Direct Payment Case 1 PDF
Direct Payment Case 1 PDF
BETWEEN
AND
BETWEEN
AND
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GROUNDS OF JUDGMENT
INTRODUCTION
[2] The appeal was heard on 13.5.2019 where apart from the learned
counsels for the Appellant and the Respondent, Mr. Mark Ho
and Ms. Pang Li Xuan also appeared for the 4 th Defendant
(„D4‟). The Writ and Statement of Claim („SoC‟) was filed in
the Sessions Court on 23.7.2018. D4 had applied to intervene
vide a Notice of Application dated 5.9.2018 which was allowed
by the SCJ on 20.9.2018.
[3] Although D4 did not file a Notice of Appeal against the decision
of the SCJ in the O. 14 application, according to counsels for
D4, they had participated in the oral submissions in the court
below. In view of this fact, I allowed D4‟s counsel to address
the Court in this appeal.
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[7] The documents which are related to this appeal are as follows:
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[20] The parties do not dispute the fact that between the period from
15.10.2010 until 8.6.2015, the Appellant had made 39 progress
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[23] The Respondent alleged that the Appellant‟s action in paying the
amount of RM531,441.12 to D4 is in breach of the Sub-contract.
In paragraph 13 of the SoC, the Respondent stated that the
Appellant together with its Chief Financial Officer (2 nd
Defendant) and Senior General Manager, Tender and Contract
Division (3 rd Defendant) should have complied with the express
provisions in the Sub-contract as amended by the Addendum as
regards direct payment being made to the Respondent instead of
following the instructions of the Liquidator.
[24] It is also a pleaded fact in the SoC that there is mala fide in that
the 2 nd and 3 rd Defendants had conspired and/or colluded with
the Contractor so that the payment in dispute is released to the
Liquidator instead of to the Respondent as provided under the
Sub-contract. The Appellant and the 2 nd and 3 rd Defendants
vehemently deny this accusation in their Defence.
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(a) that the Addendum cannot bind the Appellant since it was
entered into by the Contractor and the Respondent;
(b) that with the Contractor being wound up, it was no longer
the situation where the Appellant can make payment to the
Respondent directly on behalf of the Contractor;
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[27] In essence, the SCJ concluded that there are no triable issues
befitting the need for a trial because the Appellant had made
previous payments directly to the Respondent based on the
intention as reflected in paragraph 10 of the Addendum and such
payments continued even after the Contractor was wound up.
Therefore, the Appellant cannot now avoid payment on the
grounds that paragraph 10 of the Addendum does not bind the
Appellant. The SCJ took the view that the issues raised by the
Appellant and the other Defendants are an afterthought.
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[28] Learned counsel for the Appellant, Mr. Wong Hok Mun
submitted that the SCJ erred in her reasoning by failing to take
into account the following facts:
(b) it is clear from Clause 28(e) of the Main Contract that any
payments made by the Appellant to the Respondent were
actually payments to the Main Contractor but were paid to
the Respondent pursuant to the Main Contractor‟s
instruction in the said Clause; and
(c) by reason of the lack nexus between the Appellant and the
Respondent, the Appellant cannot have any liability
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[31] Next, it was submitted that the Appellant had, from the
inception, made direct payments to the Respondent and these
add up to 39 times in the total sum of RM10,390,567.19. After
the Contractor was wound up, the Appellant made four direct
payments to the Respondent for IPC No. 36, 37, 38 and 39 based
on the instructions of the Official Assignee. The disputed sum is
alleged to be for IPC No. 40 for works completed by the
Respondent up to March 2017. However, the Liquidator issued
the instruction vide letter dated 13.4.2017 for payment to be
made to D4. This letter, says the Respondent, was not copied to
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[34] It was finally submitted that the statutory provisions and cases
cited by the Appellant which relate to privity of contract
(Tractors Malaysia Bhd v. Kumpulan Pembinaan Malaysia Sdn.
Bhd. [1979] 1 M.L.J. 129; Joo Yee Construction Pte. Ltd. v.
Diethelm Industries Pte. Ltd. & Ors. [1990] 3 CLJ (Rep) 655;
Syarikat Ong Yoke Lin Sdn Bhd v. Giant Cash & Carry Sdn Bhd
& Ors [2000] 4 CLJ 733; Artic Building and Civil Engineering
Sdn Bhd v. Ahmad Zaki Sdn Bhd & Ors [2009] 9 MLJ 328); and
Mersing Construction & Engineering Sdn Bhd v. Kejuruteraan
Bintai Kindenko Sdn. Bhd. & 3 Ors [2010] MLJU 1686), the
undue preference principle and pari passu rule (The Annotated
Malaysian Companies Act 2016, pp 625 and 685-687, Sweet &
Maxwell Asia and Thomson Reuters) are clearly distinguishable
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[35] In sum, the Respondent submitted that there was no error on the
part of the SCJ in granting summary judgment against the
Appellant since it has no defence on the merits.
D4’S SUBMISSIONS
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[40] Basically, the only issue before the SCJ in hearing the
Respondent‟s application under O. 14 RoC 2012 is whether there
are triable issues meriting a full trial for its determination. If the
Appellant had succeeded in raising even one triable issue, it will
not be a fit case and proper case to order summary judgment. It
is only in plain and obvious cases where there are no issues to
be tried should recourse be had to the O. 14 procedure. A triable
issue is an assertion that not only has been raised and is denied
or disputed, but is one upon which there is some evidence that is
not equivocal or lacking in precision, or is not inconsistent with
undisputed contemporary documents or other statements by the
same deponent, or is not inherently improbable in itself, to
support it: see South East Asia Insurance Bhd v. Kerajaan
Malaysia [1998] 1 CLJ 1045 and Perwira Affin Merchant Bank
Bhd v. Dato’ Soh Chee Wen [1999] 1 LNS 170; [2003] 3 MLJ
555.
[41] It is notable that the SCJ did not refer to a single case, not just
concerning the legal principles surrounding an application under
O. 14 RoC 2012, but throughout her Grounds of Judgment
(„GoJ‟), even though the written submissions by the Appellant
and the Respondent were certainly not devoid of the relevant
authorities for each proposition put forth by them respectively.
It is only in the penultimate paragraph of the SCJ‟s GoJ that she
said “… Mahkamah memutuskan bahawa tiada isu-isu untuk
dibicarakan yang ditimbulkan oleh Defendan -defendan bagi
menentang permohonan Plaintif disini.”. Under the
circumstances, I am unable to make a determination as to
whether the SCJ is well appraised of the law on summary
judgment.
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[42] The terms and conditions governing the relationship between the
Contractor and the Appellant is stipulated in the Main Contract
whilst that between the Appellant and the Respondent is
contained in the Sub-contract and Addendum.
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[45] Apart from the contractual terms, there are four key
correspondence in the RoA Volume 2 (Part B). The first is the
letter dated 3.9.2014 from the Insolvency Department, Federal
Territory Branch, Kuala Lumpur to the Appellant in reply to the
Appellant‟s letter dated 10.7.2014 which states, inter alia, as
follows:
“…
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…”.
3. …
4. …
…”.
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“…
…”.
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“…
…”.
[50] From the GoJ, the SCJ appears to have concluded that there are
no triable issues in the suit due to the past conduct of the
Appellant in making payments directly to the Respondent even
after the Contractor had been wound-up. There is no express
statement in the GoJ to the effect that the SCJ has made a
positive finding of an estoppel by convention within the
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[51] Now, there is no doubt whatsoever that the Main Contract was
made between the Contractor and the Appellant, and the Sub-
contract and the Addendum were made between the Appellant
and the Respondent. There is equally no doubt that the Main
Contract and the Sub-contract are in the P.W.D. Form 203A
(Rev. 10/83) and Form 203N (Rev. 10/83), respectively. The
direct payment scheme utilising these standard forms are
explained by the learned authors Datuk Sundra Rajoo and Ir
Harbans Singh KS in “Construction Law in Malaysia”, Sweet &
Maxwell Asia, 2012 at p 292 as follows:
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…”.
[emphasis added]
[52] The above excerpt from the textbook lends support to the
Appellant‟s submission that the provision which allows direct
payment to be made by the Appellant to the Respondent is in
fact Clause 28(e) of the Main Contract. When such payments are
made, they shall be deemed to be payments to the Contractor by
the Appellant under and by virtue of the Main Contract.
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[56] I pause here to note that this Court does recognise that there
exists a difference in the wordings of Clause 28(e) of the Main
Contract with Clause 20(e) in Joo Yee Construction Pte. Ltd.
where the latter –
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[emphasis added]
[57] In Joo Yee‟s case, the plaintiff, Joo Yee Construction Company
Pte. Ltd. was wound-up pursuant to a court order on 10.2.1989.
Prior to that, on 12.9.1989, the plaintiff entered into a building
contract with the Government of Singapore for the construction
of a Blood Transfusion Services/ Department of Scientific
Services Complex at the General Hospital, Singapore.
International Development and Consultancy Corporation Pte.
Ltd. (“Indeco”) was appointed by the Government as the agent
for the purpose of administering the main contract, and is the
superintending officer as defined in the main contract. The 1 st to
4 th defendants are the nominated sub-contractors for the
development.
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[61] Likewise, I would say that the real issue for determination by
the SCJ in the suit is whether the four direct payments made by
the Appellant to the Respondent subsequent to the winding-up
order against the Contractor, and the direct payment for the sum
of RM531,441.12, which is currently being claimed from the
Appellant, have contravened or will contravene the CA 1965 or
CA 2016. If the answer to the poser is in the affirmative, the
previous payments made directly to the Respondent cannot
operate as an estoppel against the Appellant and the present
claim must necessarily fail.
[63] Since the publication of the said textbook, Lee Swee Seng J
(now JCA) in CT Indah Construction Sdn Bhd v. BHL Gemilang
Sdn Bhd [2018] 1 LNS 380 had occasion to consider the
question as to whether section 30 of the Construction Industry
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Pronouncement
…”.
[emphasis added]
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CONCLUSION
[69] With respect, the SCJ failed to clinically examine the pleadings
and Affidavits and to analyse the legal issues raised in the
application before her. Had a more thorough enquiry been
conducted, the SCJ would have found that there is at least one
meritorious defence which had been raised by the Appellant.
[70] Based on all of the above considerations, this is not a plain and
obvious case which is suitable for summary judgment to be
recorded. Hence, the Appellant‟s appeal is allowed with an order
that a different Sessions Court Judge is to preside at the full trial
of the suit.
(ALIZA SULAIMAN)
Judicial Commissioner
High Court
Kuala Lumpur
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COUNSEL:
For the appellant - Wong Hok Mun & Koh Pei Siah; M/s Azim, Tunku
Farik & Wong
Advocates & Solicitors
Unit 5-03, 5 th Floor
Wisma Badan Peguam Malaysia 2, Lebuh Pasar Besar
50050 Kuala Lumpur
Pembinaan Juta Mekar Sdn Bhd v. SAP Holding Berhad & Anor
[2014] 1 LNS 314
Bond M & E (KL) Sdn Bhd v. Isyoda (M) Sdn Bhd and Brampton
Holdings Sdn Bhd (Third Party) [2017] 1 LNS 259
Sigma Elevator (M) Sdn Bhd v. Isyoda (M) Sdn Bhd & Anor [2016] 10
MLJ 635
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Joo Yee Construction Pte. Ltd. v. Diethelm Industries Pte. Ltd. & Ors.
[1990] 3 CLJ (Rep) 655
Syarikat Ong Yoke Lin Sdn Bhd v. Giant Cash & Carry Sdn Bhd & Ors
[2000] 4 CLJ 733
Artic Building and Civil Engineering Sdn Bhd v. Ahmad Zaki Sdn Bhd
& Ors [2009] 9 MLJ 328
Aseambankers Malaysia Berhad & 3 Ors v. Teoh Chyn Choon & Anor
[2014] 1 LNS 827
Azlin bin Khalid v. Mohamad Njib Ishak and other appeals [2017] 6
MLJ 537
Abdul Rahim Abdul Hamid & Ors v. Perdana Merchant Bankers Bhd
& Ors [2000] 2 CLJ 457
Malayan Insurance (M) Sdn Bhd v. Asia Hotel Sdn Bhd [1987] 2 MLJ
183
Bank Negara Malaysia v. Mohd Ismail & Ors [1992] 1 MLJ 400;
[1992] 1 CLJ Rep 14
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Perwira Affin Merchant Bank Bhd v. Dato' Soh Chee Wen [1999] 1
LNS 170; [2003] 3 MLJ 555
Re C.G. Monkhouse Pty. Ltd. (in liquidation) and The Companies Act
[1968] 88 WN (Pt. 2) (N.S.W.) 238
Qimonda Malaysia Sdn Bhd (In Liquidation) v. Sediabena Sdn Bhd &
Anor [2012] 3 MLJ 422
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