Y.M. RAJA HALINUDDIN BIN RAJA HALID (No. K/P: 561029-08-5619) RESIDENMAS DEVELOPMENT SDN. BHD. (No. Syarikat: 342867-A)

IN THE HIGH COURT OF MALAYA AT MELAKA IN THE STATE OF MELAKA, MALAYSIA CIVIL SUIT: 22NCVC-55-10/2016 BETWEEN Y.M. RAJA HALINUDDIN BIN RAJA HALID (No. K/P: 561029-08-5619) .. PLAINTIFF AND RESIDENMAS DEVELOPMENT SDN. BHD. (No. Syarikat: 342867-A) DEFENDANT JUDGMENT OF THE COURT BACKGROUND. 1. The short, but nevertheless important, issue for detemination in this case pertains to the often- employed instrument known as_ deed of assignment. The question that often comes up for determination is whether such an assignment is an absolute one. That question took the center stage in the present case. It arose in the following way. The Defendant, Residenmas Development Sdn. Bhd. (“RD”) is the developer of a project known as “Pembangunan Bercampur di atas Lot PT805-PT806, Muara Sungai Duyung, Mukim Alai, Daerah Melaka Tengah, Melaka” (“Melaka Project’)’. The Defendant then appointed one Pembinaan Suai Kasturi Sdn. Bhd. (“PSK”) as the main contractor for the development of the first phase of the Melaka Project (“Phase I”) vide a “Letter of Acceptance” dated 29.12.2006 which was duly accepted by PSK on 10.1.2007 (the “Contract’). In the course of executing its obligations under Phase I, PSK encounted financial and technical difficulties due to some disputes with its joint venture partner, Intraline Resources Sdn. Bhd. In order to overcome these difficulties, PSK decided to obtain assistance of the Plaintiff Y.M. Raja Halinuddin bin Raja Halid (“YM”). In consideration of YM’s assistance, PSK: a) Assigned the income and payments/ proceeds that PSK was entitled to receive under the Contract to YM _ which is evidenced by, inter alia, YM’s solicitors’ Messrs. Wan M Amin & Associates letter dated 16.4.2009 (“Assignment”); and b) Empowered YM and his nominees with authority, custody and management control of PSK. At all material times, the Defendant was aware of the Assignment resulting in the “take over” of PSK by the Plaintiff, and his nominees through the dealings between the parties as well as correspondence signed by the Plaintiff for and on behalf of PSK in the course of constructing Phase | of the Melaka Project. Phase | was successfully completed and a Certificate of Practical Completion dated 30.10.2010 (“CPC”) certifying the due completion of Phase | to the value of RM28,963,235.00 (“Full Contract Sum”) was issued by = Arkitek Pembangunan, the appointed architect for the Melaka Project. Around the time of the CPC, the previous directors and shareholders of PSK wrested control of PSK from the Plaintiff which ted filing Originating Summons No: 24NCvC-856-04/2012 in the Kuala Lumpur High Court (“KLHC OS’) against PSK, its directors and shareholders and the Defendant. In the KLHC OS, both the Plaintiff and the Defendant had exchanged affidavits, after which a Consent Order dated 16.8.2012 was recorded. 10. 11. The Defendant's financier for the Melaka Project is Malaysia Building Society Berhad (“MBSB’). After the issuance of the CPC, necessary direct payment was made to MBSB to the tune of RM20,000,000.00 and thus leaving a balance sum of RM8,963,235.00 (“Balance Contract Sum”) due and owing by the Defendant to PSK under the Contract. Meanwhile the certificate of fitness for Occupation dated 19.9.2011 (“CFO”) was issued by the authorities. No payment was made by the Defendant to PSK. The Plaintiff claiming to be entitled to the Balance Contract Sum was also not paid. The plot took on another turn when PSK was wound up on 14.5.2013. In this suit, the Plaintiff claimed to be entitled to the Balance Contract Sum. He sought for the following orders: a) The Balance Contract Sum of RM8, 963,235.00; 5 b) ‘Alternatively, such sum as the Court deems fit; General damages to be assessed: Interest; Costs; and Any other reliefs that the Court deems suitable. 12. Itis to be noted however during trial, the Plaintiff in his witness statement varied his claim to a sum of RM3,200,534.63. The Defendant’s Amended Defence. 13. In summary, the Defendant states the following: a) There is a reduction from the full contract sum by a total amount of RM859,764.87 comprising removal from the scope of work from the Contract a sum of RM440,768.00 and further (unspecified) deduction of RM418,995.87 (“Reduction”); 6 b) Denies that there has been any assignment at all; Alternatively, if there is an assignment, that there is no notice to the Defendant of the assignment; In respect of the KLHC OS, that: The KLHC OS against the Defendant had been withdrawn. The Plaintiff was only a manager having management control over PSK. The Plaintiff has no capacity to sue the Defendant in his own name; and Alternatively, that the Consent Order pursuant to the KLHC OS has not been served on the Defendant. It was PSK that had completed Phase | of the Melaka Project and not the Plaintiff and it was PSK with whom the Defendant liased with, in respect of Phase | of the Melaka Project. 14, g) The Defendant has set off which exceeds and extinguishes the Plaintiff's claim comprising: Liquidated and Ascertained Damages (“LAD”) for late completion of Phase | of the Melaka Project amounting to RM9,157,500.00; Payment made to PSK and PSK’s sub-contractors amounting to RM9,026,234.56; and Defective works amounting to RM279,074.95. Alternatively, that the Plaintiff's claim is barred by limitation. It is to be noted that the Defendant has not filed any cross claim or counter claim for the alleged sums due as stated in paragraph 13 above. Witnesses 15. The following witnesses gave evidence during the trial. Plaintiff's Witnesses PW-1 Tee Min Hoe, Former Project Manager of PSK. PW-2 Raja Halinuddin bin Raja Halid, Plaintiff. Defendant’s Witnesses DW-1 Haji Mohd Noor bin Sidin, Managing Director of RD. DW-2 Mohd Affandi bin Hussain, Contractor. DW-3 Mohd Anuar bin Abdullah Zawabi, Account Executive. Competing Arguments on liability. 16. In summary, the Plaintiff submitted as follows: b) The Plaintiff's claim against the Defendant is premised on the Assignment found in Messrs. Wan M. Amin & Associates’ letter dated 16.4.2009. That the Assignment is an absolute assignment in Part “C” of Bundle B pages 123-124 will show the followings: - (i) Clause 3 sets out the absolute non- negotiable “entitlement” to the Plaintiff as representative of the group of investors comprising (a) RM1.6 million; (b) First RM2 millions of estimated profits; and (c) a further sum of RM1.6 million; (ii) Clause 7 provides for the security of the absolute assignment via execution of share transfer forms in escrow; (iii) Clause 8 sets out the total control of PSK passing over to the Plaintiff via PSK's Chief Operating Officer and Chief Financial Officer positions; 10 17. 18. (iv) Clause 9 and 10 sets out the complete and absolute control of PSK by an Executive Committee solely comprising of the Plaintiff and its representatives: and (v) Clauses 19 and 20 further support the absolute nature of the Assignment as there will be no re-transfer of shares/ownership of PSK until full payment of the assigned sum. it is further submitted that all other terms as to breakdown of portions and signatories of the bank account are mere mechanics and relate as to how the various sums will be devided amongst the parties and other operational mechanisms relating to PSK and Phase ! project. Premised on the evidence of the Assignment in Messrs. Wan M. Amin & Associates’ letter dated 16.4.2009, it is submitted that upon a proper construction of that document as a whole, it will 11 19. lead to the irresistible conclusion that an absolute assignment of PSK’s right and liabilities in Phase 1 of the Melaka Project has been created and there is no need for the use of the expression “assignment” or “assigns” for the assignment to be created. As regard the argument of locus of the Plaintiff to bring this suit as an individual against the Defendant, the Plaintiff © submitted the Defendant’s argument is based on the wrong premise that there is no absolute assignment with notice. Itis not in dispute that the notice has been given to the Defendant as stated below: - a) Letter dated 11.5.2009 signed by previous directors of PSK as a general notice, receipt of which is affirmed by DW1 on behalf of the Defendant in paragraph 14 of the Defendant's “Afidavit Jawapan Defendan Kelima’” in the KLHC OS; 12 20. b) f) g) Letter dated 28.2.2009 signed by the Plaintiff as “Guarantor (Executive Committee PSK)”; Letter dated 15.10.2010 signed by the Plaintiff as “Guarantor (Executive Committee PSK)”: Letter dated 22.11.2010 signed as Director of SS industries Sdn. Bhd.; The Plaintiff's letter dated 10.3.2010 signed as Director of SS Industries Sdn. Bhd. The Plaintiff's “Afidavit Sokongan” affirmed on 27.03.2012 (in paragraphs 36 & 43) to the KLHC OS; and The Plaintiff's “Afidavit Jawapan Plaintiff’, affirmed on 13.07.2012 (in paragraph 5 (iv) to the Originating Summons in the KLHC OS. In addition, in the KLCH OS, the Defendant had filed “Afidavit Jawapan Defendan Kelima’” affirmed on 16.5.2012 by DW-1 in response to the 13 Plaintiff's “Afidavit Sokongan” affirmed on 27.3.2012 where: a) The Plaintiff's “Afidavit Sokongan” affirmed on 27.3.2012 exhibited the Assignment (Exhibit “RH-9”): b) The Defendant’s reply to the Plaintiff's “Afidavit Sokongan” affirmed on 27.3.2012 exhibiting the Assignment (Exhibit “RH-9”) at paragraph 3(a) and 12 where the Defendant expressly affirms receipt of PSK’s general written notice in the letter dated 11.5.2009 in paragraph 14; and the Defendant is therefore estopped from denying receipt of the Assignment in writing vide the Plaintiff's “Afidavit Sokongan”, no matter what response was given in RD’s “Afidavit Jawapan Defendan Kelima”. 21. In summary, the Plaintiff contended that based on the documentary evidence above it clearly demonstrates the existence of a legally binding 14 22. 23. assignment of the Balance Contract Sum from PSK to the Plaintiff in respect of which the Defendant had not only knowledge but also express notice as early as PSK’s letter dated 11.5.2009 and at the very latest, on service of the Plaintiff's “Afidavit Sokongan” affirmed on 27.3.2012 in the KLHC OS. In the light of the Assignment fulfilling all the requirements of Section 4(3) Civil Law Act 1956, the Plaintiff therefore has the capacity to bring this suit in his own name against the Defendant being the legal assignee of PSK and thus the Assignment is enforceable against the Defendant. The Defendant submitted that it is trite for there to be an assignment, there must be a document to show that there is an assignment. lf it is true that there is an assignment from PSK to the Plaintiff, the income, profit payment/proceeds which PSK is entitled to in respect of the Melaka Project would have been 15 24. 25. credited directly into the Plaintiff's account and not PSK’s account which require two (2) signatories, and one of which is PSK’s representative. Further, the Defendant submits that it is very clear from the terms of the Bailout & Temporary Take Over Agreement, what the Plaintiff has is not an assignment, much less an absolute one, but an agreement allowing the investors to invest money into a project, to manage and to control of the project. The profits are to be divided on a 50:50 basis between PSK and the investors based on the forecasted profits of RM4 million as stipulated in clauses 5 and 6 of the said Agreement. On proper evalution of the evidence, it is submitted that the Plaintiff is not a party to the PSK-Residenmas Agreement and/or does not have the locus to bring this action against the Plaintiff as there is no assignment and/or 16 absolute agreement. Thus, the Plaintiff had not proven claim on the balance of probability. Issues. 26. Essentially, the pivotal issues canvassed by the parties are as follows: (i) (ii) Whether there exists an absolute assignment given by PSK to the Plaintiff in respect of the all PSK’s right to income, payment/proceeds in relation to Melaka Project (Phase 1) under PSK-Residenmas Agreement? If the answer is in the negative, whether the Plaintiff has locus to bring this action against the Defendant as he is not a party to the PSK-Residenmas Agreement. 17 Finding of Court. 27. 28. As alluded to earlier, the Plaintiff's claim herein is pursuant to an instrument which purports to create an assignment, absolute in nature, in his favour. It is necessary therefore to embark upon an examination to determine, firstly whether there is as a matter of fact an assignment, Secondly, whether the assignment is absolute. Section 4(3) of the Civil Law Act 1956, which is an important privision in the context of this case reads thus: - Any absolute assignment, by writing, under the hand of the assignor, not purporting to be by way of charge only, of any debt or other legal chose in action, of which express notice in writing has been given to the debtor, trustee or other person from whom the assignor would have been entitled to receive or claim the debt or chose in action, shall be, and be deemed to have been, effectual in law, subject to all equities 18 29. which would have been entitled to priority over the right of the assignee under the law as it existed in the State before the date of the coming into force of this Act, to pass and transfer the legal right to the debt or chose in action, from the date of the notice, and all legal and other remedies for the same, and the power to give a good discharge for the same, without the concurrence of the assignor. That section has come up for consideration in a plethora of cases. There is little necessity for me to hearken to each of them. Suffices to say that the section traces its origin from section 136(1) of the Law of Property Act, 1925 of the UK and before that section 25(6) of the Supreme Court of Judicature Act 1873. | should like say that there is little controversy that remains on the scope and application of the section. The controversy that remains is whether in a fact pattern the provision is engaged and applicable. Thus, whether there is an assignment in a mixed questions of fact and law. The Apex Court in the case of UMW 19 Industries Sdn. Bhd. v Ah Fook [1996] 1 CLJ 379 procided a useful guide in determining the requirement of a valid assignment under section 4(3) Civil Law Act 1956. Chong Siew Fai CJ (Sabah & Sarawak) speaking for the Court had this to clarify:- We have considered s. 4(3) of the Civil Law Act, 1956 referred to by Counsel for both sides. The subsection jays down conditions for effecting absolute legal assignments. It is clear that the conditions are: (1) that the assignment must be in writing under the hand of the assignor; (2) that the assignment must be absolute and not by way of charge only; and (3) that express notice in writing must have been given to the person liable to the assignor under the assigned chose in action. If the assignment fulfills all the above conditions, it would transfer absolutely the chose in action and the right to sue upon it in the assignee's own name. 20 30. 31. 32. The Federal Court also held that as regards to the assignment to be in writing, “no particular form is necessary”. That decision of the Federal Court has in turn been accepted as laying down the correst statement of the law on the subject-see Sabah Development Bank BHd v Petron Oil (M) Sdn Bhd [2020] 4 CLJ 811. Upon analysis of the evidence and the submission of the parties, | find that the conditions as stated above have been met. It is my finding that the document in question has created an absolute assignment of PSK’s right and liabilities in Phase 1 of the Melaka Project. | find that although the word assignment has not been stated, that ipso facto does not negate the creation of an absolute assignment. The existence of an absolute assignment as per letter dated 16.4.2009, to my mind cannot be denied. The Supreme Court in Khaw Poh Chuan v Ng Gaik Peng (F), Yap Wan Chuan & 9 Ors [1996] 21 2 CLJ 185, in considering 2 documents namely, a “Deed of Assignment” and an “Agreement”, the Court at page 204(a)-(c) held: “Looking at the two agreements dated 1 April 1964 and 20 January 1965 respectively, the fact that the letter agreement is supplementary to the earlier agreement has never been in dispute among the parties. To determine if the assignment is conditional of absolute, the test of an absolute assignment should normally be only that it is one by which the entire interest of the assignor in the chose in action (such as the interest as claimed by the assignee herein) is, for the time being transferred unconditionally to the assignee and placed completely under the assignee’s control. Therefore, on a true construction of the agreements, the question is this, wat the beneficial interest of the assignor in the estates of both the deceased mother transferred unconditionally to the assignee? If the answer is affirmative, the assignment is absolute. (emphasis added) 22 33. Applying the principles above, | am of the view that the clauses in the Assignment is undeniably an absolute in nature. Therefore, the Assignment of the Balance Contract Sum from PSK to the Plaintiff in respect of which the Defendant had not only knowledge but also express notice as early as PSK’'s letter dated 11.5.2009 and at the very latest, on service of the Plaintiff's “Afidavit Sokongan” affirmed on 27.3.2012 in the KLHC OS is legally binding assignment as its fulfilled all the requirement of section 4(3) Civil Law Act 1951. Based on the aforesaid reasons it is my finding that the Plaintiff has the capacity to bring this suit in his own name against the Defendant and the assignment is enforceable against the Defendant. Quantum. 34. In the present case, the Plaintiff is claiming for special damages i.e. the amount allegedly due and owing to him. 23 35. 36. 37. It is trite that the onus is on the Plaintiff to discharge the burden of proving both as to damages and the amount (see Guan Soon tin Mining Co. v Wong Fook Kum [1969] 2 MLJ 99). The Defendant submitted that the Plaintiff herein has fallen short of the requirement by virtue of section 101 Evidence Act 1950 in proving his case as he did not tender proof or supporting documents to show that the Defendant has in fact owed him such monies as claimed by him. The Defendant further contended that throughout the trial, the Plaintiff himself was uncertain of the exact sum which he alleged to be due and owing by the Defendant to him/ PSK. Therefore, the figures that he is claiming for is nothing more than just an imagined possibility and/or mere speculation. The Defendant submitted that to assist the court, the Defendant had in goodwill filed several bundles, i.e. Bundle F, G, H and J comprising the payment slips, cheques, payment vouchers etc. to 24 show proof that the payments had indeed been made by the Defendant to the supplier/subcontractors. However, Plaintiff has raised several issues challenging the proof of payments in Bundle F, G, H and J. The issue raised are, inter alia, as follows: - a) Payments not authorized, e.g. wrong payee, over-payment, double payment etc.; b) No source document to support e.g. Progress claim, invoice etc.; c) No description of work done; d) No receipt/acknowledgment by the supplier/sub-contractor; e) Bank account is not housing developer's account; f) Payment made is not relevant to Phase 1 project; and g) Payment after CPC dates. 25 38. In response to the above issues, the Defendant submitted that PSK was the one entering contracts with the supplier/subcontractors, and not the Defendant. Due to PSK’s issue, the Plaintiff/PSK had instructed the Defendant to pay directly to the supplier/subcontractors on their behalf immediately vide their letter dated 15.10.2010. At all material time, the payments were released by the Defendant to the supplier/subcontractor under the instruction of the Plaintiff/PSK (see SD3 re-examination on 25.5.2022 at pages 713-714, BNOP). It was also submitted that at all the material time, the supporting document i.e. progress claims and invoice are with PSK. Thus, the Plaintiff who had the operational control over PSK should have access to all the documents in PSK. This fact was confirmed by SP1 who was the PSK’s Project Manager at the material time that the Plaintiff would had the possession of the accounts and the contracts with subcontractors when taking over the operation of PSK. 26 39. The Plaintiff submitted that his claim was for the balance contract sum as follows: - Full Contract Sum as - RM28,963,235.00 certified in CPC Payment via MBSB - RM20,000,000.00 Balance Contract - RM8,963,235.00 sum 40. However, in the course of trial, the Plaintiff has conceded the following amounts: iii) Defendant payment - RM1,651,305.00 to PSK (see Bundle E page 1) Payments authorized - RM3,832,320.42 by the Plaintiff vide letter dated 15.10.2010 an attached list (see Bundle B page 10 and Bundle J page 38) Defects - RM279,074.95 Total concession RM5,762,700.27 27 41. 42. After the Plaintiff's concession, the Plaintiff claim amount is now: iii) The Plaintiff's claim/ - RM8,963,235.00 balance Less Plaintiffs - RM5,762,700.27 concession Plaintiff's claim after - RM3,200,534.63 concession The Defendant is disputing the quantum of the Plaintiff's claim and pleaded the defence of set- off in paragraph 8 and 9 of the Amended Defence as follows: In paragraph 8(iii): RM8,214,366.92 with reference to a “Perakuan Bayaran Muktamad” dated 1.11.2011; In paragraph 8(v): RM9,517,500.00 referring the LAD; and In Paragraph 9Q(ii): RM9,026,234.56 referring payments made to PSK an PSK’s subcontractors on “Arahan Defendan’. 28 43. 44. As the Defendant asserting the set off, the burden lies on the Defendant to proof the existence of a valid set off and also the quantum of the set off. The Plaintiff had submitted that the starting point is the CPC, which is not disputed. The CPC certified that on 30.102010, all the works have been duly completed and the site taken into possession by the Defendant’s appointed architect, Arkitek Pembangunan. Nowhere in the CPC is there any late delivery or late completion of Phase 1 mentioned. In fact, the CPC also authorizes the release of retention monies. In addition, a Certificate of Progress payment no. AP/F07/03/PP30 dated 4.11.2010 issued by the Defendant’s appointed architect (Progress Payment 30) detailing the works done can be seen in the “Summary Claim No. 29” and “Progress Claim No. 30” supporting the certified figure of RM28,963,235.00 which is the full contract sum. 29 45, As regard the “Perakuan Bayaran Muktamad’ dated 1.11.2011 which can be found in 2 locations namely at Bundle B pages 13-16 and Bundle 1 pages 1-6 on which the Defendant alleged set off was without basis on the following reasons: a) There is no evidence that this “Perakuan’” was ever notified to or served on the Plaintiff as assignee or even as “person in- charge” of PSK. The letter dated 5.12.2011 is not only unnamed but also not even stated as “for or on behalf of PSK” vide a rubber stamp. The document found in Bundle 1 pages 1-6 shows that at page 3, PSK has not signed any acknowledgement or acceptance of the “Perakuan’. b) The “Perakuan” issued by Encik Mohamed Mokhnar bin Mokhtar of Messrs. Mokhnar & Associates, a stranger to Phase 1 of the Melaka Project and not Defendant's appointed architect for phase 1 of the Melaka Project. 30 46. 47. Cc) The “Perakuan” is dated 1.11.2011 which is 1 year after the CPC was issued certifying that the construction works were duly completed. In fact, the CFO 19.9.2011 for Phase 1 of the Melaka Project had also already been issued by the authorities. The “Perakuan” also makes references to “Variation Order” amounting to RM418,995.87 (Bundle B page 14) which totals RM859,765.81 (see pages 15 and 16 Bundle B). However, this works were not certified by the appointed architect as part of the construction done. As regards the purported LAD amounting to RM9,517,500.00 as part of set off to the Plaintiff's claim, it was argued that this appears for the first time in the “Perakuan” which document is issued post-CPC and post-CFO made by a stranger to Phase 1 of the Melaka Project. Therefore, the LAD is nothing more than a pure afterthought. 31 48. 49. As regards letter to pay and which authorized payments to subcontractors up to a sum of RM4,296,374.24, the Plaintiff submitted that there was no proof that the authorized payments were actually made. What is conceded by the Plaintiff was the sum of RM3,832,320.42 as comprising part of the authorized list. | have carefully considered the submission canvassed by both counsels. | must say that the argument of the Defendant’s counsel does not impress me. it is patently clear to me that through the evidence adduced by the Defendant’s witness in particular DW-3. | find that he gave no satisfactory answer to the numerous issues with regards to the accounting documents. Issues with the accounting documents tendered = as “authorized payment to subcontractor” in Bundles G, H, | and J showed that the amount claimed as set off was unreliable and had no evidentiary value at all to support the set off amount claimed. | therefore give no weight to that documents. 32 Conclusion. 50. 51. To conclude, | am satisfied that the assignment in question is an absolute one and it has fulfilled the requirements of section 4(3) of the Civil Law Act 1956. | also find, as a matter of fact, that the Defendant has notice of the assignment of that choose in action or the debt, resulting in the takeover of PSK by the Plaintiff and his nominees with authority, custody and management control over PSK including financial control. Therefore, Plaintiff having the necessary locus to pursue the claim herein armed with that legal assignment under his own name without having to join PSK as a party. On liability, having given careful consideration to the evidence, both oral as well as documentary, | find, on balance that the Plaintiff have proved that the Defendant is liable to pay the sum of RM3,200,534.63. Therefore, the Plaintiff's claim 33 52. 53. against the Defendant is allowed with interest as prayed in the Statement of Claim. As the Plaintiff has succeeded in his claim, the costs must follow the event. In the present case, taking into account the length of trial and the complexity of the case and on party and party basis, | exercised my discretion to award costs of RM30,000.00 in favour of the Plaintiff to be paid by the Defendant subject to allocator fees. | so order. (DATUK WIRA HAJI AHMAD NASF N HAJI YASIN) Judge High Court of Malaya At Melaka Dated: 6 March 2023 34 Counsel/ Solicitors For the Plaintiff: Messrs. Amin Karlos 31-3A, Jalan $S23/15 Taman SEA 47400 Petaling Jaya Selangor For the Defendant: Messrs. K.P Ng & Amardas No. 43-M, Jalan Ong Kim Wee 75300 Melaka 35