- The Plaintiff’s claim against the Defendant is for failure to make payment on invoices issued for work done under a letter of award.
- The Plaintiff in addition to filing the claim applied for summary judgment whereas the Defendant applied to strike out the Plaintiff’s claim under Order 18 Rule 19 of the Rules of Court 2012.
- By way of a letter of award dated 02.12.2019 the Plaintiff was appointed by the Defendant as a sub-contractor for a project known as “Provision of Pre-Commissioning Services for Tembikai Non Associated Gas (TNAG) Development (“the project”).
- The Plaintiff had carried out the sub-contract works from December 2019 to July 2020 and had issued a number of invoices.
- Some of the invoices were paid in full whereas 1 invoice was paid partly and 1 invoice unpaid leaving a balance RM1,089,675.51.
- Under the letter of award the Plaintiff could claim an interest of 18% on the outstanding sum if the payment was not made within 60 days. The late payment interest in this case came up to RM288,263.99.
- The Plaintiff is claiming for this sum of money as well as interest of 5% from the date of the Writ until the date of full payment.
- The 2 main defenses of the Defendant is that (i) the Defendant had suffered losses due to the COVID 19 pandemic and the Plaintiff is barred from enforcing his right under the contract under the COVID 19 Act 2020 (“the Act”); and (iii) the Defendant also questions the Plaintiff’s quality of work.
- The 2 main issues are whether the Plaintiff are barred from enforcing the contract because of the pandemic and whether the quality of work is up to the standard of the contract.
COVID Act 2020
- The Defendant relies on Section 7 of the Act which prevents a party to the contract to exercise a right under the contract against the other party due to the inability of the other party to fulfill its obligations under the contract due to the pandemic.
- It is clear that the provision of the Act envisages the future inability of the parties to fulfill the obligations under a contract. It does not cover the obligations already performed by one party.
- In this case the Plaintiff has already fulfilled its obligations under the contract there is nothing for the Defendant to reciprocate apart from making payments which have already become due and payable.
- The financial crunch because of the pandemic cannot be an excuse not to pay. It is to be noted that the financial crunch would have affected both the Plaintiff and the Defendant. The Plaintiff alone cannot be penalized as they have already performed their obligations under the contract.
- In short this defense of the Defendant is clearly untenable and amounts to no defense.
Quality of Work
- The Defendant have not raised at any time any complaints as to the quality of work and in fact admit to having paid fully 2 of the invoices and part of 1 invoice.
- This conduct of paying for the invoices shows their satisfaction of the works carried out. This is clearly an afterthought defense.
- This is a fit case to award a summary judgment to the Plaintiff as applied and at the same time the Court views the Defendant’s application to strike out as untenable.
In the upshot the Court allowed the Plaintiff’s application with a cost of RM4,000 and dismissed the application of the Defendant with a cost of RM2,000.
Source: Armada Petroleum Sdn Bhd v Alam Maritim (M) Sdn Bhd  MLJU 1515. Kuala Lumpur High Court. Akhtar Tahir J.
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