IMSML Website Article 4/2024: Enigma Technical Solutions Sdn Bhd v Destini Shipbuilding and Engineering Sdn Bhd [2022] MLJU 2139, A Maritime Joint Venture Dispute

Here is another case from 2022. It has not made it to MLJ’s official reported series and remains as an ‘unreported’ case. This case was heard before Tee Geok Hock JC. Unlike the previous case of Chew Chin Ping & Ors v APL-NOL (Malaysia) Sdn Bhd & Ors [2022] MLJU 1754, where the defendant did not show up at all (which resulted in a judgment in default of appearance), in the Enigma case, at least the defendant showed up in court, but then faced a summary judgment.

The subject-matter of the dispute between the parties centred on rentals of cranes, technical support and integrated logistics support. This was supplied to and used by the Defendant as part of its shipbuilding contract with another company. As a result, the Plaintiff alleged that the Defendant owed a sum of RM1,208, 934.00.

During the course of the litigation, the Plaintiff applied for a summary judgment against the Defendant, on the basis that it complied with all the procedural requirements and that the Defendant has failed to show that there was a triable issue. Summary judgment cannot be granted if the Defendant shows that there was an arguable defence which warrants a full trial. It would not be enough for the Defendant to simply put forward a 'bare denial'. This means that the Defendant must provide answers under oath which constitute evidence that they have a defence which is fit to be tried, see Richard Kuok-Onn v All Bright Plastics Sdn Bhd [2019] MLJU 1948, which followed the Court of Appeal in Chen Heng Ping @Tian Seow Hock and 5 Others v Intradagang Merchant Bankers (M) Berhad [1995] 2 MLJ 363.

There were several ways in which the Defendant tried to put forward a defence that was more than just a bare denial. First, based on the bundle of contractual documents, the Defendant argued that it had indeed contracts with TH Heavy Engineering Berhad and THHE Fabricators Sdn Bhd. The Defendant therefore concluded that it did not have any contract with the Plaintiff as the Plaintiff was not a signatory to any of the aforementioned contracts.

Tee Geok Hock JC dismissed this assertion by the defendant. Although it was true that the Government’s Letter of Award was to the main shipbuilding contractor, and the Joint Venture Agreement was between this main contractor, another company, the sub-contractor and the Defendant, this did not mean that there was no privity of contract between the Plaintiff and Defendant. The Plaintiff had indeed supplied logistics services to the Defendant under a separate and different contract, see Para [23].

Second, the Defendant argued that the Plaintiff’s invoices could only be verified by reference to delivery orders, as well as acknowledgement of receipt of goods and services at a full trial. Tee Geok Hock JC also rejected this contention by the Defendant, as this was a denial that was not supported by any documentary evidence. By contrast, the Plaintiff had given the Defendant progressive invoices on the following dates:

[1] 13 April 2020, for RM75,600;

[2]13 December 2020 for RM200,000;

[3] 2 June 2021 for RM200,000;

[4] 15 December 2021 for RM7333,334.40.

According to Tee Geok Hock JC, what the Defendant was doing was making a bare denial, without any contemporaneous documents. Hence this did not raise a triable defence which warranted a full trial, see Para [14].

Further, a letter of undertaking was signed by the a Director of the Defendant dated 15 December 2020, which contained the following promises:

[1] An undertaking to pay an unpaid balance of RM703,334;

[2] Pay crane charges for Ship 2 (by 7 April 2021);

[3] Pay crane charges for Ship 3 (by 14 October 2021).

That very same letter also acknowledged a winding up sum of RM1,678,934. The letter stated that the Defendant had paid RM900,00 to the Plaintiff on 3 December 2020, see Para [17].

There was further evidence that the Defendant acknowledge a contractual relationship with the Plaintiff. For example, there were WhatsApp messages in January and February 2021 where the Defendant’s representative admitted to the outstanding amount of RM703,334. At that point in time the Defendant asked for an extension of time to pay it, see Para [19].

Tee Geok Hock JC concluded that the Defendant had no triable defence to the Plaintiff’s claim of RM1,208,934, which represented the total amount of unpaid value of cranes and services provided by the Plaintiff. On 18 July 2022, summary judgment for this sum was given in favour of the Plaintiff. The Defendant had to pay interest at a rate of 5 percent per annum from 16 March 2022, until there was full realisation of the sum owed.

This case is a reminder that shipbuilding joint ventures, just like many other maritime related businesses are complicated and involve many different parties. The supply chains are complex and involve many different contracts, with numerous contracting parties. Projects like this require careful planning, and execution in order to avoid financial difficulties and supply chain bottlenecks. Having sufficient cash flow to make progressive payments as and when invoices are received is also crucial to a smooth execution of the project.

Thank you for reading IMSML Website Article 4/2024

Stay tuned for the next IMSML Website Article 5/2024: Mulair Oleg (mendakwa sebagai Nakhoda Kapal ‘Oriental Dragon’) & Anor v Pemunya dan/atau pihak-pihak yang mempunyai milikan atau kawalan terhadap kapal ‘Oriental Dragon’ dari Pelabuhan Panama (BRT UW Ltd & Ors, interveners) [2022] MLJU 2599

Signing-off for today,

Dr Irwin Ooi Ui Joo, LL.B(Hons.)(Glamorgan); 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

Thursday, 11 January 2024

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