MERCES BUILDERS SDN. BHD. vs DEMIRAMA SDN. BHD (MJLR 2009b4) Clement Skinner, 29/1/2009, SS
-1- [CSK.22-141-2002-II]
5 MALAYSIA
IN THE HIGH COURT IN SABAH AND SARAWAK
AT KOTA KINABALU
CIVIL SUIT NO. K22-141 OF 2002-II
BETWEEN
10 MERCES BUILDERS SDN. BHD. … APPELLANT/DEFENDANT
(Company No.: 175572-A)
Lot 1-1-17, Api-Api Centre
88300, KOTA KINABALU
SABAH
15 AGAINST
DEMIRAMA SDN. BHD. … RESPONDENT/PLAINTIFF
(Company No.: 437805-M)
Suite 2.55, 2nd Floor, Block C
Kompleks Karamunsing
20 KOTA KINABALU, SABAH
BEFORE THE HONOURABLE JUSTICE
DATUK CLEMENT SKINNER IN CHAMBERS
25 JUDGMENT
This is the hearing of an appeal to the Judge in Chambers
against the decision of the Deputy Registrar given on 02.05.2003.
On that day summary judgment was granted in the sum of
30 RM500,000.00 against the defendant under Ord. 14 Rules of the
High Court 1980 (‘the RHC’).
-2- [CSK.22-141-2002-II]
5 The defendant was awarded a contract by the government to
repair and upgrade the Likas Sport Complex at Kota Kinabalu
(‘the contract works’) valued at some RM113.2 million. The
defendant then engaged the plaintiff as a “Management Contractor”
to undertake the contract works. An Agreement (‘the agreement’)
10 was entered into between the plaintiff and defendant for that purpose.
One of the terms of the agreement i.e. Clause 5.1 states that
the plaintiff shall covenant and undertake that upon the request of the
defendant, the plaintiff shall provide or cause to be provided to and /
15 or for the benefit of the defendant as the main contractor, a corporate
guarantee or any other form of security as shall be required to enable
the defendant to provide or obtain a Performance Bond in the sum of
RM5,660,189.62 in favour of the government in respect of the
contract works awarded to the defendant.
20
This suit was commenced by the plaintiff against the defendant
for the repayment of a loan of RM500,000.00 which was payable on
demand, which it had granted to the defendant pursuant to an oral
agreement made on or about 02.04.2001 between the parties. Full
25 particulars were given of the amount paid to the defendant by way of
loan, namely, the payment on 02.04.2001 of RM500,000.00 into the
defendant’s bank account no.: 21002800109910 at RHB Bank,
No. 81 – 83, Gaya Street, Kota Kinabalu, Sabah. The plaintiff alleged
that despite a demand for repayment of the loan, the defendant had
30 refused to pay the same. Hence this suit.
-3- [CSK.22-141-2002-II]
5 The defendant filed a defence and counter-claim. It is the
defendant’s case that the RM500,000.00 it received from the plaintiff
was not a loan as alleged but instead the sum was a part payment
made by the plaintiff towards its obligations under Clause 5.1 of the
agreement, to enable the defendant to furnish the Performance Bond
10 to the government.
The defendant also alleged that the plaintiff had committed a
breach of the agreement, in that, the plaintiff had failed to pay the
balance of the amount under Clause 5.1 and had supplied piling
15 materials which did not comply with the specifications in the
agreement. Hence the defendant’s counter-claim for damages for
breach of the agreement against the plaintiff.
After the defence was filed the plaintiff filed its application for
20 summary judgment.
It is the defendant’s case that summary judgment should not
have been entered against it as:
(a) the question whether the RM500,000.00 it had received
25 from the plaintiff was a loan or whether it was only a part
payment under Clause 5.1 so as to enable the defendant
to furnish the Performance Bond, is a matter which gives
rise to a serious issue to be tried. It needs to be further
investigated. It is not suitable for summary disposal;
30 (b) there ought for some other reasons to be a trial of the
plaintiff’s claim;
-4- [CSK.22-141-2002-II]
5 (c) a dispute has arisen between the parties on the
interpretation of Clause 4.1 of the agreement as to
whether the plaintiff was engaged to manage the contract
works or was engaged to carry out those works;
(d) there was delay on the part of the plaintiff in applying for
10 summary judgment.
The law on the matter at hand is set out in National Company
for Foreign Trade v Kayu Raya Sdn. Bhd. [1984] 2 MLJ 300 where
the Federal Court held that once the plaintiff satisfies the
15 requirements under Ord. 14 i.e.;
(i) that the defendant has entered an appearance;
(ii) the statement of claim must have been served on the
defendant; and
(iii) the affidavit in support of the application complies with the
20 requirements of rule 2 of Ord. 14;
the plaintiff has established a prima facie case and becomes
entitled to judgment. The burden shifts to the defendant to
satisfy the Court why judgment should not be given against it.
25 I am satisfied that the plaintiff’s application here has satisfied all
the requirements stated in the case of National Company for Foreign
Trade, and that the plaintiff has established a prima facie case for
summary judgment against the defendant. The burden has shifted to
the defendant to show cause why judgment should not be given
30 against it.
-5- [CSK.22-141-2002-II]
5 As I mentioned earlier, it is the defendant’s case that it has
discharged that burden by showing that the issues raised by it in
(a), (b), (c) and (d) above all give rise to bona fide serious issues
which require to be tried.
10 I will now consider each of these issues to see whether they do
give rise to any triable issues.
(a) Was the RM500,000.00 a part payment under Clause 5.1
and not a loan?
15
I find that the defendant’s assertion that the RM500,000.00 was
a part payment only under Clause 5.1 of the agreement does not
stand up to closer curial scrutiny for the following reasons.
First, Clause 5.1 expressly states that the obligation of the plaintiff to
20 provide security to the defendant so that the defendant may in turn
furnish a Performance Bond to the government, only arises
“upon the request” of the defendant. The parties to a contract are
bound by the terms they have agreed to. To enable the defendant to
maintain its assertion that the RM500,000.00 was a part payment of
25 the security mentioned in Clause 5.1, the defendant must first state
the facts on which such an assertion can be based. The defendant
must at least show that it had requested the plaintiff to provide the
security and that explains the payment of the RM500,000.00 to it, but
the defendant has not placed any evidence before the Court of such
30 request. The defendant has submitted that the Court should allow it
to amend its pleadings, to enable it to plead particulars of such
5 request. I find no merit in this submission because the defendant
need not apply for an amendment before it can raise such assertion
because it has had an opportunity to file affidavits to oppose the
plaintiff’s application and could easily have stated in its affidavits the
date, time, place and mode of such request, if any. The fact that the
10 defendant did not do so is consistent with such a request not being
made. Second, Clause 15.1 of the agreement states that any notice
or demand or other communications required to be given or made
under the agreement shall be in writing. So, any request which the
defendant made pursuant to Clause 5.1 must have been made in
15 writing. The defendant would surely be in possession of a copy of its
written request if one was made to the plaintiff. The fact that the
defendant has not been able to produce such a written request is
consistent with the fact that no such request was ever made.
20 Accordingly, the defendant’s assertion that the RM500,000.00
was a part payment of the security mentioned in Clause 5.1 is
inconsistent with the undisputed contemporaneous documents in the
case.
25 (b) There ought to be a trial ³for some other reasons´?
The defendant says that there ought to be a trial for some other
reasons, namely, the plaintiff is alleged to be in breach of the
agreement for which the defendant has filed a counter-claim. I do not
30 agree with this contention. In so far as it is alleged that the plaintiff is
in breach of Clause 5.1 because it did not pay the full amount of the
-7- [CSK.22-141-2002-II]
5 security for the Performance Bond, the defendant’s allegation will
only be capable of raising an issue to be tried if the defendant can
point to some facts which show that it had made a request to the
plaintiff to be furnished with the security. Unless the defendant can
do so, of which there is none before the Court, its allegation of breach
10 of Clause 5.1 by the plaintiff is a complete non-starter. The
defendant’s counter-claim being based on the plaintiff’s alleged
breach of Clause 5.1 it is likewise a non-starter.
(c) Alleged difference in interpretation of Clause 4.1.
15
In my judgment, whether the correct interpretation of Clause 4.1
of the agreement mean that the plaintiff was appointed as a
“Management Contractor” or only the contractor to undertake the
contract works, is completely irrelevant to the issue whether the
20 RM500,000.00 was a loan from the plaintiff to the defendant or the
sum represented a part payment under Clause 5.1. It does not give
rise to any bona fide triable issue as far as the latter question is
concerned.
25 Was there delay in applying?
According to the defendant, the plaintiff had delayed in filing its
application until after the defence in this action was filed. According
to the defendant, that delay was fatal to the plaintiff’s application for
30 summary judgment. In support the case of Krishnamurthy & Anor v
Malayan Finance Corporation Bhd. [1986] 2 MLJ 134 was cited. I do
-8- [CSK.22-141-2002-II]
5 not agree. Delay per se in making the application will not defeat the
plaintiff’s application for summary judgment where no bona fide
triable issues exist. See Perkapalan Sharmelin Jaya Sdn. Bhd. &
Anor v Alpine Bank Transport New York [1997] 3 MLJ 818.
10 In the result for all the reasons given above, I find that no bona
fide triable issues have arisen that requires to be tried. The
defendant has not discharged the burden on it of showing why
summary judgment should not be entered against it.
15 I accordingly dismiss the defendant’s appeal with costs and
affirm the Order made by the learned Deputy Registrar.
20
25
DATUK CLEMENT SKINNER
Judge
30 Date : 29th January 2009
-9- [CSK.22-141-2002-II]
5 Counsel
For Appellant / Defendant : Cik Munirah Bashir Khan
Messrs. Angela Ubu & Associates
KOTA KINABALU
10
For Respondent / Plaintiff : Mr. Chong Kian Ming
Messrs. Kianming & Associates
KOTA KINABALU
5 MALAYSIA
IN THE HIGH COURT IN SABAH AND SARAWAK
AT KOTA KINABALU
CIVIL SUIT NO. K22-141 OF 2002-II
BETWEEN
10 MERCES BUILDERS SDN. BHD. … APPELLANT/DEFENDANT
(Company No.: 175572-A)
Lot 1-1-17, Api-Api Centre
88300, KOTA KINABALU
SABAH
15 AGAINST
DEMIRAMA SDN. BHD. … RESPONDENT/PLAINTIFF
(Company No.: 437805-M)
Suite 2.55, 2nd Floor, Block C
Kompleks Karamunsing
20 KOTA KINABALU, SABAH
BEFORE THE HONOURABLE JUSTICE
DATUK CLEMENT SKINNER IN CHAMBERS
25 JUDGMENT
This is the hearing of an appeal to the Judge in Chambers
against the decision of the Deputy Registrar given on 02.05.2003.
On that day summary judgment was granted in the sum of
30 RM500,000.00 against the defendant under Ord. 14 Rules of the
High Court 1980 (‘the RHC’).
-2- [CSK.22-141-2002-II]
5 The defendant was awarded a contract by the government to
repair and upgrade the Likas Sport Complex at Kota Kinabalu
(‘the contract works’) valued at some RM113.2 million. The
defendant then engaged the plaintiff as a “Management Contractor”
to undertake the contract works. An Agreement (‘the agreement’)
10 was entered into between the plaintiff and defendant for that purpose.
One of the terms of the agreement i.e. Clause 5.1 states that
the plaintiff shall covenant and undertake that upon the request of the
defendant, the plaintiff shall provide or cause to be provided to and /
15 or for the benefit of the defendant as the main contractor, a corporate
guarantee or any other form of security as shall be required to enable
the defendant to provide or obtain a Performance Bond in the sum of
RM5,660,189.62 in favour of the government in respect of the
contract works awarded to the defendant.
20
This suit was commenced by the plaintiff against the defendant
for the repayment of a loan of RM500,000.00 which was payable on
demand, which it had granted to the defendant pursuant to an oral
agreement made on or about 02.04.2001 between the parties. Full
25 particulars were given of the amount paid to the defendant by way of
loan, namely, the payment on 02.04.2001 of RM500,000.00 into the
defendant’s bank account no.: 21002800109910 at RHB Bank,
No. 81 – 83, Gaya Street, Kota Kinabalu, Sabah. The plaintiff alleged
that despite a demand for repayment of the loan, the defendant had
30 refused to pay the same. Hence this suit.
-3- [CSK.22-141-2002-II]
5 The defendant filed a defence and counter-claim. It is the
defendant’s case that the RM500,000.00 it received from the plaintiff
was not a loan as alleged but instead the sum was a part payment
made by the plaintiff towards its obligations under Clause 5.1 of the
agreement, to enable the defendant to furnish the Performance Bond
10 to the government.
The defendant also alleged that the plaintiff had committed a
breach of the agreement, in that, the plaintiff had failed to pay the
balance of the amount under Clause 5.1 and had supplied piling
15 materials which did not comply with the specifications in the
agreement. Hence the defendant’s counter-claim for damages for
breach of the agreement against the plaintiff.
After the defence was filed the plaintiff filed its application for
20 summary judgment.
It is the defendant’s case that summary judgment should not
have been entered against it as:
(a) the question whether the RM500,000.00 it had received
25 from the plaintiff was a loan or whether it was only a part
payment under Clause 5.1 so as to enable the defendant
to furnish the Performance Bond, is a matter which gives
rise to a serious issue to be tried. It needs to be further
investigated. It is not suitable for summary disposal;
30 (b) there ought for some other reasons to be a trial of the
plaintiff’s claim;
-4- [CSK.22-141-2002-II]
5 (c) a dispute has arisen between the parties on the
interpretation of Clause 4.1 of the agreement as to
whether the plaintiff was engaged to manage the contract
works or was engaged to carry out those works;
(d) there was delay on the part of the plaintiff in applying for
10 summary judgment.
The law on the matter at hand is set out in National Company
for Foreign Trade v Kayu Raya Sdn. Bhd. [1984] 2 MLJ 300 where
the Federal Court held that once the plaintiff satisfies the
15 requirements under Ord. 14 i.e.;
(i) that the defendant has entered an appearance;
(ii) the statement of claim must have been served on the
defendant; and
(iii) the affidavit in support of the application complies with the
20 requirements of rule 2 of Ord. 14;
the plaintiff has established a prima facie case and becomes
entitled to judgment. The burden shifts to the defendant to
satisfy the Court why judgment should not be given against it.
25 I am satisfied that the plaintiff’s application here has satisfied all
the requirements stated in the case of National Company for Foreign
Trade, and that the plaintiff has established a prima facie case for
summary judgment against the defendant. The burden has shifted to
the defendant to show cause why judgment should not be given
30 against it.
-5- [CSK.22-141-2002-II]
5 As I mentioned earlier, it is the defendant’s case that it has
discharged that burden by showing that the issues raised by it in
(a), (b), (c) and (d) above all give rise to bona fide serious issues
which require to be tried.
10 I will now consider each of these issues to see whether they do
give rise to any triable issues.
(a) Was the RM500,000.00 a part payment under Clause 5.1
and not a loan?
15
I find that the defendant’s assertion that the RM500,000.00 was
a part payment only under Clause 5.1 of the agreement does not
stand up to closer curial scrutiny for the following reasons.
First, Clause 5.1 expressly states that the obligation of the plaintiff to
20 provide security to the defendant so that the defendant may in turn
furnish a Performance Bond to the government, only arises
“upon the request” of the defendant. The parties to a contract are
bound by the terms they have agreed to. To enable the defendant to
maintain its assertion that the RM500,000.00 was a part payment of
25 the security mentioned in Clause 5.1, the defendant must first state
the facts on which such an assertion can be based. The defendant
must at least show that it had requested the plaintiff to provide the
security and that explains the payment of the RM500,000.00 to it, but
the defendant has not placed any evidence before the Court of such
30 request. The defendant has submitted that the Court should allow it
to amend its pleadings, to enable it to plead particulars of such
5 request. I find no merit in this submission because the defendant
need not apply for an amendment before it can raise such assertion
because it has had an opportunity to file affidavits to oppose the
plaintiff’s application and could easily have stated in its affidavits the
date, time, place and mode of such request, if any. The fact that the
10 defendant did not do so is consistent with such a request not being
made. Second, Clause 15.1 of the agreement states that any notice
or demand or other communications required to be given or made
under the agreement shall be in writing. So, any request which the
defendant made pursuant to Clause 5.1 must have been made in
15 writing. The defendant would surely be in possession of a copy of its
written request if one was made to the plaintiff. The fact that the
defendant has not been able to produce such a written request is
consistent with the fact that no such request was ever made.
20 Accordingly, the defendant’s assertion that the RM500,000.00
was a part payment of the security mentioned in Clause 5.1 is
inconsistent with the undisputed contemporaneous documents in the
case.
25 (b) There ought to be a trial ³for some other reasons´?
The defendant says that there ought to be a trial for some other
reasons, namely, the plaintiff is alleged to be in breach of the
agreement for which the defendant has filed a counter-claim. I do not
30 agree with this contention. In so far as it is alleged that the plaintiff is
in breach of Clause 5.1 because it did not pay the full amount of the
-7- [CSK.22-141-2002-II]
5 security for the Performance Bond, the defendant’s allegation will
only be capable of raising an issue to be tried if the defendant can
point to some facts which show that it had made a request to the
plaintiff to be furnished with the security. Unless the defendant can
do so, of which there is none before the Court, its allegation of breach
10 of Clause 5.1 by the plaintiff is a complete non-starter. The
defendant’s counter-claim being based on the plaintiff’s alleged
breach of Clause 5.1 it is likewise a non-starter.
(c) Alleged difference in interpretation of Clause 4.1.
15
In my judgment, whether the correct interpretation of Clause 4.1
of the agreement mean that the plaintiff was appointed as a
“Management Contractor” or only the contractor to undertake the
contract works, is completely irrelevant to the issue whether the
20 RM500,000.00 was a loan from the plaintiff to the defendant or the
sum represented a part payment under Clause 5.1. It does not give
rise to any bona fide triable issue as far as the latter question is
concerned.
25 Was there delay in applying?
According to the defendant, the plaintiff had delayed in filing its
application until after the defence in this action was filed. According
to the defendant, that delay was fatal to the plaintiff’s application for
30 summary judgment. In support the case of Krishnamurthy & Anor v
Malayan Finance Corporation Bhd. [1986] 2 MLJ 134 was cited. I do
-8- [CSK.22-141-2002-II]
5 not agree. Delay per se in making the application will not defeat the
plaintiff’s application for summary judgment where no bona fide
triable issues exist. See Perkapalan Sharmelin Jaya Sdn. Bhd. &
Anor v Alpine Bank Transport New York [1997] 3 MLJ 818.
10 In the result for all the reasons given above, I find that no bona
fide triable issues have arisen that requires to be tried. The
defendant has not discharged the burden on it of showing why
summary judgment should not be entered against it.
15 I accordingly dismiss the defendant’s appeal with costs and
affirm the Order made by the learned Deputy Registrar.
20
25
DATUK CLEMENT SKINNER
Judge
30 Date : 29th January 2009
-9- [CSK.22-141-2002-II]
5 Counsel
For Appellant / Defendant : Cik Munirah Bashir Khan
Messrs. Angela Ubu & Associates
KOTA KINABALU
10
For Respondent / Plaintiff : Mr. Chong Kian Ming
Messrs. Kianming & Associates
KOTA KINABALU
