Westports Holdings Bhd’s wholly-owned subsidiary Westports Malaysia Sdn Bhd has commenced legal proceedings against Oracle Corp Malaysia Sdn Bhd and Bank of America Malaysia Bhd (BoA) over the termination of two agreements.
The group explained that it subscribed to Oracle ERP software system via two agreements, one for Oracle Cloud Services agreement which entails an license fee of RM15.7 million to Oracle.
The other agreement was with Oracle and a contract for its outsource partner for the implementation of Oracle’s software system and a payroll system that amounted to RM15.3 million.
Westport stated that the software provider subsequently assigned the first agreement to BoA and that it is required to pay the license fee directly to the bank.
The software system project commenced in February 2019. During the user acceptance testing phase, the group observed either data discrepancy or an inability of the system to execute the purported requirements.
Eventually, Westports terminated the two agreements on December 30, 2019 after highlighted technical requests remained outstanding and it could not go-live with the systems.
Prior to the terminations, it had paid RM6.8 million.
After the termination, the group received a letter of demand from BoA for RM600,000 and Oracle made a counterclaim of RM4.1 million for services rendered.
Westports is disputing the counterclaim on the basis that the two agreements have been terminated, and that the system could not proceed to go-live despite the purported completed milestones.
The group has sought the courts to declare that the terminated agreement has negated its obligation to pay the bank and the case management has been fixed at the Kuala Lumpur High Court on July 8, 2020.