KOSI ENGINEERING SDN. BHD. v CHENGALJATI SDN. BHD.

Case Significance

Illustrates the summary determination of contractual construction under Order 14A and how a court reads a settlement deed as a whole, including its recitals and connecting words, to fix the sum recoverable in a construction dispute.

This High Court decision at Shah Alam concerns the interpretation of a settlement deed and the recovery of sums due under it in a construction subcontracting dispute. The defendant was the main contractor appointed for a package of a major elevated highway project, and it had engaged the plaintiff as a subcontractor to carry out protection, realignment and additional works. An earlier suit by the plaintiff for payment had been resolved amicably by a Surat Ikatan Penyelesaian (Settlement Deed) dated 20 January 2020, under which the parties agreed that the various heads of claim, referred to collectively as 'the Indebtedness' and comprising a received certified progress claim, an unreceived certified progress claim and invoice claims, would be paid by instalments on or before 31 December 2021, time being of the essence. When the defendant failed to comply, the plaintiff sued in the present action, and the key questions of construction were determined under Order 14A of the Rules of Court 2012. The central interpretive issues were whether Clause 1 of the Settlement Deed had to be read subject to Clause 2, whether confirmation from a third party, the project's turnkey contractor, first had to be obtained before the plaintiff became entitled to the whole of 'the Indebtedness', and whether under the deed the plaintiff was entitled to all of the heads making up 'the Indebtedness'. The court's analysis addressed the ordinary meaning of the word 'notwithstanding' and the effect of the recitals in the preamble to the deed, and it concluded that the defendant had failed to comply with the terms of the deed, in particular Clause 2. Allowing the application, the court entered judgment for the outstanding balance after deducting sums already paid under the deed and in execution proceedings, in the sum of RM1,337,088.96, with costs. The judgment is a useful illustration of the summary determination of contractual construction under Order 14A and of how a court reads a settlement deed as a whole, including the effect of its recitals and connecting words, to fix the sum recoverable.