1. Appeal against summary judgment regarding whether email communications offering installment payments constitute a legal acknowledgment of debt. (Para 1 , 2 , 7 )
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2022 MarsdenLR 787
HIGH COURT (PENANG)
AZIZAN MD ARSHAD, JC
ECK Sdn Bhd – Plaintiff
Versus
Tan Ann Hui (berniaga sebagai TAH Planning Consultant) – Defendant
RAYUAN SIVIL NO PA-12ANCVC-76-11/2021
Important Points
Communications made in a genuine attempt to settle a dispute are "without prejudice" and inadmissible as evidence of an admission of debt in summary judgment proceedings, regardless of whether they are explicitly marked as such, provided no settlement agreement was concluded.
Subject
Civil Law - Civil Procedure
Act Referred
Headnote
(A) Rules of Court 2012 - Order 14 and Order 55 Rule 2 - Evidence Act 1950 - Sections 23, 101, 102 and 103 - Summary judgment - Acknowledgment of debt - Admissibility of "without prejudice" communications - In an application for summary judgment, the plaintiff must first satisfy preliminary requirements to establish a prima facie case, shifting the burden to the defendant to raise triable issues (Paras 4-6). Communications made in a genuine attempt to settle a dispute, where legal proceedings are contemplated, are protected by "without prejudice" privilege and are inadmissible as evidence of an admission of debt if no settlement agreement is concluded (Paras 17-21).
(B) Appeal - Scope - An appeal to the High Court is by way of re-hearing, meaning the judge considers the case as if it came before the court for the first time, rather than merely reviewing whether the lower court exercised its discretion correctly (Para 3).
Facts of the case:
The plaintiff sought summary judgment based on email correspondence in which the defendant offered to settle an alleged debt through installments. The lower court granted summary judgment, viewing the offer as an admission of liability. The defendant appealed, contending that the emails were part of settlement negotiations and did not constitute a conclusive acknowledgment of debt.
Findings of Court:
The court found that the emails were part of a series of negotiations to resolve payment issues and costs. Even where not explicitly marked "without prejudice," the surrounding circumstances indicated a genuine attempt to compromise the dispute. Since the negotiations failed and no settlement was reached, these communications are inadmissible as proof of debt.
Issues: Whether email correspondence offering installment payments constitutes a conclusive acknowledgment of debt for the purpose of summary judgment or is inadmissible as "without prejudice" negotiation.
Ratio Decidendi: For a statement to amount to an acknowledgment, it must be an admission of legal liability. Communications made during genuine settlement negotiations are inadmissible under Section 23 of the Evidence Act 1950 to prove the debt itself, unless a settlement is actually reached. The emails in question were negotiations, not admissions, and thus did not provide a safe basis for summary judgment.
Result: Appeal allowed and the decision of the Sessions Court is set aside.
(B) Appeal - Scope - An appeal to the High Court is by way of re-hearing, meaning the judge considers the case as if it came before the court for the first time, rather than merely reviewing whether the lower court exercised its discretion correctly (Para 3).
Facts of the case:
The plaintiff sought summary judgment based on email correspondence in which the defendant offered to settle an alleged debt through installments. The lower court granted summary judgment, viewing the offer as an admission of liability. The defendant appealed, contending that the emails were part of settlement negotiations and did not constitute a conclusive acknowledgment of debt.
Findings of Court:
The court found that the emails were part of a series of negotiations to resolve payment issues and costs. Even where not explicitly marked "without prejudice," the surrounding circumstances indicated a genuine attempt to compromise the dispute. Since the negotiations failed and no settlement was reached, these communications are inadmissible as proof of debt.
Issues: Whether email correspondence offering installment payments constitutes a conclusive acknowledgment of debt for the purpose of summary judgment or is inadmissible as "without prejudice" negotiation.
Ratio Decidendi: For a statement to amount to an acknowledgment, it must be an admission of legal liability. Communications made during genuine settlement negotiations are inadmissible under Section 23 of the Evidence Act 1950 to prove the debt itself, unless a settlement is actually reached. The emails in question were negotiations, not admissions, and thus did not provide a safe basis for summary judgment.
Result: Appeal allowed and the decision of the Sessions Court is set aside.
Legal Category Hierarchy
Advocates:
Su Keong Siew (KS Su & Mah) for the appellant.
Daphne Choy (with Tam Xin Shun) (Choy & Assoc) for the respondent.
Su Keong Siew (KS Su & Mah) for the appellant.
Daphne Choy (with Tam Xin Shun) (Choy & Assoc) for the respondent.
Table of Contents
2. Plaintiff contends email offers of installment payments prove debt; Defendant argues communications were merely settlement negotiations without admission of liability. (Para 7 )
3. Emails were part of settlement negotiations and lacked conclusive admission of liability, rendering them inadmissible as proof of debt for summary judgment. (Para 14 , 15 , 16 , 18 , 21 )
4. Settlement negotiations, including those marked without prejudice, are inadmissible as proof of debt unless a concluded settlement agreement is reached. (Para 17 , 19 , 20 , 21 )
5. Appeal allowed, summary judgment set aside, and matter remitted to the lower court for trial. (Para 25 )
6. What is the burden of proof in an application for summary judgment under Order 14?
The plaintiff must first satisfy preliminary requirements to establish a prima facie case. Once established, the burden shifts to the defendant to raise triable issues, although the defendant is not required to show a complete defense. (Para 4 , 6 )
7. When are without prejudice communications admissible in evidence?
Letters written without prejudice are generally inadmissible as evidence of attempted negotiations to encourage settlement. They only become admissible as evidence of the terms and conditions once the negotiations result in a concluded settlement agreement. (Para 20 , 21 )
8. What constitutes a legal acknowledgment of debt for the purpose of summary judgment?
An acknowledgment requires the debtor to admit legal liability to pay the claimed sum. Statements that deny liability, claim a set-off, or are part of conditional settlement negotiations do not amount to an acknowledgment of the claim. (Para 22 )
Azizan Md Arshad JC:
Grounds of Judgment
(Enclosure 1)
Introduction
[1]This is an appeal against the decision of the Learned Sessions Court Judge which was given on 23th. June 2021, whereby the Learned Sessions Court Judge has allowed the Plaintiff to record summary judgment against the Defendant as per prayer 1 in the Notice of Application (Enclosure 5 in the Court below).
[2]On 29th of March 2022, this court had allowed the appeal with costs and set aside the summary judgment dated 23th. June 2021. The Plaintiff had appealed to the Court of Appeal. These are my grounds of judgment.
By way of-rehearing
[3]In the case of CHAN LAI YOKE & ANOR V. ESS ENGINEERING SDN BHD [2021] 1 LNS 1963; [2021] AMEJ 1842; [2021] AMEJ 1842; [2021] MLRHU 1898, set as follows:
“Order 55 Rule 2 of the Rules of Court 2012 provides that all appeals to the High Court shall be by way of re-hearing. The White Book on the Malaysian Civil Procedure 2021 Volume 1, page 812 at paragraph 55/2/1 states as follows:
In a re-hearing, a judge is not tasked to consider whether the lower court judge had exercised his discretion correctly or had properly considered the relevant material. He would consider the case as if it came before him for the first time.”
In this judgment, parties are referred as they were at Sessions Court.
Law on summary judgment
[4]The guideline on law for summary judgment under Order 14 of ROC 2012 can been seen in the case of NATIONAL COMPANY FOR FOREIGN TRADE V. KAYU RAYA SDN BHD
“We think it appropriate to remind ourselves once again that in every application under Order 14 , the first considerations are (a) whether the case comes within the Order and (b) whether the plaintiff has satisfied the preliminary requirements for proceeding under Order 14 . For the purposes of an application under Order 14 , the preliminary requirements are:
(i)the defendant must have entered an appearance;
(ii)the statement of claim must have been served on the defendant; and
(iii)the affidavit in support of the application must comply with the requirements of Rule 2 of the Order 14 .
... If the plaintiff fails to satisfy either of these considerations, the summons may be dismissed. If however, these considerations are satisfied, the plaintiff will have established a prima facie case and he becomes entitled to judgment. This burden then shifts to the defendant to satisfy the Court why judgment should not be given against him.” (see CEMPAKA FINANCE BHD v. HO LAI YING & ANOR
[5]In YEOHATA MACHINERIES SDN BHD & ANOR v. COIL MASTER SDN BHD & ORS , at page 818, his Lordship Court of Appeal Justice Vernon Ong (as His Lordship then was held):
“[177 In law, the party who desires the court to give judgment in its favour as to any legal right or liability bears the burden of proof (s. 101(1)Evidence Act 1950). The burden of proof on that party is twofold: (i) the burden of establishing a case; and (ii) the burden of introducing evidence. The burden of proof lies on the party throughout the trial. The standard of proof required of the plaintiff is on the balance of probabilities. The evidential burden of proof is only shifted to the other party once that party has discharged its burden of proof. If that party fails to discharge the original burden of proof, then the adverse party does not need to adduce any evidence...”
[6]In the Federal Court case of INTERNATIONAL TIMES & ORS v. LEONG HO YUEN [1980] 1 LNS 31; , page 87 also stated as follows:
“... According to sections 102 and 103 of the Evidence Act if the party with whom this onus lies whether initially or subsequently as a result of its shifting does not give any or further evidence or gives evidence which is not sufficient, such party must fail.”
It is also trite law that in a claim for summary judgment, the burden is on the Defendant to raise triable issues though a complete defence need not be shown. The determination of whether an issue is triable or not must necessarily depend on the facts or the law arising in each case as dis
