SARWAJA TIMUR SDN BHD v TRENERGY INFRASTRUCTURE SDN BHD

Case Significance

Illustrates the evidential weight of audited financial statements, partial payments and contemporaneous correspondence in a claim for an inter-company debt, the court entering summary judgment where the defendant's bare denials, unsupported by its own records, raised no triable issue against entries in its own audited accounts.

This High Court decision concerns competing applications in a claim for an outstanding inter-company debt: the plaintiff's application for summary judgment under Order 14 of the Rules of Court 2012, and the defendant's application to strike out the claim under Order 18 rule 19. The plaintiff, formerly a wholly-owned subsidiary of the same holding company as the defendant, had provided the defendant with a range of inter-company services — including office and vehicle rental, a transmission-line project, payments on its behalf, and utilities — for which a total sum was said to be due, before the defendant was disposed of to a third party under a share subscription agreement. The plaintiff relied on the recording of the indebtedness in the defendant's audited financial statements, where the debt appeared under amounts owing to fellow subsidiaries and was later reclassified as trade and other payables, on partial payments the defendant had made, and on a series of email exchanges between the parties' finance personnel acknowledging the debt. The defendant resisted, contending that the inter-company charges were mere book-keeping entries, that the claim was time-barred, and that the debt was disputed. The court held that the defendant had no valid triable issue: its affidavits contained bare assertions and denials, with no contemporaneous documentation from its own records to contradict the plaintiff's documents or to explain away the entries in its own audited accounts, and a claim backed by audited accounts, partial payments and contemporaneous correspondence could not be dismissed as disclosing no reasonable cause of action. The court accordingly dismissed the defendant's striking-out application as an attempt to deflect from its own lack of a defence, allowed the plaintiff's application, and entered summary judgment for the full sum with interest at 5% and costs of RM8,000. The judgment illustrates the evidential effect of audited accounts and acknowledgments in resisting a debt claim.