Mra International Sdn Bhd v Spc Diatech, LLC (WA-23CY-11-03/2017)

These are my full grounds of judgment for the 2nd tranche of the trial on assessment of damages (‘2nd Tranche’) following my decision on 14.8.2020 (which was affirmed by the Court of Appeal on 17.5.2022 and no motion for leave to appeal to the Federal Court was filed by the Plaintiff) whereby the Plaintiff’s claims were dismissed with costs and the reliefs sought by the Defendant by way of its counterclaim were allowed, namely for –

a declaration that the Plaintiff has breached the Agency Agreement between the Plaintiff and Defendant dated 31.3.2013 (‘Agency Agreement’); S/N xx37UxxBnEu7wXRvimaJXw

a declaration that the Plaintiff has committed copyright infringement against the Defendant in relation to the following:

the Defendant’s webpage on Phonon Diagnostic

(ii) the Defendant’s presentation on PDT; and

(iii) the PDT technical information in the Presentation slides on PDT as set out in Exhibits P139 and P140; (collectively ‘the Copyrighted Works’);

a declaration that the Plaintiff has committed breach of the Defendant’s confidential information in relation to the following:

the document that describes the PDT procedure entitled “Precise Procedure of Instrumental Phonon

(ii) the PDT mathematical formula; and

(iii) the Defendant’s PDT software; S/N xx37UxxBnEu7wXRvimaJXw (collectively ‘the Confidential Information’; the Copyrighted Works and the Confidential Information shall hereinafter be collectively referred to as the ‘Information and Documents’);

a perpetual injunction to restrain the Plaintiff whether acting by itself, its directors, officers, servant, representatives, shareholders, and/or any of them howsoever from infringing the copyright of the Copyrighted Works;

a perpetual injunction to restrain the Plaintiff whether acting itself, its directors, officers, servant, representatives, shareholders, and/or agents and/or any of them howsoever from utilizing, disclosing, breaching, misusing and/or in any way dealing with the Confidential Information;

an order that the Plaintiff, within twenty one (21) days from the date of this judgment, whether acting by itself, its directors, officers, servant, representative, shareholders and/or agents and/or any of them howsoever do forthwith deliver up upon oath and surrender to the Defendant or its solicitors, all Information and Documents or any other documents belonging to the Defendant that was copied, removed, extracted by and/or provided to the Plaintiff and all copies or extracts of or from such Information and Documents in its possession or under its control and to affirm and affidavit stating that the Plaintiff no longer has S/N xx37UxxBnEu7wXRvimaJXw any possession or control of the Information and

an inquiry as to damages suffered by the Defendant and/or alternatively, at the Defendant’s option an account of profits due from the Plaintiff’ act of utilizing and/or disclosing and/or in any way dealing with the Defendant’s Information and Documents and/or the Plaintiff’s acts of infringement of the Defendant’s copyright;

statutory damages pursuant to s 37(1)(d) of the Copyright Act 1987 [Act 332] (‘CA 1987’) to be determined;

exemplary and/ or aggravated damages to be determined;

pre-judgment interest and post-judgment interest at the rate of 5% per annum from the date of the filing of the Counterclaim on 2.5.2017 until the date of full settlement; and

costs to be paid by the Plaintiff to the Defendant and the quantum to be determined at the assessment of damages stage.

After having considered the oral and documentary evidence and submissions by the parties, and I was of the view that the S/N xx37UxxBnEu7wXRvimaJXw Defendant had proven, on a balance of probabilities, its claim for –

damages for breach of contract in the sum of RM14,813,482.00. In this regard the Court accepted the opinion given by the Defendant’s expert;

account of profits for breach of confidential information in the sum of RM1,979,624.59;

statutory damages in the sum of RM125,000.00 for copyright infringement;

aggravated damages in the sum of RM300,000.00;

exemplary damages at 25% of the compensatory damages as set out in subparagraphs (a), (b) and (d) above. The total compensatory damages are RM17,093,106.59 and hence, 25% of that amount is RM4,273,276.65.

interest at the rate of 5% per annum on the amounts as awarded in subparagraphs (a) to (e) from 2.5.2017 (date of filing of the counterclaim) until the date of full settlement;

costs of RM800,000.00 for the 1st Tranche of the trial on liability and RM100,000.00 for the 2nd Tranche of the trial on assessment of damages; and S/N xx37UxxBnEu7wXRvimaJXw

interest at the rate of 5% per annum on the amount awarded as costs from 9.1.2025 until the date of full settlement.

The background facts of this case have been amply narrated in MRA International Sdn Bhd v. SPC Diatech LLC [2021] MLRHU 747 (judgment after the 1st Tranche); MRA International Sdn Bhd v. SPC Diatech LLC [2022] 4 MLRH 37 (judgment on the Defendant’s application for discovery and the Plaintiff’s application for a protection order, which was affirmed by the Court of Appeal on 4.10.2022); and MRA International Sdn Bhd v. SPC Diatech LLC [2022] 6 MLRH 418 (judgment on the Defendant’s application for interim payment and penal notice, which was affirmed by the Court of Appeal on 28.8.2023) and shall not be repeated here.

For breach of contract, the relief granted was for an assessment of damages and the Defendant filed a Notice for Directions for Assessment of Damages on 9.9.2020.

On 22.7.2021, a discovery order was granted against the Plaintiff for the 2nd Tranche (‘DO’). The Plaintiff disclosed documents in December 2023, which according to the Plaintiff, were in 77 bundles consisting of 16,788 pages. However, according to the Defendant, the Plaintiff did not produce all documents ordered S/N xx37UxxBnEu7wXRvimaJXw under the DO, in particular, the management accounts and ledgers.

On 3.4.2023, the Defendant elected for an account of profits against the Plaintiff for copyright infringement and breach of confidential information.

Based on the case authorities cited by both parties, the legal principles may be summarised as follows:

a court must assess damages according to the liability judgment. The trial court must not act in any manner which is contrary to the liability judgment or has an effect of revisiting issues which have been decided at the liability stage (see Aviation Development Corporation (M) Sdn Bhd v Yayasan Selangor [2022] 3 MLJ 89);

the award for assessment of damages is not an automatic right as an order for damages to be assessed does not raise a presumption that damages have been suffered. The party seeking damages must prove the amount claimed by adducing sufficient evidence. Quantum must be based on the damages pleaded by the said party (see SPNB Aspirasi Sdn Bhd v Chimonief Sdn Bhd [2022] 4 MLJ 865); S/N xx37UxxBnEu7wXRvimaJXw

assessment of damages for breach of contract is compensatory in nature. The general principle is to place the innocent party in the same position as if the contract had been performed, in so far as money can do (see Tan Sri Khoo Teck Puat & Anor v Plenitude Holdings Sdn Bhd [1994] 3 MLJ 777 and Akitek Tenggara Sdn Bhd v Mid

assessment of damages is an exercise of discretion; it does not require absolute certainty or mathematical precision. The award should be reasonable, moderate and conventional, having regard to fairness and reasonableness [see Sambaga Valli a/p KR Ponnusamy v Datuk Bandar Kuala Lumpur & Ors and another appeal [2018] 1 MLJ 784 (CA)]. The 2nd Tranche and Issues for Determination

The trial for the 2nd Tranche was conducted for 15 days.

Apart from Mohd Hazim Bin Hassan (PW4), Datuk Fariz Nazrul Bin Che Noh (PW5) and Zelim Khan Dzhaliev (DW6) who had given evidence at the 1st tranche of the trial on liability (‘1st Tranche’) and also testified at the 2nd Tranche, the other witnesses who were called for the 2nd Tranche were – S/N xx37UxxBnEu7wXRvimaJXw

the Plaintiff’s expert, Dawin Tang Keng Wai, Director, Forensic & Investigation, PKF Covenant Sdn Bhd (PW8); and

the Defendant’s expert, An Li Fong, Chartered Accountant and Partner, Foo, Lee, An & Associates (DW7).

The issues for determination by the Court for the 2nd Tranche were as follows:

assessment of damages for breach of contract;

account of profits for breach of confidential information;

account of profits for copyright infringement and statutory damages under s 37(1)(d) of the CA 1987;

assessment of aggravated damages;

assessment of exemplary damages; and

costs for the 1st Tranche and 2nd Tranche.

Before the abovementioned issues are discussed in turn below, at the outset, it should be mentioned that the Plaintiff took the position that in the event the Court was minded to award damages, only nominal damages in the range of RM10.00 to RM2,000.00 should be allowed. S/N xx37UxxBnEu7wXRvimaJXw

In addition, three matters as set out below must first be addressed. - Plaintiff’s Objections

The learned counsel for the Defendant had summarised the Plaintiff’s objections on the matters leading up to the 2nd Tranche as follows, which includes my findings on the same:

Pleadings and whether damages for breach of contract were awarded The Plaintiff alleged that the Defendant did not plead the relief of damages for breach of contract and that the judgment for the 1st Tranche did not expressly award monetary compensation for breach of contract. As a party cannot make out a case which is not pleaded and the court cannot grant a relief which is not claimed, the Plaintiff contended that the Court should disregard the evidence adduced by the Defendant for the purported entitlement to compensation for breach of contract. Moreover, there were no agreed facts and agreed issues to be tried for the 2nd Tranche. Firstly, many case managements were held before the trial for the 2nd Tranche began but the Plaintiff never once raised S/N xx37UxxBnEu7wXRvimaJXw on the need for agreed facts and agreed issues to be tried. Therefore, it is not open for the Plaintiff to raise this complaint at this stage. In any event, in paragraph G of the prayers in the Counterclaim dated 2.5.2017, the Defendant had pleaded for “An inquiry as to damages suffered by the Defendant” (‘Said Words’). After the decision on the 1st Tranche was pronounced, I received a request from the Defendant’s solicitor to amend the draft judgment to include the words “for the Plaintiff’s breach of contract and an inquiry as to damages suffered by the Defendant” after the Said Words. However, the Plaintiff’s counsel objected to the amendment because the words “and/ or” after the Said Words suffice to preserve the Defendant’s right to an inquiry for damages for breach of contract. I then decided that the draft judgment does not need to be amended for the reason, among others, that the wordings in paragraph 8 of the judgment does not preclude the Defendant from leading evidence on general damages for breach of contract at the hearing on assessment of damages (see paragraphs 265 - 268 of the judgment on the 1st Tranche; see too, paragraphs 26 and 50 of my judgment on the Defendant’s application for a DO). In view of the above, the Plaintiff cannot now raise an objection on the ground of pleadings. The Plaintiff’s assertions of being taken by surprise or prejudiced is absolutely baseless. S/N xx37UxxBnEu7wXRvimaJXw

Whether a bifurcated trial was ordered Even before the 1st Tranche began, it was always the understanding of the parties and their counsels that there would be a bifurcated trial on liability and on assessment of damages. The Court had also ordered for a bifurcated trial and this is reflected in the judgment on the 1st Tranche.

The Plaintiff’s relationship with the Defendant This Court has delivered its verdict that the Plaintiff’s relationship with the Defendant was that of principal and agent (see paragraphs 178 and 254 of the judgment on the 1st Tranche). This issue is res judicata (see Asia Commercial Finance (M) Bhd v Kawal Teliti Sdn Bhd [1995] 3 MLJ 189) and the Plaintiff is barred from re-ventilating this matter by claiming that the Plaintiff was a reseller.

Phase 1 and Phase 2 of PDT in Malaysia In the judgment on the 1st Tranche [see subparagraph 69(c)(iii)], this Court held that the Plaintiff failed to plead the fact that there were projects in 2013 involving Professor Vladimir which it did not inform DW6. Hence, the Plaintiff was precluded from proving this fact, which was raised as an afterthought at the 1st Tranche. The issue of Phase 1 and Phase 2 of PDT is simply of no relevance to the 2nd Tranche. S/N xx37UxxBnEu7wXRvimaJXw

The price of services Clause 3.5 of the Agency Agreement provides that “The prices of Products to be sold in Malaysia shall be subject to mutual agreement of the parties in order to promote the sale and distribution of the Products in Malaysia.”. At the 1st Tranche, the Defendant had successfully proven that the Plaintiff had promoted and distributed PDT services to third parties secretly without the Defendant’s knowledge and consent and that, as an agent, the Plaintiff owed a fiduciary responsibility to the Defendant, as its principal, to act in good faith and with probity. Therefore, it was unconscionable for the Plaintiff to assert in the 2nd Tranche that it had separate terms and arrangements with the end user or main contractor for the same services.

Costs incurred by the Plaintiff to provide PDT services See the analysis in subpararagph 22(d) below.

Overall, any claim by the Plaintiff of being taken by surprise, prejudiced, embarrassed and misled is fallacious as evidenced by the Plaintiff’s conduct in the lead up to, and at, the trial of the 2nd Tranche. The Plaintiff had appointed PW8 to prepare a report on damages for breach of contract, was fully prepared in questioning its own witnesses and extensively cross-examined the Defendant’s witnesses. I agree with the Defendant that these S/N xx37UxxBnEu7wXRvimaJXw speak volumes of the Plaintiff’s knowledge and awareness of the issues for the 2nd Tranche. Moreover, arguments on breach of contract were also raised in the applications for DO and interim payment. -

O. 40A, r. 2 of the Rules of Court 2012 (‘RC 2012’) provides as follows: “Expert’s duty to the Court (O. 40A, r. 2)

2.

It is the duty of an expert to assist the Court on the matters within his expertise.

This duty overrides any obligation to the person from whom he has received instructions or by whom he is paid.”.

The Plaintiff’s expert, Dawin Tang (PW8) affirmed two affidavits [APP(1) and APP(2)] while the Defendant’s expert, An Li Fong (DW7) affirmed six affidavits [APD(1) to APD(6)].

Each party put forth its best arguments in attempting to persuade the Court to accept the evidence of its expert over the opponent’s. S/N xx37UxxBnEu7wXRvimaJXw

The Plaintiff contended that PW8 is an independent expert witness worthy of credit and significant weight should be placed on his evidence as he –

is a qualified chartered accountant and an advocate and solicitor and an approved liquidator;

holds a Capital Markets Services Representative’s license;

is a member of the Certified Practising Accountants

has extensive experience over a span of 26 years in legal and corporate finance advisory to multinational corporations, public listed and owner managed corporations; and

has provided expert investigative audit and litigation support and review of accounts services for the confectionery, manufacturing, property development, construction, mobile applications, technology, finance, event management, property management, oil and gas, wholesaler and trading industries.

The Plaintiff urged the Court not to rely on DW7’s evidence because – S/N xx37UxxBnEu7wXRvimaJXw

he has limited experience of only 14 years with no experience related to the oil and gas industry and a mere six years practising experience in Malaysia. He admitted to not having any skill, knowledge, qualification or experience in relation to non-destructive technology and non-destructive technology services in general and PDT, but yet he proffered an opinion on invoices, Purchase Orders (‘PO’) and segregation of phonon and non-phonon;

he was merely the Defendant’s mouthpiece in advancing the Defendant’s case. His evidence lacked independence and he had distorted the facts of the case to suit his conclusions which were inconsistent with the findings of the Court at the 1st Tranche; and

his reports were inaccurate, inconsistent, unreasonable, fundamentally flawed and not based on cogent data and reasons. The reports were unreliable as he changed the approach and his opinion on phonon and non-phonon in APD(1) and APD(5). He failed to adopt the best available approach and instead, based his opinion on uncertain facts, speculation and bias.

I have carefully considered the oral evidence by the experts and their affidavits and reports and I preferred DW7’s evidence over PW8’s on the following grounds: S/N xx37UxxBnEu7wXRvimaJXw

PW8’s reports were biased and inherently flawed, especially with regards to the comparison of prices charged by the respective parties to arrive at the purported Defendant’s scope. The flaws in PW8’s reports were likely due to instructions and documents from the Plaintiff’s representative (see paragraphs 85, 86 and 96 of APP(1) where it is stated that “MRA was able to identify …”; “… with the assistance of MRA …”; and “I understand from MRA …”). Furthermore, the Plaintiff had intentionally kept documents from its own expert;

PW8 had tuned his reports to suit the Plaintiff’s position and counter the evidence of DW7 despite the available documents before him and the Court (see Foo Fio Na v. Hospital Assunta & Anor [1999] 6 MLJ 738 where the expert witness had tailored his report solely to counter the evidence of his adversary and Pembinaan Teris Sepakat Sdn. Bhd. v. Kumpulan Ikram Sdn. Bhd. & Anor (Mohd Rozi bin Salleh & Anor, third party) [2015] 10 MLJ 764 where it was held that an expert should not be over-ready to confirm preconceived theories). PW8’s reports were also self-defeating (see Whitehouse v Jordan [1981] 1 WLR 246;

PW8 was not a careful expert in light of the errors found in PW8’s calculations in the price list, the Defendant’s scope and matching the 7POs (as defined in the judgment on the S/N xx37UxxBnEu7wXRvimaJXw 1st Tranche) etc. [see PW8’s answers during cross-examination and paragraphs 45 to 81 of the Defendant’s Submissions In Reply (encl. 835)];

the Plaintiff’s assertion that the calculations done by DW7 was a “simple computation” is erroneous. The computations and conclusions reached by DW7 were as a result of DW7’s efforts in combing through numerous voluminous bundles and in conducting his own independent research. As such, there was a need to call DW7 as an expert to testify; and

the fact that –

other personnel of the Defendant, such as from the accounts and finance department, were not called to testify does not mean the credibility, and subsequently the evidence, of DW7 should be impaired. This does not dampen the weight of DW7’s computation as it is the Plaintiff’s burden to prove the existence of errors in DW7’s reports; and

(ii) DW7 does not specialise in non-destructive technology and PDT carries no weight in impairing his credibility. The accounting principles adopted in one industry may be used in other industries. S/N xx37UxxBnEu7wXRvimaJXw

The credibility of PW4, PW5 and DW6 was very much a live issue in the 2nd Tranche in the same way as the 1st Tranche. Basically, I remained unimpressed by PW4’s and PW’5 evidence as they clearly showed scant regard for the oath which they took as soon as they entered the witness box. This is further elaborated below.

Similar to his testimony at the 1st Tranche, PW4 was evasive and his answers were neither plausible nor reasonable and evidently, self-serving. This is illustrated by the following:

the Plaintiff took the position that Toyo is the main contractor for the PO at pp 64 - 66, DB26. However, PW4 admitted that the Defendant did not know that the Plaintiff had appointed a third party to perform the services. Nonetheless, PW4 disputed that this constitutes a breach of the Agency Agreement when, clearly, subcontracting such work would be a breach of the exclusive Agency

PW4 denied that there was PDT work carried out by the Plaintiff. When the Defendant’s counsel was shown the PDT invoices after the termination of the Agency Agreement, PW4 claimed that it was not for PDT work, but rather part of a “blanket contract”. This is contrary to my findings that the Plaintiff had performed secret PDT projects without the Defendant’s knowledge. Further, PW4 testified that ancillary works such as scaffolding and painting may S/N xx37UxxBnEu7wXRvimaJXw be done in conjunction with, or independently of, the PDT contract. However, he was not able to show any document where scaffolding or painting work was done independently from a PDT contract. Again, he relied on the “blanket contract” excuse to defend the Plaintiff’s breaches when I have outrightly rejected this argument (see subparagraph 70(a) of the judgment for the 1st Tranche);

the Plaintiff’s stance was that it can perform conventional activities such as local UT testing, hardness testing, on-site physical measurement, on-site as built drawing etc. without being in competition with the Defendant. However, these services were listed as the Defendant’s work in the 7POs. A perusal of the Notes of Evidence (‘NoE’) would reveal PW4’s attempts to evade the questions posed by the Defendant’s counsel and the answers given were illogical and defied commercial sense (see too, PW4’s answers in relation to API work); and

the Plaintiff asserted that other costs were incurred for non-PDT work which should be deducted from the final award. The burden to prove this fact lies on the Plaintiff (see s 103 of the Evidence Act 1950 [Act 56] (‘EA 1950’). However, no documents were produced by the Plaintiff to support its claim. PW4 simply agreed with his counsel that if the documents were needed then the Defendant should have asked for it (see too, PW4’s answers regarding supporting documents to substantiate the contention that the costs of S/N xx37UxxBnEu7wXRvimaJXw services were borne by the Plaintiff and the existence of the Plaintiff’s general ledger; in respect of the latter, the Plaintiff did not provide the general ledger despite being ordered to do so under the DO and therefore, with reference to the case authority of Juahir Bin Sadikon v Perbadanan Kemajuan Ekonomi Negeri Johor [1996] 3 MLJ 627, an adverse inference was drawn against the Plaintiff).

PW5 too, was evasive to the extent that the Defendant’s counsel had to remind PW5 several times to answer the question posed to him instead of avoiding it.

When PW5 was asked as to how much the Plaintiff had earned for the 7POs, PW5 stated that the profit was “enough to cover the cost”. Upon further questioning, PW5 said that there was a “gross profit”. In fact, the Plaintiff made a total gross profit of RM17,664,531 for 2014 and 2015. Obviously, PW5 was attempting to evade admitting the sheer amount that the Plaintiff profited by breaching the Agency Agreement.

PW5 further asserted that PDT is an advanced technology. However, during the 1st Tranche, the Plaintiff took the position that “phonon is a generic word”, which was duly rejected by this Court (see paragraph 70(c) of the judgment for the 1st Tranche).

During cross-examination, PW5 agreed that the Plaintiff and the Defendant were involved in the same industry and provide the S/N xx37UxxBnEu7wXRvimaJXw same services. Nevertheless, PW5 denied that the Plaintiff and the Defendant were in competition with one another. This denial was not consonant with the Plaintiff’s conduct after the Agency Agreement was executed which depicted malice and fraud with the objective of profiting from the technology which was developed by the Defendant (see subparagraph 258(b) of the judgment for the 1st Tranche).

As for DW6, The Plaintiff contended that he was an untruthful and self-serving witness; that he was evasive during cross-examination and displayed a tendency of disregarding the question by giving irrelevant and long-winded answers.

The Defendant cited the case of Abu Bakar bin Pangis & Ors v Tung Cheong Sawmill Sdn Bhd & Ors [2014] 5 MLJ 384 to support the proposition that DW6’s evidence should not carry any weight at all in the absence of any corroborative evidence as it only shows concern of the needs and interests of the Defendant with total disregard of the truth of the matter.

In my assessment, and akin to his evidence at the 1st Tranche, DW6 remains as a credible witness. His testimony was corroborated by the documents which were produced for the entire trial. There was no valid justification for the Court to doubt his credibility, and therefore, his testimony on the version of the facts or events was preferred over that by PW4 and PW5. S/N xx37UxxBnEu7wXRvimaJXw -

The parties’ submissions on this test are found in the Plaintiff’s Summary (encl. 855) and the Defendant’s Case Note (encl. 852).

In brief, the assumption of responsibility test arose from the case of Transfield Shipping Inc v Mercator Shipping Inc [2009] 1 AC 61 where Lord Hoffman considered the notion of assumption of responsibility to resolve the issue of damages for late delivery of a ship, the Achilleas. The assumption of responsibility test has been restated as the “broader principle” when compared with the conventional approach in Hadley v Baxendale (1854) 9 Exch 341 as restated by Lord Diplock in The Heron II Koufos v C Czarnikow Ltd [1967] 3 All ER 686.

I had the occasion to discuss this test in Accolade Land Sdn Bhd v Mass Rapid Transit Corporation Sdn Bhd [2024] MLJU 1526 at paragraphs 252 - 267.

The Plaintiff submitted that the principle of assumption of responsibility was correctly accepted in Accolade Land and is applicable to the instant case for the following reasons:

the Court should take into account the commercial background of the particular market which, in this case, is the diagnostic and inspection services in the oil and gas industry when determining whether the Plaintiff has S/N xx37UxxBnEu7wXRvimaJXw assumed responsibility for the losses claimed by the Defendant i.e. 35% of its Costs of Sales. Based on the commercial background of the particular market and widely accepted market norms, the Plaintiff cannot reasonably be regarded as having assumed the risk of the Defendant’s purported loss of profits;

Clause 7.2 of the Agency Agreement provides that “In no event shall either party be liable to the other party for indirect, special or consequential damages or for loss of anticipated profits on any claims of any kind resulting from any performance, non-performance or breach of this Agreement.”. This evidences that the Plaintiff did not assume responsibility for any damages or losses suffered by the Defendant; and

the losses and damages claimed by the Defendant are too remote. The Plaintiff did not assume responsibility for the losses as claimed by the Defendant. Even if the Defendant’s purported losses were a natural consequence of the breach or were within the parties’ reasonable contemplation at the time the Agency Agreement was entered into, the Plaintiff could not have assumed responsibility for the Defendant’s loss of profits owing to the nature of the industry. S/N xx37UxxBnEu7wXRvimaJXw

In my considered view, the Defendant has correctly submitted that, on the facts in Transfield and Accolade Land, the “broader principle” was considered in the context of claims for consequential losses.

In Transfield, the plaintiff sought loss of profit for a separate contract entered into with a third party instead of the daily market rate for each day that the Achilleas was late to be redelivered.

In Accolade Land, the plaintiff sought to recover losses for the reduction in price of the property; loss of profitability; and delays in redeveloping a mixed commercial development to integrate with a proposed MRT station, which was later realigned to bypass the said development. The Court dismissed these heads of claim as being not foreseeable and too remote.

In contrast, the facts in the present case involve a straightforward Agency Agreement where the Plaintiff had agreed to secure contracts with end-customers for the Defendant to perform PDT services. The Agency Agreement contained an exclusivity clause to ensure the Plaintiff does not promote other competing technologies to potential end-customers. As I have found, the Plaintiff breached this term by promoting HATS and other diagnostic services to third parties.

The Defendant sought to recover damages from the Plaintiff for performing services under PDT contracts on its own without the S/N xx37UxxBnEu7wXRvimaJXw Defendant’s knowledge and in breach of the exclusivity clause in the Agency Agreement. The losses arose naturally from the breach of the Agency Agreement.

The Defendant did not make any claim for consequential losses such as loss of bargain or loss of opportunity in securing PDT contracts or other diagnostic contracts arising from the Plaintiff’s breaches. Had this been so, there would then be a need to consider the “broader principle” enunciated in Transfield and applied in Accolade Land. In short, the issue of the assumption of responsibility test simply does not arise in the present case.

Even on application of the “broader principle” (i.e. if the assumption of responsibility test applies), the losses arising must have been within the Plaintiff’s reasonable contemplation. The entire claim for breach of contract boils down to losses flowing naturally from the breach of the Agency Agreement and there are no complex issues such as fluctuation in market prices as in Transfield or reduction in the value of the property as in Accolade Land. 1st Issue: Damages for Breach of Contract

Detailed written submissions were filed by the parties on the 1st Issue and for the purpose of brevity, this judgment will not deal with each point of argument as raised or rebutted by each party. Suffice to say that I have read and considered the oral and S/N xx37UxxBnEu7wXRvimaJXw documentary evidence, including all affidavits affirmed by PW8 and DW7, and the parties’ written submissions leading to the conclusion in favour of the Defendant.

Upon the directions of the Court, the learned counsels had prepared an Expert Summary to explain the different approaches taken by the experts (encls. 857 and 858).

In encl. 858, the Defendant had summarised the figures as calculated by each expert in a table which is re-produced below: “No.

Plaintiff’s total revenue as per its audited financial statements (from 2013 to 2016)

Total revenue RM58,701,700

Costs of Sales (from 2013 to 2016)

SPC Scope 9.38%

Estimated SPC Scope revenue of Plaintiff

Revenue of 7POs RM3,018,769 RM3,018,737 7. Estimated loss of revenue to the Defendant RM2,487,450 RM42,324,234 S/N xx37UxxBnEu7wXRvimaJXw

Gross profit margin from Plaintiff’s audited accounts

1.77%

Gross profit margin from Defendant’s Board Minutes 35% Defendant’s entitlement to damages for breach of contract RM44,028 RM14,813,482”

In paragraph 3 of the same enclosure, the Defendant had submitted that, in the main, the divergence in opinion between the experts stems from the following:

Plaintiff’s expert Revenue estimate: Determined the division of work/ services between the parties for the duration of the Agency Agreement (for 2013 and 2016, the revenue was pro-rated based on number of days). The average division of work for the Defendant was multiplied against the Plaintiff’s total revenue for the period. Compensation: The estimated revenue was multiplied by 1.77% representing the Defendant’s average profit margin in Russia only. S/N xx37UxxBnEu7wXRvimaJXw

Defendant’s expert Revenue estimate: Utilisation of the Plaintiff’s cost of sales to determine the revenue which would have been paid to the Defendant had the contracts to end-customers been performed by the Defendant. Compensation: The cost of sales was multiplied with the Defendant’s minimum target profit margin of 35% for PDT work. (see too, the comparison table of each expert’s methods at pp 4 - 8, encl. 858)

In furtherance of the above, the learned counsel for the Plaintiff had set out PW8’s formula for computation as follows.

PW8’s quantification of the damages suffered by the Defendant and the profits earned by the Plaintiff for carrying out the Defendant’s Scope (instead of engaging the Defendant) during the Relevant Period between 1.3.2024 and 24.3.2016 was based on the figures in the financial statements in DB26 & DB27, namely the 7POs, 89 invoices/ POs, price list from the Defendant and the S/N xx37UxxBnEu7wXRvimaJXw corresponding POs from the end user, and applying the following formula: Damages= SPC Scope revenue x SPC's gross profit margin RM44,028 = RM2,487,450 x 1.77% Profits= SPC Scope revenue x MRA's EBIT margin RM483,560 = RM2,487,450 x 19.44%

PW8 derived the “SPC Scope revenue” by carrying out the following procedures:

The amount earned by the Defendant (7POs from the Plaintiff to the Defendant) was divided against the amount earned by the Plaintiff from the end user for the said services (corresponding PO from end user/ invoice from the Plaintiff for the 7POs) and multiplied by 100% to derive the percentage of Step 1. 7POs x 100% = Percentage of Step 1 PO from end user for 7POs RM3,018,769.03 x 100% = 12.23% RM24,691,286.50

Unit/ size/ length of object stated in the 89 invoices/ POs was identified and the price was determined based on the S/N xx37UxxBnEu7wXRvimaJXw Defendant’s price list and then multiplied by the price stated in the price list. Then, it was divided against the amount earned by the Plaintiff from the end user for the said services (corresponding PO from end user/ invoice from the Plaintiff for the 89 invoices/ POs) and multiplied by 100% to derive the percentage of Step 2. 89 invoices/POs x 100% = Percentage of Step 2 PO from end user for 89 invoices/POs RM1,168,920.55 x 100% = 5.86% RM19,938,681.03

Percentage of Step 1 and Percentage of Step 2 were added and then divided against the total end customer PO/ Plaintiff’s invoice and multiplied by 100% to determine the Estimated SPC Scope Revenue (Percentage SPC Scope 1 + Percentage SPC Scope 2) x 100 Total end customer PO/ Plaintiff’s invoice = Estimated SPC Scope Revenue RM4,187,689.58 x 100% = 9.38% RM44,629,967.53

Estimated SPC Scope Revenue was then multiplied to the Plaintiff’s revenue during the Relevant Period of claim (i.e. S/N xx37UxxBnEu7wXRvimaJXw

1.3.2013 - 24.3.2016 on a prorated basis for 2013 and 2016) to derive the Estimated SPC Scope revenue during the Relevant Period. Plaintiff’s revenue (2013 - 2016) Relevant Period of claim (pro-rated for 2013 & 2016) x Estimated SPC Scope Revenue = Estimated SPC Scope Revenue during the Relevant Period 2013: RM4,472,424 = RM4,633,725 x 305 days 316 days 2014: RM17,257,059 2015: RM30,012,266 2016: RM6,959,951 = RM30,607,013 x 83 days 365 days Total revenue as computed above= RM58,701,700 RM58,701,700 x 9.38% = RM5,506,219 S/N xx37UxxBnEu7wXRvimaJXw

The Defendant’s revenue for the 7POs was then deducted from the Estimated SPC Scope revenue during the Relevant Period to derive the SPC Scope revenue. Estimated SPC Scope revenue during the Relevant Period – SPC’s revenue for 7POs = SPC Scope Revenue RM5,506,219 - RM3,018,769 = RM2,487,450

PW8 derived the profit margin by carrying out the following procedures:

For damages suffered by the Defendant, PW8 utilised the Defendant’s average gross profit margin (for FYE 2013 - 2016) to reflect its own performance during the said period. The average gross profit margin (for FYE 2013 - 2016) was 1.77%. This computation was based on the information extracted from the Defendant’s Income Statement & Total Financial Results. The average gross profit margin was then multiplied with SPC Scope Revenue. Damages = SPC Scope Revenue x SPC’s Gross Profit margin RM2,487,450 x 1.77% = RM44,028.00 S/N xx37UxxBnEu7wXRvimaJXw

For loss of profits suffered by the Defendant, PW8 opined that the profit margin of the Plaintiff would be a more appropriate rate to be applied as the loss to the Defendant would be based on the profits earned by the Plaintiff. PW8 examined the gross profit margin of the benchmark companies (as identified in FLA Report) and the Plaintiff’s gross profit margins during the said period and decided to utilise the Plaintiff’s profit margin before finance cost (EBIT) for reasons stated at paragraph 100, APP(1).The average EBIT margin was multiplied with SPC Scope revenue. Loss of profits = SPC Scope revenue x Plaintiff’’s EBIT margin RM2,487,450 x 19.44% = RM483,560.00

The Plaintiff argued that no evidence was tendered by the Defendant on the costs, expenses and profitability of PDT projects done with the Plaintiff under the Agency Agreement, which was necessary to determine the losses suffered by the Defendant and profits earned by the Plaintiff for carrying out SPC’s Scope (instead of engaging SPC).

In the absence of the facts and data on the costs, expenses and profitability of the Defendant, PW8 approached the computation with the best available undisputed evidence which was the 7Pos and made his findings in APP(1) that – S/N xx37UxxBnEu7wXRvimaJXw

the Plaintiff was unable to segregate the revenue between SPC Scope and Non-SPC Scope portion as the projects were awarded on a lump sum basis without any segregation;

there were many services provided in each of the contracts procured by the Plaintiff and SPC Scope related services formed only a portion of each contract as evidenced by the 7POs and the technical reports;

based on the 7POs, the Defendant only provided PDT and the Plaintiff provided other services which were non-PDT but were required for PDT to be provided; and

only a percentage of the Plaintiff’s revenue would reflect SPC’s Scope Revenue and this can be deduced from the amount paid to the Defendant for the 7POs and compared to the amount paid to the Plaintiff by the end user for the same projects.

PW8 compared the prices of SPC Scope in the 7POs and the prices in the price list from the Defendant and concluded that both the prices appear within the range of each other and therefore was a more current reflection of the prices applicable and reasonably accurate. PW8 then utilised the price list to compute the SPC Scope Revenue for the 89 invoices/ POs that were listed S/N xx37UxxBnEu7wXRvimaJXw by DW7 in APD(4) as phonon works done by the Plaintiff on its own without engaging the Defendant.

Meanwhile, DW7 examined the Plaintiff’s invoices which were disclosed by the Plaintiff pursuant to the DO. Based on the terms of the DO, all invoices disclosed are work performed in breach of the Agency Agreement. In view of the principal-agent relationship between the parties, if the contract had been performed, the POs that would have been issued to the Defendant to perform the work would be stated as the Plaintiff’s Costs of Sales as per the Plaintiff’s audited financial statements.

DW7 explained that he used the Costs of Sales/ Costs of Services as the basis of calculation because it would have been the costs that the Plaintiff would have to pay to the Defendant had the Plaintiff allowed those services to be performed by the Defendant as required under the Agency Agreement.

Given that the invoices disclosed to the Defendant comprised a large portion of the Plaintiff’s revenue for 2013 to 2015 and that numerous contracts and commercial proposal (for example with Occidental and Vanguard) were entered into by the Plaintiff even after the termination of the Agency Agreement on 24.3.2016 (see too, the invoices and POs after that date that are PDT related), the Plaintiff’s entire Costs of Sales were used to determine the revenue obtained in breach of the Agency Agreement. S/N xx37UxxBnEu7wXRvimaJXw

Although, the Plaintiff alleged that it had performed various non-PDT work after termination of the Agency Agreement, the Defendant submitted that the Plaintiff failed to provide any credible evidence to prove other invoices are non-diagnostic revenue which is not related to PDT (reference to s 103 of the EA 1950 and Juahir’s case (supra) was repeated). As regards the Letter of Award from Petronas Carigali Sdn Bhd (‘LoA’), which the Plaintiff claimed was a maintenance contract, the scope of work according to the LoA was not disclosed and no invoice or receipt of payment was produced to support the allegation.

Further, in order to avoid double counting, DW7 deducted the amount under the 7 POs issued to the Defendant from the Costs of Sales. A figure of RM45,342,971.00 was arrived at, which constituted the revenue generated by the Plaintiff in breach of the Agency Agreement. DW7 opined that the Defendant would have made at least 35% profit on the said revenue. This was based on the Defendant’s Board Resolution dated 23.3.2007 which states that all the Defendant’s phonon related services should have a minimum of 35% profit margin.

The Defendant contended that a profit margin of 35% is reasonable taking into account that the Plaintiff’s own profit margin was around the same amount. Applying this percentage, DW7 concluded that RM14,813,482.00 is a reasonable estimate of the compensation that the Defendant should be paid for the Plaintiff’s breach of the Agency Agreement. S/N xx37UxxBnEu7wXRvimaJXw

A summary of DW7’s calculation is shown below: Formula 2013 2014 2015 2016 Total Revenue – (Audited) 4,633,725 17,257,059 30,012,266 30,607,013 82,510,063 Cost of Sales – (Audited) 3,040,651 11,937,422 17,667,372 12,697,526 45,342,971 Gross profit – (Audited) 1,593,074 5,319,637 12,344,894 17,909,487 37,167,092 Based on audited accounts cost ratio Total phonon related revenue due to SPC 3,040,651 11,937,422 17,667,372 12,697,526 45,342,971 Less: POs issued by SPC 1,735,287 1,283,450 3,018,737 SPC minimum 35% profit margin x 35% 1,064,228 3,570,747 5,734,373 4,444,134 14,813,482 S/N xx37UxxBnEu7wXRvimaJXw

Naturally, DW7’s opinion was attacked on multiple fronts which are summarised as follows:

DW7’s approach –

presumes –

(A) the entire work done by the Plaintiff was phonon monitoring and data filtration i.e. the Defendant’s scope of work, which was speculative and impossible; and

(B) that all the projects done by the Plaintiff were purportedly secret projects which is erroneous as documentary evidence shows that there were projects done with Professor Vladimir during Phase 1 and this goes beyond the projects which were considered by the Court and the finding in the judgment on the 1st Tranche that identified only six projects at subparagraph 69(c);

(ii) does not take into account the cost attributable to the projects which could have been easily identified by the Defendant; and S/N xx37UxxBnEu7wXRvimaJXw

(iii) is tantamount to causing the Plaintiff to pay twice for the costs incurred and reported in its audited accounts;

DW7’s computation –

includes costs incurred by the Plaintiff for –

(A) works and services completely irrelevant to the Plaintiff, for example, scaffolding, painting, repair works, verification works and other activities;

(B) other projects such as projects under onshore pipeline maintenance project;

(C) the 7POs. PO nos. 2, 3, 4, 5, 6 and 7 show that the Plaintiff provided and expended monies for lodging, travelling tickets, working visa, training, PPE and rental of the required equipment; and

(D) costs incurred by the Plaintiff for the 7POs. The Defendant did not provide any evidence of any cost expended by it. All costs for the deliverables under the project was borne by the Plaintiff, including mobilisation and demobilisation cost, engagement of API S/N xx37UxxBnEu7wXRvimaJXw inspector and the expenses as stated in subparagraph (C); and

(ii) does not make reference to the Defendant’s accounts;

the Defendant did not provide any documents or information on its accounts and financial position. Instead, reference was made to the United States Register of Legal Entity (USRLE) in the Russian Federation search (Appendix 2 of APP1), which was objected and the contents disputed during the 1st Tranche by DW6. The doctrine of estoppel applies to estop the Defendant from taking an inconsistent stand;

DW7’s opinions in APD(1) and APD(5) are inconsistent and were tailored to serve the Defendant’s interest. In the former, DW7 segregated non-phonon commercial invoices and proceeded to give a 5% haircut for allocation of non-phonon revenue but in the latter, DW7 took the position that all services provided by the Plaintiff should have been provided by the Defendant;

DW7 admitted that he made errors in APD(1). This goes to show that he is not skilled in the area in which he has given evidence; S/N xx37UxxBnEu7wXRvimaJXw

DW7’s approach is superficial and the computation on 35% minimum profit margin is erroneous as the minutes referred to clearly shows that 35% is merely an anticipated profit margin and there is no evidence on the ability to achieve the same. DW7’s methodology is based on assumptions and not on factual data and should be disregarded in the light of available evidence before the Court;

in APD(5), DW7 dismissed the alternative computation suggested by PW8 in APP(1). DW7 did not make any analysis of the computation reflecting a superficial consideration.

After careful consideration of the distinct approaches taken by PW8 and DW7, I was of the view that the approach adopted by DW7 should be preferred over that of PW8. My reasons are as follows:

the Costs of Sales approach reflect the costs incurred by the Plaintiff to provide services to the end-customers. Therefore, this amount would have been the Defendant’s revenue had the Plaintiff not breached the Agency Agreement. DW7’s approach was logical and results in a more probable estimate of losses for breach of contract;

DW7’s calculations and the amount proposed was moderate and conventional, having regard to fairness and S/N xx37UxxBnEu7wXRvimaJXw reasonableness and taking into account the facts of the case and the sheer sums which the Plaintiff had amassed by abusing its fiduciary position as the Defendant’s agent. The Plaintiff’s audited financial statements reveal that the total revenue amassed by the Plaintiff between 2013 to 2016 is RM82,510,063. This means the revenue split estimated by DW7 was approximately 50:50 for secret projects i.e. RM42,324,234, which should be attributable to the Defendant. The compensation sought by the Defendant was only RM14,813,482, which is approximately half of the Plaintiff’s gross profit (i.e. RM37,277,609) for the same period. The Plaintiff was not the patent owner of PDT and was supposed to be a marketing agent. The Plaintiff has now grown significant goodwill in the industry by abusing the Defendant’s trust and confidence as its agent;

the Plaintiff failed to discharge the burden of proving that there are other revenue streams that should be discounted from the Costs of Sales. The Plaintiff’s witnesses were cross-examined on the LoA. PW4 admitted that the Plaintiff did not produce the contract nor the scope of work under the LoA whilst PW8 admitted that he did not even see the scope of work for the LoA. The Plaintiff could have produced its management accounts or general ledger but it did not do so. In the circumstances, I agree with the Defendant that an adverse inference should be drawn against the Plaintiff under s 114(g) of the EA 1950 for its S/N xx37UxxBnEu7wXRvimaJXw failure to produce these documents. The only reasonable conclusion for the non-production was because the documents would show that they are PDT related services and thus, must be taken into account for purposes of calculation;

the additional costs purportedly incurred by the Plaintiff are operational expenses, not Costs of Sales. The Plaintiff failed to substantiate any of these costs and in any event, the issue does not arise because the 35% profit margin applied by DW7 sufficiently accounts for such costs, if indeed they were incurred;

PW8 has taken the view that only RM44,028.0 should be awarded to the Defendant for breach of contract. This amount is lesser than even the 7POs which the Plaintiff had issued to the Defendant between 2014 and 2015 i.e. RM3,018,737. PW8 has put forth an absurd figure to this Court, which glaringly glosses over the gravity of the Plaintiff’s breach. Moreover, –

pro-rating the Plaintiff’s revenue is inaccurate because the amount of revenue in the actual invoices for the relevant period exceeds the pro-rated amount. PW8 could have used the amount from the actual invoices to calculate the precise revenue in question; and S/N xx37UxxBnEu7wXRvimaJXw

(ii) use of the SPC Scope by PW8 was flawed. The Plaintiff was the exclusive agent of the Defendant whereby the Defendant must carry out all work for the end-customer contracts. In any event, the basis used by PW8 to derive SPC Scope is erroneous for the reasons as submitted by the Defendant. In short, the Defendant correctly submitted that there were five key issues in APP(1) which could not withstand the scrutiny of cross examination and were not explained in re-examination, namely pro-rating the Plaintiff’s revenue was unfair and produces a lower figure; the comparison between the 7 POs against the entire project performed by the Plaintiff was artificial and inconsistent; comparing the revenue the Plaintiff made for each project against the purported Price List was unreliable and fails to consider the errors therein; the basis for estimating the price the Defendant would have charged for each secret project was incorrect; and any costs claimed to be incurred by the Plaintiff would in any event be factored into DW7’s calculation since the Defendant’s claim was only for 35% of the Costs of Sales; and

reliance on the Defendant’s audited accounts in Russia to calculate the profit margin was misplaced because revenue from Malaysian projects is not recognised in the Defendant’s Russian accounts. S/N xx37UxxBnEu7wXRvimaJXw

Premised on the foregoing considerations, I found that the Defendant has proven, on a balance of probabilities, damages for breach of contract in the sum of RM14,813,482.00. 2nd Issue: Account of Profits for Breach of Confidential Information

The Defendant submitted that account of profits is an equitable remedy and is restitutionary in nature. The wrongdoer is to account for profits made out of its wrong and restore it to the complainant or victim. The basis for ordering an account of profits is that the wrongdoer is not unjustly enriched at the expense of the victim and should therefore be deprived of any profit made, which is attributable to the infringement (see Hogg v Kirby [1803] 8 Ves 215; 32 ER 336).

DW6 had testified that based on the reports disclosed pursuant to the DO, it was discovered that many of those reports show that the Confidential Information had been used by the Plaintiff.

DW6 had prepared a table listing out the reports and the specific pages which contain the Confidential Information [see Annexure A in WS (2nd Tranche) - DW6 and in the Defendant’s Written Submissions (encl. 816)]. S/N xx37UxxBnEu7wXRvimaJXw

The reports prepared by the Plaintiff for its customers were also mapped to the specific invoice, purchase order, release order etc. (see Annexure B in WS (2nd Tranche) - DW6 and in encl. 816).

The Plaintiff argued that it was incumbent on the Defendant to prove that the damages or loss claimed for breach of confidential information was caused by the Plaintiff. In National Feedlot Sdn Bhd & Ors v Public Bank Bhd [2023] MLJU 2023, the Court of Appeal considered the “gain” from the wrongful disclosure.

It was submitted that the Defendant failed to discharge the burden of proof because –

in the judgment on the 1st Tranche, the Court did not find any specific report to be in breach of the Confidential

DW6 had amended his Witness Statement by completely deleting item 1 of Annexure A, which makes reference to only phonon distribution graph. This must be taken as an admission that phonon distribution graph was not Confidential Information and the Court should disregard all references under the column of phonon distribution graph in Annexure A;

for loss of profits to be computed, the costs and expenses for the project must be identified and deducted to achieve S/N xx37UxxBnEu7wXRvimaJXw the profits that were earned by the Plaintiff in respect of specific projects. The more pertinent information required under discovery would be the costs and expenses of each project as opposed to the documents that were sought by the Defendant. As an afterthought, the Defendant relied on publicly available documents to achieve the average gross profit margin for each year, which is not the net profit margin;

the categories stated as Confidential Information in Annexure A was already provided to Petronas by the Defendant through technical reports of its previous agent,

the technical reports issued and approved by the Defendant make reference to “The documents that describes the PDT procedure entitled Precise Procedure of Instrumental Phonon Diagnostic of Pipelines” and mathematical formula. This implies that all reports which were done with the Defendant would contain similar information and reference. Hence, the Court should not allow compensation for information which has been provided by the Defendant itself in its technical reports;

the consistency of the approach and the contents between the reports in PB6 which were issued and approved by the Defendant supports the Plaintiff’s position that all PDT reports were for works done with the Defendant, irrelevant S/N xx37UxxBnEu7wXRvimaJXw of whether it was at Phase 1 or Phase 2, and it must be taken that the Confidential Information contained therein was with the Defendant’s approval;

having identified the nature of the Confidential Information and its use, it is apparent that the use of the purported Confidential Information was pursuant to the Defendant’s standard practice and consent. Therefore, the Defendant should not be granted any compensation;

the claim of purported loss of profits in the sum of RM1,979,624.59 was speculative, inaccurate and not based on any cogent evidence. In this regard, DW6 admitted that cost has not been deducted in the calculation of profits claimed by the Defendant when it should rightfully be deducted before achieving the margin for a project. The failure to deduct cost will result in the computation of the margin to be inaccurate. Further, the Defendant does not know the actual profitability of the projects listed in Annexures A, B and C in WS (2nd Tranche) - DW6; and

in the event the Court rejects the above submissions, the Court should proceed to evaluate whether only the Plaintiff profited from the projects listed in Annexure A. The Plaintiff has proven that all the PDT projects were done with Professor Vladimir, in particular item 7 of Annexure A, or DW6. Professor Vladimir was the inventor of PDT and a shareholder and director of the Plaintiff until August 2014. S/N xx37UxxBnEu7wXRvimaJXw He provided PDT services during his tenure. The Defendant was remunerated for its services for the said projects and therefore it cannot seek compensation for technical reports with such references. The Defendant’s contention that PDT can only be done by the Defendant supports the Plaintiff’s stance that all PDT projects were in fact done by the Defendant and the Defendant has been remunerated for all the projects in Annexure A.

In my assessment, the Plaintiff’s contentions were unsubstantiated.

After the 1st Tranche, I found that the Confidential Information consists of –

the Defendant’s internal document that describes the step-by-step procedure on how PDT is to be carried out titled “Procedure of Instrumental Phonon Diagnostics of

the mathematical formula invented by the Defendant and is used to identify phonon defects (‘Mathematical Formula’); and

screenshots of the Defendant’s software which can only be used by the Defendant in doing diagnostic work (‘PDT Software’). S/N xx37UxxBnEu7wXRvimaJXw

The screenshots found in the reports were screenshots from the Defendant’s software, which was used to diagnose assets. It utilises, among others, the Defendant’s mathematical formula, which the Plaintiff used without consent for the secret projects. Hence, the phonon graphs are Confidential Information.

The Plaintiff’s contention that costs and expenses of the project must be deducted based on documents that should have been requested during the discovery was baseless. If the Plaintiff wanted to rely on these documents to prove the actual costs and expenses incurred, it should have produced it. The Defendant had in fact applied the Plaintiff’s profit margin to each invoice in Annexure B. Therefore, the Plaintiff’s costs for these invoices have been deducted from the amount claimed.

The alleged technical reports that were issued and approved by the Defendant or done with the knowledge and consent of Professor Vladimir are res judicata (see paragraph 69(c)(iii) of the judgment on the 1st Tranche).

The Plaintiff’s assertion that the Defendant has not shown that only the Plaintiff profited from the projects wrongly reverses the burden. If other parties had profited from the projects, it was for the Plaintiff to produce the evidence in Court. S/N xx37UxxBnEu7wXRvimaJXw

The Defendant was able to calculate the profit margin for the Plaintiff based on the Plaintiff’s audited financial statements. The gross profit margin of the Plaintiff based on the respective audited financial statements are as follows:

2013: gross profit margin of 34.38%;

2014: gross profit margin of 30.825%;

2015: gross profit margin of 41.13%; and

2016: gross profit margin of 58.51%.

The gross profit margin for each financial year is the same as stated in the Plaintiff’s Expert Report as well.

The profit of each report was calculated by taking the Plaintiff’s profit margin for each financial year and applying that figure to the specific invoice in Annexure B. The Plaintiff’s profit margin was based on the profit margin obtained from the Plaintiff’s audited financial statements. The profit of each report is shown in Annexure C in WS (2nd Tranche) - DW6 and in encl. 816.

Based on the calculation, the Plaintiff has generated revenue of RM5,955,403.10 as per Annexure B. S/N xx37UxxBnEu7wXRvimaJXw

Based on the method of applying profit margin for the financial year to each invoice, the Plaintiff had profited approximately RM1,979,624.59 (see Annexure C).

In the final analysis, the Defendant was entitled to an account of profits for breach of confidential information in the sum of RM1,979,624.59. 3rd Issue: Infringement of

Section 37 of the CA 1987 provides, among others, as follows: “Action by owner of copyright and relief

37.

Infringements of copyrights and the prohibited acts under sections 36A and 36B shall be actionable at the suit of the owner of the copyright and, in any action for such an infringement or prohibited act, the court may grant the following types of relief:

an order for injunction;

damages;

an account of profits; S/N xx37UxxBnEu7wXRvimaJXw

statutory damages of not more than twenty-five thousand ringgit for each work, but not more than five hundred thousand ringgit in the aggregate; or

any other order as the court deems fit.

Notwithstanding subsection (1), all such relief shall be available to the plaintiff in an action under subsection 36A(3) except for statutory damages. …”.

The above quoted provision grants the Court the discretion to award damages of not more than RM25,000 for each copyrighted work which has been infringed without exceeding RM500,000 in the aggregate.

In paragraph 212 of my judgment for the 1st Tranche, I held that the Plaintiff had infringed the copyright subsisting in the Defendant’s copyrighted work as follows:

the Defendant’s webpages on PDT at pp 3803 - 3813, B25 (exhibit P138) and pp 8121 - 8129, B54 (exhibit D258);

the Defendant’s presentation on the company and PDT at pp 494 - 525, C4 (exhibit D261); S/N xx37UxxBnEu7wXRvimaJXw

the Defendant’s technical information in the presentation slides on PDT at pp 4322 - 4347, B29 (exhibit P139); and

the Defendant’s technical information in the presentation slides on PDT at pp 4396 - 4427, B29 (exhibit P140).

The Plaintiff submitted that the Defendant must identify and prove the infringing copies to enable computation of statutory damages based on the number of infringing copies. However, the Defendant referred to its own Copyrighted Works as evidence of infringing copies and therefore failed to lead evidence on the purported number of infringing copies by the Plaintiff. Under s 3 of the CA 1987, infringing copy is defined as reproduction of any work eligible for copyright.

In any event, the webpages and presentations were for the purposes and benefit of the Defendant and it has derived profits as a result of its own webpages and presentations. Any usage of the Copyrighted Works was for the purposes and benefit of the Defendant.

With respect, the Plaintiff’s reading of s 37 of the CA 1987 is erroneous. The term “each work” in sub-s 37(1) CA 1987 refers to the Defendant’s Copyrighted Works that the Plaintiff has infringed. This includes the Copyrighted Works as mentioned in paragraph 82 above. S/N xx37UxxBnEu7wXRvimaJXw

In Pekat Solar Sdn Bhd V Suria Dan Sonne Sdn Bhd & Anor [2023] 3 ILR 219, the High Court awarded RM100,000.00 for four copyrighted works owned by the plaintiff i.e. RM25,000.00 for each copyrighted work. As submitted by the Defendant’s counsel, if the legislature had intended to award damages based on the infringing work, it would have used the term “infringing work” instead of “work”. The damages would be much higher in that case and most instances of copyright infringement would exceed the RM250,000.00 cap as stipulated in the CA 1987.

Clearly, the law on statutory damages for copyright infringement is based on the Copyrighted Work of the Defendant. The Defendant had been granted account of profits for copyright infringement committed by the Plaintiff.

The Defendant has proven its entitlement to the sum of RM25,000.00 for each of the Copyrighted Work which was infringed. Therefore, statutory damages in the sum of RM125,000.00 for copyright infringement was awarded. 4th Issue: Aggravated Damages

Aggravated damages are compensatory damages, awarded as additional compensation where intangible injury is caused to a complainant, exacerbated by the wrongdoer’s exceptional S/N xx37UxxBnEu7wXRvimaJXw conduct (see Sambaga Valli (supra, at paragraph 32); see too, Rookes v Barnard [1964] AC 1129 and the application of the legal principles therein by this Court in the context of a medical negligence case in Dato' Stanley Isaacs (suing by himself and as the administrator of the estate of To’ Puan Suzanne Thomas, deceased) v The Government of Malaysia & Ors [2018] MLJU 1672).

The Plaintiff vehemently argued that the Defendant should not be entitled to both aggravated and exemplary damages as these should only be granted in the event of inadequate compensation. Compensation should not result in an unjustifiable windfall for the claimant and should not financially cripple the wrongdoer in an unjust manner (see Motordata Research Consortium Sdn Bhd v Ahmad Shahril Abdullah & 3 Ors [2017] 1 LNS 1142).

In addition, and among others, –

the Defendant did not plead the facts and particulars for aggravated and exemplary damages in its Statement of Defence and Counterclaim (see Cheong Fatt Tze Mansion Sdn Bhd v Hotel Continental Sdn Bhd (Hong Hing Thai Enterprise Sdn Bhd, third party) [2011] 4 MLJ 354 and Hassan bin Marsom & Ors v Mohd Hady bin Ya’akop [2018] 5 MLJ 141); S/N xx37UxxBnEu7wXRvimaJXw

the facts relating to, and submitted in support of, the aggravated and exemplary damages listed as purported grounds in the Defendant’s Written Submissions must be consonant and limited to the express findings in the judgment on the 1st Tranche;

the Defendant now claims separate amounts for aggravated and exemplary damages when at the liability stage, it claimed a global sum of RM800,000 for aggravated, exemplary and statutory damages;

the Defendant has concealed –

the truth that the Defendant conducted projects in Malaysia since 2009 as evidenced by the Petronas M&E report at pp 3358 - 3405, B28 (P7) and that the Defendant conducted all the PDT projects through

(ii) Professor Vladimir’s evidence by not filing his Witness Statement, which was served on the Plaintiff’s solicitors on 15.3.2019, and further suppressing his testimony by not calling him as the Defendant’s first witness as early as 11.7.2019. It was a tactical maneuver by the Defendant to name Professor Vladimir as a witness (encl. 243) and eventually securing an unverified letter (D270) that he was purportedly unfit in January 2020. Similarly, with S/N xx37UxxBnEu7wXRvimaJXw Khosim (encl. 243) and not calling him without any explanation;

the Defendant has suppressed evidence –

that the Defendant’s Russian employees were employed for the purposes of obtaining working visa and with the knowledge of the Defendant;

(ii) that the Defendant has provided PDT under other diagnostic and inspection contracts;

(iii) on the documents in its possession consisting of e-mails, technical reports, receipts, financial documents and accounts;

(iv) on the actual work distribution and payment arrangement and agreement; and

that there were projects in Malaysia with other agents after termination of the Agency Agreement;

the Defendant changed its position as to liability from the Plaintiff being allowed to conduct other services to the Plaintiff not being allowed to carry out phonon related services, services leeching on the goodwill of phonon and competing technologies; and S/N xx37UxxBnEu7wXRvimaJXw

the Defendant continued to ignore the existence of HATs as a valid and recognised diagnostic and inspection technology and ignored the HATs patent certificate at p 179, APP(1).

In my considered view, much of the matters which were raised as a defence to the Defendant’s claim for aggravated and exemplary damages were addressed, and decided upon, at the 1st Tranche. Pertinently, the Defendant has succeeded in proving, on a balance of probabilities, exceptionally bad conduct by the Plaintiff as follows:

falsifying various documents including the Certificate of Competence, Reference Letter, Reports, CVs, Contract for Services and invoices;

engaging the Defendant’s former employees who are Russians to perform diagnostic services to mislead customers into thinking that the Plaintiff’s diagnostic services were performed by the Defendant;

misleading customers into thinking that the Plaintiff was providing PDT services by using the PDT name;

breach of the Plaintiff’s fiduciary duties as agent to the Defendant. Instead of marketing PDT for the Defendant, the Plaintiff held out that it was performing PDT and concocted S/N xx37UxxBnEu7wXRvimaJXw HATs and marketed it as an enhanced PDT. Further, the Plaintiff raised reliability issues concerning PDT in order to further market its own HATs products to customers;

requesting the Defendant to keep the equipment in Malaysia and then using the equipment for itself;

conspiring with Alex to lie to the Defendant in February 2014 and the Defendant later found out that the Plaintiff had been holding out to end-customers that it was performing PDT together with the Defendant’s former staff when it tendered for a Repsol contract. DW5 informed the Defendant that Repsol had already awarded the tender to the Plaintiff to perform PDT work and this led to the termination of the Agency Agreement;

continuing to enter into agreements and secret projects with customers using the PDT name even after termination of the Agency Agreement;

having a collateral purpose in filing this suit and obtaining an ex-parte injunction which was subsequently set aside mainly due to there being no full and frank disclosure of material facts. The collateral purpose was to be on the offensive against the Defendant thinking that the Defendant will not come to Malaysia to oppose the suit;

refusing to comply with the DO for several months, which significantly delayed the 2nd Tranche; and S/N xx37UxxBnEu7wXRvimaJXw

failing to make the interim payment of RM2.5 million since the Order was made on 18.3.2022, and thus depriving the Defendant of funds.

As a result of the above conduct, the Defendant’s goodwill and reputation, especially with customers in Malaysia, was severely affected due to the Plaintiff’s misrepresentation. The Defendant was deprived of the opportunity to have new customers as the Plaintiff had effectively taken over many customers by misrepresenting to them that the Plaintiff can perform PDT or enhanced PDT.

The Defendant has been deprived of the fruits of its litigation for several years as a result of numerous delaying tactics by the Plaintiff.

Premised on the above, the Defendant submitted that an appropriate amount for aggravated damages given the injury to the Defendant caused by the Plaintiff’s acts would be RM800,000.00. This may be contrasted with the awards made in the following cases which were cited by the Defendant:

RM300,000.00 in Sambaga Valli (supra);

RM1,000,000.00 in Dr Clarence Edwin & Anor v Harta Kumpulan Sdn Bhd & Anor [2011] 6 MLJ 764; S/N xx37UxxBnEu7wXRvimaJXw

$15,000.00 in Koh Sin Chong Freddie v Chan Cheng Wah Bernard and others and another appeal [2013] 4 SLR 629;

RM50,000.00 in Gan Chon Tat dan satu lagi lwn Gan Jin Sim @ Gan Gim Sim dan satu lagi [2022] MLJU 143; and

RM200,000.00 in Creative Republic Sdn Bhd lwn Jasmin bin Samion dan satu lagi [2022] MLJU 2826.

In my opinion, an award of RM300,000.00 as aggravated damages was fair and appropriate in the circumstances of this case. 5th Issue: Exemplary Damages

In Sambaga Valli (supra), the Court of Appeal explicated that – “[33] The exemplary damages or punitive damages — the two terms now regarded as interchangeable — are additional damages awarded with reference to the conduct of the defendant, to signify disapproval, condemnation or denunciation of the defendant’s tortious act, and to punish the defendant. Exemplary damages may be awarded where the defendant has acted with vindictiveness or malice, or where he has acted with a ‘contumelious disregard’ for the right to the plaintiff. The S/N xx37UxxBnEu7wXRvimaJXw primary purpose of an award of exemplary damages may be deterrent, or punitive and retributory, and the award may also have an important function in vindicating the rights of the plaintiff (see Rookes v Barnard [1964] 1 All ER 367; AB and others v South West Water Services Ltd [1993] 1 All ER 609; Broome v Cassell & Co Ltd [1971] 2 QB 354, Laksmana Realty Sdn Bhd v Goh Eng Hwa and another appeal [2006] 1 MLJ 675).”.

The Federal Court in Tenaga Nasional Bhd (TNB) v Evergrowth Aquaculture Sdn Bhd and other appeals [2021] 5 MLJ 937 had applied the three categories of cases which warrant exemplary damages as (i) where it is statutorily provided for; (ii) where the loss is occasioned by the oppressive, arbitrary or unconstitutional conduct of government servants; and (iii) when the defendant’s conduct was profit orientated [see too, Rookes v Barnard (supra)].

The present case falls under the category of the Plaintiff’s conduct being profit orientated. In Laksamana Realty Sdn Bhd v Goh Eng Hwa And Another Appeal [2006] 1 MLJ 675, it was held that cases in this category are those in which the defendant’s conduct has been calculated by him to make a profit for himself which may well exceed the compensation payable to the plaintiff. Damage is not confined to moneymaking in the strict sense, but extends to cases in which the wrongdoer is seeking to gain something which he could not obtain at the expense of its victim. Exemplary damages S/N xx37UxxBnEu7wXRvimaJXw can properly be awarded whenever it is necessary to teach a wrongdoer that tort does not pay.

The Plaintiff submitted that exemplary damages may be awarded if the sum which the Court has in mind to award as compensation is inadequate to punish the Plaintiff for its outrageous conduct or to deter the Plaintiff from repeating such conduct. The “if, but only if” test therefore entails that exemplary damages are a remedy of last resort and a “topping-up” award. The test makes the availability of exemplary damages conditional on compensatory awards being inadequate to achieve the ends of punishment, deterrence and disapproval.

The Plaintiff asserted that its conduct was not outrageous and that punitive damages do not need to be awarded to deter the Plaintiff from engaging in similar activities. The Defendant was said to have exaggerated the facts and made baseless and unfounded allegations to paint a bad picture of the Plaintiff which has a legitimate business recognised by the oil and gas industry in Malaysia.

With respect, I was unable to share the Plaintiff’s sentiments. The Defendant had, by the evidence produced at the 1st Tranche, undoubtedly proven that the Plaintiff has abused its fiduciary position as an agent to usurp the Defendant’s role of performing services using the patented PDT technology. S/N xx37UxxBnEu7wXRvimaJXw

The Plaintiff’s conduct involved, among others, fraud, misrepresentation and forgery, and disclosed malice and insolence and merits punishment (see Worldwide Rota Dies Sdn Bhd v Ronald Ong Cheow Joon [2010] 8 MLJ 297). Even after compensatory damages is awarded to the Defendant, the Plaintiff still earned millions of Ringgit. If substantial exemplary damages are not granted, this would not deter the Plaintiff and others from repeating such wrongful conduct.

At the risk of repetition of what has been said earlier in this judgment and in the judgment on the 1st Tranche, the Plaintiff –

misled customers into thinking that the Plaintiff was providing PDT services by using the PDT name;

concocted HATs to mislead customers but still using PDT technical information and PDT methodology;

lied to customers that HATS is an enhanced version of PDT, on one hand, but on the other hand, during the trial, claiming that PDT and HATs are totally different;

misrepresented to customers that it has experience in PDT when it does not have the technical expertise, thereby putting the health and safety of the oil and gas industry at risk; S/N xx37UxxBnEu7wXRvimaJXw

kept numerous PDT work a secret from the Defendant with the aim of obtaining higher profits for itself;

continued to enter into agreements and secret projects with customers using the name “PDT” even after the termination of the Agency Agreement;

engaged the Defendant’s former employees who are Russians to perform diagnostic services to mislead customers into thinking that its diagnostic services were performed by the Defendant;

called its own employees “Phonon engineers” and “Phonon specialists” when these employees have never been trained by the Defendant who owns the only PDT Training Centre in Russia;

conspired with Alex to lie to the Defendant in February 2014;

lied to the Defendant when first confronted by the

falsified various documents; and

had a collateral purpose in filing the instant suit and obtaining an ex-parte injunction which was subsequently set aside. S/N xx37UxxBnEu7wXRvimaJXw

Based on the above and the approach in Sambaga Valli (supra) that if any award for exemplary damages is made, it should be a fraction rather than a multiple of the amount awarded by way of compensatory damages, including aggravated damages, the Defendant prayed that exemplary damages be allowed at 30% of all the compensatory damages, including aggravated damages, that would be granted by the Court.

In Sambaga Valli, Templeton & Ors v Low Yat Holdings Sdn Bhd [1993] 1 MLJ 443 (HC) and Sin Heap Lee – Marubeni Sdn Bhd v Yip Shou Shan [2005] 1 MLJ 515 (CA), exemplary damages were awarded at 25% of the total compensatory damages awarded.

Miss Manjit Kaur referred to the case of Tenaga Nasional Bhd v Big Man Management Sdn Bhd [2024] 2 MLJ 652 to support her argument that exemplary damages cannot be granted based on a percentage as contended by the Defendant. However, in that case, the trial judge had awarded exemplary damages based on 25% of the special damages. It was for this reason that the Court of Appeal held that the trial judge’s approach was unprecedented and that there was no jurisprudential support for exemplary damages to be granted as a percentage of special damages.

I was inclined to adopt the same percentage as applied in the cases mentioned in paragraph 106 above, and therefore, exemplary damages at 25% of the total compensatory damages S/N xx37UxxBnEu7wXRvimaJXw in the sum of RM17,093,106.59 was awarded i.e.

I also allowed interest at the rate of 5% per annum on the amounts awarded from 2.5.2017 (date of filing of the counterclaim) until the date of full settlement. 6th Issue: Costs

The Plaintiff took the position that each party should bear its own costs.

In the Defendant’s Written Submissions (encl. 816), a Bill of Costs was attached (see ANNEXURE D) apart from the contention that the sum of RM1,500,000.00 should be awarded for the 1st Tranche, RM200,000.00 for the 2nd Tranche and RM118,502.44 for disbursements including the expert’s fees and transcribing fees.

Notably, in the Counterclaim, the Defendant prayed for “Costs” rather than costs on an indemnity basis. At the clarification session, Ms. Cindy Goh abandoned the proposal for taxation of the Bill of Costs and instead prayed for party-to-party costs in the total amount of RM1.9 million. S/N xx37UxxBnEu7wXRvimaJXw

The guidelines in assessing the costs payable in relation to any item are set out in O. 59, r. 16(1) of the RC 2012.

This case is not an ordinary run-of the mill case. There were altogether seven causes of action, some more complex than the rest, namely, defamation; breach of contract; infringement of copyright; breach of confidential information; tort of inducement of breach of contract; tort of unlawful interference with trade or business; and tort of intentional interference with prospective economic advantage.

There was a total of 52 days of trial where, apart from the pleadings, expert reports, NoE, written submissions including in the form of Scott Schedules, diagrams and flow charts, and Bundle of Authorities, voluminous and highly complex documents were produced, specifically for –

the 1st Tranche, the following were filed:

90 volumes of Common Bundle of Documents with a total of 11,727 pages;

(ii) two volumes of the Plaintiff’s Bundle of Documents with a total of 48 pages;

(iii) two volumes of the Defendant’s Bundle of Documents with a total of 520 pages; S/N xx37UxxBnEu7wXRvimaJXw

(iv) three volumes of subpoena documents with a total of 1003 pages; and

Witness Statements with a total of 102 pages; and

the 2nd Tranche, the following were filed:

25 volumes of the Plaintiff’s Bundle of Documents with a total of 4,871 pages;

(ii) 16 volumes of the Defendant’s Bundle of Documents with a total of 4,761 pages;

(iii) PW8’s Report which is 277 pages long;

(iv) DW7’s Report of 1,106 pages comprising financial statements, annual reports and complex accounting calculations; and

Witness Statements with a total of 58 pages.

The subject matter of the action involves diagnostic services in the oil and gas industry, which is a highly specialised technical area. The patented technology, PDT, is extremely technical and involves numerous complicated diagnostic reports. Apart from the extensive legal research conducted, considerable time was spent S/N xx37UxxBnEu7wXRvimaJXw by the legal team to familiarise themselves with the terminologies used in the industry and the scientific aspects of the subject matter, and to comprehend the experts’ reports.

Due to the highly technical area as well as the issues of forgery involved, a meticulous study of the documents had to be done for the present suit. Substantial amount of time had to be spent to uncover the fraud and forgery done by the Plaintiff in respect of the voluminous documents.

The Defendant had additionally outlined the Plaintiff’s and its solicitors’ conduct from the inception of the suit (see paragraph 97, encl. 816) which did not facilitate an expeditious disposal of the suit.

Although this suit was filed in 2017, the Plaintiff’s unlawful conduct had started since 2013. The Defendant has been burdened with this litigation for more than a decade. The Counterclaim is important to the Defendant as its goodwill and reputation are at stake, especially in the light of the defamation suit brought by the Plaintiff against it, which in the end, the Defendant was vindicated.

In my assessment, costs in the sum of RM800,000.00 for the 1st Tranche and RM100,000.00 for the 2nd Tranche is appropriate. Interest at the rate of 5% per annum on the amount awarded as costs from 9.1.2025 until the date of full settlement was also ordered to be paid by the Plaintiff to the Defendant. S/N xx37UxxBnEu7wXRvimaJXw

In view of all the foregoing considerations, I made the order as set out in paragraph 2 above in respect of the 2nd Tranche. DATED: 14.10.2025 (ALIZA SULAIMAN) JUDGE HIGH COURT IN MALAYA KUALA LUMPUR Solicitors for the Plaintiff: Manjit Kaur Gill (Keshantini Baskeran with her) Messrs. Manjit Lavinder & Co. Solicitors for the Defendant: Cindy Goh Joo Seong (Nigel William Kraal with her) Messrs. Chooi & Company + Cheang & Ariff S/N xx37UxxBnEu7wXRvimaJXw