IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR
IN THE STATE OF WILAYAH PERSEKUTUAN, MALAYSIA
CIVIL SUIT NO: 22NCVC-276-06/2014
BETWEEN
IMATERA DIGITAL IMAGE SERVICES SDN BHD ... APPELLANT/DEFENDANT
(Company No. : 228021-X)
AND
SURUHANJAYA SYARIKAT MALAYSIA ... RESPONDENT/PLAINTIFF
GROUNDS OF JUDGMENT
1. By application dated 15 April 2004 the plaintiff, Suruhanjaya Syarikat
Malaysia, applied for summary judgment against the defendant, Imatera
Digital Image Services Sdn Bhd for breach of contract. The plaintiff alleged that the defendant had failed to complete the contract works awarded to it within the agreed time and claimed for liquidated damages and other quantified damages and interest thereon.
2. On 18 August 2014, I gave the plaintiff leave to enter final judgment in relation to its claim for liquidated damages for RM119,000.00 and gave the
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defendant unconditional leave to defend the balance of the claim. The defendant is dissatisfied with this decision and has appealed.
Background
3. The Limited Liability Partnerships Act 2012 (“the LLP Act”) 743 came into force on 26 January 2012. It is administered and enforced by the plaintiff, a statutory body established under Companies Commission of Malaysia Act
2001 (“CCMA”). To support the implementation of the LLP Act, the plaintiff needed an integrated information technology web-based system known as
Limited Liability Partnership System ( “the LLP System”).
4. The plaintiff conducted an open tender process to invite interested vendors to structure, build and deliver the LLP System. This was done via Tender No.
SSM 2/2011. The defendant submitted their Bid Form dated 23 June 2011 to the plaintiff’s office together with their proposed commercial and technical details for the LLP Systems.
5. Subsequent to the tender evaluation process, the plaintiff decided to accept the defendant’s tender submission. By a letter of appointment dated 30
December 2011, the defendant was appointed as the vendor to perform the work as specified in the tender. The defendant indicated their acceptance of the appointment via their letter dated 9 January 2012 subject to the terms and conditions as contained in the letter of appointment and an agreement to be executed by both parties. The agreement for the provision of the LLP
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System for Suruhanjaya Syarikat Malaysia (“SSM”) was signed by both parties on 25 April 2012 (“the agreement dated 25 April 2012”).
6. The salient terms of the agreement : a) Contract period : from 3 January 2012 (Commencement
Date) to 31 October 2012 (Expiry Date); b) Delivery Phase : The defendant shall design, develop, integrate and install the developed software and the LLP
System in 2 phases: i. Phase 1 : from 3 January 2012 and to be completed on 30 June 2012 ; and ii. Phase 2 : from 1 April 2012 and to be completed on
31 October 2012. c) Contract price : RM1,190,000.00. Method of payment as provided in Schedule 3 of the agreement. d) Scope of work : The defendant shall provide the services related to the development, supply, installation and testing of
LLP System in the plaintiff’s website as specified in Schedule
1 of the Agreement; e) The defendant shall develop the LLP System in two stages/phases as specified in Schedule 7 as follows :
Stage One : to design and develop the following modules :
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v. vi. vii. viii. i. ii. iii. iv. ix. x. iv. v. vi. vii. viii. i. ii. iii.
User Access Management ;
Public User registration;
Name Search and LLP Registration
Information Update;
Product;
Payment;
Enquiry;
Maintenance.
Stage Two : To design and develop the following modules :
General application;
Receivership;
Asset Management;
Striking Off;
Voluntary Winding Up;
Winding up by Court;
Enforcement Office;
Internal Statistical Report;
Mobile application and kiosk;
Statistical/Report. f) Project Implementation Plan : The defendants shall supply and install the LLP System and specification in accordance with the timeframes as provided in Schedule 9 of the agreement; g) Event of Default : If the defendant fails to comply with the project implementation Plan, the plaintiff may :
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i. withhold any payment due; ii. impose liquidated ascertained damages; and iii. terminate the agreement and pursue any remedies available under the agreement or by law.
7. There was delay in the performance of the contract works. As at 24 April
2012 , the defendant had merely conducted the User Requirements Study
(“URS”) and prepared documents related to the design and development of the supporting and core modules for phase 1. The defendant failed to comply with the project implementation plan.
8. Whereupon, the plaintiff issued a notice dated 5 October 2012 pursuant to clause 40.1 (b) of the agreement to the defendant to remedy the failure, defaults and breaches within 14 days from the date of receipt of the notice.
The defendant failed to comply with the notice.
9. The plaintiff then by letter dated 8 November 2012 informed the defendant that they agreed to an extension of time until 15 November 2012 for phase
1, subject to the imposition of the Liquidated Ascertained Damages
(“liquidated damages”) pursuant to clauses 4.3 and 30 of the agreement.
The letter also stated : a) The plaintiff agreed to grant an extension of time until 31
January 2013 for Phase 2 on condition that the defendant performed their duties and responsibilities as follows :
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•
To develop modules and completed Users Acceptance
Test/ UAT and Final Acceptance Test/FAT for phase 1 modules on or before 15 November 2012
•
To launch the modules for Phase 1 on 15 November
2012 in accordance with the implementation plan requested by the defendant by letter dated 22 October
2012
•
To pay liquidated damages of RM119,000.00 to the plaintiff, calculated from 4 September 2012 till 15
November 2012.
•
The defendant was put on notice that if they failed, defaulted or neglected to perform their duties and responsibilities, the plaintiff will exercise their rights pursuant to the agreement.
10. By a further letter dated 26 December 2012 , the plaintiff informed the defendant that :
•
It agreed to the extension of time until 31 January 2013 for the implementation of Phase 1.
•
It rejected the defendant’s application for waiver of the liquidated damages.
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•
The defendant’s application for an extension of time for implementation of Phase 2 until 28 June 2013 was subject to the successful implementation of the obligations and responsibilities of the defendant in developing the modules, completing the user acceptance testing (“UAT”) and end user acceptance test (“FAT”) for Phase 1 modules in full on or before 31 January 2013.
11. The defendant responded by letter dated 31 December 2012 appealing again against the imposition of liquidated damages. The defendant went on to send another two letters to the plaintiff dated 15 January 2013 and 1
February 2013 applying for the implementation period for Phase 1 be extended until 19 March 2013 and Phase 2 be extended until 14 August
2013.
12. By letter dated 6 February 2013, the plaintiff declined the extension sought and terminated the agreement with effect from 31 January 2013. Then, sometime in July, by a notice of demand dated 30 July 2013, the plaintiff sought , inter-alia, liquidated damages and general damages pursuant to clause 40 of the agreement.
13. Some seven months later, in 6 February 2014 , the plaintiff commenced this action against the defendant claiming for :
(a) Liquidated damages in the sum of RM119,000.00 ;
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(b) General damages in the sum of RM500,000.00.
(c) Special damages :
(i) RM86, 600.00 as expenses incurred in completing the LLP System by utilising their own staff ; and
(ii) RM3,508,876.00 as expenses incurred by the plaintiff in appointing a third party to complete the LLP System.
Defendant’s Opposition to Summary Judgment
14. The defendant countered the application for summary judgment on four grounds : i) The plaintiff had substantially contributed to the delay in the completion of the agreed works ; ii) Summary judgment cannot be entertained in respect of a claim for general damages. The quantum claimed must be proved by calling witnesses ; iii) The plaintiff must call witnesses to prove how the sum of
RM86,600.00 was arrived at; and iv) The claim for RM3,508,876.00 was preposterous as the contract value of the contract between it and the plaintiff was only RM1,190,000.00.
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The Law on Summary Judgment
15. The principles to be applied in determining whether or not to give summary judgment under Order 14 Rules of High Court 2012 are not controversial.
The court may give summary judgment in a plain and obvious case where the defendant has no real prospect of succeeding and there is no other compelling reason why the case or issue should be disposed of at trial. See
Bank Negara Malaysia v Mohd Ismail & Ors [1992] 1 MLJ 400, Chen
Heng Ping & Ors v Intradagang Merchant Bankers (M) Bhd [1995] 2 MLJ
363 and United Malayan Banking Corporation Berhad v Palm &
Vegetable Oils (M) Sdn Bhd [1983] 1 MLJ 206.
Discussion
16. I start by noting that neither in its defence nor affidavit in reply, the defendant has challenged the plaintiff’s right to terminate the contract pursuant to clause 40. Neither is there a counterclaim for a declaration that the termination is unlawful. The defendant’s objection to the summary judgment application is confined to the plaintiff’s entitlement to the damages claimed.
17. I now turn to examine the issues of fact and law raised by the defendant in paragraph 15 to oppose the summary judgment application.
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Claim for liquidated damages
18. The first issue has to do with the plaintiff’s right to claim Rm119,000 as liquidated damages. The plaintiff’s claim for liquidated damages is based on clauses 4.3, 13.13 , 30.1 and 30.2 of the agreement. Clause 30.1 and clause
30.2 provide :
Clause 30.1
(a) If the contractor delays or fails to carry out the services in schedule 7 by the date specified in schedule 9, or any extended date agreed upon by the parties and such delay or failure is not due to SSM, the contractor shall pay liquidated and ascertained damages to SSM for each day of the delay, commencing from the expiry of the date specified in Schedule 9, or any extended date agreed upon by the parties and ending on the date on which the services is completed.
(b) In the event the Developed Software and the Limited
Liability Partnership (LLP) Systems fails to be fully operable or is unable to perform within fourteen (14) days after issuance of Certificate for the FAT, the Contractor shall be deemed to have failed to perform its obligations under this Agreement and SSM shall have the right to impose liquidated and ascertained damages on the
Contractor until the defect is rectified by the Contractor.
Clause 30.2
The liquidated and ascertained damages shall be made payable equivalent to one percent (1%) of the Contract
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Price for each day of delay up to a maximum amount of ten percent (10%) of the Contract price.
19. Pursuant to clause 30, the defendant is liable to pay the liquidated damages only if the delay is solely attributable to it. The defendant alleged that the plaintiff had contributed to the delay. In this regard, at paragraph 6 of the affidavit in opposition affirmed on 3 July 2014, the defendant’s director,
Dato Md Zin bin Hj Hassan asserted:
“I crave leave to refer the defendant’s statement of defence whereby the defendant in its case pleaded that the delay on the part of the defendant to deliver the work in accordance with the specified timeline in the agreement was contributed by the plaintiff as well. I further state that the delay was substantially caused by the delayed “turn around time” by the plaintiff in giving its approval, the protracted time of discussion and integration processes involving third parties and the difficulties faced by the defendant due to the complexity of the system, which are well within the plaintiff’s knowledge.”
20. The plaintiff denied the assertion on the basis that it was an unsubstantiated allegation. It was pointed out that the computation of liquidated damages in exhibit A3 has never been challenged by the defendant until the filing of this action.
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21. The question of whether the plaintiff had contributed to the delay is an issue of fact. Although in the normal way it is not appropriate for a judge in a summary judgment application 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 position , inconsistent with undisputed contemporary documents or inherently improbable in itself it maybe. It is for the judge 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. See Bank Negara ( [15] supra).
22. In order to decide whether there is a triable issue on the defendant’s allegation, it becomes necessary to examine the contemporaneous correspondence to determine whether there is a basis for the defendant’s assertion. There are two letters written by the defendant which have an important bearing on the issue at hand . The first is dated 15 January 2013 and was written to the plaintiff to seek an extension of time to complete phase 1. Paragraph 4 states:
“Permohonan lanjutan ini adalah kerana Ketua Pasukan yang amat berpengalaman yang telah kami lantik iaitu En. Rudzuan
Sulaiman, telah menghadapi masalah kesihatan jantung yang tidak dapat dielakkan. Beliau telah dimasukkan ke wad hospital beberapa kali semasa menjalankan pembangunan system LLP ini. Pasukan beliau amat memerlukan beliau ketika menjalankan kerja-kerja pembangunan modul-modul disebabkan beliau
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adalah yang paling pakar dalam penggunaan “Engine SOP” yang kami gunakan dalam projek ini. Tahap kesihatan beliau telah menyebabkan kumpulan beroperasi dengan tahap yang tidak seperti diharapkan. Pada minggu lepas (hari khamis) beliau terpaksa menjalani satu “pembedahan jantung
Angioplasty” bagi melancarkan perjalanan darah ke jantung beliau. Selepas pembedahan tersebut, Alhamdulillah tahap kesihatan beliau semakin pulih walaupun masih lagi menjalani rawatan susulan. Pada masa ini beliau dan pasukannya telah bertungkus lumus untuk menyiapkan modul-modul Fasa 1.”
23. The second letter is dated 14 October 2013. It was written in reply to the plaintiff’s reminder to the defendant pay up the sum claimed in the notice of demand. The defendant stated;
“Pihak kami juga memohon jasa baik Tuan mempertimbangkan rayuan ini memandangkan pihak kami telah berusaha dan memberi komitmen yang tinggi dalam menyiapkan projek ini termasuk melantik konsultan yang berpengalaman di dalam pembangunan sistem. Pihak kami juga terpaksa menanggung kos operasi yang tinggi sepanjang menyiapkan projek tersebut.
Nasib juga tidak menyebelahi pihak kami kerana berlaki perkaraperkara berikut : i) Konsultan yang dilantik telah diserang ‘heart attack’.
Keadaannya masih tidak diketahui. ii) Kakitangan konsultan terus menghilangkan diri dan tidak datang bekerja. iii) Kesuntukan masa untuk menyiapkan modul-modul yang diperlukan.
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24. A perusal of the contemporaneous correspondence does not support the defendant’s allegation that there is a triable issue if the plaintiff had contributed to the delay. On the contrary, it appears that the delay was caused by the plaintiff but because of the ill health of its consultant for this project. Further , the defendant’s allegation that the plaintiff had substantially contributed to the delay is not supported with sufficient particulars or details to give the allegation credibility. In my judgment, the defendant’s own letters dated 28 November 2012 , 2 August 2013 and 14
October 2013 seriously undermine its assertion that the plaintiff had contributed to the delay.
25. For the reasons given, this ground does not raise a triable issue or a defence on the merits. A breach of clause 30 permits the plaintiff to claim liquidated damages.
Other Losses and Damages Claimed
26. In respect of the other claims, I accept the submission of the defendant that they were not suitable to be entertained on a summary judgment application. The plaintiff’s claim for general and special damages will have to go for trial.
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Conclusion
27. For the reasons given, the plaintiff is given to enter final judgment only in respect of their claim for liquidated damages. The defendant is given unconditional leave to defend the balance of the claim.
Dated: 22 September 2014
t.t.
(S M KOMATHY SUPPIAH)
Judicial Commissioner
High Court of Malaya
Kuala Lumpur
Solicitors :-
For the Plaintiff : Rudaini Binti Abdullah ; Pegawai Undang-Undang Suruhanjaya
Syarikat Malaysia
For the Defendant : Mahsuri Binti Hussein ; M/s Zainal Abidin & Co
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