Dscaff Engineering Sdn Bhd v Cheematrade Sdn Bhd (WA-22NCvC-535-08/2021)

CHEEMATRADE SDN. BHD.

SABAH SHELL PETROLEUM COMPANY LIMITED (NO. SYARIKAT: 993229-W) ...DEFENDAN-DEFENDAN JUDGMENT Introduction 1. The Plaintiff’s claim against the 1st Defendant is for unpaid rental as well as the non-return of the materials and accessories (“supplies”) supplied to the 1st Defendant under a Scaffold Rental Agreement (“the Agreement”) dated 15/5/2019.

The dispute between the Plaintiff and the 1st Defendant proceeded to a full trial whereby the Plaintiff called 3 witnesses whereas the 1st Defendant called 1 witness. The Plaintiff’s claim against the 2nd Defendant was earlier stuck out by the Court. 12/02/2025 09:40:03

The parties had filed the statement of agreed facts, issues to be tried and Bundle of Documents, on the directive of Court, which also formed part of the proceedings. Brief facts 4. The rental terms in the Agreement for the supplies was for a period of 24 months. The 1st Defendant was to pay a monthly rental of RM149,768 within 30 days after the issuing of an invoice by the Plaintiff. Any delay in the payment of rental would incur an interest of 1.5 % for the first 2 months and 3 % thereafter.

A further term in the Agreement was that the materials supplied will remain under the ownership of the Plaintiff and on the expiry of the Agreement to be returned back to the Plaintiff.

The Plaintiff issued 11 invoices from August 2019 to June 2020 for the supplies as stipulated under the Agreement for a sum totaling RM1,647,448. The Plaintiff contend that the 1st Defendant only made 2 payments of RM66,967.68 on 5/7/2021 and further sum of RM126,696.96 on 20/9/21 leaving an unpaid sum of RM1,453,783.36 to date.

The Plaintiff also contend that supplies for which the Plaintiff has ownership has not been returned to the Plaintiff therefore attracting further rentals as stipulated under the Agreement.

The 1st Defendant’s only defense is that there was a collateral agreement between the Plaintiff and the 1st Defendant for the payments of rental to be paid to the Plaintiff only after the 1st Defendant is paid by the 2nd Defendant. The supplies were to be provided by the 1st Defendant for the project that was undertaken by the 2nd Defendant.

The 1st Defendant further contended that this collateral agreement varied the payment terms under the Agreement. The existence of the collateral agreement/ variation 10. The fact relied upon by the Defendant to prove a collateral agreement was the communication between a Director of the Plaintiff who had volunteered to assist the 1st Defendant in receiving payment from the 2nd Defendant. This indicated that the Plaintiff was not pressing for payment and had agreed to waive payment of rental until the 1st Defendant was paid by the 2nd Defendant.

The 1st Defendant also relied on the reply filed by the Plaintiff to the Defense by the 1st Defendant that they had agreed to grant indulgence to pay the outstanding payment until payment was received by the 1st Defendant from the 2nd Defendant.

The Defendant further contended that the fact that the Plaintiff have not terminated the agreement shows that the Plaintiff had agreed to vary the terms of the Agreement and accept payment on a back to back basis.

The Plaintiff’s witnesses although admitting to granting indulgence and not strictly pressing for payment according to the Agreement, the reason for doing so was to ensure they received the money owed. They had no intention to waive their rights under the Agreement.

The Plaintiff’s witnesses also explained that non issuance of the invoices after a certain date was for accounting and tax purposes and not a waiver to exert their rights under the Agreement.

In determining the issue at hand the Court first looked at the Agreement to determine whether time was an essence in relation to the payment of rental.

In Appendix F of the Agreement it is stated that “Rental to start within 4 weeks after collection of Each Set, or when D.O to Transframe/Shell begins whichever is earlier”. The Court regard this as a fixed term for payment of rental in other words payment was not left at large.

The further terms of payment are contained in clause 7.0 of the Agreement which is worded “DESB reserves the right to charge a late payment fee of 1.5% per month for initial 2 months and 3 % per month thereafter for any outstanding until due payment is settled”.

To the Court the payment terms as agreed under the Agreement indicates that time is an essence of the contract. Where time is an essence and it is not complied with, the effect on the Agreement is as stated in section 56(1) of the Contracts Act 1950 which stipulates that:

When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified times, and fails to do any such thing at or before the specified time, the contract, or so much of it as has not been performed, becomes voidable at the option of the promisee, if the intention of the parties was that time should be of the essence of the contract.

In the Court’s view as the 1st Defendant has failed to make payments as specified under the Agreement and as time is an essence of the Agreement the Agreement has become voidable at the option of the Plaintiff.

In exercising an option to a voidable Agreement the Plaintiff has the right to do what is specified in section 64 of the Contracts Act 1950 as follows: Every promisee may dispense with or remit, wholly or in part, the performance of the promise made to him, or may extend the time for such performance, or may accept instead of it any satisfaction which he thinks fit.

A promises to paint a picture for B. B afterwards forbids him to do so. A is no longer bound to perform the promise.

A owes B RM5,000. A pays to B, and B accepts, in satisfaction of the whole debt, RM2,000 paid at the time and place at which the RM5,000 were payable. The whole debt is discharged.

A owes B RM5,000. C pays to B RM1,000 and B accepts them, in satisfaction of his claim on A. This payment is a discharge of the whole claim.

A owes B under a contract, a sum of money, the amount of which has not been ascertained. A, without ascertaining the amount, gives to B, and B, in satisfaction thereof, accepts the sum of RM2,000. This is a discharge of the whole debt, whatever may be its amount.

A owes B RM2,000, and is also indebted to other creditors. A makes an arrangement with his creditors, including B, to pay them a composition of fifty cents in the dollar upon their respective demands. Payment to B of RM1,000 is a discharge of B's demand.

In this case the Court views the conduct of the Plaintiff in granting indulgence to the 1st Defendant does not amount to either creating a collateral agreement nor can it be deemed to be a variance of the payment terms of the Agreement. It is merely an extension of time given by the Plaintiff to the 1st Defendant to make the payments. The Plaintiff has a right to exercise this option under the Contracts Act. The Plaintiff’s claim under the Agreement 22. It is clear the Plaintiff bears the burden to prove its claim as specified under section 101 of the Evidence Act 1950 which states:

Whoever desires any court to give judgment as to any legal right or liability, dependent on the existence of facts which he asserts, must prove that those facts exist.

When a person is bound to prove the existence of any fact, it is said that the burden of proof lies on that person. ILLUSTRATIONS

A desires a court to give judgment that B shall be punished for a crime which A says B has committed. A must prove that B has committed the crime.

A desires a court to give judgment that he is entitled to certain land in the 23. The standard of proof in a civil claim is proof on a balance of probabilities and in the Court’s view the Plaintiff have discharged the burden of proof exceeding balance of probabilities in this case. Apart from producing the invoices detailing out the payment due. This invoices has not been challenged by the 1st Defendant. 8 24. Clause 7.2 of the Agreement states that the “ Client shall communicate in writing to DESB any invoice errors, discrepancies or disputes within five (5) days from the receipt of the invoice. If such communication is not made, the invoice will be deemed to be approved and Client shall forever waive any error, discrepancy or dispute”

The duration of the Agreement is 24 months and as the 1st Defendant had breached the Agreement before the expiry of 24 months the balance period of rental becomes due and payable regardless of whether invoices are issued or not. The Court accepted the explanation of the Plaintiff that no invoices were issued after a certain period of time for purposes of accounting.

The Plaintiff is also demanding the return of the materials supplied failing which rentals will be continues to be paid in line with Clause 7.5 which provides that “if the materials are not returned after the hire period specified in the Agreement, rentals for the Materials will be charged until all the materials are returned back to DESB warehouse or any instructed ware house location by DESB”.

From the evidence led in this case the whereabouts of the materials or its condition are unknown. The possibility of being returned to the Plaintiff is not certain. In the Court’s view to allow rental to be period for an uncertain time is not practical.

The Court therefore applied Clause 5.5 of the Agreement which stipulates that “Unless agreed to in writing, any material not returned to DESB yard after the laps of the agreed rental period, will be deemed lost and shall be invoiced in accordance with the price quoted in Appendix C”. Conclusion 29. The Court allowed the Plaintiff’s claim on the following terms: i) Paragraph 18(a) of the Statement of Claim is allowed after deducting the deposit and payments of rental already made by the 1st Defendant; ii) The late payment fee as asked for in paragraph 18 (b) and (d) is allowed; iii) In place of paragraph 18(c) the Court directed the 1st Defendant to pay the Plaintiff according to Appendix C of the Agreement.

The Court also allowed interest of 5% per annum on all outstanding sum until full payment is made by the 1st Defendant. Finally, the Court allowed a cost of proceeding of RM100,000 to be paid by the 1st Defendant to the Plaintiff. Dated: 10.2.2025 sgd DATO’ HAJI AKHTAR BIN TAHIR Judge High Court of Malaya, Kuala Lumpur PARTIES For the Plaintiff: Nama Peguamcara: Lewis Lim / Justin Ong Tetuan Lewis Lim & Min Lee B-9-11, Plaza Mon’t Kiara No. 2 Jalan Kiara Mon’t Kiara 50480 Kuala Lumpur For the Defendant: Nama Peguamcara: VK Raj / SP Devi Tetuan A. Rajadurai P.Kuppusamy & Co. B-2-19, 2nd Floor, 8 Avenue, Jalan Sungai Jernih 8/1, 46050 Petaling Jaya, Selangor.