The court upheld the enforceability of the rental agreement and ruled that indulgence towards payments did not constitute a variation of the contract terms.

Introduction

[1] The Plaintiff's claim against the 1st Defendant is for unpaid rental as well as the non-return of the materials and accessories ("supplies"‌) supplied to the 1st Defendant under a Scaffold Rental Agreement ("the Agreement"‌) dated 15 May 2019.

[2] The dispute between the Plaintiff and the 1st Defendant proceeded to a full trial whereby the Plaintiff called 3 witnesses whereas the 1st Defendant called 1 witness. The Plaintiff's claim against the 2nd Defendant was earlier stuck out by the Court.

[3] The parties had filed the statement of agreed facts, issues to be tried and Bundle of Documents, on the directive of Court, which also formed part of the proceedings.

Brief Facts

[4] The rental terms in the Agreement for the supplies was for a period of 24 months. The 1st Defendant was to pay a monthly rental of RM149,768.00 within 30 days after the issuing of an invoice by the Plaintiff. Any delay in the payment of rental would incur an interest of 1.5 % for the first 2 months and 3 % thereafter.

[5] A further term in the Agreement was that the materials supplied will remain under the ownership of the Plaintiff and on the expiry of the Agreement to be returned back to the Plaintiff.

[6] The Plaintiff issued 11 invoices from August 2019 to June 2020 for the supplies as stipulated under the Agreement for a sum totaling RM1,647,448.00. The Plaintiff contend that the 1st Defendant only made 2 payments of RM66,967.68 on 5 July 2021 and further sum of RM126,696.96 on 20 September 2021 leaving an unpaid sum of RM1,453,783.36 to date.

[7] The Plaintiff also contend that supplies for which the Plaintiff has ownership has not been returned to the Plaintiff therefore attracting further rentals as stipulated under the Agreement.

[8] The 1st Defendant's only defense is that there was a collateral agreement between the Plaintiff and the 1st Defendant for the payments of rental to be paid to the Plaintiff only after the 1st Defendant is paid by the 2nd Defendant. The supplies were to be provided by the 1st Defendant for the project that was undertaken by the 2nd Defendant.

[9] The 1st Defendant further contended that this collateral agreement varied the payment terms under the Agreement.

The Existence Of The Collateral Agreement/ Variation

[10] The fact relied upon by the Defendant to prove a collateral agreement was the communication between a Director of the Plaintiff who had volunteered to assist the 1st Defendant in receiving payment from the 2nd Defendant. This indicated that the Plaintiff was not pressing for payment and had agreed to waive payment of rental until the 1st Defendant was paid by the 2nd Defendant.

[11] The 1st Defendant also relied on the reply filed by the Plaintiff to the Defense by the 1st Defendant that they had agreed to grant indulgence to pay the outstanding payment until payment was received by the 1st Defendant from the 2nd Defendant.

[12] The Defendant further contended that the fact that the Plaintiff have not terminated the agreement shows that the Plaintiff had agreed to vary the terms of the Agreement and accept payment on a back to back basis.

[13] The Plaintiff's witnesses although admitting to granting indulgence and not strictly pressing for payment according to the Agreement, the reason for doing so was to ensure they received the money owed. They had no intention to waive their rights under the Agreement.

[14] The Plaintiff's witnesses also explained that non issuance of the invoices after a certain date was for accounting and tax purposes and not a waiver to ex