Lkw Industrial Sdn. Bhd. v Ambank (M) Berhad (WA-12ANCC-23-03/2024)

LKW INDUSTRIAL SDN. BHD. [NO. PENDAFTARAN: 200701034962 (792991-M)]

LEE KOK WAI

MOEY MEI YOKE … PERAYU - (NO. K/P: 760308-07-5116) PERAYU DAN AMBANK (M) BERHAD [NO. PENDAFTARAN: 196901000166 (8515-D)] … RESPONDEN (DALAM MAHKAMAH SESYEN DI KUALA LUMPUR DI DALAM WILAYAH PERSEKUTUAN, MALAYSIA GUAMAN SIVIL NO.: WA-B52NCC-2168-09/2023 ANTARA AMBANK (M) BERHAD [NO. PENDAFTARAN: 196901000166 (8515-D)] … PLAINTIF

LKW INDUSTRIAL SDN. BHD. [NO. PENDAFTARAN: 200701034962 (792991-M)]

LEE KOK WAI

MOEY MEI YOKE … DEFENDAN - (NO. K/P: 760308-07-5116) DEFENDAN Page 2 of 10 JUDGMENT [1] This was an appeal by the Appellants against the decision of the Sessions Court Judge dated 20.2.2024 allowing the Respondent’s application for summary judgment under Order 14 of the Rules of Court 2012 (“ROC”) (“this Appeal”). [2] After hearing submissions from both parties, I dismissed this Appeal with costs. These are my grounds. A] SALIENT BACKGROUND FACTS [3] Via a Letter of Offer dated 12.2.2019, the Respondent offered the 1st Appellant a Term Loan facility under “SMEBiz Solution Portfolio Guarantee Scheme (PGS)” limited to RM500,000.00 for working capital purposes (“Facility”). [4] The salient terms of the Facility included: i) Repayment in 84 monthly instalments of RM8,814.00; ii) Interest rate of 5.00% per annum above the Bank’s Base Lending Rate; iii) Default interest at 1.0% per annum above prescribed rate; iv) The facility was guaranteed by Credit Guarantee Corporation (“CGC Guarantee”) for 70% of the total Facility amount (RM350,000.00). [5] Through a Guarantee and Indemnity Agreement dated 28.2.2019, the 2nd and 3rd Appellants agreed to guarantee the 1st Appellant’s obligations jointly and severally (“the guarantee”). [6] Following default in payments, the Respondent issued a Letter of Demand dated 7.8.2023 claiming arrears of RM15,628.16 as of 5.8.2023. Page 3 of 10 [7] Upon continued default, the Respondent terminated the Facility and demanded the entire outstanding sum of RM508,244.34 as of 11.9.2023. B] ISSUES FOR DETERMINATION [8] The main issues for determination in this Appeal are: i) Whether there was failure to plead disbursement of the Facility. ii) Whether the original Facility terms were superseded by the Repayment Arrangement. iii) Whether the Condition Precedent regarding the CGC Guarantee under the Facility has been fulfilled and the effect of the CGC Guarantee on the Appellants’ liability. iv) Whether proper demands were made against the guarantors, the 2nd and 3rd Appellants. v) Whether the sum claimed by the Plaintiff is correct and took into account the instalment payments made by the 1st Appellant. C] ANALYSIS AND FINDINGS Issue 1: Whether Disbursement of Facility Pleaded/Proven [9] The Appellants contend that the Respondent failed to plead the disbursement of the Facility amount. [10] However, an examination of the Statement of Claim reveals that all the material facts regarding the Facility and its subsequent default have been pleaded. [11] The Respondent has also demonstrated, inter alia, through the documents in the Appeal Record that: Page 4 of 10 i) The Facility amount of RM500,000.00 was disbursed on 28.2.2019 (Record of Appeal, page 92). ii) The Appellants never denied receiving the Facility amount. iii) No documentary evidence was produced to challenge the disbursement. Issue 2: Whether the original Facility terms Superseded by the Repayment Arrangement [12] There was a revision of the instalment payments under the Facility vide letter dated 25.11.2022 (“Repayment Arrangement”). This changed the original payment schedule in the 12.2.2019 Letter of Offer, which required payment of RM8,814.00 in monthly instalments for 84 months. [13] A significant contention by the Appellants is that the Repayment Arrangement superseded the original Facility terms, particularly regarding termination rights and payment obligations. The Appellants argue that under the Repayment Arrangement, the Respondent was not entitled to terminate the Facility but only to retain payments made. [14] The Repayment Arrangement modified the payment schedule as follows: i) RM5,200.00 per month from 5.1.2023 until 5.12.2023; ii) RM6,700.00 per month from 5.1.2024 until 5.12.2024; iii) RM8,400.00 per month for 78 months from 5.1.2025 until full settlement. [15] However, Clause 2 (under Condition Precedent) of the Repayment Arrangement explicitly preserves the original terms of the Facility: “Meanwhile save and except as varied by this Supplemental Letter of Offer, all other existing terms and conditions contained in the existing Letter(s) of Offer and the Security Documents/Agreement(s) executed between the Bank and Borrower and/or agreement(s) which the Borrower is bound ("Security Documents") shall remain unchanged and enforceable. The terms and Page 5 of 10 conditions herein shall be supplemental to the Security Documents which shall be read and construed as one instrument.” (own emphasis added) [16] While Clause 1(iii) of the Repayment Arrangement states that it “shall supersede all prior correspondence in respect of the payment holiday/moratorium”, this specifically relates to payment holiday arrangements only, not the entire Facility terms. The Appellants’ interpretation stretches the clause beyond its clear and unambiguous meaning. [17] The Respondent issued a Letter of Demand dated 7.8.2023 claiming arrears of RM15,628.16 as of 5.8.2023. While the Appellants contend they made instalment payments under the Repayment Arrangement, they have not provided evidence of such payments. The burden lies on the Appellants to prove these alleged payments. Mere assertions without supporting evidence are insufficient to raise a triable issue. [18] Furthermore, the Appellants’ argument that the termination was contrary to the Repayment Arrangement because it only allowed retention of payments is misconceived. There is no provision/clause under the Facility read together with the Repayment Arrangement that restricts or removes the Respondent’s other rights under the Facility, including the right to terminate upon default. [19] It is also clear that the Repayment Arrangement is part of the Facility. Issue 3: Whether CGC Guarantee Condition Precedent has been fulfilled and the effect of the CGC Guarantee [20] The Appellants argue that: i) The Condition Precedent to Disbursements under Clause 6.1 of the Facility has not been fulfilled, in that the Respondent must have “Receipt of the Letter of Guarantee in terms acceptable to the Bank from Credit Guarantee Corporation Malaysia Berhad (“CGC”)”. ii) The Appellants’ liability is subject to the CGC Guarantee. Page 6 of 10 [21] Firstly, it is the Respondent who imposed the CGC Guarantee condition precedent requirement that Clause 6.1 be fulfilled prior to the disbursement of the Facility. Consequently, they have the discretion to waive this requirement if they so choose. [22] Secondly, the sum under the Facility has been disbursed and that has been proven. [23] Thirdly, whether or not this condition precedent is fulfilled, or the “CGC approval” was obtained as argued by the Appellant, does not and would not impact the Facility. The Appellants are bound by the terms of the Facility and the guarantee, and cannot invalidate these terms merely by arguing that the Clause 6.1 condition precedent has not been fulfilled. [24] If this argument or defence is allowed, it would mean that the Appellants, having already received the benefits of the Facility, could now claim they are not obligated to repay it or adhere to its terms. This would be fundamentally unjust and contrary to the principles of fairness. [25] Fourthly, the CGC Guarantee does not affect the Respondent’s right to claim against the Appellants as provided under, inter alia, Clauses 10.4 and 16.2 of the Facility. [26] In Malayan Banking Bhd v. Four Winds Maritime Sdn Bhd & Ors [2012] 1 LNS 648, the Court held: "[3] Unless otherwise agreed by the bank principal borrower, the guarantor and the CGC corporation, the existence of CGC guarantee does not mean that the primary liability in the event of default by borrowers and/or guarantors rests with the CGC corporation to indemnify the bank of the agreed sum. It is trite that the bank under its facility term has absolute right to recover the facilities sum from the borrower as well as the guarantors before seeking solace on the additional guarantee from CGC corporation, unless the terms and condition of the facility agreement with the guarantee and the CGC guarantee expressly says otherwise. Sympathetic arguments raised by the defendants in the instant case such as the CGC corporation must pay for the default of borrowers because they have received a premium for the guarantee will not subscribe to commercial practice and/or realities and is not supported by case laws or jurisprudence relating to CGC guarantees as well as the duty and obligation on the part of the borrowers and Page 7 of 10 guarantors to pay the agreed sum on demand pursuant to facility terms. Equitable concepts must not be dragged into to assist defaulting borrowers or guarantors and the court must not be trapped into by such sympathetic arguments as can be gleaned from the Federal Court decision in the case of Low Lee Lian v. Ban Hin Lee Bank Ltd [1997] 1 MLJ 77.” (own emphasis added) [27] I would also note that the Appellants are approbating and reprobating on this issue (Cheah Theam Kheng v. City Centre Sdn Bhd (In Liquidation) & Other Appeals [2012] 2 CLJ 16; [2012] 1 MLJ 761). On one hand, they argue that the condition precedent regarding the CGC Guarantee was not fulfilled, yet on the other hand, they assert that the Respondent cannot claim against them or hold them liable because of the CGC Guarantee. Such an inconsistent argument puts the Appellants’ credibility in question. Issue 4: Demands Against the Guarantors [28] The proper demands were made against all Appellants through the Letter of Demand dated 7.8.2023. [29] In this regard, the Respondent had exhibited the Certificate of Posting in respect of the said Letter of Demand which was sent to all the Appellants including the guarantors, the 2nd and 3rd Appellants (Record of Appeal, pages 87-89). Issue 5: Whether Sum Claimed is Correct and Took into Account Instalment Payments [30] The Appellants argue that the sum claimed by the Respondent is incorrect and that it does not take into account instalment payments made by the 1st Appellant. [31] However, the Statement of Account for the period 8.2.2019 to 4.11.2023 issued by the Respondent clearly shows all payments were properly accounted for. [32] Further, the Certificate of Indebtedness is binding on the Appellants and is conclusive proof of the outstanding amounts due under the Facility (Cempaka Finance Bhd v. Ho Lai Ying [2006] Page 8 of 10 3 CLJ 544). The Appellants have also not disproved the amounts claimed by the Plaintiff or shown that there is a manifest error in the Certificate of Indebtedness. D] CONCLUSION [33] Having considered all the evidence and submissions from both parties, I find that: i) The Respondent has established a prima facie case for summary judgment. ii) The Appellants have failed to raise any genuine triable issues. iii) The defences raised by the Appellants are not supported by evidence and are mere bare denials. [34] Therefore, the Respondent has fulfilled the requirements of an Order 14 ROC application and the Appellants have failed to satisfy this Court as to why summary judgment should not be given against them or any triable issue (Bank Negara Malaysia v. Mohd Ismail & Ors [1992] 1 MLJ 400 and National Company for Foreign Trade v. Kayu Raya Sdn Bhd [1984] 2 MLJ 300). [35] For the reasons stated above, I dismissed this Appeal with costs in favour of the Respondent and upheld the Summary Judgment granted by the Sessions Court. Dated this 15th day of January, 2025 -SGD- (WAN MUHAMMAD AMIN BIN WAN YAHYA) Judge High Court of Malaya, Kuala Lumpur (Commercial Division (NCC 3)) Page 9 of 10 COUNSEL FOR THE APPELLANTS/DEFENDANTS Siti Nurazwani binti Zulkeflee (Nadia binti Ahmad Suhaidin together with her) Messrs Shahabudin & Rozima B-6-5, Northpoint Offices, Mid Valley City, No. 1, Medan Syed Putra Utara, 59200 Kuala Lumpur Tel: 03-22846182 Emel: shalegal@shahabudinrozima.com COUNSEL FOR THE RESPONDENT/PLAINTIFF Nur Syahirah binti Mohamad Taib Messrs B H Gan, Nor & Kim No. 1702, Level 17, Wisma Lim Foo Yong, 86, Jalan Raja Chulan 50200 Kuala Lumpur Tel: 03-21429393 Emel: enquiry@gannor.com.my LEGISLATION / RULES CITED Rules of Court 2012 ▪ Order 14

Bank Negara Malaysia v. Mohd Ismail & Ors [1992] 1 MLJ 400

Cheah Theam Kheng v. City Centre Sdn Bhd (In Liquidation) & Other

Cempaka Finance Bhd v. Ho Lai Ying [2006] 3 CLJ 544

Malayan Banking Bhd v. Four Winds Maritime Sdn Bhd & Ors [2012]

National Company for Foreign Trade v. Kayu Raya Sdn Bhd [1984] 2