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2021 MarsdenLR 3276
COURT OF APPEAL PUTRAYA
ALLIANCE CONNEXT SDN BHD & ANOR – Appellant
Versus
WANGSA BUDIMAS SDN BHD – Respondent
[Civil Appeal No: S-02(NCVC)(W)-2134-11-2019]
The court confirmed that non-current officers may represent a company in legal proceedings and established the necessity for direct evidence in proving damages and the enforceability of guarantees.
Headnote:(A) Lease Agreement – Clauses 5(a), 5(l), 5(k) – Appeal from High Court regarding breach of contract and counterclaim for overpayment of rentals – Plaintiff claimed for rental arrears and damages while defendants counterclaimed for rental overpayments and denial of the guarantee – High Court allowed part of plaintiff's claims but dismissed counterclaims. (Paras 1, 6, 10, 44-49)
(B) Testimony and Evidence – Rejection of defense witnesses due to lack of authorization – Court criticized for misapplying authoritative case law and failing to consider admissible evidence of defense witnesses – Appellants' claims of overpayment sustained. (Paras 12-21)
(C) Burden of Proof – Respondent failed to establish loss and damage to gym equipment due to reliance on hearsay evidence. (Paras 30-34)
Findings of Court: The court found that the High Court erred in its dismissal of the counterclaim and the claims against the 2nd appellant, leading to adjustments in the judgment.
Issues: Appellants questioned the High Court's treatment of witness testimonies, the validation of claims, and the legitimacy of guarantees under the agreement.
Ratio Decidendi: The appellate court confirmed that all persons are competent to testify unless disqualified, and emphasized the necessity of direct evidence concerning claims made.
Result: Appellants' appeal allowed in part, with specific judgments set aside and some claims affirmed. Cross-appeal dismissed.
Introduction
[1] This is an appeal from the decision of the High Court in Kota Kinabalu, Sabah. The plaintiff/respondent claimed damages for breach of contract arising from a lease agreement, and the defendants/appellants counterclaimed for over payment of rental. The High Court, after full trial, allowed part of the respondent's claim and dismissed the appellants' counterclaim. The appellants appealed against the whole of the judgment, and the respondent filed a cross-appeal in respect of the portions of the claim that were dismissed by the High Court. We had heard both the appeal and cross-appeal and this is our unanimous judgment.
Background Facts
[2] The plaintiff/respondent had via a Tenancy Agreement dated 30 January 2015 ("Tenancy Agreement") rented a commercial space ("the Demised Premises") in a building known as Bangunan Blue Seven from Tropicana Development (Sabah) Sdn Bhd ("the Landlord") and operated a gymnasium and fitness centre called "All Fit" ("the Gym").
[3] The respondent subsequently through a Lease Agreement dated 1 August 2015 together with additional terms contained in an attached Letter of Understanding ("LOU") (collectively referred to as the "Lease Agreement") leased the Demised Premises together with the business of the Gym complete with all the gym and fitness equipment therein to the 1st defendant/1st appellant for a period of five years. In the Lease Agreement the 2nd appellant was named as guarantor in respect of the rental payments payable by the 1st appellant to the respondent. However, no separate Letter of Guarantee was executed between the respondent and the 2nd appellant spelling out the terms of the guarantee.
[4] Sometime since October 2016 the 1st appellant had sub-leased the Demised Premises together with the gym equipment as a going business concern to a third party known as Platinum Fitness Sdn Bhd ("Platinum"). The 1st appellant states that the fact of the sub-lease to Platinum was known to the respondent and in fact from October 2016 it was Platinum that had paid the monthly rental due under the Lease Agreement directly to the respondent. However, the respondent denies knowledge of the sublease to Platinum and contends that it was done without its consent.
[5] On or about 21 October 2017, the respondent re-entered the Demised Premises and took possession of the Demised Premises together with all the gym and fitness equipment allegedly for breaches of the Lease Agreement by the 1st appellant. Thereafter, via solicitor's letter dated 6 November 2017 the respondent confirmed the respondent's exercise of its right of re-entry onto the Demised Premises citing the terms of cl 5(a) of the Lease Agreement. The respondent's solicitor further confirmed that the respondent had terminated the Lease Agreement for reasons of the 1st appellant's breaches of the Lease Agreement without specifying what the breaches were.
[6] The respondent then commenced this action for breach of contract, claiming the following relief:
a. rental arrears for September 2017 (RM7,922.80) and October 2017 (RM48,961.40) totalling RM56,884.20;
b. payment of three months rental in lieu of notice of termination (RM138,180.00);
c. nine months of guaranteed rental income (RM414,540.00);
d. outstanding electricity bill (RM18,534.81);
e. outstanding water bill (RM2,632.00);
f. loss and damage to the gym equipment (RM588,378.91);
g. loss of rentals for the remaining period of the Lease Agreement from 1 November 2017 to 31 July 2020 (RM1,519,998.00);
h. in the alternative, damages to be assessed by the Court; and
i. statutory interest of 5% per annum from date of judgment to date of full payment.
[7] The claim against the 2nd appellant was on the basis of the 2nd appellant having stood as guarantor per cl 5(l) of the Lease Agreement that stated: "The monthly rental during the term of the said lease and the guaranteed rental income as agreed under this Agreement are personally guaranteed by Mr Nicholas Ng Fui
