Jun

17

FD Marketing (M) Sdn Bhd v Victory Mix Sdn Bhd (2009) MWKAeJ 1207 [Construction law – Mareva injunction & claim for cost of materials]

Posted by

HIGH COURT OF MALAYA AT SHAH ALAM, MALAYSIA
CIVIL SUIT NO: MT1-22-1815-2007

ZALEHA BINTI YUSOF J
7 DECEMBER 2009

Cases referred to

Pacific Centre Sdn Bhd v United Engineers (M) Bhd [1984] 2 CLJ (Rep) 319

Counsel

For the plaintiff – Raymond Mah; M/s MahWengKwai & Associates
For the defendant – HS Lee; M/s HS Lee & Co

Judgment

[1] There are 3 applications before me, enclosure (5) is in respect of the plaintiff’s application for a Mareva injunction against the defendant; enclosure (14) is in respect of the defendant’s application to set-aside the ex parte Mareva injunction obtained by the plaintiff against the defendant on 8 January 2008; and enclosure (23) is in respect of the plaintiff’s application for a summary judgment against the defendant.

[2] Briefly, the plaintiff entered into a contract with the defendant to supply and deliver aluminium composite panels to be used as external cladding for the construction project known as “Cadangan Pembinaan 2 Blok Kedai Pejabat 3 hingga 4 Tingkat termasuk Piazza dan 1 Basement di atas Lot 14606 hingga Lot 14623 dan PT 9229 hingga PT 9236 (Fasa 12 B TC dan 12C TC) dan 1  Blok Perdagangan 1 Tingkat dan 2 Basemen di atas Lot 14582 (Fasa 12A TC) di Pusat Bandar Melawati, Mukim Setapak, Daerah Gombak, Selangor untuk Melawati Development Sdn Bhd” (“the said project”). The plaintiff alleged that the defendant is indebted to the plaintiff in the sum of RM374,353.00 being the outstanding balance in respect of the said materials sold and delivered to the defendant.

[3] In the alternative, the plaintiff also claims against the defendant as drawer of 5 cheques issued in favour of the plaintiff for payment of the said debt and which were dishonoured. The total amount of the said cheques are RM223,001.00. According to the the plaintiff, the defendant requested the plaintiff to withhold presentation of the said cheques unti the defendant informed the plaintiff to present the same for payment. When the defendant failed to inform the plaintiff as to when the cheques could be presented for payment, the plaintiff preceeded to present the said cheques for payment on or about 18 February 2007. The cheques were dishonoured and returned to the plaintiff with the words “payment stopped” stamped across them.

[4] The said materials were used in the construction of the said project. A joint inspection of the said project was conducted towards the end of November 2006 between the defendant, Messrs Syarikat Ismail Ibrahim Sdn Bhd (“main contractor”), Negara Properties (M) Bhd and/or Melawati Development Sdn Bhd (“developer”), Jururancang (M) Sdn Bhd (“architect”) and Juru Ukur Bahan Malaysia (“quantity surveyor”). The plaintiff avers that the joint site inspection was completed without any complaint on the quality of the said materials. The certificate of practical completion of the said project according the plaintiff was issued sometime in February 2007 and the certificate of fitness was issued sometime in March 2007. Despite numerous reminders to settle the debt, especially via the plaintiff’s solicitors’ letters, the defendant has failed, refused and/or neglected to pay the above amounts or any part thereof; hence this action against the defendant.

Enclosure (5) and (14)

[4] From the following facts, I find that the plaintiff has a good and arguable claim against the defendants.

(i) The defendant has denied that it received the plaintiff’s letter dated 17 June 2006, exhibit “KL-2” specifying the mode of payment. In Exhibit “KL-2”, the plaintiff agreed to accept and the defendant agreed to make “payment of RM46,000.00 upon arrival and balance on 60 days post-dated cheques from date of my company’s (plaintiff’s) delivery orders”. The defendant’s allegations that it did not receive KL-2, in my opinion, cannot be true.

(ii) The defendant affirms that the deposit of RM46,000.00 was made on the assumption that the said materials were in good condition. However, it had been shown that the first delivery worth RM10,257.00 was made on 19 July 2006. The defendant had inspected the said materials and had paid for these deliveries by 3 post-dated cheques. The RM46,000.00 was paid on 14 August 2008 after these deliveries on 19 July 2006. Accordingly, at the time the defendant paid RM46,000.00 it was fully aware of the appearance of the said materials. Again I find that the defendant’s allegation here, cannot be true.

(iii) Similarly, the defendant has also affirmed that the part-payment of RM80,000.00 was made on the assumption that the said materials were in good condition. This again is evidently false as the part-payment of RM80,000.00 on 18 December 2006 was made after the complete installation of the said materials, as well as the completion of the joint site inspection without any complaint in November 2006.

(iv) The defendant has also stated that it only obtained the certificate of fitness after it undertook rectification works to the said materials which had been already installed. This is evidently false because the defendant did not return any of the said materials or order any further materials from the plaintiff after the site inspection in November 2006, the last delivery being on 20 October 2006.

[5] The defendant has assets within this court’s jurisdiction as the defendant had already received all amounts due under the main contract from the developer and does not deny that it is now expecting for a further sum of RM590,000.00 in final payment from the developer for variation orders. Based on Pacific Centre Sdn Bhd v United Engineers (M) Bhd [1984] 2 CLJ (Rep) 319, I am of theopinion that a Mareva injunction can still be granted notwithstanding that the monies have yet to be received by the defendant from the developer.

[6] The plaintiff claims that the defendant is experiencing cash flow and liquidity problem and that is the reason why the plaintiff was not paid. The defendant has made denials to this allegation without showing any proof of its solvency. Therefore I believe there is risk of dissipation of the defendant’s assets or final payment.

[7] There is no evidence to show that the Defendant would suffer prejudice from an order for a Mareva injunction.

[8] I also find that the plaintiff did disclose in its affidavit in support (i.e. plaintiff’s affidavit No. 1) the following:

(a) That the defendant had complained of very small bumps on the said materials;

(b) That the plaintiff had in good faith agreed to an additional order that was free of the very small bumps and accepted the return of any unused material; and

(c) That the defendant had unilaterally imposed “back charges” on the plaintiff for charges that the defendant might have had to incur in the event the said materials were rejected by the main contractor and/or developer.

[9] The plaintiff had also disclosed the defendant’s replies to the plaintiff’s demands for payment including:

(a) The defendant’s statement of backcharges received on 17 November 2006;

(b) The defendant’s letter dated 20 April 2007 and 25 April 2007; and

(c) The defendant’s solicitor’s letter dated 9 August 2007 and 3 September 2007.

[10] As such, I find that the plaintiff did not hide any materials facts.

[11] Based on the above mentioned paragraph [4], I also find that it is actually the defendant who is lacking in probity and honesty.

Enclosure (23)

[12] I find there are no triable issues and I repeat the afore mentioned paragraph [4] of my grounds on enclosure (5) and (14).

[13] I also wish to add that there is no evidence to show that the materials installed and delivered were in fact defective or of poor quality. The said materials had been accepted at the joint site inspection in November 2006. The architect had confirmed that the said materials installed are acceptable and the defendant has admitted that the certificate of practical completion of the said project was issued on 16 February 2007 and the certificate of fitness was issued sometime in March 2007.

[14] It is also my opinion that the defendant ought to be estopped from alleging that the materials were defective as the defendant’s own conduct in continuing to accept delivery of the said materials and its part payment had encouraged the plaintiff to continue delivering the said materials. The facts that some materials were returned to the plaintiff leads to the inevitable conclusion that the materials which the defendant decided not to return must have been of acceptable and merchantable quality.

Conclusion

[15] Based on the aforementioned grounds, I make the following orders:

(a) Enclosure (5) – Order in terms.

(b) Enclosure (14) – Dismissed with costs.

(c) Enclosure (23) – The fact that there is a counter claim by the defendant is a different issue; it shall not deter the court from giving an order in favour of the plaintiff in the summary judgment application. Hence, I grant order in term on the principal relief.

Source: MahWengKwai & Associates 

Tags: , ,

Category: Construction Law

Comments are closed.