Mcgirvanmedia (Asia) Sdn Bhd v Hss Integrated Sdn Bhd (WA-22NCvC-817-12/2020)

The Plaintiff’s claim against the Defendant is for a wrongful termination of a contract in a project called Iskandar Malaysia Bus Rapid Transit System (“the project”). This was a project undertaken by the Iskandar Regional Development Authority (“IRDA”). 16/11/2025 18:38:32

The dispute between the parties proceeded to a full trial whereby the parties relied on oral evidence and documentary evidence to support their respective case. Brief facts

The principal players in the project were IRDA as owner of the project and the Defendant as the lead consultant. The Defendant won the bid to be the lead consultant in an open tender undertaken by IRDA.

In making a bid for the project the Defendant had with it a collaboration of 10 sub consultants which had been approved by IRDA. The Plaintiff was one of the sub consultants.

The collaboration between the Defendant and the Plaintiff before bidding of the tender was evidenced by a number of agreements including the Term of Reference and more importantly a non-exclusive teaming agreement (“Teaming Agreement).

The Defendant won the bid as the lead consultant and was awarded the project which was witnessed by an agreement between the Defendant and IRDA.

A few months into the project disagreements arose between the Plaintiff and the Defendant with regards to the Plaintiff’s scope and nature of work as well as variation of the works and time line as well as the payment schedule.

These disagreements led to the termination of the Plaintiff by the Defendant which led to the filing of this suit whereby the Plaintiffs are claiming for the work done as well as the balance sum promised under the agreement with the Defendant. The issue

A large part of the Trial was devoted to proving the actual scope of the Plaintiff’s work prior to the bid being successful and the variation of the scope of work and the time line for the completion of work once the project had been awarded to the Defendant as well as the payment schedule disparity.

Although these disagreements finally led to the Plaintiff’s termination by the Defendant the Court deemed it not necessary to delve in the details of the disagreements. Suffice to say that the evidence led by the parties showed that there was disagreement of the actual role of the Plaintiff as viewed by the Defendant and what the Plaintiff were ultimately asked to do.

There was also the disagreement with regards to the payment to the Plaintiff should be expedited as their involvement was limited to the early part of the project. The Plaintiff contended that that they need not have to wait for the payment until the completion of the project as their scope of work would have been completed much earlier.

In the Court’s view the sole issue for determination in this case was whether the disagreements between the Plaintiff and the Defendant justified the Defendant in terminating the Plaintiff as a sub consultant.

In the Court’s view the answer to this must be determined within the 4 corners of the agreement entered between the parties in this case. The agreements governing the parties

Although this case was proceeded between the Plaintiff and the Defendant as parties to this suit, the Court could not ignore the role of IRDA. Although IRDA was not named as a party to this suit it could not be overlooked that the owner of the entire project was IRDA and any dispute between the Plaintiff and the Defendant could endanger the entire project and cause losses to IRDA as well.

In this case the Plaintiff and the Defendant invited the Court to only consider the Teaming Agreement between the Plaintiff and the Defendant in order to determine the validity of the termination by the Defendant.

The parties were at odds whether the Teaming Agreement was a conditional agreement subject to a further sub-consultancy agreement or otherwise. The undisputed fact in this case is that both parties had failed for various reasons to execute a sub-consultancy agreement.

The Plaintiff’s stand was that the Teaming Agreement was a standalone agreement capable of being enforced regardless of the absence of the sub-consultancy agreement. The Defendant on the other hand contended that, as the parties did not execute the sub-consultancy agreement there was no agreement between the parties and hence the Defendant’s unilateral right to terminate the agreement with the Plaintiff.

The Plaintiff in contending that the Teaming Agreement was a valid contract relied on the provisions of the Contracts Act 1950 which stipulates the elements necessary of any agreement to be regarded as a enforceable contract.

The agreement in this case between the Plaintiff and the Defendant was initiated with an offer or proposal which was effectively communicated and the proposal was accepted as stipulated in the Terms of Reference. The agreement also contained valuable and lawful consideration as well as an intention of the parties to be legally bound by the agreement.

The Plaintiff contends that the Teaming Agreement between the Plaintiff and the Defendant constituted a concluded and binding contract between the Plaintiff and the Defendant contingent only upon a successful bid. Once the bid was successful the Teaming Agreement became an enforceable contract.

Needless to say, the Court in considering the Plaintiff’s argument, finds that all the ingredients of an enforceable contract have been fulfilled in this case to regard the Teaming Agreement as an enforceable contract. The validity of the Teaming Agreement is also not disputed by the Defendant. What is disputed is clause 5 of the agreement.

For ease of reference Clause 5 is reproduced here and is as follows:

5.1 In the event the Proposal is successful and the Client awards the Project to the, the Parties shall enter into a Sub-Consultancy Agreement (hereinafter referred to as the “Sub-Consultancy Agreement”) appointing the Sub-Consultant to provide the Sub-Consultancy Services, subject to terms and conditions to be mutually agreed.

5.2 The Parties acknowledge and agree that they shall in good faith negotiate the Sub-Consultancy Agreement to ensure that the terms therein are mutually beneficial and protect the Parties’ interest. Further, the Sub-Consultancy Agreement shall incorporate the terms of this Agreement and all the terms imposed by the Client against the Consultant, including the Tender Document, (collectively, the “Prime Contract”), to the extent it is applicable to the Sub-Consultancy Services, unless agreed otherwise by the Parties.

The Defendant’s contention is that the Teaming Agreement did not intend to create legal relations but was contingent on a sub-consultancy agreement being executed.

As the parties were not ad idem on the terms and conditions of the sub-consultancy agreement there was no binding contract between them. In other words, the contingency in the Teaming Agreement had not been performed to create any contractual relationship between the Plaintiff and the Defendant.

However, in this in this case the Court decided not to be drawn into the argument of both the parties into determining the nature of the Teaming Agreement between the Plaintiff and the Defendant. This is because there existed another agreement executed by the IRDA as owners of the project with the Defendant as the main consultant, which needed to be first considered.

In the Court’s view this was the principal agreement for the whole project. The disagreement and dispute between the Plaintiff and the Defendant cannot be looked at the narrow confines of only the Teaming Agreement. The relationship between the Plaintiff and the Defendant in this case, is governed also by the principal agreement between IRDA and the Defendant.

Although the Plaintiff was not a signatory to this agreement and was not a privy to the agreement between the Defendant and IRDA, the fact remains that the disagreements between the Plaintiff and the Defendant leading to the termination of the Plaintiff occurred after the execution of the agreement between IRDA and the Defendant.

It can be argued that the Plaintiff is not bound by the agreement between IRDA and the Defendant, but the undisputed fact is that all the sub-consultants in this case were appointed after the approval from IRDA. In fact, all the details and scope of work of the sub-consultant were provided to IRDA. The Court therefore deems that under the circumstances of this case the Plaintiff were indirectly privy to the agreement between IRDA and the Defendant.

Even if the Plaintiff are not privy to the agreement between the Defendant and IRDA and not bound by the terms of the agreement, the Defendant by being a party to the agreement are certainly bound by the agreement with IRDA.

For its full meaning the entire agreement of IRDA and the Defendant has to be looked in its entirety, beginning with who are the parties to the agreement. The Defendant was expressly a party and referred to as CE in the agreement. The definition of CE is given in Clause 1.1 (c) and is as follows: Engineers Act 1967 [Act 138] and engaged to provide professional engineering consultancy services to the Government under this Agreement and shall include its personnel, servants, agents, heirs, administrators, successors and duly appointed representatives. A copy of the Certificate of Registration under the Registration of Engineers Act 1967 [Act 138] is attached in Appendix 4;

The Court finds that the definition of CE in the agreement is wide enough to include the Plaintiff. The Plaintiff can be regarded as the agent for the Defendant and also the duly appointed Representative. The evidence shows that the Plaintiff had interacted on their own with IRDA from the beginning of the project. This fact was not disputed by the Defendant.

Further although the phrase sub-consultant is not used in the agreement there is reference to Associated Consultant as follows: engaged by the CE upon request and approval by the Government to carry out services for any part of the project;

It is also pertinent to look at the Recitals of the agreement to understand its intention and applicability. The Recitals gives an oversight of the purport of the agreement and is worded as follows:

(A) The Government intends to construct and complete “Pelaksanaan Projek Perintis Sistem Pengangkutan Bas Rapid Transit Di 3 Laluan Berkapsul Tinggi dan Pembinaan Laluan Khas Bas (“Busway”)” (hereinafter referred to as “the Project”) and is desirous of obtaining (hereinafter referred to as “the Services”) from the CE in connection with the works as described in the Schedules of this Agreement (Part A – Schedules of Services) (hereinafter referred to as “the Works”).

(B) The CE has submitted its proposal to the Government on the scope for the Services and both Parties have agreed on the scope of Services as per the Terms of Reference specified in Appendix 1 and Technical Documents in Appendix 2 of this Agreement.

(C) In furtherance of such intention, the Government has agreed to appoint the CE and the CE has agreed to such appointment to provide the Services necessary for the effective implementation of the Project. A copy of the Letter of Acceptance dated 28th November 2019 is attached in Appendix 3 of this Agreement.

It is clear from the Recital that IRDA is desirous in constructing and competing the project with the services provided by the Defendant and this must necessarily include the sub-consultants, the Plaintiff being one of them.

For the purposes of this case even more important is that in construction and completion of the project, the agreement envisages that disputes can arise and therefore the agreement has inserted an express and comprehensive clause on dispute resolution.

The clause is reproduced here and is as follows:

8.1 Dispute Resolution by Government Representative

Any dispute between the Parties in respect of any matter under this Agreement (except in relation to the Government exercising its sole discretion under this Agreement) which are not capable of being amicably resolved between the Parties may be referred to the appointed GR.

The GR who is appointed for such purposes shall undertake to resolve such dispute with all fairness and endeavor to achieve the best possible solution for the Parties.

If the Consultant:

fail to receive a decision from the GR within seven days

days after being requested to do so; or

(ii) is dissatisfied with any decision of the GR, then such dispute or difference shall be referred to Dispute Resolution Committee within fourteen days (14) days.

8.2 Dispute Resolution Committee

Any dispute between the Parties in respect of any matter under this Agreement (except in relation to the Government exercising its sole discretion under this Agreement) may be referred to a dispute resolution committee (hereinafter referred to as the “Dispute Resolution Committee”), comprising:

Secretary-General/ Head of Division of the Ministry as the Chairman;

(ii) one (1) representative to be appointed by the Government; and

(iii) one (1) representative appointed by the Consultant.

The Dispute Resolution Committee shall determine its own procedures. The Dispute Resolution Committee shall meet and endeavour to achieve an amicable settlement between the Parties in respect of any matter referred to it.

8.3 Arbitration

If any matter, dispute or claim which is referred to the Dispute Resolution Committee cannot be agreed by the relevant Parties within forty five (45) days after the date of referral, then such dispute or difference shall be referred to arbitration within forty-five (45) days to an arbitrator to be agreed between the Parties and failing such agreement, to be appointed by the Director of the Kuala Lumpur Regional Centre for Arbitration on the application of either Party hereto. Such arbitration shall be heard at the Kuala Lumpur Regional Centre for Arbitration and shall be conducted in accordance with the rules for arbitration of the Kuala Lumpur Regional Centre for Arbitration using the facilities and the system available at the Centre.

Such reference shall not be commenced until after the completion or alleged completion of the Project or determination or alleged determination of the Consultant’s employment under this Contract, or abandonment of the Project, unless with the written consent of the Government and the Consultant.

In the event that such consent has been obtained in accordance with clause 8.3(b), the reference of any matter, dispute or difference to arbitration pursuant to this clause and/or the continuance of any arbitration proceedings consequent thereto shall in no way operate as a waiver of the obligations of the parties to perform their respective obligations under this Contract.

Upon every or any such reference the costs of such incidental to the reference and award shall be in the discretion of the Arbitrator who may determine the amount thereof, or direct the amount to be taxed as between solicitor and client or as between party and party, and shall direct by whom and to whom and in what manner the same be borne, award and paid.

The award of the Arbitrator shall be final and binding on the Parties.

In the event of the death of the arbitrator or his unwillingness or inability to act, then the Government and the Consultant upon agreement shall appoint another person to act as the arbitrator, and in the event the Government and the Consultant fail to agree on the appointment of an arbitrator, an arbitrator shall be appointed by the Director of the Kuala Lumpur Regional Centre for Arbitration.

This clause, “reference” shall be deemed to be reference to arbitration within the meaning of the Arbitration Act 2005.

The arbitration shall be governed by the Arbitration Act 2005 and the laws of Malaysia.

In the Court’s view the above clause is binding on the Defendant and that it is imperative upon the Defendant to fully comply with this provision of dispute resolution. The Defendant should not have taken the easy way out of terminating the Plaintiff without following the due procedure outlined above.

The Defendant did not comply with the above dispute resolution clause by summarily terminating the Plaintiff and in the Court’s view doing so have breached the above agreement.

In fact, the Defendant’s action to terminate the Plaintiff is further sullied by the testimony of the representative of IRDA who testified that IRDA had at no time directed the Defendant to terminate the Plaintiff and were not a privy to the termination of the Plaintiff.

The Court taking the above factors in consideration rules that the Defendant’s termination of the Plaintiff is invalid and unlawful for which the Plaintiff are entitled to reliefs.

By wrongfully terminating the agreement the Defendant has breached the agreement with not only the Plaintiff but also IRDA. A party suffering the breach is entitled to compensation as stipulated under section 74 of the Contracts Act 1950: 1) When a contract has been broken, the party who suffers by the breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from the breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it.

Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach. Compensation for failure to discharge obligation resembling those created by contract

When an obligation resembling those created by contract has been incurred and has not been discharged, any person injured by the failure to discharge it is entitled to receive the same compensation from the party in default as if the person had contracted to discharge it and had broken his contract. Explanation - In estimating the loss or damage arising from a breach of contract, the means which existed of remedying the inconvenience caused by the non-performance of the contract must be taken into account.

In this case the reliefs claimed by the Plaintiff as set out in the Statement of Claim is for work done until the date of termination, the agreed professional fees for the balance contract period, additional out of scope works done and operating expenses

In this case the Court rules that the Plaintiff as a party suffering the breach is entitled to the entire value of the contract if it was performed which amounts to the work done plus the agreed fees for the balance period. It is not necessary for the Plaintiff to prove the actual work done or that the work was approved. As the Court has ruled that the Defendant has breached the agreement with IRDA in relation to the Plaintiff, the entire sum of the contract becomes due and payable.

In this case the Court also allows the additional cost as well as operational cost in complying with the instructions of the Defendant in performance of the contract as this naturally arose in the performance of the contract and cannot be considered as remote or an indirect loss.

In the upshot the Court allowed the Plaintiff’s claim with a cost of RM200,000 and dismissed the Defendant’s counter claim. Dated: 11.11.2025 sgd DATO’ HAJI AKHTAR BIN TAHIR Judge High Court of Malaya, Kuala Lumpur PARTIES For the Plaintiff: Nama Peguamcara: Sumita A/P Gnanarajah / Hirasini Mahendran Tetuan Yahya Anne Associates 1-20, Centrio Pantai Hillpark Jalan Pantai Murni 59200 Kuala Lumpur. For The Defendant: Nama Peguamcara: Wong Hok Mun & Eng Kar Wei Tetuan Wong Hok Mun Partnership D3-5-5, Block D3, Solaris Dutamas No. 1, Jalan Dutamas 1 50480 Kuala Lumpur.