Young Bees Sdn Bhd v Kongsimakan Berhad (No. Sykt : 1146300-H) dan 4 Lagi (WA-22NCvC-640-11/2017 (Lamp. 11))

KONGSIMAKAN BERHAD (COMPANY NO.: 1146300-H) 2

2.

NIK AHMAD AZLAN BIN NIK MUD

MOHD NAZRI BIN ABD HAMID

MOHD FAUZI BIN MANSOR (NRIC NO.: 680813-02-5961) …DEFENDANTS GROUNDS OF JUDGMENT INTRODUCTION (ENCLOSURE 11 – STAY PROCEEDING) [1] This is an application by the THIRD DEFENDANT for a stay of proceedings pending reference to Arbitration pursuant to Order 69 Rule 10(3) of the Rules of Court 2012 (“ROC 2012”) and Section 10 of the Arbitration Act 2005. [2] The Third Defendant’s application premised on the following grounds: a) The Plaintiff signed an agreement with the First Defendant known as Service Level Agreement on 22.3.2016 (“the Agreement”) and pursuant to Clause 12(a) of the Agreement 3 the parties have agreed to refer all the disputes relating to the Agreement to the Arbitration. b) This Suit should be referred to Arbitration as per the Agreement before bringing it to the Court. BRIEF FACTS OF THE CASE The Plaintiff’s claim [3] The Plaintiff’s claim against the Defendants are: “a) Bahawa Defendan-Defendan sama ada secara bersama dan/atau berasingan hendaklah menjelaskan wang sebanyak RM800,000.00 yang merupakan bayaran tertunggak untuk produk-produk yang dipasarkan ke pusat-pusat jualan atas permintaan dan/atau pesanan belian oleh Defendan-Defendan kepada Plaintif; dan/atau b) Bahawa Defendan-Defendan sama ada secara bersama dan/atau secara berasingan hendaklah memulangkan wang keahlian sebanyak RM30,000.00 yang telah dikutip oleh Defendan-Defendan daripada Plaintif dengan membuat representasi-representasi tipuan dan/atau palsu; dan 4 c) Satu perintah membenarkan Plaintif membuat “Akaun dan Inkuiri” mengenai akaun-akaun Defendan Pertama, Kedua, ketiga, Keempat dan Kelima untuk mengenal pasti bayaran-bayaran Defendan Pertama yang dialihkan secara salah ke akaun syarikat yang lain dan/atau ke akaun peribadi pengarah-pengarah dan/atau pemegang saham; dan/atau d) Bahawa Defendan-defendan hendaklah membayar gantirugi am dan/atau teladan kepada Plaintif atas tindakan dan/atau perbuatan membuat penipuan dalam membuat representasi-representasi tipuan dan/atau palsuan dalam mendorong dan/atau mempengaruhi Plaintif membuat pelaburan dalam skim tersebut di mana sebarang gantirugi tersebut ditaksirkan oleh Mahkamah Yang Mulia ini; dan/atau e) Kos tindakan ini; f) Lain-lain relif atau perintah selanjutnya yang difikirkan adil, suai manfaat dan patut diberikan oleh Mahkamah Yang Mulia ini.” Brief Facts [4] The Plaintiff and the First Defendant is a Private Limited Company whereas the Second Defendant, the alter ego of the First Defendant, 5 the Third and Fifth Defendant is one of the Directors and Shareholder of the First Defendant and the Fourth Defendant is one of the shareholders of the First Defendant. [5] The Plaintiff signed an agreement with the First Defendant known as the Service Legal Agreement dated 22.3.2016 (“the Agreement”) (refer Exhibit “NAA-1”, Affidavit in Support, Encl. 12) and pursuant to “LAMPIRAN A” of the said Agreement, the Plaintiff paid membership fee of RM30,000.00 to the First Defendant. [6] After the signing of the Agreement, the Plaintiff alleged that the First Defendant issued Purchase Orders to the Plaintiff and give instruction to supply and deliver its products to several Sales Centres identified by the First Defendant, to which the Plaintiff did. [7] It is the Plaintiff’s averment, that the First Defendant have settled all the invoices for the products supplied and delivered by the Plaintiff based on the Purchase Orders issued by the First Defendant, but the First Defendant only make prompt payment for all the invoices for first three months of the said Agreement. The First Defendant, according to the Plaintiff have failed and/or neglected to make payments for the 6 Purchase Orders issued for June, July and August 2016. Hence, the Plaintiff filed this Suit against all the Defendants here. DECISION OF THE COURT [8] Having perused all the cause papers referred to in the Third Defendant’s application for stay of proceedings, and after considering the submissions of the parties, the Court allows the application with costs of RM2,000.00 to be paid by the Plaintiff to the Third Defendant for the reasons set down below. [9] Clause 12 of the Agreement reads : “12. TIMBANGTARA a. Semua pertikaian haruslah dirujuk Semua pertikaian atau perselisihan yang timbul antara pihak-pihak di dalam perjanjian ini sama ada ketika perjanjian masih berkuatkuasa atau selepas tempoh perjanjian yang berkaitan dengan Perjanjian ini atau pembinaan atau kesannya atau tentang hak, kewajipan dan liabiliti pihak-pihak kepada perjanjian ini atau sebaliknya atau tentang apa-apa perkara lain dalam apa-apa cara yang berkaitan dengan atau yang timbul 7 daripada atau berhubung dengan hal perkara dalam Perjanjian ini, hendaklah akhirnya diselesaikan melalui timbang tara. b. Lokasi untuk timbang tara Lokasi untuk timbang tara akan berlangsung di Kuala Lumpur, Malaysia di mana akan dikendalikan mengikut Peraturan untuk Timbangtara di Pusat Timbang Tara Serantau Kuala Lumpur.” [10] Section 9 of the Arbitration Act 2005 defined arbitration agreement as follows: “Definition and form of arbitration agreement 9.

In this Act, "arbitration agreement" means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.

An arbitration agreement may be in the form of an arbitration clause in an agreement or in the form of a separate agreement. 8

An arbitration agreement shall be in writing.

An arbitration agreement is in writing where it is contained in –

a document signed by the parties;

an exchange of letters, telex, facsimile or other means of communication which provide a record of the agreement; or

an exchange of statement of claim and defence in which the existence of an agreement is alleged by one party and not denied by the other.

A reference in an agreement to a document containing an arbitration clause shall constitute an arbitration agreement, provided that the agreement is in writing and the reference is such as to make that clause part of the agreement.” [11] Section 10(1) of the Arbitration Act 2005 “Arbitration agreement and substantive claim before court 9

10.

A court before which proceedings are brought in respect of a matter which is the subject of an arbitration agreement shall, where a party makes an application before taking any other steps in the proceedings, stay those proceedings and refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed;

The Court, in granting a stay of proceedings pursuant to subsection (1), may impose any conditions as it deems fit.” [12] The principle of law governing application under Section 10(1) of the Arbitration Act 2005 can be found in the case of Press Metal Sarawak Sdn Bhd v Etiqa Takaful Berhad [2016] 5 MLRA 529 where the Federal Court held that:- “What the court needs to consider in determining whether to grant a stay order under the present s. 10(1) (after the 2011 Amendment) is whether there is in existence a binding arbitration agreement or clause between the parties, which 10 agreement is not null and void, inoperative or incapable of being performed. The existence of a valid arbitration clause in an agreement between the parties does not automatically make it operative; the arbitration clause will only be operative when the given dispute or difference falls within the ambit of the arbitration clause.” [13] Going through the Plaintiff’s Statement of Claim, it is not disputed that the Plaintiff and the First Defendant did sign the said Agreement. It is also clear in this case that, it is not the Plaintiff’s pleaded case that the Agreement is null and void, as there is no prayer put by the Plaintiff in their Statement of Claim for an Order from the Court to declare the Agreement as null and void. Therefore, the Court is of the opinion that the dispute involving the parties here derive from the Agreement and should be referred to the Arbitration first before coming to the Court. [14] Furthermore, upon reading the Plaintiff’s Statement of Claim, the Court finds that nowhere in the Plaintiff’s pleading the issue of the Agreement being null and void been raised. It is trite that a party is 11 bound by its pleadings and the Federal Court in the case of RHB Bank Bhd (substituting Kwong Yik Bank Bhd) v Kwan Chew Holdings Sdn Bhd [2010] 2 MLJ 188 has clearly states : “The respondent’s cause of action against the appellant was for breach of contract. Nowhere in the respondent’s pleading, expressly or by implication, can we detect a claim for breach of a joint venture agreement arising out of a fiduciary duty placed upon the appellant in the capacity as principal of an agent. It is a cardinal rule in civil litigation that the parties must abide by their pleadings… On this, we would like to add that it is not the duty of the court to invent or create a cause of action or a defence under the guise of doing justice for the parties lest it be accused of being biased towards one against the other. The parties should know best as to what they want and it is not for the court to pursue a cavalier approach to solving their dispute by inventing or creating cause or causes of action which were not pleaded in the first place. Such activism by the court must be discouraged otherwise the court would be accused of making laws rather than applying them to a given set of facts.” 12 [15] Since there is no dispute that the Plaintiff had signed the Agreement with the First Defendant, and that the Agreement contained an arbitration clause in it as can be clearly seen in Clause 12 of the Agreement where it expressly state that the parties to refer all disputes arising between parties to the Arbitration. Therefore, the Court allows the Third Defendant’s application with costs. Dated 26th April 2018. ……………………………………. (ROHANI BINTI ISMAIL) JUDICIAL COMMISSIONER CIVIL HIGH COURT (NCVC 8) KUALA LUMPUR. Mr. Ganesh Magenthiran (Counsel for the Plaintiff / Appellant) Messrs. Hakem Arabi & Associates Mr. Andrew Lourdes, Ms Pusppa Muraiya & Azhar Ghazali (Counsels for the Third Defendant / Respondent) Messrs. Andrew & Associates