Scott & English (Malaysia) Sdn Bhd

- vs -

Foo Thor Lombong Bijih Sdn Bhd

Judgment

Abdul Razak J

1. The question before me was simply, what was the proper construction to be given to s 42 of the Contracts Act where the promisee accepts the performance of the promise from a third party. Can the promisee still enforce the agreement against the promissor?

2. The first defendant, who was the promisor with the second defendant, says under the circumstances it was not liable to the plaintiff the promisee, but the third party.

3. The plaintiff, a limited company, was a repairer of machines. The first defendant was the owner, namely of a Cummins gravel pumpset. The second defendant was an insurance agent for NEM Insurance Bhd with whom the first defendant insured the machine. At some stage or another, the first defendant and the second defendant took the machine to the plaintiff to do certain repairs. They agreed to pay the plaintiff the sum of $37,115.77 based on the quotation to be submitted to and approved by the insurance company. The quotations were duly submitted by the plaintiff and the insurance company it seems issued instructions and gave approval for the repairs to be effected by the plaintiff to the value stated less $2,500 deductible under the excess clause.

4. The repairs were duly carried out, but the insurance company refused to meet the claim stating that they never authorised the second defendant to do the repairs or gave approval in that respect. The plaintiff’s action against the first and second defendants was for the cost of the repairs. They took out a summons for summary judgment before the Senior Assistant Registrar but this was dismissed. Hence this appeal before me.

5. At the outset, counsel for the appellant/plaintiff stated that she was not proceeding against the second defendant. The appeal was allowed. The matter has now come back before me for further argument in open court.

6. The first defendant contended that since the second defendant had performed the promise made between them, they should not be held liable.

7. This is based on s 42 of the Contracts Act which provides:

   When a promisee accepts performance of the promise from a third person, he cannot afterwards enforce it against the promisor.

8. In support of the contention, he cited the case of Haji Nik Ishak v Nik Zainab  [1975] 2 MLJ 82 as authority for that proposition. There the appellant had transferred his land to the respondent and the respondent had transferred his land to the appellant for $25,000 and $14,000 respectively. There was a balance of $11,000 due from the respondent to the appellant. The respondent’s son agreed to pay the amount, but did not do so. 

9. The appellant then sued the respondent for the sum, but the Federal Court held as the appellant had agreed to accept the offer to settle the amount by the respondent’s son, he was precluded from enforcing it against the respondent.

10. But Ali FJ’s judgment can be distinguished. There, there was a specific representation made by the third party. The defendant’s son told the plaintiff that he would discharge the defendant’s obligation which offer the plaintiff agreed to accept. This was so clearly stated by the plaintiff himself in the statement of claim. In our case, however, there was no such agreement to accept the second defendant’s performance in place of the first defendant. I think there was no doubt also that as the section itself provides, there must be performance before the section can apply. Once performed, the promisee cannot go again against the promisor, but clearly this was not the case before me because the contract was never performed by the second defendant since the cheques they gave in payment of the debt were all dishonoured.

11. The authorities are clearly in support. In the Har Chandi Lal v Sheoraj Singh 39 IC 343, the Privy Council said:

    It need hardly be added that this section applies only when a contract has in fact been performed by a third person.

    Pollock & Mulla (9th Ed page 361) is also to the same effect.

12. In the circumstances, I would confirm the Order earlier made allowing summary judgment to be entered against the first defendant and costs. It seems to me the first defendant may not be entirely without remedy because they may bring an action against the insurance company, and the latter in turn is entitled under its agreement with the second defendant their agent to be indemnified for any default committed by the agent’s officers.

Cases

Haji Nik Ishak v Nik Zainab [1975] 2 MLJ 82; Har Chandi Lal v Sheoraj Singh 39 IC 343

Legislations

Contracts Act, 1950: s. 42

Representation

Miss CC Lim for the appellant.

Ong Chin Beng for the respondent.