Haidar Mohd Noor JCA:

In this appeal the appellant, Sing Kee Motor Credit Sdn Bhd ("5K"), as the plaintiff, sued the respondent, Public Finance Berhad ('PFB'), as the defendant, in the High Court for breach of contract and for damages. The learned High Court judge after a full trial dismissed SK's action with costs and hence the present appeal by SK before us.

Brief Facts

SK is involved in second-hand car business and provides credit facilities whereas PFB, a finance company, provides credit facilities to SK in its business.

Both parties executed an agreement known as "Hire Purchase Agency Facility" on 6 May 1982 ("agreement"). Clause 9(a) of the agreement, inter alia,imposes the obligations of SK as a dealer by way of a guarantee and indemnity to include:

The Dealer undertakes to collect and pay on behalf of hirers and remit punctuallyon specified dates, all sums payable under each and every hire purchase agreement introduced by the Dealer. (emphasis added)

PFB claimed that SK had on a number of occasions failed to remit the payments punctually resulting in PFB issuing notices of claim and reminders to SK. Following that PFB, through its solicitors, issued a letter dated 25 July 1985 to SK terminating the agreement and claimed a sum of RM43,655 as due and outstanding. However, SK contended that it was willing to pay the claim of PFB on the basis that time was not of the essence of the contract. In that event SK claims that the termination of the agreement by PFB was in breach of the agreement.

Counsel for both parties agreed that there are two issues for determination. They are:

(1)whether time was of the essence of the contract;

(2)whether the plaintiff was estopped as a result of the earlier proceedings taken by PFB against SK videCivil Suit No. 24-188-86 in the High Court, Seremban. This suit is over the same contract and it was settled.

The learned judge also confined to the above two issues in his judgment.

Issue (1)

The learned judge in considering this issue went on the premise that time was of the essence of the contract. He came to this finding as cl. 9(a) of the agreement stipulates that SK is required to make payment of the rentals "punctually" and cited Leeds and Hanley Theatre of Varieties v. Broadent[1898] 1 Ch 343; Hicks v. Gardner1 Juv. 541 in support thereof. It is not disputed by SK that payments were not made punctually by it to PFB except that it was made to pay interests for the late payments though not provided for by the agreement. However, the payment of interests is not an issue here as it was made without any protest by SK.

In the appeal before us, counsel for SK conceded that time was of the essence of the contract. This would be contrary to the pleaded case of SK as by para. 7 of the statement of claim, it is plainly pleaded by SK that time was never of the essence of the contract. It would be too late for SK to change its position before us. With respect, SK should have pleaded that time was of the essence of the contract (as so pleaded by PFB in para. 6 of the statement of defence) and to aver that there was waiver on the part of PFB by not taking an early action to terminate the agreement when payments were not made punctually by SK.

In any event, the indulgence or forbearance on the part of PFB in allowing for late payments of the rentals by SK shall not prejudice or affect PFB's rights by virtue of cl. 9(f) of the agreement executed and agreed to by both parties. Clause 9(f) reads:

This guarantee shall be a continuing guarantee and the Company's rights hereunder shall not be prejudiced or affected by any indulgence or forbearance on their part extended to the Dealer or to any parties the subject hereof or by the death, bankruptcy, liquidation or insolvency of the Dealer.

PFB by way of para. 4 of the statement of defence averred that it had been constrained to grant forbearance repeatedly until termination of the agreement as a result of the breach.

By virtue of cl. 20 of the agreement