1. Phantom Engineering Sdn. Bhd. v Permodalan Risda Berhad (BA-12BM-1-01/2017)

ZAFARY BIN ABD MANAP (NO. K/P: 690906-1-08-5129) … PERAYU-PERAYU DAN PERMODALAN RISDA BERHAD (NO. SYARIKAT: 323522-K) … RESPONDEN [Dalam Mahkamah Sesyen di Shah Alam Dalam Negeri Selangor Darul Ehsan Guaman No. BA-B52M-37-09/2016 Antara Permodalan Risda Berhad (No. Syarikat: 323522-K) … Plaintif

Phantom Engineering Sdn Bhd (No. Syarikat: 1014102-A)

Amiruddin Bin Abdul Malit No. K/P: 720304-07-5091)

Zafary Bin Abd Manap (No. K/P: 690906-1-08-5129) … Defendan-Defendan] 2 GROUND OF JUDGEMENT Introduction [1] This is an appeal by the Appellants (Defendants) against the decision of the Shah Alam Sessions Court in allowing the Plaintiff’s (Respondent) claim for summary judgment under Order 14 of Rules of Court 2012 (ROC 2012) for the sum of RM855,508.58. [2] In this judgment, the parties will be known as they were in the Sessions Court. At times, the Defendants will be addressed as ‘the 1st Defendant’, ‘the 2nd Defendant’ and ‘the 3rd Defendant’ and ‘the 1st and 2nd Defendants’. Brief Facts [3] The relevant facts pertaining to this appeal as elucidated by the Session Judge and based on the written submissions of both counsels, can be summarised as follows:

The Plaintiff is a company established under the Companies Act 1965 and having its registered address at No. 5-5D, Wisma Ampang Triangle 1, Jalan Memanda 7/1 Off Jalan Ampang, 68000 Ampang, Selangor Darul Ehsan.

The 1st Defendant is a company established under the Companies Act 1965 and having its registered address at No. 3 29A, Medan Istana 6, Bandar Ipoh Raya, 3000 Ipoh, Perak Darul Ridzuan and the business address at No. 55, 1st Floor Persiaran 2B, Fasa 2, 32040 Seri Manjung, Perak Darul Ridzuan and/or No. 42, Jalan PPMP 10, Pusat Perniagaan Manjung Point Sesyen 4, 32040 Seri Manjung, Perak Darul Ridzuan.

The 2nd Defendant is an individual as well as Director of 1st Defendant and having its address at TS 1511 Mukim 9, Jalan Tanah Liat, 14000 Bukit Mertajam, Pulau Pinang and/or at No.1, Jalan Indah 2, Taman Semanggol Indah, 34400 Simpang Empat, Perak Darul Ridzuan.

The 3rd Defendant is an individual having its address at No. 40, Lorong Pauh Jaya 4/4, Taman Pauh Jaya, 13700 Perai Pulau Pinang.

As requested by the 1st Defendant, the Plaintiff agreed to offer to the 1st Defendant, Islamic Factoring facilities amounting to RM673, 551.88 based on the Syariah principles of Bai’ Ad Dayn (Loan Facility). The Plaintiff and the 1st Defendant signed the Security Document where the terms and conditions of the Loan Facility are within the 1st Defendant’s knowledge for the purposes of:

Letter of Offer of Islamic Factoring Facilities and Services of 4.4.2014; 4

(ii) Islamic Factoring and Services Agreement of 16.6.2014 (pages 54 – 85 of Appeal Record).

The Plaintiff claimed that the Loan Facility was issued to the 1st Defendant by way of Cheque Payment Voucher No. PVOC08/13 dated 13.08.2014, Disbursement Payment Advise dated 13.08.2014 and the total amount Loan Facility received by the 1st Defendant (Exhibit ABO-4)(pages 87-88 of Appeal Record).

The Plaintiff claimed that based on the terms and conditions of the Security Document and the concept of Bai Ad Dayn for the Loan Facility, the 1st Defendant agreed to repay the Loan Facility amounting to RM843,963.05 based on the 1st Defendant’s invoice No. PESB-THHEFSB-INV-2014-004 dated 23.6.2014 with prove of Certificate of Payment dated 23.6.2014, which are all within the 1st Defendant’s knowledge.

The Plaintiff claimed that based on a Letter of Guarantee of 16.6.2014, the 2nd and 3rd Defendants agreed to sign the Letter of Guarantee where the 2nd and 3rd Defendants shall jointly and severally guarantee the payment of the Loan Facility and would pay upon demand by the Plaintiff all the money due and owing by the 1st Plaintiff as stated in the Letter of Guarantee subjected to the terms and conditions. 5

The Plaintiff claimed that the 1st Defendant breached the terms and conditions of the Security Document when it failed, refused or neglected to pay as agreed in the Security Document as at 31.8.2016 where the sum of RM 855,508.58 are still due and owing under the Loan Facility, to the Plaintiff on numerous times as demanded by the Plaintiff.

The Plaintiff claimed that the 2nd and 3rd Defendants as guarantors of the Loan Facility through the Letter of Guarantee also failed, refused, neglected and/or negligent to repay the amount that is still due and owing to the Plaintiff even upon demand numerous times by the Plaintiff.

The Plaintiff claimed that the Plaintiff never revoked the Letter of Guarantee and/or released 2nd and 3rd Defendants as guarantors for the Loan Facility and the Letter of Guarantee is still enforced.

The Plaintiff claimed that the 1st Defendant through its letters of 28.7.2015, 13.8.2015, 20.4.2016 and 29.6.2016 based on Plaintiff’s letters of 30.6.2015 and 27.6.2016 admitted that the debt due and owing under the Loan Facility and proposed a repayment settlement but the proposal could not be agreed upon between the Plaintiff and the 1st Defendant as explained in Plaintiff’s letter of 27.6.2016 and 1st Defendant’s letter of 29.6.2016. 6

The Plaintiff then directed its solicitors to issue the Letter of Demand and Termination dated 30.3.2016 to the 1st Defendant and to the 2nd and 3rd Defendants, demanding the balance of the debt due and owing totaling RM812,963.59 as of 29.2.2016 but to date the Defendants failed, refused neglected and/or negligent in making repayment as demanded by the Plaintiff and as a result, the Plaintiff terminated the Loan Facility.

The Plaintiff claimed that as of 31.8.2016, the amount due and owing by the Defendants is RM855,508.58 (pages 119-121 of Appeal Record).

Meanwhile, the Defendants contended that the repayment is not by way of instalment but for the 1st Defendant to transfer to the Plaintiff all its rights and interests in the invoices, issued by the 1st Defendant to its customers.

The Defendants claimed in its Affidavit in Reply that the Plaintiff’s Payment Voucher and the Disbursement Payment Advise were never seen by the Defendants.

The Defendants claimed that the total sum demanded is wrong and that the Plaintiff had used a wrong formula in calculating the Purchase Price and therefore witnesses are needed to testify. The Defendants claimed that the repayment is via assignment of rights and that the actual repayment by the 1st Defendant’s customers are directly to be made to the Plaintiff 7 which shall occur within 180 days from date of receipt of the invoices. It is claimed by the Defendants that when the repayment did not occur for whatever reasons, then only the 1st Defendant shall be responsible to repay the Loan Facility.

The 1st Defendant claimed that prior to the dispute, the 1st Defendant had submitted two other invoices to the Plaintiff and the Plaintiff had received the repayment from the 1st Defendant’s customer.

The Defendant claimed that based on one invoice of PESB-THHEFSB-INV-2014-004 valued at RM 843,963.05 only dated 23.6.2014 issued by 1st Defendant to THHE Fabricators Sdn Bhd, the 1st Defendant’s customer, the 1st Defendant had transferred the rights and interests on the invoice to the Plaintiff and on 13.8.2014, the Plaintiff had only paid RM673,551.88 to the 1st Defendant as the purchase price of the invoice (pages 87-88 of Appeal Record).

The Defendants claimed that the 1st Defendant’s customer did not make the payment and on 30.6.2015, the Plaintiff confirmed that the 1st Defendant’s customer did not make the payment and Plaintiff demanded for the payment directly.

The Defendants claimed that the retention sum held by the Plaintiff belongs to the Defendants and should be set aside in calculating the actual repayment Loan Facility. 8

The Defendant stated that on 20.9.2016, the Plaintiff filed the Writ and Statement of Claim against the Defendants and on 25.10.2016, the Defendants filed their Defence. The Plaintiff filed a summary judgment on 8.11.2016 against the Defendants.

The Summary Judgment was allowed on 23 December 2016 by the Session Judge. Defendant’s case [4] The learned counsel for the Defendants advanced several grounds for the appeal and submitted that the Defendants have triable issues that require the dispute be heard at a trial. The Defendants’ counsel first submitted that an application for discovery under Order 24 of Rules of Court 2012 was made for those documents that were not made available to the Defendants under the Loan Facility and argued that the Defendants did not know the existence of the documents produced by the Plaintiff. [5] The Defendants’ counsel averred that the Plaintiff never showed the Statement of such account which was not delivered to the Defendants but only after the action is taken against the Defendants (the documents at page 88 and page 119 of Appeal Record). [6] About the profit margin, it is submitted by the Defendants’ counsel, to which the Plaintiff admitted is the first time made known to 9 the Defendant, the profit margin could not be decided and should be heard at trial. [7] The second triable issue submitted is the status of retention sum that was not revealed, that there are three (3) retention sums. The Defendants’ counsel averred that based on the Islamic Factoring Agreement, there is no mention of retention sum that can be retained. The counsel referred to the case of Affin Bank Berhad v Zulkifli Abdullah [2006] 1 CLJ 438 at page 451.[This is not an O14 case] [8] The Defendants’ counsel submitted that there were two (2) invoices subjected to the retention sum and that proves to show that the Defendants have a triable issue that requires a trial and relied on the authority, the case of HSBC Bank Malaysia Berhad v Dato’ Seri Khir Mohamad Toyo & Anor [2017] 2 MLRH 265 where the High Court Judge referred to the Federal Court case of Voo Min En & Ors v Leong Chung Fatt [1982] 1 MLRA 548. [9] The Defendants’ counsel submitted that the amount RM 855,608.68 was taken without considering that the Plaintiff retained RM120,351.44 which is the retention sum and other retention sum held by the Plaintiff. [10] The Defendants’ counsel submitted the third triable issue, that is, the Session Judge decided that if there is a formula as claimed by the Defendants, then the Defendants should submit the formula or calculation which means that the Session Judge recognised that there is 10 such formula and this is a triable issue (paragraph 2, page 4 of Supplementary Appeal Record). [11] In relation to the Disbursement Payment Advice (page 88 of Appeal Record), it is submitted that the calculation is based on the terms of agreement and questioned on the formula submitted by the Plaintiff. It is submitted that the Disbursement Payment Advice said the profit rate is 10% per year and the retention sum of 15% from the purchase price is not right. The counsel for the Defendants pointed this Court to the letter of 4.4.2014 (page 40 of Appeal Record). [11] It is submitted that based on the agreement at Clause 6.9 (page 73 of Appeal Record) which provides, “ …in the absence of manifest error, be accepted by and binding against the Client as final and conclusive for all purposes whatsoever…” is allowing for the Plaintiff to double charge the Defendants. [12] It is submitted that the Session Judge was erred in law based on the case of Wee Tiang Teng v Ong Chung Hooi & Anor [1978] MLJ 54. [13] It is submitted that the debt amounted was RM812,000.00 and not RM843,9963.05 as in the invoice at page 90 of Appeal Record. 11 Plaintiff’s case [14] The learned counsel for the Plaintiff submitted firstly that on 14 September 2017, the Defendants did apply for a Stay before the Sessions Court and till date has not paid the Plaintiff. It is submitted that the Defendants did propose to settle but nothing has been done. [15] The Plaintiff’s counsel averred that it is undisputed that there are three (3) offers signed by the 1st, 2nd and 3rd Defendant for the Islamic Factoring Agreement. There was a Letter of Guarantee (page 94 of Appeal Record) and therefore the Defendants have full knowledge of the sum owing to the Plaintiff. [16] The Plaintiff’s counsel submitted that the debt sum RM855,508.58 exist based on the calculation consistent with the terms and conditions of the Security Document and includes the penalty as agreed under Clause 12 of the Letter of Offer dated 4.4.2014 and Clause 4.4 of Islamic Factoring Agreement dated 16.6.014. [17] In relation to the documents as exhibited in ABO-4 (pages 87 – 88 of Appeal Record), it is submitted that they are not Statement of Account but only to show to the Court how the total was derived and this advance payment was advanced to the Defendants of RM673, 551.88 which was not disputed and the document which is an internal document belongs to the Plaintiff to which following the Islamic Factoring Agreement, there is nothing stated that a copy be given to the Defendants. 12 [18] In relation to the retention sum of RM120, 351.44, the Plaintiff’s counsel submitted that it is consistent with the Letter of Offer as at page 42 of Appeal Record, referring to clause 14 of the Letter of Offer and Clause 4.6 (vi) of the Islamic Factoring Agreement (at page 66 of Appeal Record), where the Plaintiff is entitled to withhold the retention sum in calculating the repayment sum until full settlement by the Defendants. [19] The Plaintiff’s counsel referred to the Session Judge’s written judgment (page 6 RRT) submitting that nothing is stated that the retention sum must be set off and averred that the proof of debt is true and proven. [20] It is submitted that the letter by the Defendants (pages 101 - 102 dated 28.7.2015) that the amount of RM843, 963.05 is as the invoices referred by the Defendants (pages 90 – 91 of Appeal Record). [21] It is further averred that the letters by the Defendants (pages 101 – 112 of Appeal Record) are the proposed settlement and there were no objections by the Defendants. The Plaintiff’s counsel submitted the case of Malayan Banking Berhad v Worthy Builders [2015] MLJU 45 at paragraph 10, that all the security documents can be documents of liability where the Defendants could use them against its awarder which is THHE Fabricators Sdn Bhd. [22] Based on Payment Disbursement Advice and paragraph 6 of the Letter of Offer on the purchase price where it is stated “pindahmilik jual beli hutang jumlah invoice akan dibayar oleh THHE Fabricature Co.” 13 in the case after expiry of 180 days, no payment was made by the Defendants (pages 74 and 75 of Appeal Record), where based on Clause 8.1 for Event of Default (pages 74-75 of Appeal Record), clause 9.01 (Remedies) and Clause 10.01 (Termination) of the Islamic Factoring and Services Agreement, the Plaintiff has the right to demand from the Defendants for the balance of the Loan Facility. [23] In relation to the profit rate, the plaintiff’s counsel pointed to the Letter of Offer (page 40 of Appeal Record), where Clause 9 stated that calculation that is profit margin at 2% on and above the receivables and the cost amount is value x Profit Rate 2% + 8% = 10. It is also submitted that the Terms of Facility is at Clause 7 and averred that the repayment calculation is consistent with the Letter of Offer and the Islamic Factoring Agreement. APPEAL [24] Having read both the written submissions, affidavits in support and in reply, the documentary evidence adduced before this Court, the Session Judge’s written judgment and having heard both counsels on the main grounds, I dismissed the appeal with cost. [25] Order 14 ROC 2012 is a procedural device available to expedite the disposal of a plaintiff’s action without a trial where there is no dispute as to fact and law. The only issue before this Court in an application under Order 14 ROC 2012 is whether there are triable issues meriting a full trial for determination. The Plaintiff bears the 14 burden to show a prima facie case and once proven the burden shifts to the Defendant to show that the judgment sum ought not be entered against the Plaintiff. [26] A number of cases supporting the principle under summary judgment can be referred, the case of Bank Negara Malaysia v Mohd Ismail Ali Johor & Ors [1992] 1 CLJ (Rep) 14, a Supreme Court decision, the case of Eng Seng Kuang v Hong Leong Bank Bhd [2008] MLJU 38; Malayan Insurance (M) Sdn Bhd v Asia Hotel Sdn Bhd [1986] 1 MLRA 269 (SC) and National Company for Foreign Trade v Kayu Raya Sdn Bhd [1984] 1 MLRA 190 (FC). [27] Based on the facts and evidence before this Court, this Court finds that on the careful examination of the documentary evidence, the three (3) offers were in fact signed by the 1st, 2nd and 3rd Defendant for the Islamic Factoring and Services Agreement where the Defendants are the client of the Plaintiff. In addition, there was a Letter of Guarantee (page 94 of Appeal Record) which proves to show that the Defendants have the full knowledge of the Loan Facility. It is of the view that there exists a valid agreement between the Plaintiff and the Defendants and the parties signing the agreement are bound regardless they had read the agreement or not: L’ Estrange v F Graucob Ltd [1934] 2 KB 394; Ng Sin Guan v Assunta Hospital [2015] 1 LNS 165. [28] This Court finds that the Defendants admitted the debt owed and due by the Defendants to the Plaintiff which are based on the Islamic Factoring and Services Agreement, the security documents and 15 as evidenced on Defendants’ letters. This Court viewed that this is an admission by the Defendants based on section 17(1) of Evidence Act 1950: “An admission is a statement, oral o documentary, which suggests any inference as to any fact in issue or relevant fact, and which is made by any of the persons and under the circumstances hereinafter mentioned.” [29] The facts of this instant appeal is similar to the facts of the case of Orix Factoring Malaysia Sdn Bhd v E-Furnishing International Sdn Bhd [2010] 9 MLJ 65 as attributed by the Plaintiff’s counsel, where in that case, the first defendant acknowledged its indebtedness to the plaintiff but challenged the plaintiff’s calculation and the plaintiff’s claim for summary judgment was allowed as there was no triable issue. [30] It is also this Court’s finding that the Defendants did not submit its calculation for the purchase price whereas the calculation submitted by the Plaintiff is based on the terms stipulated in the Letter of Offer and the Islamic Factoring and Services Agreement. This Court viewed that the Defendants merely deny the amount owed and the Defendants did not plead any salient and relevant facts to negate the existence of the debt. [31] Based on Clause 14 of the Letter of Offer dated 4.4.2014, and Clause 4.6 of the Islamic Factoring and Services Agreement of 16.6 2014 (page 65 of Appeal Record), the retention sum of RM120,351.44 is 16 to be held by the Plaintiff and would be refunded upon full settlement of the Loan Facility by the Defendants. This Court is also of the view that the case referred by the Defendants’ counsel, Affin Bank Berhad v Zulkifli Abdullah [2006] 1 CLJ 438 is not a case on summary judgment. [32] Relating to Clause 6.9 of the Islamic Factoring and Services Agreement, it is a provision on ‘EVIDENCE OF INDEBTEDNESS’. The Defendants as Plaintiff’s ‘Client” having taken the Loan Facility, such statement as to the amount or the balance amount owing by the Plaintiff shall be evidence of indebtedness. Clause 6.9 stated that, “A statement by the General Manager, Manager, Assistant Manager, Accountant or any other duly authorized officer of PRB for the time being as to the amount of the Facilities or balance thereof and the money and liabilities for the time being incurred or due to PRB by or from the Client shall, in the absence of manifest error, be accepted by and binding against the Client as final and conclusive for all purposes whatsoever including for purpose of legal proceedings.” [33] This Court also finds that the Session Judge had evaluated all the documentary evidence in finding the Defendants not disputing that they indeed received the Loan Facility and the debt is proven to be owing by the Defendants to the Plaintiff. This Court finds that the Session Judge was not wrong in law in allowing the Plaintiff’s action against the Defendants under Order 14 ROC 2012 following the case of Gan Yook Chin v Lee Ing Chin [2005] 2 MLJ 1. 17 [34] In view thereof, following the Supreme Court case of Malayan Insurance (M) Sdn Bhd v Asia Hotel Sdn Bhd [1987] CLJ (Rep) 182 as referred earlier, the underlying philosophy of summary judgment is to prevent a plaintiff clearly entitled to the money from being delayed and in this case, this Court finds that the Defendants have no arguable defence to the claim, there was clearly no triable issues and therefore the summary judgment must be allowed to be entered against the Defendants. The appeal is dismissed with cost. Dated: 30 April 2018 (ZALITA BINTI DATO’ ZAIDAN) Judicial Commissioner Shah Alam High Court 18 COUNSEL FOR THE APPELLANTS AMINUDDIN BIN ZULKIPLI Messrs Amin Amirul & Partners No. 49C, Bangunan Lembaga Tabung Haji Lorong Stesyen 35800 Slim River Perak Darul Ridzuan [Ref: SR-32040-16(PESB)] Tel: 05-4529 681 / 82 Fax: 05-4529 687 COUNSEL FOR THE DEFENDANT MOHD SYAHIR BIN HASHIM Messrs Shafik Sallehuddin & Kamal Suite 7.22, 7th Floor Wisma Central, Jalan Ampang 50450 Kuala Lumpur [Ref: SSK/PRB19542/CL/16/AHK/MSH/mfs]]