DALAM MAHKAMAH TINGGI MALAYA DI JOHOR BAHRU
DALAM NEGERI JOHOR DARUL TA’ZIM
RAYUAN SIVIL NO. MT (2) 12B-71-2010
ANTARA
AmFINANCE BERHAD (NO. SYARIKAT: 5493)
(dahulunya dikenali sebagai ARAB MALAYSIAN FINANCE BERHAD)
….PERAYU
DAN
1.
EUROPEMAS AUTOMOBIL SDN BHD
(NO. SYARIKAT: 349852-A)
…RESPONDEN PERTAMA
2.
MINSIN MACHINERY CORPORATION SDN. BHD.
… RESPONDEN KEDUA
JUDGMENT
GUNALAN A/L MUNIANDY, J.C :
The Appeal
[1]
This is an appeal against the decision of the Sessions Court
entering judgment for the First Respondent/Plaintiff against the
Appellant/Fifth Defendant in the sum of RM96,646.63 and dismissing
the Fifth Defendant’s claim against the Third Party (Second
Respondent).
[2]
Briefly, the facts are these. The First Defendant purchased
a motor-car from the Third Party (First Respondent) in this case. The
Fifth Defendant was the financier for the purchase. The First
Defendant then sold the car (JFB 1616) to the Plaintiff for RM
125,000.00 with the consent and approval of the Fifth Defendant. At
that material time the Fifth Defendant was the owner and the First
Defendant the hirer as the car was still under Hire Purchase. Plaintiff
paid RM96,646.63 to the Fifth Defendant to settle the outstanding
amount under the Hire Purchase Agreement between the First
Defendant and the Fifth Defendant. The Plaintiff paid RM26,572.70
to the First Defendant as the balance of the purchase price. The
Plaintiff sold another car (JFR 230) to the First Defendant. The facts
of the transaction between the Plaintiff and the First Defendant were
within the knowledge of the Fifth Defendant. The Plaintiff purchased
the car JFB 1616 with the Fifth Defendant’s consent and approval.
The Plaintiff later realised that the number 1616 was not good among
the Chinese and it would be difficult to sell the car. On 17.8.2000, the
Plaintiff assigned no. JDV 688 to the car and the no. JFB 1616 was
assigned to a motorcycle. On 12.9.2000, the police seized the car
(JDV 688) from the Plaintiff’s premises on suspicion that the car was
stolen. The police sent the car to the Chemistry Department and on
9.12.2000 informed the Plaintiff that the chassis number had been
tampered.
[3]
In his Grounds of Judgment (GOJ), the learned Sessions
Court Judge (SCJ) states that his reason for allowing the Plaintiff’s
claim was that as owner under the hire-purchase agreement (‘HPA’)
with the First Defendant, Fifth Defendant had failed to ensure that the
vehicle was in a fit condition without any defect to the chassis at the
time of sale to the Plaintiff. Further, that the Fifth Defendant had
failed to furnish any good consideration for receipt of RM96,646.63
from the Plaintiff and thus, had to return this sum by virtue of s. 66,
Contracts Act read together with the decision in Public Finance Bhd
v. Ehwan Saring [1996] 1 CLJ 628.
Plaintiff’s Claim Against Fifth Defendant:
[4]
It was not in dispute that the Plaintiff had paid the sum of
RM96,646.63 to the Fifth Defendant and the balance to the First
Defendant for purchase of the car. The issue that arose was whether
2
the Fifth Defendant, having had received an advantage had totally,
failed to give consideration in the sale to the Plaintiff? This in turn
depended on whether the Fifth Defendant had passed a good title to
the said vehicle upon receipt of the purchase price?
[5]
The SCJ made a finding that the Fifth Defendant had failed
to prove that the car which was sold to the Plaintiff by the First
Defendant had a good title whereas the Plaintiff had proved that the
car was indeed defective and not in a good condition. The cause of
action against the Fifth Defendant is based on negligence, particulars
of which are to be found in para 29 of the statement of claim. Hence,
the question of there being no privrity of contract between the Plaintiff
and the Fifth Defendant does not arise. What was being alleged
against the Fifth Defendant was that they had been negligent in
disbursing the loan to the First Defendant without ensuring that the
vehicle had a good title.
[6]
The basis of the Fifth Defendant’s defence is that at the
material time before the vehicle was successfully transferred to the
Plaintiff on 10.03.2000 and registered in the latter’s name, the vehicle
was not defective. Prior to that, the vehicle had been duly registered
by the JPJ in the First Defendant’s name. According to defence
evidence from the JPJ officer (SD2), the application for registration by
the First Defendant had been approved and at the time of registration
there was no defect in the chassis number or any evidence of
tampering. Similarly, when the Plaintiff applied for a change in the
vehicle registration number the compulsory Puspakom inspection
was carried out and a report issued. SD2 said that as certified in the
report dated 08.08.2000, the engine and chassis numbers were
correct. In short, the crux of the defence was that at the time of
seizure of the vehicle by the police a good title had already passed to
the Plaintiff which was evidenced by the JPJ registration and that, the
First Defendant had long parted with possession of the vehicle. As
such, these defendants were no longer liable for any losses arising
thereafter. The Plaintiff’s counsel submitted the First Defendant
could not pass a good title at that point in time because what had
been transferred to the Plaintiff was a defective vehicle.
3
[7]
The question for determination was whether the vehicle was
defective all along or whether it had only become defective when it
was in Plaintiff’s possession as alleged? The defence contention was
based on the Puspakom report that the vehicle was free from defects
and fit for registration and transfer of ownership. However, the defect
in this case was discovered by the Chemistry Department and not
Puspakom or JPJ. There was no evidence to the effect that the latter
agencies were in a position to certify that defects of the nature as
discovered through chemical examination did not exist. In any case,
it was highly doubtful whether they had the expertise to do so. More
importantly and significantly, at the time of the Puspakom inspection
in 1999 before the transfer of ownership to the Plaintiff was
registered, the vehicle bore the altered registration number, “ADB
1240266B676382” and not the original number, “ADB
1240266B653282”. Hence, the tampering or altering of the chassis
number was obviously not done when the vehicle was in the Plaintiff’s
possession. More importantly, the reliance on any Puspakom
inspection or report that the said chassis number had not been
tampered with as the basis of the Fifth Defendant’s defence was
misconceived. The reason for this is that this agency was unable
detect the tampering of the chassis number which it certified to be
correct whereas the Chemistry Department detected this same
number to contain a one-digit alteration.
[8]
In asserting that the said tampering of the vehicle had
occurred when it was in Plaintiff’s custody, the Fifth Defendant had
made a serious allegation against the Plaintiff. It is trite law, as
clearly spelt out in the Evidence Act, 1950 (s. 101) that he who
asserts the existence of a fact has the burden of proving its
existence. Thus, in this case, the Fifth Defendant bore the onus of
proving the said allegation. In the case of Lee Seng Kee v. Sukatno;
Ong Thean Soo (Third Party) [2008] 4 AMR 405; V.T. Singham J
held, inter alia:
“The burden of proof lies upon a party who affirms a fact
rather than upon a party who denies it (See Moni Kant Tiwari
v Baburam Dixit AIR 1978 All 144; Ng Chui Sia v. Maimon
bte Ali [1982] 1 LNS 95; [1983] 1 MLJ 110 at 111).
4
The “evidential burden” is often referred to as the “burden of
adducing” evidence. It imposes upon a party to adduce
sufficient evidence of a fact in order to justify a finding of that
fact in his favour. The evidential burden is said to be
discharged when there is sufficient evidence to justify a
favourable finding by the trier of fact. It is only when a party
discharges the evidential burden in relation to a particular
fact, namely, negligence as in the instant case, his adversary
will be obliged to adduce counter evidence for the trier of fact
to consider and if convinced to find in his favour. If the
adversary elects not to adduce the counter evidence, he
runs the risk of the trier of fact finding on that issue in favour
of the adversary. (See speech of Lord Goddard CJ in R v.
Matheson [1958] 1 WLR 474 at 478;)
[9]
Looking at the evidence, particularly the Puspakom and
Chemist Reports, it was manifest that right from the time the vehicle
was transferred to the First Defendant and registered in his name, it
carried a tampered chassis number and was thus, defective. Hence,
the First Defendant could not have passed a good title to the Plaintiff
and the fact that the vehicle had been duly registered by JPJ in the
name of the Plaintiff did not make a difference. It is trite law that the
mere transfer of a vehicle and registration in the name of the
transferee did not have the effect of passing a good title to the
transferee if the vehicle itself is defective. The transfer of property
envisaged in s. 4(1), Sale of Goods, Act, 1957, insofar as a motorvehicle is concerned should be construed as one having a good title
and not defective to such an extent that it is liable to seizure by the
authorities. Failure by the vendor to ensure this would render the
contract void under s.7 of the same Act and/or s. 57(2), Contracts
Act, 1950 for a total failure of consideration, which was evident in the
instant case.
[10]
In Lian Lee Motor Sdn. Bhd. v. Azizuddin Khairuddin [2001]
1 CLJ 768, KC Vohrah J. held that:
“…. the transfer of property stated in s.4 (1) of the Sale of
Goods, Act 1957 (‘the Act’) constitutes the essence of a
5
contract of sale and the seller who does not so transfer
property breaks the basic duty created by the contract and
there is a total failure of consideration.”.
[11]
In view of the above, I held that the decision of the learned
SCJ that the First Defendant had failed to give valuable consideration
to the Plaintiff in regards to the contract of sale and thus, that the Fifth
Defendant was liable to return the money received from the Plaintiff
was correct in law and in fact.
Appellant/Fifth Defendant’s Claim Against
Second Respondent/Third Party
[12]
The SCJ dismissed this claim on the ground that this claim
was based on an implied contract of indemnity as pleaded but that,
the Fifth Defendant failed to produce any evidence of the said
contract. There was thus, a failure to prove that a contract of
indemnity subsisted between the Fifth Defendant and the Second
Respondent at the material time and as such, there was no basis for
this claim.
[13]
A perusal of the Fifth Defendant’s statement of claim (pages
47 – 49, Appeal Record) against the Third Party would show clearly
that the cause of action is based on the Third Party’s purported
obligation to indemnify the Fifth Defendant against any claim for
losses arising from defects in the vehicle. It is averred that the Third
Party was so liable as the Fifth Defendant was a bona-fide purchaser
for value who had made full settlement of the purchase price. The
Third Party’s defence was that before the purchase the Fifth
Defendant had conducted a thorough inspection of the vehicle as
reflected in the Vehicle Inspection Report and that, the authorities
had certified the vehicle to be in a fit and acceptable condition for the
transfer of ownership to be registered. The Third Party denied having
any obligation to reimburse or indemnify the Fifth Defendant against
any claims for losses by third parties as averred.
6
[14]
It is trite law that for a cause of action founded on indemnity
to succeed it is necessary to prove that there existed a contract of
indemnity between the parties setting out the obligation to indemnify
and the terms and conditions under which the obligation arises. In
the instant case, there was no proof whatsoever of any contract of
indemnity between the parties under which the Third Party undertook
to indemnify the Fifth Defendant for any losses incurred after
completion of the sale and transfer of the property. This is a typical
case where the parties concerned seemed to be victims of
circumstances and the loss must lie where it falls. For these reasons,
the decision of the learned SCJ that the Fifth Defendant’s claim
against the Third Party for indemnity had not been proven and had no
merit on the facts was correct and not shown to be erroneous. The
remedy of indemnity is provided for under s. 77 of the Contracts Act,
1950 whereby the right to indemnity arises from the existence of a
contract of indemnity between the parties to indemnify one party
against losses caused by the other party.
[15]
A third party proceeding is distinct and separate from the
main action such as between the Plaintiff and Defendants in this
case, one of whom was the Appellant. The Appellant as the Plaintiff
in the Third Party proceedings has to show the existence a valid and
sustainable cause of action against the Third Party and cannot rely
on the Plaintiff’s pleaded cause of action against the Defendants to
establish its claim. [See Mat Abu bin Man v. Medical Superintendent,
General Hospital, Taiping, Perak [1989] 1 MLJ 226]. From the facts
and evidence, the Appellant had clearly failed to do this.
Decision
[16]
The law on appeal is well settled that where the trial court’s
decision revolves around findings of fact, the appellate court should
be slow in interfering with the decision save where a manifest error of
law or fact is shown. In Bong Nip Moy v. Narayanasamy & Anor
[1973] 1 MLJ 250, the Federal Court ruled that:
7
“The appellate court should not interfere with the findings of
the trial judge who had seen and heard the witnesses and
made his findings thereon.”.
[ See also Heller Factoring Sdn Bhd v. Metalco Industries Sdn.Bhd.
(1965) 2 MLJ 153].
[17]
In the instant case, it was the SCJ’s finding of fact that the
Appellant had failed to rebut the evidence on a balance of
probabilities that the First Defendant had delivered a defective vehicle
which made it impossible to pass a good title but had received an
advantage under a void contract. He was satisfied that the Plaintiff
had produced sufficient evidence that the chassis number of the
vehicle had been tampered with before it came into the Plaintiff’s
possession.
[18]
For the reasons as elaborated, I held that, from the facts
established in this case, the SCJ’s decision was right and did not
occasion disturbance. The Appellant had failed to show that the SCJ
had made any erroneous finding of fact or serious error of law. I,
thus, found no merits in this appeal and upheld the decision of the
trial court and maintained the order.
Dated: 27th August 2010
( GUNALAN A/L MUNIANDY )
Judicial Commissioner
High Court
Johor Bahru.
8
For the Appellant
:
Puan Wan Nornazifah Wan Mansor
Tetuan K.K Lim & Associates
Peguambela & Peguamcara
Johor Bahru.
For the Respondents
:
1) Encik T. Balaskanda
Tetuan Zaman & Associates
Peguambela & Peguamcara
Johor Bahru.
2) Encik C.M. Yeo
Tetuan CM Yeo & Associates
Peguambela & Peguamcara
Johor Bahru.
9