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[Suit No. 22-119-2011]

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MALAYSIA

IN THE HIGH COURT OF SABAH AND SARAWAK AT KUCHING

SUIT NO. KCH-22-119-2011

BETWEEN

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7 GOLDEN ANTS DYNASTY SDN BHD

8 (Company No. 740215-T)

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PLAINTIFF

No. 205, 1

st

Floor

10 Green Ville Park Shophouse

11 Jalan Batu Kitang

12 93250 Kuching

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16 NAIM CENDERA SDN BHD

17 (Company No. 261213-T)

Floor, Wisma Naim

18

9 th

AND

19 2½ Jalan Rock

20 93200 Kuching Sarawak

DEFENDANT

21

GROUNDS OF DECISION

22 1.

23 following:

In this action the Plaintiff claims against the Defendant for the

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a.

The sum of RM959,282.28 being the additional cost

incurred by the Plaintiff for the additional work;

b.

Alternatively, the sum of RM959,282.28 for additional

work carried out on a quantum meruit basis.

c.

Further and/or alternatively, damages for breach of

contract to be assessed by the Honourable Court;

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d. Interest on all sums payable under prayers (a), (b) and (c)

hereof at 8% per annum from the date of practical

May 2008, till the

completion of the works, namely 29

th

date of final payment;

e.

Such further and other relief as the Honourable Court may

deem just; and

f.

Costs.

The Plaintiff’s Case

November, 2007 ["LOA"]

issued by Naim Cendera Holding Bhd, the Plaintiff was

appointed as the contractor for the Defendant to carry out site

clearance and earthworks for the proposed affordable housing

development project on Lot 4710, Block 14, Salak Land

District, Kuching, Sarawak [Package A] ["the Work"] for the

sum of RM3,383,580.00 ["the Contract Sum"].

2. By a Letter of Award dated 16

th

3.

4.

Naim Cendera Holding Bhd. is the Holding company which

had appointed its subsidiary/associate company, the Defendant,

to enter into the contract with the Plaintiff, which the Plaintiff

agreed.

Due to the urgency of the Work, the Defendant gave the

Plaintiff only one day to prepare and submit their quotation for

the Work. Neither the Plaintiff nor the Defendant had carried

out actual survey work on the site. The Plaintiff relied on the

topographical survey of the site, which the Defendant supplied

to them, to prepare the quotation.

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5.

6.

7.

During the price negotiation stage of the tender, the Plaintiff

requested for 35% - 40% settlement and compaction of the

earth fill, as the site was situated on a swampy land. The

Defendant, relying on the settlement data of 8% - 9% of the

adjoining “Package C” of the project, allowed the Plaintiff only

15% settlement and compaction. The Plaintiff finally accepted

15% settlement and compaction on the clear understanding that

they would be paid by the Defendant for any additional volume

of earth in excess of 380,000 cubic meters.

Due to the urgency of the Work, the Defendant handed the site

over to the Plaintiff and requested the Plaintiff to commence

the execution of the Work immediately and the Plaintiff

immediately commenced execution of the Work on 26 th

October 2007, even before the issuance of the LOA. In the

November 2007, it stated the official site November 2007.

handing over was 26

LOA issued on 16

th

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In the course of execution of the Work, the Plaintiff discovered

that the volume of earth required for the earthfill work

exceeded the agreed volume of 380,000 cubic meter under the

Contract and additional work had to be carried out to transport

the excess volume of earth ["additional work"]. The Plaintiff

informed the Defendant’s then Project Manager, Encik Abdul

Razak Ahmad Marzuki, on several occasions that the Plaintiff

would be applying for variation of the additional work. The

Project Manager instructed the Plaintiff to continue with the

earthfill work and informed the Plaintiff that their application

for variation works would be considered upon practical

completion of Work.

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8. The Work was duly completed on 28

th

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May, 2008 and handed

May, 2008. The Defects

2 over to the Defendant on 29

3 Liability period of the Work ended on 29

th

November, 2008.

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November, 2008, the Plaintiff

5 submitted to the Defendant their claim for variation on the

6 additional work. There was no decision by the Defendant

7 although several meetings were held between the Plaintiff and

8 the Defendant.

9.

On 29

th

May, 2008 and 26

th

October, 2009, the Defendant informed the Plaintiff

10 that their application for additional Work has not been

11 approved by the Defendant’s management.

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10.

On 31 st

12 11.

13 work was carried out with the full knowledge of the Defendant

14 and was duly accepted by the Defendant without any protest or

15 reservation whatsoever. As a result the Plaintiff claimed the

16 sum of RM959,282.28 being the reasonable remuneration for

17 the additional work carried out on a quantum meruit basis.

The Plaintiff claimed by way of alternative, that the additional

18 12.

Hence, the claim by the Plaintiff.

19 The Defendant’s Defence

20 13.

21 additional work.

Defendant

The

denied

there

was

urgency

of

Work

and

22 14.

October

24 2007 that the contract is based on a fixed price lump sum

25 tender.

The Defendant averred that under the Preliminary and

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Generally attached to the Plaintiff’s letter dated 23

rd

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15.

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It is provided under the Special Instruction to the Tenderer

dated 24

levels as shown on the drawings are for information only and

shall not be taken to represent the true ground levels of the site.

It is the responsibility of the Plaintiff to ascertain the existing

ground levels at their own expenses for the purpose of

computing their earthworks quantity and no claim shall be

entertained if the actual ground levels are higher or lower than

the levels indicated on the drawings.

th

October 2007 that the Plaintiff is to take note that all

It is agreed between the Plaintiff and the Defendant that

immediately after taking possession of the site and before

commencing any work, the Plaintiff shall check the actual

levels and dimension against those shown on the drawing and

immediately inform the Engineer in the event of any alleged

discrepancy. If no communication has reached the Engineer,

the Contractor shall be held to accept all levels and dimension

and no claim for extra payment in this connection will be

entertained.

It is understood between the Plaintiff and the Defendant that

the Plaintiff is only entitled to claim for the sum contracted and

shall not be entitled to any further sum for any additional work.

The Defendant, its agent and/or employee and/or representative

never led the Plaintiff into believing that the Plaintiff will be

paid for any additional work done.

Bundles of Documents

At the trial, the following Bundle of Documents have been

filed by the Parties:

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a.

Bundle of Agreed Documents marked

exhibit

BAD

[agreed only as to authenticity only];

b.

Disputed Bundle of Documents marked as DBD;

 

c.

Plaintiff’s Supplementary Bundle of Documents Volume 1

to 5 marked as PSBOD Vol. 1 to Vol. 5.

d.

Statement of Agreed Fact marked as SAF.

19.

Agreed Facts

Below are the agreed facts as per the Statement of Agreed Fact

marked SAF:

STATEMENT OF AGREED FACTS

1.

2.

3.

THE CONTRACT

Under and by virtue of award NCSB/SPNB/GADSB/2007-

0863 dated 16

the Plaintiff was the contractor of the Defendant in respect of

the execution and completion of the proposed site clearance

and earthworks for the proposed affordable housing

development on Lot 4710, Block 14, Salak Land District,

Kuching, Sarawak (Package A) (for brevity, “the Contract

Sum”).

th

November, 2007 (for brevity, “the LOA”),

The LOA was issued by Naim Cendera Holdings Bhd., who

appointed its subsidiary or associate company, the Defendant,

to enter into the contract with the Plaintiff, which the

Plaintiff agreed.

Paragraph 2 of the LOA provides that “the mode of payment

(of the Contract Sum) shall be RM3,146,729.40 in cash

through monthly progress payment and the balance of

RM236,850.60 to be set off against your (the Plaintiff’s)

purchase of properties undertaken by Desa Ilmu Sdn. Bhd. at

Kota Samarahan”.

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Paragraph 3 of the LOA provides as follows:-

“You will be required to execute in due course a Formal

Contract Agreement. However, until the Formal Contract

Agreement is executed, your quotation together with this

Letter of Acceptance and the following letter and discussion

shall constitute a binding contract between Golden Ants

Dynasty Sdn. Bhd. and Naim Cendera Sdn. Bhd. The

contract number for this Contract is NC/SPNB/ST/C05/2007.

(a) Your quotation ref. no. QUO/NAIM/1007-01 dated 23 rd

October, 2007.

(b) Your scope of works shall consist of extracting of earth

filling material at Naim Ready Mix Sdn. Bhd. borrow

pit and to transport imported earth filling including

filling up to the required level and well compacted all

(c)

to specification.

You are to carry out the works all in accordance to

drawings and specification (attached).

(d) To maintain the finished proposed platform level as

stated above for an additional three (3) months after

completion of works with Licensed Surveyor’s

endorsement.

Paragraph 8 of the LOA provides as follows:-

8. The time for completion of the project shall be 2

Months after the date of official commencement date

November, 2007 and shall be

which shall be on 26 th

completed on 25

January, 2008. Failure to complete

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the whole works by or before the Date for Completion

or within any extended time fixed under Clause 23.0 or

sub-clause 32.1(iii), we reserve the right to impose

Liquidated and Ascertained Damages (LAD) at the rate

of 0.0262% of the Contract Sum or Malaysian Ringgit:

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Eight Hundred Eight Six and Cents Fifty Only

(RM886.50) per calendar day.

6. No formal Contract Agreement had been executed between

the parties.

EXECUTION OF THE WORKS

7.

On 26

the Plaintiff and the Plaintiff immediately commenced the

October, 2007, the Defendant handed over the site to

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execution of the Works, before the issuance of the LOA on

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26

th

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November, 2007, and the official commencement date of

November, 2007, stated in the LOA.

11 8. The Plaintiff duly completed the Works in accordance with

the terms of the Contract on 29th May, 2008, as certified in

the Defendant’s Certificate of Practical Completion dated

28th July, 2008.

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15 9. The Plaintiff duly handed over the completed Works to the

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19 10.

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Defendant immediately after 29th May, 2008, and the

Defendant accepted the handover subject to the Plaintiff

making good minor defects to the Works.

The Defects Liability Period of the Works ended on 28th

November, 2008, as certified in the Defendant’s Certificate

Making Good Defects dated 13

th

February, 2009.

of

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EXTENSION OF TIME

January, 2008, the Plaintiff, vide their letter

REQ/NAIM/0108-01 of idem date, applied to the Defendant

25 for extension of time (for brevity, “EOT”) of two months to

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11. On

7 th

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complete the Works on the ground of inclement weather.

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12. On

February, 2008, the Defendant, vide their letter

NCSB/SPNB/GADSB/2008-1108 of idem date, granted the

Plaintiff EOT of two months till 25

March, 2008, to

complete the Works.

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13. The Plaintiff subsequently encountered further delay of 63

days to complete the Works owing to inclement weather and

other circumstances beyond their control. The Defendant

proceeded to impose on the Plaintiff liquidated and

ascertained damages (for brevity, “LAD”) at the rate of

RM886.50 per day for 63 days amounting to the sum of

RM55,849.50.

14.

15.

April, 2009, the Plaintiff, vide their letter,

REQ/NAIM/WLAD/0409-01 of idem date, applied to the Defendant for waiver of the LAD of RM55,849.50.

On 15

th

On 31st October, 2009, the Defendant, vide their letter

NCSB/SPNB/GoldenAnts-ST/2009-2430 of idem date,

approved the waiver of the LAD of RM55,849.50.

16. On 14th November, 2009, the Defendant issued Payment

Certificate No. 10 (Final LAD Waiver) certifying the refund

of the amount of RM55,849.50 representing the waiver of the

LAD.

ADDITIONAL WORKS

17.

The contract sum for the Works agreed between the parties

was the sum of RM3,383,580.00, comprising the following

items as shown in the Summary of Tender.

 
         

Amount

Item

Description

Unit

Qty

Rate

(RM)

1.

Preliminary & Generally

LS

   

522,280.00

2.

Site clearance

Acre

25

1,000.00

25,000.00

3.

Earthworks

       

(a)

Transport only imported earth filling

3

M

380,000

6.97

2,650,000.00

(b)

Earth bund

LS

135,000.00

4.

Spot turfing

LS

   

13,500.00

5.

Earth drain

LS

   

24,300.00

6.

Temporary access road and culvert

LS

   

11,300.00

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7.

Permanent settlement reference station

LS

1,000.00

8.

Rod settlement gauge

LS

1,200.00

 

Total

 

3,383,580.00

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18.

On 25

in respect of the additional works.

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April, 2008, there was a meeting between the parties

19. On

May, 2008, the Plaintiff, vide their letter

GAD/TO/NC/0504-2008 of idem date, submitted to the

Defendant their claim on the additional work in the sum of

RM963,411.19, which comprised the cost of transport from

Naim Ready Mix Sdn. Bhd. to the site of an additional volume

of 137,630.17m³ of earthfilling material at RM7.00 per m³.

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th

20.

Immediately upon receipt of the Plaintiff’s letter, a meeting

took place between the parties on the additional works.

21.

On 15th April, 2009, the Plaintiff, vide their letter

GAD/TD/NC/0401/2009 of idem date, re-submitted to the

Defendant the relevant documents on the additional works.

22. On 31st October, 2009, the Defendant vide their letter

NCSB/SPNB/GoldenAnts-ST/2009-2429 of idem date,

informed the Plaintiff that “the application for extra

volume

has not been approved by our management”.

PAYMENT CERTIFICATES

23.

The Defendant had issued the following interim and final

payment certificates on the Works, namely:-

(1)

Payment Certificate No. 1 (Advance Payment) dated 4 th

December, 2007;

(2)

Payment Certificate No. 2 dated 7th January, 2008;

(3)

Payment Certificate No. 3 dated 31st January, 2008;

(4)

Payment Certificate No. 4 dated 23rd February, 2008;

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2 (6)

3 (7)

4 (8)

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(9)

8 (10)

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Payment Certificate No. 5 dated 27th March, 2008;

Payment Certificate No. 6 dated 29th April, 2008;

Payment Certificate No. 7 dated 15th July, 2008;

Payment

September, 2008;

Certificate

No.

8

(Penultimate)

Payment Certificate No. 9 (Final) dated 23

2009; and

dated

26 th

rd

February,

Payment Certificate No. 10 (Final LAD Waiver) dated

14

th

November, 2009.

10 Issues To Be Tried

11 20.

12 from the pleadings, I am of the opinion that the main issue to

13 be tried is as follows:

The parties have not agreed on the issues to be tried, Gleaning

14 Whether the Plaintiff is entitled to claim RM959,282.28 being

15 the alleged costs for the additional work, i.e. the additional

16 work done to transport the volume of earth in excess of

17 380,000 cubic metres?

18 21.

19 consider the following subsidiary issues, namely:

In order to answer the main issue, it is necessary first to

20 (a)

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Whether it was the Plaintiff’s responsibility to ascertain

the existing ground levels in order to fill the site to the

required level?

23 (b) Whether the Plaintiff has been dispensed from

ascertaining the existing ground level due to the urgency

of the Work?

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(c) Whether there was a promise by the Defendant’s

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representative to the Plaintiff that the Defendant would

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pay the Plaintiff for the additional work

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Subsidiary Issue (a)

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22.

It is opportune at this juncture to look at the following terms

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and conditions in the contract documents:

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(i) Under Item (d) of the Scope of Work provided by the

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Preliminary and Generally [page 150 Exhibit BAD], the

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Work involved “Earthworks including compaction to the

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level as shown in the drawings and as directed by the

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Engineer, including forming earth bunds, all as indicated

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in the drawings.”

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(ii)

Item A of the Preliminary and Generally [page 11

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Exhibit BAD] states:

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“VISIT TO SITE

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The Contractor shall visit the site of the Works and shall be

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independent inquiry and observation ascertain the

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following in connection with the works:-

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a.

The nature, character and extent of the works

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b.

Local conditions

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c – g

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h. The character of the soil or strata and the nature of

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subsoil upon which the works are to be executed.

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Tenderers are to be bore trial holes at their own

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expense if they deem it necessary.

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i.

….

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No claims made on the ground of failure to visit the site

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and/or of want of any of the aforesaid matters or other like

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information which might financially affect the Contract,

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will be considered.

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(iii)

Item C of Preliminary and Generally [page 12 Exhibit

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BAD] states:

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"SITE INSPECTION

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Immediately after taking possession of the site and before

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commencing any work, the Contractor shall check actual

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levels and dimension against those shown on the

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drawings and immediately inform the Engineer in the

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event of any alleged discrepancy. If no communications

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has reached the Engineer, the Contractor shall be held to

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accept all levels and dimensions and no claims for extra

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payments in this connection will be entertained.”

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23.

Paragraph 1 of the Special Instruction to Tenderer (page 3

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Exhibit BAD] states:

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"Existing ground levels

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Tenderer are to take note that all levels as shown on the

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drawings are for information only and shall not be taken to

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represent the true ground levels of the site. It is the

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responsibility of the tenderer to ascertain the existing

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ground levels.”

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24.

In the light of the foregoing provisions in the Contract

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documents, it is vividly clear that it is the Plaintiff’s

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responsibility to ascertain the ground level in order to

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determine the quantity of earth needed to fill the site to the

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required level.

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Subsidiary Issue (b)

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25.

It is undisputed fact that the Plaintiff did not carry out any

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topographical survey.

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26.

Counsel for the Defendant submitted that no evidence was ever

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adduced by the Plaintiff that at the material time when they

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tendered for the work, they tendered it unwillingly or were

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forced to take over the project. There was also no allegation

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that the signature of the Plaintiff on the Special Instruction to

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Tender [pages 3 - 4 Exhibit BAD], Form of Tender [pages 5-6

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Exhibit BAD], Summary of Tender [page 7 Exhibit BAD] and

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Preliminary and Generally [pages 8 - 42 Exhibit BAD] by fraud

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or misrepresentation. The Plaintiff having signed the above

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documents voluntarily have given their assent to the whole

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contract. It was submitted that under the contract, it was the

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duty of the Plaintiff to carry out independent inquiry to

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ascertain the level of the ground for the purpose of computing

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the earthwork quantity, any loss or damage suffered by the

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plaintiff due to their failure to ascertain the ground level cannot

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be claimed against the Defendant.

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27. Counsel for the Defendant submitted that even PW3, the

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licensed land surveyor, testified that it is not recommendable

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for a contractor to tender for a contract without carrying out a

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topographical survey of the ground condition and the level of

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the ground. It was submitted that the Plaintiff had only

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themselves to blame for failing to ascertain the actual ground

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level and that the Defendant cannot be penalised for the

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Plaintiff’s own failure.

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28. Counsel for the Defendant submitted that the evidence showed

2 that the Plaintiff was given possession of the site after they

3 tendered for the Work i.e. on 26

November 2007, which was

1

th

4 one month before the actual official site handing over. The size

5 of the project site is 25 acres and, according to PW3, it would

6 take one month to conduct the survey of the 25 acres of land.

7 The Plaintiff, therefore, had ample opportunity to carry out the

8 survey work but they have failed to do so. Thus, the Plaintiff’s

9 contention that they were not given ample time to carry out site

10 survey to determine the ground level ought to be disregarded.

29. PW1 explained that no topographical survey was carried out

12 prior to the tender because this is not the usual contract due to

October

14 2007, Datuk Hasmi from the Defendant Company invited him

15 to tender for the contract because his previous contractor could

16 not complete the Work and they needed a contractor to do the

October 2007 he collected the tender

October 2007 to discuss

19 about the contract (more will be said of what were discussed

October, 2007

21 the Plaintiff submitted its tender [pages 1 - 42 Exhibit BAD].

22 The Defendant accepted the Plaintiff’s tender vide their letter

October, 2007 [page 43 Exhibit BAD], which states,

24 amongst others, “You are required to mobilize your

23 dated 25

17 Work urgently. On 22

18 form and met Gordon Kab on 23

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the urgent nature of the contract. PW1 said that on 19

th

nd

rd

20 between PW1 and Gordon Kab later). On 24

th

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25 machineries to the project site and to proceed with the works

26 immediately.”

October 2007 mobilized

28 their machineries to the project and proceeded with the Work

27

30. PW1 said that the Plaintiff on 26

th

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immediately as instructed in the Defendant’s letter dated 25 th

October 2007. In other words, the Plaintiff took possession of

the site and commenced work even before the Letter of Award

(which was only issued on 16

him and well before the official commencement of work

November 2007). Based on the Letter of

Award, the time for completion of the Project shall be two

months after the official commencement date i.e. 26 th

(which was on 26

th

November 2007) was issued to

th

November 2007 until 25

Defendant had waived the requirement of site inspection by

virtue of the Defendant’s letter dated 25

43 Exhibit BAD].

October 2007 [page

January 2008. PW1 said that the

th

th

31. DW1, the project manager of the Work, testified that the

Plaintiff was supposed to check the ground level of the site

immediately after taking possession of the site, before

commencement of any work and should have immediately

informed the Engineer in the event of any alleged discrepancy

on the level and dimension given. DW1 disagreed when it was

put to him that the Defendant had waived the requirement for

October 2007.

site inspection by virtue of the letter dated 25

[page 43 Exhibit BAD].

th

32.

However, in cross-examination, DW1 had testified:

Q215 PUT: The Plaintiff was unable to do the site survey

because the Defendant instructed the Plaintiff to

“mobilize your machineries to the site and to proceed

with the works immediately” as per the letter dated

A:

25.10.2007 at page 43 of BAD.

Yes, that’s correct.

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….

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Q226 PUT: By instructing the Plaintiff to mobilize its

3

machinery onto the project site and to proceed with

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works immediately, the Plaintiff was not given any

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opportunity to survey the site at all.

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A:

I do not agree.

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Q227 PUT: Upon immediate mobilization of machinery

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and immediate commencement of works on the

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Defendant’s instruction, the Plaintiff was unable to

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ascertain the original ground level at the site.

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A

Yes, I agree.

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Q228

Now refer to page 3 of Exhibit BAD. Here, the special

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instructions to tendered stipulated 7 months from site

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possession as the time for completion of Package A,

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didn’t it?

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A

Yes, that’s correct.

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Q229

Now refer to paragraph 8 at page 49 of BAD.

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Although 7 months for completion of works for

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Package A was stipulated in the special instruction to

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tenderers, the Plaintiff was only given 2 months from

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site possession to complete the works weren’t they?

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A

Yes, I agree.

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Q230

The reduction in time to complete the work from 7

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months to 2 months shows the urgency of the works,

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correct?

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A

Yes, that is correct.

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Q231 PUT: The works were needed to be completed

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urgently as stated by Datuk Hasmi Hasnan in his

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memo at page 119 of BAD as well.

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A

Yes, that’s correct.

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33.

34.

35.

Q233 PUT: The 2 months given to the Plaintiff to complete

the proje4ct, which is less than 1/3 of the stipulated

time frame of 7 months shows that the works were

A

needed to completed urgently.

Yes, that is correct.

In my opinion, the Plaintiff has amply shown that the Project

was of urgent nature given that the former incompetent

contractor had already wasted four out of seven months of the

contract period. This is vividly evident in the note written by

October, 2007 [page 119

Exhibit BAD], that reads, “Interview and get this contractor to

do part of ……… with/without Naim Realty mix

whoever faster. Urgent, Get them to bid for future earth

work.”

give more to

Datuk Hasmi to Gordon Kab on 19

th

The urgency of the Work is further evident from the fact that

upon accepting the Plaintiff’s tender, the Defendant in their

October, 2007 [page 43 Exhibit BAD], states,

amongst others, “You are required to mobilize your

machineries to the project site and to proceed with the works

immediately.” In response to that request, it is undisputed fact

that the Plaintiff promptly moved his machinery onto the site

October 2007

without surveying the actual ground level of the site. DW1

agreed that once machinery had been moved onto the site and

work commenced, it would not be possible to survey the

original ground condition.

and started work the very next day i.e. 26

letter dated 25

th

th

I do not agree with the Defendant’s contention that the

Defendant allowed the Plaintiff to take possession of the site a

18

[Suit No. 22-119-2011]

1 month before the official commencement of the Work so that

2 the Plaintiff could carry out the survey of the ground level. My

3 reason for saying so is that survey of ground level would be

4 conducted by surveyor and does not require utilising the

5 machinery of the Plaintiff. In my view, in asking the Plaintiff

6 to mobilize the machinery to the site and start work

7 immediately, the Defendant has obliquely waived the need to

8 survey the ground level of the site.

In my opinion, due to the urgency of the Work (that had been

10 already been delayed for about four months out of seven

11 months) and pursuant to the request of the Defendant per the

12 letter dated 25

13 the Defendant requested the Plaintiff to mobilize the machinery

14 to start work immediately, the Plaintiff was literally left with

15 no opportunity to carry out site survey. The Defendant had not

16 given the Plaintiff an opportunity/time to carry out the site

17 survey and had waived the necessity to do so. As such, it does

October 2007 [page 43 Exhibit BAD] in which

9 36.

th

18 not lie in the mouth of the Defendant to say that the Plaintiff

19 have only themselves to blame for not carrying out the site

20 survey.

Subsidiary Issue (c) Whether 380,000 cubic meter of earth was the estimated or maximum volume of earth It is an agreed fact that the agreed contract sum of

25 RM3,383,580 comprised of RM2,650,000.00 for “Transport

21

22

23

24

37.

26 only Imported Earth Filling” at the quantity of 380,000 cubic

27 meter at RM6.97 per cubic meter.

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38. It is the Plaintiff’s contention that 380,000 cubic meters based

on 15% compaction is the maximum volume of earth quoted by

the Plaintiff and the Defendant had assured the Plaintiff of

payment for any additional volume of earth in excess of

380,000 cubic meter.

39. The Defendant, on the other hand, contended that 380,000

cubic meter is the estimate volume of earth quoted by the

Plaintiff to earthfill the site to the required level.

40.

41.

On 23

price based on the settlement and compaction of approximately

35% to 40% as the site was situated in swampy area. However,

during the price negotiation between the Plaintiff and one

Gordon Kab and one Abdul Razak Ahmad Marzuki for the

Defendant, they relied on the settlement data of 8% - 9% of the

adjourning "Package C" of the project and allowed the Plaintiff

only 15% settlement and compaction. They assured the

Plaintiff that the Defendant would pay for any additional costs

in transporting any additional volume of earth. PW1 said that it

was with this assurance and understanding that the Plaintiff

then agreed to amend their tender price and submitted their

October, 2007. PW1 stressed that the

Plaintiff finally accepted 15% settlement and compaction on

the clear understanding that the Defendant would pay the

Plaintiff for any additional volume of earth in excess of

amended tender on 24

rd

October, 2007 the Plaintiff submitted their contract

th

380,000 cubic meters.

On 24

tender for the Work at the price of RM3,383,580.00, of which

October, 2007 the Plaintiff submitted its amended

rd

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[Suit No. 22-119-2011]

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25

42.

43.

44.

45.

46.

Transport only imported earth filling including filling to

required level in approved layers well compacted as directed”.

The quotation was accepted by the Defendant as evidenced by

the LOA dated 25

October, 2007 [page 43 Exhibit BAD]. See,

Q & A 110 p. 45 notes of proceedings.

th

The letter at page 43 Exhibit BAD stated, amongst others:

“Please be informed that your appointment as our

earthwork contractor shall be subject to the terms and

conditions of the scope of works and agreed Contract Sum

of which will be discussed and confirmed upon at a later

date by both parties.”

It should be noted also that in the FORM OF TENDER [page 5

Exhibit BAD], it states, “Unless and until a formal Agreement

is prepared and executed this tender, together with your written

acceptance thereof, shall constitute a binding Contract between

us”.

It is an agreed fact that no formal agreement was drawn up

between the parties.

Counsel for the Defendant submitted that as no formal

agreement had been signed, the Plaintiff’s quotation, List of

Preliminary and Generally and Appendix shall constitute a

binding Contract between the Plaintiff and the Defendant.

Counsel for the Defendant contended that at page 150 of

Exhibit BAD, under Item D “Type of Contract”, the Contract is

based on a fixed price lump sum tender.

21

[Suit No. 22-119-2011]

1

47. Counsel for the Defendant contended that there was never any

2

additional work carried out by the Plaintiff for the following

3

reasons:

4

a.

It is the Plaintiff’s responsibility under the agreement to

5

complete the project including filling up the site to the

6

required level for a fixed price of RM3,383,580.00;

7

b.

Under the Scope of Work provided by the Preliminary and

8

Generally [page 150 Exhibit BAD], it stated:

9

"SCOPE OF WORK

10

The Contract comprises generally the supply of all

11

labours, materials, tools, equipments and

12

everything else necessary for the construction and

13

completion of the works in which comprise briefly

14

the following:-

15

(a) to (c)………

16

(d) Earthworks including compaction to the level as

17

shown in the drawings and as directed by the

18

Engineer, including forming earth bund, all as

19

indicated in the drawings.

20

(e) to (h)…….

21

c.

Under the Method Statement [page 53 Exhibit BAD]

22

prepared by the Plaintiff, it is stated under paragraph 1:

23

"The earthwork shall include the excavation of

24

earth from borrow pit situated at Pasir Pandak

25

from the earth licensee (Naim Ready Mix Sdn. Bhd.),

26

transportation by 10 wheeler dump truck to the

27

earthfilling site and levelling work to the required

28

level (as per the drawing) which is up to the

29

maximum of 3.45 meter above sea level in the

30

frontage of the site and 3.3 meter above sea level

22

[Suit No. 22-119-2011]

1

towards the ending of the site. The estimated

2

volume of earth to be earthfilled is about 370,000

3

meter cubic based on the settlement of 15 percent.”

4

48.

Counsel for the Defendant submitted that it is the responsibility

5

of the Plaintiff to earthfill the site to the required level as per

6

the drawing. Hence, when the Defendant asked the Plaintiff to

7

earthfill the site to the required level as per the drawing, the

8

work so required was within the scope of work under the

9

agreement. It does not vary from the scope of work. Counsel

10

for the Defendant submitted that there is no additional work

11

carried out by the Plaintiff and any claim by the Plaintiff for the

12

so-called additional work must be disallowed.

13

49.

In support of the contention that no claim be allowed for work

14

done within the scope of work under the contract, reliance was

15

placed on Teknik Segala Sdn. Bhd. v Salcon Engineering Bhd

16

[2012] 9 MLJ 543 where Justice Zaleha Yusof J held:

17

"Further, as submitted by the learned counsel for the

18

Defendant, and upon scrutinising the evidence of PW1, I

19

totally agree with the Learned counsel, that those work

20

shown in the so called variation orders fall within the work

21

scope of the Plaintiff under the contract.”

22

50.

It should be noted that Justice Zaleha Yusof went on to say:

23

Since the contract was a lump sum contract the plaintiff

24

must prove that there was an agreement between the

25

parties for variations and additional works in order for it

26

to recover further payments. There was no agreement

27

between the parties for any variation (see para 37).

23

[Suit No. 22-119-2011]

1

51.

As submitted by Counsel for the Plaintiff, it should be noted

2

that under the heading “FORM OF CONTRACT” in the

3

Preliminary and Generally on page 154 Exhibit BAD, Item A

4

Conditions of Contract provides:

5

The Article of agreement and Schedule Conditions of

6

Contract into which the Contractor will be required to

7

enter in connection with this project shall be those

8

contained in the AGREEMENT AND SCHEDULE OF

9

CONDITIONS OF BUILDING CONTRACT PRIVATE

10

EDITION (WITHOUT QUANTITIES) (as issued under the

11

sanction of Pertubuhan Akitek Malaysia Edition 1998

12

(Revised October 1998)).

13

52.

Item B of the Schedule of Conditions of Contract states:

14

"The Contractor is referred to the full text of the under

15

mentioned clauses of the Conditions of Contract to which

16

the following are short references and against which the

17

contractor is to provide any sum he considers necessary in

18

complying with the terms of these clauses.

19

Clause No…….;’

 

20

53. The Pertubuhan Akitek Malaysia Edition 1998 (Without

21

Quantities) Standard form (Annexure A) of the Plaintiff’s

22

Submission shows additional payment for variation work is

23

permissible in Article 2, which states:

24

The Employer will pay the Contractor the sum of …….

25

(RM) ……

)

(hereinafter referred as “the Contract Sum”)

26

or such other sum as shall become payable hereunder at

27

the times and in the manner specified in the Conditions.

28

54.

Clause 11.0 of Conditions of Building Contract provides, inter

29

alia, as follows:-

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22

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“11.1 The term "Variation" as used in these Conditions means:

11.1

(i)

 

alteration or modification of the design, quality or

 

quantity of the Works as shown in the Contract

Drawings and described by or referred to in the

Specification.

11.1

(ii)

 

the addition, omission or substitution of any work.

11.1

(iii)

the alteration of the kind or standard of any

 

materials or goods to be used in the Works.

 

(emphasis provided)

11.2

The Architect may issue instructions requiring a Variation

and he may sanction in writing any Variation made by

the Contractor otherwise than pursuant to an instruction

of the Architect. No Variation required by the Architect or

subsequently sanctioned by him shall vitiate this Contract.

(emphasis provided)

.

.

.

11.5

.

.

.

11.5

(v)

 

Effect shall be given to the measurement and

evaluation

of

all

Variations

in

Interim

Certificates and by adjustment of the Contract

Sum.”

(emphasis provided)

24

55.

In

Chow

Kok

Fong’s

Law

and

Practice

of

Construction

25 Contracts, 4

th

Edition, Volume 1, on page 124, it was written in

26 respect of Contract Models and Standard Forms:

27

28

29

30

31

32

33

34

“2.41 The "contract sum" is based on the work delivered in

accordance with the stipulations of the project brief or

client's requirements. In most situations, it will operate as

a fixed price or "lump sum" contract. The contractor is

only entitled to claim for additional payments where it is

demonstrated that the works, as defined in the project

brief or client's requirements, have been varied or where

there has been a breach of obligations by the owner and,

25

[Suit No. 22-119-2011]

1

as a result of which, the contractor had to incur additional

2

expense.”

3

(emphasis provided)

4

56.

In the light of the foregoing, it can thus be seen that the

5

contract sum in a lump sum agreement, like any contract, can

6

still be adjusted on the ground of any additional works

7

executed by the Plaintiff under the provisions of Clause 11.0 of

8

Conditions of Building Contract.

9

57.

The Court is mindful that it was provided under the

10

Preliminary and Generally that no claim whatsoever shall be

11

allowed for any variation in the costs of wages, materials,

12

construction plant, fuel, duty, taxes, temporary works or

13

transport or anything else whatsoever which may occur during

14

the period of this contract. Suffice it to say that the Plaintiff’s

15

claim has nothing to do with fluctuation in the prices of labour

16

and materials in the course of the Work. Hence, it is of no

17

relevance to the Plaintiff’s claim.

18

58.

It is significant to note that in the LOA, it informed the Plaintiff

19

of the acceptance of the Plaintiff’s quotation for the sum of

20

RM3,383,580.00 “subject to terms and conditions as stipulated

21

herein and in the tender documents". It further stated:

22

"You will be required to execute in due course of Formal

23

Contract Agreement. However, until the Formal Contract

24

Agreement is executed, your quotation together with this

25

Letter of Appointment and the following letters and

26

discussion shall constitute a binding Contract between

27

Golden Ants Dynasty Sdn. Bhd. and Naim Cendera Sdn.

28

Bhd….” [underline added]

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59.

60.

61.

It would appear that the agreement between the parties is both

written and oral. This is consistent with the Plaintiff’s assertion

that due to the urgency of the Work, they were not given time

to carry out the survey to determine the volume of earth

required. However, the Defendant’s representatives in allowing

the Plaintiff to quote only 15% compaction had assured the

Plaintiff in the meeting that the Defendant would pay for

transporting the additional volume of earth if the volume of

earth exceeded the quoted sum. It was on this understanding

that the Plaintiff had agreed to carry out the Work without

conducting a proper site survey.

Counsel for the Plaintiff submitted and, I concur - that

defence of lump sum contract pleaded in paragraphs 3, 13,

14(b), 17 and 22 of the statement of defence is an afterthought.

I say so because from the time the Plaintiff wrote the letter

dated 25

Defendant of their intended claim for transporting the

additional volume of earth until the filing of the defence on 7 th

February 2012, a period spanning over approximately three

years and nine months, the Defendant never once gave their

reasons for rejecting the Plaintiff’s claim for the additional

costs. The defence was raised for the first time in the statement

April, 2008 [page 8 Exhibit BAD] informing the

th

of defence.

The Court is also of the view that if it is a lump sum agreement

whereby the Plaintiff was contractually bound to fill the site to

the required level for the quoted price regardless of volume of

earth that would be required, then it would not be necessary to

make any estimate of volume of earth required to achieve the

27

[Suit No. 22-119-2011]

1 earth filling. The fact that the Plaintiff had to put in the quantity

2 of the volume of earth at 380,000 cubic meters is consistent

3 with the testimony of PW1 and PW2 that during the price

4 negotiation, Gordon Kab and Abdul Razak Ahmad Marzuki

5 only allowed him to put in 15% compacting and filling.

It should be further noted that in the Bill No. 1 Preliminary

7 and Generally in respect of Payment Certificates No. 2

8 (Advance Payment) [page 227 Exhibit BAD], it states under

9 Item B:

6 62.

10

ITEM

DESCRIPTION

UNIT

QTY

B

Earth works as specified to the required area and platform level including forming earth bund, all as indicated on the drawings

M3

380,000

The description shown in Bill No. 1 Preliminary and

12 Generally in respect of Payment Certificate No. 2 (Advance

13 Payment) above [page 227 Exhibit BAD] also appear in the

14 following bills:

11

63.

15 a.

16

17

18

Bill No. 1 Preliminary and Generally in respect of

Payment Certificate No. 3 [page 235 Exhibit BAD] under

the cover of letter dated 13

Exhibit BAD];

th

December 2007 [page 229

19 b.

20

21

22

Bill No. 1 Preliminary and Generally in respect of

Payment Certificate No. 4 [page 243 Exhibit BAD] under

the cover of letter dated 11

Exhibit BAD];

th

January 2007 [page 237

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c.

d.

e.

f.

Bill No. 1 Preliminary and Generally in respect of

Payment Certificate No. 5 [page 257 Exhibit BAD] sent

under cover of letter dated 11

Exhibit BAD];

February 2007 [page 250

th

Bill No., 1 Preliminary and Generally in respect of

Payment Certificate No. 6 [page 263 Exhibit BAD];

Bill No. 1 Preliminary and Generally in respect of

Payment Certificate No. 7 [page 275 Exhibit BAD] under

cover of letter dated 11

BAD];

April 2008 [page 267 Exhibit

th

Bill No. 1 Preliminary and Generally in respect of

Payment Certificate No. 8 [page 283 Exhibit BAD] under

cover of letter dated 29

BAD].

May 2008 [page 276 Exhibit

th

64. It should be noted that in all the above bills for the Payment

Certificates, the Plaintiff stated the quantity of the earth and the

Defendant paid the Plaintiff without raising any question about

the insertion of the quantity of earth to be transported to the

project site. This, in my view, is consistent with PW1’s

evidence regarding the amended tender that they subsequently

tendered after discussion with Gordon Kab. In other words,

380,000 cubic meters is not an estimated volume of earth but

the maximum volume of earth quoted by the Plaintiff upon the

promise by Gordon Kab and Abdul Razak Ahmad Marzuki that

the Defendant would pay the Plaintiff for the additional work in

respect of any volume of earth in excess of 380,000 cu meters.

29

[Suit No. 22-119-2011]

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65.

66.

67.

68.

For all the reasons above, my answer to Issue No. 1 is in the

affirmative.

Unsigned Memorandum [Exhibits 1 - 4 DBD]

PW1 testified that when there was no reply was forthcoming

from the Defendant regarding his claim for transporting the

additional volume of earth, on 26

approached one Datuk Hasmi bin Hasnan to assist. Datuk

Hasmi referred it to one Vincent Kueh to solve the problem.

On 27

page 101 BAD to Vincent Kueh who then called for a meeting

on

Project Manager, Sivakumar (DW1) to make proposal for

payment to the top management as discussed in the meeting.

December 2008 after which Vincent Kueh asked the

November 2008, the Plaintiff submitted the letter at

November, 2008, he

th

th

4

th

According to PW1, few days later one Nazri bin Madom,

Quantity Surveyor from Naim Cendera Sdn. Bhd., called the

Plaintiff to collect the draft memorandum [Exhibits 1 - 4 DBD]

and to confirm the contents before submission to the top

management. The Plaintiff brought back the unsigned

memorandum and confirmed its contents. PW 1 explained that

Exhibits 1 - 4 DBD was unsigned because they only wanted the

Plaintiff to confirm the contents before Nazri bin Madom

submitted it to the top management. PW1 did not know why

the Defendant did not give the Plaintiff the signed original

memorandum. PW1 believed the signed copy of the Exhibits 1

- 4 DBD would be in the possession of the Defendant.

It is to be recalled that the admissibility of the memorandum to

propose settlement was objected to by the Defendant on the

30

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69.

70.

ground that PW1 was not the maker. Counsel for the Plaintiff

June 2012, filed

and served notice to produce, under section 66 of the Evidence

Act 1950, on the ground that it was a document prepared by the

Defendant and at all material times in possession of the

Defendant to which the Plaintiff has no access. For the

Defendant, it was contended that Nazri bin Madom referred to

informed the court that the Plaintiff had, on 8

th

by PW1 must come to give evidence.

The Court allowed the admission of the unsigned memorandum

on the ground that upon receipt of the section 66 notice, the

Defendant did not produce the document for inspection. There

is nothing to show or suggest that the Defendant had informed

the Plaintiff that they are not in possession of the said

memorandum. Absence of such response gives rise to

irresistible inference that the Defendant must have the

memorandum in their possession.

In his witness statement, it should be noted that DW1 made no

allusion to the unsigned memorandum [Exhibits 1 - 4 DBD]

alleged to be written by him. When it was shown to him in the

cross-examination, to the question which was put to him that

Exhibits 1 - 4 DBD reflected his recommendation to the

management pertaining to the Plaintiff’s claim for the

additional earthwork, DW1 replied, “I disagreed because I did

not sign it”. In further re-examination, DW1 explained that he

did not sign because he did not prepare it. This testimony of

DW1 was not challenged in further cross-examination of DW1.

31

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71.

72.

73.

In my opinion it is safe to rely on the unsigned memorandum

[Exhibits 1 - 4 DBD] for the following reasons. It should noted

that the Plaintiff’s letter dated 26

to the Defendant for the attention of Datuk Hasmi Bin Hasnan

[page 101 BAD] bore two receipts of acknowledgement, one of

November 2008. This is

consistent with PW1’s testimony that after the letter dated 26 th

November 2008, he called Datuk Hasmi to explain the problem.

As Datuk Hasmi did not have any clue of the matter, he then

asked Mr Vincent Kueh to help solve the problem. On 27 th

November 2008, PW1 brought the said letter to see Vincent

Kueh and the letter was acknowledged by his staff on the same

which was by Vincent on 27

th

November 2008 addressed

th

day. [Q & A 4 page 5 NOP].

I, therefore, believe and accept PW1’s evidence that there was

December 2008. As

a result of that meeting Mr Vincent Kueh asked DW1 to

prepare a memorandum proposing payment to the Plaintiff as

discussed in the meeting. In the premise, it is my finding of

fact that in all probability DW1 had prepared the draft

memorandum for the management. It is significant to note that

the memorandum made two recommendations, namely, (1)

payment of RM953,218.39 being the additional earth

transported by the Plaintiff; and (2) waiver of LAD amounting

RM55,849.00. It is undisputed fact that the second proposal