[english translation] in the court of … · merchant marketing and project management, ......
TRANSCRIPT
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[ENGLISH TRANSLATION]
IN THE COURT OF APPEAL MALAYSIA, PUTRAJAYA
(APPELLATE JURISDICTION)
CIVIL APPEAL NO. W-02- -/2016
BETWEEN
SILVERLAKE SYSTEM SDN. BHD
(Company No.: 182899-W)
..... APPELLANT
AND
LOGICAL OPERATIONSCONSORTIUM SDN. BHD
(Company No.: 394720-X) .....RESPONDENT
In the matter of the High Court of Malaya at Kuala Lumpur
Civil Suit No. S-22-94-2010
BETWEEN
LOGICAL OPERATIONS CONSORTIUM SDN. BHD
(Company No.: 394720-X) .....PLAINTIFF
AND
1. ABDUL RAHIM BIN ABDUL RAZAK
(NRIC No.: 600915-07-5393)
2. SILVERLAKE SYSTEM SDN. BHD
(No. Syarikat: 182899-W) ...DEFENDANTS
GROUNDS OF JUDGMENT
SITI KHADIJAH BINTI S. HASSAN BADJENID
JUDGE
2
Plaintiff (Logical Operations Consortium Sdn. Bhd.) is a private limited
company incorporated in Malaysia pursuant to the law. The First
Defendant (Abdul Rahim bin Abdul Razak – SD2) is an individual and
the Second Defendant (Silverlake System Sdn Bhd) is a private limited
company incorporated in Malaysia pursuant to the law.
The evidence shows the Court the following:
The First Defendant at the material time was the Assistant General
Manager who headed and managed the Islamic Credit Card Centre at
Bank Islam. He possessed the necessary expertise in syariah matters
that was required in the implementation management of credit cards in
the Islamic Card Centre. The evidence shows to the Court that the
employment contract of the First Defendant with Bank Islam at the
material time was ending in February 2008.
The Plaintiff was the party providing consultancy services for the credit
card operations at the Credit Card Centre of Bank Islam commencing
from year 2001 to 2008.
Dr. Singanallur Venkataraman Narayanan (Narayanan – SP1) is an
American citizen and his wife (from Malaysia) were the directors and the
shareholders in the Plaintiff company. He was the main consultant of
the Plaintiff, MBA/PhD graduate from the University of Houstan (sic)
and between 1981 and 1996 he had worked at AT & T Bell Laboratories
in New Jersey USA. He has expertise in writing and preparing working
papers. He possesses a wide experience background in providing
consultancy services and had worked in Maybank (Malaysia), Bank
Islam (Malaysia) and Mellon Bank (USA).
3
Narayanan was the Managing Director of the Plaintiff who possesses
wide expertise and experience in the field of IT and credit cards at
banks and financial institutions in the country and abroad. As the main
consultant of the Plaintiff who had provided consultancy services to the
Islamic Credit Card Centre of Bank Islam, Narayanan had known the
First Defendant for a long time.
Udhaya Kumar a/l Naranam (Uday-SP2) was a freelance consultant
appointed by the Plaintiff to assist the Plaintiff with its projects. He has
18 years of experience in the areas of operation, card marketing,
merchant marketing and project management, system testing and in the
implementation of credit cards operation. He also has experience
working in several banks in Malaysia including Maybank, the credit card
operation department of Multi-Purpose Bank and POS Malaysia.
The First Defendant was at the material time the Assistant General
Manager who headed and managed the Islamic Credit Card Centre at
Bank Islam. He possessed the necessary expertise in syariah matters
that was required in the implementation management of credit cards in
the Islamic Card Centre. The evidence shows the Court that the
employment contract of the First Defendant with Bank Islam at the
material time was ending in February 2008.
The Second Defendant was an established business entity providing IT
applications and requirements as well as credit card systems to banks
and financial institutions. The Second Defendant was the party who had
long been providing Bank Islam in respect of all its IT and credit card
requirements.
4
Razak bin Mohd Mazlan (SD1) is an individual representing the Second
Defendant since the beginning of this case. He is the Senior Consultant
and the Senior Vice President of the Second Defendant company.
In mid 2006, after receiving and evaluating several proposals, Bank
Kerjasama Rakyat Malaysia Berhad (Bank Rakyat) was at the selection
stage to appoint a company known as MBf to be its main partner to
assist them in establishing and implementing a proposal for the Islamic
credit card operation.
Since Bank Islam has been operating its credit card business with
Islamic features, Bank Rakyat had contacted Bank Islam in respect of
this matter for the purpose of and in connection with the said selection
process. This matter came to the knowledge of the First Defendant
including the proposals presented by MBf to Bank Rakyat for the
purpose of procuring the said Bank Rakyat project.
The First Defendant saw this as an attractive opportunity. However, as
an employee of Bank Islam, he could not be involved with any of the
said planning. Seeing the potential of the Second Defendant in offering,
procuring and executing the project, the First Defendant approached the
Second Defendant in relation to this attractive and profitable
opportunity. In that connection, the Second Defendant initiated its offer
to Bank Rakyat to procure the said project.
For the purpose of preparing the working papers for the business
proposals especially in terms of operation which had to be submitted by
the Second Defendant to Bank Rakyat, the First Defendant realized the
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need for a joint venture with the Plaintiff to strengthen the Second
Defendant’s position in the competition with MBf to seize the available
opportunity. The First Defendant who knew of the Plaintiff’s expertise
had arranged for an introductory meeting with the Plaintiff (Narayanan &
Udai) and the Second Defendant. This meeting took place on 21.9.06 at
a location in Cyberjaya. The representative of the Second Defendant
who was present was Razak.
In this introductory session, the First Defendant had informed (made
representation to) the Plaintiff regarding the information and the great
opportunity which was within his knowledge. In the said session, parties
were given an impression, belief and confidence on the strength of the
First Defendant’s position, with the opportunity that had presented itself
to be seized from Bank Rakyat.
From the said meeting session, although according to the Second
Defendant it had the intention of procuring the project on its own as a
sole entity, it cannot be denied that it required the Plaintiff’s participation
to strengthen its position in the competition against MBf in order to
procure the said Bank Rakyat project. On the balance of probabilities,
the Court finds that the Second Defendant had supported the First
Defendant’s representation.
At the said meeting, the Second Defendant’s role was explained. The
Plaintiff’s role was also discussed in a manner which attracted the
Plaintiff to join the First Defendant and the Second Defendant to seize
the Bank Rakyat project which at the material time was at the selection
stage.
The First Defendant and the Second Defendant understood that with
the collaboration of all three parties performing its respective
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specialized roles, it would result in the success they hope for. With that
consensus, the parties expected profits if the Second Defendant
successfully procured the Bank Rakyat project.
As a result of the first meeting, which was followed by many subsequent
meetings, interaction and serious efforts by the Plaintiff, the First
Defendant and the Second Defendant were generated to achieve the
agreed objective.
The evidence is sufficient to show to the Court that at this stage, a
common intention between the Plaintiff, the First Defendant and the
Second Defendant was formed to commit to a collaboration so that the
Second Defendant would succeed in procuring the Bank Rakyat project.
Each of them was certain that once the project was successfully
procured by the Second Defendant, the agreement and collaboration
between the parties will bring about profit to all three parties.
Although there are denials from the First Defendant and the Second
Defendant, the circumstances and the evidence are sufficiently clear to
the Court to show that there was an intention to bind these three parties
to a joint venture agreement (which was unwritten) to procure the Bank
Rakyat contract which will be profitable to all three parties.
For that purpose, each of them has contributed their respective
expertise as best as possible until eventually the Second Defendant had
successfully procured the Bank Rakyat project.
However, when the ‘outsourcing’ project by Bank Rakyat was finally
awarded to the Second Defendant, only the Plaintiff had failed to obtain
the fruits of the success.
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PLAINTIFF’S CASE SUMMARY
Between 5.10.06 and 7.11.06, the First Defendant and the Second
Defendant had represented to Uday and Narayanan that:
Bank Rakyat required a partner to assist in establishing and managing
the proposed Islamic Credit Card operations; and in consideration of the
expert services of the Plaintiff (particularly Uday and Narayanan) to
procure the said project, a separate company focusing specifically on
the operation of Islamic credit card i.e. IICSO, would be established and
managed by Uday and Narayanan (to be appointed) in a joint venture
with the Second Defendant (whereby IICSO will be the sub-contractor to
the Second Defendant).
Relying on the said representations, between September 2006 and
December 2007, Uday and Narayanan had provided important business
procurement consultancy services to the First Defendant and Razak
who represented the Second Defendant.
Relying on the said representations, IICSO was incorporated on 22.8.07
under the provisions of the Companies Act, 1965.
The reliance on the said representations were within the knowledge and
agreement of the First Defendant and the Second Defendant.
The First Defendant and the Second Defendant were aware that the
services provided by the Plaintiff were not given to the Second
Defendant for free.
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The ‘outsourcing’ project by Bank Rakyat was finally awarded to the
Second Defendant by Bank Rakyat on 21.11.07 with substantial
assistance from the Plaintiff.
In breach of the said representations, IICSO was not appointed as the
sub-contractor and was not awarded the ‘post launch operations’
contract by the Second Defendant.
The First Defendant is liable to the Plaintiff personally and/or as an
agent of the Second Defendant.
The First Defendant worked for/with the Second Defendant and/or the
Silverlake group of companies as the ‘senior vice-president of business
development’ in the expansion of the ‘outsourcing’ business of credit
card operations, after the success of procuring the project.
The First Defendant had all the relevant reasons to act in the best
interest of the Second Defendant in the discussions with, inter alia, the
Plaintiff at all material times.
At all material times, the First Defendant has always acted in the best
commercial interest of the Second Defendant and/or assisted the
Second Defendant whether directly and/or indirectly in relation to
several projects which was handled by the Second Defendant, even
though at the material time, the First Defendant was an employee of
Bank Islam.
The Second Defendant has full knowledge of the First Defendant’s
involvement and in fact, had directly encouraged his involvement to
procure the project for the Second Defendant.
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The Second Defendant is liable to the Plaintiff as the Second Defendant
had obtained financial benefits from the Plaintiff’s involvement.
The Second Defendant was fully aware that the business procurement
consultancy services were not provided by the Plaintiff to the Second
Defendant for free.
The Plaintiff’s case is that the business procurement consultancy
services which is still accruing and owing amounts to RM 2,005,687.50.
The Plaintiff is entitled its claim for the loss of profits before tax of RM
16,000,000.00 which the Plaintiff will obtain through IICSO if IICSO is
awarded the operation contract after the launch.
With regard to the claim of RM 2,005,687.50, the Plaintiff claims for the
said amount from the Defendants pursuant to Section 71 of the
Contracts Act 1950 and/or on a quantum meruit basis.
With regard to the claim of RM 16,000,000.00, the Plaintiff is claiming
for the said amount from the Defendants as compensation for loss and
damage suffered by the Plaintiff that arose naturally from the aforesaid
breach.
THE FIRST DEFENDANT’S CASE SUMMARY
The First Defendant disputes the Plaintiff’s allegation that the First
Defendant had breached the representations allegedly made by him
which caused IICSO not to be awarded by the Second Defendant in
relation to the Bank Rakyat Islamic credit card project. The First
10
Defendant also disputes that he is liable to the Plaintiff for the said
damages and losses.
The First Defendant could not be liable to the Plaintiff as the First
Defendant had not represented and could not have made any
representation that the Plaintiff will be awarded any contract by the
Second Defendant in relation to the project.
The Plaintiff’s claim could not be sustained as the First Defendant was
not an employee, agent, representative or a consultant of Bank Rakyat
or the Second Defendant at the material time. Furthermore, Bank
Rakyat and the Second Defendant are independent companies with
their respective Board of Directors and management structure to
evaluate and make business decisions relating to the said project.
In that connection, the First Defendant was not in the position to
represent or agree on behalf of Bank Rakyat or the Second Defendant
on any apparent or de facto power or authority to award on behalf of
Bank Rakyat and/or the Second Defendant to any company.
The Plaintiff’s claim has to be dismissed with cost.
THE SECOND DEFENDANT’S CASE SUMMARY
The principal business of the Second Defendant is to provide
applications and solutions to banks and financial institutions including
providing information technology and operation services relating to
credit cards.
At all material times, the First Defendant was not employed by the
Second Defendant. The First Defendant was also not an agent of the
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Second Defendant and did not have the authority to represent the
Second Defendant or make any representations on behalf of the
Second Defendant. The Plaintiff was well aware of these facts.
At the material time at about the third quarter of 2006, the Second
Defendant had knowledge that Bank Rakyat was assessing the
possibilities of outsourcing its Islamic credit card operations.
Following that, the Second Defendant commenced discussions and
negotiations with Bank Rakyat where proposals were submitted by the
Second Defendant. The Second Defendant and Bank Rakyat continued
with the discussions where different business models were scrutinised.
The Second Defendant was in the position to offer, procure and execute
the project on its own. Be that as it may, it is the Second Defendant’s
common practice to consider its various available options and that
included discussions on possible collaboration with third parties.
In that circumstances, the Second Defendant agreed to meet with the
Plaintiff, represented by Uday and Narayanan since the Plaintiff had
alleged that they possess the technical expertise on several aspects of
the project.
Several meetings were held between the Second Defendant and the
Plaintiff, all of which were preliminary exploratory business discussions.
These meetings between the Second Defendant and the Plaintiff were
not at the invitation of and initiated by the Second Defendant. During the
meetings, the Second Defendant was already in the bidding process for
the project. It was the Second Defendant’s intention to procure the
project on its own as the sole entity.
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It is the Second Defendant’s case that:
a) The Second Defendant never appointed the Plaintiff, Uday and/or
Narayanan to prepare any proposals or provide any services in
relation to the project;
b) The proposals that were prepared by the Plaintiff were part of the
Plaintiff’s own initiative as part of their attempt to achieve the
Plaintiff’s objective;
c) The Plaintiff, Uday and/or Narayanan have never disclosed that
they require payment or reimbursement for the preparation of the
said proposals; and
d) There was no understanding or agreement between the parties
that the Second Defendant should pay the Plaintiff for the said
efforts.
At all material times, the Plaintiff, Uday and/or Narayanan did not
provide any services to the Second Defendant but merely lobbied for
themselves as this was part of their attempt to achieve the Plaintiff’s
objective.
At about the end of 2006 or 2007, the Plaintiff informed the Second
Defendant that the Plaintiff, Uday and/or Narayanan will combine their
involvement in relation to the matter relating to the project under a new
company called IICSO, which has yet to be incorporated at that time.
Although IICSO was not incorporated then, the Plaintiff, Uday and/or
Narayanan explained that their involvement prior to the incorporation of
IICSO will be treated as the involvement on behalf of IICSO.
13
This intention was stated in, inter alia, the proposals that were
submitted by the Plaintiff on behalf of IICSO.
Since January 2007, the Plaintiff has presented several formal
proposals (collectively referred to as “proposals”) to the Second
Defendant which, amongst others, proposed that a strategic alliance to
be formed between the Second Defendant and IICSO. The Plaintiff
explained that the proposal was prepared on behalf of IICSO.
In these proposals:
a. It clearly stated that the proposals were prepared on behalf of
IICSO;
b. It was the Plaintiff’s objective to make IICSO (and not the Plaintiff)
the business partner with the Second Defendant;
c. The proposals did not expect any relationship between the
Plaintiff and the Second Defendant;
d. The proposals did not contain any provision that would provide
any right to payment, reimbursement or any other benefits to the
Plaintiff;
e. If any of the proposals was accepted by the Second Defendant,
the agreement will be between IICSO and the Second Defendant;
and
f. It was clear that the proposals were merely proposals and there
were no agreement between the parties on any matters stated in
the proposals.
Therefore the Plaintiff does not have the locus standi to commence this
action against the Second Defendant.
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The Plaintiff, Uday, Narayanan and/or IICSO had not shown or informed
the Second Defendant that they were providing the services to the
Second Defendant and they expected to be paid or reimbursed for the
said services provided. If they had done so, the Second Defendant
would have discontinued all connections and ceased all
communications immediately with the Plaintiff, Uday, Narayanan and/or
IICSO.
The Second Defendant did not accept any of the proposals at the
material time. The Second Defendant was cautious of the basis of the
proposals as it seemed unrealistic, unbelievable and not based on
reasonable commercial basis. At that time, the Second Defendant has
not procured the project from Bank Rakyat. Therefore, it was impossible
for the Second Defendant to commit itself to the Plaintiff and/or IICSO.
At all material times, the Second Defendant did not have the intention to
form a ‘joint venture’ or ‘partners’ with the Plaintiff or IICSO. The
Second Defendant had the capability to offer and execute the project on
its own, without the involvement of the Plaintiff or IICSO.
On 21.11.07, a contract (the Main Agreement) was signed between the
Second Defendant and Bank Rakyat for the project.
On or about the time the agreement between Bank Rakyat and the
Second Defendant was about to be concluded, the Second Defendant
started negotiating with IICSO to explore the possibility of appointing
IICSO as its sub-contractor to execute the project. The expected job
scope generally involved two parts:
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a) Pre-operation consultancy services for the Main Agreement(Pre-
operation Consultancy Services); and
b) Operation services required under the Main Agreement (Post-Ops
operations).
Before the negotiations for the contract between the Second Defendant
and IICSO could be finalised, the Second Defendant needed IICSO to
provide a Pre-operation Consultancy Services to enable the Second
Defendant to fulfill its obligations under the Main Agreement. In
accordance with that, the Plaintiff had executed the Pre-operation
Consultancy Services.
The Second Defendant continued its negotiations with IICSO in good
faith but the negotiations failed to result in any agreement between the
parties. Parties could not arrive at an agreement on the material for the
Post-Ops Operations.
As a result, IICSO and the Second Defendant had decided to sign a
separate agreement dated 20.5.08 (Pre-operation Agreement) so that
IICSO could be paid for the Pre-operation Consultancy Services
provided.
The Second Defendant had paid IICSO the sum due under the Pre-
operation Agreement in full. Therefore the Second Defendant no longer
owe IICSO and/or the Plaintiff.
Therefore, the Plaintiff is estopped from claiming any payment and/or
reimbursement (if any) for the alleged business procurement
consultancy services.
16
At all material times, the Second Defendant never represented that it
would award the ‘post launch operations’ contract to IICSO or
represented or agreed that it would appoint IICSO as its sub-contractor
to manage the project for the Second Defendant.
The Second Defendant had executed the Post-Ops Operation and
executed the Main Agreement on its own, without the involvement of the
Plaintiff or IICSO save for the matters under Pre-operation Agreement.
The Plaintiff only claimed for the said business procurement ‘consulting’
services and the loss of profits for the first time by way of its solicitors’
letter dated 1.6.09. At all material times before that, the Plaintiff had
never issued any notice or demand to claim or showed any intention to
claim the charges for the alleged business procurement ‘consulting’
services and loss of profits.
On that basis, the Second Defendant says that it is not indebted to the
Plaintiff for any damages and the Plaintiff’s claim should therefore be
dismissed with cost.
ISSUES TO BE TRIED:
1. Whether the business proposal which was alleged to have been
submitted by the second defendant to Bank Rakyat to obtain the
Islamic credit card outsourcing operation project from it was based
on a continuous substantial assistance (since September 2006)
from the Plaintiff with the purpose of securing the project?
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2. Whether between 05.10.2006 and 07.11.2006, the following verbal
representations were made to the plaintiff's Uday and Narayanan
(in their capacity as authorised officers of the Plaintiff) by the First
Defendant and/or the Second Defendant:-
a) that Bank Rakyat required a partner to help in setting up and
running their proposed Islamic credit card operations; and
b) that in consideration of the Plaintiff's (in particular that of Uday
and Narayanan) expertise and services to assist the second
defendant in obtaining the project, a separate company
specialising in Islamic credit card operations be established,
i.e., the yet to be established IICSO and to be managed by
Uday and Narayanan, will be appointed to manage the project
in a “joint venture" with the Second Defendant (whereby
IICSO will be the sub-contractor to the Second Defendant)?
3. Whether in reliance on the aforesaid representations, significant
business procurement consulting services were provided by the
Plaintiff's Uday and Narayanan between September 2006 and
December 2007 (hereinafter referred to as ‘business procurement
“consulting” services’')?
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4. Whether in further reliance on the said representations, IICSO was
incorporated on 22.8.07 under the provisions of the Companies
Act, 1965?
5. Whether the reliance by the Plaintiff on the said representations
was with the knowledge and concurrence of the First Defendant
and/or the Second Defendant?
6. Whether the Plaintiff had provided ‘business procurement
“consulting” services’ to the First Defendant and/or the Second
Defendant?
7. Whether the First Defendant and/or the Second Defendant were
fully aware that the services which were provided by the Plaintiff
were not rendered gratuitously to the First Defendant and/or the
Second Defendant?
8. Whether the contract dated 20.05.2008 between IICSO and the
second defendant (hereinafter referred to as "the IICSO contract'')
had taken into consideration and/or included all the ‘business
procurement “consulting” services’ which had allegedly been
provided by the Plaintiff to the First Defendant and/or the Second
Defendant?
9. Whether the said ‘outsourcing’ project was eventually awarded to
the Second Defendant by Bank Rakyat on 21.11.07, with
substantial assistance from the Plaintiff?
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10. Whether in breach of the aforesaid representations by the Second
Defendant, IICSO was not awarded the ‘post launch operations’
contract by the Second Defendant resulting in IICSO not being
appointed as the sub contractor to manage the project for the
second defendant?
11. Whether the First Defendant is personally liable and/or as an agent
of the Second Defendant, to the Plaintiff in view of his numerous
participations?
12. Whether the First Defendant had all the relevant reasons for acting
in the best commercial interest of the Second Defendant in
discussions with, inter alia, the Plaintiff, at all material times?
13. Whether the Second Defendant had full knowledge of the First
Defendant's participation and had directly encouraged his
participation in securing the project for the Second Defendant?
14. Whether the Second Defendant is liable to the Plaintiff for the
‘business procurement “consultancy” services’ which is due and
owing of RM2,005,687.50 since the second defendant has
financially benefitted from the plaintiff's involvement?
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15. Whether the Plaintiff is entitled to the claim for the loss of pre-tax
profit of RM16,000,000.00 that the Plaintiff would have derived via
IICSO had IICSO been awarded the post-launch operations
contract by the Second Defendant?
16. Whether the Plaintiff was appointed by the Second Defendant to
prepare any proposal or provide any services regarding the
project?
17. Whether the Plaintiff had provided the alleged services voluntarily
with a view of securing business opportunities from the Second
Defendant?
18. Whether the Plaintiff had at any time informed that the Plaintiff will
impose charges for any alleged services rendered to the Second
Defendant and whether the Plaintiff had made any such claim at
the material time before 1.6.09?
19. Whether the Second Defendant had informed the Plaintiff of the
matters which have been pleaded in paragraph 11.12 of the
Second Defendant's Defence?
20. Whether the Plaintiff is aware that no decision can be made by the
Second Defendant except and until consent from the Second
Defendant's higher management is obtained?
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21. Whether the Plaintiff and the Second Defendant had any
agreement regarding the rate which the Plaintiff can impose on the
Second Defendant as payment for the alleged services rendered
by the Plaintiff to the Second Defendant?
22. Whether the Plaintiff has a valid claim against the First
Defendant as contained in the Statement of Claim dated 31.1.10?
EVALUATION OF THE EVIDENCE, APPLICATION OF THE LAW,
FINDINGS OF THE COURT AND THE RESOLUTION OF THE
ISSUES IN THE CASE
1. Whether the business proposal which was alleged to have
been submitted by the second defendant to Bank Rakyat to
obtain the Islamic credit card outsourcing operation project
from it was based on a continuous substantial assistance
(since September 2006) from the Plaintiff with the purpose of
securing the project?
From the evidence, it is shown to the Court that there were efforts from
the Plaintiff (Uday and Narayanan) which were of assistance based on
their expertise particularly in the area of credit card operation with the
purpose of successfully securing the Bank Rakyat project for the
Second Defendant.
The Court finds that Uday and Narayanan have contributed assistance
continuously and substantially in the preparation of the business
proposal that was formally submitted by the Second Defendant to Bank
Rakyat.
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2. Whether between 05.10.2006 and 07.11.2006, the following
verbal representations were made to the plaintiff's Uday and
Narayanan (in their capacity as authorised officers of the
Plaintiff) by the First Defendant and/or the Second
Defendant:-
a. that Bank Rakyat required a partner to help in setting
up and running their proposed Islamic credit card
operations; and
b. that in consideration of the Plaintiff's (in particular that
of Uday and Narayanan) expertise and services to
assist the second defendant in obtaining the project, a
separate company specialising in Islamic credit card
operations be established, i.e., the yet to be
established IICSO and to be managed by Uday and
Narayanan, will be appointed to manage the project in
a “joint venture" with the Second Defendant (whereby
IICSO will be the sub-contractor to the Second
Defendant)?
Referring to (a), representations had been made by the First Defendant
as an attractive introduction in relation to the proposal that the First
Defendant hoped could be executed for the purpose of forming an
established joint venture that could compete with MBf’s performance, so
that the Plaintiff would assist the Second Defendant in its efforts to
secure the Bank Rakyat Project.
23
Narayanan, Uday, the First Defendant and also Razak from the Second
Defendant started meeting for the same matter and objective. They met
on the invitation of the First Defendant.
Referring to (b), the evidence shows that this matter did not arise
between 5.10.06 and 07.11.06, but it arose later following the proposal
of Narayanan and Udai, and not as a result of the representation of the
First Defendant or that of the Second Defendant. IICSO was the source
of income for Uday and Narayanan as the reward from the collaboration
of procuring the Bank Rakyat project.
3. Whether in reliance on the aforesaid representations,
significant business procurement consulting services were
provided by the Plaintiff's Uday and Narayanan between
September 2006 and December 2007 (hereinafter referred to
as ‘business procurement “consulting” services’')?
Relying on the First Defendant’s representation as found in (a) of issue
(2) above, and the big opportunity envisioned by the First Defendant
(who was present with highly confidential information from someone
who held a convincing position in the Islamic Credit Card Department),
and the encouraging interest and confidence from the Second
Defendant, Narayanan and Uday had provided important ‘business
procurement “consulting” services’ between September 2006 and
December 2007.
4. Whether in further reliance on the said representations,
IICSO was incorporated on 22.8.07 under the provisions of
the Companies Act, 1965?
24
Upon reliance on the representation of the First Defendant as stated in
(a) in relation to second issue (2) above, and with the full confidence of
the Second Defendant’s impending successful procurement of the
project and the potential profits to be achieved from the project, IICSO
was incorporated pursuant to the provisions of Companies Act 1965 on
22.8.07 by Uday and Narayanan.
5. Whether the reliance by the Plaintiff on the said
representations was with the knowledge and concurrence of
the First Defendant and/or the Second Defendant?
The First Defendant and the Second knew that without the support of
the Plaintiff, they would not be strong enough to compete against MBf in
the selection process carried out by Bank Rakyat. They also knew that
the future profits which will be achieved if the Second Defendant is
successful is an attraction for the Plaintiff to assist and support the
Second Defendant in this joint venture.
On the balance of probabilities, the Plaintiff’s reliance on the said
representation was within the knowledge and agreement of the First
Defendant and the Second Defendant in the form of a necessary joint
venture in order for the success of the Second Defendant to compete
against MBf to procure the said project.
6. Whether the Plaintiff had provided ‘business procurement
“consulting” services’ to the First Defendant and/or the
Second Defendant?
The evidence is clear to the Court that the Plaintiff had provided the
said services in a joint venture between the Plaintiff, the First Defendant
25
and the Second Defendant for the Second Defendant’s success in its
effort to procure the said project.
7. Whether the First Defendant and/or the Second Defendant
were fully aware that the services which were provided by
the Plaintiff were not rendered gratuitously to the First
Defendant and/or the Second Defendant?
Referring to the evidence and on the balance of probabilities, even
though the First Defendant and the Second Defendant had successfully
created a friendly environment with the Plaintiff, as reasonable men, the
First Defendant and the Second Defendant were aware that the
services provided by the Plaintiff could not be on a gratuitous basis to
the First Defendant and the Second Defendant. The First Defendant
and the Second Defendant knew that the Plaintiff existed as a channel
for Uday and Narayanan to obtain the rewards from the Bank Rakyat
Project.
The respective parties (including the First Defendant) were aware that
the purpose of the joint venture was to ensure the success of the
Second Defendant in procuring the Bank Rakyat project which was
expected to profit the respective parties. The Second Defendant’s
success in procuring the said project was dependent on the close
cooperation of all three parties in this case as each had their respective
expertise and strength.
8. Whether the contract dated 20.05.2008 between IICSO and
the second defendant (hereinafter referred to as "the IICSO
contract'') had taken into consideration and/or included all
the ‘business procurement “consulting” services’ which had
allegedly been provided by the Plaintiff to the First Defendant
and/or the Second Defendant?
26
The Contract dated 20.5.08 did not take into account the business
procurement “consultancy” which was provided by the Plaintiff to the
First Defendant and the Second Defendant before the Second
Defendant procured the project.
9. Whether the said ‘outsourcing’ project was eventually
awarded to the Second Defendant by Bank Rakyat on
21.11.07, with substantial assistance from the Plaintiff?
The outsourcing project was awarded to the Second Defendant by Bank
Rakyat on 21.11.07 with substantial assistance from the Plaintiff.
10. Whether the Second Defendant had breached its
representations above when IICSO was not awarded the
‘post launch operations’ contract by the Second Defendant,
which resulted in IICSO not being appointed as the sub-
contractor to manage the project for the Second Defendant?
Referring to the evidence and on the balance of probabilities, the Court
finds that IICSO was not appointed because the Plaintiff and the
Second Defendant could not agree on several material terms in relation
to the said contract.
11. Whether in breach of the aforesaid representations by the
Second Defendant, IICSO was not awarded the ‘post launch
operations’ contract by the Second Defendant resulting in
IICSO not being appointed as the sub contractor to manage
the project for the second defendant?
The Court finds that the First Defendant is not personally liable to the
Plaintiff even though the First Defendant was involved in its effort to
assist and successfully procure the project for the Second Defendant.
Since the beginning, the involvement of all three parties was to ensure
27
the Second Defendant’s success in procuring the project through a joint
venture of all three parties in this case.
12. Whether the First Defendant had all the relevant reasons for
acting in the best commercial interest of the Second
Defendant in discussions with, inter alia, the Plaintiff, at
all material times?
The First Defendant had the best commercial interest of the Second
Defendant’s success in procuring the project for the purpose of
benefitting all the parties in this case including the First Defendant
himself. With reference to the evidence and on the balance of
probabilities, the Court finds that the First Defendant expected a reward
for himself if the Second Defendant successfully procured the Bank
Rakyat project which was known specifically to the Second Defendant.
With reference to the evidence and on the balance of probabilities, the
information about the Bank Rakyat project came from the First
Defendant, not the Second Defendant.
In this connection the First Defendant has all the relevant reasons to act
in the best commercial interest of the Second Defendant at the
meetings with, inter alia, Plaintiff, at all material times.
13. Whether the Second Defendant had full knowledge of the
First Defendant's participation and had directly encouraged
his participation in securing the project for the Second
Defendant?
With reference to the evidence, the Court finds that the Second
Defendant through Razak had full knowledge of the First Defendant’s
involvement
28
and had even directly cooperated with the First Defendant to procure
the said project for the Second Defendant.
This was done based ‘on trust’ that the First Defendant had links with
Bank Rakyat given that: the First Defendant brought such confidential
information from Bank Rakyat on the available opportunities; it was the
First Defendant who had the information that MBf was being considered
for the award of the said project which was surely a piece of confidential
information; the First Defendant had the proposals prepared by MBf;
and more importantly is the fact that the First Defendant had the
advantage in respect of his knowledge in Islamic syariah in the handling
of Islamic credit card.
14. Whether the Second Defendant is liable to the Plaintiff for the
‘business procurement “consultancy” services’ which is due
and owing of RM2,005,687.50 since the second defendant
has financially benefitted from the plaintiff's involvement?
With reference to the evidence, given that the Plaintiff has proven its
case, the amount claimed is a reasonable amount as compared to the
value of the project procured by the Second Defendant from Bank
Rakyat. In all circumstances the evidence in this case shows that this
sum had not been paid to the Plaintiff.
The Court finds that the Second Defendant is liable to the Plaintiff for
the ‘business procurement “consultancy” services’ that is still accruing
and owing by the Second Defendant who had financially benefitted from
29
the substantial continuous involvement and contribution of the Plaintiff
since the very beginning.
15. Whether the Plaintiff is entitled to the claim for the loss of
pre-tax profit of RM16,000,000.00 that the Plaintiff would have
derived via IICSO had IICSO been awarded the post-launch
operations contract by the Second Defendant?
The Plaintiff is not entitled to claim for the amount of RM 16,000,000.00,
given that all the amounts are based on ‘projections’ by the Plaintiff
simply without any firm supporting evidence that the Court can rely on
for the purpose of supporting the sum claimed on a legal basis.
Based on the evidence, when the Second Defendant successfully
procured the Bank Rakyat project, it required the Plaintiff (Narayanan
and Uday) to execute the Pre-Ops and Post-Ops Operation. However,
in the early stage of the procurement, complications surfaced when the
Plaintiff wanted the agreement between the Second Defendant and
IICSO in relation to the sub-contracting work to IICSO to be concluded.
However, the plan failed since there were different views between the
parties in relation to several material terms of the agreement that could
not be agreed upon.
In that regard, for the purpose of ensuring that the project continues
parties had signed a separate agreement dated 20.5.08 (Pre-operation
Agreement) so that IICSO will be paid for all the pre-ops operation
services provided by the Plaintiff.
30
Even though negotiations continued between the Second Defendant
and IICSO, partied could not reach any agreement on the material
terms of the subcontract and thereafter the contract could not be
concluded. This had ruined the relationship between the Plaintiff and
the Second Defendant. As a result, the Second Defendant had no
choice but to carry out the Post-ops operation work on its own.
16. Whether the Plaintiff was appointed by the Second
Defendant to prepare any proposal or provide any services
regarding the project?
The Plaintiff was not appointed by the Second Defendant ‘directly’ to
prepare any proposal and provide any services for the said project.
However, from the evidence and on the balance of probabilities, it is
clear to the Court that it was inadequate for the Second Defendant to
act on its own without the firm collaboration from the Plaintiff. Indirectly,
the Second Defendant successfully obtained the assistance of the
Plaintiff to prepare and provide the said services.
17. Whether the Plaintiff had provided the alleged services
voluntarily with a view of securing business opportunities
from the Second Defendant?
The evidence shows that the Plaintiff would not have contributed any
services to the project if it could not obtain any profit from the project.
The method by which the Plaintiff provided its services was by way of a
collaboration method formed amongst all the parties that were involved.
31
Even though the Plaintiff was desirous to be part of the joint venture and
obtain reward from it, with reference to the evidence, the Court could
not find that the services provided by the Plaintiff were given voluntarily.
This is the position even without any form of coercion on the Plaintiff.
Following a binding verbal agreement, the respective parties had
seriously contributed to ensure that the Second Defendant succeeded
in the procurement as the respective parties wish to profit from the said
procurement themselves. It was on this understanding that the parties
met and finally led to the success of the Second Defendant in procuring
Bank Rakyat project.
18. Whether the Plaintiff had at any time informed that the
Plaintiff will impose charges for any alleged services
rendered to the Second Defendant and whether the Plaintiff
had made any such claim at the material time before 1.6.09?
The Plaintiff did not inform about this matter until the stage where the
agreement could not be reached between the Plaintiff and the Second
Defendant to conclude the subcontract agreement with the Plaintiff,
which is after the Second Defendant was awarded the Bank Rakyat
project. With that, the Plaintiff then issued its demand when the Plaintiff
executed the Pre-Ops work. At that time, the Plaintiff did not inform
about the payment for the business procurement “consultancy”
services.
32
19. Whether the Second Defendant had informed the Plaintiff of
the matters which have been pleaded in paragraph 11.12 of
the Second Defendant's Defence?
There is no evidence to show that the Second Defendant had explained
to the Plaintiff that the Second Defendant did not accept the Plaintiff’s
request to appoint IICSO as its subcontractor for the project on the
following reasons:
a) Even though there was a possibility that the Second Defendant
may form an arrangement with IICSO, the arrangement could
only be discussed after the Second Defendant had procured a
binding contract with Bank Rakyat for the project; and
b) Even though the Second Defendant was open to the idea of
allowing IICSO to take part in the project, its participation could
only take place if the Second Defendant and IICSO reached an
agreement on the terms of the said participation.
20. Whether the Plaintiff is aware that no decision can be made
by the Second Defendant except and until consent from the
Second Defendant's higher management is obtained?
At the early stage, the Plaintiff did not know about this matter. The
Plaintiff was only aware of this when the parties were negotiating on the
terms in view of concluding the agreement between the Plaintiff and the
Second Defendant in relation to IICSO’s subcontract.
33
21. Whether the Plaintiff and the Second Defendant had any
agreement regarding the rate which the Plaintiff can impose
on the Second Defendant as payment for the alleged
services rendered by the Plaintiff to the Second Defendant?
With reference to the evidence, there was no agreement in respect of
the rates that the Plaintiff could impose on the Second Defendant for
the services provided by the Plaintiff to the Second Defendant.
However, the Court finds that the amount claimed is reasonable when
comparing the Plaintiff’s contribution with the benefits obtained by the
Second Defendant from the award obtained from Bank Rakyat.
22. Whether the Plaintiff has a valid claim against the First
Defendant as contained in the Statement of Claim dated
31.1.10?
With reference to the evidence and on the balance of probabilities, the
Court finds that the Plaintiff has a valid claim against the Second
Defendant as the party who successfully procured the Bank Rakyat
project and benefitted from it, and not against the First Defendant
personally.
Held:
With reference to the evidence, exhibits, submission from all parties and
to formulate a conclusion on the balance of probabilities, the Court finds
that the Plaintiff had proven its claim against the Second Defendant in
this case.
34
As such, the Court allows the Plaintiff’s claim in paragraph 32 of the
Statement of Claim for the sum of RM 2,005,687.50 for the business
procurement consultancy services provided before the Second
Defendant secured the award from Bank Rakyat. (in relation to
paragraph 40(a) of the Statement of Claim).
Referring to paragraph 40(b) of the Statement of Claim, the interest of
5% per annum on the judgment sum from the date of this judgment until
the date of the final settlement of the sum is allowed.
Referring to paragraph 40(e) of the Statement of Claim, costs to be paid
by the Second Defendant to the Plaintiff in the sum of RM 40,000.00.
Allocatur on the cost at 4% to be paid by the Second Defendant before
the fair order is extracted.
The claim against the First Defendant is dismissed with cost of RM
10,000.00 to be paid by the Plaintiff to the First Defendant.
Allocatur on the cost at 4% to be paid by the Plaintiff before the fair
order is extracted from the Court.
30 September 2016
[Signature]
Siti Khadijah binti S. Hassan Badjenid
Mahkamah Tinggi Malaya Melaka.