Imej Warisan Sdn Bhd v Weida Environmental Technology Sdn

Bhd
HIGH COURT (KOTA KINABALU)
CHEW SOO HO J
SUIT NO KK-22175 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 terms 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).

(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).

(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
35033538.
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:

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 valuers 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
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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 614EG and 615CD).

(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 616EG).