Tenaga Nasional Berhad v Mayaria Sdn Bhd (W-02(IM)(NCVC)-1077-07/2015)

This is an appeal against the decision of the learned Judicial Commissioner (JC) of the High Court at Kuala Lumpur delivered on 29.5 2015, allowing the Plaintiffs’ claim with costs of RM15,000 and dismissing the Defendant’s counterclaim with no order as to costs.

For ease of reference, parties will be referred to as they were in proceedings before the High Court.

A summary of the background facts is derived primarily from the learned JC’s ‘Grounds of Judgment’.

Tenaga Nasional Berhad (‘TNB’), the Defendant in this action, is the sole provider of electricity in Peninsular Malaysia. TNB is a licensee under the Electricity Supply Act, 1990 (‘the Act’) with statutory powers to 3 take action for offences committed under the Act, in particular for the tampering of TNB’s meters and the theft or pilferage of electricity.

The 1st Plaintiff is a customer of TNB and the owner of a hotel known as Good Hope Hotel (‘the Hotel’) situated on the 1st Plaintiff’s premises at PTD 19887, No. 1, Jalan Ronggeng 5, Taman Skudai Baru, Skudai, Johor Baru. [6]

the questions are suitable for determination without a full trial of the action; and

such determination will finally determine the entire cause or matter or any claim or issue therein. 8 The Agreed Issues [20] The learned JC had framed the agreed issues for summary disposal of this suit under Order 14 A of the Rules of Court, 2012 as follows:

Whether upon an inspection conducted by TNB’s officials on 30 July 2009 and discovery by the said officials that an offence under section 37 of the Electricity Supply Act 1990 (‘the Act’) had been committed by reason of the unauthorised items being connected to the metering installation at the 1st Plaintiff’s premises known as Good Hope Hotel , and upon immediate removal of the unauthorised items by the said officials and thereby rectifying the metering installation, it is lawful for TNB to thereafter issue the Notice of Disconnection under section 38 (1) of the Act which states that the supply of electricity would be disconnected on 21 October 2009. 9

Whether upon an inspection conducted by TNB’s officials on 30 July 2009 and discovery by the said officials that an offence under section 37 of the Act had been committed by reason of the unauthorised items being connected to the metering installation at the 1st Plaintiff’s premises known as Good Hope Hotel, and upon immediate removal of the unauthorised items by the said official, it is lawful for TNB to invoke section 38 (3) of the Act and issue the Notice of Demand stating that unless the sum of RM 1, 100,350.98 ( as loss of revenue due to the offence under section 37 of the Act) is paid to TNB within 24 hours, the supply of electricity would be disconnected on 21 October 2009. Findings and Decision of the High Court [21] In respect of the first issue abovementioned, the learned JC held that on the replacement or rectification of a tampered meter, the 10 Defendant is not entitled to disconnect electricity supply. The learned JC had stated as follows: “…once the impugned meter has been replaced and the offence under section 37 of the Act is no longer extant, then there is no power to issue the Notice to Disconnect as the act of replacing the impugned meter with a new meter had brought the nefarious conduct or activity to an end and there is no longer a basis or justification for disconnection of electricity as a statutorily prescribed response to an offence under section 37 of the Act.” [22] In support of the above, the learned JC had also referred to his own decision in the case of Modernia Plastic Industries (M) Sdn Bhd v Tenaga Nasional Berhad [2015] 3 CLJ 825 which dealt with a similar issue of whether a notice to disconnect the supply of electricity under section 38 (1) of the Act can be issued when the offence of tampering or pilferage of electricity under section 37(1), (3) and (14) of the Act no longer exists. Reference was also made to the decision of this Court in Claybricks & Tiles Sdn Bhd v Tenaga Nasional Bhd [2006] 4 CLJ 892 CA and the Federal Court decision in WRP Asia Pacific Sdn Bhd v 11 Tenaga Nasional Bhd [2012] 4 CLJ 478 FC. In Modernia’s case the basis for the decision was stated thus: “In this regard it is clear from the judgment of the Court of Appeal in Claybricks and the judgment of the Federal Court in WRP Asia Pacific that the power under s. 38 (1) of the Act is necessary to ensure that TNB is able to immediately sever electricity supply to avoid further illegal usage by the perpetrator. Quite clearly on the facts of the present case, there is no longer any illegal usage by the consumer such as to warrant the invoking of the power to disconnect under s. 38(1) of the Act. In this regard it should be emphasised that and borne in mind that the power to disconnect the supply of electricity is a power of limited duration and not a power to deprive the consumer of electricity in perpetuity.” [23] In respect of the second issue abovementioned on the validity of the Notice of Demand issued under section 38(1) of the Act stating that unless the sum of RM 1, 00, 350.98 be paid to TNB within 24 hours, the supply of electricity would be disconnected on 21 October 2009, the learned JC was of the view that TNB’s notice to disconnect electricity supply on default of the outstanding amount due was unlawful as the said 12 amount was recoverable by a civil action in court. In support of the abovementioned position, the learned JC had referred to subsection (5) of section 38 of the Act which provides as follows: “(5) The amount stated in the written statement shall, within the period specified in the statement, be due and payable to the licensee and in default of payment such amount shall be recoverable by civil action in a court. It is clear that TNB’s recourse for recovery of loss of revenue is by way of civil action. As such, looking at these statutory provisions, I find nothing in them that allow TNB to utilize the power of disconnection under section 38(1) of the Act as a means to demand for payment of the amount which constitutes loss of revenue. If the loss of revenue is to be recovered, then that should be pursued by way of civil action in court in the ordinary way.” [24] The learned JC held that the Notice of Demand which threatened the Plaintiffs with the disconnection of electricity supply in the event of the non-payment, was bad in law and therefore invalid. Thus, the learned JC 13 allowed the Plaintiffs’ claim against the Defendant, TNB with costs. TNB has appealed against the learned JC’s decision. The Appellant’s Submissions [25] The Appellant’s grounds of appeal before us may be summarised as follows: The learned JC had erred in his interpretation of TNB’s statutory powers under section 38 (1) of the Act. The language of section 38(1) of the Act is plain and unambiguous and therefore legislative intention is clear and must be given effect to. Section 38 (1) provides as follows: “(1) Where any person employed by a licensee finds upon any premises evidence which in his opinion proves that an offence has been committed under section 37(1), 37 (3), or 37 (14), the licensee may, upon giving not less than twenty-four hours’ notice, in such form as may be prescribed, cause the supply of electricity to be disconnected from the said premises”. 14 [26] The prior requisites for a disconnection under section 38 (1) of the Act is a subjective finding of tampering by TNB’s employee and an issuance of a 24 hours’ notice. There are no other statutory requirements stipulated in the section. Thus, the learned JC had erred in arriving at the finding that a purposive interpretation of section 38 (1) is required and supported by the cases of Claybricks & Tiles Sdn Bhd v Tenaga Nasional Bhd [2006] 4 CLJ 892 CA and the Federal Court decision in WRP Asia Pacific Sdn Bhd v Tenaga Nasional Bhd [2012] 4 CLJ 478 FC. Both the cases abovementioned had adopted the literal approach to the interpretation of section 38 (1) of the Act. [27] In addition, the learned JC had erred in his finding that the Notice of Demand to pay the sum owing together with the Notice of Disconnection in the event of non-payment was bad in law. It is clear that according to section 38(3) of the Act, TNB is entitled to require the consumer to pay for the loss of revenue and any expenses incurred by TNB as a result of the meter tampering. 15 Section 38 (3) provides as follows: “(3) The licensee may require the consumer to pay him for the loss of revenue due to the offence committed under section 37(1), 37 (3) and 37 (14) and any expenses incurred by the licensee under this section including expenses incurred in respect of the reconnection of electricity supply.” [28] Thus, the Act does not limit the right of TNB to claim the amount owing only through civil proceedings in court. Alternatively, the Act empowers TNB to claim for loss of revenue by way of a civil action in court pursuant to section 38(5) of the Act which provides as follows: “(5) The amount stated in the written statement shall, within the period specified in the statement, be due and payable to the licensee and in default of payment such amount shall be recoverable by civil action in a court.” 16 OUR DECISION [29] After a careful consideration of learned counsels’ written and oral submissions, the Records of Appeal as well as relevant authorities, we are of the unanimous opinion that the learned JC had not erred in his findings and decision. We therefore dismissed the appeal with costs and affirmed the decision of the learned JC. The grounds of our decision are stated below. [30] The primary issue for our consideration is the interpretation of the powers of TNB pursuant to the Electricity Supply Act 1990, (“the Act’) in particular in respect of TNB’s powers to disconnect the supply of electricity and to claim payment of outstanding charges due as a consequence of under billing as a result of tampering of the meter which records consumption of electricity. Disconnection of Electricity Supply [31] In respect of TNB’s power to disconnect the supply of electricity, Section 38(1) of the Act provides as follows: 17 Where any person employed by a licensee finds upon any premises evidence which in his opinion proves that an offence has been committed under section 37(1), 37(3), or 37(14), the licensee or any person duly authorized by the licensee may, upon giving not less than twenty-four-hours’ notice, in such form as may be prescribed, cause the supply of electricity to be disconnected from the said premises. [32] Although section 38(1) empowers TNB to disconnect electricity supply, it must be emphasised that in section 38(2) of the Act, the disconnection of electricity by TNB shall not exceed three months. A reading of both sections 38(1) and 38 (3) demonstrate that the power given to TNB by section 38(1) is to limit any loss suffered by TNB by an underbilling of electricity consumption. In the present case, there was no issue of further losses as TNB had already replaced the alleged tampered meter three months prior to the issuance of the Statutory Notice of Disconnection and the Notice of Demand. [33] The question posed before us is whether a literal or purposive approach should be taken in interpreting the abovementioned provision. It was contended by the Defendant that the plain and unambiguous meaning 18 should prevail. The section provides power to TNB to disconnect the supply of electricity on fulfilment of only two prerequisites: one, a subjective finding by a TNB representative that an offence has been committed (e.g. meter tampering) and two, issuing a notice to that effect ,such notice to be effective not less than 24 hours. [34] We are of the view that the learned JC had correctly construed section 38(1) and 38(3) of the Act by adopting the purposive approach whereby the purpose and intent of the Act shall be considered in construing the meaning of the provisions of the Act. In the instant case, there has been no offence committed after three (3) months of replacement of the tampered meter. Thus, the Defendant has no authority to disconnect electricity supply or to terminate electricity supply in the event payment of RM1,000,350.98 is not made within 24 hours of the issuance of Notice. Sections 38(1) and 38(3) of the Act does not authorise TNB to do so. [35] The use of the purposive approach in the interpretation of Acts is accepted by virtue of section 17A of the Interpretation Act. This approach is further supported by the Federal Court and Court of Appeal in the following cases. 19 [36] In the case of Tenaga Nasional Bhd v Ong See Teong & Anor [2010]2 MLJ 155, Augustine Paul FCJ in interpreting the meaning of the phrase, ‘upgrading’ in section 13 of the Electricity Supply Act, 1990(‘the Act’) had emphasised that what must prevail is a construction that will promote the purpose of the Act. [37] In the case of WRP Asia Pacific Sdn Bhd v Tenaga Nasional Berhad [2012] 4 CLJ 478, where the facts disclose an occasion of meter tampering, the Federal Court agreed with the Court of Appeal that section 38(1) of the Act was enacted to give effective powers to TNB to instantly prevent any offence that may be committed. It provides specifically for the preservation of TNB’s interests and empowers TNB to act expeditiously to prevent theft of electricity. [38] We agree with the learned JC’s view that in construing the abovementioned section, one must go beyond the plain and literal meaning therein and consider the purpose of the abovementioned section in order that the purpose for which the section was enacted is achieved. On this score, the contention is that the power given to TNB to disconnect 20 the supply of electricity in circumstances where an offence has been committed is to prevent further losses to TNB. Thus, the short notice of 24 hours’ notice underscores the urgency for TNB to take the drastic action of disconnecting electricity supply. [39] Section 38(2) stipulates that even in circumstances where TNB is empowered to disconnect the supply of electricity, the period of disconnection is expressly limited to a period not in excess of three months. [40] In the event that TNB has already halted any further potential losses by rectification of the defective meter or installation of a new meter, the purpose i.e. to prevent further losses to TNB has already been achieved. What then does TNB seek to achieve by taking action to disconnect electricity supply? The answer that comes to mind is to punish the errant consumer and perhaps as a deterrent to the consumer as well as other likeminded consumers who may be tempted to commit such offences. 21 [41] It seems to us that for TNB to take the abovementioned approach is entirely inconsistent with the objective of the Act which provides as follows: