JUDGMENT

Wan Hamzah SCJ:

The respondent in this appeal (to whom we shall refer as the plaintiff company) was running an insurance business and appointed the First appellant (to whom we shall refer as the First defendant) as an agent in the insurance business under the terms and conditions contained in an agency agreement which they executed on 13 November 1979. In January 1981 the plaintiff company brought an action in the Sessions Court against the First defendant claiming a sum of RM18,708.60 being outstanding premium, particulars of which had allegedly been given to the First defendant. The Second appellant (to whom we shall refer as the second defendant) was joined as a co-defendant on the premise that he was the guarantor for the First defendant. Both defendants contest the claim and in their Statement of Defence they contend as follows:

(a) the First defendant had not been supplied with the particulars of the claim;

(b) upon a proper construction of the relevant agreement entered into by the First defendant with the plaintiff company the claim was without basis;

(c) the alleged guarantee by the Second defendant is illegal, inoperative and of no effect.

As regards (b) no facts are pleaded, and thus the contention must be taken to relate to the construction of the agreement not in connection with or in the light of certain facts but to relate to the construction of the agreement by itself purely. Suffice for us to say that the defendants have failed to establish their case on the above issues. Anyhow none of the grounds stated in the memorandum of appeal touches on any of the above issues. Neither did Counsel for the defendants when arguing before us deal with any of the above issues. The above contentions are the only issues raised in the Statement of Defence. However, at the trial before the President of the Sessions Court the defence contended that:

(i) the plaintiff company could claim premium only in respect of the period when it was on risk, and since in some cases premium was not paid by the insured although cover notes had been issued, the plaintiff company was not on risk; and furthermore, some policies had been cancelled by the plaintiff company and in respect of these it was not on risk;

(ii) the First defendant had ceased to operate at 131-A, Jalan Perisai, Taman Sri Tebrau without the consent of the plaintiff company and therefore under Clause 14 of the agency agreement the agency had been thereby terminated.

These issues brought up at the trial had not been pleaded in the Statement of Defence, and this was a contravention of O. 18 r. 8 of the Rules of the High Court, and therefore the contentions should not have been entertained (Attorney-General v.Lord Mayor etc. of City of Sheffield [1912] 106 LT 367). However, on the completion of the trial the President of the Sessions Court upheld the unpleaded contentions of the defence and dismissed the plaintiff company's claim. On appeal the High Court reversed the decision of the President and gave judgment for the plaintiff company. Hence this appeal to the Supreme Court by the defendants.

Even if the unpleaded issues had been properly pleaded in the Statement of Defence we do not see how the defendants can succeed. According to the evidence the plaintiff company sent statements of account to the First defendant monthly. The defence did not produce to the Court any letter addressed to the plaintiff company to query the correctness or accuracy of the statements of account. When giving evidence the Branch Manager of the plaintiff company (PW2) explained that in respect of cancelled policies credits were given to the First defendant for the period when the plaintiff company was not on risk, i.e., the period after the cancellation, and he pointed out that credits are shown in the statements of account. On the other hand the defence made no attempt to show that credits were not given or in respect of which particular cancelled policies credits were not given. When givi