1. ) Cenmal Commercial Sdn Bhd v Malayan Banking Berhad (WA-22NCC-602-08/2023)

CENMAL COMMERCIAL SDN BHD (No. Syarikat: 261854P)

LEE KIM TIONG @ LEE KIM YEW (No. K/P: 550819-01-5179)

WORK@H SDN BHD (No. Syarikat: 820865-D) ... PLAINTIF-PLAINTIF DAN MALAYAN BANKING BERHAD (No. Syarikat: 3813-K) ... DEFENDAN GROUNDS OF JUDGMENT A. Introduction [1] The defendant applied to strike out the plaintiffs’ claim on the ground that the claim is barred by res judicata (“Striking Out Application”). [2] The court allowed the Striking Out Application, after finding that the facts of this action and the issues raised are identical to that of a previous action filed. As such, the court found the doctrine of res judicata to be applicable, to prevent the issues raised from being re-litigated. B. Background Facts [3] By various letters of offer and facility agreements (collectively, the “Facility Agreements”), the defendant granted banking facilities to the 1st plaintiff (“Banking Facilities”). The Banking Facilities are secured by, inter alia, a deed of assignment cum agreement dated 20 January 2016 between the defendant and the 3rd plaintiff. The Banking Facilities were also guaranteed and secured by a letter of undertaking and a letter of guarantee executed by the 2nd plaintiff. [4] The 1st plaintiff defaulted in the payment of the Banking Facilities, and the defendant filed an action in Kuala Lumpur High Court Suit No. WA-22NCC-548-11/2018 (“Suit 548”), to claim the outstanding amount due from the plaintiffs. On 15 May 2019, the defendant obtained summary judgment against the plaintiffs for the sum of RM97,745,966.54, together with interest and costs (“Judgment”). [5] The plaintiffs appealed against the Judgment to the Court of Appeal, by way of Appeal No. W-02(IM)(NCC)-953-05/2019 (“Appeal”). On 19 February 2020, the Court of Appeal dismissed the Appeal and affirmed the Judgment (“COA Order”). [6] The plaintiffs did not apply for leave to appeal to the Federal Court against the COA Order. Neither did the plaintiffs apply to stay the execution of the Judgment. [7] To satisfy the Judgment, the defendant commenced various execution proceedings. However, the Judgment debt has not been satisfied. [8] The plaintiffs filed this action to set aside the Judgment. [9] It is to be noted that the 2nd plaintiff was adjudged bankrupt on 26 January 2023 by another creditor. However, he did not obtain any sanction to commence this action against the defendant. C. The Striking Out Application [10] The Striking Out Application is filed under order 18 rule 19(1)(b) and (d) of the Rules of Court 2012, which reads: “(1) The Court may at any stage of the proceedings order to be struck out or amended any pleading or the endorsement, of any writ in the action, or anything in any pleading or in the endorsement, on the ground that –

it discloses no reasonable cause of action or defence, as the case may be;

it is scandalous, frivolous or vexatious;

it may prejudice, embarrass or delay the fair trial of the action; or

it is otherwise an abuse of the process of the Court, and may order the action to be stayed or dismissed or judgment to be entered accordingly, as the case may be.” (emphasis added) [11] The defendant’s contention is that the plaintiffs’ claim is barred by res judicata, as the amount due under the Banking Facilities had been adjudicated in Suit 548. Relying on Bandar Builder Sdn Bhd v United Banking Corporation Bhd [1993] 3 MLJ 36, the defendant argued that the claim is obviously unsustainable, and that this is a plain and obvious case where the court should exercise its power to strike out the claim. D. Considerations [12] In their claim, the plaintiffs sought to set aside the Judgment, alleging that the Judgment is unsustainable, as the calculation of interest imposed by the Judgment is inaccurate and illegal. Specifically, the plaintiffs argued that there is no provision in the Facility Agreements that permits the defendant to claim interest against the 1st plaintiff at a contractual rate higher than the statutory rate of five percent imposed under the Rules of Court 2012. The plaintiffs claimed that the excessive interest imposed had led to the defendant being unjustly enriched. [13] The court notes that the plaintiffs had filed the Appeal, and that the COA Order was granted on 19 February 2020. The plaintiffs did not apply for leave to appeal to the Federal Court against the COA Order. Further, there is also no application to stay the execution of the Judgment. [14] Instead, the plaintiffs filed this action – three years after the COA Order was granted – to set aside the Judgment. [15] In the Striking Out Application, the defendant argued that the doctrine of res judicata applies to the issues raised by the plaintiffs, and as such, the court is barred from considering them. The plaintiffs however contend that res judicata does not apply, in view of the unsustainability of the Judgment. [16] After considering the evidence before the court and the arguments raised by the parties, I found the doctrine of res judicata to be applicable to this case. [17] In reaching this finding, I relied on Serac Asia Sdn Bhd v. Sepakat Insurance Brokers Sdn Bhd [2013] 1 MLJ 1, which involves an action to strike out a judgment in default that was regularly obtained. The Federal Court held that once a regularly obtained judgment is perfected, a court is functus officio and thus, the matter is res judicata and cannot be re-litigated: “[44] We conclude by saying that once a regularly obtained order or judgment has been perfected, the court is functus officio. The matter as decided vide encl 6 is thus res judicata and cannot be re-litigated. It needs to be emphasised that the order made under encl 6 was appealed and affirmed right up to the Federal Court. It cannot now be revisited or reasserted under any guise in a subsequent proceeding. The issues raised by the respondent in encl 29 could have been brought up during the appeal process. The law does not allow the respondent to have a second bite of the cherry and in the manner as it did. This passage from Tenaga Berhad explains the rationale: There was no merit in the appellant’s argument that the second application to set aside the default judgment was justified because it was based upon a different ground from that relied upon in the first application. The doctrine of res judicata in its wider sense was applicable in the present case. It was certainly open to the appellant to ground its first application on the basis that the default judgment was irregular. It was therefore an issue which properly belonged to the first application. But it chose not to rely upon that ground. Once the first application was dismissed, it was not open to the appellant to make a second application to set aside the judgment on a different ground. It would amount to presenting one’s case in installment which the law does not permit. In our judgment too, the re-litigation of a regularly and properly concluded matter as determined by the court is prohibited by the wide doctrine of res judicata. The judicial process rests on the twin pillars of certainty and finality. A final order or a judgment must therefore be vigorously protected by this doctrine, a position taken by the common law courts ever since Henderson (1843).” (emphasis added) [18] It is important to note that the doctrine of res judicata applies not only to prevent the re-adjudication of issues that had already been adjudicated by a court of competent jurisdiction; it would also apply to all issues that could have been brought forward by parties exercising reasonable diligence (see Asia Commercial Finance (M) Bhd v Kawal Teliti Sdn Bhd [1995] 3 MLJ 189). [19] In the present case, the issues raised by the plaintiffs in their claim revolve around the legality of the imposition of interest on sums due by them. The plaintiffs alleged that the Facility Agreements do not contain a covenant permitting the defendant to claim interest higher than the statutory interest rate of five percent under the Rules of Court 2012. It is the plaintiffs’ contention that the excessive interest imposed had led to the defendant being unjustly enriched. [20] The court finds that these allegations could have and should have been raised to challenge the indebtedness of the plaintiffs in Suit 548, and specifically to challenge the certificate of indebtedness filed by the defendant during the hearing of the summary judgment application, which led to the Judgment being entered against the plaintiffs. [21] It is also not in dispute that the parties involved in this action and Suit 548 are identical, and that both parties’ cases were considered on the merits and had been conclusively adjudicated at both the High Court and the Court of Appeal. [22] Further, the Judgment is a validly and regularly obtained judgment, and the plaintiffs have not alleged that the Judgment was obtained fraudulently. The issue of fraud was raised by the plaintiffs during submissions, but had not been pleaded by the plaintiffs in their statement of claim. [23] With the above findings, the court holds that the doctrine of res judicata applies to this case, and this court is precluded from considering the issues raised by the plaintiffs in this action. [24] The court also took note that the 2nd plaintiff was adjudged bankrupt on 26 January 2023 by another creditor. Section 38(1)(a) of the Insolvency Act 1967 provides that a bankrupt shall be incompetent to maintain any action without the previous sanction of the Director General of Insolvency (“DGI”): “Where a bankrupt has not obtained his discharge –

the bankrupt shall be incompetent to maintain any action (other than an action for damages in respect of an injury to his person) without the previous sanction of the Director General of Insolvency; …” [25] The 2nd plaintiff did not obtain any sanction from the DGI to commence the current action against the defendant, and as such, the court finds that he is not competent to pursue his claim against the defendant. The 2nd plaintiff’s claim therefore cannot stand. E.

[26] With the finding that res judicata applies, the court finds this to be a clear and obvious case for the court to exercise its powers to strike out the plaintiffs’ claim against the defendant. [27] The Striking Out Application is therefore allowed, with costs. Dated 29 July 2025 ADLIN ABDUL MAJID Judge High Court of Malaya Kuala Lumpur Counsel: Plaintiffs : Nur Amalina Mohamad Rosli (together with Aina Shafika) of Messrs. Ramli Yusuff & Co Defendant : Aufa Radzi (together with Anson Liow) of Messrs. Skrine