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COURT OF APPEAL PUTRAJAYA
BON CHONG HING & ANOR – Appellant
Versus
GAMA TRADING COMPANY (HONG KONG) LTD – Respondent
Key Points: - Summary judgment can be granted when a contract's terms are clear and no triable issues exist (!) . - An Order 14 application is an effective procedure to dispose of an action where the defendant's defense is unsustainable (!) . - The court must critically evaluate facts presented through pleadings and affidavits, rejecting mere assertions or denials (!) . - The entire case revolved around the interpretation of the contract, with no disputed facts (!) . - A profit guarantee was provided by the appellants, guaranteeing a minimum profit for Top Alloy (!) . - The profit guarantee was housed in clause 4 of the shareholders' agreement, detailing the guaranteed profit and shortfall liability (!) (!) . - Top Alloy became insolvent and ceased operations, making it impossible to achieve the guaranteed profit (!) (!) . - The appellants' defenses included the non-execution of a referenced Seventh Schedule, termination of the agreement upon liquidation, release of the first appellant, and failure to ascertain the shortfall (!) . - The court applied a business common sense approach to contract interpretation, favoring a commercially sensible construction (!) (!) . - The reference to a non-existent Seventh Schedule was disregarded as superfluous, with clause 4 itself constituting the profit guarantee (!) (!) (!) . - The profit guarantee was intended to protect the respondent's investment and was enforceable despite the company's insolvency (!) (!) p_69p_69. - Clause 21 of the agreement, concerning termination upon liquidation, was interpreted not to apply to the profit guarantee in clause 4 (!) (!) p_69. - The insolvency of Top Alloy triggered the profit guarantee, and the first appellant was not released from his guarantee (!) (!) . - The shortfall was calculated based on the guaranteed profit and the actual profit (or lack thereof due to insolvency), leading to the maximum liability of RM2.69 million (!) (!) (!) . - The appeal was dismissed with costs, affirming the High Court's decision (!) .
| Table of Content |
|---|
| 1. summary judgment procedure effectiveness. (Para 1 , 2 , 3 , 4) |
| 2. affidavit scrutiny and undisputed facts. (Para 5 , 15 , 16 , 18) |
| 3. entire case hinges on contract interpretation. (Para 6 , 12 , 14) |
| 4. non-execution of seventh schedule argument refuted. (Para 36) |
| 5. profit guarantee remains enforceable despite absence of schedule. (Para 38 , 41 , 45) |
| 6. profit guarantee actionable upon insolvency. (Para 50 , 56 , 68) |
| 7. appeal dismissed; judgment affirmed. (Para 69 , 70) |
Introduction
[1] This was an appeal filed by both the appellants defendants from the decision of the learned Judicial Commissioner ("JC") of the Johor Bahru High Court who allowed the respondent plaintiff's application for summary judgment under O 14 of the Rules of the High 1980 ("RHC"). On 21.4.2010, this Court granted a stay of the learned JC's order pending the disposal of this appeal.
[2] An O 14 application is the best procedure in the RHC that allows the respondent plaintiff to dispose of an action where the appellants defendants' defence is clearly unsustainable in law or on the facts. In this way, the need for a full trial will be obviated and a lot of time and costs will
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