Archipelago Insurance Limited v Eaglexpress Air Charter Sdn Bhd (22NCVC-483-09/2015)

The Plaintiff’s claim is a simple and straightforward claim for debts overdue. By the Plaintiff’s documentary evidence, it is crystal clear that such debts were overdue and this fact is even admitted by the Defendant themselves. 2

Given the same straightforward nature of this claim, the Plaintiff has applied for the case to be summarily disposed under Order 14 of the Rules of Court 2012 (“Rules”).

Archipelago Insurance Limited (“Plaintiff”) is an insurance company registered under the Labuan Financial Services Authority Act 1996 with offices in the Federal Territories of Labuan as well as Kuala Lumpur.

Eaglexpress Air Charter Sdn Bhd (“Defendant”) is a Malaysian Private Limited Company incorporated under the Companies Act 1965.

The Plaintiff has from 2013 up to the time of this dispute, issued 25 aviation insurance coverage policies (“contracts”) in which the Defendant, upon fair negotiation of the premium prices, and terms of coverage, has at all material times accepted the contracts with no spec of protest whatsoever.

At all material times, the Plaintiff has issued debit notes and contracts which includes a payment schedule in each and every single contract issued, received, and accepted by the Defendant. 3

The Defendant had defaulted to pay the premiums as had been agreed. Upon these various defaults by the Defendant, the Plaintiff out of its own good will, has adjusted the overdue premiums and given the Defendant a discount in which the Plaintiff and Defendant has entered into a settlement agreement on 30.3.2015. It must be noted that the Defendant again, has never protested or raised any issues with regards with the insurance charges and prices set by the Plaintiff.

The salient terms of the settlement agreement are that the Defendant agrees to pay the outstanding amount of USD1,880,052.78 in 7 instalments for overdue premiums between 1.10.2013 to 1.4.2015 and that if so the Defendant defaults any of the scheduled instalments, the unpaid balance would immediately become due and payable. In total acknowledgment and admission of the debt and the legally binding nature of the settlement agreement, the Defendant had proceeded to pay 2 out of 7 instalments in conformity of the settlement agreement.

When the Defendant defaulted to pay the remaining balance, the Plaintiff has now sought to enforce the settlement agreement. 4

However, despite the Defendant’s numerous admissions and acknowledgments of the debts, the Defendant is still disputing the Plaintiff’s claim and resisted the Order 14 application by contending that there are triable issues for which this Court should not allowed summary judgment to be entered against the Defendant. B. NO TRIABLE ISSUES AGAINST THE CLAIM AND APPLICATION

The Defendant had twice admitted and acknowledged its indebtedness and operability of the contracts [11] It is trite law that a party should not be allowed to approbate and reprobate its stance. Similarly the Defendant cannot be allowed to admit the debt, and also deny the debt on the same breath. This Court finds guidance in the Court of Appeal decision in the case of Cheah Theam Kheang v City Centre Sdn Bhd & Other Appeals (2012) 2 CLJ 16 regarding the Defendant’s conduct of blowing hot and cold with its stance: 5 “In other words of Sir Nicolas Browne-Wilkinson VC in Express Newspapers Plc v News (UK) Ltd and Others (1990) 3 All ER 376 at pp. 383 to 384: There is a principle of law of general application that it is not possible to approbate and reprobate. That means you are not allowed to blow hot and cold in the attitude that you adopt. A man cannot adopt two inconsistent attitude towards another : he must elect between them and, having elected to adopt one stance, cannot thereafter be permitted to go back and adopt an inconsistent stance.” (See also Boustead Trading (1985) Sdn Bhd v Arab Malaysian Merchant Bank Bhd [1995] 3 MLJ 331) [12] The clear undisputed facts of the present case are that notwithstanding the Defendant’s abrupt and last-minute protest against the debts, the Defendant prior to its latent protest has twice admitted to the operability of the contracts as well as the premiums which falls due for payment by the Defendant. [13] Firstly, the Defendant has admitted and acknowledged the contracts and the debts due at all material times when the 6 contracts were issued and incepted by the Plaintiff, received and accepted by the Defendant without a single protest. There was never any issue raised about overcharges or prices. The Defendant has unconditionally accepted and admitted the debts and contracts as well as the coverage out of its own volition. There is a total absence of protest by the Defendant when the numerous debit notes and policies were received by the Defendant. [14] Secondly, the Defendant has all this while enjoyed the coverage furnished by the Plaintiff. And now, after enjoying the benefits of the contracts, the Defendant tries to avoid the payments due arising from these contracts. [15] Thirdly, the Defendant has for the second time around admitted and acknowledged the premiums due and the operability of the contracts when they agreed to the terms of the settlement agreement. The Defendant has unequivocally agreed to its indebtedness to the Plaintiff in agreeing to pay the overdue sum of USD1,880,052.78. In fact, in further admission and acknowledgment of its indebtedness, the Defendant has proceeded to pay 2 out of 7 instalments in conformity of the settlement agreement. 7 [16] Thus, this Court has no hesitation to dismiss the Defendant’s contention that the Plaintiff has failed to prove that there are binding contracts between the Plaintiff and the Defendant. This is sheer absurdity. If indeed there were no any legally binding contracts between the parties, the Defendant would have not admitted the debts and overdue of premiums. It is well within the knowledge and intent of the parties, especially the Defendant that the policies are binding as contracts. The Defendant has never protested to the debit notes and policies. The Defendant has admitted to the accrual of the premiums and binding nature of contracts twice.

(ii) The Defendant has twice admitted to the price and charges of the premiums: There is no overcharge by the Plaintiff [17] The Defendant in its attempt to escape from its liability to pay has also raised a defence that the Plaintiff has overcharged the Defendant with respect to the payable premiums on which some portions of the premiums had already been paid twice, admitted and acknowledged. In support of the overcharging contention, the Defendant tried to rely on numerous documents. Firstly, the 8 Defendant sought to prove that the Plaintiff has charged coverage for protection which allegedly has already been obtained by the Defendant with other insurers. In proving this contention, the Defendant refers to two third party agreements, being ACMI agreements with Saudi Arabian Airlines as well as National Air Services Company (“NAS holding”) [18] However, it is easy to see that the Plaintiff is not even a party to these third party agreements. The Plaintiff is not a party, and not even privy to even be aware of the existence of these third party agreements. The Defendant has not proven that such fact would be within the Plaintiff’s knowledge. [19] In the Defendant’s attempt to prove the Plaintiff’s knowledge of these third party agreements, the Defendant sought to refer to a Contract Endorsement dated 1.1.2015 by its reinsurance broker, Dashwood Brewer and Phipps (“Dashwood”) which was issued only 26 months, which was MORE THAN TWO YEARS after the contracts with the Plaintiff were incepted. 9 [20] In this instance, it is more probable than not that, at all material times during the insurance coverage, the third party agreements were never within the Plaintiff’s knowledge. [21] The Defendant has also referred to the rates which were charged by the Defendant’s new reinsurer Willis Limited, which were supposedly much lower premiums compared to the Plaintiff’s rates. [22] This Court has no hesitation to find the irrelevance of these rates charged by Willis Limited. Whatever price of the premiums, it has already been discussed, deliberated, and agreed upon years ago when the contracts with the Plaintiff were incepted. Furthermore, rates charged are totally within the domain of the parties’ freedom to contract. It is within parties’ freedom to agree to terms. Merely proving that the Defendant was able to strike a more lucrative deal with another reinsurer does not prove the unfairness or an overcharge of the Plaintiff’s rates. If that be the case, then the business structure will break as parties are allowed to abandon their contracts and their dues every single time they were able to find a more favourable contract than what they have initially agreed to. 10 [23] It is more obvious to note that the Defendant itself has expressed to Dashwood, that the Plaintiff’s contracts are more economical option vide the Defendant’s own email to Dashwood dated 20.8.2013. The Defendant had written that it intends to change “the local cedant company from Etiqa to Archipelago Insurance Limited as this is more economical for Eagle to do so”. Clearly, here the Defendant has deliberated upon the premium prices quoted by the Plaintiff for its policies. And with this conscious deliberation, it is the Defendant’s own finding and admission that the Plaintiff’s premiums are fair and economical. [24] Parties have ample opportunity to exercise their freedom to contract. This Court cannot override a contract which has been properly agreed with voluntarily and consensually, merely on the grounds that a party alleges unfair prices and overcharges which for years they have expressly agreed to and admitted to without a single protest. [25] All terms especially on the premium pricing have been discussed twice at this very moment. What more could an insurance subscriber ever ask for? The premium price has been negotiated first, when the Defendant subscribed to the numerous policies 11 since 2013, without any protests. Then upon default of a majority of the premiums due, the Defendant has negotiated and agreed for the 2nd time around, the premium prices without a spec of protest, when the Settlement Agreement was entered into. [26] Clearly this ‘new discovery’ of overcharges is an afterthought by the Defendant to avoid liability to pay. [27] It must be reiterated that the Defendant had all the opportunity to query and dispute the insurance coverage by the Plaintiff if indeed the Defendant genuinely has no need of the Plaintiff’s coverage. Instead the Defendant had enjoyed the coverage and agreed to the premium twice. Firstly, at the inception of the policies, and for the 2nd time when the Defendant agreed to the settlement agreement and was two instalments deep in conformity with the legally binding settlement agreement. [28] Furthermore, whatever excess charges (if any) genuinely within the Plaintiff’s claims have already been resolved when the total premiums due were already adjusted, discounted, and agreed upon by both the Plaintiff and the Defendant in agreeing to the final and total amount due under the settlement agreement. 12 [29] Here, the issue of the excess charges has already been laid to rest. It has been resolved and agreed to have been resolved by the Defendant. Therefore, on the same principle highlighted above, the Defendant cannot now be allowed to go against its own admission and acknowledgment.

(iii) The Defendant was not under undue influence in making the two payments under the settlement agreement [30] The Defendant has also contended that it has acceded to the settlement agreement only because it was threatened by the Plaintiff that the contracts and coverage would be cancelled if the payments were not made. [31] This Court must emphasise that the cancellation and recalling of all remainder payment is well within the rights of the Plaintiff as creditor and insurer. It is absurd that the Defendant purports that the Plaintiff should continue to furnish 100% coverage even when the Defendant has not fulfilled its end of the bargain to pay for the Plaintiff’s coverage. No contracting party could expect to be left unscathed when he has failed to honour his part in the contract. 13 Whatever ‘pressure’ or whatever ‘threat’ felt by the Defendant is borne out of its own conduct in breaching the contracts with the Plaintiff. The ‘threat’ felt is actually the Defendant’s own self-imposed fear knowing that it has to suffer the adverse consequences in failing to pay its dues which has for time and time again been admitted as well as acknowledged by the Defendant itself.

(iv) the issue on the broking slips is a non-issue [32] There is no necessity for this Court to deliberate on this minute issue considering the mass of admission and acknowledgement of the premium rates and indebtedness by the Defendant. The Defendant contends that the Plaintiff has failed to abide by aviation industry standards to prove its charges in failing to furnish to the Defendant, broking slips for its contracts. [33] The issue of proof of the debts and rates is already academic at this juncture. The Defendant has for numerous times admitted and acknowledged the indebtedness and the amount of indebtedness that it is verily clear that the Defendant has agreed to the amount outstanding as stated by the Plaintiff. The amount and proof of the 14 amount of indebtedness were never an issue to begin with. It is already patently clear that the Plaintiff has clearly proven its claim. [34] Nonetheless, the proper body in which the Defendant ought to request for the broking slip is its own broker and not the Plaintiff. The Plaintiff is an insurance company and not a broker. C. COURT’S DECISION [35] The trite requisites of an application under Order 14 of the Rules has again been reiterated in the Federal Court’s decision in the case of Cempaka Finance Bhd v Ho Lai Ying & Anor [2006] 3 CLJ 544: “In an application under O.14, the burden is on the Plaintiff to establish the following conditions: that the Defendant must have entered appearance; that the statement of claim must have been served on the defendant; that the affidavit in support must comply with r.2 of O.14 in that it must verify the facts on which the claim is based and must state the deponent’s belief that there is no defence to the claim… Once these conditions are fulfilled, the burden then shifts to the defendant to raise triable issues. The law on this is trite” 15 [36] With the foregoing deliberations and findings, it is this Court’s findings that the Plaintiff has successfully fulfilled all of the requisites of a summary judgment and proved that the Defendant indeed has no defence at all against the Plaintiff’s claim. The Defendant who has time and time again admitted its indebtedness to the Plaintiff has ultimately failed to prove any feasible defence or triable issues against the Plaintiff’s claim and application under Order 14 of the Rules. [37] Thus, this Court hereby grants order-in-terms to the Plaintiff’s application under Order 14 and enters summary judgment against the Defendant. The Defendant is hereby ordered to pay costs of RM5,000.00 to the Plaintiff. ...................................................... (DATUK AZIMAH BINTI OMAR) Judicial Commissioner High Court Shah Alam Selangor Darul Ehsan Dated the 15th February of 2016 16 For the Plaintiff - Messrs Murali B. Pillai & Associates Cik Chrishantini For the Defendant - Messrs Surend Mokhzani & Partners Cik Subitra Dali