Chen Yi Jin v Neo Sin Sing (JA-22NCvC-114-09/2020)

CHEN YI JIN …PLAINTIF- (No. K/P Singapura : S1492487F)

SEE WEE SIAH (No. K/P Singapura : S7015860D)

WANG FUCHENG (No. K/P Singapura : S2586837D)

NEO SIN SING …DEFENDAN- (No. K/P Singapura : S1636413D)

TEE NAI POH (No. K/P Singapura : S1729009F) (DALAM TINDAKAN ASAL)

NEO SIN SING …PLAINTIF- (No. K/P Singapura : S1636413D)

TEE NAI POH (No. K/P Singapura : S1729009F)

TAN AIK KIM …DEFENDAN- (No. K/P Singapura : S1492487F)

SEE WEE SIAH (No. K/P Singapura : S7015860D)

WANG FUCHENG (No. K/P Singapura : S2586837D)

CHEW SONG HENG (No. K/P : 660209-07-5139

HO CHAK HUNG (No. K/P : 740404-14-5075

POWER MINING SDN BHD (No. Syarikat : 1022097-V (COUNTER-CLAIM)

This is a suit arising from a breach of a loan agreement by the Company (D6) in which a sum of money consented amongst the directors themselves to be lent to the company.1 The Plaintiffs and Defendants (in the original suit) are the Directors of the Company.

The Plaintiffs @ Directors and the 1st Defendant@ Director are the lenders whilst D6 company is the borrower. D1, D2 (in the original suit) and D4, D5 in the counter-claim are guarantors.

This Court allowed the reliefs to the Plaintiff only to the extent that the 1st and 2nd Defendant (as guarantor) to jointly and severally return to the Plaintiffs, the payment of sum of money as loan to D6 below, with interest at 8% from 22.1.2020 till date of judgment 28.3.2025 and interest at 5% on those judgment sum from date of judgment till realization: 1st Plaintiff RM1,031,250.00 2nd Plaintiff RM1,031,250.00 3rd Plaintiff

In addition to the above reliefs, this Court allowed the Plaintiffs’ reliefs in the counter-claim against the 4th and 5th Defendant as follows:

A declaration that the 4th and 5th Defendant (in the counter-claim), liable to pay the Plaintiffs (in the counter-claim) RM750,000.00 under the Loan Agreement; 1 See: the loan agreement dated 18.6.2013 in the Common Bundles of Documents enclosure 20 at page 383 pdf.

The 4th and 5th Defendant to indemnify the Plaintiffs any losses incurred by the Plaintiffs on the said sum RM750,000.00 which the 4th and 5th Defendant are directed to pay;

The 4th and 5th Defendant to indemnify any losses incurred by the Plaintiffs (in the counter-claim) on the said sum RM750,000.00;

Cost of RM20,000.00 to be paid to the Plaintiffs (in the counter-claim) by the 4th and 5th Defendant (in the counter-claim); and

Plaintiffs’ counter-claim against the 6th Defendant (in the counter-claim) is dismissed with cost of RM15,000.00 to be paid by the Plaintiffs to the 6th Defendant.

The Plaintiffs and Defendants (D1 and D2 in the original suit and D4 and D5 in the counter-claim) are directors of the company D6 Power Mining Sdn. Bhd. These claims arise from a breakdown of the earlier consensus to the terms in an internal arrangement between the company and both the Plaintiffs and the 1st Defendant.

The internal agreement was for a loan advancement of RM5,000,000.00 collectively to the company sourced from the Plaintiffs and the 1st Defendant. A resolution was passed by the company to this effect.

The loan agreement, dated 18.6.2013 was executed between the lenders, borrower and the guarantors. The agreement contain pertinent clauses as follows:

The apportionment of the amount to be contributed towards the said loan between the Plaintiffs and the 1st Defendant (hereafter refer to as “lenders”) are as follows:

1st Plaintiff (Tan Aik Kim now known as Chen Yi Jin)

(ii) 2nd Plaintiff

(iii) 3rd Plaintiff RM1,250,000.00

(iv) 1st Defendant RM1,000,000.00

The Company as “borrower” gives the undertaking to pay the respective lenders the said loan based on the apportionment, once the company is making profits and/or able to pay back;

Clause (4) stipulates that in any event the company as borrower unable/fail to pay back the lenders the sum, the Defendants (D1 to D2 in the original suit and D4 to D5 in the counter-claim) as guarantors would be jointly and severally liable towards the repayment of the said loan of the company;

The liability of the Defendants as guarantors is limited to only the amount of RM3,000,000.00 of the loan taken by the

Clause 5 allows the lenders to initiate action to claim the loan sum of RM5,000,000.00 and/or any balance unpaid by the Company and/or the payment of RM3,000,000.00 from the Defendants as guarantors and/or when the Directors of the company came to a decision that the company seized to continue operation and/or its business and/or when the business of the company is at loss.

On 16.5.2019, a resolution was passed by the Company notifying its inability to carry out with its business and/or a going concern to proceed with its operation.2 For this reason, the Company is incapable to repay the sum borrowed or advanced as loan to the Company. This bring into effect the undertaking to repay, given by the guarantors, jointly and severally.

The 1st Defendant however, did not contribute any sum of money in the apportionment agreed. This was the finding arrived at by the learned trial Judge in an earlier suit filed by the company D6 via Civil suit Number: 22NCVC-150-09/2014 against D1 and D2 (Defendants in the original suit).3 Thus, leaving the other Defendants D2, D4 and D5 the obligation to pay RM3,000,000.00. The issue is whether D1 who was subsequently terminated as Director on 14.8.2013 still owes the duty to repay, as guarantor. 2 See: Director’s Resolution in enclosure 20 at page 393 pdf. 3 See: Order dated 31.10.2017 in enclosure 45 at page 17 pdf.

Furthermore, all the Defendants contended that the resolution passed on 18.6.2013 in itself had declared that the guarantee arising from the said loan agreement is not enforceable against the Defendants. The reason being the parties who are the lenders in the said agreement had not fulfilled their obligations due to failure to furnish the sum agreed hence there is absence of consideration to the agreement.

In short, the Defendants’ case is that with the pronouncement in suit ‘150’ earlier that D1 had not contributed any sum towards the loan, renders the loan agreement fails for lack of consideration. The earlier pronouncement also casts some doubt on the reliance of the contents of the loan agreement.

As to D4 and D5, their view is that with the original suit filed by the Plaintiffs only named D1 and D2, the liability of D4 and D5 (if not all the Guarantors) in the counter-claim ought to be apportioned up to only ¼, making D4 and D5 only liable to pay the Plaintiffs a sum of RM750,000.00. Reliance is made to the resolution passed and to sections 43 and 45 of the Contracts Act. 4 Section 43 provides: When two or more persons make a joint promise, the promise ma, in the absence of an express agreement to the contrary, compel any one or more of the joint promisors to perform the whole of the promise. Each of two or more joint promisors may compel every other joint promisor to contribute equally with himself to the performance of the promise, unless a contrary intention appears from the contract. Section 45: Where two or more persons have made a joint promise, a release of one of such joint promisors by the promise does not discharge the other joint promisor or joint promisors; neither does it free the joint promisor so released from responsibility to the other joint promisor or joint promisors.

Clause 6 at page 3 of the said loan agreement stipulates that the liability of the Guarantors is to jointly and severally guarantee part of the repayment of the money only amounting to RM3,000,000-00. Clause 5 at page 4 of the loan agreement sets the undertaking by the guarantors for the repayment of the loan.

This Court views the undertaking, as good as the Guarantors being the principal debtors themselves. “R-1” states that the following directors namely D4 and D5 (in the counter-claim) with D1 and D2 (in the original suit) as Guarantors and liable for the repayment up to RM3,000,000-00 only. At the same time, it acknowledges that D1 although was named as a contributor to the loan sum in “R-1” but D1 together with D4, D5 and D2 did not contribute any capital.

The basis why the repayment was limited to only RM3,000,000-00 was because unlike as contained in “R-1” suggesting the total sum to be RM5,000,000-00, the total payment made by the lenders as basis to provide as loan to the company D6 is only RM3,000,000-

This can be seen as follows: NO. LENDER AMOUNT IN “R-1” LENDER

P1 P1

P2 P2

P3 RM1,250,000.00 P3

D1 RM1,000,000.00 D1 None TOTAL RM5,000,000.00 TOTAL

However, as the original suit by the Plaintiffs only named D1 and D2, the obligation to jointly and severally be liable on D1 and D2 remains. The duty imposed is to shoulder the maximum amount guaranteed in “R-1” being RM3,000,000.00 cumulatively, not respectively as the clause states “to jointly and severally guarantee part of the repayment of the money only amounting to RM3,000,000.00”.

Furthermore, there is no clause in the said loan agreement to compel the lenders to sue the borrower first before the lenders can claim against the guarantors. The agreement to the contrary, gives the lenders discretion to demand for immediate payment of the whole sum of the money due and payable from the Borrower in the event the Borrower fails or refuses and/or neglect to pay (see: clause 2 at page 3 of the Loan Agreement in enclosure 20 at page 386 pdf).

In short, having opted to proceed against the Guarantors, the obligation to ‘jointly and severally pay’ on the part of the guarantors mean anyone with big pocket can settle the sum first then counter-claim it from the other guarantors or each guarantor may pay the actual sum as apportioned in “R-1” as reflected in the table in paragraph 15 above. More on this in the later part of the judgment.

This is the setting of the current suit where the Plaintiffs had only named D1 and D2 in the claim, seeking for the actual amount paid being in total RM3,000,000.00, paid jointly and severally by D1 and D2. D1 and D2 in return, had named the other Guarantors in the counter-claim.

The Plaintiffs did not propose to unjustly enrich themselves but had pleaded in their Statement of Claim as alternative, payment be made as per the actual sum paid in the table extracted in paragraph 15 above and not more, payable jointly or severally. The Defendant SD1 in his oral testimonies in this suit and suit ‘150’ had testified that the Plaintiffs (in the original suit) had made payment of monies as stated in “R-1”.

With the financial losses suffered by the company as admitted by SD1 and a valid resolution dated 16.5.2019 passed, disclosing the company’s incapability to repay all outstanding loans/advances by the Directors with business ceased, the cause of action by the lenders against the borrower and the guarantors arose in May 2019 and not earlier in year 2014 in suit ‘150’.

Hence, the contention by the Defendants that the Plaintiffs are barred from bringing this matter as it has been adjudged in suit ‘150’ is not correct at all. As can be seen, suit ‘150’ was a suit brought by the company borrower against D1 and D2 as Directors for breach of their fiduciary duty. This can be seen from the grounds of judgment of the learned trial Judge.

To quote partially the said judgment it is stated by the learned trial Judge that the claim for the repayment of purchase of machineries done without the Plaintiff’s consent/approval. This followed from D1’s termination as Director on 14.8.2013 and the resignation of D2 as Director of Plaintiff on 27.9.2013. The present suit before this Court centers on the loan agreement and the undertaking by the guarantors towards repayment executed on 18.6.2013.

As can be seen, the undertaking of the guarantors was given before their capacity as Director@ guarantors had ended. As to the meaning of ‘payable jointly and severally’, it has its recognized and accepted meaning. Even before the relevant authorities explaining the above are cited here, it is important to adumbrate here, that this present case is a claim for a liquidated sum in which the amount is ascertainable.

This Court views it necessary to discuss the meaning of this undertaking as it will explain why all Guarantors are equally liable to pay even if not named in the main suit by the Plaintiff but instead named as Defendants in the counter-claim suit by D1 and D2. In Sateras Resources (Malaysia) Bhd v. Pengurusan Danaharta Nasional Berhad [2008] CLJU 717, the Court of Appeal in discussing this term, cited 2 other cases of the High Court discussing the said term and obligation.

This is what the Court of Appeal said: “There remains only one issue which is a question of law: whether the 1st respondent having already instituted a petition for winding up against Cosmopac is barred from instituting a similar one against the appellant. This submission of the appellant is postulated on the decision made in Asia Commercial Finance (M) Bhd v. Island Rentals Sdn Bhd & Ors [2002] 2 CLJ 741. This decision in turn appeared to have evolved solely on the English decision of Parr v. Snell & Ors [1923] 1 KBD 1. Also cited by counsel for appellant were Hammond v. Schofield [1891] 1 QB 453 and Hoare v. Niblett [1891] 1 QB 781. The proposition stated in Asia Commercial Finance (supra) extracted from Parr v. Snell (supra) is as follows: 'Parr v. Snell & Ors [1923] 1 KBD 1 was an action against three joint contractors, for damages for breach of an agreement. The plaintiff obtained an interlocutory judgment for damages, to be assessed, against two of the defendants in default of defence. He then procured an assessment of damages and signed final judgment for the assessed amount against the two defendants who were in default. The court held that apart from any rules of court or any statutory provisions to the contrary, judgment against one joint contractor or tortfeasor is a bar to proceeding against the others. Putting it in another way what it means is that where there are joint tortfeasors and if final judgment is signed against one, the other is discharged. Scrutton LJ went on to say at p. 9 "that the contract is merged in the judgment, and therefore the cause of action on the contract is gone". The issue is to determine whether it was a joint contract. In this case since the 2nd to the 4th defendants signed the same guarantee there can be no dispute that it was a joint contract. In fact the plaintiff relies on such a plea when it pleaded that the defendants "jointly and severally" agreed to repay on demand. The rationale is this each joint contractor has a right to have his co-contractors joined as parties so that all parties can be before the court. I agree with the view expressed in Parr v. Snell (supra). Since final judgment has been entered against the 3rd and 4th defendants the 2nd defendant's contract has merged in the judgment entered against the 3rd and 4th defendants and there is now therefore no cause of action against the 2nd defendant remaining. I therefore struck out the suit against the 2nd defendant with costs'.

The Court of Appeal went further by making certain distinctions pertaining to the sort of claim in Parr v Snell and the above case of Asia Commercial Finance by citing another High Court case of Alliance Bank Malaysia Bhd below: “Despite this reliance on the above proposition we are of the view that there is still a need to revisit Parr v. Snell as was done in Alliance Bank Malaysia Bhd v. Mukhriz Mahathir & Anor [2006] 2 CLJ 723. In this latter case Ramly Ali J re-examined Parr v. Snell and noted the following: 'It must be noted that the Court of Appeal in that case had made a finding of facts that the relevant contract entered into by the plaintiff and all the three defendants was a joint contract, after taking into consideration the nature of the undertaking given by all of them to the plaintiff. The undertaking in that case is not for payment of liquidated amount, as in the present case. The undertaking in that case is to find a purchaser to purchase the plaintiff's shares upon his relinquishing his post as secretary of company. There is no indication or evidence at all to show that the undertaking was given on a "joint and several" basis, as in our present action. Scrutton LJ provided exception to the rule ie, "unless there is some rule or statute which prevents the operation of the old rule". One of the rules cited by the learned judge is "Order XIII - relating to judgment signed in default of appearance", where it was held: "In Order XIII and in Order XXVII if it is a case of a debt or liquidated demand, judgment may be signed against one for default of appearance of default of pleading, and yet the Plaintiff may go on and sign judgment against the others". It is also to be noted that the so a called "old rule" (as described by Scrutton LJ) still survives (in that case) as to "that class of case" ie, for action for damages or unliquidated demand where the plaintiff is not allowed to sign final judgment against some of the defendants and yet go on against the others or other. Therefore, in that case (Parr v. Snell) the Court of Appeal had rightly held that since the plaintiff's claim was not a liquidated claim (but for damages or unliquidated claim) the plaintiff cannot proceed against the remaining 3rd defendant after final judgment had been entered against the other 2 defendants. In that case, the Court of Appeal was satisfied that there was no 'rule of statute' which present the operation of the 'old rule'. From the above principles, the court understands that the said "old rule" is applicable only in cases where the contract is not at "joint contract". It is not applicable in cases where the contract is based on "joint and several" liability”.

The Court of Appeal emphasized the important dicta in Parr v. Snell on the application of the principles that centers on a joint contract when action being brought against all but one, as follows: “Apart from the point that Ramly Ali J had distinguished, Parr v. Snell on facts, it would still be useful to advert to the precise statement of Scrutton LJ to appreciate his finding as follows: 'We are dealing with a settled system of law and are not entitled to mould or disregard it, because, as I think in this case, the rule is a technical one which does not in any way affect the merits of the particular case. The technical rule of law which we have to apply is this: that where there are joint contractors if judgment is signed against one the other is discharged. I have recently had occasion to deal with that rule in Moore v. Flanagan (1), where I said, and I think rightly, that the basis of the rule is, as stated by Vaughan Williams J. in Hammond v. Schofield (2): "The basis of this defence is not the election or unconscious election, if there can be such a thing, of the plaintiff, but the right of the co-contractor when sued in a second action on the same contract to insist, though not a party to the first action, on the rule that there shall not be more than one judgment on one entire contract." I then went on to say (3): "Another technical way of putting it is to say that the contract is merged in the judgment, and therefore the cause of action on the contract is gone. A more substantial way of putting the matter is that each joint contractor has a right to have his co-contractors joined as parties so as to have them all before the Court." '. The facts in Asia Commercial Finance (M) Bhd (supra) also reveal that the plaintiff in that case obtained final judgment against defendants number 1, 3 and subsequently defendant number 4; the plaintiff having granted a loan to the 1st defendant with the 2nd, 3rd and 4th defendant being guarantees. The 2nd defendant made an application for an order that the suit against him be dismissed or struck out with costs. It is pertinent to note that Hammond v. Schofield (supra) and Hoare v. Niblett (supra) were also premised on one action being taken against a joint contractor and after having obtained judgment against one a second subsequent action was instituted against the second. It is evident that the facts in those cases are clearly distinguishable from the facts in the present appeal in that in all those three cases one action followed another. Parr v. Snell should not be glossed over resulting in a "technical rule" being applied indiscriminately and Asia Commercial Finance (M) Bhd should not be expanded beyond the facts of the case…”

Reading those detailed elaboration by the Court of Appeal in Sateras Resources (Malaysia) Bhd, this Court concludes that the facts in this present case is one based on a joint contract with clear consent by all the guarantors to be “jointly and severally” liable. The fact that the Plaintiffs had named D1 and D2 only in the main suit does not abrogate the other guarantors of their respective liabilities towards repayment.

D1 and D2 maintains the right to file a counter-claim against D4 and D5 as all had agreed to the give the undertaking. For these reasons, the counter-claim against D4 and D5 was allowed but subject to the application of the provisions in the Contract’s Act as reflected in the said paragraphs earlier. Dated : 18 September 2025 (Nurulhuda Nur’Aini Binti Mohamad Nor) Hakim Mahkamah Tinggi Malaya Johor Bahru Johor Darul Ta’zim Peguamcara Plaintif-Plaintif : Kenny Lo Jia Ye Tetuan K S Pang & Co. Unit 8.02 Tingkat 8 Menara TJB No. 9 Jalan Syed Mohd Mufti 80000 Johor Bahru Peguamcara Defendan- : Syahmi Nawawi Defendan Di Tindakan Asal Tetuan Azwad Ihsan & Co. No. 05-01 Jalan Padi Emas 1/5 UDA Business Centre Bandar Baru Uda 81200 Johor Bahru Johor Peguamcara Bagi Pihak : Mr. C H Hong D4, D5, D6 Tetuan Halim Hong & Quek A-2-23 & A-3-23 Block A Pusat Komersial Bayu Tasik Persiaran Southkey 1 Kota Southkey 80150 Johor Bahru