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[ENGLISH TRANSLATION]

IN THE COURT OF APPEAL MALAYSIA, PUTRAJAYA

(APPELLATE JURISDICTION)

CIVIL APPEAL NO. W-02- -/2016

BETWEEN

SILVERLAKE SYSTEM SDN. BHD

(Company No.: 182899-W)

..... APPELLANT

AND

LOGICAL OPERATIONSCONSORTIUM SDN. BHD

(Company No.: 394720-X) .....RESPONDENT

In the matter of the High Court of Malaya at Kuala Lumpur

Civil Suit No. S-22-94-2010

BETWEEN

LOGICAL OPERATIONS CONSORTIUM SDN. BHD

(Company No.: 394720-X) .....PLAINTIFF

AND

1. ABDUL RAHIM BIN ABDUL RAZAK

(NRIC No.: 600915-07-5393)

2. SILVERLAKE SYSTEM SDN. BHD

(No. Syarikat: 182899-W) ...DEFENDANTS

GROUNDS OF JUDGMENT

SITI KHADIJAH BINTI S. HASSAN BADJENID

JUDGE

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Plaintiff (Logical Operations Consortium Sdn. Bhd.) is a private limited

company incorporated in Malaysia pursuant to the law. The First

Defendant (Abdul Rahim bin Abdul Razak – SD2) is an individual and

the Second Defendant (Silverlake System Sdn Bhd) is a private limited

company incorporated in Malaysia pursuant to the law.

The evidence shows the Court the following:

The First Defendant at the material time was the Assistant General

Manager who headed and managed the Islamic Credit Card Centre at

Bank Islam. He possessed the necessary expertise in syariah matters

that was required in the implementation management of credit cards in

the Islamic Card Centre. The evidence shows to the Court that the

employment contract of the First Defendant with Bank Islam at the

material time was ending in February 2008.

The Plaintiff was the party providing consultancy services for the credit

card operations at the Credit Card Centre of Bank Islam commencing

from year 2001 to 2008.

Dr. Singanallur Venkataraman Narayanan (Narayanan – SP1) is an

American citizen and his wife (from Malaysia) were the directors and the

shareholders in the Plaintiff company. He was the main consultant of

the Plaintiff, MBA/PhD graduate from the University of Houstan (sic)

and between 1981 and 1996 he had worked at AT & T Bell Laboratories

in New Jersey USA. He has expertise in writing and preparing working

papers. He possesses a wide experience background in providing

consultancy services and had worked in Maybank (Malaysia), Bank

Islam (Malaysia) and Mellon Bank (USA).

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Narayanan was the Managing Director of the Plaintiff who possesses

wide expertise and experience in the field of IT and credit cards at

banks and financial institutions in the country and abroad. As the main

consultant of the Plaintiff who had provided consultancy services to the

Islamic Credit Card Centre of Bank Islam, Narayanan had known the

First Defendant for a long time.

Udhaya Kumar a/l Naranam (Uday-SP2) was a freelance consultant

appointed by the Plaintiff to assist the Plaintiff with its projects. He has

18 years of experience in the areas of operation, card marketing,

merchant marketing and project management, system testing and in the

implementation of credit cards operation. He also has experience

working in several banks in Malaysia including Maybank, the credit card

operation department of Multi-Purpose Bank and POS Malaysia.

The First Defendant was at the material time the Assistant General

Manager who headed and managed the Islamic Credit Card Centre at

Bank Islam. He possessed the necessary expertise in syariah matters

that was required in the implementation management of credit cards in

the Islamic Card Centre. The evidence shows the Court that the

employment contract of the First Defendant with Bank Islam at the

material time was ending in February 2008.

The Second Defendant was an established business entity providing IT

applications and requirements as well as credit card systems to banks

and financial institutions. The Second Defendant was the party who had

long been providing Bank Islam in respect of all its IT and credit card

requirements.

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Razak bin Mohd Mazlan (SD1) is an individual representing the Second

Defendant since the beginning of this case. He is the Senior Consultant

and the Senior Vice President of the Second Defendant company.

In mid 2006, after receiving and evaluating several proposals, Bank

Kerjasama Rakyat Malaysia Berhad (Bank Rakyat) was at the selection

stage to appoint a company known as MBf to be its main partner to

assist them in establishing and implementing a proposal for the Islamic

credit card operation.

Since Bank Islam has been operating its credit card business with

Islamic features, Bank Rakyat had contacted Bank Islam in respect of

this matter for the purpose of and in connection with the said selection

process. This matter came to the knowledge of the First Defendant

including the proposals presented by MBf to Bank Rakyat for the

purpose of procuring the said Bank Rakyat project.

The First Defendant saw this as an attractive opportunity. However, as

an employee of Bank Islam, he could not be involved with any of the

said planning. Seeing the potential of the Second Defendant in offering,

procuring and executing the project, the First Defendant approached the

Second Defendant in relation to this attractive and profitable

opportunity. In that connection, the Second Defendant initiated its offer

to Bank Rakyat to procure the said project.

For the purpose of preparing the working papers for the business

proposals especially in terms of operation which had to be submitted by

the Second Defendant to Bank Rakyat, the First Defendant realized the

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need for a joint venture with the Plaintiff to strengthen the Second

Defendant’s position in the competition with MBf to seize the available

opportunity. The First Defendant who knew of the Plaintiff’s expertise

had arranged for an introductory meeting with the Plaintiff (Narayanan &

Udai) and the Second Defendant. This meeting took place on 21.9.06 at

a location in Cyberjaya. The representative of the Second Defendant

who was present was Razak.

In this introductory session, the First Defendant had informed (made

representation to) the Plaintiff regarding the information and the great

opportunity which was within his knowledge. In the said session, parties

were given an impression, belief and confidence on the strength of the

First Defendant’s position, with the opportunity that had presented itself

to be seized from Bank Rakyat.

From the said meeting session, although according to the Second

Defendant it had the intention of procuring the project on its own as a

sole entity, it cannot be denied that it required the Plaintiff’s participation

to strengthen its position in the competition against MBf in order to

procure the said Bank Rakyat project. On the balance of probabilities,

the Court finds that the Second Defendant had supported the First

Defendant’s representation.

At the said meeting, the Second Defendant’s role was explained. The

Plaintiff’s role was also discussed in a manner which attracted the

Plaintiff to join the First Defendant and the Second Defendant to seize

the Bank Rakyat project which at the material time was at the selection

stage.

The First Defendant and the Second Defendant understood that with

the collaboration of all three parties performing its respective

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specialized roles, it would result in the success they hope for. With that

consensus, the parties expected profits if the Second Defendant

successfully procured the Bank Rakyat project.

As a result of the first meeting, which was followed by many subsequent

meetings, interaction and serious efforts by the Plaintiff, the First

Defendant and the Second Defendant were generated to achieve the

agreed objective.

The evidence is sufficient to show to the Court that at this stage, a

common intention between the Plaintiff, the First Defendant and the

Second Defendant was formed to commit to a collaboration so that the

Second Defendant would succeed in procuring the Bank Rakyat project.

Each of them was certain that once the project was successfully

procured by the Second Defendant, the agreement and collaboration

between the parties will bring about profit to all three parties.

Although there are denials from the First Defendant and the Second

Defendant, the circumstances and the evidence are sufficiently clear to

the Court to show that there was an intention to bind these three parties

to a joint venture agreement (which was unwritten) to procure the Bank

Rakyat contract which will be profitable to all three parties.

For that purpose, each of them has contributed their respective

expertise as best as possible until eventually the Second Defendant had

successfully procured the Bank Rakyat project.

However, when the ‘outsourcing’ project by Bank Rakyat was finally

awarded to the Second Defendant, only the Plaintiff had failed to obtain

the fruits of the success.

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PLAINTIFF’S CASE SUMMARY

Between 5.10.06 and 7.11.06, the First Defendant and the Second

Defendant had represented to Uday and Narayanan that:

Bank Rakyat required a partner to assist in establishing and managing

the proposed Islamic Credit Card operations; and in consideration of the

expert services of the Plaintiff (particularly Uday and Narayanan) to

procure the said project, a separate company focusing specifically on

the operation of Islamic credit card i.e. IICSO, would be established and

managed by Uday and Narayanan (to be appointed) in a joint venture

with the Second Defendant (whereby IICSO will be the sub-contractor to

the Second Defendant).

Relying on the said representations, between September 2006 and

December 2007, Uday and Narayanan had provided important business

procurement consultancy services to the First Defendant and Razak

who represented the Second Defendant.

Relying on the said representations, IICSO was incorporated on 22.8.07

under the provisions of the Companies Act, 1965.

The reliance on the said representations were within the knowledge and

agreement of the First Defendant and the Second Defendant.

The First Defendant and the Second Defendant were aware that the

services provided by the Plaintiff were not given to the Second

Defendant for free.

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The ‘outsourcing’ project by Bank Rakyat was finally awarded to the

Second Defendant by Bank Rakyat on 21.11.07 with substantial

assistance from the Plaintiff.

In breach of the said representations, IICSO was not appointed as the

sub-contractor and was not awarded the ‘post launch operations’

contract by the Second Defendant.

The First Defendant is liable to the Plaintiff personally and/or as an

agent of the Second Defendant.

The First Defendant worked for/with the Second Defendant and/or the

Silverlake group of companies as the ‘senior vice-president of business

development’ in the expansion of the ‘outsourcing’ business of credit

card operations, after the success of procuring the project.

The First Defendant had all the relevant reasons to act in the best

interest of the Second Defendant in the discussions with, inter alia, the

Plaintiff at all material times.

At all material times, the First Defendant has always acted in the best

commercial interest of the Second Defendant and/or assisted the

Second Defendant whether directly and/or indirectly in relation to

several projects which was handled by the Second Defendant, even

though at the material time, the First Defendant was an employee of

Bank Islam.

The Second Defendant has full knowledge of the First Defendant’s

involvement and in fact, had directly encouraged his involvement to

procure the project for the Second Defendant.

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The Second Defendant is liable to the Plaintiff as the Second Defendant

had obtained financial benefits from the Plaintiff’s involvement.

The Second Defendant was fully aware that the business procurement

consultancy services were not provided by the Plaintiff to the Second

Defendant for free.

The Plaintiff’s case is that the business procurement consultancy

services which is still accruing and owing amounts to RM 2,005,687.50.

The Plaintiff is entitled its claim for the loss of profits before tax of RM

16,000,000.00 which the Plaintiff will obtain through IICSO if IICSO is

awarded the operation contract after the launch.

With regard to the claim of RM 2,005,687.50, the Plaintiff claims for the

said amount from the Defendants pursuant to Section 71 of the

Contracts Act 1950 and/or on a quantum meruit basis.

With regard to the claim of RM 16,000,000.00, the Plaintiff is claiming

for the said amount from the Defendants as compensation for loss and

damage suffered by the Plaintiff that arose naturally from the aforesaid

breach.

THE FIRST DEFENDANT’S CASE SUMMARY

The First Defendant disputes the Plaintiff’s allegation that the First

Defendant had breached the representations allegedly made by him

which caused IICSO not to be awarded by the Second Defendant in

relation to the Bank Rakyat Islamic credit card project. The First

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Defendant also disputes that he is liable to the Plaintiff for the said

damages and losses.

The First Defendant could not be liable to the Plaintiff as the First

Defendant had not represented and could not have made any

representation that the Plaintiff will be awarded any contract by the

Second Defendant in relation to the project.

The Plaintiff’s claim could not be sustained as the First Defendant was

not an employee, agent, representative or a consultant of Bank Rakyat

or the Second Defendant at the material time. Furthermore, Bank

Rakyat and the Second Defendant are independent companies with

their respective Board of Directors and management structure to

evaluate and make business decisions relating to the said project.

In that connection, the First Defendant was not in the position to

represent or agree on behalf of Bank Rakyat or the Second Defendant

on any apparent or de facto power or authority to award on behalf of

Bank Rakyat and/or the Second Defendant to any company.

The Plaintiff’s claim has to be dismissed with cost.

THE SECOND DEFENDANT’S CASE SUMMARY

The principal business of the Second Defendant is to provide

applications and solutions to banks and financial institutions including

providing information technology and operation services relating to

credit cards.

At all material times, the First Defendant was not employed by the

Second Defendant. The First Defendant was also not an agent of the

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Second Defendant and did not have the authority to represent the

Second Defendant or make any representations on behalf of the

Second Defendant. The Plaintiff was well aware of these facts.

At the material time at about the third quarter of 2006, the Second

Defendant had knowledge that Bank Rakyat was assessing the

possibilities of outsourcing its Islamic credit card operations.

Following that, the Second Defendant commenced discussions and

negotiations with Bank Rakyat where proposals were submitted by the

Second Defendant. The Second Defendant and Bank Rakyat continued

with the discussions where different business models were scrutinised.

The Second Defendant was in the position to offer, procure and execute

the project on its own. Be that as it may, it is the Second Defendant’s

common practice to consider its various available options and that

included discussions on possible collaboration with third parties.

In that circumstances, the Second Defendant agreed to meet with the

Plaintiff, represented by Uday and Narayanan since the Plaintiff had

alleged that they possess the technical expertise on several aspects of

the project.

Several meetings were held between the Second Defendant and the

Plaintiff, all of which were preliminary exploratory business discussions.

These meetings between the Second Defendant and the Plaintiff were

not at the invitation of and initiated by the Second Defendant. During the

meetings, the Second Defendant was already in the bidding process for

the project. It was the Second Defendant’s intention to procure the

project on its own as the sole entity.

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It is the Second Defendant’s case that:

a) The Second Defendant never appointed the Plaintiff, Uday and/or

Narayanan to prepare any proposals or provide any services in

relation to the project;

b) The proposals that were prepared by the Plaintiff were part of the

Plaintiff’s own initiative as part of their attempt to achieve the

Plaintiff’s objective;

c) The Plaintiff, Uday and/or Narayanan have never disclosed that

they require payment or reimbursement for the preparation of the

said proposals; and

d) There was no understanding or agreement between the parties

that the Second Defendant should pay the Plaintiff for the said

efforts.

At all material times, the Plaintiff, Uday and/or Narayanan did not

provide any services to the Second Defendant but merely lobbied for

themselves as this was part of their attempt to achieve the Plaintiff’s

objective.

At about the end of 2006 or 2007, the Plaintiff informed the Second

Defendant that the Plaintiff, Uday and/or Narayanan will combine their

involvement in relation to the matter relating to the project under a new

company called IICSO, which has yet to be incorporated at that time.

Although IICSO was not incorporated then, the Plaintiff, Uday and/or

Narayanan explained that their involvement prior to the incorporation of

IICSO will be treated as the involvement on behalf of IICSO.

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This intention was stated in, inter alia, the proposals that were

submitted by the Plaintiff on behalf of IICSO.

Since January 2007, the Plaintiff has presented several formal

proposals (collectively referred to as “proposals”) to the Second

Defendant which, amongst others, proposed that a strategic alliance to

be formed between the Second Defendant and IICSO. The Plaintiff

explained that the proposal was prepared on behalf of IICSO.

In these proposals:

a. It clearly stated that the proposals were prepared on behalf of

IICSO;

b. It was the Plaintiff’s objective to make IICSO (and not the Plaintiff)

the business partner with the Second Defendant;

c. The proposals did not expect any relationship between the

Plaintiff and the Second Defendant;

d. The proposals did not contain any provision that would provide

any right to payment, reimbursement or any other benefits to the

Plaintiff;

e. If any of the proposals was accepted by the Second Defendant,

the agreement will be between IICSO and the Second Defendant;

and

f. It was clear that the proposals were merely proposals and there

were no agreement between the parties on any matters stated in

the proposals.

Therefore the Plaintiff does not have the locus standi to commence this

action against the Second Defendant.

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The Plaintiff, Uday, Narayanan and/or IICSO had not shown or informed

the Second Defendant that they were providing the services to the

Second Defendant and they expected to be paid or reimbursed for the

said services provided. If they had done so, the Second Defendant

would have discontinued all connections and ceased all

communications immediately with the Plaintiff, Uday, Narayanan and/or

IICSO.

The Second Defendant did not accept any of the proposals at the

material time. The Second Defendant was cautious of the basis of the

proposals as it seemed unrealistic, unbelievable and not based on

reasonable commercial basis. At that time, the Second Defendant has

not procured the project from Bank Rakyat. Therefore, it was impossible

for the Second Defendant to commit itself to the Plaintiff and/or IICSO.

At all material times, the Second Defendant did not have the intention to

form a ‘joint venture’ or ‘partners’ with the Plaintiff or IICSO. The

Second Defendant had the capability to offer and execute the project on

its own, without the involvement of the Plaintiff or IICSO.

On 21.11.07, a contract (the Main Agreement) was signed between the

Second Defendant and Bank Rakyat for the project.

On or about the time the agreement between Bank Rakyat and the

Second Defendant was about to be concluded, the Second Defendant

started negotiating with IICSO to explore the possibility of appointing

IICSO as its sub-contractor to execute the project. The expected job

scope generally involved two parts:

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a) Pre-operation consultancy services for the Main Agreement(Pre-

operation Consultancy Services); and

b) Operation services required under the Main Agreement (Post-Ops

operations).

Before the negotiations for the contract between the Second Defendant

and IICSO could be finalised, the Second Defendant needed IICSO to

provide a Pre-operation Consultancy Services to enable the Second

Defendant to fulfill its obligations under the Main Agreement. In

accordance with that, the Plaintiff had executed the Pre-operation

Consultancy Services.

The Second Defendant continued its negotiations with IICSO in good

faith but the negotiations failed to result in any agreement between the

parties. Parties could not arrive at an agreement on the material for the

Post-Ops Operations.

As a result, IICSO and the Second Defendant had decided to sign a

separate agreement dated 20.5.08 (Pre-operation Agreement) so that

IICSO could be paid for the Pre-operation Consultancy Services

provided.

The Second Defendant had paid IICSO the sum due under the Pre-

operation Agreement in full. Therefore the Second Defendant no longer

owe IICSO and/or the Plaintiff.

Therefore, the Plaintiff is estopped from claiming any payment and/or

reimbursement (if any) for the alleged business procurement

consultancy services.

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At all material times, the Second Defendant never represented that it

would award the ‘post launch operations’ contract to IICSO or

represented or agreed that it would appoint IICSO as its sub-contractor

to manage the project for the Second Defendant.

The Second Defendant had executed the Post-Ops Operation and

executed the Main Agreement on its own, without the involvement of the

Plaintiff or IICSO save for the matters under Pre-operation Agreement.

The Plaintiff only claimed for the said business procurement ‘consulting’

services and the loss of profits for the first time by way of its solicitors’

letter dated 1.6.09. At all material times before that, the Plaintiff had

never issued any notice or demand to claim or showed any intention to

claim the charges for the alleged business procurement ‘consulting’

services and loss of profits.

On that basis, the Second Defendant says that it is not indebted to the

Plaintiff for any damages and the Plaintiff’s claim should therefore be

dismissed with cost.

ISSUES TO BE TRIED:

1. Whether the business proposal which was alleged to have been

submitted by the second defendant to Bank Rakyat to obtain the

Islamic credit card outsourcing operation project from it was based

on a continuous substantial assistance (since September 2006)

from the Plaintiff with the purpose of securing the project?

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2. Whether between 05.10.2006 and 07.11.2006, the following verbal

representations were made to the plaintiff's Uday and Narayanan

(in their capacity as authorised officers of the Plaintiff) by the First

Defendant and/or the Second Defendant:-

a) that Bank Rakyat required a partner to help in setting up and

running their proposed Islamic credit card operations; and

b) that in consideration of the Plaintiff's (in particular that of Uday

and Narayanan) expertise and services to assist the second

defendant in obtaining the project, a separate company

specialising in Islamic credit card operations be established,

i.e., the yet to be established IICSO and to be managed by

Uday and Narayanan, will be appointed to manage the project

in a “joint venture" with the Second Defendant (whereby

IICSO will be the sub-contractor to the Second Defendant)?

3. Whether in reliance on the aforesaid representations, significant

business procurement consulting services were provided by the

Plaintiff's Uday and Narayanan between September 2006 and

December 2007 (hereinafter referred to as ‘business procurement

“consulting” services’')?

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4. Whether in further reliance on the said representations, IICSO was

incorporated on 22.8.07 under the provisions of the Companies

Act, 1965?

5. Whether the reliance by the Plaintiff on the said representations

was with the knowledge and concurrence of the First Defendant

and/or the Second Defendant?

6. Whether the Plaintiff had provided ‘business procurement

“consulting” services’ to the First Defendant and/or the Second

Defendant?

7. Whether the First Defendant and/or the Second Defendant were

fully aware that the services which were provided by the Plaintiff

were not rendered gratuitously to the First Defendant and/or the

Second Defendant?

8. Whether the contract dated 20.05.2008 between IICSO and the

second defendant (hereinafter referred to as "the IICSO contract'')

had taken into consideration and/or included all the ‘business

procurement “consulting” services’ which had allegedly been

provided by the Plaintiff to the First Defendant and/or the Second

Defendant?

9. Whether the said ‘outsourcing’ project was eventually awarded to

the Second Defendant by Bank Rakyat on 21.11.07, with

substantial assistance from the Plaintiff?

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10. Whether in breach of the aforesaid representations by the Second

Defendant, IICSO was not awarded the ‘post launch operations’

contract by the Second Defendant resulting in IICSO not being

appointed as the sub­ contractor to manage the project for the

second defendant?

11. Whether the First Defendant is personally liable and/or as an agent

of the Second Defendant, to the Plaintiff in view of his numerous

participations?

12. Whether the First Defendant had all the relevant reasons for acting

in the best commercial interest of the Second Defendant in

discussions with, inter alia, the Plaintiff, at all material times?

13. Whether the Second Defendant had full knowledge of the First

Defendant's participation and had directly encouraged his

participation in securing the project for the Second Defendant?

14. Whether the Second Defendant is liable to the Plaintiff for the

‘business procurement “consultancy” services’ which is due and

owing of RM2,005,687.50 since the second defendant has

financially benefitted from the plaintiff's involvement?

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15. Whether the Plaintiff is entitled to the claim for the loss of pre-tax

profit of RM16,000,000.00 that the Plaintiff would have derived via

IICSO had IICSO been awarded the post-launch operations

contract by the Second Defendant?

16. Whether the Plaintiff was appointed by the Second Defendant to

prepare any proposal or provide any services regarding the

project?

17. Whether the Plaintiff had provided the alleged services voluntarily

with a view of securing business opportunities from the Second

Defendant?

18. Whether the Plaintiff had at any time informed that the Plaintiff will

impose charges for any alleged services rendered to the Second

Defendant and whether the Plaintiff had made any such claim at

the material time before 1.6.09?

19. Whether the Second Defendant had informed the Plaintiff of the

matters which have been pleaded in paragraph 11.12 of the

Second Defendant's Defence?

20. Whether the Plaintiff is aware that no decision can be made by the

Second Defendant except and until consent from the Second

Defendant's higher management is obtained?

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21. Whether the Plaintiff and the Second Defendant had any

agreement regarding the rate which the Plaintiff can impose on the

Second Defendant as payment for the alleged services rendered

by the Plaintiff to the Second Defendant?

22. Whether the Plaintiff has a valid claim against the First

Defendant as contained in the Statement of Claim dated 31.1.10?

EVALUATION OF THE EVIDENCE, APPLICATION OF THE LAW,

FINDINGS OF THE COURT AND THE RESOLUTION OF THE

ISSUES IN THE CASE

1. Whether the business proposal which was alleged to have

been submitted by the second defendant to Bank Rakyat to

obtain the Islamic credit card outsourcing operation project

from it was based on a continuous substantial assistance

(since September 2006) from the Plaintiff with the purpose of

securing the project?

From the evidence, it is shown to the Court that there were efforts from

the Plaintiff (Uday and Narayanan) which were of assistance based on

their expertise particularly in the area of credit card operation with the

purpose of successfully securing the Bank Rakyat project for the

Second Defendant.

The Court finds that Uday and Narayanan have contributed assistance

continuously and substantially in the preparation of the business

proposal that was formally submitted by the Second Defendant to Bank

Rakyat.

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2. Whether between 05.10.2006 and 07.11.2006, the following

verbal representations were made to the plaintiff's Uday and

Narayanan (in their capacity as authorised officers of the

Plaintiff) by the First Defendant and/or the Second

Defendant:-

a. that Bank Rakyat required a partner to help in setting

up and running their proposed Islamic credit card

operations; and

b. that in consideration of the Plaintiff's (in particular that

of Uday and Narayanan) expertise and services to

assist the second defendant in obtaining the project, a

separate company specialising in Islamic credit card

operations be established, i.e., the yet to be

established IICSO and to be managed by Uday and

Narayanan, will be appointed to manage the project in

a “joint venture" with the Second Defendant (whereby

IICSO will be the sub-contractor to the Second

Defendant)?

Referring to (a), representations had been made by the First Defendant

as an attractive introduction in relation to the proposal that the First

Defendant hoped could be executed for the purpose of forming an

established joint venture that could compete with MBf’s performance, so

that the Plaintiff would assist the Second Defendant in its efforts to

secure the Bank Rakyat Project.

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Narayanan, Uday, the First Defendant and also Razak from the Second

Defendant started meeting for the same matter and objective. They met

on the invitation of the First Defendant.

Referring to (b), the evidence shows that this matter did not arise

between 5.10.06 and 07.11.06, but it arose later following the proposal

of Narayanan and Udai, and not as a result of the representation of the

First Defendant or that of the Second Defendant. IICSO was the source

of income for Uday and Narayanan as the reward from the collaboration

of procuring the Bank Rakyat project.

3. Whether in reliance on the aforesaid representations,

significant business procurement consulting services were

provided by the Plaintiff's Uday and Narayanan between

September 2006 and December 2007 (hereinafter referred to

as ‘business procurement “consulting” services’')?

Relying on the First Defendant’s representation as found in (a) of issue

(2) above, and the big opportunity envisioned by the First Defendant

(who was present with highly confidential information from someone

who held a convincing position in the Islamic Credit Card Department),

and the encouraging interest and confidence from the Second

Defendant, Narayanan and Uday had provided important ‘business

procurement “consulting” services’ between September 2006 and

December 2007.

4. Whether in further reliance on the said representations,

IICSO was incorporated on 22.8.07 under the provisions of

the Companies Act, 1965?

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Upon reliance on the representation of the First Defendant as stated in

(a) in relation to second issue (2) above, and with the full confidence of

the Second Defendant’s impending successful procurement of the

project and the potential profits to be achieved from the project, IICSO

was incorporated pursuant to the provisions of Companies Act 1965 on

22.8.07 by Uday and Narayanan.

5. Whether the reliance by the Plaintiff on the said

representations was with the knowledge and concurrence of

the First Defendant and/or the Second Defendant?

The First Defendant and the Second knew that without the support of

the Plaintiff, they would not be strong enough to compete against MBf in

the selection process carried out by Bank Rakyat. They also knew that

the future profits which will be achieved if the Second Defendant is

successful is an attraction for the Plaintiff to assist and support the

Second Defendant in this joint venture.

On the balance of probabilities, the Plaintiff’s reliance on the said

representation was within the knowledge and agreement of the First

Defendant and the Second Defendant in the form of a necessary joint

venture in order for the success of the Second Defendant to compete

against MBf to procure the said project.

6. Whether the Plaintiff had provided ‘business procurement

“consulting” services’ to the First Defendant and/or the

Second Defendant?

The evidence is clear to the Court that the Plaintiff had provided the

said services in a joint venture between the Plaintiff, the First Defendant

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and the Second Defendant for the Second Defendant’s success in its

effort to procure the said project.

7. Whether the First Defendant and/or the Second Defendant

were fully aware that the services which were provided by

the Plaintiff were not rendered gratuitously to the First

Defendant and/or the Second Defendant?

Referring to the evidence and on the balance of probabilities, even

though the First Defendant and the Second Defendant had successfully

created a friendly environment with the Plaintiff, as reasonable men, the

First Defendant and the Second Defendant were aware that the

services provided by the Plaintiff could not be on a gratuitous basis to

the First Defendant and the Second Defendant. The First Defendant

and the Second Defendant knew that the Plaintiff existed as a channel

for Uday and Narayanan to obtain the rewards from the Bank Rakyat

Project.

The respective parties (including the First Defendant) were aware that

the purpose of the joint venture was to ensure the success of the

Second Defendant in procuring the Bank Rakyat project which was

expected to profit the respective parties. The Second Defendant’s

success in procuring the said project was dependent on the close

cooperation of all three parties in this case as each had their respective

expertise and strength.

8. Whether the contract dated 20.05.2008 between IICSO and

the second defendant (hereinafter referred to as "the IICSO

contract'') had taken into consideration and/or included all

the ‘business procurement “consulting” services’ which had

allegedly been provided by the Plaintiff to the First Defendant

and/or the Second Defendant?

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The Contract dated 20.5.08 did not take into account the business

procurement “consultancy” which was provided by the Plaintiff to the

First Defendant and the Second Defendant before the Second

Defendant procured the project.

9. Whether the said ‘outsourcing’ project was eventually

awarded to the Second Defendant by Bank Rakyat on

21.11.07, with substantial assistance from the Plaintiff?

The outsourcing project was awarded to the Second Defendant by Bank

Rakyat on 21.11.07 with substantial assistance from the Plaintiff.

10. Whether the Second Defendant had breached its

representations above when IICSO was not awarded the

‘post launch operations’ contract by the Second Defendant,

which resulted in IICSO not being appointed as the sub-

contractor to manage the project for the Second Defendant?

Referring to the evidence and on the balance of probabilities, the Court

finds that IICSO was not appointed because the Plaintiff and the

Second Defendant could not agree on several material terms in relation

to the said contract.

11. Whether in breach of the aforesaid representations by the

Second Defendant, IICSO was not awarded the ‘post launch

operations’ contract by the Second Defendant resulting in

IICSO not being appointed as the sub­ contractor to manage

the project for the second defendant?

The Court finds that the First Defendant is not personally liable to the

Plaintiff even though the First Defendant was involved in its effort to

assist and successfully procure the project for the Second Defendant.

Since the beginning, the involvement of all three parties was to ensure

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the Second Defendant’s success in procuring the project through a joint

venture of all three parties in this case.

12. Whether the First Defendant had all the relevant reasons for

acting in the best commercial interest of the Second

Defendant in discussions with, inter alia, the Plaintiff, at

all material times?

The First Defendant had the best commercial interest of the Second

Defendant’s success in procuring the project for the purpose of

benefitting all the parties in this case including the First Defendant

himself. With reference to the evidence and on the balance of

probabilities, the Court finds that the First Defendant expected a reward

for himself if the Second Defendant successfully procured the Bank

Rakyat project which was known specifically to the Second Defendant.

With reference to the evidence and on the balance of probabilities, the

information about the Bank Rakyat project came from the First

Defendant, not the Second Defendant.

In this connection the First Defendant has all the relevant reasons to act

in the best commercial interest of the Second Defendant at the

meetings with, inter alia, Plaintiff, at all material times.

13. Whether the Second Defendant had full knowledge of the

First Defendant's participation and had directly encouraged

his participation in securing the project for the Second

Defendant?

With reference to the evidence, the Court finds that the Second

Defendant through Razak had full knowledge of the First Defendant’s

involvement

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and had even directly cooperated with the First Defendant to procure

the said project for the Second Defendant.

This was done based ‘on trust’ that the First Defendant had links with

Bank Rakyat given that: the First Defendant brought such confidential

information from Bank Rakyat on the available opportunities; it was the

First Defendant who had the information that MBf was being considered

for the award of the said project which was surely a piece of confidential

information; the First Defendant had the proposals prepared by MBf;

and more importantly is the fact that the First Defendant had the

advantage in respect of his knowledge in Islamic syariah in the handling

of Islamic credit card.

14. Whether the Second Defendant is liable to the Plaintiff for the

‘business procurement “consultancy” services’ which is due

and owing of RM2,005,687.50 since the second defendant

has financially benefitted from the plaintiff's involvement?

With reference to the evidence, given that the Plaintiff has proven its

case, the amount claimed is a reasonable amount as compared to the

value of the project procured by the Second Defendant from Bank

Rakyat. In all circumstances the evidence in this case shows that this

sum had not been paid to the Plaintiff.

The Court finds that the Second Defendant is liable to the Plaintiff for

the ‘business procurement “consultancy” services’ that is still accruing

and owing by the Second Defendant who had financially benefitted from

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the substantial continuous involvement and contribution of the Plaintiff

since the very beginning.

15. Whether the Plaintiff is entitled to the claim for the loss of

pre-tax profit of RM16,000,000.00 that the Plaintiff would have

derived via IICSO had IICSO been awarded the post-launch

operations contract by the Second Defendant?

The Plaintiff is not entitled to claim for the amount of RM 16,000,000.00,

given that all the amounts are based on ‘projections’ by the Plaintiff

simply without any firm supporting evidence that the Court can rely on

for the purpose of supporting the sum claimed on a legal basis.

Based on the evidence, when the Second Defendant successfully

procured the Bank Rakyat project, it required the Plaintiff (Narayanan

and Uday) to execute the Pre-Ops and Post-Ops Operation. However,

in the early stage of the procurement, complications surfaced when the

Plaintiff wanted the agreement between the Second Defendant and

IICSO in relation to the sub-contracting work to IICSO to be concluded.

However, the plan failed since there were different views between the

parties in relation to several material terms of the agreement that could

not be agreed upon.

In that regard, for the purpose of ensuring that the project continues

parties had signed a separate agreement dated 20.5.08 (Pre-operation

Agreement) so that IICSO will be paid for all the pre-ops operation

services provided by the Plaintiff.

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Even though negotiations continued between the Second Defendant

and IICSO, partied could not reach any agreement on the material

terms of the subcontract and thereafter the contract could not be

concluded. This had ruined the relationship between the Plaintiff and

the Second Defendant. As a result, the Second Defendant had no

choice but to carry out the Post-ops operation work on its own.

16. Whether the Plaintiff was appointed by the Second

Defendant to prepare any proposal or provide any services

regarding the project?

The Plaintiff was not appointed by the Second Defendant ‘directly’ to

prepare any proposal and provide any services for the said project.

However, from the evidence and on the balance of probabilities, it is

clear to the Court that it was inadequate for the Second Defendant to

act on its own without the firm collaboration from the Plaintiff. Indirectly,

the Second Defendant successfully obtained the assistance of the

Plaintiff to prepare and provide the said services.

17. Whether the Plaintiff had provided the alleged services

voluntarily with a view of securing business opportunities

from the Second Defendant?

The evidence shows that the Plaintiff would not have contributed any

services to the project if it could not obtain any profit from the project.

The method by which the Plaintiff provided its services was by way of a

collaboration method formed amongst all the parties that were involved.

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Even though the Plaintiff was desirous to be part of the joint venture and

obtain reward from it, with reference to the evidence, the Court could

not find that the services provided by the Plaintiff were given voluntarily.

This is the position even without any form of coercion on the Plaintiff.

Following a binding verbal agreement, the respective parties had

seriously contributed to ensure that the Second Defendant succeeded

in the procurement as the respective parties wish to profit from the said

procurement themselves. It was on this understanding that the parties

met and finally led to the success of the Second Defendant in procuring

Bank Rakyat project.

18. Whether the Plaintiff had at any time informed that the

Plaintiff will impose charges for any alleged services

rendered to the Second Defendant and whether the Plaintiff

had made any such claim at the material time before 1.6.09?

The Plaintiff did not inform about this matter until the stage where the

agreement could not be reached between the Plaintiff and the Second

Defendant to conclude the subcontract agreement with the Plaintiff,

which is after the Second Defendant was awarded the Bank Rakyat

project. With that, the Plaintiff then issued its demand when the Plaintiff

executed the Pre-Ops work. At that time, the Plaintiff did not inform

about the payment for the business procurement “consultancy”

services.

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19. Whether the Second Defendant had informed the Plaintiff of

the matters which have been pleaded in paragraph 11.12 of

the Second Defendant's Defence?

There is no evidence to show that the Second Defendant had explained

to the Plaintiff that the Second Defendant did not accept the Plaintiff’s

request to appoint IICSO as its subcontractor for the project on the

following reasons:

a) Even though there was a possibility that the Second Defendant

may form an arrangement with IICSO, the arrangement could

only be discussed after the Second Defendant had procured a

binding contract with Bank Rakyat for the project; and

b) Even though the Second Defendant was open to the idea of

allowing IICSO to take part in the project, its participation could

only take place if the Second Defendant and IICSO reached an

agreement on the terms of the said participation.

20. Whether the Plaintiff is aware that no decision can be made

by the Second Defendant except and until consent from the

Second Defendant's higher management is obtained?

At the early stage, the Plaintiff did not know about this matter. The

Plaintiff was only aware of this when the parties were negotiating on the

terms in view of concluding the agreement between the Plaintiff and the

Second Defendant in relation to IICSO’s subcontract.

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21. Whether the Plaintiff and the Second Defendant had any

agreement regarding the rate which the Plaintiff can impose

on the Second Defendant as payment for the alleged

services rendered by the Plaintiff to the Second Defendant?

With reference to the evidence, there was no agreement in respect of

the rates that the Plaintiff could impose on the Second Defendant for

the services provided by the Plaintiff to the Second Defendant.

However, the Court finds that the amount claimed is reasonable when

comparing the Plaintiff’s contribution with the benefits obtained by the

Second Defendant from the award obtained from Bank Rakyat.

22. Whether the Plaintiff has a valid claim against the First

Defendant as contained in the Statement of Claim dated

31.1.10?

With reference to the evidence and on the balance of probabilities, the

Court finds that the Plaintiff has a valid claim against the Second

Defendant as the party who successfully procured the Bank Rakyat

project and benefitted from it, and not against the First Defendant

personally.

Held:

With reference to the evidence, exhibits, submission from all parties and

to formulate a conclusion on the balance of probabilities, the Court finds

that the Plaintiff had proven its claim against the Second Defendant in

this case.

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As such, the Court allows the Plaintiff’s claim in paragraph 32 of the

Statement of Claim for the sum of RM 2,005,687.50 for the business

procurement consultancy services provided before the Second

Defendant secured the award from Bank Rakyat. (in relation to

paragraph 40(a) of the Statement of Claim).

Referring to paragraph 40(b) of the Statement of Claim, the interest of

5% per annum on the judgment sum from the date of this judgment until

the date of the final settlement of the sum is allowed.

Referring to paragraph 40(e) of the Statement of Claim, costs to be paid

by the Second Defendant to the Plaintiff in the sum of RM 40,000.00.

Allocatur on the cost at 4% to be paid by the Second Defendant before

the fair order is extracted.

The claim against the First Defendant is dismissed with cost of RM

10,000.00 to be paid by the Plaintiff to the First Defendant.

Allocatur on the cost at 4% to be paid by the Plaintiff before the fair

order is extracted from the Court.

30 September 2016

[Signature]

Siti Khadijah binti S. Hassan Badjenid

Mahkamah Tinggi Malaya Melaka.