1. ) Safwa Global Builders Sdn. Bhd. v Hanson Quarry Products Sdn. Bhd. (JB-12ANCC-4-07/2022)

SAFWA GLOBAL BUILDERS (M) SDN. BHD. (No. Syarikat:

BIBI NOORMALA BINTI CHE ALI (No. K/P: 760709-03-5430)

MOHD HALIFI BIN ARSHAD (No. K/P: 861223-23-5873) … APPELLANTS DAN HANSON QUARRY PRODUCTS SDN. BHD. (No. Syarikat: 13533-K) … RESPONDENT (IN THE SESSIONS COURT AT BATU PAHAT IN THE STATE OF JOHORE DARUL TAKZIM, MALAYSIA CIVIL SUIT NO.: JC-B52NCC-22-08/2021) Antara HANSON QUARRY PRODUCTS SDN. BHD. (No. Syarikat: 13533-K) … PLAINTIFF

SAFWA GLOBAL BUILDERS (M) SDN. BHD. October 27, 2022 2 (No. Syarikat: 929073-H) … FIRST DEFENDANT

BIBI NOORMALA BINTI CHE ALI (No. K/P: 760709-03-5430) … SECOND DEFENDANT

MOHD HALIFI BIN ARSHAD (No. K/P: 861223-23-5873) … THIRD DEFENDANT CORAM: SURIA KUMAR A/L DURAIRAJ JOHNSON PAUL JUDICIAL COMMISSIONER  JUDGEMENT  INTRODUCTION [1] This is an Appeal by the Defendants against the decision of the Learned Sessions Court Judge in allowing the Plaintiff’s application for summary judgement pursuant to Order 14 Rule 1 of the Rules of Court 2012 in the sum of RM752,949.86 with interest on the sum RM685,411.88 at the rate of 1.5% per month on the said sum from 26.7.2021 till full settlement and cost RM4,000.00. BACKGROUND FACTS [2] The Plaintiff is in the business of supplying quarry products. [3] The First Defendant is involved in General Construction. October 27, 2022 3 [4] The Second and Third Defendants are directors and shareholders of the First Defendant company. [5] The First Defendant applied for a credit account with the Plaintiff to purchase quarry products. The application was signed by the Second Defendant on behalf of the Plaintiff. [6] The Second and Third Defendants executed a Letter of Guarantee and Indemnity dated 08.12.2016 to personally guarantee payments due to the Plaintiff from the First Defendant in respect of the credit facility for the supply of quarry products to the First Defendant. [7] Thereafter, Plaintiff issued a Letter of Offer dated 24.3.2017 to the First Defendant containing the terms and conditions of the credit facility. The terms and conditions were duly accepted by the First Defendant. [8] The credit term given to the First Defendant was sixty (60) days from the date of the invoice and late payment charges at the rate of 1.5% per month will be imposed from the expiry of the said sixty (60) day period on the outstanding sums due to the Plaintiff. [9] As the request of the First Defendant, Plaintiff sold and delivered quarry products for the value of RM719,263.69. [10] The First Defendant failed to settle the sum RM719,263.69 in accordance with the credit terms given to them. [11] The sum RM719,263.69 become due and owing to the Plaintiff together with late payment charges in the sum of RM67,537.98 due October 27, 2022 4 to failing to settle within the credit period. Hence the total outstanding um due from the First Defendant to the Plaintiff is RM786,801.67 (RM719,263.69 + RM67,837.98). [12] A part payment was made by in the sum of RM33,851.81 towards the said outstanding sum leaving a balance RM752,949.86. [13] Plaintiff pleads the Second and Third Defendants are liable to pay the sum RM752,949.86 owed by the First Defendant to them pursuant to the Letter of Guarantee and Indemnity executed by the Second and Third Defendants. [14] Defendants were given ample time to settle the outstanding sum but they failed to do so. [15] Plaintiff served a notice of demand on the First Defendant dated 8.12.2020. First Defendant replied this notice via their letter dated 23.02.2021 by proposing to pay Plaintiff the sum RM757,715.02 in four (4) instalments commencing April, 2021. [16] However, there was no settlement forthcoming on the outstanding sum by the Defendants and Plaintiff made another demand on the Defendants via their solicitors notice of demand dated 26.07.2021. [17] The applicable law with regards to Application for Summary Judgement pursuant to Order 14 Rules of Court 2012 is trite. [18] In BANK NEGARA MALAYSIA V. MOHD ISMAIL [1992] 1 CLJ 627, the Supreme Court held that the duty of a judge does not end as soon as the fact is asserted by one party, or denied or disputed October 27, 2022 5 by the other on affidavit. The judge has a duty to reject if such assertion or denial is equivocal or lacking in precision or is inconsistent with undisputed contemporary documents or is inherently improbable. The Court will have to identify the issues of fact or law and to determine whether they are triable. It is therefore, incumbent on this Court to examine the issues raised by the 1st Defendant in resisting the application. [19] Defendants raised several issues in the Court below but the learned Sessions Judge upon considering the Affidavit evidence and submissions by parties decided that there were no triable issues. [20] As this appeal is by way of rehearing before me, I will deal with each of the issues raised by the Defendants. [21] As at date of hearing of the application for Summary Judgement in Court below, Defendants had yet to file their Statement of Defence. [22] Each Defendants filed an Affidavit in Reply to oppose the Plaintiff’s application for Summary Judgement. However apart from their averments in the respective Affidavits in Reply, they did not produce any documentary evidence to oppose the Plaintiff’s application. DELAY [23] The issue of delay was never raised by the Defendants in their Affidavits. It is only raised during their submissions. [24] Plaintiff explained in their submissions in Court below that the application for summary judgement was only filed on 17.02.2022 October 27, 2022 6 after the Defendants had successfully on 27.01.2022 set aside the Default Judgement dated 09.09.2021 entered against them. The Defendants had yet to file their Defence and the Plaintiff proceeded to file their application for summary judgement. As such, the Court finds there is no delay in filing of this Order 14 application. [25] Further Court is of the view that delay per-se is not a sufficient reason to dismiss an Order 14 application. The Court of Appeal in PERKAPALAN SHAMELIN JAYA SDN BHD V ALPINE BULK TRANSPORT NEW YORK [1998] 1 CLJ 424 speaking through Gopal Sri Ram JCA (as he then was) had this to say on the issue of delay: - “[1] There is no authority for the proposition that a plaintiff's summons for summary judgment may be defeated solely on the ground of delay in making the application. Such a proposition runs counter to the interests of justice. Delay is not an answer to an application made under O. 14 of the RHC where there are no bona fide triable issues. [1a] Although the primary intention of O. 14 r. 1 of the RHC may be that an application should be made before a defence has been delivered in the ordinary course, yet it is not in all cases compulsory. A plaintiff is not necessarily too late in making his application under O. 14 r. 1 of the RHC merely because a defence has been delivered.” October 27, 2022 7 NON-PRODUCTION OF PURCHASE ORDERS [26] Defendants contend the Plaintiff failed to produce Purchase Orders in support of their claim. As such, Defendants do not know who ordered the goods. [27] Plaintiff in their reply say that the First Defendant had taken delivery of the goods. A perusal of the Delivery Orders shows that it was received by the First Defendant. This is evident from the First Defendant’s company rubber stamp or from the rubber stamp of their site supervisor placed on the Delivery Orders produced by the Plaintiff. [28] According to the Plaintiff, Invoices were also sent to the First Defendant. Plaintiffs said Invoice contains an endorsement which states that the First Defendant is to notify the Plaintiff of any discrepancy within 30 days. [29] Defendants failed to produce any documentary evidence to show that they had raised objections to the quarry products supplied and delivered by the Plaintiff to the First Defendant. Further Defendants could have easily requested from the Plaintiff for the said Purchase Orders but they failed to do so. They cannot expect Plaintiff to volunteer information. [30] Court finds that not only did the Defendants failed to raise any objections, they had also admitted in writing owing RM757,715.02 to the Plaintiff via the First Defendant letter dated 23.02.2021 to the Plaintiff and proposed to settle the said sum in four (4) instalments commencing April, 2021. This letter was signed by the Second October 27, 2022 8 Defendant as the Managing Director of the First Defendant. The First Defendant’s said letter was in response to a demand dated 8.12.2020 from the Plaintiff to the First Defendant to settle the sum RM757,715,02. [31] As such, Court finds the production of the Delivery Orders and Invoices is sufficient to prove that the quarry products were indeed sold and delivered to the First Defendant by the Plaintiff and there is no necessity for the production of the Purchase Orders. Furthermore, the balance outstanding sum is not disputed and admitted by the First Defendant in their letter dated 23.02.2021 to the Plaintiff. PART PAYMENT FOR THE SUM RM 33,851.81 [32] According to the Defendants, it was not them who paid the part payment in the sum of RM33,851.81 towards the outstanding sum and this payment could have been made by their contractors. In short, Defendants do not dispute the amount RM33,851.81 as part payment towards the outstanding sum but their dispute is as to who was the payor. [33] Plaintiff plead in their claim that upon considering part payment RM38,851.81, balance outstanding due from the Defendants is RM752,949.86. [34] As stated above, First Defendant vide their letter dated 23.2.2021 signed by the Second Defendant admitted to the sum RM752,949.86 as due and payable to the Plaintiff. If the Defendants October 27, 2022 9 now say they did not make part payment for RM38,851.81, why then they admit to RM752,949.86 as the balance outstanding sum. [35] Further, Court is of the view that it is of no concern of the Plaintiff as to who made this part payment towards the outstanding sum. Likewise, the arrangement between the First Defendant and their contractors with regards to any outstanding payments due to suppliers is also of no concern to the Plaintiff. [36] Court also notes that the First Defendant has averred in paragraph 16 of their Affidavit for Reply affirmed by the Second Defendant that they could have made part payment RM33,851.81 accidentally without knowing it. [37] Court is of the view that the identity of the payor of the part payment is not a triable issue in light of the admissions made by the Defendants on the outstanding sum and the fact that it has benefited the Defendants by reducing the outstanding sum. CREDIT LIMIT OF RM200,000.00 [38] Defendants contend that the credit limit granted by the Plaintiff to the First Defendant for the supply of quarry products is only up to RM200,000.00. [39] The Defendants contend that the Plaintiff failed to obtain the First Defendant’s consent before supplying the quarry products for more than RM200,000.00 in value. October 27, 2022 10 [40] According to the Plaintiff, vide their Letter of Offer dated 24.3.2017, they have notified the First Defendant that they have full discretion to revise the credit limit at any time. [41] The First Defendant at no point of time objected to the Plaintiff supplying quarry products for more than RM200,000.00. Neither did the Second and Third Defendants as directors of the First Defendant object. The Second and Third Defendants never asked the Plaintiff for any information as to why they had supplied for more than RM200,000.00. There was no communication between them up to the date of demand. They cannot expect Plaintiff to volunteer information. [42] In any event, First Defendant took delivery of the quarry products supplied by the Plaintiff in the sum of RM719,263.69 and vide their letter dated 23.2.2021 which was signed by the Second Defendant admitted that this sum together with the late payment charges (RM67,837.98) less part payment (RM38,851.81) as being due and owing to the Plaintiff and proposed to settle by way of four (4) instalments. DISCHARGE OF THE SECOND AND THIRD DEFENDANTS AS GUARANTORS DUE TO VARIANCE IN THE CREDIT LIMIT. [43] Second and Third Defendants contend that due to the variance of the credit limit in excess of RM200,000.00 without their consent as sureties, they are discharged as sureties as to transactions subsequent to the variance. In support of their contention, they rely on Section 86 of the Contracts Act, 1950. October 27, 2022 11 [44] Whereas Plaintiff submits that the Letter of Guarantee and Indemnity executed by the Second and Third Defendants is a Continuing Guarantee and they remain liable for the sums in excess of the credit limit RM200,000.00. [45] Clauses 1, 3, 4 and 5 of the said Letter of Guarantee and Indemnity provides as follows: - “1. In consideration of you, Hanson Quarry Products Sdn Bhd a company incorporated in Malaysia (“Hanson”), at my/our request having supplied or agreeing to supply or continue to supply goods and/or having given or agreeing to give or continue to give credit, for so long as Hanson deems fit, to Safwa Global Builders (M) Sdn. Bhd. …… …

This Guarantee shall be a continuing security for all monies whatsoever now or hereafter owing to Hanson by the Customer whether alone or jointly and severally with another or others and whether as principal or surely notwithstanding that the Customer may at anytime or times cease to be indebted to Hanson for any period or periods and notwithstanding any settlement of account or accounts or otherwise.”

Hanson may at any time, without affecting its rights against the Guarantor determine enlarge or vary any credit or terms of credit … October 27, 2022 12

… This Guarantee shall not be affected by nor shall the Guarantor be released or exonerated by any variation, exchange, … [Emphasis added] [46] The Letter of Guarantee and Indemnity executed by the Second and Third Defendants does not provide that it is a limited guarantee or fixed guarantee up to RM200,000.00 only. [47] As such, the Second and Third Defendants being directors of the First Defendant company remain liable for the supply of quarry products to the First Defendant beyond the credit limit RM200,000.00 pursuant to the Guarantee and Indemnity executed by them in favour of the Plaintiff. [48] Court finds that there is no merit in the Second and Third Defendants argument. Section 82 of the Contracts Act 1950 provides that “A guarantee which extends to a series of transactions is called a “continuing guarantee”. [49] Further, as to whether the Guarantee executed by the Second and Third Defendants herein is a continuing Guarantee, Court also finds guidance in the case of HENG CHENG SWEE V. BANGKOK BANK LTD [1976] 1 LNS 179. Hashim Yeop Sani J. (as he then was) in the High Court decided as follows:- “The consideration in the guarantee in question is stated clearly in cl 1 thereof as follows:- October 27, 2022 13 In consideration of the Bangkok Bank Ltd (hereinafter called ‘the Bank’ making or continuing advances or otherwise giving credit or affording banking facilities for as long as the Bank may think fit to Malaysian Timber & Granite Products Ltd of Nos 121-1B, Jalan Imbi, Kuala Lumpur (hereinafter called ‘the principal’) I, the undersigned, Heng Cheng Swee, Advocate and Solicitor, Kuala Lumpur, hereby jointly and severally.... In the words of Lord Lyndhurst LC in Clifford v. Turrell [1845] 14 LJ Ch 390 at 397: ... the settled rule of law is, that you may prove a further consideration stated on the face of the deed. You cannot be allowed to prove a consideration inconsistent with it, but you may prove another which stands with it. In this case the defendant would seem to be urging the Court to believe in the existence of a different consideration from that stated in the guarantee in question which in my view should not be entertained. The fact that the defendant’s guarantee is a continuing guarantee is not doubted because of the express words used in the contract itself in cl. 3 and 4 of the guarantee in question. It is clearly provided in cl 1 that the defendant would pay for “every sum and sums of money which are now or shall at any time be owing or remaining due and unpaid to the bank anywhere on any account whatsoever.” It is an established rule that a continuing October 27, 2022 14 guarantee is not affected by an payment in for it is framed to secure the final debit balance. This liability is expressly provided in the guarantee in question. I fail to see how this proposition can be read against the express words of the guarantee in question. Clause 9 of the guarantee itself provides that that guarantee shall be in addition to and shall not be in any way prejudiced or affected by any collateral or other security now or thereafter held by the plaintiffs.” [50] Whereas on appeal to the Federal Court, Suffian LP held as follows:- “The defendant has signed a continuing guarantee, guaranteeing the overdraft existing at the time when he signed the letter of guarantee as well as overdrafts to be made in the future. There is not a word in the guarantee limiting the guarantee only to the amount of the overdraft existing on the date of the letter of guarantee. Clause 7 whereby the defendant agreed to the bank “enlarging” the company’s overdraft is not in my opinion an attempt to contract out of s. 86; on the contrary, it is an attempt to comply with it, agreeing on the date the letter of guarantee was signed to the bank increasing the company’s overdrafts in the future. It is said on behalf of the defendant that he could not on that date agree to an increase in the overdraft when the amount of the increase was not then known. With respect I do not agree. In my view to adopt such an argument in relation to overdraft guarantees would be to adopt too legalistic an attitude, and would result in grave inconvenience to the business of lending money by October 27, 2022 15 banks. With respect, the judgment in the Bombay case was right, for there the plaintiffs had varied the terms of their contract with their sub agent and there was nothing in their agreement with the second defendant empowering them to do so. Here on the other hand there was a provision in the letter of guarantee empowering the bank to do so, namely cl. which is not inconsistent with s. 86.” [51] And Lee Hun Hoe FJ held as follows:- “Defendant failed in his attempt to show that the guarantee had been varied and, therefore, he was discharged from his liability. Clause 1 of the guarantee indicates the consideration quite unambiguously. In the words of Lord Lyndhurst LC in Clifford v. Turrell [1845] 14 LJ Ch 390, 397. ...the settled rule of law is, that you may prove a further consideration stated on the face of the deed. You cannot be allowed to prove a consideration inconsistent with it, but you may prove another which stands with it. The guarantee is clear. There is nothing to suggest that plaintiff as banker cannot advance MTGP above the limit of guarantee.” [52] Please also see HABIB BANK MALAYSIA BERHAD V FAST TRAVEL SDN BHD [1988] 1 LNS 82 and DCB BANK BHD V PRO-VEST SDN BHD [1999] 1 LNS 368. October 27, 2022 16 [53] Wherefore the Letter of Guarantee and Indemnity executed by the Second and Third Defendants is a continuing Guarantee and they are liable for the outstanding sums due and owing from the First Defendant to the Plaintiff. FAILURE TO MAKE A DEMAND ON THE SECOND AND THIRD DEFENDANTS [54] The Second and Third Defendants contend that the Plaintiff failed to make a prior demand against them. [55] However, this issue is not raised in their Affidavits in Reply. Neither was a Statement of Defence filed raising this issue. [56] The Plaintiff pleaded in paragraph 15 of their Statement of Claim and in paragraph 19 of their Affidavit in Support that a demand was served on the Defendants through their solicitors for the balance outstanding sum but the Defendants failed to settle the same. [57] Although the said notices of demand were not produced by the Plaintiff, there was no denial of these paragraphs by the Second and Third Defendants in their Affidavits in Reply. Therefore, the Second and Third Defendants is deemed to have admitted this fact. The Supreme Court in the ALLOY AUTOMOTIVE SDN BHD V PERUSAHAAN IRONFIELD SDN BHD [1980] 1 CLJ 2 held as follows:- “In his affidavit dated 30 April 1984 Choo Chak Low did not answer the matters raised in the above affidavit of Liew Mook. There is force in the appellant’s contention that an affidavit October 27, 2022 17 must reply specifically to allegations, and if it does not, then those allegations not replied to must be taken to have been accepted. In Dawkins v. Prince Edward of Saxe Weimar [1875-76] 1 QBD 499 Blackburn J stated: ... Now, upon that, if that is the true state of the case, we are of opinion that no cause of action can be shewn. Colonel Dawkins does not meet that in the affidavit in reply...” [Emphasis added] [58] Court is of the view that the Second and Third Defendants ought to have averred expressly in their Affidavits in Reply that no notices of demand were served on them prior to the Plaintiff filing this action. [59] As such, the Second and Third Defendants are estopped from raising this issue now and is deemed to have admitted to the same. THIRD DEFENDANT’S RESIGNATION AS A DIRECTOR IN 2019 [60] The Third Defendant contends that he had resigned as a director of the First Defendant in 2019 and as such he is not liable to pay the Plaintiff for the quarry products supplied to First Defendant with effect from the date of his resignation. [61] However, no documentary evidence in support was produced by the Third Defendant to substantiate his resignation as a director from the First Defendant company. October 27, 2022 18 [62] Court is of the view that even if it was true that the Third Defendant had resigned, the release of his obligations under the Letter of Guarantee and Indemnity ought to be secured first prior to his resignation through the First Defendant. [63] The Plaintiff has no knowledge of the Third Defendant’s resignation as a director and is not concerned with the internal management of the First Defendant company. [64] As such, without being released from his obligations under the Letter Guarantee and Indemnity, the Third Defendant remains liable to the Plaintiff under the said Letter of Guarantee and Indemnity. FIRST DEFENDANT’S LETTER OF ADMISSION [65] As stated above, First Defendant via their reply dated 23.2.2021 to the Plaintiffs demand dated 8.12.2020, admitted that they are ready to settle the outstanding sum RM757,715.02 by way of four (4) instalments commencing on April, 2021. This letter was signed by the Second Defendant. A reading of the First Defendant’s letter seems to suggest that the admission was made unequivocally. [66] The Plaintiff thereafter vide their letter dated 19.3.2021 replied to the First Defendant said letter and accepted the First Defendant’s proposal. [67] These correspondence between parties was not marked without prejudice. As such there is an admission on the outstanding sum due and owing by the Defendants to the Plaintiff. October 27, 2022 19 [68] This unequivocal admission itself negates any necessity for a trial. THE LETTER OF ADMISSION SENT IN THE COURSE OF GENUINE NEGOTIATIONS [69] Defendants submit that the letter of admission was sent for genuine negotiations and as such is inadmissible. In support, the Defendants rely on the decision by Abdul Malik Ishak J in DUSUN DESARU SDN BHD & ANOR WANG AH YU & ORS [1999] 5 MLJ 449. [70] Court find that the facts in Dusun Desaru’s is distinguishable. The facts in that case relates to letters that were marked “without prejudice” and the issue therein was whether there was waiver of the privilege shield. [71] Whereas in our present case, the Defendants letter is not marked “without prejudice” and the reply by the Plaintiff accepting the Defendants’ proposal is also not marked “without prejudice”. As such, the Defendant’s letter of admission is not privileged and can be admitted in evidence. [72] Lastly, there is no proposition of law to state that a letter proposing settlement sent in the course of genuine negotiations and not marked “without prejudice” is not admissible.

[73] Wherefore based on the above reasons, Court finds there are no triable issues. October 27, 2022 20 [74] The learned Sessions Judge did not err in entering Summary Judgement in favour of the Plaintiff and his Judgement dated 28.6.2022 is upheld. [75] The Appeal is hereby dismissed with costs. Dated this 27th October 2022 at Muar in the State of Johore. t.t. SURIA KUMAR A/L DJ PAUL Judicial Commissioner High Court of Malaya Muar Johore Darul Ta’zim Counsels: For the Appellants : Lim Eng Siang with Tan Koon Heo For the Respondent : Vimalan A/L S. Visvalingam Solicitors: For the Appellants Messrs ES Lim & Co. Advocates & Solicitors No. 46A, Jalan Pingai Taman Pelangi 80400 Johor Bahru Johor. [Ref. No. : LES/ks/Lit:199/2109] October 27, 2022 21 For the Respondent Messrs A.G. Roseli & Paul Advocates & Solicitors Blok B-3-9, Pusat Perniagaan Sunway Jalan Todak 4 13700 Seberang Jaya Perai, Pulau Pinang. [Ref. No. : SPR/HAN/086/2021/S] Hearing Date : 27th October 2022 Decision Date : 27th October 2022