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2011 MarsdenLR 1511
HIGH COURT MALAYA KUALA LUMPUR
JAKS-KDEB CONSORTIUM SDN BHD – Appellant
Versus
PERBADANAN URUS AIR SELANGOR BERHAD & ORS – Respondent
[Suit No: D-22-1452-2006]
A supply agreement permitting project-based procurement does not establish exclusivity, and a claim of tortious conspiracy requires demonstrable intent to interfere unlawfully, which was not proved.
Headnote:(A) Companies Act 1965 - Breach of contract - Supply agreement dated 25 October 2001 between plaintiff and State Government for water pipes - Issue of exclusivity determined; no commitment for exclusivity provided in contract. (Paras 17-26, 31)
(B) Conspiracy - Requirements for tort established; plaintiff failed to prove defendants had intent to damage or unlawfully interfere. (Paras 41-54)
(C) Lawful vesting - Third defendant vested rights and liabilities to first defendant under lawful orders, valid under Water Supply (Successor Company) Enactment 2001. (Paras 56-70)
Facts of the case:
Plaintiff, a Malaysian consortium, alleges breach of a supply agreement, claiming defendants ceased purchasing pipes. Defendants argue the agreement allowed for procurement on a project basis and was not exclusive.
Findings of Court:
Plaintiff's claims against defendants dismissed; no evidence of exclusivity or conspiracy demonstrated.
Issues: Main issues included whether the defendants breached the contract and if there was conspiracy against the plaintiff by the defendants.
Ratio Decidendi: Court determined the supply contract intended for project-based procurement, not exclusivity. Additionally, plaintiff failed to substantiate allegations of conspiracy or unlawful interference.
Result: Claims dismissed with costs awarded against the plaintiff.
[27] Abdul Malik Ishak JCA in his dissenting judgment in Ng Hong Chai v. JB Securities , [2009] 1 CLJ 5 referred to the case of Photo Production Ltd v. Securicor Transport Ltd [1980] AC 827, 848 where Lord Diplock said that the:
"... basic principle of the common law of contract, is that parties to a contract are free to determine for themselves what primary obligations they will accept".
[28] The parties, in particular the plaintiff and the 3rd defendant had negotiated the terms of the supply agreement and had been at all material times aware that the terms would be based on the decision of the executive committee of MTES as reflected in their letter which was consequently incorporated into the supply agreement.
[29] Justice Abdul Malik went on further to say that:
"In construing the terms of the present agreement, one must endeavor to discover the intention of the parties. It is "the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract" (Investors Compensation Scheme Ltd v. West Bromwich Building Society, Same v. Hopkin & Sons (A Firm) And Others (supra) at p 912). The cardinal principle to adhere to is this. That the parties have intended what they have in fact said, so that their words must be construed as they stand (British Movienews Ld v. London and Distn'ct Cinemas Ld [1952] AC 166) At the end of the day, the meaning of an ordinary English word (Brutus v. Cozens [1973] AC 854,861; and Belgravia Navigation Co. S A v. Cannor Shipping Ltd (the 'Troll Park') [1988] Vol 2 Lloyd's Rep 423, CA), and the meaning of any technical or commercial terms (Hill v. Evans [1862] English Reports 45, Chancery, 4 De G F & J 288, 295), and the meaning of latent ambiguities (Robinson v. Wray [1865-66] Law Reports Common Pleas 1 LRCP, Vol 1, 490) as well as the need to look at the surrounding circumstances are all questions of fact (Simpson v. Margitson and others [1847] English Reports 116, King's Bench, 11 QB 23) for the Court to consider. These are exercises which our judges are familiar with and can easily be carried out expeditiously.
The law journals are replete with authorities on construction of contracts. It is an acceptable approach to say and I so say that the words are to be given their ordinary and natural meaning. Lord Hoffmann in Investors Compensation Scheme Ltd v. West Bromwich Building Society, Same v. Hopkin & Sons (A Firm) And Others (supra) at p 913 aptly said:
'(5) The 'rule' that words should be given their 'natural and ordinary meaning' reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had.'.
Therefore, the rule that the words employed must be construed in their ordinary sense can be departed from where the meaning would simply involve an absurdity beyond description If the words construed in its ordinary sense give rise to an unreasonable result, then it is unlikely that is the intention of the parties Indeed, this is also the view of Lord Reid in L Schuler A G v. Wickman Machine Tool Sales Ltd [1974] AC 235, at p 251 where his Lordship said succinctly:
The fact that a particular construction leads to a very unreasonable result must be a relevant consideration. The more unreasonable the result the more unlikely it is that the parties can have intended it, and if they do intend it the more necessary it is that they shall make that intention abundantly clear..".
[30] PW1, Chee Seong Heng, Group Senior General Manager of Jaks Resources Bhd during cross-examination by the counsel of the 3rd defendant admitted that the plaintiff never aske
