The court clarified the requirements for establishing ownership transfer in hire-purchase agreements, emphasizing the relevance of intent and the potential inapplicability of anti-suit injunctions.

Gopal Sri Ram JCA:

Preliminary

These two appeals arise out of the same subject matter. When we sat on 22 November 1999, there was only one appeal before us. It was Civil Appeal No. 686/99 ("the second appeal") in which Sabah Shipyard Sdn. Bhd. ("Sabah Shipyard") was the appellant. We then discovered from counsel that there was a related appeal, viz., Civil Appeal No. 482/99 ("the first appeal") in which BSNC Leasing (M) Sdn. Bhd. ("BSNC Leasing") was the appellant. It was against an earlier order made in the same proceedings. It was apparent that a resolution of the first appeal would finally determine the event of the second. But not the other way around.

We therefore suggested that the first appeal be also fixed on short notice and that both appeals be heard together. Counsel agreed. The learned President of the Court of Appeal then issued the appropriate direction pursuant to which both appeals were heard and disposed of, two days later, on 24 November.

Facts And Background

Sabah Shipyard is in the business of constructing, among other things, power barges for the generation of electricity. Turbines are required in the construction of power barges. In or about June 1995, Sabah Shipyard purchased a turbine from Wing Teik Holdings Bhd. ("Wing Teik"). The price was RM49 million. Wing Teik in turn ordered the turbine from Westinghouse Electric Corporation which manufactures turbines in the United States of America. Westinghouse delivered the turbine direct to Sabah Shipyard at Labuan in September 1995.

On 3 January 1996, Wing Teik raised an invoice against Sabah Shipyard for RM49 million. Sabah Shipyard paid Wing Teik RM20million in part payment of the purchase price. It needed to raise funds to settle the balance owing to Wing Teik. It therefore approached BSNC Leasing.

On 3 August 1996, a hire-purchase agreement was drawn up and executed between Sabah Shipyard and BSNC Leasing. The agreement described BSNC Leasing as the owner of the turbine. Under its terms BSNC Leasing purported to hire the turbine out to Sabah Shipyard for a gross sum of RM29 million and interest. Sabah Shipyard was to repay this amount in monthly instalments over 24 months. If it did, and it was not in breach of its covenants under the hire purchase agreement, the property in the turbine was to pass to it at the end of the period of hire. For the purpose of this transaction, Wing Teik's invoice was amended by deleting Sabah Shipyard's name and inserting BSNC Leasing. Following the execution of the hirepurchase agreement BSNC Leasing paid the sum of RM29 million to Wing Teik. Sabah Shipyard then went about constructing a power barge called "Victoria II" and installed the turbine in question as a component in the barge.

Following the economic crisis that descended upon this region in mid 1997, Sabah Shipyard, like so many other businesses began to experience financial hardship. It defaulted in the instalments payable to BSNC Leasing. It also owed monies to other creditors. It wanted to stave off all its creditors in order to earn itself some breathing space. So, acting in conjunction with its holding company, Westmont Industries Berhad, it drew up a scheme of arrangement and moved the court for various orders under s. 176 of the Companies Act 1965 . The relief it obtained included an order under s. 176(10) restraining legal proceedings against both companies.

On 3 December 1998, BSNC Leasing intervened in the s. 176 proceedings. It wanted to re-possess the turbine under the terms of the hire purchase agreement. It therefore moved the court for an order enabling it to do so. Sabah Shipyard opposed this application. Another creditor, Usaha Asas Sdn. Bhd. also intervened and opposed the orders sought by BSNC Leasing. The learned judge, after considering the copious documents put in evidence and the arguments of counsel, dismissed BSNC Leasing's application