XXXX v Fairview International School Nusajaya Sdn Bhd

Case Significance

Illustrates how a valid completion certificate operates as a precondition to a contractor's entitlement to payment, and appellate deference to a trial court's findings on delay, liquidated damages and the absence of certification in a construction dispute.

This Court of Appeal decision, in which Azmi bin Ariffin JCA delivered the grounds, arises from a construction dispute over the installation of lifts at an international school. The respondent school, as plaintiff, had sued the appellant lift contractor, as defendant, and after a full trial the High Court allowed the school's claim, awarding liquidated ascertained damages of RM940,000 for a delay of 94 days at the contractual rate of RM10,000 per day, together with further sums, while dismissing the contractor's counterclaim. The contractor appealed against that decision. The issues included a discrepancy between the letter of award and other contract documents, the absence of any written notice seeking an extension of time, the unwarranted delay in completing the works, the costs of rectification and safety works carried out by a third party, the school's loss of income from student intake, and the contractor's counterclaim for payment said to be due.

A central question was whether the consultant engaged on the project had issued a valid certification that the lift works had been completed in accordance with the contract, so as to entitle the contractor to payment. The High Court had found that there was no valid certification of completion issued by the consultant, that the contractor's counterclaim therefore could not be sustained, and that the rectification and safety works completed through the third party should be allowed to the school, so that the contractor's assertion that the school had breached the letter of award was untenable.

The Court of Appeal, after carefully scrutinising the notes of proceedings and the submissions, found no merit in the appeal. It agreed with the trial judge that there had been no certification by the consultant that the lift works were completed as required by the contract, affirmed the High Court's decision, and ordered the appellant to pay the respondent costs of RM25,000 subject to allocatur. The judgment is a useful illustration of how a valid completion certificate operates as a precondition to a contractor's entitlement to payment, and of appellate deference to a trial court's findings on delay, liquidated damages and the absence of certification in a construction dispute.