Tenaga Nasional Berhad V Pearl Island Resort Development Sdn Bhd


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CIVIL APPEAL NO: P-02(NCVC)(W)-897-04/2013






(Company No.: 200866-W)




PEARL ISLAND RESORT DEVELOPMENT SDN BHD (Dahulunya dikenali sebagai “PPH Resorts (Penang) Sdn Bhd” (Company No.: 134686-W)




(In the matter of Civil Suit No. 22NCvC-167-02/ 2012 In the High Court of Malaya at Penang)




Tenaga Nasional Berhad … Plaintiff


(Company No.: 200866-W)




Pearl Island Resort Development Sdn Bhd


(Dahulunya Dikenali Sebagai “Pph Resorts (Penang) Sdn Bhd


(Company No.: 134686-W) … Defendant








[1] This was an appeal against the decision of the High Court in Penang which dismissed the claim by Tenaga Nasional Berhad (the appellant) for outstanding sums due from Pearl Island Resort Development Sdn Bhd (the respondent) arising a Contract to Supply Electricity dated 06.06.2001 (“Contract”) entered into between the appellant and the respondent for the supply of electricity to the respondent’s premises, a club and golf course known as Lot 8134, Jalan Relau, Bayan Lepas, Pulau Pinang.


[2] The Contract was entered into pursuant to an application for Supply of Electricity dated 4.1.2001 by the respondent for electricity to be supplied at the respondent’s premise, and in this application the respondent had requested that it be supplied with a maximum load of 2270 kW. This request for the supply of the maximum load was incorporated into the Contract. By this Contract, the respondent was to pay the monthly Connected Load Charges (“CLC Charges”) if the maximum load recorded was less than 75% of the declared load of 2270 kW at the rate of RM8.50 kW.


[3] The respondent defaulted in settling the charges for electricity consumed at the premises. It wrote to the appellant to request for indulgence to pay the charges outstanding (without CLC charges) by 12 monthly instalments. This letter dated 16.8.2004 appears on page 87, Vol. 2, Appeal Record. A Deed of Settlement was then entered into on 10.06.2005, whereby the respondent agreed to:




(a) settle the admitted arrears of payments then due and owing to the appellant amounting to RM463,334.08, by 10 equal monthly instalments commencing 24.6.2005; and


(b) with effect from 24.9.2005, to also settle the current monthly electricity charges incurred by the respondent, together with the instalments.


[4] The arrears and the current charges outstanding included the CLC charges as well.


[5] The Schedule of Payment in the Deed of Settlement provided as follows:


Payment Date Arrears Payment Current Month


1 24.6.2005 25,000.00 0


2 24.7.2005 25,000.00 0


3 24.8.2005 25,000.00 0


4 24.9.2005 55,500.00 In Full


5 24.10.2005 55,500.00 In Full


6 24.11.2005 55,500.00 In Full


7 24.12.2005 55,500.00 In Full


8 24.1.2006 55,500.00 In Full


9 24.2.2006 55,500.00 In Full


10 24.3.2006 55,334.08 In Full


Total 463,334.08




[6] The respondent only paid a total sum of RM75,000.00 for the months of June 2005, July 2005 and August 2005 and thereafter defaulted in making payments as agreed. Consequently, the supply of electricity to the respondent’s premises was disconnected on 5.10.2005, after the respondent failed to comply with the appellant’s letter dated 21.9.2005 that demanded the respondent settle the accumulated unpaid arrears and current payments which stood at RM531,473.06 as at 21.9.2005, and the subsequent Notice to Disconnect dated 24.9.2005. The Notice to Disconnect gave the respondent notice to make payment of an adjusted outstanding sum of RM576,103.76 within 30 days. The respondent did not settle the instalment for 24.9.2005, and its earlier request that it be exempted from paying the CLC charges was rejected by the appellant in the appellant’s very same letter dated 21.9.2005.


[7] The respondent had secured a Bank Guarantee from Eon Bank Berhad for the sum of RM80,000.00 to guarantee the payment of electricity charges as part of the agreement to supply the electricity to the respondent’s premises. The appellant made a call on this Bank Guarantee on 14.2.2006, and the sum of RM80,000.00 was then credited into the respondent’s account with the appellant on 31.5.2005, leaving an outstanding amount of RM527,276.86 as due and payable.


[8] A Notice of Demand for the outstanding amount was issued on 30.7.2008 to the respondent. When the respondent failed to respond, the appellant then utilised the deposit of RM13,219.47 and RM3,310.22 from the other accounts of the respondent, leaving a total outstanding amount due and owing by the respondent to the appellant of RM510,747.17. That was the amount claimed by the appellant in this suit.




[9] The appellant instituted this action on 28.02.2012. The respondent argued the appellant’s claim was statute barred as it had been filed after the expiry of 6 years applicable for contractual claims under s. 6(1)(a) of the Limitation Act 1953. It was also alleged by the respondent that the appellant had acted wrongfully and in contravention of the relevant regulations (the Licensee Supply Regulation 1990) by disconnecting the electricity to the premises and that the Deed of Settlement entered into was null and void, being ultra vires the powers of the appellant under the Electricity Supply Act 1990 (‘Act 447’) when it imposed the ‘connected load charges’ which had been included in the computation of the arrears.


[10] The respondent filed a counterclaim against the appellant claiming inter alia :


(a) refund of the instalments of RM75,000.00;


(b) the repayment of the sum of RM80,000.00 under the Bank Guarantee which the respondent claimed to have been wrongfully demanded upon and received by the appellant;


(c) RM16,529.69 being the deposit sum alleged to have been wrongfully appropriated by the appellant;


(d) a sum of RM75,000.00 alleged to be the costs of operating and maintaining an alternative generator for supply of electricity to the premises allegedly incurred by the respondent, after the electricity supply to the premises was disconnected by the appellant;


(e) refund of RM150,000.00 being a further deposit paid by the respondent to the appellant on 6.6.2001 for obtaining connection of electricity supply to the premises;


(f) interest




[11] The learned High Court judge dismissed both the appellant’s claim and the respondent’s counterclaim with costs to be borne by each party. In dismissing the appellant’s claim in the High Court, the trial judge agreed with the contention of the respondent that the claim was barred by limitation, but dismissed the counterclaim as being without merits.


[12] The appellant had argued that the period of limitation should be calculated from the date the call on the Bank Guarantee was made and the monies credited, namely 31.5.2006, and not the date of default under the Settlement Agreement – 23.10.2005 – being the last day following the giving of the 30 days’ notice to settle the outstanding sums by the letter of 24.9.2005 (“Notis Pemotongan Bekalan Elektrik”). The appellant relied on s. 26(2) of the Limitation Act 1953, reading:


“(2) Where any right of action has accrued to recover any debt or other liquidated pecuniary claim, or any claim to the personal estate of a deceased person or to any share or interest therein, and the person liable accountable therefore acknowledges the claim or makes any payment in respect thereof, the right shall be deemed to have accrued on and not before the date of the acknowledgment or the last payment…” (emphasis added)


[13] The learned trial judge limited the application of this provision to situations where the “part payment” was made by the defendant itself, not by virtue of a call on the Bank Guarantee, holding:


“After having given anxious consideration to the submission of plaintiff’s Counsel, I was of the view that s. 26(2) was of no assistance to the plaintiff in the circumstances obtaining here in this case. The




monies pursuant to the encashment of the Bank Guarantee did not come from the defendant (person liable or accountable for the debt). It was trite that a Bank Guarantee of the nature here… was a separate and independent contract between the plaintiff and the Bank only and as provided therein the Bank was to pay within seven days of receipt of the relevant notice of default. The plaintiff was entitled to enforce this contract of guarantee (or indemnity, in a sense) without reference to the Defendant.” (at pp. 32 to 33 of the Grounds of Judgment)


[14] As regards the arguments taken on the counterclaim, the trial judge applied the doctrine of estoppel against the respondent (drawing on the principles laid down in Amalgamated Investment & Property Co. Ltd v Texas International Commerce Bank Ltd [1982] QB 84, as applied by our Federal Court in the oft-cited case of Boustead Trading (1985) Sdn Bhd v Arab-Malaysian Merchant Bank Berhad [1995] 4 CLJ 283) on the basis that the respondent had voluntarily entered into the Settlement Agreement and it could not now be seen as resiling from the position that it had agreed and had led the appellant to believe that it would settle the amounts to the appellant due inclusive of the CLC by the agreed instalments, which it now argued at trial as being ultra vires and void on the ground that s. 26 of the Electricity Supply Act 1990 did not confer any power on the appellant to impose and compel its customers to pay CLC. The CLC effectively allowed the appellant to charge the respondent for electricity not actually utilised, whereas it could only impose a surcharge for late payments under s. 26A of the same Act. The trial judge emphasised that the respondent overlooked s. 29 (1) and (2) of the Act which qualified s. 26 and 26A by expressly providing that there could be a special agreement entered into whereby the rights and obligations of the parties would be governed by this




special agreement. The imposition of the CLC therefore was not ultra vires the Electricity Supply Act 1990.


[15] The CLC, according to the finding of the trial judge, was not unilaterally imposed but was agreed to by the respondent. The respondent failed to call one Tan Swee Leong who was potentially a crucial witness for the respondent since he signed the Settlement Agreement on behalf of the Respondent. An adverse inference under s.114(g) was drawn against the respondent for this failure to call a crucial witness who could have either confirmed or denied whether the imposition of the CLC was agreed by the respondent.


[16] The respondent also questioned the accuracy of the outstanding charges, but this point merely taken generally and it did not show the particulars of any manifest error to the Court. The learned trial judge stated:


“The Defendant, apart from merely asserting that they have not been provided with particulars of the sum claimed, failed to show how the calculations of the sum claimed by the Plaintiff was erroneous. It was always open to the Defendant to attend at the office of the Plaintiff to obtain the necessary details and not make a sweeping allegation that they had sought for but had not been provided with the details (at p. 28 of the Judgment).”


[17] In these circumstances, the disconnection of the electricity supply to the respondent’s premises was lawfully effected with prior notice under the Licensee Supply Regulation 1990.




[18] In the submission before us in the appeal, the respondent revisited these arguments in its cross-appeal. The appellant, on the other hand, limited its grounds to the issue of limitation, which it advanced as follows:


“(i) did the encashment of the Bank Guarantee by the appellant on 31.5.2006 amount to a part-payment under s. 26(2) Limitation Act 1953, therefore giving rise to a fresh accrual of action; and (ii) did the Appellant’s “delay” in encashing the Bank Guarantee prevent the operation of s. 26(2) Limitation Act 1953.”


Although formulated as two grounds, it was evident that a negative answer to ground (i) would effectively settle ground (ii).


[19] In the course of the submissions before us, counsel for the appellant cited two case authorities to support the appellant’s contention that the part-payment did not need to be made by the respondent itself, but could be made by another party, such as the Bank on the facts of this appeal when it honoured the call on the Bank Guarantee resulting in the offsetting of the amount payable by RM80,000.00 on 31.5.2006 when the amount was paid into the respondent’s account. Since the plaintiff’s/appellant’s action was filed on 27.2.2012, it was not barred by limitation. The two case authorities are Malaysia Building Society Berhad v KL Al Dhuha Sdn Bhd & Anor [2011] 1 LNS 791 (a case heard by me as a High Court judge) and WTK Holdings Bhd v Foo Sae Heng & Anor [2011] 5 CLJ 433. We were not persuaded any of these cases supported the appellant’s contention. In Malaysia Building Society Berhad v KL Al Dhuha Sdn Bhd & Anor, supra, which concerned a default of payment on a loan, the borrower had actually agreed with the




plaintiff (the lender) that it would allow a sum of RM1 million to be utilised by the lender to offset the amount outstanding when the sum was received from Jabatan Alam Sekitar as consideration for an acquisition of part of the charged property. The borrower agreed to allow the lender to receive that sum directly from Jabatan Alam Sekitar for this purpose. The loan had been in default since November 2001. The part payment was made in January 2008. The suit for recovery of the loan was filed in 2010. There was an element of acknowledgement of the debt by the borrower after the expiry of the six years from the accrual of cause of action in addition to the agreement to allow the acquisition sum to be paid directly to the plaintiff to offset the loan. These elements are absent on the facts of this instant appeal, and therefore Malaysia Building Society Berhad v KL Al Dhuha Sdn Bhd & Anor, supra, is distinguishable on the facts, and is not an authority for a broad proposition of law that a part payment can be made by any third party for s. 26 (2) of the Limitation Act to apply.


[20] As for WTK Holdings Bhd v Foo Sae Heng & Anor, supra, the facts disclose that the part-payment was made by an associate company of the borrower. The Court of Appeal in fact decided that s. 26(2) could not apply because it was not established on the evidence that the associate company had acted as an agent of the borrower when it paid the lender. Thus, if anything this case is an authority for the proposition that part-payment must be made by the defendant himself or by his authorised agent. The Bank, on the facts of this instant appeal, could not, in our view, be equated in law as an agent of the respondent in relation to the payment on the call on the Bank Guarantee.




[21] Having considered the Grounds of Judgment of the learned trial judge and considered the submissions of counsel before us, particularly in light of the two case authorities referred to earlier, we could not find any appealable error to warrant our intervention. In his lordship’s meticulous Judgment, the facts and the law had been correctly analysed. There was no clear error whether of law or in the evaluation of the evidence that warranted any appellate intervention. The High Court was thus correct to dismiss both the plaintiff’s claim and the defendant’s counterclaim.


[22] Thus, for the reasons analysed above, we were of the unanimous opinion that both the appeal and the cross-appeal should be dismissed. That being so, we further decided that there be no order as to costs. The deposit was ordered to be refunded to the appellant.








Court Of Appeal Malaysia


Dated: 13th January 2015




for the appellant: Mah Su-Ling


Messrs Shahrizat Rashid & Lee


Menara Millenium,


8, Jalan Damanlela 50490 Kuala Lumpur




for the respondent:


J.J Chan


Messrs Shearn Delamore & Co


Wisma Hamzah Kwong Hing Lebuh Ampang 50100 Kuala Lumpur



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