INFINITY FREIGHT SERVICES & SOLUTIONS SDN. BHD. MY JET XPRESS AIRLINES SDN. BHD.

BA-22NCC-147-11/2023 Kand. 51 30/08/2024 09:49:56 IN THE HIGH COURT OF MALAYA AT SHAH ALAM IN THE STATE OF SELANGOR DARUL EHSAN, MALAYSIA CIVIL SUIT NO : BA-22NCC-147-11/2023 Between Infinity Freight Services & Solutions Sdn Bhd …Plaintiff And My Jet Xpress Airlines Sdn Bhd …Defendant GROUNDS OF JUDGMENT Introduction [1] Plaintiff filed an application for summary judgment under Order 14 of the Rules of Court 2012 (the ROC) in Enclosure 7 and subsequently an application to strike out Defendant's counterclaim under Order 18 Rule 19 of the ROC as in Enclosure 9. [2] Plaintiff's claim was for a sum of RM1,165,030.50 arising from transactions involving chartered cargo flights. Both applications were heard together, and both were allowed. Summary judgment was recorded for the sum claimed, and the Defendant's counterclaim was struck out with cost. [3] The Defendants have now appealed to the Court of Appeal, and my reasons are below. 1 S/N XnyEbazuaEilgCtR4KGlag **Note : Serial number will be used to verify the originality of this document via eFILING portal Factual Background [4] Plaintiff is a broker for Kerry E-Commerce Ltd (KEL) and Kerry Freight Hong Kong Ltd. (KFHK), which are wholly owned subsidiaries of Kerry Logistics Network Ltd (KLN), and Defendant has been providing air cargo transportation services for KLN and its subsidiaries since early 2021. [5] In July 2022, KFHK and KEL appointed the Plaintiff as the local broker to charter an air cargo carrier to transport its cargo from Shenzhen to Kuala Lumpur (SZX-KUL) and Shenzhen to Kota Kinabalu (SZX-BKI) route for a guaranteed payload of 15,000kg per flight. [6] To facilitate these flight operations, Defendant provided three (3) unsigned Block Space Agreements (BSAs), two (2) for SZX-KUL and one (1) for SZX-BKI. [7] Under the BSAs, the Defendant had agreed to charter and operate an aircraft with a guaranteed payload of 15,000kg per flight with the charter fees of US$26,500.00 for SZX-KUL route per flight and US$33,000.00 for SZX-BKI route per flight. [8] The charter flight transactions were then conducted based on the BSAs through invoices, payment summary reports and credit notes. Parties agreed that the payment for the charter fee should be paid in Ringgit Malaysia (RM) according to the exchange rate determined by Bank Negara Malaysia on the date of each of the invoices issued by Defendant. [9] It was also agreed that an advance payment of a deposit would be required for each route and that the payment of the deposit would be returned upon conclusion of the flight or to be utilised for the subsequent 2 S/N XnyEbazuaEilgCtR4KGlag **Note : Serial number will be used to verify the originality of this document via eFILING portal flights for the route as the charter fee and the Defendant would not retain the deposit made. [10] For clarity, the claims by the Plaintiff are for a total of RM1,165,030.50, which comprises: Dispute on SZX-KUL Route - The return of the advance deposit (Invoice no. 22-02345), which was paid directly to Defendant's bank account on 19.7.2024, amounting to RM234,551.50. - A fuel discount of RM13,500.00. - Cancelled and unperformed flights amounting to RM75,624.00, RM151,712.00 and RM379,280.00. Dispute on SZX-BKI Route - The return of the advance deposit of RM292,083.00. - A fuel discount of RM18,280.00. The SZX-KUL Route Advance deposit [11] From July 2022 until December 2022, Defendant operated multiple flights for the SZX-KUL route; however, it was abruptly terminated in early December 2022 without any notice to Plaintiff. As agreed under the BSA upon conclusion of such flight route, Defendant was to return the advance deposit of RM234,551.50 for the SZX-KUL route under Invoice no.22- 02345. Fuel discount (Invoice no. 22-03115) and payment to PETRONAS: [12] Within the duration of the contract, it was alleged that Defendant, through its previous Chief Financial Officer, Allif Qayyum, has started 3 S/N XnyEbazuaEilgCtR4KGlag **Note : Serial number will be used to verify the originality of this document via eFILING portal making urgent requests to Plaintiff for the charter fee under specific invoices for the SZX-KUL route to be paid directly to Petroleum Nasional Berhad (PETRONAS) due to Defendant's indebtedness for their purchase of aviation fuel and to uplift their account with PETRONAS to ensure the Defendant can operate its flights for the purpose of air cargo transportation. [13] The Plaintiff had made the payments directly to PETRONAS upon such request and instructions. As a consequence of the payment, Defendant had operated the flights under the invoices normally and as of the date of filing of this suit, Plaintiff had transferred a total amount of RM7,830,569.25 to PETRONAS and had provided a report of summary payment for each payment to the Defendant and PETRONAS for their records. [14] The breakdown of payments that have been made directly by the Plaintiff under the BSAs to PETRONAS and the Defendant have been summarised in Enclosure 14, Schedule A, page 14, paragraph 32 and is reproduced as follows: 4 S/N XnyEbazuaEilgCtR4KGlag **Note : Serial number will be used to verify the originality of this document via eFILING portal [15] Due to a significant drop in fuel price and upon negotiation between the parties, Defendant had agreed to provide Plaintiff with a fuel discount of US$1,500 per flight for October and November 2022 for the SZX-KUL route. The charter fee was then revised from US$26,500.00 to US$25,000.00 per trip for a trip involving the SZX-KUL route. [16] In October 2022, upon receiving Invoice 22-03115, Plaintiff had paid RM242,210.00 (US$26,500.00 (based on the previous charter fee) @ 4.57 x 2 flights) to PETRONAS upon the request of the same by Defendant. [17] Defendant then operated and completed two flights for the SZX-KUL route under Invoice 22-03115 on 09.10.2022 and 14.10.2022. Plaintiff claimed that Defendant has failed to return the differential amount of US$1,500.00, being the fuel discount for each trip in October (RM13,500.00 on the exchange rate of US$1=RM4.50 as the fuel discount in October 2022). Cancelled flights [18] At the end of October 2022, Defendant had agreed to further revise the SZX-KUL route's charter fee to US$16,000 from the previous charter fee. For that purpose, Defendant had given Plaintiff a 2nd BSA dated 27.10.2024 specifying the charter fee of US$16,000 per trip for the SZX- KUL until 31.12.2022 with a guaranteed payload of 15,000kg. (a) Flight trip between 16.11.2022-20.11.2022 (Invoice No. 22-03457) [19] Defendant then issued Invoice No. 22-03457 to Plaintiff for RM378,120.00 (based on the new charter fee of US$16,000) to operate five (5) flights for the SZX-KUL route within 16.11.2022-20.11.2022. The Plaintiff paid the invoiced amount to the Defendant. However, Defendant 5 S/N XnyEbazuaEilgCtR4KGlag **Note : Serial number will be used to verify the originality of this document via eFILING portal had only operated four (4) flights within that week and failed to return RM75,624.00, the charter fee for the cancelled flights. (b) Flight trip between 01.12.2022-07.12.2022 (Invoice No. 22-03504) [20] Defendant issued Invoice No. 22-03504 for RM379,280.00 (based on a charter fee of US$16,000.00 @47410 x 5) to operate five (5) flights for the SZX-KUL route which were paid by the Plaintiff on 02.11.2022. Defendant had only operated three (3) flights out of the five (5) planned flights between 01.12.2022 - 07.12.2022 and failed to return RM151,712.00 (RM379,280.00/5 flights x 2) for the cancelled flights. (c) Flight trip between 01.12.2022-07.12.2022 (Invoice No. 22-03505) [21] Defendant issued Invoice No. 22-03505 for RM379,280.00 (based on a charter fee of US$16,000.00 @47410 x 5) to operate five (5) flights for the SZX-KUL route which the Plaintiff paid. However, Defendant had failed to operate any flights between 01.12.2022-07.12.2022 pursuant to this invoice. Hence, the Plaintiff claims a full refund of RM 379,280.00. The SZX-BKI Route [22] Unlike the SZX-KUL route, the terms of arrangement and flight transactions for the SZX-BKI route were governed under BSA dated 08.07.2022 with the charter fee of US$33,000 per flight for an aircraft with a guaranteed payload of 15,000kg per trip. Return of deposit (Invoice No. 22-02343): [23] As part of the advance deposit for the SZX-BKI route, Plaintiff had paid Defendant an amount of RM292,083.00 to operate two (2) scheduled flights on the route on 16.07.2022 and 19.07.2022. Upon such payment, Defendant continued to operate the flights from July to November 2022 until Defendant later rescinded the route. However, to date, it was alleged 6 S/N XnyEbazuaEilgCtR4KGlag **Note : Serial number will be used to verify the originality of this document via eFILING portal that Defendant had failed to return the sum of the advance deposit totalling RM292,083.00 under Invoice No. 22-02343. Fuel discount and payment to PETRONAS (Invoice No. 22-03116 and CN22/368): [24] Similar to the SZX-KUL route, Defendant had made an urgent request to Plaintiff for a charter fee under certain invoices for the SZX-BKI route to be paid directly to PETRONAS to satisfy its indebtedness for the purchase of its aviation fuel. [25] In September 2022, Defendant allegedly agreed to provide a US$2,000 fuel discount from the charter fee for the SZX-BKI route, thus reducing the charter fee to US$31,000 from the initial charter fee of US$33,000. [26] In October 2022, Plaintiff chartered two flights for the SZX-BKI route under Invoice No. 22-03116 for RM301,620.00, which is based on the previous charter fee of US$33,000. The Defendant then issued the Plaintiff with a credit note no. CN22/368 to account for the differential sum of the charter fee due to the fuel discount amounting to RM18,280 (US$2,000 @ 4.5700 x 2 flights). Unfortunately, the credit note cannot be utilised, and therefore, Plaintiff claims for the fuel discount amount. [27] The Defendants' objection to both applications is based on the following: 1. Negotiations for charter flights with Plaintiff were conducted with Defendant's former Chief Financial Officer (former CFO) without the involvement of Defendant's team. 2. Upon internal investigation, Defendant had found that the former CEO had allegedly conspired with Plaintiff and had accepted cash payments for services rendered. 7 S/N XnyEbazuaEilgCtR4KGlag **Note : Serial number will be used to verify the originality of this document via eFILING portal 3. Defendant had initiated legal action on the alleged conspiracy in civil suit WA-22NCC-93-02/2023. 4. Defendant denies agreeing to a fuel discount and denied payments made by Plaintiff. 5. Defendant counterclaimed against Plaintiff seeking payment of unpaid invoices and flights carried out for both routes, general damages and cost on a full indemnity basis. Defendant asserts in their counterclaim that they had issued invoices for flights operated by Defendant on the date as particularise but did not receive any payment from Plaintiff. 6. All the above are triable issues. Order 14 Rule 1 of the ROC [28] The law on summary judgment is trite. It is only in plain and obvious cases that recourse should be given to the summary process under Order 14 Rule 1. It should only be made if the Court thinks it is a plain case and ought not to go to trial (refer to Esso Standard Malaysia v. Southern Cross Airways (M) Bhd [1972] CLJU 31 and National Company for Foreign Trade v. Kayu Raya Sdn Bhd [1984] 1 CLJ Rep 283). [29] However, the Defendants should not be shut out from defending a claim unless it is apparent they have no case in the action. A complete defence need not be shown (see Alloy Automotive Sdn Bhd v. Perusahaan Ironfield Sdn Bhd [1986] CLJ Rep 45). The defence setup need only show that there is a triable issue (Bank Negara Malaysia v. Mohd Ismail & Ors [1992] 1 CLJ 627). [30] Merely raising an issue does not mean that the issue is triable. The Federal Court in Voo Min En & Ors Leong Chung Fatt [1982] CLJU 47 held that ".. the pertinent principle being one where it is not enough for the 8 S/N XnyEbazuaEilgCtR4KGlag **Note : Serial number will be used to verify the originality of this document via eFILING portal defendant "to raise an issue or any issue". The Defendant must instead raise such issue as would require a trial in order to determine it." Order 18 Rule 19 of the ROC [31] There is also no necessity to reiterate or reprise the trite principle of law on striking out of an action under O18 R19 as it was well established by clear decisions of the Federal Court in Bandar Builders Sdn Bhd v United Malayan Banking Corporation Bhd (1993) 4 CLJ 7 on the test for striking out applications. [32] The Court of Appeal, in Sivarasa Rasiah & Ors v. Che Hamzah Che Ismail & Ors [2012] 1 CLJ 75, adopted the well-settled principle of striking out in the following passage: "A striking out order should not be made summarily by the Court if there is issue of law that requires lengthy argument and mature consideration. It should also not be made if there is issue of fact that is capable of resolution only after taking viva voce evidence during trial (see: Lai Yoke Ngan & Anor v. Chin Teck Kwee & Anor [1997] 3 CLJ 305; [1997] 2 MLJ 565 (FC))." [33] The primary task of this Court is to determine whether the issues arising from the facts canvased fall within the limbs of Rule 19(1). Analysis and Findings Preliminary Objection [34] In the present case, the Defendant had referred and exhibited a document which was acquired from an ex-parte Anton Piller order dated 27.3.2023 from Kuala Lumpur High Court in suit no: WA-22NCC-93- 02/2023 as disclosed in paragraph 16 of enclosure 12. 9 S/N XnyEbazuaEilgCtR4KGlag **Note : Serial number will be used to verify the originality of this document via eFILING portal [35] The Plaintiff objected to the reference to the document (WhatsApp text messages) and requested it to be expunged. [36] I agree with the Plaintiff's submission on the issue, and based on the authority cited, when a party obtains documents or information through compulsion in civil proceedings, they are bound by the undertaking not to disclose such material for purposes other than the intended use for which the discovery was granted (see Extreme System Sdn Bhd v Ho Hup Construction Company Bhd No 4 (2011) 10 CLJ 186 and Makonka Electronic Sdn Bhd v Electrical Industries Workers Union & 2 rs (1997) CLJU 86). [37] As Defendant's reference and reliance on the document was in breach of their undertakings of the Anton Piller order, paragraph 16 of enclosure 12 and exhibit SG-1 is expunged, and Defendant is therefore precluded from relying on the same. Summary Judgment application – enclosure 7 [38] As narrated by the Plaintiff on the dealings and transaction allegedly agreed by both parties, I will now determine whether there is an issue or question in dispute which ought to be tried and whether Plaintiff had established a prima facie case that they had become entitled to judgment to be recorded summarily (see O14 R3 ROC and National Company for Foreign Trade v Kayu Raya Sdn Bhd (1984) 1 CLJ Rep 283). Once this threshold is met, the burden shifted to the Defendant, who must show a fair probability of a real or bona fide defence (see Syarikat Kerjasama Serbaguna Tunas Muda Sungai Ara v Ghazali bin Ibrahim (1985) 2 MLJ 225). [39] It is undisputed that Plaintiff agreed to charter, and Defendant, as the carrier, agreed to operate an aircraft with a payload guaranteed up to 10 S/N XnyEbazuaEilgCtR4KGlag **Note : Serial number will be used to verify the originality of this document via eFILING portal 15,000 kg for the charter price of USD 26,500 per flight from SZX to KUL route. [40] Defendant issued invoices for an amount, as stated earlier, and it was paid by Plaintiff to Defendant's account. Defendant admitted to receiving the amount but disputed that it was paid by Plaintiff. [41] As it is, the Defendant's case is relatively straightforward. Defendant's main argument was based on the representation that its former CFO had acted alone in negotiating the charter flight and that the BSAs were entered into without the involvement and knowledge of Defendant's entire management. [42] On the issue of payment of invoices for the SZX-KUL and the SZX- BKI routes, Defendant admitted to issuing the invoices but averred that it could not identify the entity who made the payments and further investigation was required to confirm whether Plaintiff had paid the invoice amount. [43] I find such contentions are mere denial. Defendant had only made a bare assertion on uncertainty over some of the payments made to its account under the invoices issued and elected not to refund the payments claimed by Plaintiff. Defendant, through numerous instances in its pleadings and affidavit, had admitted to issuing such invoices and receiving the payments, including for the unperformed flights. [44] The fact that payments were made to a third party, it was not denied that the CFO had the authority in the dealings with Plaintiff and from the email communications tendered, the flight arrangement made between Plaintiff and Defendant was not restricted within the knowledge of the CFO himself but also by the other employees. 11 S/N XnyEbazuaEilgCtR4KGlag **Note : Serial number will be used to verify the originality of this document via eFILING portal [45] I, therefore, find that the above allegations were insignificant in denying liability and resisting their contractual obligations. The Defendants' internal mismanagement should not be a reason to deviate from their agreed obligations in the transactions. [46] Plaintiff further submitted that the allegation of collusion or conspiracy advanced by Defendant was not pleaded and did not fulfil the requirement under O. 18 r.12 of ROC. The Defendant was merely making vague references to its previous CFO of him receiving some personal benefits to establish inappropriate conduct without any evidence. [47] I find merits in the above contention. Allegation of a conspiracy by the CFO is not a valid and genuine triable issue in determining the contractual liability and obligation between both parties. [48] In conclusion, I am satisfied, based on the discussion above, that this is a clear and plain case of the Defendant's failure to return the deposit paid. I see no necessity for this matter to proceed to trial in order to determine the issues raised. [49] Having heard both parties on both applications and after careful examination of the facts narrated by the Plaintiff to fully understand the transactions, dealings and agreement between both parties, based on the contemporaneous documents exhibited by the Plaintiff and having perused the submissions, I find that the Defendant has not established any issue or question in dispute which ought to be tried or raised any bona fide defence to the Plaintiff's claim. Thus, the Plaintiff's application for summary judgment is allowed with cost. 12 S/N XnyEbazuaEilgCtR4KGlag **Note : Serial number will be used to verify the originality of this document via eFILING portal Striking out of the Defendant's counterclaim – Enclosure 9 [50] With regard to the Defendant's counterclaim, I find that it does not disclose a reasonable cause of action and only intended to deny and delay the Plaintiff's claim. [51] Defendant counterclaimed a sum of RM242,210.00 (invoice No 22- 03115), RM236,088.50 (invoice No 22-02631), USD26,500.00 (unpaid flights on 13.11.2022), RM301,620.00 (invoice No 22-03116), USD87,000.00 (invoice No 22-03908) and USD29,000.00 (invoice No 22- 03909) being outstanding and unpaid by the Plaintiff. [52] Defendant opposed the Plaintiff's application to strike out and requested that the Court consider the entire history of the case to determine that the counterclaim was not frivolous or vexatious. [53] Instead of submitting on the allegation of the allegedly unpaid amount, Defendant persistently accused its former CFO of giving instructions on the payments to PETRONAS and maintaining close relations with Plaintiff to influence payment decisions fraudulently. [54] Those allegations constitute a separate cause of action against Defendant's former CFO/employee, which does not relate to the allegedly unpaid flight transactions. I am of the opinion that the alleged cause of action was merely to divert this Court on the internal dispute of Defendant with its former CFO, and the alleged claim was a bare averment by Defendant and had no grounds or prospects of success. Final Order [55] Based on the above discussion, enclosures 7 and 9 applications are allowed with a cost of RM5000 each subject to the allocator. 13 S/N XnyEbazuaEilgCtR4KGlag **Note : Serial number will be used to verify the originality of this document via eFILING portal [56] Defendant was ordered to pay Plaintiff the sum of RM1,165,030.50 plus interest at the rate of 5% per annum from the date of judgment until full and final settlement of the sum awarded. In addition, the Defendant's counterclaim dated 13.12.2023 is hereby struck out. Dated this: 28th August 2024 ~signed~ (NOOR HAYATI BINTI HAJI MAT) Judicial Commissioner Shah Alam High Court NVCV 9 Counsels: For the Plaintiff: Dason Raj a/l Selvaraj together with Loh Ze Rong Messrs Dason Raj & Partners For the Defendant: Harjit Singh Sandhu together with Navinjit Singh Golen Messrs Harjit Sandhu, Wan & Associates 14 S/N XnyEbazuaEilgCtR4KGlag **Note : Serial number will be used to verify the originality of this document via eFILING portal