The court held that a termination of a service provider agreement was unlawful due to variations acknowledged by conduct, and expectation loss damages were warranted based on the appellant's own profit projections.

A. Introduction

[1] The Appeal before us is an appeal against the learned High Court Judge's ("learned Judge") decision to allow the Respondent-Plaintiff's claim against the Appellants-Defendants for unlawful termination and breach of a Service Provider Agreement dated 8 August 2014.

[2] The parties in the Appeal are namely; Lembaga Tabung Haji ("the 1st Appellant / LTH"), Premia Cards Sdn Bhd ("the 2nd Appellant / Premia") and Encap Sdn Bhd ("the Respondent / Encap").

B. Background Facts

[3] For a better understanding of the matter at hand, it is necessary to set out the facts of the case that has led to the present appeal before us. LTH ("the 1st Appellant / the 1st Defendant") and Encap ("the Respondent / the Plaintiff") had entered into a Service Provider Agreement ("SPA") dated 8 August 2014 in which LTH had appointed Encap to supply to LTH a Cash Management System ("CMS") in the form of ATM Cards System to replace LTH's archaic physical counters cash withdrawal system for the convenience of LTH's pilgrims ("Debit Card SPA").

[4] The Debit Card SPA was entered into, following a series of correspondences since 2011 which culminated in LTH's appointment of the Respondent.

[5] Over the period from 2011 until the signing of the Debit Card SPA, LTH constantly shifted its demands and features that LTH required to be developed and delivered by the Respondent. The initial form of CMS LTH intended under the "Kad TH Project" was the ATM Card. Subsequently, LTH requested the feature and concept of the ATM Card to be a Debit Card which was able to be linked to the Malaysian Electronic Payment System ("MEPS") which expands the usability of the Debit Card even across other local Malaysian Banks and ATMs Upon the proposal by the Respondent, LTH issued a Letter of Acceptance on 1 November 2013 agreeing to the Respondent's proposal. ("MEPS LOA").

[6] Circa 2014, the LTH yet again shifted the goalpost and instructed the Respondent to develop the Debit Card CMS to be able to be linked to MasterCard (instead of MEPS). Thus, the Debit Card SPA was entered into in view of a CMS utilising a Debit Card with connectivity and link to MasterCard ("Debit MasterCard")

[7] Since a license from Bank Negara Malaysia ("BNM") was required to be able to implement the Debit MasterCard CMS, LTH incorporated its wholly- owned subsidiary, Premia ("the 2nd Appellant / the 2nd Defendant") solely for the purpose of holding the license which the 1st Appellant seeks to obtain from BNM. Subsequent to Premia's incorporation, Premia applied to BNM for the necessary license to issue Debit MasterCards on 21 June 2016 ("Premia's 1st Application")

[8] Circa 2018, BNM rejected Premia's 1st Application. Instead, BNM suggested that the concept of the Debit MasterCard be changed to Prepaid Cards ("Prepaid Cards") which would have a higher likelihood of being approved by BNM.

[9] In adherence to BNM's suggestion, LTH and Premia continued dealings and relations with the Respondent and collectively pursued the implementation of Prepaid Cards CMS (despite the original concept of Debit MasterCards under the Debit Card SPA). Those continued works and relations inter alia include:

a. After BNM's rejection, LTH via an email dated 18 January 2018 had instructed the Respondent to now pursue and d