Tenaga Nasional Berhad v Lension (M) Sdn Bhd (22NCVC-110-07/2015)

This case concerns the plaintiff‟s (TNB) claim against the defendant for loss of revenue pursuant to s. 38(3) of the Electricity Supply Act 1990 (hereinafter referred to as „the Act‟) due to the tampering of the plaintiff‟s electricity meter which was installed at the defendant‟s premises.

The parties went through a full trial. On 7.12.2017, this Court allowed the plaintiff‟s claim. The reasons for the decision are set down as below.

On 8.10.2013, an officer from TNB, Mohd Shahril (PW1), went to the defendant‟s premises to carry out an inspection. PW1 noticed that there was a discrepancy in the meter readings recorded by the meter installed at the defendant‟s premises. In order to ascertain the cause of the discrepancy, a complete shutdown of the electricity supply was required. The defendant‟s representative agreed with TNB that a follow-up inspection would be carried out on 9.11.2013. TNB carried out its second inspection in the presence of the defendant‟s representative(s) on 9.11.2013. It was discovered that the original Current Transformer 50/5A installed by TNB was not used, instead a Current Transformer 75/5A (not supplied by TNB) was installed to all three phases of the supply of electricity to the defendant‟s premises. TNB did not install the Current Transformer 75/5A. The Current Transformer 75/5A (three units – exhibits P1A, P1B and P1C) was confiscated by TNB‟s officers. The plaintiff alleged that the unauthorised installation of the Current Page 3 of 18 Transformer 75/5A had caused the monthly electricity billing for the consumption of electricity by the defendant to be inaccurate. As a result of that, the plaintiff had suffered loss of revenue of RM1,395,607.38 for the period between 1.12.2008 and 9.11.2013 (5 years) calculated based on averaging method (kaedah purata).

The agreed issues to be tried were as follows: i. Whether the plaintiff‟s meters installed at the defendant‟s premises have been tampered with? ii. If question 1 above is answered in the affirmative, whether the plaintiff have suffered loss of revenue in the amount of RM1,395,607.38 due to the meter tampering discovered at the defendant‟s premises? iii. Whether the defendant is liable to the plaintiff for the loss of revenue if the meter tampering is proven pursuant to ss. 38(3) to

of the Electricity Supply Act 1990? First Issue [5] In gist, the defendant‟s pleaded case was that the defendant had installed the Current Transformer 75/5A without first obtaining the approval from the plaintiff due to the urgency of high consumption of electricity in the defendant‟s company. In paragraphs 8 (vi) and (ix) of the defendant‟s Re-Amended Statement of Defence, the defendant stated as follows: Page 4 of 18 “(vi) Due to the Defendant‟s production schedule which it did not want it to be disrupted for purpose of meeting its customer‟s demand, the Defendant went ahead to instruct its contractor to install and upgrade the existing CT from 50/5A to 75/5A capacity without first obtaining approval from the Plaintiff.” “(ix) The Defendant is willing to compensate the Plaintiff for its actual loss of revenue from the date of installation of the CT until it was discovered and rectified by the Plaintiff and the Defendant regrets in not obtaining the Plaintiff‟s prior approval before the 75/5A CT was installed.” [6] The defendant admitted the Current Transformer 75/5A was installed without the permission and/or approval of the plaintiff. The defendant was bound by its pleaded facts. The defendant‟s admission in its pleadings would be sufficient to establish the fact that the plaintiff‟s electricity meter had been tampered with by the defendant within the meanings as envisaged in ss. 37(1), (3) and/or (14) of the Act which state as follows: 37 Offences

Any person who tampers with or adjusts any installation or part thereof or manufacturers or imports or sells any equipment so as to cause or to be likely to cause danger to human life or limb or injury to any equipment or other property shall be guilty of an Page 5 of 18 offence and for each offence shall, on conviction, be liable to a fine not exceeding one hundred thousand ringgit or to imprisonment for a term not exceeding five years or to both. ….

Any person who in any manner dishonestly –

abstracts electricity;

consumes electricity;

uses electricity;

alters the index of any meter or other instrument used on or in connection with any installation of any supply authority or any licensed installation for recording the output or consumption of electricity; or

prevents any such meter or instrument from duly recording the output or consumption of electricity, shall be guilty of an offence and shall, on conviction, be liable to a fine not exceeding one hundred thousand ringgit or to imprisonment for a term not exceeding three years or to both. ….

Any person who damages any meter or other instrument used on or in connection with any licensed installation for recording the output or consumption of Page 6 of 18 electricity shall be guilty of an offence and shall, on conviction, be liable to a fine not exceeding five thousand ringgit or to imprisonment for a term not exceeding two years or to both.” [Note: the applicable law in this case is the law prior to the amendment of the Act pursuant to Electricity Supply (Amendment) Act 2015 - Act A1501 which came into force on 1.1.2016] [7] Based on the defendant‟s admission and the provisions of the law, the first issue is therefore answered in the affirmative. Second Issue & Third Issue [8] The defendant contended that the plaintiff did not prove on a balance of probabilities that the plaintiff had in fact suffered actual loss of revenue totalling RM1,395,607.38. [9] The defendant raised one point of contention, namely, there was no justification for the plaintiff to premise its claim based on the five years period between 1.12.2008 and 9.11.2013 for its loss of revenue. [10] The defendant submitted that the plaintiff did not prove there was any tampering prior to the discovery, because the tampering of the electricity meter was discovered on 8.10.2013, and the rectification was carried out on 9.11.2013. There was no basis for the plaintiff‟s claim for loss of revenue beginning from 1.12.2008. The defendant‟s counsel submitted that the plaintiff‟s back-billing claimed from 1.12.2008 was based on the guidelines laid down by the Energy Commission Page 7 of 18 (Suruhanjaya Tenaga), but it was not pleaded in the plaintiff‟s statement of claim. [11] The defendant‟s counsel further submitted that the relationship between the plaintiff and the defendant was based on the terms and conditions of the contract to supply electricity, and therefore, the plaintiff‟s claim could not be based on the guidelines set by the Energy Commission. There is nothing in the Act that allow the plaintiff to rely on the guidelines. The tampering could have occurred way before 1.12.2008, therefore, the amount of losses suffered by the plaintiff could have been more. As such, the actual loss of the plaintiff could not be determined by the guidelines set down by the Energy Commission. The Energy Commission was not privy to the electricity supply contract entered into between the plaintiff and the defendant. Hence, the plaintiff‟s loss of revenue could not be determined by the guidelines set by the Energy Commission. [12] The defendant‟s counsel further submitted that the plaintiff‟s claim was based on s. 38(3) of the Act which states as follows: “(3) The licensee may require the consumer to pay him for the loss of revenue due to the offence committed under subsection 37(1), (3) and (14) and any expenses incurred by the licensee under this section including expenses incurred in respect of the reconnection of electricity supply.” [13] With regard to the defendant‟s counsel‟s submission that the defendant was not bound by the guidelines set by the Energy Page 8 of 18 Commission, the counsel cited the following cases: Overseas Investment Corporation Sdn Bhd v Sri Segambut Supermarket Sdn Bhd [1986] 2 MLJ 382; Thong Foo Ching & Ors v Shigenori Ono [1998] 4 CLJ 674. This Court appreciates the principles in the cases cited by the defendant‟s counsel, but the facts in the present case could be distinguished from the facts in those cited cases. [14] In Overseas Investment Corporation Sdn Bhd, at p. 385, it was held as follows: “Lastly, the plaintiffs plead that since the contract does not contain any provision relating to the obtaining of the approval of the Foreign Investment Committee (FIC), the contract is void and unenforceable. Reference to the FIC approval must mean the „Guidelines for the Regulation of Acquisition of Assets, Mergers and Takeovers,” issued by the Government in 1974 and whether such Guidelines apply to this contract must depend on whether the parties have agreed to such Guidelines being made a term of the contract. There is no evidence to that effect and in any case the Guidelines have been held to have no force of law whatsoever but are of advisory character only and non-compliance whatsoever will have no effect as to the legality or otherwise of the contract. See the cases of Ho Kok Cheong Sdn Bhd & Anor v Lim Kay Tiong & Ors and David Hey v New Kok Ann Realty Sdn Bhd.” Page 9 of 18 [15] In Thong Foo Ching & Ors, at the headnotes of the judgment, it was held as follows: “The Guidelines [referring to “Guidelines for the Regulation of Acquisition of Assets, Mergers and Take-overs”] have no force of law and impose only a moral obligation on those affected to comply with their provisions. Consequently, non-compliance or avoidance of the Guidelines cannot render any agreement invalid or unenforceable. The learned trial judge was correct when she held that avoidance of the Guidelines in the manner that was done here cannot be held against the respondent as to render the two agreements invalid.” [16] In both cases, a party in the proceedings attempted to rely on the Guidelines for the Regulation of Acquisition of Assets, Mergers and Take-Overs as binding on the parties and asserted that the said Guidelines formed part of the terms in the agreement between the parties. The party relying on the said Guidelines asserted that the agreement entered into between the parties was invalid because of non-compliance of the Guidelines. [17] In the instant case, the plaintiff did not rely on the guidelines set down by the Energy Commission as binding between the parties. The plaintiff merely followed the advice found in the guidelines to formulate its claim. The guidelines provide that the plaintiff could back-bill up to a maximum of five years from the date of rectification of the tampered electricity meter. Page 10 of 18 [18] There was no evidence to suggest that the plaintiff was bound to follow the guidelines set by Energy Commission. The plaintiff could have elected to claim back-billing of more than five years. However, the plaintiff took heed of the advice found in the Energy Commission‟s guidelines to claim the maximum back-billing for five years. [19] Following the advice in the guidelines set by a regulatory body is different from saying the guidelines are binding. In this instant case, the plaintiff followed the guidelines with good faith and accepted it as good practice in exercising its right to formulate the back-billing claims. The plaintiff followed the guidelines not because they were binding on the plaintiff or because they have force of law, but merely as good practice. [20] Although it is open for the plaintiff to follow the advice found in the guidelines set by the Energy Commission to back-claim for its loss of revenue up to five years, the plaintiff must adduce evidence to show the plaintiff is entitled to claim back-billing for five years or more. The plaintiff must not follow the guidelines blindly, otherwise, the plaintiff‟s back-billing of five years would be without basis. [21] In this present case, the plaintiff adduced a bar-graph (see p.67 of the Ikatan Dokumen Plaintif – Bhg B) which depicts the pattern of the consumption of electricity by the plaintiff between the period 1.10.2008 and 1.03.2014. The five years back-billing was from the period between 1.12.2008 and 9.11.2013 (the day of the rectification). The bar-graph reveals that there was a sudden drop in the month of 1.12.2008. In the months prior to 1.12.2008, particularly in the months of October 2008 and September 2008, the actual consumption of the electricity was much higher than in the month of December 2008. The sudden drop in the Page 11 of 18 month of December 2008 indicates that the tampering of the meter had likely occurred in the month of November 2008. Therefore, the period from the month of December 2008 right up to the date of rectification, i.e. on 9.11.2013, was 5 years. Hence, there was evidence to suggest that the tampering had likely occurred for five years. Based on the said evidence, the plaintiff‟s back-billing did not follow blindly the guideline set by Energy Commission, but was backed by supporting evidence that the meter tampering had continued for five years. This Court is satisfied that there was evidence to justify the back-billing of five years effective from 1.12.2008. [22] With regard to the amount claimed, the plaintiff adopted the averaging method to formulate its claim. In Tenaga Nasional Bhd v Bright Rims Manufacturing Sdn Bhd [2015] 1 CLJ 521, at p. 526, the Court of Appeal held: “…A claim for backbilled sums due to meter tampering is necessarily based upon an estimate. That estimate is accepted unless it is demonstrated that there is manifest error. It is a question of whether there is or there is not a manifest error….” [23] In Tenaga Nasional Berhad v AWP Enterprise (M) Sdn Bhd [2015] 1 CLJ 400, at pp. 407 and 410, the Court of Appeal held: “[17] For electricity supplier, it is impossible to turn back the clock and re-meter the consumption. The determination is necessarily by an estimate. Page 12 of 18 …. [24] The germane consideration, in our view, is that the document demonstrates how an estimate is arrived at in calculating back charges to be imposed. An estimate, compared to actual evidence will appear as sketchy, hazy and confusing. Statistical mathematics and analysis is not a subject within the expertise of lawyers and judges. If the estimate results in imposing an additional charge of 27% to what had been billed and paid, it is not so necessarily beyond the bounds of reasonability that it must be rejected. In our view, if it is established that a meter had been tampered with and its readings does not reflect the actual consumption of electricity, and the additional charge or back charge imposed upon the consumer is not demonstrated to be manifestly unreasonable, excessive or wrong, the amount due is proved upon a balance of probabilities. [25] In the final analysis:

A consumer must pay for the electricity he consumes.

He should not be allowed to benefit from tampering of meters to pay less, as it results in the general public paying more for their electricity.

Since the clock cannot be turned back to re-measure the consumption, only estimates can be made, and if such estimate is not shown to be manifestly unreasonable, excessive or wrong, it may be accepted as proof upon a balance of probabilities of the amount estimated and claimed.” [24] The plaintiff through the testimony of Mohd Al Hafiz Bin Isahar (PW3) adduced a document (see pp. 68-69 of Ikatan Dokumen Plaintif – Bhg B) that contained tables showing the amounts of the monthly billings before and after they have been adjusted based on the averaging method of calculation for the period between 1.12.2008 and 9.11.2013. The total differential amount for that five years amounted to RM1,395,107.38 (excluding RM500.00 for the operation costs). [25] If not for the tampering of the meter, the plaintiff could have billed the defendant an extra estimated total sum of RM1,395,107.38 within that five years period. In other words, the plaintiff has suffered loss of revenue amounting to RM1,395,107.38 which accumulated in that five years period. [26] As observed in the above two Court of Appeal decisions, the plaintiff could not prove actual loss because it could not rewind the time or re-adjust the meter to measure the consumption of electricity in the past. The plaintiff could only produce an estimated loss based on an accepted methodology of calculation. The plaintiff‟s estimated loss of revenue must be backed by cogent evidence. Page 14 of 18 [27] The plaintiff‟s estimated loss of revenue was based on the calculation relying on the extracted information from the bar-graph (see p. 67 of the Ikatan Dokumen Plaintiff – Bhg B, as mentioned earlier) pertaining to the pattern of the consumption of the electricity in the past by the defendant. [28] From the bar-graph, the actual reading of the meter after rectification reveals an increase in the monthly usage of the electricity compared with the previous months before rectification. The bar-graph shows that before rectification, the average usage (based on 60 months) was within the range of 300.00 unit KWMD at the lowest and 450.00 unit KWMD at the highest. [29] After rectification, just within 4 months, there was a drastic increase between 500.00 + unit KWMD at the lowest and 600.00 ++ unit KWMD at the highest. The bar-graph clearly reveals there is a difference in the reading of the consumption of electricity before and after the rectification of the electricity meter. The bar-graph was approved by two engineers from the plaintiff, one an assistant engineer and the other one the chief engineer. The chief engineer, Anuar Bin Hanafiah (PW4), was called to give evidence for the plaintiff. He explained how his staff (PW3) derived the amount for the estimated loss of revenue, and he had approved the content in the bar-graph in toto. PW3‟s evidence was corroborated by PW4‟s explanation. Their evidence was not discredited. [30] Based on the testimonies of PW3 and PW4 and their explanation of the documentary evidence, this Court is satisfied that the plaintiff has demonstrated to this Court that the estimated amount for the loss of Page 15 of 18 revenue was not manifestly unreasonable, excessive or wrong. The amount claimed was in fact justified and supported by documents. [31] Based on the above findings, this Court is of the considered view that the plaintiff had proven its claim. The plaintiff‟s claim for five years back-billing was backed by evidence, and the methodology employed to calculate the losses was justifiable, fair and not arbitrary. Hence, this Court is satisfied on a balance of probabilities that the amount claimed by the plaintiff has been proven. Other Consideration [32] On the issue of employing the averaging method, in Pelantar Cergas Sdn Bhd v Tenaga Nasiona Berhad (Rayuan Sivil No. W- 02(NCC)(W)-1552-07/2012), the Court of Appeal took note of the “PANDUAN PERKHIDMATAN PENGGUNA DAN PEMASARAN BIL C1/2006 Panduan dan Prosedur Pengekangan Kecurian Tenaga Elektrik [“Panduan C1/2006], particularly paragraph 6.1.0 (a)(ii), wherein it states: “ii Mengunakan purata penggunan Pengiraan berdasarkan purata penggunaan boleh dibuat sekiranya terdapat “sudden drop” pada trend penggunaan bulaan. Pengiraan pembilan ke belakang secara purata boleh dibuat apabila ralat tidak doperolehi atau ianya tidak sesuai digunakan.” Page 16 of 18 [33] If one was to examine the bar-graph (p.67 of the Ikatan Dokumen Plaintif – Bhg B), one would notice that there was sudden drops in the consumption of electricity between 1.11.2008 and 1.12.2008. On 1.10.2008, the reading was slightly higher than 600 unit KWMD. On 1.11.2008, the reading was 530.00+- unit KWMD. On 1.12.2008, the reading was approximately 390.00 unit KWMD. There was a drop of 140+- unit KWMD between 1.11.2008 and 1.12.2008. The drop was even more obvious when the reading on 1.12.2008 is compared to the reading on 1.10.2008, i.e. a drop of 210 +- unit KWMD. [34] After 1.12.2008, the reading was consistently much lower than the two previous months (1.10.2008 and 1.11.2008) until the meter was rectified on 9.11.2013. After the rectification, the recording went back to normal like before the sudden drop on 1.11.2008. Hence, based on the “Panduan C1/2006”, the plaintiff was correct to employ the averaging method in it back-billing calculation in this given set of facts. The defendant did not adduce any evidence or offer any explanation as to why there was a sudden drop in the consumption of electricity within the period between 1.10.2008 and 1.12.2008. [35] It was brought to the attention of this Court by the plaintiff‟s counsel that the case Pelantar Cergas Sdn Bhd went on appeal to the apex court via suit No. Permohonan Sivil No. 08-62-02/2013 (W) for determination of one question of law, the question was as follows: “For the purpose of Section 38(4)(a) of the Electricity Supply Act 1990, whether the Applicant [TNB] is entitled to employ any one of the methods of calculation (for loss of revenue or the expenses Page 17 of 18 incurred by the Applicant) as provided for in the Applicant‟s relevant guidelines, to wit, Panduan C1/2006?” [36] On 27.8.2015, the apex court unanimously allowed the applicant‟s (TNB) appeal, and the decision of the Court of Appeal was set-aside, and the High Court decision was restored. In other words, the apex court decided that TNB is entitled to employ any one of the methods of calculation as provided in the Panduan C1/2006 as it thinks fit. Hence, the defendant‟s counsel‟s submissions with regard to the method employed by the plaintiff in its calculation for the loss of revenue was untenable. [37] The plaintiff had issued a written statement dated 3.7.2014 to the defendant (see pp. 70-73 of the Ikatan Dokumen Plaintif – Bhg B) claiming for the amount of RM1,395,607.38 (including RM500.00 for the operation costs) pursuant to s.38(4) of the Act, which in law shall be prima facie evidence of payment that has to be made by the defendant. The defendant did not raise any evidence sufficient to rebut the amount claimed was wrong in its calculation or that it was unreasonable and/or excessive or that it was speculative or arbitrary. The argument advanced by the defendant‟s counsel pertaining to the plaintiff‟s reliance on the Energy Commission‟s guidelines was untenable as explained above, and the argument that the plaintiff did not prove its actual loss was also untenable as explicated above as well. [38] Based on all the evidence before the court, this Court is satisfied that the plaintiff has proven its claim on a balance of probabilities that (i) the electricity meter was tampered (by the defendant); (ii) that the meter Page 18 of 18 tampering had caused the plaintiff to suffer loss of revenue amounting to RM1,395,607.38; and (iii) that the defendant is liable for the plaintiff‟s loss of revenue pursuant s.38(3) to (5) of the Act. Hence, the answers to the second and third issues are in the affirmative. Conclusion [39] Based on the above reasoning, this Court allowed the plaintiff‟s claim and ordered the defendant to pay the plaintiff (i) the sum of RM1,395,607.38; (ii) interest on the sum of RM1,395,607.38 at the rate of 5% per annum from the date of judgment (7.12.2017) until date of full payment and (iii) costs of RM30,000.00. -Signed- ………………………………………… CHOO KAH SING Judicial Commissioner High Court Johor Bahru Counsel for the plaintiff : Hadi Mukhlis Tetuan Shook Lin & Bok Counsel for the defendant : Abd Rahim Ali Tetuan Rahim, Aidil & Partners