1. ) Dairyar A/L Khatan Muthu v Standard Chartered Saadiq Berhad (WA-22NCvC-171-04/2023)

ANTARA DAIRYAR A/L KHATAN MUTHU [NRIC NO: 570214-07-5759]

DEWANA A/P TARA SINGH [NRIC NO: 630125-07-5214]

KUMARAN A/L DAIRYAR [NRIC NO: 821203-07-5861] …PLAINTIF-PLAINTIF DAN STANDARD CHARTERED SAADIQ BERHAD [No. Syarikat: 823437-K …DEFENDAN GROUNDS OF JUDGMENT Introduction [1] In this case there is a rather lengthy chronology of events, and at first blush appeared to be complicated. However, the undisputed contemporaneous documents – including court orders issued in earlier proceedings involving the same parties – show that the Plaintiffs’ claims are obviously unsustainable and, in any event, obviously barred by the Limitation Act 1953. Thus, this Court is duty-bound to allow the Defendant’s striking-out application under Order 18 rule 19 Rules of Court 2012. [2] The reasons for my concluding that the Plaintiffs’ action is obviously unsustainable are set out below. 20/06/2025 16:00:09 WA-22NCvC-171-04/2023 Kand. 46 Background Facts [3] The Plaintiffs are members of the same family. The 3rd Plaintiff is the son of the 1st Plaintiff and 2nd Plaintiff. [4] The Defendant is a commercial bank licensed to offer, inter alia, Islamic banking services. [5] The Plaintiffs had purchased a property in Penang which was held under GRN 84255 Lot 838, Seksyen 2, Bandar Batu Ferringhi, Daerah Timur Laut, Pulau Pinang, bearing a postal address No. 19, Lilitan Sungai Emas 11000 Batu Ferringhi, Pulau Pinang (“the Property”). The Property was charged to CIMB Bank. [6] In early 2012, the Plaintiffs approached the Defendant to refinance their purchase of the Property. It culminated in an Islamic financing agreement between the Plaintiffs and the Defendant Bank. The Defendant issued its first letter of offer to the Plaintiffs on 28th May 2012, followed by other letters. A Facility Agreement dated 26th September 2012 was the final document which concluded the Islamic financing agreement between them (collectively referred to as “the said financing agreement”). I have stated those dates because they are relevant to support my findings – which shall be explained in detail hereinbelow. [7] As the said financing agreement was by way of Islamic banking, it was structured as the Defendant bank holding 80% share of the Property while 20% share was held by the Plaintiffs. Valuing the Property at RM1,000,000, the Defendant bank was to pay out RM800,000 for the 80% share. [8] The essence of the said financing agreement was that the Plaintiffs shall gradually acquire the Defendant bank’s initial ownership interest, rights and benefits in the Property by making monthly instalment payments to the Defendant bank for a period of 420 months, and with the Defendant bank leasing its share in the Property to the Plaintiffs on the basis of “Ijarah” (an Islamic banking term). It was clearly provided that a breach of the obligation to make monthly instalment payments to the Defendant bank shall constitutes an “Event of Default” rendering any sum payable under the said financing agreement to become immediately due and payable, and all the security in relation to the said financing Agreement shall become immediately enforceable. [9] As at October 2012, the Plaintiffs owed CIMB Bank about RM430,000. In performing its part of the said financing agreement, on 16th October 2012 the Defendant bank paid RM432,754.30 (out of RM800,000) to CIMB Bank as the redemption sum to redeem the Property from CIMB Bank. It was undisputed that the Defendant bank had disbursed the balance from the RM800,000 to the Plaintiffs. [10] CIMB Bank duly discharged the title of the Property and handed the original title of the Property to the Defendant bank’s solicitors, so that it could be charged to the Defendant bank. [11] It transpired that the charge from the Plaintiffs to the Defendant bank could not be registered due to a private caveat entered by one Mr.Horst Albert Lenser (“Horst”) whose solicitors wrote to the Defendant bank on 3rd December 2012 enclosing a sealed order dated 3rd December 2012. That was the beginning of trouble for the Defendant bank because unbeknown to the Defendant bank, the 1st Plaintiff and 2nd Plaintiff were sued by Horst in a civil suit in the High Court at Penang, in Civil Suit No.22- 544-2009 (“Suit No.544”). The High Court at Penang had in fact granted judgment on 5th June 2012 in favour of Horst (“the Horst Order”) after a full trial. The Horst Order ordered, inter alia, that the Property be subjected to a lien in favour of Horst. I shall delve into further details of the said judgment in my analysis below. [12] The 1st and 2nd Plaintiffs’ appeal against the Horst Order was dismissed by the Court of Appeal. Further, they defaulted in their obligation under the said financing agreement with the Defendant bank. The Defendant bank issued a notice of termination on 17th April 2015 and demanded outstanding payment of RM845,938.98 from the Plaintiffs. [13] As the Defendant bank could not register its interest on the title of the Property and the Plaintiffs had failed to pay up, the Defendant commenced two civil suits. This was also due to the fact that Horst had commenced execution proceedings, as the Plaintiffs’ judgment creditor, to auction the Property. [14] The first suit was filed by the Defendant bank at the High Court against Horst and the Plaintiffs. It was registered as Civil Suit No. 22NCvC-52-04/2015 (“Suit No.52”) for the court to rule on the Defendant bank’s competing interest with Horst. [15] The second suit was filed by the Defendant bank at the Sessions Court against the Plaintiffs and registered as Civil Suit No. B52M-20- 06/2015 (“Suit No.20”), to recover the Defendant’s money from the Plaintiffs. [16] In Suit No.52, Horst entered appearance and defended vigorously The Plaintiffs (defendants therein) did enter appearance on 19th June 2015 but appeared to have ignored the proceedings thereafter. The Defendant bank and Horst decided to enter into a Consent Order on 13th November 2015 (‘the said Consent Order”), whereby Horst would pay the Defendant bank RM150,000 and the Defendant bank would hand-over to Horst the original title of the Property – which, as mentioned above, was redeemed from CIMB Bank by using part of the RM800,000 disbursed by the Defendant bank. Both Horst and the Defendant bank performed their respective part of the said Consent Order. [17] Horst executed on the Horst Order and the Property was sold by public auction for RM1,000,000 to the successful bidder. [18] In Suit No.20, the Plaintiffs (as defendants therein) had failed to enter appearance. The Defendant bank entered default judgment against them to recover the sum of RM845,938.98 owing as at 4th June 2015, late payment charges, etcetera. The Plaintiffs’ application to set aside the default judgment was unsuccessful. The Plaintiffs’ Cause of Action [19] The Plaintiffs’ cause of action against the Defendant bank is premised on their allegation that the Defendant bank had caused them to suffer losses by entering into the said Consent Order with Horst in Suit No.52 on 13th November 2015. [20] The Plaintiffs’ prayers in their Statement of Claim are as follows: [21] The Plaintiffs plead that they were not aware of the said Consent Order and are therefore entitled to seek the declarations as well as payment of compensation from the Defendant bank – as prayed for in para 16.4 and 16.6 of their Statement of Claim. The Defendant’s Striking-out Application [22] The Defendant bank cited several alternative grounds for its application to strike out the Plaintiffs’ claim, which are summarised as follows:

that the claim is time-barred under section 6(1)(a) of Limitation Act 1953;

(ii) res judicata and/or issue estoppel is applicable;

(iii) the facts show that the Plaintiffs’ action is obviously unsustainable. Analysis of the Facts and Law [23] It is trite that the power to strike out under Order 18 r.19 shall be exercise only when a pleading is “obviously unsustainable”. In a case such as this – with a history spanning some 11 years – it is useful to sieve through the chronology of events to pick up the undisputed facts first. [24] First, the primary event of significant consequence was the Horst Order – which the Plaintiffs concealed from the Defendant bank in June

Even though a letter of offer had been issued by the Defendant bank in May 2012, the Facility Agreement was not finalised yet when the Horst Order was issued against the Plaintiffs on 5th June 2012. [25] A sealed copy of the Horst Order is exhibited in the Defendant’s affidavit. It shows that it was issued by the High Court in a civil suit filed against the 1st and 2nd Plaintiffs (who were the defendants therein) after a full trial. It also shows that those two defendants were duly represented by counsel (one Mr.Gurunam Singh). A screenshot of the relevant part of the Horst Order is shown below: [26] It is pertinent to mention that the Horst Order is final and binding on the 1st and 2nd Plaintiffs herein because it was upheld by the Court of Appeal. The total sum payable by them (as defendants in Suit No.544) to Horst (total sum from para (a), (b) and (c) of the Horst Order) was more than RM1,500,000 as at June 2012. [27] Para (d) to (g) of the Horst Order granted Horst a lien over the Property, and further ordered them to redeem the title of the Property from Bumiputra-Commerce Bank Malaysia Bhd (now known as CIMB Bank). [28] Para (g) is in effect an injunction as it prohibits the defendants (the Plaintiffs herein) from disposing of the Property unless they have complied with para (a) to (c) thereof. [29] I have no doubt that had the Defendant bank known about the Horst Order earlier, it would not have entered into the said financing agreement with the Plaintiffs, and/or disbursed the sum of RM800,000 to them – including to pay CIMB Bank RM432,754.30 to redeem the Property for the Plaintiffs. [30] I find that the chronology of events proves that the Plaintiffs’ act of concealing the Horst Order from the Defendant bank and subsequent default of the said financing agreement left the Defendant bank with no alternative but to file Suit No.52 and Suit No.20 respectively in year 2015 to protect its interests. [31] The Plaintiffs, as co-defendants with Horst in Suit No.52, should have paid Horst pursuant to the Horst Order to settle the matter in year

This was clear as daylight because their appeal against the Horst Order had been dismissed. Their failure to pay Horst led to him enforcing the Horst Order by applying to auction the Property. The chronology of events also shows that the Defendant bank did attempt to salvage the Property which should have been charged to it as security under the said financing agreement. However, its application to intervene was dismissed by the court. [32] As mentioned in para [18] above, in Suit No.20 the Plaintiffs (as defendants therein) had failed to enter appearance, and the Defendant bank had entered default judgment against them. The Plaintiffs’ application to set aside the default judgment was unsuccessful. Thus, another indisputable fact is that the Plaintiffs owed the Defendant bank a judgment sum of more than RM845,938.98 as at 4th June 2015. [33] To recapitulate, the result of the said Consent Order was Horst paying the Defendant bank a sum of RM150,000 and the Defendant bank handing over to Horst the original title of the Property – which was redeemed from CIMB Bank in October 2012 by using part of the RM800,000 disbursed by the Defendant bank pursuant to the Islamic financing agreement. [34] As pointed in para [26] above, the Horst Order is final and binding on the 1st and 2nd Plaintiffs herein because it was upheld by the Court of Appeal, and the total payable by them to Horst (total sum from para (a),

and (c) of the Horst Order) was more than RM1,500,000 as at June

Hence, the auction of the Property for RM1,000,000 had served to reduce their indebtedness to Horst. [35] It is my judgment that there was no loss caused to the Plaintiffs because the Property was sold by way of public auction at its reserve price of RM1,000,000. It was not a case of a surreptitious sale by private contract. In any event, the Defendant bank was not involved in the auction. It had no choice – in the light of the Horst Order which was upheld by the Court of Appeal – but to hand over the title of the Property to Horst. Further, the RM150,000 collected from Horst pursuant to the said Consent Order had served to reduce the judgment debt owed by the Plaintiffs to the Defendant bank. [36] Bearing in mind that the Plaintiffs had used the Defendant bank’s money to redeem the Property from CIMB Bank, and had received the RM800,000 loan from the Defendant bank, it was really the Defendant bank that had suffered losses when the charge could not be registered. Instead of receiving a charge on a property worth RM1,000,000, the Defendant bank was reduced to holding a title that had earlier been ordered to be a lien for Horst. Fortunately, Horst agreed to cough out RM150,000 in exchange for the title – which reduced the Defendant’s bank losses. Since this was all due to the Plaintiffs concealing the Horst Order from the Defendant bank after it was issued in June 2012, it is abundantly clear that the Plaintiffs’ claim against the Defendant bank is obviously unsustainable on the facts of the case. Whether the Plaintiffs’ action is, in any event, barred by limitation [37] Since limitation was expressly pleaded by the Defendant, it is incumbent on me to consider this as an alternative ground to strike out the Plaintiffs’ claim. [38] The Plaintiffs’ pleas in their Statement of Claim are allegations of breach of contract and/or negligence – which would be time-barred if no action had been filed within 6 years from the date the cause of action arose. This can be seen at para 13 of their Statement of Claim where the Plaintiffs pleaded that the Defendant bank had “breached its contractual duties” or “breached its statutory duties” or “acted negligently” in preserving the Plaintiffs’ security by entering into the said Consent Order and/or obtaining a reasonable value for the Property. [39] The said Consent Order was recorded on 13th November 2015. Six years therefrom would be 13th November 2021. The Plaintiffs filed this action by way of a Writ of Summons only on 7th April 2023. Thus, any contractual or tortious cause of action pleaded by the Plaintiffs based on the said Consent Order is barred by s.6(1)(a) of the Limitation Act 1953 – which is specifically pleaded by the Defendant bank. [40] As the Plaintiffs herein were co-defendants with Horst in Suit No.52 in which the said Consent Order was recorded on 13th November 2015, it is quite unbelievable that they had not been bothered to keep abreast of the progress of the said civil suit – in which they had entered appearance. Further, they were being sued by the Defendant bank in year 2015 in Suit No.20 for breach of the said financing agreement. [41] The Defendant bank had actually also pointed out another fact that made it impossible for the Plaintiffs not to have known about the said Consent Order by November 2016; it was that the successful bidder of the Property had commenced an action in the Sessions Court against the Plaintiffs to seek vacant possession of the Property. How then could the Plaintiffs have not known that the Property had been sold by public auction? Thus, the Plaintiffs must have known of the said Consent Order, at the latest, by 30th November 2016. Their cause of action (if any) in both tort and contract became barred by the Limitation Act 1953, at the latest on 30th November 2022. [42] Curiously, learned counsel for the Plaintiffs submitted that the Plaintiffs came to know about the said Consent Order during the bankruptcy proceedings against them. It is indisputable that the Plaintiffs herein filed cause papers in the bankruptcy proceedings on 10th February 2020, alleging that the Defendant bank had received money from a third party. i.e. Horst, and had handed the title to a third party (Horst). Hence, if this Court is to ‘bend backward’ and give the Plaintiffs herein maximum benefit of doubt, the latest date for them having knowledge of the said Consent Order could be stretched to 10th February 2020. [43] Now, even if 10th February 2020 is to be taken as the “starting date”, the life span of their cause of action in tort could only have been extended by a period of 3 years from the “starting date” stipulated in S.6A(2) of the Limitation Act 1953, which states as follows: “An action to which this section applies shall not be brought after the expiration of three years from the starting date if the period of three years expires later than the period of limitation prescribed in subsection 6(1).” Counsel for the Plaintiffs: Chanravathane A/P S. Ponnudurai SOLICITORS FOR THE PLAINTIFFS: MESSRS S P CHANRA Advocates & Solicitors No. A-184, Jalan Mahkota, Taman Maluri, 55100 KUALA LUMPUR. Counsel for the Defendant: Lee Ji Kean SOLICITORS FOR THE DEFENDANT: MESSRS RAHMAT LIM & PARTNERS Advocates & Solicitors Suite 33.01, Level 33, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra, 59200 KUALA LUMPUR.

S.6(1)(a) of the Limitation Act 1953.

S.6A(4) of the Limitation Act 1953.

S.6A(2) of the Limitation Act 1953.

Order 18 rule 19 Rules of Court 2012.