Nugrahan Sdn Bhd v Aimst Sdn Bhd (WA-22NCC-321-05/2024)

This is a simple case concerning an alleged breach of the Product Purchase Agreement dated 29-7-2021 by the Defendant.

The Plaintiff applied for a summary judgment to be entered against the Defendant. This Court after hearing counsel for the litigants and reading the notice of application, affidavits and the submissions filed, finds S/N /rswsFl2AkaNJjsJUlJMg that judgment should be entered against the Defendants for breach of the said agreement with damages to be assessed.

This Court finds that Plaintiff has proven that Defendant did breach the terms of the said agreement. The Defendant on the other hand failed to prove the existence of a bona fide defence to the said claim or the existence of any issue that ought to be referred to at trial. Thus, justifying judgment on liability to be entered against the Defendant with damages to be assessed based on clause 2.2 and clause 6.4 of the said Product Purchase Agreement dated 29-7-2021.

The applicable law in this area is trite. This Court is duty bound to consider the affidavits and pleadings filed to ascertain whether the Defendant has shown an issue or question to be tried or that there ought to be any reason for the trial. Summary Judgment should only be entered in a plain and obvious case. See Malayan Insurance (M) Sdn Bhd v Asia Hotel Sdn Bhd [1987] 1 CLJ 246, Kiwi Brands (Malaysia) Sdn Bhd v Multiview Enterprises Sdn Bhd [1998] 2 CLJ Supp 194 and TAC Construction & Trading v Bennes Engineering Bhd [1999] 2 CLJ 117. S/N /rswsFl2AkaNJjsJUlJMg

This Court is also duty bound to analyse the affidavits filed as seen in the decision of the Supreme Court in Bank Negara Malaysia v Mohd Ismail Ali Johor & Ors [1992] 1 CLJ 627: - “Under an O. 14 application, the duty of a judge does not end as soon as a fact asserted by one party, and denied or disputed by the other in an affidavit. Where such assertion, denial or dispute is equivocal or lacking in precision or is inconsistent with undisputed contemporary documents or other statements by the same deponent or is inherently improbable in itself, then the judge has a duty to reject such assertion or denial, thereby rendering the issue not triable.”

The burden of proof is on the Plaintiffs to show that they have a clear and undeniable claim against the Defendant. Once the Plaintiff show to this Court that the facts justify the exercise of the said power under Order 14, then the burden moves to the Defendant to show that there are either bona fide defences to the claim or that there are issues that require deliberation through viva voce evidence and could only be determined at trial. Please refer to Cempaka Finance Bhd v Ho Lai Ying & Anor [2006] 3 CLJ 544. S/N /rswsFl2AkaNJjsJUlJMg

This Court may grant leave to defend the claim if the Defendants have shown a triable issue, but if there is doubt whether the said defence is bona fide, then this Court may exercise its powers to grant leave with a condition that the sums claimed by the Plaintiffs is securitized by the Defendants. Please refer to Foong Weng Tat v Siew Chin [1974] 1 LNS 34 and Builder Enterprise Sdn Bhd v Hang Nee Enterprise Sdn Bhd [2019] 1 LNS 56.

This Court may also enter judgment for part of the claim if it finds that the Defendant has no defence for part of the Plaintiff’s claim and fix the remainder of the claim to be heard at trial.

The Plaintiff in this case also seeks specific performance of the terms of the said Agreement and seeks judgment pursuant to Order 81 of the Rules of Court. The same principle of law is applicable with regard to Order 81 of the Rules of Court. C. Background Facts

The Defendant had issued a letter dated 11-5-2021 (“Letter of Intent”) addressed to Kaplan International which was directed to the S/N /rswsFl2AkaNJjsJUlJMg Plaintiff informing that the Defendant intended to purchase Kaplan products to be utilized by students at its university.

11.

The Plaintiff and Defendant then executed the Product Purchase Agreement dated 29-7-2021. The following material terms appear in the said agreement: - S/N /rswsFl2AkaNJjsJUlJMg

2.1 The Purchaser (Defendant) agrees to purchase the Products from the Vendor (Plaintiff) in the following manner:

Product I for all medical undergraduate students admitted in the respective cohort on a yearly basis starting from October 2021; and

Product 2 for all medical students in the respective cohort on a yearly basis starting from October 2024. (collectively referred to as the "Minimum Purchase")

2.2 The Purchaser further agrees that it shalI make the Minimum Purchase for at least 5 years as illustrated below: S/N /rswsFl2AkaNJjsJUlJMg

5.1 Each Party hereby represents and warrants to the other Party that:

it has full capacity, power and authority to execute and deliver this Agreement and the agreements contemplated herein, and hereby to consummate the transactions contemplated thereby and that this Agreement and all such other agreements constitute its valid and legally binding S/N /rswsFl2AkaNJjsJUlJMg obligations, enforceable against it in accordance with their respective terms;

the execution and delivery of, and the performance by it of its obligations under, this Agreement shall not:

result in a breach of its constitution (or the equivalent constitutive documents);

(ii) result in a breach of any law, rule, regulation, ordinance, order, judgment or decree of or undertaking to any court, tribunal, government body, statutory authority or regulatory, judicial, administrative or supervisory body (including without limitation, any relevant stock exchange or securities council) to which it is a party or by which it or its assets are bound; and

all relevant statutory, governmental or other approvals for the transactions contemplated herein have been obtained.

6.1 Termination This Agreement shall continue in full force and effect from the date of execution until the: S/N /rswsFl2AkaNJjsJUlJMg

termination of this Agreement by mutual agreement in writing of the Parties; or

(ii) termination in accordance with Clauses 7.2, 7.3 or 7.4 below.

6.2 Termination by Vendor due to Purchaser's default The Vendor may terminate this Agreement with immediate effect by giving written notice to Purchaser:

if the Purchaser commits a material breach of any of its obligations under this Agreement (including failure to make payment), and shall fail to remedy such breach (if capable of remedy) within one (1) month after being given written notice by the Vendor to do so;

if a petition is presented (and such petition is not stayed or struck-out within thirty (30) business days of the petition being served) or an order is made or a resolution is passed for the winding up of Purchaser;

an administrator or receiver or receiver and manager is appointed over, or distress, attachment or execution is levied or enforced upon, any part of the assets or undertaking of Purchaser; or S/N /rswsFl2AkaNJjsJUlJMg

if Purchaser becomes insolvent or is unable to pay its debts or admits in writing its inability to pay its debts as and when they faII due or enter into any composition or arrangement with its creditors or make a general assignment for the benefit of its creditors.

6.3 Termination by Purchaser due to Vendor's default The Purchaser may terminate this Agreement with immediate effect by giving written notice to the Vendor:

if the Vendor commits a material breach of any of its obligations under this Agreement, and shall fail to remedy such breach (if capable of remedy) within one (1) month after being given written notice by the Purchaser to do so;

if a petition is presented (and such petition is not stayed or struck-out within thirty (30) business days of the petition being served) or an order is made or a resolution is passed for the winding up of the Vendor;

if an administrator or receiver or receiver and manager is appointed over, or distress, attachment or execution is levied or enforced upon, any part of the assets or undertaking of the Vendor; or S/N /rswsFl2AkaNJjsJUlJMg

if the Vendor becomes insolvent or is unable to pay its debts or admits in writing its inability to pay its debts as and when they fall due or enter into any composition or arrangement with its creditors or makes a general assignment for the benefit of its creditors.

6.4 Non-Default Termination Provided that the Minimum Purchase has been completed by the Parties, either Party may terminate this Agreement by giving the other Party no less than six (6) months written notice prior to the admission of the next intake in the cohort.

6.5 Consequences of Termination

Upon termination of this Agreement in accordance with Clau es 7.1, 2, 7.3 or 7.4, neither of the Parties shall thereafter have any further rights or obligations under this Agreement to the other Party, except in respect of -

any outstanding payments by either Party to the other under this Agreement (including any interest) which shall remain due and payable; S/N /rswsFl2AkaNJjsJUlJMg

any rights or obligations under this Agreement which are expressed to apply after the termination of this Agreement; and

any rights or obligations which have accrued in respect of any breach of any of the provisions of this Agreement to any Party prior to such termination.

10.2 Entire Agreement

constitute the entire Agreement and understanding between the Parties with respect to the matters dealt with in this Agreement;

supersedes any other Agreement, letters, correspondence (oral or written or expressed or implied) entered into prior to this Agreement in respect of the matters dealt with in this

was not entered into by the Parties in reliance of any Agreement, understanding, warranty or representation of any Party not expressly contained or referred to in this Agreement. S/N /rswsFl2AkaNJjsJUlJMg

10.3 Effective date This Agreement shall take effect on the date entered on the first page of this Agreement irrespective of the diverse dates upon which the respective Parties may have executed this Agreement.

10.5 Amendments & additions No amendment., variation, revocation, cancellation, substitution or waiver of, or addition or supplement to, any of the provisions of this Agreement shall be effective unless it is in writing and signed by each of the Parties.

10.11 Knowledge & acquiescence Knowledge or acquiescence by any Party of, or in, any breach of any of the provisions of this Agreement shall not operate as, or be deemed to be, a waiver of such provisions and notwithstanding such knowledge or acquiescence, such Party shall remain entitled to exercise its rights and remedies under this Agreement, and at law, and to require strict performance of all of the provisions of this Agreement. S/N /rswsFl2AkaNJjsJUlJMg

The Defendant decided to terminate the said agreement by issuing a notice dated 16-8-2023 to the Plaintiff. The contents of the said notice are as follows: - “Considering the exceptional quality of our in-house materials and the comprehensive nature of our own resources, we have assessed that the subscription to the USMLE_KAPLAN package is no longer deemed essential for our educational objectives. The current resources available, including our in-house developed materials, have proven to be more than adequate in meeting the academic requirements of our students. In light of the above, we regret to inform you that AIMST University has decided to discontinue the subscription to the USMLE_KAPLAN yearly package, with immediate effect. We genuinely appreciate the value Nugrahan Sdn Bhd has added to our educational endeavours, and we extend our heartfelt gratitude for the support and collaboration we have shared thus far. Please consider this letter as formal notice of our intention to unsubscribe from the USMLE_KAPLAN yearly package with 30 days' notice period.” S/N /rswsFl2AkaNJjsJUlJMg

The Plaintiff dissatisfied with the decision made by the Defendant sought to appeal against the decision to terminate as seen in the letter dated 7-9-2023. D. Defence and Counterclaim by the Defendant

The Defendant raised the following issues in its pleadings and its affidavit in reply to defeat the application for summary judgment. They are summarised as follows: -

That the Defendant and AIMST University are two different entities.

(ii) Defendant have no contract with Kaplan USA and no Master Services Agreement.

(iii) The number of students for the said medical degree programme were not correct.

(iv) There was a material change in the assessment for step 1 for the after Defendant received e-mail from “Educational Commission for Foreign Medical Graduates” based on the issue concerning United States Medical Licensing Examination (“USMLE”). S/N /rswsFl2AkaNJjsJUlJMg

Alleged Misrepresentation concerning the USMLE residency programme that will cause its students difficult to obtain a residency programme in the United States.

(vi) Alleged Misrepresentation that the Product Agreement was executed based on the representation that it would allow the Defendant to facilitate the University’s agreement to the USMLE residency program.

(vii) Alleged Misrepresentation that the Product supplied by the Defendant may have an impact on the USMLE for its students.

Based on the aforesaid, the Defendant claims that they have incurred loss due to the amount paid under the terms of the Product Agreement.

The Defendant relies on the emails issued by Dr Rajesh and Jeffrey Weil dated 16-4-2014, 3-10-2012, 2-3-2015 and 3-8-2019. The Defendant also refers to the email issued by an organization seeking a survey to be undertaken on medical schools who participate in the medical school web portal of the said institute. The Defendant also produced article in journals concerning the said USMLE residency programme. S/N /rswsFl2AkaNJjsJUlJMg E. Decision of this Court

I find that the Defendant has failed to prove any bona fide defence to the Plaintiff’s claim concerning the breach of the said Product Purchase Agreement dated 29-7-2021.

Firstly, the Plaintiff and the Defendant are parties to the said Product Purchase Agreement dated 29-7-2021 and are bound by the terms of the said instrument. Whether the University itself is a party to the said agreement is irrelevant as the Plaintiff is only seeking to enforce the terms of the agreement against the Defendant. Furthermore, it is also clear that the Defendant operates and manages AIMST University. This issue is irrelevant, and the Plaintiff is entitled to have the Defendant comply with its contractual obligations.

Secondly, on the issue of the alleged misrepresentation, I find that the Defendant has failed to prove the existence of any alleged misrepresentation as it claims.

The emails referred to by the Defendant shows that the discussions S/N /rswsFl2AkaNJjsJUlJMg undertaken between the Jeffrey Weil of Kaplan and Dr Rajesh for the Defendant as referred to earlier and seen in the said emails were made in 2014 to 2019. These where years before the said Product Purchase Agreement were executed by the parties.

Furthermore, what is important is that the terms of the Product Purchase Agreement did not mention whether the supply of the said UMSLE Step 1 and Step 2 will enable all of the university students or any of its students to be successful or pass the said UMSLE residency programme. The said programme supplied as shown in Annexure A of the said Agreement only provides (i) on demand video lectures, (ii) questions and simulated exams, (iii) study plans; and (iv) practice exams. The Plaintiff did not promise that the said programme will ensure that all of the students at the university will successfully complete the UMSLE residency requirement or that the said test will be undertaken through the programmes supplied in accordance with the terms of the Purchase Programme.

This is also explained by the Plaintiff in its affidavit in reply where it was explained that the United States Medical Licensing Examination is an S/N /rswsFl2AkaNJjsJUlJMg examination procedure undertaken by the relevant authorities in the United States to enable medical practitioners to practice medicine in the United States and obtain residency. This programme and how the said licensing test is undertaken is clearly beyond the scope and control of the Plaintiff.

I also note that the Defendant had completely ignored clause 10.2 that appears in the Product Purchase Agreement. For ease of reference,

I reproduce clause 10.2: - 2 Entire Agreement

constitute the entire Agreement and understanding between the Parties with respect to the matters dealt with in this Agreement.

supersedes any other Agreement, letters, correspondence (oral or written or expressed or implied) entered into prior to this Agreement in respect of the matters dealt with in this

was not entered into by the Parties in reliance of any Agreement, understanding, warranty or representation of S/N /rswsFl2AkaNJjsJUlJMg any Party not expressly contained or referred to in this Agreement.

Having agreed to the said clause, the Defendant cannot now complaint of any form of misrepresentation as alleged in its defence. It did agree that it did not enter into the said agreement in reliance of any warranty, understanding or any representation unless they were expressly stated in the said instrument. The Defendant cannot now vary or change what has been agreed upon and cannot now claim that there was any form of misrepresentation as alleged in its Defence.

I refer to Master Strike Sdn Bhd v. Sterling Heights Sdn Bhd [2005] 2 CLJ 596, where Nik Hashim JCA (as he then was) held: - “The purpose of an entire agreement clause is to preclude a party to a written agreement from threshing through the undergrowth and finding, in the course of negotiations, some (chance) remark or statement (often long forgotten or difficult to recall or explain) upon which to found a claim, such as the present, to the existence of a collateral warranty. The entire agreement clause obviates the S/N /rswsFl2AkaNJjsJUlJMg occasion for any such search and the peril to the contracting parties posed by the need that may arise in its absence to conduct such a search. For such a clause constitutes a binding agreement between the parties that the full contractual terms are to be found in the document containing the clause and not elsewhere, and that, accordingly, any promises or assurances made in the course of the negotiations (which, in the absence of such a clause, might have effect as a collateral warranty) shall have no contractual force, save in so far as they are reflected and given effect in that document. In that case, the learned judge ruled that evidence of a collateral contract was inadmissible. He further added at p. 33 D left: the formula used is abbreviated to an acknowledgment by the parties that the agreement constitutes the entire agreement between them. That formula is, in my judgment, amply sufficient to constitute an agreement that the full contractual terms to which the parties agreed to bind themselves are to be found in the agreement and nowhere else. That can be the only purpose of the provision. S/N /rswsFl2AkaNJjsJUlJMg The principle on the entire agreement clause in Innterpreneur Pub was followed by Abdul Aziz J (as he then was) in Macronet Sdn Bhd v. RHB Bank Sdn Bhd [2002] 4 CLJ 729 HC (refd). There he ruled that the entire agreement clause precluded variation by oral agreement. At p. 740 the learned judge said: My opinion is simply this. The entire agreement clause was an agreement between the plaintiffs and the defendants. In agreeing to the clause, the parties must be presumed to have known of the existence of s. 92 and of the exceptions in it and to have intended what the clause intended, that is to exclude any attempt to vary the agreement by an oral agreement or statement, which attempt can only be made through the exceptions in s. 92. By agreeing, therefore, to the entire agreement clause, the plaintiffs agreed not to resort to any of the exceptions in s. 92. They cannot, therefore, be allowed to prove the second precontractual representation or the oral agreement and to rely on them.”

I also refer to Hewlett-Packard (M) Sdn Bhd & Anor v Agih Tinta Sdn Bhd [2022] 9 CLJ 15 and Solid Investments Ltd v Alcatel Lucent (Malaysia) Sdn Bhd [2014] 3 CLJ 73. S/N /rswsFl2AkaNJjsJUlJMg

The Defendant also claims that the letter dated 16-8-2023 was drafted at the request of the Plaintiff and the terms were crafted in accordance with the demands of the Plaintiff. I again do not find any credible evidence to support that. If this is true, the said letter would have stated that the termination was undertaken with the consent of the Plaintiff and that the terms of termination were agreed upon.

Furthermore, this letter contradicts the alleged misrepresentation as alleged by the Defendant. Instead of stating that the said products did not comply with what was promised the Defendant stated: - “Our faculty, staff, and students have consistently demonstrated their commitment to excellence in the medical field. To this end, we have invested substantial efforts in developing in-house teaching materials and resources. Over time, our experts in the medical field have continuously enhanced and refined these resources to align with the evolving educational landscape and the unique needs of our students. Our in-house resources have been well-received by our faculty and students, who have found them to possess excellent features for teaching and learning. S/N /rswsFl2AkaNJjsJUlJMg Considering the exceptional quality of our in-house materials and the comprehensive nature of our own resources, we have assessed that the subscription to the USMLE_KAPLAN package is no longer deemed essential for our educational objectives. The current resources available, including our in-house developed materials, have proven to be more than adequate in meeting the academic requirements of our students.”

Therefore, I find that the Defence raised to defeat the Plaintiff’s claim and the application for summary judgment were mere afterthoughts and not true. If these allegations are true, these would have been the basis for the said termination by the Defendant, and this is clearly not reflected in the letter dated 16-8-2023.

I have also considered the Counterclaim filed by the Defendant. I find that the said Counterclaim is based on the same issues raised by the Defendant that were pleaded and referred to earlier. I find that the said issues do not prevent the Plaintiff from the right to summary judgment against the Defendant. The existence of the Defendant’s Counterclaim S/N /rswsFl2AkaNJjsJUlJMg is premised on the alleged misrepresentation that does not constitute any defence to the Plaintiff’s claim for breach of contract as explained earlier.

For the above reasons I find that the Plaintiff has shown that it is entitled to judgment concerning the breach of contract by the Defendant and that the Defendant has failed to prove any defence to the said claim or even any issue that should be referred to trial. In the circumstances, I believe summary judgment should be entered against the Defendant. I refer to Lee Guat Eng v Seet Tiam Hock [1974] 1 MLJ 178, Societe des Etains de Bayas Tudjuh v Woh Heng Mining Kongsi [1978] 2 MLJ 267 and KC Lim & Associates Sdn v Pembenaan Udarama Sdn Bhd [1980]

Abdoolcader J (as he then was) in Societe des Etains de Bayas Tudjuh v Woh Heng Mining Kongsi [1978] 2 MLJ 267 stated: - “Where there is clearly no defence to the plaintiff's claim, so that the plaintiff should not be put to the trouble and expense of proving it, but the defendant sets up a plausible counterclaim for an amount not less than the plaintiff's claim, the order should not be for leave to defend but should be for judgment for the plaintiff on the claim S/N /rswsFl2AkaNJjsJUlJMg with a stay of execution until the trial of the counterclaim (Sheppards & Co v. Wilkinson & Jarvis [1889] 6 TLR 13 CA)”

I note that the Plaintiff seeks specific performance of the terms of the Product Purchase Agreement pursuant to Order 81 of the Rules of Court. I am however not convinced that the Plaintiff is entitled to the said order for specific performance under Order 81 of the Rules of Court.

This is because the Defendant is entitled to terminate the Product Purchase Agreement without cause as long as a 6 months’ notice before the intake of the next cohort is given pursuant to the terms of the said Agreement. I reproduce clause 6.4 of the said Agreement: - “6.4 Non-Default Termination Provided that the Minimum Purchase has been completed by the Parties, either Party may terminate this Agreement by giving the other Party no less than six (6) months written notice prior to the admission of the next intake in the cohort.” S/N /rswsFl2AkaNJjsJUlJMg

Nevertheless, I find that the Plaintiff has shown to this Court that the Defendant did breach the terms of the said Agreement by failing to give the appropriate notice in accordance with clause 6.4. This will entitle the Plaintiff to claim damages for the said breach. The issue of liability is trite under those circumstances, and I therefore find that the Defendant did breach the terms of the said Agreement.

I do not believe that the Plaintiff is entitled to specific performance of the said Agreement based on the circumstances of this case but is entitled to claim damages for the wrongful termination in accordance with the terms as agreed between the parties. Summary Judgment pursuant to Order 14 of the Rules of Court 2012 should be entered for liability against the Defendant. I refer to Akitek Timor v Tai Kian Cheong [2014] 1 CLJ 149 and Credit Corp (M) Bhd v Bulan Sabit Sdn Bhd & Ors [1989] 2 MLJ 127.

In Akitek Timor v Tai Kian Cheong (supra), Zaleha Zahari FCJ stated: - “[26] We are in agreement with the appellant's counsel that the appellant's claim pursuant to a contract which incorporated the S/N /rswsFl2AkaNJjsJUlJMg Pertubuhan Akitek Malaysia Scale of Professional charges (which included a formula as to an architect's entitlement to fees on the abandonment of a project) being analogous to a claim for liquidated and ascertained damages, can be the subject of an application for summary judgment. We are also in agreement with the appellant counsel that SAR Rajendran hearing the O. 14 application had jurisdiction to make the order which he did pursuant to O. 14 r. 3, to give interlocutory judgment on liability, but the quantum, as to the application of the prescribed formula, to be assessed.”

As to the damages claimable by the Plaintiff against the Defendant, this will have to be assessed by this Court. I direct parties to file in the appropriate affidavits to prove or disprove the amount of damages that the Plaintiff is entitled to claim against the Defendant for the aforesaid breach. F. Orders of this Court

I make the following orders: -

Summary Judgment entered on liability for wrongful termination of the said agreement against the Defendant S/N /rswsFl2AkaNJjsJUlJMg with damages to be assessed by way of affidavit evidence; and

(ii) Costs of RM 5,000.00 to be paid by the Defendant to the Plaintiff subject to allocator. Dated 21st August 2024 Dato’ Indera Mohd Arief Emran bin Arifin Judge High Court of Malaya at Kuala Lumpur NCC 5 S/N /rswsFl2AkaNJjsJUlJMg Counsel: Stephanie Chong Keh Yin and Thean Ern Chew for the Plaintiff Messrs. Rosli Dahlan Saravana Partnership Advocates & Solicitors Vischaal Yogaratnam and Nievanee Ravindran for the Defendant Messrs. Rishi & Partners Advocates & Solicitors S/N /rswsFl2AkaNJjsJUlJMg