MAJLIS BANDARAYA PULAU PINANG v Sagamuda Civil Sdn Bhd

Case Significance

Illustrates appellate reversal in a PAM 2006 construction dispute where the Court of Appeal found the delay attributable to the contractor, upheld the employer's termination as lawful, and allowed the employer's claim for liquidated ascertained damages while dismissing the contractor's counterclaim.

This Court of Appeal decision at Putrajaya concerns a construction dispute under a PAM 2006 form of contract and the consequences of delay, termination and the final account. The appellant, Majlis Bandaraya Pulau Pinang (the Penang City Council), had employed the respondent, Sagamuda Civil Sdn Bhd, as contractor, and had sued it in the High Court for breach of the construction contract, principally claiming liquidated ascertained damages for delay and damages for failure to perform. After a full trial the Judicial Commissioner had dismissed the employer's claim and, allowing the contractor's counterclaim, had declared that the employer had unlawfully terminated the contract, held that the employer was not entitled to any liquidated ascertained damages, and ordered that the contractor be paid RM1,654,195.58 for unpaid works as stated in the final account. The employer appealed. The issues on appeal included whether the contractor was in breach through non-compliance with the works schedule, whether the delay in progress, notably in the piling and utilities works, was attributable to the contractor, whether the commencement and completion dates and any condition precedent had been correctly determined, and whether the termination was lawful. Reviewing the evidence, the Court of Appeal took a different view from the trial court, being satisfied that the delay was attributable to the contractor and that the employer's claim, including for liquidated ascertained damages, was made out, while the contractor's case that the termination was unlawful could not stand. The court allowed the appeal, allowing the employer's claim in the prayers pleaded and dismissing the contractor's counterclaim in its entirety, and it ordered the contractor to pay costs of RM80,000 here and below. The judgment is a useful illustration of appellate reversal in a construction dispute where the delay is found attributable to the contractor and the employer's termination is upheld as lawful.