1

DALAM MAHKAMAH RAYUAN MALAYSIA

(BIDANGKUASA RAYUAN)
RAYUAN SIVIL NO: T-02(NCVC)(W)-1325-08/2014
ANTARA
HARIN CORPORATION SDN BHD
(NO. SYARIKAT: 308801-d)

PERAYU

DAN
RIMBUN TEKAD PREMIX (TERENGGANU) SDN BHD
(NO. SYARIKAT: 290095-T)

RESPONDEN

(Dalam Mahkamah Tinggi Malaya di Kuala Terengganu

Dalam Negeri Terengganu Darul Iman
Guaman Sivil No: 22NCVC-32-05/2013
Antara
RIMBUN TEKAD PREMIX (TERENGGANU) SDN BHD.
(NO. SYARIKAT: 390095-T)

PLAINTIF

Dan
HARIN CORPORATION SDN BHD
(NO. SYARIKAT: 308801-D)

DEFENDAN)

KORUM
ABDUL AZIZ ABDUL RAHIM, HMR
ROHANA YUSUF, HMR
PRASAD SANDOSHAM ABRAHAM, HMR

JUDGMENT OF THE COURT

[1]

This appeal by the Appellant is against the decision of the Learned

High Court Judge YA Dato Haji Mohd Yazid bin Haji Mustafa, at Kuala
Terengganu in allowing the Respondents claim in the sum of
RM1,654,286.00 together with interest and in dismissing the Appellants
counter-claim.

Background facts
[2]

Lembaga Kemajuan Terengganu Tengah (KETENGAH) had

awarded the Respondent (Rimbun Tekad Premix (Terengganu) Sdn

Bhd) a contract to build and commission a main terminal, passenger
jetty, and provide jetty services, in respect of a project known as Kenyir
Trade Centre at Pulau Bayas, Tasik Kenyir, Hulu Terengganu (the
Project).

[3]

The Respondent in turn had, pursuant to a letter of award dated

31.5.2012 offered to Sub-Contract the Project to the Appellant, Hairin

Corporation Sdn Bhd. The relationship between the Appellant and the
Respondent was formalised by way of a written agreement entered into
between them dated 6.6.2012 describing the Respondent as the Main
contractor and the Appellant the Sub-Contractor.

This agreement is

described as the Sub-Contract Agreement (Sub-Contract). The main

features of the Sub-Contract are these:
i.

the cost of the Project is stated under recital B as

RM56,593,030.30;

ii.

In consideration of the Respondent awarding the Project to the

Appellant, the Appellant agreed to pay a commission of 13.50%
equivalent to RM7,640,060.09 to the Respondent (clause 1 (b));

iii. The commission is to be paid in accordance to the First

Schedule of Sub-Contract ( clause 1 (b) );
iv. Payment received by the Main contractor from the Employer
shall be credited into a separate account opened by the Main
contractor solely for that purpose ( clause 5 (a) );
v.

The account will have join signatories of both parties;

vi. The Main contractor reserves the right to deduct from each
progress payment any sum deductible or entitled under the
Sub-Contract;
vii. In a situation where the progress payment is not sufficient to
deduct sums due, the Main contractor can deduct in the
subsequent progress payment;
viii. Events for determination of the Sub-Contract are listed in clause
15;

ix. The Sub-Contract contains an entirety clause wherein it is

stated

that

the

Sub-Contract

supersedes

all

written

memorandum, agreements, representations or understanding

between parties (clause 22(e)).

[4]

The Respondents claim was for the payment of commission in

total of RM4,000,000.00 which according to the Respondent, had

become due and payable as follows:
i.

First

payment

due

in

the

1st

month

(June

2012),

RM1,500,000.00;
ii.

Second payment due in July 2012, RM500,000.00;

iii.

Third payment due in August 2012, RM2,000,000.00 (3rd

payment).

[5]

The case of the Respondent was that a total of RM4,000,000.00

had became due and payable by August 2012. The Appellants case
was that there was nothing in the Sub-Contract that stipulates that the
Appellant had to pay up the RM4,000,000.00 out of the total commission
as claimed. The stipulations were only found in the Letter of Award
which in our view did not form part of the Sub-Contract.

[6]

The Respondent said the Appellant had failed to pay the agreed

commission due as above. This entitled the Respondent to invoke

clause 5 to deduct the sums due through the progress payment. The
Respondent had tabulated below as to how the deduction of the
progress payment had been made by the Respondent from the
progressive claim. Accordingly the deduction against the progressive
claim payment was not sufficient to cover the RM4,000,000.00 due:

Bil

7.1
7.2
7.3.

Sijil
Perakuan
Bayaran
Interim

No. 1
(11.9.2012)
No. 2
(9.11.2012)
No. 3
(5.12.2012)

Jumlah diperakui

Jumlah
dipotong
(susulan
Deed of
Assignment
Lifomax
Woodbuild
Sdn. Bhd.)

Jumlah
dipotong (wang
tahanan)

Jumlah
diperolehi

RM1,236,036.67

RM123,600.00

RM1,112,400.00

RM1,825,781.68

RM774,540.00

RM182,570.00

RM

868,590.00

RM 647,422.99

RM117,936.00

RM 64,700.00

RM

464,724.00

RM2,445,714.00

JUMLAH KESELURUHAN DIPEROLEHI

[7]

Having deducted the sums from the progressive payment as

above and after deducting a further sum of RM100, 000.00 which was
paid

earlier

by

the

Respondent

there

is

still

balance

of

RM1,654,286.00 to be paid. This is the sum claimed by the Respondent

under the Sub-Contract in this suit.

[8]

It is the Respondents case also that this non payment of the

commission due by the Appellant had caused a breach of the SubContract by the Appellant. The Respondent further alleged that the
Appellant had also breached the term of Sub-Contract for failure to
complete the Project within time stipulated. This failure had caused the
delay in the progress of the Project. Premised on these two grounds,
and after given due warning, the Appellant failed to complete the Project
in the workmanlike manner, the Respondent proceeded to terminate the
Sub-Contract.

[9]

Accordingly, vide a notice dated 27.11.2012 the Respondent

issued a termination notice purportedly under clause 15(a) to terminate

the Sub-Contract. The termination notice is found at page 260 of the
Record of Appeal (Part C). The termination notice had stipulated two
grounds as the reasons for termination. The first ground of termination
cited by the Respondent in the termination notice was the failure to pay
the agreed commission as stated in the Letter of Award dated
31.05.2012 and the second ground was the delay in the progress of the
Project.

[10] The Respondent contested the termination notice as being an

unlawful termination. This formed the basis of the Appellants counterclaim against the Respondent.

[11] The learned High Court Judge had allowed the claim of the
Respondent and dismissed the counter-claim of the Appellant. In his
grounds of judgment the learned Judge agreed that the payment of
commission was due to be paid to the Respondent upfront right from the
first month as stipulated in the Letter of Award. The learned trial Judge
allowed the claim of the Respondent and had dismissed the counter
claim of the Appellant. Against this decision, the Appellant had lodged its
appeal.

[12] In our view this appeal can be disposed by determining two main
issues viz; whether the learned judge was correct in his finding and
allowing the claim of the Respondent that RM4,000,000.00 out of the
agreed commission of 13.50 % was to be paid upfront as stipulated in
the Letter of Award and whether or not the termination of the SubContract was lawfully made by the Respondent.

[13] In his grounds of judgment at paragraph 19 the learned trial Judge

had found that Berdasarkan terma-terma perjanjian sub-kontrak,

defendan telah bersetuju untuk menjelaskan RM4 juta pada bulan Jun,
Julai dan Ogos 2012 dimana defendan hendaklah membayar kepada
plaintif jumlah RM4 juta secara terus tanpa mengikut jumlah tuntutan
progress claim. Though the learned judge had stated that the claim of
the Respondent was allowed based on the terms of the Sub-Contract it
is apparent that the learned High Court Judge had relied on the terms in
the Letter of Award. We say so because there is no clause in the SubContract which spells out the same terms of payment as stipulated
under the Letter of Award.

[14] The only clause that refers to the payment of commission under
the Sub-Contract is clause 1 (b) which we produce in extensor below;
Clause 1 (b)
In consideration of The Main Contractor hereby appoints the
Sub-Contractor to construct and complete the Works and make
good any defects whatsoever to the Works in conformity in all
respects to the provisions of the Main Contract and in
accordance with the terms and conditions set out in this
Agreement, the Sub-Contractor hereby agree to pay to the
Main Contractor at a percentage of 13.50% from the SubContract Sum AND shall be paid by the Sub-Contractor to the

Main Contractor by the manner and at the amount stated in the

First Schedule herein.

[15] This clause does not specify when the commission of 13.50 % is to
be paid. The manner of payment is stated as per the First Schedule.
Learned counsel for the Respondent contended that clause 1 (b) above
read together with the First Schedule would show that the amount of
RM4,000,000.00 out of the total 13.50% would become payable as per
stipulated in the Letter of Award.

[16] We have perused through the clauses in the Sub-Contract and we

do not find any clause to suggest the payment of the agreed commission
of up to RM4,000,000.00 in total as stipulated in the Letter of Award
would have to be paid upfront. We further do not find the First Schedule
support the case of the Respondent, that part of the commission is to be
paid upfront independent of the progressive claim.

[17] We have also examined the First Schedule attached to the SubContract. We reproduce the said Schedule for better appreciation of it.

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Schedule 1
JADUAL PEMBAYARAN KJPB
Bil. Kontrak
13.50%

56,593,030.30
7,640,059.09

BuilderWorks $ 42,193,030.30
*Berdasarkan Final Contract Sum
RIMBUN TEKAD

Bulan

Nilai Bayaran Komisen

SUB CON
Estimate Progress Claim

Cumulative
Progress Claim

Bayaran Fee permulaan

1,500,000.00

Bayaran Fee Berperingkat

500,000.00

2,500,000.00

2,500,000.00

Bayaran Fee Berperingkat

2,000,000.00

3,565,445.00

6,065,445.00

Bayaran Fee Berperingkat

256,858.32

3,565,445.00

9,630,890.00

Bayaran Fee Berperingkat

256,858.32

3,565,445.00

13,196,335.00

Bayaran Fee Berperingkat

256,858.32

3,565,445.00

16,761,780.00

Bayaran Fee Berperingkat

180,102.57

2,500,000.00

719,261,780.00

Bayaran Fee Berperingkat

256,858.32

3,565,445.00

22,827,225.00

Bayaran Fee Berperingkat

258,858.32

3,565,445.00

26392,670.00

10

Bayaran Fee Berperingkat

258,858.32

3,565,445.00

29,958,115.00

11

Bayaran Fee Berperingkat

251,182.38

3,486,657.50

33,444,772.50

12

Bayaran Fee Berperingkat

256,858.32

3,565,445.00

37,010,217.50

13

Bayaran Fee Berperingkat

96,775.09

1,343,333.00

38,353,550.50

14

Bayaran Fee Berperingkat

96,775.09

1,343,333.00

39,696,883.50

15

Bayaran Fee Berperingkat

489,878.98

6,800,000.00

46,496,883.50

16

Bayaran Fee Berperingkat

489,878.98

6,800,000.00

53,296,883.50

17

Bayaran Fee Berperingkat

96,775.09

1,343,333.00

54,640,216.50

18

Bayaran Fee Berperingkat

140,682.71

1,952.813.80

56,593,030.30

PEMBAYARAN KOMISEN

3,640,059.09

KONTRAK = (56,593,030.30 6,065,445.00)

50,527,585.30

JUMLAH KOMISEN MENGIKUT INTERIM 4 DAN SETERUSNYA

7.204%

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[18] Having further examined the First Schedule closely, it would

appear that the payment of commission is listed in column 1 which is
described as Bayaran Fee Berperingkat. The first part of that column
lists the month next to Bayaran Fee Berperingkat, the next column is the
Estimate Progress Claim, followed by Cumulative Progressive Claim in
the last column.

[19] From our observation Bayaran Fee Berperingkat seems to be

pegged to the Progress Claim in the third column. This is in tandem with
clause 5 which provides for the Respondent to deduct the same from the
progressive claim. In our view the First Schedule had not stipulated the
upfront mode of payment of the commission suggested by the
Respondent in the way it was stipulated in the Letter of Award.

[20] Learned counsel for the Respondent, beside urging us to construe

the Sub-Contract to be read with the First Schedule had also sought to
further rely on the Letter of Award as well as the testimonies of the
witness for the plaintiff SP3 to persuade us to agree to his construction
of the Sub-Contract. SP3 was the solicitor who prepared the SubContract. The evidence of SP3 is referred to is found in his Witness
Statement, in answering question no 8 and no 9. SP3 in his answer only
said that the payment of the commission is to be based on the First

12

Schedule. He further said the first 3 payment of the agreed commission

would have to be paid independent of the progress claim from the first to
the third month of the Sub-Contract. We are not able to find such a
clause in support of his statement.

[21] We however agree with the learned counsel for the Appellant that
the Sub-Contract must be construed within its four corners. Once a
contract has been reduced to writing neither party can rely on sections
91 and 92 of the Evidence Act 1950 to adduce any evidence to
contradict or vary the terms thereof. In our view the learned judge had
misdirected and had fallen into error in reading the terms in the Letter of
Award into the Sub-Contract. For one thing, the Letter of Award itself
states that the terms between them would be reduced to writing. Once
that is done the Letter of Award can no longer part of the terms between
parties unless the terms are incorporated into the Sub-Contract.
Whatever terms found in the Letter of Award which are not clearly
stipulated in the Sub-Contract should no longer form part of the terms of
the Sub-Contract. This position is further reinforced by the entirety
clause, which parties had agreed for the Sub-Contract to supersede all
written memorandum, agreements, representations or understanding
between parties (see clause 22(e)).

13

[22] There is no dearth of authority to support the legal proposition that

a written agreement must be interpreted within its four corners. It is trite
law that interpretation of a contract is a question of law to be decided by
the court and not by witnesses through their oral evidence (see NVJ
Menon v The Great Eastern Life Assurance Company Ltd [2004] 3
MLJ 38,). In Master Strike Sdn Bhd v Sterling Heights Sdn Bhd
[2005] 3 MLJ 585 the Court of Appeal held, in applying the dictum of
Abdul Aziz Mohammad J in Macronet Sdn Bhd v. RHB Bank Sdn Bhd
[2002] 3 MLJ II on the effect of an entire agreement clause, held that the
entire agreement clause is an agreement between parties and in
adhering to such a clause they must have been presumed to know the
existence of s. 92 of the Evidence Act 1950 and its exception. And by
doing so the parties are in fact agreeing not to resort to the exception.

[23] Adhering to that principle of legal interpretation in our view the

commission of 13.50% had been agreed by parties as stated in clause 1
(b) and the commission shall be paid in accordance with the First
Schedule attached to the Sub-Contract. The First Schedule however do
not state that the RM4,000,000.00 out of the total commission is to be
paid upfront as what has stated in the Letter of Award. Falling back to
the terms of the Sub-Contract the right of the Respondent had been

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provided under clause 5 which allowed deduction been made from the
progressive claim due under the Sub-Contract.

[24] Furthermore, the Sub-Contract contains an entirety clause. In

agreeing to the entirety clause, the parties must be presumed to have
known of the existence of s.92 and its exceptions and to have intended
what the clause intended, that is to exclude any attempt to vary the
agreement by an oral agreement or statement. Such attempt can only be
made through the exceptions to s.92 of the Evidence Act 1950.

By

agreeing, to the entire agreement clause also, the Respondent in this

case is therefore precluded from relying on the Letter of Award or
evidence of any witness to give a different meaning to the Sub-Contract
which contains the entire agreement clause.

[25] The line of submission adopted by the counsel for the Respondent
is not in accord with the long established legal principle that a written
contract must be interpreted within its 4 corners and no extrinsic
evidence should be employed in its interpretation. Thus it is not for SP3
to explain what was intended by the clauses of the agreement he
drafted. His responsibility in our view is to translate his clients instruction
into agreement and it is the duty of the court to interpret the written
agreement in accordance with established legal principles. Thus the

15

reliance on the Letter of Award by the learned judge in our view is

misplaced as it does not part of the terms of contract between parties.

[26] Learned counsel for the Appellant also raised the issue of mala
fide on the part of the Respondent for failure to adhere to clause 5 of the
Sub-Contract. Under clause 5, the Respondent is obliged to open an
account especially to credit progress payment made by the KESEDAR
for the Project. The signatories to the account should be equally
represented. The account was indeed opened at RHB bank Cawangan
Kuala Terengganu. The parties had agreed and named Mohd Ahmad
Ruzman Mohammad Shafei to represent the Appellant and Mohd
Khairuddin as the representative of the Respondent.

[27] The deduction made by the Respondent in our view was therefore
not in accordance with the Sub-Contract for this other reason. When the
first interim payment of RM1,236,036.67 was paid by the employer the
Respondent had directed the payment to be paid into another account
instead without the knowledge of the Appellant. The Respondent then
paid the Appellant RM100,000.00 out of the First interim payment after
the Appellant pleaded for it because it needed the fund for the Project.
As for the second interim payment of RM1,643,130.00, the third interim
payment of RM 582,660.00

and the Fourth interim payment of

16

RM337,680.00, they were all directed by the Respondent to be paid into

another account of the Respondent in breach of the agreed term under
clause 5. It is the Appellants case that such breach constitutes mala fide
conduct on the part of the Respondent. The Respondent had not been
truthful in concealing the payment received for KESEDAR, depriving the
monies due under the progress claim to the Appellant which had caused
the Project to fail.

[28] This then bring us to the counter-claim of the Appellant.

The counter-claim
[29] The counter-claim of the Appellant was premised on the allegation
that the termination of the Sub-contract was unlawful. The Appellant
contended that in fact it was the Respondent which was in breach of
clause 5 of the Sub-contract, when it interfered with the work of the
Appellant on site and had caused difficulties for the Appellant to proceed
with the Project. On these reasons the Appellant contended that the
termination was unlawful, without any basis and had caused damages
and loss of reputation and credibility of the Appellant. As a result, the
Appellant sought for damages as stipulated in paragraph 23 of the
Defence and Counter-claim.

17

[30] The learned trial judge dismissed the counter-claim by the

Appellant as his Lordship found that the Appellant failed to prove fraud.
In his judgment he said Defendan gagal membuktikan bahawa Plaintiff
telah melakukan penipuan dan lain lain alegasi yang dinyatakan di
dalam penyata pembelaan dan tuntutan balas Defendan. Plaintiff telah
menyatakan plaintiff telah melakukan salah nyata dan fraud apabila
memasukkan bayaran kemajuan pertama, kedua, dan ketiga ke dalam
akaun Plaintiff. Kedudukan undang-undang adalah mantap apabila
Defendan memplidkan wujudnya fraud di pihak Plaintiff Defendan
hendaklah membuktikan elemen fraud tersebut di luar keraguan
munasabah yang mana Defendan telah gagal berbuat demikian.

[31] In our view the counter-claim is with basis. We agree with the
Appellant that the termination was unlawful because it failed to comply
with the terms of the Sub-Contract. We have further examined the
clauses on termination under the Sub-Contract. We took note that the
termination notice had cited two reasons for the termination of the SubContract which are these. First the failure to pay the agreed commission
under clauses 2 (1), (ii), (iii) of Surat pelantikan and secondly the failure
of the Appellant to complete the Project as per the Catch Up Plan.

18

[32] We had in the preceding paragraphs stated our view that the SubContract must be read within its four corners and the reliance on the
terms of Letter of Award is excluded by the entirety clause as found in
the Sub-Contract. Hence the first ground cited in the termination notice
was outside the scope of the Sub-Contract and cannot be a ground of
termination.

[33] Furthermore, the Sub-Contract under its clause 15 specifies the

grounds of termination and is listed in clause 15 (a). The failure to
perform the contract as stipulated is, inter alia one of the grounds of
termination stated under clause 15. We are not clear too under which
particular item of clause 15, the Respondent relied on when it states in
the notice that the Appellant failed to complete the Project as per the
Catch Up Plan. We are unable to find the term Catch Up Plan used in
the Sub-Contract.

[34] That notwithstanding, under the same clause the Respondent had
to give 14 days written notice provided that the Respondent itself is not
in breach of the Sub-Contract. Crucially the 14 days notice normally is
necessary in case the breach can be remedied. The notice at page 260
dated 27 November 2012 issued is to take immediate effect. The notice
had overemphasised the effective date to be immediate, when it further

19

instructed the Appellant to cease all works on site and to remove all the
employees and to hand over the project site to the Respondent. Thus it
is clear to us that, the notice was wrong both in form and in substance. It
follows that the termination is defective and the termination of the SubContract is unlawful.

[35] We are mindful that this court at the appellate stage is constrained
to intervene on the findings of facts by the trial judge. We find this is a
case where the learned trial judge ignored the pleadings of the
Respondent when it claimed the sum over due under clause 1 read
together with the First Schedule, but its termination cited a breach under
the Letter of Undertaking and the learned trial judge had allowed the
claim without first determining what was his true construction of the
relevant clauses in the Sub-Contract. Ultimately, it would appear that the
learned judge was persuaded by the submission and the notice of
termination which anchored upon the breach of payment of the
commission agreed upon in the Letter of Award, which had been
excluded by the entirety clause under the Sub-Contract.

[36] In conclusion we allow the appeal of the Appellant against the High
Courts decision with costs. We set aside the order of the High Court and

20

we dismissed the claim of the Respondent and allowed the counterclaim of the Appellant.

[37] In the result, we allowed the sum of RM2,015.542.61 be paid to

the Appellant after deducting 13.5% and RM100,000.00 to the
Respondent.

t.t.
ROHANA YUSUF
Judge
Court of Appeal Malaysia
Dated: 1st April 2016
Counsel for the Appellant:

Samreet Singh Sagoo

Tetuan Lovelace & Hastings

Counsel for the Respondent:

Hazri bin Harus, and

Nurul Izzah binti Mohd Nazri
Tentuan Zamani Mohammad & Co
No. 1107-E, Tingkat 1-3
Jalan Pejabat, Off Jalan Sultan Ismail
20200 Kuala Terengganu