BREACHES OF CONTRACT IN CONSTRUCTION INDUSTRY

LAWRENCE YAP SIE KIONG

UNIVERSITI TEKNOLOGI MALAYSIA

BREACHES OF CONTRACT IN CONSTRUCTION INDUSTRY

LAWRENCE YAP SIE KIONG

A project report submitted in partial fulfillment of the requirements for the award of

the degree of Master of Science (Construction Contract Management)

Faculty of Built Environment

Universiti Teknologi Malaysia

JULY 2009

iii

Especially to…….

My Beloved Dad, Mum, Sisters

Friends

and

SIC Members

Thanks for everything!!

iv

ACKNOWLEDGEMENT

A debt of gratitude is owed to many individuals who have given me the

benefit of their unconditional help, tolerance and knowledge in writing and

completing this master project. First of all, I would like to express my highest

gratitude to my supervisor, Encik Norazam Othman for his guidance, advice and

support in order to complete this master project.

My appreciations also go to all the lecturers for the course of MSc

Construction Contract Management, for their patient and kind advice during the

process of completing the master project. Further, I would like to express my

special thanks my fellow classmates, who have in their own way helped me a great

deal throughout the preparation and production stages of this master project.

Finally, I would like to extend my truthful appreciation to my dearest parents

and sisters for giving their full supports.

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ABSTRACT

The doctrine of freedom to contract, as the cornerstone of contract law in the

common law countries (Malaysia inclusive) has consequently generated an

extensive array of contracts of various characteristics and varieties. In Malaysia,

there are two basic components in the contract documents used for the contracting of

most construction work that is the Contract Conditions and technical specifications

and drawings. As a general principle, once a party enters into a contract, he must

perform his obligations strictly according to the terms of the contract. However, in

the construction industry, breaches of contract are commonplace to the point of

routine. Moreover, under the complicated provisions of many construction contracts

the possible breaches of contract either by contractor or employer are numerous, and

in each case the general principles must be applied in order to determine what, if any,

damage is recoverable for the breach. This research therefore set out to illustrate the

types of breaches of contract that are currently fashionable in Malaysian

construction industry. The research is also to address the legal issues in relation to

damages. The approach adopted in this research is documentary analysis of case

laws. A total number of 53 cases were studied, where only 11 of them were

associated with the breaches of contract. Findings show that there are 7 types of

breaches existed in construction industry for the past thirty years. Most of the cases

were breached due to the reason of “abandonment of work”. On the other hand, 3

legal issues closely related to damages were addressed in this research. In summary,

findings of this research may assist the relevant parties in addressing and

overcoming the problems associated to breaches of contract and creates a win-win

situation for all parties in the Malaysian construction industry.

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ABSTRAK

Doktrin kebebasan berkontrak, kerana asas undang-undang kontrak dalam

negara-negara “common law” telah mengakibatkan penjanana satu tatasusunan yang

meluas dalam pelbagai ciri and jenis-jenis kontrak. Di Malaysia, terdapat dua

komponen asas dalam dokumen-dokumen kontrak yang digunakan untuk kontrak

kerja pembinaan iaitu Syarat-syarat Kontrak dan penentuan-penentuan teknikal serta

lukisan-lukisan. Secara prinsip umum, apabila satu pihak memasuki suatu kontrak,

pihak tersebut perlu menjalankan kewajipannya semata-mata menurut syarat-syarat

kontrak. Bagaimanapun, dalam industri pembinaan, pelanggaran kontrak adalah

biasa dan menjadi rutin. Lagipun, di bawah peruntukan-peruntukan rumit itu

banyak kontrak pembinaan kemungkinan mempunyai pemungkiran kontrak sama

ada oleh kontraktor atau majikan, dan dalam setiap kes , prinsip umum itu mesti

digunakan dalam perintah bagi menentukan apa, jika mana-mana, kerosakan boleh

dibaikpulihkan. Oleh itu, penyelidikan ini mengenalpasti jenis-jenis pemungkiran

kontrak yang cukup lazim pada masa kini dalam industri pembinaan di Malaysia.

Penyelidikan ini juga adalah untuk melihat isu-isu berkaitan kerosakan. Pendekatan

itu menggunakan penyelidikan secara menganalisis dokumen kes undang-undang.

Jumlah keseluruhan mencapai 53 kes telah dipelajari, di mana hanya 11 berkaitan

dengan pemungkiran kontrak. Penemuan-penemuan menunjukkan terdapat 7 jenis

pemungkiran wujud dalam industri pembinaan dalam tiga puluh tahun yang lepas.

Kebanyakan kes kemungkiran berlaku disebabkan “pembuangan kerja”. Sebaliknya,

3 isu perundangan yang berkait rapat dengan kerosakan dikemukakan dalam

penyelidikan ini. Natijahnya, penemuan-penemuan penyelidikan ini mungkin

membantu pihak tertentu dalam mengemukakan dan mengatasi masalah-masalah

berkaitan pemunkiran kontrak dan mewujudkan situasi menang-menang untuk

semua pihak dalam industri pembinaan di Malaysia.

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TABLE OF CONTENTS

CHAPTER TITLE ` PAGE

DECLARATION OF THESIS

SUPERVISOR’S DECLARATION

TITLE i

DECLARATION ii

DEDICATION iii

ACKNOWLEDGEMENT iv

ABSTRACT v

ABSTRAK vi

TABLE OF CONTENTS vii

LIST OF TABLES xi

LIST OF FIGURES xii

LIST OF ABBRIEVATIONS xiii

LIST OF CASES xv

LIST OF APPENDIXES xxi

1 INTRODUCTION 1

1.1 Background of Study 1

1.2 Problem Statements 5

1.3 Objective of Study 7

1.4 Scope of Study 7

1.5 Significance of the Study 8

viii

1.6 Research Methodology 8

1.6.1 Identify Research Issue 8

1.6.2 Literature Review 9

1.6.3 Data Collection 9

1.6.4 Data Analysis 10

1.6.5 Conclusion and Recommendations 10

2 BREACH OF CONTRACT 11

2.1 Introduction 11

2.2 Statutory Provisions 13

2.3 Repudiation 14

2.3.1 Repudiation by Words or Conduct 14

2.3.2 Proof of Repudiation 15

2.3.3 Consequences of Repudiation 17

2.3.4 Anticipatory Breach 18

2.4 Fundamental Breach 19

2.4.1 General Principles 20

2.4.2 Rule of Construction 22

2.4.3 Onus of Proof 24

2.5 Breach of Fundamental Terms 25

2.5.1 By Statutory Implication 26

2.5.1.1 Because the Parties 26

Have Explicitly Made it So

2.5.1.2 Because the Court so Construe it 26

2.6 Breach by the Employer 28

2.6.1 Failure to Give Possession of the Site 31

2.6.1.1 State of the Site 33

2.6.1.2 Extent and Time of Possession 35

2.6.2 Failure to Supply Plans 37

2.7 Breach by the Contractor 40

2.8 Conclusion 41

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3 DAMAGES 43

3.1 Introduction 43

3.2 General Principles 44

3.3 Types of Damages 45

3.3.1 General Damages 45

3.3.2 Special Damages 45

3.3.3 Nominal Damages 45

3.3.4 Substantial Damages 46

3.3.5 Exemplary Damages 46

3.3.6 Unliquidated Damages 46

3.3.7 Liquidated Damages 47

3.4 Remoteness of Damages 47

3.4.1 The Rule in Hadley v. Baxendale 48

3.5 Measure of Damages 51

3.6 Mitigation of Damages 52

3.7 Proof of Damages 54

3.8 Conclusion 55

4 ANALYSIS OF CASE LAWS 57

4.1 Introduction 57

4.2 Statistical Analysis and Study of Law Reports 58

4.2.1 Law Reports in Relation with 58

Construction Contract in MLJ

4.2.2 Court Cases in Relation with 59

Breaches of Contract

4.2.2.1 The Parties Engaged in the Cases 60

4.2.2.2 Types of Project Involved in Breaches 61

4.2.2.3 Party that Committed the Breach 62

4.2.2.4 Types of Breaches 63

4.2.2.5 Relief Sought 65

4.3 Findings of Legal Issues in Relation to Damages 67

4.3.1 Proof of Actual Loss 67

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4.3.1.1 Letrik Bandar Hup Heng Sdn Bhd v. 67

Wong Sai Hong

4.3.1.2 Hock Huat Iron Foundry v. 68

Naga Tembaga Sdn Bhd

4.3.2 Standard of Proof 70

4.3.2.1 Nirwana Construction Sdn Bhd v. 70

Pengarah Jabatan Kerja Raya Negeri

Sembilan Darul Khusus & Anor

4.3.3 Cross Claims 72

4.3.3.1 L’Grande Development Sdn. Bhd v. 73

Bukit Cerakah Development Sdn. Bhd

4.4 Conclusion 74

5 CONCLUSION AND RECOMMENDATIONS 75

5.1 Introduction 75

5.2 Summary of Research Findings 75

5.2.1 Objective I: To illustrate the 76

Types of Breaches of Contract that are

Currently Fashionable in Malaysian

Construction Industry

5.2.2 Objective II: To Address the Legal 79

Issues in Relation to Damages

5.3 Problems Encountered during Research 80

5.3.1 Time Constraint 80

5.3.2 Lack of Comprehensive Data 80

5.4 Future Researches 80

5.5 Conclusion 81

REFERENCES AND BIBLIOGRAPHY 82

APPENDIX A 85

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LIST OF TABLES

TABLE NO. TITLE PAGE

4.1 Types of Breaches 63

4.2 Relief Sought 65

5.1 Types of Breaches that are Currently Fashionable 76

5.2 Legal Issues in Relation to Damages 79

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LIST OF FIGURES

FIGURE NO. TITLE PAGE

4.1 Court Cases in Relation with Construction Contract 59

4.2 The Parties Engaged in the Cases 60

4.3 Types of Project 61

4.4 Party that Committed the Breach 62

xiii

LIST OF ABBRIEVATIONS

AC Law Reports Appeal Cases

All ER All England Law Reports

ALJ Australian Law Journal

ALR Australian Law Reports

ALJR Australian Law Journal Reports

App Cas Appeal Cases

B Beavan

B & S Best and Smith’s Reports

Build LR Building Law Reports

CA Court of Appeal

CB Common Bench Reports

Ch Chancery

Ch App Chancery Appeal

Ch D The Law Reports, Chancery Division

CIDB Construction Industry Development Board

CLD Construction Law Digest

DC Divisional Court, England

Const LJ Construction Law Journal

Const LR Construction Law Reports

CP Law Reports, Common Pleas

CPD Law Reports, Common Pleas Division

DLR Dominion Law Reports

Exch Exchequer Reports

Eq Equity Case

EWHC High Court of England and Wales Decisions

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FC Federal Court

F & F Foster & Finlayson’s Reports

H & N Hurlstone & Norman’s Exchequer Reports

HGCRA Housing Grants, Construction and Regeneration Act

HL House of Lords

HKC Hong Kong Cases

HKLR Hong Kong Law Reports

IR Irish Reports

KB King Bench

LGR Local Government Reports

LJKB (QB) Law Journal Reports, King’s (Queen’s) Bench

Lloyd’s Rep Lloyd’s List Reports

LR Law Reports

LT Law Times Reports

JP Justice of the Peace / Justice of the Peace Reports

MLJ Malayan Law Journal

NS Nova Scotia

NZLR New Zealand Law Reports

PAM Pertubuhan Arkitek Malaysia

PWD Public Work Department

PD Probate, Divorce and Admiralty Division of High

Court

QB Queen Bench

TCC Technology and Construction Court

SLR Singapore Law Reports

Stark Starkie’s Nisi Prius Reports

WLR Weekly Law Reports

WR Weekly Reports

xv

LIST OF CASES

CASES PAGE

AA Valibhoy &Sons Pte Ltd v. Banque Nationale de Paris

[1994] 2 SLR 772 23

Ahmad Ismail v. Malaya Motor Company & Anor [1973] 2 MLJ 66 19

Arvind Coal and Construction Co v. Damodar Vally Corporation

AIR 1991 Pat 14 43

Bath and North East Somerset District Council v. Mowlem Plc

[2004] EWCA Civ 115 17

Bunge Corporation v. Tradax [1981] 1 WLR 711 26, 27, 28

Cehave N.V. v. Bremer m.b.H. [1976] 1 QB 44 28

Compagnie General Maritime v. Diakan Spirit [1982] 2 Lloyd’s Rep 574 26

Davidson v. Gioyne (1810) 12 East 381 21

Dennis v Sennyah [1963] MLJ 95 47

Décor-Wall International SA v. Practitioners in Marketing Ltd

xvi

[1971] 2 All ER 216 22

Federal Commerce & Navigation Ltd v. Molena Alpha Inc & Ors

[1979] 1 All ER 307 17, 28

Frank & Collingwood Ltd v. Gates [1983] 1 Con LR 21 46

Freeman v. Hensler (1900) 64 JP 260 CA 37

Freeth & Snor v. Burr (1874) LR 9 CP 208 16

Frost v. Knight (1872) LR 7 Exch 111 29

Gaze (WH) & Sons v. Port Talbot Corporation (1929) 93 JP 89. 41

Hadley v. Baxendale (1854) 9 Exch 341 50

Hochster v. De la Tour (1853) 2 El & Bl 678 15, 29

Hock Huat Iron Foundry v. Naga Tembaga Sdn Bhd

[1999] 1 MLJ 65 67

Hong Kong Fir Shipping v. Kawasaki Kison Kaisha

[1962] 2 QB 26 (CA) 22, 26

Hong Leong Co Ltd V. Pearlson Enterprises Ltd (No 2)

[1968] 1 MLJ 262 47

Hosking v. Pahang Corporation (1891) 8 TLR 125 41

Hunter Engineering Inc v. Syncrude Canada Ltd

(1989) 57 DLR (4d) 321 23

xvii

Hunt and Winterbotham Ltd v. BRS (Parcels) Ltd

[1962] 1 QB 617. 25

Ibmac v. Marshall (1968) 208 EG 851 4, 34

Industrial & Agricultural Distribution Sdn Bhd v.

Golden Sands Construction Sdn Bhd [1993] 3 MLJ 433 at 447 17

Johnstone v. Milling (1886) 16 QBD 460, 470 14, 29

Joo Leong Timber Merchant v. Dr Jaswant Singh a/l Jagat Singh 55

Joseph Thorley Ltd v. Orchis Steamship Co [1907] 1 KB 660 22

Karsales (Harrow) Ltd. v. Wallis [1956] 2 All ER 866 20

Lawson v. Wallasley Local Board (1882) 11 QBD 229 4, 31

LEC Contractors (M) Sdn Bhd v. Castle Inn Sdn Bhd

[2001] 5 MLJ 510 6

Letrik Bandar Hup Heng Sdn Bhd v. Wong Sai Hong

[2002] 5 MLJ 247 66

Levison v. Patent Steam Carpet Cleaning Co. Ltd

[1978] QB 69 25

Lim Sew Lan v. Pembangunan Hysham Sdn Bhd

[1995] 5 MLJ 670 23

Lilley v. Doubleday [1907] 1 KB 669 22

Lombard v. Butterworth [1987] QB527 27

xviii

Lovelock v. Franklyn (1846) 8 QBD 371; 115 ER 916 15, 31

Low Kon Fatt v. Port Klang Golf Resort (M) Sdn Bhd

[1998] 6 MLJ 448 23

L’Grande Development Sdn. Bhd v.

Bukit Cerakah Development Sdn. Bhd [2007] 4 MLJ 518 72

Mersey Steel & Iron Co v. Naylor, Benzon & Co

(1884) 9 App Cas 434 CA 41

Monarch Steamship Co Ltd V. KarlsHamns Oljefabriker

[1949] AC 196 49

Muralidhar Chatterjee v. International Film Co Ltd 1943

AIR 30 PC 34; [1942] LR 70 IA 35, PC 13

Nirwana Construction Sdn Bhd v.

Pengarah Jabatan Kerja Raya Negeri Sembilan

Darul Khusus & Anor [2008] 4 MLJ 157 69

North West Metropolitan Regional Hospital Board v.

TA Bickerton & Sons Ltd [1970] 1 WLR 607 4

Parker Distributors (Singapore) Pte Ltd v. Svenborg

[1983] 2 MLJ 26 (CA) 23

Photo Production Ltd v. Securicor Transport Ltd

[1980] AC 827 24

Pontifex v. Wilkinson (1845) 1 CB 75 30

Raja Lope & Anor v. Malayan Flour Mills Bhd

[2000] 6 CLJ Supp 194 55

xix

Reg Glass Pty Ltd v. Rivers Locking Systems Pty Ltd

(1968) 120 CLR 516 49

Rhymney Rail Co v. Brtecon and Merthyr Tydfil Junction Rail Co

(1900) 69 LJ Ch 813 CA 30

Robinson v Harman (1848) 1 Ex 850 52

Robert v. Bury Comissioners (1870) LR 5 CP 310 4

Ross T Smyth & Co Ltd v. TD Bailey, Son & Co [1940] 3 All ER 60 16

Russel v. Sa da Bandeira (1862) 13 CB (NS) 149 31

Schuler (L.) A.G.v. Wickman Machine Tool Sales

[1974] AC 235 (HL) 28

SEA Housing Corporation Sdn. Bhd. v Lee Poh Choo

[1982] 1 MLJ 324 55

Seaton Brick and Tile Co Ltd v. Mitchell

(1900) 2 F (Ct of Sess) 550 42

Short v. Stone (1846) 15 LJQB 143 31

Societie Generale de Paris v. Milders (1853) 49 LT 55 30

State Trading Corporation of India v. Golodetz

[1989] 2 Lloyds’s Rep. 277 (CA) 28

Suisse Atlantique v. N.V. Rotterdamsche Kolen Centrale

[1967] 1 AC 361 22

xx

Syed Jaafar bin Syed Ibrahim vMaju Mehar Singh

Travel & Tours Sdn. Bhd. [1999] 4 MLJ 413 56

Sze Hai Tong Bank v. Rambler Cycle Co

[1959] AC 576; [1959] 3 All ER 182 (PC) 23

Tan Sri Khoo Teik Puat v. Plenitude Holdings Sdn Bhd

[1994] 3 MLJ 777 47

Tham Cheow Toh v. Associated Metal Smelters Ltd

[1972] 1 MLJ 171 51

The Mersey Steel and Iron Co Ltd v.

Naylor, Benzon & Co (1884) 9 App Cas 434 16

Toeh Kee Keong v. Tambun Mining Co Ltd [1968] 1 MLJ 39 51

Tramways Advertising Pty Ltd. v.

Luna Park (NSW) Ltd. (1938) 38 SR (NSW) 632 21

Trollope & Sons and Colls & Sons Ltd v. Singer (1913) 31

UGS Finance v. National Mortgage Bank of Greece

[1964] 1 Lloyd’s Rep. 446 23

Universal Cargo Carriers Corp v. Citati [1957] 2 All ER 70 19

Vitoria Laundry (Windsor) Ltd v. Newman Industries Ltd

[1949] 2 KB 528 51

Wells v. Army & Navy Co-operative Society (1902) 86 IT 764 38

Wright v. Dean [1948] 2 All ER 415 29

xxi

LIST OF APPENDIXES

APPENDIX NO. TITLE PAGE

A List of Cases Examined 85

CHAPTER 1

INTRODUCTION

1.1 Background of Study

The doctrine of freedom to contract, as the cornerstone of contract law in the

common law countries (Malaysia inclusive) has consequently generated an

extensive array of contracts of various characteristics and varieties. Coupled with an

explosion of contractual dealings arising out of the globalization and liberalization

process the practical ramifications are a multitude of contracts in all fields of human

endeavour; the construction industry not being expected. It is a tall order to deal

with the entire spectrum of such contracts.1

Basically, a contract is an agreement enforceable by law.2 In other words, a

contract is an agreement which is legally binding between the parties. The

agreement between two or more parties is constituted by an offer and an acceptance

of it.3

1 Harbans Singh, K. S. (2004). Engineering and Construction Contracts Management: Law & Principles. Selangor: Malayan Law Journal Sdn Bhd., pp.235

The Housing Grants, Construction and Regeneration Act 1996 of England

2 Section 2(h) of Contract Act 1950. 3 Vohrah, B. and Wu, Min Aun. (2000). The Commercial Law of Malaysia. Second Edition. Petaling Jaya: Pearson Malaysia Sdn. Bhd., pp.8

2

defined construction contract as an agreement for carrying out construction

operations, including sub-contracted work and architectural design or surveying

work or advice on building, engineering, decoration or landscape.4

In Malaysia, there are two basic components in the contract documents used

for the contracting of most construction work. The first of these contains a list of

legally crafted terms and conditions and is usually referred to as the “Contract

Conditions”. The second component consists of a set of technical specifications and

drawings which together define the scope, standards and other technical

requirements of the project.5

Where the employer is a government authority, the contract conditions

frequently take after a standard contract form used by the contracting authority (for

example, the Public Works Department Standard Form 203A). Alternatively, it may

consist of one of the standard contract forms issued by professional and trade bodies

such as the Pertubuhan Akitek Malaysia 6 (PAM) or the Construction Industry

Development Board (CIDB). References in this work will be made to some of the

major provisions contained in the more common standard forms. In practice, these

standard conditions may be modified, sometimes substantially, and legal liabilities

and rights or the parties to the contract would be fashioned accordingly.7

Consequently, once a party enters into a contract, the party must perform his

obligations exactingly according to the terms of the contract. 8

4 Section 104 & 105 of Housing Grants, Construction and Regeneration Act 1996 of England.

The contracting

parties are liable to answer for any of the obligations which they have failed to

discharge and it is no defence to an action for incomplete performance that the

parties have done everything that can be reasonably undertaken if the end result falls

5 Chow, Kok Fong. (1988). An Outline of the Law & Practice of Construction Contract Claims. Singapore: Longman Singapore Publishers Pte. Ltd., pp.4 6 Malaysian Institute of Architects 7 Chow, Kok Fong. (1988). op. cit., pp.5 8 Ibid, pp.27

3

short of that required by the contract.9 However, breach of contract happens, when a

party, without lawful reason, wrongs or fails to perform the terms and obligations of

the contract as agreed.10

The Contract Act 1950, vide Section 40 proffers the following provision for

breach of contract:11

“When a party to a contract has refused to perform, or

disabled himself from performing, his promise in its entirety, the

promise may put an end to the contract, unless he has signified, by

words or conduct, his acquiescence in its continuance.”

Examples of a breach of contract in relation to sale of goods include non-

delivery altogether, delivery of wrong quantities or of defective goods, or delay in

the delivery. Similarly, in construction contract, there may be non-performance,

defective or delayed performance of construction works.12 Thus, every breach of

contract carries with it the potential for dispute. In addition, whether the breach is

serious or not, it will give the innocent party a right to claim for damages from the

other party for any loss or damage sustained by the breach. However, only certain

types of serious breaches will entitle an innocent party not only to a claim for

damages but also to be discharged from all future obligations.13

As a general principle, where an employer is guilty of a breach of a contract,

the contractor is entitled to damages under two headings. The first is damages for

any actual loss that has been suffered, and the second is damages for any profit of

9 Paradine v. Jane (1647) Aleyn 26. 10 Cheong, May Fong. (2007). Civil Remedies in Malaysia. Malaysia: Sweet & Maxwell Asia., pp.9 11 Section 40 of Contract Act 1950. 12 Cheong, May Fong. loc. cit. 13 Eggleston, B. (2008). Liquidated Damages and Extension of Time. Third Edition. Oxford: Blackwell Science., pp.1

4

which the contractor has been deprived.14 The following are examples of common

breach situations in construction contracts which do not usually afford a sufficient

premise for the contractor to bring the contract to an end and for which the primary

recourse for the contractor is an action in damages:15

i. An employer fails to afford the contractor unfettered site

possession within a reasonable time from the signing of the

contract.16

ii. The employer is in breach of an express obligation to supply

instructions relating to the execution of the works.17

iii. The employer failed to nominate specialist subcontractors and

specialists in a timely manner and as a consequence of which

the critical path of the project is adversely affected.18

iv. Disruptions have been caused by other contractors engaged

separately by the employer to work alongside the main

contractor.

Hence, damages are granted to the contractor as compensation for the

damage or loss he has suffered through a breach of contract caused by the employer.

14 Murdoch, J. and Hughes, W. (2008). Construction Contracts: Law and Management. Fourth Edition. Oxon: Taylor & Francis Group., pp.308 15 Chow, Kok Fong. (1988). An Outline of the Law & Practice of Construction Contract Claims. Singapore: Longman Singapore Publishers Pte. Ltd., pp.34 16 Lawson v. Wallasley Local Board (1882) 11 QBD 229; Ibmac v. Marshall (1968) 208 EG 851; Robert v. Bury Comissioners (1870) LR 5 CP 310. 17 Robert v. Bury Comissioners (1870) LR 5 CP 310; Trollope & Colls v. Singer (1913) 1. 18 North West Metropolitan Regional Hospital Board v. TA Bickerton & Sons Ltd [1970] 1 WLR 607.

5

1.2 Problem Statements

In the construction industry, breaches of contract are commonplace to the

point of being routine.19 In some contracts certain breaches by the employer, such

as failure to make payment on an interim certificate, entitle the contractor to

determine his employment under the contract but such remedies are few and as a

general rule the contractor’s remedy for employer’s breach is the recovery of

general or unliquidated damages. That is to say, damages which are assessed after

the breach.20

Unlike the equitable remedies of specific performance and injunctions,

damages are awarded to the innocent party as of right, subject only to exceptions

such as mitigation and remoteness of damage.21

Section 74 (1) of the Contracts Act

1950 sets out the provision for such compensation. The said section reads:

Compensation for loss or damage caused by the breach of contract.

“When a contract has been broken, the party who suffers by the

breach is entitled to receive, from the party who has broken the

contract, compensation for any loss or damage caused to him thereby,

which naturally arose in the usual course of things from the breach, or

which the parties knew, when they made the contract, to be likely to

result from the breach of it.”

19 Eggleston, B. (2008). Liquidated Damages and Extension of Time. Third Edition. Oxford: Blackwell Science., pp.1 20 Ibid 21 Phang, Andrew Boon Leong et al. (1998). Cheshire, Fifoot and Furmston's Law of Contract. 2nd Singapore and Malaysian Edition., pp.636-637

6

Furthermore, Dato’ Justice Kadir Musa in the Castle Inn22

case went on to

the state that:

“What would be most probably justifiable for the plaintiff, if it

can be so proved, is to claim compensation for damages for the

defendant’s non-fulfillment of their ‘obligation’ under the contract by

virtue of section 76 of the Contract Act 1950.”

However, under the complicated provisions of many construction contracts

the possible breaches of contract either by contractor or employer are numerous, and

in each case the general principles must be applied in order to determine what, if

any, damage is recoverable for the breach in question.23

In brief, whether any types of breach becoming the “trend” of the

construction industry, or how can a claimant realize the legal issues of damages that

arise in the industry? Therefore, it is crucial for the claimants to identify the types

of breaches might occur and the legal issues associated with damages as to clear

obstacles for claiming damages that are entitled to them.

22 LEC Contractors (M) Sdn Bhd v. Castle Inn Sdn Bhd [2001] 5 MLJ 510 23 Wallace, D. (1970). Hudson’s Building and Engineering Contracts. Tenth Edition. London: Sweet & Maxwell Ltd., pp. 579

7

1.3 Objective of Study

The objectives of this study are:

♦ To illustrate the types of breaches of contract that are currently

fashionable in Malaysian construction industry.

♦ To address the legal issues in relation to damages.

1.4 Scope of Study

This following are the scopes of this study:-

♦ Only construction cases will be discussed in the study.

♦ The study only examines the contracts between employers and

contractors as well as contracts of contractors and subcontractors.

♦ Examine court cases related to the issue, particularly Malaysian cases

in the past thirty (1978-2008) years. Reference is also made to cases

in other countries such as United Kingdom, Singapore, Australia, and

Hong Kong.

8

1.5 Significance of the Study

The significance of this study is to give an insight of current scenario of

breaches of contract in Malaysian construction industry and also to bring up to date

of the legal issues in relation to damages. The study may help the parties to the

construction contract to have a more complete understanding on the exact situation

happening in the industry. In addition, the findings of the study could be used as

guidance to the parties to avoid themselves from committing any breaches.

1.6 Research Methodology

Research methodology proposes an arrangement of research procedures.

Therefore, research methodology is one of the crucial parts to ensure the research

can be carried out methodically to achieve the proposed objective of this research. It

is a systematic technique to use in the data collection process. The methodology for

this research is divided into five main stages: Identify Research Issue, Literature

Review, Data Collection, Data Analysis and Preparation of Full Research Report.

1.6.1 Identify Research Issue

Identifying the research issue is the initial stage of the whole research. To

identify the issue, firstly, it involves reading on variety sources of published

materials such as seminar papers, journals, articles, previous research report,

newspapers, magazines and electronic resources as well through the World Wide

9

Web and online databases from library of Universiti Teknologi Malaysia, PSZ’s

website.

1.6.2 Literature Review

Literature review is the stage which the research title is further explained and

discusses with the aim of various types of data and information that are gathered

through books, articles, magazines, journals, newspapers that obtained from library

and World Wide Web. Besides this, reported court cases from different sources

such as Malayan Law Journal, Construction Law Report, and Building Law Report

will be referred too. This phase is vital to support and strengthen the research before

proceed to other stages.

1.6.3 Data Collection

Collection of relevant data and information can be started in this stage. Data

will be collected mainly through documentary analysis. All collected data and

information are recorded systematically. Data collected to analyse are from

Malayan Law Journal and other law journals as mentioned before. It is collected

through the LexisNexis legal database. All the cases relating to research topic will

be sort out from the databases. Important cases will be collected and used for the

analysis at the later stage.

10

1.6.4 Data Analysis

In this stage, all the data, information, ideas, opinions and comments

collected are arranged, analysed and interpreted. Different types of analysis will be

carried out according to the requirements of the research objective. This procedure

is to process and convert the data collected into information that are useful for the

research. It is important in conducting case study in the way to identify the trends

and developments in the issue that is to be studied.

1.6.5 Conclusion and Recommendations

Conclusion and recommendations is the final stage of the research. In this

stage, the findings would be able to show the result of the research. Conclusion

need to be drawn in-line with the objectives of the research. At the same time, some

appropriate recommendations related to the problems may be made for a better

solution in relation to the said problem, or for further research purposes.

CHAPTER 2

BREACH OF CONTRACT

2.1 Introduction

A claim for damages may be based on a breach of contract or a tort or a

statute. Sometimes the same incident may give an entitlement to damages under all

three categories. For example, take a representation by an employer that a site is

free of asbestos. Assume that the site is not free of asbestos. If the representation is

in the contract, the contractor could claim damages for breach of contract. The

employer may also have been negligent in making the representation and the

contractor may have a claim in tort based on the employer’s negligent

misrepresentation.24

The employer’s position is, therefore, significantly different from the

contractor’s. Whereas the contractor has a financial remedy for numerous and

various breaches, the employer has his for only one breach of common occurrence –

failure by the contractor to complete on time. And whereas the financial effects of

the employer’s breach on the contractor can rarely be estimated in advance of the

24 Davenport, P. (2006). Construction Claims. Second Edition. Sydney: The Federation Press., pp.23

12

breach, not least because of the involvement of the sub-contractors, the financial

effects of the contractor’s late completion can usually be estimated with some

certainty.25

Consequently most standard forms of construction contract are drafted to

permit the parties to fix in advance the damages payable for late completion, where

these damages are rightly be termed as liquidated damages. In short, liquidated

damages are fixed in advance of the breach, whereas general or unliquidated

damages are proven damages assessed after the breach.26

On the other hand, most standard forms of contract do not mention damages

for breach of contract, except for liquidated damages for breach of contract. It is

assumed that the parties know that if either fails to perform a contractual obligation

or to perform it within the time stipulated in the contract, the other party can pursue

a claim for whatever damages are thereby caused to the claimant.

They are two basic types of breach of contract. The first is a simple breach.

Such a breach only gives the innocent party a right to damages. The innocent must

continue to perform the contract. The second type of breach is given various titles.

They include “repudiatory breach” and “fundamental breach”. Under common

law, such a breach gives the innocent party a right of election. The election is

between continuing to perform the contract or terminating the contract. Whichever

course the innocent party elects to adopt, the innocent party can claim damages.

However, the damages maybe different depending upon the innocent party’s

election.

25 Eggleston, B. (2008). Liquidated Damages and Extension of Time. Third Edition. Oxford: Blackwell Science., pp.2 26 Ibid

13

In short, this chapter addresses the types of breach that will give the innocent

party to claim for damages from the other party for any loss or damages sustained

by the breach.

2.2 Statutory Provisions

In Malaysia, the general provision on breach of contract is found in Section

40 of the Contracts Act 1950. Besides this provision, Section 56 which provides for

the effect of a failure to perform at or before a specified time will also be dealt

with.27

As mentioned in the previous chapter, Section 40 of Contracts Act provides

that when a party to a contract has refused to perform or disabled himself from

performing his promise in its entirety, the innocent party may put an end to the

contract.

In Muralidhar Chatterjee v. International Film Co Ltd, 28

on appeal from

India, Sir George Rankin in dealing with the scope of Section 39 of the Indian

Contract Act, which is similar to Section 40 of the Malaysian Contracts Act,

observed:

In a case within Section 39 [Section 40 of the Malaysian Contracts

Act], the party who rightly ‘puts an end to’ or ‘rescinds’ (Section 75)

[Section 76 of the Malaysian Act] the contract is entitled to damages

for the defaulting party’s breach. In this sense, the contract has not

ceased to be ‘enforceable by law’. On the other hand, neither party is

any longer bound to perform his promise – indeed an offer to do so, if

27 Dato’ Seri Visu Sinnadurai. (2003). Law of Contract. Volume One. Kuala Lumpur: Malayan Law Journal Sdn Bhd., pp.665 28 1943 AIR 30 PC 34; [1942] LR 70 IA 35, PC.

14

made by either party, could properly be rejected by the other. The

election of the party rescinding, as Cotton LJ once put it, ‘relieves the

other party from any further obligation under the contract and enables

both parties to make arrangements for the future on the footing that the

contract has been once for all broken and is at an end’: Johnstone v.

Milling (1886) 16 QBD 460, 470.29

2.3 Repudiation

Repudiation may occur where a party has breached a condition of the

contract or, in certain circumstances, an ‘intermediate’ term. ‘Condition’ is used in

a special sense in this context. It is a term of the contract that, if breached, allows

the other party to treat the contract as repudiated because (a) statute so provides, (b)

the parties have agreed that the breach should have that effect, or (c) the courts

regard the term as being of the quality to have such an effect because it goes “so

directly to the substance of the contract”.30

Therefore, in this following part will

consider (a) repudiation by words or conduct, (b) the proof of repudiation and (c)

anticipatory breach.

2.3.1 Repudiation by Words or Conduct

Basically repudiation occurs when one of the parties, intimates through

words or conduct, that he has no intention to perform his obligation when the

29 1943 AIR 30 PC 34 at 38. 30 Critchlow, J. (2007). “Remedies for Breach”, in Practical Construction Guides: Construction Law and Management. Edited by Pickavance, K. London: Informa Law., pp.415-416

15

obligation falls due in future. This act can be evinced expressly through an

unqualified statement to the effect. In Hochster v. De la Tour31

, the plaintiff was

engaged on April 12, 1852 as a courier and to accompany the defendant

commencing on June 1, 1852. Three weeks before the commencement date, the

defendant wrote to the plaintiff that his service was not required any more. The

plaintiff commenced action immediately. The court held that the plaintiff was

entitled to do so although the time for performance was not yet due. Here the

defendant’s written statement clearly amounted to repudiation. The principle in

Hochster v. De la Tour where the party repudiated before the scheduled time of

performance has been applied to cases where the performance was contingent upon

an event.

Moreover, repudiation can also be implied from the conduct of the

defaulting party that he has no intention to carry on with the contract. This can be

illustrated in a sale of goods at a future date, sells and delivers the same to another

prior to the due date 32 . Similarly, in a case of sale of land, in Lovelock v.

Franklyn33

, one Dell agreed to sell a piece of land to Lovelock at a certain price,

provided the price was paid over seven years. Before payment was made, and well

within the seven years, Dell sold the land to another. The court found that by Dell’s

conduct, he had impliedly repudiated his agreement with Lovelock.

2.3.2 Proof of Repudiation

Repudiation, whether explicitly by words or implicitly by conduct, must be

clearly established. It must be shown that the defaulting party has made his

31 (1853) 2 El & Bl 678; 118 ER 922. 32 “if a man contracts to sell and deliver specific goods on a future day, and before the day he sells and delivers them to another, he is immediately liable to an action at the suit of the person with whom he first contracted”, per Lord Campbell in Hochster v. De la Tour (1853) 2 El & Bl 678 at 688. 33 (1846) 8 QBD 371; 115 ER 916.

16

intention clear that he no longer intends to perform his contractual obligations. It

has been said that repudiation of contract is “a serious matter not to be lightly found

or inferred”.34

The relevant factors were considered by the Earl of Selborne LC as

follows:

…you must look at the actual circumstances of the case in order to see

whether the one party to the contract is relieved from its future

performance by the conduct of the other; you must examine what the

conduct is, so as to see whether it amounts to a renunciation, to an

absolute refusal to perform the contract, such as would amount to a

rescission if he had the power to rescind, and whether the other party

may accept it as a reason for not performing his part;…35

Thus, a mere refusal to perform is insufficient but there must be “an absolute

refusal to perform the contract”.36 A mere refusal or omission to carry on the

contract is insufficient especially if the party had honestly misapprehended the

situation and this was capable of correction.37 However, the difficulty is in deciding

how far a party’s honest misconstruction of the agreement should release him of the

charge of an absolute refusal to perform.38

34 Ross T Smyth & Co Ltd v. TD Bailey, Son & Co [1940] 3 All ER 60 at 71. HL, per Lord Wright.

Difficult as it may, it is important to

ensure that a party (A) purporting to terminate a contract on the ground of the other

party’s (B) purported breach, has sufficiently proved the purported repudiation.

Otherwise if the court decides that B did not repudiate the contract, then A’s

termination will be unjustified and A will be guilty of wrongful repudiation. The

35 The Mersey Steel and Iron Co Ltd v. Naylor, Benzon & Co (1884) 9 App Cas 434 at 438-439, HL. 36 See also Keating J in Freeth & Snor v. Burr (1874) LR 9 CP 208 where the buyer failed to pay one installment of several deliveries of iron as he thought that he could set off the sum due for damages for non-delivery of an earlier installment of delivery of the iron. The court held that the mere refusal to pay one installment in the circumstances did not warrant the defendant to treat the contract as abandoned. Keating J stated at p 214: “It is not a mere refusal or omission of one of the contracting parties to do something which he ought to do, that will justify the other in repudiating the contract; but there must be an absolute refusal to perform his part of the contract.” 37 “[A] mere honest misapprehension, especially if open to correction, will not justify a charge of repudiation”, per Lord Wright in Ross T Smyth & Co Ltd v. TD Bailey, Son & Co [1940] 3 All ER 60 at 72. 38 Federal Commerce & Navigation Ltd v. Molena Alpha Inc & Ors [1979] 1 All ER 307. In Malaysian context, see Industrial & Agricultural Distribution Sdn Bhd v. Golden Sands Construction Sdn Bhd [1993] 3 MLJ 433 at 447.

17

result will be that A becomes liable to B, instead of A’s earlier claim of a cause of

action against B and yet fail to entitle any damages.

2.3.3 Consequences of Repudiation

As pointed out earlier, the innocent party is not bound to accept that a

repudiatory breach terminates the parties’ respective further obligations: he may

instead affirm the contract, in which case, whilst he will still have the right to

recover damages resulting from the breach, the parties’ obligations for future

performance will continue. However, the right to affirm will, in reality, be illusory

where, for example, an employer has dismissed a contractor from the site, or a

contractor has deserted the site.39 In this regard it should be noted that, usually, a

contractor cannot compel an employer to continue allow him access to the site even

where the employer is in repudiatory breach.40

In the case of repudiation by the contractor, the employer will generally have

an entitlement to recover all his losses resulting from the contractor’s leaving site

such as any additional cost of having the works completed (beyond what it would

have cost to complete in any event) and losses resulting from any delay to

completion.41

In the case of repudiation by the employer, the contractor will generally be

entitled to his loss of profit on the works that remain incomplete. Both parties will

retain all the rights they had accrued up to the date of repudiation. Whilst both

39 Critchlow, J. (2007). “Remedies for Breach”, in Practical Construction Guides: Construction Law and Management. Edited by Pickavance, K. London: Informa Law., pp.416 40 Bath and North East Somerset District Council v. Mowlem Plc [2004] EWCA Civ 115. 41 Ibid

18

parties will be discharged from further performance, any arbitration clause or right

to adjudicate will survive in most cases.42

2.3.4 Anticipatory Breach

Where an anticipatory breach occurs, repudiation takes place before the time

for performance is due, that is, before either party is entitled to demand performance

by the other party.43 This was what happened in Frost v. Knight44

. The defendant

had promised to marry the plaintiff once his father had died. He later broke off the

engagement while his father was still alive, and when his ex-fiancée sued him for

breach of promise (which was a valid claim in those days, though not any longer),

he argued that she had no claim as the time for performance had not yet arrived.

This argument was rejected and the plaintiff’s claim succeeded.

A modern exposition on anticipatory breach is found in the judgment of

Devlin J in Universal Cargo Carriers Corp v. Citati45

as follows:

The two forms of anticipatory breach have a common characteristic

that is essential to the concept, namely, that the innocent party is

allowed to anticipate an inevitable breach. If a man renounces his

right to perform and is held to his renunciation, the breach will be

legally inevitable; if a man puts it out of his power to perform, the

breach will be inevitable in fact – or practically inevitable, for the law

never requires absolute certainty and does not take account of bare

42 Ibid 43 Elliot, C. and Quinn, F. (2007). Contract Law. 6th Edition. Harlow: Pearson Education Limited., pp.287 44 (1870) LR 5 Ex 322 at 326-327. 45 [1957] 2 All ER 70. See also Ahmad Ismail v. Malaya Motor Company & Anor [1973] 2 MLJ 66.

19

possibilities. So anticipatory breach means simply that a party is in

breach from the moment that his actual breach becomes inevitable.

Since the reason for the rule is that a party is allowed to anticipate an

inevitable event and is not obliged to wait till it happens, it must follow

that the breach which he anticipates is of just the same character as

the breach which would actually have occurred if he had waited.46

Applying the above principles, upon an anticipatory breach, the innocent

party has the immediate right to commence action, and he does not need to wait

until the time for performance becomes due. This rule has been justified on

efficiency grounds. By allowing the innocent party to accelerate his claim for

damages, it gives him the incentive to terminate the contract immediately and move

on, rather than keep himself ready to perform a contract which will be inevitably

breached (which is likely to increase his loss) when the time for performance

arrives. In long term contracts with periodic performances, the innocent party need

not wait for each performance to fall due in order to sue. Further, allowing

immediate recovery of advance payments enables the innocent party to make a

substitution contract.47

2.4 Fundamental Breach

A fundamental breach is one which has disastrous consequences for the

innocent party. In other words, this means that when the performance promised is

compared with actual performance, they were deprived of all, or substantially all,

they had bargained for.48

46 Ibid at 85.

The key to fundamental breach lay on two alternative

47 Cheong, May Fong. (2007). Civil Remedies in Malaysia. Malaysia: Sweet & Maxwell Asia., pp.15 48 Mulcahy, L. and Tillotson, J. (2004). Contract Law in Perspective. 4th Edition. London: Routledge Cavendish., pp.225-226

20

approaches, first, the importance attached by the parties to the term which has been

broken and secondly, the consequences of the breach of the term.49

2.4.1 General Principles

An aggrieved party is entitled to treat the contract as coming to an end is

where the defaulting party, either explicitly or implicitly, commits a fundamental

breach of contract.50 The characteristic situation envisaged is that as exemplified by

Karsales (Harrow) Ltd. v. Wallis51. In that case, the seller of a car had sought to

deliver an empty car body, relying on an exemption clause purporting to exclude any

warranty of road worthiness or fitness of purpose. The English Court of Appeal

found for the buyer because it held that what was actually delivered was not the

object contracted for. The exemption clause could not operate as there was a

fundamental breach of the contract.52

Undoubtedly, the fact in the Karsales case represents an extreme situation.

As a general principle, in deciding whether a fundamental breach has been

committed, the authorities appear to have regard to both the importance that the

parties are presumed to have attached to the particular term of the contract which has

been breached and the gravity of the consequences arising from that breach.

Furthermore, both the importance of the term breached and the gravity of the

consequences must be quite apparent to the party who is held to account for the

performance of the contract. A common expression used in the judgments to

49 Cheong, May Fong. (2007). Civil Remedies in Malaysia. Malaysia: Sweet & Maxwell Asia., pp.15 50 Chow, Kok Fong. (2004). Law and Practice of Construction Contracts. Third Edition. Singapore: Sweet & Maxwell Asia., pp.564 51 [1956] 2 All ER 866. 52 Chow, Kok Fong. loc. cit.

21

describe this approach is whether the breach “goes to the root of the contract”.53

The test was perhaps most clearly enunciated by Jordan CJ in the leading Australian

case of Tramways Advertising Pty Ltd. v. Luna Park (NSW) Ltd.:54

“The test… is whether it appears from the general nature of the

contract considered as a whole, or from some particular term or terms,

that the promise is of such importance to the promise that he would not

have entered into the contract unless he had been assured of a strict or

substantial performance of the promise, as the case may be, and that

this ought to have been apparent to the promisor.”

The concept of fundamental breach is perhaps most frequently encountered

in contracts for the carriage of goods and particularly, to deviations of shipping

voyages. In Joseph Thorley Ltd v. Orchis Steamship Co55, a cargo was contracted

for shipment on a vessel “bound for London”. However, instead of proceeding

straight for London, the ship called at ports in Asia Minor, Palestine and Malta. On

reaching London, the cargo was damaged through the negligence of stevedores. It

was held that although the deviation was not the direct cause of the damage, it was

nonetheless so serious a breach as to change the character of the contemplated

voyage. Accordingly, the ship owners had in the circumstances committed a

fundamental breach of contract. Similarly, in Lilley v. Doubleday56, where the

defendant had agreed under a contract to store the plaintiff’s goods in a repository,

but in fact stored them in warehouse, where they were subsequently destroyed by

fire, the court has no difficulty in holding that the defendant had “stepped out of his

contract” and thereby committed a fundamental breach.57

53 This metaphor was first used by Lord Ellenborough in Davidson v. Gioyne (1810) 12 East 381. A recent judgment which resorted to his metaphor is that of Sachs LJ in Décor-Wall International SA v. Practitioners in Marketing Ltd [1971] 2 All ER 216. 54 (1938) 38 SR (NSW) 632. 55 [1907] 1 KB 660. 56 [1907] 1 KB 669. 57 Chow, Kok Fong. (2004). Law and Practice of Construction Contracts. Third Edition. Singapore: Sweet & Maxwell Asia., pp.565

22

Other tests have been to ask whether the breach is total or fundamental or

whether the effect of the breach is such that it would be unfair to leave the injured

party to a remedy in damages.58 In commercial contracts, in particular those relating

to shipping, a prime test seems to be whether the commercial purpose of the

enterprise is frustrated.59 It is submitted that, in relation to building contracts, to ask

whether the breach goes to the root of the contract is often more helpful. The

deliberate character of a breach makes it easier for, but does not compel the court to

find that it was fundamental.60

2.4.2 Rule of Construction

It is now settled in both England and Singapore that the concept of a

fundamental breach is not a rule of law, but a rule of construction.61 The rule is

raised primarily to justify rescission as well as to defeat an exemption clause. In

Suisse Atlantique Societe d’Armement Maritime SA v. NV Rotterdamsche Kolen

Centrale62

58 Décor-Wall International SA v. Practitioners in Marketing Ltd [1971] 2 All ER 216.

, the plaintiff ship owners chartered to the defendants a ship for two years

to transport coal between Europe and the United States. The defendant agreed to

load and unload cargoes at specified rates and to pay demurrage for any delay in so

doing. As it turned out, delays in loading and unloading in fact occurred. Instead of

restricting their claims to the demurrage, the plaintiff argued that the defendants’

delays were such as to amount to a repudiation of the contract and that the

demurrage clause was thus inoperative. The House of Lords rejected the plaintiffs’

arguments and held that on the facts there was no fundamental breach which would

have rendered the demurrage clause inoperative. In the course of their judgment,

59 Hong Kong Fir Shipping v. Kawasaki Kison Kaisha [1962] 2 QB 26 (CA). 60 Suisse Atlantique v. N.V. Rotterdamsche Kolen Centrale [1967] 1 AC 361 61 The position in Malaysia is not clear at present. There are some Malaysian authorities suggesting that fundamental breach should operate as a rule of law. These include the comparatively recent decisions of the Malaysian High Court in Low Kon Fatt v. Port Klang Golf Resort (M) Sdn Bhd [1998] 6 MLJ 448 and Lim Sew Lan v. Pembangunan Hysham Sdn Bhd [1995] 5 MLJ 670. 62 [1967] 1 A.C. 361; [1967] 2 All ER. 61.

23

their Lordships approved the following statement of law by Pearson LJ in UGS

Finance v. National Mortgage Bank of Greece63

:

“… I think there is a rule of construction that normally an exception or

exclusive provision or similar provision in a contract should be

construed as not applying to a situation created by a fundamental

breach of contract. This is not an independent rule of law imposed by

the courts on the parties willy-nilly in disregard of their contractual

intention. On the contrary, it is a rule of construction based on the

presumed intention of the parties.”

This proposition was reaffirmed by the House more recently in Photo

Production Ltd v. Securicor Transport Ltd64. In his judgment in that case, Lord

Wilberforce noted65

:

“I have no second thoughts as to the main proposition that the

question whether, and to what extent, exclusion clause is to be applied

to a fundamental breach, or a breach of a fundamental term, or indeed

to any breach of contract, is a matter of construction of the contract.”

This approach was adopted by Dickson CJC of the Canadian Supreme Court

in Hunter Engineering Inc v. Syncrude Canada Ltd66. It must also be taken to be the

present position in Singapore. This is notwithstanding the Privy Council decision in

Sze Hai Tong Bank v. Rambler Cycle Co67

63 [1964] 1 Lloyd’s Rep. 446.

, which adopted the rule of law approach.

In more recent years, the courts here have cited and applied the principles in Photo

Production. These cases include the Court of Appeal decision in Parker

64 [1980] AC 827. 65 Chow, Kok Fong. (2004). Law and Practice of Construction Contracts. Third Edition. Singapore: Sweet & Maxwell Asia., pp.566 66 (1989) 57 DLR (4d) 321. 67 [1959] AC 576; [1959] 3 All ER 182 (PC).

24

Distributors (Singapore) Pte Ltd v. Svenborg68 and the High Court decision in AA

Valibhoy &Sons Pte Ltd v. Banque Nationale de Paris69

.

2.4.3 Onus of Proof

A difficulty which may surface on this subject concerns the party who should

shoulder the onus of proof.70 It would have been thought that the onus should fall

on the party alleging fundamental breach. In Hunt and Winterbotham Ltd v. BRS

(Parcels) Ltd71

, the defendants contracted to deliver fifteen parcels of woolen goods

to Machester, but only managed to deliver twelve. The court held that the onus was

on the plaintiffs to prove that the defendants had committed a fundamental breach of

contract and that until this was accomplished, the defendants were entitled to rely on

an exemption clause limiting liability for loss.

However, a different result was reached in Levison v. Patent Steam Carpet

Cleaning Co. Ltd72

. In that case, the defendants were entrusted with the cleaning of

a carpet. The carpet disappeared in circumstances which could not be explained by

the defendants. The Court of Appeal ruled that the onus lies on the defendants to

prove that the loss of the carpet arose from some cause which did not constitute a

fundamental breach.

68 [1983] 2 MLJ 26 (CA). 69 [1994] 2 SLR 772. 70 Chow, Kok Fong. (2004). Law and Practice of Construction Contracts. Third Edition. Singapore: Sweet & Maxwell Asia., pp.567 71 [1962] 1 QB 617. 72 [1978] QB 69; [1977] 3 All ER 498.

25

2.5 Breach of Fundamental Terms

Where there has been a breach of a fundamental term, that is, a term which

the parties have agreed expressly or by implication to be so important that its breach

should entitle the innocent party to treat himself as discharged from further

performance.73

Where the parties indicate expressly by the contractual language that a single

breach of a particular contractual obligation is to have the same consequences as a

fundamental breach entitling the innocent party to rescind the contract, even though

it would not otherwise be treated as a fundamental breach justifying immediate

termination. This is frequently brought about by “legal jargon” involving the use of

express words such as “condition” or “condition precedent” or “of the essence” in

regard to a particular contract obligation. However, the mere use of these

expressions, and particularly the simple word “condition”, will not by itself be

conclusive. The contract as a whole will be examined to see that it is consistent with

this intention.74

Contractual terms can be classified as “conditions”, “warranties” and

“intermediate or innominate” terms.75 A condition in this context is a contractual

term breach of which entitles the other party to operate the election referred to above

irrespective of the nature or seriousness of the breach.76

Whether a contractual term

is a condition is a question of construction. A term may be a condition:

73 Chow, Kok Fong. loc. cit. 74 Wallace, D. (1995). Hudson’s Building and Engineering Contracts. Eleventh Edition. London: Sweet & Maxwell., pp.617 75 Hong Kong Fir Shipping v. Kawasaki Kison Kaisha [1962] 2 QB 26 (CA); Bunge Corporation v. Tradax [1981] 1 WLR 711; Compagnie General Maritime v. Diakan Spirit [1982] 2 Lloyd’s Rep 574. 76 Suisse Atlantique v. N.V. Rotterdamsche Kolen Centrale [1967] 1 AC 361.

26

2.5.1 By Statutory Implication

2.5.1.1 Because the Parties Have Explicitly Made it So

It is open to the parties to agree that, as regards any particular obligation, any

breach shall entitle the party not in default to treat the contract as repudiated77, i.e. to

make the term a condition, even if it would not be so in the absence of such a

provision.78 The parties may use language which explicitly says that a contractual

term is to be so regarded. The actual use of the word “condition” is not required.

“Any term or terms of the contract, which, fairly read, have the effect indicated are

sufficient”. 79 A common instance is where it is stipulated that “time is of the

essence”.80

2.5.1.2 Because the Court so Construe it

Although the parties may not have explicitly agreed that a contractual term is

a condition, the court may find that it is.81 If the parties have not expressly ascribed

a degree of importance to the consequences of breach, the court asks what

consequences ought to be attached to it having regard to the contract as a whole.82

This must inevitably involve a value judgment about the commercial significance of

the term in question. 83

77 Bunge Corporation v. Tradax [1981] 1 WLR 711; Scandinavian Trading v. Flota Ecuatoriana [1983] 2 AC 694.

The court does not here consider the breach actually

committed since parties to commercial transactions should be entitled to know their

78 Lombard v. Butterworth [1987] QB527. 79 Bunge Corporation v. Tradax [1981] 1 WLR 711 80 Scandinavian Trading v. Flota Ecuatoriana [1983] 2 AC 81 Furst, S. and Ramsey, V. (1991). Keating on Building Contracts. Fifth Edition. London: Sweet & Maxwell., pp.148 82 Bunge Corporation v. Tradax [1981] 1 WLR 711 83 State Trading Corporation of India v. Golodetz [1989] 2 Lloyds’s Rep. 277 (CA).

27

rights at once and should not, when possible, be required to wait upon event before

those rights can be determined.84 The court will not be over ready, unless required

by statute or previous authority, to construe a term in a contract as a condition85, and

will be unlikely to do so where the effect of some breaches of the term is trivial86

.

“Warranties” are terms whose breach sounds in damages but does not

terminate or entitle the other party to terminate the contract. The use of the word

“warranty” to describe a term is not conclusive that that term is not a condition. In

insurance law, breach of warranty is treated as breach of condition and it may well

be that in a building contract the parties intend an express “warranty” of

performance or as to the result or use of the works to have the effect of a

condition.87

Whereas, intermediate terms are terms capable of operating as conditions or

warranties according to the gravity of the breach88 and it is thought that, in building

contracts, most terms which are not conditions are intermediate. There is thus

fundamental breach when the gravity of the breach of an intermediate term has the

effect of depriving the other party of substantially the whole benefit which it was the

intention of the parties that he should obtain from the contract. To amount to

repudiation a breach must go on to the root of the contract.89

84 Bunge Corporation v. Tradax [1981] 1 WLR 711 85 Cehave N.V. v. Bremer m.b.H. [1976] 1 QB 44. 86 Cehave N.V. v. Bremer m.b.H. [1976] 1 QB 44; Hong Kong Fir Shipping v. Kawasaki Kison Kaisha [1962] 2 QB 26 (CA); Schuler (L.) A.G.v. Wickman Machine Tool Sales [1974] AC 235 (HL). 87 Furst, S. and Ramsey, V. (1991). Keating on Building Contracts. Fifth Edition. London: Sweet & Maxwell., pp.148 88 Cehave N.V. v. Bremer m.b.H. [1976] 1 QB 44; Hong Kong Fir Shipping v. Kawasaki Kison Kaisha [1962] 2 QB 26 (CA). 89 Federal Commerce and Navigation Co. Ltd. v. Molena Alpha Inc. (1979) A.C. 757; Cehave N.V. v. Bremer m.b.H. [1976] 1 QB 44.

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2.6 Breach by the Employer

If the employer does not provide the site at the appointed time, or does not

appoint an architect, or otherwise does not observe some condition precedent to the

contractor’s liability to commence the work, the contractor can at once throw up the

contract and bring an action for damages for breach by the employer.90

If, however,

the contractor elects to proceed with the work, he may, according to circumstances,

be relieved from stipulation in the contract as to completion to time, liquidated

damages, etc, and still have an action for damages.

It is now well-settled that if a promisor under a contract, even before the time

for performance has arrived, declares an intention not to perform it, the promise may

immediately treat this as a breach and elect, if he so chooses, to bring action. This is

upon the grounds of general convenience.91

A party to an executor agreement may, before the time for executing it, break

the agreement either by disabling himself from fulfilling it, or by renouncing the

contract, and an action will lie for such breach before the time for fulfillment of the

agreement. If a party communicates his intention to break the contract to the other

party, of which intention he might subsequently repent, the other party can act on

such renunciation communicated to him and thus maintain his action for damages,

etc against the first party.92

A claim for wrongful repudiation of a contract can only succeed where the

language used by the repudiating party amounts to a declaration of intention of non

performance, or is such that the other party is justified in his inference of such

90 Gajria, K. (2000). G T Gajria’s Law Relating to Building and Engineering Contracts in India. Fourth Edition. New Delhi: Butterworths India., pp.788 91 Johnstone v. Milling (1886) 16 QBD 460 CA; Frost v. Knight (1872) LR 7 Exch 111; and see Wright v. Dean [1948] 2 All ER 415. 92 Hochester v. De La Tour (1853) 2 E & B 678.

29

intention; 93 and the language used must be construed together with the

circumstances of the case to see whether there is renunciation.94 When the contract

remains unperformed, or is not performed by the day fixed, it is a question of fact

‘which party was in fault in occasioning the contract not to be carried into effect’.95

The employers’ breaches are of two kinds from the point of view of

damages, depending upon whether on the one hand they have the effect of bringing

the work to an end, or preventing its starting, in which case the builder will be

deprived of the right to his profits upon work never actually carried out, or whether

on the other hand they merely reduce his profits upon (or increase the cost of) work

done by him. Such a conduct will amount to prevention either total or partial.96

In the case of prevention, that is to say, where the employer has wrongfully

terminated the contract, or has committed a fundamental breach justifying the

contractor in treating the contract as at an end, and the latter accordingly ceases

work, the measure of damages will be loss of profit which he would otherwise have

earned. In the more usual case, where the work is partly carried out at the time

when the contract is repudiated, the contractor will normally be entitled to the value

of the work done, assessed at the contract rates, plus his profit on the remaining

work.97

In the case of partial prevention, i.e., where the breach by the employer is not

fundamental and does not entitle the contractor t cease work, or, being fundamental,

is not treated as a repudiation by the contractor, the measure of damage is the loss of

profit arising from the reduced profitability or added expense of the work carried out

and completed by the contractor. It is, of course, quite possible for a continuing

93 Societie Generale de Paris v. Milders (1853) 49 LT 55; Rhymney Rail Co v. Brtecon and Merthyr Tydfil Junction Rail Co (1900) 69 LJ Ch 813 CA. 94 Pontifex v. Wilkinson (1845) 1 CB 75. 95 Ibid 96 Wallace, D. (1970). Hudson’s Building and Engineering Contracts. Tenth Edition. London: Sweet & Maxwell Ltd., pp. 596 97 Ibid

30

fundamental breach by the employer to first affect the profitability of work carried

out, since the contractor may not immediately elect to treat the contract as at an end,

and then give rise to claim for loss of profit on the uncompleted work when he does

so.98

Reduced profitability or partial prevention can arise from many possible

breaches of contract by the employer, such as failure to give uninterrupted or prompt

possession of the site,99 or drawings, details and other necessary information,100

on

interference by other contracts, and so on.

A party who by his own act, disable himself from fulfilling the contract,

makes himself liable for a breach of it, and dispenses with the necessity of any

request that he will perform it by the party with whom the contract is made.101

Clear language, in the certificate of an architect, is required before the same

is extended to cover breaches of contract by the employer,102 so that in the absence

of such words, if an architect gives a certificate for payment and the contractor has

been put to loss and expense by the employer’s breach of contract, such as delay or

interference, the certificate is not conclusive upon the contractor’s claim for

damages, unless it is an award upon a proper reference of the dispute. However, the

contractor may waive his rights to object to the certificate by expressly seeking the

architect’s decision on the matter.103

98 Wallace, D. (1970). Hudson’s Building and Engineering Contracts. Tenth Edition. London: Sweet & Maxwell Ltd., pp. 596-597 99 Lawson v. Wallasey Local Board (1882) 11 QBD 229. 100 Trollope & Sons and Colls & Sons Ltd v. Singer (1913) 101 Lovelock v. Franklyn (1847) 15 LJQB 146; Caines v. Smith (1846) 15 M & W 189; Short v. Stone (1846) 15 LJQB 143; Ogdens v. Nelson [1904] 2 KB 410. 102 Russel v. Sa da Bandeira (1862) 13 CB (NS) 149; Roberts v. Bury Commissioners (1870) LR 5 CP 310; Lawson v. Wallasay Local Board (1883) 48 LT 507 (CA.) 103 Gajria, K. (2000). G T Gajria’s Law Relating to Building and Engineering Contracts in India. Fourth Edition. New Delhi: Butterworths India., pp.789

31

If there is a repudiation of the contract by the employer before any work is

carried out, the damages recoverable are the amount of profit which the parties

knew, or assume, the contractor would have made, if he had been permitted to

complete in an ordinary way. Further, damages resulting from unusual

circumstances are recoverable according to the employer’s knowledge of those

circumstances.104

2.6.1 Failure to Give Possession of the Site

It is an obligation of the employer to give possession of the site to the

contractor. The degree of possession or access which must be afforded by an

employer must obviously vary with the nature of the work (which might, for

instance, in an extreme case, be for repairs or reinstatement of existing premises

while still occupied) or other circumstances such as in sub-contracts when the work

often must take place alongside and subject to interference by other traces or the

main contractor will normally be entitled to exclusive possession of the entire site in

the absence of express stipulation to the contrary.105 The following observations of

Collins LJ in Freeman v. Hensler are pertinent:106

I think the contract clearly involves that the building owner shall be in

a position to hand over the whole site to the contractor, immediately

upon making of the contract. I think that there is an implied

undertaking on the part of the building owner, who has contracted for

the building to be place by the plaintiff on his land, that he will hand

over the land for the purpose of allowing the plaintiff to do that which

he has bound himself to do.

104 Koufos v. Czarnikow Ltd [1969] 1 AC 350 (HL); Victoria Laundry Ltd v. Newman Ltd [1949] 2 KB 528 (CA); Ranger v. GW Railway (1854) 5 HLC 72 (HL.) 105 Gajria, K. op. cit., pp.790 106 (1900) 64 JP 260.

32

Since a sufficient degree of possession of the site is clearly a necessary

precondition of the contractor’s performance of his obligations, there must be an

implied term that the site will be handed over to the contractor within a reasonable

time of signing the contract, 107 and, in most cases a sufficient degree of

uninterrupted and exclusive possession to permit the contract to carry out his work

unimpeded and in the manner of his choice. This must particularly be so when a

date for completion is specified in the contract documents.108

If in the contract, one finds the time limited within which the contractor is to

do the work, that means, not only that he is to do it within that time, but it means

also that he is to have that time within which to do it.109

Where a contract stipulates that possession is to be given to the contractor,

the employer has no general right to come on the premises after possession has been

given; 110 but ‘possession’ in such a context would be construed as exclusive

possession, subject to an implied right of access for the owner or his architect or

engineer or other person, who by the contract, is to supervise the work for the

purpose of inspecting the work only. Where nothing is said regarding possession,

the implication would not necessarily be that exclusive possession should be given,

but the contractor must be clearly allowed such use of the site, as he requires for the

purpose of carrying out the work in the way which he thinks best. Further, the

contractor is prima facie entitled to possession of the site until completion or

practical completion and the employer is not, in the absence of an express right,

entitled to take possession of parts of the works before the completion of the

whole.111

107 Roberts v. Bury Commissioners (1870) LR 5 CP 310. 108 Gajria, K. (2000). G T Gajria’s Law Relating to Building and Engineering Contracts in India. Fourth Edition. New Delhi: Butterworths India., pp.789 109 Per Vaughan Williams LJ in Wells v. Army & Navy Co-operative Society (1902) 86 LT 764. 110 Per Du Parcy LJ in Nabarro v. Frederick Cope & Co [1938] 4 All ER 565. 111 Wallace, D. (1970). Hudson’s Building and Engineering Contracts. Tenth Edition. London: Sweet & Maxwell Ltd., pp. 319-320

33

2.6.1.1 State of the Site

The only duty that the employer will owe to a contractor in this regard will

ne to have the site ready for the contractor or subcontractor to start the work, unless

there are any express stipulation in the contract to the contrary.

In general, therefore, the employer owes no duty to the contractor to do work

to render the site easier to work upon112 or to conduct surveys or sink boreholes or

make other investigations, notwithstanding that the reality of the situation may be

that, on engineering contracts in particular, a lengthy survey may in fact be

necessary before the project can be properly designed or its cost estimated, and

notwithstanding that the system of tendering may only permit tendering contractors

a very short period in which to price and tender.113

However, the position would be different where certain information has been

given in the tender documents by the employer or his architects in regard to the

nature of the sub-soil, on which the tenderer has based his tender. An example of

this is where the employer attaches to his tender documents, a being chart of the

strate where excavation has to be done by the contractor, who quotes his rates on

such basis, which during the actual execution is found to be inaccurate. In such a

case, it is submitted, that the employer will be liable to the contractor for the extra

cost involved in the actual execution of the work.114

It is very important to determine whether the employer and the engineer ate

responsible for unanticipated extra costs or whether they should be blamed upon the

112 IBMAC v. Marshall (1968) 208 EG 851. 113 Wallace, D. op. cit., pp.316 114 Gajria, K. (2000). G T Gajria’s Law Relating to Building and Engineering Contracts in India. Fourth Edition. New Delhi: Butterworths India., pp.791

34

contractor, as a result of the information given in the tender documents being found

to be inaccurate.115

Undoubtedly, the employer is obliged to pay when the information given by

the contract documents is inadequate to enable the contractor to determine in

advance what work he will apparently have to do. The employer is also obliged to

pay: (i) when the data given by the engineer to the tenderers are inaccurate; (ii)

when the extra develop because of improper design and plans in the first place; and

(iii) when the engineer makes serious changes after the contract is signed.116

If the contractor performs the work as required by the contract but

unforeseen conditions arise for no fault of his, that necessitate modifications of the

design, and if these modifications are approved or ordered by the engineer, then the

extra costs involved are properly to be paid for the employer. For example, in one

case, a contractor was to build a 150 ft brick stack at an incinerator. No borings had

been taken at the site, and the engineer had designed the footing and the stack, as

though it were to be supported upon firm ground at the specified elevation.

However, under the stack there was deep clay overlain by a few feet of sand and

gravel. The contractor was afraid that the complication of the clay might cause

harmful settlement of the stack. Finally, the engineer made an investigation of the

required considerable extra construction. This was obviously to be paid for by the

employer as an extra change.117

115 Ibid 116 Ibid 117 Gajria, K. (2000). G T Gajria’s Law Relating to Building and Engineering Contracts in India. Fourth Edition. New Delhi: Butterworths India., pp.792

35

2.6.1.2 Extent and Time of Possession

The degree of possession or access which must be afforded by an employer

must obviously vary with the nature of the work (which might, for instance, in an

extreme case be for repairs or reinstatement of the existing premises while still

occupied) or other circumstances (as in sub-contracts, when the work often must

take place alongside and subject to interference by other trades or the main

contractor’s own work). But in the case of a new project, the main contractor will

normally be entitled to exclusive possession of the entire site, in the absence of

express stipulation to the contrary.

One common express exception is to be found in the terms normally found

permitting the presence on the site of other contractors employed by the employer,

another is a provision commonly found permitting the employer to engage other

contractors to do a part of the contract work, if the contractor refuses to comply with

any relevant instructions of the architect.118

The following observations of Collin LJ in Freeman v. Hensler,119

in this

connection are relevant:

I think the contract clearly involves that the employer shall be in a

position to hand over the whole site to the contractor, immediately

upon the making of the contract. I think that there is an implied

undertaking on the part of the employer, who has contracted for the

buildings to be placed by the plaintiff on his land, that he will hand

over the land for the purpose of allowing the plaintiff to do that which

he has bound himself to do.

118 Wallace, D. (1970). Hudson’s Building and Engineering Contracts. Tenth Edition. London: Sweet & Maxwell Ltd., pp. 317 119 (1900) 64 JP 260 CA.

36

Since a sufficient degree of possession of the site is clearly a necessary

precondition of the contractor’s performance of his obligations, there must be an

implied term that the site will be handed over to the contractor within a reasonable

time of signing the contract.120

In most cases, it is submitted that it is an implied

obligation of the employer to give the contractor a sufficient degree of uninterrupted

possession, to permit him to carry out his work unimpeded and in the manner of his

choice. This must particularly be so when a date for completion is specified in the

contract documents.

In Wells v. Army & Navy Co-operative Society, 121

it was observed by

Vaughan Williams LJ that ‘if in the contract one finds the time limited within which

the contractor is to do the work, that means, not only that he is to do it within that

time, but it means also that he is to have that time within which to do it’.

Further, it is obligation of the landlord to give to the contractor uninterrupted

possession of the site. Where a contract stipulated that possession is to be given to

the contractor, Du Parcq LJ was of the opinion that the employer has no general

right to come upon the premises after possession has been given, but ‘possession’ in

such cases must be construed as subject to an implied right of access for the

employer or persons authorized by him, for purposes of inspection and also, of

course, for the architect or engineer or authorized consultants for all purposes of

necessary supervision and administration of the contract. Where nothing is said

about possession, the implication is certainly not necessarily that exclusive

possession should be given, but the contractor must be clearly allowed such use of

the site as he requires for the purpose of carrying out the work in the way in which

he thinks best.122

120 Gajria, K. (2000). G T Gajria’s Law Relating to Building and Engineering Contracts in India. Fourth Edition. New Delhi: Butterworths India., pp.793 121 (1902) 86 IT 764 122 Gajria, K. (2000). G T Gajria’s Law Relating to Building and Engineering Contracts in India. Fourth Edition. New Delhi: Butterworths India., pp.793

37

The common express obligation of the main contractor to assume

responsibility for the safety of the works during construction requires a high degree

of effective control of the site, and the very important limits, often not sufficiently

appreciated by lawyers, on the architect’s or engineer’s control over methods of

working, reinforce this view. If therefore, it is intended that the premises should

remain occupied by the employer, his servants or agents, or that other contractors

should have access for special works, the contract should make express provisions

for these contingencies. Further, the contractor is prima facie entitled to possession

of the whole of the site until completion or practical completion and the employer is

not, in the absence of an express right, entitled to take possession of the parts of the

works before the completion of the whole.123

2.6.2 Failure to Supply Plans

An employer, who either expressly or impliedly has contracted to supply

drawings, without which the work cannot be completed, prevents the performance if

he or his architect does not do so within a reasonable time. What is reasonable time

is a question of fact, but usually plans and instructions should be furnished promptly

upon request, because it is necessary for the contractor to make provision for supply

and preparation of the materials, and the plans are therefore required before and

often long before the date at which the work itself will actually be put into the

building or works. The contractor, within reasonable limits, is entitled to say when

it is necessary for him to have such plans and instructions, for he is entitled to carry

out the work to the best advantage to himself.124

123 Wallace, D. (1970). Hudson’s Building and Engineering Contracts. Tenth Edition. London: Sweet & Maxwell Ltd., pp. 319-320 124 Gajria, K. (2000). G T Gajria’s Law Relating to Building and Engineering Contracts in India. Fourth Edition. New Delhi: Butterworths India., pp.793-794

38

In case of default in supplying plans by the employer, the contractor will be

justified in repudiating the contract. It should be noted that the plans and the

detailed instructions which are necessary for commencing the work should be

furnished to the contractor by the employer sometime in advance of the date fixed

for the commencement of the work, to enable the contractor to arrange for the start

of the work and subsequently the plans should be supplied to him as and when

required by him.125

If, initially the employer does not supply the plans to the contractor, the

latter can repudiate the contract and hold the employer liable in damages. If during

the progress of the work, there is any delay on the part of the employer in supplying

the plans and other necessary instructions, the contractor will be entitled to claim

damages from the employer, caused by such delay; and if the employer persist in

causing delay in supplying them, the contractor will be justified in repudiating the

contract and also can claim damages from the employer. It is, therefore, very

essential that every employer should keep himself ready with all the plans requires

for the completion of the work, in order to avoid any complaint of delay from the

contractor and also claim of damages from him.126

It has been observed in several works that detailed plans are not made

available to the contractor when they are required by him and as such delay is

caused in the completion of the work. In such cases, it is submitted, the employers

will make themselves liable to a claim for damages for delay by the contractors.127

In some of the government departments, the delay in supply of plans has

become a regular feature. The result is that the government has to face the

contractors’ claims for damages in different forms. In some of the government

departments, all the plans are made available before the tenders are invited. This 125 Wells v. Army & Navy Co-operative Society Lt (1902) 86 LT 764. 126 Gajria, K. (2000). G T Gajria’s Law Relating to Building and Engineering Contracts in India. Fourth Edition. New Delhi: Butterworths India., pp.794 127 Ibid

39

removes the main cause of delay and consequent claim of damages from the

contractors. It is not understood why a uniform practice of making all the plans

required for the execution and completion of the work, is not followed in all the

departments of the government.128

In case of delay in giving plans, the contractor is entitled to proceed with the

work and also claim compensation for such delay from the employer. If the

employer himself prevents performance, or unreasonably delays to perform his

obligations (e.g. to provide the site at the stipulated date), or delays the supply of

necessary drawings, information or materials, he is liable in damages to the

contractor for any extra cost resulting to the latter from these causes. The contractor

must be able to prove, however, before he can recover, that the employer is under an

express or implied obligation to perform the act by omission of which he was

suffered loss.129

In all cases, where the employer’s breach goes to the root of the contract, the

contractor can abandon the contract and at once bring an action for damages. If the

breach does not go to the root of the contract, the contractor should first complete

and then sue for damages in addition. If the breach does go to the root of the

contract he may, however, state that he treats it as a partial breach, carry out the

work, and after completing, sue for damages.130

128 Ibid 129 Gaze (WH) & Sons v. Port Talbot Corporation (1929) 93 JP 89. 130 Hosking v. Pahang Corporation (1891) 8 TLR 125.

40

2.7 Breach by the Contractor

The entire abandonment of the work by the contractor will justify the

employer in treating the contract as having been rescinded by the contractor.131

The

same considerations apply in the case of breach of particular stipulations by the

contractor, as in the case of similar breach by the employer.

Where the contract provides that the contractor shall observe particular

stipulations of the contract, such as a prescribed rate of progress, completion to

time, etc, under penalty of forfeiture of the contract, the breach of such a stipulation

by the contractor may entitle the employer to exercise his powers or forfeiture.132

It is a breach of contract, if the contractor omits to comply with bye-laws

and regulations, etc, if his contract impliedly or expressly provides that he is to do

so. If the contractor has agreed to execute the works according to bye-laws and

regulations of the local body and does not do so, he can be compelled to conform to

such bye-laws and rules as are applicable, failing which he will be held liable for the

breach of the contract and consequently for damages resulting out of such breach.133

Should a contractor, without lawful excuse, fail or refuse to perform his

contract, or abandon the work before completion, he becomes liable for damages for

breach of contract at the suit of the employer. The fact that he made his offer, or

signed the contract, under an error of judgment, will not of itself exonerate him.

Neither will it be a good defence if he pleads that, in his opinion, the enterprise was

unlawful; he must prove that it was, in fact, unlawful.134

131 Mersey Steel & Iron Co v. Naylor, Benzon & Co (1884) 9 App Cas 434 CA. 132 Gajria, K. (2000). G T Gajria’s Law Relating to Building and Engineering Contracts in India. Fourth Edition. New Delhi: Butterworths India., pp.811 133 Ibid 134 Seaton Brick and Tile Co Ltd v. Mitchell (1900) 2 F (Ct of Sess) 550.

41

If he subsequently finds that the contract is impossible of executing, by the

nature of it, he may still be liable for breach, having contracted to carry it out; but

his remedy against the employer’s endeavour to force performance is an application

to the court for revision.

Where in respect of work contracts for loading coal, 135

the tenderer by

sending a letter cleared that it would accept the work order only if a term relating to

the revision of rates is incorporated in the agreement, i.e. in the event of unforeseen

circumstances, it was held that the parties have not arrived at a concluded contract.

Therefore, the corporation cannot claim damages on the ground that it was entitled

to forfeit the amount of security deposited with them by the tenderer, as they were

put to loss by virtue of breach of contract on the part of the tenderer. As no

concluded contract had been arrived at between the tenderer and the corporation, the

question of damages did not arise.

2.8 Conclusion

In conclusion, a breach of contract is essentially a non performance of a

contractual obligation under conditions for which no legal excuse for non

performance exists.136

This same principle is applicable to cases of construction

contracts. Events may occur which hold up completion of the construction works.

Such delays inevitably increase the costs of the innocent party in the contract.

However, such breach does not, in itself, effect a discharge. It only justifies

the innocent party to regard itself as absolved or discharged from further

135 Arvind Coal and Construction Co v. Damodar Vally Corporation AIR 1991 Pat 14. 136 Chow, Kok Fong. (1988). An Outline of the Law & Practice of Construction Contract Claims. Singapore: Longman Singapore Publishers Pte. Ltd., pp.28

42

performance of the contract.137

Under such situation, the innocent party is entitled

the right to claim damages for losses that arise from the breach.

137 Gajria, K. (2000). G T Gajria’s Law Relating to Building and Engineering Contracts in India. Fourth Edition. New Delhi: Butterworths India., pp.786

CHAPTER 3

DAMAGES

3.1 Introduction

Whenever a party (the defendant) breaches a contract, the other party (the

plaintiff) will be entitled to an award of damages as monetary compensation for the

breach.138 Damages are normally awarded based on a basis of placing the innocent

party in the same financial position as if the contract had been properly

performed. 139

In addition, whether rightly or wrongly, under the English law,

damages for breach of contract are designed to compensate the innocent party for

the breach, to make good the actual loss, within certain parameters rather than to

punish the guilty party.

138 Paterson, J. et.al. (2005). Principles of Contract Law. 2

nd Edition. Sydney: Lawbook Co., pp.411

139 Duxbury, R. (1991). Contract in A Nutshell. London: Sweet & Maxwell., pp.102

44

3.2 General Principles

Damages represent the most common head of remedies claimed by an

innocent party for breach of contract. Unlike the equitable remedies of specific

performance and injunctions, damages are awarded to an innocent party as of right,

subject only to exceptions such as mitigation and remoteness of damage. Prima

facie, damages are granted to the innocent party for the damage or loss he has

suffered for a breach of contract.140 Two further points need to be considered in

relation to the general approach to this subject. These are:141

I. If the parties have expressly agreed and stipulated in their contract or

agreement a particular remedy for the breach complained of , due effect

will be given to this means of redress provided, it is not repugnant to

the law; and

II. Once the innocent party has selected a particular remedy to pursue and

has manifested his choice to the defaulting party; who in reliance upon

the manifestation has taken any action, the choice is binding and will

bar recourse to any other alternative.

140 Harbans Singh, K. S. (2004). Engineering and Construction Contracts Management: Law & Principles. Selangor: Malayan Law Journal Sdn Bhd., pp.200 141 Ibid

45

3.3 Types of Damages

Damages can be classified into a few types as following:142

3.3.1 General Damages

These are damages, which the law presumes to have resulted from the act of

the defaulting party (defendant) and which need not be specially pleaded. They are

recoverable as compensation for such loss as the parties may reasonably foresee as a

natural consequence of the breach or act complained of. Examples include damages

for pain, inconvenience, disappointment, etc: Frank & Collingwood Ltd v. Gates.143

3.3.2 Special Damages

Special damages are damages of a kind which the law will not presume in

the innocent party’s (plaintiff’s) favour, but which must be specially pleaded and

proved at the trial or arbitration hearing, e.g. loss of profit, interest on money, etc.

3.3.3 Nominal Damages

Nominal damages are damages awarded where, although there is a technical

breach resulting in the contravention of a right but it results in no real loss to the

142 Harbans Singh, K. S. (2004). Engineering and Construction Contracts Management: Law & Principles. Selangor: Malayan Law Journal Sdn Bhd., pp.209 143 [1983] 1 Con LR 21.

46

innocent party. Examples include trespass, failure of claimant to mitigate loss,144 or

where the plaintiff is better off as a result of the breach.145

3.3.4 Substantial Damages

Substantial damages represent compensation that is given for loss actually

sustained by the aggrieved party. These are in essence, pecuniary compensation

intended to put the aggrieved party (plaintiff) in the position he would have enjoyed

had the contract been performed. These represent the classic example of damages

based on the ‘compensatory’ principle.

3.3.5 Exemplary Damages

Exemplary damages are vindictive or punitive and are awarded so as to

punish a defaulting party (defendant). Exemplary damages consist of a sum

awarded which is far greater than the pecuniary loss suffered by the innocent party.

These damages are awarded only in exceptional circumstances, eg. defamation,

breach of promise to marry etc: Dennis v Sennyah.146

3.3.6 Unliquidated Damages

Unliquidated damages are unascertained damages that need to be proved.

These damages are dependent on the circumstances of the case.

144 Hong Leong Co Ltd V. Pearlson Enterprises Ltd (No 2) [1968] 1 MLJ 262. 145 Tan Sri Khoo Teik Puat v. Plenitude Holdings Sdn Bhd [1994] 3 MLJ 777. 146 [1963] MLJ 95.

47

3.3.7 Liquidated Damages

These are damages agreed between the parties at the time of contracting and

stated in the contract as the damages payable in the event of a specified breach,

usually that is of late completion. The sum must be a genuine pre-estimate of loss

likely to be caused by the breach or lesser sum. Liquidated damages cannot be

recovered simpliciter: Wearne Brothers (M) Ltd. v Jackson.147

These damages are

covered comprehensively by the provisions of Section 75 of the Contracts Act 1950.

3.4 Remoteness of Damages

A party who breaches a contract is required to compensate an innocent party

for the loss suffered as a result of the breach. However, this principle must be read

together with the principle that a defendant cannot be pinned with liability for every

single loss suffered by the plaintiff. To this end, the courts have had regard to the

requirements of causation and remoteness which act as a limiting factor.148

In relation to causation, an innocent party seeking to obtain damages must

show that the breach of contract was the underlying cause of his loss. In other

words, the breach of contract must be the “effective” cause of loss. Causation refers

to the connection between the breach and the loss suffered and the onus is on the

plaintiff to establish that “but for” the defendant’s breach, the loss or damage in

question would not have arisen. This principle is best elucidated by Reg Glass Pty

Ltd v. Rivers Locking Systems Pty Ltd.149

147 Act 137.

In this case, the defendants in breach of

contract supplied and installed a door that was not burglar-proof. Burglars later

148 Cheong, May Fong. (2007). Civil Remedies in Malaysia. Malaysia: Sweet & Maxwell Asia., pp.78-79 149 (1968) 120 CLR 516.

48

managed to break through the door and stole stock from plaintiff’s premises. The

plaintiffs succeeded in proving that but for the non-burglar-proof door, their goods

would not have been stolen, and thus recovered damages from the defendants.150

Seen in these terms, the issue of causation is very much an open-and-shut

situation. However it is when more than once act has caused the loss that difficult

questions arise. Such is the situation when the plaintiff’s loss cannot be solely

attributed to the defendant’s breach but also to other factors. Where these factors

are concurrent, the question that often arises is whether the defendant’s act is the

dominant cause of the plaintiff’s loss.151

This test, when applied, would see the

court drawing a line between cases where each of the acts is itself a sufficient cause

and those where the acts operate together to cause a loss.

Even in cases where the test of causation has been satisfied, it does not mean

that the defendant has to assume liability for all losses suffered by the plaintiff as a

result of his breach of contract. As the purpose of damages is to place the plaintiff

in the same position insofar as money can do, as if the contract had been performed,

damages is awarded only to the plaintiff for the loss actually suffered by reason of

the defendant’s breach. Thus, the defendant cannot be held liable for losses, though

flowing from his breach of contract, that are too remote.152

3.4.1 The Rule in Hadley v. Baxendale153

The law on remoteness has been laid down by the dicta of Alderson B in the

century old case of Hadley v. Baxendale. In this case, the plaintiffs’ mill suffered 150 Cheong, May Fong. (2007). Civil Remedies in Malaysia. Malaysia: Sweet & Maxwell Asia., pp.79 151 Monarch Steamship Co Ltd V. KarlsHamns Oljefabriker [1949] AC 196. 152 Cheong, May Fong. loc. cit. 153 (1854) 9 Exch 341.

49

from the crankshaft breakage, and the defendants were hired as carriers to send the

crankshaft to the makers in Greenwich. The defendants were informed “that the

article to be carried was the broken shaft of a mill, and that the plaintiffs were the

millers of the mill”. As a result of the delayed delivery, the plaintiffs’ mill was

inoperable for much longer than it would have been without the delay. The

plaintiffs claimed for loss of profits. The court held that the loss of profits was too

remote and thus the defendants were not liable for it. Alderson B laid down the test

of remoteness in two limbs ad follows:

Where two parties have made a contract which one of them has

broken, the damages which the other party ought to receive in respect

of such breach of contract, should be such as may fairly and

reasonably be considered either arising naturally, i.e. according to the

usual course of things from such breach of contract itself, or such as

may reasonably be supposed to have been in the contemplation of both

parties, at the time they made the contract, as the probable result of

the breach of it.154

In summary, the rule in Hadley v. Baxendale comprises of two main limbs,

i.e.:155

I. First limb – damages arising naturally, i.e. according to the usual

course of things from such breach of contract itself (also called

‘direct damages’); and

II. Second limb – damages as mat reasonable be supposed to have been

in the contemplation of both parties at the time they made the

154 Ibid at 354 155 Harbans Singh, K. S. (2004). Engineering and Construction Contracts Management: Law & Principles. Selangor: Malayan Law Journal Sdn Bhd., pp.204-205

50

contract, as the probable result of the breach of it (commonly

referred to as ‘consequential’ losses).

The Contracts Act 1950 has codified the common law rule in Hadley v.

Baxendale in the form of Section 74(1). This fact has been expressly acknowledged

by the local courts in a string of cases, notable of which are: Tham Cheow Toh v.

Associated Metal Smelters Ltd156 and Toeh Kee Keong v. Tambun Mining Co Ltd.157

Hence, under Section 74(1) an aggrieved party is entitled to:

I. The so called ‘ direct damages’, i.e. damages arising naturally, that

is, according to the usual course of things resulting from the breach;

and

II. ‘Consequential’ losses (or special damages for any loss sustained)

only if he can show that they are such that the other party knew at the

time of making the contract that ‘consequential’ (or special) loss was

likely to result from the breach: Vitoria Laundry (Windsor) Ltd v.

Newman Industries Ltd.158

In short, the loss recoverable is subjected to the provision that such

compensation is not to be given for any remote and indirect loss or damage

sustained as a result from the breach.

156 [1972] 1 MLJ 171. 157 [1968] 1 MLJ 39. 158 [1949] 2 KB 528

51

3.5 Measure of Damages

The measure of damages in contract is the principle involved in the

assessment of the actual monetary compensation that needs to be paid to the

innocent party for the damage sustained as a result of the breach of contract.159

Under the common law, damages may be claimed under two established principles,

namely:

I. Principle in Robinson v Harman160

The quantum of damage is assessed in the dictum that provided the damages

suffered is not too remote, the innocent party is entitled to be placed, so far

as money can do it, to the position he would have been, had the contract

been performed (or that the particular damage had not occurred), i.e. there

must be restitution in integrum.

II. Principle under the Rule in Hadley v Baxendale161

The quantum of damage is assessed on the premise that provided the damage

suffered is not too remote, the innocent party is entitled to receive damages

which are fairly and reasonable considered to be either arising naturally, i.e.

according to the usual course of things from such breach of contract itself or

such as may reasonably be supposed to have been in the contemplation of

both parties at the time they made the contract, as the probable result of the

breach of it.

Of the two principles adverted to above, the second principles as codified in

Section 74 of the Contract Act 1950 is commonly employed locally. 159 Harbans Singh, K. S. (2004). Engineering and Construction Contracts Management: Law & Principles. Selangor: Malayan Law Journal Sdn Bhd., pp.206 160 (1848) 1 Ex 850. 161 (1854) 9 Exch 341.

52

3.6 Mitigation of Damages

The central principle in damages is that a plaintiff who claims for

compensation arising from a breach of contract is limited by the rules of

remoteness. An ancillary principle is that of mitigation. Although the innocent

party is entitled to be compensated for his losses when the other party breaches the

contract, he is required to take necessary action to reduce his loss.162 This is best

captured in the words of Viscount Haldane in British Westinghosue Electric and

Manufacturing Co Ltd v. Underground Electric Railways Co of London Ltd163

who

stated two main principles:

The first is that, as far as possible, he who has proved a breach of a

bargain to supply what he contracted to get is to placed, as far as

money can do it, in as good a situation as if the contract had been

performed.

The fundamental basis is thus compensation for pecuniary loss

naturally flowing from the breach; but this first principle is qualified

by a second, which imposes on a plaintiff the duty of taking all

reasonable steps to mitigate the loss consequent on the breach, and

debars him from claiming any part of the damage which is due to his

neglect to take such steps.

The rationale underlying the issue of mitigation of loss is one of policy that

encourages the plaintiff to be self-reliant when a wrong has occurred. Framed in

economic terms, it is the desirability of avoiding wastage, to be efficient as opposed

to pinning all losses on the defendant.164

162 Cheong, May Fong. (2007). Civil Remedies in Malaysia. Malaysia: Sweet & Maxwell Asia., pp.97 163 [1912] AC 673 164 Cheong, May Fong. (2007). Civil Remedies in Malaysia. Malaysia: Sweet & Maxwell Asia., pp.97

53

Mitigation of loss has often been referred to as “the duty to mitigate”.

However, this terminology is said to be inaccurate since the plaintiff bears no such

positive duty, but is free to act in the best of his interests, albeit reasonably. Failure

by the plaintiff to comply with this so-called duty does not open him up to legal

action, rather the consequence of such failure only reduces the damages payable to

him.165

Whether a plaintiff who claims for damages has failed to mitigate the loss or

not is a question of fact and this depends on the circumstances of each case. Even if

the plaintiff has the duty to mitigate his loss, the standard required of the plaintiff

“is not a high one, since the defendant is a wrongdoer”. After all, the plaintiff in his

haste to “repair” the wrong caused by the defendant may err in his judgment and

any criticism of this by the defendant, is one of hindsight.166

The burden of proof that the plaintiff has failed to mitigate is on the

defendant. There appears to be differing views whether a defendant needs to plead

the issue of mitigation. In Raja Lope & Anor v. Malayan Flour Mills Bhd,167 the

High Court held that a defendant who wishes to rely on the defence that claimant

has failed to mitigate hiss loss must plead the issue of mitigation. However, in Joo

Leong Timber Merchant v. Dr Jaswant Singh a/l Jagat Singh,168

it was held that in

Malaysia there is no legal authority which states that the failure to mitigate must be

pleaded.

165 Burrows, A. (2004). Remedies for Torts and Breach of Contract. Third Edition. New York: Oxford University Press Inc., pp.122 166 Cheong, May Fong. op. cit.,pp.98 167 [2000] 6 CLJ Supp 194. 168 [2003] 5 MLJ 116.

54

3.7 Proof of Damages

A plaintiff claiming damages for breach of contract must produce evidence

in court of the loss that he has suffered because of the breach.169 In the absence of

documentary evidence, the court can make a reasonable evaluation of the loss

incurred. However, the plaintiff must lead at least sufficient or satisfactory evidence

to enable the court to make a fair and reasonable assumption of loss.170

A local case in relation to construction contracts, SEA Housing Corporation

Sdn. Bhd. v Lee Poh Choo,171

the developer delayed in completing the house and the

owner claimed for her loss of use and enjoyment of the house at a monthly rate at

RM 2,500. Her evidence was that she called the developer’s office and was

informed that the rental would be at that monthly rate, without witness or document

to sustain her claim. The Judge, Mohamed Dzaiddin held that the house owner

could not recover his loss as she failed to prove her loss of her house and occupation

of the said building by was of rental. Therefore, party who claim for damages they

will have the duty to prove their damages.

In recovery of special damages, plaintiff must have to plead and prove to his

claim. In another local case, Syed Jaafar bin Syed Ibrahim v Maju Mehar Singh

Travel & Tours Sdn. Bhd.172

, whereby a performance of Haj by 151 persons was

cancelled due to the defendant not obtain the visas and the plaintiff claimed for his

expenses to putting the passenger for certain duration in Kuala Lumpur. The

plaintiff had spent for RM 27,810 for the cost of bringing the passengers from Kota

Bahru to Kuala Lumpur and expenses for putting the passengers in Kuala Lumpur

from 11 May 1992 to 5 June 1992. The defendant denied the plaintiff’s claim.

169Syed Ahmad Alsagoff. (2003). The Principles of the Law of Contract in Malaysia. 2

nd

Edition.,pp.387 170 Ibid 171 [1982] 1 MLJ 324 172 [1999] 4 MLJ 413

55

The court refused the plaintiffs claim for RM 27,810 because there was no

evidence produced by plaintiff to sustain his claim. According to the Judge, the

plaintiff should produced either the receipts from hotels and restaurants or by at least

called the hotel and restaurant proprietors to show the nexus of his loss that he had

collected the sum from the 151 passengers. As a result, this case held that the

plaintiff must both specifically plead and prove his damages.

In a nutshell, it can be concluded that the innocent party who claiming for

damages should bear in mind that he/ she has the burden of proof for their actual

damages/ losses by showing the evidence of suffering and must be pleaded.

3.8 Conclusion

In brief, damages represent the most common head of remedies claimed by

an innocent party for breach of contract. In Malaysia, such remedy of breach is

covered under the provisions of Contract Act 1950. The general rule is that where

two parties have made a contract which one of them has broken, the damages which

the other party ought to receive in respect of such breach of contract should be

either such as may fairly and reasonably be considered arising naturally i.e.

according to the usual course of things, from such breach of contract itself, or such

as may reasonably be supposed to have been in the contemplation of both parties at

the time they made the contract as the probable result of the breach of it.173

However, a party culpable of breaching a contract is not generally liable for

all the damage which ensues from his breach of contract. Some damages are said to

173 Gajria, K. (2000). G T Gajria’s Law Relating to Building and Engineering Contracts in India. Fourth Edition. New Delhi: Butterworths India., pp.835

56

be too remote and therefore irrecoverable.174

And yet the innocent party has to

pursue closely to the some other rules such as measure and mitigation of damages in

order to succeed in claiming the damages.

174 Harbans Singh, K. S. (2004). Engineering and Construction Contracts Management: Law & Principles. Selangor: Malayan Law Journal Sdn Bhd., pp.204

CHAPTER 4

ANALYSIS OF CASE LAWS

4.1 Introduction

The previous two chapters discussed in detail about the topic of breach of

contract and damages. Accordingly, this chapter will be focused on the achievement

of each objective that had been set up in the first chapter. In other words, this

chapter is the analysis of case laws which provide clues to the objectives of this

research, which is illustrate the types of breaches of contract that are currently

fashionable in Malaysian construction industry and address the legal issues in

relation to damages.

To achieve these objectives, this research is done mainly through

documentary analysis of law journals and law reports. The relevant law reports are

limited to those reported in Malayan Law Journal (MLJ) which is available in the

database of LexisNexis legal search engine.

58

4.2 Statistical Analysis and Study of Law Reports

The primary purpose of this research work is to illustrate the common types

of breaches of contract in Malaysia construction industry. Therefore, it is aims to

generate the data as shown below.

4.2.1 Law Reports in Relation with Construction Contract in MLJ

In order to illustrate the types of breaches, data such as law reports from

construction contract disputes resolved by Malaysian litigation system were used.

Through LexisNexis electronic database, 53 law reports in relation with construction

contract from the past thirty years (1978-2008) were identified in Malayan Law

Journal by browsing the keywords of “breach of contract, building contract, and

damages under building contract”.

On the other hand, it must be noted that the actual number of relevant

construction contract court cases are expected to be more as some of the cases may

not retrieved from the LexisNexis database and some of them may not be reported in

law report of MLJ too. Moreover, most of the construction disputes are usually

resolved privately, either by arbitration or other dispute resolution. Therefore, cases

in relation with construction contract were in average number for the past thirty

years in comparison to non-construction contract cases.

59

4.2.2 Court Cases in Relation with Breaches of Contract

In order to find out how many how many court cases are related to breaches

of construction contract, all the 53 law reports were examined thoroughly.

Consequently, the result is as shown in Figure 4.1.

Figure 4.1: Court Cases in Relation with Construction Contract

In Figure 4.1, out of 53 law reports retrieved from MLJ, only 21% or 11 of

the court cases gave illustration types of breaches of contract while 79% of the cases

were related to the issues of payment, termination, procurement, performance bond,

arbitration clause and etc. All 11 cases of breaches of contract will be further

discussed in detail in the following part of this chapter, in order to achieve the

objective of research.

21%

79%

Breaches of Contract Non Breaches of Contract

60

4.2.2.1 The Parties Engaged in the Cases

Figure 4.2 shows the pattern of parties involved in the 11 cases of breaches

of contract. 9 out of 11 cases were disputes between employer and main contractor

and only two cases involved main contractor and subcontractor.

Figure 4.2: The Parties Engaged in the Cases

This analysis shows that in the past thirty years, subcontractors seldom

referred their dispute between main contractors to the court as it involves high

litigation cost and unwilling to influence the business relationships among

themselves. Whereas, employers and main contractors were more frequent to

implement their rights to resolve the dispute through litigation.

82%

18%

Employer v. Main Contractor Main Contractor v. Subcontractor

61

4.2.2.2 Types of Project Involved in Breaches

Construction projects can be divided into two main categories. These two

are public project and private project. Each type of projects has the possibilities to

be involved in the dispute – breach of contract. Figure 4.3 shows the types of

project in eleven cases that have been examined in this research.

Figure 4.3: Types of Project

Through Figure 4.3, it shows 82% or nine cases out of eleven were private

projects that related to the issue of breach of contract. While only two public

projects that went for litigation to solve the dispute of breach. From this research, it

shows that public projects were rarely being brought to the court. This might be due

to the arbitration provision that stated in the PWD contract form and all disputes will

be resolved through arbitration to achieve the mutual agreed solutions.

18%

82%

Public Private

62

4.2.2.3 Party that Committed the Breach

In construction industry, there are possibilities that disputes can be triggered

by any parties. In this research, parties that committed to the breach in those eleven

cases have been identified. Figure 4.3 shows the statistical data of which party that

committed to the breaches of contract.

Figure 4.4: Party that Committed the Breach

Based on Figure 4.3, in the past thirty years the courts had held that five

employers were liable in the breaches. Whereas five main contractors committed to

the breaches in five other cases. In the eleven cases examined in this research, only

one subcontractor being sued for breach of contract.

46%

45%

9%

Employer Main Contractor Subcontractor

63

4.2.2.4 Types of Breaches

Under construction contracts the possible breaches of contract are various.

This research has identified seven fashionable types of breaches in Malaysian

construction industry that brought to the court in the past thirty years. The data is

illustrated in Table 4.1 as shown below.

Table 4.1: Types of Breaches

Cases Types of Breaches Frequency

-Haji Abu Kassim v. Tegap Construction Sdn Bhd [1981] 2 MLJ 149 -L’Grande Development Sdn Bhd v. Bukit Cerakah Development Sdn Bhd [2007] 4 MLJ 518

Failure to Honour the

Architect/SO’s Certificate 2

-Tan Hock Chan v. Kho Teck Seng [1980] 1 MLJ 308

Failure to Give Effective

Possession 1

-Vistanet (M) Sdn Bhd v. Pilecon Civil Works Sdn Bhd [2005] 6 MLJ 664 -Usaha Damai Sdn Bhd v. Setiausaha Kerajaan Selangor [1997] 5 MLJ 601 -Nirwana Construction Sdn Bhd v. Pengarah Jabatan Kerja Raya Negeri Sembilan Darul Khusus & Anor [2008] 4 MLJ 157 -Hock Huat Iron Foundry v. Naga Tembaga Sdn Bhd [1999] 1 MLJ 65

Abandonment of Work & Delay

Completion Period 4

-Tan Ah Chim & Sons Sdn Bhd v. Ooi Bee Tat & Anor [1993] 3 MLJ 633

Serious Defective Work and

Failure to Remedial Work as

Required

1

-Letrik Bandar Hup Heng Sdn Bhd v. Wong Sai Hong [2002] 5 MLJ 247

Took Over Contract Work 1

64

Cases Types of Breaches Frequency

-Pembinaan LCL Sdn Bhd v. SK Styrofoam (M) Sdn Bhd [2007] 4 MLJ 113

Failure to issue Termination

Notice Based on an Operative

Time Frame

1

-Highceed Corp Sdn Bhd v. Warisan Harta Sabah Sdn Bhd & Anor [2000] 5 MLJ 337

Unclear Stop Work Order 1

Total 11

Apparently, abandonment of work was the type that constituted to four cases

of breach. While other types of breaches only appeared once or twice in the court

cases for the past thirty years. Therefore, it can be shown that “Abandonment of

Work and Delay Completion Period” is the type of breach that most currently

fashionable in Malaysian construction industry.

65

4.2.2.5 Relief Sought

Relief sought is what the claimant wants and what the law allows. 175

Although the claim must be legally recognized, there are instances when

construction industry claims are categorized without regard to the legal basis. 176

Table 4.2 shows the relief sought by the claimant due to the breach of contract

occurred.

Table 4.2: Relief Sought

Cases Relief Sought Frequency

-Pembinaan LCL Sdn Bhd v. SK Styrofoam (M) Sdn Bhd [2007] 4 MLJ 113 -Highceed Corp Sdn Bhd v. Warisan Harta Sabah Sdn Bhd & Anor [2000] 5 MLJ 337

Termination 2

-Tan Hock Chan v. Kho Teck Seng [1980] 1 MLJ 308 -Usaha Damai Sdn Bhd v. Setiausaha Kerajaan Selangor [1997] 5 MLJ 601

Quantum Meruit 2

-Tan Ah Chim & Sons Sdn Bhd v. Ooi Bee Tat & Anor [1993] 3 MLJ 633 -Letrik Bandar Hup Heng Sdn Bhd v. Wong Sai Hong [2002] 5 MLJ 247 -Nirwana Construction Sdn Bhd v. Pengarah Jabatan Kerja Raya Negeri Sembilan Darul Khusus & Anor [2008] 4 MLJ 157 -Hock Huat Iron Foundry v. Naga Tembaga Sdn Bhd [1999] 1 MLJ 65 -L’Grande Development Sdn Bhd v. Bukit Cerakah Development Sdn Bhd [2007] 4 MLJ 518

Damages 5

175 Norazam Othamn. (1997). Management of Variation in Construction Contracts. Cambridge: ARCOM 97 – 13th Annual Conference and Annual General Meeting, Conference Proceedings Vol. 1., pp.389. 176 Davenport, P. (1995). Construction Claims. Sydney: The Federation Press.

66

Cases Relief Sought Frequency

-Tan Ah Chim & Sons Sdn Bhd v. Ooi Bee Tat & Anor [1993] 3 MLJ 633

Specific

Performance 1

-Vistanet (M) Sdn Bhd v. Pilecon Civil Works Sdn Bhd [2005] 6 MLJ 664

Injunction 1

-Tan Hock Chan v. Kho Teck Seng [1980] 1

MLJ 308

Payment for Extra

Work and

Materials

1

-Haji Abu Kassim v. Tegap Construction Sdn Bhd [1981] 2 MLJ 149

Payment for Work

Done 1

Total 13

The reliefs sought in some cases were more than one, total frequency of

relief sought (13) is more than the total case (11) examined. After breaches

happened, the claimants were sought for damages for loss of profit, quantum meruit

and termination of the construction contract. However, majority of them were

claimed for damages as the remedy of the breach.

67

4.3 Findings of Legal Issues in Relation to Damages

According to the eleven case laws retrieved from MLJ, few legal issues in

relation to damages in Malaysia construction industry have been identified. These

issues should be able to assist the parties involved in the construction industry such

as employers and contractors to clarify the current scenario of damages in the

country. Furthermore, they help to develop a better understanding of their rights and

requirements for claiming such damages.

4.3.1 Proof of Actual Loss

Whenever there is a breach of contract by the defendant, plaintiff is generally

entitled to claim for damages. However, how defendant could prevent the innocent

party (plaintiff) to violate their right in over claiming the damages? And how

plaintiff could entitle the damages without any proof of loss?

4.3.1.1 Letrik Bandar Hup Heng Sdn Bhd v. Wong Sai Hong177

In the case of Letrik v. Wong, the appellant was the main contractor in

respect of the electrical works a construction project. The respondent was the

appellant’s subcontractor doing the actual electrical works. By the subcontract

agreement, the appellant obtained 12.5% of the contract sum as its profit. A few

days after signing the subcontract, the appellant took over the contract works from

177 [2002] 5 MLJ 247

68

the respondent because the appellant was not satisfied with the respondent’s

performance.

The respondent argued that the appellant’s action was wrongful and in

breach of the subcontract and that he was entitled to the profit he would have made

had he been allowed to continue with the subcontract works. Since the appellant

obtained a profit of 12.5% under the subcontract, the respondent submitted it was

only fair and reasonable that the respondent must be entitled to a profit at 12.5% of

the subcontract price as the claim arose naturally from the breach.

The learned judge agreed with the respondent’s submission and allowed the

award. The appellant appealed against the sessions court judge’s decision. The court

allowed the appeal and held that there is a crucial distinction between a claim for

payment of a debt and a claim for damages for breach. In this case, the respondent’s

claim is a claim for damages, therefore, respondent must prove the actual loss or

damages, which it failed to do. Since the respondent failed to prove its damages, its

claim failed. The High Court judge accordingly awarded the nominal damages to

respondent.

4.3.1.2 Hock Huat Iron Foundry v. Naga Tembaga Sdn Bhd178

The plaintiff, main contractor (the appellant in the first appeal and the

respondent in the second appeal) had sued the defendant, employer (the respondent

in the first appeal and the appellant in the second appeal) pursuant to an agreement

for the construction of an office and a factory. Plaintiff failed to complete the work

178 [1999] 1 MLJ 65

69

within the stipulated time and defendant claimed that the plaintiff was liable to pay

liquidated damages.

The plaintiff pleaded in its statement of claim that it had carried out

additional works based on various variation orders from defendant. The defendant

insisted that the plaintiff was not entitled to the principal amount claimed as it had

failed to complete the construction of the office and factory premises within the

stipulated time. The defendant counterclaimed for liquidated damages and loss of

interest on project investment and loss of income from investment by virtue of the

plaintiff's delay in completing the works only after the specified contractual dates.

The trial judge gave judgment for the plaintiff but also allowed part of the

defendant’s counterclaim. He concluded that from the evidence and the surrounding

circumstances of the case, the times of completion specified in the contract were of

the essence of the contract. However, the plaintiff pleaded that even though time is

of the essence of the contract, the defendant had allowed the completion dates to

pass and acquiesced in the works continuing under the agreement. The trial judge

also concluded that the defendant's loss had not been sufficiently proven and gave

judgment for RM10 as nominal damages for the loss of interest on project

investment and loss of income on investment.

Subsequently, plaintiff and defendant appealed. The court was allowing the

first and second appeal but dismissing the cross-appeal on nominal damages. The

judges in Court of Appeal were agreed with the decision of the trial judge in

concluding that the damages that had not been proved sufficiently by the defendant

and was right in giving judgment for RM10 as nominal damages of defendant.

In short, these two cases show that nominal damages may be awarded to the

innocent party when he can show a breach of contract but cannot prove any

70

sustained loss.179 Its function is merely to declare that the defendant has committed

a breach against the plaintiff and hence that the plaintiff’s rights have been

infringed.180

4.3.2 Standard of Proof

In proving loss one is concerned with future events or with hypothetical

actions of third parties, the standard of proof is required. Instead full damages are

only awarded if the claimant can prove its loss with reasonable certainty.181 As

mentioned in cases of Letrik v.Wong182 and Hock Huat v. Naga183

, if the aggrieved

party failed to prove the actual loss, nominal damages may be awarded to them.

4.3.2.1 Nirwana Construction Sdn Bhd v. Pengarah Jabatan Kerja Raya Negeri

Sembilan Darul Khusus & Anor184

In this case, the appellant/plaintiff, a building contractor entered into a

contract using the Standard PWD form with the respondent/defendant to build a

school. It was not in dispute that the appellant failed to complete the building of the

school within the time stipulated. The respondent was granted an extension of time

179 Ashworth, A. (2006). Contractual Procedures in the Construction Industry. Fifth Edition. Harlow: Pearson Education Limited., pp.32 180 Burrows, A. (2004). Remedies for Torts and Breach of Contract. Third Edition. New York: Oxford University Press Inc., pp.589 181Ibid., pp.53 182 [2002] 5 MLJ 247 183 [1999] 1 MLJ 65 184 [2008] 4 MLJ 157

71

for nine weeks. This was the first of several extensions. Finally, the respondent

issued a notice of intention to terminate the contract.

However, the appellant had not been able to execute the contract

satisfactorily. Thus, notice to terminate the contract was issued to the appellant.

However, despite various notices, the respondent allowed the appellant, upon its

request, to continue to complete the construction of the school. The construction of

the school was duly completed and officially accepted by the Ministry of Education

later. The appellant accordingly contended that the Ministry accepted the

construction of the school.

But the respondent's position was that despite this, the appellant had failed to

complete the construction of the school due to the non-compliance of the terms of

contract. The respondent further reiterated that the construction was in fact not

completed within the period allowed to the appellant. Consequently the respondent

by letter revived the former notice of termination and informed the appellant that the

contract was now terminated in accordance with the said notice.

The appellant claimed that the respondent owed the appellant a balance of

RM501.817.66 and the appellant also claimed the sum of RM2.8m for loss of future

contract as a result of this dispute, since it jeopardised its status in that the appellant

was blacklisted by PWD. The respondent contended that the amount claimed by the

appellant in the sum of the RM501,817.66 was not paid by them to the appellant,

since this amount was taken and considered as a set off payment towards the

liquidated ascertained damages imposed, due to the appellant's failure and delay in

completing the contract.

In Court of Appeal, judges allowed the appeal. The judge mentioned that

there was no doubt that the blacklisting of a contractor by the PWD can have serious

financial ramifications for plaintiff. It follows that the plaintiff must have suffered

72

some damage from the blacklisting. It was difficult to assess the damages but that is

no reason for refusing to make an award in plaintiff’s favour. It is an established

principle that breach of contract is actionable per se. In other words, damages, that

is to say, injuria, need not to be separately established as an ingredient of the wrong.

Neither is a plaintiff in an action for breach of contract required in law to

prove that the defendant acted intentionally or negligently in committing the breach.

Once a breach of contract is established a plaintiff is entitled to recover damages.

What follows is an exercise in the assessment of those damages. If at that stage he or

she is unable to evidentially establish the measure of damage suffered, nominal

damages will be awarded. Therefore, standard of proof only demands that evidence

from which the existence of damages can be reasonably inferred, which provides

adequate data for calculating its amount.

4.3.3 Cross Claims

It is evident from society in general that individuals are becoming more

claims conscious, even in construction industry this is true.185

Damages arise where

employer breach the contract that entitled contractor to claim for such remedy.

Under certain circumstances, the employer may cross claims against contractor or

vice versa.

185 Ashworth, A. (2006). Contractual Procedures in the Construction Industry. Fifth Edition. Harlow: Pearson Education Limited., pp.37

73

4.3.3.1 L’Grande Development Sdn. Bhd v. Bukit Cerakah Development Sdn.

Bhd186

In this particular case, the plaintiff's claim against the defendant was in

respect of a claim for work done for the defendant in the construction project. The

parties had adopted the standard PWD contract. Meanwhile the parties had also

entered into a Phase 2 contract to construct double storey terrace houses adopting

the same standard PWD contract.

The defendant had not settled the interim certificates in full as they fell due.

In this suit the defendant raised the defence that this sum ought to be deducted from

the sums that it was claiming the damages against the plaintiff in the Phase 2

contract which was pending before the Kuala Lumpur High Court Civil 3 by virtue

of the fact that it is entitled to do so under cl 50 of the standard PWD contract.

The court held that the plaintiff should be able to receive payment in full of

sums stated in the interim certificates without having to wait for any contra

payments that the defendant may be entitled to make against the plaintiff in the

future. A failure on the part of the plaintiff to pay in full the amount stipulated on

the certificates constitutes a breach of an essential term of the contract upon which

the plaintiff may sue to recover as it had done in this case.

To be brief, it is not open to the defendant to plead as a defence that it is not

liable to pay on the ground that it has a claim of a much larger sum against the

plaintiff which has yet to be decided in another civil suit. The defendant cannot

therefore in law make the interim certificate the basis of the defendant's cross claim

of damages in the suit pending in another court respecting the other contract.

186 [2007] 4 MLJ 518

74

4.4 Conclusion

In conclusion, this research has achieved its objectives as it aimed to

illustrate the types of breaches of contract that are currently fashionable in Malaysia

construction industry. The findings of this research show that “Abandonment of

Work & Delay Completion Period” is the main type of breach. All these were

caused by the contractors that abandoned their works during the contract period. On

other hand, three main legal issues have been addressed in this research too. These

issues are proof of loss during claiming damages, standard of proof of damages and

cross claim of damages.

CHAPTER 5

CONCLUSION AND RECOMMENDATIONS

5.1 Introduction

This particular chapter attempts to summarise the research’s findings based

on the literature review, case laws and analysis. In brief, it consists of the research’s

final findings, research’s constraints, recommendations for future studies and

conclusion to the whole of this study.

5.2 Summary of Research Findings

On the whole, the objectives of this research had been achieved through the

documentary analysis of 11 cases centered on the issue of breaches of contract in

Malaysian construction industry. The findings are summarised into following

subtopics.

76

5.2.1 Objective I: To illustrate the Types of Breaches of Contract that are Currently Fashionable in Malaysian Construction

Industry

In the end of this research, it is found that there are seven types of breaches of contract that are currently fashionable in Malaysian

construction industry. In Table 5.1, it shows the findings for this objective.

Table 5.1: Types of Breaches that are Currently Fashionable

No. Cases Types of Breach Relief Sought Contractual Relationship

1. Haji Abu Kassim v. Tegap Construction Sdn Bhd [1981] 2 MLJ 149

Failure to Honour the Architect/SO’s Certificate

-Payment for work done

Employer & Main Contractor

2. Pembinaan LCL Sdn Bhd v. SK Styrofoam (M) Sdn Bhd [2007] 4 MLJ 113

Failure to issue Termination Notice Based on an Operative Time Frame -Termination Employer & Main

Contractor

3. Tan Hock Chan v. Kho Teck Seng [1980] 1 MLJ 308 Failure to Give Effective Possession

-Quantum meruit -Payment for extra work and materials

Employer & Main Contractor

4. Tan Ah Chim & Sons Sdn Bhd v. Ooi Bee Tat & Anor [1993] 3 MLJ 633

Serious Defective Work and Failure to Remedial Work as Required

-Damages -Specific performance

Employer & Main Contractor

77

No. Cases Types of Breach Relief Sought Contractual Relationship

5. Vistanet (M) Sdn Bhd v. Pilecon Civil Works Sdn Bhd [2005] 6 MLJ 664

Abandonment of Work & Delay Completion Period -Injunction Main Contractor &

Subcontractor

6. Highceed Corp Sdn Bhd v. Warisan Harta Sabah Sdn Bhd & Anor [2000] 5 MLJ 337

Unclear Stop Work Order -Termination Employer & Main Contractor

7. Letrik Bandar Hup Heng Sdn Bhd v. Wong Sai Hong [2002] 5 MLJ 247

Took Over Contract Work -Damages Main Contractor & Subcontractor

8. Usaha Damai Sdn Bhd v. Setiausaha Kerajaan Selangor [1997] 5 MLJ 601

Abandonment of Work & Delay Completion Period -Quantum meruit Employer & Main

Contractor

9.

Nirwana Construction Sdn Bhd v. Pengarah Jabatan Kerja Raya Negeri Sembilan Darul Khusus & Anor [2008] 4 MLJ 157

Abandonment of Work & Delay Completion Period -Damages Employer & Main

Contractor

10. Hock Huat Iron Foundry v. Naga Tembaga Sdn Bhd. [1999] 1 MLJ 65

Abandonment of Work & Delay Completion Period -Damages Employer & Main

Contractor

11.

L’Grande Development Sdn Bhd v. Bukit Cerakah Development Sdn Bhd [2007] 4 MLJ 518

Failure to Honour the Architect/SO’s Certificate -Damages Employer & Main

Contractor

78

The summary in Table 5.1 shows the types of breaches of contract in

Malaysian construction industry. The findings are found to be parallel with the

literature review in Chapter 3 and 4. From the summary, it is not hard to be

discovered that only seven types of breaches existed in the court cases in the past

thirty years and most the cases were breached due to the reason of “abandonment of

work and delay completion period” either by the main contractor or subcontractor.

Therefore, the contractors are not advised to stop work at the site without

sensible reason but to progress the works steadily towards completion in accordance

with the contractual requirement as to time, sequence, programme of works and

quality of works, or he himself would be guilty of a breach of contract in failing to

maintain regular and diligent progress.

Moreover, most of the reliefs sought by the claimants were related to

monetary claims such as damages, quantum meruit and payment. It can be shown

that construction industry is a monetary orientated industry, where every single

dispute can be started by the monetary problem and also solve through monetary.

79

5.2.2 Objective II: To Address the Legal Issues in Relation to Damages

The second objective of this research was to address the legal issues

associated with damages. Throughout the analysis in Chapter 4, three main legal

issues have been spotted. All these three legal issues are shown in Table 5.2 as

below:

Table 5.2: Legal Issues in Relation to Damages

No. Legal Issues Cases Court Decisions

1. Proof of Actual Loss

Letrik Bandar Hup Heng Sdn Bhd v. Wong Sai Hong [2002] 5 MLJ 247

Failure to prove the actual damages that suffered only entitled the innocent party to be awarded nominal damages.

Hock Huat Iron Foundry v. Naga Tembaga Sdn Bhd [1999] 1 MLJ 65

2. Standard of Proof

Nirwana Construction Sdn Bhd v. Pengarah Jabatan Kerja Raya Negeri Sembilan Darul Khusus & Anor [2008] 4 MLJ 157

Neither is a plaintiff in an action for breach of contract required in law to prove that the defendant acted intentionally or negligently in committing the breach. Once a breach of contract is established a plaintiff is entitled to recover damages. Therefore, standard of proof only demands that evidence from which the existence of damages can be reasonably inferred, which provides adequate data for calculating its amount.

3. Cross Claims

L’Grande Development Sdn. Bhd v. Bukit Cerakah Development Sdn. Bhd [2007] 4 MLJ 518

Cross claim of damages in the suit pending in another court respecting the other contract is not allowed for the claimant.

80

5.3 Problems Encountered during Research

There are a few problems that encountered during the process research being

carried out:

5.3.1 Time Constraint

The major problem in writing up this project report is the time constraint.

There was only eight weeks’ time provided for this research. Everything has to be

done in a very fast manner, especially during the data collection process. Besides, it

is lack of time to go through more sources of literature review and documentary

analysis.

5.3.2 Lack of Comprehensive Data

For the case law selection process, limitation of decided court cases in

relation to breaches of contract in construction industry also caused the difficulty in

getting a comprehensive finding.

5.4 Future Researches

The followings are some recommendations for future researches: -

I. The procedural for the innocent parties to claim their remedy that

arise from breaches of contract under the Contract Act 1950.

81

II. Legal issues associated with other remedies such as injunction and

specific performance.

III. To examine circumstances that do not entitle the innocent party to

claim damages even there is a breach of contract term.

5.5 Conclusion

As a conclusion for all, adversarial nature of construction industry has

constituted to enormous cases of disputes between the parties in the construction

contracts. Such disputes may include the breaches of contracts which further

leading to loss of profit or damages to the innocent parties in the contract. In

Hudson’s Building and Engineering Contracts,187

Duncan Wallace had addressed an

issue that under the complicated provisions of many building contracts the possible

of breaches of contract are numerous.

Such situation occurs in Malaysian construction industry too. In this

research, the current fashionable types of breaches of contract in Malaysia have been

identified. Throughout the analysis of case laws, it has been found that in the past

thirty years the most fashionable type of breach is that abandonment of work by the

contractor. According to the building contracts in Malaysia such as PAM, PWD 203

A, CIDB Standard Form and etc, there is a provision that the contractors must carry

out the construction works regularly and diligently and yet they are not allowed to

abandon the works without any reasonable reason. In turn this may entitle the

innocent party to claim for the damages arise from the breaches. Through this

research, hopes it can provide a guidance to any party in construction industry to

handle the issues relating to breaches of contract and damages. 187 Wallace, D. (1970). Hudson’s Building and Engineering Contracts. Tenth Edition. London: Sweet & Maxwell Ltd., pp. 579

82

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85

APPENDIX A

LIST OF CASES EXAMINED

1 Haji Abu Kassim v. Tegap Construction Sdn Bhd [1981] 2 MLJ 149

2 Pembinaan LCL Sdn Bhd v. SK Styrofoam (M) Sdn Bhd [2007] 4 MLJ

113

3 Tan Hock Chan v. Kho Teck Seng [1980] 1 MLJ 308

4 Tan Ah Chim & Sons Sdn Bhd v. Ooi Bee Tat & Anor [1993] 3 MLJ 633

5 Vistanet (M) Sdn Bhd v. Pilecon Civil Works Sdn Bhd [2005] 6 MLJ 664

6 Highceed Corp Sdn Bhd v. Warisan Harta Sabah Sdn Bhd & Anor

[2000] 5 MLJ 337

7 Letrik Bandar Hup Heng Sdn Bhd v. Wong Sai Hong [2002] 5 MLJ 247

8 Usaha Damai Sdn Bhd v. Setiausaha Kerajaan Selangor [1997] 5 MLJ

601

9 Nirwana Construction Sdn Bhd v. Pengarah Jabatan Kerja Raya Negeri

Sembilan Darul Khusus & Anor [2008] 4 MLJ 157

10 Hock Huat Iron Foundry v. Naga Tembaga Sdn Bhd. [1999] 1 MLJ 65

11 L’Grande Development Sdn Bhd v. Bukit Cerakah Development Sdn Bhd

[2007] 4 MLJ 518