Syarikat Seri Padu Sdn Bhd

- vs -

Intan Enterprises Co

Judgment

Syed Othman FJ

(delivering the judgment of the Court)

1. This appeal is against the refusal of the High Court at Johore Bahru to remove an injunction issued on 13 June 1979 to restrain the appellant company (Seri Padu) from “felling cutting, extracting, selling or otherwise dealing with or disposing of any timber or logs or trees” (for convenience we shall refer to this expression as “exploiting timber”) from approximately 10,210 acres of land within the Dabong Forest Reserve, Ulu Kelantan in respect of which the parties had entered into an agreement dated 20 November 1978 (the 1978 Agreement) and to restrain Seri Padu from entering into an agreement with other persons.

2. The appeal is mainly on facts.

3. Seri Padu obtained the right to exploit timber over an area of about 30,202 acres within the Forest reserve from the Kelantan State Economic Development Corp under an agreement dated 20 July 1972. Seri Padu entered into the 1978 Agreement with Zainun, who is described as Zainun Md Taib, trading as Intan Enterprises Co (Intan) to sell all timber and logs from a delineated area, described as A, within the concession.

4. The relevant parts of the 1978 Agreement on which Seri Padu rely in their application to remove the injunction are cll 4, 5 and 6 which read as follows:

   4.	In consideration of the above premises the purchaser shall pay a lump sum of Ringgit Two Hundred and Eighty Thousand ($280,000) only by twelve (12) post-dated cheques payable every month commencing on 18 December 1978.
   5.	Time is of the essence of this Agreement.
   6.	In the event of failure on the part of the purchaser or his Banker to honour the aforesaid cheques upon presentation on due dates, this Agreement shall become null and void and whatever payments may have been made by the purchaser to the vendor shall be forfeited and the purchaser shall have no right to any claim whatsoever.

5. The learned trial judge found in effect as follows: Intan had paid Seri Padu $360,000 before signing the 1978 Agreement, a further sum of $60,000 upon execution of the Agreement; Intan agreed to pay instalments as shown above; Intan undertook to pay and paid all premiums, royalties, tributes and other fees payable to the State Government; Intan commenced to extract timber and entered into an agreement with Clonlee Enterprises Sdn Bhd for sale of timber; Intan also paid Seri Padu in compliance with the agreement monthly instalments totalling $143,000; in April 1979 Seri Padu advised the Forest Department, Kelantan not to accept any payment of premium, royalty, tribute and other fees from any person except Seri Padu’s directors; because of this, Intan could not work on the forest; in May 1979 Seri Padu terminated the 1978 Agreement with Intan on the alleged ground that Intan had committed a breach of the agreement.

6. Seri Padu in their affidavit seeking the removal of the injunction referred to cl 5 of the 1978 Agreement which says that time was of the essence of the contract and cl 6 which provides for the consequence of any cheques being dishonoured.

7. In their letter to Intan’s solicitors dated 24 January 1979 the informed the solicitors that Intan’s cheque for $97,000 had been returned with the note “Refer to Drawer” and gave notice of dishonour. They also said in the letter that Intan had breached the 1978 Agreement with regard to payments of monthly instalments; they gave notice of termination and informed the solicitors that all payments under the agreement were forfeited and all other payments that were due would have to be paid accordingly by Intan.

8. The learned trial judge in his grounds of judgment, among other things, said:

   The defendant (Seri Padu) alleged that there was a breach of the agreement by the plaintiff and accordingly the agreement was terminated. The defendant alleged that the terms of the agreement had been varied by a subsequent oral agreement. The method of payments had been varied and that the plaintiff had failed to comply with the new terms of the agreement as regards payment. Now whether the defendant could terminate the agreement upon new terms, varied by oral agreement, is a serious question to be tried. The validity of the defendant’s action to terminate the agreement under cl 6 of the agreement can be disputed and therefore should be argued in a trial.

9. Intan, in para 3 of the reply to the defence, too say that cl 5 of the 1978 Agreement ceased to apply to the monthly payments required to be made by Intan under the 1978 Agreement by reason of Seri Padu having agreed to a change in the mode of payments.

10. We agree with the learned trial judge in his observations. The fact that there is an oral agreement in addition to or varying the 1978 Agreement as to method of payment is all the more reason for the matter to go to trial. We also see other reasons.

11. It is shown in affidavit of 15 September 1979 by Mr. Wong Sheng Chan for Intan, that the sum of $97,436.66 as stated in the cheque was for payment of $58,333.33 due to Seri Padu from Green Tropical Sdn Bhd and $39,103.33 due from Kwee Lim Trading Agency. The instalment payment required to be made by Intan to Seri Padu for January 1979 was banked in and credited into the account of Messrs KC Koh & Co, solicitors for Seri Padu, on 16 January 1979. From this, it is clear that the allegation in the application for removal of the injunction on the ground that an instalment was not paid in time does not appear to hold water.

12. Then cl 6 of the 1978 Agreement, which relates to dishonoured cheques, specifically mentions “the aforesaid cheques”, i.e. postdated cheques referred to in cl 4 totalling $280,000. On the face of the clause the indications are that it becomes operative if all cheques are dishonoured. It is therefore a triable issue to determine whether the vendor has the right to enforce this clause if one cheque is dishonoured on presentation but then honoured in good time, as in this case.

13. It is also a matter for the court after trial to determine the intention of the parties whether the payment totalling $420,000, before or on execution of the 1978 Agreement, referred to by the learned trial judge, is some form of security for payment, since it has not been shown what these payments are exactly for. Seri Padu in their defence say that the sum was paid to Seri Padu by M/s Wong & Co, advocate and solicitors who acted for the purchaser and two other purchasers from the same timber concession. One would wonder how there could be a purchase, when as far as one could understand the situation no trees had yet been felled.

14. Another reason for this case to go to trial is the contention by Seri Padu that their agreement was with Miss Zainun Mohd Taib, trading as Intan Enterprises Co. By this, Seri Padu contend that they have been dealing with a sole proprietorship and not with a partnership. For Intan, it is argued that Miss Zainun has the right to take in partners into her firm. In arguments many authorities have been discussed. For the purpose of the present case we need not refer to them. It is shown by affidavit of Amran Abdul Rahman of 15 September 1979 (pp 80–84 of record) that on 18 November 1978 Miss Zainun submitted her application, Form A Business Registration (p 86 of record), for registration of her business as proprietor of Intan Enterprises Co. This application was registered on 20 December 1978. On the same day, i.e. 18 November 1978, Form B, Registration of Changes in Business for Intan Enterprises Co, was also filed giving three names as partners, Zainun Mohd Taib, Amran Abdul Rahman and Kassim Mohamad, but this Form was only registered on 16 August 1979.

15. For Seri Padu, it has been suggested that there might be some impropriety in the registration having taken so long. We can only say that this would be a matter of speculation. On the evidence and in circumstances of the present case, the fact that Miss Zainun entered into the 1978 Agreement in her name trading as Intan Enterprises Co does not necessarily mean that she was entering into the agreement solely in her own right. There are strong indications that Seri Padu must have been aware that she was establishing a partnership when she entered into the agreement. She is the first Malay lady to our knowledge who would be venturing into a logging business. It would be hard to expect that she would have ventured into this business by herself. In any case, it cannot be disputed that she is a party in the present action. If indeed it can be established that the others have never been involved, an application can always be made during the trial for their names to be struck out as parties.

16. Above all, from what has transpired, it is desirable in the interest of Seri Padu itself to determine the real nature of the $420,000 paid before and on signing the agreement, and in what way, if at all, it affects the 1978 Agreement, since the immediate payment stated in the 1978 Agreement for giving a right to exploit timber over a vast area is only $1.

17. On these considerations, the balance of convenience clearly shows that the injunction should stay. Intan will suffer irreparable loss if it is lifted. If not for the injunction, Seri Padu will allow others to exploit timber from the area in which Intan has still an interest, having outlayed vast sums.

18. Appeal is dismissed with costs. Deposit to respondent to account of taxed costs.

Representations

K.C. Koh for the appellant.

Raja Abdul Aziz Addruse for the respondent.