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Zul Rafique & Partners successfully resisted an appeal pertaining to a purported unlawful termination of contract worth MYR8,010,576.14

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29 October 2021

Please click HERE for the Mandarin version of the case update.

Idza Hajar Ahmad Idzam, Bailey Leong Pui Yee and Lee Sheen Yee from Zul Rafique & Partners’ Litigation Practice Group successfully acted for Lembaga Getah Malaysia (“1st Respondent”) before the Court of Appeal (coram consisting of Justice Yaacob Bin Haji Md Sam, Justice Haji Ghazali Bin Haji Cha and Justice Nantha Balan) in resisting Umibina (M) Sdn Bhd’s (“Appellant”) appeal pertaining to a purported unlawful termination of a contract worth MYR8,010,576.14 and the Government of Malaysia’s (“2nd Respondent”) cross-appeal in relation to the rightful contracting party to the said contract. Both appeal and cross-appeal were dismissed by the Court of Appeal in the 1st Respondent’s favour in which the details are as follows:-

Brief Facts

The Appellant’s claim against the 1st and 2nd Respondents is premised on a contract (“the Contract”) between the Appellant and the 2nd Respondent wherein the Appellant was engaged to inter alia carry out construction work for a project known as “Cadangan Pembangunan Stesen Penyelidikan RRIM (LGM) Sungai Pari, Daerah Padang Terap, Kedah Darul Aman” (“the Project”) from 20.04.2010 to 19.04.2011.

The Director General to the 1st Respondent was the Superintending Officer (“SO”) of the Project who is empowered to take action on behalf of the 2nd Respondent in respect of the Contract. Throughout the performance of the Contract, the Appellant had been constantly seeking for extension of time for the completion of the Project to which, the 1st Respondent and/or 2nd Respondent had after numerous indulgences sought by the Appellant allowed the Appellant to complete the Project latest by 15.05.2012 wherein it was stressed that it was not an extension of time (“EOT”) and not a waiver to the 2nd Respondent’s rights to claim liquidated ascertained damages (“LAD”) under the Contract.

Nevertheless, the project was still not completed and thereafter, the Appellant undertook to complete the Project by 11.09.2012.  Even so, the Appellant did not fulfil its undertaking. The decision to terminate the Appellant’s Contract was made by Jawatankuasa Project Sakit (“JKPS”) during the meeting on 12.09.2012 where the termination process was then made by the 1st Respondent. JKPS is a committee formed under the Ministry of Plantation Industries and Commodities to look after delayed projects which have been entered into by government agencies.

A Notice of Termination dated 19.11.2012 (“Notice of Termination”) was then issued to the Appellant. The Appellant then filed an action in the High Court against the 1st and 2nd Respondent and sought for inter alia declaration that the Notice of Termination is void and invalid, payment for value of work done as at 19.11.2012, payment for variation of work, damages for machinery and expenses suffered by the Appellant and return of the bank guarantee sum to the Appellant.

The Learned Trial Judge dismissed the Appellant’s claim against both Respondents with costs of MYR90,000.00 awarded to the 1st Respondent, leading to the appeal herein. In reaching the said decision, the Learned Trial Judge had also found that the rightful contracting party of the Contract is the 2nd Respondent leading to the 2nd Respondent’s cross-appeal herein against this particular finding.

Findings by the Court of Appeal

a.     The Appellant’s appeal is dismissed with cost of MYR10,000.00 to be paid by the Appellant to the 1st Respondent.

In arriving at the abovementioned decision, the Court of Appeal Judges found that the Appellant had failed to show any errors of fact and/or law committed by the Learned High Court Judge in arriving at the decision i.e. dismissal of the Appellant’s claims in the lower court. Further, the Appellant had also failed to demonstrate how the Learned High Court Judge was plainly wrong in arriving at the said decision.

b.     The 2nd Respondent’s cross-appeal is dismissed with no order as to costs. The primary grounds of the 2nd Respondent’s cross-appeal are, inter alia, as follows:-
  • The Learned Trial Judge erred in finding that the 2nd Respondent was the contracting party with the Appellant;
  •  The Learned Trial Judge erred in failing to appreciate that the 1st Respondent is able to inter alia enter into a contract in its own name; and
  • The Learned Trial Judge erred in failing to appreciate that the Contract entered into between the Appellant and the 1st Respondent was not in compliance with the Government Contracts Act 1949.
In arriving at the abovementioned decision, the Court of Appeal Judges found that based on the documentary evidence adduced, the Learned High Court Judge was not plainly wrong in finding that the rightful contracting party was the 2nd Respondent rather than the 1st Respondent.
 
Key Takeaways

The decision of the Court of Appeal in this case, in particular the dismissal of the cross-appeal filed by the 2nd Respondent reinforces the legal principle that the burden of proof as to any particular fact lies on that person who wishes the court to believe in its existence. In this case, the 2nd Respondent denied being the rightful party to the Contract despite the clear wordings adopted in the Contract. Further, the 2nd Respondent did not by way of witnesses or documentary evidence support its arguments that there was non-compliance with the Government Contracts Act 1949. 

For more insight into this area of law, please contact our Partners in the Litigation Practice Group:
P Jayasingam
Wong Keat Ching
Thavaselvi Pararajasingam
Idza Hajar Ahmad Idzam
Farah Shuhadah Razali
Bailey Leong Pui Yee

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