Abb Malaysia Sdn Bhd v Global Electrical & Automation Sdn Bhd (WA-12BNCC-18-06/2023)

The Appellant, ABB Malaysia Sdn Bhd (“ABB”) appealed against the decision of the Learned Sessions Court Judge (“LSCJ”) who allowed Global Electrical & Automation Sdn Bhd’s (“GEA”) claim for goods supplied to ABB.

I affirmed the decision of the LSCJ.

The facts are contained in ABB’s written submissions found in enclosure 26. The facts were not disputed in material particulars by

Briefly, ABB was appointed as the main contractors by a company Theatre Automation Malaysia Sdn. Bhd. (“TAM”). TAM was set up by State Automation Pty Ltd (“SA”), a foreign company who obtained the rights to carry out upgrading works at Istana Budaya, Kuala Lumpur.

In short TAM was the local shell company incorporated as a Malaysian entity to deal with contract matters. In reality, TAM was run by SA as TAM had no employees safe for being a corporate entity in Malaysia.

TAM then appointed ABB as the main contractor to supply the materials (cables) for the upgrading works.

ABB then appointed GEA as sub-contractor.

GEA issued an invoice dated 06.06.2017. The said invoice was paid by ABB.

On 12.07.2017, SA the actual company awarded to carry out the upgrading works informed Istana Budaya that it can no longer perform the upgrading works.

This was due to its decision to undertake a company cost freeze exercise.

As a result, SA/TAM will no longer be able to make payments to its contractors including ABB. A stop work notice was issued by SA/TAM to Istana Budaya commencing from 17.07.2017. The Tourism Ministry (Ministry/Government) who was the contracting party with SA terminated the contract on 20.10.2017.

On 06.02.2018, GEA delivered cables to ABB’s warehouse in Subang Jaya and issued an invoice dated 06.02.2018 claiming the payment for the cables supplied and delivered.

Failing to receive any payments, GEA initiated the suit against ABB which resulted in the LSCJ allowing GEA’s claim.

In considering this appeal, I will focus on only three (3) issues raised by ABB. I find these three (3) issues to be sufficient for me to determine the outcome of the appeal - i. Whether there was frustration; ii. Conduct of ABB; iii. Whether ABB was liable to pay; and iv. Whether Estoppel applicable. i. Whether there was frustration

It was argued that the LSCJ erred when she ruled frustration did not apply.

The doctrine of frustration is dealt with under s.57(2) of Contracts Act 1950 as ‘a contract to do an act which, after the contract is made, becomes impossible, or by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful’.

Essentially, there are two (2) instances of frustration, namely, when a contract becomes impossible or when a contract becomes unlawful after the contract is made. (See Ramli Bin Zakaria & Ors v. Government of Malaysia [1982] 2 MLJ 257 FC.)

The test applicable to determine whether an event is a frustrating event within the ambit of s.57 is the ‘radical change in the obligation test’. The test indicates that frustration of contract will occur where there is a radical or fundamental change in circumstances which renders the performance of the contract to be legally and physically impossible (per Salleh Abbas CJ in Kim Nam Development Sdn Bhd v. Khau Daw Yau [1984] 1 MLJ 256). Such change must be more than merely onerous or more expensive, it must be positively unjust to hold the parties to their bargain (Lord Denning MR in Ocean Tramp Tankers Corp v. V/O Savfracht [1964] 1 All ER 161).

The contract that has been frustrated (if at all) is between SA/TAM and ABB. The sub-contract between ABB and GEA remains intact.

It would be a very convenient excuse for contractors to act as “pass through” parties in a commercial arrangement if ABB is to succeed in claiming frustration and for ABB to discharge its obligations under the sub-contract with GEA. ABB for all intents and purposes, was transferring the risk in the TAM main contract to the sub-contract with GEA.

I am further fortified in my finding that frustration does not apply because there was a failure to prove the existence of the SA/TAM contract.

ABB merely relied on the 2020 Auditor General’s Report (“AG’s Report”) issued by Jabatan Audit Negara Malaysia to prove the relationship between the Ministry/Government and SA/TAM.

An excerpt of the said report is reproduced as follows-

The LSCJ did not err in finding that ABB failed to prove the contract between SA/TAM and ABB as ABB has tendered no evidence. It merely relied upon the AG’s Report to show the relationship between the Ministry/Government and SA/TAM. The same document was used by ABB to prove the contract between ABB and SA/TAM.

I agree with GEA’s contention that the AG’s Report does not prove the existence or link between the Main Contract and the current contract between the GEA and ABB.

Thus, no linkage of the relationship between ABB and SA/TAM has been shown. Furthermore, ABB has to prove the terms of its contract with SA/TAM before raising argument of frustration as the contract with SA/TAM is material to support ABB’s contention of frustration. Failure to provide such terms of contract would vitiate the argument on frustration.

Allowing such a claim would also turn the principle of privity into utter chaos.

In SYKT Ong Yoke Lin Sdn Bhd v. Giant Cash & Carry Sdn Bhd & Ors [2000] 1 MLRH 839 the court held that a subcontract executed between a main contractor and subcontractor cannot give rise to any privity of contract between the subcontractor and employer. The relevant passage is as follows: “…Reverting back to the issue of privity of contract, I need to cite certain passages from a book entitled "Law and Practice of Construction Contract Claims", second edition by Chow Kok Fong where, at p 226, the learned author said: A subcontract executed between a main contractor and subcontractor cannot give rise to any privity of contract between the subcontractor and employer. This is because subcontracting operates as a subletting of the physical construction of the works only and does not constitute an assignment of rights and liabilities under the main contract…”.

Applying the relational in the decision above, SA/TAM is the employer. There is no privity of contract between SA/TAM and GEA. Thus, frustration of the SA/TAM and ABB contract (if proven) cannot extend to GEA.

Applying the test in Kim Nam Development Sdn Bhd, there is no fundamental radical or fundamental change in circumstances which renders the performance of the contract between ABB and GEA to be legally and physically impossible. This is simply because GEA did supply ABB the cables. What remains is the payment due to

Thus, ABB’s contention that it no longer can fulfil its obligation in the contract with GEA on the grounds of frustration has no standing at all. ii. Conduct of ABB

This is purely a goods sold and delivered case. As such it is important to analyse the conduct of parties.

It is not disputed that the cables were in fact delivered to ABB’s warehouse on 06.08.2018. This fact was not only admitted by ABB in its submissions but also is supported by the evidence of DW1 and DW2 at trial.

For 3.5 years from the date of delivering of the cables ABB did not-i. dispute on the specification of the materials delivered; ii. return the materials to GEA; iii. lodge any complaint/issues regarding the materials delivered; and iv. issue a formal notice/complaint about the materials delivered.

It is my finding that the allegation of the cables delivered were not those as per the contract is an afterthought. It was never raised until the trial commenced.

It remains on record that the cables are still in the possession of ABB. The extensive submissions of ABB on this matter does not deny the fact that the cables were indeed delivered without protest from ABB.

GEA has successfully demonstrated that it did not stay away from enquiring with ABB soon after the delivery of the cables were made.

This can be seen from the series of emails as follows: a) e-mail dated 29.08.2018; b) e-mails dated 04.09.2018 until 26.08.2018 between ABB and GEA; and c) e-mail dated 05.12.2019 from ABB to chase for the invoice from

From the emails, ABB’s witness DW1 did not dispute the demands. Instead she replied to say the necessary checking would be done of the materials. At no time did ABB protest.

As date as 05.12.2019, ABB via its staff Dhanush, sent an e-mail to GEA stating “We are checking our open PO and noted that we are yet to receive your invoice for PO #3760016582. Please send your invoice copy to abb.singapore.ap@recall.com ASAP.”.

It is my finding that conduct of ABB is not consistent with the issue it now raises. iii. Whether ABB was liable to pay

The law under s.31, s.32 and s.42 of the Sale of Goods Act 1957 (“SOGA”) states -

Duties of seller and buyer. It is the duty of the seller to deliver the goods and of the buyer to accept and pay for them in accordance with the terms of the contract of sale.

Payment and delivery are concurrent conditions. Unless otherwise agreed, delivery of the goods and payment of the price are concurrent conditions, that is to say, the seller shall be ready and willing to give possession of the goods to the buyer in exchange for the price, and the buyer shall be ready and willing to pay the price in exchange for possession of the goods.

Acceptance The buyer is deemed to have accepted the goods when he intimates to the seller that he has accepted them, or when the goods have been delivered to him and he does any act in relation to them which is inconsistent with the ownership of the seller, or when, after the lapse of a reasonable time, he retains the goods without intimating to the seller that he has rejected them.”. [43] Applying the above provisions of law, GEA is entitled to claim for the sum for goods sold and delivered and for payment. The fact remains that GEA delivered the cables which were received and kept in ABB’s possession and custody at all times. It was never disputed and in fact admitted by ABB. Consequently, ABB is deemed to have accepted the cables pursuant to s.42 SOGA and is estopped from disputing the said acceptance. [44] Based on the justifications provided above, GEA is entitled to the payment demanded. iv. Whether Estoppel applicable [45] ABB contended estoppel applied. The very fact that LSCJ did not address, estoppel was itself a valid ground to overturn the LSCJ’s decision. [46] Estoppel was raised based on the following reasons: a) awareness of the stop work order; b) revival of the contract and the project was taken over by MHMT Engineering Sdn Bhd (“MHMT”); and c) e-mail dated 30.06.2017. [47] A critical argument raised by ABB was the fact that ABB and GEA did in fact participate in a bid to receive the project (“the Revival Project”). It was argued that the sub-contract (between ABB and GEA) was still subsisting and was not terminated. What has changes is that the sub-contract is now for the Revival Project. Given that ABB and GEA were parties that was bidding for the Revival Project and the sub-contract has yet to be terminated, ABB argued that GEA is estopped from enforcing the sub-contract and claiming for payment. [48] From the facts, it was not disputed that ABB did not succeed in getting the Revival Project. Instead it went to MHMT. [49] MHMT however went on to engage GEA as a sub-contractor for the Revival Project. [50] It is difficult to accept the argument that GEA is estopped from enforcing the sub-contract because firstly, the Revival Project was between MHMT and GEA. It was not ABB participating with GEA. Secondly, the works in the ABB - GEA sub-contract was upgrading of ABB variable speed drives for overstage. However, the sub-contract between MHMT - GEA was for “TAIT Package” [51] It was explained by GEA witness in court that the contracts were for two (2) distinct scope of works. It was further explained that the TAIT Package had no nexus to GEA’s claim. [52] As such I fully agree that estoppel cannot arise as the factual circumstance to invoke estoppel does not arise at all. [53] ABB also made reference to GEA’s e-mail dated 30.06.2017. It related to a specification of cables to be used. ABB claimed that they never responded to the said e-mail. Therefore, it was GEA who unilaterally confirmed the specification. [54] GEA on the other hand, argued that the e-mail pertains to the cabling of sidestage wagon. It was not for the overstage and understage works. [55] Again I find this to be an afterthought. I go back to my earlier reasoning that ABB failed to confront GEA for the materials supplied for over 3.5 years. [56] It is difficult to condone ABB’s failure to protest. Instead it fuels the argument that ABB did not find any issue with the cables or materials sent to the warehouse on 06.08.2018. [57] As such, I find the estoppel argument holds no water and is rejected. Appellate Intervention [58] I am guided by the reminder of the Federal Court in Ng Hoo Kui & Anor v. Wendy Tan Lee Peng, Pentadbir Kepada Harta Pusaka Tan Ewe Kwang, Simati & Ors [2020] MLJU 1469 which held that as long as the trial judge’s conclusion can be supported on a rational basis in view of the material evidence, the fact that the appellate court feels like it might have decided differently is irrelevant. As such, factual findings that are not “repugnant to common sense” ought not to be disturbed. Trial judges should be given “a margin of appreciation” when their assessment of the evidence is examined by an appellate courts. Conclusion [59] I find no reason to depart from the finding of the LSCJ . [60] There is no appealable error committed by the LSCJ. More importantly, it is not the duty of an appellate court to reverse the finding of a trial judge merely because I feel that the decision should be decided differently. The LSCJ must be given the margin of appreciation of assessing the facts and witnesses. I therefore affirm the decision of the LSCJ and dismiss the appeal with costs. Counterclaim [61] I find no reason to disagree with the LSCJ’s finding that the counterclaim has no merits. [62] As frustration was not proven, the issues of ABB being entitled to a refund of the 1st payment does not arise. S.15 (Adjustment of rights and liabilities of parties to frustrated contracts) of the Civil Law Act 1956 is therefore not applicable. [63] ABB’s reliance on the case of Asia Honour Paper Industries (M) Sdn Bhd v. Viridis Engineering Sdn Bhd [2021] MLRHU 2170 is also misconceived as the facts totally differ. (AHMAD FAIRUZ BIN ZAINOL ABIDIN) Judge High Court of Malaya Kuala Lumpur Dated: 17th September 2024 Counsel Arthur Ng and Syed Asyraaf for the Appellant Messrs. Christopher & Lee Ong Michelle Yoong for the Respondent Messrs. Tan, Tan & Associates