Delcol Industries (M) Sdn Bhd v Liew Yu Xuan (BA-11BNCvC-1-01/2025)

These consolidated appeals arise from the decision of the learned Magistrate delivered on 27 December 2024 in Civil Suit No. BH-A72NCvC-133-07/2022, heard in the Magistrates’ Court at Kajang. The Plaintiff, Delcol Industries (M) Sdn Bhd (“the Plaintiff”), appeals against the dismissal of its claim for loss of use and against the order that it pays RM75,190.29 to the Defendant, Liew Yu Xuan (“the Defendant”), said to be the balance of a loan advanced by the Defendant to Delcol Water Solution Sdn Bhd. Meanwhile, the Defendant’s appeal challenges the order requiring him to return the Plaintiff’s Honda City motorcar or alternatively to pay RM50,000 as its value.

Having carefully considered the Record of Appeal, the reasons of the learned Magistrate, the documentary exhibits, and the submissions of both parties, I am satisfied that the learned Magistrate misdirected herself in both fact and law. Those errors materially affected the outcome. This Court is therefore, bound to intervene.

For the reasons which follow, the Plaintiff’s appeal is allowed. The Defendant’s appeal and his counterclaim are dismissed. B.

The Plaintiff is an incorporated company and the registered owner of a Honda City 1.5L motorcar bearing registration number WC9399P. The Vehicle Ownership Certificate is exhibited at page 289 of Bahagian C of the Record of Appeal and the fact of ownership is not in dispute.

The Plaintiff acquired the vehicle pursuant to a written arrangement with Delcol Water Solution Sdn Bhd recorded in a letter dated 1 May 2019 titled “Sale of Motor Vehicles”, found at page 461 of Bahagian C. Under this document, the Plaintiff paid RM84,000 for the purchase of several vehicles, including the Honda City. This was a straightforward commercial sale between two companies within the Delcol group. The Defendant was not a party to this letter.

The Defendant’s case rests on a separate “friendly loan” arrangement entered into in early January 2017 with Delcol Water Solution Sdn Bhd alone. The loan is evidenced by a letter dated 3 January 2017 issued by Delcol Water Solution Sdn Bhd to the Defendant (page 463), acknowledging receipt of RM215,583.22 and setting out terms of repayment. A remittance slip at page 462 shows that the Defendant transferred this sum to Delcol Water Solution Sdn Bhd. The Plaintiff is not mentioned in those documents.

The Defendant alleged that a vehicle—including the Honda City—was provided to him as a form of security for the loan, and that the car constituted a lien securing repayment. However, the loan documents contain no reference to the Honda City or to any lien or charge over any vehicle. At the material time the Honda City was not owned by the Plaintiff, and the documentary record does not show any form of security being granted in favour of the Defendant.

It is common ground that certain individuals, namely Khairuddin and Lim Poh Leng (“Pauline”), were at various times directors of both Delcol Water Solution Sdn Bhd and the Plaintiff. There was also a group restructuring exercise within the Delcol entities. These matters are reflected in the company searches and particulars at pages 438–453 of Bahagian C, and the memoranda dated 27 May 2019 and 7 August 2019 at pages 464–465 relating to change of company name and payment accounts.

The Plaintiff’s position is that these corporate arrangements do not result in it assuming Delcol Water Solution Sdn Bhd’s liabilities to the Defendant, and that it is an entirely separate legal entity. The Defendant, on the other hand, contends that the Plaintiff, having taken over the business and management of Delcol Water Solution Sdn Bhd, must also be taken to have assumed its obligations, including the loan.

On 17 December 2021, the Plaintiff (through its solicitors) demanded that the Defendant return the Honda City and, as an alternative to return, offered to sell the car to the Defendant for RM50,000 (page 294). The Defendant, via his solicitors’ reply dated 21 December 2021 (pp. 295–297), took the position that the car was provided as security for the loan and would only be returned if the alleged outstanding balance of RM75,190.29 was paid.

The Plaintiff regarded this as wrongful detention of its vehicle and commenced proceedings at the Magistrates’ Court. The Plaintiff sought, among others: a. An order for the return of the Honda City, or alternatively RM50,000 as its agreed value; b. Damages for loss of use at RM200 per day from 21 December 2021; and c. Costs.

The Defendant filed a defence and counterclaim, asserting that the Honda City was a lien for the loan, and claiming RM75,190.29 as the balance outstanding, with interest and costs. The Defendant’s case rested heavily on the loan admission letter at page 463 and on a series of payments he alleged were made towards the loan, including entries in his Maybank statement annotated “payback GST” (pp. 307–437).

After a three-day trial, the learned Magistrate allowed the Plaintiff’s claim for return of the vehicle or alternatively RM50,000, but dismissed the Plaintiff’s claim for loss of use. At the same time, the Magistrate allowed the Defendant’s counterclaim for RM75,190.29, holding that the Plaintiff had effectively taken over Delcol Water Solution Sdn Bhd’s liabilities by virtue of the restructuring and common directorships, and finding that the car was a lien against the loan.

The Plaintiff appealed on the issues of assumed liability, lien, and loss of use. The Defendant appealed in respect of the order for return of the vehicle or payment of RM50,000. C.

The starting point is the doctrine of separate legal personality as stated in Salomon v Salomon & Co Ltd [1897] AC 22. A company has a legal identity separate from its shareholders, directors, and associated entities. This principle has long been accepted in Malaysia and applied, inter alia, in Aspatra Sdn Bhd & 21 Ors v Bank Bumiputra Malaysia Bhd & Anor [1988] 1 MLJ 97, where the Supreme Court cautioned that the corporate veil should only be lifted in exceptional circumstances such as fraud or sham.

The mere fact that Delcol Water Solution Sdn Bhd and the Plaintiff share common directors and are within the same corporate group does not make one liable for the debts of the other. In Hotel Jaya Puri Sdn Bhd v National Union of Hotel, Bar & Restaurant Workers & Anor [1980] 1 MLJ 109, the court held that corporate separateness is not displaced simply because entities are related or have common officers.

For one entity to assume the debts of another, there must be clear evidence of novation or assignment. The Federal Court in Yam Kong Seng & Anor v Yee Weng Kai [2014] 4 MLJ 478 emphasised that novation requires the consent of all parties concerned—the original debtor, the new debtor, and the creditor—and cannot be lightly inferred from ambiguous circumstances.

In the present case, there is no written agreement, no resolution, and no correspondence indicating that the Plaintiff agreed with the Defendant and Delcol Water Solution Sdn Bhd to assume the loan. The 1 May 2019 letter at page 461 is a sale-of-vehicles document; it says nothing about taking over any liabilities owed to the Defendant. The restructuring memoranda at pp. 464–465 similarly concern operational matters and customer payment accounts, not the Defendant’s loan.

Sections 101–103 of the Evidence Act 1950 provide that the party who asserts the existence of a fact bears the burden of proving it. In Tenaga Nasional Bhd v Perwaja Steel Sdn Bhd [1998] 2 CLJ 740, it was reiterated that a plaintiff (or counterclaimant) must affirmatively prove the defendant’s liability; it is not enough to rely on inference or weakness in the defendant’s evidence.

It was therefore, incumbent upon the Defendant, as counterclaimant, to prove that the Plaintiff owed him RM75,190.29, whether by novation, assignment, or some other legally recognisable mechanism. He failed to do so.

A lien may arise by statute, by contract, or under recognised categories of common law liens. The Supreme Court in Malayan Banking Bhd v PK Rajamani [1994] 1 MLJ 405 stressed that courts should look at the substance of a transaction and require clear evidence of an intention to create security.

The loan documents at pp. 462–463 do not state that the Honda City, or any particular vehicle, was to stand as security for the loan. The 1 May 2019 sale letter at page 461 does not refer to a lien or to any rights in favour of the Defendant. No document in the Record spells out any lien, charge or other proprietary right in favour of the Defendant over the Plaintiff’s vehicles.

A lien cannot be conjured from mere continued use of the car by the Defendant. There must be a clear legal basis. None exists here.

The longstanding principle in Robinson v Harman (1848) 1 Ex 850, adopted by Malaysian courts, is that damages should place the injured party, so far as money can do it, in the position he would have been in had the wrong not occurred. Damages are compensatory, not punitive. D.

Having re-examined the Record of Appeal, I find several aspects of the learned Magistrate’s reasoning to be inconsistent with both the evidence and the principles just outlined.

First, the Magistrate mischaracterised the 1 May 2019 letter at page 461. That letter is plainly a sale agreement. It is entirely silent on the Defendant’s loan. It does not say that the Plaintiff is taking over Delcol Water Solution Sdn Bhd’s liabilities. To treat this as evidence of debt assumption is not supported by its wording.

Secondly, the loan documents at pp. 462–463 clearly identify Delcol Water Solution Sdn Bhd as the borrower and the Defendant as lender. The Plaintiff is wholly absent from those documents. There is no novation or assignment of debt to the Plaintiff.

Thirdly, the Magistrate placed undue emphasis on the presence of common directors between Delcol Water Solution Sdn Bhd and the Plaintiff (pp. 438–453) and on an internal restructuring exercise (pp. 464–465). These matters, while relevant to the history of the entities, do not in law impose Delcol Water Solution Sdn Bhd’s liabilities on the Plaintiff.

Fourthly, the learned Magistrate treated ambiguous bank entries marked “payback GST” (pp. 307–437) as if they were instalments paid by the Plaintiff towards the Defendant’s loan. There is no direct evidence linking those entries to the loan, and the annotation “GST” suggests a different purpose. It was unsafe to treat those payments as acknowledgment of liability.

Fifthly, there is no documentary evidence of a lien. The Defendant relies solely on his assertion that the car was given as security. In the absence of any written agreement or statutory basis, this assertion cannot be accepted.

Finally, the Plaintiff’s demand letters at pages 294 and 301 were clear. From 21 December 2021 onwards, the Defendant had no legal basis to retain the vehicle. His continued possession amounted to wrongful detention. E.

Applying the law to the facts, I am driven to the conclusion that the learned Magistrate’s decision cannot stand.

The Plaintiff did not assume Delcol Water Solution Sdn Bhd’s liabilities. There is no evidence of novation or assignment. The doctrine of separate legal personality prevents the imposition of Delcol Water Solution Sdn Bhd’s debts on the Plaintiff merely because of a group restructuring or shared directors. The Magistrate’s approach runs contrary to Salomon, Aspatra, and Hotel Jaya Puri.

The Defendant, as counterclaimant, did not discharge the burden of proof under ss. 101–103 of the Evidence Act. He failed to demonstrate any contractual or statutory basis on which the Plaintiff owed him RM75,190.29. The counterclaim therefore must be dismissed.

There is no basis in law or equity to treat the Honda City as a lien securing the Defendant’s loan. Neither the 3 January 2017 loan letter nor the 1 May 2019 sale letter contains any such term. The Defendant’s continued retention of the vehicle after valid demand was therefore, wrongful.

As lawful owner, the Plaintiff is entitled to the return of its vehicle. In addition, the Plaintiff is entitled to damages for loss of use from 21 December 2021, being the date its demand was clearly communicated and rejected.

The rate of RM200 per day is not shown to be excessive and is consistent with a reasonable daily usage value of a vehicle of that class. However, damages must remain compensatory. They should not result in a windfall or punitive outcome.

In this regard, I adopt the structure reflected in my oral decision. There are two possible scenarios: a. Return scenario – The Defendant returns the vehicle. In that case, the Plaintiff should receive loss-of-use damages at RM200 per day from 21 December 2021 until the date of actual return, but subject to an overall cap of b. Substitution scenario – The Defendant fails or refuses to return the vehicle. In that case, the Plaintiff is to receive RM50,000, being the assessed value of the vehicle, in substitution of the car, together with the loss-of-use damages at RM200 per day from 21 December 2021 until the decision’s date subject to a maximum total of

For the reasons set out above, this Court makes the following orders: a. The Plaintiff’s appeal is allowed. The decision of the learned Magistrate on liability, the alleged assumption of debt, the existence of a lien, and the dismissal of loss-of-use damages is set aside. b. The Defendant’s appeal and counterclaim are dismissed. The Defendant has failed to establish any legal basis for his claim of RM75,190.29 against the Plaintiff. c. The Defendant shall return the Honda City 1.5L, registration number WC9399P, to the Plaintiff forthwith. d. In the event of return of the vehicle, the Defendant shall pay to the Plaintiff loss-of-use damages at RM200 per day from 21 December 2021 until the date of actual return, subject always to a maximum total of RM50,000. e. If the Defendant fails or refuses to return the vehicle, the Defendant shall instead pay the Plaintiff the sum of RM50,000, being the assessed value of the vehicle in substitution thereof, together with the loss-of-use damages at RM200 per day from 21 December 2021 until the decision’s date subject to a maximum total of f. Costs of both appeals are awarded to the Plaintiff at RM4,000. Dated 23 December 2025 -sgd-DATO’ ANITA BINTI HARUN JUDICIAL COMMISSIONER HIGH COURT OF MALAYA SHAH ALAM SELANGOR DARUL EHSAN To the parties’ solicitors: For the Appellant : Ratha Devi a/p Rada Krisnan (Messrs S G Lingam & Co.) For the Respondent : Priscilla Goh Chiau Wee & Aw Shi Qin (Messrs Foo Hiap Siong & Co)