Chan Kheng Hoe and Rachel Lim Han Ying [Messrs. Chong + Keng Hoe] K. Kirubakaran [Messrs. Selva Mookiah & Associates]

Chan Kheng Hoe and Rachel Lim Han Ying [Messrs. Chong + Keng Hoe] K. Kirubakaran [Messrs. Selva Mookiah & Associates]

The guarantees were founded on and expressly premised upon the Deferred Payment Scheme in the LOA and Supplemental Agreement; because a Deferred Payment Scheme of the kind in issue amounts to a conditional payment provision void under s35 CIPAA 2012 and therefore the consideration for the guarantees is forbidden by law (Contracts Act ss24(a),25), the guarantees and any related indemnities are void and unenforceable; the plaintiff is estopped from taking a position inconsistent with its stance in the adjudication, and accordingly no legal obligation arises from the guarantees; costs awarded to the defendants.

Citation
WA-22C-60-08/2021 (Mahkamah Tinggi)
Parties
Plaintiff: SCEC GROUP (MALAYSIA) SDN BHD; 1st Defendant: PASTPRESENTFUTURE SDN BHD; 2nd Defendant: WONG SIEW WOON; 3rd Defendant: LEE POH WAH; 4th Defendant: CHAN BAOJIE
Court
High Court
Jurisdiction
Malaysia
Judgment Date
16 November 2022
Case Number
WA-22C-60-08/2021 (Mahkamah Tinggi)
Procedural Posture
Civil Suit (construction Contract Dispute) / Judgment on Order 14 a Application (interlocutory Determination on Validity and Enforceability of Guarantees)
Outcome
Order for declarations and dismissals as per judgment: guarantees declared void and unenforceable; related prayers dismissed where applicable; costs to defendants.
Legal Topics
Deferred Payment Scheme, Void Contracts, Guarantees and Indemnities, CIPAA S35, Estoppel Against Inconsistent Positions
Source Language
Malay/English
Construction Law Contract Law Security/guarantee Law Equity (estoppel) Statutory Interpretation Deferred Payment Scheme Void Contracts Guarantees and Indemnities +2 more

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Parties

SCEC GROUP (MALAYSIA) SDN BHD

Plaintiff

PASTPRESENTFUTURE SDN BHD

1st Defendant

WONG SIEW WOON

2nd Defendant

LEE POH WAH

3rd Defendant

CHAN BAOJIE

4th Defendant

Procedural Posture

Civil Suit (construction Contract Dispute) / Judgment on Order 14 a Application (interlocutory Determination on Validity and Enforceability of Guarantees)

Legal Issues

  1. 1 Whether the corporate and individual guarantees are valid and enforceable
  2. 2 Whether the guarantees are null and void because they are founded on a Deferred Payment Scheme that is a conditional payment provision void under s35 CIPAA 2012
  3. 3 Whether the plaintiff is estopped from asserting a position inconsistent with its stance in the adjudication proceedings

Ratio Decidendi

The guarantees were founded on and expressly premised upon the Deferred Payment Scheme in the LOA and Supplemental Agreement; because a Deferred Payment Scheme of the kind in issue amounts to a conditional payment provision void under s35 CIPAA 2012 and therefore the consideration for the guarantees is forbidden by law (Contracts Act ss24(a),25), the guarantees and any related indemnities are void and unenforceable; the plaintiff is estopped from taking a position inconsistent with its stance in the adjudication, and accordingly no legal obligation arises from the guarantees; costs awarded to the defendants.

Court Disposition

Order for declarations and dismissals as per judgment: guarantees declared void and unenforceable; related prayers dismissed where applicable; costs to defendants.

Orders

  • Prayer 1(a) dismissed – the Guarantees are not valid and enforceable
  • Prayer 1(b) granted – the Guarantees are null and void due to the Deferred Payment Scheme being void and the Plaintiff's position in the adjudication