IN THE COURT OF APPEAL MALAYSIA
(APPELLATE JURISDICTION) CIVIL APPEAL NO. Q-02-12-08
TAN SRI DATUK PADUKA (DR) TING PEK KHIING
Lot 589, North Yu Seng Road,
98000 Miri, Sarawak. … APPELLANT
HU CHANG PEE
(also known as HII CHANG PEE)
Lot 960, Piasau Industrial Area,
98008 Miri, Sarawak. … RESPONDENT
[In the matter of Kuching High Court Suit No. 22-139-98(MR) In the High Court of Sabah and Sarawak at Miri
Hu Chang Pee
(also known as Hii Chang Pee)
Lot 960, Piasau Industrial Area,
98008 Miri, Sarawak. … Plaintiff
Tan Sri Datuk Paduka (Dr) Ting Pek Khiing Lot 589, North Yu Seng Road,
98000 Miri, Sarawak. … Defendant]
CORAM: Zaleha Zahari, JCA
Ramly bin Haji Ali, JCA Kang Hwee Gee, JCA
JUDGMENT OF THE COURT
Kang Hwee Gee, JCA:
The plaintiff’s claim against the defendant is for the return of the sum of RM8.5 million which he paid to the defendant as fees to secure for him a logging contract in a logging concession of some 40,000 acres at an area adjacent to the Lanjak Entimau Timber Concession Area in Sarawak.
The High Court at Miri found for the plaintiff and hence this appeal.
The plaintiff and the defendant were loggers and were business associates. Their relationship dated back to the 1970s when the plaintiff started to purchase logs from the defendant. The plaintiff operated his business mainly through his company Interhill Enterprise Sdn Bhd of which he was a director; and the defendant through his companies Equatorial Timber Marketing Sdn Bhd and Equatorial Timber Holdings Sdn Bhd.
It is not in dispute that sometime in June 1991 the plaintiff had met the defendant in Singapore when the defendant agreed to
obtain a logging contract for the plaintiff to log in a concession of some 40,000 acres at an area adjacent to the Lanjak Entimau Timber Concession Area in Sarawak. The plaintiff had paid the sum of RM8.5 million in cash as brokerage to the defendant on condition that the same would be returned to the plaintiff in the event that the defendant failed to obtain the contract. This is clear from the pleadings itself.
The defendant failed to obtain the contract but did not return the sum of RM8.5 million. The plaintiff then in his capacity as director of his family company Interhill Enterprise Sdn Bhd filed Miri Suit No. MR-22-18-1996 against the defendant, in the course of which Interhill Enterprise Sdn Bhd initiated an application for summary judgment under Order 14. The application was still pending before the Court when Interhill Enterprise Sdn Bhd withdrew the suit MR-22-18-1996 on 20/5/2010.
The plaintiff then decided to file the instant action in his personal capacity.
The four grounds raised at the High Court below were raised before us in this appeal.
First – that the plaintiff’s action was statute barred under s 3 of the Limitation Ordinance (Cap. 49 of Sarawak) the claim having been instituted outside the period of limitation provided therein.
Second – that the present action is an abuse of the process of the court given that a suit on the same factual matrix had been instituted in the name of Interhill Enterprise Sdn Bhd, a company of which the plaintiff was the director, against the defendant at the Court. The previous action was still active before the High Court when the present action was filed.
Third – that the sum claimed was in fact advanced to the defendant by Interhill Enterprise Sdn Bhd whose legal existence was independent and separate from its officers, directors, and shareholders. The evidence it is submitted, points conclusively to the fact that the money was paid to the defendant by the plaintiff for and on behalf of his company Interhill Enterprise Sdn Bhd and under the circumstances only Interhill Enterprise Sdn Bhd can make a claim and not the plaintiff in his individual capacity.
Fourth – that the sum of RM8.5 million claimed by the plaintiff had been set off against debts owed to the defendant by the plaintiff through a series of transactions in the course of their logging business in accordance with the understandings and practice among members of the logging business community to which they both belonged. The practice and understandings in so far as it can be understood from the evidence of the defendant, allow
them to mix their personal business dealings with dealings of companies which they owned with the liberty to set off personal debts against debts owed to their companies. The defendant claimed that the plaintiff’s claim of RM8.5 million had been set off in this manner by:
(a) Payment on the 11/4/1994 RM3,000,000.00
(b) Debit note ETM/DN/94-266 RM1,400,000.00
(c) Debit note for monthly log produce for timber area held under Timber Licence No. T/0329, No. T/0339 and No. T/0340 from March 1994 to December 1994 RM5,752,665.82
The first ground – on limitation:
This was not seriously pursued as it was abundantly clear that the present suit was filed on 22/10/1998 well within the limitation period of 3 years from the date of the defendant’s letter dated 22/12/1995 as set in Item 78 of Schedule to the Limitation Ordinance of Sarawak.
The second ground – whether there was an abuse of process:
Whereas the Miri High Court Suit No. MR-22-18-1996 was filed by Interhill Enterprise Sdn Bhd, the instant suit was by the plaintiff Hu
Chang Pee in his personal capacity. An incorporated company has a personality separate and distinct from its members. There could therefore be no question of the plaintiff Hu Chang Pee in the instant suit instituting two suits on the same claim. At worst, the instant suit introduced into the arena of conflict another claimant against the defendant for the return of the sum of RM8.5 million.
It did no harm to the defendant as he would be at liberty to raise a defence (as he did) in this suit that the money was advanced to him by Interhill Enterprise Sdn Bhd and not Hu Chang Pee. The two suits could have been consolidated at the case management stage, but the parties did not do so.
The third ground – whether the Judge fell into error:
In the earlier suit filed by Interhill Enterprise Sdn Bhd against the defendant, the plaintiff in his capacity as a director of Interhill Enterprise Sdn Bhd in an Order 14 application for summary judgment deposed two affidavits in which he had admitted that the money was in fact advanced by his company Interhill Enterprise Sdn Bhd. It was contended that the learned Judge had fallen into error in failing to consider the following evidence in favour of the defence:
i) at paragraph 5 of his affidavit in support wherein he deposed: “Pursuant to the aforesaid arrangement the Plaintiff (Interhill) duly paid the said sum of Malaysian Ringgit RM8,500,000.00 to the Defendant (the present
appellant) in staggered payments between l2h August, 1991 and 23rd September, 1991”; and
ii) at paragraph 6 of his affidavit in reply, (in answer to paragraph 2(h) of Ting’s Supplementary Affidavit in Opposition) wherein he deposed “I assert that the RM8.5 million was advanced by the Plaintiff (Interhill) and is owed to the Plaintiff (Interhill).”
We examined the Notes of Proceedings of the High Court in the present action. Uppermost in our mind is the established principle alluded to by Gopal Sri Ram JCA (as he then was) in Boonsoom Boonyanit v Adorna Properties Sdn Bhd  3 CLJ 17 that:
“….a trier of fact, in order to arrive at a decision according to law, must judicially appreciate the evidence led before him upon the issue called for resolution. A decision arrived in the absence of a judicial appreciation of evidence is liable to appellate correction. Judicial appreciation is concerned with the process of evaluating the evidence for the purpose of discovering where the truth lies in a particular case. It includes, but is not limited to, identifying the nature and quality of the evidence, assigning such weight to it as the trier of fact deems appropriate, testing the credibility of oral evidence against contemporaneous documents as well as the probabilities of the case and assessing the demeanour of witnesses.”
We also reminded ourselves of the overriding principle that in undertaking the task before him a Judge has always been afforded the latitude to arrive at his own findings of fact and that a party complaining of the omission of the Judge to consider a point in his favour must be able to convince the appellate court that the omission was so critical that it would have affected the outcome of the litigation.
Having examined the Notes of Proceedings of the High Court in the present action, we are convinced that the omission of the learned Judge to consider the two paragraphs referred to earlier would not have influenced the outcome of the litigation, for there were other more compelling evidence that the plaintiff had made the advance for himself and not for and on behalf of his company or companies. They were to be found in the letter which the plaintiff wrote to the defendant and the reply he received from the defendant’s solicitors.
The plaintiff’s letter read as follows:
“Our Ref: IE/M/447/95
Date: 6 December 1995 AR REGISTERED
Tan Sri Ting Pek Khiing
Equatorial Timber Marketing Sdn Bhd
No. I Jalan Padungan
Bandaraya Kuching Utara
P.O. Box 2939
Dear Tan Sri
RE : SUMS OF MONIES ADVANCED TO YOU
I write in respect of various sums of monies that I have advanced/paid to you over the past few years. Since my oral attempts to speak to you regarding such payments has failed to produce any satisfactory result, I am constrained to write to you.
You will recall, I met you at the Holiday Inn, Singapore in 1991. You informed me that for a fee of RM8.5 Million, you could secure a timber main-contract for my company, in respect of a timber concession of some 40,000 odd acres adjacent to Lanjak Entimau concession.
Pursuant to our conversation and the agreement that we reached, I caused to be paid to you a sum of money in both Malaysian and Singapore currency amounting to RM8.5 Million on the understanding and upon your undertaking that you would return the said money if you failed to secure such a main-contract. No time period
was fixed and I appreciate that it can take a very long time to secure such a main-contract. You repeatedly assured me each time I reminded you over the past years that you were still working on it and asked me to wait.
The last time you told me to wait was in last year, 1994. I know that you have been working on obtaining the main-contract since then, as you assured me you were doing so.
However, thinking the matter over, I do not wish to proceed any further with our arrangement. I do not want the main-contract anymore.
Therefore, I will appreciate if you could return the RM8.5 Million to me soonest.
I look forward to hearing from you soon.
for INTERHILL ENTERPRISE SDN BHD”
The reply from the defendant’s solicitors Victor Wong & Chiew dated 22/12/1995 in response to the plaintiff’s letter read:
“Your Ref: IE/M/447/95 & IE/M/448/95
22nd December, 1995 AR REGISTERED
Mr. Hii Chang Pee,
Interhill Enterprise Sendirian Berhad,
Lot 960, Piasau Industrial Area,
P.O. Box 1200/1559,
RE: TAN SRl DATUK TING PEK KHIING
YOUR CLAIM FOR SUMS ADVANCED TAN SRI’S CLAIM FOR SUMS DUE
We act for and on behalf of Tan Sri Datuk Ting Pek Khiing of Equatorial Timber Marketing Sendirian Berhad, of P.O. Box 2939, 93758 Kuching in respect of the above stated matters.
Your two letters with the above-stated reference dated 6th and 8th December, 1995 respectively and addressed to Tan Sri have been given to us with instructions to reply thereto.
In respect of the RM8.5 million paid by you to Tan Sri on the matter of the timber
concession of some 40,000 acres, we are to say that Tan Sri will make refund of the same.
In respect of the Singapore Dollars 3,580,000.00 paid by you on the matter of the transfer of Timber Licence No.T/3157, we are to say with regret that your request for the refund of this sum cannot be entertained.
We are to say that the transfer of the said Timber Licence could not be successfully carried out due to actions on your part amounting to criminal offence directly affecting the said Timber Licence. Your actions were directly and solely the cause of the cancellation of the said Timber Licence by the relevant authority. You will appreciate that in these circumstances, refund of the Singapore Dollars 3,580,000.00 cannot be made.
The Tan Sri on his part have caused to be paid, credited and/or claimed to and from you the following sums of money:-
i. By HHBB cheque No. 217679 KCH – RM3,000,000.00
ii. Debit Note ETM/DN/94-266 of 31/10/1994 – RM1,400,000.00
iii. Monthly deduction for log production at areas under T0339, T0340 and T0329 on Account – RM10,012,704.77
Total : RM10,012,704.77
So in respect of your claim for RM8.5 Million, this amount of RM10,012,704.77 due from you to the Tan Sri will more than settle your claim.
We are to request that you effect settlement of the balance of RM1,512,704.77 as soon as possible.
We are further instructed that you took over the Timber concession under Licence T/0329 on the express undertaking to pay to Tan Sri a sum of RM16 Million. To date, you have paid a total of RM4 Million against this debt, leaving a balance of RM12 Million. We are to request that you make immediate arrangement to settle this outstanding sum of RM12 Million in full.
Please by your prompt reply inform us or the Tan Sri of your arrangement to fully pay and settle the two outstanding sums set out above. We will appreciate your kind assistance in this matter.
VICTOR WONG & CHIEW
c.c. Tan Sri Datuk Ting Pek Khiing”
The admission, we observed, was consistent with the statement he made in his affidavit in reply affirmed on 3/12/1996 to oppose the plaintiff’s application for summary judgment under Order 14 in the Miri Suit No. MR-22-18-1996 Interhill Enterprise Sdn Bhd v. Tan Sri Datuk Ting Pek Khiing, at paragraph 4(a) wherein he attempted to counter the plaintiff’s claim that the money was advanced by Interhill Enterprise Sdn Bhd by deposing that “the RM8.5 million was advanced by Hii in Singapore and Malaysian currency and not by the Plaintiff (Interhill) as alleged.”
The learned High Court Judge accepted the documents as clear proof that the plaintiff was acting for himself. We accept his reasoning and find no reason to disagree with his finding on this issue.
The fourth ground – the set-off
The only issue of substance that we need to consider in this appeal in our view, is whether the sum of RM8.5 million had been set off against the mutual debts of the parties in the way described by the defendant.
First it is necessary to consider whether the defendant may set off his personal debt against debts owed to his companies.
A set-off is essentially a claim by a defendant that the plaintiff had owed him money which should be subtracted from the debt being claimed by plaintiff as at the date of the filing of the suit when the mutual debts would have to be squared up.
But as a company has a personality separate and distinct from its shareholders, it follows therefore the defendant cannot set off the debt owed to his company against the debt owed by him in his personal capacity.
To sustain his claim that the custom practised among the logging business community to which they both belonged allowed him to set off his personal debt against debt owed to his company the defendant would have to prove that the custom was “notorious, certain and reasonable and does not offend against the intention of any legislative enactment.” (Devonald v Rosser & Sons 
2 KB 728, 743.)
We would adopt what Lord Devlin said in Chan Cheng Kum & Anor v Wah Tat Bank Ltd & Anor  1 MLJ 177 Privy Council (Lord Upjohn, Lord Devlin & Lord Pearson) with respect to what is required to be proved to establish the existence of custom of merchants generally:
“Universality, as a requirement of custom, raises not a question of law but a question of fact. There must be proof in the first place that the custom is generally accepted by those who habitually do business in the trade or market concerned. Moreover, the custom must be so generally known that an outsider who makes reasonable enquiries could not fail to be
made aware of it. The size of the market or the extent of the trade affected is neither here nor there. It does not matter that the custom alleged in this case applies only to part of the shipping trade within the State of Singapore, so long as the part can be ascertained with certainty, as it can here, as the carriage of goods by sea between Sarawak and Singapore. A good and established custom “obtains the force of a law, and is, in effect, the common law within that place to which it extends”: Lockwood v Wood (1844) 6 QB 50, 115 ER 19, per Tindal C.J. at p. 64. Thus the custom in this case, if proved, takes effect as part of the common law of Singapore. As such it will be applied by any court dealing with any matter which that court treats as governed by the law of Singapore. In this sense it is binding not only in Singapore but on anyone anywhere in the world.”
The plaintiff offered no such evidence of the existence of such a custom or practice and understandings.
But even assuming that such a custom or practice and understandings in the logging business community is proved, it is clear that the defendant had failed to prove any such set-offs.
As proof of the set-off all that the defendant did was to produce a stack of over 100 documents consisting of copies of Payment Vouchers, Credit and Debit notes accompanied by a Summary of Payments made by his company Equatorial Timber Marketing Sdn Bhd to the plaintiff’s company between June 1995 and February 1998, Statement of Payments for the purchase of logs by the plaintiff’s company Interhill Enterprise Sdn Bhd from the defendant’s company Equatorial Timber Marketing Sdn Bhd for 1997 and for January and February 1998.
The documents were disputed by the plaintiff and were therefore at best, self serving documentary hearsay. Even assuming they
can be proved to be entries in the books of accounts regularly kept in the course of business of the defendant’s companies, under Section 34 of the Evidence Act 1950, they were insufficient without more, “to charge any person with liability’.
For the foregoing reasons we affirm the decision of the High Court and dismiss the appeal with costs
Both Justice Zaleha Zahari and Justice Ramly bin Haji Ali have read the draft of this judgment and have agreed with the contents therein.
DATO’ KANG HWEE GEE Hakim Mahkamah Rayuan Malaysia.
Tarikh Bicara: 6.4.2010, 7.4.2010 dan 16.6.2010.
Tarikh Keputusan: 3.11.2010
Bagi Pihak Perayu: Datuk Seri Muhammad Shafee
Abdullah bersama Encik Bong Ah Loi dan Encik Victor Wong Lit Fah Tetuan Suhaili & Bong Advocates
Bagi Pihak Responden:
Encik Lim Heng Choo Tetuan Lim & Lim Advocates