IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR (COMMERCIAL DIVISION)
SUIT NO. D22 NCC-280-2009
LTD … PLAINTIFF
EB TECHNOLOGIES (M) SDN. BHD.
GROUNDS OF DECISION (Enc. 7)
BEFORE HIS LORDSHIP TUAN ANANTHAM KASINATHER JUDGE HIGH COURT MALAYA
KUALA LUMPUR IN CHAMBER
DATE OF PROCEEDING: 18th JUNE 2010 – 9.00 AM
On or about 23rd February 2004, the Plaintiff agreed to provide the following services (the ‘services’) pursuant to the respective agreements stated below (collectively, the ‘services Agreements’):
a) Internet Exchange Service, pursuant to Application Cum Agreement for SingTel Internal Exchange Service dated 23rd February 2004 read with Terms and Conditions for the Provision of Access To Internet Through SingTel Internet Exchange (SingTel IX), and SingTel’s General Terms and Conditions of Service (Internet Exchange Agreement);
b) International Lease Circuit Service, pursuant to Service Request Cum Agreement for International Leased Circuit (ILC) Service entered into on or about 23rd February 2004 read with the Specific Terms and Conditions for International Lease Circuit Service, and SinTel’s General Terms and Conditions of Service (ILC Agreement) and
c) Retail DigiNet Service, pursuant to Service Request Cum Agreement for Retail Diginet Service dated 23rd February 2004 read with the Specific Terms and Conditions for Retail DigiNet Service, and SingTel’s General Terms and Conditions of Service (DigiNet Agreement)
to the Defendant.
The Services Agreements provide, inter alia that:
a) The Defendant shall promptly pay all fees and charges in connection with the Services when due and
b) The Defendant shall subscribe for each of the Services for a minimum term of one year (Minimum Service Period), failing which the Defendant shall pay the early termination charges prescribed in the Service Agreements (Early Termination Charges).
On 10th December 2004, some 3 months after having received and utilized the Plaintiff’s Services out of the contracted one year, the Defendant issued a letter to the Plaintiff’s Malaysian subsidiary and service representative n Kuala Lumpur, Information Network Services Sdn Bhd (INS), terminating the Services with the Plaintiff from 14th January 2005. In this letter, the Defendant expressly stated that “our last date of service shall be 13th January 2005”. The letter refers to the Defendant’s account number 24797067, which is the Defendant’s account number for the Services as billed under the Plaintiff’s invoices (Exh. ST 6 to Enc. 14).
It is not in dispute that for the Plaintiff to provide the Services in Malaysia, the Plaintiff is required to obtain a valid license granted under the Communications and Multimedia Act 1998 (Act). This is clearly stated in Section 126 of the
Communications and Multimedia Act 1998, which provides as follows:
Licensing of network facilities, network services and applications services.
i) Subject to such exemptions as may be determined by the Minister by order published in the Gazette, no person shall-
a) Own or provide any network facilities;
b) Provide any network services or
c) Provide any applications services
Except under and in accordance with the terms and conditions of-
a) a valid individual license granted under this Act or
b) a class license granted under this act
expressly authorizing the ownership or provision of the facilities or services.
ii) A person who contravenes subsection (i) commits an offence and shall, on conviction, be liable to a fine not exceeding RM 500,000 or to imprisonment
for a term not exceeding five years or to both and shall also be liable to a further fine of RM 1000 for every day or part of a day during which the offence is continued after conviction.
It is not in dispute that the Plaintiff does not have a license to operate in Malaysia under the Act.
The Plaintiff’s case
The Plaintiff’s case is that at no point of time, prior termination, did the Defendant question the validity of the services agreement or its liability to pay on the invoices issued by the Plaintiff. Indeed, the attitude of the Defendant was no different initially, after receiving the Plaintiff’s invoices incorporating its charges for services rendered prior termination and for early termination charges. After receiving these invoices, the Defendant entered into discussions with the Plaintiff to settle the outstanding payments. In emails in April and May 2005 the Defendant issued proposals to settle the outstanding amount (Exh. ST 7 to Enc. 14). The Plaintiff issued 6 invoices in respect of the outstanding services and early termination charges amounting to US $ 429,189.62 together with interest. However, the Defendant failed / refused to pay these invoices causing the Plaintiff to claim this amount and Enc. 7 is the Plaintiff’s application for summary judgment for this sum together with the interest and costs.
The Defendant’s case
The Defendant’s contend that the services agreements are invalid in law and therefore void and unenforceable. Counsel for the Defendant submitted that the services agreement including the internet exchange, the internet lease circuit and the retail DigiNet are subject to Sec. 126 of the Act. The Defendant’s case is that the Plaintiff by providing these services in Malaysia when not in possession of the requisite license, breached Sec. 126 and which breach rendered the services agreements to be null and void.
Based on the aforesaid, the Defendant submits that there are the following triable issues:
a) Whether all the Plaintiff’s Services (apart from Malaysia Half-Circuit) are in fact provided in Singapore and not Malaysia?;
b) Whether the Malaysia Half-Circuit Services applied by the Plaintiff for the Defendant, and provided by Maxis (license holder) is a way to circumvent the written law in Malaysia and hence against public policy? And
c) In any event, whether the Services Agreements are subject to the licensing requirement under the Act and whether the Plaintiff is required to hold such
license before entering the Services Agreements with the Defendant?
In this regard, Counsel for the Defendant submitted that an officer from Malaysian Communications And Multimedia Commissions should be called as a witness to testify on the aforesaid issues, in particular, as to whether the Services Agreements are subject to the licensing requirements of the Act.
At the outset, I wish to highlight that although Counsel for the Defendant raised numerous issues as amounting to triable issues for the purposes of the Plaintiff’s application for summary judgment, in the course of his oral submissions, Counsel made it known to the Court that he was relying on one issue only. This was the issue of illegality arising from the possible breach of Sec.126 of the Communications and Multimedia Act.
After a careful examination of the numerous affidavits filed by both parties, I am satisfied that the services provided by the Plaintiff except for the segment involving the International Lease circuit service comprising of a Malaysia Half Circuit of the International private Lease line connecting Singapore and Malaysia, were, all services provided in Singapore and not in Malaysia. Consequently, the question of either the Services
Agreements or the Plaintiff being in breach of Sec. 126 of the Act does not arise, in respect of these services. Any possible breach of Sec. 126 can only arise with regards to the Malaysian Half Circuit segment, as this Half Circuit interconnects with the Plaintiff’s network at the causeway between Singapore and Johor and is packaged as part of the services in order for the Defendant to access to the Plaintiff’s services in Singapore.
In my judgment, in order for this Court to rule illegal the services provided by the Plaintiff in the Malaysian Half Circuit segment, this Court must be satisfied of the Plaintiff’s intention to provide these services itself over the Malaysian Half Circuit or that, in any event, the Plaintiff did provide this service over the Malaysian Half Circuit, when not licensed to do so. The Defendant essentially relied upon the Plaintiff’s invoices which incorporated charges for services rendered in Malaysia as affording evidence of such services having been provided by the Plaintiff. The Plaintiff’s response to this is that prior execution of the services agreements, conscious that it could not provide this service over the Malaysian Half Circuit without contravening Sec. 126 of the Act, it entered into an agreement known as the One Stop Shopping Agreement dated 20th January 2000 with Maxis (OSS Agreement) (Exh. ST 9 of Enc. 14). The effect of the OSS Agreement is that with regards to any request from the Defendant for services within the Malaysian Half Circuit, Maxis International Sdn. Bhd. a licensed
telecommunications provider in Malaysia was to provide the services.
To facilitate the use by the Defendant of Maxis’s services in the Malaysian Half Circuit whilst being billed by the Plaintiff in one bill for such services, the Plaintiff incorporated a clause in the ILC Agreement. This clause 7.1 of the ILC Agreement provides as follows:
‘The customer hereby appoints SingTel as its duly authorized agent (agent) and gives SingTel full power and authority to order, purchase, hire and lease any local or international private wire or date lines or any services or facilities on the Customer’s behalf from any carrier or telecommunications services provider in any Territory, if so required by any such carrier or telecommunication service provider or any laws or regulations applicable in the relevant Territory’
Clause 7.1 operated in this manner. The Defendant when requiring services over the Malaysian Half Circuit could approach either the Plaintiff or Maxis to purchase the service, instead of having to approach both operators separately to provide their respective half-circuits that interconnects at the causeway. Under the OSS Agreement, the operator which is approached to arrange the entire full circuit between the two
countries will make the necessary arrangements with the operator in the other country to facilitate the link, and will bill the customer the charges for both half circuits (its own and that of the other operator) under one common bill. No longer will the customer receive two separate bills from the two operators. The Defendant when applying for the service would still however be required to complete each operator’s respective application forms in respect of the service. Each operator will be responsible for providing its respective half-circuit using its own infrastructure.
In this respect, the Defendant approached the Plaintiff to arrange the same on its behalf as part of the full circuit from Malaysia to Singapore to connect with and access Maxis’s Services in Malaysia. For this purpose, the Defendant duly completed and executed Maxis’s application form for the Malaysian Half-Circuit as required by the OSS Agreement before handing the same over to the Plaintiff to arrange the service on its behalf pursuant to Clause 7 of the ILC Agreement (Exh. ST 10 of Enc. 14).
Upon the Defendant’s instructions to procure the Malaysian Half- Circuit from Maxis, the Plaintiff would approach Maxis on the Defendant’s behalf and bill the Defendant for the same under the framework of Clause 7.1 of the ILC Agreement and the OSS Agreement.
In my judgment, it is evident from an examination of the framework under which the Plaintiff provided services to the Defendant in respect of the Malaysian Half Circuit that the services were provided by Maxis, a licensed
Telecommunication provider in Malaysia. Since the services within the Malaysian Half Circuit segment was provided by Maxis and not the Plaintiff, clearly the Plaintiff cannot be said to have contravened sec. 126 of the Act. To the extent that clause 7.1 of the OSS agreement contemplated this service being provided by Maxis, from the outset, it could not conceivably have been the intention of the Plaintiff to provide the services itself, since the agreement itself contemplated the services within the Malaysian Half Circuit being provided by a licensed telecommunications operator. This framework affords the explanation as to why the services provided by Maxis in Malaysia formed part of the charges payable by the Defendant being included in the Plaintiff’s bill. Accordingly, in my opinion, there is no merit in the Defendant’s claim that the agreements are null and void. Neither is there any merit in the claim that the services in Malaysia were provided by the Plaintiff. That the agreements are valid is reinforced by the conduct of the Defendant. The affidavit evidence reveals that the Defendant raised the issue of the illegality for the first time only after the Plaintiff threatened to commence legal proceedings to recover the amounts in the invoices.
As the only issue raised by the Defendant is devoid of merit, I hereby grant the Plaintiffs leave to sign final judgment against the Defendants in terms of prayers (1), (2) and (3) of Enc. 7. I order the Defendant to pay costs of RM 350 to the Plaintiff.
(Y.A Tuan Anantham Kasinather)
Pesuruhjaya Kehakiman Mahkamah Tinggi Kuala Lumpur
Date of Decision: 18th June 2010
Mr. L. K. Mak
(Tetuan Kadir Andri & Partners) … for the Plaintiff
Mr. C.J. Siew
(Tetuan Douglas Yee) … for the Defendant