The court established that continuous transactions and acceptance of invoices with late payment terms created a binding obligation, overriding claims of waiver due to failure to timely assert interest.

JUDGMENT

Ravinthran Paramaguru JCA:

[1] The issue in this case is about entitlement to late payment interest on overdue invoices issued for goods sold and delivered. The High Court, after full trial, dismissed the claim of the plaintiff for late payment interest and hence this appeal. We shall refer to the parties as plaintiff and defendant.

Background Facts

[2] We shall first set out some of the salient background facts as summarised by the learned Judicial Commissioner. They were not seriously disputed by the parties. The plaintiff is a seller of fertiliser and a member of the Fertiliser Industry Association of Malaysia (FIAM). The defendant is a reseller. It purchased fertiliser for its trade with third parties which were secured through tenders. The parties had dealings with one another since 2016 and maintained a running account. Sometime in 2017, the parties agreed for the goods to be delivered directly to the customers of the defendant after the latter issued purchase orders.

[3] It is also not disputed that on all the plaintiff's invoices and delivery orders, the following term was printed.

"Interest of 12% per annum will be charged on overdue accounts until full settlement"

The defendant did not pay within the 60-day payment period. However, from the year 2016 to May of 2018, the plaintiff did not issue any invoices to claim late payment interest. The claim for late payment interest was first made on 31 May 2018. The plaintiff issued to the defendant a tax invoice for the sum of RM593,251.20. The invoice stated that the said amount was:

"Being interest on overdue account for the month of June 2018 as per computation attached".

The sum stated actually represented overdue interest on all the invoiced sums that the defendant failed to pay within the stipulated 60-day period. Thereafter, the plaintiff continued to issue further invoices to charge the 12 per cent interest per annum for the following months.

[4] Finally, on 8 August 2018, the plaintiff issued a letter of demand for all the outstanding payment as at 31 July 2018 in the sum of RM10,426,975.27. The defendant paid the sum of RM5,931,349.73. This payment was treated as payment for the principal sum only and not as for interest that was computed for late payment. On 11 April 2019, another letter was issued by the plaintiff seeking the sum of RM5,931,349.73. This time, the defendant paid a further sum of RM3,293,915.24. Again, the payment was for the purchase price of the fertilisers and did not include the late payment interest.

[5] The plaintiff instituted legal action on 28 May 2019 to claim the sum of RM1,013,534.10. This amount represented the outstanding amount as at 15 May 2019 for the purchase price of the goods. A further sum of RM1,662,197.54 was also claimed for the late payment interest that was allegedly due as at 15 May 2019.

[6] The plaintiff applied for summary judgment. The High Court granted summary judgment in respect of the principal sum of RM1,013,534.10. However, leave to defend was granted in respect of the late payment interest claim of RM1,662,197.54. Thus, the trial proceeded only in respect of the latter sum. There was no further issue in respect of the principal sum as the defendant paid it by the time of trial.

Decision Of High Court

[7] The learned Judicial Commissioner dismissed the claim for the late payment interest in the sum of RM1,662,197.54. His Lordship was mindful that the chargeable interest rate on late payment was printed on the invoices, delivery orders. It was also the plaintiff's case that the FIAM terms and conditions were incorporated into the quotations issued to the defendant in December of 2017. However, the learned Judicial Commissioner found that the purchase orders were not made pursuant to the said quotations but pursuant to another letter of offer that did not refer to the FIAM terms and conditions. The learned Judicial Commissioner also found that there was waiver on the part plaintiff since no claim for the late payment i