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HIGH COURT MALAYA KUALA LUMPUR
PETRONAS CARIGALI SDN BHD – Appellant
Versus
ACETIMUR DRILLING SDN BHD & ANOR – Respondent
[Suit No: WA-22NCVC-527-10-2017]
The ratio decidendi of this case is that when a party is found to have issued fraudulent or fictitious invoices, resulting in unjust enrichment, the court is justified in ordering the recovery of the overpaid sums. The court emphasized that such fraudulent conduct undermines the integrity of contractual and corporate dealings, and therefore, the party unjustly enriched must return the amounts received.
Furthermore, the court held that in cases involving fraud or improper conduct, the corporate veil may be lifted to hold individuals personally liable, especially when the individual controls or orchestrates the fraudulent scheme. This is particularly applicable when the controlling individual acts as the direct or indirect mastermind behind the fraudulent acts, using the corporate entity as a vehicle for deception.
Additionally, the court established that internal procedural shortcomings or internal approvals do not absolve the fraudulent party from liability when there is clear evidence of fraudulent intent and conduct. The knowledge and participation of the controlling individual, rather than the entire corporate entity or its employees, are critical in attributing liability and justifying the lifting of the corporate veil.
Finally, the court's decision underscores that the law permits the recovery of wrongful payments made under fraudulent circumstances and that such payments should not be retained or unjustly enriched by the wrongdoer, reinforcing the principle that no one should benefit from their own wrongdoing.
Original Action
[1] The Plaintiff ("P") is a company incorporated in Malaysia. P is principally engaged in the exploration, development and production of oil and gas.
[2] The 1st Defendant ("DI") is a company incorporated in Malaysia. DI is engaged in the business of oil and gas extraction services. The 2nd Defendant ("D2") is a Malaysian citizen. D2 was a director and shareholder of DI at the material time. DI and D2 are collectively referred to as the "Defendants".
Original Third Party Action
[3] The 1st Third Party ("TP1") was an employee of P at the material time. He was formerly a Senior Executive Officer of P (in the Supply Chain Management Department) and one of the staff on P's D18 Project Management Team. The D18 Project Management Team managed the D18 Project, which is the subject matter of the instant suit.
[4] The 3rd Third Party ("TP3") is the father-in-law of TP1. TP3 is the sole proprietor of Dhiyairrina Enterprise ("Dhiyairrina"). The 4th Third Party ("TP4") is the mother-in-law of . The 2nd Third Party ("TP2") is a company incorporated in Malaysia. TP3 and TP4 were the directors and shareholders of TP2 at the material time. TP1, TP2, TP3 and TP4 are collectively referred to as the "Original Third Parties".
Subsequent Third Party Action
[5] The 5th Third Party in the Subsequent Third Party Proceedings ("TP5") was an employee of P at the material time. He was formerly a Technical Clerk of P and one of the staff on the D18 Project Management Team.
Background
[6] P entered into a Production Sharing Contract dated 2 October 2002 with Petroliam Nasional Bhd ("Petronas") and was appointed by Petronas as the operator for the exploration, development and production of hydrocarbon for oil and gas field onshore/offshore Malaysia. Pursuant to the said Production Sharing Contract, P required the Provision of Jack-Up Drilling Rig 'COSL Boss' for Petronas Carigali Drilling Program. By a contract dated 30 December 2014, P appointed and DI accepted such appointment for the Provision of Jack-Up Drilling Rig 'COSL Boss' for Petronas Carigali Drilling Program ("COSL Contract").
[7] During the course of the COSL Contract, DI issued various invoices for the performance of works under the COSL Contract and P paid for the same. The total payment made by P to DI pursuant to the COSL Contract is USD35,362,458.26 (exclusive of goods and services tax). Subsequently, P issued a Contract Closure Certificate dated 21.1.2016 pursuant to Article 39 of the COSL Contract ("Contract Closure Certificate").
[8] Sometime in May 2016, P discovered that DI had issued 3 invoices in the total sum of USD5,565,424.08 ("Excess Payment"). These 3 invoices were allegedly fictitious or fraudulent invoices as they were for amounts that had already been settled by P via prior invoices issued by DI and/or were not accompanied with the necessary supporting documents to substantiate the amount claimed in the same ("Redundant Invoices").
[9] The particulars of the Redundant Invoices that make up the Excess Payment are:
[10] Pavers that the Excess Payment was an overpayment made to the Defendants, and is therefore due to be refunded by the Defendants to P. P alleges that some of the Excess Payment was already settled via prior valid invoices issued by D1 as follows:
[11] P was under a mistaken belief that the Redundant Invoices were for genuine work performed by DI under the COSL Contract. As a result, P paid the Excess Payment to DI . But upon reviewing the payments made by P to DI under the COSL Contract sometime in May 2016, P discovered that the Redundant Invoices were in fact double and/or excess claims and/or unsupported claims made by DI.
[12] There was a meeting between P and the Defendants on 13 May 2016 to discuss the Excess Payment. The Defendants were requested to refund the Excess Payment and submit 3 credit notes for the Excess Payment. Thereafter D1 did submit 2 credit notes in the respective sums of (for Redundant Invoice 1) and (for Redu
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