Electroscon Sdn Bhd v Mzm Setia Sdn Bhd (BA-12BNCvC-45-07/2025)

This is an appeal by Electroscon Sdn. Bhd., the Defendant in the Sessions Court, against the decision of the learned Sessions Court Judge (SCJ) dated 18 June 2025.

The learned SCJ allowed the Plaintiff's claim for RM900,267.52 and dismissed the Defendant's counterclaim for alleged overpayment. The Defendant now appeals against the whole decision.

I heard the appeal, and after careful consideration of the Record of Appeal and the written submissions of both parties, I dismiss the appeal, uphold the decision of the SCJ and affirm the dismissal of the counterclaim.

Parties are referred to as they were in the Sessions Court, namely MZM Setia Sdn. Bhd. as the Plaintiff and Electroscon Sdn. Bhd. as the Defendant. Salient Facts

The Plaintiff is a subcontractor in the telecommunications and electrical infrastructure sector. The Defendant is a main contractor engaged in similar works. Since 2013, the Defendant had engaged the Plaintiff as a subcontractor for various works S/N Xa/i55ITzEWHtaoPylb36w and services. The Defendant would issue work orders and work order instructions to the Plaintiff for the work.

The Plaintiff would then issue invoices for every work order, and those invoices formed a running account of the Defendant's indebtedness to the Plaintiff.

The works included Area Network Development works, referred to by the parties as AND works; Corrective Maintenance works, referred to by the parties as CM works; and works connected with Project MRT V201.

The Plaintiff issued invoices for work allegedly carried out. The Plaintiff's case was that these invoices were recorded as part of the Defendant's account with the Plaintiff. The Plaintiff said that the Defendant made partial payments but failed to settle the full outstanding amount.

The Plaintiff's claim was eventually pleaded at RM900,267.52, and their computation was based on the following:

(a) old debt balance as at 31 December 2019, RM1,076,141.51;

(b) AND works from 2020 to 2021, RM748,709.11;

(c) CM works from 2020 to 2021, RM2,515,397.63; making a total alleged debt of RM4,340,248.25. S/N Xa/i55ITzEWHtaoPylb36w

The Plaintiff then deducted payments received, including AND works payment and old debt payment, CM works payment, payment by Dato Dr Haneef Bin Dato Hj Mokhtar, and credit notes issued by the Defendant. The Plaintiff stated that the total payments and credit notes amounted to RM3,439,980.73. On that basis, the Plaintiff claimed the balance of RM900,267.52.

The Defendant did not dispute that there were dealings between the parties. It also did not dispute that the CM works figure of RM2,515,397.63 formed part of the accounts. However, the Defendant disputed the old debt figure, the AND works figure, and the alleged sums relating to Project MRT V201.

The Defendant's position was that the old debt was not RM1,076,141.51. The Defendant pleaded a lower figure. The Defendant also said there was an overstatement or overclaim in Project MRT V201. After applying its own computation, the Defendant said it had overpaid the Plaintiff. The Defendant then counterclaimed for RM79,578.22. Findings of the SCJ

The learned SCJ allowed the Plaintiff's claim and dismissed the Defendant's counterclaim.

In summary, the learned SCJ made the following findings: S/N Xa/i55ITzEWHtaoPylb36w

(a) The Plaintiff proved its claim on the balance of probabilities.

(b) The old debt balance as at 31 December 2019 was RM1,076,141.51, and the learned SCJ relied on the Defendant's own statements of account, which recorded that figure.

(c) The Defendant's contention that the statements of account were merely without prejudice documents prepared only for reconciliation or mediation was rejected.

(d) The Defendant failed to justify the reduced old debt figure pleaded by them, and the Defendant's witnesses could not properly explain the alternative figure with clear supporting documents.

(e) The Plaintiff's claim for the AND works and CM works was accepted after considering the invoices, statements of account, payments, credit notes, and oral evidence.

(f) The Defendant failed to prove its allegation of overpayment; and

(g) The Defendant's counterclaim was dismissed because the Defendant failed to discharge the burden of proof. S/N Xa/i55ITzEWHtaoPylb36w The Appeal

The Defendant filed the appeal against the whole decision of the Sessions Court. The appeal challenges both parts of the decision, namely:

(a) The allowance of the Plaintiff's claim in the sum of RM900,267.52; and

(b) The dismissal of the Defendant's counterclaim.

The broad complaint of the Defendant is that the learned SCJ erred in fact and law in accepting the Plaintiff's computation of the outstanding sum and in rejecting the Defendant's alternative computation.

The Defendant says that the Plaintiff failed to prove the alleged old debt, the alleged AND works, and the alleged sums related to Project MRT V201. The Defendant also says that the learned SCJ wrongly treated the Defendant's own statements of account as proof of liability, when those documents were allegedly prepared on a without prejudice basis for reconciliation and mediation.

The Plaintiff submits that the appeal is without merit. It says that the learned SCJ properly evaluated the documentary and oral evidence after a full trial. The Plaintiff says the Defendant's own S/N Xa/i55ITzEWHtaoPylb36w documents supported the Plaintiff's claim and that the Defendant failed to prove its defence and counterclaim. Issues to be determined

Having considered the appeal record, submissions and the Grounds of Judgment of the SCJ, I reformulate the issues in this appeal as follows:

(a) whether the learned SCJ erred in relying on the Defendant's statements of account to find that the old debt was RM1,076,141.51;

(b) whether the statements of account were inadmissible or unreliable because the Defendant says they were prepared on a without prejudice basis;

(c) whether the Plaintiff proved the AND works claim in the sum of RM748,709.11;

(d) whether the learned SCJ erred in her findings on Project MRT V201, including the complaints relating to GST, retention sum, and material supply;

(e) whether the learned SCJ erred in not drawing an adverse inference against the Plaintiff for not calling Mohammad Faizal Bin Salleh; S/N Xa/i55ITzEWHtaoPylb36w

(f) whether the learned SCJ erred in dismissing the Defendant's counterclaim; and

(g) whether this is a proper case for appellate intervention. Analysis and Findings The nature of appellate intervention

This appeal arises from a decision after a full trial. The learned SCJ heard the witnesses, considered the documents, and made findings of fact.

The starting point is clear. An appellate court may interfere where there is a misdirection of law, a failure to consider material evidence, a consideration of irrelevant matters, or findings which are plainly wrong or against the weight of evidence. However, an appellate court should not lightly substitute its own view merely because another view of the evidence is possible.

The Plaintiff relies on Tindok Besar Estate Sdn Bhd v Tinjar & Co [1979] 2 MLRA 81. The important principle from that case is that oral evidence must be tested against contemporaneous documents and the whole circumstances of the case. That principle is directly relevant here. The learned SCJ preferred contemporaneous accounting records and documentary S/N Xa/i55ITzEWHtaoPylb36w evidence over later oral explanations, which were not fully supported by documents.

I accept that approach. This is not a case where the learned SCJ ignored documents. She engaged with the documents and the evidence. The Defendant's complaint is mainly that the learned SCJ should have preferred the Defendant's alternative computation. That is a complaint against factual evaluation. The old debt of RM1,076,141.51

The Defendant's main argument is that the learned SCJ erred in accepting the old debt figure of RM1,076,141.51.

The Defendant says that the statements of account dated 25 May 2022 and 23 October 2023 were prepared only for reconciliation and mediation. The Defendant relies on section 23 of the Evidence Act 1950 and Sinojaya Sdn Bhd v Metal Component Engineering Pte Ltd (Hoyo Crosstec Sdn Bhd, Third Party) [2003] 1 SLR 281 to argue that the absence of the words "without prejudice" is not fatal if the circumstances show that the document was part of settlement negotiations.

The Defendant also relies on sections 17 and 31 of the Evidence Act 1950, Amer Singh @ Mohinder Singh v Kelana Resorts Sdn Bhd [2007] 8 MLJ 175, and Ma Clyde v Wong Ah Mei & Anor [1970] 2 MLJ 183. The Defendant says an S/N Xa/i55ITzEWHtaoPylb36w admission is not conclusive proof, and a party may explain it away.

I accept the legal principles relied on by the Defendant. An admission is not conclusive proof. A statement made in genuine settlement negotiations may be protected by without prejudice privilege, and a court must examine the surrounding circumstances.

However, applying those principles to this case, I am not persuaded that the learned SCJ committed any error of law.

I am of the view that the learned SCJ did not treat the statements of account as conclusive proof as a matter of law. She treated them as documentary evidence emanating from the Defendant itself. That is a significant distinction. The question was not whether those documents were automatically conclusive. The question was whether, when weighed with the rest of the evidence, those documents were reliable enough to support the Plaintiff's claim.

The Defendant admitted that the statements of account came from them. The documents recorded the old debt figure of RM1,076,141.51. The Defendant then sought to reduce that figure. The learned SCJ found that the Defendant failed to explain the reduction properly. S/N Xa/i55ITzEWHtaoPylb36w

That finding was open on the evidence. The Defendant's own witness, Chow Siaw Fern, accepted the existence of the old debt but could not clearly show, with a proper breakdown, how the Defendant's reduced figure was reached. The learned SCJ was entitled to reject an alternative figure that was not supported by clear documents.

The Plaintiff also relied on the Defendant's own record as contemporaneous documentary evidence. The Plaintiff was entitled to say that the Defendant should not selectively rely on parts of its accounts while rejecting the part which recorded the old debt.

The Defendant's reliance on Tindok Besar Estate Sdn Bhd v Tinjar & Co [1979] 2 MLRA 81 assists the Plaintiff on this point. Where oral evidence clashes with contemporaneous documents, the court is entitled to prefer the documents if they are more reliable.

I therefore find no error in the learned SCJ's finding that the old debt was RM1,076,141.51. The without prejudice point

The Defendant says the statements of account should not have been relied on because they were prepared without prejudice. S/N Xa/i55ITzEWHtaoPylb36w

This argument requires close attention. Section 23 of the Evidence Act 1950 protects admissions in civil cases where they are made on an express condition that evidence of them is not to be given, or where the circumstances allow the court to infer that the parties agreed that evidence should not be given.

Section 23 of the Evidence Act 1950 provides: "In civil cases no admission is relevant if it is made, either upon an express condition that evidence of it is not to be given, or under circumstances from which the court can infer that the parties agreed together that evidence of it should not be given."

However, I am of the view that the protection does not arise merely because parties were attempting reconciliation or settlement. The court must look at the substance and circumstances.

Here, the learned SCJ treated the statements of account as accounting records, rather than merely as offers or concessions made in settlement negotiations. I do not find that approach plainly wrong.

The statements were not framed as compromise proposals. They were accounts of sums allegedly due, payments, credit notes, and balances. The fact that the accounts were S/N Xa/i55ITzEWHtaoPylb36w exchanged during discussions does not, in itself, render them inadmissible settlement concessions.

The Defendant's own authorities do not assist it beyond the general principle. Sinojaya Sdn Bhd v Metal Component Engineering Pte Ltd [2003] 1 SLR 281 recognises that the words "without prejudice" are not necessary if the circumstances show a genuine settlement communication. But it does not mean that every document exchanged during a dispute is protected.

Amer Singh @ Mohinder Singh v Kelana Resorts Sdn Bhd [2007] 8 MLJ 175 also does not assist the Defendant to the extent argued. That case supports the proposition that an admission is not conclusive. It does not say that an admission or accounting record cannot be weighed as evidence.

I accept that the absence of the phrase "without prejudice" is not, by itself, fatal to the application of section 23. As the Singapore High Court observed in Sinojaya (approved in principle in this jurisdiction), what matters is whether the circumstances indicate that both parties understood and agreed that the communications were not to be used in evidence. However, the scope of section 23 must be carefully applied. Section 23 protects "admissions", which are statements from which an inference as to a fact in issue can be drawn. It does not render inadmissible a party's own independently compiled S/N Xa/i55ITzEWHtaoPylb36w business records simply because those records were shared during settlement discussions.

I am of the opinion that the without prejudice protection shields the settlement discussion itself; it does not immunise a party's existing business documents from scrutiny. Accordingly, I find that the 25 May 2022 Statement of Account is not protected by section 23 of the Evidence Act.

The position is different for the 23 October 2023 Statement. This document was furnished during formal mediation proceedings. Under section 17 of the Mediation Act 2012, a party may not rely in any proceeding on communications or documents that arose in the course of mediation. The 23 October 2023 Statement was specifically prepared for, and furnished during, those proceedings for the limited purpose of reconciliation and cross-checking. In my view, this document attracts statutory protection and ought not to have been relied upon. However, the SCJ made no reference to the 23 October 2023 Statement in its Grounds of Judgment. Having reviewed the grounds, the SCJ's finding on the old debt was principally anchored to the 25 May 2022 Statement, which is admissible.

I therefore find no misdirection on the without prejudice issue. The burden of proof

The burden of proof remains important in this appeal. S/N Xa/i55ITzEWHtaoPylb36w

Under section 101 of the Evidence Act 1950, the party who asserts a legal right must prove the facts on which that right depends. Under section 103, the burden of proof as to any particular fact lies on the person who wishes the court to believe in its existence.

The Plaintiff bore the legal burden to prove its claim. It produced invoices, statements of account, and payment records. The learned SCJ accepted that the Plaintiff had discharged that burden.

The Defendant then sought to prove a different set of figures. It also pleaded a counterclaim for overpayment. On those matters, the evidential and legal burden lay on the Defendant.

The Defendant relies on sections 101 and 102 of the Evidence Act 1950 and Hong Yik Trading v Liziz Plantation Sdn Bhd [2017] 8 CLJ 491. I accept the general rule that the Plaintiff must prove its claim. However, on the evidence, the Plaintiff had placed before the court documentary material supporting its claim. The Defendant was then required to displace that evidence with a clear and coherent alternative computation.

The learned SCJ found that the Defendant failed to do so. I find no basis to disturb that finding. S/N Xa/i55ITzEWHtaoPylb36w The AND works

The next issue concerns the AND works. The Plaintiff claimed RM748,709.11. The Defendant says the correct figure was

The Defendant submits that the Plaintiff's invoices were unreliable because they were unsigned, unapproved, inconsistent, or duplicated. The Defendant also argues that some documents did not properly prove the actual completion of the works.

The Plaintiff submits that the invoices and supporting records proved the AND works. It also submits that the Defendant admitted a substantial part of the AND works and failed to justify the reduced figure.

The learned SCJ accepted the Plaintiff's computation. She also found that the Defendant failed to rebut the Plaintiff's evidence.

I am not persuaded that this finding is plainly wrong. The Defendant's complaint again depends on the court accepting its alternative computation. The learned SCJ was entitled to evaluate the invoices and accounts together with the evidence of the witnesses.

The court was not required to reject the Plaintiff's claim merely because the Defendant raised objections to signatures or S/N Xa/i55ITzEWHtaoPylb36w approvals, especially where the parties' commercial dealings had continued for many years through work orders, invoices, payments, and open accounts.

I find no error in the learned SCJ's finding on the AND works. The CM works

The CM works figure of RM2,515,397.63 was not seriously disputed as part of the overall account. The dispute concerned the final net balance after taking into account the old debt, AND works, Project MRT V201 items, payments, and credit notes.

The learned SCJ treated the CM works as part of the account between the parties. I find no error in that approach. The Project MRT V201, GST, retention sum, and material supply

The Defendant's submission on Project MRT V201 was that the actual total cost was RM2,225,592.88, while the Plaintiff's position led to a higher figure of RM2,931,000.00. The Defendant challenged the claims for GST, retention sum, and material supply.

The Defendant argues that there was no contractual or statutory basis for the GST and retention sum. It also argues that the S/N Xa/i55ITzEWHtaoPylb36w alleged material supply was not proved because the Defendant did not receive the materials.

The Plaintiff says the material supply and related amounts were supported by the invoices, delivery order, quotation, summary income statement, final measurement, and the course of dealing between the parties.

The Plaintiff further relied on the cases of Universal Cable (M) Bhd v Bakti Arena Sdn Bhd & Ors [2000] 1 MLRH 326, Wee Lian Construction Sdn Bhd v Ingersoll-Jati Malaysia Sdn Bhd [2010] 1 MLRA, and Design Centre (M) Sdn Bhd v Goldcourse Sdn Bhd [2010] 10 MLRH 47 in support of the proposition that where goods were accepted without timely objection or rejection, section 42 of the Sale of Goods Act 1957 would operate against the buyer.

The Defendant says those authorities are distinguishable because receipt of goods was not disputed in those cases, whereas receipt is disputed here.

I accept that the Defendant's distinction is not without force. However, the question for this court is not whether another judge might have approached the evidence differently. The question is whether the learned SCJ made a legal error or reached a finding that was plainly wrong. S/N Xa/i55ITzEWHtaoPylb36w

The learned SCJ considered the documentary evidence and the witnesses' evidence. She accepted the Plaintiff's version. I do not find that her acceptance was against the weight of evidence.

The Defendant's contention on Project MRT V201 formed part of its overall case that there was an overpayment. Since the Defendant bore the burden to prove its overpayment case, it had to produce clear documents and a coherent computation. The learned SCJ found that it did not do so. I find no reason to interfere. Failure to call Mohammad Faizal Bin Salleh and section 114(g)

The Defendant argues that Mohammad Faizal Bin Salleh was a material witness because he was allegedly involved in Project MRT V201 and had a conflict of interest. The Defendant says he was connected to both the Defendant's project operations and the Plaintiff. The Defendant submits that the Plaintiff's failure to call him should attract an adverse inference under section 114(g) of the Evidence Act 1950.

The Defendant relies on Munusamy Vengadasalam v Public Prosecutor [1987] CLJ (Rep) 221 and section 114(g) of the Evidence Act 1950.

The Plaintiff says there was no requirement to call every person involved. It submits that the Defendant did not show that S/N Xa/i55ITzEWHtaoPylb36w Mohammad Faizal's evidence was necessary or that his evidence would have been adverse to the Plaintiff.

The law is clear. An adverse inference under section 114(g) is not automatic. The court must first be satisfied that the witness was material, that the evidence was within the power of the party to produce, and that the failure to call the witness leaves an unexplained gap in the case.

On the facts, I am not persuaded that the learned SCJ erred in not drawing an adverse inference. The Plaintiff's case was based mainly on documents, accounts, invoices, and payment records. The Defendant had the opportunity to challenge those documents through cross-examination and through its own witnesses.

The failure to call Mohammad Faizal did not, by itself, require the court to reject the Plaintiff's claim. The learned SCJ's refusal to draw an adverse inference was a matter of evaluation. I find no error. The counterclaim

The Defendant's counterclaim was for alleged overpayment of RM79,578.22. S/N Xa/i55ITzEWHtaoPylb36w

A counterclaim is a positive claim. The Defendant bore the burden to prove it. It had to prove the correct figures, the correct deductions, and the alleged overpayment.

The learned SCJ found that the Defendant failed to prove the counterclaim. This finding is tied to the earlier findings on old debt, AND works, and Project MRT V201. Once the learned SCJ accepted the Plaintiff's computation and rejected the Defendant's alternative computation, the counterclaim necessarily failed.

More fundamentally, the SCJ was correct to observe that from the evidence of the Defendant's own witness (SD3), it was established that the overpayment claim was only formulated after the Plaintiff filed its writ in February 2023. SD3 confirmed under cross-examination that between 2020 and February 2023, the Defendant never communicated to the Plaintiff that there had been any overpayment. No letter, email or demand for refund was sent in that three-year period. This is inconsistent with a party genuinely believing it had overpaid by nearly RM698,000.00. The entire counterclaim appears to have been assembled in reaction to the Plaintiff's suit rather than arising from any genuine pre-existing belief.

Hence, I find no error in the SCJ's decision to reject the counterclaim. S/N Xa/i55ITzEWHtaoPylb36w Conclusion

The Defendant's appeal is, in substance, an invitation for this court to reassess the accounts and prefer the Defendant's computation over the Plaintiff's computation.

That is not sufficient for appellate intervention. The learned SCJ had the advantage of hearing the witnesses and assessing the evidence at trial. Her findings were supported by documents and reasons. I do not find that she misunderstood the law, applied the wrong burden of proof, ignored material evidence, or reached a plainly wrong conclusion.

I also do not find that the authorities cited by the Defendant require a different result. Those authorities state correct principles, especially on without prejudice privilege, admissions, burden of proof, and adverse inference. However, applying those principles to the evidence, the Defendant has not shown any appealable error. Final Order

For the reasons stated above, I dismiss the appeal.

I affirm the decision of the Sessions Court dated 18 June 2025, including: S/N Xa/i55ITzEWHtaoPylb36w

(a) The judgment entered for the Plaintiff in the sum of RM900,267.52; and

(b) The dismissal of the Defendant's counterclaim.

Costs of RM12,000 are awarded to the Respondent, subject to the allocator. Dated this: 13 May 2026 ~signed (NOOR HAYATI BINTI HAJI MAT) JUDGE HIGH COURT OF MALAYA SHAH ALAM, SELANGOR Representative: For the Appellants : Ang Jian Ming Messrs Tay, Tee & Nasir For the Respondent : Haris bin Md Nor Messrs Adnan Sharida & Associates S/N Xa/i55ITzEWHtaoPylb36w