MERANTI MARSHAL SDN BHD v 1. ) MOHD KUSHAIRI BIN KAMISAN 2. ) EMF ENERGY SDN BHD

Case Significance

Confirms that a contractor who fails to perform through its own fault cannot recover damages for a lawful termination, and that allegations of wrongful procurement of a public-works project must be proved before liability can attach.

This High Court decision from the Construction Court in Kuala Lumpur concerns a contractor's claim for damages arising from a public-works project, and whether the plaintiff could recover against an individual and a company said to have procured and then terminated its involvement. The dispute arose out of a road-construction project advertised by the Public Works Department (Jabatan Kerja Raya) for tender by Bumiputera contractor companies. The plaintiff alleged that the first defendant, an individual who was also his principal witness, had, through his connections with the Public Works Department, secured the project and been responsible for inserting the name of the second defendant company so that it was appointed as the main contractor. The plaintiff's case was that it was entitled to damages when its involvement in the project came to an end. The Court examined the contractual relationships and the circumstances of the termination. It found that the termination by the second defendant was lawful and reasonable, and that it was the plaintiff who had breached its obligations, being unable to continue the project through its own fault — a failing unconnected with the second defendant's responsibilities under the contract. On those findings, the Court held that the plaintiff had no right to claim any damages against either the first or the second defendant. It dismissed the plaintiff's claim against both defendants with costs, ordering the plaintiff to pay RM20,000 in costs to the first defendant and RM50,000 in costs to the second defendant. The decision illustrates that a contractor who fails to perform through its own fault cannot recover damages for a termination that was itself lawful, and that a party alleging wrongful procurement of a project must establish the wrongdoing before any liability can attach. The decision also reflects that a party who seeks to found liability on an allegation that a project was improperly procured must prove that wrongdoing to the requisite standard, and cannot convert its own default in performance into a claim for damages against those said to have brought about, and later ended, its involvement.