Feller Resources Sdn Bhd V Contramec Sdn Bhd

  

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MALAYSIA

 

IN THE HIGH COURT IN KUALA LUMPUR (COMMERCIAL DIVISION) ORIGINATING SUMMONS NO: D-24NCC-99-2009

 

In the matter of the project known as “Cadangan Pembangunan 3 blok Pangsapuri Kos Sederhana (Berjumlah 760 unit) yang mengandungi Blok 1 : 280 Unit (15 Tingkat) dengan 7 unit kedai-kedai berkunci : Blok 2 : 240 Unit (16 Tingkat) Dengan Pencawang TNB dan tempat letak kereta di tingkat bawah : Blok 3: 240 Unit (16 Tingkat) dengan pencawang TNB dan tempat letak kereta di tingkat bawah serta lain-lain kemudahan di atas Lot PT 35076 Jalan U4/17 (JP), Seksyen U4, Shah Alam, Selangor Darul Ehsan untuk Tetuan Juta Permai (M) Sdn Bhd”

 

And

 

In the matter of the building contract entered into between Feller Resources Sdn Bhd dan Contramec Sdn Bhd on 1.3.2006

 

And

 

In the matter of section 11(1)(h) Arbitration Act 1952

 

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And

 

In the matter of Orders 7 and 29 of the Rules of the High Court 1980

 

And

 

In the matter of section 218(1 )(e) and (2)(a) of the Companies Act 1965.

 

BETWEEN

 

FELLER RESOURCES SDN BHD

 

(Company No.: 126018-M) … PLAINTIFF

 

AND

 

CONTRAMEC SDN BHD

 

(Company No.: 159388-M) … DEFENDANT

 

BEFORE THE HONOURABLE JUDGE Y.A. DR. HAJI HAMID SULTAN BIN ABU BACKER

 

IN CHAMBERS

 

JUDGMENT

 

This is my judgment in respect of the plaintiff’s originating summons essentially to restrain the defendant from presenting a winding up petition for default of payment of payment certificates.

 

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Brief facts

 

1. In the instant case the defendant says the plaintiff has failed to pay two payment certificates amounting to RM 619,419.84. However the plaintiff says that it has been a practice to advance payment even before issue of payment certificates. In that respect the plaintiff says that it has overpaid the defendant a sum of RM 235,918.32 and also a sum of RM 187,000.00. The plaintiff also says that it is ready for the matter to be referred to arbitrator as per the agreement and/or alternatively for the issue to be determined by court in a separate action. The defendant says arbitration is not suitable in this case, and sets out the reasons which are not necessary for me to elaborate at this stage.

 

Preliminaries

 

2. In the instant case there are sufficient evidence to show the practice of advance payment and/or dispute relating thereto. This dispute has been evident from 2006 and there does not appear to be any communication to show that the dispute has been resolved. The plaintiff and defendant relied on the following cases namely: Mobikom Sdn Bhd v Inmiss Communications Sdn Bhd [2007] 3 MLJ 316; Tan Kok Tong v Hoe Hong Trading Co Sdn Bhd [2007] 2 CLJ 305; Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd & Or [1992] 2 All ER 609; A.R.Fernandez & Ors v National Union of Bank Employees [1986] 2 MLJ 135; Rimbunan Hijau Sdn Bhd v Sarawak Plywood (M) Sdn Bhd

 

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[1985] 2 MLJ 377; IJM Construction Bhd v Harta Kumpulan Sdn Bhd [2007] 8 CLJ 291; Stonegate Securities v Gregory [1980] Ch 576; Malayan Flour Mill Bhd v Raja Lope & Tan Co [2000] 7 CLJ 288; Multimedia Development Corp Sdn Bhd v Pembinaan Purcon Sdn Bhd [2006] 2 MLJ 653; Malaysian Resources Corporation Bhd v Juranas Sdn Bhd [2002] 3 MLJ 169; Re Nima Travel Sdn Bhd [1986] 2 MLJ 374; Kumpulan Liziz Sdn Bhd v Pembinaan OCKSdn Bhd[2003] 4 CLJ 709; Pembenaan Leow Tuck Chui & Sons Sdn Bhd v Dr.Leela ’s Medical Centre Sdn Bhd [1995] 2 CLJ 345; Antah Schindler Sdn Bhd v SSangyong Engineering & Construction Co Ltd [2008] 3 CLJ 641; Bandar Raya Development Bhd v Woon Hoe Kan & Sons Sdn Bhd [1972] 1 MLJ 375.

 

3. I have read the originating summons, affidavits and submission of the parties in detail. I take the view that the plaintiffs application as prayed must be partly allowed. My reasons inter alia are as follows:

 

(i) As a general rule payment certificates relating to construction dispute must be honoured. And that does not mean a party can present a winding up petition as of right for its breach. Support for the proposition is found in a number of cases. The defendant had relied on the following cases namely (a) Kumpulan Liziz Sdn Bhd v Pembinaan OCK Sdn Bhd [2003] 4 CLJ 709; (b) Pembenaan

 

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Leow Tuck Chui & Sons Sdn Bhd v Dr.Leela ’s Medical Centre Sdn Bhd [1995] 2 CLJ 345; (c) Antah Schindler Sdn Bhd v SSangyong Engineering & Construction Co Ltd [2008] 3 CLJ 641; (d) Bandar Raya Development Bhd v Woon Hoe Kan & Sons Sdn Bhd [1972] 1 MLJ 375. The cases relied on by the defendant relates to summary judgment. The plaintiff in those cases had not proceeded to wind up the company as what the defendant in this case attempts to do without a judgment. In the instant case the plaintiff is not challenging the payment certificates but alleging that there is overpayment. The allegation of the plaintiff is well documented and no reasonable mind at this stage will say that there is no issue between the plaintiff and the defendant to permit the defendant to present a winding up petition. And the court is not required at this stage to scrutinize the evidence as it would have done when dealing with a summary judgment application.

 

(ii) Filing a civil suit to obtain judgment is a right but winding up of company is only a discretionary relief and the consideration and evaluation of evidence and weight to be given may differ as the defendant has better alternative.

 

(iii) The nature of injunction which the plaintiff is seeking are referred to as “Fortuna Injunction ”, [see Fortuna Holdings Pty Ltd v. The

 

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Deputy Commissioner of Taxation [1978] VR 83]. I have dealt with this area of jurisprudence in TPPT v Jurukur Berjasa [2009] 1 LNS1221. I do not wish to repeat the same save to say where the debt claimed is bona fide disputed on substantial ground, the court would grant the injunction when it is just and equitable to do so. The same test may not be applicable when the court is exercising its jurisdiction and/or power when hearing a winding up petition. The threshold here is much lower, then the winding up court, as the law permits a company to be wound up if it is shown that it is not able to pay debt due and owing which exceeds RM 500.00.

 

(iv) I have taken into consideration that the defendant if he so chooses can proceed by arbitration or alternatively proceed to file a suit to recover the sum allegedly owing as the plaintiff in the instant case has no objection to both.

 

4. For reasons stated above, I allow prayers 2 and 3, with costs. The defendant to pay the plaintiff costs in the sum of RM 6,000.00.

 

I hereby order so.

 

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(Y.A. DR. HAJI HAMID SULTAN BIN ABU BACKER)

 

Judge

 

High Court (Commercial Division)

 

KUALA LUMPUR

 

Date: 25th January 2010

 

For the Plaintiff: C.K. Yeoh, (Jamie Wong Siew Min with him); M/s

 

Ranjit Singh & Yeoh

 

For the Defendant: K. Y. Chang; M/s K.L.Lim & Lee

 

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