St Healthcare Group Sdn. Bhd. v Modalku Ventures Sdn. Bhd. (BA-12ANCC-48-10/2025)

[Company No.: 202001032089(1388409-X)]

2.

…APPELLANTS / PLAINTIFFS AND MODALKU VENTURES SDN. BHD. …RESPONDENT / [Company No.: 201601019329(1190266-X)] DEFENDANT Digabungkan, diteruskan dan didengar bersama IN THE HIGHT COURT OF MALAYA AT SHAH ALAM IN THE STATE OF SELANGOR DARUL EHSAN, MALAYSIA CIVIL APPEAL NO.: BA-12ANCC-48-10/2025

[Company No.: 202001032089(1388409-X)]

2.

…APPELLANTS / PLAINTIFFS AND MODALKU VENTURES SDN. BHD. …RESPONDENT / [Company No.: 201601019329(1190266-X)] DEFENDANT [Dalam Perkara Mengenai Guaman No. BK-B52NCC-2-02/2025 Dalam Mahkamah Sesyen di Sepang] ANTARA MODALKU VENTURES SDN. BHD. [Company No.: 201601019329(1190266-X)] …PLAINTIF

[Company No.: 202001032089(1388409-X)]

2.

…DEFENDAN-DEFENDAN [Diputuskan oleh Tuan Hakim, Tuan Amir Affendy Bin Hamzah di Mahkamah Sesyen di Sepang pada 19 September 2025] GROUNDS OF JUDGMENT

This judgment concerns two related appeals, namely Appeal No. BA- 12ANCC-47-10/2025 (“Appeal 47”) and Appeal No. BA-12ANCC-48- 10/2025 (“Appeal 48”). Pursuant to an order of this Court dated 28 November 2025, both appeals were consolidated and heard together. For easy reference, I shall refer the parties as they were in the court, namely the Appellants as the Defendants and the Respondent as the Plaintiff.

Appeal 47 is the Defendant’s appeal against the decision of the Sessions Court Judge (SCJ) at Sepang delivered on 19 September 2025, which allowed the Plaintiff’s application for summary judgment under Order 14 of the Rules of Court 2012 in the sum of RM410,405.86, together with late payment interest and costs of RM5,000.00. Subsequently, Appeal 48 arises from the same transaction and is also the Defendants’ appeal against the learned SCJ’s decision allowing the Plaintiff’s application to strike out the Defendants’ Defence and Counterclaim pursuant to Order 18 rule 19 of the ROC 2012.

The Respondent is duly registered as a Recognised Market Operator under section 34 of the Capital Markets and Services Act 2007 holding a valid licence issued by the Securities Commission Malaysia to operate a peer-to-peer (“P2P”) financing platform under the name and style of “Funding Societies”.

On 18 October 2022, pursuant to a Note Issuance, Facility Agreement and Guarantee, the Respondent extended a financing facility in the sum of RM370,000.00 to the 1st Defendant, backed by the joint and several personal guarantees of the 2nd and 3rd Defendants, as Guarantors. This facility was executed following a formal application by the 1st Defendant and a clear acceptance of the Facility Offer dated 11 October 2022, supported by a Directors’ Resolution of the 1st Defendant authorising the said transaction.

Critically, it is an undisputed historical fact that prior to the facility in question, the Defendants had successfully applied for, obtained and fully liquidated an earlier financing facility of RM100,000.00 from the Respondent. This prior transaction was executed under the very same RMO licence and governed by materially identical contractual architecture, without any form of protest, or challenge by the Defendants as to its contractual validity, licensing compliance, or the fairness of its commercial terms. THE IMPACT OF THE FIRST ORIGINAL SUIT FILED BEFORE THE

The initiation, conduct and eventual compromise of the First Suit (Suit No. BB-52NCC-74-07/2023) constitute a crucial factor underpinning the decision of the SCJ to grant summary judgment and strike out the Counterclaim. When the Respondent originally filed the suit in Court on 21 July 2023 to recover the outstanding balances under the primary Facility Agreement, the Defendants chose not to file a defence. They did not raise any of the issues currently pleaded, such as the alleged lack of licensing under the FSA 2013, ultra vires actions, or contractual unconscionability. Instead, the Defendants unequivocally adopted a position of compliance and concession by approaching the Respondent to negotiate terms of understanding. This process was completed in the formal execution of the Settlement Agreement dated 28 August 2023.

The formal Settlement Agreement dated 28 August 2023, are as follows, whereby:

(a) There was an admission of indebtedness where the Defendants explicitly acknowledged and admitted an outstanding sum of RM425,768.06 as at 28 August 2023;

(b) A restructured repayment scheme was negotiated by the parties and the Defendants bound themselves, jointly and severally, to repay a restructured Settlement Sum amounting to RM482,104.86 by way of agreed monthly instalments pursuant to Clause 3.2; and

(c) Under the proviso to Clause 3.2 and Clause 5.2(c), the Defendants agreed that a default in any of the instalment payments, would trigger late payment interest at a rate of 0.1% per day alongside late payment charges of RM500.00 per repayment cycle until full settlement, entitling the Respondent to recover the entirety of the Settlement Sum less any irregular payments received.

Subsequently, upon the execution of the Settlement Agreement above, the original first suit was withdrawn by the Respondent with liberty to file afresh. Thereafter, the Defendants proceeded to make partial payments totaling RM85,584.00, comprising RM20,000.00 on 21 August 2023 and a further RM65,584.00 afterwards. These payments were made seamlessly, without any qualification, reservation of rights, or dispute of any nature.

The Defendants subsequently fell into default for the second time. The Respondent issued an initial notice of demand via electronic mail on 24 December 2023, followed by a formal statutory notice of demand through its solicitors on 30 May 2024. Both notices were met with absolute silence. On 12 August 2024, the Respondent instituted the present action, Suit No. BK-B52NCC-2-02/2025, claiming a sum of RM410,405.86 quantified as at 29 July 2024. The claim is verified by a Certificate of Indebtedness executed by the Respondent’s State Head.

On 15 October 2024, the Defendants proceeded to file their Defence and Counterclaim. By way of Defence, the Defendants pleaded that there was a manifest error in the calculation of the Certificate of Indebtedness and that the Respondent’s P2P business operated ultra vires for the RMO licence or otherwise Appellants required a separate banking or financial licence under the Financial Services Act 2013. They further asserted that the interest and penalty imposed was unconscionable, amounting to an unenforceable penalty clause and contended that both the primary Facility Agreement.

The Settlement Agreement was also unacceptable contracts procured via an actionable inequality of bargaining power. By way of Counterclaim, the Defendants sought corresponding declaratory reliefs mirroring their Defence, alongside claims for general, aggravated and exemplary damages. In response, the Respondent filed two distinct interlocutory applications, one, an application for summary judgment over the main claim pursuant to Order 14 of the ROC 2012 and a separate application to strike out the Defendants Counterclaim pursuant to Order 18 rule 19(1)(a), (b) and (d) of the ROC

2012.

On 19 September 2025, the SCJ allowed both applications and the brief grounds of the summary judgment held that the Appellants had failed to disclose any triable issue and characterised the defences raised, as “taktik helah semata-mata” (a mere tactical ploy), without expressly addressing the Certificate of Indebtedness or the specific manifest-error contentions raised by the Appellants.

In her brief grounds of judgment on the striking out application, the learned SCJ held, first, that the Sessions Court had no jurisdiction to grant any of the declarations sought, relying on section 69(g) of the Subordinate Courts Act 1948 and secondly, that the Counterclaim failed to plead particulars of the general, aggravated and exemplary damages were claimed. The Appellants now appeal both decisions and I turn to the applicable law before addressing each ground. ISSUES BEFORE THE COURT

Based on the grounds raised by the Defendants, the specific substantive issues, to determine if summary judgment was properly granted are categorized as follows: The Conclusiveness of the Certificate of Indebtedness and the Threshold for Manifest Error

(i) Whether the alleged inconsistencies within the Certificate of Indebtedness constitute a "manifest error" sufficient to displace its contractually agreed status as conclusive evidence of debt. The Operational Mechanics of the Settlement Agreement and the Defense of Novation

(i) Whether the execution of the subsequent Settlement Agreement operated as a complete novation that extinguished the original liabilities under the Facility Agreement, thereby rendering the Respondent's current claim legally inconsistent. Statutory Licensing Requirements and Alleged Ultra Vires Peer-to-Peer FinTech Operations

(i) Whether the Respondent's peer-to-peer (P2P) financial activities exceeded its regulatory scope as a Recognised Market Operator (RMO) under the Capital Markets and Services Act 2007, or otherwise required separate commercial banking licensure under the Financial Services Act 2013. The Enforceability and Conscionability of Agreed Default Interest and Penalty Structures

(i) Whether the contractually stipulated interest rates, daily late payment charges and administrative fees collectively constitute an unconscionable, extravagant and legally unenforceable penalty clause. E. Commercial Vulnerability and the Equitable Vitiation of Contracts via Unequal Bargaining Power

(i) Whether underlying financial distress or severe economic difficulty at the time of execution provides an equitable basis to invalidate commercial agreements under the doctrine of unequal bargaining power. APPELLATE DETERMINATION IN APPEAL 48 ON STRIKING OUT

Having regard to the grounds raised by the Defendants, the core issues to determine whether the Counterclaim was properly struck out are categorized as follows: - The jurisdictional basis relied on by the SCJ

(i) Whether the Sessions Court possesses the statutory jurisdiction under Section 65(5)(b) of the Sessions Court Act to grant declaratory relief when it is raised in a defence or via a counterclaim within an existing action properly before the court. Counterclaim discloses a reasonable cause of action

(i) Whether the Appellants' counterclaim discloses a reasonable cause of action under Order 18 rule 19(1)(a) ROC 2012, or if it is obviously unsustainable due to a lack of necessary factual particulars to support the claims of illegality and unconscionability. Pleading of general, aggravated and exemplary damages

(i) Whether a prayer for general, aggravated and exemplary damages can disclose a reasonable cause of action if the pleading completely fails to allege the underlying material facts and conduct necessary to ground those specific heads of damages. Waiver under Clause 7 of the Settlement Agreement and abuse of

(i) Whether the Appellants counterclaim constitutes an abuse of the process of the court under Order 18 rule 19(1)(d) by attempting to relitigate legal and factual disputes they had expressly and contractually undertaken not to raise under Clause 7 of the Settlement Agreement. THE APPLICABLE LAW Summary judgment under Order 14

It is well settled that summary judgment is a special jurisdiction to be exercised only in plain cases where the defendant has no bona fide defence and that the court will refuse the relief where the defendant raises a triable issue, a difficult point of law, or shows that there ought, for some other reason to be a trial. Genneva Malaysia Sdn Bhd v Tio Jit Hong & Ors [2020] 4 CLJ 449; UNP Plywood Sdn Bhd v HSBC Bank Malaysia Bhd [2010] 5 CLJ 177; Bank Negara Malaysia v Mohd Ismail Ali Johor & Ors [1992] 1 CLJ (Rep) 14.

A defendant is not required to establish a complete defence but a single bona fide triable issue suffices to defeat the application (Bank Negara Malaysia, supra; Best Re (L) Limited v China Pacific Property Insurance Co Ltd [2018] 1 LNS 654). Equally it is, the court’s duty not to grant summary judgment merely because an assertion has been made and denied on affidavit. Where the assertion is vague, lacking in precision, inconsistent with undisputed contemporaneous documents, or inherently improbable, the court is entitled and indeed obliged to reject it, as not raising a triable issue. Bank Negara Malaysia v Mohd Ismail & Ors [1992] 1 MLJ 400. A bare assertion in an affidavit, without more, does not ipso facto entitle a defendant to leave to defend, the court must ask whether there is a fair or reasonable probability of a real, bona fide defence. Microsoft Corporation v Yong Wai Hong [2008] 3 MLJ 309, applying Banque de Paris et Des Pays-Bas (Suisse) SA v Costa de Naray [1984] 1 Lloyd’s Rep 21.

Where a contract provides that a certificate of indebtedness issued by an officer of the creditor is to be conclusive evidence of the debt, such a certificate shifts the evidential burden to the defendant and will only be displaced by manifest error appearing on its face. Cempaka Finance Bhd v Ho Lai Ying & Anor [2006] 3 CLJ 544; Citibank NA v Ooi Boon Leong & Ors [1981] 1 MLJ 282. The authorities relied on by the Appellants namely Credit Corp (M) Bhd v Lucky Height Development Sdn Bhd & Ors [1996] 1 LNS 69, Oriental Bank Bhd v Jaafar Sidek Mohd Salam & Ors [1990] 2 CLJ (Rep) 585 and Bank of Commerce

(M) Bhd v Tan Boon Soon @ Tan Polo [1995] 1 CLJ 69, correctly establish that conclusiveness can be displaced where there is genuine, demonstrable inconsistency between the certified sum and the underlying account, particularly where the creditor refuses to explain the discrepancy. These cases turn on their own facts and do not dispense with the requirement that the defendant has to identify a genuine and not merely asserted discrepancy.

Generally, a settlement agreement which compromises of an existing cause of action operates, in the ordinary course, as a novation which supersedes and extinguishes the original obligations, replacing them with new contractual obligations. Pacific Sanctuary Holdings Sdn Bhd v Masaland Constructions Sdn Bhd [2020] 4 CLJ 490; PJD Landmarks Sdn Bhd v Soh Jien Min & Ors [2022] 8 CLJ 464; Stabilised Pavements

(M) Sdn Bhd v PLB Terbang Sdn Bhd [2023] 1 LNS 130. Where, however, the settlement agreement itself expressly preserves a right to sue for the settlement sum, less the payments received, upon default, a claim founded on that default is not inconsistent with the doctrine of novation. It is an enforcement of the settlement obligations, not a resurrection of the extinguished original obligations.

The doctrine of unequal bargaining power and the wider doctrine of unconscionable bargains are recognised in this jurisdiction. Saad Marwi v Chan Hwan Hwa & Anor [2001] 3 CLJ 98; Alexander John Shek Kwok Bun v Rich Avenue Sdn Bhd & Anor [2008] 7 CLJ 754. Similarly, a sum payable on breach, whether styled as interest, a fee, or a penalty, will be unenforceable to the extent it is extravagant and unconscionable when measured against the creditor’s legitimate interest and any conceivable loss. Cubic Electronics Sdn Bhd (In Liquidation) v Mars Telecommunications Sdn Bhd [2019] 2 CLJ 723; Selva Kumar A/L Murugiah v Thiagarajah A/L Retnasamay [1995] 2 CLJ 374. These doctrines, however, are fact-sensitive, a party invoking them at the summary judgment stage must, at the very least, plead and depose to particulars capable of supporting the inference sought, rather than bare conclusions.

Repeated, unequivocal and open admissions of a debt, whether made in correspondence or by conduct including entering a settlement, making partial payments or omitting to dispute a claim over a sustained period are capable of estopping a party from later denying the debt and of rendering a subsequently raised defence a mere afterthought unworthy of trial. KM Quarry Sdn Bhd v Ho Hup Construction Co Bhd [2006] 7 MLJ 203; HSBC Bank Malaysia Bhd v LH Timber Products Sdn Bhd & Ors [2005] 6 MLJ 625; OCBC Bank (M) Bhd v Belton Springs Industries Sdn Bhd & Anor [2005] 7 MLJ 289; Tan Sri Abdul Khalid Ibrahim v Bank Islam Malaysia Bhd & Another Case [2010] 4 CLJ 388; Malaysia Airports Sdn Bhd v APFT Land Sdn Bhd [2018] 10 MLJ 257. This line of authority must, however, be applied with some caution at the interlocutory stage and it does not operate to foreclose every defence merely because a defendant previously made payments or did not object earlier. The question remains whether, viewed as a whole, the defence now advanced is bona fide or is contradicted by undisputed documents and conduct to the point of being inherently improbable. Striking out under Order 18 rule 19

The jurisdiction to strike out pleadings under Order 18 rule 19 ROC 2012 is exercised only in plain and obvious cases, where it can be seen on the face of the pleading, without minute examination of disputed facts, that the claim or defence is obviously unsustainable. The authorities are clear on this point, is Bandar Builder Sdn Bhd & 2 Ors v United Malayan Banking Corporation Bhd [1993] 4 CLJ 7; Seruan Gemilang Makmur Sdn Bhd v Kerajaan Negeri Pahang Darul Makmur & Anor [2016] 3 CLJ 1; Kerajaan Malaysia v LFL Sdn Bhd & Another Appeal [2025] 1 CLJ 851. A reasonable cause of action is a factual situation which, if established, entitles the pleader to a remedy (Indah Desa Saujana Corp Sdn Bhd & Ors v James Foong Chen Yuen [2008] 2 MLJ 11). Where unsustainability can only be demonstrated after lengthy or mature consideration of contested issues of law or fact, the matter is not appropriate for summary striking out and must proceed to trial (Sivarasa Rasiah & Ors v Che Hamzah Che Ismail & Ors [2012] 1

Turning to jurisdiction, section 65(5)(b) of the Subordinate Courts Act 1948 empowers the Sessions Court, in respect of any action or suit otherwise within its jurisdiction, to make a declaration in any proceedings before it, whether or not any other relief is or could be claimed. On the same note, Section 69(g) SCA, which excludes the Sessions Court’s jurisdiction over “actions, suits or proceedings… for declaratory decrees”, however, must be read subject to the express exception of the section itself. Authorities such as Foo Tseh Wan v Toyota Tsusho (M) Sdn Bhd [2018] 9 MLJ 664 and Wong Loy Fatt & Anor v Lim Tok Yew [2015] 5 CLJ 602 confirm that section 65(5)(b) permits declaratory relief ancillary to and within, an action otherwise properly before the Sessions Court.

As regards damages, Order 18 rule 12(1A) ROC 2012 prohibits the quantification of a claim or counterclaim for general damages. Aggravated and exemplary damages are, for pleading purposes, treated as general damages and likewise need not be quantified (Kris Angsana Sdn Bhd v Eu Sim Chuan @ Eu Sam Yan & Anor [2007] 5 MLJ 13; Suzana bt Md Aris v DSP Ishak bin Hussain & Ors [2011] 1 MLJ 107). However, that rule, addresses quantification only and it does not dispense with the ordinary and more fundamental requirement, applicable to every cause of action, that the material facts relied upon be pleaded with sufficient particularity to disclose the cause of action said to be made out. APPEAL 47: SUMMARY JUDGMENT COURTS ANALYSIS AND FINDINGS The Certificate of Indebtedness and the alleged manifest error

The Appellants’ principal complaint is that the Certificate of Indebtedness is bare and provides no calculation and that the amounts claimed in the earlier Letter of Demand (RM485,909.64), the First Suit (RM485,649.91), the Settlement Agreement (RM425,768.06), the second Letter of Demand (RM404,340.83) and the present claim (RM410,405.86) are all inconsistent on their face.

I do not accept that this discloses a manifest error because firstly, both Clause 29 of the Facility Agreement and Clause 6.3 of the Settlement Agreement, which the Appellants signed, expressly and unambiguously provide that a certificate of the Respondent’s officer is to be conclusive evidence of the debt “with or without any particulars of calculation” and irrespective of whether it indicates “how such amount has been calculated”. The Appellants cannot, having contracted on those terms, now complain of what they agreed to accept.

Secondly, I have independently examined the figures relied on by both sides, including the itemised reconciliation exhibited in the Respondent’s affidavit in support, which breaks the claimed sum down into Principal Unpaid, Interest Unpaid, Pre-Restructured Late Penalty, Pre-Restructured Late Interest and post-default Late Penalty and Late Interest. In my opinion, that reconciliation seems to be arithmetically consistent. The Settlement Sum of RM482,104.86, itself, is the aggregate of the constituent heads acknowledged in Clause 2.1.1 read with the schedule to the Settlement Agreement and together with further late payment interest, late payment charges of RM3,300.00. The RM10,585.00 respectively accrued after the second default (as expressly contemplated by the proviso to Clause 3.2), less the admitted partial payments of RM85,584.00, produces exactly RM410,405.86, namely the sum certified and claimed. The differing figures appearing in the 2023 demand, the First Suit and the Settlement Agreement are on this analysis no more than successive statements of a running account at different points in time, before and after restructuring and are not inconsistent with one another once the intervening restructuring and payments are taken into account.

Given that reconciliation, which was capable of verification from the parties own documents without any need for viva voce evidence, I am satisfied that no manifest error is shown on the face of the Certificate of Indebtedness and that this ground does not raise a bona fide triable issue. / The Settlement Agreement, novation and the basis of the claim

The Appellants further contend that, since the Settlement Agreement effected a novation extinguishing the original Facility Agreement debt, the Respondent’s claim and Certificate, which refer to the sum being due “under the Note Issuance (Business Term Financing) Facility Agreement cum Guarantee”, are misconceived and legally inconsistent with the pleaded facts.

I accept that, as a matter of law, the Settlement Agreement amounts to a novation, as explained in the cases of Pacific Sanctuary Holdings and PJD Landmarks. However, this argument does not help the Appellants in the present case. The Settlement Agreement itself, specifically Clause 5.2(c) read together with Clause 3.2, clearly preserves the Respondent’s right, if there is a default, to recover the full Settlement Sum (minus any payments already made). The amount now claimed and certified is exactly that Settlement Sum, as shown in the reconciliation already discussed. In other words, the Respondent is not trying to revive the old Facility Agreement but is simply enforcing the Settlement Agreement’s own default provisions.

The Appellants argue that the Certificate of Indebtedness and the Statement of Claim wrongly refer back to the original Facility Agreement, instead of focusing on the Settlement Agreement. In my view, this is simply imprecise drafting. It points to the history of the financing arrangement rather than changing the actual legal basis of the claim. The real claim is to enforce the Settlement Agreement’s default terms. A minor drafting slip like this, which causes no confusion about the amount owed and no prejudice to the Appellants, does not amount to a manifest error. Nor does it raise a genuine issue that needs to go to trial. The licensing and ultra vires argument

The Appellants contend that the Respondent, notwithstanding its RMO licence, was in substance conducting unlicensed direct lending outside the scope of that licence and / or requiring separate authorisation under the FSA 2013, rendering the Facility Agreement and Settlement Agreement illegal and unenforceable under section 24 of the Contracts Act 1950.

This argument raises, on one view, a point of law of some general importance and I have given it careful consideration. I am nevertheless satisfied that it does not raise a bona fide triable issue in the circumstances of this case, for the following reasons: -

(a) The core issue is whether the Respondent acts as a direct principal lender or as a regulated intermediary platform and whether a contractual stipulation requiring repayments to be made exclusively to it converts an agency framework into direct lending. As a Recognised Market Operator under section 34 of the Capital Markets and Services Act 2007, the Respondent is licensed to operate an investor-funded peer-to-peer (P2P) platform. This structure is confirmed by the Facility Agreement, which explicitly designates the Respondent as an agent for the funding investors, utilizes Malaysian Trustees Berhad to hold the raised funds and includes an anonymity clause (Clause 30) regarding investor identities. Provisions that are only logical if the investors are the true source of funds. Consequently, the Appellants assertion that the Respondent is a "direct creditor" based solely on the repayment mechanism is legally untenable, as it is a standard commercial practice for an agents, to collect funds on behalf of its principals without altering the underlying agency and platform framework.

(b) The Appellants have not pleaded or deposed to any particulars capable of substantiating the bare allegation of direct lending, no evidence of the absence of investor funding, no evidence from the Respondent’s own records and no expert or regulatory material was placed before the Sessions Court or before this Court. A bare assertion, unsupported by particulars and contradicted by the parties’ own contemporaneous documents, is insufficient to raise a triable issue, Microsoft Corporation v Yong Wai Hong, supra.

(c) The licensing requirements under the Financial Services Act (FSA) 2013 do not apply to the Respondent's peer-to-peer (P2P) capital markets platform, as the Act specifically targets traditional banking, insurance and payment systems. Since Parliament established a distinct, comprehensive regulatory regime for capital market products under the Capital Markets and Services Act (CMSA) 2007, which the Respondent fully complied with, then this specific statutory framework governs the activity rather than the general provisions of the FSA 2013.

(d) The Appellants prior conduct further undermines their defense, as they had previously obtained and fully repaid an identical RM100,000.00 facility from the Respondent under the same regulatory structure without objection. Raising this illegality argument only after defaulting on a second facility, 2.5 years into the business relationship, indicates that the challenge is not a genuine legal issue but a bad-faith tactical device to avoid contractual repayment obligations.

For these reasons I find that the licensing and ultra vires ground, though dressed as a point of law, is not a genuinely arguable one on the material before the Court and does not raise a triable issue or a difficult point of law within the second limb of Order 14 rule 3(1). The compounding interest and penalty structure

While the reasonableness of default charges is ordinarily a fact-sensitive inquiry, the challenge fails because the interest and penalty structure were transparently disclosed from the outset in a one-page Letter of Offer. Crucially, the terms were subsequently revisited and re-agreed by the Appellants within a separate Settlement Agreement, that was negotiated after the commencement of legal proceedings.

The Appellants mislaid their argument because they simply asserted that the fees were unfair without providing any actual evidence to back it up. Under In cases like Cubic Electronics and Selva Kumar, a court cannot rule that charges are "extravagant and unconscionable" based on a bare assertion alone. To successfully challenge the amount being charged, the Appellants needed to present a properly pleaded alternative calculation, expert evidence, or specific data comparing these charges to normal industry rates to prove they were inconsistent. While courts have the right to scrutinize these clauses, the challenge ultimately failed because the Appellants brought no concrete data or alternative math to the table to turn their claim into a real triable issue. Cubic Electronics Sdn Bhd (In Liquidation) v. Mars Telecommunications Sdn Bhd [2019] 2 CLJ 723, Selva Kumar A/L Murugiah v. Thiagarajah A/L Retnasamay [1995] 2

In addition, the bona fide of this challenge is further undermined by the Appellants own conduct, specifically their substantial partial payment of RM85,584.00 under that very Settlement Agreement they now seek to impugn. The earlier performance was completed without any contemporaneous objection to the calculation or deduction of the charges, demonstrating that the allegation of unconscionability is not a genuine legal grievance but an afterthought raised solely to resist enforcement. Unequal bargaining power

The Appellants’ final substantive ground is that the Facility Agreement and Settlement Agreement were procured through unequal bargaining power, rendering them unconscionable under the doctrine recognised in the case of Saad Marwi v. Chan Hwan Hwa & Anor [2001] 3 CLJ 98.

While the doctrine of unequal bargaining power may be available in appropriate cases involving SME borrowers and institutional financiers, the Appellants' basis for invoking it is legally insufficient. The unparticularised assertion that the First Appellant had “no choice” due to financial distress constitutes, a mere conclusory statement rather than a particularised fact, which is capable of raising a bona fide triable issue.

I am in the opinion that this assertion is directly contradicted by the objective commercial circumstances of the transaction. The First Appellant is an incorporated entity that formally executed a Directors Resolution to accept the facility and the parties shared a history of informed commercial engagement, evidenced by the Appellants having previously repaid an identical facility without complaint. In the absence of any evidence showing an attempt to negotiate alternative terms or a refusal by the Respondent to entertain such negotiations, the plea cannot be sustained. Conclusion on Appeal 47

I concluded that none of the grounds advanced by the Appellants, whether viewed individually or collectively, disclosed a bona fide triable issue, a difficult point of law, or any other reason justifying a trial under the second limb of Order 14 rule 3(1). This determination was reinforced by the Appellants’ own 2.5-year course of conduct, specifically their unqualified settlement of the first suit, execution of the Settlement Agreement acknowledging their debt, substantial partial payments and full repayment of a prior identical facility. Applying Bank Negara Malaysia v Mohd Ismail, the court found that these bare assertions were directly contradicted by contemporaneous documents and past conduct, meaning the Sessions Court Judge did not err in granting summary judgment, thereby prompting the dismissal of Appeal 47. APPEAL 48: STRIKING OUT OF THE COUNTERCLAIM AND COURTS FINDINGS The jurisdictional basis relied on by the SCJ

(i) Whether the Sessions Court possesses the statutory jurisdiction under Section 65(5)(b) of the Sessions Court Act to grant declaratory relief when it is raised in a defence or via a counterclaim within an existing action properly before the court. Counterclaim discloses a reasonable cause of action

(i) Whether the Appellants' counterclaim discloses a reasonable cause of action under Order 18 rule 19(1)(a) ROC 2012, or if it is obviously unsustainable due to a lack of necessary factual particulars to support the claims of illegality and unconscionability. Pleading of general, aggravated and exemplary damages

(i) Whether a prayer for general, aggravated and exemplary damages can disclose a reasonable cause of action if the pleading completely fails to allege the underlying material facts and conduct necessary to ground those specific heads of damages Waiver under Clause 7 of the Settlement Agreement and abuse of

(i) Whether the Appellants' counterclaim constitutes an abuse of the process of the court under Order 18 rule 19(1)(d) by attempting to relitigate legal and factual disputes they had expressly and contractually undertaken not to raise under Clause 7 of the Settlement Agreement. The jurisdictional basis relied on by the learned SCJ

I deal first with the jurisdictional point, since it was raised as a primary issue on which the SCJ struck out the Counterclaim. Based on the jurisdictional boundary between Section 65(5)(b) and Section 69(g) of the Subordinate Courts Act 1948 (SCA), it is necessary to harmonize these provisions rather than treat them as mutually exclusive. Section 65(5)(b) SCA explicitly empowers the Sessions Court, in any proceedings properly brought within its jurisdiction, to grant declaratory relief, irrespective of whether any other remedy is or could be claimed. Conversely, Section 69(g) SCA establishes a statutory bar, stipulating that the Sessions Court cannot entertain stand-alone actions where a declaratory decree is the sole and primary relief sought.

Consequently, I decline to affirm the decision on the narrow jurisdictional grounds expressed by the SCJ. That finding, however, does not conclude the question of striking out applications completely. It is a foundational principle of appellate review that when evaluating a striking out order, this Court is primarily concerned with the ultimate correctness of the order itself, rather than whether every strand of reasoning supporting it can withstand scrutiny. If the decision to strike out the Counterclaim is sustainable on alternative grounds properly raised before the court of first instance, that order must stand.

In this regard, the Respondent’s application was, from its commencement, concurrently anchored upon Order 18 rule 19(1)(a) and (d) of the Rules of Court 2012. Namely, that the Counterclaim discloses no reasonable cause of action and constitutes an unmitigated abuse of the process of the Court. Having disposed of the jurisdictional preliminary, I now turn to the merits of this alternative, on a potentially determinative, bases. Whether the Counterclaim discloses a reasonable cause of action

In my view, the truth of the facts pleaded in the Counterclaim, I find is obviously unsustainable on its face for the same reasons set out in my findings on the licensing and unconscionability grounds in Appeal 47 above. On the allegations of illegality in the Counterclaim, whether the Respondent's business exceeded its RMO license or required an FSA license is a purely question of law and contractual interpretation. This can be determined solely by looking at the undisputed, authentic documents namely the Facility Agreement, CCM search and SC public licensing records. In my opinion a trial with oral evidence, witness testimonies or an extensive factual investigation on this subject matter is completely unnecessary.

The remaining declarations regarding unconscionability and unequal bargaining power, collapses, because they lack the necessary material facts and particulars. The Counterclaim offers only bare legal conclusions, asserting "no choice" without detailing the actual negotiations and fails to prove how the charges exceed any legitimate interest. Under Indah Desa Saujana Corp Sdn Bhd v James Foong Chen Yuen, a pleading that asserts a legal conclusion without supporting facts fails to disclose a reasonable cause of action and cannot stand. Pleading of general, aggravated and exemplary damages

While the Appellants are legally correct that under Order 18 rule 12(1A) ROC 2012, general, aggravated and exemplary damages do not need to be quantified in a pleading (Kris Angsana; Suzana bt Md Aris), the Counterclaim still fails on a more fundamental ground and lack of material facts.

Aggravated and exemplary damages require specific factual pleadings showing reprehensible conduct that justifies punishment or aggravation and general damages require a factual basis showing actual loss. Because the Counterclaim contains only bare assertions and without these necessary particulars, the prayer for damages fails to disclose a reasonable cause of action and was properly struck out. Waiver under Clause 7 of the Settlement Agreement and abuse of process

The Counterclaim faces a separate, decisive hurdle under Clause 7 of the Settlement Agreement, where the Appellants expressly undertook not to challenge the Respondent’s authority, locus, or the validity of the Facility Agreement and debt. While parties cannot contract out of genuine statutory illegality or oust the court's jurisdiction (Cubic Electronics), Clause 7 does not do that. It is a valid contractual admission made knowingly by commercial parties with access to legal advice. Because no actual illegality or unconscionability was proven, Clause 7 simply holds the Appellants to their own commercial bargain, making their current declarations legally unsustainable. Conclusion on Appeal 48

Taken as a whole, the Counterclaim is obviously unsustainable under Order 18 rule 19(1)(a) and constitutes an abuse of the court process under rule 19(1)(d) and my opinion is compelled by: I. The total absence of particularized or arguable grounds for illegality or unconscionability; II. The failure to plead any material facts supporting the claims for aggravated or exemplary damages; and III. The Appellant’s express undertaking in Clause 7, coupled with their 2.5-year delay in raising these issues after unqualified performance.

For these reasons, while I do not affirm the striking out of the Counterclaim on the narrow jurisdictional basis relied by the Appellants, I am satisfied that the order striking out the Counterclaim was nonetheless correct, on the alternative and independently sufficient grounds that the Counterclaim discloses no reasonable cause of action and constitutes an abuse of process, therefore Appeal 48 is dismissed.

In conclusion, having found no merit in the arguments presented, I hereby dismiss both appeals in their entirety and uphold the original decisions of the Sessions Court Judge. In respect of Appeal 47, the court's order granting summary judgment is affirmed on the grounds that the Appellants failed to raise any triable issues or a bona fide defense. Regarding Appeal 48, the order striking out the Appellants' Defence and Counterclaim is likewise affirmed, as their pleadings disclosed no reasonable cause of action and amounted to an abuse of the court process. Consequently, the Appellants are ordered to pay the Respondent the legal costs for both appeals. Date: 6th July 2026 SGD SHOBA DORAI RAJAH JUDICAL COMMISSIONER SHAH ALAM HIGH COURT Solicitor for the Appellant / Plaintiff 1,2,3: Bong Lep Siong [MESSRS CHEAH TEH & SU] Solicitor for the Respondent / Defendant 1: Kho Se Jia, Ho Chan Chon, See Cai Xia [MESSRS IZAD KAZRAN & CO. (KUALA LUMPUR)]