1. ) Selvaraj A/L Sandoshom v Alliance Bank Malaysia Berhad (WA-12ANCC-82-09/2024)

SELVARAJ A/L SANDOSHOM [Identity Card No.: 480702085113]

DEVATHAN JAMAL LILY [Identity Card No.: 471221055218] … PLAINTIFFS AND ALLIANCE BANK MALAYSIA BERHAD [Business Reg. No.: 198201008390 (88103-W)] …DEFENDANT JUDGMENT Introduction [1] This judgment arose from the Appellants’ appeal against the decision of the learned Sessions Court Judge given on 19.8.2024 dismissing the Appellants’ Notice of Application made pursuant to Order 14A rule 1 and or Order 33 rules 2 and 5 of the Rules of Court 2012 posing 2 legal questions for determination. The learned Session Court Judge had answered in the negative both the questions which are set out below. [2] After hearing oral submissions from counsel and perusal of the relevant cause papers, I allowed the appeal with costs. Background Facts [3] The Appellants obtained a housing loan facility of RM 150,000.00 from the Respondent to purchase a parcel of vacant bungalow land in Batang Kali (“the Property”) sometime on 11.7.2001 (“the Loan Facility”). [4] Sometime in late May 2003, the Appellants received a letter of demand from the Respondent recalling the Loan Facility in its entirety and demanded the repayment of the entire outstanding sums thereunder. [5] The Respondent subsequently filed a civil action against the Appellants vide Kuala Lumpur Sessions Court Suit No. 1252-9451- 03 (“the First Suit”) and obtained an Amended Judgment in Default on 14.7.2003 for the entire outstanding sum claimed under the Loan Facility (“Amended Judgment in Default”). [6] On 24.6.2015, nearly 12 years after the Amended Judgment in Default, the Respondent applied for leave to enforce the said judgment. Leave was initially allowed by the Sessions Court but on appeal, the High Court set aside the order granting leave with costs. The Respondent’s appeal to the Court of Appeal against the High Court’s decision was dismissed with costs on 9.12.2016. [7] Some 6 years later, on 15.3.2023, the Appellants received a letter from the Respondent’s solicitors enclosing a Writ and Statement of Claim dated 7.3.2023 in respect of the suit herein claiming again the entire outstanding sum under the Loan Facility but less the proceeds of sale of the Property (“the Present Suit”). [8] Before the Session Court, the Appellant filed an application under Order 14A and Order 33 rules 2 and 5 of the Rules of Court 2012 (“ROC 2012”) for the following Proposed Questions of law to be determined: i. whether the Respondent’s Present Suit is barred by the doctrine of res judicata by virtue of the First Suit, which was finally determined by the Court of Appeal on 9.12.2016; ii. whether the Respondent’s Present Action is barred by the doctrine of limitation pursuant to sections 6 and or 21 of the Limitation Act 1953. [9] The learned Sessions Court Judge had answered both the questions in the negative and being dissatisfied, the Appellants had appealed to this Court. Court’s Considerations [10] The Proposed Questions are questions of law based on undisputed facts. There is no dispute that this is a fit and proper case for disposal of the Present Suit pursuant to Order 14A rule 1 and or Order 33 rules 2 and 5 of the ROC 2012 as the Proposed Questions would finally and fully dispose of this case if answered in the affirmative [See: Petroleum Nasional Bhd v Kerajaan Negeri Terengganu [2004] 1 MLJ 8; Ramba AK Bungkong & Ors v Asco Green Sdn Bhd and another appeal [2020] MLJU 974; EUPE Bangsar South Development (JV) Sdn Bhd v Lam Sai Yoh [2023] 9 MLJ 392] [11] In the Present Suit, the Respondent’s claims are founded on the same breach of the Loan Facility, the only difference being the sum claimed is for the entire outstanding but less the sale proceeds of the Property. [12] The learned Session Court Judge found that the Respondent had a new cause of action for the balance outstanding sum due under the Loan Facility after the sale of the Property and the proceeds of sale deducted from the original outstanding sum. In holding the same, the learned Sessions Court Judge had relied on Tan Kong Min v. Malaysian national Insurance Sdn Bhd [2006] 1 MLJ 501 (“Tan Kong Min”). [13] However, Tan Kong Min is no longer good law. Tan Kong Min had followed the earlier decision of the Federal Court in Hongkong & Shanghai Bank Corp Ltd v. Wan Mohd bin Wan Ngah [1991] 3 MLJ 119 (“Hongkong & Shanghai Bank Corp Ltd”). The said case has been expressly overruled by the Federal Court in Chan Boi Loi v Public Bank Bhd and another application [2011] 1 MLJ 478 (“Chan Boi Loi”). More specifically, the late Gopal Sri Ram FCJ, had held in Chan Boi Loi as follows: "It is clear from the statement of facts in Tan Kong Min v Malaysian National Insurance Sdn Bhd that the only points in the case that called for decision were (i) when the insurance company's cause of action to recover the shortfall arose and (ii) which period of limitation was to be applied, that is, the six years prescribed by s 6 or the 12 years prescribed by s 21 of the Limitation Act 1953. The observation 'where the respondent is also a chargee of the property and the only terms that bind the parties are the terms set out in the annexure to the charge, the respondent is not entitled at law and in equity to proceed by way of a civil suit before first realising the security under the charge' is pure obiter dicta and not part of the ratio decidendi. It is not to be treated as binding authority. At the risk of repetition. Tan Kong Min was an action to recover a shortfall that had occurred after the sale of the security. It was not an action for the recovery of a debt due from the borrower to the lender. As for Hongkong & Shanghai Banking Corp Ltd v Wan Mohd bin Wan Ngah, it was clearly overtaken by the decision of this court in Low Lee Lian v Ban Hin Lee Bank Bhd and must be now regarded as overruled. It is of interest to note that Lamin PCA was a member of this court in Low Lee Lian and subscribed to a view that was at variance with that he had expressed in Wan Mohd bin Wan Ngah's case. We would reiterate that a lender is entitled to pursue all remedies available against a borrower simultaneously, contemporaneously or successively to recover the money lent unless there is an agreement to the contrary." [emphasis added] [14] In the present case, Clause 19.7 of the Loan Facility expressly allowed the Respondent to pursue all remedies simultaneously, contemporaneously and or successively: "In addition to the remedies as hereinbefore set out, the Bank shall be at liberty and without prejudice to the said remedies, proceed or commence against the Borrower any claims actions suits civil proceedings of any nature and by law prescribed whether simultaneously with the remedies set out Clause 19 hereof or before or after or at any time at the absolute discretion of the Bank." [emphasis added] [15] In other words, the Respondent was entitled to proceed to file the First Suit without first realizing its security under the charge over the Property. In fact, this was exactly what the Respondent had done. After obtaining the Amended Judgment in Default in 2003, the Respondent had proceeded 5 years later to auction the Property. [16] To my mind, when the Respondent obtained the Amended Judgment in Default in the First Suit, the Respondent’s cause of action based on the Appellants’ breach of the Loan Facility had merged with the said judgment, thereby extinguishing the original cause of action. This means that the Respondent is no longer entitled to file a similar cause of action based on the breach of the Loan Facility. [17] The aforesaid then leads to the question whether the Respondent had acquired a fresh cause of action after the Property was sold and the sale proceeds deducted from the outstanding sum under the Loan Facility. This question has been answered by our Court of Appeal in Lim Ban Hooi & Anor v. Malayan Banking Berhad [2018] 5 MLJ 421 (“Lim Ban Hooi”). In Lim Ban Hooi, Mary Lim CJA (as Her Ladyship then was) stated thus: “Where a borrower defaults in repayments, the Federal Court in Chan Boi Loi v Public Bank Bhd & Another Application [2009] 6 CLJ 81 reiterated that 'a lender is entitled to pursue all remedies available against a borrower simultaneously, contemporaneously or successfully to recover the money unless there is an agreement to the contrary'. In the event there is a shortfall after a public sale, the right to bring an action in personam to recover the balance outstanding is not postponed until the charged land is sold. The right of realization of the property does not vest in the lender a new, separate and independent cause of action. The promise to pay or the right to recover for a shortfall does not affect the original promise or obligation to pay: the obligation to pay remains, just that it is now for a lesser sum. As expressed by Lord Hershell LC in Re McHenry McDermott v Boyd [1894] 8 Ch 290, 'The truth is that the debt is one debt only. The second clause of the document did not create a new debt, but only prescribed what should be done in the event of realisation, and what use should be made of the money realised. The words gave the creditor no right which would not equally have existed without them'." [emphasis added] [18] In fact, even prior to the Court of Appeal’s decision in Lim Ban Hooi, Nazlan Ghazali J (as His Lordship then was) and Lee Swee Seng JC (as His Lordship then was) in Bank Simpanan Nasional v Tham Lai Ling [2016] 6 CLJ 880 (“Bank Simpanan Nasional”) and Ambank (M) Bhd v Jayabalan Ramachandran [2013] 2 CLJ 776 (“Ambank (M) Bhd”) respectively had similarly held that no fresh cause of action accrues to the bank to claim the recovery of any shortfall after the sale of the charged property. The relevant passages in the said 2 cases are set out below: "Accordingly, the position in law presently is one that should rightfully be construed as being settled, in that there is no fresh cause of action available to the chargee to claim the recovery of any shortfall after the sale of the charged property. It cannot be denied that the bank certainly has the right to recover the shortfall but that right of recovery in personam accrues from the date of default and thus subject to the applicable limitation period, is six years under s. 6 of the Limitation Act 1953." - per Nazlan J in Bank Simpanan Nasional "In as much as Wan Mohd Wan Ngah 's case (supra) has been overruled, the raison d'etre for holding that a fresh cause of action in personam for the shortfall only arises upon ascertaining the amount after a successful auction must be taken as have been impliedly overruled too." – Lee Swee Seng JC in Ambank (M) Bhd [19] Since the sale of the Property did not give rise to any fresh cause of action to the Respondent for the recovery of the outstanding sum under the Loan Facility and the said cause of action had already merged into the Amended Judgment in Default, the Respondent’s Present Suit is simply unsustainable. [20] However, the first Proposed Question is not whether the Present Suit is unsustainable because the First Suit has merged with the Amended Judgment in Default. Instead, the question is whether the Present Suit is barred by the doctrine of res judicata. [21] Res judicata is normally taken up against a party who had lost in an earlier action and seeking to re-litigate the same action in a new proceeding. In this case, the doctrine is raised against the Respondent who had prevailed in its action against the Appellant in the First Suit. Notwithstanding the aforesaid, the doctrine of res judicata is wide enough to cover the facts in the instant case (even though strictly speaking the Respondent no longer has the cause of action which has merged with the judgment). In Dato’ Sivanathan a/l Shanmugam v Artisan Fokus Sdn Bhd [2016] 3 MLJ 122, Idrus Harun JCA (as His Lordship then was) stated the doctrine in the following manner: ‘Res judicata simply means a matter adjudged, and its significance lies in its effect of creating an estoppel per rem judicatam. The res judicata rule dictates that when a matter between two parties has been adjudicated by a court, the matter may not be pursued further by the same parties and their privies because the judgment becomes the truth between such parties, its application produces finality in litigation and one ought not to be vexed twice for the same cause of action. Since a res judicata creates an estoppel per rem judicatum, the doctrine of res judicata is really the doctrine of estoppel per rem judicatum (see: Asia Commercial Finance (M) Bhd v. Kawal Teliti Sdn Bhd [1995] 3 MLJ 189)’ [22] Accordingly, since the First Suit had fully and finally determined the Respondent’s cause of action against the Appellants in respect of the outstanding sum arising from the breach of the Loan Facility, the Respondent is barred from filing the Present Suit based on purportedly the same cause of action (albeit no longer in existence) by the doctrine of res judicata. [23] I agree with learned counsel for the Appellant that the Respondent’s Present Suit is an attempt to mount a backdoor appeal against the Court of Appeal’s decision dated 9.12.2016 in the First Suit. As rightly put by learned counsel for the Appellants, the fallacy of the argument that the Respondent has a new cause of action for the shortfall after the sale of the Property is apparent by asking the question whether the Respondent could have filed the Present Suit for part of the sum due under the Loan Facility if their application for leave to enforce the Amended Judgment in Default for the entire outstanding sum had been allowed by the Court of Appeal in the First Suit. [24] In the premises, the first Proposed Question must be answered in the affirmative. [25] I will now turn to the second Proposed Question. [26] The Respondent has pleaded in their Statement of Claim in the Present Suit that its claim is founded on breach of contract under the Loan Facility. Pursuant to section 6(1) of the Limitation Act 1953, the limitation period to file the claim in the Present Suit would be 6 years from the date on which the cause of action accrued. [27] In this case, the latest date upon which the Respondent’s cause of action would have accrued was on 9.5.2003 when the Respondent issued its letter of demand to recall the Loan Facility and demanded the repayment of the entire outstanding sum thereunder. [28] Clearly, the Present Suit which is filed 20 years later is filed out of time. The learned Sessions Court Judge was clearly wrong in holding that the applicable limitation period was 12 years from the date the cause of action accrued pursuant to section 2(1) of the Limitation Act 1953 and that the cause of action only accrues when the shortfall crystalized with the sale of the Property to arrive at the balance outstanding sum. [29] The correct legal position has been well settled by the Federal Court in the case of Thameez Nisha Hasseem (as the administrator of the estate of Bee Fathima @ dll, deceased) v. Maybank Allied Bank Bhd [2023] 4 MLJ 145, where Abang Iskandar FCJ held as follows: "We cannot but agree with the above observation because the 16D notice can never be issued without there being a default in repayment first. And because certainty is important in the law of limitations the date of the failure to pay is certain as compared to when the 15D notice is issued - for such issuance is dependent upon the chargee's discretion. This point is what the Court of Appeal noted in Lim Ban Hooi: .. If the time period of 12 years does not run from when the breach of the agreement took place whence the right to receive money accrued has been disaffected, a chargee may well decide not to do anything for the next 100 years, and still be in time to enforce the ad rem right of order of sale.' … Based on the foregoing, we are of the considered view that the period of limitation in s 21(1) begins from the date of the failure to repay the debt and not from the failure to remedy the 16D notice." [emphasis added] [30] In the premises, it is my judgment that the limitation period in this case has long expired when the Present Suit was filed. Again, the second Proposed Question is answered in the affirmative. Conclusion [31] In view of the above, the Appellants’ appeal is allowed with costs and the Present Suit is dismissed with costs. Dated the 7th day of April 2025 ONG CHEE KWAN Judge of the High Court of Malaya High Court of Kuala Lumpur, NCC2 & Admiralty Counsel:

Counsel for Appellants: Ms. Sharmini Natalie Durai together with Ms. Pang Yi Qing (Messrs. Zain & Co.)

Counsel for Respondent: Mr. Sim Kok Yew together with Ms. Syarifah Dewi Siti Fatimah binti Syed Ahmad Fahmi Wafa (Messrs. K.Y. Sim & Co.)

Petroleum Nasional Bhd v Kerajaan Negeri Terengganu [2004] 1 MLJ 8 2. Ramba AK Bungkong & Ors v Asco Green Sdn Bhd and another appeal [2020] MLJU 974 3. EUPE Bangsar South Development (JV) Sdn Bhd v Lam Sai Yoh [2023] 9 MLJ 392 4. Tan Kong Min v. Malaysian national Insurance Sdn Bhd [2006] 1 MLJ 501 5. Hongkong & Shanghai Bank Corp Ltd v. Wan Mohd bin Wan Ngah [1991] 3 MLJ 119 6. Chan Boi Loi v Public Bank Bhd and another application [2011] 1 MLJ 478 7. Lim Ban Hooi & Anor v. Malayan Banking Berhad [2018] 5 MLJ 421

Bank Simpanan Nasional v Tham Lai Ling [2016] 6 CLJ 880 9.

Ambank (M) Bhd v Jayabalan Ramachandran [2013] 2 CLJ 776 Dato’ Sivanathan a/l Shanmugam v Artisan Fokus Sdn Bhd [2016]

Thameez Nisha Hasseem (as the administrator of the estate of Bee Fathima @ dll, deceased) v. Maybank Allied Bank Bhd [2023]

Sections 2(1); 6 and or 21 of the Limitation Act 1953 2. Order 14A rule 1 and or Order 33 rules 2 and 5 of the Rules of Court 2012