WA-21NCVC-65-06/2017
High Court of Malaysia24 Apr 2018
The written judgment as the court issued it, with the coram, case number, and source links. Every paragraph has its own anchor.
Content
1 Counsel: For the Plaintiff: Ms Noor Jasreena Jasmen; Federal Counsel . For the Defendants: Ms Noreha Bt Othman; Tetuan Nesan, Cheng & Co . DALAM MAHKAMAH TINGGI MALAYA DI KUALA LUMPUR DALAM WILAYAH PERSEKUTUAN, MALAYSIA GUAMAN SIVIL NO.: WA-21NCVC-65-06/2-17 BETWEEN KERAJAAN MALAYSIA PLAINTIFF AND PNP PARACHUTE INDUSTRIES (M) SDN BHD (No. Syarikat : 489578-M)
1
The plaintiff is the government of Malaysia. The defendant is a company incorporated in Malaysia in the business of supplying parachutes and related accessories inter alia for military purposes.
2
There is before me an application made under 14A of the Rules of Court 2012 [“ROC”] which is for this Court to determine any 2 construction of law and documents arising out in any matter at any stage of the proceedings where to the court such questions are suitable for determination without going through a full trial and that determination will dispose the entire matter.
3
An application of this nature, can only be resorted either:
i
by the parties or by the court on its own motion, if there is no dispute by the parties to the relevant facts; or,
II
(ii) The court concludes that the material facts are not in dispute. In Thein Hong Teck & Ors v Mohd Afrizan bin Husain and another appeal [2012] 2 MLJ 299 FC Hasan Lah FCJ in delivering the decision of the Federal Court held as follows: It is trite law that O 14A of the Rules of the High Court 1980 may only be resorted to if there is no dispute by the parties as to the relevant facts, or that the court, upon scrutinising the pleadings concludes that the material facts are not in dispute (see Dream Property Sdn Bhd v Atlas Housing Sdn Bhd [2008] 2 MLJ 812). Where the issues of fact are interwoven with legal issues raised, it will be undesirable for the court to split the legal and factual determination for to do so would in effect be to give rulings in vacuo or on a hypothetical ruling, which the court will not do (see State of Bank of India v Mariani Marketing 1 March 1991, CA Transcript No 91/0304). 3 It is, therefore, the position that only if the applicant has crossed this hurdle could the court proceed to determine the questions of law raised in the application. The plaintiff’s pleaded case [4] By an agreement dated 18.12.2008 (“the Agreement”) made between the plaintiff and the defendant, the defendant had agreed to supply, deliver and commission 52 units of the parachute free-fall tactical glider (“the equipment”) for the Malaysian Army. The Agreement is for a period of 15.7.2008 to 14.7.2009. [5] According to cl 37 of the Agreement, the defendant had to ensure that the equipment so supplied and delivered shall not be defective and in compliance with the specifications of the plaintiff. [6] The plaintiff had inspected and tested the equipment supplied by the defendant and discovered as follows:
a
The first Final Test Acceptance (“FAT”) report which was conducted from 10.6.2009 to 30.6.2009 revealed that 34 out of the 52 units of the equipment were defective. The plaintiff had instructed the defendant to make good the same before 11.8.2009.
b
The plaintiff had, from 12.8.2009 to 21.8.2009, conducted another test in respect of the returned and duly repaired 34 units of the equipment and according to the second FAT 4 report, and discovered that another 21 units of the 34 were defective which were eventually repaired.
c
The same process went on until the issuance of the 4th FAT dated 29.10.2009 whereby all of the equipment were certified to be in good condition and in accordance with the specifications. [7] However, on 13.1.2010 while undergoing a free-fall training at Zon Guguran Semalu, Kem Trendak, Melaka, the plaintiff discovered that equipment was damaged where stitches on the one side of the pilot chute cap were broken and all seams in the pilot chute cap were loose. The plaintiff, by a letter dated 25.2.2010 had instructed the defendant to remedy the aforesaid damage which the defendant did. By 30.7.2010 all the equipment could then be used for its purpose. [8] A payment of RM1,050,000 was then made on 6.11.2010 by the plaintiff to the defendant after the issuance of the final FAT report. After the payment was made, the Parachute Board of the Malaysian Army, during a meeting held on 26.11.2010 had resolved that the defendant should conduct another test on all the 52 units of the equipment. Subsequently, the plaintiff and defendant had met and it was purportedly agreed that the defendant would refund the plaintiff the sum of RM1,050,000 and the plaintiff agreed to return the equipment to the defendant. 5 [9] The defendant’s position is that it had performed its obligation under the Agreement and this had been made known to the plaintiff on 17.3.2011. [10] The plaintiff in this action is claiming for the refund of the said sum of RM1,050,000 and interest at the rate of 5% per annum from the date of judgment to the date of full realisation. The application under O 14A [11] The application in Encl 10 is supported by the affidavit (“AIS”) of Tifla Hairi Taib (“Tifla”), who is the legal and secretarial manager of the defendant, affirmed on 16.1.2018. The plaintiff then filed an affidavit in reply (“AIR”) affirmed by Mohamad Ridzuan bin Ismail (“Ridzuan”) dated 30.1.2018. Ridzuan is the deputy under-secretary procurement division, Ministry of Defence, Malaysia. [12] In response thereto, Tifla had filed a further affidavit (“FAIS”) dated 19.2.2018. Is there any dispute on the relevant facts? [13] The first thing that this Court has to determine is whether there was a dispute on the relevant facts that would be a hurdle in disposing the matter under O 14A of the ROC. [14] I can only summarise the position as follows. The plaintiff is objecting to the application since the issues raised in the instant 6 suit could not be disposed of by way pleadings and affidavit evidence. [15] The learned Federal Counsel submitted that the action could only be disposed of by way of viva voce evidence, especially so in respect of the acceptance of the equipment, the quality and the extent of the defects. It is also the plaintiff’s case that the defendant had failed to conduct a re-testing of the equipment pursuant to the meeting dated 26.11.2010. In fact, a letter dated 13.12.2010 [Exh MRI-1 of the AIR] the defendant offered to conduct the said re-testing. [16] The defendant’s case is quite straightforward. First, all of the tests required by the Agreement had been conducted and perfected on 15.12.2009 and a final certificate had been issued. Paragraphs 9 and 10 of the statement of claim provides as follows: [9] Plaintif kemudiannya telah mengesahkan semua Payung telah dibuat pembaikan pada 30 Julai 2010 dan boleh digunakan. [10] Pada 6 November 2010, Plaintif telah membuat pembayaran kepada Defendan berjumlah RM1,050,000 selepas dokumen Laporan Final Acceptance Test (FAT) disediakan dan disahkan. From the averments of the plaintiff it is quite clear that the plaintiff had conceded that by 30.7.2010, the defendant had 7 remedied the defects to the extent that it could be used by the plaintiff. This was duly certified, and for this reason, the plaintiff had made payment to the defendant for the contractual sum as referred to in cl 5.1 of the Agreement. [17] In answer to the issuance of the letter dated 13.12.2010 [Exh MRI-1 of AIR], the defendant averred that such an offer was not mandatory and not even provided for in the Agreement. It cannot in anyway bind the defendant. The analysis [18] The Final Certificate which was dated 15.12.2009 [Exh THT-2 of the AIS] and signed by both parties clearly stated as follows: Dengan ini disahkan bahawa BARANG-BARANG seperti yang dinyatakan telah dilaksanakan mengikut SPESIFIKASI KERAJAAN seperti di Jadual kedua kepada kontrak ini dan ia telah diperiksa dan diuji oleh Wakil Kerajaan dan berpuashati dengan ujian yang telah dijalankan. Learned counsel for the defendant submitted that the issuance of the Final Certificate should be read together with cl 37.2 of the Agreement which provides inter alia that the warranty period of the equipment is one year from the date of the Final Certificate. It further provides that the defendant would only be contractually liable to remedy any defects if it occurred within the warranty period. The procedure is that the defendant would have to remedy or replace the defective part of the equipment 8 within 30 days of receipt of the notice of rejection from the plaintiff. [19] Going by the Final Certificate which was dated 15.12.2009, it means the warranty period would have ended on 15.12.2010. If the plaintiff would like to exercise its right under cl 16 in rejecting part of the equipment, what the plaintiff should have done was to serve a Notice of Rejection under cl 16.1 of the Agreement which would give a 30-day notice to the defendant to replace or otherwise remedy the defective part of the equipment. [20] I have gone through the respective pleadings of the parties herein and could not find anything therein that refers to any notice made under cl 16.1 of the Agreement. It should be borne in mind that before even cl 37.2 comes into operation the notice under cl 16.1 must be issued first. It is, if I may, a condition precedent. [21] What that is exhibited in Exh MRI-2 of the AIR is the minutes of the meeting held on 29.11.2010. To me, the minutes of the meeting is irrelevant. Minutes of the meeting including its resolution thereto could not be construed as a Notice of Rejection. What is more important is that the Notice of Rejection should have been issued before the last date of the warranty period within the meaning of cl 16.1 of the Agreement. [22] The same applies to any parts of the defective equipment which need to be remedied or replaced. If there was no such Notice of Rejection issued by the plaintiff, the plaintiff could not rely on cl 9 37.4 of the Agreement which provides for the same warranty period for the defective part of the equipment. [23] In fact, the Agreement is so comprehensive that there is a specific format of the Notice of Rejection as can be seen in
Schedule
Schedule 5 of the same. Any other form of notice that radically departs from the format in Schedule 5 could not be construed as a Notice of Rejection within the meaning of the Agreement. [24] While I can understand that the plaintiff could perfectly rely on cl 15.1 as submitted by the learned Federal Counsel, proper procedure must be followed. [25] Since no Notice of Rejection was pleaded by the plaintiff, I could only assume that there was not such notice issued. This raises the question whether the plaintiff is allowed to go beyond its pleadings if this case were to be allowed to go for trial. The Federal Court in its recent judgment in Iftikar Ahmed Khan (as the executor of the estate for Sardar Mohd Roshan Khan, deceased) v Perwira Affin Bank Bhd (previously known as Perwira Habib Bank Malaysia Bhd) [2018] 2 MLJ 292 FC made it clear that parties are bound by their pleadings and are not allowed to adduce facts and issues which they have not pleaded. In fact, it further held that a decision based on an issue which was not raised by the parties in their pleadings was liable to be set aside Abu Samah Nordin FCJ in delivering the judgment of the Federal Court said as follows: It is settled law that parties are bound by their pleadings and are not allowed to adduce facts and issues which they have 10 not pleaded: Samuel Naik Siang Ting v Public Bank Bhd [2015] 6 MLJ 1, State Government of Perak v Muniandy [1986] 1 MLJ 490, Veronica Lee Ha Ling & Ors v Maxisegar Sdn Bhd [2011] 2 MLJ 141; [2009] 6 CLJ 232. In Lee Ah Chor v Southern Bank Bhd [1991] 1 MLJ 428; [1991] 1 CLJ Rep 239 it was held that where a vital issue was not raised in the pleadings, it could not be allowed to be granted and to succeed on appeal. A decision based on an issue which was not raised by the parties in their pleadings is liable to be set aside: Yew Wan Leong v Lai Kok Chye [1990] 2 MLJ 152. In The Chartered Bank v Yong Chan [1974] 1 MLJ 157 the Federal Court set aside the judgment of the trial judge as it was decided on an issue not raised on the pleadings. In that case the trial judge erred in concluding that the pleadings included a claim for breach of contract as well as a claim for libel. [26] The aforesaid pronouncement by the Federal Court would mean that even if this case goes for a full trial, it would not shed any further light on the way in the manner the court would interpret the Agreement. Even if there was a Notice of Rejection issued under cl 16.1, the plaintiff would not be allowed to adduce the same in evidence since it was not pleaded. [27] In the circumstances, what is left is the Final Certificate in Exh THT-2 where the plaintiff made it very clear that the equipment was examined and tested by the plaintiff and that they had complied with the specifications required by the plaintiff. It further stated that the plaintiff was satisfied with the test conducted. 11 [28] It is for this reason and upon scrutinising the pleadings I am inclined to conclude that the material facts are not in dispute and I so hold. The Questions of Law [29] Since I have made a finding that this action is suitable for disposal by way of an O 14A application, I will now proceed to address the questions of law raised in Encl 10. [30] I will answer questions 2, 3, 4, and 5 first before concluding it with question 1. Question 2: Whether the defendant had performed its obligations [31] From the Final Certificate exhibited in the AIS, it is abundantly clear that parties have agreed that the defendant had complied with all the specifications required by the plaintiff. I have gone through the wordings of the Final Certificate and it in my opinion the words “telah diperiksa dan diuji oleh Wakil Kerajaan dan berpuashati dengan ujian yang telah dijalankan” would mean that all of the equipment were examined and tested by the plaintiff and that the plaintiff was satisfied with the test conducted. [32] From the document adduced, and this document has not be challenged, it is clear that the defendant had performed its obligations under the Agreement. This can be seen in the words “disahkan bahawa BARANG-BARANG seperti yang dinyatakan 12 telah dilaksanakan mengikut SPESIFIKASI KERAJAAN”. It simply means that the defendant as at 15.12.2009, had complied with all the specifications itemised in Schedule 2 of the Agreement. [33] In short, the answer to Q2 must be in the affirmative. I therefore, hold that based on Exh THT-2, the defendant had performed its part of the obligations in supplying, delivering and commissioning 52 units of the equipment. Question 3: The implication of the FATs [34] The plaintiff seeks for an answer to the question whether the 4th FAT report dated 29.10.2009 which is in Exh THT-6 could be construed as an indication that all the 15 units of the equipment which were returned by the defendant to the plaintiff after remedial works were in working condition fit for their purpose. The 4th FAT report had confirmed that there were no further defects on the 15 units of the equipment and that there were in “good” condition. [35] Para 3 of accompanying note dated 29.10.2009 signed by Capt Mohd Farid bin Abdul Hamid states as follows: [3] Hasil dari pemeriksaan teknikal keempat yang dilakukan, didapati kesemua item yang dibuat penggantian adalah baik dan mengikut spesifikasi yang ditetapkan. 13 It is quite obvious the 4th FAT report made it clear that the remaining units of the equipment that were earlier sent for remedial works were returned by the defendant and confirmed by the plaintiff to be in compliance with the specifications. [36] Since there was no Notice of Rejection in the format as required in Schedule 5, I can only conclude that the 4th FAT report is conclusive of the fact that compliance of the defendant. [37] Based on the available admissible documents before me, the answer to Q3 would be in the affirmative and that the defendant had indeed supplied, installed, integrated, tested and commissioned all of the units of the equipment. Question 4: Whether parties are bound by cl 37.2 of the Agreement [38] Cl 37.2 provides for the warranty period which I had indicated earlier would have ended on 15.12.2010. [39] I respectfully agree with the learned Federal Counsel that the plaintiff reserved the right to reject any of the units of the equipment under cl 15.1. [40] In cl 37.1 the defendant warrants to the plaintiff that all of the units of the equipment to be supplied would comply with the specifications in the Agreement. Under cl 37.2 of the Agreement, the plaintiff could seek for the replacement of any of the units of the equipment or any part thereof by issuing the Notice of Rejection within the said warranty period. 14 [41] I do not think there is any dispute on the issuance of the Final Certificate dated 15.12.2009. [42] In answer to Q4, the parties are bound by cl 37.2 of the Agreement. They are also bound by the condition precedent that any such rejection must be through a proper Notice of Rejection. A proper Notice of Rejection must be in accordance with Schedule 5. Since the Notice of Rejection was neither pleaded nor exhibited, my only inevitable conclusion would be that it was never issued. Question 5: Was there any defect within the warranty period? [43] In the absence of any pleadings on the issuance of the Notice of Rejection or any exhibits thereof, this Court cannot conclude that there was any defect in respect of the equipment or any part thereof. What is before the Court is that full payment of RM1,050,000 has been made by the plaintiff to the defendant. As I have said earlier, evidence of any meetings in respect of any alleged defects is irrelevant since the proper mechanism would be to issue the Notice of Rejection. [44] By making the full payment to the defendant, the plaintiff had acknowledged that cl 11 of the Agreement which includes sub-clauses 11.1.1 to 11.1.6 had been complied with. [45] In my considered opinion, whatever remedial works made by the defendant, if any, could not be considered as pursuant to cl 37.2 because there was no proper Notice of Rejection issued. In the 15 circumstances, in the absence of any Notice of Rejection, the defendant is discharged from any further obligations under the Agreement at the end of the warranty period which was on 15.12.2010. [46] In answer to Q5, even if there were any defects within the warranty period, the defendant was under no obligation to make good of the same unless proper procedure was undertaken by the plaintiff. [47] It should also be noted that when the payment was made it was not made by way of Notis Pembayaran Bersyarat, under the Agreement. In other words, the payment made by the plaintiff to the defendant was unconditional. Conclusion [48] Finally, in answer to Question 1, and for the reasons aforesaid, it is my finding that the plaintiff is not entitled to the refund of the sum of RM1,050,000 from the defendant. Unless there is a settlement agreement signed by the parties herein, no amount of meetings held between parties would give the right to the plaintiff to the refund of the money. [49] By way of a final observation, parties to the contract should have adhered strictly to the provision of the same. If there is a certain format for certain notices provided for in the contract, then such format must be adhered to. If it has been adhered to, then it 16 must be specifically pleaded so that parties would not be prevented from adducing evidence to that effect. [50] I therefore, grant an order in terms of the application and make a consequential order that, having answered and determined all the questions referred to in Encl 10, the plaintiff’s claim is dismissed under O 14A r 1(2) of the ROC with costs of RM5,000 subject to allocatur. Dated: 24 April 2018 (DATO’ WAN AHMAD FARID BIN WAN SALLEH) Judicial Commissioner High Court Kuala Lumpur
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