1. Suzina Zaimarwati Binti Omardin v Credit Guarantee Corporation Malaysia Berhad (BA-12ANCC-1-02/2017)

SUZINA ZAIMARWATI BINTI OMARDIN

ERWAN BIN ZAFRY

SHEIKH SALLEH BIN SHEIKH ABOD (NO. K/P: 530612-01-5261 / 4457765) … PERAYU-PERAYU DAN CREDIT GUARANTEE CORPORATION MALAYSIA BERHAD (NO. SYARIKAT : 12441-M) … RESPONDEN (DALAM MAHKAMAH SESYEN DI SHAH ALAM DALAM NEGERI SELANGOR DARUL EHSAN, MALAYSIA SAMAN NO: BA-A52NCC-147-06/2016 ANTARA CREDIT GUARANTEE CORPORATION MALAYSIA BERHAD (NO. SYARIKAT: 12441-M) … PLAINTIF

SUZINA ZAIMARWATI BINTI OMARDIN

ERWAN BIN ZAFRY

SHEIKH SALLEH BIN SHEIKH ABOD (NO. K/P: 530612-01-5261 / 4457765) … DEFENDAN-DEFENDAN) 2 GROUND OF JUDGMENT Introduction [1] This is an appeal by the Appellants (1st, 2nd and 3rdDefendants) against the decision of the Session Judge whom allowed the Respondent’s (Plaintiff) application for summary judgment under Order 14 of Rules of Court 2012 (ROC 2012) on 23.1.2017. [2] In this judgment, the parties will be referred to as they were in the Sessions Court. At times, ‘the Defendants’ will be referred individually as ‘the 1st Defendant’, ‘the 2nd Defendant’ and ‘the 3rd Defendant’ or as ‘the 1st, 2nd and 3rd Defendants’. [3] Having read both counsels’ written submissions, the Appeal Record and the written judgment of the learned Session Judge and after hearing the oral submissions of both counsels, I dismissed the appeal with costs. My grounds follow. Brief Facts [4] The background facts leading to this appeal can be summarised based on the Record of Appeal and the written submission of both counsels as follows:

The Plaintiff’s claim is for the amount of RM248,191.80, the outstanding sum owed by the Defendants from an overdraft 3 facility provided by Malayan Banking Berhad (MBB) to Golden CallibreSdnBhd (GCSB) (the Borrower).

The Plaintiff is a registered company in Malaysia, having its address at 14th Floor, Bangunan CGC, Kelana Business Centre, 97 Jalan SS7/2, 47301 Petaling Jaya, Selangor Darul Ehsan. The Plaintiff claimed that the Plaintiff’s purpose is providing loan facilities to any borrowers who wish to apply for overdraft facility to start a business with banking institution of Malaysia.

The 1st Defendant is an individual having the service of contract address at Golden Calibre Sdn Bhd, No. 77, Jalan PJS 11/9, Bandar Sunway, 46150 Petaling Jaya, Selangor Darul Ehsan and/or at No. 37, Jalan Athinahappan 5, Taman Tun Dr Ismail, 60000 Kuala Lumpur and/or at No. 11, Jalan Sultan Muhammad 9/9, 40100 Shah Alam, Selangor Darul Ehsan.

The 2nd Defendant is an individual having the service of contract address at the Golden Calibre Sdn Bhd, No. 77, Jalan PJS 11/9, Bandar Sunway, 46510 Petaling Jaya, Selangor Darul Ehsan and/or at No. 4, Jalan USJ 3/4F, 47600, Subang Jaya, Selangor Darul Ehsan and/or at 36, Lorong Cheong Yoke Choy, Off Jalan Cochrane, 55100 Kuala Lumpur.

The 3rd Defendant is an individual having the service of contract address at Golden Calibre Sdn Bhd, No. 77, Jalan PJS 11/9, 4 Bandar Sunway, 46510 Petaling Jaya, Selangor Darul Ehsan and/or at 37, Jalan Athinahappan 5, Taman Tun Dr Ismail, 60000 Kuala Lumpur and/or at No. 11, Jalan Sultan Muhammad 9/9, 40100 Shah Alam, Selangor Darul Ehsan.

The Plaintiff claimed that upon the Defendants’ request, the Malayan Banking Berhad (MBB) offered an overdraft facility to the Borrower amounting to RM500,000.00 based on a Credit Guarantee Corporation Direct Access Guarantee Scheme – Tabung Usahawan Bumiputra (the Loan Facility) through the offer letters of 30.3.2002, 13.4.2002 and 15.5.2002 (offer letter) and the Loan Agreement of 5.6.2002 (Loan Agreement).

The 1st, 2nd and 3rdDefendants are the guarantors of the Borrower based on the Letter of Guarantee of 5.6.2002 (Letter of Guarantee) and agreed to repay any demands made by MBB if a breach of contract occurred by the Borrower (Exhibit FSK- 4).

Based on the Letter of Guarantee, it was agreed between MBB and the Defendants, among others, the 1st, 2nd and 3rd Defendants agreed to bear all debts owing and due by the Borrower and the notice and legal process will be served via prepaid registered post or ordinary post to the 1st, 2nd and 3rd Defendants and the service is deemed to have effected five days after the date of posting. 5

Based on a Notice of Subrogation from MBB to the Plaintiff dated 20.2.2014 (Notice of Subrogation), MBB agreed that all debts owing by the Borrower are subrogated to the Plaintiff and the Plaintiff will take over all rights and interests of MBB as in the offer letter and the Loan Agreement. The Notice of Subrogation of 20.2.2014 and the Letter of Disclaimer of 20.2.2014 are referred to as Exhibit FSK-5 (pages 109-110 of Record of Appeal).

The Plaintiff claimed that the Borrower failed to make the installment payments and the outstanding sum of the loan became due and owing to MBB. On 20.4.2015 the Borrower went for a winding up process (winding up company based on Insolvency Department’s information of 16.6.2016, Exhibit FSK- 1).

The Plaintiff claimed that upon MBB’s demand, the Plaintiff settled the payment of the outstanding sum of the Borrower, as agreed in the offer letter and the Loan Agreement. The Plaintiff is claiming for the subrogated sum of RM248,191.80 as of 31.3.2016 together with interests and costs.

The Plaintiff claimed that as an agreed settlement by the Borrower, the Borrower issued five post-dated cheques to the Plaintiff dated 28.3.2014, 28.4.2014, 28.5.2014, 28.6.2014 and 28.7.2014 (Exhibit FSK-7) where one of the signatories to the 6 cheques is the 3rd Defendant, who is also the director of the Borrower.

The Defendants on the other hand, denied that there were debts by the Borrower that were subrogated to the Plaintiff (paragraph 7, page 17 of Appeal Record) that are within the Defendants’ knowledge and stated that the Plaintiff bears the burden to prove as such.

The Defendants stated that the guarantee given was subjected to the specific terms between MBB and the Defendants only that the guarantee was for any debts of Borrower which is valid under any law and contract. The Defendants also strongly objected that they ever agreed to the subrogation to Plaintiff by MBB or by any persons and denied the existence of a privity of contract between them and the Plaintiff.

The Plaintiff claimed that the Plaintiff had served the Notice of Demand of 25.4.2016 to the Defendants based on the service of contract and addresses, demanding for the RM248,191.80 as of 31.3.2016 with interests. The Plaintiff claimed that till date, the Defendants refused and or neglected to repay although the Writ Summons of 24.6.2016 had been served regularly. 7 Defendant’s submission [5] Briefly, the learned counsel for the Defendant advanced several grounds for this appeal, asserting that there are triable issues that should be heard for full trial. It is submitted that the Borrower is faced with winding up and the Letter of Guarantee of 5.6.2002 had been tampered which is an act of fraud that would be prejudicial to the Defendants. [6] The counsel for the Defendants averred that the Letter of Guarantee had been re-dated, relying on clause 35 where additional words to clause 35 were made without the Defendants’ knowledge and agreement as the amendments were made after the Letter of Guarantee was signed and stamped, highlighted one of the amended clause: “Dated the 5 JUN 2002 day of Credit Guarantee Corporation Malaysia Berhad (“CGC”) shall be allowed for subrogation of all rights of the Lender against the Customer in respect of any amount paid by CGC in accordance to the scheme. Dated the 5th day of June 2002” [7] The Defendants’ counsel submitted that the Plaintiff had failed to adduce any evidence that there is an independent document that despite Defendants consent to guarantee, is subjected to subrogation. The counsel for the Defendants averred that there is no specific provision on subrogation which extends to the Letter of Guarantee. 8 [8] The Defendants’ counsel further argued on the issue whether the offer letter is a subrogation, on the basis that if the Letter of Guarantee is valid, then there is no need to have such clause in the offer letter for MBB to subrogate its rights to the Plaintiff. [9] It is also submitted that where there is a failure of frank disclosure, the onus is on the Plaintiff to proof the truthful and in this case, the Plaintiff had stated that it is an internal document where no document is submitted and therefore there is no proof by the Plaintiff. [10] It is averred by the Defendants’ counsel that the discussion prior to winding up of the Borrower is not ipso facto be used as an admission of guilt. [11] The counsel for the Defendants also raised the issue about the interests which was non-existent at the time of the alleged subrogation on 20.2.2014 and asserted that there are issues to be tried. Plaintiff’s submission [12] The learned counsel for the Plaintiff submitted that the issue of fraud and tampered documents raised by the Defendants were never pleaded in their Defence of 1.9.2016. The Plaintiff’s counsel averred that in relation to tampering of document as claimed by the Defendants, there was no police report made and the Defendants never objected earlier when they signed the Letter of Guarantee. The Plaintiff’s counsel submitted that there was no 9 tampering, it was the Defendants assertion and therefore the Defendants bear the burden to show to the Court the tampered documents. [13] It is submitted that the Defendants should exhibit the actual letter tampered before voicing allegation of tampering which was never exhibited by the Defendants. It is submitted that such failure to plead cannot be rectified by way of affidavit: Sivakumar a/l Varatharaju Naidu v Ganesan a/l Retanam [2010] 7 MLJ 355; United Malayan Banking Corp Bhd v Palm & Vegetable Oils Sdn Bhd & Ors [1983] 1 MLJ 206. In relation to clause 35, the Plaintiff took a position that this was an amendment done before the Defendants signed the Letter of Guarantee. [14] It was brought to this Court’s attention on the letter (page 153 of Appeal Record) where the Borrower wrote to the Plaintiff dated 12.6.2013, admitting the debt, stating “as discussed” and Defendants agreed to restructure the existing loan facility into a term loan. [15] In relation to the Notice of Subrogation, the relevant clause is pointed out stating the guarantors as ‘joint & several’ and that the offer letter showed that the CGC, the Plaintiff, has the right to subrogate (page 32 of Record of Appeal). The Plaintiff’s counsel relied on the cases, Credit Guarantee Corporation Malaysian Berhad v Ang Kah Hua & Anor [2011] 1 LNS 728 and Credit Guarantee Corporation Malaysian Berhad v Wetape Industries Sdn Bhd & Ors [2012] MLJU 116, submitting that the Plaintiff has the right to claim for the outstanding sum from the Defendants as the Plaintiff had paid the same amount to MBB. 10 APPEAL [16] Briefly, matters pertaining to a summary judgment under Order 14 of ROC 2012 had been decided in a plethora of cases that it is a procedural device to expedite a plaintiff’s action where there is no dispute as to facts and law: Malayan Insurance (M) Sdn Bhd v Asia Hotel Sdn Bhd [1987] 2 MKLJ 183. It is trite law that the burden to prove is on the plaintiff to establish a prima facie case: Bank Negara Malaysia v Mohd Ismail Ali Johor &Ors [1992] 1 CLJ (Rep) 14, Supreme Court. [17] Once a prima facie case had been established by the plaintiff, the burden then shifts to the defendant to show why an order for summary judgment ought not to be entered against the plaintiff, that is, the defendant must show that there are issues to be tried: Shell Malaysia Trading Sdn Bhd v Filotek Trading Sdn Bhd [1999] 8 CLJ 592, High Court Penang; Fira Development Sdn Bhd v Goldwin Sdn Bhd [1989] 1 CLJ 34, Federal Court. [18] This Court viewed that the issues revolving around the appeal is mainly concerning the outstanding sum under the loan facility to be payable by the Defendants and whether the outstanding sum was subrogated to the Plaintiff via the Notice of Subrogation by the MBB. Reverting to the facts, there was an agreement for a loan facility between the Borrower and MBB as spelt out in the offer letter and the Loan Agreement where the Defendants are the guarantors of the Borrower. 11 [19] Upon careful perusal of the offer letter (pages 32 – 43 of Appeal Record), the terms and conditions dated 30.3.2002,it was offered to the Borrower the overdraft facility of RM500,000.00 (page 32 of Appeal Record), where it is a ‘joint and several guarantee for RM500,000.00 to be executed’ by the Defendants (page 33 of Appeal Record) and that in the event of default (paragraph 2 of ‘OTHER TERMS AND CONDITIONS’, page 33 of Appeal Record), “… you agree that CGC shall be subrogated to all rights of the Financial Institution against you in respect of the amount paid by CGC in accordance to the DAGS Scheme….” [20] This Court also viewed that the offer letter was accepted, signed by the 3rd Defendant dated 2.4.2002. Accordingly, the Loan Agreement (pages 49 – 88 of Appeal Record) laid out the terms as the offer letter which defined the joint and several guarantee where the 1st Defendant and 2nd Defendant are named (page 51 of Appeal Record), the individual guarantee is the 3rd Defendant (page 50 of Appeal Record) and the subrogation is stated under Schedule 1 of the Loan Agreement under the heading of ‘Other Terms and Conditions’, paragraph 2 (page 88 of Appeal Record). [21] Upon careful perusal of the Letter of Guarantee (pages 90 –99 of Appeal Record), the named guarantors which comprise the 1st and 2nd Defendants had signed, ‘jointly and severally, agree and guarantee’ to pay on demand all moneys owing and which remained unpaid. The Letter of Guarantee is a continuing guarantee following clause 12and based on clause 17 (page 95 of Appeal Record), the Defendants are the ‘sole and 12 principal debtors’ if the money which are not recoverable “shall nevertheless be recoverable from me/us or each of us…” [22] The issue of MBB’s rights had been subrogated was contended by the Defendants. The definition of subrogation can be referred in Daulat Ram Prem, HK Saharay, ‘Prem & Saharay’s Judicial Dictionary of Words and Phrases’, Second Edition, 2016, at page 4671, where it means, “1. The substitution of one party for another whose debt the party pays, entitling the paying party to rights, remedies, or securities that would otherwise belong to the debtor. For example, a surety who has paid a debt is, by subrogation, entitled to any security for the debt held by the creditor and the benefit of any judgment the creditor has against the debtor, and may proceed against the debtor as the creditor would.” To support this principle, I rely on the case of Credit Guarantee Corporation Malaysian Berhad v Ang Kah Hua & Anor [2011] 1 LNS 728as attributed by the Plaintiff’s counsel that it relates to the substitution of one person for another, that is one creditor for another. [23] The subrogation rights are expressly stated in the offer letter and the Letter of Guarantee. In addition, the subrogation is clearly provided by way of the Notice of Subrogation and the Letter of Disclaimer of 20.2.2014 (pages 109 and 110 of Appeal Record). In the latter, it is stated that in consideration of the settlement between Plaintiff and MBB, ‘the Lender’, 13 MBB disclaims all its rights to “enforce, demand, claims and proceed with recovery, legal or any actions in relation to the Facility …against the Borrower and Guarantor.” Further, MBB acknowledged that all such rights to enforce, demand, claims and proceed against the Defendants have been subrogated to the Plaintiff (page 110 of Appeal Record). This Court also finds that the Notice of Subrogation of 20.2.2014 had been served by registered post and ordinary mail to the 1st and 2nd Defendants (page 109 of Appeal Record). [24] This Court also finds that the Defendants admitted in its Defence that in reference to paragraph 5 of the Plaintiff’s Statement of Claim in relation to the overdraft facility, the Loan Agreement, is subjected to specific terms between MBB and the Borrower (paragraph 4, page 16 of Appeal Record) which this Court viewed as an admission of the debt following section 17 of Evidence Act 1950;the case attributed by Plaintiff’s counsel, Ulu Selangor Estates Sdn Bhd v Ng Kim Leng [1993] 3 CLJ 182. This Court also rely on the case by the Federal Court, Yam Kong Seng & Anor v Yee Weng Kai [2014] 4 MLJ 478 where it is held that judicial admission in the pleading stands on a higher footing than evidentiary admission and any failure of the to rebut the admission would entitle the other party to enter judgment. [25] Based on the documentary evidence of the offer letter, the Loan Agreement, the Letter of Guarantee, the Letter of Disclaimer, the Notice of Subrogation and the letter of 12.6.2013 by the Borrower, there is a prima facie case established by the Plaintiff on the balance of probabilities that 14 the Defendants are the guarantors to the outstanding sum of the Borrower and the agreed subrogation rights of MBB to the Plaintiff. [26] In relation to the triable issues, it is the Defendants’ contention that the Letter of Guarantee was tampered. This Court viewed that when the Defendants averred of tampering documents and that there is fraud, the onus to proof shifts to the Defendants, on the balance of probabilities to prove as such. To prove fraud, the standard is on balance of probabilities: Letchumanan Chettiar Alagappan @ L Allagappan (as executor to SL Alameloo Achi alias Sona Lena Alamelo Acho, deceased) & Anor v Secure Plantation Sdn Bhd [2017] 4 MLJ 697. [27] This Court viewed that upon careful perusal of the Defence, there was no mention of tampering of documents by the Plaintiff nor allegation of fraud on the Plaintiff’s part. Allegation of fraud must be specifically pleaded. This Court holds the view that parties are bound by their pleadings which are facts pleaded for their action: Dato’ Tan Chin Woh v Dato’ Yalumallai @ M Ramalingam s/o V Muthusamy [2016] MLJU 641,FC. [28] In view of non-pleaded material fact on the tampered documents and fraud by the Defendants’, such statement cannot be made good by affidavit evidence: Sivakumar a/l Varatharaju Naidu v Ganesan a/l Retanam [2010] 7 MLJ 355; United Malayan Banking Corp Bhd v Palm & Vegetable Oils Sdn Bhd & Ors [1983] 1 MLJ 206. [29] Nevertheless, this Court had a close scrutiny of clause 35 of the Letter of Guarantee, as alleged by the Defendants to be tampered, this 15 Court finds no such tampering as the amendments had been initialed by the parties and stamped with the date stating as 18.3.2002, which is before the date of signing, 5 June 2002 (page 98 of Appeal Record). This Court finds that the amendments made were prior to Defendants signing which proves to show that upon signing the Letter of Guarantee, the Defendants are aware of the amendments made to the Letter of Guarantee. [30] This Court viewed that the certificate of indebtedness (page 117 of Appeal Record) is clearly provided as in clause 16 of the offer letter, clause 19.1 of the Loan Agreement and is provided in the Letter of Guarantee under clause 11. Such certificate of indebtedness is a conclusive evidence clause which does not require the Plaintiff to adduce proof: Cempaka Finance Bhd v Ho Lai Ying (trading as KH Trading) & Anor [2006] 2 MLJ 685. [31] The letter by the 3rd Defendant of 12.6.2013 (pages 152 – 154 of Appeal Record) to the Plaintiff clearly showed the agreed arrangement to restructure the existing facility into term loan at the rate to be determined by the Plaintiff, proves to show that the subrogation of MBB’s rights are within the Defendants’ knowledge and is an admission of the existence of the debt by the Defendants. It is also a fact that the Defendants, by their conduct, had issued post-dated cheques which clearly is an admission of the debt (pages 115 – 116 of Appeal Record). The Statement of Account (pages 112 – 113 of Appeal Record) proves to show that the Borrower had been making the payments including interests for the loan facility. This Court could not find even one triable issue for this Court to disallow for summary judgment to be entered. 16 [32] This Court also finds that the Session Judge had evaluated all the facts and evidence as reflected in her written judgment (pages 10 -21 of Supplementary Appeal Record) where reference was made to authorities on the principle of subrogation upon perusing both parties’ affidavits and the exhibits adduced by the Plaintiff particularly the Letter of Guarantee, the offer letter and the Borrower’s letter of 12.6.2013 to the Plaintiff where the 3rd Defendant agreed to restructure the existing facility into a term loan at a rate to be determined by the Plaintiff (pages 12 – 13 of Supplementary Appeal Record). [33] The Session Judge also made a finding of fact that there was directors’ meeting attended by the 1st and 3rd Defendants together with the Plaintiff agreeing to the restructuring of the facility and subrogation, which estops the Defendants from denying Plaintiff’s rights to subrogation (pages 13 - 15 of Supplementary Appeal Record). In light of the above reasons, the appeal is dismissed with costs. Dated: 26 June 2018 (ZALITA BINTI ZAIDAN) Judicial Commissioner Shah Alam High Court 17 COUNSEL FOR THE APPELLANTS CHERIAN A/LKC KURUVILA Tetuan Feroz & Co. No. 15, Persiaran Damansara Endah Damansara Heights 50490 Kuala Lumpur [Ruj: FZ/23-43/16/5256] Tel: 03-03-2095 4115 Fax: 03-2095 6115 COUNSEL FOR RESPONDENT

RASHIDI UMMI SALHAH BINTI MOHAMAD Tetuan Lua & Mansor No. 11-1, Jalan PJS 11/28 Bandar Sunway 46150 Petaling Jaya Selangor Darul Ehsan [Ruj: LMS/CGC/436/13/NJ]