The unlawful unilateral termination of a contract without proper notice or compliance with agreed terms cannot absolve the terminating party from liability for damages associated with breach of contract.

JUDGMENT

Zulqarnain Hassan SCJ:

Background

[1] Today is for judgment. This is the full written judgment by this Court.

[2] The plaintiff claimed from the defendant the loss of profit of RM166,060-00 as a result of unilateral termination of contract by the defendant.

[3] The defendant counter claimed from the plaintiff the return of RM199,740-00 which was the 30% deposit paid by the former to the latter.

Salient Facts

[4] The defendant was formerly known as Malaysian Newsprint Industries Sdn Bhd [MNI]. It was in the business of manufacturing of paper and owned a factory in Mentakab, Pahang Darul Makmur.

[5] The defendant intended to carry out plant upgrading works at the factory. For the purpose, two projects were planned; the fire water tank project and the sludge incinerator electro static precipitator or briefly known as SI ESP Project. [The reference for SI ESP project was VE108 and MNI Purchase Order No: ME-011439 while the Fire Water Tank project VE110 and MNI Purchase Order No: ME-011895].

[6] With regards to the ESP project, the defendant appointed a Taiwanese company - Tai & Chyun [T&C] to manufacture and supply the precipitator to the site as well as to provide engineers to guide, supervise and troubleshoot the installation works on the site.

[7] The plaintiff was an engineering and construction company.

[8] The defendant appointed the plaintiff to carry out the two projects. For the ESP project [the project], the defendant appointed the latter to provide services to install the sludge incinerator electrostatic precipitator at the defendant's factory.

[9] As owner or employer of the project, the defendant led and gave due instruction to the parties for the smooth running of the project.

[10] The plaintiff and defendant [parties] entered into terms of agreement of the project.

[11] Under Peraturan 5(2), Peraturan-Peraturan Kualiti Alam Sekeliling (Udara Bersih) 2014, the project could not be commenced unless a written notification was given to the Director of General of Environment [DOE] 30 days before the commencement of the project.

[12] However the defendant failed to file the notification when the contract was concluded. The project was ultimately not executed due to unilateral termination by the defendant.

[13] The projects were later on subjected to Court case filed by the plaintiff against the defendant.

[14] The present case relates to the project, while another Sessions Court hears the fire water tank project. This Court is made to understand the trial for other case is still pending at the time this grounds is being prepared.

Periods Between January Until April 2019

[15] Between this period, the parties had been having a series of meetings to ensure the smooth running of the project. The parties had also been issuing commercial documents such as proposal, revised proposal and purchase order [PO] to formalize the contract.

[16] The parties agreed that the project encompassed two (2) phases. Phase No 1 was pre assembly activities where temporary structure components, manpower and the crane would be stalled on the site while the phase No 2 was the execution stage where the boiler shutdown would take place for the purpose of installation of the parts.

[17] The plaintiff' scope of work was primarily to manage and mobilize the manpower and crane during the two phases.

[18] The parties agreed that Mr Ling from the defendant was the head for the project and the commencement work was 1st April 2019.

[19] As for the monetary terms, the followings were the agreed conditions:

(a) The final negotiated contract price was RM665,800-00;

(b) 30% down payment within 10 days after order confirmation; and

(c) Standby, demobilization and remobilization rates were to be mutually agreed by both parties.

[20] The plaintiff agreed to provide the cable and T&C would provide the cable list. The defendant would decide the cable length.

Details Of The Contract

[21] The revised proposal was dated 22 February 2019. It was emailed on 6 March 2019 by the plaintiff to th