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2025 MarsdenLR 921
HIGH COURT MALAYA KUALA LUMPUR
LIEBHERR SALES KLUANG SDN BHD – Appellant
Versus
ZHONGJI CONSTRUCTION SDN BHD – Respondent
[Civil Suit No: WA-22NCVC-729-12/2022]
A Settlement Agreement is binding when a party acknowledges debt through conduct, including part payments, and the opposing party fails to provide credible defenses.
Headnote:(A) Contract Law - Settlement Agreement - The plaintiff sought recovery of RM1,398,685.50 under a Settlement Agreement dated 16 December 2021, acknowledging the defendant's liability after deducting payments made. The defendant denied liability, claiming damage occurred within warranty. (Paras 1-2, 10-12)
(B) Burden of Proof - The plaintiff successfully discharged its burden of proof on the balance of probabilities, establishing its claim through credible evidence. (Paras 3, 45)
(C) Acknowledgment of Debt - The defendant's conduct, including part payments and audit confirmations, constituted an acknowledgment of debt, binding it to the Settlement Agreement. (Paras 18-24)
(D) Warranty Defense - The defendant's warranty defense was rejected as it failed to provide credible evidence of coverage and raised the argument belatedly. (Paras 25-29) (E) Quantum of Damages - The defendant's challenge to the quantum of repair costs was inconsistent with its prior acknowledgment and lacked merit. (Paras 34-38) (F) Decision to Replace Parts - The decision to replace damaged parts was justified and not subject to the defendant's belated objections. (Paras 41-44)
Findings of Court:
The Settlement Agreement was valid and binding, and the plaintiff proved its claim.
Result: Plaintiff's claim allowed for RM1,398,685.50 with interest at 5% per annum and costs of RM50,000.00.
JUDGMENT
Introduction
[1] The plaintiff commenced this action against the defendant to recover the sum of RM1,398,685.50 ("Outstanding Sum") which remained outstanding pursuant to a Settlement Agreement executed on 16 December 2021. The Outstanding Sum represented the balance due from the defendant to the plaintiff after deducting three payments amounting to RM398,685.00 from the agreed sum of RM1,797,370.50.
[2] The claim arose from repair costs and rental charges incurred for a drilling machine identified as Drilling Rig Machine Type/SN: LB36-410/115953 ("Second Machine"). The machine sustained damage while it was under the possession and control of the defendant. The defendant denied liability and contended that the damage occurred within the warranty period. The defendant further asserted that the damage did not result from any mishandling on its part.
[3] After carefully assessing the evidence and considering the submissions from both parties, I found that the plaintiff had successfully discharged its burden of proof on the balance of probabilities. The plaintiff successfully established its claim through credible evidence. Consequently, I allowed the plaintiff's claim in full. I also awarded costs in the sum of RM50,000.00 to the plaintiff. The reasons for my decision are set out below.
Brief Facts
[4] The plaintiff and the defendant entered into a rental with purchase option order on 26 February 2018 ("First Agreement") for a drilling machine identified as Drilling Rig Machine Type/SN: LB36-410/115926 ("First Machine"). Under the terms of the First Agreement, the defendant took possession of the First Machine subject to the agreed rental and purchase conditions.
[5] Subsequently, on 12 April 2018, both parties executed another rental with purchase option order ("Second Agreement") for a second drilling machine, identified as Drilling Rig Machine Type/SN: LB36-410/115953 ("Second Machine"). The Second Agreement was separate and distinct from the First Agreement, though both were executed between the same parties and involved similar contractual terms
[6] The Second Machine was delivered to the defendant on 17 April 2018 in accordance with the terms of the Second Agreement. Following the delivery, the defendant's operator underwent training on the operation and handling of the machine from 18 April 2018 to 25 April 2018. The training was conducted to ensure proper use and maintenance of the machine in accordance with the manufacturer's specifications.
[7] On 3 June 2018, while the Second Machine remained in the defendant's possession and control, it sustained damage. The damage occurred when its luffing mechanism failed to lift, rendering the machine inoperative.
[8] The defendant submitted an insurance claim for the damage sustained by the second machine. However, Allianz General Insurance Company (M) Berhad rejected the claim on 20 September 2018. Following the rejection, the plaintiff undertook the necessary repairs to restore the machine to operational condition. The repairs included the replacement of damaged components and the procurement of spare parts.
[9] Upon completion of the repairs, the plaintiff issued invoices dated 26 December 2018 and 31 December 2018 in the total sum of RM1,600,217.70. The invoiced amount covered the cost of repairs, spare parts, labour charges, workshop rental, transport and crane charges, consumable items and related expenses incurred in restoring the machine.
[10] Between 2019 and 2021, both parties engaged in negotiations in an attempt to resolve the dispute amicably. Following extensive discussions, they reached a settlement which was formalized in a Settlement Agreement dated 16 December 2021. Under the terms of the agreement, the defendant acknowledged its liability and agreed to pay the sum of RM1,797,370.50.
[11] The agreed sum was to be settled through four postآ¬dated cheques and financing arrangements. The Settlement Agreement was intended to fully and finally
