DALAM MAHKAMAH RAYUAN MALAYSIA
(BIDANGKUASA RAYUAN )
RAYUAN SIVIL NO. P-02-2860-11/2011
ANTARA
BANK PERUSAHAAN KECIL & SEDERHANA
MALAYSIA BERHAD (NO. SYARIKAT : 49572-H)
...
PERAYU
DAN
ISKANDAR ZULKARNAIN BIN ZAINAL ABIDIN
Berniaga sebagai ORGANIC BITE MARKETING
(NO. PENDAFTARAN PERNIAGAAN : AS0274573-V)
...
RESPONDEN
(Dalam Perkara Guaman No. 22-675-2010
Dalam Mahkamah Tinggi Malaya Di Pulau Pinang
ANTARA
ISKANDAR ZULKARNAIN BIN ZAINAL ABIDIN
Berniaga sebagai ORGANIC BITE MARKETING
(NO. PENDAFTARAN PERNIAGAAN : AS0274573-V)
...
PLAINTIF
DAN
BANK PERUSAHAAN KECIL & SEDERHANA
MALAYSIA BERHAD (NO. SYARIKAT : 49572-H)
...
DEFENDAN
1
CORAM:
RAMLY BIN HJ. ALI, JCA
ZAHARAH BINTI IBRAHIM JCA
ANANTHAM KASINATHER, JCA
ANANTHAM KASINATHER, JCA
DELIVERING JUDGMENT OF THE COURT
BACKGROUND FACTS
1.
By an exclusivity supplier agreement dated 10th August 2005,
the respondent agreed to supply certain dehydrated products
and meet any orders placed by a company known as Target
Agriculture
(Private)
Limited
N
(PVS)
13490
(“Target
Agriculture”) for dry fruits (see pages 101 to 120 of the Appeal
Record of Bahagian A, B & C). To enable it to meet its
contractual obligations to Target Agriculture, the respondent
caused to be delivered to it by one Winkler Wachtel (Sea) Sdn
Bhd (“Winkler Wachtel”) four machines namely:
i)
FG-SH 254
Pineapple Skinning and Center Coring Machine
Model : WW 254
Serial No: 1001
2
ii)
FG-SH 200
High Speed Guillotine Cutter
Model: WW 200
Serial No.: 1005
iii)
FG-SH 162
Hot Air Circulation Oven (Diesel Fired)
Model: WW 162
Serial No: 1001
iv)
FG-WWDZ 400
Double Chamber Vacuum Packing Machine
Model: WW Dz 400 2SB
Serial No: 1004
and a ten ton walk-in cold room (freezer) by a delivery order
dated 3rd July 2006. (see page 121 of the Appeal Record of
Bahagian A, B & C).
2.
Prior the delivery of the machines by Winkler Wachtel, the
respondent entered into a hire purchase agreement with the
appellant to finance the purchase of the aforesaid machines
from the said Winkler Wachtel. The terms of the hire purchase
agreement inter alia included the following covenants by the
respondent:
3
i)
that the said machinery / equipment is / are of a
size, design, capacity and manufacture selected by
the respondent;
ii)
That the respondent is satisfied that the said
machinery / equipment is / are suitable for its
purpose;
iii)
That the appellant is not the manufacturer of the
said machinery / equipment or property of such
kind;
iv)
That having inspected said the machinery /
equipment
the
respondent
has
signed
this
agreement relying entirely on its own judgment and
not on any statements made by the appellant or the
agents or servants of the appellant;
v)
That no warranty of fitness or that the said
machinery / equipment is / are merchantable shall
apply to this agreement;
vi)
That the said machinery
/ equipment is / are
accepted by the respondent with all faults and
defects (if any) and delivery shall be conclusive
evidence that the said machinery / equipment is /
are in good and substantial working order and
condition;
4
vii)
That the appellant has not made and does not
hereby make any representation or warranty with
respect to the merchantability, condition, quality,
durability or suitability of the said Machinery /
equipment in any respect;
viii)
That all promises, warranties and conditions,
express or implied by Statute or otherwise whether
given hereunder or collateral hereto or otherwise
are hereby expressly negative and extinguished;
and
ix)
That the appellant shall not be liable to the
respondent either in contract or in tort for any
liability, claim, loss, damages or expenses of any
kind or nature.
(see page 96 of the Appeal Record of Bahagian
A, B & C)
3.
Pursuant to clause 3 of the first schedule to the hire purchase
agreement, the disbursement of the purchase price to Winkler
Wachtel was conditional on the respondent fulfilling the
following terms and condition:
5
“ i)
This agreement and any other security documents
set out in the appellant’s letter of offer and referred
to in Item 11 hereof has been executed and
stamped;
ii)
The respondent shall have confirmed that the
machinery / equipment are in good working
condition;
iii)
The respondent shall have issued a Banker’s
Standing Instruction / Order in favour of the
appellant for the payment of the rent installments.
Such Banker’s Standing Instruction / Order shall
remain
valid
throughout
the
tenure
of
this
agreement and shall not be revoked unless
otherwise agreed to by the appellant; and
v)
The respondent shall have obtained a warranty from
the supplier in respect of the machinery / equipment
for a period of one (1) year”.
(see page 105 of the Appeal Record of
Bahagian A, B & C)
4.
In compliance with the pre-conditions stipulated in the first
schedule to the hire purchase agreement i.e set out in
paragraph 3 above, the respondent caused to be written to the
6
appellant two letters dated 14th July 2006 confirming the receipt
in good order and condition of the five items stipulated in
paragraph 1 above and mandated the appellant to disburse the
purchase price to the supplier Winkler Wachtel (see page 122
of the Appeal Record of Bahagian A, B & C).
5.
Sometime in September 2010, the respondent commenced an
action against the appellant seeking damages of some USD 26
million purportedly for losses suffered by him arising from the
poor
performance of the machines delivered by Winkler
Wachtel. The pleaded cause of action for the damages is that
the servants of the appellant had represented to the respondent
that Winkler Wachtel possessed sufficient experience and
expertise in respect of the machines forming the subject matter
of the delivery order of 3rd July 2006 (see paragraph 8 of the
statement of claim of Appeal Record) and that the
respondent would not have purchased these machines but for
this representation (see paragraph 9 of the statement of
claim at page 28 of Appeal Record). The appellant denied
having made any such representation.
6.
On 6th April 2011, the appellant filed the Summons in Chambers
for the statement of claim to be struck out under O18r 19 (1) (a)
(b) and (d) of the Rules of High Court 1980. In paragraph 8 of
the affidavit filed in support of the application, the appellant
alleged that the machines were selected by the respondent and
that the appellant did not induce the respondent to purchase
7
the machines. The appellant also referred to the terms and
conditions of the hire purchase agreement as affording a total
defence to the respondent’s claim (see paragraphs 9, 13 and
14 of the supporting affidavit of Nordin bin Abdullah at
pages 44 and 45 of the Appeal Record). The respondent in
his affidavit in reply for the first time identified the servant of the
appellant who is alleged to have made the representation to be
one Encik Lokman and further claimed that Winkler Wachtel
was introduced to him by the appellant. The respondent also for
the first time impliedly alleged that the appellant was the agent
of Winkler Wachtel in respect of the alleged representation
concerning the capacity of the machines. (see paragraphs 913 of the respondent’s affidavit in reply at pages 50 and 51
of the Appeal Record).
7.
The application under O18 r19 came up for hearing before the
Learned High Court Judge on 20th October 2011 when His
Lordship after hearing submissions disallowed the application,
His Lordship in his grounds of judgment dated 20th October
2011 cited the following facts:
a)
Sama ada pegawai plaintif bernama Encik
Lokman tersebut tidak pernah sama sekali
membuat representasi kepada plaintif tentang
keupayaan
mesin
dan
latar
belakang
pembekal mesin syarikat Winkler Wachtel;
8
b)
Sama ada benar plantif telah berurusan
terlebih dahulu dengan Winkler Wachtel bagi
membeli
mesin
tersebut
tanpa
apa-apa
representasi oleh pegawai defendan;
c)
Sama ada pengeluaran surat kredit kepada
Winkler Wachtel oleh defendan adalah dari
representasi
belakang
plaintif
atau
pengalaman
di
atas
defendan
latar
dalam
berurusan dengan Winkler Wachtel yang
mana plaintif mengatakan representasi oleh
defendan mengesyorkan syarikat tersebut
sebagai
syarikat
yang
berpengetahuan
mendalam dan berkemahiran luas dalam
bidang tersebut;
d)
sama ada plaintif telah bertindak sepenuhnya
di atas representasi oleh pegawai plaintif
tersebut; dan
e)
Bagi
isu
penyataan dalam surat plantif
bertarikh 14.7.2006 yang dihujahkan oleh
defendan
bahawa
plantif
diestop
dari
menafikannya, mahkamah ini berpendapat
hujahan
defendan
tersebut
adalah
tidak
mempunyai merit kera ketika surat bertarikh
14.7.2006 dikeluarkan oleh plaintif, ketika
9
tarikh tersebut mesin terlibat masih lagi dalam
proses pemasangan yang mengambil masa
satu bulan dan dengan itu belum lagi
beroperasi dan berfungsi. Tiada keterangan
sebaliknya yang dapat mengatakan mesin itu
telah pun berfungsi pada tarikh 14.7.2006
tersebut
as facts which required elucidation at a trial in
refusing the application.
(see pages 18-21 of the Appeal Record of
Bahagian A, B & C)
DECISION OF THE COURT
8.
In a typical hire purchase arrangement, the finance company
such as the appellant only provides finance. Save in
circumstances where the finance company and the supplier of
the goods are related companies, and this is not one such
case, the finance company’s knowledge of the supplier and the
goods forming the subject matter of the sale and purchase
agreement between the hirer and the supplier is likely to be
only such information as is provided by the hirer. There is
nothing in the evidence before the court to suggest that the
arrangement between the appellant and the respondent was
any different from the customary relationship between the
10
respondent as hirer, the appellant as owner and Winkler
Wachtel as the supplier of the machines save for the bare
allegation of the respondent. We opine to this effect because
the respondent hirer entered into the exclusivity supplier /
agreement with Target Agriculture to supply dehydrated
products and other processed fruits, vegetable and nut
products as early as 10th August 2005. It is reasonable to
assume that prior entering into this agreement, the respondent
had already identified the supplier and the necessary
machinery which were capable of producing the dehydrated
products which it had agreed to sell to Target Agriculture. On
the facts of this case, our assumption is supported by the letter
from Winkler Wachtel dated 17th August 2005 (see page 124 of
the Appeal Record of Bahagian A, B & C). This letter
evidences the fact that simultaneously with the exclusivity
supplier
agreement,
the
respondent
was
conducting
negotiations with Winkler Wachtel for the purchase of the
machines. The letter from Winkler Wachtel dated 17th August
2005 refers to an earlier enquiry about the machines from the
respondent concerning these machines. What is also clear from
this letter is that the respondent was dealing directly with
Winkler Wachtel. There is no evidence of the appellant being
involved with either Winkler Wachtel or the respondent at this
point of time since the hire purchase agreement was only
executed in February 2006. Against this backdrop, in our
judgment,
His
Lordship
when
considering
whether
the
respondent’s claim that Encik Lokman had made oral
11
representations were credible ought to have applied the
principle of law governing the exercise of judicial discretion in
cases to be determined on affidavit evidence. That is this:
“Where such assertion, denial or dispute is
equivocal, or lacking in precision or inconsistent
with undisputed contemporary documents or other
statements by the same deponent, or is inherently
improbable in itself, then the Judge has a duty to
reject such assertion or denial, thereby rendering
the issue not triable”
(see Bank Negara Malaysia v. Mohd Ismail [1992] 1
MLJ 400 at page 408).
In our judgment, if His Lordship had considered the
respondent’s pleaded case against the contemporaneous
documentary evidence including the terms and conditions of the
hire purchase agreement which will be examined later in this
judgment, His Lordship would have realized the respondent
hirer’s claim of the existence of oral representations to be
inherently incredible. We opine to this effect because there is
no evidence that the appellant knew the supplier before the
execution of the hire purchase agreement and less still to be in
possession of any information concerning the machines so as
to be in the position to make the alleged representations.
12
9.
The second characteristic of the typical hire purchase
agreement is that consistent with a finance company’s lack of
knowledge of the particulars of the business pursued by a hirer
and of the machines sought to be purchased by the hirer, the
standard hire purchase agreement invariably incorporates
covenants on the part of the hirer that it and it alone has
knowledge of the items forming the subject matter of the hire
purchase agreement and that the finance company as owner
disavows any responsibility for representations as regards the
merchantability, condition, quality, durability or suitability of the
said machinery / equipment. The standard hire purchase
agreement also invariably incorporates exclusionary terms to
exclude all promises, warranties and conditions, express or
implied by statute or otherwise whether given thereunder or
collateral to the hire purchase agreement so as to expressly
negative
and
extinguish
claims
of
oral
representations
purportedly by the finance company and its servant’s agents.
The purpose behind a finance company extracting such
covenants from the hirer is to preclude the hirer from
subsequently alleging that it had purchased the machinery on
the recommendation/ representations of the appellant. What is
common in our Courts is for the hirer to unsuccessfully raise
collateral oral promises by way of defence when confronted
with
claims
by
the
finance
company
for
outstanding
installments. In that event, the finance company would typically
rely on exclusionary clauses contained in the hire purchase
agreement
in
successfully
obtaining
judgment
for
the
13
outstanding installments. The question posed in this appeal is
whether the position should be any different because it is the
hirer who is suing the finance company?
10.
The respondent’s allegations of misrepresentation against the
appellant owner are not being raised by way of defence but in a
claim for damages. However, the cause of action is for a breach
of the hire purchase agreement, the alleged breach taking the
form of a collateral promise purportedly made by a staff of the
appellant owner as regards the merchantability / suitability of
the machines to meet the commercial needs of the respondent
hirer. In our judgment, irrespective of whether the hirer raises
the oral representations by way of defence or to found a claim,
the express covenants provided by the respondent hirer in
clause 14 and more particularly set out in paragraph 2 of this
judgment clearly serve to absolve the appellant of any liability.
For instance clause 14 (i) and (ii) includes covenants by the
respondent hirer that he personally selected the machines and
determined its suitability and merchantability, contrary to his
pleaded case. Clause 14 (iv) and (vi) includes covenants by
respondent hirer that he selected the machines based on his
own judgment and that he was personally satisfied as to its
performance. Finally, in clause 14 (vii) and (viii) the respondent
hirer acknowledged that his decision to purchase the machines
was not based on any representation, promises, or warranties
originating from the appellant. In our judgment, these clauses
clearly operate to absolve the respondent of any liability even if
14
the appellant’s assertions concerning the oral representations
purportedly made by Encik Lokman are true. With respect, the
Learned High Court Judge does not appear to have addressed
his mind to the covenants provided by the respondent hirer in
the hire purchase agreement at all. In this respect, it must be
borne in mind that our Courts have always recognized an
“entire agreement clause” in a contract as serving to preclude
the reception by the Court of any collateral promise so as to
defeat the expressed intention of the parties contained in a
contract (see Macronet Sdn Bhd v. RHB Bank Sdn Bhd [2002] 3
MLJ 11). With respect, in our opinion, the same principle of law
should be applied by our Courts so as to exclude claims of oral
representations when such claims are contrary to expressed
covenants in a hire purchase agreement. In our judgment,
when so applied claims based on oral representations contrary
to expressed covenants in the hire purchase agreement can
and should be summarily dismissed.
11.
A third aspect of a typical hire purchase agreement is the
incorporation in the agreement of conditions precedent to the
disbursement of the purchase consideration to the supplier
being subject to the written confirmation of the hirer that the
machines
were
in
good
order.
The
rationale for the
incorporation of such conditions precedent is, again, because
of the unfamiliarity of the finance company with the machines
and to avoid subsequent claims by the hirer arising from
defects at the point of the installation of the machines in the
15
premises of the hirer. Hence, the conditions precedent in the
first schedule of the hire purchase agreement that the appellant
owner was not to disburse any moneys to Winkler Wachtel until
“the hirer shall have confirmed that the machinery / equipment
are in good working condition” and
“the hirers should have
obtained a warranty from the supplier in respect of the
machinery / equipment for a period of one (1) year”. The
respondent hirer provided such written confirmation vide its
letter of 14th July 2006. The Learned High Court Judge refused
to accept the contents of this letter as discharging the appellant
owner
of any responsibility for the alleged defects in the
machines. His Lordship reasoned that whether the owner can
rely on this letter had to be determined by the court in a trial of
the action since the defect was discovered after the installation
of the machines. With respect, such a finding totally disregards
the terms of the hire purchase agreement which expressly
excludes liability on the part of the appellant owner for any such
defects. Additionally, this ruling overlooks the fact that the
conditions precedent in the form of those set out above are
included precisely because the appellant owner not being
familiar with the machines required the respondent hirer to
undertake the task of dealing with the supplier on all matters
relating to the performance status of the machines. This is also
consistent with the rights of the parties in contract since it is
only the respondent hirer who can sue the supplier for any
defect as the appellant owner is not a party to the contract for
the purchase of the machines. In any event, in our judgment,
16
the respondent hirer having induced the appellant owner to part
with the purchase consideration on its representation that the
machines were in good order is clearly estopped in law from
now contending otherwise particularly when the appellant
owner has made the provision of the letter of confirmation, a
condition precedent to the disbursement of the purchase
consideration.
12.
In our judgment, in the face of the terms and conditions of the
hire purchase agreement, the Learned High Court Judge ought
to have allowed the respondent’s application applying the
reasoning contained in this judgment. We are conscious that
the application before the Learned High Court Judge involved
points of law and our courts have traditionally refused to strike
out claims under O18 r19 if the resolution of the application
involved difficult issues of law. However, since hire purchase
transactions are common in this country and the hire purchase
agreement forming the subject matter of this application is a
standard hire purchase agreement, we are not persuaded of
the need for a trial. In our judgment, if the Learned High Court
Judge had followed the pronouncements Mohd Azmi FCJ (as
he then was) that:
“where the issue raised is solely a question of law
without reference to any facts or where the facts are
clear and undisputed, the Court should exercise its
duty under O14. If the legal point is understood and
17
the court is satisfied that it is unarguable, the Court
is not prevented from granting a summary judgment
merely because ‘the question of law is at first blush
of some complexity and therefore takes a little
longer to understand”
(at page 408)
when exercising His Lordship ‘s discretion, then, in our
judgment, His Lordship would have allowed the application and
struck out the respondent hirer’s claim as being wholly
unsustainable. Admittedly, the case of Bank Negara Malaysia v.
Mohd Ismail (supra) concerned an application for summary
judgment. However, in our judgment, the pronouncements of
His Lordship should be followed in all applications requiring
determination on affidavit evidence since Mohd Azmi FCJ in
making the aforesaid pronouncements was merely adopting the
pronouncements of Lord Diplock in the Privy Council case of
Eng Mee Yong & Ors. v Letchumanan [1979] 2 MLJ 212. Lord
Diplock, in turn, in Eng Mee Yong & Ors. v Letchumanan (supra)
was dealing with an application for the removal of a caveat.
Indeed, Mohd Azmi FCJ himself recognized this to be the case
when His Lordship said and I quote:
“Although Lord Diplock was dealing with an
application for removal of caveat in that particular
case, we are of the view that the above principle of
law is relevant and applicable in all cases where a
18
Judge has to decide a case or matter on affidavit
evidence.”
(at page 408)
For the reasons stated herein, we allowed this appeal and
struck out the respondent hirer’s claim. The order of the
Learned High Court Judge ruling to the contrary is hereby set
aside and the respondent ordered to pay costs of RM 10,000 as
costs here and below to the appellant. The deposit is hereby
ordered to be refunded to the appellant.
Sgd.
ANANTHAM KASINATHER
JUDGE
COURT OF APPEAL MALAYSIA
PUTRAJAYA
DATE OF DECISION: 8th AUGUST 2012
DATED THIS: 8th FEBRUARY 2013
19
COUNSEL FOR THE APPELLANT:
Mr. Abu Bakar Jais
Tetuan Hisham, Sobri & Kadir
Peguambela & Peguamcara
Tingkat 16, Pertama Kompleks
Jalan Tuanku Abdul Rahman
50100 Kuala Lumpur
COUNSEL FOR THE RESPONDENT:
Mr. Ang Khoon Cheong
Tetuan C.P. Ang Company
Peguambela & Peguamcara
No. 18, Lebuh Kampung Benggali
12000 Butterworth
Penang
REFERENCE:
1.
Bank Negara Malaysia v. Mohd Ismail [1992] 1 MLJ 400
2.
Macronet Sdn Bhd v. RHB Bank Sdn Bhd [2002] 3 MLJ 11
3.
Eng Mee Yong & Ors. v Letchumanan [1979] 2 MLJ 212
20