Fortuna Injunction PECD v Freehold Point [2008] 3 CLJ 215, Commentary by Eldarius Yong

This is a case whereby the Plaintiff seeks a Fortuna Injunction to restrain the Defendant’s winding-up petition.

The case involves PEDC Construction SDN BHD as the Plaintiff against Freehold Point SDN BHD as the Defendant [2008] 3 CLJ 2015. The Plaintiff is at all times a developer who ordered goods on behalf of their sub-contractor, a third party company from the Defendant. The goods were delivered to the third party company but was to be paid by the Plaintiff. In a letter dated 24th March 2006, the Defendant wrote to the Plaintiff informing them that the goods were being prepared with a reminder that an agreement has been reached between the Plaintiff and the Defendant in their last meeting for the payment of RM133,640.00. The Plaintiff did not reply or deny the agreement.

In applying for the injunction, the Plaintiff raised three points. First, the Plaintiff disputed the quality of the goods. Second, the Plaintiff purported that there was a shortfall of goods in the final delivery. This two points were dealt together by the High Court Judge, Dato. Vincent Ng Kim Khoay. The Plaintiff adduced a Letter of Complaint sent to them by the third party company dated 9th March 2006. I concur with the Judge in his absolutely correct judgment in that although there was a Letter of Complaint, the complaint was never conveyed to the Defendant. His Lordship then wrote that it is deemed unconditional acceptance of goods if a complaint was not made within a reasonable time. The Plaintiff has not, within a reasonable time make or convey the complaint to the Defendant.

The Plaintiff’s third defence is that the Defendant had attempted to defraud the Plaintiffs. The goods were accepted to one Charles Lee, who was a spouse of a director in the third party company. This was a rather direct point as delivered by His Lordship in his judgment. Charles at all material times was an employee and a spouse of a director in the third-party company. He was the only person liaising with the Plaintiff as the third party company has no sales personnel. Therefore, the Plaintiffs must have knowledge of this relationship. Moreover, the Plaintiff never raised this issue at any point prior to the Defendant’s claim for the amount owed.

Last but not least, there is that the letter dated 24th March 2006 containing the agreement to pay for RM 133,640.00 that  was never replied. The Defendant’s case was made on this letter as they contend that the letter amounted to a promise, an agreement to pay the remainders. The Plaintiff’s reply was that the letter was never replied to and they did not admit to that promise.

So, is a failure to reply an admission?

The answer to this question made up a substantial part of His Lordship’s judgment. I concede in my attempt to write a better ratio decidendi than the late Dato Vincent Ng. In his judgment, he cited several authority which helped him in his monologue on this topic.

In the 1996 case of David Wong Hon Leong, the facts were similar to this case, in that a letter was sent containing an agreement between the two parties. The letter was never replied. Gopal Sri Ram JCA stated that “if there had never been an agreement as alleged, it is reasonable to expect a prompt and vigorous denial.”

However, His Lordship then cited the case of Tan Cheng Hock v Chan Thean Soo. This case relied on the English case of Wiedemann v Walpole, a landmark case in contract law which is contradictory to the aforementioned case of David Wong Hon Leong. It states that the mere fact that a letter was not replied was “no evidence corroborating the Plaintiff’s testimony in support of such promise.” Nonetheless, it was also said in the same case that if a letter was sent containing an agreement between two parties, “the person who receives the letter must answer it if he means to dispute the fact that he did so agree.”

In my humble opinion, I strongly believe that even in a social situation, a promise that was made should be carried out. A promise that was made in business should hold even more weight. When a letter containing a promise agreed upon prior to the sending of the letter, that letter should be replied if its content was to be disputed. Otherwise, it should be taken as an absolute agreement, albeit silent. Precedence seems to be in contradiction with each other when it comes to this topic as there is a constant overriding of case laws on this matter. Like all the countless law essays out there, I will finish this point by using the biggest cliche in law papers around the world. I strongly believe that perhaps, to avoid confusion, this principle should be discussed in the Parliament and be made into a statute.

In conclusion, I concur with every point adjudged by the late Dato Vincent Ng. His explanation on every point of contention was delivered with accuracy and clarity. This judgment requires no head scratching or dictionary flipping and to that I, on behalf of readers of my paper says “Much Obliged, My Lord”.

Eldarius Yong Zhen Jie