1002 Current Law Journal [2015] 9 CLJ

TANJUNG TERAS SDN BHD v. KERAJAAN MALAYSIA A

COURT OF APPEAL, PUTRAJAYA

ABDUL WAHAB PATAIL JCA
LINTON ALBERT JCA
LIM YEE LAN JCA
B
[CIVIL APPEAL NO: W-01-134-04-2013]
18 MAY 2015

CONTRACT: Payment for works done – Agreement – Sale of land and construction
of apartments (project) – Principle contractor and sub-contractor – Failure to
complete project within time frame – Termination of agreement with principle C
contractor – Whether sub-contractor could counterclaim for compensation for works
done – Quantum meruit – Whether conditions under s. 71 to be compensated for
works done satisfied – Whether trial judge erred in interpreting conditions –
Principle in Siow Yong Fatt v. Susur Rotan Mining – Whether applicable –
Contracts Act 1950, s. 71 D

The respondent (‘the plaintiff’) entered into a sale and purchase agreement
(‘the agreement’) with Jeram Permata (‘JP’). In consideration, JP agreed to
sell a piece of land and to construct 226 medium cost apartments on the said
land (‘the project’). A sum of RM16 million was paid to JP by the plaintiff
under the agreement, which included the price of the said land. The E
defendant was appointed by JP as its sub-contractor vide a letter of acceptance
(‘LOA’) dated 15 February 2007 to construct the super structure works under
the project. There was delay on the part of JP in completing the project and
in consequence, the plaintiff issued a letter of termination to JP on 13 July
2007. After the termination of the agreement, the defendant refused to leave F
the project site. The plaintiff gave notice to the defendant to vacate the project
site and further informed the defendant that the plaintiff would not be making
any payment to the defendant after the agreement was terminated on 13 July
2007. The defendant refused to vacate the site despite the notice. Therefore,
the plaintiff then filed an action against the defendant vide an originating G
summons (‘OS’) and sought, inter alia, for a declaration that it was the owner
of the land and was entitled to vacant possession of the land. In opposing the
plaintiff’s OS, the defendant contended, inter alia, that the termination of the
agreement between plaintiff and JP was wrongful on the ground that there
were representations made that extension of time would be granted to JP to
H
complete the project. It was further alleged by the defendant that the unlawful
termination of the agreement had resulted in loss and damage to the
defendant as it was not paid a single cent for the work done on the project.
The defendant submitted that payment for work done under the LOA was on
a back-to-back basis, ie, the defendant would be paid only if JP was paid.
Therefore, the defendant counterclaimed against the plaintiff for the amount I
of RM50 million. The High Court granted the prayers in the plaintiff’s OS.
The OS was also converted into a writ action so that the defendant’s
 [2015] 9 CLJ Tanjung Teras Sdn Bhd v. Kerajaan Malaysia 1003

A counterclaim for compensation could be determined at a trial. During the

trial, the defendant confined its counterclaim against the plaintiff to a sum
of RM3,009,254.23 as certified by JP’s architect (‘DW2’) under three
interim certificates. The trial judge held that since there was no contractual
relationship between the plaintiff and the defendant, the defendant’s
B counterclaim was not a contractual claim but a claim premised on s. 71 of
the Contracts Act 1950 (‘CA’). The High Court Judge referred to the case of
Siow Yong Fatt v. Susur Rotan Mining (‘Siow Yong Fatt’s case) and held that
to succeed in a claim under s. 71 of the CA, four conditions had to be met
ie, the doing of the act or the delivery of the thing must (i) be lawful; (ii) be
C
done for another person; (iii) must not be intended to be done gratuitously;
and (iv) must be such that the other person enjoys the benefit of the act or
the delivery. The High Court Judge found that the defendant had failed to
fulfil condition (ii) and (iv) to successfully establish a claim under s. 71. In
regards to quantum, the High Court Judge had similarly found that the
defendant had failed to discharge its burden of proving the sum of
D
RM3,009,254.23 and merely relied on the three interim certificates issued
by DW2. The High Court Judge further held that the defendant had failed
to particularise the works done by the defendant and the particulars of claim
in respect of the same. Hence, the present appeal. On appeal, the defendant
submitted that the High Court Judge had misconstrued conditions (ii) and
E (iv). In interpreting the words in condition (ii) ‘must be done for another’ the
trial judge gave undue emphasis to the fact that since the defendant would be
paid by JP for the works, therefore the defendant had failed to show that the
works were done for the plaintiff. The trial judge erred in failing to give
consideration to the fact that whatever works that were done under the
F project were done for the principal of the project ie, the plaintiff in this case.
In relation to condition (iv), the trial judge also made an erroneous finding
of fact that ‘since the works were performed for JP, it is JP who has benefited
and not the plaintiff’.
Held (allowing appeal with costs)
G Per Lim Yee Lan JCA delivering the judgment of the court:
(1) Section 71 of the CA is the statutory embodiment of the common law
principle of quantum meruit, which provides for a just compensation as
the measure of the work done as opposed to contractual damages.
Liability under s. 71 is not based on any existing contract between the
H
parties. Rather, it is based on equitable principle of conscionable
conduct and restitution to prevent unjust enrichment by one party at the
expense of another party. The submission that there is no obligation on
the part of the plaintiff to pay the defendant for the structure work done
because there was no privity of contract between the parties does not
I hold any water. (paras 31 & 32)
1004 Current Law Journal [2015] 9 CLJ

(2) The High Court Judge appeared to have given a very mechanical or A
narrow interpretation to the second condition. The factual scenario of
the present case is very different from the case of Seow Yong Fatt. At the
time the structure work was done by the defendant, it was in fact done
for the plaintiff as the ultimate owner of the project and the plaintiff was
the direct beneficiary of the project. The defendant had intended to be B
paid for carrying the works. The fact that the defendant would receive
payment from JP and not the plaintiff did not alter the fact that the
defendant never intended the work to be done gratuitously. Therefore,
the second condition ought to have been found in favour of the
defendant. (para 45) C
(3) The defendant was only appointed as a sub-contractor to construct the
super structure work while the construction of the entire project was the
responsibility of JP. The plaintiff had benefited from the super structure
work as the plaintiff had since revived the project and had appointed
new contractors to continue to build the apartments on the super D
structure work done by the defendant. There was no evidence to show
that the super structure work done by the defendant was defective and
or had to be demolished when the new contractor took over the project.
It would be unjust for the plaintiff to refuse to pay any compensation to
the defendant for the value of the structure work done. Based on the E
foregoing, the defendant had successfully proven, on a balance of
probabilities, its claim under s. 71 of the CA. (paras 48-53)
(4) The defendant’s claim for the sum of RM3,009,245.23 is premised on
the three interim certificates certified and issued by DW2, as part of its
progress payment claim under the terms of its LOA with the main F
contractor, JP. A sum certified for interim payment based on
contractual terms cannot form the basis of calculation of compensation
based on quantum meruit in a claim under s. 71 of the CA. However,
the court took note that in the three interim certificates, there was a sum
of RM1,241,022.56 certified as ‘actual physical work done’. The G
defendant was entitled to claim the said sum as reasonable compensation
for the super structure work done on the project site on a quantum meruit
basis. (paras 60-61)
(5) DW2 had in his testimony stated that the three interim certificates were
issued by him after the works were evaluated and verified by JP’s H
quantity surveyor (‘DW1’). Both DW1’s and DW2’s testimony was not
seriously challenged by the plaintiff during trial. Hence, it was not as if
the sum of RM1,241,022.56 for ‘actual physical work done’ was a figure
plucked from the air by the defendant as alleged by the plaintiff. It was
prepared by men skilled in their respective profession and the High I
Court could accept that they had acted professionally when quantifying
and certifying the various amounts stated in the certificate, including the
sum of RM1,241,022.56 for physical work done by the defendant.
(para 62)
 [2015] 9 CLJ Tanjung Teras Sdn Bhd v. Kerajaan Malaysia 1005

A (6) In allowing the defendant’s appeal on quantum, the defendant’s

contention that although a sum of RM16 million had purportedly been
paid by the plaintiff to JP under the agreement, it did not include the
structure work carried out by the defendant on the project site. The
documentary evidence adduced by the plaintiff itself showed that the
B RM16 million was paid to JP between the period 19 June 2003 to
2 February 2005 whilst the defendant was appointed by JP as its sub-
contractor only on 15 February 2007. In other words, the RM16 million
paid to JP could not have included payment super structure work which
was yet to be done by the defendant at the relevant time. Therefore, the
C
defendant was awarded the sum of RM1,241,022.56. (paras 64 & 65)
Bahasa Malaysia Translation Of Headnotes
Responden (‘plaintif) telah memeterai perjanjian jual beli (‘perjanjian’)
dengan Jeram Permata (‘JP’). Sebagai balasan, JP bersetuju menjual sebidang
tanah dan membina 226 pangsapuri kos sederhana di atas tanah tersebut
D
(‘projek’). Sejumlah RM16 juta dibayar kepada JP oleh plaintif di bawah
perjanjian itu, termasuk harga tanah tersebut. Defendan dilantik oleh JP
sebagai subkontraktor melalui surat penerimaan (‘LOA’) bertarikh
15 Februari 2007 untuk membina kerja struktur di bawah projek ini. Berlaku
kelewatan di pihak JP dalam menyiapkan projek dan dengan itu, plaintif
E mengeluarkan surat penamatan kepada JP pada 13 Julai 2007. Selepas
penamatan perjanjian, defendan enggan meninggalkan tapak projek. Plaintif
memberikan notis kepada defendan untuk mengosongkan tapak projek dan
seterusnya memaklumkan kepada defendan bahawa plaintif tidak akan
membuat apa-apa bayaran kepada defendan selepas perjanjian tamat pada
F 13 Julai 2007. Defendan enggan mengosongkan tapak walaupun telah
menerima notis. Oleh itu, plaintif kemudiannya memfailkan tindakan
terhadap defendan melalui saman pemula (‘OS’) dan memohon, antara lain,
satu perisytiharan bahawa ia pemilik tanah tersebut dan berhak mendapat
milikan kosong tanah. Dalam membantah OS plaintif, defendan
G
menghujahkan, antara lain, bahawa penamatan perjanjian antara plaintif dan
JP adalah salah atas alasan bahawa representasi-representasi dibuat agar
lanjutan masa diberikan kepada JP untuk menyiapkan projek tersebut.
Defendan seterusnya mendakwa bahawa penamatan tersebut menyalahi
undang-undang perjanjian kerana ia telah menyebabkan kerugian dan
kerosakan kepada defendan kerana tidak dibayar satu sen pun untuk kerja
H
yang dilakukan dalam projek ini. Defendan menghujahkan bahawa bayaran
bagi kerja yang dilakukan di bawah LOA dilakukan secara berturut-turut,
iaitu defendan akan dibayar hanya jika JP telah dibayar. Oleh itu, defendan
membuat tuntutan balas terhadap plaintif bagi jumlah RM50 juta. Mahkamah
Tinggi membenarkan permohonan OS plaintif. OS ini juga ditukar menjadi
I tindakan writ supaya tuntutan balas defendan bagi pampasan boleh
diputuskan semasa perbicaraan. Semasa perbicaraan, defendan menghadkan
tuntutan balasnya terhadap plaintif kepada satu jumlah RM3,009,254.23
1006 Current Law Journal [2015] 9 CLJ

seperti disahkan oleh arkitek JP (‘DW2’) di bawah tiga sijil sementara. A

Hakim bicara memutuskan bahawa oleh kerana tiada hubungan kontrak
antara plaintif dan defendan, tuntutan balas defendan bukan satu tuntutan
berkontrak tetapi satu tuntutan berdasarkan s. 71 Akta Kontrak 1950 (‘AK’).
Hakim Mahkamah Tinggi merujuk kes Siow Yong Fatt v. Perlombongan Rotan
Susur (‘kes Siow Yong Fatt’) dan memutuskan untuk berjaya dalam satu-satu B
tuntutan di bawah s. 71 AK, empat syarat perlu dipenuhi iaitu melakukan
tindakan tersebut atau penyampaian benda tersebut mesti (i) sah;
(ii) dilakukan untuk orang lain; (iii) tidak sepatutnya dimaksudkan untuk
dibuat secara sukarela; dan (iv) mestilah dalam keadaan di mana seorang lagi
menikmati manfaat tindakan-tindakan atau penyampaian tersebut. Hakim C
Mahkamah Tinggi memutuskan bahawa defendan gagal memenuhi syarat
(ii) dan (iv) untuk mewujudkan satu tuntutan di bawah s. 71. Berhubung
dengan kuantum, Hakim Mahkamah Tinggi juga memutuskan defendan gagal
melepaskan bebannya untuk membuktikan RM3,009,254.23 dan hanya
bergantung pada tiga sijil sementara dikeluarkan oleh DW2. Hakim
D
Mahkamah Tinggi seterusnya memutuskan bahawa defendan gagal
memperihalkan kerja-kerja yang telah dilakukan oleh defendan dan butiran
tuntutan yang sama. Oleh itu, rayuan ini. Atas rayuan, defendan
menghujahkan bahawa Hakim Mahkamah Tinggi telah tersalah tafsir syarat
(ii) dan (iv). Dalam mentafsir perkataan-perkataan dalam syarat (ii) ‘must be
done for another’, hakim bicara memberi penekanan tidak berpatutan pada E
fakta bahawa memandangkan defendan akan dibayar oleh JP untuk kerja-
kerja yang dilakukan, defendan gagal menunjukkan bahawa segala-galanya
dibuat untuk plaintif. Hakim bicara terkhilaf apabila gagal memberi
pertimbangan pada fakta bahawa walau apa pun kerja yang dilakukan di
bawah projek dilakukan untuk prinsipal projek iaitu untuk plaintif, dalam kes F
ini. Berkenaan syarat (iv), hakim bicara juga membuat satu dapatan fakta
yang salah iaitu ‘oleh kerana kerja-kerja dilakukan untuk JP, JP yang telah
memanfaatkannya dan bukan plaintif.’
Diputuskan (membenarkan rayuan dengan kos)
Oleh Lim Yee Lan HMR menyampaikan penghakiman mahkamah: G

(1) Seksyen 71 AK adalah penjelmaan berkanun prinsip common law

quantum meruit, yang memperuntukkan pampasan yang adil sebagai
penilaian kerja yang dilakukan, bertentangan dengan ganti rugi kontrak.
Liabiliti di bawah s. 71 bukan berdasarkan apa-apa kontrak sedia ada
H
antara pihak-pihak. Sebaliknya, ia berdasarkan prinsip berekuiti
kelakuan yang disedari dan pengembalian untuk mengelakkan
pengkayaan tidak patut oleh satu pihak dengan mengorbankan pihak
lain. Hujahan bahawa tiada kewajipan oleh plaintif untuk membayar
defendan untuk kerja-kerja struktur dilakukan kerana tiada priviti
kontrak antara pihak-pihak tidak boleh kekal. I
 [2015] 9 CLJ Tanjung Teras Sdn Bhd v. Kerajaan Malaysia 1007

A (2) Hakim Mahkamah Tinggi seolah-olah memberi satu tafsiran sempit atau
sangat mekanikal kepada syarat kedua. Fakta senario kes ini sangat
berbeza daripada kes Seow Yong Fatt. Semasa kerja-kerja struktur dibuat
oleh defendan, ia secara fakta telah dilakukan untuk plaintif sebagai
pemilik utama projek dan plaintif ialah benefisiari langsung projek.
B Defendan telah dimaksudkan untuk dibayar kerana menjalankan kerja-
kerja. Fakta bahawa defendan akan menerima bayaran daripada JP dan
bukan plaintif tidak mengubah fakta yang defendan tidak pernah berniat
agar kerja dibuat secara sukarela. Oleh itu, syarat kedua sepatutnya
diputuskan berpihak pada defendan.
C (3) Defendan hanya dilantik sebagai subkontraktor untuk membina kerja-
kerja struktur manakala pembinaan keseluruhan projek menjadi
tanggungjawab JP. Plaintif mendapat manfaat daripada kerja-kerja
struktur kerana plaintif telah menghidupkan semula projek itu dan
melantik kontraktor baru untuk terus membina pangsapuri bagi kerja-
D kerja struktur yang telah dilakukan oleh defendan. Tiada bukti yang
menunjukkan bahawa kerja-kerja struktur yang dilakukan oleh defendan
adalah cacat dan/atau terpaksa dirobohkan apabila kontraktor baru
mengambil alih projek tersebut. Tidak adil jika plaintif enggan
membayar apa-apa pampasan kepada defendan untuk nilai kerja struktur
E
yang dilakukan. Berdasarkan perkara di atas, defendan berjaya
membuktikan, atas imbangan kebarangkalian, tuntutan di bawah s. 71
AK.
(4) Tuntutan defendan untuk jumlah RM3,009,245.23 berdasarkan tiga sijil
sementara yang sah dan dikeluarkan oleh DW2, sebagai sebahagian
F daripada tuntutan bayaran di bawah syarat LOAnya dengan kontraktor
utama, JP. Satu jumlah disahkan untuk bayaran interim berdasarkan
terma kontrak tidak membentuk dasar pengiraan pampasan berdasarkan
quantum meruit dalam satu tuntutan di bawah s. 71 daripada AK. Walau
bagaimanapun, mahkamah mengambil kira bahawa dalam tiga sijil
G
sementara tersebut, terdapat satu jumlah RM1,241,022.56 yang
disahkan sebagai ‘kerja fizikal sebenar yang dibuat. Defendan berhak
menuntut jumlah tersebut sebagai pampasan berpatutan untuk kerja
struktur yang dijalankan di tapak projek atas dasar quantum meruit.
(5) Dalam testimoninya, DW2 menyatakan bahawa tiga sijil sementara
H telah dikeluarkan olehnya selepas segala-galanya dinilaikan dan
ditentusahkan oleh juruukur bahan (‘DW1’) JP. Kedua-dua keterangan
DW1 dan DW2 tidak dicabar dengan serius oleh plaintif semasa
perbicaraan. Oleh itu, jumlah RM1,241,022.56 bukanlah ‘kerja fizikal
sebenar yang dibuat’ untuk satu angka yang dipetik secara rawak oleh
I
defendan seperti yang didakwa oleh plaintif. Ia disediakan oleh orang
yang mahir dalam profesion masing-masing dan Mahkamah Tinggi
boleh menerima bahawa mereka bertindak profesional dalam
1008 Current Law Journal [2015] 9 CLJ

menjumlahkan dan mengesahkan pelbagai amaun yang dinyatakan A

dalam sijil tersebut, termasuk jumlah RM1,241,022.56 untuk kerja
fizikal yang dilakukan oleh defendan.
(6) Dalam membenarkan rayuan defendan mengenai kuantum, hujahan
defendan bahawa walaupun RM16 juta didakwa telah dibayar oleh
B
plaintif untuk JP di bawah perjanjian, ia tidak termasuk kerja-kerja
struktur yang dijalankan oleh defendan di tapak projek. Keterangan
dokumentar yang dikemukakan oleh plaintif dengan sendiri
menunjukkan bahawa RM16 juta telah dibayar kepada JP antara tempoh
19 Jun 2003 hingga 2 Februari 2005 manakala defendan dilantik oleh
JP sebagai subkontraktor hanya pada 15 Februari 2007. Dalam erti kata C
lain, RM16 juta yang dibayar kepada JP tidak boleh termasuk bayaran
untuk kerja-kerja struktur yang masih belum dilakukan oleh defendan
pada masa itu. Oleh itu, defendan diawardkan sejumlah RM1,241,022.56.
Case(s) referred to:
D
Abu Mohammed v. Mohammed Kunju Lebba (1995) DMC 316 (refd)
Aw Yong Wai Choo & Ors v. Arief Trading Sdn Bhd & Anor [1991] 3 CLJ 2834; [1991]
2 CLJ (Rep) 294 HC (refd)
Craven-Ellis v. Canons Ltd [1936] 2 KB 403 (refd)
Delpuri-Harl Corp JV Sdn Bhd v. Perbadanan Kemajuan Negeri Selangor [2014] 1 LNS
1075 CA (refd) E
Great Eastern Shipping Co Ltd v. Union of India AIR 1971 Cal 150 (refd)
Kotah Match Factory Kotah v. State of Rajasthan, AIR 1970 Raj 118 (refd)
Kumpulan Teknik Sdn Bhd v. Murad Hashim Communication Sdn Bhd & Anor [2012]
6 CLJ 80 HC (refd)
Mulamchand v. State of Madhya Pradesh, AIR 1968 SC 1218 (refd)
New Kok Ann Realty Sdn Bhd v. Development & Commercial Bank Ltd New Hebrides F
(In Liquidation) [1986] 1 LNS 30 SC (refd)
Pallonjee Eduljee and Sons v. the Lonavala City Municipality AIR 1937 Bom 417 (refd)
Ramkrishna Shankarrao v. Rangoobai and anr AIR 1959 Bom 519 (refd)
S&M Shopping Arcade Sdn Bhd v. Fui Lian-Kwong Hing Sdn Bhd [2003] 3 CLJ 58 HC
(refd)
Shen Yuan Pai v. Dato Wee Hood Teck & Ors [1974] 1 LNS 153 HC (refd) G
Siow Wong Fatt v. Susur Rotan Mining Ltd & Anor [1967] 1 LNS 161 PC (refd)
Spatial Ventures Sdn Bhd v. Twintech Holdings Sdn Bhd [2013] 1 LNS 729 HC (refd)
Teh Ah Khoon Enterprise Sdn Bhd v. Puncakdana Sdn Bhd [2004] 1 LNS 558 HC (refd)

Legislation referred to:

Contracts Act, s. 71 H

Contract Act [Ind], s. 70

For the appellant - S Ramesh; M/s Ramakrishnan & Assocs
For the respondent - Juraidah Abbas; SFC

[Editor’s note: For the High Court judgment, please see Kerajaan Malaysia v. Tanjung I
Teras Sdn Bhd [2013] 10 CLJ 336.]
Reported by S Kahvitha
 [2015] 9 CLJ Tanjung Teras Sdn Bhd v. Kerajaan Malaysia 1009

A JUDGMENT
Lim Yee Lan JCA:
Introduction
[1] This is an appeal by the appellant/defendant against the decision of the
B Kuala Lumpur High Court dated 28 February 2013 which dismissed the
appellant/defendant’s counterclaim for the sum of RM3,009,254.23 against
the respondent/plaintiff.
[2] We heard the appeal on 13 August 2014, after which we adjourned the
matter for consideration and decision. We now give our decision.
C
[3] In this judgment, the parties will be referred to as they were in the
High Court.
Background Facts

D [4] The chronology of events leading to the counterclaim of the defendant

can be summarised as follows:
(i) the plaintiff entered into a sale and purchase agreement dated 24 May
2003 (“the agreement”) with a company known as Jeram Permata
(Cheras Sdn Bhd) (“JP”), in which, in consideration of JP agreeing to
E sell a piece of land and constructing on the said land 226 medium cost
apartments as staff quarters for the Jabatan Bomba Dan Penyelamat
Malaysia (JBPM), under the Ministry of Housing and Local
Government, the plaintiff will pay a purchase price of RM50,548,000
(out of which RM4.44 million represents the price of the said land) to
F JP (“the project”);
(ii) a sum of RM16 million had been paid to JP by the plaintiff under the
agreement, which included the price of the said land. The said land had
since been transferred to the plaintiff and registered in the name of the
Federal Lands Commissioner under a document of title known as
G HS(D):99285 Lot No. 5194 Mukim of Kuala Lumpur;
(iii) under cl. 27.1 of the agreement, the project must be completed by JP
within 24 months from the date of the building plans approvals given
by DBKL on 12 November 2004, which brings the completion date
of the project to 11 November 2006;
H
(iv) there was delay on the part of JP in completing the project, despite
seven warning letters issued by the plaintiff on various dates between
24 April 2006 and 14 November 2006;
(v) by a letter dated 21 May 2007, the plaintiff gave a notice of breach of
I the agreement to JP. The said notice further stated that if the breach
is not remedied by JP within 30 days, the agreement would be
terminated;
1010 Current Law Journal [2015] 9 CLJ

(vi) by a letter dated 13 July 2007, the plaintiff issued a letter of A

termination to JP;
(vii) the defendant was appointed by JP as its sub-contractor vide a letter of
acceptance dated 15 February 2007 (“LOA”) to construct the “super
structure works” under the project (see AR jilid 2(2) (Bahagian C LOA
B
on p. 276);
(vii) after the termination of the agreement, the defendant refused to leave
the project site;
(ix) vide a letter dated 13 September 2007, the plaintiff gave a notice to the
defendant to vacate the project site within 14 days of the letter and C
further informed the defendant that the plaintiff will not be making any
payment to the defendant after the agreement was terminated on
13 July 2007. The defendant refused to vacate the site despite the
notice;
(x) the plaintiff then filed an action against the defendant vide an D
originating summons (“OS”) dated 12 October 2009 seeking the
following reliefs:
(i) a declaration that it is the owner of the said land and is entitled to
vacant possession of the said land;
E
(ii) a declaration that the defendant as the sub-contractor of the main
contractor, JP, are trespassers on the said land after the agreement was
terminated; and
(iii) an order that the defendant to vacate the said land within 14 days from
the date of the court’s order; F

(xi) the defendant in its affidavit in reply opposed the plaintiff’s OS on the
ground that there were many disputes of facts which could be resolved
only through hearing the oral evidence of witnesses under a writ.
Amongst the disputed facts were whether the termination of the
G
agreement between plaintiff and JP was wrongful as there were
representations made by the plaintiff’s agents from JBPA and the
Ministry of Housing and Local Government to JP and the defendant
that extension of time would be granted to JP to complete the project;
whether there were representations made by the plaintiff’s agents from
JBPA and the Ministry of Housing and Local Government to the H
defendant that direct payment to the defendant would be made if the
defendant could procure JP’s architect’s certificate to certify the work
done. It was further alleged by the defendant that the unlawful
termination of the agreement had jeopardised the defendant in the sense
that payment to the defendant for work done under the LOA was on I
a back to back basis, ie, defendant would be paid only if JP is paid and
 [2015] 9 CLJ Tanjung Teras Sdn Bhd v. Kerajaan Malaysia 1011

A the unlawful termination of the agreement had resulted in loss and

damage to the defendant as it was not paid a single cent for the work
done on the project for which the defendant intended to pursue a
counterclaim of RM50 million against the plaintiff;
(xii) in its affidavit in reply, the plaintiff averred, inter alia, that it had no
B
contractual relation with the defendant and no approval was given to
JP for the appointment of the defendant as a sub-contractor as was
required under the agreement; that it was not aware of the appointment
of the defendant as JP’s sub-contractor and did not know the nature of
the work the defendant was contracted by JP to carry out on the
C project. The plaintiff also maintained that neither the plaintiff nor its
representatives had at any time given any representation to the
defendant that direct payment would be made if the defendant could
procure the architect to certify the work carried out by it;
(xiii) the defendant, in its affidavit in reply, while acknowledging that no
D
consent was obtained by JP for the appointment of the defendant as its
sub-contractor, maintained that the plaintiff was fully aware of the
defendant’s appointment as the defendant had to take instructions not
only from JP but its architect, civil structural engineer, mechanical
and electrical engineer, quantity surveyor and also the plaintiff’s
E representatives from JBPA;
(xiv) on 10 March 2010, the Kuala Lumpur High Court granted order in
terms of the plaintiff’s OS and the defendant, its workers and agents
were ordered to vacate the said land within 30 days from the date of
the order;
F
(xv) the High Court also directed the defendant’s counterclaim to go for
trial and further directed that all existing affidavits filed by the parties
in respect of the OS to stand as pleadings; and
(xvi) the counterclaim was heard before the present High Court Judge.
G During the trial, the defendant confined its counterclaim against the
plaintiff to a sum of RM3,009,254.23 as certified by JP’s architect
under three interim certificates.
Issues To Be Tried

H [5] During the trial parties had agreed to the two following issues to be
tried:
(a) whether the plaintiff has an obligation under the law to pay the
defendant as a sub-contractor for the works that have been completed on
the said project;
I
(b) if the answer to the first issue is in the affirmative, what are the sums
due to the defendant?
1012 Current Law Journal [2015] 9 CLJ

Decision Of The High Court A

[6] At the conclusion of the trial, the learned High Court Judge dismissed
the defendant’s counterclaim based on the following findings.
[7] In regard to the first issue, the learned trial judge accepted the
submission of learned counsel for the defendant that since there was no B
contractual relationship between the plaintiff and the defendant, the
defendant’s counterclaim was not a contractual claim but a claim premised
on s. 71 of the Contracts Act, which reads as follows:
Section 71 - obligation of person enjoying benefit of non-gratuitous act.
C
Where a person lawfully does anything for another, or delivers anything
to him, not intending to do so gratuitously, and such other person enjoys
the benefit thereof, the latter is bound to make compensation to the
former in respect of, or to restore, the thing so done or delivered.
[8] The Privy Council’s decision in the case of Siow Wong Fatt v. Susur
Rotan Mining Ltd & Anor [1967] 1 LNS 161; [1967] 2 MLJ 118 (“Siow D
Wong Fatt”) was referred to in which it was held that to succeed in a claim
under s. 71 of the Contracts Act, the following four conditions have to be
met:
The doing of the act or the delivery of the thing:
E
(a) must be lawful;
(b) must be done for another person;
(c) must not be intended to be done gratuitously;
(d) must be such that the other person enjoys the benefit of the act or F
the delivery.
(e) ...
[9] Based on the factual matrix of this case, the defendant had failed to
fulfil the second and fourth conditions set out in Siow Wong Fatt to
successfully establish a claim under s. 71. G

[10] In regard to the second condition, it was held at para. 11 of the

judgment as follows:
11. With respect to the 2nd condition, the Court has to consider
whether the works were done by the Defendant for the Plaintiff or H
otherwise and the Court is mindful it must be considered “at the time that
the act is done or the thing delivered”. DW3, Tuan Haji Roshaizad bin
Othman stated that the works were performed by the Defendant for JP
and in consideration thereof, the Defendant will be paid by JP. Hence the
Defendant has not fulfilled the 2nd condition to show that the works
were done for the Plaintiff. I
 [2015] 9 CLJ Tanjung Teras Sdn Bhd v. Kerajaan Malaysia 1013

A [11] Whereas for the fourth condition at para. 12 of the judgment as

follows:
12. In relation to the 4th condition, since the works were performed for
JP, it is JP who has benefited and not the Plaintiff. In consideration
for the works done, the sum of RM50,548,000,00 will be paid to JP,
B out of which it is undisputed a sum of RM16,444,072.19 has been
paid (Bundle B pp. 42-46, Bundle C pp. 136-160, Bundle D pp. 1-2).
12.1 DW3 stated that on numerous occasions the Defendant has
requested to the Plaintiff or Plaintiff’s agent to compensate the
Defendant for the work done for which the Plaintiff had
C obtained benefit in that. The Plaintiff revived the project and
appointed new contractors to continue to build the apartments
on the “super structure works” done by the Defendant.
12.2 I find the Plaintiff has not benefited from the work done by the
Defendant because the project was not completed and the
Plaintiff had to appoint new contractors to complete the project
D
when in fact it was an Agreement between Defendant and JP
to build 226 units of apartments on behalf of JP.
13 ...
14. To sum up, I find the Defendant has not satisfied the 2nd and 4th
E
conditions out of the 4 conditions spelled out in Siow Wong Fatt
(supra) and therefore I am of the view that the Defendant’s claim
for compensation under s. 71 of the Contracts Act cannot be sustained.
[12] In regard to the second issue on quantum, it was held as follows:
16. The Defendant submitted on the issue of quantum through Kuh
F Cho Sen (DW1), a quantity surveyor attached to the firm of Juru
Kos, appointed by JP in respect of the project and Ar Jason Low
Chee Eng, an architect and partner of JLA/Architect, the firm
appointed by JP as project architect. The Defendant submitted - (i)
the witnesses testified based on Bundle E which contain the
certificates determining the value of works done by the Defendant
G for the project, the valuation of works were done by the surveyor,
and subsequently certified by the architect; (ii) it is undisputed that
the total amount certified for Progress Claims No,1, 2 and 3
amounted to RM2,708,328.81; and (iii) the amount Defendant
claimed is RM 3,009, 254.23, being the sum of RM 2,708,328.80 plus
the retention sum of RM300,25.42.
H
17. Based on the Affidavits before the Court which were ordered by the
Court to stand as pleadings when the Originating Summons was to
a writ action, I agreed with the Plaintiff’s submission that the
Defendant did not particularise the works done by the Defendant
and the particulars of claim in respect of the same. The Plaintiff
I has urged the Court to dismiss the Defendant’s counterclaim of
RM3,009,254.23 on account of this alone.
1014 Current Law Journal [2015] 9 CLJ

17.1. I am not inclined to do so because of the circumstances A

of this case in that there are no normal pleadings as in a normal
writ action. It is not disputed that the Defendant’s counterclaim
was ordered to proceed to trial and the Affidavits are to stand
as pleadings.
18. The burden is on the Defendant to prove its damages as per the B
principle in Bonham-Carter v. Hyde Park Hotel Ltd [1948] 64 TLR 177
at p. 178 cited by His Lordship Arifin Zakaria J (as he then was) in
Kuantan Trading v. Syarikat Kilang Papan Pinang, Dungun, Terengganu
Sdn Bhd [1994]1 LNS 72.
18.1 The Plaintiff submitted the following items ought to be
C
deducted from the RM3,009,254.23-
(i) Liquidated Ascertained Damages (LAD) calculated in this
manner -
LAD (12.11.2006-13.7.2007) (244 hari)
= RM 3,379,099.88 D

1 hari LAD =RM 3,319,099.88/244

= RM 13,848.77
(1.5.2007-13.7.2007) (63 hari) = RM 12,84817 X 63 hari
E
=RM872,472.51
(ii) Preliminaries of RM1,354,184.50 as the Defendant was
unable to give details of the breakdown for this amount.
(iii) Variation Order for RM205,412.90 as DW1 and DW2 agreed
there was no order for variation given by the Plaintiff to the F
Defendant.
(iv) Material on site for RM267,446.25 as there was no proof of
the same.
(v) Retention sum of RM300,925.42 ought to be deducted as
DW3 agreed that the retention sum was held by JP and this G
sum has been deducted from the amount of RM 3,009,254.23
(Bundle B p. 25).
18.2 I accept the Plaintiff’s submission that all the items (i) to (v)
totaling RM3,000,441.58 have to be deducted from
RM3,009,254.23 leaving a balance of RM 8,812.65. H
The Appeal
[13] Before us, learned counsel for the defendant raised the following main
issues:
(i) the learned judge erred in finding that the defendant had failed to I
prove its claim under s. 71 of the Contracts Act 1950 as laid down
in Siow Wong Fatt;
 [2015] 9 CLJ Tanjung Teras Sdn Bhd v. Kerajaan Malaysia 1015

A (ii) the learned trial judge failed to appreciate that a claim under s. 71
is premised on the equitable principle of restitution to prevent unjust
enrichment to a party who had received goods or services from
another party who, at the time of delivering such goods or services,
did not intend it to be gratuitous (see: New Kok Ann Realty Sdn Bhd
B v. Development & Commercial Bank Ltd New Hebrides (In Liquidation)
[1986] 1 LNS 30; [1987] 2 MLJ 57 (SC), Aw Yong Wai Choo & Ors
v. Arief Trading Sdn Bhd & Anor [1991] 3 CLJ 2834; [1991] 2 CLJ
(Rep) 294; [1992] 1 MLJ 166 (HC) and Kumpulan Teknik Sdn Bhd v.
Murad Hashim Communication Sdn Bhd & Anor [2012] 6 CLJ 80;
C
[2012] 8 MLJ 572 (HC), Mulamchand v. State of Madhya Pradesh, AIR
1968 SC 1218, Great Eastern Shipping Co Ltd v. Union of India AIR
1971 Cal 150 and Kotah Match Factory Kotah v State of Rajasthan, AIR
1970 Raj 118).
(iii) In Aw Yong Wai Choo, the plaintiffs were purchasers of houses
D developed by the first defendant under sale and purchase agreements
entered into between the plaintiffs and the first defendant. The first
defendant was unable to complete the project and the second
defendant had carried on and completed the same. The court held
that when the second defendant decided to take over the project and
E
built the houses according to more expensive specifications, it did so
in no way which could be conceivably unlawful. When it did so it
did not intend it to be gratuitous. The plaintiffs had all gained and
enjoyed the benefit of such specifications. Thus, the second defendant
was entitled to claim the additional costs of the expensive
specifications from the plaintiffs under s. 71 of the Contracts Act
F
1950;
(iv) in Kumpulan Teknik Sdn Bhd, the court held that a claim based on
quantum meruit can be made for work done where the contract is
terminated by breach. The party had obtained a benefit. The works
G
were not intended to be done gratuitously, it would therefore be
unjust for a party who has obtained a benefit to then refuse to make
payment;
(v) in this case, the learned judge had misconstrued the second condition
in s. 71 as laid down in Siow Wong Fatt;
H (vi) in Siow Wong Fatt, the PC held that although the road was built by
the first respondent (Susur Rotan), with the approval of the appellant
(Siow Wong Fatt), it was done for Susur Rotan’s own benefit because
under the chain of contracts Susur Rotan was the body that was going
to exploit the mineral land. This decision was not based on the fact
I of who ought to have paid Susur Rotan under the chain of contracts;
1016 Current Law Journal [2015] 9 CLJ

(vii) this is in contrast to the facts in our case which involved a A

construction project between the plaintiff as the employer, JP as the
main contractor and the defendant as the sub-contractor of JP. The
project encompasses the construction of 226 apartment units meant
for the plaintiffs agent, JBPM, as its staff quarters by JP as the main
contractor. JP in turn employed the defendant as its sub-contractor B
to construct the super structure work comprised in the project;
(viii) the learned trial judge in interpreting the words in the second
condition “must be done for another” gave undue emphasis to the
fact that since the defendant would be paid by JP for the works,
therefore the defendant had failed to show that the works were done C
for the plaintiff;
(ix) the learned trial judge erred in failing to give consideration to the fact
that whatever works that were done under the project were done for
the principal of the project, the plaintiff in this case. The issue of who
D
makes the payment to the defendant is an issue of contractual
obligations.
(x) in regard to the fourth condition in s. 71, the learned trial judge again
erred in wrongly interpreting the PC’s decision in Siow Wong Fatt.
In its judgment, the PC had clearly stated that “it is clear on the facts
E
though the details are obscure and were never fully explored that
Siow has benefited from the building of the road”. In other words,
the fourth condition in s. 71 had been satisfied. The PC went on to
state that “if the other conditions of the section are satisfied, then
compensation must be paid for that act if the person sued has enjoyed
F
the benefit”. The other conditions were of course the first, second
and third conditions in s. 71. The PC held that Susur Rotan was not
able to fulfil the second condition (that the work was done for
another) because, at the time of the construction of the road, Susur
Rotan had intended the road for its own benefit in order to enable
it to exploit the mining land. The road was never intended for the G
benefit of the appellant (Siow Wong Fatt). Further, at the time of
constructing the road, Susur Rotan did not look to any one for
payment. It was under those circumstances that the PC held that it
was not unjust for Siow Wong Fatt to retain the benefit of the
construction of the road on the said mining land by Susur Rotan after H
the mining operations failed to materialise;
(xi) the facts in our case are totally different from the facts Siow Wong
Fatt. Here the super structure work formed part of the works under
the project for which JP had expected to be paid under the main
contract. The defendant, as the subcontractor of JP, had also I
expected to be paid for the super structure work from the plaintiff
through JP, its main contractor, on a back-to-back basis;
 [2015] 9 CLJ Tanjung Teras Sdn Bhd v. Kerajaan Malaysia 1017

A (xii) what is more important is that the project was constructed for the
benefit of the plaintiff as staff quarters of its employees serving under
the JBDPA. While it is true the project was not completed by JP,
but it has since been revived and the new contractor had utilized the
superstructure work done to complete the project. In other words,
B the defendant had fulfilled all the conditions in s. 71 as set out in
Siow Wong Fatt to enable it to be paid a reasonable compensation for
the super structure work done;
(xiii) up to the date of the counterclaim, the defendant had not received a
single cent for the super structure work from JP. It was not denied
C that under the sub-contract the defendant was only entitled to receive
payment from JP on a back-to-back basis, ie, the defendant would
only be paid for work done if and after JP receives the payment for
the work from the plaintiff. In this case, the plaintiff had failed to
establish at the trial that JP had already been paid for the super
D structure work by the plaintiff through JP;
(xiv) in fact, the documents produced by the plaintiff during trial giving
the breakdown of the RM16 million allegedly paid to JP under the
project clearly showed that all the payments were made beginning
from 19 June 2003 until 2 February 2005. On the other hand, the
E defendant was appointed by JP as its sub-contractor only on
15 February 2007. In other words, the RM16 million paid to JP
could not have included payment for super structure work which was
yet to be done by the defendant;
(xv) hence, the learned judge made an erroneous finding of fact when, in
F
relation to the fourth condition, she found that “since the works were
performed for JP, it is JP who has benefited and not the plaintiff. In
consideration for the works done, the sum of RM50,548,000 will be
paid to JP, out of which it is undisputed a sum of RM16,444,072.19
has been paid”;
G
(xvi) with regard to the second issue relating to quantum, the defendant’s
claim against the plaintiff was for the sum of RM3,009,254.23 certified
under three interim certificates dated 2 August 2007, 10 August 2007
and 19 September 2007. The said sum of RM3,009,254.23 was made
up of RM2,708,328.81 which represents the value of work done and
H RM300,925.42 as refund of retention sum held under the sub-
contract;
(xvii) the three interim certificates were issued by JP’s architect (DW2)
after the works were evaluated and verified by JP’s quantity surveyor
(DW1) in accordance with the procedure laid down in the LOA
I
governing the payment of work done by the defendant. DW1’s and
DW2’s oral testimony was not subject to serious cross-examination
by the plaintiff;
1018 Current Law Journal [2015] 9 CLJ

(xviii) it was submitted that the defendant had therefore proven that the A
value of the work done by the defendant on the super structure work
was RM3,009,254.23;
(xix) the plaintiffs witnesses, SP1 and SP2, during cross-examination had
also not disputed the valuation and certification made by DW1 and
B
DW2. The amounts certified in the three interim certificates were
therefore binding on the plaintiff (see: Shen Yuan Pai v. Dato Wee
Hood Teck & Ors [1974] 1 LNS 153; [1976]1 MLJ 16, Teh Ah Khoon
Enterprise Sdn Bhd v. Puncakdana Sdn Bhd [2004] 1 LNS 558; [2004]
MLJU 630 and S&M Shopping Arcade Sdn Bhd v. Fui Lian-Kwong
Hing Sdn Bhd [2003] 3 CLJ 58; [2003] MLJU 203); C

(xx) it was further contended that the learned trial judge erred in law and
in fact when she acceded to the plaintiffs submission that it was
entitled to deduct from the total sum of RM3,009,254.23 claimed
by the defendant, the sums for (i) liquidated and ascertained damages
D
(LAD) (RM872,472.51) purportedly incurred by JP as the main
contractor for delay in the completion of the project; (ii) preliminaries
(RM1,354,184.50), variation order (RM205,412.90) and materials
on site (RM267,446.25) and (iii) retention sum (RM300,925.42),
which left a meager sum of RM8,812.65 due to the defendant;
E
(xxi) the learned judge failed to consider that the plaintiff’s submission was
an attempt to introduce evidence of a set - off or counterclaim which
was never pleaded in any of its affidavits in the OS and also defied
the learned trial judge’s own ruling on this issue at the commencement
of the trial;
F
(xxii) the defendant had invested considerable time, money and effort in
carrying out the super structure work for which it had not been paid
a single cent by JP and the plaintiff. JP could not pay the defendant
because the plaintiff had wrongly terminated the agreement and
refused to pay JP for the work done by the defendant; and
G
(xxiii) the plaintiff had benefited from the super structure work for which
neither JP nor the defendant had intended to be done gratuitously.
It was thus inequitable and unjust for the plaintiff to refuse to pay the
defendant for the work done. The plaintiff is therefore liable in law
to pay the defendant the sum of RM3,009,254.23 pursuant to s. 71 H
of the Contracts Act 1950.
[14] Learned Senior Federal Counsel (SFC), on the other hand, in her
submission, contended that no error either of fact or law had been committed
by the learned High Court Judge to warrant any appellate intervention of this
court, for the following reasons. I
 [2015] 9 CLJ Tanjung Teras Sdn Bhd v. Kerajaan Malaysia 1019

A [15] Firstly, the plaintiff maintained its position that there was no
contractual relationship between the plaintiff and the defendant to impose
any obligation in law on the plaintiff to pay for the work done by the
defendant.
[16] The contractual relationship under the agreement on the project was
B
between JP and the plaintiff and any claim for payment for work done, if
any, under the project was to be made by JP and not by the defendant.
[17] The defendant was appointed by JP without the approval or
knowledge of the plaintiff and way after the contractual period under the
C
agreement had expired, as admitted by DW3.
[18] The plaintiff had lawfully terminated the agreement after JP breached
its contractual obligation to the plaintiff under the agreement for failing to
complete the project within the contractual period.
[19] The plaintiff’s witnesses, SP1 and SP2 had in their testimony denied
D the defendant’s allegation that representation had been made to the defendant
that the plaintiff would make direct payment to the defendant if it could
procure the architect of JP to certify the work done by the defendant.
[20] Thus, the factual scenario in this case does not fall under the purview
of s. 71 of the Contracts Act to allow the defendant to make a claim under
E
that section. However, if this court is of the view that the defendant’s claim
falls to be governed by s. 71 of the Contracts Act 1950, the plaintiff submits
that the learned High Court Judge was right in holding that based on the PC’s
decision in Siow Wong Fatt, the defendant had failed to satisfy the second and
fourth conditions in s. 71 to successfully establish a claim under that section.
F
[21] In particular, in regard to the second condition, the learned High
Court Judge was right in holding that whether the work was done for the
benefit of the plaintiff had to be considered at the time the work was done.
It was submitted that in this case at the time the work was done it was for
the benefit of JP. This is because the defendant was the sub-contractor of JP
G
and would receive payment from JP. The work was not done for the plaintiff
but for the benefit of JP.
[22] In regard to the fourth condition, it was submitted that the learned trial
judge was again correct in holding that the plaintiff has not benefited from
H the super structure work done by the defendant as the project was not
completed and the plaintiff had to appoint new contractors to complete the
project.
[23] In regard to the second issue on quantum, since the learned High Court
Judge had decided the first issue in the negative, this issue did not therefore
I arise for consideration.
1020 Current Law Journal [2015] 9 CLJ

[24] Be that as it may, it was submitted that the learned High Court Judge A
was right to hold that the defendant failed to prove the quantum of its claim.
This is because during the trial the defendant merely produced three interim
certificates certified by JP’s architect (DW2) as proof of the amount claimed.
[25] It was observed that no documentary evidence was adduced by DW2,
B
the architect, to explain and support each item certified by him. What the
court had before it were the bare figures stated in the three certificates.
[26] The learned trial judge had in fact earlier agreed with the plaintiff’s
submission and found that the defendant had failed to particularise the works
done by the defendant and the particulars of the claim in respect of the same. C
In other words, the learned judge found that the defendant had completely
failed to discharge its legal burden to prove the quantum of its claim. The
learned trial judge ought therefore to have dismissed the defendant’s claim
on this ground alone, which unfortunately she failed to do so.
[27] It was submitted that even assuming that the amounts certified in the D
three interim certificates were binding on the plaintiff, the plaintiff fully
agrees with the learned High Court Judge that there must be deducted from
those amounts the five items stated in para. 18 of the learned judge’s judgment
and for the reasons stated in the said paragraph.
[28] In conclusion, for the above reasons, the plaintiff urged this court to E
dismiss the defendant’s appeal with costs.
Our Decision
[29] Having read the written submissions and heard oral arguments of
learned counsel for both parties, and having perused the appeal records, we F
are of the view that this appeal ought to be allowed on account of errors of
fact and law on the part of the learned High Court Judge in arriving at her
decision. We set out the reasons for our decision.
On The First Issue Of Liability
G
[30] The defendant’s counterclaim against the plaintiff is for the sum of
RM3,009,254.23 as the value of the super structure work done by the
defendant under the project. The claim is premised on s. 71 of the Contracts
Act 1950.
Juristic Basis Behind S. 71 H
[31] Section 71 is the statutory embodiment of the common law principle
of quantum meruit, which provides for a just compensation as the measure of
the work done as opposed to contractual damages (see: Siow Wong Fatt,
Craven-Ellis v. Cannons Ltd [1936] 2 KB 403, Delpuri-Harl Corp JV Sdn Bhd v.
Perbadanan Kemajuan Negeri Selangor [2014] 1 LNS 1075; Spatial Ventures Sdn I
Bhd v. Twintech Holdings Sdn Bhd [2013] 1 LNS 729; [2014] 8 MLJ 14).
 [2015] 9 CLJ Tanjung Teras Sdn Bhd v. Kerajaan Malaysia 1021

A [32] Liability under s. 71 is not based on any existing contract between the
parties. Rather it is based on the equitable principle of conscionable conduct
and restitution to prevent unjust enrichment by one party at the expense of
another party (see: Ramkrishna Shankarrao v. Rangoobai and anr AIR 1959
Bom 519; (1958) 60 BOMLR 459, Abu Mohammed v. Mohammed Kunju Lebba
B (1995) DMC 316 and Pallonjee Eduljee and Sons v. the Lonavala City
Municipality AIR 1937 Bom 417; (1937) 39 BOMLR 835).
[33] In Craven-Ellis v. Cannons Ltd, it was held that:
The obligation to pay reasonable remuneration for the work done when
there is no binding contract between the parties is imposed by a rule of
C law and not by an inference of fact from the acceptance of service.
[34] In Ramkrishna Shankarrao v. Rangoobai, it was held as follows:
From a bare reading of the section it is clear that even if there is no
contract for the performance of certain work and if the Plaintiff has done
D that work, without intending to do that work gratuitously, and the
Defendant has enjoyed the benefits thereof, then the Defendant is bound
to compensate the Plaintiff in respect of such work. The equitable principle
underlying Section 70 of the Contract Act is that there should be no
undue enrichment of one party at the cost of another. It is based on the
principle of restitution which prevents unjust enrichment by one party.
E The learned Counsel for the Appellant invited my attention to some
reported decisions on this point.
In: [1968] 3 SCR 214, Mulachand v. State of MP, it was held that the
contract in that case was not a valid one. However, the relief was granted
by invoking Section 70 of the Indian Contract Act. It was pointed out that
under Section 70 of the Contract Act the juristic basis of the principle
F
under this section is not founded on any contract or tort but it is based
on quasi-contract.
In: [1970] 3 SCR 415, P Dhunji Shaw v. Poona Municipality the plaintiff was
supplying goods to the Municipality for which there was no contract but
it was held that under Section 70 of Contract Act when a person lawfully
G delivers to another and not intending to do so gratuitously is entitled to
return of the goods or the payment of the value of the goods. Similarly
in: [1978] 3 SCR 571, Md Ishaq v. Iqbal & Md Ali & Company it was also
a case of Plaintiff’s supplying some goods to the Defendants and there
was no contract. The court spelt out an implied contract by conduct of
the parties. That means there was supply of goods by the Plaintiff and its
H
acceptance by the Defendants. Even in the present case, the Plaintiff has
done some additional work and the Defendant has accepted and enjoyed
the benefits of the same.
Similarly in: [1980] 3 SCR 893 Union of India v. JK Gas Plant the Supreme
Court applied the principle underlying Section 70 of the Contract Act and
I granted the relief even though there was no valid contract. It was held
that since the Defendant has enjoyed the benefit of the work done by the
Plaintiff, he is bound to pay the full value of the goods.
1022 Current Law Journal [2015] 9 CLJ

[35] In Abu Mohammed v. Mohammed Kunju Lebba the court held as follows: A

The Section indicates that there is no distinction between the grant of a

benefit to another on request and a grant without request. In both cases
the person who enjoyed the benefit has liability to recompense the grantor
of the benefit and the only exception is that when the grant was intended
as a gratis, the recipient has no legal liability. It is now well settled that B
Section 70 is much wider in scope than the principles adumbrated in
common law (vide Gajapathy Krishna Chandra v. Sreenivasa, AIR 1915 Mad 95).
[36] In Pallonjee Eduljee and Sons v. the Lonavala City Municipality the
Bombay High Court held, inter alia, as follows:
... The important point to notice is that in a case falling under s. 70 the C
person doing something for another or delivering something to another
cannot sue for the specific performance of the contract, nor ask for
damages for the breach of the contract, for the simple reason that there
is no contract between him and the other person for whom he does
something or to whom he delivers something. So where a claim for
D
compensation is made by one person against another under s. 70 it is not
on the basis of any subsisting contract between the parties but on a
different kind of obligation. The juristic basis of the obligation in such a
case is not founded upon any contract or tort but upon a third category
of law, namely, quasi contract or restitution. In Fibrosa v. Fairbairn [1943]
AC 32 Lord Wright has stated the legal position as follows: E
... any civilised system of law is bound to provide remedies for
cases of that has been called unjust enrichment or unjust benefit,
that is, to prevent a man from retaining the money of, or some
benefit derived from, another which it is against conscience that he
should keep. Such remedies in English Law are generally different
F
from remedies in contract or in tort, and are now recognised to fall
within a third category of the common law which has been called
quasi-contract or restitution.
6. In Nelson v. Larholt [1948] 1 KB 330 Lord Denning has observed as
follows:
G
It is no longer appropriate to draw a distinction between law and
equity. Principles have now to be stated in the light of their
combined effect. Nor is it necessary to canvass the niceties of the
old forms of action. Remedies now depend on the substance of
the right, not on whether they can be fitted into a particular
framework. The right here is not peculiar to equity or contract or H
tort, but falls naturally within the important category of cases
where the court orders restitution if the justice of the case so
requires.
7. Applying the principle to the present case, it is manifest that the
appellant would have been entitled to compensation under s. 70 of the
I
Indian Contract Act if he had adduced evidence in support of his claim.
 [2015] 9 CLJ Tanjung Teras Sdn Bhd v. Kerajaan Malaysia 1023

A [37] Section 70 of the Indian Contract Act referred to in the three Indian
cases is in pari materia with s. 71 of our Contracts Act.
[38] In the light of the decided authorities cited above on the jurisdic basis
behind s. 71 of our Contracts Act, it is thus clear that the learned SFC’s
submission that there is no obligation on the part of the plaintiff to pay the
B
defendant for the super structure work done because there was no privity of
contract between the parties does not hold any water.
Conditions To Be Fulfilled In A Claim Under s. 71
[39] As rightly pointed out by the learned High Court Judge, in a claim
C under s. 71, the defendant is required to fulfil four conditions as set out in
the Privy Council’s decision in Siow Wong Fatt as set out above.
[40] The learned High Court Judge, having evaluated the factual matrix
before her, came to the conclusion that the second and fourth conditions had
not been met by the defendant to entitle it to make a claim under s. 71. We
D had earlier set out in detail the reasons for her findings on these two
conditions.
[41] To understand the decision of the Privy Council in Siow Wong Fatt,
it is pertinent to appreciate the facts in that case.
E [42] The brief facts in Siow Wong Fatt as appeared in the headnotes read
as follows:
The appellant (Siow) made discoveries of a few hundred acres of land
which gave promise of bearing iron ore. In November 1959 he obtained
a prospectors licence and a mining lease was granted to him in September
F 1961. He then formed a company called the Kota Mining Co Ltd
(hereinafter called “Kota”) and transferred all the benefits and burdens
vested in him to the company. By an agreement dated September 19, 1960
Kota transferred its right under the earlier agreements to the first
respondent (Susur Rotan) in consideration of $40,000 and a further
$40,000 was to be paid at a later stage (which was never paid) with a
G tribute of $2 for every ton raised. Thus by a train of sub-contracts Susur
Rotan became entitled as a matter of substance to the benefit of the
prospectors licence and a right to a mining sub-lease of the mineral land.
Susur Rotan then as a commercial owners of the mining rights
constructed a road eight or nine miles long leading to the mineral land.
But despite that Susur Rotan never started to mine the land as it appeared
H that Kota did not carry out their part of the contract. Susur Rotan then
sued Kota for specific performance of the agreement dated September 19,
1960 and they joined Siow as a defendant against whom they made a
claim for specific performance of an alleged oral agreement. When the
case came up before Azmi J, as he then was, counsel for Susur Rotan
announced that the action between his client and Kota had been settled
I so that the action proceeded between Susur Rotan and Siow, and Azmi
1024 Current Law Journal [2015] 9 CLJ

J held that there was no oral agreement as alleged and dismissed the A
action. Susur Rotan then appealed to the Federal Court who found
against Susur Rotan upon the alleged oral agreement but in its favour
under section 71 of the then Contracts (Malay States) Ordinance and
directed an inquiry as to the sum to which Susur Rotan was thereby
entitled ([1965] 2 MLJ 45). On appeal to the Privy Council the sole
question before their Lordships was whether the Federal Court were B
right in holding that Susur Rotan had a valid claim against Siow under
section 71 of the said Ordinance in respect of their expenditure upon the
road.
[43] The PC had answered the sole question in the negative. Having set out
the four conditions which must be fulfilled in order to establish a claim under C
s. 71, the PC went on to hold that based on the facts, Susur Rotan had failed
to fulfil the second condition of the section. This is what the PC said in regard
to this condition:
It is the second point which in their lordships’ judgment is decisive of this
case. As a matter of phraseology the section seems clear upon it. To bring D
the section into play the person when doing the act or delivering the thing
must do the act “for another person” or deliver something “to him”. So
that his then present intention must be to do the act or to deliver the
thing for or to another.
[44] Relying on the words that the work must be done “for another person” E
or to “deliver something to him” and that intention must be gathered at the
time the work was done or delivered, the learned High Court Judge went on
to hold that since “DW3 had stated that the works were performed by the
defendant for JP and in consideration thereof, the defendant will be paid by
JP, hence the works were not done for the plaintiff but for JP”, the second F
condition was not satisfied.
[45] We are unable to agree with the learned High Court Judge’s reasoning
on the second condition. She would appear to have given a very mechanical
or narrow interpretation to the second condition. She had overlooked the
observation made by the PC, in regard to the second condition, that at the G
time of the construction of the road, Susur Rotan was not doing it for the
benefit of Siow but for its own benefit under the chain of contracts because
it was the body that was going to exploit the mineral land. It was also clear
from the facts that at the time of the construction, Susur Rotan was not
looking to Siow or any one else for reimbursement of the costs involved. H
[46] Coming back to the case before us, the factual scenario is very
different from Siow Wong Fatt. The facts here were that (1) the project was
built for and on behalf of the plaintiff to be used as the staff quarters of
JBDPAN; (2) the project was undertaken by JP for the plaintiff under the
agreement for which JP had expected to be paid under the agreement; (3) the I
super structure work was part of the works under the project; (4) JP had
appointed the defendant as its sub-contractor to construct the super structure
work; (5) the defendant had certainly expected to be paid for the super
structure work by JP on a back-to-back basis.
 [2015] 9 CLJ Tanjung Teras Sdn Bhd v. Kerajaan Malaysia 1025

A [47] Having regard to the juristic basis behind s. 71 which is premised on

the equitable principle of restitution, good conscience and prevention of
unjustment enrichment, we hold as a matter of fact that at the time the super
structure work was done by the defendant, it was done for the plaintiff as the
ultimate owner of the project and the plaintiff was the direct beneficiary of
B the project. The defendant had intended to be paid for carrying the works.
The fact that the defendant would receive payment from JP and not the
plaintiff did not alter the fact that the defendant never intended the work to
be done gratuitously. The second condition ought to have been found in
favour of the defendant.
C [48] We now come to the fourth condition. In this regard, we are again of
the view that the learned High Court Judge erred in holding that as the whole
project was not completed and the plaintiff had to appoint a new contractor
to complete the project, the plaintiff had not benefited from the defendant’s
work.
D
[49] It must be borne in mind that the defendant was only appointed as a
sub-contractor to construct the super structure work while the construction
of the entire project was the responsibility of JP.
[50] DW3 had testified in Q&A 48 of his witness statement that the
plaintiff had benefited from the super structure work as the plaintiff had since
E
revived the project and had appointed new contractors to continue to build
the apartments on the “super structure work” done by the defendant.
[51] There was no evidence on record to show that the super structure work
done by the defendant was defective and or had to be demolished when the
F new contractor took over the project. Although at the commencement of the
trial the plaintiff did seek to file in a supplemental bundle of document to
enclose a Structural Integrity Test Report by IKRAM, to show defects in the
work carried out under the project, it was disallowed by the learned High
Court Judge after hearing submission of the parties. There was no cross
appeal by the plaintiff on this ruling of the learned High Court Judge.
G
[52] Consequently, we agree with the defendant’s learned counsel that the
plaintiff could not deny that it had benefited from the super structure work
done by the defendant. It would therefore be unjust for the plaintiff to refuse
to pay any compensation to the defendant for the value of the super structure
H work done by the defendant.
[53] In conclusion, based on the foregoing discussions, we agree with the
defendant that it had successfully proven, on a balance of probabilities, its
claim under s. 71 to the Contracts Act.
On Quantum
I
[54] In regard to quantum, the learned High Court Judge had similarly
found that the defendant had failed to discharge its burden of proving the sum
of RM3,009,254.23.
1026 Current Law Journal [2015] 9 CLJ

[55] She had agreed with the plaintiff’s submission that the defendant had A
merely relied on the three interim certificates issued by DW2 and had failed
to particularise the works done by the defendant and the particulars of claim
in respect of the same.
[56] The learned judge went on to hold that even if the defendant had
B
proven its claim for the sum of RM3,009,254.23, the plaintiff was entitled
to set-off the items mentioned in (i) to (v) totaling RM3,000,441.58 from
RM3,009,254.23, leaving a balance of RM8,812.65 due to the defendant.
[57] The question is whether the learned High Court Judge had applied the
correct principle in assessing a claim under s. 71 of the Contracts Act. As C
we had stated earlier, s. 71 of our Contracts Act is the statutory embodiment
of the common law principle of quantum meruit, which provides for just
compensation as the measure of the work done as opposed to contractual
damages (see: Siow Wong Fatt, Craven-Ellis v. Cannons Ltd (supra), Delpuri-Harl
Corp JV Sdn Bhd v. Perbadanan Kemajuan Negeri Selangor (supra); Spatial
D
Ventures Sdn Bhd v. Twintech Holdings Sdn Bhd (supra)).
[58] In Siow Wong Fatt this was stated so by the PC at p. 121 para. D-E
of its judgment as follows:
If the other conditions of the section are satisfied then compensation
must be paid for that act if the person sued has enjoyed that benefit. E
That compensation must prima facie be measured by the worth of the act
done. Whether or not it ought to be modified by an assessment of the
benefit enjoyed is not a matter which their lordships propose to discuss
in this judgment.
The words “compensation must be measured by the worth of the work done” F
implies a quantum meruit formula.
[59] In Spatial Ventures Sdn Bhd, the plaintiff’s claim to be paid professional
fees based on the scale costs in the letters of appointment was rejected by
Nallini Pathmanathan J (now JCA), on the ground that reference to the scale
G
in the contract or on the contract price of the project is not a tenable basis
on which to assess or award damages on a quantum meruit basis. The learned
High Court Judge gave the following rationale for her findings as appeared
in paragraphs of her judgment:
The Law on Quantum Meruit
H
[24] The position in law is that an assessment for restitution on the basis
of quantum meruit is in reality a measure of the costs of the work done,
a matter which does not depend upon the contract and therefore will not
be trammeled or limited by the contract rate. This gives the plaintiff, not
contractual damages, but restitution for the work done.
I
[25] It follows from the foregoing that the Plaintiff cannot seek to recover
damages on quantum meruit basis by reference to the scale in the contract
or on the contract price. Therefore the Plaintiff’s claim premised on the
 [2015] 9 CLJ Tanjung Teras Sdn Bhd v. Kerajaan Malaysia 1027

A scale costs in the letters of engagement is not a tenable basis on which

to assess or award damages and accordingly the said basis, in accordance
with the law, is rejected.
Assessment on a a Quantum Meruit Basis
[26] It follows from the foregoing that the court has to consider the
B following issues in assessing work done:
a. What as a matter of fact is the work done?
b. How is the work done to be measured?
[60] Reverting to the present case before us, the defendant’s claim for the
C sum of RM3,009,245.23 is premised on the three interim certificates
certified and issued by DW2 (JP’s architect), as part of its progress payment
claim under the terms of its contract (LOA) with the main contractor, JP.
Based on the decision in Spatial Ventures Sdn Bhd, to which we fully adopt,
it is thus obvious that a sum certified for interim payment based on
D contractual terms cannot form the basis of calculation of compensation based
on quantum meruit in a claim under s. 71 of the Contracts Act.
[61] Be that as it may, we took note that in the three interim certificates
there was a sum of RM1,241,022.56 certified as “actual physical work
done”. Is the term “actual physical work done” equivalent to “the value of
E the work done” or “costs of the work done” as envisaged in Siow Wong Fatt
and Spatial Ventures Sdn Bhd to entitle the defendant to claim the said sum
as reasonable compensation for the super structure work done on the project
site on a quantum meruit basis?
[62] We are of the view that the above question should be answered in the
F
affirmative. This is because, unlike the case of Spatial Ventures Sdn Bhd where
the assessment of damages before the Registrar was entirely by way of
affidavit evidence and there were no cross-examination of the affidavits filed
by the parties, in this case, DW2, JP’s architect, and DW1, JP’s quantity
surveyor, were called by the defendant and were cross examined by the
G plaintiff’s counsel. DW2 had in his testimony stated that the three interim
certificates were issued by him after the works were evaluated and verified
by DW1, JP’s quantity surveyor. Both DW1’s and DW2’s testimony was
not seriously challenged by the plaintiff during trial. Hence, it was not as if
the sum of RM1,241,022.56 for “actual physical work done” was a figure
H plucked from the air by the defendant as alleged by the plaintiff. It was
prepared by men skilled in their respective profession and the court could
accept that they had acted professionally when quantifying and certifying
the various amounts stated in the certificate, including the sum of
RM1,241,022.56 for physical work done by the defendant.
I
1028 Current Law Journal [2015] 9 CLJ

[63] In the circumstances of this case, this court takes the view that on a A
balance of probabilities and in the interest of justice, the sum RM1,241,022.56
certified in the three interim certificates under the component of “actual
physical work done” should be accepted as the value of work done by the
defendant on a quantum meruit basis.
B
[64] In allowing the defendant’s appeal on quantum, we have also accepted
the defendant’s contention that although a sum of RM16 million had
purportedly been paid by the plaintiff to JP under the agreement, it did not
include the super structure work carried out by the defendant on the project
site. Indeed, the documentary evidence adduced by the plaintiff itself showed
that the RM16 million was paid to JP between the period 19 June 2003 to C
2 February 2005 whilst the defendant was appointed by JP as its sub-
contractor only on 15 February 2007. In other words, the RM16 million
paid to JP could not have included payment for super structure work which
was yet to be done by the defendant at the relevant time.
D
[65] In conclusion, based on the foregoing findings and conclusion, we
hereby allow this appeal with costs and set aside the decision of the High
Court Judge. The defendant is awarded the sum of RM1,241,022.56 as
reasonable compensation for the super structure work carried out on the
project site. The sum awarded to carry interest at the rate of 5% from the date
of this judgment until the date of full realisation. E

[66] The defendant is awarded agreed costs of RM30,000 and deposit is to

be refunded to the defendant.