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MALAYSIA: ESTOPPEL AND BREACH OF CONTRACT

15th May, 2020

In the Court of Appeal case of Mohamad bin S Ahmad & Ors v Lembaga Pengelola Dewan Bahasa dan Pustaka [2019] 9 MLJ 315, all partners of Darul Fikir, namely Mohamad Bin S. Ahmad, Sheikh Ahmad Bin Mohamad, Sheikh Mohammad Ayman Bin Mohamad and Sheikh Mohammad Syaamil Bin Mohamad (hereinafter referred to as “the Appellants”) appealed against decision of the High Court dated 7 August 2018, which dismissed the Appellants’ claim for an injunction to restrain Lembaga Pengelola Dewan Bahasa dan Pustaka (hereinafter referred to as “the Respondent”) from issuing an open tender to invite a third party to bid for a contract to publish and supply a book entitled “Mushaf Al-Quran Bertajwid dan Berwarna” (hereinafter referred to as “the Book”) without obtaining the Appellants’ written consent.

The Appellants are the exclusive distributors and also the copyright owners of the Book. The Appellants brought an action against the Respondent in the High Court of Malaysia for breach of the contract on 2 September 2016 between the parties when the Respondent issued the tender without the Appellants’ written consent. However, the High Court ruled that the Respondent did not breach the contract as the contract is for one-year duration which had already lapsed, and a supplemental contract had not been signed between both parties. The High Court also ruled that the contract had been duly performed and the Respondent had paid the Appellants in full. As such, there is no provision in the contract that prevent the Respondent from issuing the tender.

In the appeal, the issues for consideration was whether the Respondent can issue the tender without the written consent of the Appellants after the contract had expired, and whether the Respondent had expressly acknowledged and agreed that the copyright in the colour code of Book are conferred on the Appellants.

The counsel for Appellants emphasized that the Appellants’ claim against the Respondent is entirely on the breach of the contract, not concerning an infringement of copyright. The counsel for Appellants also highlighted the fact that both parties agreed that the Appellants are the copyright owners of the Book. On the other hand, the counsel for Respondent argued that the obligations under the contract are no longer enforceable between the parties as the contract had expired.

The Court of Appeal referred to the relevant provisions of the contract as follows:

  1. Recital (1) – Dr. Taha is the owner of the copyright in the colour code of the Book.
  2. Clause 13.1 – the copyright in the colour code of the Book are owned by the Appellants due to the fact that Darul Fikir is the exclusive distributor of the Book granted by the original copyright owner subject to the payment of royalty of honorarium.
  3. Clause 15.3 – allows for the Respondent at all times to appoint a third party to manage the publication, printing and supply of the Book provided that it had obtained prior written consent of the Appellants or the owner of the copyright in the colour code of the Book.

The Court of Appeal opined that there is an error of law in the approach of the High Court that no copyright of the Book is conferred on the Appellants pursuant to Clauses 13.1 and 14.1 of the contract.

The Court of Appeal also pointed out that the Respondent had initially agreed in Clause 13.1 of the contract that the copyright in the colour code of the Book are owned by the Appellants due to the fact that the Appellants are the exclusive distributor of the Book but was now denying the existence of the facts as represented by them in the contract.

The Court of Appeal held that the statements in Clauses 13.1 and 15.1 of the contract are statements of facts which parties are bound by estoppel from denying it, even if in fact the contract had expired. In addition, the Court had taken a view on the terms of the contract, whereby no one other than the Appellants are the owners of the copyright in the colour code of the Book and it would be inequitable based on the principle of estoppel for the Respondent to allow the third party to publish and supply the Book without the Appellants’ written consent even though the contract had expired. As a result, the Court unanimously decided that the appeal was allowed with cost and the High Court’s decision was set aside.