Sun Holding (Sun Park Hotel) Co. Ltd v Export-Import Bank of Malaysia Berhad (N-02(IM)-2411-11/2017)

BETWEEN

CHEOK SOON GUAN … APPELLANTS AND EXPORT-IMPORT BANK OF MALAYSIA BERHAD … RESPONDENT (In the High Court of Malaya at Seremban, Negeri Sembilan Civil Suit No: 22-351-2010 Between Export-Import Bank of Malaysia Berhad … Plaintiff

And Sun Holding (Sun Park Hotel) Co. Ltd

Cheok Tiam Cheng

Cheok Soon Guan … Defendants) 2 CORUM: HAMID SULTAN BIN ABU BACKER, JCA ABDUL KARIM BIN ABDUL JALIL, JCA HANIPAH BINTI FARIKULLAH, JCA JUDGMENT [1] This was the Appellants’ (defendants) appeal against the High Court’s decision on 31st October 2017 in allowing the Respondent’s (the plaintiff therein) application (enclosure 172) to strike out and dismiss the Appellants’ counterclaim dated 17th July 2013. [2] Nipping the issue in the bud, the singular issue in this case, as rightly raised by learned counsel for the appellants, revolves around the true meaning and effect of the Federal Court’s decision dated 25th November 2015 which states as follows: “PERINTAH RAYUAN INI yang ditetapkan untuk perbicaraan pada hari ini dalam kehadiran Gopal Sri Ram (Alvin Tang, C.K Lim, Ahmad Shahrizal Abdul Aziz dan David Yii bersamanya), peguamcara bagi pihak Perayu-Perayu dan Ghazi Ishak (Wan Muhammad Amin Wan Yahya dan Karlos Israphil Bendlin bersamanya), peguamcara bagi pihak Responden DAN SETELAH MEMBACA 3 Rekod-Rekod Rayuan yang kesemuanya difailkan di sini DAN SETELAH MENDENGAR hujahan pihak-pihak yang tersebut di atas MAKA ADALAH DENGAN SEBULAT SUARA DIPERINTAHKAN bahawa:

Rayuan ini dibenarkan berdasarkan kepada soalan undang-undang berikut yang dijawab di dalam negatif:- Di dalam Bahasa Melayu Samada klausa pilihan undang-undang di dalam suatu kontrak di antara warganegara Malaysia dan sebuah syarikat yang diperbadankan di Negara asing berkenaan dengan suatu gadaian hartanah asing menentukan bidangkuasa Mahkamah Malaysia untuk memperbicarakan suatu pertikaian yang berbangkit dari gadaian tersebut setelah pihak-pihak telah bersetuju (‘submitted’) kepada bidangkuasa tak-ekslusif Mahkamah-Mahkamah Malaysia? Di dalam Bahasa Inggeris Does a choice of law clause in a contract between a Malaysian and a company incorporated in a foreign country in respect of a mortgage of foreign land determine the jurisdiction of a Malaysian Court to entertain a dispute arising out of that mortgage when the parties have submitted to the non-exclusive jurisdiction of the Malaysian Courts?

Perintah-Perintah Mahkamah Rayuan dan Mahkamah Tinggi berkenaan dengan Tuntutan-Balas Perayu-Perayu sahaja diketepikan;

Perintah kos yang diawadkan oleh Mahkamah Rayuan dan Mahkamah Tinggi diketepikan;

Kes ini dihantar semula ke Mahkamah Tinggi di hadapan Yang Arif Hakim, Datin Zabariah Mohd Yusof untuk Tuntutan-Balas Perayu-Perayu diputuskan; 4

Kos rayuan ini sebanyak RM25,000.00 dibayar oleh Responden kepada Perayu-Perayu; dan

Deposit dikembalikan kepada Perayu-Perayu DIBERI di bawah tandatangan saya dan Meterai Mahkamah pada 25 November 2015.” [3] After considering the submissions of respective counsel, and upon proper consideration of the learned Judge’s reasons for making that order, and the appeal records, we unanimously allowed the appeal, finding that there was basis for appellate intervention. Resultantly, we ordered the counterclaim to be remitted back to the High Court for it to be determined accordingly as ordered and directed by the Federal Court via the aforementioned order dated 25th November 2015. [4] The facts leading to the present appeal are not in dispute. For the purpose of this appeal, and within the confine of the above issue, the pertinent facts have been ably summarized by the learned trial judge as follows: “3. In the main action, the Plaintiff’s claim against the Defendants in the High Court is for outstanding sums due under 2 Facility Agreements executed by the 1st Defendant (D1) and guaranteed by the 3rd and 4th Defendants (D3 and D4). The 2nd Defendant (D2) was adjudicated a bankrupt by the Seremban High Court on 5.3.2012 and remains an undischarged bankrupt. There has been no sanction obtained from the Director General of Insolvency. Therefore, D2 has no capacity to maintain or pursue the counterclaim.

The Defendants’ counterclaim is premised on the Plaintiff’s breach of duty of care in selling secured assets at a gross undervalue. The Defendants contend that such breach resulted in the loss and 5 damages to the Defendants in the sum of no less than USD113.4 million.

The case went for full trial in the High Court and the High Court delivered decision as follows: i) The Plaintiff’s claim was allowed in the sum of USD1,294,154.31 (as at 22.3.2013 ) with interest and costs; ii) The Defendants’ counterclaim was dismissed on the ground that the High Court had no jurisdiction to determine the same, and that it should be determined in Lao PDR.

The Defendants appealed to the Court of Appeal and the Court of Appeal dismissed the Appeal and affirmed the decision of the High Court.

Dissatisfied, the Defendants appealed to the Federal Court. The Federal Court affirmed the decision of the High Court and the Court of Appeal as far as the main claim by the Plaintiff is concerned. However, on the counterclaim, the Federal Court allowed the Defendants’ Appeal premised on the following questions of law which was answered in the negative: “Does a choice of law clause in a contract between a Malaysian and a company incorporated in a foreign country in respect of a mortgage of foreign land determine the jurisdiction of a Malaysian Court to entertain a dispute arising out of that mortgage when the parties have submitted to the non-exclusive jurisdiction of the Malaysian Courts?” It is to be noted that only the Judgment of the High Court and the Court of Appeal with regards to the counterclaim of the Defendants was set aside by the Federal Court. As far as the main claim is concerned the decision of the High Court and the Court of Appeal remains. The Federal Court ordered that: “Kes dihantar semula ke Mahkamah Tinggi….untuk tuntutan balas Perayu-Perayu diputuskan.”

When the case was remitted back to the High Court, in the course of case management for the fixing of the hearing dates of the 6 counterclaim of the Defendant, the Plaintiff filed Enclosure 172, which is a striking out application of the Defendants’ counterclaim….” (Emphasis added) [5] As alluded earlier, learned counsel for the appellants raised only one hard issue which will decisively determine this appeal. The issue revolves around the true effect of the said Federal Court’s order; more particularly on the words “…untuk tuntutan balas Perayu-Perayu diputuskan.”. According to learned counsel, the effect of the order lies decisively on the words “diputuskan” and the learned judge must decide and deliver a decision on the counterclaim and should not have entertained the Respondent’s application as per enclosure 172 to strike it out instead. In his short and sharp summation, learned counsel submitted that the concerned Federal Court’s order was very clear in its terms and cannot be disobeyed. [6] Learned counsel for the Respondent strenuously disagreed with the above learned counsel for the Appellants’ contention. Referring to the Respondent’s written submissions and rebuttal notes, the sum total of his argument was that the learned judge has the discretion to deal with the case in whatever manner she deems fit including to strike out the Appellants’ counterclaim at any stage of the proceeding which she correctly did in the present case (see cases referred to in Appendix B of the Respondent’s Further Rebuttal Notes). [7] After considering arguments of both parties, and after properly reading and appreciating the said Federal Court’s order, we cannot but 7 agree with learned counsel for the Appellants’ submission as to its meaning and effect in toto. Based on the brief backdrops of the case as narrated above, we take the view that the terms of the order have to be read and understood in the setting that it was placed. It is not disputed that the trial on the Respondent’s claim and the Appellants’ counterclaim had been concluded. Nevertheless, at the end of the trial, the learned judge dismissed the Appellants’ counterclaim on a threshold jurisdictional point, which was affirmed subsequently by the Court of Appeal. The Appellants however succeeded in securing the Federal Court Order in 2015 where the decision on the counterclaim was set aside and the counterclaim was remitted back to the High Court to be decided or determined (“untuk diputuskan”). In this setting, we are of the view that the word “diputuskan” is very clear and carry the meaning that the counterclaim must be decided on its substantive merits. To us, it needs no authority to support the elementary principle that the Federal Court order, being the apex court, binds all concerns and must be obeyed. The learned judge has no discretion but to obey it. Thus, the learned judge was plainly wrong when she allowed the Respondent’s enclosure 172, the effect of which is to go against the clear order of the said Federal Court’s decision. [8] Resultantly, we set aside the order of the High Court in allowing the Respondent’s application in enclosure 172. Pursuant to the binding effect of said Federal Court’s order, we hereby directed the learned judge to deliver her decision on the counterclaim on its substantive 8 merits. The Appellants’ appeal was therefore allowed with cost of RM 20,000.00, (here and below) subject to allocator. t.t (ABDUL KARIM BIN ABDUL JALIL) Judge Court of Appeal Dated : 2nd July 2019 For the Appellant: Datuk Seri Gopal Sri Ram (with Alvin Tang, Teo Ju-Li, Emily Wong, Ng Jun Wei, Damien Chan) Messrs Bodipalar Ponnudarai De Silva For the Respondent: Logan Sabapathy (with Wan Muhammad Amin Wan Yahya, Karlos Israphil Bendlin, Carmelia Cheong, Jowe Almeida)