Richard Malanjum J:

The Claim And The Defences

In this action the plaintiffs are claiming for the following relief, namely:

(i) the said sum of RM6,223,241.00

(ii) agreed interest on the said sum of RM6,223,241.00 at the rate of 11% per annum calculated on day to day basis from 27th October 1997 till realisation;

(iii) such other reliefs this Honourable Court deems fit to grant.

The defendants are disputing the claim and have raised several issues in defence. For the 1st defendant the issues raised are basically that the claim is premature and/or extinguished as a result of the default on the part of the plaintiffs in not complying with the terms stated in a document dated 12 November 1996 (exh. P2).

There were also set-off and counterclaim filed but these were withdrawn in the course of the hearing.

As for the 2nd defendant initially there were various points raised. But some were abandoned. Hence I would only deal with the remaining points in this judgment.

And since there are also common points raised by both the 1st and 2nd defendants I will deal with those first and consider the other points separately if necessary.

The Background Facts

The plaintiffs were once the directors and shareholders in the 1st defendant. The 1st defendant is a company incorporated in Malaysia and operated a sawmill until July 1998. The 2nd defendant is a company incorporated in Malaysia as well and a shareholder in the 1st defendant.

Briefly, the 1st defendant was formerly known as Veramex Sdn. Bhd. It was then under the control of the plaintiffs and their two other brothers. In March 1996 the 2nd defendant joined in. As of 28 August 1996 it is not in dispute that the 1st defendant owed the plaintiffs in the sum of RM10,134,000 (the outstanding sum). Such fact is evident by exh. P1 of even date and duly confirmed by the 2nd defendant.

And pursuant to a share sale agreement dated 12 November 1996 (exh. P3) the plaintiffs and their brothers disposed of their remaining interests in the 1st defendant to one Liu Ho-Tien who the 1st plaintiff (PW1) described as the representative of the 2nd defendant. It was also the evidence of the 1st plaintiff that following that sale he managed to obtain from the 2nd defendant a guarantee to pay the outstanding sum and that is shown in exh. P4. And there is the letter issued by the 1st defendant to the plaintiffs dated 12 November 1996 (exh. P2) containing confirmation and undertaking in relation to the outstanding sum. It is also not in dispute that there was a reduction of the outstanding sum when the 1st defendant upon the order by the plaintiffs delivered one shipment of wooden laminated board leaving a balance the amount of which itself is in dispute between the parties. The plaintiffs put the balance of the outstanding sum as at 27 October 1997 to be RM6,223,241 whilst the 1st defendant gives the figure of RM5,431,454.87 as at 15 September 1997. It is the payment of this balance of the outstanding sum that is the subject of this present action.

The Evidence

The evidence of PW1, other than what has been referred hereinabove, also alleged, inter alia, that he had no choice but to accept the terms of exh. P2 in order to secure payment of the outstanding sum. And although initially he was adamant in saying that there were orders placed for the supply of plywood, when under cross-examination he conceded that there was in fact only one order whilst the rest were only enquiries. And his explanation for the cause of such a situation was that the parties could not come to an agreement on the prices.

As for the testimony of the 2nd plaintiff, Lin Wen Chuan (PW2), inter alia, he confirmed that there was only one shipment of plywood from the 1st defendant made in connection with exh. P2. Nevertheless this witness initially testified under cross-examination that many orders were placed to the 1st defendant for the supply of plywood. But finally this witness agreed that there was in fact only one order made while