Etika Distributions Sdn Bhd v T.G.Distributions Sdn Bhd (WA-22NCC-79-03/2017)

The place of business of the Defendant is in Terengganu;

The witnesses, including other potential witnesses for the Defendant are based in Terengganu;

The cause of action and the facts on which the proceedings are based arose in Terengganu; and

The High Court in Kuala Terengganu is thus the most appropriate and convenient forum to determine the dispute between the parties. [8] The Plaintiff resisted this application, arguing instead that the correct forum is indeed the High Court in Kuala Lumpur. [9] I shall next examine the arguments of the Defendant in support of the instant application, and the assertions made by the Plaintiff to Page 3 of 15 counter the same before I state my findings. But before all that, I think it is apposite and in the interest of clarity for the law governing the subject of transfer of proceedings from one High Court to another be stated. The Law on Transfer of Proceedings [10] The underlying jurisprudence on the transfer of proceedings is found in the provisions of Section 23(1) of the Courts of Judicature Act 1964 (“CJA”), which provides for the civil jurisdiction of the High Court as follows:- “Civil jurisdiction – general

(1) Subject to the limitations contained in Article 128 of the Constitution the High Court shall have jurisdiction to try all civil proceedings where –

the cause of action arose;

the defendant or one of several defendants resides or has his place of business:

the facts on which the proceedings are based exist or are alleged to have occurred; or

any land the ownership of which is disputed is situated, within the local jurisdiction of the Court and notwithstanding anything contained in this section in any case where all parties consent in writing within the local jurisdiction of the other High Court.” [11] For clarity, Section 3 of the CJA further defines “local jurisdiction” to mean:-

in the case of the High Court in Malaya, the territory comprised in the States of Malaya, namely, Johore, Kedah, Kelantan, Malacca, Negeri Sembilan, Pahang, Penang, Perak, Perlis, Selangor,

in the case of the High Court in Sabah and Sarawak, the territory comprised in the States of Sabah, Sarawak and the Federal Territory of Labuan". Page 4 of 15 [12] Thus the High Court of Malaya, for instance, constitutes one local jurisdiction. In Sova Sdn Bhd v Kasih Sayang Realty Sdn Bhd [1988] 2 MLJ 268, Lim Beng Choon J held as follows: “…a High Court located at Penang or at Alor Setar is but a branch of the High Court in Malaya and each branch of the High Court in Malaya located in any state has concurrent jurisdiction to entertain any civil proceedings regardless of whether the cause of action arose in another state”. [13] In addition, paragraph 12 of the Schedule to the CJA further provides for the additional power of the High Court to transfer proceedings in the following terms:- “Transfer of proceedings

Power to transfer any proceedings to any other Court or to or from any subordinate court, and in the case of transfer to or from a subordinate court to give any directions as to the further conduct thereof: Provided that this power shall be exercised in such manner as may be prescribed by any rules of court”. [14] Order 57 r 1(1) and 1(4) of the RC 2012 similarly provides for the Court’s power to transfer proceedings to another Court as follows: “Transfer of proceedings to another Court (O.57 r 1)

1.

Where the Judge of the High Court or a Judge of the Sessions Court or a Magistrate is satisfied that any proceedings in that Court can be more conveniently or fairly tried in some other Court of co-ordinate jurisdiction, he may on application by any party, order the proceedings to be transferred to the other Court……….

Before making any order to transfer any proceedings from -

the High Court to another High Court of co-ordinate jurisdiction;

a Subordinate Court to the High Court;

the High Court to a Subordinate Court; or

a Subordinate Court to another Subordinate Court, Page 5 of 15 the High Court Judge or the Judge of the Sessions Court or Magistrate, as the case may be, shall take into consideration whether the High Court or Subordinate Court which shall hear the case is located at or nearest to the place where –

(A) the cause of action arose;

(B) the defendant, or one of the several defendants, resides or has his place of business;

(C) the facts on which the proceedings are based exist or are alleged to have occurred;

(D) the land the ownership of which is disputed is situated; or

(E) for other reasons it is desirable in the interests of justice that the proceedings should be transferred.” [15] For completeness, it should also be stated that in the context of the Federation of Malaysia having two High Courts of coordinate jurisdiction, one being the High Court of Malaya covering the territorial jurisdiction of West or Peninsular Malaysia, and the other, the High Court of Sabah and Sarawak concerning the territories in the states of Sabah and Sarawak, it is settled law that there is no legal basis for the transfer of proceedings from one High Court to another. [16] Thus the Federal Court in the case of Fung Beng Tiat v Marid Construction Co [1996] 2 MLJ 413, held, in the judgment delivered by Gopal Sri Ram JCA (as he then was):- "First, it is crystal clear from art 121 of the Federal Constitution that there are two separate High Courts in Malaysia exercising distinct territorial jurisdiction over different geographical areas of the country. There is the High Court in Malaya and there is the High Court in Sabah and Sarawak. Each has jurisdiction over dispute that arise within its territory. As presently advised, there is absent in any Federal legislation that confers power upon the one High Court to transfer proceedings to the other. This bifurcation of territorial jurisdiction was dealt with by Hashim Yeop A. Sani J (later Chief Justice, Malaya) in Sykt Nip Kui Cheong Timber

Contractor v Safety Life & General Insurance Co Sdn Bhd [1975] 2 MLJ His Lordship observed that: Page 6 of 15 ''[I]t is all too clear that both the High Court in Malaya and the High Court in Borneo have separate and distinctive territorial jurisdiction. Article 121(1) of the Constitution speaks of the two High Courts having 'co-ordinate jurisdiction' and the definition of 'local jurisdiction' in the Courts of Judicature Act 1964 speaks of the territorial jurisdiction of each of the two High Courts". ……………………………………….. [17] More recently, the Federal Court in Hap Seng Plantations (River Estates) Sdn Bhd v Excess Interpoint Sdn Bhd & Anor [2016] 3 MLJ 553 reaffirmed its earlier decision in Fung Beng Tiat v Marid Construction Co and rejected the argument that the new Order 57 r 1 of the RC 2012 permitted the transfer between the two High Courts. Delivering the judgment of the Federal Court, Zulkefli Ahmad Makinuddin, CJ (Malaya) (now PCA) held that the reference to “local jurisdiction” in Section 3 of the CJA meant that the power to transfer any proceedings must be confined to transfers within a particular local jurisdiction and not between the two local jurisdictions. [18] In exercising the discretionary power to consider whether or not to invoke the transfer under Order 57, the factors set out thereunder, as similarly stated in Section 23 of the CJA as noted above, must be taken into account. It is also of significance to observe that no one single factor will prevail over the other. For the Court must weigh all the factors relied on in making a decision as to whether the application ought to be favourably considered (see the High Court decision in POSC TI Sdn Bhd v Kerajaan Negeri Terengganu & Anor [2016] 10 MLJ 663). Evaluation & Findings of this Court A) Where the cause of action arose [19] The cause of action in the writ action filed by the Plaintiff is concerning a claim for payment allegedly due to the Plaintiff from the Defendant for goods sold and delivered by the Plaintiff to the Defendant pursuant to the Agreement and as evidenced by the various delivery orders and invoices. The failure on the part of the Defendant to make the payment as claimed by the Plaintiff thus constitutes a breach of contract, giving rise to a cause of action for the Plaintiff to pursue against the Defendant. Page 7 of 15 [20] In situations of cause of action involving non-payments like in the instant claim, it has been held that the breach occurs at the place where payment was supposed to be made such that the cause of action will thus accrue in that place. If place of payment is unspecified, payment must be made at the place of business or residence of the party who is entitled to the payment. [21] I can do no better that reproduce that part of the judgment of the High Court in the case of Malacca Securities Sdn Bhd v Loke Yu [1999] 6 MLJ 112, which facts bear much similarity with those in the instant case, as follows:- “In this case, sub-para (b) and (d) clearly cannot apply in favour of the plaintiff as the defendant resides in Kuala Lumpur and the subject matter of this action is not land. That leaves for consideration sub-para (a) and

of the section. I shall first consider sub-para (a). With regard to accrual of a cause of action in contract cases it is deemed to have occurred at the place where the breach took place. In support of this principle I refer to the case of Cuban Atlantic Sugar Sales Corp v Compania De Vapores San Elefterio Limitada [1960] 1 All ER 141 where Lord Hodson LJ said at p 143: … The question is not whether a breach must be deemed to have been committed, or whether a breach must necessarily be taken to have been committed when the defendants have put themselves in the wrong, but whether a breach has been committed in the United Kingdom. And Ormerod LJ said in the same case at p 145: … Counsel for the defendants at the beginning of his argument said (and I think rightly) that the jurisdiction of the courts under RSC Ordinance 11 rule 1 should be administered with the greatest care, as it is a rule which tends to encroach on the sovereignty of other nations. Bearing that in mind, one has to consider the one and only important question in this appeal, and that is whether the defendants have committed a breach of contract within the jurisdiction. In a contract for the payment of money the breach occurs when there is a failure to pay the sum promised. This is logical as the meaning of 'cause of action' is the act on the part of the defendant which gives the plaintiff his cause of complaint (see Jackson v Spittall (1870) LR 5 CP 542). The failure to pay will be the cause of complaint. That breach will have to be at the place where the payment is to be made and the cause of action will therefore accrue in that place (see Bank Bumiputra Malaysia Bhd v Melewar Holdings Sdn Bhd & Ors [1990] 1 CLJ 1246). Where there is no Page 8 of 15 agreement as to the place where the payment should be made then the payment should be made at the place where the plaintiff lives. In this regard I refer to Northey Stone Co v Gidney [1894] 1 QB 99 where Charles J said at p 100: The action is brought to recover the balance of the price of goods sold and delivered. According to the law applicable to contracts, there being no special stipulation as to the place of payment, the defendant must pay at Bath, where his creditors, the plaintiffs, live”. [emphasis added] [22] In the instant case, the party who claimed to be entitled to the payment is the Plaintiff, who has its registered address in Kuala Lumpur. Clause 21.1.3 of the Agreement on notices also specifies the notification address of the Plaintiff to be in Kuala Lumpur. Since the applicable Agreement is silent on venue of payment, this is the place where payment ought to have been made by the Defendant. Failure on the part of the Defendant to have made the payment claimed by the Plaintiff thus meant that a breach occurs in Kuala Lumpur. The fact that the place of business and the registered address of the Defendant are in Terengganu is in so far as the question on where the cause of action arose, is of secondary importance, if not entirely irrelevant. Thus, on this ground, the Plaintiff was correct in having filed its writ action in the High Court in Kuala Lumpur. [23] Even if it was the case that payment could be made by electronic medium of online transfers, the principle would then be that the breach occurs where the recipient’s bank account intended for receiving payment from the payer is opened and maintained. However, neither of the parties touched on this point, and no evidence was given of any bank accounts. B) Where the Defendant has its place of business [24] It cannot be denied however, that the business of the Defendant is located and based in Kuala Terengganu and in Dungun. And Order 57 r 1 (4) (b) as well as Section 23 (1) (b) of the CJA clearly concern the place of business of the Defendant, not the Plaintiff. Thus, on this basis, the application of the Defendant seeking the transfer to the High Court in Kuala Terengganu is not unmeritorious. Page 9 of 15 [25] In this regard, I must nevertheless, emphasise two important considerations. First, the subparagraphs in (a), (b), (c) and (d) of Section 23 (1) of the CJA, as set out above, are to be read disjunctively. Thus, a party intending to institute an action in a High Court may do so if his case falls within any one of the said paragraphs (See the Court of Appeal decision in Enersafe Sdn Bhd v Megarina Sdn Bhd [2006] 4 MLJ 271, and the High Court case of Malacca Securities referred to earlier). [26] Secondly, and consistent with POSC TI Sdn Bhd v Kerajaan Negeri Terengganu & Anor referred to earlier, fulfilment of any one of the four requirements is not necessarily definitive. All the factors set out in paragraphs (a) to (d) of Section 23 (1) of the CJA, or the corresponding provisions in Order 57 r 1 must be considered. And the overarching issue for determination is whether the Court is the most appropriate and convenient forum to hear the dispute. The following observations of the High Court in Malacca Securities are most instructive:- “In referring to this case Edgar Joseph Jr J (as he then was) said in Wee Chow Yong t/a Vienna Music Centre v Public Finance Bhd [1989] 3 MLJ 508 at p 512: The case of Sova Sdn Bhd v Kasih Sayang Realty Sdn Bhd [1988] 2 MLJ 268 reminds us of the familiar proposition that the High Court of each state in our country are but branches of the High Court of Malaya and that each branch has concurrent jurisdiction to entertain any civil proceeding regardless of whether the cause of action arose in another state. The result is that a plaintiff is entitled to file an action in any branch of the High Court in Malaya regardless of whether the cause of action arose in another state (see Re Application of Asia Insurance Co Ltd [1968] 2 MLJ 228). I therefore hold that this court has jurisdiction to entertain this action even if the defendant is correct in his submission that the cause of action arose in Kuala Lumpur coupled with the fact that he resides there also. But, as Lim Beng Choon J observed in Sova Sdn Bhd, that is not the end of the matter as the critical issue for determination is whether this court is the forum conveniens to hear the dispute between the parties notwithstanding the fact that it has jurisdiction to do so. His Lordship added at p 271: However, that is not the end of the matter since the defendants have also contended that this court is not the proper or convenient forum to determine the dispute between the parties. To this contention, I agree. It is quite obvious that in creating a branch of the High Court in Malaya in each state, the legislature had two things in mind:

to enable the parties of a civil suit to have easy access to a branch of the High Court in Malaya located in a state where either the plaintiff or the defendant resides. When a person is sued for breach of contract or for that matter a tortious act when the breach or the tort was committed in the state where he resides, it is certainly unreasonable to require him to travel all the way, say, to Kuala Lumpur to defend himself. Apart from the expense incurred, the defendant may have to remain in Kuala Lumpur perhaps one week to participate in the civil proceedings. No doubt he would be compensated in terms of costs should he succeed in defending himself but the inconvenience caused may outweigh the amount of costs awarded to him;

(ii) the obvious reason for the setting up of a branch of the High Court in every one of the 11 states is to facilitate the disposal of cases in Malaya and to cut down, even if it is not yet possible to obliterate, the backlog of cases pending in any one or more of the branches of such High Court. For the reasons as stated above, I do not think that the present civil proceedings should be dealt with by this court. I am also of the view that it is for the defendants to apply to this court for a transfer of the civil suit and the application made by the plaintiff under O 81(1) to the High Court in Malaya at Penang or Kuala Lumpur since the cause of action arose in Penang but the parties have their places of business in Kuala Lumpur. His Lordship therefore declined to exercise his jurisdiction to hear the case on the ground that it should be heard in another branch High Court in accordance with the doctrine of forum conveniens. That brings into focus the circumstances in which a court which has jurisdiction to hear a case can lawfully decline to exercise its jurisdiction on the ground that the case must be heard by a more accessible court. In declining to exercise jurisdiction a court does so not on grounds ofconvenience but of the suitability or appropriateness of another tribunal in the interests of all the parties and for the ends of justice (see Sim v Robinow (1892) 19 R 665, Spiliada Maritime Corp v Consulex Ltd [1987] AC 460). In this regard reference may be made to The Atlantic Star [1973] 2 All ER 175 where Lord Morris of Borth-y-Gest said at pp 183–184: The cases show that if there is jurisdiction in the court and if a plaintiff becomes enabled to invoke it and chooses to do so he may nevertheless in some circumstances not be allowed to do so. In the decisions which indicate what those circumstances are certain words constantly emerge. They are such words as 'vexation' or'oppression'. Thus in McHenry v Lewis (1882) 22 Ch D 397, Sir George Jessel MR said that it was part of the general Page 11 of 15 jurisdiction of the court to prevent a defendant being 'improperly vexed' by legal procedure ….” [emphasis added] [27] As such, the totality of the respective positions of the parties vis-à-vis the requirements to be considered in Section 23 (1) or Order 57 r 1 (4) must be evaluated before arriving at the determination of the forum conveniens. The mere fact that the Defendant and their witnesses are located in Terengganu is not determinative of the issue. C) Where the facts on which the Suit is based exist or occurred [28] The Suit involves a claim for the payment said to be due to the Plaintiff from the Defendant on the basis on goods sold and delivered to the latter. The goods were presumably said to have been received by the Defendant in Terengganu. This thus potentially warrants the need to call witnesses who are based in the Defendant’s place of business to confirm delivery. This also however potentially involves the Plaintiff and a third party distributor involved in this Suit, both of which are based in Kuala Lumpur and Selangor, perhaps to confirm on the fact of the supply and delivery of the goods. [29] Further, in its defence, the Defendant questioned the person who signed the Agreement on behalf of the Plaintiff, and whether the said third party distributor appointed by the Plaintiff to deliver the said goods to the Defendant was validly authorised. This thus means that witnesses for the Plaintiff concerned with the execution of the Agreement, and from the third party distributor appointed by the Plaintiff may potentially have to be called. They are on the other hand based in Kuala Lumpur and Petaling Jaya, Selangor, respectively. The Agreement itself had been executed in Kuala Lumpur by the Plaintiff and stamped in Hulu Langat, Selangor. And it has earlier been stated that payment should also be made to the Plaintiff in Kuala Lumpur. On the whole it appears that this issue of where the greater substance of facts of the Suit existed or occurred is somewhat inconclusive. Page 12 of 15 D) Whether there are other reasons making it desirable in the interest of justice for the transfer [30] In any transfer application, and as set out in Section 23 of the CJA and Order 57 r 1 of the RC 2012, the duty of a Court hearing the application is to determine the appropriate forum where the dispute of the case may be conveniently and fairly tried. The factors to be considered in the exercise of judicial discretion to decide on the application are those set out in the said provisions of the CJA and the RC 2012, such as where the cause of action arose, the residence or place of business of the defendant and the hardship of the parties and their respective witnesses. [31] In this case, the contention of the Defendant is effectively of some validity only by reason of the claim that its witnesses are residing in Terengganu, and the goods were received by them in Terengganu. But on the other hand, it has been found that the cause of action of the Plaintiff against the Defendant arose in Kuala Lumpur. [32] I must emphasise that whilst the determining consideration as to which Court is more suitable and appropriate is dependent on the forum conveniens of the case, as had been held by the Supreme Court in American Express Bank Ltd v Mohamed Toufic Al-Ozier & Anor [1995] 1 MLJ 160, the burden is unmistakably on the party making the transfer application, in the instant case, the Defendant, to satisfy the Court that another Court (in this case, in Kuala Terengganu) is the more appropriate forum to hear the case. [33] However, other than the fact of its place of business being in Terengganu and of the witnesses for the Defendant also are said to be residing in that state, not much had been proffered by the Defendant to further strengthen its application or to credibly challenge the resistance put up by the Plaintiff in response to this application. [34] An important consideration that however significantly weakens the case of the Defendant is that this application by the Defendant is designed to deal only with the main claim of the Plaintiff in the Suit. It does not extend to the counter claim filed by the Defendant as well. Thus, even if the claim of the Plaintiff were to be transferred to the High Court in Kuala Page 13 of 15 Terengganu, the counter claim of the Defendant will continue to be heard at the High Court in Kuala Lumpur. [35] Surely this runs counter to the essence of why a proceeding should be transferred. Having the parties, and their respective witnesses to attend the High Court in two different locations, one in Kuala Terengganu for the main claim (as applied for by the Defendant) and the other in Kuala Lumpur for the counter claim is neither fair nor appropriate and is certainly not convenient to all parties. It is the antithesis of a fair, just and economical disposal of the proceedings envisaged in the RC 2012. [36] No explanation was given by the Defendant as to why it did not seek to also transfer its counter claim. Its notice of application and the affidavit in support dealt only with the arguments to support its application to transfer the main claim of the Plaintiff in the Suit. [37] In such a situation, in the counter claim, the witnesses for the Plaintiff will now be the witnesses for the defendant. This strengthens the case of the Plaintiff since it now also is the defendant who is based in Kuala Lumpur, making the transfer to Terengganu less deserving, given Section 23 (1) (b) of the CJA and Order 57 r 1 (4) (B). The cause of action remains in Kuala Lumpur since the alleged unlawful realisation of the bank guarantee was in respect of the funds deposited by the Defendant at Maybank in Kuantan, in favour of the Plaintiff pursuant to the Agreement, which was then enforced by the Plaintiff under Clause 8.2 (b) of the Agreement, whereby the sum of the security of the bank guarantee was then credited by Maybank to the account of the Plaintiff. [38] In the case referred to by the Plaintiff of Amalan Lengkap Sdn Bhd v SKS Coachbuilders Sdn Bhd [2016] 1 LNS 883, the suit filed in the High Court in Melaka involved both a claim and a counter claim. The defendant in that case applied to have the proceedings transferred to the High Court in Shah Alam. Unlike the application in the instant case before me, the defendant in that case, quite sensibly, applied for both the main claim and the counter claim to be transferred. The application was however refused by the High Court which found that like in the instant case, the pleaded cause of action arose in Melaka, since the claim was for contractual payment due from the defendant to the plaintiff who had its place of business in Melaka. Page 14 of 15 [39] In the instant case before me, other than the cause of action having arisen in Kuala Lumpur, the Defendant also did not seek the transfer of its counter claim to Kuala Terengganu. That I think is fatal to its application and puts paid to whatever little semblance of merit that the Defendant ever had to warrant the transfer. If a suit involves a counter claim, the failure of the applicant to seek the transfer of both the main claim and the counter claim should generally not be countenanced as it would clearly defeat the entire objective of securing the most convenient forum for the resolution of the dispute. The application of the Defendant, for such reasons, considering the factors specified in Order 57 r 1 and Section 23(1) of the CJA is not sustainable and must fail. Conclusion [40] In view of the foregoing reasons, it is my judgment that the Defendant has not succeeded in establishing its case for the transfer of the Suit concerning the main claim of the Plaintiff from the High Court of Kuala Lumpur to the High Court in Kuala Terengganu. I therefore dismiss enclosure 7, with costs to the Plaintiff. Dated: 14 August 2017 (MOHD NAZLAN BIN MOHD GHAZALI) Judge High Court NCC1 Kuala Lumpur Page 15 of 15 Counsel: For the Plaintiff Mohd Khairul Azri Messrs S.Ravichandran & Anuar Kuala Lumpur For Defendant Zahidah Zakaria Messrs G.K. Soh & Partners Kemaman, Terengganu