Amfinance Berhad V Reinplas (M) Sdn Bhd & 2 Ors


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CIVIL APPEAL NO. W-02-2430-09/2011 BETWEEN










CIVIL APPEAL NO. W-02-2429-09/2011 BETWEEN








(In the matter of Civil Trial No: D-22-1198-2009 before the High Court of Malaya sitting in Kuala Lumpur)




Balia Yusof bin Hj. Wahi, JCA Mohd Zawawi bin Salleh, JCA Umi Kalthum binti Abdul Majid, JCA








[1] Parties will be referred to as plaintiff and defendants, as they were in the court below.


[2] The first defendant entered into a hire purchase agreement (the agreement) with the plaintiff, a finance company on 31.7.1997 for a unit of machinery known as Twin Discharge Dry Mix Concrete Batching Plant, Model: Mega 3. The second and third defendants jointly and severally agreed to indemnify the plaintiff against any loss or damages whatsoever resulting or arising out of any breach or non performance by the first defendant of its obligations and duties under the agreement. Under the agreement, the first defendant agreed to pay the plaintiff 48 monthly instalments of RM10,269.00 per month on or before the first of each month with effect from 1.9.1997, with the final instalment of RM10,240.20.


[3] The first defendant had defaulted on its monthly instalment payments and a Notice of Intention to Repossess was issued by the plaintiff on 17.3.1998 asking the first defendant to rectify its default within 7 days from the service of the said notice. Upon receiving the said notice, the first defendant continued to pay the monthly instalment.






[4] The first defendant again defaulted on the monthly instalment making its last payment on 31.7.1998, where it paid a sum of RM7,200.00.


[5] On 19.8.1999, the plaintiff through its solicitors had issued a letter of demand for the payment of arrears and accruing interest and also to recall the whole outstanding amount under the agreement. On 27.10.1999, the plaintiff filed Civil Action No. D-3-22-2886-1999 against the first defendant seeking for the recovery of the sums due together with interest (first suit). The first suit however, was suspended to allow the parties to negotiate a settlement of the five other accounts that the first defendant had with the plaintiff.


[6] At all material times, the machine was in the possession of the first defendant until it was reported stolen on 29.5.2001. On 8.6.2001, the first defendant informed the plaintiff about the theft of the said machine and filed a claim with the insurers. The plaintiff further suspended and subsequently discontinued the first suit on 22.10.2001 to, inter alia, afford the first defendant’s claim with the insurers. Meanwhile, the first defendant continued to make repayments of three of its five accounts with the plaintiff. On 17.8.2004 the insurers rejected the first defendant’s claim.






[7] The plaintiff, through its solicitors, issued a Notice of Termination dated 27.5.2004 to demand for the sum of RM644,397.56 as at 18.5.2004 being arrears due and owing under the agreement. On 30.6.2004 the plaintiff filed its claim against the defendants.


The High Court Decision


[8] On 19.8.2011, the High Court allowed the plaintiffs’ claim with cost RM10,000.00.


[9] In allowing the plaintiff’s claim, the learned High Court judge had ruled that the plaintiff is only entitled to the outstanding sum of RM393,291.00 together with the insurance premium of RM6,370.00 with interest at 1.16% per calendar month as provided under clause 2 of the agreement. The said sum RM393,291.00 is the outstanding amount remaining unpaid under the said agreement as at 18.5.2004. As for interest, the learned High Court judge ruled that the plaintiff is only entitled to claim interest on the sum from 1.8.1998 (the last date of the repayment under the agreement being 31.7.1998) to 8.6.2001 (the date when the plaintiff was notified of the theft of the goods). The learned High Court judge also allowed interest at 4% from the date of judgment (19.2.2011) to date of realisation.






[10] The said finding by the learned High Court judge was premised on the conclusion reached by Her Ladyship that the plaintiff ought to have taken steps to repossess the machine the moment there was a breach by the defendant in making repayments of the amount due under the agreement and also because of the plaintiff’s failure to mitigate its losses.


The Appeals


[11] Being dissatisfied with the decision, both the plaintiff and the defendants filed their respective appeals.


[12] In appeal no W-02-2430-09/2011, the plaintiff is appealing against a part of the decision given by the learned High Court judge which allowed the plaintiff to claim interest at a rate of 1.16% per month on the judgment sum of RM393,291.00 beginning from 1.8.1998 to 8.6.2001 and thereafter interest at a rate of 4% per annum from 19.8.2011 to date of realisation.


[13] The defendants, in appeal no. W-02-2429-09/2011 are appealing against the whole decision.






[14] The two appeals were heard together and we proceeded with the hearing of the plaintiff’s appeal in Appeal No. W-02-2430-09/2011. We allowed the appeal. Following that, the defendants withdrew their appeal in Appeal No. W-02-2429-09/2011.


The Plaintiff’s Claim


[15] Paragraph 15 of the plaintiff’s statement of claim reads:


“15. Oleh yang demikian, Plaintif menuntut terhadap Defendan-Defendan


secara bersesama dan berasingan seperti berikut:


i) Jumlah sebanyak RM644,397.56 yang dikira setakat 18.05.2004;


ii) Faedah pada kadar 13.9% setahun dikira secara harian akan dikira atas baki belum jelas berjumlah RM393,291.00 dari 19.05.2004 sehingga penyelesaian keseluruhannya;


iii) Kos;


iv) Apa-apa pelepasan atau remedi yang difikirkan munasabah oleh Mahkamah Yang Mulia.”


[16] It is pertinent to put down the details upon which the abovesaid claim of the plaintiff is founded. The said claim is based on the following calculation as stated in paragraph 13 of the statement of claim:




Harga Sewa Beli




Campur : Caj Terma Jumlah Harga Sewa Beli










Tolak : Deposit RM 43,000.00


Baki Ansuran Belum Berbayar RM492,883.20


Tolak : Bayaran Ansuran telah dibayar RM 89,353.00


: Bayaran terdahulu RM 10,240.20


Baki ansuran belum berbayar RM393,291.00


Campur : Faedah Tertunggak setakat 18.05.04 RM244,736.56




Campur : Premium Insuran RM 6,370.00


Jumlah Tertunggak setakat 18.05.2004 RM644,397.56 ”




[17] At the outset of the hearing, learned Counsel for the plaintiff had informed the panel that the only issue which he wished to canvass before the court is whether the plaintiff as the owner of the goods has a contractual duty to repossess the same under the hire purchase agreement. Learned counsel for the respondents was in agreement with the said proposition.


Our Decision


[18] It is the contention of the plaintiff that it has no contractual duty to do so and reliance was placed on clause 5 of the agreement. Clause 5 merits reproduction and it reads as follows:


“5. If the Hirer shall


a) make default in punctually paying the initial payment or any of the hire rentals or any other sums payable under the Agreement (whether demanded or not), or






b) commit any act of bankruptcy or have a receiving order made against him or if a liquidator or trustee shall be appointed of any portion of his estate or effects or if he shall convene any meeting of creditors or make a deed of assignment or arrangement or compound with his creditors or (being a company) shall pass a resolution for winding-up or have a petition for winding-up presented or have a receiver appointed or die or


c) have any execution or distress levied or allow the goods to be seized under any distress execution or other process or allow a judgement to remain unsatisfied or


d) fail to observe and perform any of the terms conditions and stipulations on his part herein contained or


e) do any act or thing which in the Owner’s opinion may prejudice or jeopardise its rights of ownership of the goods or


f) have been convicted by any competent court of a criminal offence


then it shall be lawful for the Owner (but without prejudice to the Owner’s claim for arrears of hire or damages for breach of Agreement and without discharging any liability of the Hirer to the Owner) without notice to terminate this hiring or by written notice sent (by post or otherwise) to or left at the Hirer’s last known address forthwith to determine this hiring, and the Owner’s consent to the Hirer’s possession of the said goods shall be deemed to be withdrawn and the Hirer shall forthwith at the Hirer’s expense deliver up the said goods to the Owner and the Owner and its servants or agents shall be entitled without any notice to enter upon any premises where the said goods may be and seize and take possession thereof and to recover all charges costs and expenses incurred in connection therewith.”






[19] Learned counsel for the plaintiff further referred to us the case of Am Finance Bhd v. Ultimate Eight Sdn. Bhd & Ors [2014] 1MLJ 210


to which we were grateful. In that case, this Court had decided that there was no contractual duty imposed on the owner to repossess the goods from the hirer. In the aforesaid case, the facts are very much similar to the instant appeal wherein there was a default of payment of rentals of the equipment under a hire purchase agreement. The hire purchase agreement, like the agreement in the instant appeal, is not subject to the Hire Purchase Act 1967.


[20] Among the issues raised in the said case is whether the appellant/owner was in breach of the hire purchase agreement by not repossessing the equipment. The Court had considered clause 5 of the hire purchase agreement which is identical to clause 5 reproduced above and held that it was incumbent upon the respondent/hirer to deliver up the equipment upon its default of payment. There was no contractual duty imposed on the appellant/owner to enter the premise of the respondent to repossess the equipment.


[21] Coming back to the instant appeal, having laboriously gone through the provisions of clause 5 of the agreement, the learned High Court judge concluded that “the plaintiff ought to have taken steps






towards physical repossession of the said machine when the 1st defendant failed or did not deliver up the said machine” ( see page 31 Rekod Rayuan Jld 1).


[22] Premised on this finding, at paragraph 21 of the written grounds of judgment (pg 32 Rekod Rayuan Jld 1), the learned High Court judge had gone further to find that the plaintiff ought to have mitigated its losses by repossessing and reselling the said machine when the 1st defendant failed to deliver up the same. Her Ladyship further held that the plaintiff is only entitled to the balance outstanding up to when the plaintiff was notified of the theft of the equipment, that is on 8.6.2001. As to interest on the sum allowed, the learned High Court judge also allowed up to the same date of 8.6.2001 at the rate of 1.16% per calendar month as provided in the agreement.


[23] At paragraph 30 (pg 36 Rekod Rayuan Jld 1) of her written grounds of judgement, the learned High Court judge had given her reasons as follows:


“…On the facts of this case, I find compelling reasons to allow the imposition of interest only until the date when the said machine was reported stolen because of the conduct of the Plaintiff in not mitigating its loss by taking repossession of the said machine and then reselling it. If the Plaintiff had repossessed and resold the said machine, that would have at least afforded the Defendants an opportunity of a






reduction of the sums due as would ordinarily have been the case in the law of damages”.


[24] We found these reasons to be unsustainable. In our view, the learned High Court judge had erred in her interpretation of clause 5 of the agreement. There was no contractual duty on the part of the plaintiff to repossess and/or to resell the goods and thus mitigating its losses.


[25] We had considered the relevant clause in the agreement and we found no ambiguity whatsoever in the provision. We would give effect to the clear, unambiguous and plain words of the said clause. We found no reason to differ from the earlier decision of this Court in Am Finance Bhd v. Ultimate Eight Sdn. Bhd & Ors (supra).


[26] For the aforesaid reasons, on the question which was raised as an issue in this appeal, we answered the same in the negative.


[27] In the upshot, the plaintiff’s appeal was allowed and we set aside the judgment of the High Court and the plaintiff’s claim as set out in the prayers at paragraph 15 of the statement of claim was allowed.






We ordered costs of RM20,000.00 here and below to the plaintiff and the deposit to be refunded.


[28] Upon the withdrawal of the defendant’s appeal No. W-02-2429-09/2011, we ordered the same to be struck off with cost of RM2,000.00 and the deposit to be refunded.




DATO’ BALIA YUSOF B. HJ. WAHI Judge, Court of Appeal Malaysia


Dated: 15 May 2015




For Appeal No. W-02-2430-09/2011:


Hargopal Singh, Tetuan KK Lim & Associates for the Appellant.


N. Nathan and KY Lee, Tetuan Kumar Jaspal Quah & Aishah, Advocates & Solicitors for the Respondents.


For Appeal No. W-02-2429-09/2011:


N. Nathan and KY Lee, Tetuan Kumar Jaspal Quah & Aishah, Advocates & Solicitors for the Appellants.


Hargopal Singh, Tetuan KK Lim & Associates for the Respondent.



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