A collateral contract existed obligating the Defendant to waive liquidated damages in exchange for the Plaintiff's continued funding, leading to a finding of unjust enrichment.

Introduction

[1] The Plaintiff's claim against the Defendant was for the sum RM20,208,151.67 and RM15,389,726.41 being post-receivership funding extended for the construction of two vessels for the Defendant.

[2] Full trial was conducted where the Plaintiff called 3 witnesses and Defendant called 2 witnesses. At the end the trial, having considered the evidence as a whole, the Plaintiff's claim was allowed. The grounds are stated below.

Factual Background

[3] Between 2004 and 2012 Plaintiff, a licensed bank, granted banking facilities to one NGV Tech Sdn Bhd ("NGV Tech") a ship builder to the extent of RM884,330,000.00 ("Banking Facilities") and various documents were executed ("Facility Documents"). In consideration thereof, NGV Tech executes various Debentures in favour of the Plaintiff ("Debentures").

[4] On 21 February 2012 the Defendant, through the Ministry of Defence ("MINDEF"), and NGV Tech entered into a contract i.e. Shipbuilding Contract No KP/PERO2B/RT305/2010/DE for the sale and fitting out of two (2) training vessels known as Gagah Samudera and Teguh Samudera ("Vessels") for the Royal Malaysian Navy ("Shipbuilding Contract") for a total sum RM294,000,000.00. Under the Shipbuilding Contract (see Common Bundle of Document ("CBoD") Volume B7 pp 2572 - 2676) MINDEF is the implementing agency on behalf of the Defendant.

[5] NGV Tech defaults in repaying the banking facilities owing to the Plaintiff. On 20 March 2013, the Plaintiff issued a notice of crystallisation whereby all floating charges over NGV Tech's assets were crystallised into a fixed charge.

[6] On 3 April 2013 the Plaintiff appoints Mr Duar Tuan Kiat as Receiver and Manager ("the R & M") over NGV Tech. On 9 April 2013, the R & M together with, among others, representatives from NGV Tech and the Plaintiff met with the Secretary General of MINDEF to inform the appointment of the R & M.

[7] On 14 May 2013, NGV Tech was wound up pursuant to a winding-up petition presented by Nordic International Ltd

[8] Via its letter dated 4 July 2013, the R & M notified the Defendant inter alia that NGV Tech has been wound up and the R & M has been appointed to take over NGV Tech.

[9] Pursuant to the terms of the Facility Documents, the Plaintiff was entitled to terminate the Banking Facilities. However, by way of a collateral contract between the parties, the Plaintiff agreed to continue funding the construction of the Vessels pursuant to the Defendant's representations, inter alia:

(a) the sale and delivery of the Vessels was a project of national interest;

(b) that all liquidated damages would be waived entirely and unconditionally subject to only the approval of the Ministry of Finance ("MOF"). Written confirmation of the unconditional waiver of all liquidated damages ("Written Confirmation") would be given and forthcoming. Defendant through MINDEF would secure the Written Confirmation; and

(c) the Defendant would not seek to set off the balance progress payment (approximately RM40 million for work done by NGV Tech) payable to NGV Tech against any liquidated damages (approximately RM40 million too) which the Defendant is