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2020 MarsdenLR 233
HIGH COURT MALAYA SHAH ALAM
ANN JOO METAL SDN BHD – Appellant
Versus
BUKIT FRASER THERMAL TECHNOLOGIST SDN BHD (ENCL 15) – Respondent
[Petition Companies (Winding-Up) No: BA-28NCC-476-07/2019]
The without prejudice rule does not apply to admissions of debts in negotiation if there is no bona fide dispute regarding the actual debt owed.
Headnote:(A) Companies Act 2016 – Section 465(1)(e),(h) – Winding-Up Petition – The Respondent failed to discharge the debt of RM473,045.63, prompting the Petitioner to file a Winding-Up Petition after a Statutory Notice was ignored. (Paras 4, 5, 6)
(B) Without Prejudice Rule – The without prejudice rule protects negotiations aimed at settlement from admissibility as evidence. However, an unequivocal admission of debt, made in correspondence not labelled without prejudice, is admissible. (Paras 8, 19, 22)
Facts of the case: The Petitioner claimed RM473,045.63 for goods delivered upon the Respondent's request, following an unaddressed Statutory Notice demanding payment. (Paras 4, 5)
Findings of Court: The Court found no bona fide dispute regarding the debt; therefore, the Respondent's application to strike out admissions in communication was dismissed. Exhibit P-4 was admitted. (Paras 22, 23)
Issues: The main issue was whether the negotiations constituted a bona fide dispute regarding the debt owed. (Para 20)
Ratio Decidendi: The Court highlighted that negotiations regarding payment terms, without denying the debt itself, do not attract the without prejudice privilege. (Paras 19, 22)
Result: The application was dismissed, with costs awarded to the Petitioner. (Paras 22, 23)
JUDGMENT
Introduction
[1] Enclosure 15 dated 17 October 2019 is the Notice of Motion filed by the Respondent pursuant to O 18 r 19(1) of the Rules of 2012 and / or under s 469 of the Companies Act 2016 and / or inherent jurisdiction of this Honourable Court for the followings orders:
(1) that the entire para 5 (iii) at p 3 of the Winding Up Petition dated 31 July 2019 and Exhibit "P-4" exhibited thereto be stuck out;
(2) that costs of this Application and costs of this Winding Up Petition be borne and paid by the Petitioner;
(3) Further and / or other relief of which this Honourable Court deems fit and just in the circumstances.
The Relevant Cause Papers
[2] The relevant cause papers referred to in respect of the Petitioner's Petition are as follows:
(i) Winding-Up Petition dated 31 July 2019 ["Petition"];
(ii) Affidavit Verifying the Petition affirmed by Lim Aun Chuan on 2 August 2019 ["Affidavit Verifying Petition"];
(iii) Respondent's Affidavit Opposing Petition affirmed by Graham Robert Mccieliand on 8 October 2019 [''Respondent's Opposition Affidavit"]
(iv) Petitioner's Affidavit in Reply in support of the Winding-Up Petition dated 31 July 2019 affirmed by Lim Aun Chuan on 22 October 2019 ["Affidavit in Reply"]
(v) Notice of Motion (i) In Opposing Winding-Up Petition dated 31 July 2019; and (ii) In Support of Respondent's Application to Strike Out Part of the said Winding-Up Petition) dated 17 October 2019 ["Notice of Motion"];
(vi) Respondent's Affidavit in Opposition to the Petition and in Support of the Striking Out Motion affirmed by Graham Robert McClelland on 17 October 2019 ["Respondent's 2nd Affidavit"]
(vii) Petitioner's Affidavit in Reply affirmed by Lim Aun Chuan on 7 November 2019 ["Petitioner's 2nd Affidavit"];
(ix) Respondent's Affidavit in Reply affirmed by Graham Robert Macclelland on 19 November 2019 ["Respondent's 3rd Affidavit"];
(x) Petitioner's Affidavit in Reply affirmed by Lim Aun Chuan on 2 December 2019 ["Petitioner's 3rd Affidavit"] and
(xi) Respondent's Affidavit in Reply affirmed by Graham Robert Maccielland on 16 December 2019 ["Respondent's 4th Affidavit"].
[3] For convenience, I will refer to the parties according to the titles assigned to them in this Court.
Brief Facts
[4] The Petitioner claims against the Respondent for a sum of RM473, 045.63 for goods sold and delivered to the Respondent at the Respondent request. The said sum is derived from the followings items:
(a) Price of goods: RM448,339.05
(b) Interests at the rate of 1.5 % per month (as at 29 May 2019): RM24, 706.58
Total: RM473. 045.63
[5] Subsequently, on 17 June 2019 the Petitioner served a Statutory Notice pursuant to s 465 (1) (e) and (h) of the Companies Act 2016 at the registered address of the company requiring it to pay the aforesaid debt of RM473, 045.63 within twenty - one (21) days of receipt of the said Statutory Notice. Twenty-one (21) days has lapsed from the service of the Notice and the Respondent failed to pay the sum as demanded. The Petitioner had no choice but to file the winding up petition.
[6] Subsequent to the filing of the Winding - Up Petition, the Respondent filed the Notice of Motion (Encl 15) to strike out the entire para 5 (iii) of the Petition and Exhibit P - 4 exhibited thereto on the following grounds:
(i) Paragraph 5 (iii) in the Petition alluding to "without prejudice communication" between the parties;
(ii) The Respondent alleged that the "without prejudice communication" are exhibited in para 5 (iii) as Exhibit P-4; and
(iii) The said para 5 (iii) and Exhibit P-4 cannot be retained since (i) it is scandalous, frivolous and vexatious; (ii) it may prejudice, embarrass or delay the fair trial of the action; or (iii) it is otherwise an abuse of the process of the Court.
Findings Of The Court
[7] Generally, a "without prejudice" letter is a privileged document that specifically relate to negotiations genuinely aimed at a settlement between parties in a dispute.
[8] It is settled law that letters written without p
