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2025 MarsdenLR 5101
HIGH COURT MALAYA KUALA LUMPUR
LIEBHERR SALES KLUANG SDN BHD – Appellant
Versus
ZHONGJI CONSTRUCTION SDN BHD – Respondent
[Civil Suit No: WA-22NCVC-729-12/2022]
A Settlement Agreement acknowledging debt constitutes a binding obligation, and prior payments indicate intent to comply with terms, while defenses based on warranty must be substantiated by credible evidence.
Headnote:(A) Contract Law - Settlement Agreement - The court examined the binding nature of a Settlement Agreement dated 16 December 2021, determining that the defendant acknowledged liability for RM1,797,370.50, with a default leading to the claim for RM1,398,685.50. Documented evidence included admissions of liability and prior payments. (Paras 10, 19, 36)
(B) Burden of Proof - The plaintiff successfully discharged the burden of proof on the balance of probabilities, substantiating repair costs through credible documentation and the defendant's prior acknowledgment. (Paras 37, 40)
(C) Warranty Coverage - The court held that warranty claims were not viable as the defendant did not present sufficient evidence of mishandling or defects covered under warranty. (Paras 25, 29)
Facts of the case:
The plaintiff sought RM1,398,685.50 from the defendant due to non-payment under a Settlement Agreement concerning repair costs for a drilling machine. The defendant disputed liability, claiming warranty coverage enabled them to avoid responsibility. (Paras 1, 2, 12)
Findings of Court:
The Settlement Agreement constituted a valid and binding obligation. The plaintiff proved its claim and was entitled to costs of RM50,000.00. (Paras 46)
Issues: Whether the Settlement Agreement was binding, establishing liability for the Outstanding Sum and evaluating the warranty defense. (Paras 14, 15)
Ratio Decidendi: The court found the defendant's conduct inconsistent with its claim of dispute, and the documentation and part payments demonstrated an acknowledgment of debt and liability. (Paras 18, 23)
Result: Claim allowed for RM1,398,685.50 with interest and costs awarded to the plaintiff.
| Table of Content |
|---|
| 1. settlement agreement terms and claims (Para 1 , 2 , 4 , 5 , 6 , 7 , 8 , 9 , 10 , 11 , 12 , 13) |
| 2. dispute over binding nature of settlement agreement (Para 14 , 15) |
| 3. acknowledge of debt and estoppel principles (Para 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23) |
| 4. warranty coverage limitations (Para 25 , 26) |
| 5. acknowledgment of repair costs (Para 34 , 35 , 36) |
| 6. repair method and consent issues (Para 41 , 42) |
| 7. court's final judgment and order (Para 45) |
Introduction
[1] The plaintiff commenced this action against the defendant to recover the sum of RM1,398,685.50 ("Outstanding Sum") which remained outstanding pursuant to a Settlement Agreement executed on 16 December 2021. The Outstanding Sum represented the balance due from the defendant to the plaintiff after deducting three payments amounting to RM398,685.00 from the agreed sum of RM1,797,370.50.
[2] The claim arose from repair costs and rental charges incurred for a drilling machine identified as Drilling Rig Machine Type/SN: LB36-410/115953 ("Second Machine"). The machine sustained damage while it was under the possession and control of the defendant. The defendant denied liability and contended that the damage occurred within the warranty period. The defendant further asserted that the damage did not result from any mishandling on its part.
[3] After carefully assessing the evidence and considering the submissions from both parties, I found that the plaintiff had successfully discharged its burden of proof on the balance of probabilities. The plaintiff successfully established its claim through credible evidence. Consequently, I allowed the plaintiff's claim in full. I also awarded costs in the sum of RM50,000.00 to the plaintiff. The reasons for my decision are set out below.
Brief Facts
[4] The plaintiff and the defendant entered into a rental with purchase option order on 26 February 2018 ("First Agreement") for a drilling machine identified as Drilling Rig Machine Type/SN: LB36-410/115926 ("First Machine"). Under the terms of the First Agreement, the defendant took possession of the First Machine subject to the agreed rental and purchase conditions.
[5] Subsequently, on 12 April 2018, both parties executed another rental with purchase option order ("Second Agreement") for a second drilling machine, identified as Drilling Rig Machine Type/SN: LB36-410/115953 ("Second Machine"). The Second Agreement was separate and distinct from the First Agreement, though both were executed between the same parties and involved similar contractual terms
[6] The Second Machine was delivered to the defendant on 17 April 2018 in accordance with the terms of the Second Agreement. Following the delivery, the defendant's operator underwent training on the operation and handling of the machine from 18 April 2018 to 25 April 2018. The training was conducted to ensure proper use and maintenance of the machine in accordance with the manufacturer's specifications.
[7] On 3 June 2018, while the Second Machine remained in the defendant's possession and control, it sustained damage. The damage occurred when its luffing mechanism failed to lift, rendering the machine inoperative.
[8] The defendant submitted an insurance claim for the damage sustained by the second machine. However, Allianz General Insurance Company (M) Berhad rejected the claim on 20 September 2018. Following the rejection, the plaintiff undertook the necessary repairs to restore the machine to operational condition. The repairs included the replacement of damaged components and the procurement of spare parts.
[9] Upon completion of the repairs, the plaintiff issued invoices dated 26 December 2018 and 31 December 2018 in the total sum of RM1,600,217.70. The invoiced amount covered the cost of repairs, spare parts, labour charges, workshop rental, transport and crane charges, consumable items and related expenses incurred in restoring the machine.
[10] Between 2019 and 2021, both parties engaged in negotia
