Defendant had

depended on the boundary stones of the STP as demarcated by the

Plaintiff's surveyor before the Defendant started work on the STP, I

therefore find that it was the Plaintiff's fault that the STP was built out of

position. This was because the Defendant had depended on the

accuracy of the Plaintiff's demarcation of the site of the STP, which, as it

turned out, was not the case.

[41] As for the Plaintiff's/SP1's allegation that SD2 had misrepresented

to him with regard to the signing of the Amended Plan, I find that the

Plaintiff had fai led to prove on a balance of probabil i t ies that the

27


Defendant / SD2 had misrepresented to SP1. It is trite law that a person

is bound by any document he has signed knowingly or unknowingly of

its contents unless he can prove that he had signed it due to fraud or

misrepresentation (see Serangoon Garden Estate Ltd v. Marian Chye

[1959] 25 MLJ 113; Ooi Yoke In (F) and Anor v. Public Finance Bhd

[1993] 2 CLJ 464). SP1 was the managing director of the Plaintiff, which

is a housing developer. It is hard for me to accept the testimony of SP1

that he did not know / understand the contents of the Amended Plan

when he signed it. As the managing director of the Plaintiff, he would be

used to reading Site Plans and signing such Plans should there be a

need to amend it. It is not plausible to me to accept the Plaintiff's

contention that when SP1 signed the Amended Plan for the alleged

purpose of obtaining the approval of the relevant authority that he did

not closely scrutinize the Amended Plan to see what was needed to be

amended and why it needed to be amended. It is my finding that SP1

knew what he was signing and therefore had known about the shift in

the positioning of the STP and had agreed to the amendment. It must

be remembered that Pegasus had all these time approved the interim

certificates for progress payments to the Defendant and Pegasus would

have also known about this error when it signed the relevant stage

28


payment. Since Pegasus was in the employ of the Plaintiff, at the very

least Pegasus', knowledge of this fact must be imputed to the Plaintiff. If

Pegasus saw it fit not to inform the Plaintiff about the error it was not for

the Plaintiff to lay the burden wholly on the Defendant to inform it of the

error, seeing especially that the Plaintiff was under the duty to provide

the site information / demarcation in the first place.

[42] In this context I am disturbed by the fact that the Plaintiff did not

see it fit to call Pegasus or its representative as the Plaintiff's witness

seeing that Pegasus was the Plaintiff's consulting engineer for the STP

project. Likewise, the Plaintiff had failed to call its surveyor who had

surveyed the Site. I therefore invoke the provisions of section 114(g) of

the Evidence Act against the Plaintiff for failing to call these persons as

its witnesses.

[43] In the circumstances, I agree with the learned counsel for the

Defendant's submission that the Plaintiff is now estopped from denying

that it had knowledge of the error and had signed the Amended Plan in

order to have it submitted to the relevant authority for that authority's

approva l . The Amended P lan moreover was sen t to the re levan t

29


authority for its approval via Pegasus's letter dated 20.12.2005 at page

45, B and was carbon copied to the Plaintiff.

[44] Since I have found that the Defendant was not at fault in building

the STP out of position and that the defence of estoppel applied against

the Plaintiff, I therefore dismiss the Plaintiff's claim for general damages

in respect of the so-called encroachment by the Defendant into the

buffer zone.

H. Whether the Defendant had delayed in completing and

handing over the STP on or before 31.12.2005.

[45] The Contract completion date was agreed to be on 31.12.2005.

But the STP was only completed and handed over to the Sewerage

Service Department on 13.7.2006 (page 32, B; page 48 Notes of

Evidence), after a delay of 193 days

[46] The Defendant's defence was that:-

46.1. there was no delay;

46.2. the Plaintiff, vide Pegasus, had on 21.12.2005 forwarded the

Amended Plan signed by the Plaintiff and which was approved

on 23.1.2006;

30


46.3. even if there was any delay the parties had waived the time limit

as evidenced by the fact that the Plaintiff had made payments for

the sum of RM1,215,050.00 or 90% of the said Contract sum

without any objection nor dispute, between the period 2005 until

2007 and had not set off its alleged claim for LAD;

46.4. the Plaintiff had failed to obtain the electricity supply as was

required under Appendix A, page 3, B, Clause 8.1 of the said

Contract, seeing that Tenaga Nasional would install the electricity

meter only on 26.5.2006 (page 129, B);

46.5. the Plaintiff had made all the payments under the said Contract

from 2005 to 2007 without raising any objection nor dispute on the

delay in completion and handover of the STP;

46.6. in view of the above, the Plaintiff was estopped from raising this

issue.

[47] The Plaintiff submitted that:-

47.1. the Defendant's witness, SD2 had admitted that as at 15.1.2006,

the works were not completed yet as no testing and

commissioning had been done (page 48, Notes of Evidence);

47.2. with reference to the Defendant's letter to Pegasus on page 56, B,

31


dated 12.1.2006, requesting for extension of time, SD2 had

confirmed that the Defendant did not receive any response from

Pegasus. Neither did the Defendant adduce any evidence to

show that the Plaintiff had specifically waived the time limit (page

49, Notes of Evidence);

47.3. as for the Plaintiffs failure to obtain the electricity supply, SD2 had

admitted that the Defendant did have temporary electricity supply

and had given unsatisfactory explanation as to why the Defendant

could not do the testing and commissioning by saying that the

electricity was for light usage only (page 48, Notes of Evidence).

SD2 had also failed to explain why the Defendant did not apply for

an extension of time by reason of there was no supply of electricity

other than to state that supply of electricity was not within the

scope of the Defendant's work (page 49, Notes of Evidence);

47.4. if the non-supply of electricity was the main reason for the delay,

the least the Defendant should have done was to put it on record

to the Plaintiff and to Pegasus, which would shield the Defendant

from any claim of LAD. As the Defendant failed to do so, it

showed that the delay was never caused by the Plaintiff's failure to

obtain electricity supply.

32


[48] The Plaintiff therefore submitted based on section 75 of the

Contracts Act 1950 and Sakinas Sdn. Bhd v. Slew Yik Hau & Anor

[2002] 5 MLJ 497 it was entitled to recover LAD at the rate of

RM1,500.00 per day x 193 days = RM289,500.00

[49] Once again I wish to reiterate that the said Contract was a design

and build contract whereby upon the Defendant presenting its bills for

payments, the Plaintiff, through Pegasus issuing the Progress Payment

Certificates, would have to honour the said payments. The fact that the

Plaintiff had made the progress payments to the Defendant did not

mean that the Plaintiff had waived its rights to claim LAD against the

Defendant. After all, it was very important for the Plaintiff that the

Defendant completed the construction of the STP so as not to cause the

Plaintiff itself in delaying the completion of its housing and commercial

shop lots project. Whatever dispute it may have with the Defendant

could be taken up at a later time, and which the Plaintiff did in this

action. As for the setting - off issue, that was exactly what the Plaintiff

did by refusing to pay the balance of the said Contract price of

RM129,998.00 to the Defendant.

33


[50] As for the non-supply of electricity, I agree with the submission of

learned counsel for the Plaintiff that it was not the cause of the

Defendant's delay in completing the STP. In the first place, and as

admitted by SD2, there was a temporary supply of electricity to the Site

which could easily be used for the purposes of testing and

commissioning the STP. Secondly, if it was true that a proper supply

of electricity was required by the Defendant for the express purpose of

testing and commissioning the STP, it is hard to understand why the

Defendant failed to apply for an extension of time seeing that the

electricity supply was required for the testing and commissioning of the

STP, being within the scope of works of the Defendant. The Defendant

saw it fit to apply for an extension of time for soil testing and piling

design, shortage of bakau piles and rain factor in its letter dated

12.1.2006 to Pegasus (pages 56-61, B), and yet did not see it fit to apply

for an extension of time in regard to the electricity supply essential to its

completion of the STP works. This served to show to me that the non-

supply of the electricity to the Site by the Plaintiff was not essential as

there was a temporary supply of electricity and it did not cause the delay

in the completion of the STP. Further, as Pegasus failed to respond to

the Defendant's request for an extension of time and nothing was done

34


by the Defendant to pursue the matter, there was no extension of time

granted to the Defendant by the Plaintiff.

[51] Be that as it may, since the Plaintiff, vide Pegasus, had forwarded

the Amended Plan to the relevant authority on 21.12,2005, which was

approved on 23.1.2006, it is only fair to me to allow the Defendant an

extension of time of 33 days (from 21.12.2005 to 23.1.2006) to enable

the Defendant to accommodate the time required to wait for the outcome

of the relevant authority's approval. This would mean the Defendant is

to be faulted for 160 days delay in completing the STP, which in turn

means the Plaintiff is entitled to a LAD of 160 days x RM1,500.00 =

RM240,000.00. I do so hold as the parties had not disputed on the rate

of the LAD and I regard the rate as being reasonable in the

circumstances.

I. Whether the Superintending Engineer/ Pegasus had

erroneously issued the Certificate of Practical Completion

dated 2.1.2006.

[52] The CPC dated 2.1.2006 (CPC) was issued by Pegasus (pages

5455, B).

35


[53] It was the Plaintiff's submission that:-

53.1. the CPC was invalid as it had been issued by mistake or without

legal basis;

53.2. the Plaintiff's contention was supported by the fact that the

Defendant had on or about 12.1.2006, about 12 days after the

purported issuance of the CPC, requested for an extension of time

to complete the works and to extend the physical completion to

15.1.2006 (pages 56-61, B);

53.3. SD2 had admitted that as at 15.1.2006 the works were not yet

completed as no testing nor commissioning had been done (page

48, Notes of Evidence);

53.4. and yet Pegasus continued to issue 3 Progress Payment

Certificates No. 5 dated 24.1.2006 (pages 26-27, B), No. 6 dated

24.8.2006 (pages 67-68, B) and No. 7 dated 24.9.2007 (pages 75-

76, B) after the issuance of the CPC. It was absurd of Pegasus to

have issued the CPC when substantial works were still in

progress;

53.5. it is well established principle of law that the date of Practical

Completion usually indicates the end of the construction period

and the commencement of the period of making good defects and

36


the defect liability period; end of the period of the contractor's

general possession of the site, site responsibility and full control

reverts to the employer / owner; end of certification of regular

interim payments etc. (see pages 301 - 302, Nigel M. Robinson,

et al, Construction Law in Singapore and Malaysia , Second

Edition, Butterworths Asis, 1996). However, the factual matrix of

this case showed the opposite state of affairs after the issuance of

the CPC. The physical possession of the STP was given to the

Sewerage Service Department on 13.7.2006 (page 32, B) and 3

Progress Payment Certificates amounting to RM529,998.00 were

issued after the date of Practical Completion.

[54] It was submitted by the Defendant that:-

54.1. this issue raised by the Plaintiff was a non-issue;

54.2. the Plaintiff had never disputed nor questioned the actions taken

by Pegasus in particular Pegasus's action in issuing all the

Progrerss Payment Certificates and the CPC before the filing of

this action;

54.3. the Plaintiff had made payments to the Defendant from 2005 to

2007 based on the Progress Payment Certificates issued by

Pegasus without registering any protest or dispute;

37


54.4. the Plaintiff did not raise any objection nor dispute against the

issuance of the CPC dated 2.1,2006 until the Defendant filed the

2009 Case in the Sessions Court on 4.8.2008;

54.5. the Plaintiff did not institute any action against Pegasus in respect

of the CPC nor added Pegasus as a party in this suit;

54.6. the Plaintiff had admitted to receiving the STP in 2006 without

raising any objection, dispute against the Defendant nor with

Pegasus;

54.7. moreover, Pegasus was the Plaintiff's representative and or agent

in respect of the STP project.

[55] Even though Pegasus was engaged by the Plaintiff as the

superintending engineer, Pegasus's role cannot be purely said to be that

of an employee of the Plaintiff nor its agent for the purposes of the

said Contract. Even though the said Contract between the Plaintiff and

Defendant was an informal one (there was no form of contract executed

between them) I am of the view that the basic principles pertaining to the

role of a superintending engineer or architect, as the case may be, are

applicable to Pegasus. This role of Pegasus can be understood by my

quoting extracts from case law as follows:-

38


Syar i ka t Ong Yoke L in Sdn . Bhd . v. Gian t Cash and Carry Sdn .

Bhd & Ors [2000] 4 CLJ 733 (H.C. ) @ 759: -

As alluded to earlier, the third defendant was a mere architect of the

Giant hypermarket. The third defendant was employed by the first

defendant. The duties of the third defendant as an architect and the

obligat ions that f lowed under i t can readi ly be seen in exhibi t TUH

1 of encl. 11. According to the case of Sutcliffe v. Thackrah And

Others [1974] 2 WLR 295, the architect has got certain roles to play

Lord Reid described the posit ion of the architect in that case in these

fine words (see page 299 of the report):-

Now I can come to the pos i t ion o f an a rch i t ec t . He i s emplo yed

by the bui lding owner but has no contract with the contractor. We

d o n o t i n t h i s c a s e h a v e o c c a s i o n t o c o n s i d e r w h e t h e r

never theless he may have some duty to the contractor : I do not

think that a considera t ion of that matter would help in the present

case. The R.I .B.A. form of contract sets out the archi tect ' s

functions in great detail. It has often been said, I think rightly, that

the archi tect has two different types of funct ion to perform. In

many matters he is bound to act on his c l ient ' s ins truct ions ,

whether he agrees with them or not ; but in many other mat ters

requir ing profess ional ski l l he must form and act on his own

opinion.

39


Man y ma t t e r s ma y a r i se in the course o f the execu t ion o f a

bu i ld ing con t rac t where a dec i s ion has to be made which wi l l

a ffec t the amount o f money which the con t rac to r ge t s . Under

R. I .B .A. con t rac t man y such dec i s ions have to be made b y the

arch i tec t and the par t i es ag ree to accep t h i s dec i s ions . For

example , he dec ides whe ther the con t rac to r shou ld be

re imbursed fo r los s under c lause 11 (var i a t ion) , c lause 24

(d i s tu rbance) o r c l ause 34 (an t iqu i t i es ) ; whe ther he shou ld be

a l lowed ex t ra t ime (c lause 23) ; o r where work ough t r easonab l y

have been comple t ed (c lause 22) . And , pe rhaps mos t impor tan t ,

he has to dec ide whe ther work i s de fec t ive . These dec i s ions wi l l

be reflected in the amounts contained in certificates issued by the

arch i tec t .

The building owner and the contrac tor make their contrac t on the

understanding that in all such matters the architect will act in a fair

and unbiased manner and i t mus t therefore be implici t in the

owner 's contract with the archi tect that he shal l not only exerc ise

due care and ski l l but a lso reach such decis ions fa ir ly, holding the

balance between his cl ient and the contrac tor.

I t would be cor rec t to say tha t the du ty o f the a rch i tec t i s to i s sue

certificate and certify whether the contractor has met its contractual

obligation so as to entitle the contractor to receive interim payments

during the progress of the works. In discharging i ts duty, the architect

40


must be seen to be impar t i a l and mus t ac t f a i l y and p rofess iona l l y

when exerc i s ing i t s independen t j udgmen t . I f the a rch i tec t f a i l s to

fu l f i l these requ i rements , the aggr ieved par ty ma y cha l lenge the

dec i s ion o f the a rch i t ec t .

Hiap Hong & Co. Pte L td v. Ong Huat Deve lopment Co (P te )L td [2001] 2 SLR 458 (C.A. S ingapore) a t pages 464 , 465 : -

15. It is settled law that an architect under a building contract is not

an arbi trator. But he has a dual funct ion. In the words of Lord Reid

in Sutc l i f f e v. Thackrah [1974] AC 727 a t 737 ; [1974] 1 Al l ER 859

at 863: ' In many mat ters he is bound to act on his cl ient ' s

ins truct ions , whether he agrees with them or not ; but in many other

mat ters requir ing profess ional ski l l , he must form and act on his own

opinion ' .

16. I t is equal ly set t led law that an owner and a contrac tor would

have made their contract on the unders tanding tha t in al l matters

where the archi tec t has to apply his profess ional ski l l and judgment,

the archi tect wil l act in a fair and unbiased manner in applying the

terms of the contract . Such mat ters wil l inc lude the issue of

certificates for payments and the grant of extension of time. While an

archi tec t under such a contrac t is the employer ' s agent , in the

exercise of his funct ions requir ing ski l l and judgment, he must act

fai ly and profess ional ly and nei ther par ty should seek to unfair ly or

unduly inf luence him in the discharge of those funct ions .

41


At page 470:-

35. It is vitally important to bear in mind the nature of the duties of the

architect when he I exercising the function of a certifier, As stated

before, it is settled law that he is to act faily and independently. He is not

subject to the directions or instructions of either party although he must

listen to both parties before he arrives at his own decision. Thus, in

exercising the function of certification the architect cannot be the agent

of the owners. The nature of that function is wholly inconsistent with the

architect being an agent of the owner. In Emden's Construction Law

Issue 56/Jun 1999 at p. II 275 the authors stated 'When issuing

certificates the architect or other certifier is not acting as the employer's

agent but must form and act on his own opinion.' In 4(2) Halsbury's

Laws of England (4th Ed Reissue) the learned authors stated that the

architect's duties as certifier are different from his duties as agent or

arbitrator although sometimes it is not easy to distinguish them.'

36. It is true that the architect is employed by the owner and to that extent

the latter has control over him. But such control must necessarily be

confined to matters in which the architect acts as the owner's agent and

not in relation to matters where the architect is accorded a special role

under the contract and where he is expected to exercise independent

judgment. In para 6.228 of Hudson's the authors, after referring to

matters on which the owner exercises control over the architect, go on to

state that 'the owner of necessity ceases to be entitled to control (the

42


architect's) activities in relation to the matter he is called upon to decide,

whether as certifier or arbitrator.

The role of the superintending engineer as elucidated above must

necessarily include his role as the issuer of the Certificate of Practical

Completion, not only for the purpose of issuing Progress Payment

Certificate. Based on the said role played by Pegasus vis the Plaintiff

and the Defendant, the CPC issued by Pegasus can be challenged by

the Plaintiff for illegality.

[56] Even though it was most regrettable that the Plaintiff did not see it

fit to sue Pegasus in this action nor call the representative of Pegasus

as its witness, but based on the factual matrix of this case and in respect

of this issue on the legality of the CPC, I hold that the CPC was wrongly

issued by Pegasus and therefore was invalid.

[57] I agree with the submissions of learned counsel for the Plaintiff on

this issue. I hold that Pegasus in issuing the 3 Progress Payment

Certificates Nos. 5 to 7 amounting to RM529,998.00 or 39% of the

Contract Sum after the CPC was issued showed very clearly that a

substantial portion of the works in completing the STP had yet to be

43


done by the Defendant. That being the case, it was premature of

Pegasus to have issued the CPC. On top of that, the testing,

commissioning and handing over of the STP was only completed on

13.7.2006, that is, over 6 months after the CPC was issued.

[58] The progress payments made by the Plaintiff to the Defendant vis

Progress Payment Certificates Nos. 5 to 7 cannot prevent the Plaintiff

from challenging the decision of Pegasus since the Plaintiff was only

doing that which it was obliged to do by virtue of the said Progress

Payment Certificates being issued by Pegasus. It is an established

principle that an interim certificate is a condition precedent to payment.

any party aggrieved by the amount stated as due in a certificate can only

challenge it at arbitration or to commence an action for damages for

breach after issuance of the Certificate of Practical Completion. [See

Nigel M. Robinson, Construction Law in Singapore and Malaysia

(supra) at pages 344-346].

[59] As for the Defendant's contention that the Plaintiff had filed this

action only after the Defendant had filed the 2009 Case on 4.8.2008 at

Batu Pahat Sessions Court, I note the Plaintiff's submission that the

44


Plaintiff, through its previous solicitors, did send a Letter of Demand

dated 3.7.2007 on pages 69 - 70, B, to the Defendant demanding

damages and compensation in respect of the breaches of contract

pertaining to the construction of the STP, that is, before the date the

Defendant filed the 2009 Case in the Batu Pahat Sessions Court. The

Defendant's contention therefore had no merits.

[60] I consequently hold that the CPC should have been issued much

later on and certainly not on 2.1.2006.

J. Whether the Plaintiff owed the Defendant the sum of

RM129,998.00, being the balance of the contract sum

remaining unpaid.

[61] According to the Defendant's pleadings, and which was not

disputed by the Plaintiff in so far as the Progress Payment Certificates

and payments had been made to the Defendant vis the said Certificates,

Pegasus had issued 7 Progress Payment Certificates as follows:-

Certificate No. Date of Certificate Amount (RM)

1 6.9.2005 36,450.00

2 3.10.2005 182,880.00

45


3 7.11.2005 141,885.00

4 19.12.2005 453,835.00

5 24.1.2006 414,950.00

7 24.9.2007 80,702.88To t a l p a y m e n t t o

b e m a d e1,345,048.00

[62] The Plaintiff had made 7 progress payments as follows:-

Date Amount (RM)

29.9.2005 36,450.00

17.10.2005 182,880.00

24.1.2006 522,113.50

4.5.2006 73,606.50

30.8.2006 150,000.00

3.11.2006 150,000.00

7.2.2007 100,000.00

Total Payment made 1,215,050.00

46


This meant that there was a balance of RM129,998.00 due from and

owing by the Plaintiff to the Defendant. The Defendant now claims from

the Plaintiff the said amount seeing that the Defects Liability Period had

ended in 2007.

[63] The Plaintif on the other hand alleged that it had never agreed to

the reduction in the Contract Sum by the use of cheaper bakau piles by

the Defendant, that the said sum was not owed by the Plaintiff to the

Defendant or alternatively was set-off with the amount accrued and

owed by the Defendant to the Plaintiff in the 2008 Case.

[64] In view of the fact that the Plaintiff did not see it fit to bring

Pegasus as a party to the 2008 Case, nor call a representative of

Pegasus as a witness, I take the view that the Plaintiff did not wish to

dispute the said Progress Payment Certificates issued by Pegasus. It

would also appear to me that the Plaintiff was contented to accept the

Defendant's Projected Cost of RM95,048.00 as a result of the use of

bakau pile wholly on the Site which then reduced the Contract Sum from

RM1,350,000/- to RM1,345,048. That being the case, I find that as the

Plaintiff had only paid the Defendant the total sum of RM1,215,050.00,

the sum of RM129,998.00 is still due and payable from the Plaintiff to

47


the Defendant. However, this sum is ordered to be set - off against the

sums I have ruled to be payable by the Defendant to the Plaintiff as

damages in the 2008 Case.

K. CONCLUSION:

[65] For the reasons stated above I make the following orders:-

The 2008 Case.

65.1. special damages comprising of:-

(i) deductions in cost of piling material at RM4,952.00 -

allowed;

(ii) LAD of RM240,000.00 - allowed;

65.2. general damages as a result of the encroachment into the buffer

zone - disallowed;

65.3. a declaration that the CPC issued by Pegasus on 2.1.2006 is null

and void - allowed;

65.4. costs at RM15,000.00 - allowed;

65.5. interest at 5% per annum from the date of judgment until judgment

is satisfied - allowed;

The 2009 Case.

65.6. the sum of RM129,998.00 shall be payable by the Plaintiff to

48


the Defendant and which shall be set-off from the sums due

from the Defendant to the Plaintiff in the 2008 Case;

65.7. costs at RM15,000.00 - allowed;

65.8. interest on the sum of RM129,998.00 at 4% per annum from the

date of filing of the Summons (4.8.2008) to the date of judgment

and at 5% per annum from the date of judgment until judgment is

satisfied - allowed.

(UMI KALTHUM ABDUL MAJID)Judge

High Court Muar

Dated: 14 DECEMBER 2012

49


Counsels:

For the plaintiff - Gideon Tan; M/s Gideon Tan Razali Zaini

Peguambela & Peguamcara812, 8th Floor, Block A, Kelana Square17, Jalan SS 7/2647301 Petaling Jaya, Selangor Darul Ehsan

For the defendant - M/s Mogan Karupiah

Peguambela & Peguamcara380-C, Sin Hoe GardenBukit Baru75150 Melaka.

50

effect of progressive payment on lad, interim payment certificates

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