Gerbang Mutiara Resources v Pzs Sdn Bhd (KA-22NCvC-4-02/2023)

BETWEEN GERBANG MUTIARA RESOURCES (Company No: SA0009986-K / 200503065302)

MOHD RAMLI BIN ISMAIL (NRIC No: 770126-03-6211) (suing in his capacity as sole proprietor, t/a GERBANG MUTIARA RESOURCES) …PLAINTIFFS

AND PZS SDN BHD (Company No: 356828-U / 199501027623)

ZHANIEF BIN ZOHARI (NRIC No: 911227-02-5315) …DEFENDANTS GROUNDS OF JUDGMENT (After full trial)

This is a classic dispute between a prospective subcontractor and a main contractor. While the former believes itself to be the rightful 27/05/2026 15:29:10 KA-22NCvC-4-02/2023 Kand. 96 S/N wOx8lx38o0MfUyh4y187g …page 2 appointee by virtue of having expended effort during the tender process, it faces understandable frustration when a formal appointment never materialises, ultimately culminating in litigation. However, a subcontractor’s grievances do not automatically translate into legal rights. Before any action can be maintained or a remedy granted, the subcontractor must first establish the existence of a valid, binding contract between the parties. Without confirming this crucial legal nexus, the claimant risks commencing a suit in vain. Facts and Background 2. The Plaintiffs were allegedly appointed by the Defendants, through a Letter of Appointment dated 7 September 2021 (“the LOA”), to prepare work costing and quotations for two projects.:

(i). Upgrading Raw Water and High-Pressure Clean Water Pumps at the Arau Water Plant (Phases I, II, and III) and Guar

(ii). Upgrading the Arau Water Plant (Phase IV).

These projects were at the tendering stage and within the LOA, it was alleged that it stipulated that if the Defendants were successfully awarded with a tender, the Plaintiffs and Defendants would be appointed as sub-contractor and main contractor, respectively. Based on the LOA and pursuant to it, the Plaintiffs performed the tasks for ‘work costing’ and S/N wOx8lx38o0MfUyh4y187g …page 3 issued quotations for both projects.

The Defendants subsequently used these figures to submit bids of RM35,582,360.10 for the first tender and RM15,512,364.90 for the second.

On 7 March 2022, it was agreed by both parties that a meeting was held between the parties to discuss the projects, but no formal contract was ever signed.

Sometime in early 2022, the Second Defendant was successfully awarded the contract for the second tender at the stipulated tender sum. Despite securing the contract, the Second Defendant did not appoint the First Plaintiff as its subcontractor, instead engaging a third party to execute the subcontracted works.

The Defendants justified their decision by arguing that the LOA contained a clause “subject to contract” and that the Plaintiffs lacked the necessary capacity as they only held a CIDB Grade G3 license. Legally, a G3 license restricts the Plaintiffs to undertaking projects not exceeding RM1,000,000. Because Tender 2 was awarded for RM15.5 million, the Plaintiffs were statutorily barred from undertaking the sub-contract.

The Plaintiffs subsequently initiated the lawsuit, claiming breach of agreement, fraud, and deceit. They are seeking damages for loss of profit and reliance loss totalling RM2,134,642.42, as well as other special and S/N wOx8lx38o0MfUyh4y187g …page 4 exemplary damages. The First Plaintiff and First Defendants are businesses accompanied by the Second Plaintiff, the sole proprietor and the Second Defendant, the company director, respectively. Decision and Findings of the Court 9. Having heard testimonies of witnesses and comprehensively considered evidence presented during trial and having read both parties’ written submissions and heard the oral submissions, this Court dismisses the Plaintiffs’ suit entirely.

The terms of the agreement have yet to be formalised and are subject to a formal contract 10. The core and pith of this suit is whether the LOA signed between the First Plaintiff and First Defendant forms a valid and binding contract between the parties, specifically, to appoint the First Defendant as a sub-contractor.

The Plaintiffs claim that the LOA constituted a valid, binding contract and a clear representation that they would be awarded the sub-contract. They argue that, despite the "subject to contract" clause, a contract was formed because the elements of a contract were present: an offer, its acceptance (by performing the costing), and consideration.

The Defendants argue that there was no concluded contract. They S/N wOx8lx38o0MfUyh4y187g …page 5 rely on the express terms of the LOA, which stated the appointment was subject to entering into a "formal contract upon agreement between both parties".

It is my finding that the Plaintiffs have failed to surmount the legal hurdle imposed by the "subject to contract" clause. On this point, the Plaintiffs vehemently contended that they had satisfied the core legal elements of a contract—namely, offer, acceptance, and consideration— through the LOA. However, the final indispensable element, being the intention to create legal relations (consensus ad idem), is completely negated by the express terms of the LOA itself. The document explicitly states that it is "subject to contract" and underscores that "both parties to have further discussion and arrangement for the specific scope of works to be awarded." This clear language necessitates close scrutiny of the parties' subsequent conduct to determine whether a meeting of the minds ever occurred on the salient and essential terms of the agreement.

The parties had only called one witness each during the trial, which was the Second Plaintiff and Second Defendant, both of whom were the negotiating parties of the LOA at opposite ends of the table. Therefore, this is a case of conflicting testimonies rife with self-interest. There was no third witness called to break the stalemate, despite one Dato’ Kader and Ir. Darwish was referenced in their testimonies as being present in their discussions. As neither party had any issue with the absence of testimony from these third parties, I am left to consider which testimony is true based on the documentary evidence provided. S/N wOx8lx38o0MfUyh4y187g …page 6

In their submissions, the Plaintiffs highlighted that during cross-examination, SD1 (the Second Defendant and director of the First Defendant) agreed to the suggestion that the insertion of the term "subject to contract" in the LOA was intended to formalise the parties' shared intention to appoint the First Plaintiff as a subcontractor: Setuju saya cadangkan bahawa kalau kita rujuk kepada perenggan C ini muka surat 3, ianya hanya lah untuk formalize niat pihak-pihak iaitu PZS Sdn Bhd akan melantik GMR sebagai sub contractor apabila PZS Sdn Bhd telah dilantik sebagai main contractor untuk tender kedua fasa 4? Setuju. [refer p. 75, Encl. 86]

However, the Plaintiffs conveniently overlooked the testimony immediately following this exchange. SD1 explicitly agreed with the alternative suggestion that critical contractual particulars—such as pricing and the respective liabilities of the main contractor and subcontractor— were meant to be fully itemised only within a subsequent formal contract: P: Dan kalau ada formal contract, dia akan mendetailkan harga subkontrak, apa tanggungjawab antara main contractor dengan sub contractor, betul? Betul.

This can be seen in an earlier part of the cross-examination, where SD1 had mentioned that the proper appointment of the First Plaintiff as a S/N wOx8lx38o0MfUyh4y187g …page 7 subcontractor would require a formal contract to be written up: Selepas itu kita tengok di muka surat 3 perenggan C, “to enter into a formal contract upon agreement between both parties”. Jadi, pemahaman tuan berkenaan perenggan C ini macam mana? Perlu ada formal contract. Perlu ada formal contract untuk melantik GMR sebagai subkontraktor, betul? Ya. [refer p 74, Encl. 86]

Thus, it is clear that even under the pressure of cross-examination, SD1 consistently and incontrovertibly maintained that a formal contract was a prerequisite to any valid appointment of the First Plaintiff as a subcontractor. He consistently asserted that such a formal contract would set out the specific details of the parties' obligations, including the definitive contract price. This position is entirely harmonious with the express language of the LOA. Furthermore, the Defendants correctly argued that the LOA lacked the essential terms typical of a commercial construction contract, including a definitive contract value, a detailed scope of work, a project duration, and progressive payment terms. For a construction project valued in the millions, it would be highly commercially anomalous to bind parties to terms as open-ended and indeterminate as those found in the LOA.

The Plaintiffs relied primarily on the Federal Court decision in Charles Grenier Sdn Bhd v Lau Wing Hong [1996] 3 MLJ 327 to support S/N wOx8lx38o0MfUyh4y187g …page 8 their contention that the connotation suggesting an agreement between parties is ‘subject to contract’ does not necessarily preclude the possibility of a complete binding agreement already existing and is thus enforceable.

At the outset, the Federal Court in Charles Grenier recognised that it is a well-settled principle that when an arrangement is made to be ‘subject to contract’ or any similar expression, it is considered that parties are still in a state of negotiation and are not bound until a formal contract is exchanged. However, there is an exception to this, as explained in the succeeding paragraphs. While the Federal Court recognised that businessmen often would record their agreements in a crude and summary fashion, the court further examined the agreement of parties in the suit and found that there was sufficient clarity of the agreement’s terms, i.e., the parties, the property, the price, and its essential terms. This requirement of ‘sufficient clarity of terms’ will be seen in another earlier judgment relied on by the Plaintiffs.

In Voo Syun Mui v. Yap Mooi Mooi [1984] 1 CLJ Rep 457, the Federal Court also decided on a question of fact whether an option to purchase a house, despite being subject to a formal agreement, exists as a legally binding and enforceable agreement. However, again, this case was decided at trial, which had laid out its most pertinent terms: the consideration, the period to exercise the option, the property, and the parties. Therefore, it appears the condition of ‘sufficient clarity’ of the agreement’s terms remains.

In the absence of clear terms of the agreement, the legal position S/N wOx8lx38o0MfUyh4y187g …page 9 holds that when an agreement contains a "subject to contract" clause, it serves as a condition precedent. Unless a formal contract is executed, the agreement is not legally binding or enforceable. This was succinctly explained in Deutsche Bank (Malaysia) Bhd v. MBF Holdings Bhd & Anor [2015] 8 CLJ 1068.

Thus, it is abundantly clear through these three decisions at the apex court that to invoke the exception to a ‘subject to contract’ condition precedent under Charles Grenier, the Plaintiffs must show the terms of the agreement they seek to enforce, in this case, the LOA, possess sufficient clarity as to its contractual terms.

However, the testimonies provided and the evidence exhibited point decisively to the contrary. There exists a clear, documented intention between the parties to engage in further discussions and to particularise the contractual terms governing the potential appointment of the Plaintiffs as subcontractors. In short, the LOA amounts to nothing more than an "agreement to agree," rather than a binding subcontract. Consequently, I find that no binding and enforceable contract ever came into existence to support the remedy sought by the Plaintiffs—namely, contractual damages arising from an alleged breach by the Defendants to appoint them as subcontractors for the awarded project.

On this ground alone, this suit may be dismissed in its entirety, as there are no remedies available to and proven by the Plaintiffs. For completeness, I will also address other issues raised in this suit. S/N wOx8lx38o0MfUyh4y187g …page 10

The Plaintiffs do not fulfil the legal requirements to perform the alleged contract 26. Under this heading, the Plaintiffs' primary contention is that the capacity issue is a mere afterthought. They allege that the Defendants first raised the CIDB Grade G7 requirement in their Statement of Defence and had never communicated this prerequisite prior to the litigation. The Plaintiffs further argued that because the LOA did not expressly stipulate a G7 license requirement, the Defendants' reliance on this issue is unwarranted. Lastly, the Plaintiffs submitted that the CIDB Grade G7 requirement in the Tender Document applied exclusively to the main contractor, with no such explicit minimum grade imposed on subcontractors.

However, this Court finds the Plaintiffs' contentions to be both factually and legally flawed. First, the allegation that the licensing issue was a mere afterthought is directly refuted by contemporaneous documentary evidence. The Defendants' letter dated 3 March 2022 explicitly listed "Qualification (Licensing)" as an agenda item long before this suit was instituted. Second, irrespective of whether the Tender Document was silent on the minimum registration grade for subcontractors, the Plaintiffs remain statutorily bound by the legal restrictions of their own CIDB registration. A CIDB Grade G3 license strictly caps the Plaintiffs' capacity to undertake projects to those not exceeding RM1,000,000. Consequently, it was a statutory impossibility for the Plaintiffs to execute an RM15.5 million subcontract, and the Defendants were entirely justified in refusing to proceed with them. S/N wOx8lx38o0MfUyh4y187g …page 11

As part of their defence, the Defendants highlight that the Plaintiffs lacked the capacity to be awarded a RM15.5 million sub-contract because the Plaintiffs only held a CIDB Grade G3 license, which legally limits them to projects not exceeding RM1,000,000. Thus, they were obliged to appoint a different party capable of performing the subcontract, which requires a CIDB Grade G7 license.

It is undisputed that the tender notice does contain a requirement for a CIDB Grade G7 license. An excerpt of the notice is reproduced below for ease of reference: a) … b) Perakuan Pendaftaran dengan Lembaga Pembangunan Industri Pembinaan (CIDB) Gred G7, Kategori CE, Pengkhususan CE20 dan CE21 (Kerja-kerja Bekalan Air dan Awam) dan Kategori ME, M15 (Kelengkapan Mekanikal Pelbagai) dan M19 (Pemasangan Loji dan Peralatan). c) … [refer p. 6, Encl. 78]

While an admission was elicited from SD1 that the tender notice did not explicitly mandate subcontractors to hold a CIDB Grade G7 license, SD1 lacks the statutory authority to conclusively determine the overall applicability of CIDB regulations to subcontractors. In confirming that the tender notice contained no express provision binding subcontractors to that specific grade, SD1 was merely pointing to a clear textual omission. If the Plaintiffs' line of reasoning were adopted, the inverse would be S/N wOx8lx38o0MfUyh4y187g …page 12 equally true: nothing in the text explicitly exempts subcontractors from such structural requirements. Under the governing CIDB framework, it was legally and commercially untenable to award an RM15.5 million subcontract to a Grade G3 licensee. The Defendants were entirely justified in engaging a qualified third party, and their defence on this point is perfectly reasonable. Main contractors must remain free to safeguard their commercial interests and ensure absolute compliance with both the express and implied regulatory parameters of a main contract.

The Plaintiffs further took issue with the fact that no formal written notice was issued by the Defendants, citing the lack of a CIDB Grade G7 license as the reason for non-appointment. This Court finds it anomalous that the Plaintiffs seek to impose a condition nowhere to be found in any agreement between the parties, attempting to elevate a procedural courtesy into a binding contractual obligation. SD1 testified that verbal discussions and communications regarding this licensing constraint took place with the Second Plaintiff. The Plaintiffs' failure to maintain records of these communications does not shift the legal burden to the Defendants, as the Defendants were under no statutory or contractual duty to provide written notice in this matter.

Moreover, this Court finds that the issue of CIDB grading was not a material consideration for the parties at the time the LOA was executed, as the binding obligations therein were confined strictly to work costing and the issuance of tender quotations; the ultimate appointment of the Plaintiffs as subcontractors remained subject to a formal contract. This is verified by the parties' subsequent conduct, as both SP1 and SD1 testified that neither intended to discuss the CIDB license parameters during the S/N wOx8lx38o0MfUyh4y187g …page 13 execution of the LOA. Ultimately, it falls within the Defendants' commercial purview to determine the method and manner of their regulatory compliance. This Court cannot retroactively impose a contractual obligation that the parties themselves never contemplated.

Payment for the Work Costing Services 33. For completeness, this Court must address the work costing actually performed by the Plaintiffs. Based on Paragraph 5 of the Statement of Agreed Facts, it is undisputed that the Plaintiffs did execute the preliminary 'work costing/quoted price' for the Defendants. The Defendants contended that they had discharged any liability for this work by making a compensation payment of RM10,000 to Ir. Ausamah Darwish, who acted as the Plaintiffs' technical advisor and intermediary.

During the trial and in their submissions, the Plaintiffs vehemently challenged this payment, primarily attacking the documentary proof, namely the cheque deposit slip (Exhibit D9). The Plaintiffs relied on James Wong King Tat v Pang Chen Ken [2023] MLJU 1085 to argue that the Court can attach no weight to a document if its contents are entirely illegible. During the final oral submissions, the Defendants' counsel graciously and rightly conceded that Exhibit D9 is indeed illegible and carries no evidentiary value. Consequently, I rule that Exhibit D9 is to be disregarded entirely.

However, the exclusion of Exhibit D9 does not prove fatal to the Defendants' assertion that payment was made. The disbursement to Ir. S/N wOx8lx38o0MfUyh4y187g …page 14 Ausamah Darwish was sufficiently corroborated by other contemporaneous evidence, specifically the Defendants' internal Payment Voucher (Exhibit D8) and the WhatsApp chat transcripts exchanged between the Second Defendant and Ir. Ausamah Darwish. In those transcripts, Ir. Ausamah Darwish explicitly acknowledged the agreed quantum, stating: "eh kan dah agree each 10k bang macam mana nak bincang dengan yang lain payah tu bang”.

The Plaintiffs attempted to distance themselves from Darwish, claiming he was not authorised to accept payments into his personal account. However, the evidence overwhelmingly shows that the Plaintiffs held out Darwish as their primary technical advisor, intermediary, and point of contact throughout the project negotiations. Therefore, I find as a fact that the Defendants did compensate the Plaintiffs' intermediary for the work costing services rendered. Even if quantum meruit had been pleaded (which it was not), the Defendants did not unjustly enrich themselves as compensation was paid.

The Plaintiffs have been compensated for the work done 37. As stated in the above paragraphs, the LOA was not an agreement to appoint the Plaintiffs as the Defendants’ subcontractor. Instead, the only contract concluded was to prepare the "work costing/quoted price” for the tender bids. It is an agreed fact that the Plaintiffs have performed works for the Defendants in accordance with the issued costing. Therefore, the question is whether the work has been properly compensated. S/N wOx8lx38o0MfUyh4y187g …page 15

The Defendants assert they already compensated the Plaintiffs for the initial work costing effort by paying RM10,000 to Ir. Ausamah Darwish, whom the Defendants dealt with as the Plaintiffs’ technical advisor and representative.

The Plaintiffs resisted the contention that this payment discharged the Defendants' liabilities. They emphasised that the RM10,000 sum was credited directly into Ir. Darwish's personal bank account, rather than the corporate account of the First Plaintiff or the personal account of the Second Plaintiff. They further argued that a payment made to an individual technical advisor does not constitute a valid discharge of a debt owed to a contracting firm, in the absence of a prior agreement authorising such a payment arrangement.

The Plaintiffs' submission that the document should be marked merely for identification must be rejected. The maker of the document identified it on the stand, thereby fully satisfying the threshold procedural requirements for admissibility into evidence. However, the absolute, undisputed illegibility of Exhibit D9 strips the document of any structural reliability; it is therefore held to be entirely devoid of evidential weight.

4.1. The illegible cheque has no evidentiary value 41. The first piece of evidence on this issue is a cheque deposit receipt marked as D9. This Court notes that the Plaintiffs raised an objection during trial due to the illegibility of the receipt and, in their written submissions, submitted that D9 ought to be reverted to IDD9 instead. This S/N wOx8lx38o0MfUyh4y187g …page 16 Court disagrees with the Plaintiffs’ submissions that the evidence should be marked as ID, given that the maker has identified it and therefore fulfilled the procedural requirements to be admitted into evidence. However, this Court agrees with the Plaintiffs that D9 is completely illegible and thus cannot carry any evidentiary value.

On this issue of legibility, this Court finds support in the decision of Lim Hock Leng J (as he then was) in James Wong King Tat (supra), where His Lordship found that the illegible original printouts do not prove the bank account number in question and thus are of no evidentiary value.

It is also noteworthy that the counsels for the Defendants also conceded in oral submissions that the cheque does not carry evidentiary value, but not without a submission that the existence of the receipt does corroborate that a cheque of RM10,000 was indeed issued out to Ir. Darwish vide internal payment voucher, D8. I will discuss this point further in the next section.

Hence, this Court has no issue accepting the Plaintiffs’ contention that legibility constraints of D9 effectively nullified its evidentiary value to support the Defendants’ case.

4.2. The Plaintiffs’ works have been paid through their representative 45. While the Plaintiff successfully neutralised D9 and correctly pointed out that the payment voucher D8 was merely an internal document lacking S/N wOx8lx38o0MfUyh4y187g …page 17 Darwish's signature of receipt, the Plaintiff's argument ultimately fails against the electronic evidence. The WhatsApp messages presented by the Defendant are a contemporaneous written record. Ir. Darwish's own message, "eh kan dah agree each 10k bang", serves as an undeniable admission that an agreement for the RM10,000 payment existed between him and the Defendant.

The Plaintiffs’ counsel explicitly brought up the "each" aspect when questioning SD1. He was asked whether any letter had been issued by the Defendants to the Plaintiffs confirming that each would pay RM10,000, and SD1 admitted that no such letter existed and that the agreement was purely verbal. In the larger picture, parties had never seriously argued that there was a question of each party paying the RM10,000, but were largely focused on whether the RM10,000 resolved the Defendants’ liability to the Plaintiffs. Therefore, the question of whether each party has paid has a negligible effect on this issue.

According to the testimony of SD1, the individuals referenced in Ir. Darwish’s WhatsApp message regarding a payment of RM10,000 "each" was the three attendees of the meeting at Tropicana, who had requested financial compensation upon realising they would not secure the subcontract. These individuals were identified as Ramli (the Second Plaintiff), Ir. Darwish and Dato' Kader. Accordingly, the Plaintiffs cannot credibly disclaim knowledge of this financial arrangement.

Reviewing the evidence in its totality, the existence of the internal payment voucher (Exhibit D8), paired with Ir. Darwish’s contemporaneous S/N wOx8lx38o0MfUyh4y187g …page 18 WhatsApp messages discussing the RM10,000 disbursement establish, on the balance of probabilities, that an agreement existed to pay this sum for the services rendered. Under cross-examination, SP1 conceded that Ir. Darwish acted as the Plaintiffs' technical advisor. Concurrently, SD1 testified that the Plaintiffs held out Ir. Darwish as their primary intermediary. This relationship is further substantiated by the extensive WhatsApp communications between the Defendants and Ir. Darwish concerning the tender project—specifically regarding the procurement of reference documents, technical specifications, and the preparation of the work costing reports under the LOA. It was therefore entirely reasonable for the Defendants to treat Ir. Darwish is an authorised representative of the Plaintiffs.

Hence, the fact that the payment was routed to Ir. Darwish's personal account, instead of the Plaintiffs' corporate account, is legally inconsequential. It is telling that the Plaintiffs did not contend that this sum ought to have been returned to the Defendants. Their argument rests solely on the assertion that no such payment arrangement was authorised, and that had the payment been genuinely intended for the Plaintiffs, it would have been disbursed to them directly. Concurrently, it has consistently been the Plaintiffs' case that they viewed the consideration for the work done as an absolute entitlement to be appointed as subcontractors.

The Defendants correctly submitted that the Plaintiffs failed to make a clear election of remedies. In their Statement of Claim, the Plaintiffs pleaded "loss of profit and/or reliance loss" quantified at RM2,134,642.42. As settled by the Court of Appeal in Delpuri-Harl Corp JV Sdn Bhd v S/N wOx8lx38o0MfUyh4y187g …page 19 Perbadanan Kemajuan Negeri Selangor [2014] 1 LNS 1075, a plaintiff is legally required to elect between a claim for expectation loss (loss of profits) or reliance loss (wasted expenditure). A plaintiff is precluded from claiming both concurrently, nor can they plead them alternatively so as to abdicate the choice to the discretion of the Court. By failing to unequivocally elect their remedy throughout the trial, the Plaintiffs' claim for special damages is rendered speculative, uncertain, and unsustainable in law.

The Plaintiffs failed to elect their remedy and failed to prove damages suffered 51. The Defendants correctly submitted that the Plaintiffs failed to make a clear election in their remedies. In their Statement of Claim, the Plaintiffs pleaded for 'loss of profit and/or reliance loss' amounting to RM2,134,642.42. As established by the Court of Appeal in Delpuri-Harl Corp JV Sdn Bhd v Perbadanan Kemajuan Negeri Selangor [2014] 1 LNS 1075, a plaintiff must make an election between claiming for expectation loss (loss of profits) or reliance loss (wasted expenditure). A plaintiff cannot claim both simultaneously, nor can they plead them in the alternative and leave it to the Court to decide. By failing to elect their remedy throughout the trial, the Plaintiffs' claim for special damages is rendered uncertain and bad in law.

The last point of contention is the Plaintiffs’ failure to elect their remedy. For ease of reference, the following is their prayer as stated in the Statement of Claims: S/N wOx8lx38o0MfUyh4y187g …page 20 i) Gantirugi bagi kehilangan keuntungan (‘loss of profit’) dan/atau kehilangan kebergantungan (‘reliance loss’) yang telah dialami Plaintif-Plaintif berjumlah RM2,134,642.42 (atau suatu jumlah lain yang akan ditaksirkan dan/atau ditentukan oleh

It is observed that the Plaintiffs' prayer encompasses both loss of profits and wasted expenditure. The Defendants argued that this duplicity disentitles the Plaintiffs from recovering any substantial remedy under these heads. During oral submissions, counsel for the Plaintiffs stated that they chose to recover loss of profits, while simultaneously maintaining that the Court ought to determine the appropriate remedy on their behalf. It is trite law that such an election cannot be made at the stage of closing submissions; it is far too late in the proceedings to rectify this pleading defect.

The Court of Appeal decision in Delpuri-Harl Corp (supra) is clear on this. It is trite that in the event of a breach of contract by a defaulting party, he may either claim for loss of profits or wasted expenditure, but it cannot be both. There must be an election. The effect of claiming both is that it renders the claim uncertain and thus disentitles the Plaintiffs to remedies that require specific pleadings, such as quantum meruit. There is no duty on the court, whether legal or moral, to make the choice for the Plaintiffs. It also affects the Plaintiffs’ case, as it would inevitably undermine their ability to prove it due to this uncertainty.

This is precisely the predicament characterising the present case. The Plaintiffs' claim of RM2.1 million was derived from a mathematical calculation prepared exclusively for the purpose of this litigation—a fact S/N wOx8lx38o0MfUyh4y187g …page 21 readily admitted by SP1 under cross-examination. This computation was never discussed, much less agreed upon, by the parties. Adopting the words of SP1, the 15% profit margin that yielded the RM2.1 million figure was calculated strictly on the basis of his subjective personal experience. The Defendants are correct in their assertion that the claim for damages is entirely speculative and grounded upon a unilateral document to which they never assented. It is a fundamental principle of law that special damages and loss of profit must be strictly proved and cannot be derived from arbitrary conjecture or speculation. Consequently, the Plaintiffs have failed to discharge the burden of strictly proving their loss of profit.

During the oral submissions, the issue arose as to whether the Court could alternatively award nominal damages or quantum meruit for the work costing actually done. An award under quantum meruit is unsustainable under these circumstances. Quantum meruit constitutes a distinct cause of action based fundamentally on unjust enrichment; it must be expressly and particularly pleaded, which the Plaintiffs failed to do within their Statement of Claim. It is a baseline procedural axiom that a court cannot grant a substantial civil remedy that was never explicitly pleaded.

Furthermore, this Court cannot award nominal damages as a fallback remedy under these circumstances. Nominal damages serve as a judicial acknowledgement that a legal wrong has been committed, notwithstanding a claimant's failure to strictly quantify their resulting losses, as observed in Bekalan Sains P & C Sdn Bhd v Bank Bumiputra Malaysia Bhd [2011] 5 MLJ 1. The foundational prerequisite for any award of damages is the established commission of a civil wrong, whether S/N wOx8lx38o0MfUyh4y187g …page 22 in tort or in contract, with damages serving to compensate the aggrieved party for injury flowing directly from that infraction. Where a legal wrong is established, but the loss remains unquantified, nominal damages may follow. Conversely, in the absence of a proven legal wrong, a party is wholly disentitled to any damages whatsoever, nominal or otherwise. As affirmed by the Federal Court in Lee Nyan Hon & Brothers Sdn Bhd v Metro Charm Sdn Bhd [2009] 6 CLJ 626, damages cannot subsist in a vacuum. Because I have determined that no binding contract was formed due to the "subject to contract" clause, the Defendants committed no actionable breach. Absent a finding of liability, there is no legal foundation upon which an award of nominal damages can rest.

The Plaintiffs failed to prove Fraud, Deceit, and Conspiracy 58. In their pleadings, the Plaintiffs also claimed that the Defendants' refusal to award the sub-contract and alleged concealment of facts amounted to fraudulent misrepresentation, the tort of deceit, and conspiracy. However, throughout the trial, the Plaintiffs failed to adduce any substantial evidence to satisfy the strict burden of proof required for these serious allegations. The claims of fraud, deceit, and conspiracy remained mere assertions without corroborative proof. Therefore, these causes of action are wholly dismissed.

Claim for General, Exemplary, and Aggravated Damages 59. In addition to special damages, the Plaintiffs also prayed for general S/N wOx8lx38o0MfUyh4y187g …page 23 damages, exemplary damages, and aggravated damages to be assessed by the Court. It is a trite principle of law that damages can be awarded only when a legal wrong or liability has been firmly established against the defending party. As the Plaintiffs have failed to prove any breach of contract, deceit, fraud, or conspiracy by the Defendants, there is absolutely no foundation in law or in fact to justify an award for general, exemplary, or aggravated damages. These claims are therefore dismissed. Conclusion 60. Upon careful consideration of the pleadings, submissions, testimonies of witnesses during trial, and evidence exhibited, this Court finds that the Plaintiffs have failed to prove their case on the balance of probabilities, due to the following reasons:—

(i). No contractual obligation exists between the Plaintiffs and Defendants to appoint the Defendants as a sub-contractor pursuant to the LOA, as the LOA was an “agreement to agree” and not a contract that carried legally binding obligations between the Plaintiffs and Defendants for the said appointment. There was a stark absence of essential terms typically seen in a construction contract of such a value.

(ii). Even if the Defendants intended to appoint the Plaintiffs as their sub-contractor, the Defendants are justified in their legal obligations to appoint a CIDB Grade G7 contractor for the S/N wOx8lx38o0MfUyh4y187g …page 24 purpose of the project.

(iii). Instead, the LOA can only be considered a contract to engage the services of the Plaintiffs to produce a “work costing/quoted price” report for the Defendants’ use in their tender bid. This work has been compensated by the Defendants through a payment to their representative, pursuant to a verbal agreement.

(iv). The Plaintiffs failed to elect their remedy in their Statement of Claims, thus disentitling them from remedies that require it to be in their pleadings. They also failed to prove their damages as they relied on a speculative document created solely for the purpose of the suit. As no legal wrong has been proven, the Plaintiffs are also not entitled to any nominal damages.

This suit is hereby dismissed with costs awarded to the Defendants. Dated: 27th May, 2026 ..................................................................................... YA Dr Hj. John Lee Kien How @ Mohd Johan Lee Judge High Court of Malaya Alor Setar S/N wOx8lx38o0MfUyh4y187g …page 25 For the Plaintiffs: Adenan bin Ismail and Addhwa Fozi bin Mohamad Messrs. Adenan & Associates Advocates & Solicitors For the Defendants: Koay Jun Hui, Burhanudeen bin Abdul Wahid and Muhammad Adam bin Burhanudeen Messrs. Burhan & Co Advocates & Solicitors Authorities Cases Bekalan Sains P & C Sdn Bhd v Bank Bumiputra Malaysia Bhd [2011] 5 MLJ 1 Charles Grenier Sdn Bhd v Lau Wing Hong [1996] 3 MLJ 327 Delpuri-Harl Corp JV Sdn Bhd v Perbadanan Kemajuan Negeri Selangor [2014] 1 LNS 1075 Deutsche Bank (Malaysia) Bhd v. MBF Holdings Bhd & Anor [2015] 8 CLJ 1068 James Wong King Tat v Pang Chen Ken [2023] MLJU 1085 Lee Nyan Hon & Brothers Sdn Bhd v Metro Charm Sdn Bhd [2009] 6 CLJ 626 Voo Syun Mui v. Yap Mooi Mooi [1984] 1 CLJ Rep 457 S/N wOx8lx38o0MfUyh4y187g