Pembinaan Jaya Zira Sdn Bhd v Bs Sheet Piles Sdn Bhd (BA-12BNCvC-31-08/2023)

This is an appeal by the Appellant/Defendant against the decision of the Sessions Court in allowing the Respondent/Plaintiff’s application for summary judgment. The action filed by the Respondent/Plaintiff against the Appellant/Defendant in the Sessions Court was in relation to a construction claim and a subsequent settlement agreement entered into between the parties.

Foremost in this appeal is the question of whether this is a case in which the Appellant/Defendant has succeeded in raising an issue or question in dispute which ought to be tried or there ought for some other reason to be a trial within the meaning of Order 14 rule 3 of the Rules of Court 2012.

The ensuing issue is whether it is the Appellant/Defendant that is liable to pay the balance sum owed to and claimed by the Respondent/Plaintiff or some other third party. Put differently, the issue for determination is whether the Appellant/Defendant has been absolved from liability as per the balance sum owed to and claimed by the Respondent/Plaintiff. The Parties and the Background Facts [4]

[10] A point of considerable significance, which has crystallised into a contentious issue, is the fact that pursuant to the terms in the agreement, the payment is to be made directly to the Respondent/Plaintiff from the Employer/Owner of the said project, that it, the Malaysian Resources Corporation Berhad (“MRCB”). [11] The above proposal was accepted by Respondent/Plaintiff on 4 July, 2022 on condition that in the event the second payment was not received on or before 30 November, 2022, it will take action against the Appellant/Defendant to recover the sum due and owing. [12] Upon receiving the first payment of RM573,691.93, which the Respondent/Plaintiff received directly from MRCB, it withdrew its adjudication proceedings on 8 July,

However, the Respondent/Plaintiff did not receive the second payment of RM726,308.10 as agreed. [13] When a few reminder letters that were sent went unanswered, the Respondent/Plaintiff commenced an action in the Sessions Court claiming for the balance amount of RM726,308.10 and thereafter filed an application under Order 14 of the Rules of Court 2012. The Parties’ Contentions [14] The Appellant/Defendant’s contention in this appeal is fairly straightforward. The crux of its case is that it does not owe the Respondent/Plaintiff the amount claimed. According to the Appellant/Defendant, the settlement agreement as agreed by the parties expressly imposes the obligation to pay the balance amount of RM726,308.10 to the Respondent/Plaintiff on MRCB. Based on this argument, not only is the Respondent/Plaintiff not entitled to summary judgment, its Writ and Statement of Claim ought to be struck out. [The Sessions Court decided against the Appellant/Defendant on both the summary judgment application by the Respondent/Plaintiff and its own striking out application respectively.] [15] As far as the core issue in this appeal is concerned, the position taken by the Appellant/Defendant is that it has managed to raise triable issues. The Appellant/Defendant relied primarily on the meeting minutes dated 15 November, 2021 which, according to the Appellant/Defendant clearly confirmed that:

It is the employer, MRCB, who is liable to pay the debt to the

The Appellant/Defendant has been absolved from its liabilities to pay the Respondent/Plaintiff; and

The Respondent/Plaintiff no longer has any cause of action against the Appellant/Defendant. [16] Based on the minutes of that meeting, the Appellant/Defendant further submitted as follows: Kami berhujah bahawa terma-terma penyelesaian tersebut telah berubah dan cara pembayaran telah diubah kepada pembayaran terus daripada MRCB kepada Responden. Terma-terma ini telah dipersetujui oleh Responden dan Perayu dalam Rundingan tersebut. Adalah hujahan kami bahawa pihak-pihak adalah terikat dengan terma-terma dalam Minit Mesyuarat tersebut; tidak wajar dan munasabah untuk Responden kemudiannya kembali kepada Kontrak asal di mana Perayu dikehendaki membayar kepada Responden; HMS telah terkhilaf dalam membenarkan permohonan penghakiman terus tersebut tanpa melihat dan menilai serta mempertimbangkan Minit Mesyuarat tersebut telah mengikat Responden dan MRCB bukan lagi mengikat Perayu; dan Kami sesungguhnya percaya bahawa Minit Mesyuarat tersebut adalah jelas mengikat pihak-pihak dalam tindakan ini dan Responden tidak boleh dengan sesuka hati mengubah termaterma tersebut mengikut kehendak Responden dan menekan Perayu meskipun Perayu telah melepaskan tanggungjawab untuk menyelesaikan baki terhutang tersebut kepada MRCB. [17] In support of the above arguments, the Appellant/Defendant relied on a number of authorities that had propounded a number of principles and these include (1) Antara Vista Sdn Bhd v Rumaya Properties Sdn Bhd [2017] AMEJ 1605; [2017] 1 LNS 1876; [2017] MLJU 1964; [2017] MLRAU 495 where it was held that courts “ought not to look beyond what was contained within the four walls of the contract document”; (2) Charles Grenier Sdn Bhd v Lau Wing Hong [1996] 3 AMR 3533; [1997] 1 CLJ 625; [1996] 3 MLJ 327; [1996] 2 MLRA 188 where it said that “the law leans in favour of upholding bargains and not in striking them down”; and (3) Shackleton on the Law and Practice of Meetings, Minutes as Evidence: “The existence of a formal record, or minutes, of a meeting may be some evidence that the parties intended to be legally bound by what was decided at the meeting, but this is capable of being negatived.” [18] The Respondent/Plaintiff fervently disputed the existence of any issue or question in dispute which ought to be tried. [19] The Respondent/Plaintiff submitted that a true reading of the meeting minutes for the meeting held on 15 November, 2021 will reveal that:

Appellant proposed full settlement of the amount owed to the Respondent in the sum of RM1,300,000.00. (Para 2.0.2);

Respondent agreed to the amount as owed. (Para 2.0.3);

Appellant will propose to MRCB for the amount to be paid directly to the Respondent. (Para 2.0.4);

Appellant was waiting for MRCB’s confirmation on the proposal. (Para 2.0.4); and

Appellant is now awaiting for MRCB’s confirmation to pay the said payment directly to the Respondent. (Para 2.0.6). [20] In short, the Respondent/Plaintiff argued that based on the meeting minutes, it is apparent that it was the Appellant/Defendant who proposed that it will propose to MRCB to release the payment directly to the Respondent/Plaintiff. However, there was no confirmation or undertaking by MRCB that it is has agreed to the proposal. The Respondent/Plaintiff further pointed out that MRCB did not attend the meeting and there was never a specific representation made by MRCB directly to the Respondent/Plaintiff that it will pay the amount owed by the Appellant/Defendant. [21] The Respondent/Plaintiff further contended that in any event, the proposal was merely a payment arrangement by the Appellant/Defendant for MRCB to release the payment directly to the Respondent/Plaintiff and nothing more. As noted, MRCB is the employer of the project. [22] Punj Lloyd Sdn Bhd v Ramo Industries Sdn Bhd & Anor and Another Case [2019] 6 CLJ 250; [2019] 6 CLJ 250; [2019] 4 MLRH 270 (“Punj Lloyd”) was cited by the Respondent/Plaintiff. The pertinent parts of the decision in that case are as follows: It is not in every case that merely because of some payment arrangements made by a promisor then a promisee is said to have released the promisor from its liability to pay. Otherwise, a promisor can always arrange for payments in the cheques from third parties or even a bank to make direct payments to the promisee and when there is default of payment, the promisor can always disclaim liability for payment! The court must always bear in mind what is the custom and trade of a particular industry and it is patently common in a construction contract for payments to be arranged by a contracting partner to come from its parent company or its employer up the chain of contracts or even as in this case, its joint venture partner. [23] To further substantiate its case, the Respondent/Plaintiff also cited the case of Guinness Anchor Marketing Sdn Bhd v Chellam Joe Vethathya Singh [1999] 3 AMR 2735; [1999] 7 CLJ 392; [1999] MLJU 88; [1999] 3 MLRH 133 where the Plaintiff had obtained summary judgment against the Defendant for breach of the settlement agreement reached between the Plaintiff and the Defendant. [24] Finally, the Respondent/Plaintiff also averred that its act in accepting the first payment from MRCB directly did not absolve the Appellant/Defendant from its liability to pay the outstanding sum. The Applicable Principles Governing this Appeal [25] Although trite, it bears reiteration that the approach to be taken in this appeal is by way of a re-hearing. In United Malayan Banking Corporation Berhad v Pembinaan KYS Sdn Bhd & 2 Ors [1993] 3 CLJ 612, the Supreme Court held in no uncertain terms that an appellate court should not regard an Order 14 appeal as reviewing the exercise of the judge’s discretion but approach the appeal as rehearing. [26] Equally established is the principle that when a plaintiff in an Order 14 application has complied with all the preliminary requirements of the provisions in Order 14 of the Rules of Court 2012, the central issue for determination would then be whether the defendant has raised any triable issue within the meaning of Order 14 rule 3(1) of the Rules of Court 2012. In this respect, the burden of proof is on the defendant to raise triable issues that warrants a trial. [27] It is also well settled that “if a defendant in an O.14 application succeeds in raising even a single triable issue, it will not be a fit and proper case to order summary judgment”: South East Asia Insurance Bhd v

The Decision of this Court [28] One essential event that is vital is the entire claim/appeal is the settlement agreement. The crucial piece of documentary evidence that relates to and reveals the terms of the agreement between the parties is the minutes of the meeting of 15 November, 2021. [29] An examination of the said minutes point to the conclusion that the Appellant/Defendant had not been absolved of its liability for the debt. Nowhere was it stated that the Respondent/Plaintiff agreed to accept payment from MRCB in substitution of the Appellant/Defendant or that the Appellant/Defendant is absolved from its liability to pay. There was no assignment of the debt from the Appellant to MRCB. [30] The agreement that payments due from the Appellant/Defendant to the Respondent/Plaintiff are to be paid by MRCB to the latter was merely an arrangement that is commonplace in the building/construction industry, where an employer releases payment directly to sub-contractors. This arrangement, which was in the first place was proposed by the Appellant/Defendant, did not amount to the Appellant/Defendant being relieved of its obligation to pay the Respondent/Plaintiff. [31] This Court agrees with the Respondent/Plaintiff that the Appellant/Defendant in the present appeal cannot use this arrangement to escape from its liabilities. Otherwise, a promisor can always arrange for payment from third parties and when there is a default, the promisor can always disclaim liability. [32] There was no tripartite agreement entered into by the three parties, namely, the Appellant/Defendant, the Respondent/Plaintiff and MRCB. MRCB was not a party to the settlement agreement. [33] On the argument by the Appellant/Defendant that the Respondent/Plaintiff had accepted the first payment made directly by MRCB to the Respondent/Plaintiff, the fact remains that the balance sum was still owing by the Appellant/Defendant to the Respondent/Plaintiff, entitling the Respondent/Plaintiff to claim that balance sum from the Appellant/Defendant. [34] On the authority of Punj Lloyd, notwithstanding the arrangement in our present case, it is the Appellant/Defendant who is liable to pay the outstanding amount owed to the Respondent/Plaintiff. [35] Based on the above findings, together with the authorities considered and the contemporaneous documents before this Court, the Respondent/Plaintiff is entitled to summary judgment. [36] The appeal is dismissed with costs of RM20,000, subject to allocatur. Dated: 8 August, 2024 sgd [CHOONG YEOW CHOY] Judicial Commissioner High Court of Malaya Shah Alam Counsel: Mahsuri binti Hussein for the Appellant (Messrs. Law Office of Paul) Sobanaranee a/p Venogopal for the Defendant Respondent (Messrs. Palani)