Roti Roti Manufacturing Sdn Bhd v One Auto Worldwide (M) Sdn Bhd (BA-24-703-09/2017)

2.1 The Plaintiff (Roti Roti Manufacturing Sdn Bhd) has appointed the Defendant (One Auto Worldwide (M) Sdn Bhd) to produce and pack various instant coffee under the brand Papparich (“PAPPARICH Products”).

2.2 The Defendant alleged that the Plaintiff had failed to pay a sum RM769,837.05 for goods delivered to the Plaintiff and storage charges. A notice of demand dated 6.7.2017 was issued to the Plaintiff demanding the payment of the said sum. The Plaintiff did not comply to the said notice of demand and this had prompted the Defendant to commence a civil suit in the Malacca Sessions Court vide civil suit MA-B52NCC-14-08/2017 (“the said Malacca civil suit”).

2.3 Thus, the Defendant in Enclosure 1 here, is the Plaintiff claiming for failure/default of payment, in the said Malacca civil suit and the Plaintiff in Enclosure 1 is the Defendant in the said Malacca civil suit, refuting obligation to pay. 4

2.4 The Plaintiff, has however refuted the claim. In its statement of defence, the Plaintiff instead counterclaimed for the sum of RM3,009,540.78 as damages allegedly for losses suffered due to the Defendant’s breach in packaging the PAPPARICH products. C. THE PLAINTIFF’S APPLICATION [3] In support of its application to transfer the said Malacca civil suit to the Shah Alam High Court, the Plaintiff had contended the following: i. the Plaintiff is domiciled in the state of Selangor Darul Ehsan as its main place of business at No. 8, Jalan SS13/ 3B, Subang Jaya Industrial Estate, Petaling Jaya 47500 Selangor. The Plaintiff’s registered address is also in Selangor namely; at Lot 5, Jalan P 10/12, Kawasan Perusahaan Bangi, Bandar Baru Bangi, 43650 Selangor. ii. the Plaintiff’s witnesses reside in Selangor. The Plaintiff will incur unneccesary expenses to bring the witnesses to the Malacca Court. This would be oppresive on the Plaintiff. D. THE DEFENDANT’S OPPOSITION 5 [4] To a limited extent, the Defendant agrees with the Plaintiff that the said Malacca civil suit ought to be transferred to the High Court as the counterclaim does exceeds the monetary jurisdiction of the Sessions Court. What the Defendant is opposing; is the transfer of the said Malacca civil suit to the Shah Alam High Court. [5] The Defendant contends that the Shah Alam High Court is not the appropriate forum to litigate the said Malacca civil suit. The forum conveniens lies at the Malacca High Court. [6] The counsel for the Defendant had submitted that the Plaintiff here had failed to make payment to the Defendant and as the payment was supposed to be made by the Plaintiff at the Defendant’s office at Malacca, and thus, the cause of action arose in Malacca. [7] The counsel for the Defendant also submitted that in respect of the counter claim, the Plaintiff’s counterclaim was based on the allegation that the Defendant was in breach of packaging the Papparich products and therefore there was a breach of the OEM agreement on the part of the Defendant. In alleging the breach, the Plaintiff claimed that the Papparich products that it has received are defective and not of merchantable quality. The 6 Defendant strongly denied and refuted such allegations. According to the Defendant, when the Plaintiff alleged that the Papparich products delivered to them are defective and not of merchantable quality, the alleged breach would have occurred at the Defendant’s factory at Malacca. Since the Defendant’s factory is in Malacca the cause of action arose in Malacca. In addition, in order for the Defendant to refute the Plaintiff’s allegation, the Defendant has to call its witnesses who are all from the Malacca factory. [8] The counsel for the Plaintiff on the other hand had submitted that this case is simply a case of alleged non-payment for goods delivered and thus issues such as where the cause of action arose or the facts on which proceedings are based exist or alleged to have occurred would be irrelevant or immaterial in determining the forum conveniens. [9] The Plaintiff’s counsel further submitted that, even if the place where the cause of action arose is to be considered in determining the forum conveniens, the forum conveniens for the said Malacca civil suit is at Shah Alam High Court as allegedly the cause of action in the present case arose when the Plaintiff failed to pay the 7 invoices issued by the Defendant. The Plaintif’s failure to pay constituted an act on the part of the Plaintiff that gave rise to a cause of complaint to the Defendant. In addition to this, the Plaintiff submits that all the while the Plaintiff had been making payment to the Defendant in the banks in Selangor / Kuala Lumpur. E. THE LAW [10] The Sessions Court’s monetary civil jurisdiction is clearly spelt out under of the Subordinate Courts Act 1948 (Revised 1972) (SCA 1948). Section 65(1)(b) of the SCA 1948 provides as follows: “Sessions Court shall have jurisdiction to try all actions and suits of a civil nature where the amount in dispute or the value of the subject-matter does not exceed RM1.0 Million ringgit.” [11] The procedural law relating to transfer of proceedings to another court is set out under Order 57 the Rules of Court 2012 (“ROC”). [12] Order 57 rules 1 (1) of the ROC provide as follows: Transfer of proceedings to another Court (O.57, r.1)

1.

Where the Judge of High Court or a Judge of the Sessions Court or a Magistrate is satisfied that any proceedings in that 8 Court can be more conveniently or fairly tried in some other Court of co-ordinate jurisdiction, he may on application by any party, order the proceedings to be transferred to the other Court. [13] While Order 57 rule 1(2) of the ROC provides:

A transfer of any proceedings from –

A Subordinate Court to the High Court; or

the High Court to a Subordinate Court, Shall only be made by an order of that High Court Judge on application by any party by origination summons or notice of application, whichever is appropriate. [14] Order 57 rule 1(4) of the ROC provides factors which must be considered by the court before making any order to transfer proceedings is made. Order 57 rule 1(4) of ROC reads as follows:

Before making any order to transfer any proceedings from-

the High Court to another High Court of co-ordinate jurisdiction;

a Subordinate Court to the High Court;

the High Court to a Subordinate Court; or

a Subordinate Court to another Subordinate Court, the High Court Judge or the Judge of the Sessions Court or Magistrate, as the case may be, shall take into consideration 9 whether the High Court or Subordinate Court which shall hear the case is located at or nearest to the place where-

(A) the cause of action arose;

(B) the defendant, or one of the several defendants, resides or has his place of business;

(C) the facts on which the proceedings are based exist or are alleged to have occurred;

(D) the land the ownership of which is disputed is situated; or

(E) for other reasons it is desirable in the interests of justice that the proceedings should be transferred. [15] Looking at the the Plaintiff’s counter claim, clearly the counter claim exceeded the Sessions Court monetary civil jurisdiction of RM1 million. And therefore, this Court must say that an order to transfer the said Malacca civil suit to the High Court is inevitable. F. Forum Conveniens [16] Now, the next issue for this Court to determine is; which High Court is the appropriate forum conveniens to hear the said Malacca civil suit; whether the Malacca High Court or the Shah Alam High Court. 10 [17] In respect of the issue forum conveniens raised by the Defendant, it is trite that the constitution and jurisdiction of the Malaysian courts are clearly enshrined in the Federal Constitution. Article 121(1) of the Federal Constitution constituted two High Courts having co-ordinate jurisdiction and status namely; (i) one in the States of Malaya, which shall be known as the High Court in Malaya and shall have its principal registry at such place in the States of Malaya as the Yang di-Pertuan Agong may determine; and (ii) one in the States of Sabah and Sarawak, which shall be known as the High Court in Sabah and Sarawak and shall have its principal registry at such place in the States of Sabah and Sarawak as the Yang di-Pertuan Agong may determine. [18] The territorial jurisdiction of the two High Courts is defined under the section 3 of Courts of Judicature Act 1964 (CJA) which reads: “local jurisdiction” means-

in the case of the High Court in Malaya, the territory comprised in the States of Malaya, namely, Johore, Kedah, Kelantan, Malacca, Negeri Sembilan, Pahang, Penang, Perak, Perlis, Selangor, Terengganu (and) the Federal Territory of Kuala Lumpur; and 11

in the case of the High Court in [Sabah and Sarawak], the territory comprised in the States of [Sabah, Sarawak] and the Federal Territory of Labuan.

… including, in either case, the territorial waters [and the air space above those States and the territorial waters]; [19] Given the definition local jurisdiction under section 3 of the CJA, if one of such High Court has jurisdiction over any cause or matter, it shall necessarily follow that any branch of the High Court within the same territorial limit shall likewise have jurisdiction thereon. [20] Thus, in the case before the court here it is not so much of a dispute with regard to territorial limit, but which branch of the High Court of Malaya is the forum conveniens for the said Malacca civil suit. [21] The civil jurisdiction of the High Court of Sabah and Sarawak and that of the High Court of Malaya is provided in subsection 23(1) of 12 the Courts of Judicature Act 1964 (“the Act”), which provides as follows:-

(1) Subject to the limitation contained in Article 128 of the Constitution the High Court shall have jurisdiction to try all civil proceedings where –

the cause of action arose; or

the defendant or one of the several defendants resides or has his place of business; or

the facts on which the proceedings are based exist or are alleged to have occurred; or

any land the ownership of which is disputed is situated, within the local jurisdiction of the Court and notwithstanding anything contained in this section in any case where all parties consent in writing within the local jurisdiction of the other High Court.” [22] It is well settled that the jurisdiction of the High Court as provided in subsection 23(1) of the Act, paragraphs (a), (b), (c) and (d) must be read disjunctively. (See Enersafe Sdn Bhd v Megarina Sdn 13 Bhd [200] 2 CLJ 102, Malayan Banking Bhd v International Tin Council and another appeal [1989] 3 MLJ 286, Malacca Securities Sdn Bhd v Loke Yu [1998] 3 AMR 2501 and Mee Ying Enterprise Jewellers (suing as a firm) v Che Jah bte Abdullah [1992] 2 MLJ 263). [23] In the case of Bank Bumiputra Malaysia Berhad v Melewar Holdings Sdn. Bhd. & 4 Ors. [1990] 1 CLJ (Rep) 654, Mustapha Hussain J has held inter alia that: “The breach of contract i.e., the failure of the defendant to pay the outstanding sums due occured at Kuala Pilah. Despite the fact that all the transactions were concluded in Kuala Lumpur, the principle cause of action i.e., against the borrower arose in Kuala Pilah and this principle cause of action supersedes the defendants residential qualification under s. 23(b) of the Court of Judicature Act 1964” [24] In Malacca Securities Sdn Bhd v Loke Yu [1998] 3 CLJ 22, the High Court held as follows: “In a contract for the payment of money the breach occurs when there is a failure to pay the sum promised. This is logical as the 14 meaning of "cause of action" is the act on the part of the defendant which gives the plaintiff his cause of complaint (see Jackson v. Spittall [1870] 5 LRCP 542). The failure to pay will be the cause of complaint. That breach will have to be at the place where the payment is to be made and the cause of action will therefore accrue in that place (see Bank Bumiputra Malaysia Berhad v. Melewar Holdings Sdn. Bhd. & 4 Ors. [1990] 1 CLJ (Rep) 654 (refd)). Where there is no agreement as to the place where the payment should be made then the payment should be made at the place where the plaintiff lives…” [25] In the case of Tawin Industries (M) Sdn Bhd v FEC Cables (M) Sdn Bhd [2005] 5 CLJ 140, Low Hop Bing J (as he then was) had this to say at page 148: “The plaintiffs registered address is in Melaka, from where the defendant had ordered the goods, the payments for which were to be made in Melaka where the defendant's four key management personnel have had a meeting with the plaintiff's assistant manager, resulting in the agreement by the defendant to pay the debt in five cheques which the defendant had apparently failed to honour. On the facts, there can be no doubt in my mind that the High Court of Malaya at Melaka is the forum conveniens to hear and determine the plaintiffs action herein”. 15 [26] In the case of Amalan Lengkap Sdn Bhd v SKS Coachbuilder Sdn Bhd [2016] MLJU 513, the High Court held inter alia: “[12] In the present case, I find that the Plaintiff's pleaded cause of action arose in Melaka. The facts pleaded by the Plaintiff shows that there was a demand made by the Plaintiff for the Defendant to make payment of the balance due under the Contract. In a contract that involves the payment of money, the breach occurs when there is failure to pay; and the cause of action would have accrued at the place where the payment is to be made. Though the contract itself does not stipulate the place of payment, it would be reasonable to surmise that any payment due under the Contract would naturally be payable at the Plaintiff's office in Melaka. This principle was reiterated by Charles J in Northey Stone Co v. Gidney [1894] 1 QB 99 at p 100 in the following terms: The action is brought to recover the balance of price of goods sold and delivered. According to the law applicable to contracts, there being no special stipulation as to the place of payment, the defendant must pay at Bath, where his creditors, the plaintiffs, live. [13] Thus, when the Defendant failed to make the payment as demanded by the Plaintiff, the breach would have occurred in Melaka, ie, where the office of the Plaintiff is situated; and the cause of action would arise in Melaka. See also the case of Bank 16 Bumiputra Malaysia Berhad v. Melewar Holdings Sdn. Bhd. & 4 Ors. [1990] 1 CLJ (Rep) 654. The Plaintiff's claim would, as such, come well within the ambit of O. 57 r. 4(a)(A) of the Rules of Court. The Plaintiff also states in its affidavit that its witnesses are residing in Melaka. Therefore, whether the 'suitability or appropriateness' test expounded in Spiliada by Lord Goff and adopted by the Supreme Court in American Express Bank Ltd; or the 'proximal nexus ' test espoused in Low Loong Yoong & Anor, is applied, I find that the High Court in Malaya at Melaka would be the appropriate forum to adjudicate upon this dispute. [27] VT Singham JC (as he then was) in the case of Yap Thiam Choy v Syarikat Pembenaan Fajar Baru (Rembau) Sdn Bhd [2000] 6 MLJ 755 held as follows: “... the plaintiff's address in Temerloh is not a condition or requirement under para 2(1) of the Third Schedule of the Subordinate Courts Act 1948 in order to decide the forum in which the summons ought to be instituted. It is also the view of this court that the fact that the defendants had filed a counter-claim against the plaintiff which was included in the statement of defence does not in any way change the position of the plaintiff for the purposes of determining the forum or give effect that para 2(1)(b) was meant for a plaintiff who has received a counter-claim against him which was included in the statement of defence as a defence to the plaintiff's action.The words in para 2 of the 17 Third Schedule are clear and without any ambiguity and this court must give it a purposive interpretation to those literal words without inserting to cause a different situation or condition as argued by the plaintiff's counsel.” [28] This Court is in agreement with the submission of the Defendant’s counsel that even though Plaintiff is domiciled in Selangor and the Plaintiff’s business and its registered address are also in Selangor, the fact remains that the Plaintiff had failed to make payment to the Defendant in respect of goods which had been delivered by the Defendant and for storage charges of 148 packaging materials stored in the Defendant’s factory. (See Writ dan Pernyataan Tuntutan kedua-dua bertarikh 02.08.2017 di eksibit “D-1” Afidavit Sokongan). [29] The Plaintiff in the present case is well aware that all payment to the Defendant must be paid to the Defendant at its Malacca factory. When the Plaintiff failed to pay the Defendant the sums for delivered goods and the storage charges, the failure of payment on the Plaintiff’s part had triggered the Defendant to file the said Malacca civil suit. 18 [30] This Court must say here that, this case involves a specific contract regarding manufacturing and packaging of Papparich products. An issue of payment or non-payment, entitled or not entitled, obligation or non-obligation to pay, all boils down to the salient essence of the contract; which is manufacturing and packaging of the Papparich products. [31] The manufacturing and/or packaging are conducted and performed in the Defendant’s factory in Malacca. To determine whether there is failure to pay or whether there is no obligation to pay, the relevant factor is the performance of the contract in the Malacca factory. Thus, the cause of action of non-performance of the contract (either on the breach of payment or breach of obligations and/or terms of the specific contract) occurred in Malacca. This Court is of the view that the stance taken by the respective parties here all hinges on the successful or failure to perform the manufacturing and/or packaging of goods. The Defendant’s claim for due payments hinges on the successful and complete performance of the Defendant’s manufacturing and/or packaging, which occurs in Malacca. On the same note, the Plaintiff’s refute on the obligation to pay also hinges on the success/failure of the Defendant’s performance under the contract, 19 which occurs in Malacca. Thus, it is vividly clear here that Malacca High Court is the forum conveniens. [32] Furthermore, this Court is of the view that the Plaintiff’s contention on the reliance on the location/branch of the bank it frequents to make payment is sorely misplaced. As had been repeatedly agreed and upheld in the numerous precedents deliberated above, the cause of action arises and follows where the Plaintiff or creditor resides. [33] Now, the Plaintiff in the said Malacca civil suit is the Defendant whose factory and address is in Malacca. It matters not the branch/location of the bank the payment was made. At the very end of the performance of the contract, the payment must be made to the creditor (or party/plaintiff claiming payment (which is the Defendant in the said Malacca civil suit)), and the creditor here is the Defendant. And since the Defendant resides in Malacca, notwithstanding the branch or locality of the bank payments were made, the payment accordingly must follow and must be accorded to the Defendant, who resides in Malacca. Therefore, if there shall be any default or failure in payment, such default and/or failure to pay occurs in Malacca, and not the bank in which the payments 20 were allegedly made. It is erroneous for this Court to consider the locality or territoriality of a bank, which is a financial institution not even named as party in the suit. [34] In view of the above, it is this Court’s judgment that that the forum conveniens is at the High Court of Malacca. [35] Based on the aforementioned reasons, the Plaintiff’s application is hereby dismiss with costs of RM3000.00 to the Defendant. t.t. ………………………………………….. (DATUK AZIMAH BINTI OMAR) Judge High Court Shah Alam Selangor Darul Ehsan Dated 8th January, 2018 Peguam Plaintif - Tetuan Vin & Isaac Lee En. Kelvin Ng Chun Yee Peguam Defendan -