PENS HOLDINGS SDN. BHD. v AIMA CONSTRUCTION SDN. BHD.

Case Significance

Illustrates how a main contractor's written assurance to a downstream sub-contractor can be examined for the ingredients of a constructive trust over retention monies within a layered construction-contracting chain, and the limited scope for appellate interference with the trial court's findings on such a trust.

This High Court decision at Kangar, Perlis, is an appeal from the Sessions Court in a construction-payment dispute. The project was the construction of the Perlis State Legislative Assembly Complex, for which the appellant, Pens Holdings Sdn Bhd, had been awarded the main contract by the Public Works Department (JKR) in about 2005. The appellant appointed Felhatan Trading Sdn Bhd as sub-contractor, which in turn engaged a firm trading as Nam Fang Kusyen dan Perhiasan, which appointed the respondent, Aima Construction Sdn Bhd, as its sub-contractor by a letter dated 19 May 2005. The respondent completed the works in September 2007, a certificate of completion issued, and the defects liability period expired in September 2009, but a retention sum of RM331,665.17 remained unpaid, in respect of which the respondent had earlier obtained judgment against the Nam Fang firm. The present dispute focused on a letter the appellant had sent the respondent in January 2016. The Sessions Court had allowed the respondent's claim for the retention sum with interest at 5 per cent from 15 September 2009 and costs. On appeal the central question was whether that letter created a constructive trust binding the appellant in favour of the respondent, and whether any such constructive trust was subject to a further approval letter from a third party. Having examined the correspondence and the findings below, the High Court found no basis to disturb the Sessions Judge's conclusions on the existence and effect of the trust. It dismissed the appeal and ordered costs of RM10,000. In upholding the finding, the court accepted that the January 2016 letter had to be read against the full contracting chain and the earlier judgment obtained against the intermediate firm, rather than in isolation. The judgment is a useful illustration of how a contractor's written assurance to a downstream sub-contractor can be scrutinised for the ingredients of a constructive trust over retention monies in a layered construction-contracting chain.