1. ) Kusatex Sdn Bhd v Wira Foam Industries Sdn Bhd (BA-12BNCvC-25-05/2024)

This is the Appellant/Defendant’s appeal against the decision of the Sessions Court delivered on 29 April 2024. The Sessions Court allowed the Respondent/Plaintiff’s claim and awarded the Plaintiff the sum of RM576,285.79 for supplying hospital linen materials to the First Defendant. The Appellants' counterclaim and third-party proceedings were dismissed.

For ease of reference, the parties will be referred to as they were in the Court below.

The Learned Sessions Court Judge (SCJ) decided that a valid contract existed between the Plaintiff and the First Defendant and also found the Second Defendant jointly liable based on an alleged oral undertaking.

Having carefully examined the evidence presented and the written submissions by both parties on appeal, I am satisfied that the Plaintiff failed to prove the existence and validity of any binding contract between the parties. I therefore allowed the Defendants’ appeal on the main claim but upheld the dismissal of the Defendants’ counterclaim.

The Plaintiff, Wirafoam Industries Sdn Bhd, is in the business of supplying textiles and fabrics. The First Defendant, Kusatex Sdn Bhd, also engages in textiles, while the Second Defendant, Shafiqurrahman bin Haji Shamsuddin, is its director.

The Plaintiff’s claim before the Sessions Court was for RM576,285.79, alleged to be the outstanding price of goods supplied to the First Defendant between 10 February 2018 and 5 September 2018. The Plaintiff’s pleaded case was that 19 purchase orders (POs) had been issued by the First Defendant to the Plaintiff for the supply of fabric, and that 127 invoices were subsequently issued for payment.

The Defendants denied the claim and argued that there was no valid or enforceable contract, as the alleged POs were issued without proper authority and without the Second Defendant’s approval. The Defendants also counterclaimed for conspiracy to defraud and unlawful interference.

The Respondent did not tender any of the 127 invoices, nor any delivery orders or packing lists to prove that the alleged goods were indeed delivered to the Defendants’ customers. The only documents produced were copies of the 19 POs, which the Defendants disputed as being unauthorised.

The Defendants argued that the learned SCJ made an error in law and fact by concluding that a binding contract existed between the parties, as the Plaintiff failed to discharge the burden of proof under sections 101 and 102 of the Evidence Act 1950, given that no documentary evidence of delivery (such as the 127 invoices or delivery orders) was presented.

The Defendants argued that a POs merely constitutes an offer under section 2(a) of the Contracts Act 1950, which must be accepted by the offeree either in writing or through conduct. In this case, there was no written acceptance nor any proof of delivery to demonstrate acceptance by conduct.

The Defendants further argued that the learned SCJ failed to apply section 114(g) of the Evidence Act 1950 when drawing an adverse inference against the Plaintiff for concealing material evidence, namely the 127 invoices and delivery orders that would have proved delivery and acceptance.

Regarding the 19 POs, the Defendants argued that these were invalid because they were signed by individuals lacking authority, namely SP2 and the Third Party. They asserted that this was done without the knowledge or approval of the Second Defendant. Testimonies from SD1, SD2, and SD3, former general managers of the First Defendant, confirmed that all POs for purchases from external suppliers required the prior approval and signature of the Second Appellant.

Regarding the oral undertaking, the Defendants argued that there was no evidence of any personal guarantee by the Second Defendant. The Plaintiff did not produce any written undertaking, and the alleged oral promise lacked supporting corroborative proof. The Appellants cited Giga Engineering & Construction Sdn Bhd v Yip Chee Seng & Sons Sdn Bhd & Anor [2015] 6 MLJ 449 and Globeway Lagoon Sdn Bhd v Pasaraya St Bb Sdn Bhd & Ors [2024] MLRHU 1552, arguing that there were no pleaded or proven allegations of fraud or exceptional circumstances to justify piercing the corporate veil.

Regarding the counterclaim, the Defendants argued that there is sufficient evidence of a conspiracy between the Plaintiff, SP2, and the Third Party to injure the First Appellant’s business, as pleaded in detail at paragraphs 21 to 22 of the Statement of Defence and Counterclaim. A police report lodged by the Second Defendant on 24 May 2021 supported these allegations.

The Defendants contended that the learned SCJ failed to appreciate this evidence and made an error in dismissing the counterclaim.

The Plaintiff, on the other hand, argued that the existence of a binding contract was established through the 19 POs and the evidence of SP1 and SP2. SP2 confirmed that she prepared and sent the POs to the Plaintiff with the authority of the Second Appellant, while SP1 testified that the Plaintiff had delivered the fabrics to Edgenta, the First Defendant’s customer.

The Plaintiff contended that the Defendants’ reliance on the lack of invoices or delivery orders was unfounded, as the business dealings were based on a long-standing trust between the parties, and delivery was verified by packing lists sighted by SP2. The POs, it was claimed, indicated ongoing commercial dealings and were sufficient to infer a valid contract.

The Plaintiff further contended that the Second Defendant was personally liable based on his oral undertaking to settle the First Defendant’s debt. Reliance was placed on the case of Central Cables Bhd v Tan Kim Lien [2006] 6 MLJ 10, where the court held that an oral undertaking is enforceable if proved by credible testimony.

On the counterclaim, the Plaintiff argued that there was no credible evidence of conspiracy or fraud. The police report lodged by the Second Defendant was inconclusive, and no criminal proceedings were initiated. The Plaintiff maintained that the learned SCJ correctly found no proof of collusion or unlawful interference with the First Defendant’s trade.

The appellate jurisdiction of this Court is governed by well-established principles. An appellate court should be slow to disturb findings of fact made by a trial judge who had the benefit of observing witnesses' demeanour. Interventions are only justified if the decision is “plainly wrong” or demonstrates an “insufficient judicial appreciation of the evidence” (see: Sivalingam a/l Periasamy v Periasamy & Anor [1995] 3 MLJ 395, Gan Yook Chin & Anor v Lee Ing Chin & Ors [2004] 4 CLJ 309, Ng Hoo Kui & Anor v Wendy Tan Lee Peng (administratrix for the estate of Tan Ewe Kwang, deceased) & Ors [2020] 12 MLJ 67).

It is trite law that appellate intervention is warranted if the trial judge fails to evaluate the evidence and issue before him in its entirety and makes bare findings of fact with no justifiable reason to substantiate them (MMC Oil & Gas Engineering Sdn. Bhd. v Tan Bock Kwee & Sons Sdn. Bhd. [2016] 2 MLJ 428). Upon perusal of the cause papers and having considered the written and oral submissions by the parties, I find the findings of the learned SCJ are plainly wrong and therefore, an appellate intervention is warranted. My reasons are as follows:

The first and most crucial issue is whether the Plaintiff had proved the existence of a valid and binding contract between itself and the First Defendant. This forms the foundation of the Plaintiff’s claim and constitutes the “first hurdle” that the Plaintiff needed to overcome.

The Plaintiff’s case largely depended on the testimony of SP1, Affandy Chin Bin Abdullah (Plaintiff's Manager), and SP2, Hasfariza Binti Hassan (the First Defendant’s former purchasing executive), as well as on the 19 POs allegedly issued by the First Defendant. SP2 claimed to have prepared and emailed these POs to the Plaintiff. However, the Plaintiff’s evidence did not extend beyond mere assertions that the POs were issued.

The Plaintiff cannot rely solely on the existence of the POs to prove a binding contract. Under Section 2(b) of the Contracts Act 1950, acceptance must be clearly established either by conduct or communication. In the absence of delivery evidence, no valid acceptance of the POs by the Plaintiff has been proven. Mere oral assertions by SP1 and SP2 fall short of satisfying this evidentiary burden.

The Defendants also argued that, if the Plaintiff relied on conduct to prove acceptance, it must provide documentary evidence showing that the goods ordered were indeed delivered, such as the delivery orders, packing lists, or the 127 invoices which the Plaintiff itself pleaded. This was never provided.

The lack of such vital documentary evidence is detrimental. During cross-examination, SP1 admitted that although 127 invoices were allegedly issued, none were presented in court.

Moreover, SP2, who was alleged to have issued the POs under SPK1’s (the Third Party, Roslan) or the Second Defendant’s authority, admitted that she had never seen any delivery orders and solely relied on a “packing list,” which was also not produced as evidence. Her testimony therefore failed to verify actual delivery or receipt by the First Defendant.

The Defendants properly invoked section 114(g) of the Evidence Act 1950, urging the Court to draw an adverse inference against the Plaintiff for withholding material evidence in its possession. The Plaintiff never explained the absence of invoices and delivery orders, despite relying on them as the basis of its claim.

The Plaintiff’s argument that its long-standing business relationship with the Defendants justified reliance on oral dealings and POs could not replace the need for proper proof of contract. This Court agrees with the Defendant's point that business familiarity cannot substitute for documentary proof of offer, acceptance, and performance as required by law.

In contrast, the evidence presented by the Defendants showed that the POs were not authorised by the Second Defendant. The Defendants’ witnesses, including SD1 (the Second Defendant), SD2, and SD3 (former General Managers), testified that all POs required the Second Defendant’s signature or explicit approval before they could be issued.

The Defendants’ case was further supported by the cross-examination of SPK1, who admitted that he did not obtain the Second Defendant’s approval before issuing the disputed purchase orders.

Having considered all of the evidence, I find that the Plaintiff failed to discharge its burden of proof under sections 101 and 102 of the Evidence Act 1950. There was insufficient evidence of a valid acceptance or of performance by delivery. Without proof of delivery or invoices, there was no consideration to support the alleged agreement, making the Plaintiff’s claim legally unsustainable. The learned SCJ has erred in accepting mere assertions unsupported by documentary evidence.

Regarding the Defendants’ counterclaim for conspiracy and unlawful interference, I agree with the learned SCJ that the evidence did not meet the required standard. Although allegations of collusion between the Plaintiff and the Third Party were made, no independent or corroborative evidence was presented. The burden of proof rests on the Defendants to establish such tortious acts on a balance of probabilities, which they failed to do. Consequently, I upheld the dismissal of the counterclaim.

Accordingly, this Court finds that the Plaintiff failed to prove on a balance of probabilities that the goods were ever delivered or that the alleged contract was performed. On this fundamental ground, I allowed the Defendants’ appeal against the Sessions Court’s decision on the main claim.

However, I agreed with the learned SCJ that the evidence did not substantiate the Defendants’ counterclaim for conspiracy and unlawful interference.

For the foregoing reasons, the Defendants’ appeal is allowed partially. Accordingly, I order that the Defendants’ appeal on the main claim be allowed with costs of RM15,000.00 for herein and below. The counterclaim remains dismissed with costs of RM10,000.00. Dated 30 OCTOBER 2025 -sgd-JAMHIRAH ALI JUDGE HIGH COURT OF MALAYA SHAH ALAM SELANGOR DARUL EHSAN To the parties’ solicitors: For the Appellant : Wilson Wong Fu Sheng & Rayveni A/P Asogan (Messrs Sean Dudley & Associates) For the Defendant : Tawfiq bin Affandy Chin & Muhammad Hafiz bin Hood (Messrs Hafiz Ruzaini & Co)