Orange Business Services (Network) Sdn Bhd v Dealtel (Malaysia) Sdn Bhd (W-02(IM)(NCVC)-808-04/2018)

1 IN THE COURT OF APPEAL, MALAYSIA AT PUTRAJAYA (APPELLATE JURISDICTION) CIVIL APPEAL NO. W-02(IM)(NCVC) - 808 - 04/2018 BETWEEN ORANGE BUSINESS SERVICES (NETWORK) SDN BHD … APPELLANT AND DEALTEL (MALAYSIA) SDN BHD … RESPONDENT HEARD TOGETHER WITH CIVIL APPEAL NO. W-02(IM)(NCVC) - 812 - 04/2018 BETWEEN DEALTEL (MALAYSIA) SDN BHD … APPELLANT AND ORANGE BUSINESS SERVICES (NETWORK) SDN BHD … RESPONDENT 2 (In the High Court of Malaya at Kuala Lumpur Commercial Division Civil Suit No: WA - 24NCVC - 414 - 08/2017 Between Orange Business Services (Network) Sdn Bhd … Plaintiff And Dealtel (Malaysia) Sdn Bhd … Defendant (MAIN SUIT) And Between Dealtel (Malaysia) Sdn Bhd … Plaintiff And

1. Orange Business Services (Network) Sdn Bhd

2. Orange Business Services Malaysia Sdn Bhd … Defendants) (COUNTERCLAIM) CORAM: VERNON ONG LAM KIAT, JCA HARMINDAR SINGH DHALIWAL, JCA KAMALUDIN MD SAID, JCA 3 JUDGMENT OF THE COURT [1] There were two appeals before us. The appeals were against three orders made by the Kuala Lumpur High Court on 19 March 2018. The orders were made in respect of a claim and counterclaim filed by the parties in the civil suit. In summary, the learned Judge had - a) dismissed a summary judgment application by the plaintiff; b) ordered a stay of the plaintiff’s claim pending arbitration; and c) ordered a stay of the defendant’s counterclaim. [2] Aggrieved with the said orders, both the plaintiff and the defendant in the High Court filed the instant appeals. After hearing the parties and taking into consideration the written submissions, we dismissed both appeals and affirmed the orders of the High Court. Our reasons for doing so now follow and will constitute the judgment of the court. For convenience the parties will be referred to as they were in the High Court. Brief Facts and Background [3] The plaintiff provides telecommunication services under the brand “Orange” (services). Upon request of the defendant, parties entered into agreements where in accordance to the terms, the defendant was to pay 4 the plaintiff’s charges within 30 days of the invoice date. The plaintiff claimed that services were provided to the defendant and invoices were issued. It was further claimed that only part payment was made leaving a balance debt of RM1,017,630.74. The defendant in turn filed a counterclaim alleging wrongful termination of the agreements and failure to provide satisfactory services. [4] It was not disputed that the agreement between the parties contained an arbitration clause. Clause 14.2 of the Cover Agreement provides: “Formal Dispute Resolution. All disputes arising from or in connection with the Agreement shall be finally resolved or settled, exclusively by arbitration … Notwithstanding this Clause or anything to the contrary contained in this Agreement, at any time either Party may institute any proceedings or make any application to any court that is necessary for the protection of such Party’s property or to obtain injunctive relief.” [5] It can hardly be disputed that both the claim by the plaintiff and the counterclaim by the defendant were disputes arising from the Agreements. Nevertheless, the plaintiff proceeded to file its claim for the balance debt in the High Court and the defendant filed its defence and counterclaim for wrongful termination and unsatisfactory services. Both 5 parties appeared quite content to ignore the arbitration clause and subject themselves to the civil court’s jurisdiction. [6] The plaintiff then filed the application for summary judgment in Enclosure 8 claiming that its claim was for a recovery of a disputed debt. Subsequently, and quite surprisingly we might add, the plaintiff filed an application in Enclosure 15 for a stay of the defendant’s counterclaim pursuant to s. 10 of the Arbitration Act 2005 (“AA 2005”). [7] After hearing arguments of the parties, the learned Judge dismissed the application for summary judgment. The learned Judge granted the plaintiff’s application for a stay of the counterclaim pending arbitration. The learned Judge was however troubled by the proceedings being held in two different tribunals considering possibly the same issues. The learned Judge on his own then ordered the plaintiff’s action to go for arbitration as well. The Instant Appeal [8] Before us, the decisions of the High Court were assailed by both the parties. We considered each of the grounds as follows. On the criticism concerning the dismissal of the summary judgment application, 6 we took into account the learned Judge’s findings after having considered the contentions of both parties. His findings were as follows: “[32] Berdasarkan kepada pliding dan kertas kausa serta hujahan peguam-peguam, saya mendapati Dealtel berjaya menunjukkan kepada Mahkamah bahawa terdapat isu-isu untuk dibicarakan. [33] Peguam terpelajar Orange Network mendakwa memandangkan Dealtel tidak mempertikaikan jumlah pada invois-invois yang dikeluarkan, tiada pembelaan/isu untuk dibicarakan. Walaupun dalam pliding mereka Dealtel tidak mempertikaikan jumlah yang dicatitkan dalam invois-invois tersebut, Dealtel mendakwa bahawa mereka tidak diserahkan dengan invois-invois tersebut oleh Orange Network. Sebaliknya mereka mendakwa hanya diserahkan invois-invois bertarikh 16.06.2017 oleh Orange Malaysia berjumlah RM311,880,77 yang mana mereka telahpun membayar kepada Orange Malaysia sejumlah RM85,000.00. Baki RM226,880.77 yang telah mereka bayar kepada Orange Malaysia telah ditolak atas alasan nama penerima berbeza/telah bertukar. [34] Dealtel juga mendakwa/memplid bahawa penamatan perjanjian oleh Orange Network adalah tidak sah. Dealtel juga memplidkan bahawa oleh kerana perkhidmatan yang dibekalkan oleh Orange Network tidak memuaskan, maka Dealtel mendakwa Orange Network tidak berhak kepada bayaran penuh sepertimana yang mereka tuntut. Dealtel mendakwa atas fakta tersebut mereka berhak kepada diskaun. [35] Berdasarkan pliding dan fakta tersebut, saya mendapati Dealtel berjaya menimbulkan isu-isu untuk dibicarakan. Pada hemat saya isu-isu tersebut hanya dapat diputuskan selepas perbicaraan penuh dan kes ini tidak wajar diputuskan secara 'summarily'.” 7 [9] In this respect, we were not persuaded that the learned Judge had fallen into error. We agreed with the learned Judge that there were triable issues. There was some dispute as to whether the defendant had received the invoices. There was also a dispute as contended by the defendant that the services provided by the plaintiff were unsatisfactory and they were entitled to some discount. Another issue raised was whether, in the circumstances of the case, the termination of the Agreements was valid. There was therefore, in our view, no merit on this ground. [10] On the next issue concerning the application for stay pending arbitration, we agreed with the learned Judge that the parties were bound by the arbitration agreement in the form set out earlier. We also agreed that the plaintiff had not taken a step in the proceedings as they never filed the defence and had in any event reserved their right to refer the counterclaim to arbitration (see Sanwell Corp v Trans Resources Corp Sdn Bhd & Anor [2002] 2 MLJ 625 and Comos Industry Solution GMBH v Jacob and Toralf Consulting Letrikon Sdn Bhd & Ors [2012] 4 MLJ 573). The appeal on this ground was therefore a non-starter. [11] The only ground which merited serious consideration, in our respectful view, was whether the learned Judge was right to order the 8 plaintiff’s claim to go for arbitration when no such application was made by any party. In this context, as was noted earlier, the learned Judge was concerned by the possibility of two different tribunals coming to different decisions on the same facts and issues. So was the learned Judge right? [12] The power to stay proceedings arises from s. 10 of the AA 2005. The relevant part of s. 10 of the AA 2005 provides: “10.(1) A court before which proceedings are brought in respect of a matter which is the subject of an arbitration agreement shall, where a party makes an application before taking any other steps in the proceedings, stay those proceedings and refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed” (emphasis added) [13] It was contended by the plaintiff that the provision is clear and unambiguous. One party must apply for such a stay. Since no application was made by either party, the intention of the parties was to have the dispute decided by the court. The order granted by the learned Judge, it was submitted, was therefore contrary to the parties’ intention. [14] At first blush, there appears to be merit in the plaintiff’s argument. However, on a careful perusal, the argument proffered overlooks the significant fact that the whole position was materially altered when the 9 plaintiff chose to apply to stay the proceedings on the counterclaim pending arbitration by relying on the very arbitration agreement upon which it was earlier contended was waived by the parties. In our view, this action by the plaintiff brought a wholly different complexion as to how the dispute between the parties ought to be resolved. [15] As alluded to earlier, the learned Judge took the view that it would be inappropriate to have the claim and counterclaim decided in different tribunals. In our view, this was certainly a legitimate concern. The claim and the counterclaim were so closely connected that it would have been awkward and discomforting for two different tribunals to decide on the same issues canvassed in each tribunal. [16] If the plaintiff was to be granted its way, there would certainly be a concern about multiplicity of proceedings. In such a case, the High Court had the power to dismiss or stay proceedings under its inherent jurisdiction or in pursuance to s. 25(2) of the Courts of Judicature Act 1964 (“CJA 1964”) read together with item 11 of the Schedule to the CJA 1964 which states:- “Power to dismiss or stay proceedings where the matter in question is res judicata, or where by reason of multiplicity 10 of proceedings in any court or courts the proceedings ought not to be continued”. [17] The objection to multiplicity of proceedings is well-grounded and underscored by the public interest to avoid conflicting decisions by two different courts on the same issue between parties (see Lesco Development Corp Sdn Bhd v Malaysia Building Society Bhd [1987] CLJ (Rep) 160 and Taunton Collins v Cromie and Anor [1964] 2 All ER 332). Conflicting decisions on the same issue not only brings embarrassment to the court or tribunal but may also undermine public confidence in the administration of justice. [18] Authorities on the point also suggest that having multiple actions on the same issues is an abuse of process giving power to the court to act accordingly by striking out any such action or actions (see Jasa Keramat Sdn Bhd & Anor v Monatec (M) Sdn Bhd [1999] 4 MLJ 637; Damayanti Kantilal Doshi & Ors v Jigarlal Kantilal Doshi & Ors [2001] 6 MLJ 417; Penang Port Commission v Kanawagi s/o Seperumaniam [2008] 6 MLJ 686 and Lai Kim Loi v Dato’ Lai Fook Kim & Anor [1989] 2 MLJ 290). [19] In the circumstances, we agreed that having the claim and counterclaim decided in different tribunals would be an abuse of the process of the court as that would countenance litigating the same issues 11 before different courts. So either both the claim and the counterclaim remained in the civil courts or both had to be referred to arbitration. [20] The learned Judge exercised his discretion to refer the whole suit including the claim and counterclaim to arbitration presumably for the reason that there was an arbitration agreement in the contract between the parties and also on account of the order he had granted for the stay of proceedings on the counterclaim. [21] In our view, such power could be exercised by the court under its inherent jurisdiction to prevent abuse of process. For these reasons, it was our judgment that the learned Judge had correctly exercised his discretion. Appellate intervention was therefore not warranted. Conclusion [22] In the circumstances, and for the reasons we have provided, we found no merits in both appeals. Accordingly, both appeals were dismissed with no order as to costs. The orders of the High Court were affirmed. Deposit to be refunded. 12 Dated: 09 May 2019 Signed (HARMINDAR SINGH DHALIWAL) Judge Court of Appeal Malaysia Counsel / Solicitors: For the Plaintiff/Appellant in Appeal No. 808-04/2018: Bahari Yeow Tien Hong (with Lim Zhi Jian) (M/s Lee Hishammuddin Allen & Gledhill) For the Defendant/Appellant in Appeal No. 812-04/2018: Ramesh Chandran (with him Sazarina said) (M/s Ramesh Yum & Co)