Sunway Quarry Industries Sdn Bhd v Seng Tat Roadworks Sdn Bhd & 3 yang Lain (WA-22NCVC-374-06/2018)

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LOH YEW CHUAN … DEFENDAN-DEFENDAN JUDGMENT [1] This is an action by the Plaintiff against the 1st Defendant company and three individuals for payment in respect of certain goods sold and delivered and services provided by the Plaintiff to the 1st Defendant. Having filed the action the Plaintiff made two applications for summary judgment. The first application, in Enclosure 12, is for summary judgment against the 2nd, 3rd and 4th Defendants. The second application, in Enclosure 45, is for summary judgment against the 1st Defendant. 2 Background [2] Two applications for summary judgment were filed because a judgment in default was first obtained against the 1st Defendant. As such, Enclosure 12 was filed for summary judgment only as against the 2nd, 3rd and 4th Defendants. However, the judgment in default against the 1st Defendant was set aside upon its application whereupon Enclosure 45 was then filed for summary judgment in respect of the 1st Defendant. Both the applications for summary judgments were heard together. [3] The Plaintiff is a locally incorporated company carrying on business, inter alia, as a quarry operator, selling quarry products and the provision of related services. The Plaintiff’s claim against the Defendants is for a sum of RM2,278,096.31 as at the 31st of May 2018, being payment for goods sold and delivered and services supplied to the 1st Defendant. The 2nd, 3rd and 4th Defendants were sued as guarantors of the 1st Defendant. The 2nd, 3rd and 4th Defendants were directors of the 1st Defendant while the 2nd and 3rd Defendants were also shareholders of the 1st Defendant. [4] In respect of the amount claimed, the relationship between the Plaintiff and the 1st Defendant stemmed from a document described as an “APPLICATION FOR CREDIT ACCOUNT” made by the 1st Defendant dated 4th June 2008 and which application was approved by the Plaintiff. Also set out in this application, which was signed by the 4th Defendant on behalf of the 1st Defendant, are several terms and conditions agreed to by the parties and they included the rate of interest of one and one half percent chargeable for overdue debts thereunder. 3 [5] As regards the 2nd, 3rd and 4th Defendants, they signed a document entitled “GUARANTEE & INDEMNITY”, also dated 4th June 2008, in which they jointly and severally guaranteed, inter alia, payment on demand of all money and liabilities owing to the Plaintiff by the 1st Defendant. The 2nd and 3rd Defendant signed one “GUARANTEE & INDEMNITY” while the 4th Defendant signed another. The terms of these “GUARANTEE & INDEMNITY” are identical. [6] Particulars of the Plaintiff’s claim were set out in paragraph 12 of the Statement of Claim. The particulars provided were the invoice numbers, their dates and the outstanding amounts. It was also pleaded that in respect of the Plaintiff’s supply of the goods and services in question, the 1st Defendant had in fact made part payment of a sum of RM431,006.58. [7] The 2nd, 3rd and 4th Defendants delivered a joint defence. In it, they denied liability for the Plaintiff’s claim. They also denied knowledge of the guarantees pleaded by the Plaintiff. [8] The 1st Defendant in its Amended Defence and Amended Counterclaim, denied liability for the Plaintiff’s claim and maintained that the goods were not delivered and they were not received by the 1st Defendant. Although it does not deny making payment of the said sum of RM431,006.58 the 1st Defendant maintained that the payment was made in error and denied that it amounted to an admission. As a consequence, the 1st Defendant mounted a counterclaim for the return of the sum of RM431,006.58 paid to the 1st Plaintiff. 4 [9] In its Reply and Defence to the 1st Defendant’s Defence and Counterclaim, the Plaintiff set out particulars of the purchase orders placed by the 1st Defendant for the goods and services in question. The first of such purchase orders issued by the 1st Defendant was dated 11th May 2017 and there were a total of 35 purchase orders alleged to have been issued by the 1st Defendant from the 11th of May 2017 to the 12th of December 2017. The 1st Defendant’s counterclaim was denied. The evidence and contentions [10] In evidence, led by the Plaintiff, were copies of the “GUARANTEE & INDEMNITY” executed by the 2nd, 3rd and 4th Defendants which they claimed they had no knowledge of in their defence. [11] Also exhibited was the “APPLICATION FOR CREDIT ACCOUNT” executed by the 4th Defendant on behalf of the 1st Defendant and copies of the Plaintiff’s solicitors’ letters dated 7th March 2018 demanding payment of the sum claimed from the defendants. [12] Further and also in evidence was a letter dated 18th April 2018, under the 1st Defendant’s letterhead, addressed to the Plaintiff. This letter was signed by the 2nd Defendant. Learned counsel sought to exclude this letter on the basis that it was made without prejudice as a bona fide attempt at settlement. However, there was no indication or evidence whatsoever that might suggest that this letter was written or extended on a without prejudice basis. The contents of this letter is of relevance and it states as follows: 5 “Dear Sir, FINAL NOTICE FOR AN OVERDUE ACCOUNTS We refer to our conversation with your Mr. John, Mr. Leong and Ms Kalin with our Managing Director Dato’ Low Ban Hin and our Accounts Manager, Raymond Cheong. Your principal outstanding amounting of RM2,349,741.17 on last year July 2017 till March 2018, we regret to inform that we are unable to make the full outstanding payment due to your good company at this point of time. We wish to propose 2 proposal of settlement scheme for the outstanding payment to be made under proposal as follows :- First proposal of settlement scheme :- 1) 1st payment of RM155,976.27 to be pay by 23 April 2018 2) 21 payment of RM100,000.00 each to be pay by 15 May 2018 to 15 February 2020 3) Last payment of RM93,764.90 to be pay on 15 March 2020 Second proposal of settlement scheme :- 1) 1st payment of RM155,976.27 to be pay by 23 April 2018 2) Contra of Kelantan Plantation of 1000 ekars of RM3 Million as attachment files We humbly seek for your kind understanding and consideration, We are sincere to settle the outstanding payment and hope that this matter can be resolve amicably. Sorry for any convenience caused. Thank you. Yours faithfully, BAN HIN ELECTRICAL & CONSTRUCTION SDN BHD ………SGD………. Dato’ Low Ban Hin 6 [13] After this letter, 3 payments were made by the 1st Defendant to the Plaintiff. These payments were made on the 20th of April 2018, 18th of May 2018 and 7th of June 2018. These payments made were not denied. However, these payments by the 1st Defendant are part of the subject matter of the 1st Defendant’s counterclaim. It was the 1st Defendant’s contention that having investigated the Plaintiff’s claims it was found that the payments made by the 1st Defendant were in error because the goods and services were never supplied or received by the 1st Defendant. [14] Also exhibited by the Plaintiff in its affidavit in support of its applications were copies of the purchase orders issued by the 1st Defendant and the relevant invoices. In these invoices were particulars namely dates, “D/O No” (delivery order numbers), “Lorry No” (Lorry numbers), description, “EX/DEL” (ex-quarry or delivered), Quantity, unit price and amount. These were then supported by copies of the Delivery Orders purportedly signed off by the lorry drivers. Monthly statements of accounts were also sent to the 1st Defendant. [15] What the Defendants pointed out was that the delivery orders were not signed off, and thus no receipt acknowledged, by the 1st Defendant. The Defendants also maintained that the letter dated 18th April 2018, referred to above, although written under the letterhead of the 1st Defendant, was signed off by the 2nd Defendant on behalf of another company, Ban Hin Electrical & Construction Sdn Bhd. [16] In addition, it was also contended by the Defendants that there were manifest errors in the Plaintiff’s invoices and they did not add up to 7 as much as the sum claimed of RM2,278,096.31. However, upon learned counsel for the Plaintiff pointing out that amendments had been made to the invoices and they were as appearing in an updated table in Exhibit CLK 11 to the Plaintiff’s Affidavit in Reply (Enclosure 52), counsel for the Defendants conceded that taking that into account, the amount in dispute should be RM1,934,776.04 and not RM2,278,096.31. The Plaintiff’s applications [17] The Plaintiff’s applications were made under Order 14 of the Rules of Court 2012 and it is trite that what the Plaintiff has to demonstrate is that there are no triable issues raised by the Defendants. [18] It is true that if the Plaintiff cannot prove that the goods and services in question were delivered, they cannot succeed in their claim against the Defendants. In that sense, the Defendants’ defence that the goods and services were not delivered to or received by the 1st Defendant is a perfectly good defence and that is a question of fact that has to be determined by the Court (see Ascot International Pte Ltd v Elevic Trading Sdn Bhd [1996] 2 CLJ 645 and CFB Aluminium Extrusion Sdn Bhd v Lim Soon Seng [2014] 1 LNS 1311). [19] It is important to bear in mind the general principle that was enunciated by Mohamed Azmi SCJ in the decision of the Supreme Court in Bank Negara Malaysia v Mohd Ismail Ali Johor & Ors [1992] 1 MLJ 400 at p 408: “In our view, basic to the application of all those legal propositions, is the requirement under O 14 for the court to be satisfied on affidavit 8 evidence that the defence has not only raised an issue but also that the said issue is triable. The determination of whether an issue is or is not triable must necessarily depend on the facts or the law arising from each case as disclosed in the affidavit evidence before the court. On the treatment of conflict of evidence on affidavits, Lord Diplock speaking in the Privy Council on Eng Mee Yong & Ors v Letchumanan 5 had this to say at p 217: Although in the normal way it is not appropriate for a judge to attempt to resolve conflicts of evidence on affidavit, this does not mean that he is bound to accept uncritically, as raising a dispute of fact which calls for further investigation, every statement on an affidavit however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself it may be. Although Lord Diplock was dealing with an application for removal of caveat in that particular case, we are of the view that the above principle of law is relevant and applicable in all cases where a judge has to decide a case or matter on affidavit evidence.” [20] It is however, equally important to bear in mind the observation also made by Mohamed Azmi SCJ in that same case, where he stated at p 408: “Under an O 14 application, the duty of a judge does not end as soon as a fact is asserted by one party, and denied or disputed by the other in an affidavit. Where such assertion, denial or dispute is equivocal, or lacking in precision or is inconsistent with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable in itself, then the judge has a duty to reject such assertion or denial, thereby rendering the issue not triable.” [21] In a similar vein, in the earlier case of Banque de Paris et des Pays-Bas (Suisse) SA v de Naray [1984] 1 Lloyd's Rep 21 at p 23, Ackner LJ had said that: 9 “It is of course trite law that O. 14 proceedings are not decided by weighing the two affidavits. It is also trite that the mere assertion in an affidavit of a given situation which is to be the basis of a defence does not, ipso facto, provide leave to defend; the Court must look at the whole situation and ask itself whether the defendant has satisfied the Court that there is a fair or reasonable probability of the defendants having a real or bona fide defence.” The above-quoted dictum of Ackner LJ was cited with approval by Glidewell LJ in National Westminster Bank plc v Daniel and others [1994] 1 All ER 156 at p 160. [22] In the case at hand, the existence of the relationship between the Plaintiff and the 1st Defendant evidenced by the “APPLICATION FOR CREDIT ACCOUNT” was not disputed. So too, the existence of the guarantees executed by the 2nd, 3rd and 4th Defendants. That relationship existed for several months and the invoices indicated that the goods and services were supplied over a period of months and they were not insubstantial in quantity. The Defendants do not deny that there were goods and services to be supplied by the Plaintiff. However, what the Defendants maintained were that the goods and services were never provided; they were not received by the 1st Defendant. It is somewhat odd that if the 1st Defendant indeed did not receive the goods and services it required of the Plaintiff, why then was there no enquiry or protest by the 1st Defendant. There was also no record of any protest by the Defendants, or any of them, against the invoices and statements sent by the Plaintiff. 10 [23] Instead, there was the letter written by the 2nd Defendant dated 18th April 2018, referring to a meeting and a proposal to settle the Plaintiff’s alleged outstanding debts. There was no written retraction of this letter on the basis that it had been erroneously or wrongly sent. The 1st Defendant’s contention was that it was signed off by the 2nd Defendant under the name of a different company. However, it is not as if the contents of the letter was something discrete from the Plaintiff’s claim in this case or had nothing to do with it. In addition, 3 more payments were made by the 1st Defendant and these payments were made after the letter of 18th April 2018 by the 2nd Defendant. [24] To my mind the Defendants’ defences may be described as being shadowy. The 2nd, 3rd and 4th Defendants’ denial of any knowledge do not accord with the documentary evidence tendered. There is also no evidence of any conduct consistent with the defence that the goods and services in question were never supplied or received by the 1st Defendant. [25] This Court finds itself with a conclusion similar to that expressed by Edgar Joseph JR, J (as his Lordship then was) in Sungei Way Leasing Sdn Bhd v. Sena Land Development Sdn Bhd [1989] 2 CLJ (Rep) 526 where he stated at page 529: “At the end of the day, I was of the view that the defences raised were so shadowy that I was very nearly ready to give the plaintiff summary judgment under O. 14. In Ionian Bank Ltd. v. Couvreur [1969] 1 WLR 761, the Court of Appeal in England, being satisfied that the defence raised by the defendant was not a sham, nevertheless took the view that it had little or no substance and “the case was almost one in which summary judgment should be 11 ordered” (per Davis LJ at p. 788) and was described as so “shadowy” that the Judge was right in giving leave to defend only on condition that the full amount should be brought into Court (per Denning LJ at p. 787). See also Paclantic Financing Co. Inc. v. Moscow Narodny Bank Ltd. [1984] 1 WLR 931 and Vann Lynn Development Ltd. v. Pelias Construction Co. Ltd. [1969] 1 QB 607. Accordingly, I considered that whilst the defendant should be granted leave to defend, I should in the exercise of my discretion, impose conditions, to the order granting leave.” (see also the similar observations of the Indian Supreme Court in IDBI Trusteeship Services Ltd. v Hubtown Ltd. (2016) 8 MLJ 390 (SC)). [26] This Court too is of the view that in the circumstances of this case and, having regard to the defences raised and the evidence adduced, the Defendants should be granted leave to defend but with conditions imposed. In this case, this Court finds that there should be provided by the Defendants a sum as security for the claim. [27] However, conditions imposed in granting of leave to defend should not be oppressive or such that would render the Defendants an illusory opportunity to defend the action. As was stated Edgar Joseph JR J in Sungei Way Leasing Sdn Bhd: In deciding what conditions I should impose, I recognised that any conditions I imposed should be reasonable. Just as it was important to ensure that a defendant is not deprived of his right to defend if he has an argument worth listening to, so it is equally important not to deprive him of that same right by imposing conditions on the grant of leave with which he is quite unable to comply. (See Ward v. Plumbley [1890] 6 TLR 198). 12 [28] Going by the 4th Defendant’s letter of 18th April 2018, there seem to be assets in the form of a plantation. In addition, the offer of settlement made did not indicate why the 1st Defendant was unable to pay the sum claimed. There was no evidence of any financial hardship on the part of the 1st Defendant, or why it was unable to pay the entire sum claimed. There was also no evidence that the 2nd, 3rd and 4th Defendants were in any financial difficulties. It should also be borne in mind that that liability in this case is against all the defendants and not just the 1st Defendant. [29] Having regard to the foregoing and in respect of Enclosures 12 and 45, the Defendants were granted leave to defend conditional upon payment of a sum of RM1,934,776.04 by the close of business on 14th January 2019 to the Defendant’s solicitors, to be held as security towards satisfying any judgment that may be entered against the Defendants, pending the trial of the action failing which judgment as prayed for in the Statement of Claim be entered against the Defendants. That the security to be provided was to be held by the solicitors for the Defendants was agreed to by the parties. The parties were also given liberty to apply. Dated this 28th Day of January 2019 -SGD- (DARRYL GOON SIEW CHYE) Judicial Commissioner High Court of Malaya Kuala Lumpur (Civil NCvC 2) 13 COUNSEL FOR THE PLAINTIF: S Rampal (Messrs Norendra & Yap No. 1, Jalan Tempinis Satu Lucky Garden, Bangsar 59100 Kuala Lumpur. Tel.: 03-2282 5688 / Fax: 03-2284 5940 / E-mail: ny@norendra-yap.com COUNSEL FOR THE DEFENDANT: Jess Pang (Messrs Alex Chang & Co. C-3a-3A, Megan Avenue 1 189, Jalan Tun Razak 50400 Kuala Lumpur. Tel.: 03-2166 7889 /2166 7899 ) CASES CITED Ascot International Pte Ltd v Elevic Trading Sdn Bhd [1996] 2 CLJ 645 and CFB Aluminium Extrusion Sdn Bhd v Lim Soon Seng [2014] 1 LNS 1311). Bank Negara Malaysia v Mohd Ismail Ali Johor & Ors [1992] 1 MLJ 400; [1992] 1 CLJ (Rep) 14 Banque de Paris et des Pays-Bas (Suisse) SA v de Naray [1984] 1 Lloyd's Rep 21 National Westminster Bank plc v Daniel and others [1994] 1 All ER 156 Sungei Way Leasing Sdn Bhd v. Sena Land Development Sdn Bhd [1989] 2 CLJ (Rep) 526 Trusteeship Services Ltd. v Hubtown Ltd. (2016) 8 MLJ 390 (SC) Syarikat Pakar Kayu dan Perdagangan Sdn Bhd v Maa-sk Sdn Bhd [1986] CLJ (Rep) 694 14 ICM Trading Sdn Bhd v Perniagaan Azman Bersaudara [2006] 5 CLJ 209 Gold Coin (Malaysia) Berhad v First Dragon Sdn Bhd [1994] 1 LNS 52 KGN Jaya Sdn Bhd v Pan Reliance Sdn Bhd [1996] 2 CLJ 611 Soon Leong Fatt & Anor v Kumpulan Lee Hing Sdn Bhd [1999] 1 LNS 350 Thiviya Corporation (M) Sdn Bhd & Ors v Mega Alliance Builder Supplies Sdn Bhd [2012] MLJU 628 Lek Chaun (M) Sdn Bhd v Shapadu Properties Sdn Bhd [1995] 1 LNS 1 Small Medium Enterprise Development Bank Malaysia v Lim Woon Katt [2016] 9 CLJ 73 Sykt. Tan Thian Siong Sdn Bhd v Sykt. Siaw Teck Hwa Realty & Development Sdn Bhd [1983] CLJ (Rep) 878 Perangsang Dagang Sdn Bhd v Tanjung Teras Sdn Bhd & Ors [2008] 2 CLJ 199 S Marine Sales & Services v Lem Teh Sem @ Lim Teck Seng, High Court Suit No: MT1-22-101-2002 Caltex Oil Malaysia v Classic Best Sdn Bhd & 3 Ors, High Court Civil Appeal No: MT1-12-137-2004 Lionsquare (M) Sdn Bhd v Dayatera Roof Systems Sdn Bhd, High Court Suit No: D8-22-87-2007 (No.2)