Concrete Engineering Products Berhad v Greegroup Eng Sdn Bhd & Anor (WA-22C-34-03/2017)

GREENGROUP ENG SDN. BHD.

MONTANE CONSTRUCTION SDN. BHD. (COMPANY NO: 962941-V) ... DEFENDANTS THE JUDGMENT OF Y.A. LEE SWEE SENG [1] The Plaintiff is the supplier of prestressed spun concrete piles. The Second Defendant, Montane Construction Sdn Bhd, is the main contractor of the project “Cadangan Pembangunan Perniagaan Bercampuran 32 Tingkat Di Atas Lot 10372 & Lot 10373 (Lot 106 & 107), Pulau Melaka, KB XLIII, Daerah Melaka Tengah, untuk Tetuan Gold Mart Sdn Bhd” (“the said 2 Project”) whereas the First Defendant is the sub-contractor appointed by the Second Defendant for piling and pilecaps work for the said project. Project [2] The First Defendant placed orders with the Plaintiff for supply of prestressed spun concrete piles for the said project. In addition, the Second Defendant via a Letter of Undertaking dated 5.11.2015, undertook to deduct from any outstanding sum owing to the First Defendant and make direct payment to the Plaintiff on behalf of the First Defendant in the event that First Defendant fails to settle the payment due for spun pile purchased for the said project. It reads: “As requested by Green Group Eng Sdn. Bhd., we would like to inform that in the event if Green Group Eng Sdn. Bhd. fails to settle the payment due for the spun pile purchase for the above mentioned project, we hereby undertake to deduct from any outstanding sum owing to Green Group Eng Sdn. Bhd. and shall pay on their behalf directly to you for the settlement in part or in full of the amount. However, if there is no outstanding payment between Green Group Eng Sdn. Bhd. and us, we shall not be responsible to you 3 for any outstanding payment by Green Group Eng Sdn. Bhd”. (emphasis added) [3] The said Letter of Undertaking is clearly a conditional Undertaking conditional on there being an outstanding payment between the First Defendant and the Second Defendant. Problem [4] As narrated by learned counsel for the Plaintiff, the Plaintiff’s claim is entirely based on the First Defendant’s failure to make payment for the prestressed spun concrete piles supplied by the Plaintiff, which the First Defendant as at the date of filing of the present action had failed to deny or dispute the sum owing by them to the Plaintiff. [5] As at 30.6.2016, the consultant of the said Project had approved payments by the Second Defendant to the First Defendant in Interim Certificates No.1 to 7 and the outstanding sum and payable to the First Defendant is RM13,321,169.45. As at 30.6.2016 which is the date of the last invoice issued by the Plaintiff, the sum payable to the Plaintiff for the entire supply of concrete piles for the said Project is RM12,386,220.83. 4 [6] Nevertheless, the Second Defendant only made payment for the sum of RM6,300,000.00 to the Plaintiff as at the issuance of interim certificate 7. Therefore, the Plaintiff argued that the Second Defendant had breached their Undertaking to the Plaintiff because they had failed to make payment to the Plaintiff even though there is outstanding sum and payable to the First Defendant. [7] The Second Defendant had made the last payment on 13.9.2016 of RM1,200,000.00 to the Plaintiff and such sum is not enough to settle the outstanding sum to the Plaintiff and there is an outstanding sum of RM4,886,220.83 which is the sum claimed by the Plaintiff against both the Defendants. [8] The Plaintiff argued that the Second Defendant had breached their Undertaking to the Plaintiff and made payment to third parties and to themselves from the outstanding amount which was supposed to be paid to the Plaintiff. It was argued that the Second Defendant had breached the Undertaking when it failed to deduct and pay out to the Plaintiff from the monies which became due and payable by the Second Defendant to the First Defendant under numerous Interim Certificates of Payment. 5 Prayers [9] There were two applications before the Court. The first was in Enclosure 12 being the Plaintiff’s application for summary judgment against the Second Defendant and the second being Enclosure 14, the Plaintiff’s application for summary judgment against the First Defendant. Both are for the sum of RM4,886,220.83 as at 30.6.2016 together with interest at the rate of 1.5% per month from 1.7.12016 until full realization. Principles [10] The principle of law with respect to summary judgment is plain to all. Learned counsel for the Plaintiff referred to the Federal Court case of National Company For Foreign Trade v Kayu Raya Sdn Bhd [1984] 2 MLJ 300 at page 301 – 302 where it was held that: “…We think it appropriate to remind ourselves once again that in every application under Order 14 the first considerations are (1) whether the case comes within the Order and (b) whether the plaintiff has satisfied the preliminary requirements for proceeding under Order

For the purposes of an application under Order 14 the preliminary requirements are: 6 i. the defendant must have entered an appearance; ii. the statement of claim must have been served on the defendant; and iii. the affidavit in support of the application must comply with the requirements of Rule 2 of the Order 14… ... If the plaintiff fails to satisfy either of these considerations, the summons may be dismissed. If however, these considerations are satisfied, the plaintiff will have established a prima facie case and he becomes entitled to judgment. The burden then shifts to the defendant to satisfy the Court why judgment should not be given against him [see Order 14 Rules 3 and 4(1)]. … The question before us is whether the respondent by this affidavit has satisfied the learned trial Judge that a bona fide arguable defence has been raised which ought to be tried.” (emphasis added) 7 [11] The case of Bank Negara Malaysia v Mohd Ismail & Ors [1992] 1 MLJ 400 was also referred to by the Plaintiff. There the Supreme Court observed as follows at page 408: “In our view, basic to the application of all those legal propositions, is the requirement under O 14 for the court to be satisfied on affidavit evidence that the defence has not only raised an issue but also that the said issue is triable. The determination of whether an issue is or is not triable must necessarily depend on the facts or the law arising from each case as disclosed in the affidavit evidence before the court… Under an O 14 application, the duty of a judge does not end as soon as a fact is asserted by one party, and denied or disputed by the other in an affidavit. Where such assertion, denial or dispute is equivocal, or lacking in precision or is inconsistent with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable in itself, then the judge has a duty to reject such assertion or denial, thereby rendering the issue not triable. In our opinion, unless this principle is adhered to, a judge is in no position to exercise his discretion 8 judicially in an O 14 application. Thus, apart from identifying the issues of fact or law, the court must go one step further and determine whether they are triable.” (emphasis added) [12] Order 14 rule 1 and 2, Rules of Court 2012 (“ROC 2012”) provides as follows:

“Application by plaintiff for summary judgment (O. 14, r. 1)

Where in an action to which this rule applies a statement of claim has been served on a defendant and that defendant has entered an appearance in the action, the plaintiff may, on the ground that the defendant has no defence to a claim included in the writ, or to a particular part of such a claim, or has no defence to such a claim or part thereof except as to the amount of any damages claimed, apply to the Court for judgment against that defendant.

Subject to paragraph (3), this rule applies to every action begun by writ other than—

a claim by the plaintiff for libel, slander, malicious prosecution, false imprisonment, seduction or breach of promise of marriage; or 9

a claim by the plaintiff based on an allegation of fraud.

This Order does not apply to an action to which Order 81 applies.

Manner in which application under rule 1 shall be made (O. 14, r. 2)

An application under rule 1 must be supported by an affidavit in Form 13 verifying the facts on which the claim, or the part of a claim, to which the application relates is based and stating that in the deponent’s belief there is no defence to that claim or part, as the case may be, or no defence except as to the amount of damages claimed.” [13] I agree with learned counsel for the Plaintiff that the preliminary requirements under Order 14 rule 1 and 2, ROC 2012, have been satisfied to enable the Plaintiff to file the present applications for summary judgment against both the Defendants : i. the Defendants have entered an appearance; ii. the Statement of Claim have been duly served on the Defendants; iii. the Plaintiff’s action in the present case does not fall within the ambit of Order 14 rule 1(2) and (3); and 10 iv. the affidavits in support of the present applications have been complied with the requirements under Order 14 rule 2. [14] That is the correct approach to follow in a summary Judgment application under O 14 r 1 (1) ROC 2012. The Plaintiff had established a prima facie case against both the Defendants and becomes entitled to judgment. The burden then shifted to the Defendants to satisfy this Court why judgment should not be given against them and the Defendants, in opposing the Plaintiff’s applications for summary judgment, must satisfy this Court on affidavit evidence or otherwise that they had raised a triable issue or bona fide arguable defence which ought to be tried in full trial or that there ought for some other reason to be a trial. Whether Summary Judgment against the First Defendant should be granted in Enclosure 14 [15] I agree with the Plaintiff that the First Defendant had failed to raise any triable issue in its affidavit evidence. The First Defendant in its affidavit in reply merely denied the averments made by the Plaintiff in the affidavit in support of the application, without affording any issue of fact or law which could possibly negate the Plaintiff’s claim. 11 [16] It was argued by learned counsel for the First Defendant that the First Defendant had in its affidavit in reply alleged that the Plaintiff had failed to adduce proper document and/or invoices to prove the debt owed by the First Defendant to the Plaintiff. [17] The answer to that argument raised is found in the dicta of His Lordship VC George J (later JCA) in the case of Supreme Leasing Sdn Bhd v Dior Enterprises & Ors [1990] 2 MLJ 36 at page 38 where His Lordship held that: “The practice of exhibiting, for example, a copy of the written contract on which the claim is based or the correspondence between the parties or the invoices and delivery orders in a goods sold and delivered case may have some relevance in anticipating a contention that the plaintiffs' claim is not bona fide or some other defence, but is not necessary to meet any requirement of the O 14 procedure. In an O 14 application, the plaintiff is not required to prove his claim. In the instant case, the learned senior assistant registrar would have been justified in giving summary judgment to the plaintiff on the basis of the first affidavit filed in support of the application which had met all the requirements presented by O 14. The contention made on behalf of the defendants at the initial hearing amounted to a 12 submission that the plaintiffs had not proven their claim which, as has been seen, is not required of a plaintiff in an O 14 application.” (emphasis added) [18] In CIMB Bank Bhd v Tan Hua Peng @ Tan Kwah Peng [2012] 8 MLJ 442, I had adopted the above approach and observed as follows: “[31] I agree with learned counsel for the plaintiff that in an O 14 application, the plaintiff only needs to verify the facts on which the plaintiff's claim is based as explained by His Lordship VC George J (as His Lordship then was) in Supreme Leasing Sdn Bhd v Dior Enterprises & Ors [1990] 2 MLJ 36 : “Verification of the facts in the context of O 14 r 2 is not to be understood to mean proving the facts. The plaintiff has in effect swear to the truth of the facts on which the claim is based. It is sufficient to swear that the amount claimed is owed. It is the cause of action that has to be verified and not the results or consequences of the alleged cause of action …” [19] Following the principles in the cases referred to above, I agree that in the present Order 14 application, the facts that the Plaintiff swore in its affidavit that the amount claimed is owed by the First Defendant and 13 verified the facts on which the Plaintiff’s claim is based, the Plaintiff have satisfied the requirements of Order 14 application. Therefore, such unsupported allegation made by the First Defendant would not vitiate the Plaintiff’s entitlement to a judgment against the First Defendant under Order 14 application. [20] It is to be noted that the First Defendant had failed to plead any fact or raise any defence against the Plaintiff’s claim but merely denied the Plaintiff’s claim and put the Plaintiff to strict proof. Such a bare denial by the First Defendant both in its Defence and affidavit to oppose the summary judgment application is woefully inadequate. The case of Huo Heng Oil Co (EM) Sdn Bhd V Tang Tiew Yong [1987] 1 MLJ 139 is crystal clear on this position of the law where it observed as follows: “… Respecting the claim of the appellant for the price of the goods sold and delivered, counsel for the respondent admitted that the respondent relied on paragraph 2 of the Defence and Counterclaim. Having regard to the pleadings, this is plainly the case. It is therefore necessary to consider the said paragraph 2 which reads: "With regards paragraphs 2 and 3 of the Statement of Claim, the Defendant denies owing the Plaintiff the said sum of 14 M$18,510.87 or at all and shall put the Plaintiff to strict proof thereof." With respect, the above general denial is, in my view, bad in law. In an action for price of goods sold and delivered, it is not sufficient for the defendant to merely deny the debt; he must plead any facts which negative the existence of the debt or which show that the claim is not maintainable on other grounds… See also Chong Chow Fong v Ban Tuck (M) Sdn Bhd [1983] 2 CLJ 25 26 at page 26 where Edgar Joseph Jr. J. said: "…Indeed, if a defendant by his Statement of Defence simply "puts the plaintiff to proof of the several allegations in their statement of claim" the defendant will be taken as admitting the claims alleged in the Statement of Claim and the plaintiff would be entitled to judgment without adducing any evidence in support of his case: (see Harris v Gamble (1878 VII ChD p 877)." In opposing the application for summary judgment, the respondent must satisfy the court that with respect to the applicant's claim there is an issue or question in dispute which ought to be tried or that there 15 ought for some other reason to be a trial of that claim (0.26A r.3(1)). But this cannot be achieved by raising facts which do not constitute a defence to the claim: Hookham v Mayle (1906) 22 TLR 241 nor by a mere general denial of indebtedness…” (emphasis added) [21] Thus the First Defendant pleading and proffering a bare denial simply would not do. The First Defendant must plead facts which could negate the existence of the debt owing to the Plaintiff or which could show that the Plaintiff’s claim against the First Defendant is unsustainable. [22] I agree with learned counsel for the Plaintiff that based on the Defence and affidavit filed by the First Defendant, the First Defendant had failed to do the same as there is no issue of fact or law raised by the First Defendant to resist the Plaintiff’s claim. Furthermore, the First Defendant’s general denial of the debt owing to the Plaintiff also does not constitute a triable issue. Bereft of any triable issues, it would be both a waste of the Court’s time and resources and indeed of all parties involved if the Plaintiff’s claim would have to go for trial with witnesses that would need to be called. 16 [23] A summary judgment application is eminently suited for such a case as this where the First Defendant’s averments are hopelessly hollow such that this Court would have no compunction to allow summary judgment. [24] The conduct of the First Defendant is most telling and indeed they are estopped from denying the debt as they were fully aware of the same much earlier and did not dispute them. It is so inherently incredible for the First Defendant to merely deny the debt when all documentary evidence shows to the contrary. (See the letter of demand dated 1.11.2016 which set out the sum owing by the First Defendant to the Plaintiff, exhibited as Exhibit “LKW-2” in the Affidavit in support and Exhibit “LKW-A” in the Affidavit in reply of the Plaintiff to Enclosure 14.) [25] As for interest, there is no evidence that interest at the rate of 1.5% per month had been charged previously and that it only appears in the Statement of Account. In the circumstances of the case this Court would grant interest at 5% per annum from date of filing of writ to realization. [26] The Plaintiff’s learned counsel was agreeable to interest at 5% per annum from date of writ to realization and withdrew their claim for interest at 1.5% per month from the date claimed. 17 [27] As for costs (O59 r 22(1)(c) Appendix ROC 2012) this Court would grant costs of RM5,000.00 to be paid by the First Defendant to the Plaintiff. [28] There has not been any appeal filed by the First Defendant against this part of the Court’s decision. [29] I shall now consider the more meaty arguments with respect to the Plaintiff’s claim in summary judgment in Enclosure 12 against the Second Defendant in which there are appeals filed by both the Plaintiff and the Second Defendant. Whether there are any triable issues with respect to summary judgment for the sum that the Second Defendant had paid the First Defendant in breach of the Letter of Undertaking [30] The Plaintiff’s cause of action against the Second Defendant is for breach of undertaking given via a Letter of Undertaking dated 5.11.2015 (Exhibit “LKW-1” in Plaintiff’s affidavit in support). In essence, the said Letter of Undertaking states as follows: a) The Second Defendant undertakes to deduct from any outstanding sum owing to the First Defendant and shall make direct payment to the Plaintiff on behalf of the First Defendant in the event that First 18 Defendant fails to settle the payment due for spun pile purchased for the said project; AND b) If there is no outstanding payment between the First and the Second Defendant, the Second Defendant shall not be responsible to the Plaintiff for any outstanding payment by the First Defendant. [31] It is pertinent to note that the Second Defendant’s Undertaking was given to the Plaintiff at the request of the First Defendant. Hence, the First Defendant at all material time in all probability, would have full knowledge of the nature and extent of the Undertaking given by the Second Defendant to the Plaintiff. [32] The Second Defendant did not dispute having given the said Letter of Undertaking. What is being raised as an arguable Defence is that the said Letter of Undertaking is a conditional Letter of Undertaking conditional upon whether there is any outstanding payment between the First and the Second Defendant such that if there is none, then the Second Defendant would have no obligation to pay the Plaintiff. [33] The First and Second Defendant have a running account with respect to amount outstanding for piling Works done as well as for goods and materials purchased on behalf of the First Defendant by the Second 19 Defendant for the said Project including goods and materials purchased by the Second Defendant from the Plaintiff on behalf of the First Defendant. There were also other sub-contractors of the First Defendant which from time to time, the First Defendant had instructed the Second Defendant to pay direct to from the amounts outstanding from the Second Defendant in its Account with the First Defendant. [34] The question that arises is whether the Second Defendant has an obligation to confirm with the Plaintiff before making payments out from the amounts due under the Interim Certificates No.1-10 that had been issued so far. The fact that there are payments due under the Interim Certificates is not in dispute by the Second Defendant. [35] This is an arguable issue of mixed fact and law. The obligation to pay would generally only arise when the Plaintiff has notified the Second Defendant of a sum remaining unsettled from the First Defendant to the Plaintiff. In fact that appears to have been the practice so far as there was no complaint until when the First Defendant failed to pay the Plaintiff the outstanding sum now claimed in summary judgment. [36] This much can be said: any payments direct to the First Defendant by the Second Defendant when there are payments outstanding from the 20 First Defendant to the Plaintiff would expose the Second Defendant to a Claim by the Plaintiff for direct breach of the Letter of Undertaking. [37] It does not matter if without this payment, the First Defendant would not be able to pay its operating expenses including staff salaries and rental of equipment and the like. An Undertaking is an Undertaking and to allow a direct payment to the First Defendant when there is still an amount outstanding from the First Defendant to the Plaintiff would be to go counter to the terms of the Letter of Undertaking and to denude it of any meaning and efficacy altogether. [38] Surely it cannot stand up in law for the Second Defendant to say: “So sorry for not having made any payment to you because I need to pay the First Defendant for work done as certified under the various Interim Certificates.” The Letter of Undertaking was given by the Second Defendant to the Plaintiff at the request of the First Defendant. There is no way for the Second Defendant to avoid and wriggle its way out of its contractual obligation to pay the Plaintiff from the sum outstanding from the Second Defendant to the First Defendant, which sum the Second Defendant had paid direct to the First Defendant. 21 [39] There is thus no triable issue that would merit proceeding to trial on this type of payment. [40] I thus have no hesitation to allow summary judgment to be entered for only a part of the Plaintiff’s claim i.e. the claim for the sum of RM867,674.58 together with interest at 5% per annum from date of writ to realization with costs of RM2,000.00 being the sum that the Second Defendant had paid the First Defendant directly in breach of the Letter of undertaking. Whether the Second Defendant had breached its Letter of Undertaking to the Plaintiff when it refuses payment on ground that there is no amount outstanding as there is an LAD claim that the Second Defendant has against the First Defendant and that in effect the First Defendant still owes the Second Defendant [41] The Second Defendant alleged in paragraph 12.3 of its affidavit in reply that the Plaintiff’s action against the Second Defendant is an afterthought as the Plaintiff at all material time did not raise the issue of breach of undertaking until the issuance of Interim Certificate No.10 (in October 2016). In Interim Certificate No. 10 it is stated that the Second 22 Defendant is entitled to claim liquidated damages against the First Defendant. [42] The Plaintiff’s stand is that since the Second Defendant had known since 9.6.2016 of an amount outstanding, it does not lie in the Second Defendant’s mouth to say that it has an outstanding amount in LAD to be set-off against the amount owing by the Second Defendant to the First Defendant. At the same time, the Plaintiff also reiterated the outstanding sum and informed that they will continue to hold the Second Defendant responsible for the unpaid sum. [43] The Plaintiff’s submission on this issue is supported by the Plaintiff’s letters to the Second Defendant dated 19.7.2016 and 22.7.2016 and the Second Defendant’s letter in reply dated 3.8.2016 which is attached as Exhibit “LKW-A” in the Plaintiff’s affidavit in reply. [44] In paragraph 12 of the Second Defendant’s affidavit in reply it is stated that they had deducted such amount stated in Interim Certificate No.10 to partly satisfy their LAD claim. The Second Defendant in paragraph 14 of the affidavit in reply also alleged that the First Defendant still owes certain payment to the Second Defendant. 23 [45] The Plaintiff submitted that these issues are not relevant to the Plaintiff’s claim in this case, for the following reasons: a) Cause of action The Plaintiff’s cause of action against the Second Defendant accrued at the time when the Second Defendant failed to deduct from the amount due and payable to the First Defendant under the Interim Certificates and failed to make direct payment to the Plaintiff, of which it can be traced back to the issuance of the 1st Interim Certificate in December 2015 where there was already outstanding sum owing by the First Defendant to the Plaintiff for supply of spun piles and yet no payment was made by the Second Defendant to the Plaintiff under the 1st Interim Certificate to settle the outstanding sum but rather, full payment was made to the First Defendant. In contrast, the cause of action of the Second Defendant to claim LAD and other payments from the First Defendant is yet to accrue at the date of filing this action (March 2017) as the statement of final account was only issued in April

Thus, the Second Defendant’s LAD and other claims should not have any bearing on the Plaintiff’s claim against Second Defendant arising from the breach of undertaking; 24 b) Challenge of the First Defendant The Second Defendant’s right to claim liquidated damages and other payments has been challenged and denied by the First Defendant as stated in paragraph 7 and 9 of the First Defendant’s Defence. Therefore, the issues of whether the Second Defendant is entitled to claim liquidated damages and other payments from the First Defendant and the amount claimable from the First Defendant for the LAD and other claims (if any) are still subject to the determination of the Court in a separate suit and it is of no relevance to the Plaintiff’s claim; c) Second Defendant’s obligation to make payment under the Interim Certificate is absolute Whether or not the Second Defendant have a claim against the First Defendant, be it a LAD or other claims, the Second Defendant at all material time is still under an obligation to make payment upon issuance of the Interim Certificate. This means that the Plaintiff’s right to be paid preceded over the Second Defendant’s right on the amount stipulated under the Interim Certificates. This is even so where the Second Defendant’s LAD 25 and other claims were challenged and denied by the First Defendant. Therefore, the Second Defendant is not allowed to retain any amount due under Interim Certificate No.10 to satisfy their LAD claim as the amount ought to have been paid to the Plaintiff upon issuance of the Interim Certificate. Thus, the Second Defendant’s act of using the amount due and payable to the First Defendant under Interim Certificate No.10 to partly settle the disputed LAD claim constituted another breach of the undertaking. [46] With respect to learned counsel for the Plaintiff, I do not think that the Letter of Undertaking is so clear and unambiguous as to warrant the interpretation advanced by the Plaintiff. The fact that there is a condition attached to the Letter of Undertaking raises here an arguable Defence by the Second Defendant that if there is no amount outstanding from the Second Defendant to the First Defendant, then there is no legal obligation and hence not a breach of the Undertaking for the Second Defendant not to pay the Plaintiff. Whether or not there is an amount outstanding from the Second Defendant to the First Defendant has to be determined at trial and not by affidavit evidence when there is a dispute on the facts. [47] I do not think the condition in the Undertaking was put it as a mere appendage for decorative purposes. A condition is attached to the 26 Undertaking because the parties anticipated and accepted the fact that there may well be instances when there is no amount outstanding or that perhaps there may even be the reverse case of an amount outstanding from the First Defendant to the Second Defendant. Thus I cannot accept that the obligation of the Second Defendant to pay the Plaintiff is absolute. It is clearly conditional and whether or not this condition has been fulfilled is a matter for trial. [48] It must have been within the contemplation of the parties that if there is delay in the First Defendant completing the piling works, then there will be the LAD claim that the Second Defendant would make against the First Defendant. [49] Indeed in construction disputes almost every claim by a contractor is met with a Counterclaim by the employer whether it be for LAD or for costs of rectifying defects or additional costs incurred in engaging a new contractor to complete the Works left uncompleted by the contractor. [50] Learned counsel for the Plaintiff, in his resourcefulness, also submitted that the cause of action of the Second Defendant to claim LAD and other payments from the First Defendant is yet to accrue at the date of filing this action (March 2017) as the statement of final account was only 27 issued in April 2017. Thus, it is contended that the Second Defendant’s LAD and other claims should not have any bearing on the Plaintiff’s claim against Second Defendant arising from the breach of Undertaking. [51] I am not prepared at this summary judgment stage to conclude that the Second Defendant’s cause of action for LAD would only arise after the statement of final accounts is prepared. As reflected in Interim Certificate No. 10 the Second Defendant’s LAD Claim is already recognized and the First Defendant might well dispute it and it is precisely for this reason that summary judgment should not be allowed. The Second Defendant if it has to sue the First Defendant can claim whatever is currently outstanding and continuing if at that time it is uncertain when the First Defendant would complete the Works if at all. [52] I find the case of Syarikat Kerjasama Serbaguna Tunas Muda Sungai Ara v Ghazali bin Ibrahim [1985] 2 MLJ 225 referred to by learned counsel for the Second Defendant and the dicta at page 226 relevant: “The issue here is whether or not there is a triable defence. This simply means that it is for the Defendant to show merits, he has a good defence to the claim, or that a difficult point of law is 28 involved, or the dispute is as to the fact which is to be tried or any other circumstances showing reasonable grounds of a bona fide defence.” (emphasis added) [53] If the Plaintiff had wanted the security of payment from the Second Defendant then it should have availed itself of the instrument of an irrevocable Letter of Guarantee and Indemnity for after all, the piles are supplied for the ultimate benefit of the Second Defendant. There can even be a principal debtor clause where the obligation of the Second Defendant to pay the Plaintiff is that of a primary Obligor and not as a mere Surety. However that is not the case here. [54] Surely a conditional Letter of Undertaking to pay conditional on there being first a debt due from the Second Defendant to the First Defendant cannot be if the same effect as an irrevocable Letter of Guarantee and Indemnity. [55] At this stage of summary judgment I am not prepared to say that the law requires the Second Defendant to be so altruistic as to forsake and deny its own debts outstanding from the First Defendant and to make payments over to the Plaintiff and then to content itself by filing a separate action against the First Defendant. 29 [56] Lest I be misunderstood, all I am saying here is that there is a real triable issue as to whether or not the Second Defendant may deduct the LAD claim that it has asserted from the amount outstanding to the First Defendant for Works done. [57] Learned counsel for the Plaintiff said that even the First Defendant is disputing and denying the LAD, and that is precisely the point, it is not relevant where the Second Defendant’s obligation to pay the Plaintiff under the Undertaking is concerned. At this stage I cannot say for certain that it is not due or that even if it is due, the Letter of Undertaking compels the Second Defendant to pay over to the Plaintiff without this deduction of the LAD. [58] On that score alone the matter should go for trial. All that the Second Defendant needs to show at this stage of summary judgment is that there is at least one issue that should go for trial as it is an arguable issue and this Court would be constrained to allow the Second Defendant unconditional leave to defend and so the Plaintiff’s application for the balance sum claimed would have to be dismissed. Whether the Second Defendant had breached its Letter of Undertaking to the Plaintiff when it made various payments of behalf 30 of the First Plaintiff to Third Parties Subcontractors and Suppliers with respect to the Project [59] In paragraph 10 of the Second Defendant’s affidavit in reply, the Second Defendant stated that payments have been made upon issuance of the Interim Certificates and such payments were made in accordance with the instructions given by the First Defendant. On this issue, learned counsel for the Plaintiff submitted that the Second Defendant’s obligation to make payment to the Plaintiff by virtue of the undertaking is not subject to the instructions of the First Defendant. In other words, even though the First Defendant gave instructions to the Second Defendant as to the payment under the Interim Certificates, the Second Defendant at all material time was still under an obligation to deduct and make direct payment to the Plaintiff. [60] Learned counsel for the Plaintiff castigated the Second Defendant as having no regard whatsoever to the Undertaking given to the Plaintiff, in that it did not inform the Plaintiff of any deduction and payment made, from the monies payable to the First Defendant, to other suppliers and/or sub-contractors and to the Second Defendant themselves. (Refer to the Letter from Plaintiff to the Second Defendant dated 22.7.2016 attached as Exhibit “LKW-A” in the Plaintiff’s affidavit in reply). 31 [61] Learned counsel for the Plaintiff submitted with considerable persuasion that if the Second Defendant is to be allowed to make payment as per the First Defendant’s request and/or instructions without having regard to the Undertaking, it would ultimately defeat the purpose of the Undertaking given to the Plaintiff to secure its payment from the Second Defendant in the event that the First Defendant neglects the Plaintiff’s claim. Therefore, it was submitted that the Second Defendant’s excuse on the issue of payments made according to the First Defendant’s instructions is totally unreasonable and would not serve as a bona fide defence to the Plaintiff’s claim in this case. [62] It was further submitted by the Plaintiff that the fact that the Second Defendant made payments on behalf of the First Defendant to other suppliers and/or sub-contractor of the First Defendant instead of paying the amount due under the Interim Certificate to the Plaintiff, clearly constituted breach of the undertaking. Likewise the Second Defendant was also in breach of the Undertaking by making deductions from the amount due under the Interim Certificates for the materials purchased by them on behalf of the First Defendant for the said Project upon the First Defendant’s request. 32 [63] Learned counsel for the Plaintiff had very helpfully summarized all the relevant payments made by the Second Defendant in the table in TAB 1 of his submission for the payment details under the Interim Certificates that he had summarized from the Exhibit “TLC-4” attached in the Second Defendant’s affidavit in reply. [64] It was argued quite forcefully that the Second Defendant’s action reeks of bad faith in that after having depleted the amount owing under the Interim Certificate from which the Plaintiff is entitled to satisfy their claim, they deny the Plaintiff of their claim relying on the condition of the Undertaking, which is the Second Defendant has no obligation to pay the Plaintiff if there is no more payment outstanding to the First Defendant. [65] The Plaintiff urged this Court not to fall for such a Defence because the Second Defendant is relying on its own breach of the Undertaking in refusing to make the payments to the Plaintiff. [66] On the other hand, learned counsel for the Second Defendant submitted that his client has not only a defence against the Plaintiff’s claim, but a good and triable defence as follows: 33

The Plaintiff had supplied concrete piles to the First Defendant at the request of the First Defendant at the agreed rate and price between the Plaintiff and the First Defendant.

All the terms of payment and the price payable for the supply of concrete piles from the Plaintiff to the First Defendant is in accordance to the agreed invoice and interest between the Plaintiff and the First Defendant.

The Letter of Undertaking dated 5.11.2015 was issued at the request of the First Defendant, and it is only issued in respect of the said Project in which the First Defendant is involved. The said Letter of Undertaking is conditional upon:

If the First Defendant fails to pay for the purchase of concrete piles for the said Project, the Second Defendant undertakes to deduct any outstanding amount owed to the First Defendant and the Second Defendant shall pay on behalf of the First Defendant directly to the Plaintiff for settlement of part or all of such amount;

(ii) The Second Defendant shall not be liable to pay for any overdue payment by the First Defendant in the absence of any 34 overdue payment between the First Defendant and the Second Defendant.

The contractual relationship between the First Defendant and the Second Defendant is subject to the Letter of Award dated 10.9.2015 and the Contract between the First Defendant and the Second Defendant had been terminated by the Second Defendant’s letter dated 20.10. 2016 addressed to the First Defendant.

Whether there is any payment to be made by the Second Defendant to the First Defendant is subject to the interim certificates of the said Project’s consultant (“Interim Certificates”) which provides that the Second Defendant shall make payments (whether directly or indirectly) to the First Defendant in accordance to the said Interim Certificates based upon the contractual obligations of the Second Defendant to the First Defendant.

The Second Defendant had made payments to the First Defendant when the said Interim Certificates were issued to the Second Defendant and the Second Defendant had made direct payments to the Plaintiff and other suppliers of the First Defendant only upon the express request of the First Defendant. Such payments were based 35 upon the said Interim Certificates as laid out in Exhibit “TLC-4” of the Second Defendant’s Affidavit in Reply upon the express requests of the First Defendant as laid out in Exhibit “TLC-5” of the Second Defendant’s Affidavit in Reply.

In consideration of the Second Defendant in agreeing to the request of the First Defendant to supply building materials to the First Defendant for the said Project, the First Defendant had agreed to pay the Second Defendant or to deduct from the sums payable by the Second Defendant to the First Defendant based upon the said Interim Certificates (Please refer to Exhibit “TLC-6” of the Second Defendant’s Affidavit In Reply).

Upon the issuance of Interim Certificate No. 10, the consultant for the said Project had confirmed that the Second Defendant is entitled to claim a sum of RM2,250,000.00 from the First Defendant being Liquidated Damages. Following through, the Second Defendant issued a letter dated 25.10.2016 to inform the First Defendant that the Liquidated Damages shall be recovered under Interim Certificate No.

In this respect, the Second Defendant did not breach any undertaking to the Plaintiff since there is no amount owing or payable from the Second Defendant to the First Defendant. 36

The Plaintiff’s claim against the Second Defendant for the sum of RM4,886,220.83 relied upon the undertaking given by the Second Defendant to the Plaintiff by the letter dated 5.11.2015 is an afterthought because at all material times, the Plaintiff had never raised any issues with regard to any breach of the said Undertaking until upon the issuance of Interim Certificate No. 10 which confirmed that the Second Defendant is entitled to claim the sum of RM2,250,000.00 from the First Defendant as Liquidated Damages. Nevertheless, the Second Defendant had never breached any undertaking to the Plaintiff since there is no overdue payments by the Second Defendant to the First Defendant (Refer to Exhibit “TLC-7” of the Second Defendant’s Affidavit In Reply).

The Second Defendant shall not be liable to the Plaintiff for any overdue payment by the First Defendant based on the following:

The First Defendant is owing to the Second Defendant based upon the Statement of Final Account which was issued by the consultant of the said Project.

(ii) Until today, there is outstanding amounts owing by the First Defendant to the Second Defendant. This can be clearly seen 37 in Interim Certificate No. 10 (Pages 172 to 190) in Exhibit “TLC- 4”. Refer to Exhibit “TLC-8” of the Second Defendant’s Affidavit In Reply.

Other than that a meeting was being held between the representatives of the Plaintiff and the Second Defendant at the Second Defendant’s office premises on 23 January 2017, the Second Defendant had never made any proposal of settlement to the Plaintiff (Please refer to Exhibit “TLC-9” of the Second Defendant’s Affidavit In Reply). [67] The Second Defendant submitted that they had fulfilled their obligations under the said Letter of Undertaking. The Second Defendant further submitted that the Court must give effect to the intention of the parties in the Letter of Undertaking. The Second Defendant referred to the case of Michael C. Solle v United Malayan Banking Corp. Bhd. [1986] 1 MLJ 45 at page 46 - 47wherein the Court held: “The principles of construction to be applied to the undertaking are similar to those applied to an ordinary contract. The intention of the parties are to be gathered from the language used. They are presumed to have intended what they said. The common and 38 universal principle is that an agreement ought to receive that construction which its language will admit, which will best effectuate the intention of the parties, to be collected from the whole of the agreement.” [68] I do not agree with the Second Defendant when it said that the Plaintiff had failed to condescend upon the particulars of how the Plaintiff arrived at the sum of RM12,386,220.83 as claimed to be payable to the Plaintiff as at final invoice dated 30.6.2016 as claimed in paragraph 10 of the Plaintiff’s Affidavit In Support. This sum has not been seriously disputed by the First Defendant. It is derived from the total sums due under the invoices issued by the Plaintiff to the First Defendant. [69] I also cannot agree with the Second Defendant when it argued that the Plaintiff had failed to condescend upon the particulars of how the Plaintiff arrived at the sum of RM13,321,169.45 as claimed to be payable to the Plaintiff based upon the said Interim Certificates No. 1 to 7 as claimed in paragraph 11 of the Plaintiff’s Affidavit In Support. As stated before, this is the total sum approved by the consultant of the said Project wherein the Second Defendant has to pay the First Defendant in interim certificates 1 to 7 and the outstanding sum and payable to the First Defendant in Interim Certificates 1 to 7 is RM13,321,169.45. 39 [70] If that is not the sum so certified, this is a matter within the knowledge of the Second Defendant and surely the Second Defendant should be able to disclose to this Court the correct amount. The First Defendant is not disputing the sum and it is rather odd for the Second Defendant to say that the Plaintiff had not descended to details when it is the Second Defendant’s own Consultant who had certified the Interim Certificates No. 1-7. [71] Equally frivolous is the Second Defendant’s contention that the Plaintiff had failed to condescend upon the particulars of their allegation that the Second Defendant had paid to the Plaintiff a sum of RM6,300,000.00 as at the issuance of the said Interim Certificate No. 7. If it is a case of the Second Defendant having paid more than that, surely the Second Defendant must produce evidence of the payment that exceeds the sum of RM6,300,000.00. [72] Similarly there is no merits in the Second Defendant’s stand that the Plaintiff had failed to condescend upon the particulars of their allegation that the Second Defendant had made a final payment of RM1,200,000.00 and that there is an outstanding sum of RM4,886,220.83 as allegedly owing by the Second Defendant to the Plaintiff as claimed in paragraph 12 of the Plaintiff’s Affidavit In Support. If that amount of further payment was not made or that a bigger sum had been paid, surely it is for the Second 40 Defendant to come forth with evidence of the correct amount. Whether or not the balance sum RM4,886,220.83 is owing is a question of law or a mixed question of law and facts for the reasons given below. [73] The Second Defendant referred to the case of Shell Malaysia Trading Sdn. Bhd. v Filotek Trading Sdn. Bhd. [1999] 8 CLJ 592 wherein the Penang High Court held as follows: “[3] A defendant may show cause against a plaintiff’s application for summary judgment by the following methods: (i) by a preliminary or technical objection; (ii) on the merits, for example, that he has a good defence to the claim on the merits or that a difficult point of law is involved or there is a dispute as to the facts which ought to be tried or there is a real dispute as to the amount due which requires the taking of an account to determine the amount due or any other circumstances showing reasonable grounds of a bona fide defence.” (emphasis added) [74] I can accept the various propositions of law summarized in ICM Trading Sdn. Bhd. v Perniagaan Azman Bersaudara, [2006] 5 CLJ 209 where the Melaka High Court held as follows: 41 “[26] In an action for the price of goods sold and delivered, it is not sufficient for the defendant to merely deny the debt, but he must plead any facts which negative the existence of the debt, as a general denial is bad in law, adding that the defence must condescend upon particulars: per Chong Siew Fai J (later CJ (Sabah & Sarawak)) in Huo Heng Oil Co. (E.M.) Sdn. Bhd. v Tang Tiew Yong [1987] 1 MLJ 139 at 141I right column, at p. 143F left column. (See also Shell Malaysia Trading Sdn Bhd v Filotek Trading Sdn Bhd [1999] 8 CLJ 592 at 595 f-g, per Jeffrey Tan J; SJ Securities Sdn Bhd v Sahara bte Harun Civil Suit No. 22- 10-1995 High Court Shah Alam, Mallal’s Digest Volume 2(3) Civil Procedure, 4th edn., para 5893; Wong Hon Leong David v Noorazman bin Adnan [1995] 4 CLJ 155 per Gopal Sri Ram JCA, referring to Tan Cheng Hock v Chan Ghean Soo & Anor [1987] 2 MLJ 479 at p. 487 per Edgar Joseph Jr J (later FCJ) and Abdol Mulok Awang Damit v Perdana Industri Holdings Bhd [2003] 3 CLJ 497 at p. 503 c-g and 504 a-d per Richard Malanjum JCA).” [75] The request in writing for the payment to the Plaintiff under the Undertaking was made by the Plaintiff to the Second Defendant via the Plaintiff’s letter dated 09.06.2016, to settle the outstanding sum of RM5.8 million. The fact that the Second Defendant is aware of this is reflected in 42 paragraph 1 of their letter to the Plaintiff dated 03.08.2016 (5th page of the Exhibit “LKW-A” in the Plaintiff’s affidavit in reply). It would be fair to say that the Second Defendant at all material time after 09.06.2016 was aware of the outstanding sum owing by the First Defendant to the Plaintiff for the supply of spun piles. [76] Learned counsel for the Plaintiff invited the Court to examine the conduct of the Second Defendant when dealing with the amount due and payable to the First Defendant under various Interim Certificates, after the receipt of the Plaintiff’s letter on 09.06.2016 which the Plaintiff castigated as payments made in breach of the Letter of Undertaking other than the payments to the Plaintiff themselves. [77] The Plaintiff had categorized the conduct of payments by the Second Defendant into 5 different types as follows:

1st type of conduct (Conduct (i)) Instead of paying the Plaintiff, the Second Defendant had made deduction to pay to themselves for materials purchased by them for or on behalf of the First Defendant.

2nd type of conduct (Conduct (ii)) 43 Instead of paying the Plaintiff, the Second Defendant made deduction to pay to themselves for the direct purchase orders, which they themselves have made from the Plaintiff for supply of piles after Plaintiff had stopped supply to the First Defendant.

3rd type of conduct (Conduct (iii)) Instead of paying the Plaintiff, the Second Defendant made deduction to pay other suppliers and/or sub-contractors i.e. KLS Resources, Hexatech Energy and Fairdinkum Resources.

4th type of conduct (Conduct (iv)) Instead of paying the Plaintiff first pursuant to the undertaking, the Second Defendant had disbursed it to the First Defendant.

5th type of conduct (Conduct (v)) Instead of paying the Plaintiff, the Second Defendant had withheld whatever remaining amount for their LAD claim, which is in breach of the undertaking given to the Plaintiff. [78] After the Plaintiff’s letter dated 09.06.2016, there were 4 Interim Certificates issued by the Consultant of the said project: 44 I. Interim Certificate No. 7 dated 5.7.2016 – page 91 of Exhibit II. Interim Certificate No.8 dated 18.8.2016 – page 118 of Exhibit III. Interim Certificate No.9 dated 14.9.2016 – page 149 of Exhibit IV. Interim Certificate No.10 dated 14.9.2016 (typo error on the date of this Certificate) – page 174 of Exhibit “TLC-4”. CERTIFICATE NO.7 RM80,823.49 Paid to other suppliers / sub-contractors upon 1st Defendant’s instruction Interim Certificate No.7 dated 5.7.2016 Certified amount: RM1,778,158.29 All payments were made by 2nd Defendant RM791,812.95 Paid to 2nd Defendant themselves for purchase of materials (by way of deduction) RM750,000 Paid to Plaintiff RM155,521.85 Paid to 1st Defendant upon their instruction Total payments of RM1,028,158.29 made by the 2nd Defendant 45 [79] Under the Interim Certificate No.7, the certified amount payable by the Second Defendant to the First Defendant is RM1,778,158.29. The same can be seen on page 91 of Exhibit “TLC-4”. [80] Out of the certified amount of RM1,778,158.29, the Second Defendant made payment of RM791,812.95 to themselves by way of deduction for purchase of materials on behalf of the First Defendant (Conduct (i)). Also see Page 93 of the Exhibit “TLC-4”. [81] Secondly, out of the certified amount of RM1,778,158.29 under the Interim Certificate No.7, the Second Defendant upon instruction of the First Defendant, made payment to other suppliers and/or sub-contractors i.e. KLS Resources Sdn Bhd [RM70,000.00] and Hexatech Energy International Sdn Bhd [RM10,823.49] (Conduct (iii)) making a combined total of RM80,823.49. [82] Lastly, the Second Defendant paid the remaining sum under the Interim Certificate No.7, which is RM 155,521.85 to the 1st Defendant upon their request (Conduct (iv)) even though the Second Defendant has been informed of the huge outstanding sum that was owing to the Plaintiff by the First Defendant via Plaintiff’s demand letter dated 09.06.2016. This payment to the First Defendant was clearly in breach of the undertaking as 46 the Second Defendant shall deduct such amount which was due and payable to the First Defendant and make direct payment to the Plaintiff. [83] Thus, a total amount of RM1,028,158.29 under the Interim Certificate No.7 was paid by the Second Defendant to the following parties which, the Plaintiff argues, were in breach of the Undertaking given to the Plaintiff: i. other suppliers and/or sub-contractors; ii. the First Defendant; and iii. the Second Defendant themselves. CERTIFICATE NO.8 Divided into Interim Certificate No.8 dated 18.8.2016. Certified amount: RM2,885,242.47. All payments were made by 2nd Defendant RM1,225,294.28 Paid to 2nd Defendant themselves (by way of deduction) RM1,200,000 Paid to Plaintiff RM56,010.29 Paid to other suppliers / sub-contractors upon 1st Defendant’s instruction RM403,937.90 Paid to 1st Defendant upon their instruction Total payments of RM1,685,242.47 made by the 2nd Defendant RM550,789.39 was deducted for 2nd Defendant’s direct purchase order with the Plaintiff RM674,504.89 was deducted for the purchase of other materials on behalf of the 1st Defendant 47 [84] Under the Interim Certificate No.8, the Consultant certified an amount of RM2,885,242.47 to be payable to the First Defendant by the Second Defendant. The same can be seen on page 118 of Exhibit “TLC-4”. [85] Out of the certified amount of RM2,885,242.47, payments were made according to the payment chart above. Again, despite knowing that the outstanding sum owed by the First Defendant to the Plaintiff has accumulated to RM6.85 million even before the issuance of this Interim Certificate No.8 (the Plaintiff’s letter dated 22.7.2016 which informed the same to the Second Defendant has been attached as 4th page of Exhibit “LKW-A” in the Plaintiff’s Affidavit in Reply), the Second Defendant failed to fulfill their obligation pursuant to the undertaking and continued to make payment to themselves for the purchase of materials on behalf of the First Defendant via deduction from the certified amount under this Interim Certificate No.8 [RM1,225,294.28], and also made direct payments to other suppliers and/or sub-contractors [RM50,000.00 to KLS and RM6,010.29 to Hexatech, amounting to RM56,010.29 in total] and the First Defendant [RM403,937.90]. (Conduct (i), (iii) and (iv)) [86] Learned counsel for the Plaintiff pointed out that it is of utmost importance to note that the amount of RM1,225,294.28 deducted by the 48 Second Defendant for themselves under this Interim Certificate No.8, also included the amount for the Second Defendant’s direct purchase order with the Plaintiff (RM550,789.39) for the continued supply of piles to the said project. In essence, the Second Defendant purchased piles from the Plaintiff on their own, but subsequently deducted the same from the amount due and payable to the First Defendant under this Interim Certificate No.8. This is evident from the Second Defendant’s direct purchase order dated 18.7.2016 (2th page of Exhibit “LKW-A” of the Plaintiffs Affidavit in Reply) showing the Second Defendant’s deduction list and deduction form (Page 120 and 121 of Exhibit “TLC-4” of the Second Defendant’s Affidavit in Reply). Learned counsel for the Plaintiff submitted that this is not only a breach of the undertaking but also a mala fide conduct on the part of the Second Defendant by utilising the amount payable to the First Defendant under the Interim Certificate from which the Plaintiff is entitled to satisfy their claim, and the Second Defendant helped themselves to pay for their own direct purchase order. (Conduct (ii) above) [87] Under this Interim Certificate No.8, the Plaintiff submitted that the Second Defendant were in breach of the Undertaking given to the Plaintiff by making payments of RM1,685,242.47 in total, to the following parties: 49

the other suppliers and/or sub-contractors;

(ii) to the First Defendant; and

(iii) to the Second Defendant themselves (for the purchase of materials and Second Defendant’s direct purchase order with the Plaintiff). CERTIFICATE NO.9 Divided to Interim Certificate No.9 dated 14.9.2016 Certified amount: RM1,240,879.44 All payments were made by 2nd Defendant RM104,966.57 was deducted for 2nd Defendant’s direct purchase order with the Plaintiff No payment to Plaintiff RM898,101.79 Paid to 2nd Defendant themselves (by way of deduction) RM34,562.82 Paid to other suppliers/sub-contractors upon 1st Defendant’s instruction RM308,214.83 Paid to 1st Defendant upon their instruction RM793,135.22 was deducted for the purchase of other materials on behalf of the 1st Defendant Total payments of RM1,240,879.44 made by the 2nd Defendant which were in breach of the undertaking 50 [88] Under the Interim Certificate No.9, the Consultant certified an amount of RM1,240,879.44 to be payable to the First Defendant by the Second Defendant. The same can be seen on page 149 of Exhibit “TLC-4”. No payment was made to the Plaintiff under this Interim Certificate No.9. [89] Once again, the Second Defendant made direct payments, out of the certified amount of RM1,240,879.44, to the other suppliers and/or sub-contractors [RM30,000.00 to Fairdinkum Resources, and RM4,562.82 to Hexatech, amounting to RM34,562.82 in total] and to the 1st Defendant [RM308,214.83]. (Conduct (iii) and (iv) above) The remaining sum under this Certificate i.e. RM898,101.79 were deducted by the Second Defendant themselves for the purchase of materials and this amount also included another Second Defendant’s direct purchase order with the Plaintiff [RM104,966.57]. This can be seen from the Second Defendant’s purchase order dated 11.8.2016 (last page of Exhibit “LKW-A” in the Plaintiff’s Affidavit in Reply) together with the deduction list and deducted form (page 151 and 152 of Exhibit “TLC-4” in the Second Defendant Affidavit in Reply). (Conduct (i) and (ii) above) [90] Therefore, learned counsel for the Plaintiff contended, all payments made under the Interim Certificate No.9 constituted multiple breaches of the undertaking by the Second Defendant which amounting to the full 51 certified sum of RM1,240,879.44, as no payment was made to the Plaintiff at all even though this amount was due and payable to the First Defendant. CERTIFICATE NO.10 [91] The certified amount under the Interim Certificate No.10 is RM1,718,973.57 due and payable to the First Defendant (page 174 of Exhibit “TLC-4” in the Second Defendant’s Affidavit in Reply). Similarly, no payment was made to the Plaintiff. [92] The Second Defendant deducted RM762,871.26 for purchase of materials on behalf of the First Defendant (Conduct (i) above). Furthermore, the Second Defendant claimed liquidated damages (LAD) of RM2,250,000.00 from the First Defendant and withheld the remaining Interim Certificate No.10 dated 14.9.2016 (typo error) Certified amount: RM1,718,973.57 All payments were made by 2nd Defendant RM762,871.26 Paid to 2nd Defendant themselves for purchase of materials RM956,102.31 Withheld by the 2nd Defendant to partly satisfy their LAD claim 52 amount of RM956,102.31 under this Certificate to partly satisfy their LAD claim. (Conduct (v) above) [93] Learned counsel for the Plaintiff submitted that the deduction of RM762,871.26 made by the Second Defendant is obviously in breach of the undertaking for the same reason given above in the previous Interim Certificates. Other than that, learned counsel for the Plaintiff further submitted that the Second Defendant could not withhold the remaining sum of RM956,102.31 for their LAD claim. [94] Learned counsel for the Plaintiff also referred to the case of Terminal Perintis Sdn Bhd V Tan Ngee Hong Construction Sdn Bhd And Another Case [2017] MLJU 242 where it was observed that: “[145] I can appreciate that an Employer too would have its claim when the determination of the contractor's employment is validly done. However, many a time such a claim would not have crystallized yet at point of determination and is still subject to proof even in a case of an Employer's LAD claim because of section 75 Contracts Act 1950 as enunciated in the case of Selva Kumar a/l Murugiah v Thiagarajah a/l Retnasamy[1995] 1 MLJ 817...” 53 [95] I must say here that the above observation was made in the context of Adjudication where the Claimant is claiming based on its Payment Claim and not in the context of litigation where the Second Defendant who asserted an LAD that is deductible from the amount owing to the First Defendant should be given the opportunity to prove its Claim and more so when the consultant has so certified in the context of a subsequent termination by the Second Defendant for breach of the contract by the First Defendant. [96] The Plaintiff submitted that the Second Defendant breached the Undertaking when they failed to pay the Plaintiff the sum of RM1,718,973.57, being the certified amount under the Interim Certificate No.10, to settle the outstanding sum owed by the First Defendant for supply of piles. [97] As illustrated in the payment charts for the Interim Certificate No.7, 8, 9 and 10 above, the Second Defendant made payments of RM5,673,253.77 in total, to parties other than the Plaintiff, which the Plaintiff submitted were payments made in breach of the Undertaking. 54 PAYMENT DETAILS UNDER INTERIM CERTIFICATES NO. 7 TO NO. 10 Conduct (i) in para 5 Conduct

(ii) in para 5 Conduct (iii) in para 5 Conduct

(iv) in para 5 Conduct

in para 5 Certificate No. (Date) Certified Amount (RM) Payment to CEPCO (Plaintiff) Payment to Montane by Deduction (2nd Defendant) For purchase of materials Payment to Montane by Deduction (2nd Defendant) Direct Purchase Order with Plaintiff Payment to Other Suppliers and/or Sub-contractors Payment to GreenGrou p (1st Defendang) Payment to Montane for their LAD claim (2nd Defendant) 7 (5/7/2016) 1,778,158.29 750,000 791,812.95 Nil (KLS) 70,000.00 (Hexatech) 10,823.49 155,521.85 Nil 8 (18/8/2016) 2,885,242,47 1,200,000 674,504.89 550,789.39 (KLS) 50,000.00 (Hexatech) 6,010.29 403,937.90 Nil 9 (14/9/2016) 1,240,879.44 No payment 793,135.22 104,966.57 (Fairdinkum) 30,000.00 (Hexatech) 4,562.82 308,214,83 Nil 10 (14/9/2016) (typo error) 1,718,973.57 No payment 762,871.26 Nil Nil Nil 956,102.31 TOTAL 7,623,253.77 1,950,000 3,022,324.32 655,755.96 171,396.60 867,674.58 956,102.31 Payments made by Second Defendant other than to Plaintiff TOTAL: RM5,673,253.77 55 Certificate No. Amount paid by Second Defendant other than to Plaintiff (RM) 7 1,028,158.29 8 1,685,242.47 9 1,240,879.44 10 1,718,973.57 Total 5,673,253.77 [98] Learned counsel for the Plaintiff cited the case of Chase Perdana Sdn Bhd (Formerly Known As Chew Piau Bhd) v CIMB Bank Bhd [2010] 1 MLJ 685, where Justice Nallini Pathmanathan JC (now JCA) held that: “[52] The breach of an undertaking attracts damages in the same manner as a breach of contract (see Tan Sri Khoo Teck Puat & Anor v Plenitude Holdings Sdn Bhd [1994] 3 MLJ 777 at p 786). It is therefore correct to state that an undertaking is similar to that of contractual relationship.” [99] Therefore, as a result of the breach of undertaking given by the Second Defendant, the Plaintiff submitted that they are entitled to recover 56 from the Second Defendant the amount of RM4,886,220.83, being the outstanding sum owing by the First Defendant to the Plaintiff for supply of piles, which ought to be paid to the Plaintiff from the certified amount of the Interim Certificates by virtue of the Undertaking. [100] The case of Chase Perdana (supra) can be distinguished from the present case. The Defendant in that case gave a letter of undertaking to the Plaintiff that it would set aside a sum of money in the project account, from time to time, as a security for the Plaintiff. The Defendant failed to set aside any sum in the project account but argued that since no monies have been set aside, they are not liable for the Plaintiff’s claim. The Court in that case found that the Defendant did not set aside a sum of money as required by the letter of undertaking and therefore it constituted a breach of the undertaking given. As such, despite there is no remaining sum in the project account, the Court ordered judgment to be entered in favour of the Plaintiff for the amount claimed based on the Defendant’s breach of undertaking. [101] In the present case it was not a case of the sums not being set aside but that payments made to third parties had been accounted for. The question is whether it is an arguable Defence that under the conditional Letter of Undertaking, is the Second Defendant allowed to make payments 57 on behalf of the First Defendant in what appears to be a running account between the First Defendant and the Second Defendant. [102] I cannot agree more with the Plaintiff that one would have to determine the intention of the parties to the undertaking when interpreting an undertaking especially when the Undertaking is conditional. However that intention of the parties is best formed after the parties have called their witnesses to testify with respect to the context in which the said conditional Undertaking was given. I have no problem with the proposition referred to by learned counsel for the Plaintiff in the case of Lee Chin Huat & Anor v Choo Keng Hee & Anor [2013] 3 MLJ 94 where the Court of Appeal held that: “[10] In interpreting the undertaking, there was a requirement to interpret the undertaking in such a manner that would lead to a reasonable rather than an absurd result (see ICI Paints (Canada) Inc v JM Breton Plastering (1984) Co [1992] 116 NSR (2d) 385). 'A Court is entitled to consider the logical consequences of each. When one interpretation would lead to an absurdity and the other would not, the courts are entitled to conclude that the contract was not intended to produce an absurd result' (see Brinkerhoff International Inc v Numac Energy Inc [1996] AJ No 883).” 58 [103] The issue as to whether the Second Defendant is entitled to set off the sums owing by the First Defendant to the Second Defendant is a matter to be decided at trial as the way the Undertaking is worded leaves room for the argument that the condition was there for a purpose and that purpose could well be that if there is a valid LAD claim from the Second Defendant against the First Defendant, then the Second Defendant is entitled to set off this against the sums outstanding. [104] In the case of RHB Bank Berhad v Pembinaan Danau Lumayan Sdn Bhd [2017] MLJU 461 the Court, in allowing the application for summary judgment, held that: “[15.5] (e) Furthermore when the Defendant consented to the LACP and undertook to remit all amounts of the proceeds in respect of the contract to IBCSB’s Proceed Account with RHB as instructed by IBCSB, the consent and undertaking given was made without any reservations whatsoever to their rights to make deduction and set off. Therefore to claim they are entitle to do so and that such set off and deductions has resulted in zero payment to IBCSB is misleading.” [105] Learned counsel for the Plaintiff submitted that since the Undertaking was given by the Second Defendant to the Plaintiff without making any 59 provision as to their right to make deduction for themselves and others, then the Second Defendant’s obligation to make direct payment to the Plaintiff according to the Undertaking should prevail and therefore any deduction made by the Second Defendant for themselves and others would constitute breach of the Undertaking. [106] However in the present case it is arguable that the condition provides for the taking of accounts between the First Defendant and the Second Defendant as without that there is no need for the qualification that there must first be present a case where there is an amount outstanding between the First Defendant and the Second Defendant. [107] Plaintiff at all material times would have known that the First Defendant would be making its Progress Claim for work done for the piling Works and would have costed in the costs of the spun piles and the labour involved. Invariably the Progress Claims and the corresponding Interim Certificates would result in an outstanding sums due from the Second Defendant to the First Defendant. [108] The fact that the Plaintiff and the Second Defendant agreed to the Undertaking being conditional on there being an outstanding sum due from the Second Defendant to the First Defendant would suggest possibly that 60 parties allowed for set offs between the First Defendant and the Second Defendant to be considered in the equation; or at the very least that is an arguable Defence. [109] I am not prepared at this summary judgment stage to hold that in effect the Second Defendant must postpone its own claim against the First Defendant where LAD is concerned and where payments on behalf of Third Parties contractors are concerned. [110] There does not appear to be anything reflecting bad faith for the Second Defendant to order materials and goods on behalf of the First Defendant for the Project and then make deductions accordingly from the First Defendant as surely if the First Plaintiff had ordered the materials and goods and paid for them, such a purchase by the Second Defendant on behalf of the First Defendant would have been unnecessary. [111] At the very least it is an arguable Defence whether the Second Defendant is required to subordinate its own right and priority to a debt due from the First Defendant under the conditional Letter of Undertaking. [112] In the case of the spun piles purchased by the Second Defendant direct from the Plaintiff on behalf of the First Defendant, the Plaintiff had in a very real sense been paid for the piles by the Second Defendant and the 61 Plaintiff’s complaint is that the Second Defendant should not be allowed to deduct this sum from the amount owing by the Second Defendant to the First Defendant such that a lesser amount is now due to the Plaintiff from the First Defendant’s Account. [113] It can be surmised that such an Undertaking is normally entered into when the Plaintiff as supplier is not confident of the financial standing of the First Defendant to pay and so request for an Undertaking from the Second Defendant to pay. As stated if there is no such condition attached to the Undertaking, then the Second Defendant would be required to pay the Plaintiff all sums outstanding arising out of the supplies of spun piles from the Plaintiff to the First Defendant. If that had been how the Undertaking is worded without any condition or qualification, then there would have been no ambiguity whatsoever. [114] Likewise when it comes to purchase of materials on behalf of the First Defendant for the Project from other suppliers, again does the Letter of Undertaking create a priority of payment such that the Second Defendant’s debt from the First Defendant should be subordinated to that of the Plaintiff? That is best left to be decided at the trial where the intention of the parties can perhaps be better ascertained as the way the condition in the Letter of Undertaking is worded leaves room for such an argument. 62 [115] How different is that from a case where the First Defendant had expressly requested the Second Defendant to purchase materials on its behalf for the piling Works and had expressly authorized the Second Defendant to make the necessary deduction from the Interim Certificates as reflected in those Certificates? [116] Again how different is that from a situation where the First Defendant had asked for an advance from the Second Defendant to allow it to purchase materials from third parties or for that matter from the Plaintiff? [117] The Second Defendant referred to the case of Berjaya Times Squares Sdn. Bhd. (formerly known as Berjaya Ditan Sdn. Bhd.) v M Concept Sdn. Bhd. [2010] 1 MLJ 597 where it had been referred to the case of Attorney General of Belize & Ors v Belize Telecom Ltd [2009] UKPL 15 as follows: “The court has no power to improve upon the instrument which it is called upon to construe, whether it be a contract, a statute or articles of association. It cannot introduce terms to make it fairer or more reasonable. It is concerned only to discover what the instrument means. However, that meaning is not necessarily or always what the authors or parties to the document would have intended. It is the 63 meaning which the instrument would convey to a reasonable person having all the background knowledge which would reasonably be available to the audience to whom the instrument is addressed. See Investors Compensation Scheme Ltd v West Bromwich Building Society; Investors Compensation Scheme Ltd v Hopkins & Sons (a firm) & Ors; Alford v West Bromwich Building Society & Ors; Armitage v West Bromwich Building Society & Ors [1998] 1 All ER; 98 at pp 912–913 [1998] 1 WLR 896. It is this objective meaning which is conventionally called the intention of the parties, or the intention of Parliament, or the intention of whatever person or body was or is deemed to have been the author of the instrument”. (emphasis added) [118] This is one case where the background knowledge is best appreciated when the evidence is before the Court with respect to the circumstances under which the Letter of Undertaking was given and the conduct of the parties subsequent thereto until the dispute arose. The context, best known after the trial, would give the proper colour to the contractual agreement and arrangement arising out of the Letter of Undertaking. 64 [119] Likewise payments to the First Defendant’s Sub-contractors which would represent the costs to the First Defendant’s piling Works such that if these Sub-contractors are not paid, they would probably stop or slow down Work. [120] Would it have made any difference if the First Defendant had instead asked for an advance from the Second Defendant so that the First Defendant may be able to pay these Sub-contractors? Would the Second Defendant not be entitled to deduct this sum from the amount outstanding from the Second Defendant to the First Defendant? Again the question is best answered after full trial. [121] As to the issue of whether a demand is necessary before the obligation to pay under the Letter of Undertaking has arisen, that is best left to be decided at the trial. For the moment, learned counsel for the Second Defendant rightly pointed out that the letter from the Plaintiff to the Second Defendant dated 9.6.2016 is not exhibited and only at best may be taken as the date from which the Second Defendant knew of the amount outstanding from the First Defendant to the Plaintiff. 65 [122] For the moment what we have is the letter from the Second Defendant dated 3.8.16 replying to the said letter of the Plaintiff dated 9.6.16 as follows: “We would like to state the following chronological events and points to you so that both of us will fully understand the position.

We receive your 1st letter addressed to us dated 9 June 2016 stating amount owed by Green group to your company is RM 5.8 million

….” [123] Thus, learned counsel for the Second Defendant submitted that the aforesaid is the only reference to the said Letter dated 9.6.2016 and no further than that. [124] The Second Defendant further submitted that the demand for payment was made by the Plaintiff to the Second Defendant when the Notice of Demand dated 22.12.2016 was issued by Messrs. Raja Badrol, Ramli & Azizi on behalf of the Plaintiff. (Refer to Exhibit “LKW-3” of the Plaintiff’s Affidavit in Support affirmed by Leong Kway Wah on 2 May 2017). 66 [125] As at 22.12.2016, learned counsel for the Second Defendant highlighted that the relevant Interim Certificate is Interim Certificate No. 10 and Interim Certificate No. 10 reveals that the Second Defendant is entitled to recover Liquidated Damages from the First Defendant, the amount being RM2,250,000.00. [126] Earlier, the Second Defendant had issued and sent a letter dated 25.10.2016 to the First Defendant duly notifying the First Defendant that the Second Defendant will recover the said amount of Liquidated Damages from Payment Certificate No. 10 (Refer to page 178 of the Second Defendant’s Affidavit in Reply affirmed by Tan Ler Choo on 25 May 2017). It is pertinent to note that the First Defendant did not reply to the aforesaid Second Defendant’s letter dated 25.10. 2016. [127] Thus, at the point a demand for payment was made by the Plaintiff to the Second Defendant, learned counsel for the Second Defendant said that the documentary evidence revealed that no amounts were owed and/or owing by the Second Defendant to the First Defendant. On the contrary, the First Defendant is liable to the Second Defendant for the sum of RM1,293,897.69. 67 [128] The proceedings of summary judgment is totally unsuited for a matter such as this where there are many complex issues of both law and facts and mixed questions of law and facts which are best determined at the trial. Pronouncement [129] For the reasons given above, with respect to Enclosure 12 which is the Plaintiff’s application for summary judgment against the Second Defendant, I had allowed judgment for the sum paid by the Second Defendant to the First Defendant in clear breach of the said Letter of Undertaking of the sum of RM867,674.58 together with interest at 5% per annum from date of writ to realization with costs of RM2,000.00. [130] I had ordered the balance claim to proceed to trial and the Second Defendant be given unconditional leave to defend the balance claim, after satisfying myself that there were arguable defences and triable issues raised. Dated: 29 November 2017. Y.A. LEE SWEE SENG Judge High Court Kuala Lumpur 68 For the Plaintiff : Moses Susayan and Cheng Siong Kiat (Messrs Raja Badrol, Ramli & Azizi) For the First Defendant: Deepa Sundaran (Messrs Subramaniam & Shafiq) For the Second Defendant: Kelvin Chow and Benjamin Tay (MessrsThakurta Low & Rajendra)