Majlis Bandaraya Pulau Pinang v Sagamuda Civil Sdn Bhd

Appellant(s): Majlis Bandaraya Pulau Pinang

Respondent(s): Sagamuda Civil Sdn Bhd

• YAA Datuk Seri Utama Wan Ahmad Farid Bin Wan Salleh
• YAA Dato' Hashim Bin Hamzah
• YA Datuk Azimah binti Omar

• The employer appointed the contractor for a construction project under a PAM contract, with a stipulated completion date of 14 September 2015.
• The contractor experienced significant delays, leading to the employer's initial termination of the contract. Following the contractor's plea, the contract was conditionally reinstated via a Conditional Reinstatement Agreement (CRA), granting 45 days for completion under a revised schedule and an additional right for the employer to terminate "at any time" for non-adherence.
• The contractor again failed to adhere to the revised schedule, resulting in a second termination. The contractor subsequently initiated adjudication proceedings under CIPAA, which found in its favour. The High Court later dismissed the employer's claim for liquidated ascertained damages (LAD) and allowed the contractor's counterclaim, ruling the terminations invalid, the CRA an Extension of Time (EOT), and the final account not binding.

• Whether the High Court erred in finding that the employer's termination of the PAM contract was invalid.
• Whether the High Court correctly determined that the Conditional Reinstatement Agreement (CRA) constituted an Extension of Time (EOT), thereby setting time at large and invalidating the employer's claim for Liquidated Ascertained Damages (LAD).
• Whether the High Court was correct in finding that the Final Account was not binding on the contractor, despite the contractual provisions for dispute resolution.

• The Court of Appeal reversed the High Court's decision, holding that the employer's termination of the contract was valid, as the second termination was exercised under the mutually agreed Conditional Reinstatement Agreement (CRA) and did not require strict adherence to the original Conditions of Contract (COC) termination procedures.
• The Court found that the CRA was not an Extension of Time (EOT) within the meaning of the PAM contract, and therefore, time was not set at large, preserving the employer's entitlement to Liquidated Ascertained Damages (LAD) for the contractor's delays.
• The Court further ruled that the Final Account was binding on the contractor, as it failed to dispute it within the stipulated contractual period, and mere refusal to sign did not invalidate it. Estoppel applied against the contractor for its inconsistent stance on contractual compliance.