Imej Warisan Sdn Bhd V Weida Environmental Technology Sdn Bhd 2ec51

Imej Warisan Sdn Bhd v Weida Environmental Technology Sdn Bhd HIGH COURT (KOTA KINABALU) CHEW SOO HO J SUIT NO KK-22–175 OF 2011 20 December 2013 Contract — Building contract — Breach — Design and build contract — Discovery of cracks due to settlement — Piling works done by employer — Contractor failing to carry out rectification works despite architect's instruction to make good tilting problem — Whether employer entitled to employ third party to carry out rectification works — Whether contractor liable for costs of rectification works — Whether fundamental breach — Whether loss naturally arising in usual course of things — Contracts Act 1950 s 74(1) The plaintiff was the contractor for a construction project. The defendant was appointed by the plaintiff as a subcontract to design and build the sewage treatment plants ('the STPs') in the said project. Upon completion of the STPs, during the defects liability period the plaintiff discovered cracks on the walls of one of the STP which was tilting to a differential settlement of at least 400mm. When the defendant failed to carry out the rectification works on the STP in accordance with the recommendations of the consultant engineer, the plaintiff carried out the rectification at a total costs of RM602,580. The plaintiff therefore claimed the sum of RM602,580 being damages arising from the breach of contract by the defendant. The defendant denied liability to rectify the defects and claimed that they had constructed the STP according to the instructions and design of the consultant engineer and that they had duly performed the piling works using the plaintiff's piling rig to the satisfaction of the plaintiff. The defendant counterclaimed for the sum of RM122,550.32 being the subcontract fees still due and owing by the plaintiff. Held, allowing the plaintiff's claim with costs and allowing the counterclaim in part with no order as to costs: 

(1) The architect had issued instruction to the defendant to make good permanently the tilting problem of the STP and when the defendant failed or neglected to do so, the plaintiff could rely on common law principles to engage other contractor to carry out the work that was not properly performed. The failure to comply with the and conditions of the contract by failure or refusal to make good the defects could be construed as a breach of the contract. The plaintiff could also rely on s 74(1) of the Contracts Act 1950 to claim compensation for the loss or damage caused by the defendant, which naturally arose in the usual course of things from the breach the parties knew when they made the contract to be likely to result from the breach of it. A breach of a fundamental term of the contract will attract compensation for the loss or damage arising out of the breach. The plaintiff's claim was within the law (see para 20).

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(2) The defence had not come up with any technical report on the tilting to draw a conclusion that it was due to the plaintiff's piles or the change in design and specification that caused the said tilting. The defendant was the contracting party to this design and build contract. They must be conversant and must be satisfied with all technical nature of the work to be carried out as well as to complete the construction without defects of a substantial nature. Even if the pile was to be made available by the plaintiff, the defendant still held the responsibility and obligation to ensure that it was the correct and proper one to be used and could not follow blindly if it was inappropriate or unsuitable especially so when they were obligated under the contract to design and build and must therefore perform in conformity with their expertise. It was unacceptable to shift the blame to others when they had not shown that they had satisfied their fundamental obligation to build in the manner that the STP was well structured and safe. The defence was not meritorious and sustainable (see para 21).

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(3) The defence's counterclaim was allowed in the sum of RM92,290.32 and this sum was to be set-off from the judgment sum of RM602,580 with no orders as to costs (see para 23).

Notes For cases on breach, see 3(2) Mallal's Digest (4th Ed, 2013 Reissue) paras 3503–3538. Cases referred to Teh Khem On & Anor v Yeoh & Wu Development Sdn Bhd & Ors [1995] 2 MLJ 663; [1996] 2 CLJ 1105, HC (refd) Legislation referred to Contracts Act 1950 s 74(1) Evidence Act 1950 s 114(g) Sri Marina Tiu (Yap Chin & Tiu) for the plaintiff. Ronny Cham (Ronny Cham & Co) for the defendant.

GREAVES & CO (CONTRACTORS) LTD -V- BAYNHAM MEIKLE & PARTNERS; CA 1975 JULY 9, 2015 DLS LEAVE A COMMENT

References: [1975] 3 All ER 99, [1975] 1 WLR 1095, [1975] 2 Lloyds Rep 325 Coram: Lord Denning MR Consultant engineers were instructed to design a warehouse, the first floor of which, as they knew, was to be used for storing drums of oil that would be moved around by fork-lift trucks. The warehouse was built to the engineers’ design but after a few months’ use the first floor began to crack because it was not strong enough to bear the loads imposed on it. The main contractor, by whom the engineers had been employed, made a claim against them alleging that they had impliedly warranted that their design would produce a building fit for its intended use. Held: Despite recognising that a professional man does not normally undertake an unqualified obligation to produce the desired result, the exchanges between the parties were such as to give rise to an implied term that the warehouse as designed would be fit for the purpose for which it was required. Those who provide professional services do not generally give an unqualified undertaking to produce the desired result. Lord Denning MR said: ‘Apply this to the employment of a professional man. The law does not usually imply a warranty that he will achieve the desired result, but only a term that he will use reasonable care and skill. The surgeon does not warrant that he will cure the patient. Nor does the solicitor warrant that he will win the case.’ This case cites:

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Cited – Samuels -v- Davis ([1943] K.B. 526)

When a dentist agrees to make a set of false teeth for a patient, there is an implied warranty that they will fit his gums. . . This case is cited by: 

Cited – Platform Funding Ltd -v- Bank of Scotland Plc

(Formerly Halifax Plc) CA (Bailii, [2008] EWCA Civ 930, Times) The parties disputed the extent of duty owed by a surveyor to a lender relying on his valuation of a property to be loaned. Held: The valuer’s appeal failed. The valuer had valued the wrong property, after being misled by the borrower. The . .  Cited – Thake -v- Maurice CA ([1986] 2 WLR 337, [1986] QB 644, [1986] 1 All ER 497) A vasectomy was performed. The husband was told that contraception precautions were not necessary but a child was born. The claim was brought in contract and in tort. The first instance court found no reason why public policy prevented the recovery . . KEMAYAN CONSTRUCTION SDN BHD v PRESTARA SDN BHD Find out more 

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HIGH COURT (KUALA LUMPUR) KAMALANATHAN RATNAM JC COMPANIES WINDING-UP NO D5-28-310 OF 1996 13 June 1997 Contract — Building contract — Claim for work done — Failure of contractor to rectify defects — Whether such failure would justify refusal to make payment for work done Companies and Corporations — Winding up — Inability to pay debt — Bona fide dispute as to whether debt owing to petitioner — Filing of petition to wind up company even though petitioner's breach under the contract had yet to be remedied — Whether filing of petition was premature — Whether demand of the petitioner was excessive The respondent had signed a building contract ('the contract') with a contractor ('the original contractor'). Subsequently, the respondent, the petitioner and the original contractor entered into a deed

of novation whereby, inter alia, the original contractor was released from the performance of the contract and the petitioner was substituted in its place accordingly. On 6 October 1995, the architect to the project ('the architect') certified Interim Certificate No 15 for a sum of RM1,106,099.57. On 9 October 1995, the architect issued a certificate of practical completion with a list of defects to be rectified by the petitioner within the 12-month defects liability period. On 16 November 1995, the architect issued Interim Certificate No 16 for a sum of RM1,646,782.94. The petitioner failed to remedy the defects and complete the works. The respondent therefore refused to pay the petitioner. On 19 August 1996, the petitioner filed a petition as well as the statutory notice of demand pursuant to s 218 of the Companies Act 1965 demanding the total sum of RM2,752,882.51 based on Interim Certificate Nos 15 and 16. The respondent disputed the debt on the basis that the building constructed had been found to have various defects. In its submission, the petitioner contended that the balance one moiety of the retention sum was sufficient to cover all the rectification costs and that therefore the respondent ought to honour the two interim certificates. The architect's letter dated 11 April 1996 ('the architect's letter') that the costs of rectification would be deducted from the retention sum was produced. Held, dismissing the petition 

(1) Under the contract, the petitioner had an obligation to comply with the architect's instructions and to rectify the defects at its own cost pursuant to the architect's instructions. It was not open to the petitioner to argue that since it had not been paid it was entitled to disregard the architect's instructions and refuse to rectify the defects. Therefore, it was the petitioner's breach in 1997 5 MLJ 608 at 609 the first instance that prompted the respondent to exercise its rights under the contract to withhold payment.Thus, for the purposes of a right to wind up, the failure of the petitioner to comply with the architect's directive with regard to the defects clearly and without a doubt gave the respondent a right to dispute the interim certificate and it followed therefore that the debt was in dispute. The respondent was thus justified in refusing to pay the petitioner.Further, the filing of the petition was premature as the contract required the petitioner to rectify the defects within the 12-month defects liability period. As a result of the breach on the part of the petitioner, the respondent was entitled under the contract to deduct from the interim certificates for the rectification works. On this issue too, there was a bona fide dispute on the demand by the petitioner (see pp 614E—G and 615C—D).

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(2) It was uncertain from the available evidence and submission whether the retention sum was sufficient to cover all the rectification works, as the major rectification works had yet to be carried out. In any event, the architect's letter by itself served to override the release of one moiety of the retention sum under Interim Certificate No 16. If indeed the architect was of the opinion that the balance one moiety was sufficient to cover the defective works, he would have written '… deducted from the balance one moiety of the retention sum'. In the circumstances, the demand of the petitioner which included one half of the retention sum was excessive, thus rendering the s 218 notice invalid (see pp 615F and 616E—G).