Southeastasianet Technologies Msc Sdn Bhd v Iris Corporation Berhad (BA-12ANCVC-163-10/2019)

The Defendant appeals against the summary judgment allowed by the Sessions Court on 26.9.2019 wherein the Plaintiff’s claim of USD 60,684.20 together with interest calculated at 5% from date of filing of the Writ of Summons until realisation, and costs of RM 1000 was allowed. Background facts

The facts, relevant to this appeal are as follows. The Plaintiff is a public listed company, incorporated in Malaysia with an address at IRIS Smart Technology Complex, Technology Park Malaysia, Bukit Jalil, 57000 Kuala Lumpur.

The Defendant is also a company incorporated in Malaysia with a business address at No. B-612, Level 6, Block B, Kelana Square, 17, Jalan SS 7/26, Kelana Jaya, 47301 Petaling Jaya, Selangor.

On 19.11.2006, the Defendant entered into a 15-year concession agreement with the Ministry of Interior, Cambodia to design, develop and implement the ICAO E-Passport Stickers, E-Passport Systems & Autogates for the Passport Offices in Cambodia (“the E-Passport Project”). Under this agreement, the payment for the entire scope of the works would be made based on the usage of the E-Passport stickers daily by the Passport offices, Cambodia. 3

On 17.1.2007, the Plaintiff was engaged by the Defendant to design, develop and implement the E-Passport Project (“Project Agreement”). Under this agreement, the Defendant was to pay the Plaintiff USD 6.00 for each E-Passport sticker. The payment was to be made within 3 working days from the date of receipt of the invoices from the Plaintiff.

Parties subsequently entered into another agreement called the Frame Agreement for the System Supply and Services dated 21.7.2011. (“Frame Agreement 1”). The supply of E-Passport stickers at USD 4.10 per piece was part of the system and services agreed to be supplied. Under Frame Agreement 1, the payment terms were varied from the Project Agreement. The Defendant had to make payment within 90 days from the date of receipt of invoices.

Thereafter, due to the revision of the price for the E-Passport Stickers, another Frame Agreement for the System Supply and Services dated 18.10.2013 was signed between the Plaintiff and the Defendant. (“Frame Agreement 2”). The agreed price for the E-Passport Stickers was USD 3.20 per piece, and payment for the stickers was to be made within 90 days from the date of the Invoice.

On 4.9.2013, the Defendant placed an order for 40,000 ICAO E-Passport Stickers for the 1st quarter of 2014, to be delivered by the 1st week of November 2013 (“Order”). The Order was delivered on 30.10.2013 together with 108 pieces of replacement E-Passport Stickers. The Defendant duly acknowledged receipt of the delivery. 4

The Defendant was billed an amount of USD 128,000 for the delivery of the 40,000 pieces of E-Passport Stickers at USD 3.20 per piece, vide Invoice No. 20148888 dated 26.3.2014. Following the terms of Frame Agreement 2, the Defendant was obligated to make payment before 25.6.2014, which it did not.

As the Defendant failed to make payment before 25.6.2014, the Plaintiff sent a reminder through its letter of 8.10.2015. Thereafter, the Defendant made a partial payment of USD 67,315.20 on or about 27.10.2015, leaving an outstanding sum of USD 60,684.80.

The Plaintiff now claims for the outstanding sum as the Defendant, despite the demand made by the Plaintiff, has not settled this sum. The action of the Plaintiff is premised on a breach of contract. The Defendant’s response

The Defendant contends firstly that Frame Agreement 2 is not a stand-alone Agreement. It is to be read back to back with the E-Passport Project. Secondly, based on the conduct of dealings between the parties from the time of the Project Agreement, Frame Agreement 1 and Frame Agreement 2, there was an assumption and understanding that the Defendant would not have to pay the Plaintiff until and unless the Defendant has been paid under the E-Passport Project.

In addition, all the prior agreements and arrangements entered into with the Plaintiff had to be considered to appreciate the obligations of the parties, particularly on the terms of payment as agreed 5 between the parties. The payment terms in the Project Agreement were previously changed from 3 working days to 90 working days of delivery of invoice under Frame Agreement 1 and Frame Agreement 2 to enable a working system between the parties where payment would be made in the next quarter based on quarterly projections. This arrangement continued until the last order of 40,000 E-Passport stickers. Only 21,036 E-Passport stickers were utilised. The Defendant had fully met its obligations with the payment of USD 67,315.20 for the utilised stickers to the Plaintiff. Decision of this court

The approach to be taken by this court in an O. 14 appeal is settled law. The appeal before me is a rehearing and not a review of the exercise of the learned Sessions Court judge’s discretion. (See: Ng Hee Thong & Another v Public Bank Berhad [1995] 1 MLJ 281, Malayan Insurance (M) Sdn Bhd v Asia Hotel Sdn Bhd [1987]

The Plaintiff in an application for summary judgment must satisfy the preliminary requirements under Order 14 Rules of Court 2012. (See: National Company For Foreign Trade v Kayu Raya Sdn Bhd [1984] 2 MLJ 300).

I find that the Plaintiff has done so in this case, as the defendant has entered an appearance, the statement of claim has been served on the Defendant and the affidavit in support of the application complies with the requirements of rule 2 of Order 14. 6

It is trite that upon satisfaction of these requirements, the burden then shifts to the Defendants to satisfy the court that judgment should not be entered against them. (See: Cempaka Finance Bhd v Ho Lai Ying (trading as KH Trading) & Anor [2006] 2 MLJ 685).

In summary judgment applications, much reliance is usually placed on documents adduced as supporting evidence. The Plaintiffs have also taken the same approach by relying on the terms of Frame Agreement 2.

The pertinent terms of Frame Agreement 2 are:-

The Defendant shall pay USD 3.20 for each E-Passport sticker delivered by the Plaintiff to the Defendant;

(ii) The Defendant shall make payment to the Plaintiff within 90 days upon receipt of the invoice for the E-Passport sticker from the Plaintiff; and

(iii) In the event the Defendant fails to pay the Invoice amount within the period of 90 days, a late penalty charged in accordance to the agreed formula in Frame Agreement 2 shall be imposed.

The Plaintiff’s claim is substantiated by documentary evidence. It is pertinent to note that the documentary evidence is not disputed. An invoice for 40,000 stickers at a price of USD 3.20 was issued to the Defendant. The amount of RM 128,000 was to be paid before 7

25.6.2014. It was only after more than a year later, that the sum of RM 67,315.20 was paid. The sum of USD 60, 684.20 remains unpaid till today.

It is against this evidence of the Defendant’s indebtedness, that the issues raised by the Defendant will have to be considered. To defeat a summary judgment application, the Defendant does not have to just raise any issue, the issue raised must be one that is triable.

The Defendant asserts that its obligation to pay the Plaintiff only arises when it is paid by the Cambodian government. To support its assertion, reference was made to the Project Agreement and the emails exchanged between 19.6.2007 to 3.7.2007. These emails will tend to show that the Plaintiff agreed to bill the Defendant based on what was issued to the Passport Office of Cambodia, and not what the Plaintiff delivered.

The payment terms that this email purported to establish was during the period the Project Agreement was in force. The parties appeared to have made a one-off exception to the application of the contract terms. It cannot be taken as applicable to the subsequent agreements entered into between the parties.

The allegation that the agreement between the parties was essentially back to back with the E-Passport Project, and hence Plaintiff is to be paid only when Defendant is paid by the Cambodian Government, is not plausible. There is absolutely no 8 evidence of such an arrangement apart from the exchange of emails in 2007.

Further, the emails cannot be relied on as establishing the payment terms to be on the basis of ‘paid when paid’ for Frame Agreement 2, the breach of which forms the basis of the Plaintiff’s claim. Where a contract has been reduced to writing, the terms of the contract is to be examined within the four corners of the contract, which is to be conclusive of the matter. This principle has been stated in several authorities.

In Tractors Malaysia Bhd v Kumpulan Pembinaan Malaysia Sdn Bhd [1979] 1 MLJ 129, the Federal Court referred to the principle enunciated by Viscount Haldane’s in Dunlop v Selfridges [1915] AC 857 which states that “where a contract has been reduced to writing, it is in the writing that the court must look for the whole of the terms made between the parties”.

In Koh Siak Poo v Perkayuan OKS Sdn Bhd &Ors [1983] 3 MLJ 164, the Supreme Court held, Where the written contracts are clear and unambiguous the court should not go behind the written terms of the contract to introduce or add new terms to it. See also Tindok Besar Estate Sdn Bhd v Tinjar Co [1979] 2 MLJ 229. The respondents did not challenge the validity of the contract on the ground of fraud or want or failure of consideration….In a situation like this the duty of the court is confined to the construction of the written documents and extrinsic evidence is not admissible by virtue of ss 91 and 92 of the Evidence Act. 9

The Plaintiff is seeking to enforce the payment terms which stipulate a 90-day period from the date of receipt of invoice to make payment for delivery of the E-passport stickers. This contractual right arises from Frame Agreement 2 and the payment terms are couched in words which are clear and unambiguous.

As stated earlier, the emails were exchanged during the period of the Project Agreement. The practice and arrangement with regard to payment that was purportedly established during the period the Project Agreement was in force is now irrelevant. This agreement has been superseded by Frame Agreement 2. Frame Agreement 2 contains a material clause referred to as an entire agreement clause in clause 31.

Clause 31 expressly provides that all previous agreements entered into between the parties have been superseded and that the parties rights and obligations shall be governed only by this Agreement. As Clause 31 is relevant it is reproduced herein:- 31

31.1 This Agreement including all its schedules, appendices and any attachments hereto shall constitute the entire agreement between the Parties with respect to the matters contained herein, shall supersede any and all previous agreements and understandings between the Parties with respect to such matters and shall bind and inure to the benefit of the Parties, their successors in title and permitted assigns. The Parties have entered into this Agreement in reliance upon the representations and mutual undertakings contained herein and not in reliance upon any oral or written representations or information 10 provided to one Party by any representative of the other Party which is not referenced herein.

It is patently clear from clause 31 that all previous agreements have been superseded and overtaken by this agreement and that only the terms therein are to be referred to and no other. In short, the sole contractual document to be considered is Frame Agreement 2.

The effect of an entire agreement clause has been pronounced in several cases. In Master Strike Sdn Bhd v Sterling Heights Sdn Bhd [2005] 2 CLJ 596, the Court of Appeal held, Clause 24 is an entire agreement clause that constitutes a binding agreement between the appellant and the respondent with regard to all the matters mentioned in the contract and therefore, in our judgment, the contract[2005] 3 MLJ 585 at 594 does not permit any term to be implied or import any other considerations not in the contract. In Innterpreneur Pub Co v East Crown Ltd [2000] 3 EGLR 31 at p 32K-L right a somewhat similar provision to cl 24 is set out. In his judgment, Lightman J opined on the purpose and the effect of an entire agreement where at p 33A-B left he said: The purpose of an entire agreement clause is to preclude a party to a written agreement from threshing through the undergrowth and finding, in the course of negotiations, some (chance) remark or statement (often long forgotten or difficult to recall or explain) upon which to found a claim, such as the present, to the existence of a collateral warranty. The entire agreement clause obviates the occasion for any such search and the peril to the contracting parties posed by the need that may arise in its absence to conduct such a search. For such a clause constitutes a binding agreement 11 between the parties that the full contractual terms are to be found in the document containing the clause and not elsewhere, and that, accordingly, any promises or assurances made in the course of the negotiations (which, in the absence of such a clause, might have effect as a collateral warranty) shall have no contractual force, save in so far as they are reflected and given effect in that document. In that case, the learned judge ruled that evidence of a collateral contract was inadmissible. He further added at p 33D left: …the formula used is abbreviated to an acknowledgment by the parties that the agreement constitutes the entire agreement between them. That formula is, in my judgment, amply sufficient to constitute an agreement themselves are to be found in the agreement and nowhere else. That can be the only purpose of the provision.

Very recently, the Federal Court in Wong Yee Boon v Gainvest Builders (M) Sdn Bhd [2020] 3 MLJ 571 had occasion to consider again the effect of entire agreement clauses. Justice Rohana Yusuf FCJ although delivering the dissenting judgment on the facts, reiterated the principles on entire agreement clauses. With regard to the entire agreement clause in clause 13, she said, [59] Clause 13 as well as ss 91 and 92 of the Evidence Act would exclude any reliance on any purported representation on the part of the appellant citing the decision of this court in Tindok Besar Estate Sdn Bhd v Tinjar Co [1979] 2 MLJ 229 in support. I have carefully perused and analysed the introducer agreement. Bearing in mind that it is a written agreement the rule of interpretation of it, is well settled. Once a contract is reduced to writing it must be read within its four corners 12 without more. Also ss 91 and 92 of the Evidence Act would exclude any reliance on any purported representation on the part of the appellant. This court had in Tindok Besar Estate Sdn Bhd v Tinjar Co held that when the terms of an agreement is reduced to writing, s 92 specifically excludes evidence to contradict, vary or add to the written agreement except in situations provided in the provisos to that section. The legal position is trite in this area of the law (see Donald James Rae & Anor v Bruno Sorrentino and another appeal [2015] 2 MLJ 218; [2014] 1 LNS 1102 and Nortel Networks (Asia) Ltd (formerly known as Northern Telecom (Asia) Ltd) & Ors v Sapura Holdings Sdn Bhd & Ors [2012] 6 MLJ 491; [2012] 8 CLJ 296). [60] It is also significant to note that the introducer agreement also contains an Entire agreement clause which estopped the respondent from relying on any purported representation by the appellant, outside the scope of the agreement. The entire agreement clause in cl 13 states clearly that: This Agreement contains the full and complete understanding between the Parties and supersedes all prior arrangement, agreement and understanding, whether written or oral appertaining to the subject matter of this agreement and may not be varied by an instrument signed by all parties.

Applying the principles enunciated to the instant case, any paid when paid arrangement is to be disregarded in the light of the unambiguous terms of Frame Agreement 2 as to payment. The terms contained therein are conclusive and no variation of the express terms is allowed. 13

For the foregoing reasons, I do not find the issues raised by the Defendant triable to merit a trial of this case. The plaintiff ought not to be prevented from obtaining judgment where there is no fairly arguable defence to the claim.

In the circumstances, the appeal is dismissed and the Plaintiff’s summary judgment application is allowed. Judgment is hereby entered for the sum of USD 60,684.20 together with interest at the rate of 5% from the date of filing of the Writ of Summons until realisation. I also order that costs of RM 5000 be paid to the Plaintiff. Dated: 9 November 2020. -sgd- ………………………. Alice Loke Yee Ching Judicial Commissioner High Court of Malaya Counsel for Plaintif : Mr. Wong Yen Wei Tetuan Zul Rafique & Partners Counsel for Defendant : Mr. Harvinder Singh Sidhu (Ms. Vasanthi Rasathurai with him) Tetuan Vin Law Co 14