Pestech Sdn Bhd v Syarikat Pembenaan Yeoh Tiong Lay Sdn Bhd (WA-22C-44-06/2023)

This is an appeal against the decision of this Court in respect of enclosure 7 delivered on 20.7.2023 in respect of the Inter Partes Injunction applied for by the Plaintiff which was dismissed by this Court.

On 27.6.2023 this Court had granted Order In Terms (27.6.2023) for an ex parte application in enclosure 7 (Enclosure 7) to amongst others restrain the Defendant and/or its agents from trespassing, S/N vLppGicn0GBd4kwtE1dUw using and/or tampering with various machines (Machines) as listed in the said Enclosure 7 Pursuant thereto the Inter Partes hearing for the said Injunction application was fixed for 6.7.2023 and thereafter adjourned to 14.7.2023 for the respective parties to file their affidavits in respect of Enclosure 7.

At the hearing of the Inter Partes on 14.7.2023, this Court after hearing both learned counsels for the respective parties, adjourned the decision of the same to 20.7.2023.

The Plaintiff (Pestech Sdn Bhd) is the owner of 23 specialised Machineries (“Machineries”) as listed in Schedule 2 of the Notice of of Enclosure 7).

The Machineries were purchased from Balfour Beatty Rail Sdn bhd on 9.3.2015.

Plaintiff prepared a Master List for the Machineries on 20.5.2016.

Plaintiff leased these Machineries on 29.5.2017 (plus others) to Pestech Technology Sdn Bhd.

PTE used these Machineries in a contract dated 24.8.2018 entered into with the Defendant (“Construction contract”) who was appointed as the main contractor for the Project involving the ‘design, construction, supply, installation, completion, testing, commissioning S/N vLppGicn0GBd4kwtE1dUw and maintenance of the electrified double track from Gemas to Johor Bahru (Project).

Prior to the Construction Contract it was alleged by the Defendant that they had issued an invitation to tender for “Fixed Price, Date Certain, Turnkey Engineering, Procurement, Construction and Maintenance contract relating to the Electrical System of the electrified Double track from Gemas to Johor Bahru (Works)”.

The Plaintiff then made a submission for the aforementioned tender exercise and amongst others in its documents thereto listed out the Machineries to be deployed for the Works and described itself as being owned by the Plaintiff.

The Construction Contract also included a list of documents which formed part of the definition of “Agreement” therein which included inter alia the Conditions of Sub-contract which speaks of ownership of the Machineries remaining with the Plaintiff and that the Machineries will not be removed from the Site without prior written consent of the Plaintiff.

There was also a parent company guarantee issued by Pestech International Bhd (“PIB”) that the obligations of the Plaintiff under the Sub contract would personally be made good by PIC and that PIC would indemnify the Defendant (Parent Company Guarantee).

The Construction Contract was terminated on 10.5.2023.

The lease agreement was terminated on 8.6.2023. S/N vLppGicn0GBd4kwtE1dUw

The Defendant has it was alleged without permission from the Plaintiff, taken over the care and control of the Machineries since termination.

It is also alleged that there are numerous instances as reflected in the Affidavit in Support of the Plaintiff for Enclosure 7 trying to collect and remove the Machineries but have been prevented by the Defendant.

The Plaintiff did on 15.6.2023 write directly to the Defendant demanding:-

the delivery and return of the Machineries to the Plaintiff.

(ii) seeking written confirmation within 24 hours that the Defendant will do so.

The Defendant has allegedly not responded to date.

It was submitted by the Plaintiff amongst others that: a) the Plaintiff is the owner of the Machineries. b) the Plaintiff has no contractual relationship with the Defendant (which the Defendant has admitted in their affidavits) c) The Defendant’s entire argument centers on the fact that PTE had represented to the Defendant that PTE is the owner of the S/N vLppGicn0GBd4kwtE1dUw Machineries. Even If true, that is a separate cause of action between the Defendant and PTE d) The Plaintiff is a separate entity from PTE. e) Under Contract which does not bind the Plaintiff, it only allows the Defendant to utilise equipment & machineries that belong to PTE. It cannot extend to equipment & machineries owned by others. f) The Parent Company Guarantee has not been invoked. g) the Plaintiff’s claim is based on detinue

The Defendant on the other hand contends in essence as follows:- a) there is an inequity and a lack of candour on the part of the Plaintiff so as to disentitle them to an injunction; and /or b) there is an absence of bona fide when the wholly owned subsidiary of the parent company is seeking equitable relief that an obvious agreed contractual basis of a relationship involving such parent company is to be disregarded and non existent

After perusing and examining the grounds in Enclosure 7, the respective affidavits and the exhibits pertaining thereto, I have taken due consideration of the facts before me in particular: S/N vLppGicn0GBd4kwtE1dUw i. the lease agreement between the Plaintiff with Pestech Technologies Sdn Bhd (“PTSB”) dated 29.5.2017 ii. the Parent Company Guarantee given by Pestech International Berhad (“PIB”) who is also the holding company of the Plaintiff and PTSB, to the Defendant and the terms therein iii. the contract dated between PTSB and the Defendant and the terms therein iv. the group corporate structure of PI, PTSB and the Plaintiff v. inter se the contractual relationship between PTSB and PI with the Defendant vi. the grounds relied on by the Plaintiff in support of their Enclosure 7 vii. whether the Plaintiff has been shown on a balance of probabilities that it is the owner of the machineries; and viii. whether the Plaintiff’s right have been unlawfully interfered with

I have also considered the case, as cited by learned counsel for the Plaintiff of Ong Leong Chiou & Anor v Keller (M) Sdn Bhd & Ors [2021] 3 MLJ 622 where the Federal court held amongst others that “On piercing, liability could devolve on more than one party to the dispute” but I am, for the record, not intending to pierce the corporate veil at this interlocutory stage. S/N vLppGicn0GBd4kwtE1dUw

I however find on the basis of and applying the practical reality of the legal relationship between PTSB and PI with the Defendant that there appears prima facie to be an implied, if not constructive knowledge, by the Plaintiff of the representations made to the Defendant by both PTSB and PI of inter alia respectively that PTSB is the owner of the machineries, that the ownership will remain with PTSB and that the Machineries will not be removed from the Site without the permission of the Defendant. This approach can be seen in the case of Sunrise Sdn Bhd v First Profile (M) Sdn Bhd & Anor [1996] 3 MLJ 533 where the Federal Court in a judgment delivered by Chong Siew Fai, Chief Justice of Sabah & Sarawak, it was held: “We are in complete agreement with the basic principle of the fundamental attribute of corporate personality, ie that the corporation is a legal entity distinct from its members, be they individuals or corporate bodies – a principle firmly established since Aron Salomon v A Salomon & Co Ltd [1897] AC 22. However, since then, the development of the law has seen numerous deviations from the strict rule of the separate legal entity of the company through cases where the courts, on the particular facts and circumstances of those cases, found it appropriate and necessary to depart. Thus, in cases where there are signs of separate personalities of companies being used to enable persons to evade their contractual obligations or duties, the court would disregard the notional separateness of the companies”

A similar approach was applied by the Court of Appeal in Kwan Chew Holdings Sdn Bhd v Kwong Yik Bank Bhd [2006] 6 MLJ 544 where Gopal Sri Ram JCA (as His Lordship then was) in delivering the judgement of the Appellate Court held: S/N vLppGicn0GBd4kwtE1dUw “[36] That brings me to the second point made by learned counsel for the defendant. He says that even if there was a breach by the defendant, the plaintiff can recover nothing as it was another company in the group and not the plaintiff that was the developer. This answer is singularly devoid of merit and the answer to it is not difficult to find. It lies in the defendant's own conduct. If you examine the documentary evidence you will see that throughout their business relationship the defendant regarded the plaintiff and the group of companies to which it belonged as one and the same entity. That is why the defendant in its letter dated 23 September 1986 required the plaintiff to utilise all sums received in excess of the redemption monies to pay and settle the monies owing from the other companies in the group. Having conducted itself in this fashion towards the plaintiff it is, in my judgment, not open to the defendant to change its stance now and choose to treat each company in the group as a different entity. It is not a question of the court lifting the corporate veil (Adams v Cape Industries Plc [1990] Ch 433) or the companies in the group being treated as a single economic unit as was done in DHN Food Distributors Ltd v Tower Hamlets London Borough Council [1976] 1 WLR 852, a case which is at present of doubtful authority (see, Woolfson v Strathclyde Regional Council [1978] SLT 15). It is merely an example of equity acting in personam whereby the defendant is estopped from asserting that each company in the plaintiff's group of companies is a distinct and separate entity because it would be unjust for it to do so. As the Federal Court observed in Boustead Trading (1985) Sdn Bhd v Arab-Malaysian Merchant Bank Bhd, estoppel is: a doctrine of wide utility and has been resorted to in varying fact patterns to achieve justice. Indeed, the circumstances in which the doctrine may operate are endless.” S/N vLppGicn0GBd4kwtE1dUw

I hold that as a result of the above, the Defendant has at this juncture shown on a balance of probabilities that the Plaintiff may not have come with clean hands, more so when the Defendant has averred that the facts now stated by the Plaintiff was not known to Defendant before this proceedings.

From the facts before me, the Parent company i.e Pestech International Berhad (“PIB”), appears to be prima facie the directing mind of both PTSB and the Plaintiff and I find that the ultimate remedy that the Plaintiff would appear to be asking this Court in this matter is to rewrite the bargain between the Defendants and PTSB as well as PIB respectively which I find, at least at this stage of the proceedings, maybe inequitable.

Due to the facts of the matter, I am satisfied this is not a suitable case for this Court to decide on the ownership of the Machineries at this stage of the proceedings without having a trial of the same where viva voce evidence can then be put forth to this Court for it to make a decision on the ownership issue.

I therefore hold that as an injunction is an equitable remedy, and in particular due to the circumstances and the facts as laid out before this court, this Court must in the factual circumstances before me consider:- i. the sanctity of each individual Company and that the Court only steps in, in exceptional circumstances to make a determination on the lifting of the corporate veil S/N vLppGicn0GBd4kwtE1dUw ii. the public interest element in the Project

This Court has also taken note that it is only in exceptionally rare cases for a mandatory injunction to be made, where there is a higher threshold to be met by the Plaintiff herein and that the effect of the mandatory injunction is similar to an ultimate remedy.

Thus, applying the principles in Keet Gerald Francis Noel John v Mohd Noor Bin Abdullah & Ors [1995] 1 MLJ 193, this Court holds:

the arguments canvassed with regards the legality of the respective agreements was a serious question requiring full and proper deliberation and consideration at the trial of the action after all the alleged facts have been put forth to the Court and this Court cannot, and in fact is in no position to determine the same at this interlocutory stage

(ii) there are therefore serious bona fides issues to be tried based on the facts before me which merits a full trial of the matter

(iii) after balancing the practical realities of the situation before me with the other relevant and competing considerations, I find that the practical realities herein weighs heavily in favour of the injunction being discontinued until the disposal of the trial of the action

(iv) that damages will be an adequate remedy for the Plaintiff as compared to the damage that will be caused to the Defendant in S/N vLppGicn0GBd4kwtE1dUw not being able to utilize the machines for the Project which will lead to the Project being stalled and the possibility of the contract / concession for the said Project being terminated

the public interest which would be occasioned as a result of the delays in the said Project

I therefore hold that the Ex Parte Injunction is not to continue and be dismissed with costs in the cause subject to the undertaking to be given by the Defendant within 48 hours from date hereof that the Defendant a) it is not to transfer, sell and/or dispose of the machines/equipments; and/or b) will not move the said machines from the Project Site in anyway whatsoever until the case before this Court is disposed off; and/or c) will reasonably maintain the machines/equipments, fair wear and tear accepted, and that the same are to be safely kept and stored in a reasonable manner until the case before this Court is disposed off. Dated: 20th day of July 2023 sgd. NADZARIN WOK NORDIN HIGH COURT JUDGE CONSTRUCTION COURT 1 S/N vLppGicn0GBd4kwtE1dUw COUNSEL FOR THE PLAINTIFF: Rodney Gomez, Jacintha Sasidaran and Eng Sze Pei [Messrs Shearn Delamore & Co.] COUNSEL FOR THE DEFENDANT: Felix Dorairaj, Logan Sabapathy, Chong Samuel Man Hon and Ariel Priyanka Francis [Messrs Dorairaj Low & Teh] S/N vLppGicn0GBd4kwtE1dUw