Axens v 1. Mission Biofuels Sdn Bhd (22NCVC-995-08/2012)

MISSION BIOFUELS SDN BHD

KNM PROCESS SYSTEMS SDN BHD GROUNDS OF JUDGMENT (Full trial) [1] In the present case, the Plaintiff, a French limited company by the name of Axens had commenced an action against the First and the Second Defendants, both of which are Malaysian companies incorporated under the laws of Malaysia. [2] In its Statement of Claim, the Plaintiff sought out to claim for the following reliefs: 2 i) A declaration that the services provided by the Plaintiff were to the benefit of the 1st and/or 2nd Defendant(s); ii) A declaration that the 1st and/ or 2nd Defendant(s) are liable to the Plaintiff for sums due pursuant to the services provided by the Plaintiff; iii) Judgment against the 1st and 2nd Defendants for the sum of USD791,278.43; iv) In the alternative to (ii) and (iii) above, the Honourable Court shall make a determination of indebtedness of the Defendants and ascertain whether judgment for the sum of USD791,278.43 shall be entered as against the 1st or 2nd Defendant; v) Contractual Interest at the rate set out by the EURIBOR-3M plus 2% from the due date of the invoices until the date of Judgment; vi) Further Interest at the rate of 4% on the crystallized Judgment sum (including interest as set out in prayer (v) above) until full realization; vii) The determination of costs be made in line with the final determination of liability by the Honourable Court; and viii) Such further and the other relief as this Honourable Court deems fit and proper. [3] In the alternative, the Plaintiff had also pleaded in its Statement of Claim that the First and the Second Defendants have jointly and severally benefitted from the Plaintiff’s services and thus seeks that judgment be entered against both the First and Second Defendants on the basis of quantum meruit. 3 [4] The facts that gave rise to the Plaintiff’s action against both the Defendants from the pleadings and also the evidence adduced during the trial are as follows:

4.1 The Plaintiff, a company incorporated under the laws of France having its registered office at 89, Boulevard Franklin Roosevelt, F- 92508, Rueil-Malmaison Cedex, France is an international provider of technologies, catalysts, absorbents, specialized equipment and services in the hydrocarbon industry.

4.2 The First Defendant, a Malaysian company by the name of Mission Biofuels Sdn Bhd has its registered address at Suite 50-4-1, 4th Floor, C-26-05, 3 Two Square, No.2, Jalan 19/1, 46300 Petaling Jaya, Selangor Darul Ehsan.

4.3 The Second Defendant, KNM Process System & Sdn Bhd having its registered address at 15, Jalan Dagang SB 4/1, Taman Sungai Besi Indah, 43300, Seri Kembangan, Selangor Darul Ehsan is a leading turnkey system provider for the oil and gas, petrochemicals, mineral power, environment, renewable energy, biotechnology Industries and also specializes in equipment manufacturing.

4.4 The First Defendant was desirous to obtain the design, engineering, procurement, manufacture, supply, erection, construction, completion, testing and commissioning of a 4 Continuous Acid Conditioning and Silica Pre-treatment, FFA Pre-treatment and Methyl Esther Tansesterification Plant with biodiesel output of 750 tpd (250,000 tpa) and 98% pure technical grade glycerine output of 82 tpd (27.308 tpa) with associated balance of plant at Kuantan Port, Malaysia which includes the Plaintiff’s Esterfip-H process for a Biodiesel Production Unit (“the Biodiesel Plant”).

4.5 To achieve its desire of owning a biodiesel plant as described above, on 25.7.2007, the First Defendant had entered into an Engineering, Procurement, Construction and Commissioning Contract (EPCC) with the Second Defendant.

4.6 By this EPCC, the Second Defendant was appointed as the contractor by the First Defendant to build and construct the Biodiesel Plant. The works to be carried out by the Second Defendant is described in the EPCC as follows: “works” means all the plant to be provided, all the works required in connection with the design, engineering, procurement, manufacture, transport, installation, construction, commissioning, start up, demonstration and testing of the biodiesel plant and all other works to be done by the contractor under the contract and shall include those as detailed in Appendix 1 any changes made to such works in accordance with this contract.

4.7 In order to procure the technology, the relevant and necessary license and also the license rights for the Biodiesel Plant, on the 5 same day, the First Defendant and the Plaintiff had entered into a Technology Transfer Agreement N*07/3071 (TTA) wherein the Plaintiff is to provide amongst others, basic design, licence rights, technical guarantees and related start-up Technical Assistance for the performance test of the Biodiesel Production Unit.

4.8 In furtherance to these EPCC and TTA agreements, also on the same day, the Plaintiff, the First Defendant and the Second Defendant had entered into another agreement, a tripartite agreement called the Transfer Agreement N* 07/3071/T (TA).

4.9 The recital of the TA specifically mentioned that the First Defendant had selected the Plaintiff’s Esterfip-H process for its biodiesel production plant and consequential to such recital, there were two agreements entered between the parties namely, i. The Process Book Supply Agreement (PBSA) executed between the Second Defendant and the Plaintiff. ii. TTA agreement between the First Defendant and the Plaintiff. These two agreements are attached as Appendix 1 to the TA.

4.10 The TA primarily provides for the assignment of all obligations and rights under the TTA from the First Defendant to the Second Defendant. However, the assignment of the TTA to the Second 6 Defendant was on a periodic term and this is provided under Article 2 which reads: Article 2 – Effective date – Termination

2.1 This Agreement shall become binding upon the Parties on the date of the last signature hereafter and that date shall be the effective date of this Agreement.

2.2 After the successful performance test period of the Unit, as defined in the TTA, or after four (4) years after the effective date, whichever occurs First, this agreement shall stand assigned by KNM to MISSION BIOFUELS, who will accept said assigned and who will henceforth become the only contracting party vis-a-vis AXENS as well as the only responsible party, this responsibility including the obligations to pay any sum remaining due at the date of the assignment.

4.11 The financial terms in relation to the Plaintiff’s services is provided under Article 8 of the TTA under the heading of “Financials”. Article 8 basically envisages that the Plaintiff will be paid in two components namely, for the licence royalty and the Start Up Technical Assistance (Start Up services). Article 8.1 specifically provides that the full licence rights or the royalty are at a fixed sum of USD 1,355,000.00 while Article 8.2 under the heading “Assistance and Services” provides for the manner of payments to be made to the Plaintiff in respect of their assistance and services rendered under Article 7.4 and 7.5 namely for assistance during the initial stages of operation of the Licence unit and upon further request of services by the First Defendant. The manner of 7 invoicing for the purposes of payment to the Plaintiff is stipulated under Article 8.3 which states:

8.3 Payment – invoicing a) In its invoices, LICENSOR shall designate the payer (LICENSEE) as follows: Suite 50-4-1, 4th Floor Wisma UOA Damansara 50 Jalan Dungun 50490 b) LICENSOR shall transmit the invoices to the following address: i) if it concerns royalties under Article 8.1 M. Swaminathan Managing Director Suite 50-4-1, 4th Floor Wisma UOA Damansara 50 Jalan Dungun 50490 Kuala Lumpur Malaysia ii) if it concerns assistance and services under Article 8.2: M. Swaminathan Managing Director Suite 50-4-1, 4th Floor

4.12 It is not in dispute that even though the agreements were executed on 25.7.2007, the Plaintiff had only conducted a site 8 investigation in January 2009 and nothing had happened since then. The Plaintiff had only returned to the site at the end of August 2009 and began its site operation at the end of October 2009.

4.13 The Plaintiff had thereafter proceeded to carry out its obligations under the TTA and subsequently had successfully completed its scope of works. In pursuance to the TTA, the Plaintiff had accordingly issued invoices for both the royalty and the Start Up services. It is not in dispute that the payments of royalties for the licence were fully settled by the Second Defendant.

4.14 The Plaintiff’s complaint is with regard to the Start Up services’ invoices. According to the Plaintiff, pursuant to Article 8.3 of the TTA, the Plaintiff had issued invoices for the Start Up services to the First Defendant. The First Defendant had made payments up to three initial invoices which were sent to them. However there were no more payments made by the First Defendant for the subsequent five (5) invoices.

4.15 Whilst the remaining invoices remain unpaid, the Plaintiff had demanded payment of the unpaid invoices from both the Defendants resulting in a series of communications between the parties via letters and emails. Through these exchanges of communications, both the Defendants had disputed the responsibility of settling the five unpaid invoices. The First 9 Defendant stands on the position that by virtue of the TA, the TTA is assigned to the Second Defendant and thus any claims arising therefrom must be paid by the Second Defendant. On the contrary, the Second Defendant in turn had contended that there was a successful performance test period of the Unit as defined under the TTA on 30.3.2010, and with this successful performance test, the obligations and rights under the TTA has been novated or reassigned to the First Defendant. [5] Faced with this dilemma, the Plaintiff filed this action. [6] The First and the Second Defendants stood by their respective positions stated in their letter denying responsibility to pay the Plaintiff for its services. Both the Defendants had asserted against each other on the liability to pay the Plaintiff and this is clearly reflected in their counterclaims. The First Defendant’s counterclaim against the Second Defendant is reproduced below:

A declaration that all the rights and obligations under the Technology Transfer Agreement dated 25.7.2007 entered into between the Plaintiff and the First Defendant and which has been assigned to the Second Defendant by the Transfer Agreement dated 25.7.2007 between the Plaintiff, First Defendant and Second Defendant has not been reassigned to the First Defendant as the Second Defendant has not achieved the Final Performance Acceptance.

A declaration that the Second Defendant is liable to pay all amount claimed by the Plaintiff in this action. 10

A declaration that the First Defendant is entitled to be indemnified and/or reimbursed by the Second Defendant in respect of all or any amount which the First Defendant may be held liable to pay to the Plaintiff in this action.

Payment by the 2nd Defendant to the 1st Defendant as follows:- i) USD 69,363.28 together with the interest thereon at the rate of 6% per annum from 28.01.2010 or at such rate and from such time as determined by this Honourable Court to the date of full settlement; ii) USD 298,744.85 together with interest thereon at the rate of 5% per annum from 28.01.2010 or at such rate from such time as determined by this Honourable Court to the date of full settlement;

Damages to be assessed by the Court [7] The Second Defendant counterclaimed for following reliefs against the

A declaration that pursuant to the Technology Transfer Agreement N 07/3071 (“the TTA”) dated 25.7.2007 read with the Transfer Agreement dated 25.7.2007 (“the Transfer Agreement”) entered into by the Plaintiff and the Defendants, all the obligations of the Second Defendant have been assigned to the First Defendant and henceforth becomes the only contracting party vis-a vis the Plaintiff as well as being the only responsible party to pay any sum due to the Plaintiff.

In the alternative, a declaration that pursuant to the Technology Transfer Agreement N 07/3071 („the TTA”) dated 25.7.2007 read together with the Transfer Agreement dated 25.7.2007 (“the Transfer Agreement”) entered into by the Plaintiff and the Defendants, all the obligations of the Second Defendant have been novated to the First Defendant and henceforth become the only 11 contracting party via-a-vis the Plaintiff as well as being the only responsible party to pay any sums due to the Plaintiff.

General damages to be assessed;

Interest at the rate of 5% per annum on the decreed sum allowed by this Honourable Court from the date of the Counterclaim until full realisation. [8] It is pertinent to note that the dispute between the First and the Second Defendants on the issues of completion and delays of the Biodiesel Plant are live issues in the arbitration proceeding. [9] The trial of this case had proceeded where five witnesses had testified. The Plaintiff called its Director of Services and Engineering Support Department Jean Marie Le Cacher de Bonneville (PW1). PW1 was the Director of Axens Technical Assistance from 2006 to 28.2.2013. The First Defendant had called two witnesses. They were, Swaminathan a/l S. Mahalingam (DW1) who is the Group Chief Executive Officer of the First Defendant and Norhisham bin Abdul Rahman (DW2) the Group Financial Controller while the Second Defendant had its Project Director for the Biodiesel Plant project, Selva Kumar Rasiah (DW3) testified for the Second Defendant. [10] There was a long Iist of issues raised by the parties in the Statement of Issues to be Tried filed. However, the issues can be summarised into four core issues as follows: 12 i. Pursuant to the TA and the TTA, who is liable or responsible to the Plaintiff for the sums claimed in the invoices issued by the Plaintiff, whether the First or the Second Defendant or both the Defendants can be made liable to pay the invoices issued by the Plaintiff on a joint and severable basis? ii. Whether the assignment of the TTA to the Second Defendant is still in subsistence or has come to an end and had reverted back to the First Defendant after the lapse of 4 years even though the Second Defendant has not achieved the Final Performance Test period of the Unit as defined under TTA. iii. In the event that the party who is liable to pay the Plaintiff is not ascertainable, can the Plaintiff be entitled to be paid on the basis of quantum meruit? iv. Whether the First Defendant and the Second Defendant are entitled to the reliefs claimed in their respective counterclaims. [11] The above four issues primarily centred around the construction of the TA and the TTA with regard to the assignment of the TTA in relation to the payment for the Start Up services. [12] However in the course of the trial, there were documents (letters and emails) contained in the Common Bundle of Documents which were referred to the witnesses that gave rise to the following issues: a) Whether the Agreement Letter between the Plaintiff and the Second Defendant dated 8.6.2009, pleaded by the First Defendant can be relied upon by the First Defendant to support its case. b) Whether Estoppel can be raised against the First Defendant and the Plaintiff with regard to their conducts in respect of the payments of the three earlier invoices issued by the Plaintiff. 13 c) Whether was there a separate agreement between the Defendants to pay the Plaintiff in respect of the Start Up services. d) Whether the EPCC entered between the First Defendant and the Second Defendant is in the form of Turnkey contract at a fixed lump sum price. Submission by the counsel for the Plaintiff [13] At the outset, Mr. James Monteiro, the learned counsel for the Plaintiff had brought to this Court’s attention about the legal dispute between the First Defendant and the Second Defendant which is still pending before the arbitrator to which the Plaintiff is not a party. And thus, he had contended that the dispute between the parties before this Court is purely factual dispute and not a legal one. [14] The counsel for the Plaintiff had submitted that the Plaintiff’s claim against the Defendants is based on the unpaid invoices for the Start Up services rendered by the Plaintiff in pursuance to the TTA. He contended that the TTA being an annexure to the TA, should for all intent and purposes forms a part of the TA. The learned counsel for the Plaintiff further submitted that the main purpose of the TA entered between the Plaintiff, the First Defendant and the Second Defendant was to transfer the First Defendant’s obligations under the TTA to the Second Defendant. The Second Defendant had accepted the obligations and rights related thereto. These obligations and rights have been transferred to the Second Defendant is inclusive of the obligation to pay the Plaintiff for its services. However by virtue of Article 1 of the TA, after either the 14 successful performance of the unit or after 4 years whichever is sooner, all these obligations will be transferred back to the First Defendant. [15] The learned counsel for the Plaintiff also submitted that since the Plaintiff had completed the scope of works spelt out under the TTA to the satisfaction of both the Defendants, both Defendants have thereby benefitted from the Plaintiff’s works that entitles the Plaintiff to be paid in in full. [16] The learned counsel for the Plaintiff further submitted that the Plaintiff should not be deprived of any payment or monies lawfully due to it when both the Defendants have acknowledged that the there is an amount due to the Plaintiffs but deliberately refused to pay as one party puts the liability to pay on the other party. [17] It is also the contention of the learned counsel for the Plaintiff that the total amount of the five invoices of USD 791,278.43 was not challenged by both the Defendants in their pleadings and in their evidence submitted before this Court. Both the Defendants only raised the issue on who has the obligation to pay the Plaintiff and they were passing the buck to each other. In view of this, the Plaintiff therefore urges this Court to make a finding that both the Defendants are jointly and/or severally liable to the Plaintiff. In this contention, the counsel for the Plaintiff relies on two authorities. ( See i. Chuang Uming (Pte) v Setron Ltd and Anor Appeal [1999] SGCA 77 on which the Singapore Court of Appeal had relied on the findings of the Canadian Supreme Court, Appeals Division 15 in the case of Nowlan v Brunswick Construction Ltd [1973] 34 DLR

422 and Victoria University of Manchester v Hugh Wilson & Ors [1984] 2 Con LR 43. It was held in Nowlan’s case that “… Where there are concurrent torts, concurrent breaches of contract or a breach of contract and a concurrent tort both contributing to the same damage, whether or not the damage would have occurred in the absence of either cause, the liability is a joint and several liability and either party causing or contributing to the damage is liable for the whole damage to the person aggrieved …” ii. Malaysian Supreme Court’s decision in the case of Choo Ah Kow v Yeoh Yew Thiam [1989] 1 MLJ 187.) [18] In alternative, the counsel for the Plaintiff further submitted that in the event this Court finds difficulty in asserting the obligations under the TTA, since the Plaintiff had provided the Start Up services to both the Defendants non-gratuitously and both the Defendants have benefitted from the services, therefore the Plaintiff is entitled to be compensated on the basis of quantum meruit. In support of this proposition the counsel for the Plaintiff relies on section 71 of the Contracts Act 1950 and the case of Foo Song Mee v Ho Kiau Seng [2011] SGCA 45. Submission by the counsel for the First Defendant [19] Mr Leong Wai Hong, the learned counsel for the First Defendant, on the other hand argued that the First Defendant has no obligation or responsibility to pay the Plaintiff for the remaining unpaid invoices as the unpaid invoices were for services rendered by the Plaintiff directly to the Second Defendant and not to the First Defendant. The learned counsel further argued that by virtue of the TA, the TTA has been assigned to the 16 Second Defendant and since the Second Defendant had accepted the assignment, the Second Defendant had also accepted all obligations and rights under the TTA from the First Defendant. Until and unless one of the two circumstances described under Article 2.2 of the TA occurs, the termination clause has not yet come into operation. Until then, the obligations and rights shall still remain with the Second Defendant. The Second Defendant have benefitted from the Plaintiff’s Start Up services and therefore, the Second Defendant is responsible to pay the Plaintiff for the Start Up services. Submission by the counsel for the Second Defendant [20] On the contrary, Mr T. Kuhendran, the counsel for the Second Defendant had submitted that there was a successful performance test period of the Unit, as defined in the TTA on 30.3.2010, hence the TTA has been novated or shall stand reassigned from the Second Defendant to the First Defendant, who will henceforth become the only contracting party with the Plaintiff as well as the only responsible party to pay sums remaining due to the Plaintiff. Alternatively, he also argued that since the relevant four years had lapsed on 27.7.2011, any obligation to pay the Start Up services rendered by the Plaintiff is on the First Defendant. On the issue of novation, the learned counsel finds reliance on section 63 of the Contract Act 1950 and several cases, namely the cases of Toeh Kee Keong v Tambu Mining Co. Ltd [1968] 1 MLJ 39, Mawar Awal (M) Sdn Bhd v Kepong Management Sdn Bhd [2005] 6 MLJ 132 and Polygram Records Sdn Bhd v The Search & Anor [1994] 3 MLJ 127. 17 The law [21] First and foremost, this Court must be reminded that the law and the principles relating to construction of contract is trite and settled.

21.1 In the case of Royal Selangor Golf Club v Anglo Oriental (M) Sdn Bhd [1990] 1 CLJ 995, Lim Beng Choon J. in considering disputes of the parties in respect of a contract had adopted the general principles of construction of a contract as enunciated in the case of National Coal Board v Win Neil & Son (St. Helen) [1948] 1 All ER 555 which accordingly had held : “The First two issues involve the construction of the contract. I bear in mind the principles of construing a contract. The relevant ones for the purpose of this case are : (1) construction of a contract is a question of law; (2) where the contract is in writing the intention of the parties must be found within the four walls of the contractual documents; it is not legitimate to have regard to extrinsic to have regard to extrinsic evidence (there is, of course, no such evidence in this case); (3) a contact must be constructed construed as at the date it was made: it is not legitimate to construe it in the light of what happened years or even days later; (4) the contract must be construed as a whole, and also, so far as practicable, to give effect to every part of it. In Central Bank of India v. Harford Fire Insurance Co Ltd. AIR [1965] SC 1288, the Supreme Court of India lays stress on the Second principle advocated in the Wm Neill & Sons (St Helens) Ltd case when it says at p.1290: Now it is commonplace that it is the Court‟s duty to give effect to the bargain of the parties according to their intention and when that bargain is in writing the intention is to be looked for in the words used unless they are such that one 18 may suspect that they do not convey the intention correctly. If those words are clear, there is very little that the Court has to do. The Court must give effect to the plain meaning of the words however much it many dislike the result

21.2 In the case of Jainarain Singh & Anor v The State of Bihar & Ors AIR 1980 Patna 24 it was held that the words used in the contract must be interpreted literally and without the aid of the principles of natural justice.

21.3 In the case of Syarikat Binaan Utara Jaya ( A Firm) v Koperasi Serbaguna Sungei Glugor Berhad [2009] 2 AMR 50, Abdul Malik Ishak, JCA from the available authorities had in para 17 of the Court of Appeal’s judgment, with regard to construction of a contract where the language employed is clear, had made the following propositions:

the Court must give effect to the plain meaning of the words, no matter how distasteful the result may be (The Central Bank of India Ltd. Amritsrar v. The Hartford Fire Insurance Co. Ltd. [1965] AIR Vol. 52, 1288 SC);

where the language in the document is unambiguous and clear, the real nature of the document is to be determine solely by looking at its contents, uninfluenced by any intention of the parties ((Nawab Major Sir) Mohammad Akbar Khan v. Attar Singh and Others [1936] AIR Vol. 23, 171 PC);

when the minds of the parties are expressed in an unambiguous manner, the Court cannot override the declared intention of the parties unequivocally expressed (K. Appukuttam Panicker and Another v. 19 S.K.R.A.K.R Athappa Chettiar and Others [1966] AIR Vol.53, 303 Kerala); and

there is no scope, at all, for drawing upon hypothetical considerations or the supposed intention of the parties when the words contained in the contract are clear and unambiguous (The Union of India v. Kishorilal Gupta and Bros. [1959] AIR Vol. 46, 1362 SC). Decision of the Court Issues (i) and (ii) will be dealt with together The TA and the TTA [22] The TA can be found at page 45 to 47 of the Agreed Bundle (Bundle B). It is a simple and straight forward three pages document including the title page which is the first page. The preamble of the TA appears on the second page, while page 3 contains the assignment terms and the signatures of the representative of the Plaintiff, the First Defendant and the Second Defendant. Now, Article 1 of the TTA is simply worded in this manner: Article 1 – Assignment of the TTA The TTA between the MISSION BIOFUELS and AXENS is assigned from MISSION BIOFUELS to KNM who accepts to endorse all obligations and rights related thereto. [23] The title to Article 1 of the TA states of the assignment of the TTA. Article 1 stipulates that the TTA between the First Defendant and the Plaintiff is 20 assigned from the First Defendant to the Second Defendant who thereafter accepts to endorse all obligations and rights related to the TTA. The words or the language used in Article 1 is succinctly precise and clear. There is no ambiguity or doubt whatsoever as to the meaning or effect of the assignment of the TTA to the Second Defendant by the First Defendant. Therefore, with the assignment, it truly means that the Second Defendant has agreed and consented to accept all obligations and rights under the TTA from the First Defendant. The Second Defendant is therefore bound by all the terms contained in the TTA in its entirety including Article 8. This Court had earlier mentioned in this judgment that the payment for the Start Up services is specifically covered under Article 8.2. under the heading “Assistance and Services”. It is so obvious that at the time when the Second Defendant consented to the assignment and accepted the TTA, the Second Defendant must have also accepted the obligation and/or the responsibility to pay the Plaintiff in respect of the Start Up services. [24] Thus, it is this Court’s considered view that there is no argument that the obligation or responsibility to pay the Plaintiff for the Start Up services was vested on the Second Defendant from the time when the TA was executed. [25] Nonetheless, the assignment of the TTA under Article 1 is on a periodic term or definite time because the TA also contains a provision for termination of the assignment. Article 2.2 provides that if any one of the occasions spelt out in Article 2.2 were to occur (whichever occurs first) 21 the assignment comes to an end and the TTA shall be reverted back to the First Defendant. Therefore, from the clear language of the terms in the TTA, the natural conclusion is that the Second Defendant’s obligation or responsibility to pay the Start Up services to the Plaintiff arises or begins from the date of the TA was executed until one of the two occasions spelt out in Article 2.2 occurs (whichever occurs first). [26] Having established the fact above, this Court now turns to the most pivotal issue for determination, that is which one of the two Defendants is responsible to pay the Plaintiff for the unpaid invoices for the sum of USD 791,278.43 or shall both the Defendants be made liable jointly or severally? In delving into this determination, this Court shall first refer back to the Plaintiff’s claim. The sum of USD 791,278.43, being the basis of the Plaintiff’s action against both the Defendants were from invoices for the Start Up services issued by the Plaintiff for the period between January 2010 and May 2010. For ease of reference, the details of the five (5) unpaid invoices are tabulated and reproduced in the table below: No. Invoice No. Issuance Date Due Date Amount (USD) 1 90003577 18/01/2010 17/02/2010 252,720.00 2 90004117 16/03/2010 15/04/2010 156,639.34 3 90004120 16/03/2010 15/04/2010 141,629.09 4 90004121 16/03/2010 15/04/2010 48,744.00 5 90004771 20/05/2010 19/06/2010 191,546.00 Total 791,278.43 22 [27] It can be clearly seen from the table above that the date of the five invoices ranges from January 2010 until May 2010. In an ordinary course of business, invoices are normally issued after services were rendered or goods had been delivered to the client or customer. Looking at the date of these invoices were issued, one irresistible conclusion to be made would be that the Start Up works must have been carried out before the date indicated on the invoices. In other words, the five unpaid invoices were issued by the Plaintiff after rendering its services. This position is confirmed by PW1 during the cross-examination by the counsel for the First Defendant. In his evidence PW1 had also stated that the Plaintiff had completed its site activity at the end of March 2010. To this end, we shall now examine the financial term in relation to the Start Up services as provided in Article 8.2 of the TTA. Article 8 reads:

8.2 Assistance and services. LICENSEE shall bear LICENSOR‟s expenditures when rendering services under articles 7.4 and 7.5 as follows. a) A per diem fee (“Base Daily Rate”) shall be paid to LICENSOR per each employee and each day spent out of customary place of employment. This Base Daily Rate is one thousand five hundred US Dollar (US$ 1,500) based on INDEX as specified in Article 1 – hereof. This amount is firm but subject to escalation. The Base Daily Rate will be multiplied by the INDEX RATIO for the month immediately preceding the First month of the calendar year during which LICENSOR provides the services. [28] From sub Article (a) it is abundantly clear that for the Start Up services rendered, each employee of the Plaintiff will be paid a per diem fee at a Base Daily Rate of USD1500 based on INDEX each day spent out of the customary place of employment. Therefore, this confirms that the 23 invoices have been issued after the Plaintiff’s employees have rendered their services at the customary place of employment which is the Biodiesel Plant’s site. In addition to that, these invoices were issued with supporting time sheets and the time sheets for the five unpaid invoices are at pages 1 to 24 Bundle B2. Close scrutiny of the time sheets reveals that the Start Up services rendered by each of the Plaintiff’s employees were for the months of November 2009, December 2009, January 2010, February 2010 and March 2010. It is pertinent to note that the time sheets at pages 21 to 24 also indicate that the last travel day for the Plaintiff’s employees was on 1.4.2010. This supports the fact that there were no more Start Up services when the Plaintiff’s employees had completed their site activities and left the site. [29] This Court had earlier concluded that the obligation or responsibility to pay the Plaintiff the Start Up services rests on the Second Defendant from the date the TA was executed until the occurrence of one of the two occasions spelt out under Article 2.2 whichever occurs first. The next question to be determined is whether at time the Start Up services were rendered by the Plaintiff in respect of the unpaid invoices, was the TTA still remained assigned with the Second Defendant or has the assignment been terminated and TTA had reverted back to the First Defendant. [30] On the termination of the assignment of the TTA, this Court is mindful of the fact that the dispute between the First Defendant and the Second Defendant over completion and delays of the Biodiesel Plant are live 24 issues at the arbitration. The dispute invariably concerns proper commissioning and acceptance of the biodiesel plant. Thus, the issue whether or not there was a successful performance test as defined in the TTA is not a matter to be determined by this Court. [31] The next question is, has the assignment of the TTA been terminated by virtue of the expiration of the four (4) years from the effective date? The effective date was the date when the TA was executed in which is 25.7.2007. The four years period will lapse on 25.7.2011. This being the case, the five unpaid invoices were issued for the Start Up services provided by Plaintiff during the subsistence of the assignment of the TTA to the Second Defendant. It is therefore this Court’s judgment that the Start Up services rendered by the Plaintiff was for the benefit of the Second Defendant. After all, it was the intention of parties when executing the agreements on 25.7.2007 that the assigning of the TTA to the Second Defendant was for the sole purpose of facilitating the Second Defendant as the main contractor to carry out the Second Defendant’s obligations expressly set out or defined in the EPCC namely the construction of a complete Biodiesel Plant which is ready to be operated by the First Defendant. [32] For completeness sake, this Court shall also delve into the successful performance test not so much to ascertain or determine whether or not there was a successful performance test on 30.3.2010. But instead to consider and deliberate on the date claimed by the Second Defendant being the date of the successful performance test namely the date 25

30.3.2010. Bearing in mind that there could not be an earlier date than 30.3.2010. Now, assuming that the Second Defendant’s contention on the successful performance test is accepted, taking the date of 30.3.2010, the assignment will then come to an end after the 30.3.2010. If there is any novation or reassignment of the TTA to the First Defendant as contended by the learned counsel for the Second Defendant, the earliest date of novation or reassignment of the TTA to the First Defendant would be after 30.3.2010. This Court had concluded earlier that the Start Up services were clearly services rendered by the Plaintiff during the months of November 2009 until March 2010. Thus, the assignment of the TTA to the Second Defendant would still continue to subsist until 30.3.2010. Therefore, it is also this Court’s judgment that even assuming that there was a successful performance test (if any) the unpaid invoices were due against the Second Defendant notwithstanding the successful performance test period (if any) as the five unpaid invoices were for services rendered and became due (as per the time sheets) against the Second Defendant at a time even before the successful performance test period. According to the time sheets also, the Start Up services were rendered even before the successful performance test period (if any). [33] Thus, it is this Court’s judgment that even after taking into consideration that if there was successful performance test period on the 30.3.2010, the sums claimed by the Plaintiff in the five unpaid invoices was already due during the subsistence of the TTA assignment to the Second Defendant that is before the successful performance test period (if any). 26 [34] Based on the above mentioned reasons, it is this Court’s Judgment that the Second Defendant is the party responsible to pay the Plaintiff for the unpaid invoices in respect of the Start Up services rendered by the Plaintiff. Whether both the Defendants can be made liable to pay the invoices issued by the Plaintiff on a joint and several basis. [35] It is patently clear from the financial terms under the TTA that the parties in the present case had never intended to have the effect of joint and/or several liability. Under the TTA, the financial terms (Article 8) are clearly and precisely set out upon the party responsible for any payments in respect of services rendered by the Plaintiff. There is no ambiguity in the financial terms. In so far as the Start Up services is concerned, the TTA specifically provides the obligation to pay on one single party. More so, in the present case there were no joint promises made between the First Defendant and Second Defendant to pay the Start Up services jointly or severally. Therefore, it is this Court’s considered view that there can be no joint and several responsibility for the payments for the Start Up services. Whether the Agreement Letter between the Plaintiff and the Second Defendant dated 8.6.2009 pleaded by the First Defendant and can be relied upon by the First Defendant to support its case. [36] On behalf of the First Defendant, it was also contended that in addition to the TA and the TTA, the Second Defendant’s responsibility to pay the 27 Plaintiff for the Start Up services was also clearly spelt out and provided in the Agreement Letter dated 8.6.2009 (pages 58-60, Bundle B) between the Plaintiff and the Second Defendant. The learned counsel contended that this is evidenced when PW1 testified, he had told the Court that there was a long silence after 27.7.2007’s agreements. On 16.1.2009, the Plaintiff did send an email dated 16.1.2009 to the Second Defendant enclosing together a Draft Agreement dated 15.1.2009 (pages1-4, Bundle B) summarizing the general arrangements and conditions concerning the Start Up scope of works and its financial terms. In this email the Plaintiff had requested the Second Defendant to give its comments on the Draft Agreement so that an agreement can be reached by both parties and be signed thereafter. DW1 had admitted signing the Agreement Letter (Agreement Letter). The Second Defendant had in the Agreement Letter agreed and confirmed the terms set out by the Plaintiff in respect of the Start Up services. It was the submission of the counsel for the First Defendant that this Agreement Letter was a renegotiation between the Plaintiff and the Second Defendant in respect of the Start Up services and its financial terms. [37] The learned counsel for the Plaintiff had objected to any reference made to the Agreement Letter on the ground that the Agreement Letter was never pleaded by the First Defendant in its pleadings. The counsel for the Plaintiff argued that the position taken by the First Defendant from the beginning that the Second Defendant had not yet achieved the successful performance test. The learned counsel further submitted that the First Defendant must not be allowed to rely on the Agreement Letter. 28 On this note, the learned counsel for the Plaintiff referred this Court to several authorities. (See i. RHB Bank Bhd (substituting Kwong Yik Bank Bhd) v Kwan Chew Holdings Sdn Bhd, [2010] 2 MLJ 188. ii. The Chartered Bank v Yong Chan [1974] 1 MLJ 157. iii. Pembinaan SPK Sdn Bhd v Jalinan Waja Sdn Bhd [2014] 2 MLJ 322). [38] The counsel for the Second Defendant, on the other hand had submitted to this Court that the Agreement Letter is merely procedural and operational. He argued that the basis on which the invoices raised by the Plaintiff are based on the TTA and TA and not the Agreement Letter. It was further submitted by the counsel for the Second Defendant that this is consistent with all the correspondence between the parties which only refers to the TTA and the TA. According to the learned counsel, the First Defendant vide its own letters or its solicitors’ letters also acknowledged the fact that the Plaintiff’s claim is based on the TTA and the TA. Even the Plaintiff itself had never referred to the Agreement Letter. The Court‟s finding on the Agreement Letter [39] With regard to the Agreement Letter and also the Draft Agreement, this Court is in the agreement with the counsel for the First Defendant that it is the First Defendant’s stand from the beginning that the First Defendant has no obligation to pay the Plaintiff for the Start Up services pursuant to the TA. The Agreement Letter and the Draft Agreement are consistent with the TA and the TTA and they are in actual fact supporting 29 evidence to support the First Defendant’s position and thus, need not be pleaded. [40] In the event this Court is wrong to conclude that the Agreement Letter is within the pleaded case of the First Defendant, this Court seeks assistance from the Court of Appeal’s decision in the case of Bank Bumiputra Malaysia Bhd v Emas Bestari Sdn Bhd & Anor [2014] 1 CLJ 316. In this case, Abdul Wahab Patail, JCA on behalf of the Court of Appeal had this to say at page 326 paragraphs 26 to 27 on objection not pleaded case of a party: “(26) The objection that a matter has not been pleaded is not the ground for the objection. It is a general description of the nature of the objection. But whether the objection is sustainable is decided by the grounds for the objection. Such grounds arise from the nature of the matter. Hence, if the matter raised is only a question of fact, but the evidence relied upon in respect of it are already admitted in evidence before the Court, which means the other party is not taken by surprise. Protestations or affectations of surprise “because it was not pleaded” in such case holds no merit. Only if it is shown that the matter raised relied upon facts not pleaded and therefore the party making the objection did not have the opportunity of addressing the truth and accuracy of description of that fact, may the objection hold merit and be sustained. ... [41] Abdul Wahab Patail JCA further referred to the Federal Court case of Superintendent of Lands and Surveys, 4th Division & Anor v. Hamit Matusin & Ors [1994] 3 CLJ 567, in deliberation over objections as to matters not pleaded at variance with pleadings: 30 “The underlying well-known rationale for requiring such material facts to be pleaded is of course, to prevent the opposing party from being taken by surprise by evidence which departs from pleaded material facts, for such evidence if allowed, will prejudice and embarrass or mislead the opposing party. If a party is taken by surprise, he must object there and then at the point of time when such evidence emerges, for such evidence to be disregarded by the Court, and the Court will then uphold such timely objection. The Court will generally however grant an adjournment if requested on suitable terms as to costs etc. for the pleading to be amended by the party seeking to adduce such evidence. One must bear in mind the need for an orderly adversary system of a Court trial, not a chaotic harangue in a market place. A party is not taken by surprise when the circumstances actually indicate so, e.g. when such evidence is the very evidence sought to be relied on by him from the outset, or when he fails to object to such evidence then and there as this Court now seeks to emphasize. [27] After elaborating on the point further, His Lordship concluded: Therefore a Court inevitably ought to enquire, when there is a failure to object to such evidence when it is adduced, whether it is such a radical departure, if not, it is a mere variation, modification or a development, then the impropriety of admission of such evidence at variance with the pleadings is deemed to be waived and the defect in such pleadings cured.” [42] In the present case, such objection against the inclusion of the Agreement Letter was not even made in a timely manner. The objection was only made in the written submission of the Plaintiff. Adding to that effect, the Plaintiff had never put to the attention of the Court of their objection at the time the Agreement Letter was actually and indeed 31 included in the Common Bundle of Documents. The objection was unheard of until the Written Submission was filed. It is altogether implausible to say that the Plaintiff was taken by surprise in any manner. They had the opportunity to address the Agreement Letter, even accepted its inclusion of the Agreement Letter and even with that, not even an iota of objection was raised. Thus, it is this Court’s considered view that, in light of the Plaintiff’s failure to object against the Agreement Letter being adduced at the time the Agreement Letter had surfaced to the attention of the parties and the Court, even if in the instance, the Agreement Letter was beyond the First Defendant’s pleaded case, the objection shall fail and the Court shall consider the First Defendant’s contention on the Agreement Letter. [43] A fair reading of the entire Agreement Letter together with Article 8.2 of the TTA would support the conclusion that the Agreement Letter was the renegotiation of the financial terms in respect of the Start Up services between the Plaintiff and the Second Defendant. This Court finds that the recital of Article 8.2 reads as Assistance and Services. This Court had earlier referred and discussed sub Article (a) of Article 8.2 which provides the rate to be paid to each of the Plaintiff’s employees when rendering their services at the site. Further examination of Article 8.2, sub Article (g) reads this: g) LICENSEE shall pay directly to LICENSOR personnel all living expenses of LICENSOR personnel including food and First class hotel accommodation and supply at LICENSEE‟s sole charge all necessary office space and associated 32 facilities including secretarial services, telephone, telex, etc. and local independent transportation facilities as [44] Sub Article (g) clearly covered the living expenses of the Plaintiff’s employees such as accommodation, air tickets, transportation and food. PW1 and DW3 confirmed all the living expenses were paid by the Second Defendant. To this Court, if the Second Defendant’s contention is true that the First Defendant is responsible to pay for the Start Up services, living expenses being part of Assistance and Services, the Second Defendant would have requested the First Defendant to pay for these living expenses or claimed reimbursement on whatever amount had been expended to them. This was not so in the present case. The Second Defendant had accepted the responsibility to pay the living expenses instead. This runs contrary to the Second Defendant’s own evidence that the Second Defendant is only responsible to pay the Plaintiff for the licence royalty and the basic engineering under the PBSA but it paid for the living expenses without any complaint. Furthermore, to accept the Second Defendant’s contention that the First Defendant will bear the Start Up services in respect of the invoices issued while the Second Defendant pays the living expenses under sub Article (g) of Article 8.2 would not be the true intention and interpretation of Article 8.2 for the true meaning of Assistance and Services. To this Court’s mind, Article 8.2 must be read in its entirety from Article 8.2(a) to (k) and not by any preferential selection. Hence, this Court finds that the Agreement Letter between the Plaintiff and the Second Defendant confirms the position on the responsibility of the Second Defendant to pay the Plaintiff 33 for the Start Up services during the subsistence of the assignment of the TTA to the Second Defendant. Whether was there a separate agreement between the Defendants to pay the Plaintiff for the Start Up services [45] As regards to the contention that there was a separate agreement between the Defendants to pay the Plaintiff, both the counsel for the Plaintiff and the First Defendant have urged this Court not to pay any credence to this point raised by the Second Defendant as it was not pleaded. This Court is in fact of the similar view with the First Defendant and the Plaintiff, that after all, the argument of the Second Defendant on this supposed separate agreement was not at all within the corners of their pleaded case. It was clearly not pleaded. A close perusal of the Second Defendant’s pleading would reveal that they have only pleaded that, by virtue of the successful performance test, the TTA was novated or was reassigned back to the First Defendant. If at all, the Second Defendant’s pleaded case is closely hinged upon the reassignment pursuant to the Transfer Agreement (TA). Any other facts not to the effect of proving such reassignment in pursuance of the TA must be specifically pleaded as it is a ground totally separate from the pleaded case on reassignment. Similarly, the Second Defendant’s contention on this separate agreement is not at all related to the TA or even all other agreements between the parties. This alleged separate agreement is not even remotely related to the reassignment pleaded by the Second Defendant. It is a contention which is clearly separate and distinct from the Second Defendant’s pleaded contention on the reassignment of the 34 TTA pursuant to the TA. Thus, it is this Court’s considered view that the existence of a separate agreement must be specifically pleaded which the Second Defendant had failed to do. However, in the Second Defendant’s bid to establish that there was a separate agreement between the Defendants to pay the Plaintiff, the counsel for Second Defendant had referred witnesses to documents (letters and emails) contained in the Common Bundle Of Documents during the trial. The witnesses (PW1, DW1 and DW3) did not dispute the letters and the emails. In fact, they had admitted writing and sending the letters and the emails during the exchange of communications. Relying on the case of Bank Bumiputra Malaysia Bhd v Emas Bestari Sdn Bhd & Anor [2014] 1 CLJ 316, this Court shall now deal with this issue. [46] On behalf of the Second Defendant it was also submitted that there was a separate agreement between the parties in respect of the payments to the Plaintiff for the Start Up services and the royalty. According to the learned counsel, the agreement was that the First Defendant will bear the cost for the assistance and services by the Plaintiff during the erection, installation, commissioning start up and testing of the Biodiesel Plant, whereas the Second Defendant will bear the cost for the royalty and also the cost of basic engineering fees arising from the PBSA. It was because of this agreement or arrangement that the Plaintiff had sent the invoices for the Start Up services to the First Defendant in which the First Defendant had proceeded to pay the first three invoices. In respect of the licence for the royalty and the basic engineering fee according to the PBSA, the Plaintiff had only sent the invoices for these two items to 35 the Second Defendant to which the Second Defendant had settled in full. The counsel further submitted that the Plaintiff was and is aware of such agreement between the Defendants and that explains the sending of the Start Up services’ invoices to the First Defendant. [47] To further support its contention that there was a separate agreement between the Defendants to pay the Plaintiff for the Start Up services, the Second Defendant had also relied on Article 8 of the EPCC and the exchange of communications between the parties arising from the Letters of Demand issued by the Plaintiff to both the Defendants demanding payment of the unpaid invoices. The learned counsel had referred to this Court to some of the passages in the letters and the emails. [48] For ease of reference, the passages quoted by the Second Defendant’s counsel in respect of the letters and emails are reproduced here: a) The 1st Defendant’s emails dated 3.5.2010 (page 95, Bundle B) to the Plaintiff :- “We confirm receipt of the outstanding invoices which had been forwarded to KNM for their verification. Upon receipt of the verification, the payment will be effected immediately.” b) The 1st Defendant’s email dated 3.6.2010 (page 94, Bundle B) to the Plaintiff:- “Mission will proceed to pay the November and December invoices. The other months will be paid once the relevant information/ documents are received for verification by KNM. 36 c) The 1st Defendant’s email dated 16.12.2009 (page 119, Bundle B) to the Second Defendant: “ Dear Selva, Can you please verify that these invoices are ok for payment. We do not have details of when they were here or what there were actually doing as it was arrange directly by KNM. d) Letter dated 18.5.2011 (pages 91-93, Bundle B) from the Plaintiff to the 2nd Defendant: “Up until now these invoices were paid by Mission Biofuels based on the agreement between KNM and Mission Biofuels, according to which KNM used to check the validity of our invoices and Mission Biofuels used to pay them.” [49] In reply to Second Defendant’s assertion that there was a separate agreement between the Defendants in respect of payments to the Plaintiff, the counsel for the Plaintiff had argued that this arrangement or agreement between the Defendants and the supporting arguments have not been pleaded by the Second Defendant. The counsel further submitted that this new position by the Second Defendant is an afterthought and should not be given an iota of credence by this Court. The learned counsel had cited these cases in support of his contention: i. RHB Bank Bhd (substituting Kwong Yik Bank Bhd) v Kwan Chew Holdings Sdn Bhd, [2010] 2 MLJ 188. ii. The Chartered Bank v Yong Chan [1974] 1 MLJ 157. iii Pembinaan SPK Sdn Bhd v Jalinan Waja Sdn Bhd [2014] 2 MLJ 322. 37 [50] The First Defendant’s counsel had strenuously denied the existence of any separate agreement between the Defendants to pay the Plaintiff. Firstly, it was argued that that the Second Defendant did not plea its allegation on such separate agreement. Secondly, the Defendant did not produce to this Court any documentary evidence to support such assertion. Thirdly, the Second Defendant’s reliance on the recital of Article 8 of the EPCC to prove the existence of such agreement is totally wrong and misconceived. Fourthly, in the absence of any documentary evidence to substantiate the existence of the separate agreement, the Second Defendant should have produced oral evidence instead, and at least call either Ir. Lee Swee Eng, the Second Defendant’s Group Managing Director or Mr. Terry Chew the Second Defendant’s Director of Group Contract Documentation as witnesses. According to the learned counsel for the First Defendant, these two persons would be able to confirm the existence of such agreement. It was further argued by the counsel for the First Defendant that the failure to call either one of them attracted the invocation of adverse presumption under section 114 (g) of the Evidence Act 1950 against the Second Defendant. The counsel for the First Defendant had referred this Court to the two cases on this matter. ( See Chan Yoke Lan (Administrator of the estate of Chong Yoke Fah, Deceased) v Pacific & Orient Insurance Co Sdn, Bhd [1999] 1 MLJ 303 and Datin Peggy Taylor v Udachin Development Sdn Bhd [1984] 2 CLJ.) 38 [51] As regards to the passages of letters and emails referred by the Second Defendant’s counsel, the counsel for the First Defendant had submitted that the passages quoted by the counsel for the Second Defendant was not quoted in full by the counsel for the Second Defendant. In respect of the Plaintiff’s letter dated 18.5.2011, the full contents of the paragraph reads this way: “As you surely understand, Axens does not want to take part into discussion between KNM and Mission BIofuels... You may thus understand that the only recourse Axens has, is to stick to the legal wording and check who is its legal and contractual debtor. Legally speaking, it indeed appears that your company, KNM is our direct debtor since KNM has been assigned all rights and obligations under the above agreement by the Transfer Agreement dated April 25th, 2007...” (emphasis added) [52] According to the counsel for the First Defendant the contents of the 18.5.2011’s letter is consistent with PW1’s evidence that the First Defendant had agreed to pay the Plaintiff on behalf of the Second Defendant as a result of being pressured or cornered by the Plaintiff as the Plaintiff had threatened to abandon the site activity if payments are not made. [53] The counsel for the First Defendant had further submitted that similarly with the two emails dated 3.5.2010 and 3.6.2010, they were not quoted in full by the counsel for the Second Defendant to reflect the actual contents. According to the counsel for the First Defendant, the two emails are actually attachments to the Plaintiff’s letter in which the 39 Plaintiff had clearly stated that the Second Defendant is its direct debtor because of the assignment. [54] The learned counsel also submitted that likewise, the First Defendant’s email dated 16.12.2009 was also not fully quoted by the Second Defendant’s counsel. The content of the email in full reads: “Dear Selva, Can you please verify that these invoices are ok for payment. We do not have details of when they were here or what there were actually doing as it was arrange directly by KNM. As discussed MBSB will pay these and other such invoices. The apportionment of the amounts between KNM and MBSB will be discussed and finalised later at handover. Our view is that MBSB should not pay for anything beyond the normal time required. Axens has confirmed that the normal time required is 1 week for inspection and 4 weeks for commissioning and performance tests. Best regards, Nathan Mahalingam Group Managing Director” (emphasis added) [55] This Court agrees with the counsel for the First Defendant that the Second Defendant’s failure to call either Ir. Lee Swee Eng or Mr. Terry Chew, warranted the invocation of adverse inference under section 114(g) of the Evidence Act 1950 against the Second Defendant. This Court opines that the Second Defendant having asserted that there was a separate agreement between the Defendants to pay the Plaintiff, had not produced any document to prove the existence of a separate agreement. The most logical option in this situation is to call either Ir Lee Swee Eng, its Group Managing Director or Mr Terry Chew, its Director 40 of Group Contract Documentation as a witness. Ir Lee Swee Eng as a Group Managing Director must have been involved in the negotiation of such agreement (if any) and he should be able to shed some light over the alleged agreement between the First Defendant and the Second Defendant. Mr. Terry Chew who is responsible for any contract or agreement entered by the Second Defendant would be in the position to enlighten this Court of such agreement (if any). Thus, notwithstanding whether or not the fact on the separate agreement was pleaded or otherwise, this Court is of the considered view that the Second Defendant had failed to prove the existence of such alleged separate agreement. Whether Estoppel can be raised against the First Defendant and the Plaintiff with regard to their conducts in respect of the payments of the three earlier invoices issued by the Plaintiff. [56] It was also argued on behalf of the Second Defendant that the conduct of the First Defendant in making the payment of the three invoices amounting to USD 368,103.13 had clearly led all the parties to believe that the First Defendant will make payment for the entire Start Up services to the Plaintiff. It was also further submitted for the Second Defendant that if there was no such agreement between the Defendants, the First Defendant should have protested against the invoices and informed the Plaintiff and the Second Defendant that the First Defendant is not obliged to pay the Plaintiff in respect of the Start Up Services and that the invoices should be addressed to the Second Defendant at an earlier stage that is on the receipt of the First invoice from the Plaintiff. 41 However, the First Defendant did nothing of that sort but instead proceeded to pay the Start Up services’ invoices for January, February, June, July and August 2009. And therefore, the First Defendant and the Plaintiff should be estopped from claiming the outstanding payments for the invoices in respect of Start Up services from the Second Defendant. On the issue of estoppel, the counsel for the Second Defendant had relied on the Federal Court’s decision in the case of Boustead Trading

Sdn Bhd v Arab-Malayan Merchant Bank Berhad [1995] 3 MLJ 331 and few other cases namely, i. Asia General Equipment and Supplied Sdn Bhd & Ors v Mohd Sari bin Datuk OKK Hj Anuar & Ors [2012] 3 MLJ 49. ii. Mohamed Ismail bin Mohamed Shariff v Zain Azahari bin Zainal Abidin & Ors [2013] 2 MLJ 605. iii. Yoong Sze Fatt v Pengkalen Securities Sdn Bhd [2011 4 MLJ 805.) [57] Upon close examination and evaluation on the letters and also the emails in totality, this Court is inclined to conclude that the First Defendant’s payments in respect of the three earlier invoices for the Start Up services were made on behalf of the Second Defendant. The email dated 16.12.2009 had clearly indicated that there were discussions between the First Defendant and the Second Defendant prior to the payments of the three earlier invoices and it was agreed between them that whatever amount had been paid by the First Defendant will be apportioned between the First Defendant and the Second Defendant. The apportionment will be discussed and finalised at the handover of the Biodiesel Plant to the First Defendant. The arrangement was agreed upon by all the parties, and therefore, there is no issue of estoppel here. 42 [58] Another argument raised by the Second Defendant’s counsel is regarding the invoices that were sent to the First Defendant which demonstrated the First Defendant’s responsibility to pay the Plaintiff for the Start Up services. On this issue, this Court is in agreement with the First Defendant counsel’s contention that merely because the invoices issued under the name of the First Defendant and were sent to the First Defendant does not make the First Defendant liable to pay the Plaintiff. PW1 when he was being cross examined by counsels for the Defendants had actually explained that it was the Plaintiff’s internal “SAP” system which causes the invoices to be sent automatically to the First Defendant pursuant to Article 8.3 of the TTA. In view of the Court’s finding on the core issues, this Court is of the view that this issue here is of little significance. Whether the EPCC entered between the First Defendant and the Second Defendant is in the form of Turnkey contract at a fixed lump sum price. [59] Now, the next issue to be determined is whether the EPCC is a Turnkey contract as submitted by the First Defendant’s counsel. It was argued on behalf of the First Defendant that the EPCC being a Turnkey contract, a fixed lump sum contract at the price of RM122 million, the Second Defendant is obligated under the EPCC to hand over or deliver to the First Defendant a complete Biodiesel Plant in working order without any overrun costs. The counsel further submits, the RM 122 million fixed price lump sum set out in the EPCC is payable to the Second Defendant as the contractor, who in turn must take all the necessary steps including 43 hiring subcontractors and paying them. The RM122 million are to be paid to the Second Defendant in three parts, namely: Part A: Price of RM875,000/- (Malaysian Ringgit Eight Hundred & Seventy Five Thousand only) representing the fixed sum payable by the Second Defendant to the Plaintiff under the PSBA : Part B: Price of RM4,742,500/- (Malaysian Ringgit Four Million Seven Hundred Forty Two Thousand Five Hundred only) representing the fixed sum payable by the Second Defendant to the Plaintiff under the TTA; and

13.1 Works to be Performed Except as otherwise expressly set forth in this Contract, the Contractor shall perform or cause to be performed all the Works, on a fixed price lumpsum basis in accordance with the provisions of this Contract including: i) all engineering design, procurement and manufacturing required for a completely engineered Biodiesel Project; ii) Transportation of plant & equipment up to Site, port of entry clearance and handling works in Malaysia required in connection with the completion of the Biodiesel Project; iii) construction infrastructure works, civil and structural construction, mechanical and electrical erection and installation works and commissioning, start-up and testing of the Biodiesel Project, including obtaining the relevant licensing and Consents. iv) provision of all necessary labour, construction fuels, chemicals, utilities, tools, Contractor‟s Equipment, supplies and other consumables and works (other than materials, equipment and supplies provided by Purchaser‟s suppliers or Purchaser all as outlined in Clause 11.8); and; v) making good any defects or deficiencies in the Works in accordance with the obligations of the Contractor pursuant to Clause 36 hereof. The Contractor shall be responsible for completing the Works and achieving the final Performance Acceptance by the agreed Time for Completion and demonstrating the capability of the Biodiesel Project to achieve the Performance Guarantees failing which the Contractor shall be liable for and pay to the Purchaser applicable liquidated 46 damages for delay and performance shortfall pursuant to Clause 34 and 35, as the case may be. (emphasis added) [62] From the wording of Article 13.1, clearly the EPCC between the First Defendant and the Second Defendant was indeed a pure Turnkey contract. Issue iii [63] This Court will now deal with the issue of claim on quantum meruit. The legal position for quantum meruit is well established. It is sufficient for this Court to refer to the case of Syarikat Binaan Utara Jaya V. Koperasi Serbaguna Sungai Glugor Bhd [2009] 1CLJ 786. In this case, the Court of Appeal at paragraph 39 of its judgment had deliberated on circumstances in which quantum meruit cannot arise as a remedy and consequently had held the following: [39] According to the case of Gilbert & Partners (a firm) v. Knight [1968] 2 All ER 248, CA, a claim on a quantum meruit cannot arise if there is an existing contract between the parties to pay an agreed sum. The facts in Gilbert & Partners (a firm) v. Knight (supra) may briefly be stated as follows. There, a surveyor agreed to prepare drawings, arrange tenders and supervise works pertaining to alteration, the cost of which be estimated at roughly £600, for a fee of £30. The employer ordered extra work which brought the total cost to £2,283 but the surveyor did not, while the work was going on, tell the employer that he would require further fees. The Court held that the surveyor would be bound by the existing agreement to perform services for £30 and could not recover a reasonable sum on a new implied contract 47 [64] In the present case, the TTA which was assigned under the TA to the Second Defendant by the First Defendant for a periodic term and the Agreement Letter clearly contained provisions on the financial terms, the obligation to pay the Plaintiff, the manner of payment as well as the amount that the Plaintiff should be paid for its services. Hence, payment on the basis of quantum meruit cannot arise. Issue iv [65] The First Defendant in counterclaiming against the Second Defendant sought for a declaration that: all the rights and obligations under the Technology Transfer Agreement dated 25.7.2007 entered into between the Plaintiff and the First Defendant which has been assigned to the Second Defendant by the Transfer Agreement dated 25.7.2007 between the Plaintiff, First Defendant and Second Defendant, had not been reassigned to the First Defendant as the Second Defendant had not achieved the Successful Performance Test. [66] On contrary, the Second Defendant counterclaims against the First Defendant for a declaratory order to declare that: a) pursuant to the Technology Transfer Agreement N*07/3071 (“the TTA”) dated 25.7.2007 read with the Transfer Agreement dated 25.7.2007 (“the Transfer Agreement”) entered into by the Plaintiff and the Defendants, all the obligations of the Second Defendant have been assigned to the First Defendant and henceforth becomes the only contracting party vis-a vis the Plaintiff as well as being the only responsible party to pay any sum due to the plaintiff, or 48 b) In the alternative, a declaration that pursuant to the Technology Transfer Agreement N 07/3071 („the TTA”) dated 25.7.2007 read with the Transfer Agreement dated 25.7.2007 (“the Transfer Agreement”) entered into by the Plaintiff and the Defendants, all the obligations of the Second Defendant have been novated to the First Defendant and henceforth become the only contracting party via-a-vis the Plaintiff as well as being the only responsible party to pay any sums due to the Plaintiff. [67] The counterclaims above sought by parties are in the form of a declaration. The granting of declaratory reliefs is purely an exercise of discretionary powers vested into Courts. The principle is well settled and well established. (See i. Section 41 of the Specific Relief Act 1950. ii. Petaling Tin Bhd v Lee Kian Chan & Ors [1994] 1 MLJ 657. iii. Datuk Syed Kechik bin Syed Mohamed v Government of Malaysia & Anor [1979] 2 MLJ 101. iv. Hanson v Radcliffe Urban District Council [1922] All ER.) [68] Although the Court reserves unfettered discretion in granting declaratory reliefs, the Court can only exercise such discretion to declare one party’s rights over another party or parties only if they can prove that they have such rights against or over the other party or parties. In the present case, the rights asserted by both the First Defendant and the Second Defendant are in respect of the assignment or reassignment of the TTA under Article 1 and Article 2 of the TA. The TTA entered between the Plaintiff and the First Defendant provides the terms in which the obligations and rights of the Plaintiff and the First Defendant were spelt out in respect of the technology and procurement of relevant licences necessary for the biodiesel plant. To facilitate the Second 49 Defendant’s obligation to the First Defendant under the EPCC, the TTA was assigned to the Second Defendant vide the TA. The assertion of rights of the First Defendant against the Second Defendant or vice versa is only in respect of the issue whether or not the assignment has been terminated and the TTA had been reassigned or reverted back to the First Defendant. Whether or not the assignment has been terminated or has come to an end depends upon the occurrence of either one of the two occasions spelt out under the TA namely by expiration of four years from the effective date or the successful performance test defined under the TTA. [69] It is an established fact that the dispute arising from the EPCC between the First Defendant and the Second Defendant are currently in arbitration and the arbitration disputes are with regard to the proper commissioning and acceptance of the biodiesel plant. Therefore, the determination of whether or not there was a successful performance test may not be decided at this juncture as the rights asserted by both parties are still being adjudicated before the arbitrator. There are no determinable rights as of yet for this Court to grant a declaration for or against any of the parties based on the parties’ counterclaims. Thus, it is this Court’s considered view that there can be no declaratory order as to this issue. [70] In regards to the expiration of the four years from the effective date, this Court is of the considered view that this contention is a non-issue on the ground that this Court had concluded earlier that the disputed sums 50 under the five unpaid invoices were sums due even before the expiration date after the lapsing four years. [71] The First Defendant in its counterclaim also sought for a declaration that the First Defendant is entitled to be indemnified and/or reimbursed by the Second Defendant in respect of all or any amount which the First Defendant may be held liable to pay to the Plaintiff in this action. In this respect the First Defendant seeks for a declaration that the payment which had been made to the Plaintiff for the three earlier invoices amounting to USD 368,108.13 should be indemnified and/or reimbursed by the Second Defendant. [72] It is the judgment of this Court that no declaration can be granted in respect of the monies that had been paid by the First Defendant for the payment of the three earlier invoices to the Plaintiff for the simple reason that the First Defendant is bound by the arrangement or agreement that those payments were made on behalf of the Second Defendant. The First Defendant also agreed that the apportionment of the amounts between the First Defendant and the Second Defendant will be discussed and finalized later at the hand-over of the Biodiesel Plant. The First Defendant cannot now claim for the sum to be indemnified or reimbursed at this juncture. Furthermore, the rights to the sum of monies do not arise until it has been discussed and finalised at the handover. Thus, this Court is of the view that the Fist Defendant is not entitled to the declaration sought in respect the sum of monies paid for the three earlier invoices. 51 [73] Based on the aforementioned reasons, this Court makes the following orders;

a declaration that the services provided by the Plaintiff in respect of the sum USD 791,278.43 were to benefit of the Second Defendant.

a declaration that the Second Defendant is liable to the Plaintiff for sums due pursuant to the services provided by the Plaintiff.

judgment be entered against the Second Defendant for the sum USD 791,278.43.

contractual interest at the rate set out by EURIBOR-3M plus 2% from the date of the invoices until the date of judgment.

further interest at the rate of 4% the crystallised judgment (including interest as set out in order (d) above) until full realisation.

the First Defendant’s counterclaims are dismissed with costs.

the Second Defendant’s counterclaims are dismissed with costs. 52 On the issue of Costs [74] This Court has taken cognizance of the submissions of all respective parties upon the issue of costs. Upon that, this Court awards costs to the amount RM 60,000.00 to the Plaintiff to be paid by the Second Defendant and also costs of RM 30,000 to the First Defendant also to be paid by the Second Defendant. t.t ...................................................... (DATUK AZIMAH BINTI OMAR) Judicial Commissioner High Court NCVC 13 of Shah Alam Selangor Darul Ehsan Dated the 5th day of September, 2014. For the Plaintiff - Tetuan James Monteiro James Monteiro, John Skelchy and Vishal Kumar For the First Defendant - Tetuan Skrine Leong Wai Hong,Claudia Cheah and Angela Yap For the Second Defendant - Tetuan Zul Rafique & Partners T. Kuhendran, Koo Ai Ling and Judy Song