IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR, WILAYAH PERSEKUTUAN [CIVIL DIVISION] CIVIL SUIT NO. S Between

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1 IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR, WILAYAH PERSEKUTUAN [CIVIL DIVISION] CIVIL SUIT NO. S Between KRIS HEAVY ENGINEERING & CONSTRUCTION SDN. BHD. PLAINTIFF And ABB INDUSTRIAL CONTRACTING SDN. BHD. DEFENDANT GROUNDS OF JUDGMENT [1] The claim by the Plaintiff, Kris Heavy Engineering & Construction Sdn. Bhd. ("KHEC") against the Defendant, ABB Industrial Contracting Sdn. Bhd. ("ABB") are for losses and damages as a result of alleged unlawful/wrongful termination by ABB of the Sub-Contract to KHEC and for the unpaid progress claims and the losses and damages suffered as a result of carrying out the works pursuant to the Sub-Contract Agreement (KHE-99/053) dated (''the Sub-Contract"). 1

2 The Pleadings [2] The Writ and Statement of Claim filed in 2002 dated was for a grand total sum of RM5,260,026.36, the respective interests under the various heads of claim, declarations as to unlawful and wrongful termination and loss and expenses incurred by KHEC. A defence and counter-claim dated was made for the sum of RM2,713, with interest thereon at 8% from until full realisation thereof; and to which a reply and defence dated was filed. [3] As background, it was pleaded and admitted by ABB that by a contract made between Toyo Engineering And Construction Sdn. Bhd. (the "Main Contract"), and ABB, the Employer awarded to ABB a contract to execute the electrical works at the Kertih Aromatics Project (KR-2)... and thereby appointing ABB as the main contractor in respect of the electrical works at the said Project (hereinafter referred to as the "Employer"). [4] There is inaccuracy to the use of terms, giving excuse to dispute. [5] From the outset in the Statement of Defence and counter-claim, it was stated that ABB will be seeking further and better particulars from 2

3 KHEC to enable ABB to verify various matters pleaded by KHEC and to respond to the same more properly and comprehensively and that in the meantime, the defence were set out in the Statement of Defence dated At the sections on the statement describing the parties and the background to the contract the parties defence was replete with pleadings of no knowledge, unable to verify the statements, qualified admissions and correction as to terms where it was asserted by ABB that "... Section 1 of the Sub-Contract is actually described as and contains the "Articles of Agreement" and not "Articles of Association" as pleaded by KHEC. In addition..." [6] Save as to admissions made by ABB, KHEC made no concessions, but joined issue with ABB on its Defence, repeated its assertions and put KHEC to strict proof. [7] The Amended Defence and Counter-claim dated , pursuant to an Order of Court obtained on was eventually filed, and the Reply and Defence thereto bears the date Observations on Pleadings [8] It is observed that notwithstanding the time the parties had, the nature of the project and the contracts were left in dispute. Indeed 3

4 although the pleading by KHEC at para 2.1 of the Statement of Claim was previously admitted by ABB, it was amended to: "A) The Kertih Aromatics Project (KR-2) 2.1 Paragraph 2.1 of KHECs Statement of Claim is admitted. 2.1 The Defendant refers to paragraph 2.1 of the Statement of Claim and avers that the Kertih Aromatics Project (KR-2) ("the Project") is a project to build a new petrochemical plant. The Project is located in Terengganu. The Employer in the project is Aromatic Malaysia Sdn. Bhd. Toyo Engineering and Construction Sdn. Bhd. ("TEC") is the main turnkey contractor for the project. TEC'S scope of work is to design, build and commission the plant. The project consultant is Forster Wheeler " [9] The subsequent paragraphs elaborated the added further detail to the relationships. The Reply and Defence to Counter-claim dated were as follows: 4

5 "2. Mengenai perenggan-perenggan 2 hingga Penyataan Pembelaan Defendan, Plaintif menafikan setiap satu dan kesemua pengataan yang dinyatakan disana dan mengulangi kandungan perenggan-perenggan di Penyataan Tuntutan Plaintif dan meletakkan Defendan kepada beban bukti yang kukuh." [10] To be better able to appreciate the full nature, scope and extent of the dispute, the issues that arose from the Statement of Claim are reproduced below: 1. Whether pursuant the instructions of ABB, KHEC commenced to mobilize its resources, plant and equipment progressively to the work site in accordance to the milestone schedule and programme as provided by ABB? (paragraph 4.1 Statement of Claim) 2. Whether KHEC took possession of the site on and submitted the three (3) weeks look ahead milestone schedule and programme to ABB? (paragraph 4.1 Statement of Claim) 5

6 3. Whether KHEC commenced work immediately since ABB had given instructions to start on the HV cabling since ABB informed that other information particulars and details will be provided by ABB as and when it is required? (paragraph 4.1 of Statement of Claim) 4. Whether ABB also informed that the work for LV cabling for the process area is to commence immediately after KHEC finishes the HV cabling works? (paragraph 4.1 of Statement of Claim) 5. Whether KHEC immediately commenced the Works as instructed and directed by ABB in order to comply with the milestone schedule and program? (paragraph 4.2 of Statement of Claim) 6. Whether upon mobilizing and commencing the Works, KHECs work was delayed and disrupted at various different periods of time for various reasons beyond the control of KHEC and KHEC was unable to proceed and complete the Works in accordance with the milestone schedule and programme of ABB? (paragraph 4.3 of Statement of Claim) 6

7 7. Whether amongst the delay and disruption caused to KHEC execution of the Works, inter alia, were: (paragraph 4.3 Statement of Claim) late possession of site; wrongful and delayed instructions from ABB; wrong cable schedule information; delay in cable delivery, defective materials and duct banks; insufficient instructions, particulars, details and drawings and delay in issuance of drawings; safety power-on and missing cable drums from site; lack of work front co-ordinations and instructions from ABB. 8. Whether KHEC discovered the following changes to the Works and to the earlier instructions given by ABB upon commencing the works: 8.1 instructions given that the lay down area was 2 kilometre out of the job site and the only access was via the main road. The Plaintiff never received drawing 7

8 No.202-T4643/E despite numerous requests to ABB? (paragraph Statement of Claim); 8.2 inspection test procedure (ITP) given and later most of the work scope was upgraded to grade "P status while the previous instructions was either grade "B" or "C status? (paragraph of Statement of Claim); 8.3 change in the scope of work due to the difficulty in access since KHEC had to manually transport sand into the trench bed? (paragraph Statement of Claim); 8.4 changes in the work scope and construction programme and KHEC had to work out of the sequence/milestone schedule and programme in accordance with ABBs approved construction programme? (paragraph of Statement of Claim); 8.5 the estimated time of arrival of cables varied without notice to KHEC? (paragraph of Statement of Claim); 8

9 8.6 the field instructions given by the consultant, Foster Wheeler (FW), differed from the drawings approved for construction (AFC) when the Works completed by KHEC in accordance with the AFC drawing issued by ABB which was later rejected by FW? (paragraph of Statement of Claim); 8.7 changes in the duct bank installation? (paragraph of Statement of Claim); 8.8 poor co-ordination since there were changes in the management of ABB? (paragraph Statement of Claim). 9. Whether whilst KHEC was awaiting ABB s further instructions, ABB took site possession on and proceeded to commence work? (paragraph 4.5 of Statement of Claim) 10. Whether KHEC by its letter dated , attempted to mitigate losses and damages and informed that there were numerous outstanding issues and problems that needed to 9

10 be discussed before KHEC can resume work? (paragraph 4.5 of Statement of Claim) 11. Whether ABB without giving further instructions to KHEC or attempting to mitigate the losses, gave notice of suspension on ? (paragraph 4.6 of Statement of Claim) 12. Whether the acts of ABB was unlawful and wrongful termination of the Sub-Contract? (paragraph 4.6 of the Statement of Claim) 13. Whether KHEC responded by issuing a notice of repudiation on ? (paragraph 4.5 of the Statement of Claim) 14. Whether KHEC informed that ABB had failed to consider the outstanding issues and the various breaches of the terms of the Sub-Contract by ABB which inevitably caused KHEC not being in a position to complete the Works? (paragraph 4.5 of the Statement of Claim) 15. Whether the outstanding issues and breaches raised in KHEC s letter dated entitled KHEC to repudiate the 10

11 Sub-Contract due to ABBs notice of suspension dated ? 16. Whether the outstanding issues and the breaches of the Sub-Contract as identified below were material to the execution of the Sub-Contract by KHEC: 16.1 the failure to deliver materials on time? 16.2 the failure to reply to KHEC s letters and site memos? 16.3 the failure to provide accurate positioning of cable drums locations? 16.4 the failure to provide proper primary drainage to cater for the surface water "run off" and overflowing broken drains? 16.5 the disregard to KHEC s continuous and urgent request for information and documents necessary to expedite the said Sub-Contract Works? 11

12 16.6 the failure by ABB to trenches and duct banks as per schedule? 16.7 the act of giving wrong instructions leading to rejections? 16.8 the negligence which resulted in backfill sand being rejected by the FW/TEC? 16.9 the lack of co-ordination with the FW/TEC on the 11kv/damage cable, resulting in KHEC suffering financial loss? the failure to mitigate delays? the failure to provide scaffolding on time? the failure to make progress payment as and when it becomes due and payable? the failure to provide access? 12

13 16.14 the unlawful removal of cables specifically delicate for P2 Area which lead to the suspension of permanent works? the failure to provide cable ladders (P1/P2) which lead to the suspension of permanent works? the failure to provide QA/QC which lead to rejections and idling time? the failure to deliver cables in a sequential manner, thus resulting in sequence of work being disrupted, subsequently rejection and damages? the failure to provide proper work front coordination? the failure to provide proper administration, which resulting in plant/machinery idling? the failure to provide AFC drawings in a timely fashion? 13

14 16.21 the deviation and/or delay in the milestone schedule by ABB although KHEC had submitted a three (3) weeks lookahead milestone schedule to ABB? the failure to inform the change in AFC drawings? the failure to inform the change in design of cables pulled? the failure to inform KHEC the rejection of works despite Plaintiff s numerous request for the field inspection report? 17. Whether the above amounts to a breach of the various terms and conditions of the Sub-Contract? 18. Whether ABB had unlawful and wrongful terminated the Sub- Contract? 19. Whether KHEC is entitled to the claims for non payment of progress claim for work-done as identified in paragraph 5 of the Statement of Claim? 14

15 20. Whether KHEC is entitled to the claims tor losses and damages as a result of the unlawful termination of the Contract as identified in paragraph 6 of the Statement of Claim? 21. Whether KHEC is entitled to the claims in respect of unit rate for lead sheath cables as identified in paragraph 7 of the Statement of Claim? 22. Whether the deduction/back charges as identified in paragraph 8 of the Statement of Claim? 23. Whether KHEC is entitled to the claims for loss and expenses incurred as a result of extension of the Contract as identified in paragraph 9A of the Statement of Claim? 24. Whether KHEC is entitled to the claims for prolongations costs as identified in paragraph 9B of the Statement of Claim? 15

16 25. Whether KHEC is entitled to the claims for unfair suspension of works as identified in paragraph 9C of the Statement of Claim? 26. Whether KHEC is entitled to the claims for unlawful termination (wrongful omission of works) as identified in paragraph 10 of the Statement of Claim? [11] The Statement of Issues demonstrated that the decision of the Court will not only necessarily be founded on application of law on findings of fact, but to make the findings of fact on the evidence require contractual management experience and technical expertise to appreciate the evidence and give the evidence their due weightages. Findings of fact upon lawyers' arguments would be anybody's guess and may be wholly unpredictable. It can be an engineer's and a contractor's nightmare when findings of fact on such matters are left to be made by parties who have neither experience nor expertise to appreciate the evidence and draw the correct conclusions. For example, everyone knows apples fall from the apple tree. It took Sir Isaac Newton to observe, measure the rate of fall of apples and other objects to deduce the laws of gravity and its relationship to mass and distance. Today the 16

17 same laws are applied to calculate trajectories to land satellites on the other side of the moon. [12] The problem that the Court faces is that if the technical and contract foundations are not understood and the evidence adduced is not correctly appreciated, it may be wrongly concluded that it is not proven. Purpose of Pleadings and Trials [13] The basic principles of pleading is simple. Requiring a plaintiff to state in his pleadings his cause of action and the facts relied upon in respect thereof, and the defendant likewise in respect of his defence, a. gives notice to each other the cause of action facts and defences relied upon; and b. identifies what is not disputed and what is not. [14] By putting the plaintiff to strict proof, the defence gives notice to the plaintiff to disclose the nature of the evidence relied upon by the plaintiff so that the defendant can appreciate the nature of the evidence relied upon and elect whether to require discovery and/or interrogatories 17

18 to check and verify that evidence so satisfy itself as to the accuracy and reliability of such evidence. If the defendant disputes it after such checking and verification, the trial in the Court is not about the evidence and what it means but to focus on its weaknesses as to reliability and accuracy. It is only at the stage of hearing of submissions that submissions are made as to what it all means. [15] Since a plaintiff has the entire period of limitation in which it can file its claim, it means that a plaintiff must prepare its case and be ready to proceed to trial on its case as pleaded immediately if allowed, at the time its writ and statement of claim is filed. [16] If a claim is defended against, the checking and verification must be commenced immediately upon close of pleadings, such that by the first case management date the parties can inform the Court: a. On the pleaded case what facts are not disputed and what facts are disputed, and in respect thereof what evidence had been disclosed, checked and verified satisfactorily, and what had not. The discussion would be, in respect of evidence not disclosed on disputed facts that can be dealt with by unless orders, and what needs to be determined at trial; and 18

19 b. On the pleaded defence, likewise. If the plaintiff had been slow in commencing its action, it may warrant giving time to the defendant to prepare its defence and put together its evidence. [17] In this case, it was not done. The Statement of Issues produced at trial clearly demonstrated that the parties themselves either did not or were unable to disclose the nature of the evidence relied upon to support the assertions made, or if the evidence were disclosed, likely had not been checked and verified. It is worth repeating that if the case had been properly prepared for trial, the parties would be able: a. to inform the Court which parts of the asserted facts on the pleadings previously disputed had been resolved and how they have been resolved; b. if material disputed assertions of facts, the nature of the evidence relied upon that had been disclosed, what were the unresolved problems with such evidence when checked and verified; and 19

20 a trial would be conducted to test such evidence before the Court so that findings on such disputed evidence could be made before proceeding to hear submissions on the facts as a whole in order to draw inferences for findings of fact to be applied, together with the law, to resolve the dispute as to the claims between the parties. [18] Since both parties had almost equally failed, the claim and counter-claim should have been dismissed since as at the date fixed for trial, the case was not ready for trial. The profusion of issues of fact in the Statement of Issues, with bundles of documents un-indexed as to which piece of evidence pertains to which disputed fact, would quickly reduce the trial into such a circus as to be unjusticiable. [19] An attempt was made by the Court to save the case for the parties. Appointment of Court Expert [20] This was explained in open Court in the presence of counsels and the representatives of the parties. It was suggested to the parties that consideration be given to the appointment of a person whose qualifications, experience and expertise were accepted by the parties, who could assist the Court in the assessment of the voluminous documents, technical and contractual, in relation to the case for the 20

21 parties. It was suggested that the parties might refer to lists of recognised consultants maintained by Petronas in Malaysia. It was heartening to see the nods of understanding and relief of the representatives of the parties, though counsels appeared initially quizzical. [21] The basis for the suggestion is Order 40 of the Rules of the High Court There is a dearth of case-law authority. [22] In England and Wales, it was only through the recommendations of Lord Woolf that in 2009, a proper structure for the appointment of assessors in the superior courts was put in place (Lord Woolf Access to Justice (Final report to the Lord Chancellor on the civil justice system in England and Wales (London: HMSO,1996) ( inal/sec3c.htm). That procedure, incorporated as Rule 35.15(2) the Civil Procedure Rules in 2009 provides for the appointment of persons with the necessary skill and experience in dealing with a matter for adjudication in the superior court. Besides being assigned to prepare a report for the court on an issue in the proceedings to be given to the parties involved in the litigation (r 35.15(3)(a)), the court may direct that 21

22 the assessor(s) attend the whole or any part of the trial and advise the court on any such matter. [23] Similar suggestions were recommended in Australia by the Australian Law Reform Commission Experts (Review of the adversarial system of litigation (Background Paper 6) 1999 ( [24] The proposed court expert was, in the instant case, not made as an order of Court but by seeking the agreement of the parties. [25] The case was stood down for a half-hour or so. When Court resumed, the Court was informed that KHEC agreed with the suggestion. Counsel for ABB informed the Court their representatives would be recommending the suggestion for agreement by their principals in London. That agreement was obtained within a few days. Appointment of Ir. Wong Chun Hon [26] At the next hearing date, the Court was informed that both parties had identified a consultant that they both accept as qualified. This consultant is Ir. Wong Chun Hon, a Registered Professional Engineer with the Board of Engineers Malaysia, a Member of the Institution of 22

23 Engineers, Malaysia and a Competent Electrical Engineer (275kV) with the Energy Commission, Malaysia. He had graduated with a B.Sc. (Hons.) degree in Electrical and Electronics Engineering (U.K.) in 1976 and had a Master's Degree in Business Administration from the University Malaya in He had worked with Tenaga Nasional Berhad (previously known as National Electricity Board of Malaysia) for 35 years in various engineering, supervisory and management levels until his retirement in mid-2007 as General Manager, Project Management, Asset Development in the Transmission Division. During his working career, he had worked mainly in the generation and transmission projects division as Project Engineer, Project Manager and General Manager and in the Transmission System Operation Department as Control Manager and Operation Planning Manager. Since the end of 2007, he had been active in providing Technical Advisory Services for IPP, Consulting Services, Competency Services and conducting Technical Training for both public and in-house courses. [27] It is evident that his background, qualification and experience matches him to the technical issues of the electrical sub-contract in this case. 23

24 [28] Accordingly, the Court accepted him as a court expert to assist in the assessment of the evidence, and would, subject to manifest error being demonstrated, be prepared to accept his evaluation and assessment of the evidence and deliver decision based upon it. Procedure Before Ir. Wong Chun Hon [29] In open Court in the presence of the parties, the nature of the case, the purpose of his appointment, that his duty and responsibility was solely to the Court was explained to Ir. Wong Chun Hon. He was clear that in making his assessment, it was not his role to make a decision on the claim or any part of it as that remained the responsibility of the trial Court. He was, therefore, confined to make recommended findings. [30] Due to the technical nature of the evidence being assessed, the Counsels for the parties were reminded that they were to seek the assistance of their clients' engineers to assist in their submissions to Ir. Wong Chun Hon. Subject to the parties not being denied any right to a fair hearing, the parties were given wide latitude to make their technical presentations to the court expert. 24

25 Ir. Wong Chun Hon Assessment Reports [31] The 1st Assessment Report by Ir. Wong Chun Hon was released on 23 October The 2nd Assessment Report was issued on 11 January The Final Report on 18 March [32] The assessment reports were the results of submissions by the parties, including principally, a. Defendant's Questions For Assessor April 2009; b. Defendant's Questions For Assessor June 2009; c. Defendants Submissions 17 August 2009; d. Plaintiff's submission in Reply 4 September 2009; e. Defendants Challenge To Assessor's Findings 30 November 2009; f. Plaintiffs Questions To Assessor's Findings 1 December 2009; g. Plaintiffs' Additional Questions And Submission To Assessor's Findings 17 December 2009; h. Defendants Supplemental Submission 17 December 2009; i. Defendants Additional Questions In Respect Of Assessor's Findings 18 December 2009; j. Plaintiff's Submission In Reply To Defendant's Submission dated

26 [33] The Final Assessment Report having been issued on to the parties, the parties were instructed to submit their submissions to the Court. These comprise: a. Defendants Final Submission 2 April 2010; b. Plaintiff's Written Submission 30 April 2010; and c. Defendants Final Submission In Reply 31 May Consideration of Plaintiff's and Defendant's Submissions before the Court [34] It was submitted for ABB that: "The Defendant would emphasize that the Assessor's findings are only "Recommended Findings". It was agreed by the parties and as directed by this Court that the Court is not necessarily bound to adopt the findings and the parties are entitled to challenge the Assessor's Recommended Findings and persuade this Honourable Court to make a finding that differs from the Assessor's. The Defendant will refer to the Assessor's Recommended Findings in the course of this submission. For ease of reference, the Assessor's Recommended Findings dated will be referred to as "the Assessor's Report." 26

27 [35] This was in support of ABB's submissions that KHEC has failed to prove its claim on a balance of probability and therefore KHEC s claim must be dismissed with costs. To do so, ABB addressed (i) the nature of the contract; (ii) KHEC's complaints as pleaded; (iii) the evidence supporting or otherwise, KHEC s claim; and (iv) whether KHEC s complaints (if true) have any material impact on the Sub-contract. [36] ABB's submissions addressed the Sub-contract between the parties, under the headings the Kertih Aromatics Project (KR-2), the Electrical Sub-contractors Sub-contract dated , the Subcontract Works, the Assessor's Comments; The Plaintiff's Case As Pleaded and its main complaints; Plaintiff's Heads of Claims for unpaid progress claims No. 1-5, damages for unlawful termination Claim in respect of lead sheath cables, for unlawful back charges, for loss & expense involved as a result of extension of Sub-contract Period, for wrongful omission of works; ABB's Defence and Counter-claim. [37] KHEC's submissions, needless to say, was to adopt the recommended findings of the assessor. It was submitted that the: "13... Defendant was seeking the Court to re-hear and make fresh findings on the entire technical issues as pleaded by the 27

28 parties when the same had been placed, heard and considered by the Assessor. The sole purpose of the appointment of the Assessor was to assists the Court to determine the technical issue but however, now ABB is asking Your Lordship to decide on these technical issues and make fresh findings. The request of ABB today makes the entire exercise of appointing the Assessor to assist the Court a futile exercise." "14. My Lord, it must also be noted that on one hand, ABB submits that this Honourable Court is not bound by the findings of the Assessor and must make new findings on the technical issues. But on the next breath and whenever the findings are in its favour, ABB submits that KHEC s assertions on the issues are not proven and this Honourable Court is bound by the findings (appropriating and reprobating). Clearly a frivolous conduct on the part of ABB." [38] In respect of these opening submissions, it is only necessary to say that the appointment of the court expert is to assist the Court to make findings of fact involving technical matters in an informed manner. The court expert is not appointed as an arbitrator of fact whose findings 28

29 are agreed to be final and conclusive. In confining himself to "recommended findings", the court expert had acted commendably in a professional manner reflecting his experience and expertise. As understood by all parties, the findings of fact within its jurisdiction is not a power of the Court, but a responsibility that it cannot and therefore will not abdicate. [39] The submissions made before the Court are therefore read as, for KHEC, seeking to demonstrate where manifest error was made by the assessor. For example, if an assessment was made upon data involving hot water, and the facts show what was involved was cold water, the Court may be persuaded there was manifest error if authoritative reference is produced to show hot and cold water give different results. But if the terms used were water and warm water, judicial notice may be taken that water in the tropics is generally warm and it may make no difference. The Final Report [40] The Final Report of 18 March 2010 might on the face of it have been sufficient. But to a non-technical finder of fact such as the Court, making a finding based on the report at face value may not be making a finding made with a clear understanding of it. The danger is over 29

30 reliance upon the technical assessment bordering upon an abdication of responsibility, and denying the parties a fair assessment of the case they seek to make. [41] The Final Report is a revision of two earlier reports upon which further submissions had been allowed. Noting each and every statement upon which further submission was made and following through to the statements in the Final Report, and examining the reasoning, whether explicit or inherent, was a lengthy and tedious exercise. Nevertheless the steps of statements in the report, the further questions put, and the resultant revised reports culminating in the Final Report gave a better appreciation of the thinking behind the issues. Without the assessment by Ir. Wong Chun Hon, the making of findings of fact that are safely correct as basis for decision would have been impossible. With the assessment, it became possible by assessing whether the reasoning displayed manifest error or not. [42] The Final Report is invaluable in its summation of the overall project issues as presented in the Bundle of Pleadings. Resolving the disputed facts at the beginning of the pleadings, project background provided a clear picture of the work contracted and to be performed by the parties. 30

31 The KR2 Project Contracts [43] The project owner is Aromatic Malaysia Sdn. Bhd. It awarded its Kertih Aromatics Project ("the KR2 Project") to Toyo Engineering and Construction Sdn. Bhd. (TEC) as its main contractor on turnkey basis. [44] TEC awarded a contract to ABB for all the Electrical Works associated with the KR2 project, under which inter alia: a. All civil works including cable trenches and cable duct banks are to be done by TEC. b. The supply of power cables and control cables are from TEC. c. TEC is responsible to provide all access, drawings and information to ABB to perform the work and all equipment were to be installed in accordance with the agreed work schedule. d. The single milestone date or completion of works was 31 August

32 e. The contract is for a provisional contract price of RM11,550, for direct and indirect works, with actual payable claims based on actual work volumes and quantities completed. [45] Though delays by TEC and sub-contractors and Suppliers employed by TEC to meet agreed target dates resulting in delays to the execution of the works shall entitle ABB to an extension of time and extra costs, ABB was bound as follows: a. Data furnished by TEC are for information and reference purpose only. b. The Defendant - i. has satisfied himself as to the nature and location of the site, the general and local conditions and all other matters which may in any way affect the performance of the works, the costs; ii. is deemed to be experienced in construction works in the country and familiar with and fully aware of any and 32

33 all the site conditions, then existing or anticipated to be existent, that may affect the performance of and the cost for, the time schedule in connection with the works, is not entitled to price adjustment by changed or differed site conditions; iii. is not guaranteed by TEC as to continuous performance of the Works and any change in sequence or rescheduling of works, idle time and work interruption has been taken into account by the contractor before entering into the contract. [46] Considerable risk, therefore, was passed on to ABB by TEC. [47] In its turn, ABB awarded a Sub-Contract KHEC, and the claims arise from this latter Sub-Contract. The ABB-KHEC Sub-Contract ("the Sub-Contract") [48] The clearer description of the Sub-Contract is that it is not an "Electrical Works Contract", but an "Electrical Installation Works Contract". It was to be performed commencing 24 January 1999 to 30 November 1999; and payment would be by measurement. 33

34 [49] Under the Sub-Contract, KHEC would supply all cable lugs below 70mm2 secondary scaffolding cable markers, cable insulation tapes, cable entry sealant and cable ties. [50] At Section D Summary of Issues, the Final Report explained at D.1-D.6 the nature of the cable laying works. The Final Report made the following points: a. D.3...Cables need to be carefully pulled and laid to prevent damages to the electrical insulation protective layer. Cable trenches are thus prepared with sand bedding initially and upon completion of cable laying, the trench is backfilled with sand up to a certain height and finally a layer of protection tiles is put in place before the trench is handed back for final earth filling. The pulling works are basically done manually with assistance of a cable pulling winch and cable rollers. b. D.4 In KR2 project, the total estimated length of cables to be laid is 602,924 meters. Judging from the initial planned completion of all cable pulling works by mid May 99, this would require a daily cable laying output of 5000 meters per day!. This target would require a concerted effort by all 34

35 parties to work together and complete their portion of work as planned and barring severe inclement weather conditions. c. D.5 The cable laying works appears simple but it can be very difficult and complex to carry out if one has no control of the whole cable pulling value chain as faced by the Plaintiff. The Plaintiff has only control on the manpower and use of some machinery. All cables, cable trenches, cable duct banks, cable racks and ladders are supplied by TEC. d. D.6 The following areas associated with the cable laying works are deliberated to relate to the issues raised by the Plaintiff and the Defendant in their submission which had led to the delay and subsequent suspension and termination of the cable pulling works. i. Electrical Work Schedule ii. iii. iv. Site possession Supply of cables Complete Cable schedule v. Technical drawings vi. Availability of cable trenches 35

36 vii. viii. ix. Status of cable duck banks and cable ducts Supply of Sand Cable racks and trays x. Protection tiles xi. xii. xiii. xiv. Site access Manpower Issues and Work Methods Damaged cables Effective Project Management Electrical Work Schedule [51] This pertained to there being the Electrical Work Schedule Rev.1 dated that TEC, ABB and KHEC all have to work under to meet the completion schedule of the KR2 Project turnkey contract. It meant that all parties have to order their activities, but because the activities are inter-related and affect other activities. The KHEC was to prepare its 3 week look-ahead schedule programme so that ABB could give the necessary site possession, preparing and supplying information, work drawings details, giving necessary consents and approvals etc. to enable works to proceed as planned. [52] The court expert expressed the view that: 36

37 "D There were letters related to submissions of the look ahead schedule by the Plaintiff. The issue is not so much on the submission and approvals but the focus should also be on the part of the defendant to take actions to enable activities to proceed as planned." [53] The following is a summation. Site possession [54] KHEC was initially allotted cable pulling areas at Sub-station 21-25, Process Area P1-P5 and Utility Area, but on taking possession of site on , not all sites were available for cable pulling work. KHEC was instructed to focus on the P1 and P2 process areas first before doing P3-P5 areas. Subsequently in May 99, the P3-P5 areas were taken back by ABB and by letter dated 5/7/99, KHEC issued notice of suspension of work due to KHEC's default. [55] The problem was coordination of work, for example KHEC thought the plan given did not allow for power cables, which are heavy and more difficult to pull and therefore better to be laid these cables first. 37

38 Supply of cables [56] Under the TEC-ABB Contract, the supply of both the power and control cables is by TEC under a master schedule, but site conditions may affect the delivery schedule of the cables. [57] In this case, KHEC had complained of the supply of cable supplied not according to schedule and shortages therefore of cables needed to be laid. [58] KHEC alleged ABB did not take the matter with TEC. [59] Further, there was the issue of lead sheath cables and removal of drums without notice. Complete Cable Schedule [60] The cable schedule defines the connection list of cables to be laid from one location to another from an assigned cable drum. Technical drawings [61] Technical drawings indicating details of cable layout arrangement in trenches and duct banks ensure correct positioning of cables for the final entry/exit points and avoid criss-crossing of cables. 38

39 [62] The Court agrees poor working relationship between the parties lead to poor coordination as it is a scheduling matter of common interest. Availability of cable trenches [63] Cable trenches were to be prepared by TEC. These are dug and after all cables had been laid and protected, will be covered back by TEC. [64] Weather, principally rain affect these. There could be soil erosion or collapse at the edges of the trenches due to the rain water flowing into the trenches. Soil and sand may be washed down into the trenches, and into the cable ducts. It can be a source of endless argument when parties are not working together. Status of cable duct banks and cable ducts [65] The cable ducts were by TEC and handed over to ABB, and into which cables were to be put by KHEC. KHEC had complained of blocked or twisted cable ducts and the assignment of two many cables in one duct. [66] The court expert expressed the following view: 39

40 "As regards to too many cables assigned to a specific cable duct causing difficulties in cable pulling, the Plaintiff would have to comply to the engineering and drawing details as provided by the client. The Plaintiff is expected to manage the duct bank constraints and manage their pulling techniques without sacrificing the safety and conditions of the cables pulled. The reason for delays and problems in pulling the cables caused by cable duct design issue is not acceptable." Supply of Sand [67] KHEC had complained the sand provided by ABB contained stones and backfilling with such sand was rejected by Foster Wheeler. Cable racks and trays [68] Since provision of cable racks and trays are the responsibility of ABB and TEC, KHEC expected to be entitled for extension of time. Protection tiles [69] This pertains to tiles placed above cables when KHEC has completed its work, and the trenches are to be backfilled by TEC. KHEC complained these were broken by 3rd parties. 40

41 [70] The Court agrees with the court expert's observation that until KHEC had handed over site possession of the trenches, it remained responsible for the protection of the tiles. Site access [71] KHEC complained as to site access. In a turkey contract with multiple activities proceeding at the same time involve unavoidable site access restrictions from time to time. It was a site management issue all contractors are familiar with and accept. Manpower Issues and Work Methods [72] The court expert found from the records, site related issues seem to be the main cause in hampering cable pulling works resulting in delays, additional works and expenses. ABB had complained of slow progress by KHEC. KHEC had complained on staff idling time due to the work stoppages and therefore was hesitant to engage more manpower. Damaged cables [73] The court expert accepted as reasonable KHEC complaint of 3 incidences of damaged cables due to third parties, where cables need to be replaced or repaired. 41

42 Effective Project Management [74] A perusal of the Sub-Contract shows ABB is the contractor with TEC for all electrical works, and KHEC is only the electrical installation works contract, mainly cable laying works. The electrical works can only be coordinated by ABB. [75] A telling observation is made by the court expert as follows: "D There were many correspondences, replies and site memos written by the Plaintiff. It is very unusual and tedious for a sub-contractor (Plaintiff) to write all the letters and memos to the main contractor (Defendant) seeking clarifications, meetings, information, instructions and giving advice on actions to be taken up with TEC. A competent contractor will normally not do so unless he is facing difficulties and stuck with site issues beyond his control and he is not getting responses or directions. Whilst some of the complaints are minor in nature, the Defendant had failed to respond to most of the letters. On the other hand, the Plaintiff has responded to the Defendants complaints, especially on slow progress. 42

43 D Without clear directions and access areas to work, it would be difficult to manage manpower requirements and overall work activities. D In a nutshell, the Defendant's project site management and coordination works were unsatisfactory. " Court Expert on Questions Put [76] The following is a review of the most material part of the questions and answers set out between pages 22 and 95 of the Final Report: a. Records indicate KHEC started site work on The possession of site can be taken as on and commencement work on b. The sequence of whether HV or LV cables to be pulled first is of no major consequence as the decision is based on site and availability of cables conditions. c. There was no late possession of site. d. For cable pulling works to commence the cable route must be complete with cable trenches, cable ducts, eflex 43

44 (flexihose), racks and tray and termination areas. KHEC is probably referring to specific cable routes not handed over as per the Master Electrical Works schedule for commencement of cable pulling works. e. Referring to the written letters, transmittals and site photos from KHEC demonstrating wrongful and delayed instructions from the ABB, most of the correspondence evidence is not wrongful and delayed instructions. A few of the correspondences were related to delayed instructions resulting in delays and disruptions of works. f. Wrong cable schedule information was not proven completely. But ABB's role to pursue such matters with TEC where appropriate and ensure availability of cable laying stretches for KHEC to carry out works. g. So also cable delivery, defective materials and duct banks provided by TEC. 44

45 h. There was a general need for additional information on drawings, particulars and details related to cable pulling works to enable work by KHEC. i. Documents by KHEC requested ABB to assist in resolving cable drum delivery, instruction on cable damaged, trenches and bus ducts, civil works and other contractor's works, which ABB ought to address with TEC. j. KHEC never received drawing No. 202-T4643/E despite numerous requests to ABB. k. Difficulty in access during certain construction stage is expected because access is not exclusive to KHEC. l. There was no change in KHEC work scope but there were changes in the cable pulling schedule and out of sequence works due to site conditions. The progress in cable laying works and completion of certain sections is dependent on the appropriate cable delivery times. For prolong delays in cable arrivals due to TEC's failure, ABB is entitled to extension of time and costs if such delays result in delays due to out of 45

46 sequence works. Correspondingly, KHEC is entitled to claim from ABB for extension of time and costs for delays in supply of cables due. m. Assertion regarding poor coordination arising from changes in the management not supported. n. The referred documents do not prove ABB took back site possession on However, Daily manpower record indicated no work was carried out from o. The failure of TEC to provide items on time shall entitles ABB to an extension of time and extra cost (and applicable to KHEC) as provided for in the contract between TEC and the Defendant. p. Both parties were at the same site office location and in this respect, one would expect daily meetings being held to address work plans, information required, solving issues, assess to drawings etc. Such requests via formal transmittal suggest the information is not forthcoming and that the working relationship between the two parties at site is poor. 46

47 q. In order to pull cables from one location to another, the cable trenches, including the associated cable duct banks, cable racks and eflex pipes have to be available to complete the pulling process. Making sections available is insufficient as highlighted by the Plaintiffs letters on this issue which includes cable racks and cable duct banks issues. r. ABB did approve and paid progress claims 1 and 2 amounting to RM 173, The rest of the claims were not approved due to disputes regarding incomplete supporting documents and reports and variation works. [77] The foregoing demonstrated a breakdown of coordination between the turnkey contractor (TEC), its electrical works contractor (ABB) and the latter's electrical installation works contractor (KHEC). [78] Generally coordination becomes the major issue before which individual priorities must give way to give and take in major contracts involving multiple concurrent activities in order to be completed as soon as possible so that financing costs can be kept to a minimum. 47

48 [79] The nature of a turnkey contract is to transfer construction risks to a willing contractor. Including the risk of financial loss from delays. A turnkey contractor is accepted not only upon the perception it is competent and can produce the performance bonds, but also upon its acceptance and absorption of all risks of delays within its turnkey contract price. A contractor to a turnkey contractor is required to confirm it is aware of the terms of the turnkey contract. It forms the basis of its obligation to perform for the turnkey contractor to enable the latter to meet its obligations. [80] A third tier of contractor such as KHEC, in this case, contracts in respect of a component of the package contracted by ABB. Whereas the whole of the electrical works could be laid out and completed by ABB if it chose to do so, the KHEC electrical installation contract works package, to pull cables, cannot be performed without coordination for the necessary trenches and ducts being ready to accept cables, and that the necessary cables are available. The record shows that KHEC had issued notices and letters including for plans and drawings, to enable it to carry out its works to little avail. It was not the failure of KHEC but of ABB. 48

49 [81] The submission that KHEC had only pleaded a case complaining that it was not given site possession is in the circumstances misleading. With all of the evidence adduced before the Court and the technical submissions before the court expert, both parties had every opportunity to check, verify and address each and every assertion of fact in relation to the claim and the counterclaim. It is plain in the circumstances the termination was wrongful and the consequences follow. Conclusion and Decision [82] Studying the ABB submissions dated and , the Court is mindful that ABB is not satisfied with the proof by KHEC. However, civil litigation is not proof to the subjective satisfaction of a defendant, but an objective standard of the balance of probabilities. It remains difficult to conclude there was in fact any manifest error on the part of the court expert, or that KHEC had failed to prove its case upon a balance of probabilities. [83] There were two prongs to the case for ABB. One is that the Sub- Contract is a sub-contract of a turnkey contract with strict obligations to completion dates and to assumption of risks by the sub-contractor KHEC similar to that assumed by ABB itself. The Second is that various complaints of failures by ABB were not correct. 49

50 [84] While ABB was correct in part, this Court finds that the evidence shows that ABB had not provided the necessary coordination with itself or TEC on critical aspects that have direct impact on scheduling and the quality of works (e.g. placement of cables in the ducts) that would enable KHEC to perform its contractual obligations within the turnkey schedule. [85] It is rare that there is a turnkey contractor that may perform all its works internally. It may subcontract packages to sub-contractors. The terms of such subcontracts with different contractors and different packages may vary, from full transfer of responsibility of the package with a fixed completion date, to, for the sake of argument, a relatively open ended basis. But regardless what the terms may be, the performance require coordination by the party that let out the contract. In this case, ABB as sub-contractor to TEC for Electrical Works had further sub-contracted the Electrical Installation Works component in it to KHEC. Except for certain specified items, all the cables, ducts and trenches were the work scope of ABB or TEC. It is true the coordination is the responsibility of TEC. But TEC has not been joined as a party if the case for ABB it was the fault of TEC. The case for KHEC with ABB is for ABB s failure to coordinate and provide the necessary coordination to enable KHEC to perform its contract obligations. 50

51 [86] Having reviewed the submissions for KHEC in the light of submissions for ABB, this Court finds that KHEC had proved upon the balance of probabilities its claim. [87] Accordingly, the Court enters judgment for the Plaintiff KHEC on declarations and claims as prayed, and orders that (a) damages, and (b) amounts due on progress claims 1-5 be assessed by the Registrar of the High Court of Kuala Lumpur. Costs is fixed in the sum of RM200, As agreed by the parties, the ABB counter-claim is dismissed with no order as to costs. Signed (ABDUL WAHAB PATAIL) Judge High Court of Malaya Kuala Lumpur Dated: 28 th May 2015 Date of Decision: 28 th May