Judgment in Default Obtained by a Company Providing Shipping Agency Services in Pak Asia Shipping & Logistics Sdn Bhd v Cosco Shipping Lines (Malaysia) Sdn Bhd [2022] MLJU 1741 (High Court, Shah Alam) per Rozi Bainon PK

This is a brief write-up on an ‘unreported’ judgment made by Her Ladyship Rozi Bainon PK at the Shah Alam High Court on 6 August 2022. Note, Her Ladyship was appointed as a Judicial Commissioner on 4 February 2022 (see https://selangor.kehakiman.gov.my/ms/hakimpesuruhjaya/ya-puan-rozi-binti-bainon accessed on 30 September 2022). Much of the transcript was in Bahasa Melayu. I have taken the liberty to translate the document for this article.

The brief facts of the unreported case

Pak Asia Shipping and Logistics Sdn Bhd (PAS), the Appellant in this case, was the Defendant during the litigation in the Sessions Court. The Plaintiff and Respondent in the case is Cosco Shipping Lines (Malaysia) Sdn Bhd (CSL), a company that provided shipping agency services. In the lower Sessions Court, CSL provided services for 2 consignments for export. CSL had fulfilled its obligation and ensured that the goods were sent from the load port to the port of discharge. Unfortunately, the goods were not collected by the Consignee after discharge, and eventually auctioned off by Customs.

The decision of the Sessions Court

CSL billed PAS RM259,845.90 for its services and sought to recover this in court. Interest sought amounted to RM91,452.23, as of 29 June 2021, at a rate of 0.1 percent per day on the sum owed. Judgment in default was entered for the CSL, as PAS did not respond to the demands of CSL.

The appeal by PAS at the High Court, Shah Alam

PAS argued that it failed to collect the goods from the port of discharge because its business did not operate from 1 June 2021 to 25 August 2021, due to the Movement Control Order (MCO) as Gazetted, which was applicable from March 2020 to 2021. However, Judicial Commissioner (JC in English, and ‘Pesuruhjaya Kehakiman’ (PK) in Bahasa Melayu) Rozi Bainon held that there was no evidence that PAS even attempted to obtain the relevant permission to conduct its business. Her Ladyship also found that PAS has a history of delays in conducting itself in this matter.

Judicial Commissioner Rozi Bainon held that PAS did not have a ‘defence on merits’. Allegations by PAS that there was mala fide on the part of CSL were unproven. There was also no evidence that the contract for shipping services between PAS and CSL were subject to the doctrine of frustration, as there was no impossibility of performance. Her Ladyship applied the test in Section 57(2) of the Contracts Act 1950, which is also nicely explained by Visu Sinnadurai, The Law of Contract in Malaysia and Singapore - Cases and Commentary’ at p.487-488 with the following words:

‘A contract is frustrated when there is a change in the circumstances which renders a contract legally or physically impossible of performance. According to the House of Lords in the case of Joseph Constantine Steamship Line, Ltd v Imperial Smelting Corpn Ltd [1942] AC 154 the doctrine ‘is only a special case of the discharge of contracts by an impossibility of performance arising after the contract was made’.

Her Ladyship also held that there was a contractual duty on PAS to collect the cargo after delivery. If this was not done, CSL would suffer a financial loss (which included a loss of profits) due to loss of use of the containers, as well as various demurrage and detention charges. The charges were reasonable and based on the sum agreed between the parties in the contract, which was enforceable under Section 10(1) of the Contracts Act 1950. Note that under this sub-section, if parties freely enter into a contract, and the reciprocal consideration is lawful, in pursuit of a lawful object, the contract is not void and legally binding.

CSL also acted reasonably by taking the about a week to consider an appeal by PAS to waive such charges, before subsequently rejected the appeal. The delay in collecting the container was caused by PAS. As it had a business of exporting food and other goods to Pakistan, it was well versed with the applicable laws in that jurisdiction, and should have dealt with the authorities accordingly. Judicial Commissioner Rozi Bainon reiterated that this was self-induced frustration similar to that in Maritime National Fish Ltd v Ocean Trawlers Ltd [1935] AC 524 and does not discharge PAS of its contractual obligation. Note that Her Ladyship went so far as to describe that ‘tindak tanduk Perayu agak “slow motion”.’

Based on her findings above, her Ladyship held that there were no grounds for interfering with the decision of the Sessions Court, because CSL had established a prima facie case, the Sessions Court Judge decided the case reasonably based on the facts and evidence, and was not wrong to warrant appellate court intervention, see Ong Leong Ciou & Anor v. Keller (M) Sdn Bhd & Ors And Another Appeal [2019] 3 MLRA 322 at 329, Ng Hoo Kui & Anor v. Wendy Tan Lee Peng, Administrator of the Estates of Tan Ewe Kwang, Deceased & Anor [2020] 10 CLJ 1, and National Company For Foreign Trade v Kayu Raya Sdn Bhd [1984] 2 MLJ 300.

In conclusion, Judicial Commissioner Rozi Bainon ruled that the judgment in default given in favour of CSL was a regular judgment by the Sessions Judge. Hence it should not be set aside ex debitio justitae. Equally important, PAS had not raised ant serious issues as a bona fide reasonable defence.

Thank you for reading IMSML Website Article 10/2022

Stay tuned for the next IMSML Website Article 11/2022:

Lien on Goods for Failing to Pay Warehousing and Logistics Services Provided in FM Global Logistics (M) Sdn Bhd v Prestige Sports Sdn Bhd [2022] MLJU 1767 (High Court, Shah Alam) per Alice Loke Yee Ching JC

Signing-off for today,

Dr Irwin Ooi Ui Joo, LL.B(Hons.); LL.M (Cardiff); Ph.D (Cardiff); CMILT

Professor of Maritime and Transport Law

Head of the Centre for Advocacy and Dispute Resolution

Faculty of Law

Universiti Teknologi MARA Shah Alam

Selangor, Malaysia

17 October 2022

Note that I am the corresponding author for the IMSML Website Articles. My official email address is: uijoo310@uitm.edu.my