Advantage Marine Services (M) Sdn Bhd v Ts Maritime Sdn Bhd (WA-28NCC-987-12/2022)

The Petitioner claims that the Respondent owes the Petitioner the sum of RM1,090,000.00 for services rendered to the Petitioner. The services are for the re-floating of a vessel called Ocean Serene (“the Vessel”) at Sungai Klang (“re-floating services”).

The Petitioner issued a statutory notice under section 466(1) of the Companies Act 2016 (“CA 2016”) dated 21.11.2022 and served the same on the Respondent. After the expiry of 21 days from the date of service of the notice, when the Petitioner received no response from the Respondent, the Petitioner filed this petition to wind-up the Respondent.

The Respondent issued a purchase order (“PO”) to the Petitioner to provide re-floating services for the Vessel at Port Klang and upon successful re-floating, to hand over the Vessel to the owner’s representative, to be towed away.

The Petitioner sent a quotation following the receipt of the PO from the Respondent. The price for the re-floating services was quoted at RM770,000.00 and agreed to by the Respondent (“the Original Contract”).

After the Respondent accepted the quotation, the Petitioner avers that it undertook an assessment of the risks involved in the job scope for the re-floating services and decided to charge an additional sum. The parties agreed to the additional charge of RM670,000.00 after some negotiations between the dates of 25.03.2022 and 13.04.2022.

The Petitioner avers that it had successfully refloated the Vessel, which was evidenced by a letter of accomplishment dated 19.05.2022 issued by the Respondent.

Following the agreement for the additional charges, the parties executed a new agreement dated 21.07.2022 (“Variation Agreement”). Amongst the terms of the Variation Agreement is that the additional charges will be paid over four (4) installments.

The Respondent had paid an initial deposit of RM 350,00.00 upon accepting the initial quotation from the Petitioner, leaving a balance sum of RM420,000.00 from the Original Contract.

When the Respondent failed to pay the balance sum of RM420,000.00 from the sum agreed in the Original Contract, the Petitioner issued a notice of demand to the Respondent dated 17.08.2022.

In response to the notice dated 17.08.2022 from the Petitioner, the Respondent via a letter dated 30.08.2022 proposed to pay the balance sum of RM420,000.00 in 12 monthly installments.

In reply to the Respondents letter dated 30.08.2022 the Petitioner through its solicitors’ letter dated 20.09.2022, rejected the Respondent’s proposal of settlement and counter-proposed payment of both the balance Original Contract sum of RM420,000.00 and the Variation Agreement sum of RM670,000.00 in eight (8) monthly installments.

The Respondent replied via an email dated 05.10.2022 stating (reproduced verbatim) as follows: “TS Maritime at this moment is incapable of entertaining client instruction We are trying hard to make our company stable and running smooth as before in order to pay all debts:” (See Exhibit TKS-7, Petitioners Affidavit in Reply (“AIR”))

It is noted that by this email dated 05.10.2022, the Respondent did not raise any issue of non-performance by the Petitioner or any failure to re-float the Vessel by the Petitioner. It merely stated that the Respondent was not in a financial position to make any payment to the Petitioner.

Since the Respondent in its email of 05.10.2022 admitted that it was in a poor financial position, the Petitioner thereafter issued a statutory notice under section 466(1) of the CA 2016 dated 21.11.2022. It is also noted that the Respondent did not reply to the statutory notice nor did it deny receiving the notice. The Petitioner thereafter filed this petition seeking an order to wind-up the Respondent.

The main issues raised by the Respondent in opposing this petition are that:

The contract is based on a “No Cure No Pay Basis”, which means that the Petitioner is not entitled to any payment if it fails to re-float the Vessel within the period specified in the Original Contract.

(ii) The maximum period of re-floatation works must be done within 45 days of the start of the contract, which is 04.10.2021. Thus, the work should be completed by 28.11.2021.

(iii) The scope of work for re-floating the Vessel includes “safe towing of the ship to any shipyard for repair works on the vessel”. (see paragraph 4 of the Respondent’s written submission in Enclosure 19). [16] In essence, the Respondent’s case is that the Petitioner has breached the terms of the contract by failing to re-float the Vessel within the time prescribed, since time has been made “of the essence”. [17] The Respondent avers that the Petitioner’s failure to perform the contract is evidenced by the Non-Performance of Salvage Work dated 22.07.2022 from the ship manager of the Vessel’s owner. [18] The Respondent avers that the Petitioner failed to “dewater” the Vessel, thus the Vessel could not be towed to the shipyard to commence repair work. (see paragraph 10 of Enclosure 19) [19] Consequent to the breach of the terms of the contract, the Respondent has a valid cross-claim against the Petitioner. FINDINGS OF THIS COURT [20] Having read the affidavits and submissions by both parties, this Court finds that the Respondent has failed to raise any bona fide dispute to the Petitioner’s claim herein for the following reasons:

The Respondent in its letter to the Petitioner dated 30.08.2022 proposing payment of the balance Original Contract sum in eight (8) installments and the Respondent’s email reply of 05.10.2022 to the Petitioner’s demand did not make any reference to any breach of the contract or failure to re-float the Vessel as alleged by the Respondent. The Respondents letter dated 30.08.2022 only contains an admission that the Respondent was in a dire financial position and thus, was unable to pay its debt until the Respondent was in a more stable condition.

(ii) It is improbable that the Respondent could have overlooked to raised such an important issue as the alleged total failure to re-float the Vessel in its reply email dated 05.10.2022. I am persuaded by the decision of Gopal Sri Ram JCA (as he then was) in the case of David Wong Hon Leong v Noorazman Adnan [1995] 4 CLJ 155 where his Lordship said: “During argument, we registered our surprise at the learned Judge’s reluctance to enter judgment for this sum of RM100,000. After all, the appellant had failed to respond to the letter of 17 December. If there had never been an agreement as alleged, it is reasonable to expect a prompt and vigorous denial. But, as we have pointed out, there was no response whatsoever from the appellant. It must also be noted that in commercial cases (not civil), courts have taken notice that, in the ordinary course of business, if one man of business states in a letter to another that he has agreed to do certain things, the person who receives that letter must answer it if he means to dispute the fact that he did so agree (see PECD Construction Sdn Bhd v Freehold Point Sdn Bhd [2008] 3 CLJ 215).” The above decision was quoted with approval by Hamid Sultan Abu Backer in the case of Small Medium Enterprise Development Bank Malaysia v Lim Woon Katt.

(iii) On the issue of time being of the essence, the Respondent submits that the re-floatation services shall have been completed by 28.11.2021. This issue was never raised by the Respondent in its reply to the Petitioner’s letters rejecting the Respondent’s proposal for settlement by installments. The signing of the Variation Agreement about eight (8) months after the proposed date of completion renders time for completion to be at large and no longer relevant.

(iv) The Respondent also submits that the Notice of Non-Performance dated 22.07.2022 from the ship manager of the Vessel’s owner is evidence of the Petitioner’s failure to successfully complete the re-floatation services. It is noted that the Respondent did not disclose to this Court that the ship owner and the Respondent have the same shareholders and also common directors. (see exhibit TK5-9 Enclosure 28).

The Notice from the ship owner is dated 22.07.2022, which happens only one (1) day after the date of the Variation Agreement. It is curious why the Respondent would sign the Variation Agreement and the next day, the same directors of the Respondent acting in a different capacity would give Notice of Non-Performance to its related company.

(vi) Additionally, in its reply to the Petitioners notice of demand dated 17.08.2022, the Respondent in its letter dated 30.08.2022, did not refer to the alleged Notice of Non-Performance given to it by the ship owner more than one month earlier. Thus, this Court is persuaded by the Petitioner’s submission that the Notice of Non-Performance is a concoction and an afterthought by the Respondent. [21] For the reasons given in paragraph 20 above, this Court finds that the Respondent has failed to raise a bona fide dispute on substantial grounds to the sum claimed by the Petitioner. Therefore, the orders prayed for by the Petitioner are hereby allowed with costs of RM7,000.00 to be paid out of the assets of the Respondent. Dated 20 June 2024 ……………..t.t….………… Ahmad Murad Bin Abdul Aziz Judge High Court of Malaya Kuala Lumpur COUNSEL FOR THE PETITIONER: MR CHAI YEE MAN SOLICITORS FOR THE PETITIONER: TETUAN CHOO & K.C. KOK COUNSEL FOR THE RESPONDENT: MS JAMIATUL ADAWIYAH SOLICITORS FOR RESPONDENT: TETUAN ABDUL RAHMAN AZUBIR & CO Cases Referred to: ➢ David Wong Hon Leong v Noorazman Adnan [1995] 4 CLJ 155 ➢ Small Medium Enterprise Development Bank Malaysia v Lim Woon Katt [2016] 9 CLJ Legislation Referred to: ➢ Companies Act 2016 Decision date: 09.11.2023