Gfw Malaysia Sdn.Bhd v Study Germany Sdn. Bhd. (BK-A72NCC-16-02/2026)

Whether the sum of RM50,000.00 was a loan or capital advance recoverable by the Plaintiff, or a capital contribution;

Whether, if the sum of RM50,000.00 constituted a capital contribution, the terms and conditions (if any) governing the repayment of that capital contribution had been fulfilled.

Whether an oral set-off agreement was concluded between Dr. Azlan and Thomas Eichler in June 2025, whereby RM25,000.00 of the outstanding balance was discharged by way of a set-off;

Whether the Audit Balance Confirmation Letter dated 11 August 2025 constituted a conclusive acknowledgment of indebtedness;

Whether the Defendant is entitled to an equitable set-off against the Plaintiff's claim based on the Defendant's counterclaim;

Whether the Plaintiff is estopped from pursuing the present claim. ANALYSIS AND DECISION [10] This Court is satisfied that the 3 conditions in National Company for Foreign Trade v Kayu Raya Sdn Bhd [1984] 2 MLJ 300, have been fulfilled namely: (a) the Defendant must have entered an appearance; (b) the statement of claim must have been served on the Defendant; and (c) the affidavit in support of the application must comply with Order 14 rule 2 of the Rules of Court 2012, have been fulfilled. [11] The burden shifts to the Defendant to raise at least one triable issue to justify the Court granting the Defendant leave to defend. (See SOUTH EAST ASIA INSURANCE BHD V. KERAJAAN MALAYSIA [1998] 1 CLJ 1045, CA) [12] I also refer to the landmark case of Cempaka Finance Bhd v Ho Lai Ying (trading as KH Trading) & Anor [2006] 2 MLJ 685, 689, FC, in an application for summary judgment, the burden is on the defendant to show that there are bona fide triable issues that summary judgment ought not to be granted. [13] In Bank Negara Malaysia v. Mohd Ismail Ali Johor & Ors [1992] 1 MLJ 400, the Supreme Court summarized the approach to be taken in dealing with summary judgment’s application: “It is trite law that O. 14 is to enable a plaintiff to obtain summary judgment without trial, if he can prove his claim clearly and if the defendant is unable to set up a bone fide defence or raise an issue against the claim which ought to be tried. Thus it is stated in Anglo-Italian Bank v Wells 38 LT p.201 that “when the Judge is satisfied not only that there is no defence but no fairly arguable point to be argued on behalf of the defendant it is his duty to give judgment for the plaintiff.” This proposition is I must say simple enough but its application to the facts of a particular case often gives rise to some difficulties. I must therefore delve deeper into the case law for a definition (if one is available) of “no fairly arguable point to be argued” (Emphasis added) [14] Similarly, in the case of Esso Standard Malaysia v. Southern Cross Airways (M) Bhd [1972] 1 LNS 3, it was held that an application under O. 14 of the ROC order should only be made only if the court thinks it is a plain case and ought not go to trial. [15] I shall deal with each of the Defendant's issues in turn. First issue: whether the sum of RM50,000.00 was a loan or capital advance recoverable by the Plaintiff, or a capital contribution; and Second issue: whether, if the sum of RM50,000.00 constituted a capital contribution, the terms and conditions (if any) governing the repayment of that capital contribution had been fulfilled. [16] The Defendant submitted that the character of the RM50,000.00 payment as a capital contribution is established by the Defendant's Invoice No. SG-INV2410-018 issued to the Plaintiff on 4 October 2024, wherein the description of the payment was expressly stated as “Capital Contribution Establishment Holding”. Although the Holding Company was not incorporated, that circumstance, by itself, does not automatically confer upon the Plaintiff a right to the repayment of the capital contribution. [17] I am unable to agree with the Defendant's contention. I find that although the said sum was initially paid for the purpose of establishing the Holding Company, that commercial purpose failed as the entity was never incorporated. Consequently, the basis upon which the payment was made failed, and the Plaintiff is entitled to recover the sum. [18] Furthermore, it is not disputed that the Defendant made three instalment payments totalling RM25,000.00 to the Plaintiff. Each of these payments was made with specific reference to “INV 20250002”, being the Plaintiff’s invoice. It is my finding that by making those instalment payments, the Defendant demonstrated an intention to discharge the alleged payment obligation, and such conduct is inconsistent with a complete denial of liability. [19] This is consistent with the decision of the High Court in Liebherr Sales Kluang Sdn Bhd v Zhongji Construction Sdn Bhd [2025] CLJU 285, where it was held that: “[23] The defendant's conduct in making part payments was inconsistent with its assertion that it had never acknowledged the debt. By honouring three post-dated cheques, the defendant demonstrated an intention to fulfil its payment obligations under the Settlement Agreement. [24] Such conduct contradicted its subsequent denial of liability. If the defendant had genuinely disputed its obligation to pay the repair costs, it would not have agreed to a structured payment schedule or proceeded to issue and honour three cheques. The absence of any contemporaneous objection further undermined the credibility of the defendant's claim that it had never acknowledged the debt.” [20] Accordingly, neither of the Defendant's contentions gave rise to a triable issue. Third issue: whether an oral set-off agreement was concluded between Dr. Azlan and Thomas Eichler in June 2025, whereby RM25,000.00 of the outstanding balance was discharged by way of a set-off; [21] The Defendant’s contention that the instalment payments totalling RM25,000.00 were made pursuant to the oral agreement allegedly concluded in June 2025 is contradicted by the fact that the first payment was made in April 2025, two months before the alleged agreement. I therefore find that the payments could not have been made pursuant to the said oral agreement. [22] It is also pertinent to note that each of the Defendant’s instalment payments, namely RM5,000.00 on 30 April 2025, RM5,000.00 on 6 May 2025 and RM15,000.00 on 17 October 2025, clearly bore the Plaintiff’s invoice reference number, “INV 20250002”. [23] Having reviewed the Defendant's affidavit, I find no contemporaneous documents, minutes of meetings, or written communications, including emails or messages, evidencing the alleged oral agreement for set-off. [24] Therefore, I find that this is clearly not a triable issue. Fourth Issue: whether the Audit Balance Confirmation Letter dated 11 August 2025 constituted a conclusive acknowledgment of indebtedness. [25] This Court finds that the Defendant’s assertion that the Audit Balance Confirmation Letter dated 11 August 2025 was merely a historical record and that Dr. Ahmad Azlan bin Azmi signed it only as the Plaintiff’s nominee director, amounts to nothing more than a bare denial. The said document confirmed that the balance of RM50,000.00 was correct and owing to the Plaintiff as at 31 December 2024. [26] It is a well-established principle of law that when a party signs an audit balance confirmation, it constitutes a clear admission of debt. The Court of Appeal in the case of Sagujuta (Sabah) Sdn Bhd v Trane Malaysia Sales & Services Sdn Bhd [2013] CLJU 1425; [2013] 1 LNS 1425 CA; [2014] 5 MLJ 535 affirmed the decision of the High Court in allowing the respondent's summary judgment application in respect of its counterclaim and made the following observations with regard to effect of an auditor's confirmation: “20. In short, the significance of the audit certification request can be seen from the statement contained therein. It specifically states that in the Appellant's financial book, the amount due to the Respondent is RM3,887,555.12. This is a clear admission of debt based on the amount stated as at the date 31 December 2010. An audit confirmation request is an important step in an audit of a company's financial accounts. It is a way of ensuring that the amount as appears in the company's book is correct and the only manner to confirm this amount is by way of confirmation by the creditor concerned.

Based on the above documents, namely the certification of payments by the Appellant's appointed Consultant, Messrs JSPEC and the audit confirmation request by the Appellant's group accountant, we are satisfied that the learned High Court judge was correct in coming to a conclusion that the Appellant's defence to the Respondent's counter claim is unlikely to succeed in a trial as it raises no triable issue. We are in agreement with such findings and find no reason to disturb it. To us, the position is clear i.e. upon certification by the Appellant's consultant payment must be made to the Respondent. The certification was confirmed by the Appellant's itself when it issued an audit confirmation request. The authenticity of the audit confirmation request issued by the Appellant is not in dispute in view of those documents above, the Appellant cannot possibly deny the same.” [27] Similarly in the case of Liebherr Sales Kluang Sdn Bhd v Zhongji Construction Sdn Bhd [2025] CLJU 285, the Learned High Court Judge decided that the voluntary confirmation of figures in an audit confirmation letter constituted an unequivocal admission and served as conclusive proof of debt. Such confirmation reflected a clear acknowledgment of financial liability. [28] As a director, Dr. Ahmad Azlan bore a legal responsibility to ensure the accuracy of the documents he executed. His assertion that he acted merely as a “nominee director” cannot be relied upon as a means to avoid liability. [29] Accordingly, I find that this issue did not give rise to a triable issue. Fifth Issue: whether the Defendant is entitled to an equitable set-off against the Plaintiff's claim based on the Defendant's counterclaim; and Sixth Issue: whether the Plaintiff is estopped from pursuing the present claim [30] I find that both issues raised by the Defendant are devoid of merit and do not amount to triable issues. [31] According to the Defendant, the Plaintiff is estopped from pursuing this claim because its Managing Director instructed the Defendant to issue invoices to HonestPassion GmbH for services provided by the Defendant to the Plaintiff and/or its related entities. [32] The Defendant seeks to effect a set-off based on invoices issued to HonestPassion GmbH, a separate foreign entity, with which the Plaintiff has no privity of contract. [33] To my mind, the Plaintiff has never instructed the Defendant to issue invoices to HonestPassion GmbH. The Defendant’s counterclaim concerns separate transactions involving a distinct entity and cannot amount to a bona fide defence to the Plaintiff’s claim. Even if the counterclaim is capable of giving rise to a set-off, it does not constitute a triable issue for the purpose of resisting the Plaintiff’s application for summary judgment, as it does not arise from the same cause of action as the Plaintiff’s claim. [34] The law requires that a defence of set-off be founded upon matters that are clearly connected with, or form part of, the Plaintiff's cause of action. A cross-claim arising from an independent transaction cannot be relied upon as a set-off but stands only as a counterclaim. In the present case, the Defendant's invoices pertain to a third-party entity and separate commercial transactions. They therefore constitute nothing more than a counterclaim, lacking the requisite connection to the Plaintiff's cause of action. [35] This principle is derived from the Federal Court's decision in Permodalan Plantations Sdn Bhd v Rachuta Sdn Bhd [1985] 1 MLJ 157, where it was held that: “It is, therefore, clear that a counterclaim is wider than a defence of set-off and that whilst the former is a separate action by a defendant against a plaintiff, the latter is essentially a defence, although a defendant is entitled to add it as counterclaim. Being a defence to a plaintiff's action, the matter sought to be set off must essentially be connected with or form part of the matter upon which the plaintiff's action is founded. Indeed Mr. Cecil Abraham conceded this point. With this principle in mind in that a set-off is a defence and that if a counterclaim consisting of matters to be set-off is added to the defence, such counterclaim becomes a special kind of counterclaim, and that the set-off must be clearly connected with the claim..” [36] In the final analysis, the question of whether the issues raised by the Defendant were triable must be considered in light of the guidance provided by the Federal Court in Voo Min En & Ors v Leong Chung Fatt [1982] 2 MLJ 241. The relevant principle is that it is insufficient for a defendant merely to raise an issue, the defendant must raise an issue of such substance that it warrants determination at trial. [37] I find that the issues raised by the Defendant in the present suit clearly have failed to meet the test of being a triable issue. CONCLUSION [38] Applying the well-established principles laid down in National Company for Foreign Trade v Kayu Raya Sdn Bhd [1984] 2 MLJ 300, this Court finds that the Plaintiff is entitled to summary judgment. The Defendant failed to discharge the burden of proving that there were issues that merit a trial. [38] The above were the reasons for my decision. However, I am humbly guided by the decision of the High Court. Dated 30th July 2026 suriani SURIANI BINTI UJANG Magistrate Sepang Magistrate Court Selangor Counsel Nadzrul Niezar for the Plaintiff Chambers of Nadzrul Niezar Vishnu Vijandran for the Defendant Messrs. Aqran Vijandran