IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR (COMMERCIAL DIVISION) SUIT NO. D5-22-960-2002 BETWEEN CARMOND SDN BHD … (No. Syarikat : 140070-X) PLAINTIFF AND 1. RAWDYAH @ SITI RAWDYAH BTE DATO’ HJ SAMSUDIN 2. ABDULLAH BIN ALI … GROUNDS OF DECISION 1 DEFENDANTS Background Facts 1. This is the plaintiff’s claim against the first defendant as the principal debtor and the second defendant as a guarantor for the sum of RM4,171,181.00 as at 16.5.2002 and interest of RM4,699,214.00 as at 31.5.2002 being the balance purchase price of jewelleries sold to the first defendant. 2. It is the plaintiff’s case that since 1988 it sold jewelleries from time to time to the first defendant. As the first defendant became a regular customer of the plaintiff, the plaintiff had allowed part payment of the said jewelleries to be made on credit/deferred terms. The Plaintiff aver that until the month of November 1990, the first defendant had made full payments of all jewelleries that she had previously purchased. However, starting from December 1990, when she continued to make new purchases, she had failed to make full payment thereof. 3. The defendants deny owing the plaintiff the sum claim herein, being sums due and owing for jewelleries allegedly purchased by the first defendant. The first defendant states that she was not a customer of the 2 plaintiff but instead was an agent and/or partner of the plaintiff in the business of selling jewellery. The first defendant also states that she did not receive the jewellery allegedly valued at RM4,421,181 as claimed by the plaintiff and never received any benefit in relation thereto. The first defendant takes the position that her role was limited to introducing the plaintiff to customers and sold jewelleries on behalf of the plaintiff. The first defendant states that she was forced to sign the letter of admission of debt dated 23.5.2002 under duress. 4. The second defendant denies agreeing to be a guarantor to the plaintiff and pleaded in his defence that he was not involved with the business of the first defendant. Plaintiff Evidence 5. The plaintiff’s first witness, Ng Lay Bee (PW1), is a director of the plaintiff. PW1 testified that the first defendant frequently visited the plaintiff’s jewellery shop and purchased jewelleries at the Mall which is located next to Putra World Trade Centre. According to PW1, she would draw up invoices for those jewelleries and the first defendant would 3 acknowledge the purchase and confirm the amount payable by signing on the invoices. 6. PW1 said in evidence that as payment for those jewelleries were not made at the time of the purchase, she had created a debtor account for the first defendant for the purpose of keeping the records of all the transactions and any payment made (Exhibit P2 pg 1 Bundle B) for the debtor’s account and Exhibit P4 (a-g) for all the invoices). 7. PW1 explained that the details amount owing by the first defendant as at 5.6.2001 are as itemized below : Item Date No. 1. 9.12.1990 – Debit/ Credit/ Balance Purchase Payment (RM) (RM) (RM) 1,108,450.00 - 1,108,450.00 100,000,.00 1,008,450.00 26.6.1991 2. 22.7.1991 3. 14.8.1991 - 117,700.00 1,126,150.00 12.9.1991 4. 12.9.1991 21,000.00 4 1,105,150.00 5. 23.9.1991 100,000.00 1,005,150.00 6. 6.12.1991 140,150.00 865,000.00 7. 10.2.1992 – 1,298,000.00 2,163,000.00 16.3.1992 8. 28.2.1992 100,000.00 2,063,000.00 9. 18.3.1992 1,000,000.00 1,063,000.00 10. 8.5.1992 – 7,614,553.00 8,677,553.00 11.7.1992 11. 11.7.1992 2,000,000.00 6,677,553.00 12. 4.9.1992 2,500,000.00 4,177,553.00 13. 11.3.1991– 449,628.00 4,627,181.00 1,134,000.00 5,761,181.00 18.11.1992 14. 8.12.1992 – 17.7.1993 15. 16.11.1993 500,000.00 5,261,181.00 16. 4.9.1998 95,000.00 5,166,181.00 17. 1.6.2000 530,000.00 4,636,181.00 18. 5.6.2001 215,000.00 4,421,181.00 4,421,181.00 5 8. According to PW1, in November 1993, the defendants met with her and her husband (PW2) who is also the director of the plaintiff to discuss about the outstanding sum. In the meeting, the second defendant had agreed to guarantee the payment of the outstanding sum on condition the plaintiff give the first defendant two (2) years to settle the balance amount due. 9. PW1 said, she agreed to the second defendant’s request and then he handed over a cheques for the amount of RM500,000.00 dated 11.11.1993 (pg15 Bundle B) as part payment. The court notes that this payment was not disputed between the parties. 10. PW2 confirmed that there was a meeting between him, PW1 and the defendants whereby the second defendant agreed to guarantee the balance outstanding sum and handed a cheque of RM500,000.00 to PW1. Defendant’s Evidence 11. The first defendant Rawdyah @ Siti Rawdyah Bte Dato’ Hj Samsudin (DW1) is a housewife. In examination in chief, she testified that she was 6 an agent of the plaintiff and that PW1 relied on her for sale of the jewelleries to VIP and VVIP. DW1 informed the court that she was given many valuable gifts by PW1 for introducing customers to her. 12. PW1 said in examination in chief that she agreed to sign the invoices and statement of account without regard to the content thereof and without any query. During cross-examination when asked why did she acknowledged and signed the invoices and the statement of accounts this is what DW1 said : “Masa dia sign tu suruh saya confirm acknowledge the above figure kan is true and correct. Dia selalu macam tu. Pada saya tak kisah la kan, tulis macam tu, hobi dia. Saya ingat dia ni macam sengaja nak menganiayai saya. Saya sign sebab dia kata, dia macam hobi dia kan suruh sign, saya sign je lah tak sangka sampai ke Mahkamah.” 13. In reference to the letters of admission of the debt signed and acknowledged (Exhibit P28 and Exhibit P32), DW1 explained that she was forced to sign the admission of debt in the presence of gangsters employed 7 by the plaintiff. In cross-examination DW1 admitted that she did not lodge any police report in respect of the duress by the gangsters employed by PW1. 14. The second defendant, Abdullah bin Ali (DW2) is the husband of the first defendant. DW2 testified that he had never made any representation to the plaintiff to guarantee the payment of jewelleries purchased by the first defendant. 15. In cross-examination, DW2 denied that he met with PW1 and PW2 to discuss on the outstanding amount due. Further he said he knew PW1 and PW2 because sometimes the two of them will come to his house to meet his wife about business. 16. PW2 also confirmed in cross-examination that he received a notice of demand dated 4.3.2002 from the plaintiff asking him to make payment as the guarantor to his wife’s debt. In cross-examination, he admitted that he did not response to the said letter as he is not involve with DW1’s business. 8 Issues 17. Based on the facts of this case, the issues requiring determination are : (i) Whether the first defendant owed RM4699,214.00 to the plaintiff (ii) Whether the second defendant had given an oral guarantee to the plaintiff Whether the first defendant owed RM4699,214.00 to the plaintiff 18. The plaintiff is claiming the balance purchase price of the jewelleries amounts to RM 4,421,181.00 which remain unpaid by the first defendant as at 6.6.2001. The letter of demand dated 4.3.2002 was issued to the defendants based on this figure. The calculation of RM4,421,181.00 may be summarised as follows : 9 Item Date No. 1. 9.12.1990 – Debit/ Credit/ Balance Purchase Payment (RM) (RM) (RM) 1,108,450.00 - 1,108,450.00 100,000,.00 1,008,450.00 26.6.1991 2. 22.7.1991 3. 14.8.1991 - 117,700.00 1,126,150.00 12.9.1991 4. 12.9.1991 21,000.00 1,105,150.00 5. 23.9.1991 100,000.00 1,005,150.00 6. 6.12.1991 140,150.00 865,000.00 7. 10.2.1992 – 1,298,000.00 2,163,000.00 16.3.1992 8. 28.2.1992 100,000.00 2,063,000.00 9. 18.3.1992 1,000,000.00 1,063,000.00 10. 8.5.1992 – 7,614,553.00 8,677,553.00 11.7.1992 11. 11.7.1992 2,000,000.00 6,677,553.00 12. 4.9.1992 2,500,000.00 4,177,553.00 10 13. 11.3.1991– 449,628.00 4,627,181.00 1,134,000.00 5,761,181.00 18.11.1992 14. 8.12.1992 – 17.7.1993 15. 16.11.1993 500,000.00 5,261,181.00 16. 4.9.1998 95,000.00 5,166,181.00 17. 1.6.2000 530,000.00 4,636,181.00 18. 5.6.2001 215,000.00 4,421,181.00 4,421,181.00 19. PW1 in her testimonies went through the item listed in the table above, providing details of the items and showing the relevant documentary evidence. For ease of reference, the learned counsel for the plaintiff had summarized PW1’s evidence by cross referring to the invoices to each of the items in the table mention above as follows : 11 Items Total Invoices Documents in Amount Bundle B (RM) (pages) Remarks 1 1,108,450.00 18 - 38 Invoices Complete 3 117,700.00 40 - 44 Invoices Complete 7 1,298,000.00 48 - 53 Invoices Complete 10 7,614,553.00 3, 6-7 Invoices missing 13 449,628.00 55 - 57 Invoices Complete 14 1,134,000.00 58 -59 Invoices Complete 20. With regard to the missing invoices for item 10, PW1 explained that the invoices were parts of the documents taken away in a theft that occurred on 06.04.1999 at the plaintiff’s shop at The Mall and a police report was made (Exhibit P14 at pg 78 of Bundle B) had been produced. Further, the court notes that the amount owing for item 10 was also proven by the statement of accounts issued by PW1 to the first defendant. In this regard, the statement of accounts (Exhibit P 12) that had been tendered by the plaintiff as evidence to the court can be summarized as follows : 12 No Statement as at Outstanding Documents Whether Balance in Bundle B acknowledged? (RM) (pages) 1 26.6.1991 1,108,450.00 39 Yes. By DW1. 2 12.9.1991 1,105,150.00 45 Yes. By DW1. 3 23.9.1991 1,005,150.00 46 Yes. By DW1. 4 6.12.1991 865,000.00 47 Yes. By DW1. 5 16.3.1992 1,063,000.00 1 Yes. By DW1. 6 11.7.1992 6,177,553.00 54 No. 7 31.12.1999 5,166,181.00 66 Yes. By DW1. 8 17.7.2001 5,311,553.00 60 Yes. By DW1. 21. Following the issuance of the letter of demand, on 11.4.2002, the first defendant made partial payment of RM100,000.00 [exhibit P30, page 8 of Bundle C] and further, on 16.5.2002, the first defendant trade-in her used jewelleries for a sum of RM150,000.00 [exhibit P31, page 73 of Bundle B] to reduce her debt with the plaintiff. This payment and the trade-in arrangement had reduced the outstanding amount to RM4,171,181.00 as at 16.5.2002. 13 22. The amount of RM4,171,181.00 is the principal amount claim by the plaintiff in this action. Further, the court finds that this amount is duly confirmed in writing by the first defendant in a letter dated 16.5.2002 (pg 73 Bundle B, Exhibit P31). DW1 admits in cross-examination that the signatures on exhibit P31 was hers. The court finds that this is an evidence of admission to the amount claimed by the plaintiff. 23. Referring to the decision of Scrutton CJ in L. Estrange v F.Grancob Ltd [1934] 2 KB 394, the court in the case of Hee Teck Seng v. Lasman Das Sundra Shah [2000] 8 CLJ 317 states that: “When a document containing contractual terms is signed, then in the absence of fraud, or, I will add, misrepresentation, the party signing is bound, and it is wholly immaterial whether he has read the document or not” 24. The House of Lords in the case of Saunders v. Anglia Building Society [1971] AC 1004 held as follows: “A person who signs a document and parts with it so that it may come into other hands, has a responsibility, that of a normal man of 14 prudence, to take care what he signs, which, if neglected prevents him from denying his liability under the document according to its tenor.” 25. In respect of the interest claimed, by a letter dated 23.5.2002 the first defendant confirmed her agreement to the imposition of interest at the rate of 10% p.a and confirmed that the calculation of interest thereof was true and correct (Exhibit P32, Pg74-75 Bundle B). 26. However, the first defendant in her evidence in chief and in cross- examination said that she was coerced to sign the letter of admission by PW1 in the presence of gangsters. On this issue the court finds that the plaintiff never lodge any police report regarding the alleged threat by gangsters. In fact DW2 in cross-examination confirmed that DW1 never informed him of the threat by the gangsters allegedly employed by PW1. 27. In the absence of a police report, the allegation by the first defendant of duress must be construed as a bare allegation. In Soo Lip Hong v Tee Kim Huan [2005] 5 AMR 576, the Court of Appeal, per Mohd Ghazali Yusof JCA (as he then was) said : 15 “There was also no evidence of any police report or similar things alike to suggest that PW1 was attempting to cheat DW1. In the absence of such evidence, the only irresistible factual inference I could draw would be for the purpose(s) of purchasing the relevant property by PW1 from DW1 as agreed by both parties as evidenced by P1.” (see also Chong Wan Ping & Anor v Shamshudeen Hj Mohd Yunus [2010] 2 AMR 773). 28. Further, the court is in agreement with the submission of the learned counsel for the plaintiff that the plaintiff after admitting to the debt is now estopped from denying her liability to pay. 29. In the case of Hsbc Bank Malaysia Berhad v Lh Timber Products Sdn Bhd & Ors [2005] 8 CLJ 249 the doctrine of estoppel is elucidated in the following words: “The doctrine of estoppel is a wholesome rule. It is a rule entrenched in the English common law. Equity merely supplements the rule. It precludes a man from denying the existence of a state of affairs which he has previously asserted by words or conduct. Estoppel in pais (by words or conduct) has grown by leaps and bounds. The rule has always been that there would be estoppel where by words or conduct 16 there had been a representation of existing facts (Jorden v. Money [1854] 5 H.L.C. 185; Maddison v. Alderson [1883] 8 App. Cas. 467; and Neville v. Wilkinson [1782] 1 Bro. C.C. 543) and not of law (Territorial and Auxiliary Forces Association of the County of London v. Nichols [1949] 1 K.B. 35; Kai Nam v. Ma Kam Chan [1956] A.C. 358; and Tomlin v. Reid [1963] E.G.D. 338) which was intended to be acted upon and was in fact acted upon to his prejudice by the person to whom it was made (Canadian Pacific Ry. v. R. [1931] A.C. 414 at 429; Pickard v. Sears [1837] 6 Ad. & E. 469 at 474; Citizens’ Bank of Louisiana v. First National Bank of New Orleans [1873] L.R. 6 H.L. 352 at 360; and Dean v. Bruce [1952] 1 K.B. 11). The maker of the representation cannot renege against the person so acting that the facts are other than he has represented them to be.” 30. Applying the principle in the above case, the first defendant admissions both by words and conducts had amounted to representations that the nature of the transactions between her and the plaintiff and her liability to pay thereof were never disputed. Based on these representations the plaintiff had continued to sell the jewelleries to the first defendant. The first defendant cannot only now, in this case, deny the 17 nature of the transactions carried out between them since 1988 and her liability to pay. Whether the second defendant had given an oral guarantee to the plaintiff 31. The learned counsel for the plaintiff contended that the second defendant had given an oral guarantee to the plaintiff. The learned counsel for the defendants submitted that the burden is on the plaintiff to prove that the second defendant had given the oral guarantee to the plaintiff, referring to sections 101 and 102 of the Evidence Act 1980. 32. In my judgment, as the plaintiff desires this court to give judgment as to the legal right or liability, dependent on the existence of facts which he asserts in relation to the existence of an oral guarantee, the plaintiff must prove these facts exists, in accordance with section 101(1) and under section 101(2), of the Evidence Act 1950, the burden of proof lies on the plaintiff (see Nuri Asia Sdn Bhd v Fosis Corporation Sdn Bhd [2006] 5 CLJ 307; MBF Finance Bhd, supra, and Tenaga Nasional Berhad 18 (formerly Lembaga Letrik Negara Tanah Melayu) v Perwaja Steel Sdn Bhd (formerly Perwaja Terengganu Sdn Bhd) [1995] 4 CLJ 670 HC). 33. I have carefully perused the notes of proceedings, and find that the evidence adduced by the parties respectively pertaining to the existence or otherwise of an oral guarantee is sharply conflicting. Faced with such a conflict of oral testimonies of the means to determine its accuracy is by referring to and relying on contemporaneous acts and deeds of witnesses to draw reasonable inferences. This approach is adopted by the Federal Court in Tindok Besar Estate Sdn Bhd v Tinjar Co [1979] 2 MLJ 229 where Justice Chang Min Tat (as he then was) said: “For myself, I would with respect feel somewhat safer to refer to and rely on the acts and deeds of a witness which are contemporaneous with the event and to draw the reasonable inferences from them than to believe his subsequent recollection or version of it, particularly if he is a witness with a purpose of his own to serve and if it did not account for the statements in his documents and writings. Judicial reception of evidence requires that the oral evidence be critically tested against the whole of the other evidence and the circumstances of the case. Plausibility should never be mistaken for veracity.” 19 34. The above approach was also applied by James Foong J (as he then was) in Industrial Concrete Products [2001] 8 CLJ 262 and Low Hop Bing J (as he then was) in the case of Nuri Asia Sdn Bhd Supra. 35. In Noorianti Zainol Abidin & Ors. v Tang Lei Nge [1990] 1 CLJ 943 Lim Beng Choon J (as he then was) had occasion to say that the trial judge should not approach the case on the basis of deciding which story out of the conflicting stories that should be believe, but rather to consider which version was inherently probable or improbable. All things being equal, it is trite law that if the version of one of the parties is inherently probable, then the judge has no choice but to accept the version forthwith (see Chua Chong Cher v Teo Lang Keow & Ors [1970] 2 MLJ 27. Abdul Kadir bin Mohamad v Kamarulzaman bin Mohd Zin & Anor [2000] MLJU 658). 36. The second defendant’s denial of the oral guarantee hinged on his claim that he was totally unaware of the purchases of jewelleries by the first defendant. However, he admits in cross-examination that upon receipt of the Letter of Demand from the plaintiff’s previous solicitors [exhibit P29 at page 76 -77 of Bundle B] demanding payment from him as guarantor of the 20 first defendant, he did not take any action or even reply to the said letter. Subsequently he also testified that he never confronted the plaintiff for clarification. 37. Is it probable for the second defendant who claims to be unaware of the first defendant’s purchases of jewelleries and the oral guarantee to act in such a way? The court finds that it is inherently improbable for the second defendant to be indifferent and unconcerned about the demand especially since it involved substantial amount of money and alleges grave liability on him. 38. The court also finds that the first and second defendant’s testimonies also contradict each other. While the first defendant over protectively stated that the second defendant had never met either PW1 or PW2, the second defendant however stated that they have met occasionally at the defendants’ residence when PW1 and PW2 came over for meetings. In fact, I find that such contradictions impair the credibility of the defendants as witnesses. 21 39. Further the defendants contended that there was an agency relationship between the first defendant and the plaintiff and that there were third party customers who actually bought the jewelleries, however no independent evidence from this third party was offered by the defendants. No accounts of the alleged actual customers were provided. 40. In this case, upon balancing the demeanour of the first and second defendant against the rest of the evidences and probabilities of the case, I have come to the conclusion that they were not credible and thereby their oral evidence are of no value. In the case of Tan Cheng Hock v Chan Thean Soo And Anor [1987] 2 MLJ 479, Justice Edgar Joseph Jr (as he then was)held that: “In arriving at my finding as to credibility, I did not rely solely on demeanour for that has to be balanced against the rest of the evidence and the probabilities of the case. 41. It is settled law that oral evidence is sufficient to prove a fact in the absence of documentary evidence to support it. In the case of S T U v The Comptroller Of Income Tax [1962] MLJ 220 it was held that : 22 “In this case certain explanations given by the appellant to the officers of the Income Tax Department were rejected on the ground that there was no documentary evidence to support them. No doubt documentary evidence can in many cases be very cogent and convincing. The lack of it, however, should not invariably be a reason for rejecting an explanation. Not every transaction is accompanied or supported by documentary evidence. Much depends on the facts and circumstances of the case, but if the person who is giving the explanation appears to be worthy of credit, does not reveal any inconsistency and there is nothing improbable in the explanation, it can, in my view, be accepted.” 42. PW1 testified in her examination in chief as follows: “In November, 1993, the Defendants had met up with me and my husband, Mr. Lee to discuss the settlement of the outstanding sum. I had explained to the Defendants that the Plaintiff cannot withstand such a large debt as the Plaintiff is financially distressed due to the armed robbery at the shop in OUG. The Plaintiff has also been pressed by their supplier for payment of these jewelleries bought by the first Defendant. And unless the first Defendant settles the amount 23 due, the Plaintiff would have no choice but to take legal action to recover the amount due.” 41.PW1 further said that, “After some discussion, the second Defendant had requested the Plaintiff to withhold any legal action against the first Defendant and to give the first Defendant two (2) years to settle all the outstanding sum. If the Plaintiff agrees to the second Defendant’s request, the second Defendant will guarantee payment of the outstanding sum and make an initial payment of RM500,000.00. I agreed to the second defendant’s request and his agreement to guarantee payment of the outstanding sum. The second defendant then handed me a cheque for the amount of RM500,000.00.” 43. The cheque amounting to RM500,000.00 dated 11.11.1993 is found at page 15 of Bundle B. This payment to the plaintiff was admitted by the first defendant in her testimony during cross-examination. 44. The oral guarantee given by the second defendant was also witnessed by Mr. Lee Chin Fong @ Lee Chin Wah, one of the plaintiff’s 24 directors. Mr. Lee was called to testify as PW2. When asked about the meeting that was held in November, 1993 he state under oath as follows: “At this meeting, my wife and I had informed the Defendants that the Plaintiff is facing financial difficulties caused by the armed robbery at the shop in OUG and slow down in business. Also the Plaintiff’s supplier were chasing for payment for the jewelleries bought by the first Defendant. We also informed the Defendants that unless the first Defendant settles the amount due, the Plaintiff would have no choice but to take legal action against her. After some discussion, the second Defendant asked the Plaintiff to withhold legal action against the first Defendant and to give the first Defendant two (2) years grace period to settle her debt. And if the Plaintiff agrees to the second Defendant’s request, the second Defendant will guarantee payment of the outstanding sum and make an initial payment of RM500,000.00.” “My wife and I agreed to the second Defendant’s request and accepted his agreement to guarantee payment of the first Defendant’s debt. The second Defendant then handed RM500,000.00.” 25 a cheque to my wife for 45. PW1 and PW2 testimonies in respect of the oral guarantee were consistent and correspond with the rest of the evidence in respect of the sale transactions between the plaintiff and the first defendant. The sequence of events clearly shows that the oral guarantee from the second defendant came in November, 1993 when the first defendant’s indebtedness became intolerable to the plaintiff and the plaintiff was seriously contemplating to proceed with legal action against the first defendant. This version of PW1 was also corroborated by the undisputed fact that there was no new purchase by the first defendant since mid July, 1993. That version would certainly to my mind not something which would be inherently improbable. 46. In this regard, it is not improbable or unlikely for the second defendant as the husband of the first defendant to come to her rescue and guarantee the payment to the plaintiff in order to save his wife from legal proceedings. Thus, on balance of probability, I find that there is no reason me to reject the oral testimonies of PW1 and PW2 and therefore the testimonies ought to be accepted. 26 47. Hence, I am of the view that the plaintiff has proved on the balance of probabilities that the second defendant had given an oral guarantee. Conclusion 46. For the reason set out above, I find that on the balance of probabilities, the plaintiff has prove its case against the defendants and plaintiff is entitled to the relief sought and I hereby allow the plaintiff’s claim. I further award costs to the plaintiff. Dated 17.8.2010 (HANIPAH BINTI FARIKULLAH) JUDICIAL COMMISSIONER HIGH COURT KUALA LUMPUR (COMMERCIAL DIVISION) 27 Solicitor for the Plaintiff 1. Haryaty Ibrahim for the Tetuan PM Tan Yaty Chin Advocates & Solicitors 14-4-3A, Level 4 Bangunan Setia 1 15, Lorong Dungun Damansara Heights 50490 Kuala Lumpur Solicitor for the Defendants 2. Intan Mazlina Tetuan Kumar Partnership Suite 12.01-12.02, 12th Floor Wisma E & C, No. 2 Lorong Dungun Kiri Damansara Heights 50490 Kuala Lumpur 28