Sessions Court orders Solaris Dutamas to pay RM362,381 to EF Security for security services

Sessions Court orders Solaris Dutamas to pay RM362,381 to EF Security for security services

In a partially successful claim, the Sessions Court of Kuala Lumpur has ordered Solaris Dutamas Management Corporation to pay RM362,381.89 to EF Security Sdn Bhd for unpaid security monitoring services. The court, presided over by Judge Siti Fatimah Binti Talib, rejected a separate claim for a RM290,980.60 Grant Penalty and dismissed the Defendant’s counterclaim.

A Contract Born from Promises of Grant Funding

The dispute arose from a Service Grant Agreement (SGA) signed on 10 March 2023. EF Security, trading as UU Security, was to provide CCTV systems, AI robots, and a central monitoring platform (UCAM) to Solaris Dutamas, the management corporation for the Solaris Dutamas development in Kuala Lumpur. The monthly service fee was set at RM38,220.00 (excluding SST).

EF Security claimed it installed 187 cameras across four blocks, conducted testing and commissioning, and issued invoices from March to November 2023 totalling RM362,381.89. Solaris Dutamas made no payments, prompting EF Security to suspend services and terminate the SGA.

Solaris Dutamas defended itself on two main grounds: first, that the SGA was signed only for a feasibility study and was induced by misrepresentation about a grant from the Malaysian Technology Development Corporation (MTDC) or Khazanah Nasional; second, that the security system was defective and did not meet promised standards. It also filed a counterclaim for damages.

Court Rejects Feasibility Study and Misrepresentation Defences

Judge Siti Fatimah found that the SGA was a valid and binding contract, not merely a feasibility study. The agreement contained substantive terms on monthly fees, a 36-month duration, termination clauses, and penalties—inconsistent with a limited study. “If the SGA were truly only for a feasibility study, there would be no need for detailed payment terms, a contract period, and penalty clauses,” the court observed.

The Defendant failed to prove that misrepresentation or fraud had vitiated its consent. Although Solaris Dutamas argued that EF Security represented the existence of a RM300,000 government grant, the court noted that the SGA itself clearly stated payment obligations. “The party signing a contract is bound by its terms unless fraud or misrepresentation is proven,” the judge said, citing * L’Estrange v F Graucob Ltd *.

The court also highlighted that Solaris Dutamas, advised by a lawyer and having access to professional guidance, did not raise any objections at the time of signing or during installation. “The Defendant’s conduct in permitting installation and using the system is inconsistent with its claim that the agreement was only for a feasibility study,” the judgment read.

Partial Victory: Invoices Allowed, Grant Penalty Rejected

On the claim for unpaid invoices, the court ruled in favour of EF Security. “The Plaintiff has proved on a balance of probabilities that the Defendant is liable to pay the invoices amounting to RM362,381.89,” the judge stated.

However, the court rejected the Grant Penalty of RM290,980.60, which EF Security sought under Clause 15 of the SGA for early termination within 12 months. Applying the principle from * Cubic Electronics Sdn Bhd v Mars Telecommunications Sdn Bhd * [2019] 2 CLJ 723, the court found that the Plaintiff failed to prove the sum was reasonable compensation. “No detailed cost breakdown, supplier invoices, or evidence of actual loss was submitted,” the judge noted. “Allowing both the invoice claim and the penalty would result in an unjust double recovery.”

The court also refused the contractual interest of 1.5% per month, substituting it with a 5% per annum rate from the date of filing until full settlement.

Counterclaim Dismissed

Solaris Dutamas’ counterclaim, based on allegations of defective systems and misrepresentation, was dismissed. The court found no expert evidence to substantiate the claimed losses. “The counterclaim cannot be allowed based on general dissatisfaction; it requires specific proof of loss,” the judge said.

Orders and Implications

The court ordered: - Payment of RM362,381.89 with 5% interest per annum from the date of filing until judgment. - Post-judgment interest at 5% per annum until full settlement. - A declaration that the SGA was terminated due to the Defendant’s breach. - Dismissal of the Grant Penalty claim and the counterclaim. - Costs of RM10,000 to the Plaintiff.

The judgment underscores the importance of clear contractual terms and the difficulty of relying on pre-contractual representations to set aside a signed agreement. It also highlights the court’s strict approach to penalty clauses, requiring plaintiffs to prove the reasonableness of liquidated damages.