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2025 MarsdenLR 6346
HIGH COURT MALAYA PULAU PINANG
POLYDAMIC SDN BHD – Appellant
Versus
ASPEN GLOVE SDN BHD & ORS – Respondent
[Civil Suit No: PA-22NCC-50-07/2023]
The absence of a written settlement agreement between the Plaintiff and the 2nd and 3rd Defendants established that they are not liable for the debts of the 1st Defendant, affirming separate corporate legal identities.
Headnote:(A) Settlement Agreement - The Plaintiff sought a declaration that the Defendants breached a settlement agreement regarding a debt of RM 2,893,205.00. The 1st Defendant admitted owing RM 4,194,511.10. A default judgment was entered against the 1st Defendant. The Court found no settlement existed between the Plaintiff and the 2nd and 3rd Defendants, as the evidence established that the agreement was solely with the 1st Defendant. The Plaintiff's claim against the 2nd and 3rd Defendants was dismissed due to lack of privity of contract. (Paras 1, 31, 102, 103)
(B) Corporate Veil - The Court determined that the Defendants operated as separate legal entities and rejected the request to lift the corporate veil, concluding that the Defendants do not form a single economic entity. (Paras 86, 94)
(C) Evidence - The burden of proof rested on the Plaintiff to demonstrate the existence of a settlement agreement and the various claims could not be established as there were no written agreements presented. (Paras 35, 60, 63, 105)
| Table of Content |
|---|
| 1. plaintiff's claims based on settlement breach. (Para 1 , 2 , 3) |
| 2. details of supplied goods and settlement discussions. (Para 5 , 9 , 10 , 11 , 12) |
| 3. defendants' denial of liability and contract. (Para 19 , 22 , 23 , 24) |
| 4. plaintiff and defendants' respective contentions. (Para 32 , 33) |
| 5. burden of proof rests with the plaintiff. (Para 34 , 35) |
| 6. court's determination of settlement agreement existence. (Para 36 , 41 , 42) |
| 7. court's distinction of settlement with only d1. (Para 43 , 44 , 45 , 90) |
| 8. court's rejection of implied representations. (Para 66 , 67 , 68) |
| 9. court finds no basis to lift corporate veil. (Para 94 , 96) |
| 10. implications of filing a proof of debt. (Para 97 , 100 , 101) |
| 11. court's dismissal of plaintiff's claims. (Para 103 , 104) |
Introduction
[1] The Plaintiff ('P') commenced these proceedings against all three Defendants seeking inter alia a declaration that the Defendants have breached a settlement agreement to pay P a sum of RM 2,893,205.00 and for an order that all three Defendants are jointly and severally liable to pay P the said sum. Alternatively, P seeks an order that the 2nd and 3rd Defendants ("D2 and D3") transfer to them two properties at the value of RM2,893,205.00.
[2] It is undisputed that the 1st Defendant ("D1") as at 30 June 2022 had admitted owing P the sum of RM4,194,511.10 as evident from D1's audit confirmation dated 26 July 2022. However, D1 was subsequently wound up and P has since obtained leave from the winding up Court to proceed with these proceedings against D1. However, after filing a Memorandum of Appearance, D1 thereafter failed to file their Statement of Defence. Thereafter, post-trial and before the Court's decision could be rendered, P filed encl 82 which was its application to enter Judgment in Default of Defence against D1. The Court allowed such application and declared that D1 had breached the settlement agreement where it agreed to pay P the said sum of RM 2,893,205.00 and an order that D1 ought to pay P such amount with interest and costs. At trial, although the representative of the Insolvency Department (KPI) was present, they did not partake in the proceedings at trial which then proceeded against D2 and D3 only.
[3] As such, in relation to P's claim against D2 and D3, I will hereinbelow set out the salient background facts, the parties' rival contentions and my analysis of the same in determining if P has successfully established their claim against D2 and D3.
Background Facts
[4] The facts and chronology of events in this matter are largely undisputed. Learned Counsel for D2 and D3 have aptly summarised the facts and the parties' respective cases as can be gleaned from the pleadings and they are narrated as follows.
P's Claim (Based On The Statement Of Claim)
[5] P has supplied goods, equipment, and labour required for the manufacture and installation of an "online chlorination system" at DTs factory located at Plot 9, Kulim Industrial Park, Phase 4, Kedah Darul Aman.
[6] D1 had made payment of RM 3,474,905.00 for the supply received.
[7] As at the date of filing this action, the outstanding amount due for the supply owed by D1 is RM 4,194,511.10 based on the purchase orders and delivery orders between P and D1.
[8] The Defendants share the same registered address, as well as several common directors and a common secretary and hence can be collectively referred to as the "Aspen Group".
[9] On 14 July 2022, a meeting was held and was attended by the representatives of the Defendants and P. At the said meeting, Aspen Group had represented and admitted that all the staff and employees of D1 had been terminated and that they would take responsibility for settling its outstanding debts. They acknowledged the debt and proposed to settle it either through cash payment, property transfer developed by Aspen Group or a combination of both.
[10] After the meeting and several follow-ups via emails and WhatsApp messages, and after visiting proje
