Transkon Sdn Bhd v Geto Global Construction Tech Malaysia Sdn Bhd (BA-12BC-10-08/2024)

This is an appeal by the Appellants against the judgment delivered by the Learned Sessions Court Judge after full trial.

The reference to the parties remain as per the original suit. The Appellants were the 1st and 2nd Defendants and the Respondent was the Plaintiff in the original suit at the Sessions Court.

This case was filed by the Plaintiff claiming for the outstanding payment payable to it by the 1st Defendant and the 2nd Defendant as the guarantor to the 1st Defendant relating to the supply Self-Climbing Platform Framing Module (“SCP”) by the Plaintiff to the 1st Defendant for the development project at Mesa Hill, Phase 4, Persiaran Ikmu BBN, Bandar Nilai Utama (“the Project”).

The Plaintiff had supplied the SCP based on the 1st Defendant’s orders but the 1st Defendant had failed to pay the Plaintiff a sum of RM423,650.36 for the supply received by it.

The 1st Defendant has objected to the Plaintiff’s claims on the basis that the Plaintiff has failed to supply in accordance to the specification requested by it and due to the Plaintiff’s failure to supply 3 accordingly, the 1st Defendant filed a counterclaim of RM292,161.79 for the damages and losses suffered by it.

The 2nd Defendant being the provider of a Personal Guarantee and Indemnity to the Plaintiff opposed the Plaintiff’s claims against him on the basis that it was made pre-maturely as no notice of demand was made to him prior to making the claims.

In order to recover the unpaid sum, the Plaintiff filed a civil action at the Sessions Court via suit no. BA-A52C-17-10/2022. C. SESSIONS COURT’S DECISION AFTER FULL TRIAL

This is the Defendants’ appeal against the entire Judgment of the Learned Sessions Court Judge Puan Rafiqha Hanim Binti Mohd Rosli dated 14.8.2024 where she had allowed the Plaintiff’s claim with costs of RM10,000.00 and dismissed the 1st Defendant’s Counterclaim with costs of RM5,000.00 [see pgs. 13-14 Part A Record of Appeal (“RA”)].

The Plaintiff’s claims were allowed at the Sessions Court as follows:- a. Payment of the sum of RM423,650.36 as at 27.07.2022; b. Interest at the rate of 1.5% per month on the outstanding sum calculated from the date of default until full settlement; c. Interest at the rate of 5.0% per year on the outstanding sum calculated from the date of judgment until full settlement; d. An Order for payment of total sum within 14 days from the date of judgment; and 4 e. A Penal Notice pursuant to Rule 45 of Order 7 of the Rules of Court D. GROUNDS OF APPEAL BY THE DEFENDANTS

That the Learned Sessions Court Judge had erred in facts and law on the following grounds: i. That the Learned Sessions Court Judge had decided that all parties are bound to the Sale Contract dated 16.10.2020 and that “tiada sebarang ketidakpatuhan dalam Kontrak Jualan”, although the Defendants had shown that the Self-Climbing Platform (SCP) supplied by the Plaintiff were for the length of only 217.617 meter and not in accordance to the perimeter of the building of 240.0 meter as stated in the Sale Contract dated 16.10.2020. ii. That the Learned Sessions Court Judge had decided that “Defendan Pertama telah gagal membuktikan bahawa mereka telah mempertikaikan jumlah amaun yang dituntut” when at all material times, the Defendants had via letters dated 29.05.2021,

15.07.2021 and 8.7.2022 raised their complaints to the Plaintiff on the issue of non-compliance related to the building perimeter term for the SCP supplied by the Plaintiff. iii. That the Learned Sessions Court Judge had decided that the Defendants did not consider the building perimeter when the Plaintiff supplied the SCP although evidenced that upon installing the SCP the building perimeter will be remeasured within 1-2 months after fixing the same. iv. That the Learned Sessions Court Judge had decided that ‘tiada sebarang tindakan daripada Plaintif yang menunjukkan terdapatnya suatu penerimaan ke atas Pesanan Belian tersebut’ dan ‘Pesanan Belian dan Sebut Harga hanyalah sebagai tawaran awal sahaja dan tidak mewujudkan apa-apa perjanjian’ although there was evidence to show that the Defendants issued an invoice dated 23.9.2020 for the payment of deposit after the Purchase Order dated 8.9.2020 (PO) and had paid a sum of RM80,000.00 on 8.10.2020 as deposit to the Defendants. v. That the Learned Sessions Court Judge had decided that ‘tiada keterangan dalam mana-mana dokumen yang menyatakan bahawa sekiranya terdapat perbezaan ukuran perimeter, pihak Plaintif perlu berbuat demikian’ (to compensate) when it is clearly stated in the Sale Contract dated 16.10.2020 that the supply of the SCP is based on the terms to remeasure and if there are any difference in the actual design, payments will be made or refunded accordingly. vi. That the Learned Sessions Court Judge had decided that ‘ukuran semula mengikut ratio +/- 10% tersebut adalah terpakai bagi bilangan unit SCP Module Framework sahaja dan bukannya pada perimeter’, when there exist ambiguity in the terms of the Sale Contract wherein it is not stated whether the remeasurement is based on the number of units supplied or on the building perimeter, furthermore during remeasurement, by conduct, the remeasurement was on the building perimeter and not the number of units. vii. That the Learned Sessions Court Judge had decided that the parties had agreed on the variation charges, whereas according to the Sale Contract dated 16.10.2020 should there be any variation and addition to the terms of the contract, it has to be done in writing. In this case, there is no written agreement between parties to show that they had agreed on the additional charges. viii. That the Learned Sessions Court Judge had decided that ‘penghantaran surat tuntutan bukanlah satu prasyarat untuk mengambil tindakan terhadap Defendan Kedua’ although it is trite law that it is a pre-condition to serve notice to the guarantor first in a on demand contract. ix. When the Learned Sessions Court Judge had incorrectly referred to the case of Danaharta Urus Sdn Bhd v Kam Tick Beng & Anor [2014] 2 MLJCON 22 on the principle that there is no need for a notice of demand to be served to the 2nd Defendant as the 2nd Defendant had been alleged to be the principal debtor. The reliance made was actually derived from the case of Allied Bank (M) Sdn Bhd v Yau Jiok Hua [2006] 5 MLJ 145 which can be distinguished as in that case it was a claim against the borrower and not the guarantor. x. When the Learned Sessions Court Judge had failed to consider that when SP2 had sent reminder via WhatsApp to the 2nd Defendant, the said reminder was addressed to the 1st Defendant and that SP2 had never sent any reminder to the 2nd Defendant as the guarantor. xi. That the Learned Sessions Court Judge had decided that the 1st Defendant had admitted that it failed to make the payments due to the fact that Eng Han Engineering had not paid the 1st Defendant, in actual fact, the Plaintiff’s claim was at all material time wrong, gross and leads to unjust enrichment arising from the Plaintiff’s non-compliance of the terms of the agreement between the Plaintiff and the 1st Defendant. xii. That the Learned Sessions Court Judge had allowed 2 interest rates against the Judgment Sum, that is 1.5% per month and 5% per annum for which there is no provision in law to make such order. xiii. That the Learned Sessions Court Judge had decided to dismiss the 1st Defendant’s counterclaim when the 1st Defendant had proven that the Plaintiff is aware that the SCP are for the usage at the Project belonging to Eng Han Engineering and any breach of the terms related to the supply of the SCP not in accordance to the specification, the 1st Defendant will suffer damages and bear losses arising from such breach. xiv. That the Learned Sessions Court Judge had allowed a Penal Notice to be part of the Judgment for a purely monetary claim. E. ISSUES [11] Based on the Grounds of Appeal, this court will address the same by grouping the grounds as follows: a. items (i), (iii), (iv) and (vi) paragraph 10 hereinabove – Whether the agreement between parties was based on the PO and quotation and or the Sale Contract dated 16.10.2020 and whether the order for SCP was based on units or building perimeter. b. items (ii), (v), (vii) and (xi) paragraph 10 hereinabove - Whether the variations were agreed by the parties and whether the Plaintiff’s claim was disputed by the 1st Defendant. c. items (viii), (ix) and (x) paragraph 10 hereinabove – Whether a Notice of Demand is required to be given to 2nd Defendant d. item (xii) paragraph 10 hereinabove – Whether there was interest on interest imposed e. item (xiii) paragraph 10 hereinabove - Whether the counterclaim should be dismissed f. item (xiv) paragraph 10 hereinabove – Whether a Penal Notice can be allowed for a purely monetary judgment F. FINDINGS OF THE COURT [12] As the Grounds of Judgement by the Sessions Court Judge had included her thorough judicial appreciation of the issues raised before her upon conclusion of the full trial, this appeal will be looked into by examining the GOJ and all the records of the appeal including the notes of proceedings at the Sessions Court together with both parties’ submissions at this appeal. a. Whether the agreement between parties was based on the PO and quotation and the Sales Contract dated 16.10.2020 and whether the terms of the Sale Contract dated 16.10.2020 has been breached by the Plaintiff. [13] Based on the GOJ, the Learned Sessions Court Judge had addressed the issue on whether the parties are bound by the terms of the Sale Agreement dated 16.10.2020 at length wherein she had deliberated by considering the facts which had been presented before her and the evidences by both the Plaintiff’s and the Defendant’s witnesses at trial. [14] It was the Learned Sessions Court Judge’s findings of fact that the Sale Contract dated 16.10.2020 was an agreed fact as filed by the parties. At Clause 9.1 of the Sale Contract, it is expressly stated that “All correspondences and negotiations, which have taken place prior to the signing of the contract, shall be considered null and void.” As such, although there were prior negotiations and POs issued, the parties are bound by the terms of the Sale Contract which had been subsequently executed by them. [15] As this court sees it, the only reason the 1st Defendant insist that the PO and quotations are still binding on the parties is because of the descriptions/specifications of the SCP ordered by the 1st Defendant are said to be based on the measurement of 298.99 m being the building perimeter and not the 60 units of the SCP as claimed by the Plaintiff. [16] This court finds that the 1st Defendant’s reliance on the PO and quotation is no longer relevant in relation to the building perimeter length as even in its Grounds of Appeal, the 1st Defendant claims that the Plaintiff has not met the specifications of the order of supplying the SCP to cover the building perimeter of 240.0 m as per stated in the Sale Contract dated 16.10.2020. “That the Learned Sessions Court Judge had decided that all parties are bound to the Sale Contract dated 16.10.2020 and that “tiada sebarang ketidakpatuhan dalam Kontrak Jualan”, although the Defendants had shown that the Self-Climbing Platform (SCP) supplied by the Plaintiff were only for the length of only 217.617 meter and not in accordance to the perimeter of the building of 240.0 meter as stated in the Sale Contract dated 16.10.2020.” (Emphasis added) [17] Therefore, the Learned Sessions Court Judge had not erred in facts and or the law in deciding that the terms of the Sale Contract dated 16.10.2020 bind the parties and that the PO and quotation are only the initial offer which was superseded by the Sale Contract dated 16.10.2020. [18] It is the 1st Defendant’s contention that the Plaintiff had supplied the SCP to only cover the length of 217.617 m and not 240.0 m being the length of the building perimeter as stated in the Sale Contract dated 16.10.2020, as such the Plaintiff has failed to supply according to specification. [19] It is also the 1st Defendant’s contention that the 60 units of SCP supplied by the Plaintiff only covered 217.617m of the enclosure/building perimeter length, however, through the letter dated 17.6.2021 (pg 325 of Encl 5) by the Plaintiff to the 1st Defendant, the Plaintiff had explained that the quotation provided to the 1st Defendant had been based on 60 units of SCP amounting to RM1,108,820.00. In the same letter, it was also clarified that the final quantity was 59 sets of SCP at a length of 217.617 m + 1 set SCP which was only charged at RM8,754.60 (balance cost of 1 set of SCP i.e. RM9,025.73 was deducted via the issuance of a Credit Note for the same amount). [20] Hence, the 1st Defendant’s contention that the Plaintiff had supplied 60 sets of SCP which only covers the length of 217.617 m is incorrect. At a length of 217.617 m, the fact as stated in the letter dated 17.6.2021 was only 59 sets and not 60 sets of SCP. [21] This court finds that the Learned Sessions Court Judge had deliberated this issue and made findings of facts and law that the supply of the SCP was based on the units i.e. 60 sets and not based on the length of enclosure/building perimeter. Her findings had been based on the evidences adduced before her at trial by the witnesses from both parties and the documentary evidences filed in court. [22] Perusing through the documents, this court finds that although the enclosure/building perimeter had been measured differently in several documents, the quantity of the SCP had remained at all times as 60 sets in all documents including the Sale Contract dated 16.10.2020. Therefore, this court does not find that the Plaintiff had breached the terms of the Sale Contract dated 16.10.2020 as claimed by the 1st Defendant as 60 sets of SCP had been supplied by the Plaintiff as was found by the Learned Sessions Court Judge. b. Whether the variations were agreed by the parties and whether the Plaintiff’s claim was disputed by the 1st Defendant. [23] It is the Defendants’ contention that all variations are to be agreed in writing and in this case, there is none in writing. However, it cannot be denied that the Sales Contract dated 16.10.2020 stipulates that the delay in making payments by the 1st Defendant, any charges incurred due to the delay are to be borne by the 1st Defendant (see pg 288 of the ROA – part C – encl. 5). The 1st Defendant did not deny that it had delayed the payments due to the Plaintiff and arising from that delay, the Plaintiff could not send the SCP as scheduled and as such had incurred additional costs. [24] It was the Learned Sessions Court Judge’s factual finding based on the evidence adduced before her during trial and through the documents filed in substantiating the claims made by the Plaintiff for these additional charges that the 1st Defendant had not objected to these additional charges claimed by the Plaintiff and in fact, the 1st Defendant had agreed to the same when the 2nd Defendant had provided the Letter of Guarantee and Indemnity dated 9.3.2021 to the Plaintiff in order for the balance SCP sets to be delivered. [25] Therefore, this court is unable to agree with the 1st Defendant’s contention that the Learned Sessions Court Judge had erred in fact and in law in allowing this claim by the Plaintiff. c. Whether a Notice of Demand is required to be given to the 2nd Defendant [26] The Defendants’ contention is that the Learned Sessions Court Judge had erred in relying on the case of Danaharta Urus Sdn Bhd v Kam Tick Beng & Anor [2014] 2 MLJCON 22 (Danaharta case) when arriving at her decision that there was no requirement for a prior demand to be made when a guarantor was taken as a principal debtor: ”41. Berdasarkan pada kes ini di atas, Mahkamah ini berpandangan bahawa Surat Jaminan yang ditandatangani oleh Defendant Kedua tleah dengan jelas mengatakan bahawa tiada keperluan untuk Plaintif menghantar surat tuntutan semula kepada Defendan Kedua. Tambahan pula, sebagaimana yang diputuskan dalam kes di atas, penghantaran surat tuntutan bekanlah suatu prasyarat untuk mengambil tindakan terhadap Defendan Kedua.” [27] I agree with the Defendants that this was not the principle of the Danaharta case. On the contrary, in the Danaharta case, it was held that although the guarantor had been taken as the principal debtor as in this case, there must still be a demand made in a guarantee where there is a pre-requisite requirement to do so. Failing to issue a demand, would make any legal proceeding against the guarantor to be pre-mature as no cause of action has accrued as yet. This can be seen at paragraphs 44 and 45 of the Danaharta case: “[44] Turning now to the facts of the instant case:

D2 here is a guarantor and not the borrower. Notwithstanding that cl 1 of the guarantee and indemnity seeks to place liability on her as a principal debtor, that does not detract from the fact that she is a guarantor;

A construction of cl 1 above shows that the intention of the parties was to impose a liability on the guarantors to repay the liabilities of the borrower on demand. The borrower is a distinct entity separate from the guarantors. Monies were lent to the borrower not D1 and D2 directly thereby distinguishing the situation from the Allied Bank’s case. In other words, it cannot be said that vis a vis D2 there is a pre-existing debt which it is her duty to pay prior to receipt of a demand.

The use of the phrase ‘as principal debtors’ in cl 1 of the guarantee and indemnity does not have the effect of negating the requirement for a demand in the instant case. This is because a construction of the said guarantee reveals that a demand is a pre-requisite for the payment of monies by D1 and D2. The liability of D1 and D2 is stated to be that of guarantors. Their promise to repay is circumscribed by the requirement that the bank issue a demand. It is quite unlike the Allied Bank’s case where the bare use of the words ‘on demand’ vis-a-vis the borrower did not have the same effect. In the instant case, the words ‘on demand’ appear in the context of the promise of the guarantors to repay the borrower’s liability and therefore determines when such liability arises and is a pre-requisite for the action. [45] In the instant case as the demand is a pre-requisite to the claim for monies owed by the borrower it follows that the failure to effect service on D2 renders the claim against D2 bad. In this context I refer to Soon Peng Yam & Anor v Bank of Tokyo-Mitsubishi (M) Bhd [2004] 2 MLJ 31; [2004] 1 CLJ 532 where Alauddin Mohd Sheriff JCA stated as follows: On the first issue, it is settled law that the liability of a guarantor ahses only on demand made. The service of a notice of demand is a prerequisite for the institution of any proceedings in respect of the claim. In Mok Hin Wah & Ors v United Malayan Banking Corp Bhd [1987] 2 MLJ 610, the then Supreme Court when faced with the same question regarding a letter of demand had this to say: In our opinion the law is very clear on this point. The respondent as creditor must prove a real demand by sending actual notice of demand to the respective guarantors And further at p 611: Since bank guarantees invariably specify that the liability of the guarantor is to pay on demand, the words are not devoid of meaning or effect but make the demand a condition precedent to suing the guarantor (see also Ng Hee Thoong & Anor v Public Bank Bhd [1995] 1 CLJ 609 and Allied Bank (Malaysia) Bhd v Yau Jiok Hua [1998] 2 CLJ 33). The Supreme Court therefore considered the case of Allied Bank (M) Bhd v Yau Jiok Hua [1998] 6 MLJ 1; [1998] 2 CLJ 33 in stating the position in law. It fortifies the finding on the facts of this case that a demand is a pre-requisite to the bringing of an action against D2.” [28] Therefore, in this case, there is a clear error in law by the Learned Sessions Court Judge, that is, there is no requirement for a demand to be made to the 2nd Defendant being the guarantor as he had taken himself to be the principal debtor despite there exist a on demand pre-requisite in the guarantee agreement. It has been established that the liability against a guarantor only arises after a valid notice had been served on the guarantor. d. Whether there was interest on interest imposed [29] This is no longer an issue as the interest imposed was based on the guarantee agreement which this court has found to be pre-maturely invoked by the Plaintiff. Consequentially, the interest of 1.5% per month is disallowed by this court. e. Whether the counterclaim should be dismissed [30] The 1st Defendant had relied on the building perimeter of 298.99m which is claimed to be the measurement which the Plaintiff has to supply the SCP. Since the Plaintiff had only supplied 60 sets of SCP which the 1st Defendant claims to have only covered 217.617m, the discrepancy of the perimeter amounting to RM291,161.79 is claimed as the 1st Defendant’s loss suffered and unjust enrichment enjoyed by the Plaintiff. [31] This court disagrees with the 1st Defendant’s argument on its counterclaim as it has been established and admitted by the 1st Defendant that the building perimeter stated in the Sales Contract dated 16.10.2020 is 240.0m only. It has also been established that the length of 217.617m is made out of 59 sets of SCP and there was a partial SCP provided by the Plaintiff to the 1st Defendant with the refund via a Credit Note. Hence, the 1st Defendant has failed to establish that the Learned Sessions Court Judge’s error in fact and law in relation to the dismissal of its counterclaim on the basis that the 1st Defendant had failed to substantiate its claim for the sum of RM291,161.79. [32] Hence, this court is unable to see any error in facts or law in relation to the dismissal of the 1st Defendant’s counterclaim. f. Whether a Penal Notice can be allowed for a purely monetary judgment [33] The Learned Sessions Court Judge in allowing the Plaintiff’s claim had also allowed for a Penal Notice pursuant to O45 r.7 ROC 2012. At this appeal, the Defendants had objected to the endorsement of the Penal Notice in the judgment on the basis that the claim against the Defendants are purely monetary and as such had relied on the case of Lee Lay Ling v Goh Kim Nam (Cheah Pei Ching, co-respondent) [2014] 8 MLJ 805 where Justice S Nantha Balan JC (as he then was) in the High Court held: “[20] First, if monetary judgments, whether they are to be paid in a lump sum or at different intervals by way of instalments payment, are to be enforced by way of committal proceedings then the effect would be that all judgments for the payment of money (regardless of whether they are made in matrimonial or other proceedings) may, without any exception, be enforced by committal proceedings. That would mean that every judgment debtor who fails to make payment under an order of court would be liable to committal proceedings quite apart from the prospect of being adjudicated a bankrupt or having to face execution proceedings by way of a writ of seizure and sale, garnishee or charging order. If that is the intent of the Rules of Court 2012 then it must be clearly and unequivocally stipulated as such. … [22] Hence, in my view, O 45 r 1 has stipulated very clearly how monetary judgments are to be enforced. It is equally clear that committal is not a mode of enforcement for a monetary judgment, unless it is a monetary judgment which falls within O 45 r 5. …” [34] Since this is a purely monetary judgment and as such, Order 45 r.1 clearly stipulates the many ways a monetary judgment can be enforced. If a Penal Notice is endorsed in a judgment which is purely monetary such as this, the effect of it is clearly to enforce the judgment by way of a committal proceeding, doing away all other modes of enforcement stipulated in Order 45 r. 5. [35] Hence, I am the view that the Learned Sessions Court Judge had erred in allowing the Penal Notice for a purely monetary judgment to be endorsed in the Judgment. G. CONCLUSION [36] As conclusion, this court allows the appeal of the Defendants on a portion of the Session Court’s Judgment as follows: i. The legal proceedings against the 2nd Defendant is pre-mature; ii. The imposition of interest of 1.5% per month on the sum of RM423,650.36 is disallowed; and iii. The Penal Notice endorsement is disallowed. [37] All items other than the items listed in paragraph 35 hereinabove in the judgment dated 14.8.2024 are upheld by this court. [38] Parties to bear their own costs. SUMATHI A/P MURUGIAH Judicial Commissioner High Court of Malaya Shah Alam, Selangor Darul Ehsan DATE : 12 MARCH 2025 Counsel for Transkon : Ms. Chloe Lim Yen Hwa & Ms. Tanushaa Dewi (Messrs. Chloe Lim & KM Loke) Counsel for Geto Global : Mr. Jonathan Khaw (Messrs. Chern & Co)