Bank Simpanan Nasional v Innovation Associates Consulting Sdn Bhd (WA-22NCvC-277-06/2020)

1.1 This suit pertains to the breach of contract by the defendant for the upgrading of the Human Resource Information System (HRIS) being used by the plaintiff since 2010:

The plaintiff used the HRIS maintained under Kaizen HR Software provided by EASS Sdn Bhd, a basic system of records and administration of employee-related management services.

The plaintiff wanted a more robust system that could be fully 25 integrated with the existing Kaizen System, including employee performance management. Succession planning & talent development and learning management features for long-term enterprise goals concerning talent and human capital. 30 23/05/2024 09:42:51 Kand. 48

1.2 Through an open tender exercise, the defendant was awarded the contract for the upgrading works, where the project commenced sometime in August 2016, but the defendant failed to deliver the working and finished product/system as envisioned in the contract. Ultimately, the defendant defaulted to remedy the breach, contract was 35 terminated on 01.07.2019, leading to the plaintiff's recovery suit. [2]

2.1 After considering all cause papers, evidence at the trial, and hearing parties' respective arguments, on a balance of probabilities, I found 40 that the plaintiff had proven its case against the defendant. Final judgment was accordingly entered.

2.2 The defendant was ordered to pay a cost of RM30,000.00 to the plaintiff within thirty (30) days from the date of this order. 45 2.3 Aggrieved, the plaintiff filed this appeal against my decision. My reasons are as follows: [3] The witnesses at the trial are:

Plaintiff: PW1: Nahar Bin Megat Shuib, and 50 PW2: Nur Naziha Binti Mohd Akhbar

Defendant: DW1: Azlan Zainal Abidin BRIEF FACTS 55 [4] The facts in a nutshell (for easy reference, I have divided into subtopics) are as follows: The RFP Open Tender Exercise 4.1 On 15.04.2016:

The plaintiff had issued an invitation to tender exercise seeking Requests For Proposals (RFP) from qualified companies registered with the Ministry of Finance in the required field: “RFP For Supply, Design, Development, Installation, Integration, Testing, Commissioning, Training, and Post-Implementation Support of 65 HR Technology Solutions for BSN”, Tender Ref No:PT10/16. (CBOD Part A, L.14, pp.1-49/PDF pp.3-51).

The project aims to provide comprehensive human resource technology (HRT) solutions based on the best practices that 70 require the least customisation to expedite the process and allow it to be fully integrated with the existing Kaizen HR system.

Up to this juncture:

Since 2010, the plaintiff has used an HR Information system (HRIS) 75 maintained under the Kaizen HR Software provided by EASS Sdn Bhd (EASS).

It is only a basic system of records and administration of employee-related management services.

The plaintiff seeks a robust system that could be fully integrated with the 80 existing Kaizen System and would comprise employee performance management, succession planning and talent development, and learning management features for long-term enterprise goals concerning talent and human capital. 85

The defendant’s proposal (CBOD Part A, L.14, pp.50-232/PDF pp.52- 234) was accepted, leading to the issuance of a Letter of Award (LoA) and Letter of Bidder’s Acceptance for the defendant to 90 undertake the project (CBOD Part A, L.14, pp.233-245/PDF pp.235-247).

The plaintiff received a Malayan Bank Guarantee (BG) of RM139,375.25 dated 05.07.2016 as a performance bond required under the LoA (CBOD Part A, L.14, pp.246-248/PDF pp.248-250). 95 The SDD For HR Setup & Employee Induction 4.3 On 14.09.2016: After several prior meetings leading up to the preparation of the Solution Definition Document for HR Setup & Employee Induction (SDD), which identifies and sorted out the project activities and 100 configuring the final Ramco Solutions developed by Ramco Systems Sdn Bhd (Ramco) to comply with and meet BSN’s process requirements (CBOD Part C, L.16, pp.325-396/PDF pp.328-399). The Agreement 105 4.4 On 15.09.2016:

The parties executed the RFP For Supply, Design, Development, Installation, Integration, Testing, Commissioning, Training, and Post-Implementation Support of The HR Technology Solutions Agreement (CBOD Part B, L.15, pp.1-71/PDF pp.4-74).

The project implementation award was agreed at RM3.9M The Subcontract/Licensing Agreement 4.5 On 28.9.2016:

To carry out the Agreement, the defendant entered into a 115 subcontract agreement with Ramco (the solution provider) for the latter to develop and provide the required software and all related services for the project implementation.

It is not in dispute that Ramco had earlier, on 07.09.2016, issued its Corporate Guarantee (CBOD Part B, L.15, pp.66-69/PDF pp.69-72) 120 to the plaintiff, guaranteeing the defendant’s (client) performance concerning the implementation and support services of the Ramco Software to be developed and used (Licensing Agreement) for the project (CBOD Part B, L.15, pp.72-76/PDF pp.75-79). 125

However, I take cognisance that the defendant, save for mentioning the Corporate Guarantee, does not plead the issue of Ramco’s Corporate Guarantee in its Statement of Defence, and parties are, by law, bound to their pleadings. 130 The Project Implementation 4.6 The project commenced sometime in early August 2016, even before the execution of the Agreement on 15.09.2016. The following facts are discovered from the trial and cause papers:

The defendant unexpectedly requested column changes from 135 their initial set-up of 90 to 325 columns to incorporate all the required details for one employee under the upgraded system. EASS/Kaizen would need six months to facilitate this in a single flat file chargeable to the plaintiff: 140 Data Integration and Migration Impediment From The Outset Data integration involves integrating/linking the present HR data (Kaizen) with the new HR System (Ramco System) developed by the defendant under the Agreement before data migration occurs.

At the start of the project, the defendant had advised the plaintiff that 90 145 columns were sufficient to input all the required data on one BSN employee under the upgrading exercise.

This was proven insufficient and was subsequently altered from 90 to 325 columns.

The chronological integration details can be seen in the CBOD Part C, 150 L.16, pp 402-405/PDF pp.405-408.

The email threads can be seen in the CBOD Part C, L.16, pp 417- 468/PDF pp.420-471.

It is proven that the required number of columns changed from 90 to 325 because the defendant failed to do a comprehensive initial study of 155 the existing system and its parameters/constraints before advising the plaintiff on the adequacy of the proposed 90 columns at the outset that was according to the defendant sufficient to meet the plaintiff’s upgrading requirements.

The defendant took the position that they didn’t need to do the initial 160 study when making the technical proposal (RFP) to the plaintiff.

Realising that 90 columns were not enough to fulfil the plaintiff’s requirements, and when the columns increased to 325, the defendant insisted that the data be provided in a single flat file format instead of the flat file format (SDD) and that EASS/Kaizen deliver the data in 165 that format:

EASS/Kaizen could not provide data in a single flat file but only in 8 flat files.

(ii) To create a single flat file, EASS/Kaizen needed about six months to manually collect the data since Kaizen is a basic 170 system that does not include employee performance management, succession planning and talent development, and learning management features, which the plaintiff’s HR Department had previously manually managed.

(iii) To comply with the defendant’s request, EASS/Kaizen will 175 charge the plaintiff RM162,000.00 which was not an item nor was it contemplated by the Agreement with the defendant (CBOD

(iv) On 18.04.2017, at a meeting between the plaintiff, EASS/Kaizen, the defendant, and Ramco, it was agreed that Kaizen would 180 share (25.04.2017) the table structure along with the examples for Ramco's initial study. Ramco would analyse and arrange a meeting to discuss a final solution.

On 26.04.2017, the defendant informed the plaintiff that based on the shared format, the defendant needed to develop the entire 185 logic from scratch that would be chargeable as a Change Request (CBOD Part C, L16, pp.479-482/PDF pp.482-485).

(vi) On 24.05.2017, the defendant sent a Change Request dated 22.05.2017 for RM163,800 to develop (a) a Scheduler for System Integration with Kaizen and (b) to develop a Trigger Program for 190 the System Integration with Kaizen (CBOD Part C, L.15 pp. 95- 97/PDF 98-100).

(vii) At a meeting on 12.07.2017, the plaintiff informed all parties concerned that all these changes required by the defendant must not have a cost impact on the project implementation, and both 195 the defendant and Ramco must absorb any cost arising.

(viii) Kaizen provided the agreed incremental data in 8 flat files to the defendant. The defendant issued another Change request dated 19.07.2017 for RM50,400.00 to the plaintiff to redesign the integration logic based on the incremental flat files shared by 200 Kaizen (CBOD Part C, L.16, pp.493-496/PDF pp.496-499). The defendant then changed their stand to a single flat file because they already developed a single consolidated file without knowing the background of the existing system, which is attributed to their failure to study the system before making their proposal. They 205 were not ready to develop eight flat files for the integration process, as it takes time and is costly.

(ix) The plaintiff refused to approve the Change Request, so the defendant agreed to absorb the cost (CBOD Part C, L.16, pp.98- 99/PDF pp.101-102). Though it agreed to absorb the price, the 210 defendant insisted that the plaintiff sign the Change Request but was refused as the plaintiff took the position that it is within the scope of services of the defendant to complete the data integration deliverables. Minutes of meetings (CBOD Part C, L.16 pp 100/PDF 102-113) 215 Project Work Cessation by the Defendant 4.7 Thereafter, the defendant ceased any further work on the contract and requested the plaintiff to pay for the Change Request so that the work could proceed. The plaintiff threatened to terminate for breach of 220 contract, but the defendant sought indulgence and was requested to forward a written remedial proposal, but the defendant failed to deliver the requested proposal. Termination of the Agreement 4.8 The plaintiff subsequently invoked clause 23 of the contract: 225

Give the defendant fourteen days to remedy the default, or the contract will be terminated as provided for in the Agreement. Then, sue the defendant for compensation, a full refund, further damages, and costs.

The defendant's continued default led to the termination of the 230 contract on 01.07.2019. The Defendant’s Position 4.9 The defendant took the position that:

The parties agreed in the SDD on the file format that Kaizen would 235 give to the defendant and Ramco.

Based on the eight flat files containing incremental data given from the Kaizen system, they had to issue: -Change Request No. 17CR-BSN-003, dated 10.04.2017 (CBOD Part B L.15 pp 92-04/PDF pp.95-97, and 240 -Change Request No. 17CR-BSN-003A, dated 22.05.2017 (CBOD Part B L.15 pp 95-07/PDF pp.98-100), .-Change Request No. 17CR-BSN-004B, dated 19.07.2017 (CBOD Part C L.16 pp 493-496/PDF pp.496-499),

The Kaizen system failed to provide the incremental data of the 245 file format as agreed. Defendant agreed to absorb the cost for Change Request No. 17CR-BSN-004B dated 19.07.2017, i.e., RM72,000.00.

All the Change Requests were issued after the project was implemented, and the plaintiff failed to sign the Change Request 250 to proceed with the implementation.

The plaintiff instead issued the Remedial Notice alleging that the defendant had breached the terms of the contract and wrongfully proceeded with a premature termination on 01.07.2019 without allowing the defendant to remedy and continue with the project.

The plaintiff rejected the defendant's eventual remedial proposal to replace the Ramco software with another to solve the problem.

The defendant's cessation of the project work constitute a breach of Clause 18.5 of the Agreement, which stipulates that the company/defendant agrees to continue performing the services 260 while the parties attempt to resolve disputed payment or deliverables. THE PARTIES ARGUMENTS [5] I have observed and considered the parties' arguments and, in a 265 nutshell, as follows: THE PLAINTIFF [6] The plaintiff argued their claim as follows:

6.1 Data integration is within the scope of services of the defendant under 270 the Agreement as stipulated: “RFP For Supply, Design, Development, Installation, Integration, Testing, Commissioning, Training, and Post-Implementation Support of HR Technology Solutions for BSN”. The RFP tender documents clearly stated that the proposed system 275 could also be fully integrated with the existing EASS/Kaizen HRIS. In their RFP Technical Submission, the defendant stated that the Human Capital Management (HCM) solution is based on Service-Oriented Architecture (SOA) and can integrate with third-party solutions. The defendant also said that “interface requirement to be studied and 280 appropriate interface (flat file/XML/Web Service) shall be built. In his evidence, DW1 agreed that the bidding price quoted by the defendant includes the integration process and is part of the Agreement (NOP L.30, PDF pg.430: lines 11, 13, 14, 18, 20, and 23).

6.2 Clause 10: Variation: Sub-clause 10.5 (a) of the Agreement explicitly 285 denies the defendant’s claim under the Change Request. It stipulates that any works reasonably incidental and ancillary to the Statement of Works (SoW), Deliverables stated in the RFP, Regulatory Requirements, Functional & Technical Specifications and the Company’s Proposal shall not be deemed a variation. BSN shall not 290 pay the Company any additional charges (CBOD Part B, L.15, pp.22- 23/PDF pp.25-26).

6.3 The data integration issue should not have arisen had the defendant conducted a comprehensive study of the existing Kaizen system before 295 submitting their RFP. During the invitation to bid, the defendant had been made aware of the requirements for the project where detailed RFP documents were made available:

The defendant's new HR system must integrate with the Kaizen System. Clause 1.1(4) of the RFP advised potential bidders to 300 study the bid documents carefully. The bidder must submit an accurate and complete proposal (CBOD Part A, L.14, pg.10/PDF pg.12)

Emphasis on the technical requirements of the project can be seen in Clause 4 of the RFP document where integration (part 8) with other applications is required (CBOD Part A, L.14, pp.30-31/PDF 305 pp.32-33).

The defendant/company warranted that the implementation and maintenance services would be undertaken in compliance with the RFP and Functional & Technical Specifications: Clause 4.3 (e), The Agreement (CBOD Part B, L.15, pg.13/PDF pg.15).

That said, DW1 gave evidence at the trial and took the position that a comprehensive study of the existing EASS/Kaizen System was unnecessary (NOP, L.30, pp.12-13/PDF pp.393-394). The plaintiff argued that if a thorough study had been done before submitting the RFP Tender Paper, it would have avoided/mitigated the 315 integration issues and facilitated the smooth implementation of the project.

6.4 PW2 gave evidence at the trial that the number of columns changed from 90 to 325 because the defendant failed to conduct a 320 comprehensive study of the EASS/ Kaizen System:

The defendant, on that premise, advised the plaintiff that 90 columns were sufficient for the plaintiff’s project requirements and executed the SDD on that basis on 14.09.2016 (Solution Definition Document for HR Setup & Employee Induction) (CBOD Part C, L.16, 325 pp.325-396/PDF pp.328-399). This SDD is not to be treated as the SDD for integration. Contrary to the defendant's assertion, they have not yet prepared the SDD for integration as one of the defendant’s deliverables under Part 4 of Schedule 1 of the Agreement: 330 PW1: NOP, L.31, pp.27/PDF pg.76: Lines 19-29; pp.31-35/PDF pp.192-196; PW2: NOP, L.31, pp.70-71/PDF pp.282-283, pp.79-80/PDF pp.291-292; PW2: NOP, L.30, pp.79-80/PDF pp.254-255. Instead of delivering the SDD for integration, the defendant issued Change Requests dated 22.05.2017 and 19.07.2017 335 when there can’t be variation without the plaintiff’s prior approval as required under clause 10.4 and 10.5(a) of the Agreement: PW1: NOP, L.31, PDF pp.69, lines 32, pg.70, lines 1-12. pg.74, line 32; PW2: NOP, L.30, PDF pg.302 lines17-31, pg.303 lines 1-23.

The defendant insisted that the data be given in a single flat file 340 format that did not accord with the SDD since the format agreed to by parties in the SDD was a flat file format.

EASS/Kaizen eventually provided eight flat file formats on 25.04.2017. However, on 26.04.2017, the defendant informed the plaintiff that Kaizen had provided the flat file in a different format 345 from the defendant's already developed single consolidated file for the data integration.

Consequently, the defendant issued a Change Request dated 22.05.2017 for RM173,628.00 to gather BSN employee's data from the Kaizen System and deliver to Ramco (CBOD Part B, L.15, 350 pp.95-97/PDF pp.98-100), and Change Request dated 19.07.2017 for RM50,400.00 to redesign the integration logic based on the incremental files shared by EASS/Kaizen (CBOD Part C, L16, pp.493- 496/PDF pp.496-499).

The plaintiff took the position that the defendant’s conduct delayed 355 the entire project when the defendant insisted that the data be given in a flat file format, although the defendant knew, for Kaizen to provide the data in flat file format, it would take six months to develop it. Even after EASS/Kaizen provided data in the flat file format, the defendant changed its approach to a single flat file 360 format because it had already created a single consolidated file without studying the background of the existing EASS/Kaizen System. The defendant was not ready to develop the eight flat files EASS/Kaizen gave for the integration as it would be costly and time-consuming.

The defendant's contractual obligation in the Agreement is to complete the data integration and migration process, which they failed to do in the circumstances.

6.5 Before the impasse:

Called for several meetings between the parties between September 2018 and November 2018.

The plaintiff requested a written remedial proposal from the defendant, but the defendant failed to deliver.

Consequently, the plaintiff issued a Remedial Notice on 375 24.01.2019, informing the defendant of their position and the consequences of a pending termination for non-compliance. The defendant claimed the said notice was ambiguous, which in the circumstances is untenable and constitutes an afterthought (CBOD Part B, L.15, pp.113-115/PDF pp.116-118).

The plaintiff invoked clause 23 of the Agreement, giving the defendant fourteen (14) days to remedy the breach; in default thereof, it would lead to the termination of the Agreement immediately:

In a written reply on 08.02.2019, the defendant did not provide the 385 written remedial proposal but instead offered an excuse that the plaintiff was deliberating on the issue of recommencement (CBOD Part B, L.15, pg.116/PDF pg.119).

The project had been delayed by one year, six months and five days from the date of the Change Request (paragraph 6.4(4) hereof).

In breach of the foregoing fourteen-day notice, the defendant notified their proposed remedial plan in a letter dated 14.03.2019 by suggesting replacing the Ramco software with a new one at the same price (CBOD Part B, L.15, pp.117-125/PDF pp.120-128; NOP, L.31, pp.118-121/PDF pp.536-539).

The plaintiff rejected the proposal and elected instead to exercise its right to terminate the agreement since, at the bidding and award stage of the project, the defendant proposed using the Ramco software that supposedly works with the existing Kaizen system. Proposing to replace the Ramco software unless agreed to by the plaintiff would breach the 400 Agreement (NOP, L.31, PDF pp.315-317).

Consequently, the plaintiff terminated the Agreement under clause 23.3 (CBOD Part B, L.15, pg. 34/PDF pg. 37) and asked the defendant to refund all monies paid (CBOD Part B, L.15, pg.126/PDF pg.129). 405 The defendant attempted to argue:

That it was the plaintiff and Kaizen that caused the delay by not providing the data in the file format requested by them, but the defendant, however, failed to clarify why they changed from a flat file format (agreed in the SDD) to a single file format.

However, the facts at the trial prove that the defendant altered their position throughout the integration process.

6.6 The plaintiff pleaded that the defendant had been fraudulent and negligent in its representation, thereby inducing the award of the 415 contract to them. They misrepresented themselves. Clauses 4.3 and 4.4 of the Agreement contain the express warranty and representation of the defendant in the Agreement, which they had defaulted (CBOD Part B, L.15, pg.12/PDF pg.15). 420 6.7 The defendant refuses to call its subcontractor, the solution provider Ramco, to offer evidence to clarify matters at the trial. Instead, the defendant attempts to shift the burden of calling its subcontractor to the plaintiff, which is not tenable in the circumstances. In addition, the defendant failed to call its Project Manager, Mr Kuganath Pillai, to offer 425 evidence as he was, as claimed by DW1, the best person to shed light on matters pertaining to the implementation of the project. Even DW1 is an ex-CEO of the defendant who has no personal knowledge of the Agreement between the parties and relied merely on the documents disclosed to him (NOP, L.31, pp.21-23/PDF pp.376-378).

6.8 DW1 gave evidence that he wouldn’t know if Ramco could solve the technical issue in the project, even if the plaintiff had dealt directly with it by calling on Ramco’s Corporate Guarantee. Ramco was involved in the file format issue from the beginning (NOP L31, pp. 54-57/PDF pp.472- 435 475). Nevertheless, other than naming the guarantee in its defence, the defendant never pleaded on the Corporate Guarantee issued. The legal option of calling on it is on the plaintiff and not at the defendant's insistence in aiming to exonerate himself from the responsibility for the failure by passing the bulk to Ramco.

6.9 Consequent to the lawful termination of the Agreement, the plaintiff asks for the return of RM1,629,677.92 already paid to the defendant, compensation and other related prayers. The defendant's arguments that the plaintiff's payments were subject to milestones 445 achieved/completed, which would disentitle the plaintiff to restitution, are untenable. It must be read or taken in totality to the terms and conditions of the Agreement between the parties and cannot stand alone. The milestone payment schedule merely indicates that the payment obligation arises progressively as the project progresses. The 450 awarded contract must be completed by the agreed terms and conditions. In failing to complete and deliver the working integration process, the Agreement had been breached by the defendant: Berjaya Times Square Sdn Bhd v M-Concept Sdn Bhd [2010] 1 CLJ 269, FC observed that there was a failure or refusal to perform the promise 455 in its entirety within the agreed time frame. The Federal Court in Lucy Wong Nyuk King & Anor v Hwang Mee Hong [2016] 4 CLJ 813, FC observed that it is an established principle of construing a contract that, among others, an agreement must be interpreted as a whole, to ascertain the true meaning of its several clauses, and also, so far as 460 practicable, to give effect to every part of it. It was further stated that each clause in an ordinary commercial contract should be interpreted to harmonise with the other contract clauses and cited, in support:

Damansara Realty Sdn Bhd v Bangsar Hill Holdings Sdn Bhd & Anor [2011] 9 CLJ 257, FC that observed that the right of an innocent party to 465 terminate a contract or treat itself as having been discharged from the contract is mainly premised on the grounds of repudiation or a fundamental breach.

Section 76 of the Contracts Act 1950 stipulates that a party who rescinds a contract is entitled to compensation for any damage he has sustained due 470 to the contract's non-fulfilment.

Section 40 of the Contracts Act 1950 gives an innocent party the right to rescind a contract when the defaulting party refuses or disabled himself from performing the contract.

Section 65 of the Contracts Act 1950 entitles the innocent party to claim a 475 refund under the contract.

Berjaya Times Square Sdn Bhd v M-Concept Sdn Bhd [2010] 1 CLJ 269, FC ruled that a contract breaker must pay damages to the innocent party. In the circumstances, the plaintiff prays that its claim against the defendant 480 is allowed with cost. 485 THE DEFENDANT [7] The defendant argued their defence as follows:

7.1 In contesting the plaintiff’s action:

The defendant took the position of attacking the Remedial Notice 490 issued by the plaintiff before the termination of the Agreement concerning the Change Requests by the defendant that were required to meet the requirements of the plaintiff (CBOD L.15, pp.113- 115/PDF pp.116-118).

As long as the Change Request was there, the defendant couldn’t 495 proceed with the work (NOP L.31, pg.57/PDF pg.269; pg.72/PDF pg.284)

The Remedial Notice was issued with insufficient clarity as it was more focused on the grievances and dissatisfaction of the plaintiff. The failure by the plaintiff to stipulate the breach puts the defendant at a disadvantage as to what needs to be remedied. It 500 renders the notice defective.

7.2 It was argued that the plaintiff contributed to the project's implementation delay. EASS/Kaizen insisted on using a View Table approach when the SDD agreed on a flat file approach (CBOD Part C L.16 pp.325-396/PDF pp.328-399). Kaizen continuously failed to provide 505 the flat file data to the defendant, thus delaying the project implementation, while the defendant claimed they were ready and willing (CBOD Part C, L16, pg.447/PDF pg.450; pg.452/PDF pg.455). The defendant was ultimately forced to issue the Change Request to address the problem: the increase in columns and the lack of 510 cooperation from EASS/Kaizen.

7.3 The defendant claimed that the plaintiff did not dispute their evidence on the fact that:

The plaintiff could have provided the defendant with the flat file format that can be generated from the View table format of 515 EASS/Kaizen as early as February 2017, but it was not done.

The inability to provide the data in the requested format caused the inevitable delay in the project implementation. In these circumstances, the defendant cannot be liable for the delay. PW1 agreed that the plaintiff (Kaizen) caused the delay (NOP L.31, pg.29- 520 30/PDF pg.120-121, NOP L.30, pg.68/PDF pg.243)

Due to the passage of time, it is no longer the essence of the agreement as in clause 12 of the Agreement (CBOD Part B, L.15, pg.23/PDF, pg.26).

The Federal Court in Berjaya Times Square Sdn Bhd v M- 525 Concept Sdn Bhd [2010] 1 CLJ 269, FC observed that section 56(1) Contracts Act 1950 on time must be read with section 40, where the phrase “fails to do such thing” in s.56(1) must refer to the promise in its entirety. A fundamental breach of the Agreement is legally required.

Consequently, it was argued that the plaintiff elected not to rescind the Agreement as per the implementation timeline in Schedule 2 of the Agreement, taken together with clause 12, leading to a conclusion that the plaintiff never intended for time to be of the essence. 535

7.4 The plaintiff is not entitled to rely on the allegation of the defendant’s negligent or fraudulent misrepresentation in para 29-40 of the SoC.

Clause 2.2 of the Agreement stipulates that it constitutes the entire agreement between the parties and supersedes any previous agreement or understanding between them. When entering the 540 Agreement, the parties acknowledged that they had not relied on any representation or warranty save as expressly set out.

Sections 91 and 92 of the Evidence Act 1950 stipulate that the Agreement itself will show and establish the agreed terms and conditions. No oral agreement or statement shall be admissible 545 between parties to contradict, vary, add to, or subtract from its terms.

7.5 The defendant also argued:

That payment milestones were set in Schedule 2 of the Agreement. The evidence at the trial showed that payments under 550 the Agreement were made to the defendant progressively upon the completion of the stages in the schedule (NOP L.30, pg.20/PDF pg.195; pg.31/PDF pg.206). All the payments made to the defendant are akin to paying the defendant on a quantum meruit basis:

The defendant submitted that the claim for the total sum invested by the 555 plaintiff, as stated in paragraphs 64-65 SoC, is untenable in light of the milestone provisions. A payment of RM1,629,677.92 to the defendant was used by the defendant for payment to acquire the Ramco Software License to be used in the project. It would be unjust to allow the plaintiff to claim this payment.

The claim for the cost of funds in paragraphs 38-39 of the SoC is untenable as it is not provided for under any part of the Agreement.

The claim for the Working Committee & Project Steering Committee cost (RM16,470.28) in paragraphs 69-70 of the SoC is unproven at the trial.

Similarly, the claim for LAD in paragraphs 71-73 remains unproven at the trial.

The claim for the Return on Investment in paragraphs 74-77 of the SoC was never within the contemplation of the parties in the Agreement. With the defendant achieving certain milestones in Schedule 4 of 570 the Agreement, the plaintiff's action seeking a refund of all monies paid seems misplaced.

Clause 7.5 of the Agreement (CBOD Part B, L.15, pg.17/PDF pg.20) gives the plaintiff options to either implement the Agreement all at once (big bang) or a phased approach. The plaintiff adduced no 575 evidence to show an election had been made for compliance by the defendant, citing Messrs Motilal Padampat Sugar Mills v State of Uttar Pradesh & Ors [1979] AIR 621, SC, where the Supreme Court of India held that waiver means an abandonment of a right and it may be either express or implied from the conduct, 580 but it must be an intentional act with knowledge.

In the circumstances, the defendant argued that the Court must determine whether the notice to remedy is within the parties' contemplation. A party cannot be allowed to approbate and reprobate: Boustead Trading Sdn Bhd v Arab Malaysian 585 Merchant Bank [1995] 4 CLJ, FC; Development & Commercial Bank Bhd v Asparta Corp Sdn Bhd [1996] 1 CLJ. In the circumstances, the defendant prays that the plaintiff’s claim is dismissed with cost. THE LAW 590 [8] It is trite in law that all cases are decided on the legal burden of proof being discharged. The burden of proof in establishing its case is on the plaintiff. It is not the defendant's duty to disprove it. The evidentiary burden is trite that those who allege a fact are duty-bound to prove it (see s.101, 102, and 103 of the Evidence Act 1950). 595 - In Selvaduray v Chinniah [1939] 1 MLJ 253, 254 (CA) held: "The burden of proof under section 102 of the Evidence Enactment is upon the person who would fail if no evidence at all were given on either side, and accordingly, the plaintiff must establish his case. If he fails to do so, it will not avail 600 him to turn around and say that the defendant has not established his. The defendant can say it is wholly immaterial whether I prove my case or not. You have not proved yours". - In Johara Bi bt. Abdul Kadir Marican v. Lawrence Lam Kwok Fou & 605 Anor [1981] 1 MLJ 139, (FC) held: "It was all a matter of proof, and until and unless the plaintiff has discharged the onus on her to prove her case on a balance of probabilities, the burden did not shift to the defendant. Even if the defendant's case was completely unbelievable, the claim against him must, in these circumstances, be dismissed. With respect, we 610 agree with this judicial approach." [9] In Berjaya Times Square Sdn Bhd v M-Concept Sdn Bhd [2010] 1 CLJ 269, FC. The distilled principles, among others, are:

Where an agreement is not regulated by statute, parties are at complete liberty, under the doctrine of freedom of Contract, to agree on any terms they think fit.

The court's role is to interpret the Contract sensibly (a commercially sensible construction). See Loh Wai Lian v SEA 620 Housing Corporation Sdn Bhd [1987] 1 LNS 37, PC.

The starting point is for the Court to recognise that in an action for a breach of Contract, it is for the Court to determine who is the innocent party and who is the guilty party.

A contract breaker must pay damages to the innocent party. 625 However, if he has made any payment under a contract (not being a true deposit for the purchase of movable or immovable property), the contract breaker is entitled to have that payment set off against the damages he has to pay. However, he cannot seek to recover any benefit he may have conferred upon the innocent 630 party where he is guilty of breach of Contract. Were it otherwise, a contract breaker could take advantage of his wrong. This is against the principle and the policy of the law.

The FC cited Attorney General of Belize v. Belize Telecom Limited [2009] UKPC 11, where when delivering the Advice of the 635 Board, Lord Hoffmann said: “The Court has no power to improve upon the instrument which it is called upon to construe, whether it be a contract, a statute, or articles of association. It cannot introduce terms to make it fairer or more reasonable. It is concerned only to discover what the instrument means. However, that meaning is not 640 necessarily or always what the authors or parties to the document would have intended. It is the meaning which the instrument would convey to a reasonable person having all the background knowledge which would reasonably be available to the audience to whom the instrument is addressed: see Investors Compensation Scheme Ltd v West Bromwich 645 Building Society [1998] 1 WLR 896, 912-913. It is this objective meaning which is conventionally called the intention of the parties, or the intention of Parliament, or the intention of whatever person or body was or is deemed to have been the author of the instrument.” 650

A contract is to be interpreted under the following guidelines:

A Court interpreting a private contract is not confined to the four corners of the document. It is entitled to look at the factual matrix forming the background of the transaction.

The factual matrix that forms the transaction's background includes all 655 material reasonably available to the parties.

The interpreting Court must disregard any part of the background that is declaratory of subjective intent only and

The Court should adopt an objective approach when interpreting a private contract. 660 [10] The Federal Court in Michael C. Solle v United Malayan Banking Corporation [1986] 1 MLJ 45, FC observed that the principles of construction to be applied are that the parties' intentions are gathered from the language used. They are presumed to have intended what 665 they say. The common universal principle is that an agreement ought to receive that construction, which its language will admit, that will best effectuate the parties' intention to be collected from the whole arrangement. The Courts are to give effect to the terms of the Contract (if any). 670 [11] The Federal Court in Apex Pharmacy Holdings Sdn Bhd v Chee Chin [1984] 2 MLJ 287, FC ruled that if an agreement is void by s.66 Contracts Act 1940, the innocent party is entitled to restitution. However, if an agreement is voidable at the option of the innocent 675 party, then by section 76, he would be entitled to damages and restitution. The High Court in Chye Fook v The Teng Seng Realty Sdn Bhd [1989] 1 MLJ, HC observed that a party who rescinds a contract is entitled to compensation for any damage which he has sustained through the non-fulfilment of the contract. 680 [12] REPUDIATION:

Section 40 of the Contracts Act 1950 deals with a breach of contract that amounts to its repudiation: Effect of refusal of a party to perform promise wholly.

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. 690 It can occur when:

A party refuses to perform or disables himself from performing his promise in its entirety.

When a contract is broken due to breach, the innocent party has the choice to end the contract or affirm its continuance. 695

The innocent party must accept the repudiation and terminate the contract.

If he does not, the contract remains in existence, and the innocent party must continue to perform his part of the contract; if he does not, he will be in breach, and the wrongdoer can elect to rescind the impugned 700 contract.

The general principles governing repudiatory breach under section 40 of the Contracts Act 1950 were held by the Federal Court in Berjaya Times Square Sdn Bhd v M-Concept Sdn Bhd 705 [2010] 1 CLJ 269, FC, that the starting point in an action for breach of contract is for the court to determine who is the innocent party and who is the guilty party; and the next question would be whether the innocent party is entitled to terminate the contract for breach and claim for damages under s.40 CA 1950, or whether 710 the innocent party can rescind the contract ab initio and claim for restitution.

A party refuses to perform when he indicates to the other party, either by conduct or in express terms, an intention not to proceed 715 with the contract. This amounts to repudiation of the contract or his obligations under the contract.

The Supreme Court in Rasiah Munusamy v Lim Tan & Sons Sdn Bhd [1985] 2 MLJ 291, SC that was cited and followed in PT 720 Vision Renewable Fuels v Export-Import Bank of Malaysia Bhd [2014] 2 AMCR 488; [2015] 8 MLJ 706, HC where the principles in the judgment of Mohamed Azmi SCJ can be distilled as follows:

Not every refusal to perform some part of the contract amounts to 725 repudiation or a refusal to perform.

There must be an absolute refusal to perform his part of the contract.

Short of an express refusal, however, the test is to ascertain whether the action or actions of the contract breaker are such as to lead a reasonable person to conclude that he no longer intends to be 730 bound by its provisions.

Only when there is an express refusal or where, on the facts, a reasonable man can conclude that there has been an absolute refusal to perform his part of the contract can the other party elect to terminate the contract or exercise the option of affirming the 735 contract.

If there is a genuine dispute as to the interpretation of the contract or its terms that have caused the breach by one party, that party cannot be taken to have refused to perform his part of the contract. 740

The phrase “disabled himself from performing” was explained in Akitek Tenggara Sdn Bhd v Mid Valley City Sdn Bhd [2007] 5 AMR 453; [2007] 5 MLJ 697, FC explained that the word “disabled himself from performing his promise” is wide enough to include any act on the part of a party which has the effect of bringing the 745 contract to an end, that is, any deliberate act. There is no need to show that the act was in breach of the contract or wrong on the part of the wrongdoer. In that case, the new shareholder of the defendant terminated the plaintiff's services, an architect, because they wanted to bring in their architect. This state of affairs was 750 brought about by the defendant's act of wanting its architect and changing the project's plans, thereby disabling it from performing its part of the agreement. Thus, when a party refuses to perform or disables himself from performing, he repudiates the contract by breach or commits a repudiatory breach. The refusal or disability 755 to perform must relate to the contract's fundamental term or obligation. Only a violation of a fundamental term would justify repudiation. The Court of Appeal in Ching Yik Development Sdn Bhd v Setapak Heights Development Sdn Bhd [1997] 1 AMR 89; [1997] 1 CLJ 287, CA laid down the following principles:

In every contract, some terms are of fundamental importance and others of lesser or minor importance. The law creates this distinction to determine the kind of remedy to be given to the innocent party.

Where the term breached is fundamental to the contract, the innocent party is entitled to treat himself as being discharged from further 765 obligations under it.

Conversely, where the obligation that has been breached is only subsidiary or minor, the innocent party may not treat himself as being free of his obligations under the contract; he may, however, sue and recover damages for the non-performance of the subsidiary term.

A party who terminates a contract or treats it as having come to an end in reliance upon the breach of a non-fundamental term is himself guilty of breach of contract.

Whether a term is fundamental to the contract or merely a term of subsidiary importance depends very much on how the contract is 775 constructed. [13] FINDINGS

13.1 I have examined all-cause papers, the evidence at the trial, and the parties' respective submissions and considering my observation in the 780 totality of the evidence and my observations in the parties' respective arguments in paragraphs [6] 6.1-6.9 and [7] 7.1-7.5 hereof, in addition to, I find an on a balance of probabilities the plaintiff has proven its case against the defendant and the defendant has failed to produce compelling or persuasive evidence to tilt the evidential scale in its 785 favour.

13.2 In accordance with the principles held by the Federal Court in Berjaya Times Square Sdn Bhd v M-Concept Sdn Bhd [2010] 1 CLJ 269:

The starting point is for the Court to recognise that in an action for 790 a breach of Contract, it is for the Court to determine who is the innocent party and who is the guilty party. In coming to this determination, a Court interpreting is entitled to look at the factual matrix forming the background of the transaction. The factual matrix of the transaction's background includes all material 795 reasonably available to the parties.

A breach of Contract occurs when a party to a Contract expressly or impliedly fails or refuses to perform or fails to perform satisfactorily one or more of his obligations.

From the facts gathered and established at the trial of this action, I find no hesitation in holding that the defendant is, in fact, in breach of the Agreement between the parties when they failed to honour their obligation to deliver a working product/solution as 805 envisaged in the Agreement. The fundamental subject matter of the Agreement can be seen collectively in clause 1 of the Agreement: Project: It means the project for the provision and implementation of the Software and 810 customised Software during the implementation Period, known as the Supply, Design, Development, Installation, Integration, Testing, Commissioning, Training, and Post-Implementation Support of HR Technology Solutions for BSN. 815 RFP: This means the business requirements of BSN in respect of the Project as reflected in BSN’s request for proposal submitted to the Company and any clarifications made by the Bank and subsequently agreed by the Company pursuant thereto and the requirements of which may be varied by BSN from 820 time to time through a variation. Software: Means the latest and most advanced version of the software supplied by the Company to BSN under the Agreement (including any duly licensed third- 825 party bundled software provided by the Company), in its executable object code form, together with procedures, statements, screen layouts, and machine-readable instructions. Statement of Works (SoW): 830 Means all works to be carried out and completed by the Company under the scope of works for the successful implementation of the Project as per