Ong Hock Lai

[2017] MLRHU 361 v. Sma Plantation Sdn Bhd pg 1

ONG HOCK LAI

v.
SMA PLANTATION SDN BHD

High Court Malaya, Kota Bahru

Ahmad Bache JC
[Civil Appeal No: DA-12B NCVC-10-05/2016]
30 April 2017

Case(s) referred to:

Re North, ex-parte Hasluck [1895] 2 QB 264 (refd)
Sobri Arshad v. Associated Tractors [1991] 2 MLRH 349; [1991] 3 MLJ 32; [1991]
3 CLJ 756 (refd)
Tennas Engineering Sdn Bhd v. Sebor (Sarawak) Marketing & Service Sdn Bhd
[2005] 5 MLRH 463; [2005] 5 MLJ 54 (refd)

Legislation referred to:

Bankruptcy Act 1967, ss 38(d), 39, 109
Companies Act 1965
Evidence Act 1950, s 188
Rules of Court 2012, O 55 r 7

Counsel:
For the plaintiff: M/s Mohd Nasir & Co
For the defendant: M/s Zaid Ibrahim & Co

[Dismissed the appellant's application with cost.]

GROUNDS OF JUDGMENT

Ahmad Bache JC:

(Interlocutary - Enclosure 17)

A. Background

[1] The Appellant who was the 2nd Defendant at the trial court below
(Sessions Court) filed leave to adduce fresh evidence under O 55 r 7 of the
Rules of Court 2012 (ROC) through encl (17) (the Application) before the
hearing of the appeal against the decision of the Sessions Court. The Sessions
Court had on 26 April 2016 gave judgment in favour of the
Respondent/Plaintiff, wherein the Appellant/2nd Defendant had to pay the
balance of the purchase price of RM558,518.00, with 5% interest per annum,
and cost of RM18,200.00 and the Appellant's counter-claim dismissed with
cost of RM17,700.00.

[2] The Appellant/2nd Defendant subsequently filed a Notice of Appeal

 Ong Hock Lai
pg 2 v. Sma Plantation Sdn Bhd [2017] MLRHU 361

against the entire judgment which is yet to be heard by this Court. The 1st
Defendant did not file any appeal. The fresh evidences sought to be adduced,
with which this leave is concerned is, firstly, that Suhaili, who was the
beneficial owner of the business firms, who had sold it to the Appellant/2nd
Defendant by the Respondent/Plaintiff, and who was the witness for the
Respondent/Plaintiff, was a bankrupt since 2000. The second fresh evidence
sought to be adduced is that there was an excess payment of RM50,000.00
made to the Respondent/Plaintiff via Hong Leong Cheque much earlier but
was not deducted by the Respondent/Plaintiff when filing the claims against
the Appellant/2nd Defendant. The Appellant/2nd Defendant was only aware
of the aforesaid facts after the conclusion of the trial.

[3] On 9 February 2017, after hearing submissions from both parties, this
Court dismissed the aforesaid application of the Appellant/2nd Defendant
with cost of RM3,000.00.

[4] Dissatisfied, the Appellant/2nd Defendant filed a Notice of Appeal to the

Court of Appeal. As mentioned earlier the 1st Defendant did not file an
appeal.

[5] Herein are the grounds for the ruling of this Court.

B. Brief Facts

[6] The Appellant/2nd Defendant is an individual residing in Sungai Buloh,

Selangor, whereas the 1st Defendant is at all material time a company
incorporated under the Companies Act 1965, having its registered address at
158, Tingkat 2, Bangunan Sultan, Jalan Bangsar, 59200 Kuala Lumpur. The
relationship between the 1st Defendant and the Appellant/2nd Defendant was
not stated in the pleading.

[7] The Plaintiff/Respondent at all material time is a company incorporated

under the Companies Act 1965, having its registered address at No
531,Tingkat 2, Blok 25 Jalan Jambatan Sultan Yahya , 15050 Kota
Bharu,Kelantan.

[8] Under a 'Settlement Agreement" dated 30 March 2014 entered into by

parties, the 1st Defendant and Appellant /2nd Defendant , agreed to buy 9
business firms belonging to the Respondent/Plaintiff at a cost of
RM11,665,000.00. After taking into account of discounts and certain
deductions, a balance of RM558,518.00 was due to the Respondent/Plaintiff.

[9] According to the agreement, the due date for payment was on 27 June
2014, but both the 1st Defendant and Appellant/2nd Defendant failed to settle
the balance even though a notice of payment was served by the
Respondent/Plaintiff, followed by the suit against the 1st and 2nd
Defendants/Appellants.

[10] At the trial, evidence regarding the two issues were not adduced, as
according to the Appellant/2nd Defendant, they were not aware of such facts.
 Ong Hock Lai
[2017] MLRHU 361 v. Sma Plantation Sdn Bhd pg 3

C. Issues For Determination By The Court

[11] The issues to be determined by the Court were as follows:-

i) Can fresh evidence per se be allowed to be adduced at the appellate

stage to prove that Suhaili, the witness for the Respondent/Plaintiff, is
a bankrupt.

ii) Does Suhaili's position as a bankrupt has any bearing in the suit as
he is not a party to the suit.

iii) Whether the RM50,000 excess payment made to the

Respondent/Plaintiff by the 1st Defendant and the 2nd Defendant
/Appellant was due to their negligence or a deliberate act of the
Respondent/Plaintiff in concealing the fact.

iv) Having determined para (ii) and para (iii), can those 2 fresh
evidence be allowed to be adduced.

D. Submission By The Appellant

[12] The Appellant/2nd Defendant submitted that he had no knowledge of

Suhaili being a bankrupt until a search was made by his counsel on 20
September 2016 after the trial, which revealed that Suhaili was a bankrupt
since the year 2000. Further, according to the Appellant/2nd Defendant, it
was affirmed that Suhaili Abdul Halim was a beneficial owner to those firms
that was sold to the 1st Defendant and the Appellant/2nd Defendant. Hence,
as he was a bankrupt, the Appellant/2nd Defendant submitted that, Suhaili
has no capacity in law to enter into "Settlement Agreement" dated 30 March
2014.

[13] Further, the Appellant/2nd Defendant submitted that the act of Suhaili
who did not reveal his bankrupt status was an offence under s 39 and 109 of
the Bankruptcy Act 1967. According to the Act, Suhaili cannot enter into any
business or commercial dealings which gave rise to him being a party to a
contract involving such business or commercial activities without informing
the adverse party ie the two Defendants. Further, Suhaili should get the prior
consent of the Director General of Insolvency.

[14] The Appellant/2nd Defendant also submitted that Suhaili's bankrupt

status was a valid ground for the application as no sanction was obtained from
the Director General of Insolvency. The Respondent/Plaintiff therefore had
no locus standi to commence legal proceeding against the Appellant in the
Sessions Court below. It was further submitted that the evidence of the
bankrupt status of Suhaili did not exist during the trial in spite of the fact that
Suhaili appeared as a witness for the Respondent/Plaintiff. No disclosure of
this fact was made at the material time and Suhaili had represented himself to
the Appellant as someone who had the capacity to enter into any agreement.
The Appellant/2nd Defendant also submitted that the bankrupt status of
 Ong Hock Lai
pg 4 v. Sma Plantation Sdn Bhd [2017] MLRHU 361

Suhaili would likely to have a determining influence of the decision in the

case.

[15] On the second issue, the Appellant submitted that the

Respondent/Plaintiff intentionally did not include, or calculate, the
RM50,000.00 excess payment already made earlier when the Respondent filed
the claim against the 1st Defendant and the Appellant/2nd Defendant. The
Appellant further submitted that had the copy of the cheque made available at
the trial court, it would certainly affect the payment sum to be paid by the
Appellant/2nd Defendant.

[16] The Appellant/2nd Defendant discovered this fact when they found the
copy of the cheque after the trial was concluded and after the Notice of Appeal
was filed on 09 May 2014. According to the Appellant/2nd Defendant, it was
misplaced and its existence could not have been discovered even with the
exercise of all proper care and diligence. The copy of the cheque was only
discovered during an audit on the other files.

E. The Submission Of The Respondent/Plaintiff

[17] The Respondent/Plaintiff inter alia submitted that the Appellant's

application should be dismissed with cost as Suhaili was not a party to the
proceeding (Guaman Sivil No B52 NCC-26-10/2014) ie he was not named as
a Plaintiff in this case, hence any evidence regarding Suhaili's status was
irrelevant.

[18] Further, it was submitted that the Appellant knew or ought to have
known about Suhaili's status as he was a witness in the trial. The Appellant
should have cross examined him, and/or, objected to him being a witness. But
this was not the case.

[19] Regarding the second issue, the Respondent/Plaintiff submitted that the
reason given by the Appellant ie the copy of the cheque was "unable to be
found" was unacceptable and unreasonable. This was because the cheque was
at all time in the custody of the Appellant/2nd Defendant, and therefore the
Appellant/2nd Defendant was negligent, and/or failed to tender the cheque in
the course of the trial. The Respondent/Plaintiff also submitted that the
Appellant's application was an afterthought, and an attempt to deny him to
enjoy his fruits of litigation.

[20] Further, the court was already functus officio as the outcome of the trial
was finalised with the decision of the claim already decided by the trial court
in which the decision was in the Respondent/Plaintiff's favour.

F. Analysis And Finding Of This Court

i) Can Fresh Evidence Per Se Be Allowed To Be Adduced At Appellate Stage?

[21] The answer is in the affirmative. Such application for leave is permissible
under O 55 r 7 of ROC 2012 which requires two stringent requirements to be
 Ong Hock Lai
[2017] MLRHU 361 v. Sma Plantation Sdn Bhd pg 5

fulfilled by the applicant to the satisfaction of the judge. The provision is

reproduced below:-

"At the hearing of any appeal, fresh evidence shall not be admitted
unless the Judge is satisfied that:-

(a) at the hearing in the Subordinate Court, the new evidence

was not available to the party seeking to use it or that
reasonable diligence would not have made it so available; and

(b) the fresh evidence, if true, would have had or would have
been likely to have a determining influence upon the decision
of the Subordinate Court".

[22] As such the submission by the Respondent/Plaintiff that this Court

cannot hear this application because it was functus officio was misconceived.
The trial court might be functus officio but not this court exercising its appellate
jurisdiction.

ii) Does Suhaili's Position As A Bankrupt Has Any Bearing In The Suit As He
Is Not A Party To The Suit

[23] The Appellant/2nd Defendant argued that Suhaili was declared bankrupt
since 20 June 2000. However, the search was only made on 20 September
2016. The Appellant/2nd Defendant did not explain the reason for the delay
in making such a search. This Court found that it was negligent on the part of
the Appellant/2nd Defendant not to make the search much earlier before the
trial as he was represented by a lawyer. This Court opined that the move
embarked on by the Plaintiff was hence an afterthought.

[24] Be that as it may, this Court was of the opinion that the status of Suhaili
as a bankrupt was not relevant as he was not a party to this suit. He was not a
Plaintiff neither was he a Defendant. In fact all payments were made under the
name of the Respondent/Plaintiff and not Suhaili. This fact was consistent
with paras 6.4 and 6.5 of the "Settlement Agreement" dated 30 March 2014
whereby the payment was to be made to the Respondent/Plaintiff and not
Suhaili, and the payment to be guaranteed by "OHL" ie the Appellant/2nd
Defendant.

[25] Further at the trial, he was a witness and gave evidence for the
Respondent/Plaintiff. Therefore, the trial was not a nullity even though
Suhaili was a bankrupt. In fact under s 188 of the Evidence Act he is a
competent witness.

[26] Although the issue of Suhaili's bankrupt status was raised, it did not
undermine the decision made by the trial Judge and, perhaps at the appellate
stage, as parties are bound by their pleadings. Further, the facts in issue of the
suit was about the agreement arrived at by both parties and the breach which
involved the application of the law of contract ie the Agreement entered into
by both parties and not about Suhaili's issue of bankruptcy under the
 Ong Hock Lai
pg 6 v. Sma Plantation Sdn Bhd [2017] MLRHU 361

Bankruptcy Act. This Court noted that although there were some matters that
were not explained in the contract, but the parties agreed that they were bound
by the contract which was signed by them. In the trial, the issues ventilated
were about the business dealings between both parties vis-a-vis the contract. All
these issues had been decided by the trial court, as are shown in the following
paragraphs.

[27] This Court had looked at the proceedings of the trial to satisfy itself. From
the grounds of judgment, it was clearly shown that the status of Suhaili as a
bankrupt did not have any bearing on the outcome of the trial. On the contrary
from the grounds of judgment, it was proven, inter alia, that payment was to be
made to the Respondent/Plaintiff, not Suhaili, and that parties had agreed to
be bound by the Agreement, and that the interim payment that was to be made
to the Respondent/Plaintiff was guaranteed by the Appellant/2nd Defendant
and both Defendants are to pay the balance due within ninety days.

[28] This Court had referred to the extracts of the grounds of judgment of the
trial judge which had shed more light on the trial and which clearly showed
that Suhaili's status as a bankrupt had no bearing on the trial. At pp 194 to 196
Rekod Rayuan Tambahan, this was what the trial Judge said:-

"1. Samada Plaintif Membuktikan Tuntutannya Sebanyak

RM558,518.00

[28] Tuntutan Plaintif dan Tuntutan Balas Defendan-Defendan adalah

terhasil daripada hubungan Kontrak di antara pihakpihak. Di dalam
kes ini Perjanjian yang dimasuki di antara pihak-pihak adalah tidak
dipertikiaikan. Dengan demikian terma-terma Perjanjian adalah
mengikat pihak-pihak dan pihak-pihak perlu melaksanakan
tanggungjawab masing-masing seperti yang diperuntukkan di dalam
Perjanjian.

[29] Mengikut Perjanjian, Defendan-Defendan telah bersetuju untuk

membeli 9 firma perniagaan milik Plaintif dengan harga belian
sebanyak RM11,665,000.00. Defendan-Defendan telah membuat
bayaran sebanyak RM9,957,000.00. Fakta-fakta setakat itu adalah
tidak dipertikaikan.

[30] Namun setakat mana ia merujuk kepada bayaran yang masih

berbaki sebanyak RM558,518.00, perkara ini dipertikaikan oleh
Defendan-Defendan. Defendan Kedua mengatakan bahwa
mengambilkira bahawa terdapat pertindihan kawasan yang diluluskan
kepada firma-firma perniagaan yang dijual oleh Plaintif tersebut, dan
Jabatan Perhutanan Negeri telah mengesahkan pertindihan kawasan
tersebut, kawasan yang dinyatakan di dalam Perjanjian untuk firma-
firma perniagaan tersebut menjadi lebih kecil dan dengan itu
Defendan-Defendan berhak untuk diberikan diskaun, dan setelah
mengambilkira diskaun tersebut, tiada lagi baki hutang yang perlu
dibayar kepada Plaintif. Disebaliknya Plaintif yang berhutang kepada
Defendan-Defendan untuk jumlah yang Defendan terlebih bayar.
 Ong Hock Lai
[2017] MLRHU 361 v. Sma Plantation Sdn Bhd pg 7

[31] Di dalam kes ini, Defendan Kedua mendakwa bahawa kedua-dua

pihak mempunyai tanggungjawab untuk mendapatkan pengesahan
daripada Jabatan Perhutanan Negeri mengenai isu pertindihan dan
Plaintif telah dengan tidak sewajarnya memindahkan beban untuk
membuktikan terdapat pertindihan kawasan tersebut kepada
Defendan. Untuk menjelaskan isu ini Mahkamah merujuk kepada cl
6.5 (c) Perjanjian, dimana diperuntukan seperti berikut:-

"6.5 The interim payment payable to SMA shall be

RM620,400.00 and the payment is guaranteed by OHL
(hereinafter referred to as "the interim payment" which shall
remain as the only and sole obligation/warranty of OHL in
this agreement. The payment of the interim payment shall be
made in the following manner:-

a) ....

b) ....

c) Within 90 days from the date of this Agreement,

OHL shall pay the balance RM220,400.00 to SMA
(hereinafter referred to as "the final Interim
Payment").

[32] Berpandukan peruntukan tersebut, jelas bahawa bayaran interim

yang perlu dibayar kepada Plaintif dijamin oleh Defendan Kedua dan
di dalam tempoh 90 hari Defendan-Defendan hendaklah membayar
bakinya kepada Plaintif. Seterusnya Mahkamah merujuk kepada cl 5.2
dan 5.3 Perjanjian di mana diperuntukkan:-

"5.2 Notwithstanding the provisions of this Agreement, KPSB

may obtain and secure documentary proof in showing the
Approved Land to any Business Firm Listed in the Schedule
to cl 3 is overlapping with any logging tagging approval and
the documentary proof must be delivered to the parties before
the Final Interim Payment is due and payable as provided in
cl 6.5 (c) herein. If any of such documentary proof is produced
by KPSB, the Parties shall Immediately verify the overlapping
area and to mutually negotiate and agree to any payment
adjustment, if any.

5.3 Subject to cl 5.2 above, the Approval Land shall be

deemed final and conclusive on the date if the Final Interim
Payment is due and Payable and no overlapping area shall in
any event whatsoever affect the payment herein provided."

[29] The Court noted that the Bankruptcy Act 1967 does not permit a
businessman from engaging into business whilst being a bankrupt without a
prior sanction of the Director General of Insolvency (DGI) - (s 38(d) of
 Ong Hock Lai
pg 8 v. Sma Plantation Sdn Bhd [2017] MLRHU 361

Bankruptcy Act 1967). Even assuming that Suhaili as a bankrupt and also as a
beneficiary was subjected to that provision, this would be a matter between the
bankrupt (Suhaili) and the DGI. It is up to the DGI to take action against him.
In fact the case of Re North, ex-parte Hasluck [1895] 2 QB 264 is authority for
the proposition that the statute relating to bankruptcy should be construed in a
manner most favourable to the person affected. In Sobri Arshad v. Associated
Tractors [1991] 2 MLRH 349; [1991] 3 MLJ 32; [1991] 3 CLJ 756, the Court
said:-

"Bankruptcy proceedings are not execution proceedings and do not

therefore come within the defination of a "suit".

[30] Towards this end, this Court ruled that Suhaili's status as a bankrupt
should not deprive the Respondent/Plaintiff to file a suit against the two
Defendants in the case involving a breach of contract, or for recovering debts
due to the Respondent/Plaintiff. Suhaili, as a beneficiary, and the
Respondent/Plaintiff, are two separate entities. They can sue and be sued.

[31] In the upshot, this Court ruled that the Appellant/2nd Defendant was
negligent for not making the bankruptcy search much earlier and that Suhaili's
status as a bankrupt had no bearing in this suit, and hence fresh evidence
regarding his bankruptcy should not be allowed to be adduced, as it will not
have a determining influence on the decision of the trial court.

[32] Regarding the second issue of the excess payment of RM50,000.00, in so

far as the trial court was concerned, the evidence of excess payment was not
before the trial court. The onus was on the Appellant/2nd Defendant to prove
that excess payment was made and that the Respondent/Plaintiff should have
considered that payment when presenting their claim at the trial court. This
was not done.

[33] This Court ruled that the Appellant/2nd Defendant cannot have a second
bite at the cherry by adducing that evidence at the appeal stage on the basis
that they had just discovered the new evidence after the trial. The
Appellant/2nd Defendant cannot just give the excuse such as "cannot be
found". Suffice to say that this Court was not satisfied that due diligence was
exercised to locate the cheque. If the court were to allow, this will open the
floodgate, and there will be an influx of such application, where parties, due to
their sheer negligence, or inadvertence, or neglect, who failed to adduce such
evidence at the trial court, will try to have a second chance at the appellate
stage. Further, by just proving mere possession of a copy of the cheque payable
to the Respondent/Plaintiff, would not be sufficient as the Appellant/2nd
Defendant will still have to prove that the original cheque was received by the
Respondent/Plaintiff and was honoured by the bank and credited into the
account, as the onus of proof was on them.

[34] This Court was referred to the case of Tennas Engineering Sdn Bhd v. Sebor
(Sarawak) Marketing & Service Sdn Bhd [2005] 5 MLRH 463; [2005] 5 MLJ 54,
HC, where the Court said:-
 Ong Hock Lai
[2017] MLRHU 361 v. Sma Plantation Sdn Bhd pg 9

"13. In examining the appellant's list of documents (sch I to exh A of

exh C7 in the affidavit of Chan Poh Hui affirmed on 15 April 2004
(encl 16)), it is noteworthy to observe as pointed out by Mr Ee that
there was listed therein an extensive number of documents ranging
from as early as July 1993 until mid 1998. It is indeed strange why the
two payment vouchers dated 4 January 1996 and 14 June 1996 were
not available then. Although the appellant contended that they are just
being honest and speaking the truth by reference to an exh J1, the fact
still remains ie, the said documents were at all material times in their
possession and given the length of time available to the appellant to
attempt and locate the said documents, have they therefore, in truth
and in fact exercised reasonable diligence to locate them? Therefore I
am of the view that it is highly questionable and doubtful whether the
appellant has exercised reasonable diligence in securing the said
documents before the hearing of the magistrate's court application.

15. In the light of the line of authorities which I have alluded to above,
I therefore, find that the appellant has failed to satisfy the first
condition under O 55 r 5A of the RHC 15 and because the first and
second conditions of O 55 r 5A of the RHC are cumulative and not in
the alternative, I have no alternative but to dismiss the appellant's
Application with costs to the respondent."

iv. Having Determined Para (ii) And Para (iii), Can Those 2 Fresh Evidences
Be Allowed To Be Adduced

[35] This Court found that the Appellant/2nd Defendant failed to satisfy the
two conditions required under O 55 Rule 7 of ROC 2012 as alluded to earlier.
Even though, assuming that only one condition was fulfilled, this Court was
constrained to allow the application because the first and second conditions
cannot be read disjunctively, but conjunctively. Thus, both conditions have to
be fulfilled.

G. Conclusion

[36] In the upshot, this Court dismissed the Appellant's application with cost
of RM3,000.00.