Content
1 IN THE COURT OF APPEAL MALAYSIA (APPELLATE JURISDICTION) CIVIL APPEAL NO. W-01-254-07/2013 BETWEEN MEDICAL ONLINE (M) SDN BHD … APPELLANT
Loading…
/akn/my/judgment/court-of-appeal/2017/e395d1dc-d063-441d-84ff-110bb28d8467
Court of Appeal of Malaysia12 Jan 2017W-01-254-07/2013
The written judgment as the court issued it, with the coram, case number, and source links. Every paragraph has its own anchor.
Content
1 IN THE COURT OF APPEAL MALAYSIA (APPELLATE JURISDICTION) CIVIL APPEAL NO. W-01-254-07/2013 BETWEEN MEDICAL ONLINE (M) SDN BHD … APPELLANT
1
1.
2
2.
3
KEMENTERIAN KESIHATAN MALAYSIA KEMENTERIAN KEWANGAN MALAYSIA … RESPONDENTS [In the matter of Kuala Lumpur High Court Civil Suit No. S-21-2-2007 Between Medical Online (M) Sdn Bhd … Plaintiff And 1.Kerajaan Malaysia 2.Kementerian Kesihatan Malaysia 3.Kementerian Kewangan Malaysia … Defendants] CORAM LIM YEE LAN, JCA ABDUL RAHMAN SEBLI, JCA HARMINDAR SINGH DHALIWAL, JCA 2 JUDGMENT OF THE COURT [1] In the High Court at Kuala Lumpur, the appellant sued the respondents for damages for the respondents’ alleged acts of breaching and terminating the concession agreements. At the conclusion of the trial, the appellant’s suit was dismissed with costs, hence the present appeal. For convenience, we shall refer to the parties as they were in the High Court, namely the appellant as plaintiff and the respondents as the respective defendants. [2] The salient facts are as follows. On 20.1.2000, three concession agreements (“the concession agreements”) were entered into between the 1st defendant and the plaintiff to develop a project called Telehealth MSC-KKM (“the project”). The project was divided into 3 components, namely:
Subsection
(1) Lifetime Health Plan (“LHP”);
Subsection
(2) Mass Customised Personalised Health Information And Education (“MCPHIE”);
Subsection
(3) Continuing Medical Education (“CME”). [3] The concession agreements were executed to empower the plaintiff to develop the project at various pilot sites, namely in the Kuala Lumpur, 3 Ipoh, Kajang and Seremban General Hospitals and their affiliated Health Centres. [4] On 9.6.2000, both parties agreed to appoint Kumpulan Darul Ehsan Berhad to replace S.A. Capital Sdn Bhd as one of the equity holders in the plaintiff. [5] On 1.8.2000, three supplementary concession agreements were signed to amend the structure of the shareholders of the company and to amend the commencement date of the concession agreements. [6] As it turned out, the plaintiff was unable to pay its creditors and banks and this resulted in Alliance Merchant Bank, the agent for the plaintiff’s loan syndicate, to appoint a Receiver and manager. [7] On 25.3.2004, the then Chief Secretary of the 2nd defendant, Datuk Alias Ali, terminated the Telehealth concession agreements, citing the appointment of the Receiver and Manager as the sole ground of termination. [8] Essentially the plaintiff’s case against the defendants was as follows. The original execution date of the concession agreements was on 4 20.1.2000 and the plaintiff was supposed to commence providing the services not later that the 1st day of the 39th week following the original execution date. [6] On 9.2.2000, the 2nd defendant sent a letter to the plaintiff informing it that the 3rd defendant had given instruction that its equity structure be restructured by considering an alternative 40% equity holder to replace S.A. Capital Sdn Bhd. [7]
Preamble
Pursuant to the 3rd defendant’s instruction, the plaintiff claimed that it was forced and oppressed to enter into further negotiations with the 1st defendant to determine the replacement of the 40% equity shareholder in order to allow them to start with the project. [8] Due to the negotiation and change of equity holder in the plaintiff, the plaintiff claimed that it was unable to commence the project and the implementation of the project was delayed. The plaintiff was not allowed to implement the concession agreements until a supplementary concession agreement was signed. [9] On 1.8.2000, the first supplementary concession agreement (“the SCA-1”) was entered into between the plaintiff and the 1st defendant. 5 According to the plaintiff it signed the SCA-1 under duress in order to mitigate further losses which it had incurred within a period of 7 months from the original execution date. [10] The plaintiff proceeded with the installation of the LHO system simultaneously at the various pilot sites. In August 2000, the installation of the LHP system at the Ipoh Hospital was interrupted due to insufficient electricity supply to support the Telehealth application of the project. [11] The plaintiff’s complaint was that the 1st and 2nd defendants failed and/or refused and/or neglected to enforce clauses 9.2, 17.1.1 and 17.2.1 of the concession agreements causing an additional delay in the implementation of the project at Ipoh Hospital. [12] In view of the shortage of electricity supply at Ipoh Hospital and the delay in rectifying the problem, a second supplementary concession agreement (“the SCA-2”) was required to amend the payment clause from simultaneous completion (Schedule 27 required the plaintiff to complete installation on all 4 sites) to individual completion of each of the pilot sites in order to receive payment from the 3rd defendant. 6 [13] In April 2003, the plaintiff was informed verbally by the 2nd defendant that the SCA-2 could not proceed, which forced the plaintiff to apply for a RM67 million loan from the Malaysian Debt Venture (“the MDV”) in September 2002 as the non-payment for the installation of the project had caused severe cash flow in the plaintiff. [14] At a meeting chaired by Tan Sri Dr. Samsuddin bin Hitam, the Secretary General of the 3rd defendant: (i) said that the 1st defendant should pay if the plaintiff had completed the works and if the 2nd defendant used the said applications; (ii) told the MDV not to proceed with the loan as the 2nd defendant would pay the plaintiff based on the LHP services utilized by the 2nd defendant; (iii) offered to pay the plaintiff for the costs of the development of the Telehealth project’s infrastructure and infostructure. [15] On 16.4.2003, the plaintiff after being assured by the Secretary General of the 3rd defendant, submitted the payment proposal to the 3rd defendant which remained unpaid. [16] On 30.11.2003, the plaintiff suffered severe cash flow after having successfully completed the LPH version 1 at the three hospitals at its own costs and expense as a result of the non-payment by the 3rd defendant, 7 refusal in implementing the SCA-2 by the 2nd defendant and the MDV loan offer was intervened by the Secretary General of the 3rd defendant. This resulted in the plaintiff not being able to pay its creditors and banks. From the plaintiff’s perspective, it was all the defendants’ fault. [17] The defendants’ case on the other hand was as follows. The concession agreements were executed on 20.1.2000. Parties had agreed to restructure the shareholders of the plaintiff company. The SCA-1 was entered into on 1.8.2000. The plaintiff failed to fulfil its obligations under the concession agreements. The plaintiff went into receivership. The concession agreements were terminated by the defendants. The plaintiff was not entitled to any further payment as stipulated in the concession agreements. [18] The agreed issues to be tried were the following:
Subsection
(1) Restructuring of shareholders
i
(i) Whether the restructuring of shareholders was voluntary or forced?
Subparagraph
(ii) What were the consequences of the restructuring of the shareholders? 8
Subparagraph
(iii) Whether there was a breach of clauses 16.5 and 16.6 of the concession agreements?
Subparagraph
(iv) Whether the plaintiff was given the new time schedule?
Subsection
(2) Delay
i
(i) Whether there was any delay in the implementation and completion of the project?
Subparagraph
(ii) What was the cause of the delay?
Subsection
(3) Electricity
i
(i) Who was responsible to ensure sufficient electricity for the purpose of implementing the project?
Subparagraph
(ii) Whether there was a breach of clause 9.2, clause 17.1.1 and clause 17.2.2 of the concession agreements?
Subsection
(4) Representation
i
(i) Whether there was such representation of the supplementary concession agreement 2 (SCA 2)?
Subparagraph
(ii) Whether there was a representation for paying the cost of infrastructure development and infostructure development?
Subsection
(5) Payment When was payment due according to the concession agreements?
Subsection
(6) Concession agreements’ execution date When shall the plaintiff commence providing the services? 9 [19] We shall refer to the trial judge’s findings in respect of each issue to show that Her Ladyship had sufficiently dealt with the complaints raised by the plaintiff against the defendants. But before that, it needs to be mentioned that in deciding on liability, the learned trial judge had pointed out at the outset that notwithstanding the existence of the LHP, MCPHIE and CME concession agreements, the breach alleged by the plaintiff which led to its losses was only in respect of the LHP concession agreements. Her reasons were as follows: “This is based on the plaintiff’s statement of claim, particularly paragraphs 19, 20 and 21(problem of LHP in Ipoh), paragraph 23 (SCA 2 for LHP), paragraph 42 (project in Hospital Ipoh confined to LHP), paragraph 43 (the alleged misrepresentation of SCA 2 is only with regard to LHP concession agreement) and paragraph 44 (with regard to LHP concession agreement only). It is to be observed that the plaintiff did not plead on losses due to the inability to proceed with obligations under the MCPHIE and CME concession agreements. It is trite law that parties are bound by their pleadings (see Miskinah bte Jaya & Ors v Mohamed bin Salleh & Anor [1984] 1 MLJ 187 at p. 188 following Esso Petroleum Co. Ltd v Southport Corporation [1956] A.C. 218).” [20] We shall now refer to those parts of the grounds of judgment where the learned trial judge dealt with the issues to be tried, starting with the first issue (Restructuring of shareholders). These were her findings: “22. The Court finds that the Plaintiff’s contention is without merit- 10
a
(a) MOL was not prevented from engaging with the Telehealth Core Team or barred from entering the pilot sites of the Project as according to PW1 the development of the software systems for the Project was a dynamic process and they were still in the process of developing the process. PW2 likewise testified that in April 2000, MOL was still in the process of developing software system for the Project.
b
(b) It is undisputed that the business model for the Project is BOO (“Build, Own and Operate”) whereby in cl. 5.1 it is stated “The Company shall supply and install at its sole costs and expense the LHP System which includes all computer hardware and software, renovations, standardization and refurbishment of the Installation Sites and the Operations Data Centre to house the LHP System and any other items or works needed for the necessary connections to the server and thereafter maintain the LHP System in conformity in all respects with the provisions of this Agreement and to provide the Services timeously in accordance with the System Implementation Schedule.” (Emphasis added)
c
(c) The fact that the business model for the Project is BOO is confirmed by PW1 who stated that MOL’s business model was “Build, Operate and Own (BOO) and after 5 years to be transferred to the Government.” Including the Defendant witnesses.
d
(d) Further PW1 admitted in cross-examination that the Government made an initial contribution of RM9 million to MOL prior to the implementation of the Project comprising RM2 million for MCPHIE based on the document in Schedule 27 Bundle B1 p. 508; RM2 million for CME based on the document in Schedule 27 Bundle B2 p. 746 and RM5 million for LPH based on the document in Schedule 27 Bundle B p. 298. This was also agreed to by PW4 in cross-examination (Notes of Proceedings (“NOP”) Vol. 3 p. 305).
22
22.1 In any event if I were to err in my finding that there was no delay which has cost implication to the Plaintiff, I find there is no evidence adduced by the Plaintiff that they 11 complained to the Defendants during the negotiations of SCA1 on the issue of compensation for the “holding period” and the Plaintiff is thereby estopped from raising the same now.” [21] On the second issue of delay, the learned judge dealt with the issue in the following manner: “33. There is no merit in the Plaintiff’s contention that the Concession Agreement was frustrated due to the irresponsible conduct of the Defendants. The evidence shows the cause of the delay is a consequence of MOL’s own financial incapability and lack of the required skills and knowledge. This is borne by the testimonies from DW2, Dr. Normah who stated that the Plaintiff in most of the meetings kept asking for financial support or stimulus (Q&A(s) 4, 5 and 6 WSDW2).
34
It is supported by the evidence from (i) DW4 (Q&A16 WSDW4) about the formation of a team of technical experts and domain experts from MOH established to assist MOL; (ii) DW1, Tan Sri Dr. Samsudin Hitam pertaining to the due diligence report from AT Kearney that MOL’s financial position is weak and cash resources are low and overall assessment of MOL’s corporate governance is weak.
35
As for the golden share issue, the Government according to DW1 is entitled to appoint a director; it is not compulsory to appoint and such appointment is at the absolute discretion of the Government.
35
35.1 Further the contention of the Plaintiff that the director is essential to provide the proper link between the plaintiff and the Defendant is a non issue given given there is a unit created in the 2nd Defendant to assist MOL and MOL is a member of the Telehealth Implementation 12 Committee and Telehealth Steering Committee. As explained by DW4 the Telehealth unit was headed by the head/director and periodic meeting will be organized by the head with all project heads of LHP, MCPHIE, CME and TC and the vendor. The precursor to the Telehealth unit according to DW4 “due to the weaknesses of MOL” was the establishment of “[A] strong team from MOH … consist of the Government technical experts and domain experts … to provide assistance … In addition … many clinicians from MOH and University to support among other things(sic) content development and clinical algorithm.” (Q&A16 WSDW4).” [22] The third issue – Electricity. This issue relates to the question of who was responsible for providing sufficient electricity to implement the project. The learned judge’s finding was that it was the plaintiff’s responsibility. We reproduce below what Her Ladyship said: “38.3 The Plaintiff’s reliance on cl. 9.2 of the Concession Agreement on “Joint Software Development” is misplaced. In my view this clause in fact fortifies the Defendants’ position that the responsibility of ensuring the adequacy of electricity supply to the installation sites, inclusive of the Kinta District (and the Ipoh Hospital) lie with the Plaintiff. Cl. 9.2 states that the assistance which the Government agrees to render is stipulated in Schedule 32 and there is nothing in the Schedule to say that it is the Government’s responsibility to ensure the supply of electricity is adequate. The closest item linked to cl. 17.2.1(c) relied on by the Plaintiff in my view is item 4 “Accessibility to the site and provide minimum requirement of the site.”
38
38.4 On top of that before the Government can render the assistance of access to the site envisaged by cl. 17.2.1(c), it is incumbent on the Plaintiff “at its own costs and expense to 13 install the necessary connections for the electric power.” Thus I agree with the Defendant’s submission that all the Plaintiff had to do was to fulfill its obligation under Schedule 3 of the Concession Agreement by pitting the Distribution Panel for Uninterrupted Power Supply (UPS) incoming and outgoing and the problem would have been settled. This is borne by the evidence of DW3 (Q&A6 WSDW3(A)) that the Telehealth Infrastructure meeting on 27.3.2002 discussed the issue of electricity supply in Ipoh Hospital was sufficient. It is supported by the contemporaneous documentary evidence of a letter of confirmation from TNB dated 1.4.2002 (Bundle C pp. 1352-1353) and received by MOH on 3.4.2002 wherein based on a meeting between TNB, MOL, MOH and MI on 26.3.2002, TNB stated that the electricity supply to Hospital Ipoh has the firm capacity of approximately 5 Megawatt whilst the maximum requirement of the Ipoh Hospital at the material time was 1MW only and the maximum requirement of electricity in the said Hospital including the Telehealth Project would rise to 1.5 MW only.
39
Further to the aforesaid provisions, the Plaintiff was well aware of the electricity problem in Ipoh as admitted by PW1 who sought to qualify his answer by relying on cl.
17
17.2.1 that the Government will provide the electricity (NOP Vol.1 p. 100). PW1 was cross-examined at length with regard to cl. 3 (NOP Vol. 1 pp. 100-111) and referred the responsibility is within the “data centre” and “software development”. I find PW1 is just being evasive as there is a specific provision, cl. 4 which deals with “Operations Data Centre”.
39
39.1 PW4 was cross-examined as to his answer that MOL could not proceed with LHP implementation activities “due to shortage of electricity supply at Hospital Ipoh and its surrounding area” (Q&A16 WSPW4) but in cross-examination PW4 agreed there were 2 site visits and the shortage of electricity supply at Hospital Ipoh did not preclude the Plaintiff from developing software development at their own data centre. 14
40
Thus I find it is evident that the responsibility of ensuring the adequacy of electricity supply to the installation sites, inclusive of the Kinta District (and the Ipoh Hospital) lie with the Plaintiff based on the terms of the Concession Agreement.” [23] Issue (4) – Representation. The learned judge dealt with this issue extensively at page 39-50 (11 pages) of the grounds of judgment and we do not wish to reproduce them in full. Suffice it if we reproduce her conclusion, as follows: “53. On the available evidence, I find there is no representation made by the Defendants to pay for the cost of infrastructure and infostructure development.” [24] As for the question of payment and damages, the learned judge did not find it necessary to address the issue in the light of her findings on the issues referred to above. [25] Having gone through the grounds of judgment and the notes of proceedings, it is clear to us that the learned trial judge had carefully and meticulously considered all the issues that she was called upon to determine. We were not persuaded that she had gone seriously wrong either on the facts or on the law in dealing with those issues. 15 [26] Before us, the plaintiff had filed a 194-page written submission in support of its argument that the learned trial judge was wrong in finding that its claim had not been proved. It was urged upon us that her decision should be reversed and substituted with a finding that the plaintiff’s claim had been proved and judgment be entered in its favour. [27] What the plaintiff submitted before us was a regurgitation of what it had submitted before the High Court. For all intents and purposes, what it was inviting us to do was to overturn the findings of fact made by the learned trial judge who had seen and heard the witnesses giving evidence in court. [28] There was no justification for us to do that. The principle is trite that an appellate court is always slow to interfere with findings of fact made by the trial court. It will only interfere if it can be shown that the findings are perverse and had thereby occasioned a miscarriage of justice. [29] All material issues raised had been adequately considered by the learned judge and, as we said, they relate essentially to questions of fact in respect of which Her Ladyship had made firm findings. The learned judge had carefully considered the evidence before her and we do not see how it can be said that she was plainly wrong in finding that the plaintiff’s 16 claim had not been proved. Her finding on liability was based on actual evidence before her and should not therefore be disturbed. [30] This is not a case where the trial court’s finding is unsupported by the evidence or against the probabilities of the case. The contrary is true in that the decision is fully supported by both oral and documentary evidence. It was for this reason that we unanimously dismissed the plaintiff’s appeal with costs and affirmed the decision of the High Court. ABDUL RAHMAN SEBLI Judge Court of Appeal Malaysia Dated: 7 December 2017. For the Appellant: Lew Cho Kang and Wee Yeong Kang of Messrs Shafee & Co. For the Respondents: Ahmad Terriruddin bin Mohd Salleh, SFC and Nik Mohd Nor bin Nik Kar, SFC of the Attorney General’s Chambers. 17
Wrong text, a broken link, out-of-date content, or a removal request — tell us and we'll check it against the official source.