1. ) YEW SZE SZE v Chu Pang Kiong (AA-12A-27-11/2024)

YEW SZE SZE

YEAK MEE LENG (NRIC NO.: 711119-08-5576) ... APPELLANTS AND 15 CHU PANG KIONG ( RIC NO.: 491025-08-5979/0643509) RESPONDENT (In the Matter in the Sessions Court at Batu Gajah 20 In the State of Perak Darul Ridzuan Civil Suit No: AE-B52NCVC-27-10/2023 Between 25 Tenaga Nasional Berhad (Company No.: 199001009294/200866-W) Plaintiff And Chu Pang Kiong 30 (NRIC No.: 491025-08-5979/0643509)

Yew Sze Sze 35 (NRIC No. 910211-08-5108)

Yeak Mee Leng (NRIC No.: 711119-08-5576) ... third-party) 40 GROUNDS OF JUDGMENT Introduction [1]. This appeal concerns whether tenants can be held liable for unauthorised electricity use committed by their sub-tenant. The respondent (landlord), sued by TNB, issued a third-party claim 45 against the tenant (appellants) under the terms of the tenancy agreement. However, the sub-tenant (Sik Chin Keong) admitted sole responsibility in a statutory declaration. The appellants, in challenging the third-party notice, contend that the subletting was lawful and they had no knowledge of the offence. The 50 failure to consider these facts justifies appellate intervention to set aside the third-party proceedings. Background facts [2]. The respondent, Chu Pang Kiong ( Chu ), who is the landlord, 55 was at all material times the registered consumer of electricity for premises located at No. 250, First Floor, Jalan Lumut, Taman Sejati 3, Sitiawan, Perak. On 10 December 2021, S/N BAPi1bK88kKljSh3iK6gug Tenaga Nasional Berhad ( TNB ) conducted an inspection at the said premises and discovered unauthorised electrical 60 connections bypassing the electricity meter. The inspection revealed that power was being diverted directly into the premises without passing through the registered meter, resulting in an allegation of electricity theft and loss of revenue to TNB. 65 [3]. TNB thereafter filed a civil claim against Chu in the Sessions Court, seeking RM903,925.55 as compensation for unauthorised electricity usage and related losses. In response, Chu filed a third-party notice against the tenants, Yew Sze Sze and Yeak Mee Leng (appellants), asserting that they had been 70 his tenants since March 2016 and should indemnify him pursuant to clauses in the tenancy agreement. [4]. The appellants opposed the third-party proceedings and applied to set aside. They contended that they had lawfully sublet the first floor of the premises to one Sik Chin Keong ( Sik ) under a 75 sub-tenancy agreement dated 25 October 2021. They relied on a statutory declaration dated 11 February 2022 from Sik, in which he admitted to being solely responsible for the unauthorised power diversion and agreed to bear full liability. [5]. Chu, in his affidavit in reply, avers that he had not been informed 80 of the sub-tenancy to Sik and expressly stated that had he known of the sub-tenancy to Sik, he would not have named the appellants as third-parties in the TNB suit. The Sessions Court, S/N BAPi1bK88kKljSh3iK6gug the present appeal. 85 Finding of the Court [6]. Having carefully considered the parties' submissions and the relevant material on record, this court is satisfied that appellate intervention is warranted. The core dispute concerns the propriety of third-party proceedings commenced by the 90 respondent (Chu) against the appellants, who had sublet the 1st floor tenanted premises to one Sik, who had independently committed the wrong and admitted to it in a statutory declaration. Cause of action in Tort, not Contract-based 95 [7]. The third-party action brought by Chu against the appellants is fundamentally misdirected. The wrongdoing alleged is the unauthorised tampering with electrical installations, which falls within the cause of action for tort, not contract. The learned Sessions Court erred in holding that third-party proceedings 100 cannot be brought against Sik due to the absence of a contractual relationship between Chu and Sik. This is evident terhadap Sik Chin Keong kerana Pihak-pihak Ketiga 105 tersebut yang menyewakan tingkat satu premis tersebut kepada beliau. Pihak Defendan tidak ada nexus dengan Sik S/N BAPi1bK88kKljSh3iK6gug Chin Keong oleh itu, pihak Defendan tidak boleh membaca 110 [8]. This reasoning is flawed in law. It is trite that a contract is not a precondition to a tort-based claim. Tortious duties may arise independently of contractual obligations. The unauthorised act here was independently committed by Sik, who has admitted sole responsibility in a statutory declaration. The appellants 115 lawfully sublet the 1st floor of the premises to Sik under Clause 2(n) of the tenancy agreement. There is no evidence to establish that the appellants participated in or had knowledge of the wrongful act. Therefore, a right to indemnify in tort arises, although there exists no contractual relationship between Chu 120 and Sik. [9]. In this respect, this c Eastern Shipping Co Ltd v Quah Beng Kee [1924] AC 177 to apply to the present case. Lord Atkinson held that: 125 implied, but it is not confined to cases of contract. A right to indemnity exists where the relation between the parties is such that either in law or in equity there is an obligation upon the one party to indemnify the other. There are, for instance, cases in which the state of circumstances is such that the law 130 attaches a legal or equitable duty to indemnify arising from an assumed promise by a person to do that which, under the circumstances, he ought to do The right to indemnity need not the notion of a request made under circumstances from which 135 S/N BAPi1bK88kKljSh3iK6gug the law implies that the common intention is that the party requested shall be indemnified by the party requesting him; it may arise (to use Lord Eldon's words in Waring v. Ward (1); a case of vendor and purchaser) in cases in which the Court will "independent of contract raise upon his (the purchaser's) 140 conscience an obligation to indemnify the vendor against the [10]. admission in his statutory declaration confirms his role as the 145 sole wrongdoer. There is no requirement of contractual nexus between Chu and Sik to ground a right of indemnity in law or equity. The Sessions Court erred by focusing narrowly on the lack of contractual privity and failing to appreciate that tortious liability lies solely with Sik as the tortfeasor. Chu himself 150 have issued the third-party notice against the appellants. The proper party to be sued in tort is therefore Sik, not the appellants. [11]. This c 155 that he would not have issued the third-party notice had he undermines the existence of any prima facie case against the appellants. The purpose of a third-party procedure is not to name nominal parties but to bring in a party against whom the 160 defendant genuinely seeks indemnity if liability is ultimately found. Accordingly, a defendant must, at the outset, demonstrate a prima facie basis for such indemnity to issue S/N BAPi1bK88kKljSh3iK6gug third-party notice. Here, Chu himself accepted that the liability lies with Sik upon learning of the sub- 165 statutory declaration admitting the tampering. In these circumstances, there is no basis for the third-party notice to remain against the appellants. No Breach of tenancy agreement by appellants [12]. The evidence does not support any breach of the tenancy 170 agreement by the appellants. Clause 2(n) of the tenancy agreement confirms that the appellants were contractually permitted to sublet the first floor of the premises without needing Chu's prior written approval. Clause 2(n) states: "To allow the Tenant to sublet the first floor only of the said premises without 175 the prior written consent from the Landlord." [13]. Therefore, the appellants' act of subletting the upper floor to Sik under a written agreement dated 25 October 2021 was lawful and within the scope of their tenancy rights. Clause 2(m), which prohibits tampering with electricity or water meters, is not 180 applicable. The inspection by TNB revealed tampering with the wire by causing a bypass of the meter, in which case the meter does not record the correct consumption of electricity. It is not tampering with the meter itself. Furthermore, there is no evidence that the appellants participated in, tampered with, or 185 had knowledge of the tampering. In fact, the wrongdoing was admitted solely by Sik, who had affirmed a statutory declaration. In the absence of any act or omission by the appellants that S/N BAPi1bK88kKljSh3iK6gug directly breaches the terms of the tenancy agreement, no breach can be attributed to the appellant. 190 False representation by Chu in leave application [14]. The foundation for the third-party proceedings was tainted by a serious misrepresentation on the part of the Chu. In seeking leave to issue the third-party notice, Chu averred that the appellants had admitted to the tampering that gave rise to the 195 TNB suit. This assertion is materially false and is directly rebutted by the following three facts that are on the record: a) a statutory declaration dated 11 February 2022 by Sik clearly states that Sik alone committed the unauthorised act without the knowledge or involvement of the 200 appellants. b) Chu's later affidavit contradicts his earlier position, expressly stating that had he known of Sik's role, he would not have named the appellants as third parties. This inconsistency casts serious doubt on the bona fides of his 205 application. c) The inspection did not reveal tampering with the meter itself, but rather an external bypass, which further distances the appellants from culpability under the tenancy clause relating to meter interference. 210 These three facts collectively show that the court was misled at the leave stage, and the resulting third-party proceedings were S/N BAPi1bK88kKljSh3iK6gug grounded on a factual premise that was false and unsustainable. 215 [15]. To hold the Appellants liable for the wrongful act of their sub-tenant would be unjust, as the sub-tenancy with Sik was lawfully created in accordance with Clause 2(n) of the principal tenancy to the Appellants merely because Sik was their sub-tenant. 220 Once the sub-tenancy was validly executed under the principal knowledge or lack thereof at the material time. Consequently, Inapplicability of Clauses 2(h) and 2(m) 225 [16]. reliance on Clauses 2(h) and 2(m) of the tenancy agreement to impose indemnity liability upon the appellants is misconceived. Clause 2(h) relates to the tenant's obligation to indemnify the landlord for acts or omissions committed by the tenant or their invitees. However, in this case, the wrongdoing 230 or the illegal bypassing of the electricity meter was not committed by the appellants or anyone acting under their direct control. The sub-tenant, Sik, had exclusive possession of the 1st floor under a lawful sub-tenancy and has independently admitted to tampering. 235 [17]. Clause 2(m), which prohibits tampering with water and electricity meters, similarly has no application. The tampering S/N BAPi1bK88kKljSh3iK6gug identified by TNB involved bypass wiring outside the meter, not interference with the meter itself. Furthermore, liability under Clause 2(m) arises only if the tenant is the offender or caused 240 the offence, which is not the case here. The appellants had neither been involved nor had any knowledge of the tampering. Accordingly, Chu cannot invoke these contractual clauses to shift responsibility to the appellants. There is no contractual or legal basis to sustain an indemnity claim against them under the 245 terms of the tenancy agreement. No right of contribution as the appellants are not joint tortfeasors [18]. Chu has also contended that he is entitled to a contribution from the appellants and, as such, liable to be made a party in the proceeding. However, the appellants correctly rely on Yong 250 Thien Wieo v Allianz General Insurance Company (M) Bhd (Supreme Power Auto Sdn Bhd & Ors, Third Parties) [2020] MLJU 2090; [2020] CLJU 1884, where it was held that contribution only arises among joint tortfeasors. His Lordship Ong Chee Kwan JC (as he then was) said as follows: 255 the Third Parties for contribution since a claim for contribution can only arise in situation of joint tortfeasors. [24] It is not the Defendant's case that the Defendant is a joint tortfeasor for the damage loss arising from the fire to 260 the premises. S/N BAPi1bK88kKljSh3iK6gug [27] Since the Defendant is not a tortfeasor for the damage suffered by the Plaintiff in this case the claim for contribution by the Defendant from the Third Parties is clearly 265 [19]. There is no allegation or evidence that the appellants acted in concert with Sik to cause loss to TNB. As such, the claim for contribution is unsustainable as there is also no legal right for 270 Chu as the defendant (in the suit by TNB) to look to the appellant as third-parties for contribution since a claim for contribution can only arise in a situation of joint tortfeasors, which, in this case Sik has admitted as an independent tortfeasor, exculpates the appellant. 275 Chu's admission and lack of due diligence [20]. A critical fact that undermines the legitimacy of the third-party proceedings is Chu's own admission in affidavit evidence. In his affidavit in reply, Chu candidly stated that had he been aware of the sub-tenancy between the appellants and Sik, and of Sik's 280 statutory declaration admitting sole responsibility for the unauthorised electricity diversion, he would not have joined the appellants in the action. This admission is fatal to the continuation of the third-party notice. It reflects that Chu himself recognised the person responsible for the tampering is Sik, and 285 against whom the cause of action lies, not the appellants. [21]. Chu's failure to make proper inquiries before issuing the third-party notice, and his change of position after realising the true S/N BAPi1bK88kKljSh3iK6gug facts, shows a lack of due diligence and candour in the initial application for leave to issue the third-party notice. It further 290 suggests that the third-party proceedings were not based on a full and fair disclosure of material facts before the court. Since Chu acknowledged he would have refrained from initiating third-party proceedings had he known the proper position at the instance of leave application, it is now incumbent upon this court 295 to do the needful, that is, to set aside the order made in those proceedings. [22]. The court retains the discretion to set aside such notices even after leave has been granted, particularly since Chu failed to demonstrate prima facie case against the appellants, as 300 explained in the Malaysian Rules of Court 2012 Annotation at paragraph 16/2/4: 16/2/4. Discretion. The granting of leave is a matter of judicial discretion. If a prima facie case is made out within any of the cases in r 1 (ante), leave will be granted. The court 305 will not, in considering whether to grant leave or not, go into the merits of the case: Edison & Swan United Electric Light Co v Holland (1889) 41 Ch D 28, CA (Eng). The granting of leave does not prevent the court from setting aside the third-party proceedings later under r 4 (post). 310 A third-party notice should not be granted if the defendant does not have a prima facie case. For example, where the alleged damage flows from the plaintiff's wrong, it is obviously inappropriate to bring another person into the proceedings for this Purpose: Muhamad Saleh bin Hashim 315 v Percon Corp Sdn Bhd [2003] 6 MLJ 483. S/N BAPi1bK88kKljSh3iK6gug [23]. Upon reviewing the evidence on appeal, it is clear that the prima facie case lies solely against the sub-tenant, Sik. The Sessions Court Judge erred in issuing the third-party notice against the 320 appellants, as the alleged wrongdoing arose from acts solely attributable to Sik, not the appellants. Conclusion [24]. This court finds that the Sessions Court erred in failing to recognise that Chu's proper cause of action lay in tort against 325 Sik, not in contract against the appellants. The tenancy agreement does not support indemnity liability as the clauses relied upon are inapplicable. There is no basis for contribution as Sik and the appellants are not joint tortfeasors. Further, the third-party notice appears to have been obtained without full 330 disclosure. Accordingly, the third-party proceedings are set aside. As such, the appeal is allowed with costs of RM1,500, to the appellants. Dated : 19 November 2025 335 [MOSES SUSAYAN] JUDGE HIGH COURT IN MALAYA AT IPOH, PERAK 340 S/N BAPi1bK88kKljSh3iK6gug Counsel : For the appellants : Kelvin Ding Advocates and Solicitors [Messrs Ng Hock Cheh & Co] 345 Sitiawan, Perak For the respondent : Jaswant Kaur d/o Ram Singh Advocates and Solicitors [Messrs Nesamalar & Associates] 350 Ipoh, Perak Headnotes TORT: Indemnity Electricity theft by sub-tenant Whether tenant 355 liable Whether cause of action against tenant lies in tort or contract Whether landlord misled court in obtaining leave to issue third-party notice Sub-tenant admitted sole wrongdoing Whether Sessions Court erred in allowing third-party proceedings against tenant 360 CIVIL PROCEDURE: Third-party proceedings Leave to issue third-party notice Whether court retains discretion to set aside notice post-leave Whether prima facie case shown Misrepresentation of material facts at leave stage 365