Kooka Paper Manufacturing Sdn Bhd v Grand Universal Trading Sdn Bhd (BA-22NCvC-351-08/2023)

Courts frequently encounter cases where the contesting parties present diametrically opposed applications. The Plaintiff often argues that their case is unanswerable and seeks summary judgment in their favour without a trial. Conversely, the Defendant typically contends that the Plaintiff's case is misconceived and without merit, and therefore should be struck out at the outset. Both parties cannot be correct; one or both may be wrong. Neither party is correct when the case is not clear-cut enough to justify either the entry of summary judgment or the striking out of the action. 06/08/2024 11:48:13 BA-22NCvC-351-08/2023 Kand. 31

This Plaintiff’s claim is the present case is for storage charges for raw materials which the Defendant has placed in the Plaintiff’s warehouse. It should be noted that the raw materials stored at the Plaintiff’s warehouse were meant for the Plaintiff to manufacture into final products for the Defendant. The Plaintiff’s Notice of Application in Enclosure 8 is for summary judgment whilst the Defendant’s Notice of Application in Enclosure 10 is for the Plaintiff’s Writ and Statement of Claim to be struck out.

The fundamental issue is whether storage charges are due and payable from the Defendant to the Plaintiff.

In view of the applications in Enclosures 8 and 10 that are before this Court, the issues for determination are (i) whether the Plaintiff is entitled to summary judgment; pursuant to Order 14 of the Rules of Court 2012; and (ii) whether the Plaintiff’s Writ and Statement of Claim ought to be struck out pursuant to Order 18 rule 19(1)(a) – (d) of the Rules of Court 2012. Two Applications – To be Heard Together or in Succession?

Although the Plaintiff had submitted that both the striking out and summary judgment applications should be heard “at the same time”, the Plaintiff argued that since it has put up a substantive claim and has also satisfied the requirements under Order 14 of the Rules of Court, “the burden has shifted to the Defendant”. In other words, the Plaintiff’s 3 contention is for this Court to first determine the summary judgment application in Enclosure 8.

This Court is of the considered view that it is at liberty to consider each of the two applications in succession. This Court agrees with the Defendant that it should first consider the striking out application in Enclosure 10. The Plaintiff is not in any way prejudiced through the adoption of such an approach. This Court is also mindful of the decisions of the High Court in Builtamont International Sdn Bhd v RHB Bank Bhd [2018] AMEJ 1477; [2018] CLJU 1847; [2019] 8 MLJ 787; [2018] MLRHU 457 and Pureman Venture Sdn Bhd v Kedah Cement Sdn Bhd (formerly known as Lafarge Cement Sdn Bhd) and another case [2021] AMEJ 0727; [2021] CLJU 699; [2021] MLJU 807; [2021] MLRHU 588.

The Defendant’s striking out application in Enclosure 10 is premised on the following grounds, namely:

The claim lacks sufficient particularity;

The commercial relationship between the parties were governed by the Manufacturing Agreement and the Repayment Plan

The doctrine of quantum meruit and/or section 71 of the Contracts Act 1950 is not available to the Plaintiff’s claim; and

The Plaintiff is estopped from claiming such storage charges and/or the same had been waived by the Plaintiff. [8] In support of its application in Enclosure 10, the Defendant cited the case of Bandar Builder Sdn Bhd & Ors v United Malayan Banking Corporation Bhd [1993] 2 AMR 1969; [1993] 4 CLJ 7; [1993] 3 MLJ 36; [1993] 1 MLRA 611 and a number of other decisions that have applied the principle as propounded by the Supreme Court. The Defendant further cited cases that have explained the grounds in Order 18 rule 19(1)(a) –

of the Rules of Court 2012. The cases are Cornelius Jimbangan @ Mindolos v Joseph Crispin & Anor (Michael Persius Ubu, third party) [2009] 10 CLJ 87; [2009] 6 MLJ 82; [2009] 1 MLRH 506 and Asia Debut Sdn Bhd v Kementerian Pendidikan Malaysia & Ors [2015] 2 AMR 544; [2014] CLJU 1339; [2015] 9 MLJ 770; [2014] MLRHU 907 on paragraph

(a), Harapan Permai Sdn Bhd v Sabah Forest Industries Sdn Bhd [2011] 1 AMR 21; [2011] 1 CLJ 285; [2011] 2 MLJ 192; [2010] 3 MLRA 37on paragraph (b), Hadi Bin Hassan v Suria Records Sdn Bhd & Ors [2005] 5 AMR 235; [2004] 8 CLJ 225; [2005] 3 MLJ 522; [2005] 1 MLRH 11 on paragraph (c) and Amazing Place Sdn Bhd v Couture Homes Sdn Bhd & Anor [2010] AMEJ 0668; [2010] CLJU 823; [2011] 7 MLJ 52; [2010] 18 MLRH 55 on paragraphs (c) and (d). [9] The Defendant argued that the Plaintiff had not complied with Order 18 rule 7(1) and (2) of the Rules of Court 2012 which require that: 7(1) … every pleading shall contain, and contain only, a statement in a summary form of the material facts on which the party pleading relies for his claim or defence, as the case may be, … , and the statement shall be as brief as the nature of the case admits. 7(2) … the effect of any document or the purport of any conversation referred to in the pleading shall, if material, be briefly stated, …. [10] According to the Defendant, the Plaintiff’s claim for the purported storage charges was pleaded with insufficient particulars, specifically regarding the purported verbal agreement for the storage charges and the Defendant’s acceptance and request for deferment of the storage charges. [11] The other prevailing contention of the Defendant’s striking out application is that the Manufacturing Agreement dated 1 November 2018 signed between the Defendant and the Plaintiff make no mention of any fees and/or charges related to the storage charges, presently claimed by the Plaintiff. The Defendant relied on Clause 15.3 of the Manufacturing Agreement which reads as follows: This Agreement contains the entire understanding of the Parties relating to the subject matter contained herein and supersedes all prior agreements and understandings, written or oral, relating to the subject matter hereof. This Agreement shall not be modified, amended or terminated except in a writing signed by the Parties.” [12] The Defendant underscored and reiterated the point that “the Plaintiff is not allowed to imply and/or import any terms that are not in the Manufacturing Agreement”. [13] Further and/or alternatively, the Defendant averred that the Plaintiff is estopped from seeking to make amendments to the Manufacturing Agreement as parties are bound by the terms of the Manufacturing Agreement as it stands especially in view of the fact that the mutual understanding between the Plaintiff and the Defendant, that no storage charges are applicable vis-à-vis the Converter Storage (as contained in the Manufacturing Agreement) was affirmed by the Plaintiff and/or its personnel and/or its representative and/or its agent. On this argument, the Defendant referred this Court to the case of Master Strike Sdn Bhd v Sterling Heights Sdn Bhd [2005] 3 AMR 378; [2005] 2 CLJ 596; [2005] 3 MLJ 585; [2005] 1 MLRA 276. [14] On the point relating to the Converter Storage, the Plaintiff’s case is that the present claim relates to the storage of the raw materials at its warehouse and that is unrelated to the Converter Storage as mentioned in the Manufacturing Agreement. In reply, the Defendant submitted that whilst the Converter Storage was specified by the Manufacturing Agreement to be of a particular address, the general definition of Clause 1.5 should also be read together, which means a place where the Company Material, Finished Products and/or related items are kept and/or converted. Clause 1.5 of the Manufacturing Agreement reads as follows: Converter Storage means, the place where the Company Material, Packaging Material, Finished Products and/or related items are kept and/or converted. The Converter Storage must remain at all times smoke free, odor free, clean and dry as required by the Company. The addresses are Lot 840 & 841, Jalan Subang 7, Taman Perindustrian Subang, Sungai Penaga, 47500 Subang Jaya, Selangor Darul Ehsan, Malaysia. [15] According to this line of argument, the Plaintiff is contractually obligated to store the company/raw materials and any charges and/or cost for such storage ought to be covered and/or dealt with by the Manufacturing Agreement “despite its expiry”. On this point, the Defendant cited the case of Amazing Place Sdn Bhd v Couture Homes Sdn Bhd & Anor [2010] AMEJ 0068; [2010] CLJU 823; [2011] 7 MLJ 52; [2010] 18 MLRH 55. In short, the Defendant averred that there is no contractual basis for the Plaintiff to claim the storage charges, when the same was and/or ought to be covered under the Manufacturing Agreement and the Defendant denies that the Plaintiff is entitled to such additional storage charges. [16] The other main ground relied by the Defendant in it support of its striking out application is that the invoices issued by the Defendant to the Plaintiff (in respect of the purchase of finished products) had been fully settled by the Plaintiff without any contra/set-off of the storage charges. Hence, the Plaintiff had waived those storage charges, or are estopped from making a claim. [17] Interestingly, the Plaintiff averred that it is unable to and indeed did not resist the Defendant’s striking out application on the basis that there are triable issues as this would defeat its own summary judgment application. The position adopted by the Plaintiff is that the striking out application ought to be dismissed, and the application for summary judgment ought to be allowed. [18] The Plaintiff’s contention that it is unable to resist the Defendant’s striking out application on the basis that there are triable issues is misconceived. Such arguments, in this Court’s view, are available to the Plaintiff, so long as they are couched in alternative terms. [19] In opposing the Defendant’s striking out application, the Plaintiff’s contentions are as follows:

Although the Manufacturing Agreement did not contain provisions on storage charges, that does not mean that storage at the Plaintiff’s warehouse would be free;

As the matter of storage charges for the Defendant’s raw materials at the Plaintiff’s warehouse would fall outside the scope of the Manufacturing Agreement, it would be logical that the Defendant has to pay, like any customer who rents space in a warehouse. It cannot be free;

At the time that the Manufacturing Agreement was prepared by the Defendant, the Defendant’s raw materials were already stored at the Plaintiff’s warehouse;

The Manufacturing Agreement was a commercial contract for the conversion of raw materials (by the Plaintiff) into finished paper products (for the Defendant); and

The Plaintiff and the Defendant were in a business relationship. Both were doing business. They were not friends. The Decision on the Striking Out Application [20] The Plaintiff’s present claim can be traced to an invoice that it had issued to the Defendant dated 1 September, 2021 relating to rental payments of the storage space and administration of the same for the period of December 2017 to June 2021 in the sum of RM3,828,034.76. [21] In its Statement of Claim, the Plaintiff pleaded as follows: ….

Bermula sekitar Disember 2017, Defendan telah mengambil ruang penyimpanan di gudang Plaintif di Lot 11907A, Lorong Ikan Bawal, Telok Gong, 42000 Pelabuhan Klang, Selangor untuk penyimpanan bahan-bahan mentah (kertas).

Bahan-bahan mentah dalam bentuk gulungan jumbo (kertas) akan digunakan oleh Plaintif untuk dibuatkan kepada produk siap, seperti tisu dan/atau produk kertas lain, berpandu kepada pesanan Defendan.

Pengebilan untuk caj penyimpanan (ditanggung untuk penyimpanan bahan-bahan mentah Defendan) telah ditangguhkan atas permintaan Defendan, kerana Defendan menjangkakan pesanan yang besar, selepas itu, Defendan akan menyelesaikan dengan Plaintif.

Walaupun isu caj penyimpanan sentiasa menjadi kebimbangan bagi Plaintif, pengurus-pengurus Defendan sentiasa merayu kepada Plaintif untuk menangguh apa-apa tindakan agar tidak memberi kesan negatif kepada keadaan kewangan Defendan.

Melalui invois No.40453. bertarikh 1 November 2021, Plaintif telah mengeluarkan bil kepada Defendan untuk caj penyimpanan sejumlah RM3,828,034.76 untuk tempoh dari Disember 2017 hingga Jun 2021. Walau bagaimanapun, Defendan gagal dan/atau enggan membuat sebarang pembayaran. ….

Secara alternatif, Plaintif menegaskan bahawa penyimpanan bahan-bahan mentah Defendan di gudang Plaintif (dalam kuantiti yang besar dan untuk jangka masa yang lama) tidak bermaksud untuk diberikan secara percuma (“gratuitous”), seperti yang telah diketahui atau difahami oleh Defendan pada setiap masa yang material. Oleh itu, Defendan tertakluk untuk memberikan pampasan kepada Plaintif, yang akan dinilai berdasarkan caj penyimpanan pasaran yang adil, mengikut Seksyen 71 Akta Kontrak 1950.

Atas sebab kegagalan dan/atau keengganan Defendan untuk membayar caj penyimpanan berjumlah RM4,024,841.88 yang dikenakan terhadap Defendan di bawah invois-invois Plaintif seperti yang dinyatakan di atas, atau apa-apa jumlah yang mungkin dinilai dan didapati terhutang oleh Defendan kepada Plaintif, Plaintif telah mengalami kerugian dan kerosakan, yang disebabkan oleh Defendan. DAN tuntutan Plaintif terhadap Defendan sperti berikut:- a) Jumlah tertunggak sebanyak RM4,024,841.88 perlu dibayar oleh Defendan kepada Plaintif secara serta merta, b) Sebagai alternatif, bagi caj penyimpanan (bagi bahan-bahan mentah Defendan di dalam gudang Plaintif) yang akan dinilai oleh Mahkamah Yang Mulia, yang perlu dibayar oleh Defendan kepada Plaintif secara serta merta, a) Faedah ke atas jumlah di atas pada kadar 5% setahun dari tarikh Penghakiman sehingga tarikh pembayaran penuh, c) Kos, dan d) Relif lanjut atau relif sampingan lain yang adil dan saksama dalam keadaan. [22] The above pleadings reveal that there was a failure to plead and to provide the particulars with regards to the purported Defendant’s acceptance and request to defer the storage payment, the date and time of the alleged agreement, with whom the agreement was made and the relevant terms of the agreement, including but not limited to the rate of charges and duration of the storage of the company/raw materials. [23] Based on the mandate in Order 18 rule 7 of the Rules of Court 2012 and the authorities as laid down in Yogananthy a/p AS Thambaiya v Idris bin Osman [2018] MLJU 1654 and Renault SA v Inokom Corp Sdn Bhd & Anor and other appeals [2010] 5 MLJ 394; [2019] 2 MLRA 405, the Plaintiff’s claim is unsustainable and ought to be struck out. [24] This Court has considered the Plaintiff’s argument (in its Written Submission in Reply) that the above ground is not part of the Defendant’s pleaded case. Upon examining the Defendant’s Affidavit in Support of its application in Enclosure 10, this Court finds that the objection raised by the Plaintiff is unmeritorious. [25] In opposing the Defendant’s striking out application in Enclosure 10 and in advancing its own application in Enclosure 8 for summary judgment, the Plaintiff repeatedly argued that the Manufacturing Agreement entered into between the parties is of no relevance to the main claim. Hence, the terms in the said Manufacturing Agreement should not be invoked in determining the main claim. [26] The Plaintiff further argued that a distinction ought to be made between pre and post storage of the raw materials and of the final products respectively. According to the Plaintiff, the main claim for outstanding storage rental is independent of the Manufacturing Agreement. Storage of the raw materials is an entirely separate business transaction. As a distinct business transaction, surely storage charges must be incurred, so the Plaintiff argued. [27] The Plaintiff also maintained that the Plaintiff and the Defendant were in a business relationship. That both were doing business. That they were not friends. [28] While the above arguments are indeed convincing, the fact remains that the Plaintiff have failed to adduce sufficient evidence to support its main claim. On that basis, this Court is of the considered view that it is safe for it to exercise its discretion pursuant to Order 18 rule 19(1)(b), (c) and/or (d) and to allow the application in Enclosure 10. [29] The application is Enclosure 10 is allowed. The Summary Judgment Application. [30] In support of its Notice of Application in Enclosure 8 for summary judgment, the Plaintiff has raised the grounds as discussed above and averred that it had satisfied the burden of proof of its claim against the Defendant on a balance of probabilities, including the quantum of its claim (as the rate has not been disputed). The Decision in the Summary Judgment Application [31] Based on this Court’s findings and conclusion reached on Enclosure 10, the Plaintiff’s application in Enclosure 8 is disallowed. The Decision on Costs [32] The Plaintiff to pay costs of RM20,000 to the Defendant, subject to allocatur. Dated: 31 July, 2024 sgd [CHOONG YEOW CHOY] Judicial Commissioner High Court of Malaya Shah Alam Counsel: Mohd Ivan Hussein with Queenie Hoh for the Plaintiff (Messrs. The Chambers of Queenie Hoh Li Chian) Austen Emmanuel Pereira for the Defendant (Messrs. Rosli Dahlan Sarava Partnership)