Asia Honour Paper Industries (M) Sdn Bhd v Viridis Engineering Sdn Bhd (WA-12BNCVC-40-06/2021)

This is the Appellant’s (Defendant) appeal against the whole of the decision of the learned Sessions Court Judge (“SCJ”) after a full trial. The SCJ had allowed the Respondent’s (Plaintiff) claim for RM166,060 against the Appellant, with costs of RM18,000. And dismissed the Appellant’s counterclaim for RM199,740 against the Respondent, with costs of RM17,000. 2

The Respondent’s claim is for loss of profit in the sum of RM166,060. The Appellant’s counterclaim against the Respondent is for refund of the RM199,740 paid to the Respondent. These relate to a project known as MNI SI Boiler Retrofit Construction Services to install one Sludge Incinerator Electrostatic Precipitator (SI ESP) (“Project”).

I allowed the appeal and set aside the decision of the SCJ. I dismissed the Respondent’s claim and allowed the Appellant’s counterclaim. Here are the grounds of my decision.

Around January/February 2019, the Appellant invited the Respondent to submit a proposal for the Project in accordance with the terms and conditions set out by the Appellant including the Appellant’s standard terms and conditions (“Standard Terms and Conditions”). By way of a Proposal VE108 Revision 2 dated 22.2.2019 (“Proposal”), the Respondent forwarded to the Appellant the terms of their construction services for the Project. The salient terms of the Proposal are:

the contract sum of the Project is a sum of RM665,800 (“Contract Sum”);

‘standby rates’ are to be mutually agreed;

‘demobilization & remobilization rates’ are to be mutually agreed.

By way of a Purchase Order No. ME-011439 dated 27.3.2019 (“Purchase Order”), the Appellant awarded the Project to the Respondent (“Contract”). It is undisputed that the terms stated in the Proposal are to be incorporated as part of the Contract. By way of the Appellant’s email dated 28.3.2019 (“Appellant Email”), the Purchase Order together with 3 the Standard Terms and Conditions were sent to the Respondent. By way of the Respondent’s email dated 29.3.2019 (“Respondent Reply”), the Respondent acknowledged receipt of the Appellant Email enclosing the Purchase Order and the Standard Terms and Conditions.

According to the Proposal, the execution of the Project was to commence on 1.4.2019. But the Project did not commence on 1.4.2019 as both parties were still discussing Project issues in preparation for the commencement of work. On 19.4.2019, the Appellant paid a sum of RM199,740 to the Respondent being the 30% down payment of the Project. Thereafter, there were further discussions between the parties regarding the progress of and issues arising from the Project and another project with the Respondent known as the ‘Fire Water Tank Project’. The Project was then put on hold pending the outcome of those discussions between the parties.

By way of a settlement agreement dated 17.9.2019 (“Settlement Agreement”), the parties agreed, inter alia, as follows:

the Appellant would submit its application to the Department of Environment (“DOE”) to obtain their approval in order for the Respondent to commence works for the Project; and

until the settlement of the issues regarding the cable length and approval from the DOE, the Project would not be executed in November/December February/March 2020.

8.

By way of the Appellant’s email dated 20.2.2020, the Appellant proposed 2 dates for the Respondent to commence works for the Project, i.e. in April 2020 or June 2020. By way of an email dated 25.2.2020, the Respondent, inter alia, informed the Appellant that prior to the commencement of the works, both parties must mutually agree on the standby and demobilization rates. The Respondent quoted standby rates in the sum of RM100,000 and demobilization rates in the sum of RM665,800 to the Appellant. By way of the Appellant’s email dated 26.2.2020, the Appellant requested the Respondent to reduce the standby and demobilization rates as the rates quoted by the Respondent are unreasonable and unsubstantiated. Respondent. As a result, parties could not mutually agree on the standby and demobilization rates. This resulted in the Respondent’s refusal to commence the work for the Project. According to the Appellant, the Respondent is deemed to have failed to comply with the terms and conditions of the Contract. Appellant terminated the Contract. At the time of the said termination, the 5 Respondent had not commenced any work for the Project. As there was no work undertaken by the Respondent, the Appellant demanded refund of the 30% down payment in the sum of RM199,740 paid to the Respondent. Sessions Court proceedings The Appellant counterclaimed against the Respondent for refund of the RM199,740 paid to the Respondent for the Project.

John Raymund Fernandez for the Respondent (“PW1”);

Wilson (subpoena witness) for the Respondent (“PW2”);

Ng Boon Jiun (subpoena witness) for the Respondent (“PW3”);

Wong Kam Choy for the Appellant (“DW1”); and

Sivanantham a/l Kanchymalay for the Appellant (“DW2”).

allowed the Respondent’s claim for the sum of RM166,060 against the Appellant, with cost of RM18,000; and

dismissed the Appellant’s counterclaim for the sum of RM199,740 against the Respondent, with cost of RM17,000 to be paid to the Respondent. 6 Appellant’s case

the termination of the Contract was lawful on the following grounds:

(i)

(ii) the standby and demobilization rates quoted by the Respondent were unreasonable and was even more than the Contract Sum of RM665,800.

(iii) the Respondent refused to negotiate with the Appellant on the standby and demobilization rates. And further refused to commence work on the basis that these rates had not been mutually agreed.

(iv) the Standard Terms and Conditions had been incorporated into the Contract. Pursuant to clause 10(c) thereof, the Appellant was entitled to terminate the Contract due to the Respondent’s failure to comply with the terms and conditions of the contract.

the Respondent’s refusal to commence the works entitled the Appellant to terminate the Contract pursuant to clause 10(c) of the Standard Terms and Conditions. Alternatively, on the basis of a total failure of consideration pursuant to section 40 of the Contracts Act 1950 (“Contracts Act”).

the Appellant is entitled to refund of its part payment of RM199,740 paid to the Respondent as the Respondent did not commence or perform any works under the Contract.

the Respondent is not entitled to loss of profit of RM166,060 on the following grounds:

clause 18 of the Standard Terms and Conditions states that the Appellant is not liable to the Respondent for, inter alia, loss of profit;

(ii) the Respondent failed to prove its alleged loss of profit. 7

the SCJ had erroneously considered certain irrelevant issues and as a result made irrelevant and erroneous adverse findings of facts and comments against the Appellant when:

the said issues had been resolved by way of the Settlement

(ii) the commencement date of the Project had been set at large by way of the conduct of the parties; and

(iii) issues raised by the Respondent in its email dated 26.2.2020 had been resolved by parties. Law on Appeal Courts of Judicature Act 1964. It states that all civil appeals from the Subordinate Court to the High Court shall be by way of a rehearing: Lee Ing Chin @ Lee Teck Seng & Ors [2005] 2 MLJ 1 at 10-11; [2004] 4 CLJ 309, the Federal Court laid down the law on appellate interference where there is a failure of judicial appreciation of evidence: “[11] In gist, the pivotal question raised by the appellants was whether the term 'insufficient judicial appreciation of the evidence' used by the Court of Appeal constituted a new test for appellate intervention. We think it is important to examine this proposition in the light of what the Court of Appeal had said in its judgment beginning from para 27 which we have reproduced earlier but repeated herein for the purpose of emphasis. It states: … Suffice to say that we re-affirm the proposition that an appellate court will not, generally speaking, intervene unless the trial court is shown to be plainly wrong in arriving at its conclusion. But appellate interference will take place in cases where there has been no or insufficient judicial 8 appreciation of the evidence. It is, we think, appropriate that we say what judicial appreciation of evidence involves. … [14] In our view, the Court of Appeal in citing these cases had clearly borne in mind the central feature of appellate intervention, ie to determine whether or not the trial court had arrived at its decision or finding correctly on the basis of the relevant law and/or the established evidence. In so doing, the Court of Appeal was perfectly entitled to examine the process of evaluation of the evidence by the trial court. Clearly, the phrase 'insufficient judicial appreciation of evidence' merely related to such a process. This is reflected in the Court of Appeal's restatement that a judge who was required to adjudicate upon a dispute must arrive at his decision on an issue of fact by assessing, weighing and, for good reasons, either accepting or rejecting the whole or any part of the evidence placed before him. The Court of Appeal further reiterated the principle central to appellate intervention, ie that a decision arrived at by a trial court without judicial appreciation of the evidence might be set aside on appeal. This is consistent with the established plainly wrong test.” MLJ 149 at 154, the Court of Appeal held that an appeal should be allowed on an error of law: “[8] Hence, the proper approach is that if (a) it is shown that the judgment cannot be explained or justified by the special advantage enjoyed by the trial judge by reason of having seen and heard the witnesses testify and being tested before him, and (b) an injustice is demonstrated to have been occasioned by any error by the trial judge, for example:

the judgment is based upon a wrong premise of fact or of law;

there was insufficient judicial appreciation by the trial judge of the evidence of circumstances placed before him;

the trial judge has completely overlooked the inherent probabilities of the case;

that the course or events affirmed by the trial judge could not have occurred;

the trial judge had made an unwarranted deduction based on faulty judicial reasoning from admitted or established facts; or 9

the trial judge had so fundamentally misdirected himself that one may safely say that no reasonable court which had properly directed itself and asked the correct questions would have arrived at the same conclusion; an appellate court will intervene to rectify that error so that injustice is not occasioned.” Court of Appeal case of Mok Yong Kong & Anor v Mok Yong Chuan [2002] 2 MLJ 718 at 723 which said: “Having carefully read the judgment of the learned judge, we are satisfied that there are merits in the complaints raised by the appellants before us. It appears that the learned judge misappreciated the facts. She overlooked that the caveat had nothing to do with the first suit (No 22-289-1998), while most of her reasons are related to the allegations pleaded in that suit. Further, the omission to take the application through the steps required by law and the omission to consider the delay between the date of the caveat and the second suit (No 22-135-1999) amount to non-directions which have seriously prejudiced the appellants. This is accordingly a fit and proper case for this court to review and reconsider the application that was before the learned judge.” Merchant Bankers Bhd & Ors [2006] 5 MLJ 1 at 10 held that an appellate court will more readily interfere with the trial judge’s findings of facts when the finding of fact depends upon inferences drawn from other facts. As opposed to the finding of a specific fact which relies on credibility of witnesses: “[18] … We wish to state that we are well aware of the settled principle that a trial court is in a more advantageous position to make findings of fact and assessing the credibility of witnesses, hence generally as an appellate court we will not interfere with a decision which is based on such findings of fact unless there is a clear justification for doing so. Further, a distinction has to be made between a finding on a specific fact which relies on the credibility of witnesses and a finding of fact which depends upon inferences drawn from other facts. In 10 the latter case, an appellate court will more readily interfere with the trial judge's findings of fact and form an independent opinion, than in the case of the former … Having said the foregoing we are also of the view that an appellate court cannot in a peremptory fashion say, because it is an assessment of facts of a trial judge against the oral and written evidence presented before him, they are not prepared to interfere with such a finding of fact, without even making any distinction as to the nature of the findings. It is only after an analysis of the evidence afresh, and on a review of the law can such a finding be made by an appellate court. Without this approach, the endorsement of the appellate court, deserves little or no weight at all. … … [19] From the dicta cited above, it is evident that an assessment of facts must be undertaken before an appellate court decides whether to intervene or not. Hence, the approach of the appellate court in this instance in merely endorsing the finding of the trial judge without a critical assessment of the evidence goes again the grain of these authorities.” SCJ. His findings based on inferences and deductions from the facts are, in my view, faulty and unwarranted. To my mind, the SCJ is plainly wrong and there has been insufficient judicial appreciation of the evidence on his part. Termination of the Contract by the Appellant was lawful Appellant is not liable for breach of the Contract for the following reasons:

the Standard Terms and Conditions had been incorporated into the Contract. They were sent to the Respondent together with the Purchase Order and the Respondent did not raise any objection to the Standard

(b)

the Respondent had refused to negotiate with the Appellant on the standby and demobilization rates and had insisted that the Appellant agree to the rates quoted by the Respondent;

the Respondent was unwilling to commence with any works if parties did not mutually agree to the standby and demobilization rates;

the Respondent’s refusal to commence work amounted to a failure to comply with the terms and conditions of the contract and justified the Appellant to terminate the Contract pursuant to clause 10(c) of the Standard

even if the Standard Terms and Conditions had not been incorporated into the Contract, the Respondent’s refusal to commence work amounted to a total failure of consideration and justified the Appellant putting an end to the contract pursuant to section 40 of the Contracts Act. The Standard Terms and Conditions were incorporated into the Contract Terms and Conditions were never intended to be part of the agreed terms by the parties. The SCJ further held that if the Standard Terms and Conditions were considered an important legal document by the Appellant, it must be notified in the email by the Appellant. But the 12 Appellant Email only made reference to the Purchase Order. See paragraphs 95 to 97 of the SCJ’s grounds of judgment (“GoJ”). English High Court case of Kelland Homes Ltd v Ballytherm Ltd & Ors [2019] IEHC 46 which held that the general approach in relation to email attachments is that attachments to emails are regarded as part of the email: “129 The general approach taken to attachments to emails that an attachment is regarded as part of the email. However, if the deponent is satisfied, having obtained the appropriate legal advice, that the contents of an attachment are wholly irrelevant, they may be excluded. In Mr. Durcan's second affidavit, he has identified a small number of particular attachments which he states must, be relevant because of the description of the attachment, which include in some cases references to “PIR3010” and “PIR3009”. Having regard to the particular items to which he has referred, I shall direct that the supplemental affidavit of discovery address, in particular, the question of those particular attachments. The number of these is limited.” Bench Division opined that readers of email should be taken to have read the attachment: “[41] The Defendant submits that as Dr Grant sent the email with the RSPB Critique as an attachment, readers of the email therefore must be taken to have read the RSPB Critique as well: see Dee at 27 to 32. Such readers it is said would understand Dr Grant to be discussing Dr Johnstone's conclusions, and to be commenting upon what Dr Johnstone has identified as the problems with the Claimants' work. Mr Munden was also content for the two publications to be looked at together. In my view Mr Wolanski is correct in suggesting both that Dr Grant was discussing Dr Johnstone's conclusions, and that the readers of the email should be taken to have read the attachment, to which their attention 13 was directed. That does not mean however that the two publications, which are dealt with separately in the Particulars of Claim, should be treated as one publication for the purpose of meaning. In circumstances where each presents, self-evidently, the author's own analysis of the Wildlife Biology paper, it seems to me the correct approach for present purposes is that each publication provides the context in which the other should be read.” Standard Terms and Conditions. Thus, the Respondent was clearly notified by the Appellant regarding the incorporation of the Standard Terms and Conditions into the Contract. The Standard Terms and Conditions were intended to be part of the agreed terms in the Contract when it was sent together in the Appellant Email. Appellant via the Appellant Email. The only time the Respondent raised its objection to the Standard Terms and Conditions was after the termination of the Contract on 17.3.2020. This was admitted by PW1 during cross-examination: “Q: ... So do you agree with me that in your email dated 29.03.2019, you did not raise any objection to the PO and the terms of conditions that was attached together? SCJ: ‘No’, what? No-No, I didn’t, I did not. I agree with you I did not raise any objections. Do you agree also that subsequently or after 29.03.2019, you did not raise any objection to the PO and the Defendant’s standard terms and conditions? 14 No, I do not agree. Can you show to the Court where you have objected to the PO and the terms and conditions? Can you please give me a couple of minutes to refer to my documents. Yes. SCJ: Mr Clinton, do you know what page? Help him. If you refer to page 186 of Bundle B2 … if you look at Point No.3, line No.2. ‘Further there is no such Clause 22 in this purchase order. For avoidance of doubt, Viridis have never accepted such a term as part of this purchase order nor is it referenced in the purchase order. Mr Fernandez, do you agree that this response was only communicated after the termination? This response was communicated after the termination. After the termination, right? Yes.” Conditions were never intended to be part of the agreed terms by the parties is plainly wrong. The Standard Terms and Conditions being attached to the Appellant Email ought to be regarded as part of the email. And the Respondent who had received and acknowledged the Appellant Email should be taken to have read and accepted the incorporation of the Standard Terms and Conditions into the Contract. No agreement on standby and demobilization rates Respondent quoted standby and demobilization rates in the sum of RM100,000 and RM665,800 respectively for the Project. I accept the Appellant’s stance that the standby and demobilization rates quoted by the Respondent are unreasonable for the following reasons. 15 during cross-examination: “Q: Do you agree that … over and above the contract sum of 665,800? Or basically these rates are over and above the contract sum that was awarded to the Plaintiff? SCJ: Agree or not, is it? Yes. Agree or not? Agree or disagree? That these rates are? Over and above the contract sum that was awarded to you, or to the Plaintiff. Agree or disagree? Agree.” RM100,000 and RM665,800 respectively. And further requested the Respondent to propose more reasonable rates. However, by way of the Respondent’s email dated 9.3.2020, the Respondent had disagreed and rejected the Appellant’s request. Respondent refused to negotiate with the Appellant 16 Respondent had refused to negotiate with the Appellant on the standby and demobilization rates quoted by the Respondent and insisted that the Appellant agree to the rates quoted by the Respondent. The Respondent’s refusal to negotiate the standby and demobilization rates with the Appellant is evident from the Respondent’s email dated 9.3.2020. Wherein the Respondent did not attempt to negotiate or propose any other rates. Instead the Respondent rejected the Appellant’s request and insisted that the rates proposed by the Respondent were reasonable. Respondent’s refusal to commence work Respondent who was unwilling to commence with any works if parties did not mutually agree on the standby and demobilization rates. It was the SCJ’s finding that the Appellant did not refer to any evidence to support its contention that the Respondent refused to commence any works unless the standby and demobilization rates were mutually agreed. (See paragraphs 105 and 106 of the GoJ). However, the Appellant had in paragraph 90 of its written submissions dated 10.5.2021 referred to the Respondent’s email dated 25.2.2020 to support its contention that the Respondent refused to commence any works unless the standby and demobilization rates were mutually agreed between the parties. Respondent’s email dated 25.2.2020 and find that it was the Respondent who was unwilling to commence with any works if parties did not mutually agree on the standby and demobilization rates. The Respondent’s refusal 17 to commence the works amounted to a failure to comply with the terms of the Contract. Such failure entitles the Appellant to terminate the Contract pursuant to clause 10(c) of the Standard Terms and Conditions. Total failure of consideration Appellant to put an end to the Contract pursuant to section 40 of the Contracts Act. 597 at 611 considered section 40 of the Contracts Act. The Federal Court held that a non-defaulter has the right to repudiate the contract only when the defaulter refused to perform or has disabled himself from performing the whole or his promise: “[24] Section 40 of the Act is a restatement of the English common law position. It provides as follows: When a party to a contract has refused to perform, or disabled himself from performing, his promise in its entirety, the promisee may put an end to the contract, unless he has signified, by words or conduct, his acquiescence in its continuance. Special attention should be paid to the phrase ‘his promise in its entirety’. Under the section the right in a non-defaulter to repudiate a contract only accrues when the defaulter has refused to perform or has disabled himself or herself from performing the whole of his promise. If there is part performance by the defaulting party, the innocent party may not put an end to the contract.” 18 [2011] 6 MLJ 464 at 484-485, the Federal Court held that the main consideration when determining whether an innocent party can treat the contract as having been repudiated is whether there has been a total failure of consideration. A total failure of consideration is where a reasonable and commercially sensible person would look upon the project and see that the performance of the contract has little or no value at all: “[57] Whether or not an innocent party can treat the contract as having been repudiated is a question of fact. It depends on the facts and circumstances of each case. The main consideration is whether or not there has been a total failure of consideration. This can be derived from s 40 of the Contracts Act 1950 where the words 'his promise in its entirety' appear. [58] In Berjaya Times Square Sdn Bhd it was held as long as some work has been done indicating that the development or construction had commenced, there would be no total failure of consideration because the promise had been performed although not in its entirety. On the facts of that case the decision may be supportable. But we do not agree with the stand that there can be no total failure of consideration so long as part of the promise has been fulfilled. [59] In our view, whether or not there has been total failure of consideration is a question of fact which can be resolved by looking at the circumstances of the case. Each case has its own peculiar facts. No two cases can be said to be identical although they may be similar. We are inclined to take the view that minimal works such as getting development permission orders or taking possession over the land for development purposes may not in most instances fall on the same side as Berjaya Times Square Sdn Bhd. This is simply because such an interpretation does not make commercial sense. What good is a mere foundation of an office building to a company? In such circumstances, it must be taken as if the promise had not been fulfilled in its entirety. [60] In fact in Berjaya Times Square Sdn Bhd, it did not rule as wrong the conclusions in the cases which allowed termination of the respective contracts on the ground that there was failure to complete the contractual works (see Tan Yang Loong & Anor v Newacres Sdn Bhd [1992] 1 MLJ 289; Chye Fook v Teh Teng Seng Realty Sdn Bhd [1989] 1 MLJ 308; Law Ngei Ung v Tamansuri Sdn Bhd [1989] 2 CLJ 44 (Rep); [1989] 2 CLJ 181). As such the principle should therefore be this. There is a total failure of consideration (and a failure to perform a promise in its entirety) where a reasonable and commercially 19 sensible man would look upon the project of having little or no value at all. If the reasonable and commercially sensible man sees the performance of the contract of having some value, it should be taken that there has been no total failure of consideration and accordingly the promise has been performed in part. In the earlier instance, there is a right to terminate the contract, but not in the latter instance.” Respondent’s performance of the Project would have little or no value at all on the basis that no works had been commenced by the Respondent for the Project. The Respondent had merely attended meetings with the Appellant to undertake preparations for the commencement of the works. There were correspondences between the Respondent and the Appellant to update on the status of the preparations and to set a commencement date. However, at all material times, no works had been commenced on site. Contract under section 40 of the Contracts Act on the following grounds. The Respondent refused to commence the works for the Project since parties could not mutually agree on the standby and demobilization rates. There has been a total failure of consideration in performing the Respondent’s contractual obligations in its entirety since:- (a) no works had been commenced on site by the Respondent; and (b) the 20 Respondent’s preparatory works are considered minimal which have little or no value at all. Contrariwise, the termination of the Contract was done in accordance with clause 10(c) of the Standard Terms and Conditions. Alternatively, pursuant to section 40 of the Contracts Act following the refusal of the Respondent to commence the works. Appellant entitled to refund of its part payment Ahmad & Ors v Sarawak Plantation Agriculture Development Sdn Bhd [2015] MLJU 1941 which held that part payment generally is not liable to forfeiture and must be returned to the purchaser if the contract is not performed by either the purchaser or the vendor: “[53] With regard to part payment, this must be distinguished from deposit.

The SCJ found that there was no evidence to suggest that it was the intention of the parties to return the payment according to the considerations set out in the case of Zainal Abidin (supra). (See paragraphs 121 to 123 of the GOJ). I disagree. The general principle stated therein is subject to, inter alia, interpretation of the terms of the Contract and intention of the parties.

From the payment terms in the Purchase Order, I find that it is the intention of the parties that the 30% down payment is to be treated as a part payment towards the Contract Sum and not to be treated as a deposit. In any event, no works had been commenced by the Respondent for the Project. There was also no evidence to suggest that it was the intention of the parties to withhold or forfeit the payment made to the Respondent. As such, I am of the view that the Appellant is entitled to refund of the part payment of RM199,740 paid to the Respondent. Respondent not entitled to loss of profit

In my opinion, the Respondent is not entitled to loss of profit. This is because clause 18 of the Standard Terms and Conditions states that the 22 Appellant shall not be liable to the Respondent for among others, any loss of profit or other pecuniary loss. It reads: 18) MNI’s sole and entire liability for any demands, claims or actions which the Supplier of third party may have against MNI at law or equity, shall be limited to not more than the value of the good(s) and/or service(s) that gave rise to the claim. In any event, MNI shall not be liable to the Supplier for any indirect, exemplary, incidental, punitive, special, consequential, property or other damages, including, without limitation, any loss profits, loss of use, business interruption, loss of information, programs or other data, downtime, costs of replacement of goods or services or any third party claims or other pecuniary loss.

Pursuant to clause 18 of the Standard Terms and Conditions, it is clear that the Appellant is not liable to the Respondent for, inter alia, any claim for loss of profit or other pecuniary loss. On this basis, the Respondent’s claim for loss of profit must fail. The SCJ erred in law and in fact by failing to consider that clause 18 of the Standard Terms and Conditions applies herein and that the Appellant shall not be liable to the Respondent for among others, loss of profit or pecuniary loss. (See paragraph 114 of the GoJ). Respondent failed to prove loss of profit

Even if the Standard Terms and Conditions were not incorporated into the Contract, the Respondent had not proven on a balance of probabilities its claim for loss of profit in the sum of RM166,060. It bears repeating that no works had been commenced by the Respondent for the Project. Notwithstanding that, the SCJ found that the Respondent’s internal document ‘MNI VE108 Calculation of Loss of Profits’ (which is the Respondent’s own calculation of loss of profit) was sufficient documentary 23 evidence to support its claim for loss of profit. (See paragraphs 116 and 117 of the GoJ).

The law is trite that a claimant must prove his claim for damages. The claimant bears the burden of proving both the fact and the amount of the damages. Damages must be proved with substantive evidence. It is not enough to provide mere particulars, summaries, estimations or general conclusions.

In Datuk Mohd Ali Hj Abdul Majid & Anor v Public Bank Bhd [2014] 6 CLJ 269 at 283, the Federal Court said: “[33] Therefore, in a claim for damages, it is not sufficient for the plaintiff to merely state the amount of damages that he is claiming, he must prove the damage that he had in fact suffered to the satisfaction of the court. This principle is borne out in the case of Bonham-Carter v Hyde Park Hotel [1948] 64 TLR 177 where Lord Goddard CJ observed: Plaintiffs must understand that if they bring actions for damages, it is for them to prove their damage; it is not enough to write down the particulars, and so to speak, throw them at the head of the court, saying: This is what I have lost, I ask you to give me these damages. They have to prove it.”

In Lembaga Kemajuan Tanah Persekutuan (FELDA) & Anor v Awang Soh bin Mamat & Ors [2009] 4 MLJ 610; [2009] 5 CLJ 1; [2010] 1 AMR 285, the Court of Appeal said (at page 665, MLJ): “[137] All the 354 respondents plaintiffs are claiming damages and they must prove them. McGregor on Damages (16th Ed) at p 236 sets out the law on damages in this way: A plaintiff claiming damages must prove his case. To justify an award of substantial damages he must satisfy the court both as to the fact of damage and as to its amount. If he satisfies the court on neither, his action will fail, or at the most he will be awarded nominal damages where a right has been infringed. If the fact of damage is shown but no evidence is given as to 24 its amount so that it is virtually impossible to assess damages, this will generally permit only an award of nominal damages; this situation is illustrated by Dixon v Deveridge [1825] 2 C & P 109 and Twyman v Knowles [1853] 13 CB 222.”

The law governing loss of profit can be found in section 74 of the Contracts Act. The Respondent bears the burden of proving its loss to be entitled to damages of loss of profit, if any.

In Lim Tze Sian v Coverright Surface Malaysia Sdn Bhd [2017] 1 MLJ 418 at 428-429, the Court of Appeal held that the respondent in that case is obliged to prove loss of profit: “[28] With respect, we fail to see how on any principle of evaluation and certainly not on a proper evaluation can those conclusions be drawn. Unless admitted, or unless the claim is for liquidated damages where the judgment entered is a final judgment, the respondent is still obliged to prove its loss. Since the claim of loss here is for general damages (regardless that the respondent had stated in its defence and counterclaim that the sum of RM1m is claimed as ‘general damages’), the claim is one for unliquidated damages. [29] In a claim for compensation aimed primarily at putting a party whose rights have been violated, it is, as far as money can do so, to the same position that such person would have been had his rights been observed - see Parkson Corp Sdn Bhd v Fazaruddin bin Ibrahim (t/a Perniagaan Fatama) [2002] 4 MLJ 122; [2002] 1 MLRA 568. In order to succeed in its claim for damages, the respondent must also satisfy the test of remoteness as enunciated in s 74 of the Contracts Act 1950: Section 74 Compensation for loss or damage caused by breach of contract

Where a contract has been broken, the party who suffers by the breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from the breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it.

Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach. 25 [30] Section 74 requires the respondent to prove that it had suffered loss of profits as a result of the appellant’s breach of the confidentiality and non-competition agreement. The respondent must prove that this loss of profit arose naturally in the usual course of things from such breach, or which both parties knew at the time of the making of the contract, that such damage or loss is likely to result from such breach. If this loss is too remote or is an indirect loss, the respondent is not entitled to any compensation, and the court must dismiss the claim, or order nominal damages even if interlocutory judgment has already been entered. There are no free passes to compensation for any claimant, save where there is admission. [31] Quite aside from this fundamental principle, the respondent is also required to prove that the losses sustained are caused by the appellant. There must be a causal link or nexus between the loss claimed and the act of the appellant. An interlocutory judgment, including one by default, only means that the fact of breach of contract has been established or is dispensed with. The respondent is no longer required to prove liability. What remains to be established and proved is the matter of loss, and the amount of that loss. In Tan Ah Chio & Ors v Lua Kim Soon & Ors [2015] 1 MLJ 334; [2014] 1 LNS 1004, the Court of Appeal had held that: It is trite law that a party claiming damages must prove actual losses suffered and that the losses suffered were caused by the opposing party’s breach. [32] The burden of proving this loss of profits always remained with the respondent. Until the respondent has discharged the burden, there is no issue of rebuttal by the appellant. In Bonham-Carter v Hyde Park Hotel Ltd [1948] 64 TLR 177, Lord Goddard stated: Plaintiffs must understand that if they bring actions for damages it is for them to prove their damages. It is not enough to write down the particulars and so to speak throw them at the court, saying: ‘This is what I have lost. I ask you to give me damages’. They have to prove it.”

In Sony Electronics (M) Sdn Bhd v Direct Interest Sdn Bhd [2007] 2 MLJ 229 at 242, the Court of Appeal affirmed the Registrar’s award of nominal damages and held that the respondent had failed to prove the loss allegedly suffered from the appellant’s breach of contract. As there is 26 no basis to ascertain the amount of losses suffered, only nominal damages should be awarded: “[97] In the instant case, we find that the respondent has clearly failed to prove this loss which was allegedly suffered from the appellant’s breach of contract. In a situation where there is an infringement of a legal right such as this but where there is no basis for ascertainment of the amount of loss suffered, a nominal damage may be awarded ...”

Even if the termination of the Contract by the Appellant is unlawful, the Respondent still bears the burden of proving that it has suffered the purported loss of profit. In Kembang Serantau Sdn Bhd v YBK Usahasama Sdn Bhd [2017] MLJU 2165, the High Court held that the plaintiff’s failure to produce any project accounts or supporting documents to substantiate the claim for loss of profits in a case of wrongful termination, ought to fail in limine: “[190] Generally a Contractor is entitled to claim for loss of profit arising out of a wrongful termination by the Employer. However like all claims of this nature the Plaintiff would have to be put to strict proof of this head of damages. [191] The Plaintiff referred to the case of O Stable Panel Sdn Bhd v Kenmark Industrial Co. Sdn Bhd (2010) 8 MLJ 686. It was held in that case that in the event the plaintiff suffered damages due to illegal termination, the factors to be considered would be taking into consideration all costs and expenses with the total value of the contract. It is based on the principle that had it not been due to the Defendant’s unlawful termination, the Plaintiff would have been allowed to complete the balance of the works and to ultimately receive the balance of the contract value. The Plaintiff argued that it is entitled to 15% of the balance total Contract Sum amounting to RM20,507,546.34 being its loss of profit. [192] The Defendant on the other hand relied on the ratio in Popular Industries Limited v Eastern Garment Manufacturing Sdn Bhd [1989] 3 MLJ 360 at page 367 as follows: “It is axiomatic that a Plaintiff seeking substantial damages has the burden of proving both the fact and the amount of damages before he can recover. …” 27 [193] Further at page 369: “In this context, I am reminded of Lord Goddard’s dictum in Bonham-Carter v Hyde Park Hotel quoted with approval by Thomson CJ in Lee Sau Kong v Leow Cheng Chiang, namely, that: Plaintiffs must understand that if they bring actions for damages it is for them to prove their damage; it is not enough to write down the particulars, and so to speak, throw them at the head of the Court, saying, ‘This is what I have lost, I ask you to give me these damages’. They have to prove it.” … [201] All said the Plaintiff’s Claim for damages for loss of profit leaves much to be desired and is totally unsatisfactory and this Court would in the circumstance grant only a nominal damages of RM5,000.00 having regard to the Contract Sum and the balance value of work to be done and the remaining time needed for completion and the past profit record of the Plaintiff.”

In my assessment, the Respondent’s internal document ‘MNI VE108 Calculation of Loss of Profits’ is insufficient to prove the Respondent’s claim for loss of profit. The said document is undated and is merely a table of calculation prepared by the Respondent themselves without any contemporaneous accounts or documents to support the calculation and amount stated therein. This was admitted by PW1 during cross-examination: “Q: Now I refer you to pages 25 to 26. Of? Same bundle. Bundle B3. Can I, ok, refer you to page 26? Can I refer you to, from scaffolding onwards? Yes, scaffolding onwards. Are you there? Are you there? Yes. So on the scaffolding accommodation until the miscellaneous site. Yes. Do you agree with me, there are no documents produced to justify these expenses? SCJ No document? Sorry, there are no documents in this bundle to justify these expenses. Other than this.” 28

The Respondent attempted to rely on the following documents to justify its claim:- (a) letter of quotation dated 19.2.2019 from Ashiatech Sdn Bhd (“Ashiatech”) to the Respondent; and (b) letter of quotation dated 3.4.2019 from Perkhidmatan Crane Hung Thai Sdn Bhd (“Perkhidmatan Crane”) to the Respondent.

However, the letter of quotation from Ashiatech is merely a quotation which did not materialize as Ashiatech did not mobilize any workers for this Project. This was admitted by PW2 during cross-examination: “Q: Do you have personal knowledge of the SI ESP project between the Plaintiff and the Defendant? Do you agree with me that Ashiatech was not involved in any site meetings for this particular project which is the SI ESP? We - Ashiatech was, were not - No, not involving. SCJ Agree? You agreed? Yes, I agreed. Do you agree that your workers were not mobilised for this particular project? Not mobilised yet.”

Likewise, the letter of quotation from Perkhidmatan Crane is merely a quotation which did not materialize as Perkhidmatan Crane did not mobilize any mobile cranes for this Project. This was admitted by PW3 from Perkhidmatan Crane during cross-examination: “Q: Ok. So, do you have knowledge of this SI ESP project between the Plaintiff and the Defendant? No. We are not aware of as well. So do you agree with me that Perkhidmatan Crane Hung Thai did not mobilise any cranes for this so-called project, for any of the projects? No, we have not mobilised any based on the quotation. 29 Quotation?

Furthermore, no payments were made to Ashiatech and Perkhidmatan Crane for the quotations issued by them. There was no contemporaneous documentary evidence adduced by the Respondent to show that payments, if any at all, were made to Ashiatech and Perkhidmatan Crane. This was admitted by PW1 during cross-examination: “Q: Would you agree that the Plaintiff did not make any payment for, on these quotes? Make what payment? Did you make any payments to Ashiatech for these quotes? No, ok. So this quotation was provided to you even before the revised proposal and PO was issued. Agree? Yes. ... Can you show to this Court any of the bundles or any of the so-called your confirmation in the bundles? No, not in the bundles. … Question, did you make payments to Crane Hung Thai? SCJ: No document of payment? No? Not in this bundle. Not in any of the bundles?

It seems to me that ‘MNI VE108 Calculation of Loss of Profits’ prepared by the Respondent is self-serving as it is their own calculation of loss of profit. In this regard, the Court of Appeal case of Tetuan Bahari Choy & Nongchik (law firm sued as a partnership) v Harta Megajaya Sdn Bhd [2019] 6 MLJ 491 is instructive. In that case, the respondent sued the 30 appellant for, among others, professional negligence in causing a failed land transfer transaction. The respondent claimed for the sum of RM5 million in damages but the High Court only awarded RM300,000 as actual loss suffered. On appeal, the Court of Appeal further reduced damages to RM100. The Court of Appeal agreed that the respondent failed to prove the damages claimed. The exhibits tendered were self-serving documents without any basis. The Court of Appeal said (at page 499): “[18] Having perused the evidence on the record, we are of the view that Megajaya has failed to prove the damages sought. The documents tendered in support of the claim … are by themselves insufficient to establish liability against Bahari Choy. We do not think that it is sufficient to merely write down the particulars to prove the claim for damages sought. There was no independent documentary or other evidence to support the estimates and projections.”

I conclude that the Respondent has failed to provide sufficient evidence to support its claim for loss of profit of RM166,060. The SCJ erred in law and in fact by failing to find that the Respondent had not proven such claim on a balance of probabilities. (See paragraphs 117 to 118 of the GoJ). Irrelevant issues considered by the Sessions Court Judge

The SCJ had erroneously considered irrelevant issues and as a result, made irrelevant and erroneous adverse findings of facts and comments against the Appellant when parties had in fact entered into the Settlement Agreement to resolve the said issues. The SCJ erroneously considered the following irrelevant issues arising from the Project, namely:

the application to obtain the necessary approval from the DOE for purposes of the commencement of the Project. (See paragraphs 52, 55, 65 to 71 of the GoJ); and 31

the commencement date of the Project. (See paragraphs 52 to 64 of the GoJ).

Upon considering these irrelevant issues, the SCJ went on to make irrelevant and erroneous adverse findings of facts and comments against the Appellant as follows:

that there was a lack of planning by the Appellant in handling the Project which led to delay and the Project could not commence on 1.4.2019. (See paragraphs 53 to 55 of the GoJ); and

that the Appellant failed to obtain approval from the DOE before the commencement of the Project and the Appellant’s failure to submit an application to obtain the necessary approval from the DOE is a criminal offence under the Environmental Quality (Clean Air) Regulations 2014. (See paragraphs 57 to 64 of the GoJ). Issues resolved in the Settlement Agreement

The above issues considered by the SCJ are irrelevant to the dispute between the parties as these issues had already been resolved by parties by way of the Settlement Agreement. Wherein parties had agreed, inter alia, that:

the Appellant would make the necessary submissions to the DOE to obtain approval for purposes of commencing the works for the Project; and

until the settlement of the issues regarding, inter alia, the approval from the DOE, the likely commencement date of the Project would be February/March 2020.

The SCJ again considered irrelevant issues and made further adverse findings of facts and comments against the Appellant in stating that there were no actions from the Appellant to carry out the terms in the Settlement Agreement to settle the outstanding issues which caused 32 further delay in the Project. On the contrary, the Appellant had taken steps to carry out the terms in the Settlement Agreement, wherein:

the Appellant had prepared for its submission to obtain the necessary approval from the DOE;

around October/November 2019, the Appellant had duly submitted its application to DOE for its approval;

upon receiving the approval from the DOE on 5.2.2020, the Appellant had by way of its email dated 20.2.2020 proposed to the Respondent 2 dates for the Respondent to commence works for the Project, i.e. in April 2020 or June 2020.

The SCJ erred in fact by failing to consider the Appellant’s action in carrying out the terms in the Settlement Agreement. Which led to the SCJ making adverse finding of fact and comments against the Appellant. The aforesaid issues are irrelevant issues arising from the Project. The SCJ had erroneously considered these irrelevant issues. And as a result, made adverse findings of facts and comments against the Appellant. The fact of the matter is that parties had already entered into the Settlement Agreement to resolve the said issues. Commencement date at large

Even if the issue of commencement date of the Project is relevant to the dispute between the parties, I find that the commencement date of the Project had been set at large. As it is clear that it was not possible for works to commence on the commencement date of 1.4.2019 on the following grounds:

based on the Respondent’s email dated 6.3.2019, the Respondent informed the Appellant that the lead time or order of the cables for the 33 Project was estimated to be delivered 4 weeks from the date of the order and that the Respondent required sufficient notice to plan for potential mobilisation. As the Contract was only entered on 27.3.2019, the cables required for the Project would only be delivered 4 weeks from 27.3.2019. Therefore, it was impossible that the Respondent would be ready to commence works for the Project on 1.4.2019;

based on the Respondent’s email dated 29.3.2019, the Respondent would be arranging for a coordination meeting with Tai & Chyun Associates Industries, Inc. (“Tai & Chyun”) before commencement of work. It was therefore impossible for the Respondent to mobilize and commence work on-site within the next 3 days when the coordination meeting had not taken place;

by April and early May 2019, the Respondent was still liaising with Tai & Chyun in respect of the issues of the Project including the ‘temporary structure and lifting jig’ drawings and the cable length required for the

in May 2019, the Respondent was offering its services to make a submission to the DOE and was still giving comments on the revised temporary structure drawings;

further, the Respondent did not take the position that the mobilization to the Project site had to be 1.4.2019. In fact, in the Respondent’s email dated 2.8.2019, the Respondent alleged that there were outstanding issues and they were “unable to commit to any mobilization dates”.

Based on the conduct of the parties in discussing and planning the progress of the Project after 1.4.2019:- (a) the Respondent was clearly not ready to commence the works on 1.4.2019; and (b) it is impossible that the Project could have commenced on the intended commencement date of 1.4.2019. As such, the SCJ erred in fact by failing to consider the aforesaid conduct of the parties which made it impossible for works to commence on 1.4.2019 and simply finding that the commencement date of the Project was to be 1.4.2019. 34

Further, by way of the Settlement Agreement, parties had agreed that the commencement date of the Project would be after the settlement of the issues of the Project, which would likely be February/March 2020. Accordingly, the SCJ erred in law and in fact by failing to consider that the parties had by their own conduct set the time at large.

I refer to the High Court case of Plaza Rakyat Sdn Bhd v Datuk Bandar Kuala Lumpur [2012] 7 MLJ 36 at 48-49 which held that time is no longer of the essence and is set at large if discussions and negotiations were carried out after the agreed deadline: “[48] The central issue in this case is whether time has been set at large and is no longer of the essence resulting in the notices of default and/or termination of the JVA and the lease agreements by the defendant premature, invalid and bad in law. It is common ground that initially the project was to be completed within 72 months (six years) from 16 December 1992, the date of the JVA, that is, by 1998. However, the plaintiff was not in a position to complete the project by 1998 due to a variety of reasons especially the Asian economic crisis that hit Malaysia in

Many discussions were held between the plaintiff and defendant and several extensions of time were given to the plaintiff with the last extension of time being granted till 31 May 2007. Despite the many proposals made to, inter alia, change the concept of construction and sales and to enter into new agreements, the parties failed to reach any new consensus. Protracted negotiations were carried on from 2007 till late 2009 with no new deadline in sight. It looked as though the defendant was quite happy to just carry on negotiations till the notice of default was issued in 2010. In the circumstances it may not be entirely wrong for the plaintiff to contend that time had been set at large. In the case of Loke Yuen Cheng & Anor v Vimtex Sdn Bhd [1998] 4 MLJ 169 the Court of Appeal held that when time is of the essence of the contract and the party in the right allows the time for completion to pass and the parties go on negotiating, then time is no longer to be regarded as of the essence of the contract, that is, time has become at large. 35 However, time can be made of the essence again by the defendant giving reasonable notice to the plaintiff to complete the construction of the project. But the defendant did not do so before the notices of default and/or termination of the JVA and lease agreements were issued thus rendering the said notices invalid and bad in law.”

In Foo Yee Construction Sdn Bhd v Vijayan a/l Sinnapan [2014] 5 MLJ 660 at 674, the Court of Appeal held that by conduct, non-insistence of strict compliance of the deadline will render the time being set at large: “[37] Despite the existence of a 'time is of the essence' clause (see cl 3.1 of the building contract), what was obvious here was that by conduct, the plaintiff did not insist on the strict compliance of the deadline for handing over (November 2008) and had waited until 2012 to commence this action. In the circumstances time had been set at large. In the Berjaya Times Square 's case too, it was also ruled by the Federal Court that where there were both a 'liquidated damages clause for late delivery' and also a 'time is of the essence clause' in the same agreement, the expressly stated liquidated damages would necessarily mean that the 'time is of the essence clause' had been waived as to its strict effect.”

In the instant case, by the Respondent’s conduct of not insisting on strict compliance of commencing the works for the Project on 1.4.2019, the commencement date of the execution of the Project was not 1.4.2019 as time had been set at large. This was admitted by PW1 during cross examination: “Q: Ok. Now I refer you to your Q&A, Question 19 to 21. Here you mentioned that, you mentioned that you are, the Plaintiff can start work, can start work immediately, was ready and willing and able to commence work immediately and the date stated in the price quotation, to commence work was 01.04.2019. So that was in your witness statement. So my question to you is this, since the works did not commence on 01.04.2019, did the Plaintiff inform the Defendant immediately after 1st April, that the Defendant has breached the terms of the contract? You did not inform? No.” 36

From the conduct of the parties after 1.4.2019, it is clear that the Respondent did not insist on strict compliance in mobilizing and commencing work on site on 1.4.2019. But instead continued with its subsequent discussions and negotiations with the Appellant, which led to the date for the commencement of work on-site being left at large. The SCJ erred in law and in fact in failing to consider that it was not possible for works to start on the commencement date of 1.4.2019 stated in the Proposal. And that the parties had by their conduct set at large the commencement date of the Project. Respondent’s email dated 25.2.2020

The SCJ made adverse findings of facts and comments against the Appellant when he held that:

the Appellant did not take any serious action to resolve the outstanding issues stated in the Respondent’s email dated 25.2.2020. (See paragraphs 38 and 39 of the GoJ); and

the Appellant had attempted to ‘hide the evidence’, to ‘keep out of sight the admission’ of stating that “we disagree with your rate, pls propose reasonable rate” in the Appellant’s email dated 26.2.2020. (See paragraph 86 of the GoJ).

However, almost all of the ‘outstanding issues’ stated in the Respondent’s email dated 25.2.2020 had already been resolved prior to that. This is evident from the Appellant’s email dated 20.2.2020 to the Respondent wherein the Appellant stated, inter alia, that:

there was no change in the Respondent’s scope of works, and the only change was the postponement of the schedule of the works due to the DOE application; 37

the issue of the cable length had been clarified by the Appellant;

there was no need for the Appellant to submit any further documents to the Respondent in order to carry out its scope of works; and

the Appellant proposed 2 dates for the Respondent to commence works for the Project, i.e. in April 2020 or June 2020.

It is worth reiterating that the Appellant had in fact duly complied with the terms set out in the Settlement Agreement. The SCJ’s finding that the Appellant ‘did not take any serious action to resolve the outstanding issues’ is therefore incorrect.

The SCJ’s finding that the Appellant had attempted to ‘hide the evidence’ is unsupported by any contemporaneous documentary evidence. It should have been irrelevant in the determination of the dispute between the parties. The evidence shows that:

the Appellant had never attempted to hide the said evidence, i.e. the Appellant’s email dated 26.2.2020, from the Respondent or the court to ‘keep out of sight the admission’ by the Appellant. There was never any need for the Appellant to hide such evidence;

the Appellant’s statement of requesting the Respondent to propose reasonable rates is not in any way an admission;

throughout the entire trial proceedings, the said email had been included as evidence in the Common Bundle of Documents;

furthermore, the Appellant had not only referred to the said email in its written submissions, but had relied on the said email to show that the Appellant had requested the Respondent to propose more reasonable rates; and

there are no contemporaneous documentary evidence to suggest that the Appellant had attempted to ‘hide the evidence’ or ‘keep out of sight’ such evidence from anyone. 38 Respondent’s arguments

The Respondent argues that the Appellant was negligent in calculating the length of the cables which impacted the Respondent to incur cost of labour in installing the additional cables. However, I agree with the Appellant that the cable length issue is irrelevant and is not the determining issue of the dispute between the parties. This was also the view of the SCJ. The SCJ held that the issues on cable length and variations are not the determining issues and opined that it is unnecessary to discuss. (See paragraph 124 of the GoJ).

The Respondent avers that the application to obtain the necessary approval from the DOE is an issue to be tried and had been pleaded. However, I agree with the Appellant that this issue is irrelevant to the main dispute, which is whether the Appellant was justified in terminating the Contract. In any event, this issue had been resolved by way of the Settlement Agreement.

The Respondent contends that the Appellant breached the Contract by failing to disclose to the Respondent at the time the terms of the Contract were being negotiated that the approval of the DOE was a pre-condition for works to commence. However, I accept the Appellant’s explanation as to why the DOE approval was not obtained by the Appellant before the Contract was awarded. It was because initially the Appellant was of the opinion that DOE approval was not required for the Project as the Project involves replacing a part of the boiler and not replacing the whole unit. The Appellant had only started taking steps to 39 obtain the DOE approval in August 2019 after further discussion with the Respondent on 5.8.2019.

This is evident from the minutes of meeting dated 5.8.2019 and the re-examination of DW1: “Q” Alright. Mr Wong, you were also referred to your Question and Answer 5.7. If you can refer to your Q&A 5.7, your witness statement 5.7. Ok, so the question that was or the questions that were asked are as follows. Not commence because DOE requirement not fulfilled. No, you answered, ‘No, DOE requirement fulfilled February this year.’ And then you were referred to your Question and Answer 5.7. ‘You agee that no dated was fixed for the commencement.’ You said yes. And the question to you ‘You agree with me that even after the DOE consent approval, no date could be fixed, no definite date can be fixed.’ You answer is, ‘We fixed two possible dates.’ Can you explain to the Court why? Ok. For this DOE approval issue, I will try to explain ok. This DOE notification for this job is a bit of grey area because this depend on, you categorise this job as a new installation or a replacement of old part. So this, for this job, is kind of a grey area. Our people, our team in AHP since April last year until August, is our team thinking that this do not require DOE notification because its replacing one part inside the machine. We are not replacing the whole unit. We have done similar job on another part of the boiler and we do it without informing DOE. So this is why when John suggest to us or quoted us in May 2019 to do this submission to DOE, we do not take action on that because our team feel that its not required. Its not required. And whether, then also in the PO to John, we never say that this is your scope of work or Mr John is, will have to be responsible for this part. If I not inform and later we are found against the law, its MNI AHP that they want to responsible. And we even make it very clear to Mr John on this in August, somewhere in August, very clear to them that this is MNI responsibility. He can proceed with the work. So the question later asked why in, I take so long is after August when we bring this up again to my top management, they feel that ok, since we have time, we might as well apply it, might as well we apply because this application involve RM10,000, the cost. So its additional cost to the company. So this explain why my application why so late. …

Notwithstanding the above, upon finding out that the approval of DOE had not been obtained, the Respondent did not raise any issue to the 40 Appellant nor reject the Contract on the basis that the DOE approval was not obtained. At all material times, the Respondent did not inform the Appellant that the Appellant breached the terms of the Contract for failure of obtaining the approval from DOE before the Contract was executed. In fact, the Respondent offered its services to help the Appellant to submit the application to the DOE for approval for a fee of RM10,000. Furthermore, based on the minutes of meetings between the parties on 5.8.2019, it was agreed, inter alia, that the Appellant shall confirm whether they require the DOE approval for the Project, and that the Respondent will provide a checklist for the requirements of the DOE approval. In light of this, the commencement date of the Project had been set at large by the parties’ own conduct.

The Respondent says that the Standard Terms and Conditions are not part of the Contract as all the terms were already agreed between the parties before the Purchase Order was issued by the Appellant on 27.3.2019. And that the Purchase Order and the Standard Terms and Conditions are two separate documents where the Respondent had only acknowledged receipt of the Purchase Order but not the Standard Terms and Conditions. However, I agree with the Appellant that the Standard Terms and Conditions were in fact intended to be part of the agreed terms in the Contract when it was sent together with the Purchase Order in the Appellant Email.

The Respondent cited the Federal Court case of Sababumi (Sandakan) Sdn Bhd v Datuk Yap Pak Leong [1998] 3 CLJ 503 which held that in deciding whether a term ought to be implied in a contract, 2 elements have to be satisfied. Namely:- (a) the officious bystander test; and (b) the business efficacy of the transaction. The Respondent 41 contends that an officious bystander would not have found it obvious to incorporate the Standard Terms and Conditions into the Contract. And that the question of the Standard Terms and Conditions giving business efficacy to the Contract between parties does not arise. I disagree.

With regard to the officious bystander test, the Respondent:- (a) quoted an exorbitant standby and demobilization rates; (b) was not willing to lower the said rates; and (c) refused to commence the works if the said rates are not mutually agreed between the parties. The refusal of the Respondent to commence the work would therefore indicate that the Respondent had failed to comply with the terms of the Contract. Since the Contract does not provide for the rights of the parties in the event of such default, my view is that an officious bystander would have found it obvious to incorporate the Standard Terms and Conditions into the Contract. As it does set out the provisions and parties’ rights in the event of default.

With regard to business efficacy, my opinion is that the incorporation of the Standard Terms and Conditions would give business efficacy to the transaction of the Contract. Because the Standard Terms and Conditions set out the provisions and parties’ rights in the event of default. The incorporation of the Standard Terms and Conditions would give the desired result of both parties in ascertaining their rights when parties encounter a default such as the current dispute wherein the Respondent refuses to lower the standby and demobilization rates and refused to commence the works if parties could not mutually agree on the rates. If the Standard Terms and Conditions are not incorporated into the Contract, it seems to me that the Contract will be left in a deadlock wherein parties are unable to determine their rights in the event of a dispute. 42

I conclude that the termination of the Contract by the Appellant was lawful on the following grounds:

(a)

the Respondent refused to negotiate with the Appellant on the standby and demobilization rates, and further refused to commence work on the basis that these rates had not been mutually agreed.

the Standard Terms and Conditions had been incorporated into the Contract. Pursuant to clause 10(c) thereof, the Appellant was entitled to terminate the Contract due to the Respondent’s failure to comply with the terms and conditions of the Contract.

the Respondent’s refusal to commence the works entitled the Appellant to terminate the Contract pursuant to clause 10(c) of the Standard Terms and Conditions. Or alternatively, on the basis of a total failure of consideration pursuant to section 40 of the Contracts Act.

Accordingly, the Appellant is entitled to refund of the RM199,740 paid to the Respondent as the Respondent did not commence or perform any works under the Contract. The Respondent is not entitled to loss of profit of RM166,060 pursuant to clause 18 of the Standard Terms and Conditions. And the Respondent has in any event failed to prove its damages on a balance of probabilities.

For the reasons above, I allowed the appeal and set aside the decision of the SCJ. I allowed the Appellant’s counterclaim and ordered that the sum of RM199,740 be refunded by the Respondent to the Appellant. I awarded interest on the said judgment sum at the rate of 5% 43 per annum from the date of judgment to the date of payment. I ordered the Respondent to pay costs of RM35,000, here and below, to the Appellant. Dated 24 November 2021 Quay Chew Soon Judicial Commissioner High Court of Malaya, Kuala Lumpur Civil Division NCvC 10 Counsels Raymond Mah, Gan Chong Chieh and Wong Chee En (Messrs MahWengKwai & Associates) for the Appellant. Rajindar Singh Veriah and Clinton Gomez (Messrs Rajindar Singh Veriah & Co) for the Respondent. Cases cited Gan Yook Chin (P) & Anor v Lee Ing Chin @ Lee Teck Seng & Ors [2005] 2 MLJ 1; [2004] 4 CLJ 309 Perembun (M) Sdn Bhd v Conlay Construction Sdn Bhd [2012] 4 MLJ 149 Mok Yong Kong & Anor v Mok Yong Chuan [2002] 2 MLJ 718 Abdul Rahim Abdul Hamid & Ors v Perdana Merchant Bankers Bhd & Ors [2006] 5 MLJ 1 Kelland Homes Ltd v Ballytherm Ltd & Ors [2019] IEHC 46 Bowker (t/a Lagopus Services) & Anor v Royal Society for the Protection of Birds [2011] EWHC 737 Berjaya Times Squares Sdn Bhd (formerly known as Berjaya Ditan Sdn Bhd) v M Concept Sdn Bhd [2010] 1 MLJ 597 Damansara Realty Bhd v Bungsar Hill Holdings Sdn Bhd & Anor [2011] 6 MLJ 464 Datuk Haji Zainal Abidin bin Ahmad & Ors v Sarawak Plantation Agriculture Development Sdn Bhd [2015] MLJU 1941 Datuk Mohd Ali Hj Abdul Majid & Anor v Public Bank Bhd [2014] 6 CLJ 269 at 283 Lembaga Kemajuan Tanah Persekutuan (FELDA) & Anor v Awang Soh bin Mamat & Ors [2009] 4 MLJ 610; [2009] 5 CLJ 1; [2010] 1 AMR 285 Lim Tze Sian v Coverright Surface Malaysia Sdn Bhd [2017] 1 MLJ 418 Sony Electronics (M) Sdn Bhd v Direct Interest Sdn Bhd [2007] 2 MLJ 229 Kembang Serantau Sdn Bhd v YBK Usahasama Sdn Bhd [2017] MLJU 2165 Tetuan Bahari Choy & Nongchik (law firm sued as a partnership) v Harta Megajaya Sdn Bhd [2019] 6 MLJ 491 Plaza Rakyat Sdn Bhd v Datuk Bandar Kuala Lumpur [2012] 7 MLJ 36 Foo Yee Construction Sdn Bhd v Vijayan a/l Sinnapan [2014] 5 MLJ 660 Sababumi (Sandakan) Sdn Bhd v Datuk Yap Pak Leong [1998] 3 CLJ 503 44 Legislation cited