Lafarge Concrete (M) Sdn Bhd v Tan Ngee Hong Construction Sdn Bhd (A52NCC-306-11/2016)

This is an application by the plaintiff for summary judgment under Order 14 rule 1 of the Rules of Court 2012 against the defendants.

On 9.5.2016 the court made a decision and allowed the plaintiff’s application for summary judgment against the defendants with costs in the amount of RM1,500 to be paid by the defendants to the plaintiff. 2

Dissatisfied with the decision of the court, the defendants filed an appeal to the High Court.

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The salient terms and conditions of the agreement inter alia, were as follows:- a. “8. We shall have the right to charge late payment interest at the rate of 1.5% per month (or any other rate as may be prescribed by us without notice to you) on the outstanding sum still due by you to us before as well as after judgment”; b. “10. We shall be deemed to have delivered the products to you if… the delivery order is endorsed by any person who collects 3 the same from us or by any person present at the said address without the need of your company chop…. Any certification made by any of our officer that the products have been properly delivered to your said address on a specified date shall be sufficient proof of delivery”; c. “16. Any statement of indebtedness certified by any of our officer as to the balance of monies still outstanding and due from you to us shall be binding and conclusive evidence against you in any legal proceedings”; and d. “21. Any invoice, statement of account, notice and/or other documents to be sent to you shall be sent through ordinary prepaid post… and the same shall be deemed to have been received by you within two (2) days after the date of posting.”

As security or in consideration of the plaintiff agreeing to sell and deliver goods to the 1st defendant, by a ‘Joint and Several Personal Guarantee’ between the 2nd and 3rd defendants and the plaintiff (“letter of indemnity”)1, the 2nd and 3rd defendants had jointly and severally 4 guaranteed to indemnify and pay all sum due and owing by the 1st defendant together with interest and all losses suffered by the plaintiff.

The letter of indemnity provides inter alia, for the following:- a. “1. … I/We the undersigned HEREBY JOINTLY AND SEVERALLY GUARANTEE to you as principal/s and not merely as surety/ies…”; b. “9. … A certificate/statement signed by your officer as to the sums and liabilities for the time being due or incurred to you from or by the Customer shall be conclusive evidence for the purposes of this Guarantee and in any legal proceedings against me/us”; and c. “15. Any notice or demand hereunder shall be deemed to have been sufficiently given if sent by prepaid post letter… and shall be assumed to have reached the address within two (2) days after the date of posting.” 5

It is not in dispute that goods had been sold and delivered by the plaintiff to the 1st defendant and/or for the benefit of the 1st defendant.

It is unrebutted that pursuant to a demand made by the plaintiff via its ‘Statement of Accounts For the Month of November 2014’2, the 1st defendant had made part payment through MBB Cheque No.: 3689483 for a sum of RM29,506.54 leaving the balance principle sum of RM103,510.79 as claimed in this suit.

The 1st defendant has breached the terms and conditions of the agreement in failing to make payment for a sum of RM148,871.01 (i.e. principle sum of RM103,510.79 + % as at 11.11.2016 of RM45,360.22) to the plaintiff, full particulars of which are stated in the affidavit in support. 6

Letters of demand dated 14.11.2016 to the defendants had been sent to the defendants. However, the defendants have refused, failed and/or neglected in paying the same.

Though the agreement and letter of indemnity are unstamped, that does not provide a triable issue under the summary judgment application.

Part payment had been made by the 1st defendant to the plaintiff without any protest.

The defendants raised the following issues:- a. that both the agreement and the letter of indemnity are unstamped; 7 b. that the 1st defendant did not receive the goods. There is no proof of acknowledgement on the invoice/debit notes and delivery orders by the 1st defendant; and c. that the defendants deny receiving the letters of demand dated 14.11.2016. DECISION OF THE COURT That both the agreement and letter of indemnity are unstamped

The court find that although the agreement and the letter of indemnity are unstamped, that is not a triable issue to be considered by the court. In reference to the case of of American Express International Banking Corp v Tan Loon Swan [1992] 1 CLJ (Rep) 1 the Supreme Court had in allowing a summary judgment application held that “the non-stamping of documents concerned (guarantee document) does not provide a triable issue”. That the 1st defendant did not receive the goods. There is no proof of acknowledgement on the invoice/debit notes and delivery orders by the 1st defendant. 8

Under the agreement, it clearly stated that any statement of indebtedness certified by any officer of the plaintiff and certificate signed by the plaintiff’s officer as to the sums and liabilities for the time being due shall be conclusive evidence in a legal proceeding against the defendants. Clause 16 of the agreement and Clause 9 of the letter of indemnity provides as follows:- a. Clause 16 of the agreement provides:- “Any statement of indebtedness certified by any of our officer as to the balance of monies still outstanding and due from you to us shall be binding and conclusive evidence against you in any legal proceedings”; and b. Clause 9 of the letter of indemnity provides:- “A certificate/statement signed by your officer as to the sums and liabilities for the time being due or incurred to you from or by the Customer shall be conclusive evidence for the purposes of this Guarantee and in any legal proceedings against me/us.”

In the case of Cempaka Finance Bhd v Ho Lai Ying & Anor [2006] 3 CLJ 544 the Federal Court had in allowing for summary judgment to be entered based on a certificate of indebtedness held that:- 9 “A certificate of indebtedness operates in the field of adjectival law, excusing the Plaintiff from adducing the proof of debt and shifting the burden onto the defendant to disprove the amount claimed. …A clause of this nature has been described as a conclusive evidence clause and has been held to be binding and valid by courts in Australia and England. The certificate of indebtedness, issued in accordance with the aforesaid cls. 27 and 7.03, was lucid enough. There was nothing to indicate or suggest any manifest error on the fact of the said certificate nor was any fraud shown.”

The above principle as enunciated in Cempaka Finance Bhd (supra) has been cited with approval in the recent Federal Court case of Hong Leong Bank Bhd v M Muthiah & Anor and Another Appeal [2014] 1 CLJ 1.

Since the burden of proof has shifted to the defendants, it is incumbent upon the defendants in their affidavit showing cause to condescend into the particulars as to how the amount claim in this suit is 10 without basis failing which the defendant’s defence is a bare denial and cannot be a triable issue. This, the defendants have clearly fail.

Further, Clause 10 of the agreement provides that:- “Any certification made by any of our officer that the products have been properly delivered to your said address on a specified date shall be sufficient proof of delivery.”

In Bumiputra Commerce Leasing Bhd v Tax-Win Industries Sdn Bhd & 2 Ors [2003] 1 LNS 94 the High Court had in relying upon the ‘Delivery Certificate’ to support proof of delivery, allowed for summary judgment to be entered.

I agree with the submission by the plaintiff that the acknowledgement of delivery can be seen clearly on all the Delivery Orders. In fact, the 1st defendant has even made part payment on the sum outstanding then and the 1st defendant has never once disputed nor raised any issue in regards to the goods delivered or the amount claimed in the Invoice/Debit Notes and Delivery Orders. 11

In the case of National Panasonic (M) Sdn Bhd v Lem The Sem & Anor [2003] 8 CLJ 408 , Low Hop Bing J (as he then was) referred with approval to Lek Chuan (M) Sdn Bhd v Shahpadu Properties Sdn Bhd [1995] 1 LNS 110 wherein Haidar J (as he then was) had entered summary judgment for the plaintiff when the statement of account were presented to the defendants who duly made some payments to the plaintiff.

I find that the submission by the defendants defies logic and common sense. If at all there had been no delivery of goods, why did the defendants make part payments? The allegation that there was a discrepancy in the amount claimed by the plaintiff clearly run counter to contemporaneous documents such as invoices, delivery orders and statement of account which have been duly delivered to the first defendant who had not disputed them but had made part payments thereon.

The 1st defendant had made part payment to the plaintiff when statement of account was presented leaving the balance sum as claimed in this suit. The submission presented by the defendants is somewhat naïve besides being inherently improbable. If at all the 12 defendant had not received the goods, what was the need for the defendant to make part payment thereof?.

In the case of Gold Coin (Malaysia) Bhd v First Dragon Sdn Bhd [1994] 1 LNS 52 Abdul Malik Ishak J (as he then was) has held as follows:- “Against these formidable evidence, the defendant simply denied receiving the goods. This kind of defence is not enough. In an action for the price of goods sold and delivered, the defendant must not (as here) merely plead a denial of the debt or a denial that the goods were received; but he must go further - he must plead any facts which negative its existence or which show that the action is not maintainable on other grounds … 13 The defendants deny receiving the Letters of Demand dated 14.11.2016 27. It is admitted by both the 2nd and 3rd defendants that they jointly and severally undertook the obligation of a principal debtor to pay the sum due and owing by the 1st defendant together with interest and all losses suffered by the plaintiff.

In discussing the relevant authorities for the proposition of a principal debtor clause, Lau Bee Lan J in Ambank (M) Sdn Bhd v E-Cenit Systems Sdn Bhd [2015] 1 LNS 1159 at para 13 held that:- “... the authorities which I shall refer hereafter recognize that the existence of a principal debtor clause in the Guarantees obviates the Plaintiff from issuing a demand to the 2nd- 4th Defendants and the service of the Writ of Summons and the Statement of Claim is sufficient notice.”

By reason of the foregoing, the existence of the principal debtor clause in the Letter of Indemnity and the fact that the 1 st defendant itself is the principal debtor obviates the plaintiff from issuing letter of demand to the defendants. The service of the Writ Terpinda dan Pernyataan Tuntutan Terpinda dated 2.2.2017 itself is sufficient notice. 14

Be that as it may, I agree with the submission by the plaintiff that the Letters of Demand dated 14.11.2016 had been effectively served on the defendants as provided under Clause 21 of the agreement and Clause 15 of the Letter of Indemnity respectively which reads as follows:- a. Clause 21 of the Agreement provides:- “Any invoice, statement of account, notice and/or other documents to be sent by us to you shall be sent through ordinary prepaid post at your address… and the same shall be deemed to have been received by you within two (2) days after the date of posting.”; and b. Clause 15 of the Letter of Indemnity provides:- “Any notice or demand hereunder shall be deemed to have been sufficiently given if sent by prepaid post letter to my/our address in Malaysia last known to you or stated hereon and shall be assumed to have reached the address within two (2) days after the date of posting.”

In the Supreme Court case of Amanah Merchant Bank Bhd (Formerly Known As Amanah-Chase Merchant Bank Bhd) 15 v Lim Tow Choon (Through Official Assignee) [1994] 2 CLJ 1 the court at page 5 held that:- “… It is sufficient for the appellant to show that the notice was correctly addressed, prepaid and delivered to the post office and acknowledged for service by the postal authority. Once these facts have been established, the deeming provision will inevitably apply.” 32 Relying upon the conclusiveness of the Certificate of Indebtedness and Certificate of Delivery, issue raised by the defendants is untenable and cannot be a triable issue.

Based on the reasons stated above, I find that this is a fit and proper case for the summary judgment to be entered against the defendants with costs. 16 Dated this 4th day of July, 2017 sgd