Kurdamai Construction and Engineering Sdn Bhd v Innoseven Sdn Bhd and 3 Others
Civil Appeal No. W-02-2809-11/2012; Court of Appeal
Date of Judgment: 02 September 2014 (Date of Judgment: 13th August 2014) | Source: Federal Court Registry



CIVIL APPEAL NO: W-02-2809-11/2012








[In the Matter of High Court of Malaya at Kuala Lumpur [Civil Division] Civil Suit No: NCVC2 (S4)-22-904-2006]


Kurdamai Construction And Engineering Sdn. Bhd. ... Plaintiff


1. Innoseven Sdn. Bhd.

2. Abdul Rahim Bin Talib ... Defendants

[Disatukan menurut suatu Perintah Mahkamah bertarikh 17 Ogos 2010]

[In the Matter of High Court of Malaya at Kuala Lumpur; Suit No: S10(S3)-22-875-2008]


Kurdamai Construction And Engineering Sdn. Bhd. ... Plaintiff


1. Innoseven Sdn. Bhd

2. Abdul Rahim Bin Talib

3. Hamimesa Bin Mohamed

4. Syarikat Perumahan Negara Berhad ... Defendants

CORAM: Abdul Wahab Patail, JCA, Aziah Ali, JCA, Lim Yee Lan, JCA


[1] This is an appeal by a sub-contractor Kurdamai Construction And Engineering Sdn. Bhd. ("the Appellant") against the decision of the High Court in Civil Suit No: (S10)S4-22-904-2006 against Innoseven Sdn. Bhd. ("the Main Contractor") and company director, Abdul Rahim Bin Talib, and in Civil Suit No: (S10)S3-22-875- 2008 against Innoseven Sdn. Bhd. ("the Main Contractor"), company directors Abdul Rahim Bin Talib and Hamimesa Bin Mohamed, and Syarikat Perumahan Negara Berhad ("SPNB"), inter-alia as follows:

(a) Civil Suit No: (S10)S4-22-904-2006

i) Allowed claim for Interim Progress Payment No. 10 for RM894,000.00 less the following to the Main Contractor:

(a) RM50,000.00 Yuran Pengurusan;

(b) RM36,000.00 Provisional Works;

(c) RM140,000.00 replacement of non-compliant pipes; and

(d) RM83,326.52.00 for project transportation.

(b) Civil Suit No: (S10)S3-22-875-2008

i) Dismissed claim by the Appellant;

ii) Dismissed counter-claim by the Main-Contractor;

iii) The Appellant failed to prove conspiracy;

iv) RM746,000.00 paid by the Main Contractor into the Project Account in respect of interim Progress Payment No. 11 and No. 12 to be repaid to the Main Contractor;

v) RM736,029.60 as "Final Account" to be paid by SPNB to the Main Contractor; and

vi) Performance Bond to be returned to the Appellant.

Brief Background

[2] The case for the Appellant may be summarised as follows.

[3] Desirous to revive an abandoned project, SPNB awarded a contract ("the Main Contract") for "Cadangan Pemulihan Perumahan Taman Desa Rakyat Perdana yang mengandungi 1030 Unit Rumah Pangsa Kos Rendah 5 Tingkat Di atas Lot PTD 115591 Seluas 28.74 Ekar, Jalan Kong-Kong, Mukim Plentong, Daerah Johor Bharu, Johor" ("the Project") on 28/4/2005 to the Main Contractor. Practical Completion for the Project was certified in or early June 2008. The Certificate of Fitness for Occupation was issued on 6/8/2006 for part of the Project and 31/3/2007 for the balance.

[4] Almost a month later on 16/5/2002, the Main Contractor awarded to the Appellant a Sub-Contract. At the same time as the sub-contract, the Main Contractor executed a Deed of Assignment and a Power of Attorney in favour of the Appellant. Following delivery by the Appellant to the Main Contractor of a performance bond as required by way of a bank guarantee for the sum of RM671,500.00, the Main Contractor, on 11/5/2005, issued an "irrevocable mandate" to Public Bank that all payments received under the Main Contract are to be paid into the "Project Account". The Appellant was notified of this arrangement by the Main Contractor's letter of 18/7/2005.

[5] The sub-contract commenced on 17/5/2005 and was completed 15/5/2006.

[6] There is no dispute that the Appellant had been paid up to interim Progress Payment No. 9. Dispute began with interim Progress Payment No. 10 for the sum of RM894,000.00 which was received but which failed to be paid into the Project Account.

[7] The Appellant obtained an ex-parte injunction on 8/9/2006, and a mandatory injunction on 13/2/2007 for the interim payment under interim Progress Payment No. 10 to be paid into the Project Account.

[8] The Appellant was evicted from the site in October 2006, after termination dated 21/9/2006 by the Main Contractor.

[9] The Appellant maintains it had completed its obligations under the Sub-Contract.

[10] The Appellant commenced the two civil suits -

(a) Guaman Sivil No: S10(S4)-22-904-2006 for breach of contract, breach of trust, fraud and deceit and sought against the Main Contractor and its director:

i) declarations that the entire contract had been assigned to the Appellant and therefore the Appellant was entitled to perform all obligations and to all sums paid into the Project Account from the Main Contract;

ii) judgement for the sum of RM894,000.00;

iii) interest at 8% from date of breach to full settlement;

iv) costs; and

v) such other orders as the Court thinks fit.

(b) Guaman Sivil No: S10(S3)-22-875-2008 for wrongful termination on 21/9/2006 by the Main Contractor; breach by the Main Contractor and its two directors to divert funds from SPNB from the Project Account; complicity of SPNB with the breach by the Main Contractor and its directors; wrongful demand on performance bond by SPNB; unjust enrichment by the Main Contractor, its directors and SPNB; conspiracy by the Main Contractor, its directors and SPNB; and sought:

i) declaration that the Main Contractor and its directors are liable to the Appellant as constructive trustee of the funds received form SPNB;

ii) declaration that SPNB is liable to the Appellant as constructive trustee for all monies for the project other than from the Project Account;

iii) judgement for RM3,439,133.52.00;

iv) declaration that SPNB is not entitled to call upon the performance bond;

v) order that RM671,500.00 be returned to Public Bank Berhad if it had been paid out by the Bank;

vi) general damages;

vii) an account for all benefit, profits, enrichment obtained as a result of their breach;

viii) RM3,000,000.00 damages "keterlaluan";

ix) RM3,000,000.00 damages "teladan";

x) interest at 8%;

xi) costs; and

xii) such other and/or further reliefs as the Court thinks fit.

[11] The responses are as follows:

(a) Guaman Sivil No: (S10)S4-22-904-2006 the Main Contractor and its director counter-claimed for -

i) declarations that:

(1) the deed of assignment and power of attorney are illegal and null and void;

(2) the Main Contractor is entitled to all payments from SPNB;

(3) the Appellant is responsible to the purchasers for all claims during the defect liability period under the Main Contract;

(4) judgement be entered for losses as a result of abandonment of work by the Appellant:

(a) RM592,112.50.00 for contract omission;

(b) RM315,000.00 for works to complete the project;

(c) RM50,000.00 for management fee for Progress Payment No. 10;

(d) reimbursement for any liquidated and ascertained damages, and on disputed claims assessed by SPNB;

(e) RM300,000.00 to Main Contractor for claims by purchasers during the defect liability period;

(f) exemplary, punitive and exemplary damages;

(g) interest at 8% to full settlement;

(h) costs; and

(i) such orders as the Court thinks fit.

(b) Guaman Sivil No: (S10)S3-22-875-2008

i) SPMB pleaded:

(1) the performance bond was by the Main Contractor;

(2) it was not privy to the arrangements between the Main Contractor and its Appellant, specifically the sub-contract, the deed of assignment, power of attorney between them;

(3) no document to show SPMB conspired or joined with the Main Contractor to injure the Appellant;

(4) call on performance bond was a bona fide act on breach by the Main Contractor; and

(5) Appellant prevented from making claim against SPMB by estoppel, acquiescence and conduct.

ii) The Appellant joined issue and pleaded:

(1) SPMB knew of the sub-contract, deed of assignment and power of attorney and the need to make all payments to the Project Account;

(2) SPMB never objected to payments being made into the Project Account or assignment of the Main Contract before the interim Progress Payment No 10 where SPMB complied with making payments into the Project Account;

(3) SPMB is estopped from denying the validity of the subcontract, deed of assignment, power of attorney and the need to make payments into the Project Account;

(4) Conduct of SPMB is unconscionable.

Appeal Submissions for Appellant

[12] Before us, written submissions were made for the Appellant under the following headings which we address ad seriatim. Having heard oral submissions, we had reserved our decision.

Ground 1, 3 and 4 Memorandum of Appeal

[13] This comprised the following grounds from the Memorandum of Appeal:

(a) membuat pendapatan bahawa Plaintif telah ditamatkan kontraknya dengan secara tidak salah dan/atau Plaintif tidak memberi sebarang maklum balas atau persoalan berkenaan penamatan kontrak Plaintif.

(b) membuat pendapatan bahawa Plaintif enggan dan/atau abai untuk menyiapkan Projek, yang mana sebenarnya Plaintif dihalau keluar daripada tapak Projek.

(c) gagal meneliti fakta dan membuat pendapatan bahawa penamatan kontrak Plaintif tersebut adalah secara tidak salah dan/atau tidak bercanggah dengan Klausa 17.2 Sub-Kontrak yang memperuntukkan Plaintif perlu diberikan notis 30 hari berserta senarai kerja-kerja defek yang perlu diperbetulkan dan/atau diperbaiki.

[14] Before us, the submissions on these issues stressed the money spent by the Appellant, that the photographs relied upon to show works not done do not show the percentage of work done, and while denying there was work done by the Main Contractor or SPMB, it was submitted that the work cannot be to the amount as claimed because the defects certified in the Final Account is only RM179,093.00.

[15] The only point that might be of substance is the submission with reference to Clause 17.2 of the sub-contract that the subcontractor be given 30 days' notice to remedy the defects notified. Even so, the submission made was:

"18. Ia berkaitan dengan konspirasi antara Responden-Responden yang boleh dilihat pada atau sekitar September/Oktober 2006, apabila pekerjapekerja Perayu dihalau daripada tapak Projek oleh Responden Pertama (setelah kontrak Perayu ditamatkan tanpa notis yang sewajarnya dan/atau tidak mengikut peruntukan Sub-Kontrak), SP2 telah menghubungi SD3 untuk mendapatkan bantuan beliau terhadap tindakan Responden Pertama tersebut. Namun, SD3 hanya telah menasihatkan Perayu supaya beredar daripada tapak Projek buat sementara dahulu dan cuba untuk menyelesaikan masalah itu dengan Responden Pertama, akan tetapi tiada tindakan lanjut yang sewajarnya diberikan oleh Responden Ke-4."

[16] The notice of termination was issued by the Main Contractor. It had nothing to do with SPMB. We, therefore, find this part of the submission lead to nowhere.

[17] It was submitted:

"19. Adalah undang-undang yang mantap bahawa notis berkenaan kerja-kerja defek adalah perlu diberi kepada Sub-kontraktor sebelum Sub-kontraktor tersebut boleh disabitkan/libel, sebaliknya sekiranya Kontraktor Utama membaiki kerja-kerja defek tersebut sendirinya maka Kontraktor Utama tersebut tidak boleh bergantung kepada klausa defek terhadap Sub-kontraktor (rujuk Keating On Building Contracts by Sir Anthony May, TAB 1, Ikatan Otoriti Perayu di m/s 246-247).

[18] The submission against termination addresses termination for failure to remedy defects notified. It does not address termination by non-performance in completing only 96.4% of the Project.

[19] It was also submitted:

"20. Sebagai tambahan, Perayu berhujah bahawa sekiranya betul wujudnya kerja-kerja defek yang tulen yang sememangnya tidak diperbetulkan, Responden Ke-4 pasti tidak akan membuat bayaran lanjutan ke dalam Akaun Projek kerana terdapatnya jumlah sebanyak RM1,598,012.12 yang sebenarnya telah diperakukan oleh Konsultan Projek (setelah ditolak bayaran kepada Subkontraktor- Sub-kontraktor Pihak Ketiga yang telah dilantik oleh Responden Pertama/Responden Ke-4) yang mana jumlah RM1,598,012.12 tersebut sepatutnya dibayar ke dalam Akaun Projek (rujuk Rekod Rayuan Jilid 2 (Bahagian C), m/s 1539)."

"21. Perayu percaya bahawa sepanjang tempoh perbicaraan kes ini keterangan yang telah diberikan oleh SP2 berkenaan surat tersebut tidak langsung dipertikaikan/dinafikan dan penamatan salah Perayu juga tidak diperjelaskan oleh Responden-Responden."

[20] The argument is that if there was in fact defects to be remedied, SPMB would not have made payment into the Project Account because there exists of RM1,598,012.12 that had been certified and not paid. We were not shown what is the connection. We find the argument in this submission not coherent.

[21] In considering the above, we observe that it is the case for the Appellant that it had completed its work by 15/5/2006, and that in the Minutes of Client Consultant Meeting No. 13 dated 8/6/2006 it is recorded that progress of work as on 7/6/2006 was 96.4% and this was not denied by SD1.

[22] In Nirwana Construction Sdn Bhd v Pengarah Jabatan Kerja Raya Negeri Sembilan Darul Khusus & Anor [2008] 4 MLJ 157 at 179, the Court of Appeal declared (per Zainun Ali JCA) the doctrine as to damages on breach of contract:

"It is now established by the doctrine of substantial performance that a promisor who has substantially performed his side of the contract may sue on the contract for the agreed sum, though he remains liable in damages for his partial failure to fulfil his contractual obligations."

[23] In our minds, the 96.4% of work is unquestionably substantial performance and entitles the Appellant to seek payment. While the doctrine of substantial performance entitles the Appellant to seek payment, it does not entitle the Appellant to be paid for the remaining work not done, and/or for defective work. Nor does it disentitle the Main Contractor from terminating the contract and to evict the Appellant from the site if the Appellant fails to complete the balance of work not done, or fails or refuses to rectify the defective works. We note there is no dispute that a termination notice was in fact issued on 21/9/2006.

[24] The Appellant had claimed an amount payable if (a) the works were 100% completed, and (b) there were no defects. The learned Judicial Commissioner had addressed the works not done on the basis of the evidence before the Court, and ordered deductions from the amount claimed. The submissions argued the High Court had erred, but no effort was made to demonstrate to this Court from the evidence where the High Court erred in arriving in its findings and conclusion.

[25] A ground of appeal is stated in the Memorandum of Appeal to give notice to the other party, thereby giving the other party fair and ample opportunity to address the ground of appeal. To succeed in its appeal, the Appellant is expected, at the hearing of the appeal, to substantiate its ground of appeal by demonstrating, on that ground, where the error is, how the court appealed from had erred, that the error affected the merits and therefore warrants appellate intervention to correct the injustice that had resulted from that error. It is not sufficient for an appellant merely to present arguments to support the grounds it had set out in the memorandum of appeal, and to expect the appellate court to comb through the record of proceedings and the evidence to make out the case for the appellant. In our view, since the independence and impartiality of a court is fundamental to a fair hearing and decision, a court cannot abandon its non-partisan, neutral, even-handed, objective, dispassionate yet open and fair22 minded approach to maintain impartiality to make out the case for a party that does not do it for itself.

[26] We had reserved our decision with the thought that we would check the evidence in the Record of Appeal in order to determine what had been proved. Seeking a guide as to the extent we can do so led us to the above consideration and conclusion. The system of justice is adversarial not because it is a contest of arguments, but means that it is for each party to make out its case for itself. It cannot depend upon another, and least of all the court.

[27] We cannot therefore intervene.

Ground 2 Memorandum of Appeal

[28] This comprised the following ground from the Memorandum of Appeal:

(a) Gagal untuk mempertimbangkan bahawa Defendan-Defendan telah menyerahhakkan Projek tersebut kepada Plaintif.

[29] On this issue, the Appellant relied upon the following:

(a) "SD1 telah memberi keterangan bahawa Responden Pertama telah pun membuat bayaran-bayaran progresif, hanya setakat Bayaran Progresif No. 1 sehingga No. 9 ke dalam Akaun Projek tersebut, dan Bayaran Progresif No. 10 hanya dibayar ke dalam Akaun Projek setelah Perayu memperolehi Perintah-Perintah Injunksi tersebut terhadap Responden Pertama."

(b) "SD1 semasa pemeriksaan balas, telah memberi keterangan bahawa tuntutan Perayu antara lain adalah segala bayaran yang patut dibayar di bawah Kontrak Utama tersebut untuk kerja-kerja Projek tersebut. Pada masa yang sama juga telah mengakui bahawa Projek tersebut telah diserahhakkan kepada Perayu, Perayu telah melaksanakan Projek tersebut dan patut dibayar bagi kerja-kerja yang telah dilakukan."

(c) "SD1 melalui eksibit-eksibit "D10" dan "D11" di soalan-soalan nombor 6 dan 8 bahawa Responden Pertama pada setiap masa yang material bersedia untuk membayar Perayu untuk kerja-kerja Projek tersebut yang telah disiapkan oleh Perayu."

[30] It was submitted that since the Main Contractor only objected to the validity of the sub-contract, the deed of assignment and the power of attorney by a letter dated 23/1/2006 and had not raised any dispute earlier, and had made progress payments No. 1 to No. 9 into the Project Account, this shows the "niat jahat" and/or with mala fide of the Main Contractor when it tried to divert progress payment No. 10 by directing SPMB, by letter dated 2/8/2006, to pay the progress payment into a new account and not the Project Account. But even though the submission went to argue "niat jahat" and mala fides, the conclusion of the submission is only as to the following:

"29. Lantaran itu, melalui keterangan saksi-saksi Perayu, SD1, SD2 dan juga dokumen-dokumen Sub-Kontrak, DOA dan POA adalah jelas nyata dan terang bahawa wujudnya kontrak yang sahih dan mengikat diantara Responden Pertama dan Perayu."

[31] In our view, the evidence shows conduct and relationship between parties where work is performed by the Appellant, and payments for work done by the Appellant and received by the Main Contractor from SPMB is paid into the Project Account. The ground, by itself, however does not lead to any need to correct the decision of the High Court.

Ground 5 Memorandum of Appeal

[32] This comprised the following ground from the Memorandum of Appeal:

(a) Memutuskan bahawa Sijil Layak Menduduki ("Certificate of Fitness for Occupancy/CFO") yang diperolehi Plaintif adalah secara salah dan/atau telah diperolehi berdasarkan kerjakerja yang telah disiapkan oleh sub-kontraktor pihak ketiga atas ketidaksempurnaan kerjakerja Plaintif.

[33] The submission that the issue of the Certificate of Fitness for occupancy means that the Project was completed by the Appellant is without merit, for the reason that the issue of it has nothing to do with whether it was the Sub-contractor who completed the project. It does not matter who completed the project.

[34] We therefore find no merit on this ground of appeal.

Ground 7 Memorandum of Appeal

[35] This comprised the following grounds from the Memorandum of Appeal:

(a) Gagal untuk mempertimbangkan bahawa LAD yang dikenakan adalah minima, yang mana penangguhan tidak mungkin terlalu lama. Tambahan pula, Kontrak adalah diserahhakkan kepada Plaintif, bahkan Defendan-Defendan telah berkali-kali membuat percubaan untuk menyelewengkan wang Projek.

[36] This ground is to the effect that the learned Judicial Commissioner had failed to take into consideration that:

(a) the LAD is minimal, where the delay is not too long;

(b) the main contract was assigned to the Appellant; and

(c) the Main Contractor, its directors and SPMB had many times tried to divert the project monies.

[37] Before this Court, the point of the submission is not made clear. It merely paints a broad outline of what it claims the High Court failed to take into consideration, but fails to address how that failure results in such injustice on the merits of the claim which warrants intervention by an appellate court. S. 72 Courts of Judicature Act 1964 (Revised 1972) Act 91 provides that "No judgment or order of the High Court, or of any Judge, shall be reversed or substantially varied on appeal, nor a new trial ordered by the Court of Appeal, on account of any error, defect, or irregularity, whether in the decision or otherwise, not affecting the merits or the jurisdiction of the Court."

[38] In our view, the High Court directed its attention to evidence of the claim, work not done and as to rectification of defect, and made orders accordingly.

[39] The grounds above and the submission thereon for the Appellant do not address and demonstrate where the High Court erred in arriving at its decision and in making the orders that it made.

Ground 6 Memorandum of Appeal

[40] This comprised the following ground from the Memorandum of Appeal:

(a) Memutuskan untuk menerima keterangan SD2 bahawa keputusan untuk mengarahkan Defendan Ke-4 untuk membuat Bayaran Progresif Interim No. 10 ke dalam akaun selain daripada Projek Akaun adalah semata-mata suatu transaksi perniagaan dan tidak berunsurkan frod atau penipuan mahupun ia bertujuan untuk melanggar terma-terma Sub-Kontrak.

[41] It is trite that when someone did not receive what he expected and feels somehow cheated, he says there is fraud. Such "colloquial fraud" or colloquialism is far from what is recognised in law as fraud. In law, fraud must be proved beyond reasonable doubt. It involves proof beyond reasonable doubt of the intention to defraud, i.e. an intentional misrepresentation to another of material existing fact with knowledge of its falsity for the purpose of inducing that other to act or rely upon and resulting in injury or damage to that person. There is no evidence on record of any intention on the part of the Main Contractor or SPMB at the time the sub-contract was awarded that they intend to seek the Sub-Contractor to perform works but would be denied payment. The payment of Progress Payments 1-9 negates any fraudulent intent. Nor is there evidence of any intention not to pay when the Appellant commenced the works under Progress Payment 10.

[42] The non-payment to the Appellant by not crediting the monies into the Project Account to which the Appellant had access was simply non-payment, and if unwarranted, amounts, in law, to a breach of contract.

[43] We find the allegation so totally without foundation and illconceived, that the arguments therefor amounts to no more than a perverse construction of the facts to support an otherwise empty allegation of fraud. We hold that the High Court did not err in rejecting that there was fraud.

Ground 8, 11, 12 and 13 Memorandum of Appeal

[44] This comprised the following grounds from the Memorandum of Appeal:

(a) membuat pendapatan bahawa Defendan-Defendan hanya mengkehendaki tuntutannya ditolak ("set-off) daripada jumlah wang RM894,000 adalah berniat jahat dan/atau tidak suci ("perverse"];

(b) gagal meneliti fakta dan undang-undang apabila membuat pendapatan bahawa tiada unsur-unsur konspirasi terhadap Defendan-Defendan dibuktikan oleh Plaintif;

(c) membuat pendapatan fakta bahawa Plaintif dalam kegagalan membuktikan unsur-unsur konspirasi terhadap Defendan-Defendan, telah memutuskan jumlah RM746,000 yang dibayar oleh Defendan Ke- 4 ke dalam Akaun Projek mengikut Perintah- Perintah Injunksi Mahkamah bertarikh 08.09.2006 dan 13.02.2007 dalam tindakan ini berkaitan Bayaran Interim No. 11 dan No. 12, dikembalikan kepada Defendan Ke-4;

(d) gagal untuk mengambilkira bahawa Bayaran Interim No. 11 dan 12 telah dicemari ("tainted") dan bayaran tersebut tidak disahkan.

[45] The point in Ground 8 has been dealt with immediately above.

[46] Perusal of the written submissions shows that notwithstanding the grounds above, the submissions launched upon the following:

(a) That SPMB is an accessory to the Main Contractor and its directors, and relied upon Royal Brunei Airlines Sdn Bhd v Tan Kok Ming [1996] 2 CLJ 380; [1995] 3 MLJ 74 for the proposition that SPMB -

i) thereby became a constructive trustee;

ii) by assisting the Main Contractor to breach the injunction, committed contempt of court (T.O Thomas v Asia Fishing Industry [1997] 1 MLJ 15);

(b) That all monies for the project are trust money, the Main Contractor, its directors and SPMB cannot utilize the money as set-off for their claims (ESPL (M) Sdn Bhd v Radio & General Engineering Sdn Bhd [2005] 2 ML] 422);

[47] In ESPL (M) Sdn Bhd v Radio & General Engineering Sdn Bhd (supra), it was specifically provided in the sub-contract at clause 27.1 that the monies was held as a trust fund to pay labourers, suppliers and sub-subcontractors for the project. It was not demonstrated there is any such clause in this case. Our own efforts failed to unearth such clause. Similarly, it was not demonstrated to this Court that there was an injunction against SPMB that it cannot make any funds available to the Main Contractor to pay other subcontractors who completed the works and to rectify defects. A nonpayment amounting to a breach of contract with a contractor cannot prevent a project owner or developer from engaging another contractor to complete the works so that sales and purchase contracts to 3rd parties can be honoured or to remedy defects to honour similar contracts to 3rd parties, for the dispute as to nonpayment is purely a breach of contract for which monetary compensation is adequate remedy.

[48] Royal Brunei Airlines Sdn Bhd v Tan Kok Ming (supra) provides no assistance. In that case, it was held that the proceeds of sales of the airline tickets were held in trust by the travel agent company whose rights was only to a commission on ticket sales, and therefore cannot use the monies from sales of tickets for conduct of its business.

[49] In our view, the non-payment to the Appellant amounted to a breach of contract as to payment simply results in a debt owed by the Main Contractor, for which the remedy is to mount a civil suit, but provides no raw material to embroider a case for breach of trust, injunction and contempt of court in their efforts to meet the obligations to the purchasers delivery to whom had been long delayed.

Ground 9 and 10 Memorandum of Appeal

[50] This comprised the following grounds from the Memorandum of Appeal:

(a) Memutuskan bahawa jumlah tuntutan Plaintif dibenarkan untuk Bayaran Progresif Interim No. 10, iaitu RM894,000.00, setelah ditolak, antara lainnya, RM36,600.00 untuk Kerja-Kerja Provisional yang telah diambil alih oleh Defendan Pertama daripada Plaintif dan tolakan RM140,000.00 untuk paip-paip yang tidak mematuhi spesifikasi kontrak, yang mana Plaintif telah membayar terlebih dahulu kepada Defendan Pertama bagi Kerja-Kerja Provisional tersebut sebelum diambil alih dan juga yang mana Plaintif telah menyiapkan kerja kontraktualnya bagi kerja-kerja paip yang mematuhi spesifikasi kontrak.

[51] The written submission at paragraph 49 to 55 thereof -

(a) complained of as to when payment was made to 3rd party contractors for provisional works;

(b) asserted "Perayu sebenarnya telah menyiapkan kerja kontraktualnya antara lain bagi kerja-kerja pemasangan paip dan meter air yang mematuhi spesifikasi Kontrak Utama asalnya akan tetapi kemudiannya terdapat arahan baru untuk penukarannya mengikut spesifikasi baru setelah Perayu ditamatkan kontraknya tanpa diberi notis/peluang untuk membaikinya." and "justeru itu, Responden Pertama telah melantik sub-kontraktor pihak ketiga yang baru ...";

(c) that the "Final Account", showing a difference between the claim for "APK/VO" and/or rectification and the AI/EI issued by the Project Consultant shows "Ini merupakan satu percubaan muslihat oleh Responden-Responden bagi mengaburi mata pihakpihak. "

[52] We cannot fathom the relevance as to when the 3rd party contractors were paid. It is no unusual in urgent cases to take the risk of loss in making advance payments for the purpose of enabling the contractor to start quickly and proceed with work smoothly. SPMB and the Main Contractor are entitled to issue variation orders, and the consequences of inability of the sub-contractor to perform the variation order is no different from inability to perform any other obligation. That there was a difference between the project consultants AI/ED and the claims for the variation orders underlines that one is the project consultant's estimates, while the costs of the variation orders do not are determined by the contactors available within the time frame required and the process of the demand. It is therefore no evidence of any trick or fraud (muslihat).

[53] It was submitted:

53. Kerja-kerja yang dilakukan oleh Sub-kontraktor Pihak Ketiga tersebut juga boleh dipersoalkan dan/atau "unconscionable" kerana tiada sebarang dokumen mahupun Bayaran Interim No. 11 dan No. 12 tersebut mempunyai sebarang penjelasan lanjut berkenaan kerja-kerja benar yang telah dilakukan ('details of actual work done') bagi pembaikan defek, sebagaimana contoh adanya penjelasan tersebut bagi Bayaran Interim Progresif No. 10. (rujuk Rekod Rayuan Jilid 2 (Bahagian C) Eksibit "P62" di m/s l506-1527). Jumlah diperakukan pun tiada dan juga tarikh penilaian turut tiada.

[54] The basic principle of the system of civil litigation is simple. A plaintiff's statement of claim gives notice of the cause of action and the facts he relies upon. A defendant's statement of defence gives notice of the cause of action and the facts that he disputes. The defect of the rules of court is that it does not state who does what next. If a defendant disputes a fact relied upon by the plaintiff and whether the defendant puts the plaintiff to proof or not, the fact he disputes means the plaintiff is required to disclose the nature of the evidence he relies upon in respect of that fact. The disclosure must be made as soon as possible after close of pleadings. The disclosure of the nature of the evidence relied upon demonstrates that the fact asserted by the plaintiff is not a bare assertion, but is founded on some evidence. It enables the defendant to check and determine whether he requires interrogatories and/or discovery and production in order to verify the authenticity of the evidence relied upon. A defendant does likewise in respect of facts he asserts, enabling the plaintiff the opportunity to check, and determine whether he needs interrogatories and/or discovery and production to verify the authenticity of the evidence relied upon by the defendant. At the end of the exercise, both parties would have before them the undisputed facts and the evidence in respect of disputed facts, and knows that if the matter proceeds to trial, what would be the facts and the evidence the Court will be looking at. That knowledge allows parties to make an informed decision whether to settle and on what terms. At first case management, parties can inform the registrar whether the matter is settled in full, or in part and record judgement in respect of it, and what part remains to be tried. Trial time would be minimized and confined to determination of credibility of witnesses before proceeding to hear submissions on the whole of the case.

[55] The first case management date is also the occasion for parties to raise such matters as failure or refusal to answer interrogatories, or to produce documents for verification as to authenticity, and it is for the registrar then to issue, where warranted "unless orders" to answer an interrogatory or to produce a document within a number of days failing which, what will be the adverse presumptions drawn, and no evidence in contradiction may be admitted. In such case, a second case management date need to be set.

[56] The above ensures that assertions are addressed so that assertions made in Court have basis founded upon evidence. The evidence may be circumstantial or equivocal, but in such case the alternatives should also be addressed so that the balance of probabilities can be examined. No effort to do so was attempted in this case. While it is for the Court to make its findings and conclusion, it is not for the Court to make out a party's case for him on the basis of his arguments. If the Court did so, the other party cannot be faulted for thinking the Court is biased in favour of the other party.

[57] We, therefore, dismiss these grounds of appeal.

Ground 14, 15 and 16 Memorandum of Appeal

[58] This comprised the following grounds from the Memorandum of Appeal:

(a) Gagal meneliti fakta dan undang-undang telah memutuskan bahawa jumlah RM736,029.69 iaitu Bayaran Terakhir mengikut "Final Account", yang tidak pernah dituntut oleh Defendan-Defendan kecuali dibangkitkan tuntutannya oleh Responden Pertama ketika penghujahan dan juga yang sepatutnya diberikan kepada Plaintif kerana ia merupakan baki wang amanah kontraktual ("contractual trust money") dibawah Kontrak Utama bagi Projek, diberikan kepada Defendan Pertama;

(b) apabila membuat pendapatan bahawa walaupun tidak terdapat priviti Kontrak ("privity of contract") di antara Plaintif dan Defendan Ke-4, namun Defendan Ke-4 adalah liable sebagai pemegang amanah konstruktif ("constructive trustee");

(c) gagal meneliti fakta bahawa sepanjang perbicaraan, SD1 dan SD2 mengakui bahawa jumlah RM736,029.69 bukannya kepunyaan mereka dan/atau mereka tidak berhak kepadanya. Dan apabila SD3 dan SD4 disoal balas berkenaan jumlah wang tersebut, mereka turut tidak dapat memberi penjelasan berkenaan dengannya akan tetapi menyatakan hanya "Quantity Surveyor" ("QS") bagi Projek dapat menjelaskannya yang mana QS tersebut tidak langsung dipanggil sebagai saksi sehingga penghujung perbicaraan.

[59] But the submissions were:

56. ... pihak Perayu mengulangi perenggan-perenggan 41 sehingga 48 di atas dan menegaskan bahawa dalam ketiadaan dokumen yang jelas menunjukkan bahawa Responden Ke-4 dengan nyata bersetuju akan wang bayaran Projek dibayar kepada Perayu melalui Akaun Projek, akan tetapi jelas tiada pertikaian bahawa Responden Ke-4 mempunyai pengetahuan berkenaan dengan susunan pembayaran ke dalam Akaun Projek.

57. Seterusnya, walaupun Responden Ke-4 enggan untuk menghiraukan dan/atau tidak endah kepada status pembayaran progresif Projek tersebut dengan alas an bahawa tiada "no privity of contract" di antara Responden Ke-4 dan Perayu (rujuk Rekod Rayuan Jilid 2 (Bahagian C) Eksibit "P6", m/s 1662}, namun ketika satu mesyuarat sekitar tarikh 25.03.2007, SPl ditemani oleh peguamcaranya ketika itu, Puan Parameswari dari Tetuan R.S. Seelan, Parames & Co., SD3 memaklumkan bahawa bayaran-bayaran progresif daripada Responden Ke-4. selain setakat yang telah diterima Perayu pada ketika itu. telah dibayar akan tetapi bukan ke dalam Akaun Projek tersebut. (rujuk Rekod Rayuan Jilid 2 (Bahagian C) Eksibit "P5", m/s 1657-1661).

58. Boleh disimpulkan di sini bahawa Responden Ke-4 ada membuat pembayaran seperti yang diminta oleh Responden Pertama melalui surat 12.11.2006 (rujuk Rekod Rayuan Jilid 1 (Bahagian C), m/s 1189), yang mana Responden Pertama turut berjanji unit-unit rumah akan diberi kepada pembeli-pembeli dalam masa terdekat dan memberi jaminan dan/atau akujanji kepada Responden Ke- 4 bahawa Responden Ke-4 bebas dan tidak akan disabitkan dengan liabiliti-liabiliti di dalam Guaman 22-904- 2006.

59. Pada masa yang sama, Perayu dan peguamcara terdahulunya turut menulis surat bertarikh 07.12.2006 memberi notis kepada Responden Ke-4 berkenaan Guaman 22-904-2006 dan semua bayaran progresif selanjutnya dimasukkan ke dalam Akaun Projek (rujuk Rekod Rayuan Jilid 1 (Bahagian C), m/s 1278-1280). Sebaliknya, Responden Ke-4 memilih untuk tidak mengendahkan kesemua notis dan makluman Perayu pada masa material, dan memilih untuk terus membuat bayaran lanjut bagi kerja-kerja Projek tersebut ke dalam akaun yang selain daripada Akaun Projek.

60. Suatu "judicial notice" haruslah diambilkira di mana sepanjang perbicaraan di Mahkamah Tinggi Kuala Lumpur, SD1 dan SD2 mengakui bahawa jumlah Bayaran Terakhir mengikut "Final Account" sebanyak RM736,029.69 sepanjang masa material bukannya kepunyaan mereka dan/atau mereka tidak berhak kepadanya, kecuali dibangkitkan tuntutannya oleh Responden Pertama ketika penghujahan.

61. Apabila SD3 dan SD4 disoal balas berkenaan jumlah wang tersebut, mereka turut tidak dapat memberi penjelasan berkenaan dengannya akan tetapi menyatakan hanya "Quantity Surveyor" ("QS") bagi Projek dapat menjelaskannya yang mana QS tersebut tidak langsung dipanggil sebagai saksi sehingga penghujung perbicaraan.

62. Jumlah tersebut sepatutnya diberikan kepada Perayukerana ia merupakan baki wang amanah kontraktual ("contractual trust money") dibawah Kontrak Utama bagi Projek. Maka. terdapat priviti kontrak ("privity of contract") di antara Perayu dan Responden Ke-4 dan Responden Ke-4 adalah liabel/bertanggungjawab sebagai pemegang amanah konstruktif ("constructive trustee"), jelas dapat dilihat bahawa Responden Ke-4 adalah merupakan aksesori di dalam membantu Responden-Responden Pertama, Ke-2 dan Ke-3 di dalam memungkiri amanah ("breach of trust").

63. Oleh yang demikian, berdasarkan pelbagai fakta-fakta dan/keadaan-keadaan tersebut di atas, ia jelas menunjukkan dan membuktikan bahawa Responden Ke-4 merupakan pemegang amanah konstruktif ("constructive trustee") untuk memastikan kesemua bayaran yang patut dibayar bagi Projek di bawah Kontrak Utama, yang merupakan harta amanah ("trust property"), dibuat secara tidak boleh dibatalkan ("irrevocable") ke dalam Projek Akaun bagi pihak Plaintif (rujuk ESPL (M) Sdn Bhd v Radio & General Engineering Sdn Bhd supra, TAB 6, Ikatan Otoriti Perayu, per Gopal Sri Ram JCA [pada ketika itu) di m/s 423 HELD (2) dan 427-429 para 7,10,11 dan 12).

[60] We have addressed ESPL (M) Sdn Bhd v Radio & General Engineering Sdn Bhd (supra) earlier above and held it is distinguishable on the facts and is therefore of no assistance to the case for the Appellant. There is no direct or specific evidence SPMB held the money on trust for any party. In our view, there is no legal principle that the monies payable under a contract ipso facto becomes money held on trust to pay the contractor. In the said case, there was a specific clause where the parties agreed the money was held on trust.

[61] We, therefore, dismiss these grounds of appeal.

Ground 17 and 18 Memorandum of Appeal

[62] This comprised the following grounds from the Memorandum of Appeal:

(a) Gagal meneliti fakta dan tidak memutuskan dan/atau mengambilkira berkenaan kerja-kerja variasi/tambahan ("VO") yang telah dilakukan oleh Plaintif bagi Projek tersebut.

(b) membuat pendapatan bahawa tiada bukti unsurunsur konspirasi. Wang Projek yang kononnya disahkan dan senarai kerja-kerja variasi/tambahan ("VO") telah dipalsukan ("concocted") oleh Defendan Ke-4 berbanding dokumen-dokumen kontemporari ("contemporaneous documents") Plaintif.

[63] The case for the Appellant is that the claim for RM3,439,133.52 for payment due including variation orders had been pleaded, and asserting that the Sub-contractor had performed the work, the Appellant had submitted a "Final Claim" (Exhibit P13).

[64] It was submitted:

"67. Sebagai tambahan, Perayu turut berhujah bahawa kerja-kerja VO yang dilakukan oleh Perayu adalah selaras dan seperti dengan di dalam 'Bill of Quantity' Kontrak Utama, namun jika dibandingkan dengan kerja-kerja VO yang kononnya didakwa dilakukan oleh Responden Pertama adalah tidak munasabah."

[65] Yet no effort was made to demonstrate why or how it was "tidak munasabah", to enable this Court to consider the submission and to convince this Court that the High Court had erred. The Court was left to sort and find out for itself.

[66] We hold that since the Appellant had failed to demonstrate where the High Court had erred as alleged, there is no reason to intervene, and to do so would be contrary to section 72 of the Courts of Judicature Act.

Jawapan Kepada Rayuan Balas Responden Pertama Ke-2 dan Ke-3

[67] This comprised the following submissions:

(a) Perayu berhujah bahawa berdasarkan satu Minit Mesyuarat Klien-Konsultan No.13 bertarikh 08.06.2006, ia menunjukkan bahawa kemajuan kerja-kerja Projek tersebut sehingga 07.06.2006 adalah sebanyak 96.40% dan ketidaksempurnaan dan/atau baki kerja-kerja tidak siap adalah 'of minor effect'/kecil sekali. Iaitu 3.60%. Ini telah diperakui kesahihannya dan/atau tidak dinafikan langsung oleh SD1 apabila disoal balas. Sebagai tambahan juga, Eksibit "P62" turut menunjukkan sedemikian dan Perayu juga tidak diberi notis dan/atau peluang sewajarnya berkenaan kerja-kerja defek untuk diperbaiki oleh Perayu yang mana sepatutnya dimaklumkan oleh Responden-Responden.

(b) Responden-Responden tidak langsung memanggil "Quantity Surveyor" ("QS") sebagai saksi seperti yang dimaklumkan sepanjang perbicaraan dan peguamcara Responden-Responden tidak memaklumkan bahawa Responden-Responden tidak mempunyai kes untuk dijawab semasa perbicaraan di Mahkamah Tinggi Kuala Lumpur, semua keterangan yang dikemukakan oleh Perayu haruslah dan sepatutnya diterima sebagai benar oleh Yang Arif Pesuruhjaya Kehakiman di dalam kes ini. (Rujuk kes Jaafar bin Shaari & Anor (suing as administrators of the estate of Shofiah bte Ahmad, deceased) v- Tan Lip Eng & Anor [1997] 3 MLJ 693, dan Takako Sakao v Ng Pek Yuen [2010] 1 CLJ 381.

(c) Kesimpulan Perayu dengan rendah dirinya berhujah dan memohon bahawa baki Bayaran Progresif Interim No. 10 sebanyak RM309,326.52 yang telah diberikan kepada Responden Pertama oleh Mahkamah Tinggi Kuala Lumpur pada 05.11.2012 (RM894,000, iaitu jumlah Bayaran Progresif No. 10 - RM584,673.48, iaitu jumlah yang dibenarkan oleh Mahkamah Tinggi Kuala Lumpur di bawah Bayaran Progresif No. 10), bahawa jumlah baki di dalam Akaun Projek sebanyak RM736,029.69 iaitu Bayaran Terakhir mengikut "Final Account", dan juga bahawa jumlah RM3,439,133.52 yang merupakan jumlah yang patut dibayar dan terhutang kepada Perayu, termasuk juga kerja-kerja VO kesemuanya dibayar dan/atau diberi semula kepada Perayu "as of contractual right".

[68] The cross-appeal was not pursued. There is no necessity to address the above.

[69] In conclusion, we would say that the law of contracts is codified and well established. It is not for the Courts to legislate by introducing legal rights against those who are not party to the contract between the Appellant and its Main Contractor. In so far as the action is founded upon the tort of fraud and conspiracy, it is clear that the Appellant had failed to prove its case.

[70] The Appellant's appeal is, therefore, dismissed with costs. Costs is fixed at RM10,000.00 for the 4th Respondent. Costs is fixed at RM45,000.00 here and below for the 1st , 2nd and 3rd Respondents. Deposit is to be refunded.


Court of Appeal, Malaysia

Dated: 02 September 2014

For the Appellant: Mr. Mohd Firuz Jaffril & Mr. Abdullah Bin Abdul Rahman, Messrs Firuz Jaffril, Aidil & Zarina, Lot 3A-13 & 3A-13A, 4th Floor, No. 1, Jalan PJU 8/5G, Perdana The Place, Bandar Damansara Perdana, 47820 Petaling Jaya, Selangor

For the 1st, 2nd & 3rd Respondents: Mr. Vinod Sharma, Messrs Raihan Sharma & Co No. 57, Jalan Medang Serai, Bukit Bandaraya Bangsar, 59100 Kuala Lumpur

For the 4th Respondent: Mr. Helmi Bin Hamzah & Mr. Mohd Rosly Khady Bin Ayub, Messrs Hisham Sobri & Kadir, Level 20, Menara MARA, 232, Jalan Tuanku Abdul Rahman, 50100 Kuala Lumpur

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