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2015 MarsdenLR 731
COURT OF APPEAL PUTRAJAYA
SEN MEDIA SDN BHD – Appellant
Versus
PERUNDING PAKAR MEDIA SDN BHD & ORS – Respondent
[Civil Appeal No: W-01(NCC)(W)-29-01/2013]
The court established that non-compliance with internal procurement procedures does not invalidate a contractual obligation.
Headnote:The judgment concerns a claim for unpaid media services where the High Court awarded damages against the defendant. The defendant appealed, arguing loss due to non-payment from a third party. The court reviewed contractual obligations and held that the lower court erred in law regarding the existence of a contract with the third party.
Result: the appeal was allowed against the second third party.
| Table of Content |
|---|
| 1. claim arises from unpaid media services. (Para 1 , 4 , 6 , 14) |
| 2. contractual relationship established through performance. (Para 10 , 11 , 12 , 17) |
| 3. procedural non-compliance does not invalidate contracts. (Para 18 , 21 , 27 , 29) |
| 4. payments made despite procedural complaints. (Para 20 , 22 , 23 , 24) |
[1] In the High COURT, the 1st respondent, Perunding Pakar Media Sdn Bhd (the plaintiff in the High COURT), brought a writ action against the appellant, Sen Media Sdn Bhd (the defendant in the High COURT), for unpaid media services rendered in the sum of RM2,554,143.62.
[2] The appellant in turn had successfully applied by way of third party proceedings to add two third parties to the 1st respondents writ action, namely the 2nd respondent, the Government of Malaysia (the 1st third party in the High COURT), and the 3rd respondent, Majlis Sukan Negara Malaysia (the 2nd third party in the High COURT).
[3] We shall be referring to parties in this judgment in the capacity as they were in the High COURT.
[4] After a full trial, the High COURT allowed the plaintiffs claim against the defendant for damages in the sum of RM2,523,651.62 with interest of 5% per annum from date of judgment until full satisfaction and costs.
[5] As for the 1st and 2nd third parties, the High COURT held that the defendant failed to establish its case against both the 1st and 2nd third parties and therefore the High COURT dismissed the third party claim against them.
[6] Aggrieved by the decision of the High COURT, the defendant filed an appeal to this COURT, naming the plaintiff, the 1st third party and the 2nd third party as 1st, 2nd and 3rd respondents respectively. The plaintiff cross-appealed on the limited issue of the interest awarded by the High COURT.
[7] We heard all the appeals together. At the conclusion of the hearing of the appeals, by a unanimous decision, we:
(i) dismissed the defendants appeal against the plaintiff and the 1st third party with no order as to costs;
(ii) allowed the defendants appeal against the 2nd third party; and
(iii) dismissed the plaintiffs cross-appeal with no order as to costs.
[8] Following our decision, the 2nd third party had filed an application for leave to appeal to the Federal COURT.
[9] We now give our reasons for allowing the defendants appeal against the 2nd third party.
[10] The outline background facts of the case concerning the defendant and the 2nd third party are as follows. The plaintiff and the defendant are media companies. The defendant carried on the business of selling "time slots" for advertisements to its clients who wish to advertise their products/services in all forms of media. The defendant appointed the plaintiff as the media agency to purchase the timeslots for this purpose. The plaintiff provided to the defendant "media services", meaning the plaintiff placed and paid for "advertisement placements/bookings" in the print and electronic media for the defendant. For the media services rendered, the plaintiff enjoyed agency commissions, which constituted its profits.
[11] The plaintiff sued the defendant for unpaid media services rendered. The defendant failed to pay the remaining sum claimed by the plaintiff because it did not receive the payment from the 2nd third party.
[12] The defendant then commenced third party proceedings against the 2nd third party; this was essentially a claim by the defendant to be indemnified by the 2nd third party. To this end, the defendant asserted that it had a contract with the 2nd third party for the supply of media services. The defendant contended that the Media Plans were the basis of the contract with the 2nd third party.
[13] The crux of the defendants case was that it had obtained the media contract from the 2nd third party and in turn, it had appointed the plaintiff to place and secure the bookings in the print and electronic media for the 2nd third party. The plaintiff would then invoice the defendant for the media services render
