JUDGMENT

Balia Yusof Wahi FCJ:

Background Facts

[1] The appellant, Usima Sdn Bhd (hereinafter referred to as Usima) was appointed as the main contractor by Jabatan Kerja Raya ("JKR") to construct a water tank and carry out pipe laying works (the main contract). The respondent, Lee Hor Fong (hereinafter referred to as LHF) was the subcontractor appointed by Usima to carry out the works.

[2] By a Letter of Award dated 5 November 2002, Usima appointed LHF as its subcontractor to carry out and complete the contract works for a total sum of RM9,510,863.51 commencing on 30 September 2001. The completion date for the contract was 7 March 2003. In the said letter of award, it was stated that the terms and conditions of the main contract will be deemed to form and be construed as part of the subcontract.

[3] Dispute arose between the parties and by a letter dated 13 January 2003 Usima terminated the subcontract alleging that LHF had breached the terms of the contract by abandoning the contract works.