YENG YING SDN. BHD. v LLC INFRA SDN BHD

Case Significance

Illustrates how a construction dispute can be decided by the counterclaim rather than the claim: a sub-subcontractor's action for retention and unpaid work was not only dismissed but overtaken by the other party's entitlement to set-off, back charges and substantial liquidated ascertained damages for delay.

This decision of the Construction Court within the High Court in Kuala Lumpur concerns competing claims between a sub-subcontractor and its subcontractor on an earthwork package forming part of a major railway project. By a letter of award the defendant had appointed the plaintiff as sub-subcontractor to provide earthwork services for a section of an electrified double-track railway between two towns, at a contract sum exceeding RM22 million. The plaintiff claimed a retention sum said to have been held back by the defendant and a further sum for work done, the latter reduced after the defendant produced evidence of a payment already made. The defendant resisted the claim and counterclaimed for substantial sums, including set-off and back charges and liquidated ascertained damages for delay, together with the refund of an advance payment. Having tried the competing cases, the court preferred the defendant's position. It dismissed the plaintiff's claim in its entirety and allowed the defendant's counterclaim, ordering the plaintiff to pay the defendant set-off and back charges of RM2,394,844.48 and liquidated ascertained damages of RM21,068,000, and to refund an advance of RM100,000. The court also ordered the plaintiff to pay the defendant's costs, fixed at RM351,365.10, on an indemnity basis. The scale of the liquidated damages, dwarfing the plaintiff's own claim, reflected the court's findings on responsibility for delay to the works and the contractual mechanism by which such damages had been agreed to be calculated. The court's award of costs on the more onerous indemnity basis, rather than the ordinary basis, signalled its view of the manner in which the losing party had conducted or pursued the claim. The judgment illustrates how a construction dispute can turn decisively on a counterclaim, where a contractor's claim for retention and unpaid work is not merely defeated but overtaken by the other party's entitlement to set-off, back charges and liquidated damages for delay.