JUDGMENT

Steve Ritikos JC:

Introduction

[1] The Plaintiff is a company registered in Malaysia under the Companies Act 2016 with its registered address at Unit 07-03, 7th Floor, Wisma Damai Point, 88300 Kota Kinabalu, Sabah.

[2] The Defendant, Majlis Perbandaran Tawau, is the municipal council for Tawau district in Sabah and whose duties under the Local Government Ordinance includes to execute works of such general advantage to the health, convenience or comfort of the inhabitants for Tawau as seem desirable.

[3] The Defendant, pursuant to s 7 of the Local Government Ordinance 1961 is also a body corporate having perpetual succession and a common seal and shall be capable in law of suing and being sued in its corporate title.

[4] The Plaintiff's claims against the Defendant are for the following relief:

(a) A declaration that the Defendant has breached the 2 Letters of Acceptance of Tender dated 28 July 2020;

(b) Damages to be assessed against the Defendant;

(c) Interest on damages assessed at the rate of 5% per annum pursuant to s 11 of the Civil Law Act 1956 or at such rate to be determined by this Court from 1 April 2021 to date of judgment;

(d) Interest at the rate of 5% per annum on the damages assessed from the date of judgment to the date of realization;

(e) Cost; and

(f) Such other order may be made as the Court thinks fit and just.

Brief Facts Of Case

[5] By 2 Letters of Tender Acceptance dated 28 July 2020 (interchangeably referred to as "the contract"), the Defendant awarded to the Plaintiff tender works for the services of rubbish clearing and collection within Tawau District for Zone 1 and Zone 2 for a period of 5 years commencing from the 26 October 2020 until 25 October 2025, and subject to the terms and condition as particularized in cls 10, 11 and 12 of the said Letters.

[6] The Plaintiff accepted the award for the tender works and be bound by the terms of the tender, contract and specifications contained in the tender documents.

[7] The contract price for Zone 1 is RM142,637.13 per month and the total contract price is RM8,558,228.00.

[8] The contract price for Zone 2 is RM141,734.36 per month and the total contract price is RM8,504,061.50.

[9] The Defendant alleged that the Plaintiff failed to perform or fulfill the condition precedent in accordance with the terms of the said Letters of Tender Acceptance dated 28 July 2020 and vide a letter dated 1 April 2021, the Defendant terminated the contract between the parties. Thus, the present suit is brought by the Plaintiff against the Defendant.

Plaintiff's Claims

[10] The contentions of the Plaintiff are basically as follows:

(i) The Plaintiff alleged, inter-alia, that upon acceptance of the 2 Letters of Tender Acceptance, a contract is concluded between the plaintiff and the defendant (despite the clear terms of the Letters that there be a formal contract prepared and entered into later on by the parties incorporating all the terms of the tender as shall be modified).

(ii) The Plaintiff alleged that due to the refusal and/or failure of the Defendant to prepare and sign the formal agreement, they were unable to obtain bank loans to be released, as a consequence of which they have suffered losses.

(iii) The Plaintiff's contention is that a formal contract must be signed first in order to enable them to perform their mandatory obligation as stipulated under the Tenders, particularly cl 12.2 of the said Tenders.

Defendant's Defence

[11] The Defendant's defence is premised on 3 main grounds, namely:

(i) There was no concluded and/or binding contract between the plaintiff and the defendant. By stating in cl 9 of the Letters of Tender Acceptance that there be a formal contract prepared and entered into later on by the parties incorporating all the terms of the tender as shall be modified, the said Letters were merely a letter of intent.

(ii) That there must be a prior approval of the Minister of Local Government and Housing, Sabah for the Defendant to enter into the contract, pursuant to s