1. ) Bagan Masyhur Sdn. Bhd. v Public Bank Berhad (PA-22NCvC-30-02/2021)

BAGAN MASYHUR SDN BHD

G.M.P. MASYHUR SDN BHD

MASYHUR FIRST DEVELOPMENT SDN BHD

ZUIHAIMI BIN ISMAIL (NO. K/P: 661125075005) …PLAINTIF-PLAINTIF Question DAN PUBLIC BANK BERHAD (NO. SYARIKAT: 6463-H) …DEFENDAN JUDGMENT (ORDER 14A APPLICATION) PRELUSION [1] The Defendant bank (D) gave banking facilities to the Plaintiffs (Ps). Legal proceedings ensued between them concerning the facilities. Eventually, they entered into a Global Settlement Agreement dated 23.9.2010 (GSA). 09/07/2024 09:02:01 PA-22NCvC-30-02/2021 Kand. 52 Page 2 of 13 [2] Ps were to settle the agreed settlement sum by paying monthly payments according to an agreed payment schedule, which expired at the end of July 2018. [3] Ps defaulted in making the payments. D issued to Ps notices of demand, and a notice of default. [4] In what appears to be a preemptive measure, Ps instituted this suit against D for the alleged wrongful termination of the GSA. In its defence, D pleaded that it did not terminate the GSA. Instead, it was Ps who had breached the GSA. [5] D then applied under Order 14A of the Rules Of Court 2012 to pose questions of law and the interpretation of contract (the GSA) to determine this suit without a trial. [6] Should D’s Order 14A application be allowed, or dismissed? THE PARAMETERS OF ORDER 14A [7] Order 14A provides that Courts can decide on a question of law, or a question of the interpretation of a document, such as a contract. Courts could decide on a question of law or a question of interpreting a document, if two conditions are met. [8] The first condition is that it is suitable to decide the question without having to go through a full trial. In other words, the question can be answered summarily. Page 3 of 13 [9] The second condition is that the Court’s decision on the question will dispose of the whole case (the entire dispute) between the competing parties. [10] The pertinent parts of Order 14A are set out below for reference (with my emphases in bold)— Order 14A. Disposal of case on point of law Determination of questions of law or construction (O. 14A, r. 1)

The Court may, upon the application of a party or of its own motion, determine any question of law or construction of any document arising in any cause or matter at any stage of the proceedings where it appears to the Court that—

such question is suitable for determination without the full trial of the action; and

such determination will finally determine the entire cause or matter or any claim or issue therein.

On such determination the Court may dismiss the cause or matter or make such order or judgment as it thinks just… [11] To elaborate—two requirements justify making a determinant Order under Order 14A. The first requirement is suitability—the Court must be satisfied that it is suitable for the question posed to be decided without a trial, which means that the facts required to answer the question are undisputed. In other words, it is suitable to use the Order 14A procedure when the facts needed to answer the question are not in dispute, or are admitted, or are proven—Seloga Sdn Bhd v UEM Gynisys Sdn Bhd [2007] 7 MLJ 385 (CA) at MLJ page 403; Seloga Sdn Bhd v UEM Genisys Sdn Bhd [2008] 2 AMR 477 at AMR page 498; Seloga Sdn Bhd Page 4 of 13 v UEM Genisys Sdn Bhd [2008] 2 CLJ 686 at CLJ paragraph [53]; Seloga Sdn Bhd v UEM Genisys Sdn Bhd [2007] 3 MLRA 381 at paragraph [53]. [12] The second requirement is finality—answering the question posed will conclude the whole case with finality. There should be no remaining issues that must be determined by the process of a trial. In other words, after the question posed is answered by the Court, there should no longer be any need to still go through a trial to finally dispose of the case— Petroleum Nasional Bhd v Kerajaan Negeri Terengganu And Anor Appeal [2004] 1 MLJ 8 (CA); [2003] 5 AMR 696; [2003] 4 CLJ 337; [2003] 1 MLRA 582; particularly at paragraph 19. WHAT ARE THE PLAINTIFFS’ CAUSES OF ACTION? [13] Ps causes of action are for—

the unlawful termination of the GSA i.e. for breach of the GSA. One of the reliefs sought is an Order for the specific performance of the GSA. The remedies sought are damages; and

unjust enrichment—the interest charged after D declared an Event Of Default (as defined under the GSA) is the interest under the existing facilities agreements between Ps and D. The interest charged is not the interest stipulated in the GSA anymore. The interest under the existing facilities is more i.e. higher than the interest under the GSA. As such, the argument is that D is unjustly enriching itself. ARE THERE ANY DISPUTED FACTS THAT MAKE IT UNSUITABLE TO UTILISE THE ORDER 14A PROCEDURE? Page 5 of 13 [14] In opposing this Order 14A application, Ps assert that there are disputed facts that render it unsuitable for an Order to be made under Order 14A. I then asked Ps to submit the strongest, most cogent disputed fact that renders this Order 14A application unsuitable to be determined summarily i.e. without a trial. I found it difficult to comprehend Ps’ answer. But what I can decipher, from Ps’ Written Submissions and their oral submissions, is that the asserted disputed facts include—

whether the GSA is still subsisting. Ps assert that the GSA still subsists. Ps pray for an Order for the specific performance of the GSA. But D does not dispute this fact. D takes the same position i.e. that the GSA subsists, particularly concerning the rights and obligations after the Event Of Default is declared under the GSA. Also, D has not terminated the GSA. There is no documentary evidence to show that D terminated the GSA. Ps want the GSA to subsist. So does D. This is therefore an undisputed fact, or it is an indisputable fact. This fact—that the GSA still subsists—is therefore not a disputed fact which makes it unsuitable to utilise the Order 14A procedure.

whether the charging of interest at the rates agreed under the existing facilities agreements (which are higher) instead of at the rates agreed under the GSA (which are lower), tantamounts to unjust enrichment. But under the GSA, D has the right to do that: charge the higher interest rates under the existing facilities agreements. When an Event Of Default occurs, D is no longer obligated to charge the lower interest rate under the GSA. Instead, D is entitled to revert to the terms of the existing facilities agreements to recover the amount due Page 6 of 13 and payable, calculated on the terms of the existing facilities agreements, including charging interest at the rates under those agreements. I find that this alleged disputed fact is an indisputable fact—the fact that D is entitled to charge interest at the rates under the existing facilities agreements when there is a default by Ps under the GSA.

Ps also argue that D took inconsistent positions, which means that there are disputed facts that make it unsuitable to allow this Order 14A application. I find that there is no documentary evidence or affidavit evidence (supported by documentary evidence and not just by Ps merely saying so), that D took inconsistent positions that give rise to disputed facts that make it unsuitable to consider this Order 14A application. WHAT THEN ARE THE AGREED FACTS? [15] On the contrary, referring to the Common Chronology Of Facts, these are the agreed facts (undisputed facts) that I am compelled to consider—

Ps and D signed the GSA (in September 2010).

In April 2015, D issued a notice of demand to Ps, for non-payment of the amounts due and payable under the GSA.

The last payment that Ps made to D at the time was in November 2016.

In January 2018, D issued another notice of demand to Ps.

The last payment that Ps made to D at the time was in April 2018.

The agreed time for Ps to finish paying D under the GSA (the settlement period) expired in August 2018. Page 7 of 13

In November 2019, D issued to Ps a notice of declaration of default under the GSA—declaring that an Event Of Default had occurred. WHAT ARE THE PERTINENT TERMS OF THE GSA THAT CAN BE CONSTRUCTED WITHOUT A TRIAL? [16] This suit is essentially a matter which can be determined by the construction of the terms of the GSA. The pertinent terms that can be constructed without a trial, which would bear upon this Order 14A application include clause 2.1, clause 2.2, clause 5(j)(i) and (ii), clause 10, clause 11, clause 12, and Schedule A and Schedule B. [17] Clause 2.1 provides that Ps are obligated to make payments according to the “terms of settlement”, namely the schedule of payments set out in Schedule B. [18] Clause 2.2 provides that the amounts due and payable by Ps against the respective existing facilities are set out in Schedule A. [19] Clause 5(j)(i) and (ii) provide that Ps’ failure to pay constitutes an Event Of Default. When Ps fail to pay as they are obligated to, D can declare it an Event Of Default. D then no longer has obligations to Ps to compromise on the amounts due and payable under the existing facilities agreements. D can enforce the existing facilities agreements, including the related securities, to recover the amounts due and payable under the agreements between the parties. [20] Clause 10 provides that time is of the essence when construing the GSA. It also provides that any omission or permitted-delay (in other words: Page 8 of 13 any indulgence) on D’s part—cannot be construed as D waiving its rights under the GSA. [21] Clause 11 is the “entire agreement” clause, which provides that the terms of the GSA supersede all previous arrangements and understandings between Ps and D concerning the amounts due and payable. In this regard, Ps alleged that the terms of the GSA were allegedly varied, orally, as a result of the meeting between Ps and their representatives with D’s officer: Lee Cheang Beng. Clause 11 would render any alleged arrangement or understanding arising from the meeting to be of no effect. [22] In any event, clause 12 provides that any amendment or variation to the terms of the GSA—to be effective and binding—must be done in writing. THE ANSWERS TO THE ORDER 14A QUESTIONS POSED [23] Considering the agreed facts (the undisputed facts), and also the indisputable facts, as well as the pertinent terms of the GSA, I answer the questions that D poses as follows. [24] Question 1—Was there an Event Of Default? The Answer is: Yes, because—

Ps breached the GSA by defaulting in not paying the payments due and payable under the GSA.

Referring to the Common Chronology Of Facts, signed by both sides, it is an agreed fact that the last payment that Ps made, Page 9 of 13 and received by D, was in November 2016, which is in breach of the schedule of payments under the GSA.

D declared that an Event Of Default had occurred. [25] Question 2—Did D breach the GSA or did Ps breach the GSA? The Answer is: D did not breach the GSA but Ps breached the GSA, because—

Ps did not and could not identify the instance of breach by D.

Ps defaulted in their obligatory payments, which is a breach of the GSA. [26] Question 3—Is D entitled to exercise all its rights and to pursue all the remedies available to it under the GSA and the “existing securities” under the GSA, to recover all amounts due and payable? The Answer is: Yes, because clause 5(j)(ii) gives D that right. [27] Question 4—Can the terms of the GSA be amended or varied as asserted by Ps? The Answer is: No, because clause 12 provides that any amendment or variation must be done in writing. Ps have not produced any document that proves or demonstrates that any term of the GSA was amended or varied. [28] At this juncture, I address Ps’ argument that the Answer to Question 4 does not determine this suit entirely, and hence this Order 14A application should not be allowed, and that this Court should not give Answers to the Questions posed. Page 10 of 13 [29] I find this argument untenable because it is not each individual Question posed that must entirely determine the claim. It is the Questions posed collectively that must entirely determine the claim. [30] Question 5—Was D unjustly enriched? The Answer is No, because—

Ps have produced no evidence to demonstrate, or evidence from which it could be inferred, that D was double-charging Ps interest by charging interest on both the GSA and the existing facilities agreements.

In the two related foreclosure proceedings, D was recovering the amounts due and payable under the existing facilities agreements, which D had every right to do.

D charged interest on the existing facilities’ accounts.

D did not file a suit to recover the amounts due and payable under the GSA.

The settlement sum and the interest element under the GSA are in fact lower than the overall amount due and the interest element in the existing facilities agreements. But—Ps breached the GSA. D declared an Event Of Default. And the rights and obligations of the parties reverted back to the rights and obligations under the existing facilities agreements.

I also find that Ps have not satisfied the elements for the cause of action for unjust enrichment propounded in Dream Property Sdn Bhd v Atlas Housing Sdn Bhd [2015] 2 MLJ 441 (FC), particularly at paragraph [117]; [2015] 2 AMR 601; [2015] 2 CLJ 453; [2015] 2 MLRA 247. The Federal Court sets out the Page 11 of 13 four elements that Ps must establish to succeed in their cause of action for unjust enrichment, which are—

D must have been enriched;

(ii) D’s enrichment must have been gained at Ps’ expense;

(iii) it is unjust to let D retain the benefit or gain; and

(iv) D has no defence to “extinguish or reduce” D’s liability to make restitution i.e. to restore Ps with the benefit or gain that D had obtained.

Ps have not shown any evidence to satisfy these four elements for their cause of action for unjust enrichment. [31] Question 6—Should the GSA be specifically enforced? The Answer is No, because—

Ps should not be given a specific performance Order to enforce the GSA (the contract) that Ps themselves have breached— Eastern Properties Sdn Bhd v Hampstead Corporation Sdn Bhd [2008] 1 AMR 285 (CA) at paragraphs [14] and [15]; [2007] 6 CLJ 538; [2007] 2 MLRA 406. In other words, Ps should not be granted an Order for the specific performance of the very contract that they have themselves breached.

The settlement period under the GSA lapsed at the end of August 2018. Ps have not performed the promises that they contracted to perform under the GSA. After the expiry of the settlement period, no obligation or matter remains performable under the GSA. Page 12 of 13 THE RESULTANT JUDGMENT OR ORDER THAT SHOULD BE MADE HERE [32] For these reasons, I find that it is suitable to determine this suit by answering the questions of law and construction of contract posed in this Order 14A application. I also find that answering the Questions posed will finally determine Ps’ entire claim against D, and there is no need to go to trial to determine any remaining issues. [33] And I answer the Questions posed in favour of D, against Ps. [34] In the circumstances, I allow D’s Order 14A application, and in consequence, I dismiss Ps’ claim with costs of RM40K to be paid by Ps to D by 20.5.2024. Costs are subject to the allocatur. Dated: 9 July 2024 KENNETH ST JAMES Judicial Commissioner Penang High Court Counsel/Solicitors: For the Plaintiffs Farhan Alia Binti Ahmed Othman [Messrs. Zulhaimi & Co. (Pulau Pinang)] Page 13 of 13 For the Defendant Chan Kok Keong with Deborah Lui Shien Mae [Messrs. Shook Lin & Bok (Kuala Lumpur)] Legislation referred to:

Order 14A of the Rules of Court 2012. Cases referred to:

Seloga Sdn Bhd v UEM Gynisys Sdn Bhd [2007] 7 MLJ 385 (CA); Seloga Sdn Bhd v UEM Genisys Sdn Bhd [2008] 2 AMR 477; Seloga Sdn Bhd v UEM Genisys Sdn Bhd [2008] 2 CLJ 686; Seloga Sdn Bhd v UEM Genisys Sdn Bhd [2007] 3 MLRA 381.

Petroleum Nasional Bhd v Kerajaan Negeri Terengganu And Anor Appeal [2004] 1 MLJ 8 (CA); [2003] 5 AMR 696; [2003] 4 CLJ 337; [2003] 1 MLRA 582.

Dream Property Sdn Bhd v Atlas Housing Sdn Bhd [2015] 2 MLJ 441 (FC), [2015] 2 AMR 601; [2015] 2 CLJ 453; [2015] 2 MLRA 247.

Eastern Properties Sdn Bhd v Hampstead Corporation Sdn Bhd [2008] 1 AMR 285 (CA) at paragraphs [14] and [15]; [2007] 6 CLJ 538; [2007] 2 MLRA 406.