See Suk Ling v B.I.G Industrial Gas Sdn. Bhd (AA-12B-47-12/2024)

HONG HUI YEE 10 (NRIC No.: 750420-08-5286)

LIEW SHAN FUN (NRIC No.: 740410-13-5375)

SEE SUK LING (NRIC No.: 830322-08-5194)

HONG CHAU YEE (NRIC No.: 791118-08-5569) … APPELLANTS 20 [keempat-empat berniaga sebagai Rakan Kongsi di bawah nama dan gaya Sitiawan Industrial Enterprise] 25 AND B.I.G INDUSTRIAL GAS SDN BHD (Company Registration No.: 062396-A) … RESPONDENT 30 In the Sessions Court at Ipoh Suit No. AA-B52Ncvc-67-10/2019 Between 35 B.I.G. Industrial Gas Sdn Bhd … Plaintiff And 40 1. HONG HUI YEE (NRIC No.: 750420-08-5286)

LIEW SHAN FUN (NRIC No.: 740410-13-5375)

SEE SUK LING (NRIC No.: 830322-08-5194)

HONG CHAU YEE 50 (NRIC No.: 791118-08-5569) [keempat-empat berniaga sebagai Rakan Kongsi di bawah nama dan gaya Sitiawan Industrial Enterprise] …. Defendants 55 GROUNDS OF JUDGMENT Introduction [1]. At the outset, the court observes that the intitulement of this 60 appeal is inaccurate as the 1st and 2nd defendants are not appellants. This appeal is brought solely by the 3rd and 4th defendants. For ease of reference, the parties shall be referred to by their original designations in the court below. [2]. This appeal concerns the liability of the 3rd and 4th defendants 65 for the plaintiff’s claim arising from the loss of industrial gas cylinders supplied to Sitiawan Industrial Enterprise (“SIE”), a partnership business previously carried on by four partners. The central question is whether they remain liable for obligations incurred during the subsistence of the partnership 70 despite their subsequent exit. Background facts [3]. The plaintiff, B.I.G. Industrial Gas Sdn Bhd, is a supplier of industrial gases delivered in reusable cylinders. On 15 November 2007, Sitiawan Industrial Enterprise (“SIE”) applied 75 to be appointed as a distributor. By letters dated 12 January 2008 and 7 April 2008, SIE was appointed as distributor for the Sitiawan, Lumut and Manjung areas. The distributorship provided for cylinder rental at RM0.20 per day, with any cylinder not returned within 6 months deemed lost and 80 chargeable at RM800 each. On 7 May 2008, the 3rd and 4th defendants joined the partnership, making SIE a four-partner business. [4]. Between January 2010 and June 2015, the plaintiff supplied gas and cylinders to SIE in the course of the distributorship. In 85 or about June 2015, the 3rd and 4th defendants exited the partnership pursuant to a High Court consent order. Prior to and around this period, the plaintiff was informed of internal partnership separation of the business and arrangements were made to reallocate distribution areas. Despite the exit, the 90 business under SIE continued to hold a substantial number of cylinders. [5]. At a meeting on 22 September 2015, SIE confirmed that it was holding 1,426 cylinders, and by letter dated 1 October 2015, SIE was given 6 months to return them while continuing to pay 95 rental. Over time, some cylinders were returned, but 906 cylinders remained unreturned and were treated as lost. The plaintiff issued a letter of demand on 11 March 2019 and subsequently commenced proceedings against all 4 partners of SIE on 30 October 2019 to recover RM724,800, being the 100 loss value of the outstanding cylinders, together with interest and costs. On 18.08.2020, summary judgment was entered against the 1st and 2nd defendants. They filed no appeal against that judgment. As a result, the plaintiff’s claim against the 1st and 2nd defendants was already determined at that 105 stage, and the action proceeded to trial only against the 3rd and 4th defendants. Undisputed facts [6]. There is no dispute that SIE was appointed as the plaintiff’s distributor and that the plaintiff supplied cylinders to SIE in the 110 course of their distributorship. It is also not disputed that the 3rd and 4th defendants were partners of SIE until their exit in or about June 2015, as mentioned in the High Court consent order. The central issue is whether the 3rd and 4th defendants remain liable for the loss of 906 cylinders, notwithstanding their 115 subsequent exit from the partnership. Appellant’s contention [7]. The appellants’ principal contention is that upon leaving the partnership, they did not take possession of any cylinders and that the business, including control of the cylinders, was 120 thereafter managed solely by the 1st and 2nd defendants. It is further argued that the plaintiff dealt directly with the continuing partners and that any liability should therefore rest exclusively with them. Finding of Court 125 [8]. Having considered the record, this court is of the view that the appellants’ arguments are directed primarily at the internal arrangements between the partners and the question of possession or control after their exit. While such matters may be relevant as between the partners themselves, they do not, 130 without more, determine the liability of partners to a third-party creditor vis-a-vis the respondent. As established in Alan Michael Rozario v. Merbok MDF Sdn Bhd [2010] 3 MLRA 94; [2011] 1 CLJ 433; [2010] MLJU 1331, a partner's lack of knowledge or non-involvement in specific firm affairs does not 135 absolve them of liability under the Partnership Act 1961. This principle was further reinforced in Fujifilm Business Innovation Asia Pacific Pte Ltd v. Kamaliah Muda [2022] MLRHU 1057; [2022] 5 AMR 742; [2022] MLJU 1204; [2022] CLJU 1215, which held that internal arrangements or the 140 segregation of duties between partners are irrelevant to external creditors. Her Ladyship Evrol Mariette Peters, in Fujifilm Business’s case (supra), expressed in these words: “[13] ...it is trite law that segregation of duties amongst partners in a firm is not a defence to liability incurred by the 145 firm. In the present case, the Second Defendant should have had an indemnity agreement with her partner within the Firm. But as stated in the case of View Esteem Sdn Bhd v. Ooi Tse Lye & Ors; Low Gay Teck & Ors (Third Parties) [2018] 3 MLRH 370, ‘no amount of arrangements between 150 the partners inter se whether as salaried, commission or equity partners in charge of separate projects or assignments or branches would affect the world at large that deals with the partnership as a whole.’” 155 Her ladyship further reinforced at paragraph [14]: “[14] As such, whatever internal arrangements that the Second Defendant had with her partner or anyone in the Firm for that matter was irrelevant as far as the Plaintiff was concerned. This was explained in the Court of Appeal case 160 of Alan Michael Rozario v. Merbok MDF Sdn Bhd [2010] 3 MLRA 94; [2011] 1 CLJ 433,.” [9]. The plaintiff’s claim is founded on supplies of cylinders made to SIE between January 2010 and June 2015. The 165 documentary evidence shows that the cylinders forming the subject matter of the claim were delivered during the period when the 3rd and 4th defendants were still partners. There is no evidence of a claim being made for cylinders that were supplied after June 2015. The claim sum for the 906 cylinders 170 represents the balance cylinders remaining after a gradual return over time. [10]. The legal position is well settled under Sections 11 and 19(2) of the Partnership Act 1961 that partners are jointly liable for obligations incurred in the course of the partnership while it 175 subsists. The relevant provisions of Sections 11 and 19(2) are reproduced below: “11. Liability of partners Every partner in a firm is liable jointly with the other partners for all debts and obligations of the firm incurred while he is 180 a partner; and after his death his estate is also severally liable in a due course of administration for such debts and obligations, so far as they remain unsatisfied but subject to the prior payment of his separate debts” 185 “19. Liability of incoming and outgoing partners

A partner who retires from a firm does not thereby cease to be liable for partnership debts or obligations incurred before his retirement”

A retiring partner may be discharged from any existing 190 liabilities by an agreement to that effect between himself and the members of the firm as newly constituted and the creditors, and this agreement may be either express or inferred as a fact from the course of dealing between the creditors and the firm as newly constituted 195 It is settled law that a partner who retires does not thereby cease to be liable for partnership debts or obligations incurred before his retirement. The Federal Court in Malayan Banking Berhad v Lim Chee Leng & Anor [1985] 1 MLJ 214; [1984] 200 1 MLRA 475 and the Court of Appeal in Kompleks Perkayuan Kelantan Sdn Bhd v Tian Chuan Sen & Yang Lain [2020] 2 CLJ 781; [2020] 6 MLJ 635; [2019] MLRAU 369; (refd), both affirm that a retiring partner remains liable for partnership debts incurred before retirement. His Lordship Lee Hun Hoe CJ in 205 Malayan Banking Berhad v Lim Chee Leng & Anor (supra) states: “The learned Judge was perfectly right to refer to s. 19(2) of the Partnership Act which states in no uncertain terms that:- 210 A partner who retires from a firm does not thereby cease to be liable for partnership debts or obligations incurred before his retirement. The defendants incurred the debt on the Trust Receipt 215 before their resignations or retirement. The debt was also due before their resignations or retirement. They cannot escape liability by merely pleading resignation or retirement.” 220 [11]. Such liability of the partner, as in the present case, is only discharged if there is a tripartite agreement (novation) between the retiring partner, the newly constituted firm, and the creditor under Section 19(3) of the Partnership Act 1961. In the present case, there is no evidence that the plaintiff agreed to 225 release the 3rd and 4th defendants from their antecedent liabilities. [12]. The appellants’ reliance on the fact that they did not retain possession of the cylinders after June 2015, does not alter this position. The absence of possession does not negate liability 230 arising from supplies made prior to their retirement. Furthermore, the plaintiff’s subsequent dealings with the 1st and 2nd defendants do not amount to a discharge of existing liabilities. Under the doctrine of estoppel by conduct and silence as articulated in Boustead Trading (1985) Sdn Bhd v. 235 Arab-Malaysian Merchant Bank Berhad [1995] 3 MLJ 331; [1995] 4 CLJ 283; [1995] 1 MLRA 738, the appellants' failure to promptly dispute the plaintiff's 2015 letters recording the outstanding cylinder balance, coupled with the subsequent payment of rental for those very cylinders by a cheque signed 240 by the 4th defendant in 2018, constitutes an acknowledgment of the debt and the firm's continued custody of the cylinders. [13]. A further point arises from the submissions made in open court on 24 February 2026, where the appellants argued that their liability shifted to the 1st and 2nd defendants, as control of the 245 cylinders had passed to them and the plaintiff dealt solely with them. Such a position would require a pleaded case that the plaintiff had expressly or impliedly agreed to look only to the continuing partners, or that there was collusion between the plaintiff and the 1st and 2nd defendants to the appellants’ 250 prejudice. However, no such case was pleaded. As held in Veronica Lee Ha Ling & Ors v. Maxisegar Sdn Bhd [2009] 2 MLRA 408; [2009] 6 CLJ 232; [2011] 2 MLJ 141, a litigant should not be permitted to succeed on a point not raised or pleaded before the court of first instance. His Lordship Gopal 255 Sri Ram FCJ (as he then was) express very simply: “[8] It is settled law that a litigant should not be permitted to succeed in an appeal upon a point not raised or pleaded before the court of first instance. The matter is really one of natural justice. The several authorities on the subject were 260 collected and discussed in the judgment of Jemuri Serjan SCJ in Lee Ah Chor v. Southern Bank Bhd [1990] 2 MLRA 6; [1991] 1 MLJ 428; [1991] 1 CLJ Rep) 239. We would also refer to Hoe Cheong Products Co Ltd v. Cargill Hongkong Ltd [1995] 1 WLR 404 which sufficiently demonstrates the 265 point “ And paragraph [9] reinforces further the point: “It would be manifestly unjust for the appellants to succeed before us on a point not taken before the High Court.” 270 [14]. Neither was any allegation of collusion or improper arrangement fully explored at trial in the present case. The issue was only mentioned generally and not clearly put to the plaintiff’s witnesses. Without a pleaded and proven case of 275 such an arrangement or collusion, the appellants cannot rely on the post-dissolution control of the business to deny liability. [15]. The appellants also challenge the evidential basis of the plaintiff’s claim, contending that the figures were not properly verified. This court finds that the plaintiff had produced a 280 detailed statement of account and supporting documents tracing the supply and subsequent return of cylinders. The trial court was entitled to accept this evidence. In accordance with the "plainly wrong" test reaffirmed by the Federal Court in Ng Hoo Kui & Anor v. Wendy Tan Lee Peng, Administrator of 285 the Estates of Tan Ewe Kwang, deceased & Ors [2010] 10 CLJ 1; [2020] 12 MLJ 67; [2020] 6 MLRA 193, an appellate court will not interfere with a trial judge’s findings of fact unless the decision is shown to be perverse or lacks judicial appreciation of the evidence. Her Ladyship Zabariah Mohd 290 Yusof FCJ (as she then was) states: “[78] …following this court’s ruling in Tengku Dato’ Ibrahim Petra Tengku Indra Petra (supra) an appellate court should not interfere with the factual findings of a trial judge unless it was satisfied that the decision of the trial judge was “plainly 295 wrong” where in arriving at the decision it could not reasonably be explained or justified and so was one which no reasonable judge could have reached. If the decision did not fall within any of the aforesaid category, it is irrelevant, even if the appellate court thinks that with whatever degree 300 of certainty, it considered that it would have reached a different conclusion from the trial judge” In the present case, the criticisms raised relate only to the weight of the evidence rather than admissibility. 305 [16]. In substance, the appellants invite this court to re-apportion liability based on post-dissolution control of the business. However, the determinative question is whether the obligations arose during the partnership period. On the evidence, that requirement has been satisfied. 310 Conclusion [17]. Accordingly, this court finds no error in the decision of the Sessions Court in holding that the 3rd and 4th defendants are 315 jointly liable, as partners of SIE, for the losses incurred up to June 2015. The appellants’ grievance, if any, lies elsewhere and not against the plaintiff. [18]. The appeal is dismissed with costs of RM6,000.00 to be paid to the plaintiff. The cross-appeal on the judgment sum is 320 allowed. Accordingly, the judgment sum is fixed at RM724,800.00. Dated : 30 March 2026 325 [MOSES SUSAYAN] 330 JUDGE HIGH COURT IN MALAYA AT IPOH, PERAK 335 Counsel For the Appellants : Nanda Suppiah Advocates and Solicitors 340 [Messrs AM Ong & Partners] Ipoh, Perak For the Respondents : Chai Bitt Yen Advocates and Solicitors 345 [Messrs Ting & Ting] Klang, Selangor (Notice: This Grounds of Decision is subject to official editorial 350 revision) Headnotes: PARTNERSHIP: Liability of retiring partners – Loss of industrial gas cylinders supplied to partnership – Whether 3rd and 4th Defendants remained jointly liable for losses incurred up to June 2015 – Whether 355 internal partnership separation, possession or control after exit could defeat liability to third-party creditor – Whether supplies forming subject matter of claim were made during period of partnership – Whether liability under ss 11 and 19(2) of Partnership Act 1961 ceased upon retirement – Whether subsequent dealings with 360 continuing partners amounted to release – Whether unpleaded allegation of collusion or arrangement could be relied upon on appeal – Whether trial court’s findings were plainly wrong 365