Dnex Solutions Sdn Bhd v I Data Centre Solutions Sdn Bhd (BA-22NCvC-16-01/2023)

In this action, the Plaintiff sued the Defendant for restitution of the sum RM5,789,878.95 paid under a contract, on grounds that the Defendant did not perform the said contract and had thereby been unjustly enriched, relying on Sections 66 and/or 71 of the Contracts Act 1950.

The Defendant contended that the contract was still afoot, that the RM5,789,878.95 refund sum (“Refund Sum”) had already been expended in preliminary works under the contract and further counterclaimed for RM2,995,050.00 for alleged 26/09/2025 15:49:56 BA-22NCvC-16-01/2023 Kand. 51 S/N kePHHcvxx0WTw2cY5czjDg payments made to consultants appointed to perform the contract. Background facts

On 26-6-2020, the Plaintiff participated in a tender for a contract worth RM47,174,717.00 to, inter alia, develop a new data centre for MYGOVCLOUD@PDSA Sentral at Aras B1, Blok D6, Kompleks D, Putrajaya and relocate existing infrastructure for a Government agency, Unit Pemodenan Tadbirandan Perancangan Pengurusan Malaysia, or better known by its English acronym, MAMPU (“Project”).

On 15-9-2020, the Plaintiff received the Letter of Acceptance from MAMPU based on the contract price of RM47,174,717.00 to complete the Project for a duration of 37 months starting from 22-9-2020 to 23-10-2023. The Plaintiff sub-contracted part of the works to the Defendant as evidenced by a Quotation No. QT-092020-001 dated 30-9-2020 and a Purchase Order No. DSSB20-000011 dated 6-11-2020 (“Contract”).

The Contract sum was RM38,599,193.00, including RM28,113,327.00 for the infrastructure and equipment for the data centre. Based on the Defendant’s quotation, the initial works that constitute part of the RM28,113,327.00 work scope were: S/N kePHHcvxx0WTw2cY5czjDg

On 30-11-2020, the Plaintiff paid the Defendant the Refund Sum as the initial 15% of the Contract sum that the Defendant had invoiced on 12-11-2020, according to the payment terms set out in the Purchase Order. The payment terms were 15% upon confirmation and 85% upon completion of works.

According to the Plaintiff, before any works were carried out, MAMPU rejected the appointment of the Defendant as sub-contractor, postponed the Project due to the Covid-19 Movement Control Orders by the Government and on 30-8- 2021, changed the location of the Project and suspended the Project indefinitely.

The Defendant disputed the Plaintiff’s case that no works were carried out, that the Project had become impossible to perform or that the Plaintiff is entitled to claim a return of the Refund Sum. Analysis and findings

This Court has reviewed the available documentary evidence comprising correspondence passing between the Plaintiff and Defendant, interspersed with communications from MAMPU. They are highlighted as follows: S/N kePHHcvxx0WTw2cY5czjDg a) By email dated 1-12-2020, the Defendant notified the Plaintiff in response to instructions from the Plaintiff to take preparatory steps for the Contract, that it had commenced the process of appointing Civil & Structural and Mechanical & Electrical (C&S and M&E) consultants, was undertaking preliminary technical works, and followed up for entry to the Project site. b) By letter dated 3-12-2020, the Plaintiff received a notice of breach from MAMPU complaining, inter alia, that the Plaintiff had appointed new subcontractors without prior approval from the Government. c) By emails between the Plaintiff and Defendant in April and May 2021, the parties continued to hold meetings, discussed the draft Systems Requirement Design (“SRD”) Document, project implementation schedules, project team organization charts, project members and commercial matters. d) By letter dated 12-7-2021, the Plaintiff received a letter from MAMPU complaining that the SRD was submitted late, and that the Project was “put on hold” with instructions to maintain the status quo in view of the Movement Control Order (“MCO”) in June 2021 and Enhanced MCO commencing 3-7-2021 due to the Covid- 19 pandemic. S/N kePHHcvxx0WTw2cY5czjDg e) By email dated 3-8-2021 from the Defendant to the Plaintiff, the Defendant inquired after the status of the application to start works on the ground, having been notified that MAMPU had issued a 12-7-2021 letter that the Project be “Put On Hold.” The Defendant further notified the Plaintiff that they have put together a team to implement the project and sought directions and timeline. f) By letter dated 30-8-2021, the Plaintiff received a further letter from MAMPU that the Project would be postponed indefinitely as reassessment and analyses needed to be carried out due to a decision to change the Project site to another proposed location, and gave the Plaintiff the option to withdraw from the Project or wait for the Project to resume. g) In response to the 30-8-2021 letter, the Plaintiff emailed the Defendant on the same day and asked the Defendant to demobilize and prepare a list of costs incurred. h) By a letter of demand dated 30-6-2022 to demand payment of the Refund Sum, the Plaintiff notified the Defendant that “MAMPU has not allowed us to appoint you as a supplier and/or subcontractor for the project.”

The Plaintiff’s pleaded cause of action is unjust enrichment premised on Sections 66 and/or 71 of the Contracts Act 1950, both of which necessarily presuppose that there is no valid S/N kePHHcvxx0WTw2cY5czjDg contract on which to sue, because the Contract was void or had become void.

In post-trial submissions, the Plaintiff’s legal bases for why the Contract is void or voidable were two-fold:

rescission of the Contract for repudiation by the Defendant per Sections 40 and 56 of the Contracts Act 1950; and

frustration of the Contract within the meaning of Section 57 of the Contracts Act 1950.

Though it is not entirely clear from the pleadings, the Defendant’s counterclaim appears to simply be for non-payment of amounts due under the Contract, as the case is premised on affirmation of the Contract. The Defendant did not advance a claim for specific performance, nor, as one might expect, a quantum meruit or loss of profit claim.

The Plaintiff submitted that the Defendant had breached the terms of the Contract within the meaning of Sections 40 and 56 of the Contracts Act 1950, and that this entitled the Plaintiff to rescind the Contract and claim the refund. S/N kePHHcvxx0WTw2cY5czjDg

Based on this claim, it must be proved that the Defendant refused to perform or disabled itself from performing its promise in its entirety, entitling the Plaintiff to rescind the Contract (see Berjaya Times Square Sdn Bhd v. M-Concept Sdn Bhd [2010] 1 CLJ 269).

The Plaintiff also argued in the context of the Defendant’s contractual performance that the Plaintiff is entitled to rescind the Contract because of a total failure of consideration. The factual premise is, again, that no products or services were supplied by the Defendant to the Plaintiff according to the Contract.

Dealing briefly with the concept of total failure of consideration, it is not a free-standing cause of action, but a ground for restitutionary remedies. In this case, it can be a consequence of a repudiatory breach of the Contract by the Defendant or, as discussed in the next section, frustration of the Contract (see Goh Yew Chew & Anor v Soh Kian Tee [1970] 1 MLJ 138).

Considering the nature of the Contract works and the evidence of what transpired as set out in this case, it is unclear what the Plaintiff means when it contends that the Defendant failed to supply any products and services under the Contract in breach of the Contract. No particulars were pleaded or proved. S/N kePHHcvxx0WTw2cY5czjDg

According to the work programme in evidence, project initiation and planning, including project team mobilisation and site possession, shop drawing design submission and approval were to have commenced on 1-9-2020. However, the Defendant was never given site possession, as evident from the follow-up email of 1-12-2020.

There was no total failure of consideration when the performance of the Contract is considered, as the evidence also showed that the Defendant had mobilised its project team and apparently, the SRD was submitted. Although there is no evidence of the Defendant’s actual involvement in it, the preparation of that document appears in the Defendant’s scope of work. Based on the letter of 12-7-2021, MAMPU received an SRD for the Project.

For the above reasons, this Court finds that there is no legal or factual basis to argue for rescission ab initio of the Contract on grounds of repudiatory breach by the Defendant.

In any case, the Plaintiff’s argument is a non-starter because rescission of the Contract for repudiatory breach and/or total failure of consideration is not even the Plaintiff’s pleaded case. The pleaded case was the impossibility of performance due to a change of circumstances. It cannot be seriously disputed that the entire factual premise of the Plaintiff’s case, as pleaded, transpired through no fault of the Defendant. S/N kePHHcvxx0WTw2cY5czjDg

In short, this Court has no difficulty finding that there is no basis to argue that the Defendant refused or disabled itself from performing the Contract as the words of Sections 40 and 56 of the Contracts Act 1950 require.

Based on the above findings, there is no need to address the Defendant’s submissions in response to this ground i.e. that the Contract contains no provision for restitution. Any right to restitution would have accrued by operation of law, not based on a contractual provision.

The Plaintiff’s submissions, which did accord with the facts pleaded, are that the Contract was frustrated within the meaning of Section 57(2) of the Contracts Act 1950. The provision envisages two main instances of frustration, i.e. when a contract becomes impossible, or when a contract becomes unlawful.

According to the Court of Appeal in Guan Aik Moh (KL) Sdn Bhd & Anor v Selangor Properties Bhd [2007] 4 MLJ 201: “…there are three elements woven into the fabric of the doctrine embodied in s 57. First, the event upon which the promisor relies as having frustrated the contract must have been one for which no provision has been made in the contract. If provision has been made then the parties must be S/N kePHHcvxx0WTw2cY5czjDg taken to have allocated the risk between them. Second, the event relied upon by the promisor must be one for which he or she is not responsible. Put shortly, self induced-frustration is ineffective. Third, the event which is said to discharge the promise must be such that renders it radically different from that which was undertaken by the contract. The court must find it practically unjust to enforce the original promise.”

Frustration is the impossibility of performing according to the original undertaking, and does not apply when the contract can still be performed with greater difficulty or expense (see the famous formulation of the test for frustration in Davis Contractors Ltd v Fareham Urban District Council [1956]

To recap, the pleaded supervening events in this case are the following, i.e. MAMPU rejected the appointment of the Defendant as sub-contractor, postponed the Project due to the Covid-19 MCOs by the Government and on 30-8-2021, changed the location of the Project and suspended the Project indefinitely.

Despite the notice of breach from MAMPU dated 3-12-2020, this Court found no evidence that MAMPU had rejected the Defendant as a supplier and/or subcontractor for the project. Even if that were true, the Plaintiff did not terminate the Contract but had continued to engage with the Defendant throughout 2021 until as late as 30-8-2021. S/N kePHHcvxx0WTw2cY5czjDg

However, there is unchallenged evidence in the correspondence from MAMPU dated 12-7-2021 that the Project was put on hold due to MCO and that on 30-8-2021, the site of the Project was changed to a different location and the Project was suspended indefinitely to undertake reassessments for site suitability. Neither events were provided for in the Contract, nor caused by the Plaintiff’s doing.

The question is whether the tentative re-location with no certainty of suitability, changes to the SRD and consequential time and cost implications, are prevailing factors that render the Contract radically different from that which was initially undertaken through no fault of either party, such that it would be unjust to enforce the original Contract.

The Defendant argued that the Project was not cancelled, nor was the Contract impossible to perform because of the alleged supervening events. The Defendant further pointed out that, based on the Plaintiff’s Project Manager, Aswadey Bin Wagimen (“PW2”), the Project was revived in October 2023.

This Court finds that the MCO-induced delay in the Project did not qualify as a frustrating event, but the decision by MAMPU that was conveyed on 30-8-2021 to change the Project site and suspend it indefinitely does for these reasons: a) The Contract involved a substantial work scope by the Defendant in respect of RM47,174,717.00 Project to S/N kePHHcvxx0WTw2cY5czjDg develop a new data centre for MYGOVCLOUD@PDSA Sentral at Aras B1, Blok D6, Kompleks D, Putrajaya. This was a large-scale Government project to construct and fully equip a data centre and relocate equipment, fixtures and fittings from the existing data centre to a specific new location. b) Based on the content of the 30-8-2021 letter from MAMPU, the original Project site was no longer available and a new space had been proposed by the Government. However, MAMPU needed to engage with third parties to ascertain the suitability of the floor space in the building in terms of load bearing and soil structure outside the building for the placement of outdoor utilities (cables, chiller, genset etc.).

As at 30-8-2021, there was no certainty that the Project would proceed at the new site. Regardless of the decision taken by the Plaintiff to either withdraw or wait for the Project to resume, the bargain between the Plaintiff and Defendant had radically changed at that point since the Contract was for largely the entire Project works based on the Quotation and accompanying workscope.

This Court accepts the evidence of PW2 that the location of the Project was indeed changed and when it resumed in October 2023, a new SRD had to be prepared to fulfil changed requirements at the new Project site. The work done and S/N kePHHcvxx0WTw2cY5czjDg planned to be done under the Contract was not shown to be transferable from one project site to another. In fact, no attempt was made to demonstrate that it was.

It follows from Section 57(1) and (2) of the Contracts Act 1950 that when the Contract is frustrated by becoming impossible to do what was originally undertaken, the Contract becomes void and is discharged by operation of law. When a contract is discharged by frustration, the contract does not become merely voidable but is brought to an end forthwith and automatically. Remedy in the event of frustration

Restitutionary remedies are provided for under Section 57(3) and 66 of the Contracts Act 1950. This was acknowledged on 30-8-2021 when the Plaintiff asked the Defendant to demobilize and provide a listing of costs incurred. S/N kePHHcvxx0WTw2cY5czjDg

Such a step is consistent with Section 66 of the Contracts Act 1950 and/or Section 15 of the Civil Law Act 1956 to adjust the rights and liabilities of the parties after the Contract is frustrated.

The Defendant did not respond to provide the listing of costs at the material time. The heads of claims for the Refund Sum and the further RM2,995,050.00 by way of counterclaim were unparticularised in the Defence and Counterclaim. At the trial, the Defendant’s primary witness, Azhar bin Abdul Ghafar (“DW1”) identified the following to account for it: Item Details Amount (RM) Systems Requirement Design unspecified Mechanical and Electrical drawings by Jurutera Perunding Inspirasi unspecified Staff costs (Nov 2020 to Jan 2023) @ 125,001.25 per month - Managing Director-Director - Finance Manager 4,750,047.50 S/N kePHHcvxx0WTw2cY5czjDg - IT Manager - Procurement Manager - Safety Officer - Accounts Officer - Accounts Clerk - Administration Officer - Administration Clerk - Receptionist Payments to “facilitators” 2,900,000.00 - Khairil Nikmanisham bin Pamuji (15-9- 2020): RM1,000,000 Commission - Minds@work (1- 11-2020) : RM400,000 Lead, coordinate, facilitate and motivate all associated project resources to gain alignment on project goals and deliverables S/N kePHHcvxx0WTw2cY5czjDg - Golden Sky Network (3-11- 2020) : RM500,000 Develop and drive integrated project plans and current system/infra, aligning project tactics with project strategy - AMZ Technology (15-12-2020) : RM250,000 Establish, maintain and lead high performance project team, serving as the project advocate within the client organization - Infra Rede Resources (15- 12-2020): RM250,000 of RM1,983,500.00 Plan, schedule and control project activities to fulfil objectives and safety project requirements Compensation to Infra Rede Resources - 595,000

The short answer to the above claims is that, save for the SRD and mechanical/electrical drawings by Jurutera Perunding Inspirasi, expenditure for the other items do not form part of the consideration for the Contract sum. S/N kePHHcvxx0WTw2cY5czjDg

In respect of the SRD, no quantum is specified, and the only indication of its value arises from the Defendant’s own quotation of RM200,000.00. Given that the staff listing suggests the Defendant outsourced the preparation of the SRD, it was incumbent upon the Defendant to adduce proof of payment for that deliverable.

According to PW2 and this Court accepts his evidence, that no work could commence before approval of the SRD by MAMPU and there was no record of any engagement by MAMPU on the SRD on file for the original Project site. Consistent with the letter dated 12-7-2021 from MAMPU, the SRD was tendered late and was never reviewed or finalized.

As for the mechanical/electrical drawings by Jurutera Perunding Inspirasi, they are dated in 2021 but appear to be marked as tender drawings. Although Wan Maliki bin Wan Muhammad of Jurutera Perunding Inspirasi was called to testify (“DW3”), still no evidence was adduced of the quantum paid by the Defendant for the drawings.

This Court finds that the Defendant did not discharge the burden of proving the value of any advantage it says the Plaintiff has gained for any work done under the Contract. S/N kePHHcvxx0WTw2cY5czjDg

For the reasons set out above, the Plaintiff’s claim is allowed and the Defendant’s counterclaim is dismissed with costs RM20,000.00. Bertarikh : 26 September 2025 SGD ELAINE YAP CHIN GAIK PESURUHJAYA KEHAKIMAN MAHKAMAH TINGGI MALAYA SHAH ALAM Peguam bagi pihak Plaintif: Dato’ Kevin Sathiaseelan @ Joshua Kevin (Messrs Kevin & Co.) Peguam bagi pihak Defendan: Nor Azlan bin Sharin (with Hanif bin Abdul Rahman) (Messrs Hanif Abdul Rahman And Assoc.) S/N kePHHcvxx0WTw2cY5czjDg