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2017 MarsdenLR 116

HIGH COURT MALAYA KUALA LUMPUR
MCC OVERSEAS (M) SDN BHD – Appellant
Versus
SYNERGY PROMENADE KLVC SDN BHD – Respondent
[Civil Appeal No: WA-12BC-20-12/2016]



Important Points

The Letter of Intent did not create a binding contract, and the demand on the Bank Guarantee was invalid as it lacked proper grounds under the Tender Documents.

Subject

Contract Law - Letters of Intent

Headnote

The judgment concerns the appeal against the Sessions Court's ruling which dismissed the Appellant's claims regarding the legality of a demand on a Bank Guarantee. The Appellant contended that the Letter of Intent was not binding. The Court found that the Sessions Court erred in treating the Letter of Intent as enforceable. The primary issues were whether the Letter of Intent binds the parties and if a breach occurred under Clause 13.1 of the Tender Documents. The Court concluded that the demand was invalid and upheld the appeal with costs.
Table of Content
1. arguments regarding the interpretation and binding nature of the letter of intent. (Para 19 , 22 , 23 , 24)

[18] Following the Decision at the Sessions Court, parties came to an agreement whereby the Respondent will not execute the Sessions Court judgment pending the outcome of this appeal and in exchange, the Appellant has deposited the sum of RM 500,000.00, to be held by the Respondents solicitors as stakeholders. Parties had further agreed that this Court will not only decide on the release of the bond monies but also in relation to the monies held by the Respondents solicitors as stakeholders pending the disposal of this appeal.

Grounds Of Appeal

[19] The Appellant is not satisfied with the Session Court judges finding and submitted that the Sessions Court judge had erred in both facts and laws on various findings. The Appellant listed out various errors according to it found in the judgment as follows:-

1) The judge failed to properly interpret and appreciate the documents submitted at the trial. The document known as the "Tender Negotiation Client & Contractor" or any purported agreement on the amount of RM350, 000,000.00 as the project price was premised upon a specific design or proposal that was submitted by the Appellant, which was eventually rejected, abandoned or in any event not pursued by the parties.

2) The judge had failed to properly appreciate the law. In law, a letter of intent in which parties indicate they do not intend to enter into legal relations until the final contract is signed and agreed is not a binding contract. The Judge failed to find that from the express wording of the LOI, the LOI was not a binding contract but was merely an intention to have a contract in the future.

3) Judge failed to give due weight to undisputed contemporaneous written evidence. In arriving at the finding that the Appellants action in submitting the Tender Bond demonstrated that the Appellant had agreed with the terms of the Letter of Intent, the Judge has failed to give due weight to the undisputed contemporaneous documents particularly the Tender Bond issued by Bank of China dated 28 October 2015 which states that the Tender Bond was deposited with the Respondent "...in accordance with the conditions of the tender...".

4) The Judge failed to properly interpret and appreciate the documentary evidence given at the trial. The learned Judge erred in finding that the demand on the Tender Bond was validly made when in fact no specific ground under Clause 13.1 of the Tender Documents was cited by the Respondent in the demand and none of the events in Clause 13.1 occurred.

5) The judge failed to properly interpret and appreciate the evidence given at the trial. The Judge at para 58 of the Grounds of Judgment found that the Respondents demand on the Tender Bond was not unconscionable as the Appellant failed to submit the bill of quantities. However, the Judge failed to find that the Bills of Quantities were not necessary or material in a design and build project, there was no longer any necessity or purpose for the Appellant to submit a Bills of Quantities for the amount of RM 350, 000,000.00 and the failure to do so did not amount to a non-compliance of the Tender Documents that could justify a demand on the Tender Bond.

The Decision By The Sessions Court

[20] With regards to grounds raised by the Appellant, the Session Court judge decision which are under scrutiny is at p 43 of the Appellants Core Bundle (Vol 1) when she held as follows:-

"29. Dan di dalam kes di hadapan Mahkamah ini keterangan oleh saksi Plaintif, SP-1 dan saksi Defendan serta dokumentari eksibit khususnya Tender Negotiation dan Surat niat itu menunjukkan pihak-pihak telah bersetuju dengan harga kontrak RM350 juta dan Plaintif telah menyatakan untuk memenuhi harga RM350 juta tersebut. Pada Mahkamah tindakan dan perbuatan Plaintif tersebut adalah fakta yang relevan bagi menunjukkan niat Plaintif. Keterangan juga menunjukkan Plaintif tidak pernah menafi

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