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2016 MarsdenLR 708
COURT OF APPEAL (PUTRAJAYA)
ABDUL RAHMAN SEBLI, JJCA, VERNON ONG LAM KIAT, J, MOHD ZAWAWI SALLEH, J
Small Medium Enterprise Development Bank Malaysia Berhad – Plaintiff
Versus
Sigma Pelangi Systems Sdn Bhd – Defendant
CIVIL APPEAL NO W-02(IM)(NCC)-1531-09/2015
K Ganesan (R Subashini with him) (Ganesan & Irmohizam) for the appellant.
Alvin Oh Seong Yew (Sia Siew Mun & Co) for the respondent.
The doctrine of res judicata bars re-litigation of claims with the same cause of action, while a supplemental agreement may absolve parties from pre-existing obligations.
Headnote:(A) Civil Procedure - Principles Relating to Applications to Strike Out a Claim - The court may only strike out a claim if it is clearly untenable, and there exists a reasonable cause of action, however weak the claim may be (Para 6).
(B) Res Judicata and Abuse of Process - The doctrine of res judicata covers issues that were or could have been raised in a prior dispute and prevents re-litigation of the same cause of action (Para 10).
(C) Definition of Negligence - To establish negligence, the plaintiff must show the defendant’s failure to renew the Working Capital Guarantee Scheme caused damages (Para 5).
(D) Supplemental Agreement Interpretation - The court found that the executed supplemental agreement which excluded the WCGS eliminated the defendant's obligation to renew the scheme (Para 20).
Facts of the case:
The appellant executed a financial agreement with the respondent, who later claimed negligence for the appellant's failure to renew a guarantee scheme. The prior judgment was confirmed by the Court of Appeal concerning breach of contract (Paras 1, 2).
Findings of Court:
The court allowed the appeal based on the interpretation that the supplemental agreement effectively absolved the defendant from obligations concerning the WCGS. The appeal was allowed with costs (Paras 21).
Issues: The primary issues included the applicability of res judicata concerning previous claims and the interpretation of the supplemental agreement (Para 12).
Ratio Decidendi: The court emphasized that negligence claims are distinct from breach of contract and determined that the supplemental agreement’s clauses absolved the appellant from the renewal obligation (Para 19).
Result: Appeal allowed with costs of RM10,000.00.
| Table of Content |
|---|
| 1. overview of the appeal and its context. (Para 1 , 2) |
| 2. grounds for dismissal by the high court. (Para 3) |
| 3. arguments about res judicata and negligence. (Para 4 , 5) |
| 4. principles governing striking out a claim. (Para 6 , 7 , 8 , 12) |
| 5. application of res judicata principles in the case. (Para 10 , 11 , 14 , 15 , 17 , 19) |
| 6. final decision to allow the appeal. (Para 21) |
Mohd Zawawi Salleh JCA:
JUDGMENT OF THE COURT
Introduction
[1]This is an appeal by Small Medium Enterprise Development, the appellant herein (the defendant in the High Court), against the decision of the learned Judicial Commissioner (JC) given on 1.9.2015, dismissing the appellant’s application to strike out the writ and statement of claim filed by the plaintiff (the respondent).
The Facts
[2]The relevant facts of the case may be shortly stated as follows –
(a)On 26.6.2009, the appellant and respondent executed a Revolving Working Capital Facility Agreement (“the RWC Facility”) for a sum of RM5,000.000.00.
(b)The RWC Facility is secured by a scheme known as the Working Capital Guarantee Scheme (“WCGS”) whereby 80% of the RWC Facility is guaranteed by a third-party company known as “SJPP”, should the respondent default on any payment.
(c)In the meantime, default occurred. On 14.10.2014, the appellant obtained a summary judgment against the respondent and the guarantors vide Civil Suit No: 22(NCC)- 220-06/2014 at the High Court of Kuala Lumpur (the previous suit) for a sum of RM4,766,253.11 as at 15.4.2014.
(d)The respondent appealed against the decision but the appeal was dismissed by the Court of Appeal.
(e)On 27.4.2015, the respondent filed the writ and statement of claim against the appellant (the present suit). In essence, the respondent alleged that the appellant was negligent and/or failed to renew the WCGS for the period from 15.9.23010 until 14.9.2012, despite having collected the renewal fees from the respondent.
(f)On 4.6.2015, the appellant filed a notice of application (Encl.15) under O18 r 19(a), (b), (c), or (d) and/or O 92 r 4 of the Rules of Court 2012
(g)On 1.9.2015, the High Court dismissed Encl.5. Hence, this appeal.
High Court’s Decision
[3]The learned JC dismissed Encl.15 for the following reasons –
“[7] In the present case, even if the case of the Plaintiff for negligence on the part of the Defendant for not renewing the WCGS is weak, there is still no possibility of striking out that can be made against the Plaintiff’s writ and statement of claim. And in this regard, can it be safely said that the claim of negligence has no basis at all? I would not think so as the issue of negligence needs to be litigated, no matter how weak the case of negligence is made out by the Plaintiff
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[10] There is also the issue whether the variation to the facility agreement and whether the supplemental agreement executed mean that the term previously providing for SJPP to make payment for 80% of the default sum is no longer applicable. And if this so there is still the issue whether the variation and the supplemental agreement can be retrospective to cover the period of the alleged Defendant’s failure to renew the WCGS.”.
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[12] Further, this court would also say there is no issue of res judicata as raised by the Defendant which submitted that the defendant actually had obtained judgment and this judgment was affirmed by the Court of Appeal against the Plaintiff for the relevant facility. This is because the judgment obtained by the Defendant is for breach of the agreement and the cause of action is obviously different from the cause of action in this particular case now before this court which is for negligence in the alleged failure of the Defendant to renew the WCGS. Where the cause of action is different, res judicata cannot apply. (See Federal Court’s case of Loh Holdings Sdn. Bhd v Peglin Development Sdn. Bhd & Anor Chan Yuow Seng v Ling Ong Hua
(See page 3 – 4, Rekod Rayuan Tambahan)
Parties’ Respective Submissions
[4]The main thrust of lear
