CHINA CONSTRUCTION YANGTZE RIVER (MALAYSIA) SDN. BHD. (Dahulunya dikenali sebagai China Construction Third Engineering Group (M) Sdn. Bhd.) v WK PLASTERCEIL AND CONSTRUCTION SDN BHD

Case Significance

Instructive on the binding effect of pleadings, the bar on running unpleaded defences on appeal to avoid trial by ambush, and the limits of appellate intervention under the plainly-wrong test in a construction progress-claim dispute.

This High Court decision at Johor Bahru is an appeal from the Sessions Court in a construction sub-contract payment dispute. The appellant, China Construction Yangtze River (Malaysia) Sdn Bhd (formerly China Construction Third Engineering Group (M) Sdn Bhd), had, by a letter of award, engaged the respondent, WK Plasterceil and Construction Sdn Bhd, as a sub-contractor to supply and install plaster ceiling works for condominium blocks in a Mont Kiara development, at a contract sum of RM4,156,964.00 payable through monthly progress claims. The sub-contractor said it had completed the works, including variation orders, and had submitted a final progress claim, Progress Claim No. 22, for an outstanding balance, without complaint from the appellant. The appellant had made a partial set-off against the sum owing by transferring an apartment unit, but the court below treated that as a partial set-off rather than a full settlement. After a full trial the Sessions Court allowed the sub-contractor's claim, and the appellant appealed. The court, per Manira binti Mohd Nor JC, dismissed the appeal. A decisive feature was that the defences argued on appeal, including that the claim had not first been verified by the appellant and that the works were not carried out to specification or quality, had not been pleaded in the appellant's statement of defence; applying the rule that parties are bound by their pleadings and that a court should not decide on an issue not raised in the pleadings, the court held that these unpleaded defences could not be run on appeal so as to avoid trial by ambush. Applying the plainly-wrong test and according due deference to the trial judge's findings of fact, the court found that the Sessions Court had evaluated the evidence fairly on the balance of probabilities in arriving at the proven balance owing, recognised the set-off, and disclosed no misdirection or misappreciation of evidence. The appeal was accordingly dismissed and the Sessions Court decision affirmed, with costs of RM5,000. The judgment is instructive on the binding effect of pleadings and the limits of appellate intervention in construction progress-claim disputes.