Josu Engineering Construction Sdn. Bhd. V Tsr Bina Sdn. Bhd.


Download PDF Here













(Dalam Mahkamah Tinggi Malaya Di Seremban Dalam Negeri Sembilan Darul Khusus, Malaysia Writ Saman No: MT1-22-2-2004




Josu Engineering Construction Sdn. Bhd. … Plaintif


(No. Syarikat: 117040-V)




TSR Bina Sdn. Bhd.


(No. Syarikat: 220440-W) … Responden)




Mohd. Ariff Md Yusof, JCA Mohd Zawawi Salleh, JCA Idrus Harun, JCA


– 1 –






[1] The appeal arose out of the Seremban High Court’s decision dated 23.5.2014 dismissing the appellant’s application for interim payment under Order 22A of the Rules of Court 2012 (“RC 2012”).


[2] There are no written grounds of judgment of the High Court. We do not, therefore, have the benefit of the High Court’s reasoning for dismissing the application.


Facts of the Case


[3] The facts giving rise to this appeal may be summarised as follows:


(a) On 5.1.2014, the appellant commenced an action against the respondent for breach of contract. The respondent in turn filed its defence and counter-claim against the appellant also for breach of contract.


(b) On 6.2.2007, the High Court allowed the appellant’s application to strike out the respondent’s defence and counter-claim pursuant to Order 34 of the Rules of the High Court 1980 and entered judgment on liability in favour of the appellant.


– 2 –


(c) On 2.3.2007, the respondent filed an appeal to the Court of Appeal against the decision of the High Court dated 6.2.2007 (the 1st appeal).


(d) On 4.4.2007, the respondent filed an application to set aside the judgment dated 6.2.2007 and to reinstate the defence and counter-claim. Following thereto, the respondent withdrew the 1st appeal.


(e) On 3.2.2008, the respondent’s application was dismissed by the High Court on the ground that the proper cause of action should have been by way of appeal to the Court of Appeal.


(f) On 4.2.2009, the respondent filed an appeal to the Court of Appeal against the decision dated 3.2.2009 (the 2nd appeal).


(g) On 16.8.2011 the 2nd appeal was dismissed by the Court of Appeal.


(h) The respondent then applied for leave to appeal to the Federal Court. The leave application was dismissed on 14.2.2012.


(i) On 30.8.2012, the appellant filed an application for assessment of damages; and


– 3 –


(j) On 28.5.2013, the appellant filed an application under Order 22A of the RC 2012 for an order for interim payment. As stated earlier, the High Court dismissed the appellant’s application. Hence, this appeal.


The Appeal


[4] The appellant assailed the impugned decision on various grounds. However, we find that the appeal can be disposed of on the following two key issues:


(a) whether the appellant’s application for interim payment is pre-mature; and


(b) whether the circumstances of this instant appeal do not warrant an order for the interim payment to be made.


[5] Learned counsel for the respondent submitted that the appellant’s application for an interim payment is pre-mature. In support of his submission, reliance was placed on the decision of the High Court in Loy Teck Chye v Antah Sedgwick v Chartered Insurance Brokers Sdn. Bhd. (Kuala Lumpur High Court Suit No: D10(D4)-22-214-1994) (2009) 1 LNS 684, where Mohamed Apandi Ali J (as he then was) said:


“Since the Plaintiff has already filed an application for assessment of damages vide Enclosure 59, the Plaintiff’s application for an interim payment is pre-mature and should be refused. If is only upon assessment that the


– 4 –


Court can determine what sum that can properly be said to be due to the appellant.”.


[6] With respect, on the factual matrix of this instant appeal, we are unable to agree with the submission.


[7] At the outset, it is important to have the term “interim payment’ clearly defined. “Interim payment’ is payment paid to a plaintiff on account of final damages, that is before the assessment of damages has been completed. They are paid primarily to overcome financial difficulties which a plaintiff might experience pending final assessment (See NSW Law Reform Commission, Report 78 [1986] – Provisional Damage).


Issue (a)


Legal Principles on Interim Payment


[8] An interim payment of damages can be made in accordance with Order 22A of the RC 2012, where the Court is “satisfied” that “the plaintiff has obtained judgment against the defendant for damages to be assessed” (see rule 3(b)), or “if the action proceeded to trial, the plaintiff would obtain judgment for substantial damages against the defendant’ (see rule 3(c)).


[9] As shown above, rule 3(c) allows interim payment of damages even though liability is still in question.


[10] Courts in England have interpreted the burden placed upon a plaintiff seeking interim payment to be something more than a


– 5 –


prima facie (at first glance) standard, but something less than the criminal standard.


[11] In Shearson Lehman Inc. v Maclaine, Watson Ltd, [1987] 1 W.C.R 480, Lloyd, L.J explained at p 489:


“Something more than a prima facie case is clearly required; but not proved beyond reasonable doubt. The burden is high. But it is a civil burden on the balance of probabilities, not a criminal burden. This involves no lasting hardship on the defendant since there is a provision for readjustment at the trial in case of an overpayment.”.


[12] This decision was followed in Ricci Burns Ltd. v Toole [1989] 1 W.L.R 993:


“The standard of proof on the probabilities is high but is it not necessary to exclude every possibility of failure because the order for interim payment may be reversed at trial.”.


[13] The following comments of May, L.J. in Gibbons v. Wall, (12 February 1988), (C.A) (unreported) were quoted with approval by Browne-Wilkinson VC in British and Commonwealth Holdings PLC v Quadrex Holdings Inc. [1989] 3 All E.R 492 at 509:


“[T]he civil burden of proof…is a flexible test…and it depends upon the nature of that which has to be proved where on the flexible scale of the balance of probabilities one has to pitch the burden…in the context of an application for an interim payment … the burden is a high


– 6 –


one within that standard if only because litigation of its nature involves no certainties. A plaintiff with what may appear on paper to be a strong case may find it fail at trial.


If he does then he will have to repay the whole or to the extent that he fails, part of the interim payment. But … the plaintiff may spend it …. If he does it may be difficult … to recover if he fails ultimately at trial. Clearly the burden resting upon an applicant in those circumstances is towards the top of the flexible scale.”.


[14] In David Chelliah v Monorail Malaysia Technology Sdn.


Bhd. [2005] 2 AMR 173, our Malaysian Court of Appeal held that –


(a) the standard of proof required in an application for interim payment is on the balance of probabilities (paragraph [11]);


(b) underlying purpose of Order 22A is to provide for an interim payment to alleviate a plaintiff’s hardship which may exist during the period from the commencement of an action to the conclusion of the trial: see paragraph [12]; and


(c) there is no necessity for the plaintiff to show that he would suffer prejudice if he did not obtain an interim payment; neither must he show that a particular sum is required to cover a need. In awarding an interim payment, the court is not concerned with how the money is to be spent.


– 7 –


[15] Discussing the current English rules, (which are in pari materia with those contained in the Malaysian Order 22A of RC 2012), this is how the required standard of proof is treated in Blackstone’s Civil Practice, 2008 (at page 454, para 36.9):


“On an application under CPR, r. 25.7(1)(c), (d), the court has to be satisfied on the balance of probabilities that the claimant ‘would’ obtain judgment. This wording is identical to that used in the old rules (RSC, Ord. 29, rr. 11(1 )(c) and 12(1 )(c)), and it ought to be the case, despite the new approach to interpretation, that the same principles will apply regarding the standard of proof on these two grounds. If so, it has to be shown that the claimant will win on the balance of probabilities, but at the upper end of the scale, the burden being a high one. Being likely to succeed at trial is not enough.”. (Emphasis added).


[16] In Civil Procedure (second edition) by Paula Loughlin and Stephen Gerlis, the authors’ view of the position is stated thus: –


“An interim payment may be made… where the claimant has a very strong claim against the defendant”.


“They are regularly made.. where liability is often easily established”. (emphasis added).


[17] Paragraph 36.13 of Blackstone’s Civil Practice, 2008 (page 455), is also quite instructive: it likens applications for interim payment to applications for summary judgment. The paragraph reads as follows:


– 8 –


“It is quite common to combine applications for summary judgment with applications for interim payments. Summary judgment is available where the defence has no real prospect of success, and interim payments are available where the claimant can show that liability will be established. Obviously these are similar concepts.”.


[18] Order 22A of the RC 2012 does not restrict interim payment of damages to any type of action. In England, where the approach is to identify particular types of claim in which an interim payment may be made, the rules essentially cover every type of action. (See England & Wales, Rules of the Supreme Court, Ord.29, rr. 11 & 12).


[19] The English Court of Appeal in Schott Kem Ltd v Bentkey [1990] 3 All E R 850 held at page 858 that there is “no basis for any further limitation on the jurisdiction of the court to order interim payments than those set out in Ord. 29 itself.” .


[20] Where the judgment was entered in favour of the appellant/plaintiff and for damages to be assessed, it was held by English Court of Appeal to be a proper case for ordering interim payment (See Stringman (A Minor) v McArdle [1994] 1 WLR 1653).


[21] Thus, in our view, interim payments can be ordered in actions other than personal injury cases such as proceedings for contractual claims, actions for wrongful death, product liability


– 9 –


actions, wrongful dismissal claims, trespass to land, misappropriation of funds, and actions for property damaged.


[22] There are strong policy grounds for the Courts to order interim payments in an appropriate case. It is in the interests of the administration of justice and of plaintiffs in particular, that defendants be encouraged to make early voluntary interim payments so as to alleviate financial hardship on the part of the plaintiffs.


[23] In this instant appeal, there is no need for the court to consider any question of potential liability as it is simply not an issue. The judgment on liability has been awarded in favour of the appellant pursuant to the High Court order dated 6.2.2007. What are left to be assessed are the quantum/amounts of damages of the appellant’s claim in paragraphs 9.1(a) to 9.1 (l)(iii) of the Statement of Claims.


[24] In David Chelliah (supra), the appellant had obtained judgment against the respondent for damages to be assessed, yet the Malaysian Court of Appeal held that it was a proper case for ordering interim payment. Similarly, there was no judgment o liability entered in the cases of Schott Kern and Shearson Lehman (supra), but the courts ordered interim payment in those cases.


– 10 –


[25] In the circumstances, in this instant appeal, the application for interim payment by the appellant is not pre-mature.


Issue (b):


[26] Learned counsel for the appellant submitted that the circumstances of this instant appeal did not warrant an order for interim payment to be made on the following grounds:


(a) The appellant had failed to discharge the burden of proof that the loss alleged to have been suffered was caused by the respondent’s breach;


(b) There is no urgency; and


(c) The appellant did not suffer any hardship.


[27] Concerning ground (a), learned counsel for the respondent submitted that the appellant would not be able to discharge its burden of proof of showing “causation” i.e. that its loss arose from the breach at the assessment proceedings.


[28] Concerning ground (b), learned counsel for the respondent posited that the appellant had only filed the Notice of Assessment on 30.8.2012, i.e. 5 (five) years after date of the judgment. The application for interim payment was filed on 28.5.2013, i.e. 9 (nine) months later. Therefore, there is no urgency for the appellant to pursue claim for damages against the respondent,


– 11 –


[29] Lastly, learned counsel for the respondent argued that the appellant had also failed to show that an order for interim payment is necessary to alleviate hardship to the appellant pending the disposal of the assessment proceedings. The winding up petition had been withdrawn. CIMB Bank had indicated that they would unfreeze the appellant’s account if the event of default, i.e. the winding up petition was withdrawn.


[30] We will deal with grounds (b) and (c) first. They are related grounds.


[31] As we have alluded to in paragraph [22], the object of an application for an interim payment is to alleviate hardship or prejudice to the plaintiff during the period from the institution of the proceedings up to the date of trial. By virtue of the High Court order dated 6.2.2007, the appellant is entitled to recover the claims stated in paragraphs 9.1(a) to 9.1 (l) (iii) of the Statement of Claim at amounts to be assessed by the Registrar. However, the assessment of damages could not be proceeded expeditiously due to two applications for discovery of documents filed by the respondent. This has caused hardship to the appellant especially where the amounts and monies due haven been withheld since 2002 i.e. more than 10 (ten) years ago.


[32] Further, hardship was further caused to the appellant when the respondent filed the petition for winding up against the appellant


– 12 –


in respect of the Port Dickson’s case. The appellant has been compelled by the winding-up petition to fork out a further sum of more than RM1 million in order to stands off the winding up petition.


[33] Having said that, we must issue a caveat here. The rule does not require the appellant to demonstrate real hardship in application for interim payment. The plaintiff is not required to demonstrate any particular need beyond the general need to be paid his damages as soon as possible and the court should not, when considering to order such a payment, investigate how the money is to be used. However, in this instant appeal, the appellant has shown hardship in the circumstances.


Ground (a)


[34] In the application for interim payment, the appellant seeks interim payment for items as follows:


Paragraph # of Statement of Claims Description Amount (RM)


9.1(a) Retention money 368,982.45


9.1(b) Balance value of works done but not yet certified 1,341,954.08


9.1 (j) Principal amount of the performance bond 641,600.85


9.1(k) Alternative claim of interest at 8 % on the principal amounts of claims as from


– 13 –


Paragraph # of Statement of Claims Description Amount (RM)


19.12.2002 to 19.5.2013; 309,945.25


i. Interest on retention money 1,127,241.42


ii. Interest on balance value of works done but not certified iii. Interest on amount of performance bond money 538,944.71



[35] Rule 3 of Order 22A of the RC 2012 provides that the Court may order the defendant to make an interim payment of such an amount as it thinks just, not exceeding a reasonable proportion of the damages which in the opinion of the Court is likely to be recovered by the plaintiff.


[36] The factors to be taken in determining “a reasonable proportion of the damages” are factual based. Some of the relevant factors are as follows –


(a) The Court has to consider what is the likely the damages to be awarded at trial;


(b) The Court should also have to keep in mind the danger of overpayment and the possible hardship to the defendant;


– 14 –


(c) The Court should not be influenced by how the applicant is proposing to use the payment


(d) The Court needs to take into account any existing counter-claim or contributory negligence claim;


(e) The Court needs to consider whether the applicant wants to use the money in a way intended to prejudice any subsequent issue in the trial;


(f) The Court needs to consider the respondent’s resources or lack of such resources; and


(g) The Court needs to consider the strength of the evidence in each case.


[37] Thus, on an application for an interim payment, the Court is primarily focused on ensuring that the plaintiff is not kept out of the damages to which he or she is entitled, without incurring a real risk of over-compensating a plaintiff or prejudging matters that are properly within the province of the trial judge.


[38] In this instant appeal, we have scrutinized the material on the Appeal Records, and we are satisfied that the appellant had proved that if the action proceeded to trial (or for assessment of damages), the appellant would obtain judgment for substantial damages against the respondent in respect of the Performance Bond money


– 15 –


within the meaning of Order 22A rule 3(I)(c) and 4(c) of the RC 2012.


[39] There is ample evidence to show that the appellant provided Performance Bond of RM641,684.85 to the respondent pursuant to the subcontract. Contemporaneous document evidence also shows that on or about 21.1.2003, Bumiputra Commerce Bank paid the Performance Bond money of RM641,684.85 to the respondent as clearly evidenced by the bank’s letter dated 21.1.2003 and acknowledged by the respondent.


[40] We, therefore, ordered that the an interim payment should be made forthwith by the respondent to the appellant for the Performance Bond money in the sum of RM641,684.85. We rejected awarding interest on the amount of the Performance Bond money.


[41] We reserved the assessment of damages in respect of other items claimed by the appellant. Further, inquiries are needed in respect of these items. The damages in respect of these items should be assessed by the Registrar.


[42] We take the position that interim payment procedures are not suitable where the factual issues are complicated or where difficult points of law arise which may take many hours and the citation of many authorities to resolve. (See Schoot Kem Ltd (supra) at page 73).


– 16 –


[43] The Court is not confident to make out a correct figure the amount that the appellant would be entitled in respect of these items.




[44] In the result, the appellant’s appeal is allowed in part. The orders of the Court are as follows:


(i) The application for an interim order by the appellant in respect of the Performance Bond money in the amount of RM641,684.85 is granted in terms as prayed in para (i) of Enclosure 10, as varied by this Court;


(ii) The interest on the amount of Performance Bond money is refused;


(iii) The said interim payment should be paid to the appellant and not to be paid into Court;


(iv) Damages pertaining to other items claimed by the appellant deferred and to be assessed by the Registrar of the High Court Seremban;


(v) Costs of RM5,000.00 here and below to be paid to the appellant; and


(vi) Deposit to be refunded.


– 17 –


[45] This judgment is prepared pursuant to section 41(1) of the Courts of Judicature Act 1964 as our learned brother Mohd. Ariff Md Yusof, JCA has since retired.


Dated: 1st October 2015 sgd.




Court of Appeal Malaysia


Counsel for the appellant: G H Tee Tetuan GH Tee & Co No. 22A-3, Jalan PJU 8/3A Perdana Business Centre Bandar Damansara Perdana 47820 Petaling Jaya Selangor Darul Ehsan


Counsel for the respondent: Ramesh Abraham (Lam Ko Luen and Yvonne Chan with him) Tetuan Shook Lin & Bok 20th Floor, AmBank Group Building 55 Jalan Raja Chulan 50200 Kuala Lumpur.


18 –

PDF Source: