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2025 MarsdenLR 1090
HIGH COURT MALAYA KUALA LUMPUR
SK INTERNATIONAL (M) SDN BHD – Appellant
Versus
TALSU POLYMER TECHNOLOGY SDN BHD – Respondent
[Civil Appeal No: WA-12BNCvC-43-03/2024]
An MOU can be legally binding if its terms are clear and the parties have acted upon them, despite claims of non-enforceability due to lack of a formal agreement.
Headnote:(A) Contracts - Memorandum of Understanding - Binding nature - The court affirmed that an MOU can be enforceable if the terms are clear and parties acted upon them, despite the defendant's claim of non-binding status due to lack of a Service Level Agreement. (Paras 15-20)
(B) Counterclaim - Special damages - A party seeking special damages must provide specific evidence to substantiate claims. The defendant's counterclaim was dismissed for lack of evidence. (Paras 48-51)
Facts of the case:
The plaintiff engaged the defendant for obtaining licenses and approvals under an MOU, but the defendant failed to fulfill its obligations, leading to a refund claim. (Paras 3-14)
Findings of Court:
The court upheld the Sessions court's decision, dismissing the appeal and confirming the binding nature of the MOU. (Paras 1, 2)
Issues: Whether the MOU was binding and if the defendant's counterclaim for damages was valid. (Paras 15, 48)
Ratio Decidendi: The enforceability of an MOU depends on the parties' intentions and actions, and a breach of contract precludes a party from enforcing its rights under the same contract. (Paras 16, 49)
Result: Appeal dismissed with costs.
| Table of Content |
|---|
| 1. court dismisses appeal and affirms lower court's decision. (Para 1 , 2) |
| 2. facts of the case outline obligations and failures of the defendant. (Para 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10 , 11 , 12 , 13 , 14) |
| 3. mou was legally binding despite defendant's claims. (Para 15 , 16 , 17 , 18 , 19 , 20) |
| 4. plaintiff did not abandon the manufacturing license application. (Para 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28 , 29) |
| 5. defendant's frustration claim due to covid-19 is legally unsustainable. (Para 31 , 32 , 33 , 34 , 35 , 36 , 37 , 38) |
| 6. defendant's failure to secure licenses not caused by plaintiff's actions. (Para 39 , 40 , 41 , 42 , 43 , 44 , 45 , 46 , 47) |
| 7. counterclaim lacks merit due to insufficient evidence. (Para 48 , 49 , 50) |
Introduction
[1] In this judgment, the parties are referred as they were before the trial court. This appeal arose from the decision of the Sessions court which allowed the plaintiff's claim against the defendant for the refund of RM320,000.00. The Sessions court had also dismissed the defendant's counterclaim for RM250,000.00.
[2] After careful consideration of the submissions of both parties and the records of appeal, we found no merit in this appeal. We were not persuaded that the learned Sessions court Judge had erred in her evaluation of the evidence or that her decision was plainly wrong. We accordingly dismissed the appeal with costs.
Brief Background Facts
[3] On 28 March 2018, the defendant and the plaintiff had entered into a memorandum of understanding ("MOU") along with a business advisory proposal ("BAP"). Pursuant to these documents, the defendant undertook to secure various governmental licences and approvals necessary for the plaintiffs business operations. In consideration of these services, the plaintiff had agreed to pay the defendant a professional fee amounting to RM450,000.00 exclusive of 6% GST.
[4] The scope of work outlined in the MOU and BAP required the defendant to obtain specific governmental licences and approvals necessary for the plaintiff's business operations. The agreed scope of work included the following:
(a) securing manufacturing license (ML) approval from the Ministry of International Trade and Industry (MITI) within four weeks from the date of complete document submission;
(b) obtaining business license (BL) approval from the relevant local authorities within four weeks from the date of complete document submission;
(c) acquiring licensed manufacturing warehouse (LMW) approval from the Royal Customs Department within six weeks from the date of complete document submission;
(d) obtaining pioneer status approval from the Malaysian Investment Development Authority (MIDA) within six months from the date of complete document submission;
(e) securing expatriate position incentives from MIDA within four months from the date of complete document submission;
(f) obtaining an approved permit (AP) for the importation of used plastic materials within six months from the date of complete document submission; and
(g) securing approval from the Department of Occupational Safety and Health (DOSH).
[5] As of 11 January 2019, the plaintiff had paid the defendant a total sum of RM351,000.00 inclusive of 6% GST. In return, the defendant was obligated to secure the necessary governmental licences and approvals as stipulated in the MOU and BAP.
[6] However, the defendant had only managed to obtain approval from DOSH and a temporary business licence issued by Majlis Perbandaran Klang (MPK). The temporary business licence was later revoked by the local authority. The defendant had failed to secure the remaining licences and approvals within the agreed timelines.
[7] On 31 January 2019, the plaintiffs factory was raided by DOE. During the raid, the enforcement officers informed the plaintiff that an environmental impact assessment (EIA) report was a mandatory requirement for obtaining DOE's approval for the business licence. The plaintiff was made aware of this requ
