Sehubungan dengan itu, PERKESO amat berbesar hati sekiranya pihak tuan dapat memberikan maklumbalas bagi pelantikan ini. Dengan penerimaan surat lantikan ini, adalah dimaklumkan bahawa suatu ikatan kontrak adalah telah wujud di antara PERKESO dengan tuan. Suatu kontrak rasmi akan disempurnakan kemudiaannya supaya pihak tuan dapat melaksanakan obligasi kontrak dan mematuhi keperluan yang ditetapkan sebagaimana yang terkandung di dalam cadangan yang diserahkan oleh pihak tuan bertarikh 14 September 2020 serta pada sesi penjelasan bertarikh 18 September 2020 bersama PERKESO. [9] Meanwhile, on 7 February 2021, the defendant sent the plaintiff a "Surat Penangguhan" ("Letter of Suspension") informing them of its decision to suspend the project. [10] Other than the statement that "terdapat perkembangan baharu di pihak Kerajaan", the Letter of Suspension did not contain any reasons or justifications for the suspension. [11] As soon as the plaintiff received the Letter of Suspension, it sought support from the Prime Minister of Malaysia's office through a letter dated 16 February 2021. [12] As a result, the Prime Minister at that time noted in the plaintiff's letter that he had no objections to the plaintiff's application for support. [13] The plaintiff also sent a letter dated 17 February 2021 asking the defendant to explain or clarify the suspension of the project's implementation. [14] In October 2021, the defendant issued a Termination Notice informing the plaintiff that the defendant does not wish to pursue the project. [15] By letter dated 22 November 2021, the plaintiff expressed its disappointment over the termination. [16] No response was received from the defendant. [17] It was because of this that the plaintiff initiated this action against the defendant. Issues to be tried [18] During the course of advancing its case, the plaintiff raised seven issues that needed to be resolved. As I review the same, I discover that they are not only interrelated, but also involve the issue of whether the plaintiff is entitled to damages, which can only be decided after determining liability. [19] In light of this, I find that only one main issue needs to be resolved in order to determine the rest of the issues. The issue is whether the Letter of Appointment between the plaintiff and defendant constitutes a binding contract. Court's analysis and findings [20] In advancing its argument that a contractual relationship exists between the parties, the plaintiff argues that it was the defendant who had made it clear from the beginning that they intended to create a contractual relationship with the plaintiff. According to the plaintiff, it is important to refer to the contents of the Letter of Appointment. In this case, the Letter of Appointment clearly states that with the acceptance of the Letter of Appointment by the plaintiff, a contractual relationship has been established between the defendant and the plaintiff. In accordance with this, the Letter of Appointment also indicated that a formal contract would be finalised later so that the plaintiff can fulfil the contractual obligations and comply with the fixed requirements outlined in the plaintiff's earlier proposal of 14 September 2022. Therefore, it is the plaintiff's case that based on the said contents and ingredients of the Letter of Appointment, it is apparent that the defendant clearly intended to create legal relations with the plaintiff and that the defendant did indeed establish the said contractual relationship with the plaintiff. [21] Moreover, the plaintiff argues that the trite legal position of the law is that it supports upholding bargains rather than knocking them down arbitrarily. Using this principle of law, the plaintiff contends that there is a contractual relationship between the parties based on the corresponding exchange between them and the evidence presented at trial. In this case, the plaintiff claims that it was never the intention of the parties for the contract to only come into existence after a formal agreement has been executed. This, according to the plaintiff, is evident from the fact that the defendant never raised the issue of whether or not there was a contract throughout the letters of correspondence exchange between the parties, as indicated in the letters dated 9 February 2021, 17 February 2021, 2 March 2021, and 5 October 2021. [22] Additionally, the plaintiff argues that the Letter of Appointment was never intended to be subject to any situation. As far as the defendant's witnesses are concerned, there have been no correspondences or documents presented to show that the parties have no contractual relationship. [23] In conclusion, the plaintiff asserts that this Court should only be concerned with discovering what the Letter of Appointment means, and there is no need to rewrite any new contract terms into it. [24] While opposing the plaintiff's arguments, the defendant argues that the plaintiff has not even attempted to address the crux of the defendant's position, which is that neither party has reached a consensus ad idem. This leads to the glaring question of what exactly is the substance of the offer that was purportedly offered by the defendant and accepted by the plaintiff, according to the defendant. Despite the plaintiff's vehement argument that there is a contract between the two parties, the plaintiff has not addressed what constitutes an acceptance of such a contract. It is the defendant's stand that it is abundantly clear from the draft agreement that there are still fundamental and substantive clauses that are still being discussed between the parties as of 22 December 2020. [25] As a result, the documentary evidence clearly indicates that these issues remain outstanding between the parties. Consequently, the defendant argues that at no time was there a consensus ad idem between the parties. Accordingly, the defendant argues that it would be putting the cart before the horse for the plaintiff to seek enforcement of the terms of a purported contract when such terms have not yet been agreed upon. [26] Those are the arguments the parties have raised. [27] In accordance therewith, I have carefully considered this matter and the issues raised by the parties and will now proceed with my analysis. [28] First, I must examine the contents of the Letter of Appointment in order to determine whether there is a legal relationship between the parties that constitutes a binding contract. In examining the Letter of Appointment, I find that based on the said Letter of Appointment, the defendant clearly indicated that it intended to appoint the plaintiff as a strategic partner in order to allow the plaintiff to begin the process of digitising the defendant's SOCSO benefits. Consequently, the defendant requested the plaintiff's feedback on the appointment. [29] Here, the Letter of Appointment made it clear that if the plaintiff accepted the Letter of Appointment, a contractual relationship would be established between the parties. Despite this, it has also been agreed that a formal contract will be finalised later so that the defendant can perform the contractual obligations and comply with the fixed requirements as stipulated in the proposal submitted by the plaintiff dated 14 September 2020, as well as after the clarification session on 18 September 2020 between the plaintiff and defendant. Upon acceptance of the Letter of Appointment, the plaintiff was required to prepare a draft contract within 14 days of acceptance for the defendant to review and agree upon before a formal agreement was to be signed. [30] After appreciating the Letter of Appointment, what next step I should take to determine if there is a contract between the parties? [31] In order to do so, I am well aware of the following trite legal position. Accordingly, the law is clear that if any documents or letters rely on as constituting a contract, contemplate the execution of a further contract between the parties, what is the legal position of such a relationship between the parties thereto? [32] There are two aspects to this. As a first point, it pertains to the question of construction, which is, firstly, whether the execution of a further contract is a condition of the terms of the bargain, or, secondly, whether the execution of the contract is merely an expression of the parties' wishes regarding the way in which the transactions already agreed to will actually take place. This means, in the former case, there will be no enforceable contract, either because the condition is not met or because the law does not require a contract to exist. The latter case, however, clearly establishes a binding contract and the reference to the formal document can be ignored. [33] Following my understanding of this legal position, I will then determine whether the execution of the further contract is a condition of further terms of the bargain, or whether it is merely an expression of the parties' wishes as to the manner in which the transaction already agreed upon will proceed. [34] As a result of a close examination of the Letter of Appointment, it appears to me that this Letter of Appointment establishes a legal relationship between the plaintiff and defendant, which is why it constitutes a legally binding contract. In arriving at this finding, I find that the execution of the further contract as expressly dictated in the Letter of Appointment is a mere expression of the desire of the plaintiff and the defendant as to the manner in which the transaction already agreed to will, in fact, be carried out. The reason for this is that the most important thing that governs the relationship between the parties is not just the Letter of Appointment per se, but also the plaintiff's proposal dated 14 September 2020, which was fully accepted by the defendant when it issued the Letter of Appointment. Despite the fact that the draft agreement is unsigned, if I were to go into it in further detail, it does not specifically mention any new terms concerning the scope of work of the plaintiff. In other words, the draft agreement has already accepted that the plaintiff's proposal dated 14 September 2020 would be automatically accepted in its entirety. [36] Furthermore, the terms of the draft agreement merely refer to the standard terms and conditions that apply to a normal contract between the parties. As an example, there are the standard terms in relation to the termination of the contract, the warranties offered by each party, etc. It does not mention that the parties were to discuss the scope of work to be performed by the plaintiff. As the Letter of Appointment made clear, the defendant has accepted the plaintiff's proposal, and the contract only formalises the legal relationship between them. [37] Overall, I find that the formal agreement is merely an expression of the parties' desire to formalise such an appointment. It is also necessary to emphasise the use of the term 'formal' to reflect this. It is thus clear that there is a binding contract, so the court can ignore the reference to the formal document. [38] The effect of the above legal position has been observed by the Court of Appeal in the case of Baldah Toyyibah (Prasarana) Kelantan Sdn Bhd v Dae Hanguru Infra Sdn Bhd & Another Appeal [2020] 5 CLJ 27, where His Lordship Hamid Sultan Abu Backer JCA observed as follows at pp 32 & 33: Subject To Contract [13] Terms and conditions communicated during the negotiation of an agreement with a proviso, 'subject to contract' may not lead to a final contract. At common law, it is well-established in sale of land, until formal contracts are exchanged parties are not bound. (See Eccles v. Brynt [1948] Ch 93, [1947] 2 All ER 865; Hoorobin v. Majestic Hotel (Chelternham) Ltd [1973] 227 Estates Gazette 993). [14] It is well-established that if the finalised terms is sufficient to conclude, the contract, the phrase subject to contract, may be superfluous. In Von Hatzfeldt-Wildenburg v. Alexander [1912] 1 Ch 284 at 288-289, Parker J observed: It appears to be well settled by the authorities that if the documents or letters relied on as constituting a contract contemplate the execution of a further contract between the parties, it is a question of construction whether the execution of the further contract is a condition of terms of the bargain or whether it is a mere expression of the desire of the parties as to the manner in which the transaction already agreed to will in fact go through. In the former case there is no enforceable contract either because the condition is unfulfilled or because the law does not recognise a contract to enter into a contract. In the latter case there is a binding contract and the reference to the more formal document may be ignored. [39] Having made the above findings on liability, it is now time for me to address the issue of damages and their quantum, and whether or not the plaintiff is entitled to them. [40] The first thing I will do is examine the plaintiff's arguments regarding the quantum of damages. Specifically, the plaintiff claims that it has incurred losses of up to RM17,999,414.00 due to the suspension and termination of the project by the defendant. [41] According to the plaintiff, it incurred all these costs due to the verbal instructions and timeline that the defendant set for the plaintiff's proposal, as well as to the technical meetings held between the parties. It is the plaintiff's argument here that the defendant had already agreed to the commercial terms, which is the cost per card, so the defendant would never be concerned with the costs incurred. Hence, if the defendant had not unilaterally suspended and terminated the project, the plaintiff would not have suffered losses amounting to RM17,999,414.00. [42] Further to the above, the plaintiff claims to be entitled to RM38,250,000 for the cumulative loss of profits over the period of ten years based on the value in the draft agreement. Alternatively, the plaintiff claims that it is entitled to compensation under section 71 of the Contracts Act 1950, which calls for compensation in the range of RM17,999,414.00. [43] Lastly, the plaintiff seeks exemplary damages for the defendant's actions in terminating the contractual relationship without reasonable cause. As a government body, the defendant acted without due regard to the plaintiff's rights and interests, and therefore, the case falls under the Rookes v Barnard category. However, there was no further analysis made by the plaintiff regarding how Rookes v Barnard is clearly relevant to the situation. [44] Meanwhile, the defendant argues that the plaintiff has not sufficiently proved his claim for damages in response to the plaintiff's argument. According to the defendant, the plaintiff's documentary evidence relied on to establish its alleged losses and damages is fundamentally insufficient and incapable of satisfying the plaintiff's legal burden of proof. Here, the defendant argues that the plaintiff does not prove that these expenses were actually incurred. In addition, the plaintiff failed to adduce documents showing payment of the invoices the plaintiff claims to have incurred. Moreover, the defendant argues that the plaintiff failed to adduce any evidence concerning the alleged advantage obtained by the defendant under Section 71 of the Contracts Act 1950. Moreover, the plaintiff has no basis for claiming exemplary damages against the defendant, since the decision was made by the Minister of Human Resources. [45] As I proceed with the analysis of the arguments raised herein, I must first be guided by the applicable law when dealing with an issue such as this one. In Lim Tze Sian v Coverright Surface Malaysia Sdn Bhd [2017] 5 CLJ 150, the Court of Appeal affirmed the trite legal principle that the party seeking damages must prove the extent of the damage. The following detailed observation was made by Her Ladyship Mary Lim JCA (as Her Ladyship then was) at pp 160-162: [30] Section 74 requires the respondent to prove that it had suffered loss of profits as a result of the appellant's breach of the confidentiality and noncompetition agreement. The respondent must prove that this loss of profit arose naturally in the usual course of things from such breach, or which both parties knew at the time of the making of the contract, that such damage or loss is likely to result from such breach. If this loss is too remote or is an indirect loss, the respondent is not entitled to any compensation, and the court must dismiss the claim, or order nominal damages even if interlocutory judgment has already been entered. There are no free passes to compensation for any claimant, save where there is admission. [31] Quite aside from this fundamental principle, the respondent is also required to prove that the losses sustained are caused by the appellant. There must be a causal link or nexus between the loss claimed and the act of the appellant. An interlocutory judgment, including one by default, only means that the fact of breach of contract has been established or is dispensed with. The respondent is no longer required to prove liability. What remains to be established and proved is the matter of loss, and the amount of that loss. In Tan Ah Chio & Ors v. Lua Kim Son & Ors [2014] 1 LNS 1004, the Court of Appeal had held that: It is trite law that a party claiming damages must prove actual losses suffered and that the losses suffered were caused by the opposing party's breach. [32] The burden of proving this loss of profits always remained with the respondent. Until the respondent has discharged the burden, there is no issue of rebuttal by the appellant. In Bonham-Carter v. Hyde Park Hotel Ltd (1948) 65 TLR 177 Lord Goddard stated: Plaintiffs must understand that if they bring actions for damages it is for them to prove their damages. It is not enough to write down the particulars and so to speak throw them at the court, saying: 'This is what I have lost. I ask you to give me damages.' They have to prove it. [33] Similarly, the Federal Court in the decision of Taiping Poly (M) Sdn Bhd v. Wong Fook Toh & Ors [2011] 3 CLJ 837 opined: The onus is on the plaintiff to prove the loss actually sustained by reason of the defendant's conduct. The plaintiff is entitled to such damages as naturally flowing from their unlawful act, and that there is no artificial limitation in the case of a passing off action. [34] As this court has indicated earlier, there is no evidence in either the learned SAR's decision or that of the learned judge that these fundamental principles had been duly considered. Where these basic principles have been shown to have been ignored, not applied or applied wrongly, the High Court and now, this court is justified in interfering so as to do justice. This was expressed by the Federal Court in the celebrated decision of Tan Sri Khoo Teck Puat & Anor v. Plenitude Holdings Sdn Bhd [1995] 1 CLJ 15: We need hardly add that in considering this appeal, and in particular, the grounds upon which an appellate Court would be justified in interfering by reassessment of the damages, we have reminded ourselves of what Greer LJ had said in Flint v. Lovell [1935] KB 354 CA (at p 360). "This Court", he said: ... will be disinclined to reverse the finding of a trial Judge as to the amount of damages merely because they think that if they had tried the case in the first instance they would have given a lesser sum. In order to justify reversing the trial Judge on the question of the amount of damages it will generally be necessary that this Court should be convinced either that the Judge acted upon some wrong principle of law, or that the amount awarded was so extremely high or so very small as to make, it in the judgment of this Court, an entirely erroneous estimate of the damage to which the plaintiff is entitled. [35] Applying those principles to the assessment that was conducted here, we find that there was actually no consideration of these principles at all. The learned judge, certainly did not ask the right questions, whether the principles of compensation for a breach of contract have been properly applied by the learned SAR. Even though the SAR had said that the loss as seen in the several exhibits before the court were clearly caused by the appellant, the learned judge must examine that evidence with a view to satisfying herself that there was indeed proper assessment conducted. Where the learned judge fails to do that, and that is the case in the present appeal, we must intervene to prevent injustice. [36] When we examine the pieces of evidence presented by the respondent, we found that they do not, in fact, support its claim; regardless whether that evidence is taken on its own or collectively. Consequently, the respondent cannot be said to have proved its loss and is therefore, not entitled to any compensation, including a claim for loss of profits [46] I will now proceed to determine whether the plaintiff is entitled to the sum of RM17,999,414.00, which was allegedly expended during the project with the defendant. Having appreciated the law, I am well aware of the trite legal position that it is the burden of the party seeking damages to prove the quantum of damages. This is not a matter of shortcuts. It is also necessary for the plaintiff to show that the damages sustained are due to the defendant's actions, such that there is a causal connection between the damages and the defendant's actions. As a consequence, until and unless the plaintiff has discharged his burden, there is no point on the part of the defendant in rebutting the plaintiff's claim for damages. [47] Based on a thorough examination of the arguments of the parties and the plaintiff's evidence in relation to damages, I find that the plaintiff has not sufficiently proved its claim for damages. My findings can be attributed to a few factors. [48] Firstly, I find that the plaintiff did not provide any proof that the defendant gave the plaintiff permission to proceed with the contract. According to the evidence before the court, the agreement between the parties at that stage relates only to the proposal submitted by the plaintiff that led the defendant to issue the Letter of Appointment. Taking a step further in this regard, I find that the plaintiff's evidence that it has received verbal confirmation from the defendant to begin implementing the project is not credible. In this case, there is no evidence before the court that such was the defendant's instruction or direction. [49] Secondly, there is also a clause in the draft agreement that any further action by the plaintiff is subject to the date of execution. Here, it appears to me that the execution date of the agreement refers to the kick-off date of the program to be determined by the defendant after the agreement has been executed. As a result of this evidence, it can be concluded that although the plaintiff has been appointed as a strategic partner and a contract has been formed that binds both parties, the move forward is still dependent on the defendant's direction. [50] As a third point, I also find that the plaintiff's alleged work had not benefited the defendant. This means that the alleged work did not enhance the defendant's position to the plaintiff's unfair disadvantage. [51] The above findings alone eliminate the need to investigate further into the plaintiff's invoices. [52] Nevertheless, for the sake of completeness, I will consider whether the plaintiff has proved that the expenses were incurred and payments were made. This has two aspects. On the first point, I find that, except for three invoices, the plaintiff has failed to prove that the invoices were paid. Here, I find that the plaintiff has largely failed to provide documents showing that payments have been made toward invoices that the plaintiff alleges to have incurred. This is material and vital evidence for the court to consider when considering the plaintiff's damages claim. How is it that the plaintiff cannot produce proof of payments in the form of bank cheques, banking payments slips, or other proof of payments if those invoices were actually paid? [53] In the second instance, the plaintiff appears to have provided three proofs of payment towards Mastercard invoices. They are in the range of RM372,663.79 made on 25 November 2019, RM226,545.82 made on 24 December 2019, and RM110,534.42 made on 1 December 2020. Unfortunately, this court has difficulty acknowledging this payment because the plaintiff has not proven that these invoices or expenditures were incurred for this project. Accordingly, the plaintiff has failed to establish a causal connection between the loss claim and the termination of the contract by the defendant. As such, PW3's testimony as a whole does not suffice to establish the same. [54] In this regard, I also keep in mind that this involves the questions of technical aspects and specifications of computer programming, which requires the necessity of calling an expert or any witness for that matter, to show to the court that these expenses are clearly as a result of the further development of the plaintiff's proposal. Moreover, the court cannot ignore the fact that these expenses could also be generated for other projects of the plaintiff unrelated to the defendant. Thus, the court cannot accept such evidence from the PW3 because it can also be said that it is self-serving statements without any particular reference to documentation. [55] In addition, I cannot ignore the fact that there were invoices for allegedly recurring services after the defendant specifically informed the plaintiff to put the drafting of the agreement on hold. I also find it difficult to accept that some of the invoices were for renovations, computers, and even office chairs. It is rather difficult for me to tie up with the projects in that way. One would assume that all these basic infrastructures would already exist and shouldn't be charged to the defendant. There were also some financing documents related to financial facilities, which were clearly for a different project and predated the existing project between the plaintiff and defendant. [56] The loss of profits will now be the focus of my discussion. [57] On this basis, I am unable to award the plaintiffs RM38,250,000.00 for their alleged loss of profits from the project over the next 10 years, assuming that there was no termination by the defendant. The plaintiff failed to show the projected profits versus expenses incurred in generating the RM38,250,000.00 loss of future profits. Without taking into account the remunerations, office expenses, and other ongoing business expenses, it is impossible to say that the plaintiff is entitled to a clean RM38,250,000.00 in profits. The plaintiff's claim for future profits is crippled by its failure to provide a clean sheet of calculations in that regard. [58] For exemplary damages, I find that punishing the defendant for terminating the contract is not necessary. In this regard, I do not believe the principle in the Rookes v Barnard applies to the defendant here, as it did not constitute oppressive, arbitrary, or unconstitutional government action. Conclusion [59] In light of the above, the plaintiff's action is therefore dismissed with costs of RM25,000.00, subject to allocatur. Dated 31 $ ^{st} $ March 2026 (Raja Ahmad Mohzanuddin Shah) Judge High Court of Malaya Kuala Lumpur Counsel for the Plaintiff-Wong Yun Loong & Mokhzani Harris bin Yusof Messrs Isa Aziz IbrahimCounsel for the Defendant-Dato' Dr Abd Shukor bin Ahmad & Daniel Bock Jr Wei Messrs Shukor Baljit & Partners