CENTURY SOFTWARE (MALAYSIA) SDN BHD NORTHPORT (MALAYSIA) BHD

CENTURY SOFTWARE (MALAYSIA) SDN BHD NORTHPORT (MALAYSIA) BHD

Clauses 22 and 23 must be read together; clause 23 does not create a freestanding right to terminate that defeats clause 22's cure procedure. The Defendant performed part of the contract and substantial performance occurred (evidenced by Go-Live, extensive live usage and warranty regime); there was no total failure of consideration under s.40. The Plaintiff's termination was therefore invalid and constituted a constructive breach making the Defendant entitled to the unpaid contract balance (Amount 1). The claim for Amount 2 for additional works failed for lack of agreement, invoicing and primary records.

Citation
W-02(NCVC)(W)-1110-05/2018 (Mahkamah Rayuan)
Parties
Appellant (in Appeal 1110); Respondent (in Appeal 1132): Century Software (M) Sdn Bhd; Appellant (in Appeal 1132); Respondent (in Appeal 1110): Northport (Malaysia) Bhd
Court
NCVC
Jurisdiction
Malaysia
Judgment Date
23 September 2019
Case Number
W-02(NCVC)(W)-1110-05/2018 (Mahkamah Rayuan)
Procedural Posture
Civil Appeal (contract Dispute) / Court of Appeal Judgment on Consolidated Appeals W 02(ncv C)(w) 1110 05/2018 and W 02(ncv C)(w) 1132 05/2018 (grounds of Decision)
Outcome
Appeal 1132 dismissed; Appeal 1110 allowed in part
Legal Topics
Termination Clauses, Acceptance and Go Live, Warranty Period, Substantial Performance, Total Failure of Consideration, Constructive Breach, Contract Interpretation, Damages and Interest
Source Language
Malay/English
Contract Law Commercial Law Civil Procedure Remedies Termination Clauses Acceptance and Go Live Warranty Period Substantial Performance +4 more

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Parties

Century Software (M) Sdn Bhd

Appellant (in Appeal 1110); Respondent (in Appeal 1132)

Northport (Malaysia) Bhd

Appellant (in Appeal 1132); Respondent (in Appeal 1110)

Procedural Posture

Civil Appeal (contract Dispute) / Court of Appeal Judgment on Consolidated Appeals W 02(ncv C)(w) 1110 05/2018 and W 02(ncv C)(w) 1132 05/2018 (grounds of Decision)

Legal Issues

  1. 1 Whether termination under clause 23 was valid and whether clause 23 is a freestanding right
  2. 2 Whether there was total failure of consideration under s.40 Contracts Act 1950
  3. 3 When the warranty period commenced and whether there was acceptance of the System (Go-Live)

Ratio Decidendi

Clauses 22 and 23 must be read together; clause 23 does not create a freestanding right to terminate that defeats clause 22's cure procedure. The Defendant performed part of the contract and substantial performance occurred (evidenced by Go-Live, extensive live usage and warranty regime); there was no total failure of consideration under s.40. The Plaintiff's termination was therefore invalid and constituted a constructive breach making the Defendant entitled to the unpaid contract balance (Amount 1). The claim for Amount 2 for additional works failed for lack of agreement, invoicing and primary records.

Court Disposition

Appeal 1132 dismissed; Appeal 1110 allowed in part

Orders

  • Appeal 1132 dismissed
  • Appeal 1110 allowed in part: Defendant awarded RM2,220,000.00 (Amount 1) with interest at 5% per annum from date of judgment until full settlement