fails to comply with Clause 4.2 (Performance Security) or with a notice under Clause 15.1 (Notice to Correct) to correct a failure to a material obligation under the contract” [27] Clause 15.2.2 of the Principal Contract reads: 19 “In any of these events or circumstances, the Employer may, upon giving 14 days’ notice to the Contractor, terminate the Contract and expel the Contractor from the Site. However, in the case of sub-paragraph (e) or (f), the Employer may by notice terminate the Contract immediately.” [28] Whilst it is not necessary for this Court to definitively decide at this stage, on the validity of the termination of the Contract by the Defendant, this Court may nevertheless decide whether for the purpose of the injunction applied for, the issue of the termination of the Contract is a serious question to be tried. Therefore when faced with diametrically opposing affidavits with each side espousing its entrenched position, this Court must eschew any approach that unquestioningly and uncritically accept everything said merely because it is contained in an affidavit affirmed under oath. It is entitled to weigh and consider the relative probabilities of the positions posited by the parties, rejecting the preposterous and that which is plainly indefensible on the one hand and reserving for consideration at another forum at trial or arbitration the plausible and probable on the other hand. The salutary and sagacious speech of Lord Diplock in the Privy Council case of Eng Mee Yong & Ors 20 v Letchumanan [1979] 2 MLJ 212 at page 217D-F would speak to our present situation: “Although in the normal way it is not appropriate for a judge to attempt to resolve conflicts of evidence on affidavit, this does not mean that he is bound to accept uncritically, as raising a dispute of fact which calls for further investigation, every statement on an affidavit however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself it may be. In making such order on the application as he "may think just" the judge is vested with a discretion which he must exercise judicially. It is for him to determine in the first instance whether statements contained in affidavits that are relied upon as raising a conflict of evidence upon a relevant fact have sufficient prima facie plausibility to merit further investigation as to their truth.” (emphasis added) [29] This principle was applied by his Lordship Gopal Sri Ram JCA (later FCJ) in the Court of Appeal case in Khidmas Capital Sdn Bhd & Anor v NRB Holdings Ltd and other appeals [2006] 4 MLJ 194. In this 21 case, the plaintiff obtained an ex parte injunction to freeze the defendant's assets worldwide. The judge who granted the order did not produce any written reasons for his decision. In the appeal, learned counsel for the defendants challenged the freezing order on two grounds, namely: Firstly, there was no urgency in the matter warranting the making of the order; and Secondly, there had been non-disclosure of material facts by the plaintiff. [30] His Lordship Gopal Sri Ram JCA at paragraph [10] reasoned as follows: “Having examined the evidence, we were satisfied that there was really nothing in complaint about non-disclosure. It is crystal clear from the documents that all negotiations between the parties were conducted after the freezing order had been obtained. The evidence relied on by the appellant as showing that there had been negotiations pre-dating the freezing order is vague and imprecise. A reasonable tribunal properly directing itself would have given that evidence no weight whatsoever. And this is something well within the province of the learned judge 22 in this case. See, Eng Mee Yong & Ors v Letchumanan [1979] 2 MLJ 212 where the Privy Council approved the rejection by the first instance judge in an interlocutory proceeding of vague and imprecise assertions.” (emphasis added) [31] The Defendant had by their notice dated 8 March 2016 requested the Plaintiff to submit their Remedial Plan as the Plaintiff had failed to comply with the Stage Gate Schedule which was the new schedule for the completion of the Works under the SSC. [32] In the present case, there was no agreement reached between the Parties where the Remedial Plan is concerned. Parties are properly and plainly in negotiation; and until the negotiated terms have prevailed over the previous terms of the Contract, either party are permitted to walk away. There is no implied term that once parties started negotiation, then they must negotiate until a settlement is reached, otherwise no one is allowed to walk away. That itself would introduce extraneous factors like undue influence into a negotiation. No one would dare to commence a bona fide negotiation to explore possibilities of a settlement and a workable way forward in a contract that is right and ripe for termination for falling behind 23 schedule for fear that one might be guilty of terminating the negotiation in bad faith. [33] In a negotiation, there will be offers and counter-offers and the basic principle of contract law applies; that a counter-offer cancels the original offer and is a fresh offer altogether. Likewise too a counter-offer not accepted may at any time be withdrawn and further negotiations terminated unless there is a "lock-out period" of some sort where the status quo is maintained until the time frame is over. Otherwise parties would loath to put anything in writing even on a without prejudice basis for fear that if some proposals were made and one does not accept, then the offeror might argue that it would be unconscionable not to pursue an offer to a settlement and to walk away in what is said to be a unreasonable rejection of a reasonable offer. That itself would place an intolerable burden on all parties open to negotiation to avoid litigation; it would be a dampener and even dangerous to come to the negotiation table even when here, it is at the behest of the Minister in charged whose presence was there at the first meeting of all stakeholders after the initial stalemate. As was said long ago by John F Kennedy in his presidential inaugural speech on 20 January 1961: "Civility is not a sign of weakness and sincerity is always subject to proof. Let us never negotiate out of fear. But let us never fear to negotiate." 24 [34] Both the parties were cautiously careful in reserving and preserving their positions as can be seen in the various correspondence between the parties on the negotiations with respect to the details in the proposed Remedial Plan. The Plaintiff's letters maintained the mantra of "Subject to Contract" in all their correspondence on the exchange of terms between the parties with respect to the Remedial Plan. That of the Defendant ended with the expression that "all rights are reserved in the interim." Indeed the Plaintiff's own rule for the negotiations was that both parties shall not be required to waive any of their legal rights. [35] The fact of the matter was that there was no concluded contract arrived at with respect to the completion of the balance Works which had gone way past the completion date. [36] It is not sufficient for the Plaintiff to take the stand that the Heads of Agreement had been agreed when as we know, the body of the agreement is equally important for as they say, the devil is in the details and here the parties could not agree. Otherwise what is said to have been concluded is nothing more than a contract to enter into another contract with terms still having not being agreed which is no contract at all. 25 [37] The Parties' accrued rights would perforce apply unless some fresh terms have been agreed upon as varying previous terms. [38] The Plaintiff had relied on the case of Emirates Trading LLC v Prime Mineral Experts Pte Ltd [2015] 1 WLR 1145 for the proposition that the Defendant must negotiate in good faith. In that case, there is a dispute resolution clause which provides that the parties shall seek to resolve a claim by friendly discussion. The use of the word “shall” in clause 11 indicates that the obligation is mandatory. In the present case, no such clause exists in either the Principal Contract, Novation Agreement, FSA or even in the SSC. [39] As a matter of first principle, the parties’ obligations under a contract are strictly determined by the contractual obligations that they have entered into. In Aseambankers Malaysia Bhd & Ors v Shencourt Sdn Bhd & Anor [2014] 4 MLJ 619, the Court of Appeal at paragraph [325] held that “on the state of the current law, there is no general duty of good faith and fair dealing at common law”. [40] In the case of Mid Essex Hospital Services NHS Trust v Compass Group UK and Ireland Ltd (Trading as Medirest) [2013] EWCA Civ 200, the English Court of Appeal reinforced the proposition that there is no 26 general duty of good faith between contractual parties. Lord Justice Jackson at paragraph [105] said the following: “In addressing this question, I start by reminding myself that there is no general doctrine of 'good faith' in English contract law, although a duty of good faith is implied by law as an incident of certain categories of contract: see Horkulak at paragraph 30 and Yam Seng Pte Ltd v International Trade Corporation Ltd [2013] EWHC 111 (QB) at paragraphs 120–131. If the parties wish to impose such a duty they must do so expressly”. (emphasis added) [41] The Defendant submitted that the facts of the present case is similar to that of I-Expo Sdn Bhd v TNB Engineering Corp Sdn Bhd [2015] 10 MLJ 20. The plaintiff in that case contended that the issuance of the NTP dated 23 March 2006 (B3/670) fixes the commencement date of the LOA to be 22 March 2006 and shows that the plaintiff has fulfilled all pre-conditions under the LOA meaning that the requirement for the production of the performance bond and the payment of the further payment was somehow varied. Lau Bee Lan J at paragraph [46] held that: “The plaintiff submits there is no provision in the LOA to suspend the works of the plaintiff at the Perai Power Station and for the defendant 27 to instruct the plaintiff to vacate the Perai Power Station unless the LOA is properly terminated. With respect I cannot accept the plaintiff’s contention. My reasons are these. The issuance of the NTP (23/3/206) must be taken in the context of the ongoing discussions between the parties as a result of the request from the plaintiff to vary the terms of the agreement which I alluded to in paras 45-45.5 above. It was an indulgence given by the defendant. I agree with the defendant’s submission that once there is a repudiatory breach of contract, the innocent party has an option or elect either to affirm the contract or accept the repudiation and terminate the contract. Support for this proposition is found in the case of Berjaya Times Squares Sdn Bhd (formerly known as Berjaya Ditan Sdn Bhd) v M Concept Sdn Bhd [2010] 1 MLJ 597 at p 607 para 13, where Gopal Sri Ram FCJ, speaking on behalf of the Federal Court) stated: He or she may elect to accept the repudiation, treat the contract as at an end and sue for damages... Alternatively, he or she may elect to reject the repudiation and treat the contract as subsisting. Whether the one or the other course was adopted by the promise the innocent party is a fact that is to be inferred 28 by the court from the objective facts, including the words and conduct of the parties....” [42] It cannot be said here that the Defendant had not acted in good faith by indulging in the Plaintiff’s request to negotiate. The Defendant had even at the behest of the Minister met up with the Plaintiff’s financiers. At the end of the day the parties could not agree on the details regarding the key clauses in the Remedial Plan. Where there is no agreement ad idem, this Court cannot substitute one for them. [43] I am in agreement with the Defendant's submission that, more importantly, it is succinctly clear that the Plaintiff’s obligation under Clause 4.2 of the Principal Contract is wholly independent of any other assertions, contentions, disputes, claims, breaches, complaints and allegations that may exist between the parties. [44] There is thus absolutely no link or nexus between a wholly independent obligation to furnish a Performance Bond, and the monetary claims by the Plaintiff. The clear failure by the Plaintiff to comply with its obligation under the Principal Contract can be taken cognizance of by this Court without the need to call for further investigation. 29 [45] The Defendant submitted that it is trite that performance bond is a form of financial security for the performance of the underlying contract between contracting parties. In construction industry, performance bond functions as an effective safeguard against non-performance, inadequate performance or delayed performance and its production provides a security as readily available to be realized, when the prescribed event occurs, vis-a-vis simply failing to complete the work which had been contracted to carry out: See Lotteworld Engineering & Construction Sdn Bhd v Castle Inn Sdn Bhd & Anor [1998] 7 MLJ 105 at page 111G, and ‘Law of Guarantee' by Geraldine Andrews and Richard Millet, (6th Ed), Sweet & Maxwell, 2011 at paragraph 16-003, page 621. [46] At paragraph 16-004, page 622 in 'Law of Guarantee' by Geraldine Andrews and Richard Millet, (6th Ed), Sweet & Maxwell, 2011, the learned authors state that: “In the construction industry, both in England and abroad, cash-flow problems are common, particularly in a time of recession. The employer therefore runs the risk of a project worth millions of pounds being abandoned at a critical stage because the contractor or a subcontractor has suddenly become insolvent… 30 …Many building contracts are commissioned by government (or local government) departments or bodies, after seeking bids for the tender from various contractors. Anyone awarding large contracts out of public funds will usually be particularly concerned to ensure that the successful bidder for the contract has sufficient technical and financial resources to undertake the project in accordance with its terms. Such employers are often equally concerned to ensure that moneys advanced on account will be used for the purposes of the project, and not as part of the contractor’s general working capital.” (emphasis added) [47] To appreciate the importance of performance bond as security to guard against the potential risks of contractor insolvency, the Defendant referred to the article “Constructing safety nets” by Ebony Alleyne in Construction Law October 2014 as follows: “A contractors’ worth is frequently in his receivables, such as debts, claims, retention and work in progress, and given contractors are still contending with rising material and energy prices (giving rise to fairly low profit margins) there are enduring concerns surrounding the effect of extended payment terms on the supply chain, in terms of cash flow and solvency. 31 All things considered, while the financial recovery is well under way; the power imbalance between employers and contractors means employers will continue to require informal forms of security, outside the construction contract. The common approach is for employers to require a performance bond or guarantee, and take comfort from the assumption it will provide a sizeable all-purpose safety net should things go wrong… …Performance bond is generally a condition precedent to the construction contract, and the employer is usually reassured by the option to call on a solvent paymaster should the contractor default or become insolvent.” [48] In Kejuruteraan Bintai Kindenko Sdn Bhd v Nam Fatt Construction Sdn Bhd & Anor [2011] 7 CLJ 442, Ramly Ali JCA (as he then was), in affirming the commercial significance of performance bonds at paragraph [61] held as follows: “A performance bond is basically a form of security for the performance of the underlying contract between the parties. Usually the underlying contract between the parties provides for the requirement of a performance bond to be issued by a bank for the 32 benefit of the beneficiary in the event of non-performance of the other party of the contractual obligations between them. The underlying purpose of a performance bond is to provide a security which is to be readily, promptly and assuredly realisable when the prescribed event occurs, as stipulated in the underlying contract.” (emphasis added) [49] This principle was first enunciated by Ackner LJ in Esal (Commodities) v Oriental Credit [1985] Lloyd's Rep 546 at page 549. [50] The Federal Court in The Pacific Bank Bhd (sued as guarantor) v Kerajaan Negeri Sarawak [2014] 6 MLJ 153, speaking through Zainun Ali FCJ observed at paragraph [173] as follows: “…In this kind of situation, contractors in construction works are required to provide a performance bond as security to complete the construction project. It is a 'guarantee' in layman's term by the contractor to construct and complete the construction project until completion. It differs slightly from a letter of guarantee in terms of value attached to it where the bond is of the amount of a percentage of the value of the contract sum of the project. As a condition prior to commencement of the contractor's works, the 33 contractor provides a performance bond to the employer. In the event a breach or default occurred during the construction works of the project, a party's rights would depend on the provisions of the contract and the bond, but where it is an unconditional bond, the employer (the owner or occupier of the construction project) is allowed to make its claim by demanding for the bond without giving any reason.” (emphasis added) [51] The Defendant highlighted that given the significance and gravity of performance bond in construction and infrastructure contracts, such form of financial security shall remain in full force and effect at all material times to guard against the potential risks of contractors being unable to fulfill its obligations under the contract for reasons, inter alia, its inadequacy, incapacity, inadvertence, negligence, error, or occurrence of supervening events. [52] The Defendant submitted with considerable support from case law that a failure to provide and/or renew or maintain a performance bond is a fundamental breach, entitling the employer to terminate the contract: see Hudson’s Building and Engineering Contracts (12th Edition), at 34 paragraph 10-053, page 1329 which refers to the case of Swartz & Son (Pty) v Wolmaransstad Town Council 1960 (2) S.A. 1. [53] In Langkawi R & D Academy Sdn Bhd v Ketua Setiausaha, Kementerian Pertahanan Malaysia & Ors [2012] 5 MLJ 662, there was a failure on the part of the contractor to provide the performance bond within 14 days from the date of the contract. Abdul Malik Ishak JCA in delivering the judgment of the Court of Appeal stated at paragraph [45] as follows: “The failure on the part of the plaintiff appellant to provide the performance bond within 14 days from the date of the contract must necessarily fall on 25 October 2001 — calculated from 11 October 2001 being the date of signing of the contract. Whereas the breach as to the delivery of one unit of flyable technology demonstrator occurred on 15 November 2001. These breaches entitled the defendants respondents to terminate the contract and to prevent the plaintiff appellant access to the TUDM Butterworth premises.” (emphasis added) [54] Further, in I-Expo Sdn Bhd v TNB Engineering Corp Sdn Bhd [2015] 10 MLJ 20, the letter of award stipulated, inter alia, for the requirement of the performance bond to be furnished. One of the grounds 35 of termination of the contract was the failure to provide the performance bond. Lau Bee Lan J held that the termination was valid and at paragraph [54], observed as follows: “As the plaintiff failed to provide the performance bond and the further payment within the stipulated periods… the defendant was entitled to revoke the LOA…" [55] Likewise, the position under English law is similarly strict. In Multi Veste 226 BV v NI Summer Row Unitholder BV and others [2011] EWHC 2026, Lewison J (as he then was) held that the failure to provide the bank guarantees was certainly a repudiatory breach. Lewison J held at paragraph [186] as follows: “It is common ground that the failure to provide the bank guarantees and to complete the other documents required by cl 2.5 within five working days after satisfaction of the council pre-condition was a breach of contract by the NI Unitholder…” (emphasis added) [56] In considering whether such a breach is repudiatory in nature, at paragraph [202], Lewison J held as follows: “I do not, I think, need to decide whether failure to provide one (or even all three) of the three NI bank guarantees would on its own 36 amount to a repudiatory breach. The fact is that the NI investors refused to complete. In my judgment that did amount to a repudiatory breach, which in principle entitled Multi to terminate the USA.” (emphasis added) [57] I agree with the Defendant, as amply shown in light of the above, that performance bond is a critical and key security feature of a typical infrastructure contract. Performance bond under this kind of contract is a separate and standalone obligation, not dependent on any other conditions, i.e. progress payment being maintained. [58] This fact cannot be overlooked or ignored, that the Plaintiff has failed to renew and maintain a performance bond that will remain in full force and effect until the Plaintiff has fully executed and completed the Works. There is absolutely no justification for dispensing with it at all times while the Works remains unperformed. As such, the Defendant has the absolute and independent right to terminate the Principal Contract as clearly stipulated in clause 15.2.2 of the Principal Contract when it issued its Notice to Terminate dated 9 June 2016. There is no basis for saying that such a termination is unlawful, unconscionable and in bad faith and therefore 37 invalid in fact and law. At the very least such a termination is not a serious issue to be tried for the purpose of this injunction. [59] As pointed out by the Defendant, the Plaintiff had previously provided a Performance Bond pursuant to clause 4.2.1.1 of the Principal Contract dated 1 August 2011 which was renewed on 17 March 2014, 14 April 2014 and the most recent renewal expired on 25 April 2016. As early as 25 April 2016, the Defendant had written to the Plaintiff requesting the Plaintiff to extend the validity period of the Performance Bond and notified the Plaintiff that should they fail to extend the validity of the Performance Bond, the Defendant would exercise its right under clause 15.2 of the Principal Contract. The Plaintiff sent a letter dated 18 May 2016 to the Defendant requesting for a waiver of the requirement of the Performance Bond until 30 June 2016. At paragraph 3(g) of this letter, it is stated that “We request that Prasarana waives the requirement for Scomi to renew the Performance Bond until 30th June 2016 while the remedial plan is being discussed and until the necessary agreements are reached". [60] The Defendant rejected the said request in its letter of 2 June