Ambank(M) Berhad v Precious Concrete Sdn Bhd (WA-22NCC-301-05/2024)

AND PRECIOUS CONCRETE SDN BHD

C&L MINERALS SDN BHD

LAW THIEN LOY

CHUAH CHONG EE

CHOO KHEN LON (NRIC NO.: 840212-05-5161) DEFENDANTS GROUNDS OF JUDGMENT A.

This is a case concerning the alleged breach of the obligations owed by the Defendants to the Plaintiff for the (i) Overdraft Facility bearing the account number 8881045111674 and the (ii) the Multi Trade (Trust S/N yFx4/fqJRka2SrE7Yus0bA Receipt). Both facilities were granted by the Plaintiff to the 1st Defendant Precious Concrete Sdn Bhd and guaranteed by the 2nd to 5th Defendants. B. APPLICABLE LAW – SUMMARY JUDGEMENT

The applicable law in this area is trite. This Court is duty bound to consider the affidavits and pleadings filed to ascertain whether the Defendant has shown a bona fide defence or existence of any issue or question to be tried or that there ought to be any reason for the matter to be determined at trial.

Summary Judgment should only be entered in a plain and obvious case. See Malayan Insurance (M) Sdn Bhd v Asia Hotel Sdn Bhd [1987] 1 CLJ 246, Kiwi Brands (Malaysia) Sdn Bhd v Multiview Enterprises Sdn Bhd [1998] 2 CLJ Supp 194 and TAC Construction & Trading v Bennes Engineering Bhd [1999] 2 CLJ 117.

This Court is also duty bound to analyse the affidavits filed as seen in the decision of the Supreme Court in Bank Negara Malaysia v Mohd Ismail Ali Johor & Ors [1992] 1 CLJ 627: - S/N yFx4/fqJRka2SrE7Yus0bA “Under an O. 14 application, the duty of a judge does not end as soon as a fact asserted by one party, and denied or disputed by the other in an affidavit. Where such assertion, denial or dispute is equivocal or lacking in precision or is inconsistent with undisputed contemporary documents or other statements by the same deponent or is inherently improbable in itself, then the judge has a duty to reject such assertion or denial, thereby rendering the issue not triable….”

The burden of proof is on the Plaintiff to show that they have a clear and undeniable claim against the Defendants. Once the Plaintiff shows to this Court that the facts justify the exercise of the said power under Order 14, then the burden moves to the Defendants to show that there are either bona fide defences to the claim or that there are issues that require deliberation through viva voce evidence and could only be determined at trial. Please refer to Cempaka Finance Bhd v Ho Lai Ying & Anor [2006]

This Court may grant leave to defend the claim if the Defendants have shown a triable issue, but if there is doubt whether the said defence is bona fide, then this Court may exercise its powers to grant leave with a S/N yFx4/fqJRka2SrE7Yus0bA condition that the sums claimed by the Plaintiffs are securitized by the Defendants. Please refer to Foong Weng Tat v Vu Siew Chin [1974] 1 LNS 34 and Builder Enterprise Sdn Bhd v Hang Nee Enterprise Sdn Bhd [2019] 1 LNS 56.

This Court may also enter judgment for part of the claim if it finds that the Defendants have no defence for part of the Plaintiff’s claim and fix the remainder of the claim to be heard at trial. C.

The Plaintiff had provided the 1st Defendant General Banking Facilities / Multi-Trade Finance Facilities up to the sum of RM 3.5 million as seen in the letter of offer dated 15-4-2021. The terms of the letter of offer were accepted by the 1st Defendant on 20-4-2021. The terms of the letter of offer were amended or extended by the subsequent letters dated 18-5-2021, 25-2-2022, 28-2-2022, 9-8-2022, 28-3-2023, 12-5-2023, 8-6-

S/N yFx4/fqJRka2SrE7Yus0bA

The Plaintiff and the 1st Defendant had also entered into the Facilities Agreement dated 12-11-2021.

The 2nd Defendant had entered into a Guarantee and Indemnity Agreement with the Plaintiff dated 12-11-2021. The material terms of the said Guarantee and Indemnity with the 2nd Defendant are as follows: S/N yFx4/fqJRka2SrE7Yus0bA S/N yFx4/fqJRka2SrE7Yus0bA S/N yFx4/fqJRka2SrE7Yus0bA

The 3rd to 5th Defendants had also entered into a Guarantee and Indemnity Agreement dated 12-11-2021. The terms of the said Guarantee and Indemnity are as follows: - S/N yFx4/fqJRka2SrE7Yus0bA S/N yFx4/fqJRka2SrE7Yus0bA S/N yFx4/fqJRka2SrE7Yus0bA S/N yFx4/fqJRka2SrE7Yus0bA

The 1st Defendant had allegedly committed an event of default by failing to comply with the terms of the Facility Agreement. A letter of demand was issued by the Plaintiff against the Defendants through the letter of demand dated 4-8-2023 for the full sums outstanding under the Facilities granted to the 1st Defendant.

A second letter of demand was issued to the Defendants via the solicitor’s letter dated 18-8-2023. The Plaintiff had terminated the facilities and demanded that the sum of RM 3, 333, 639.46 and the sums due under the terms of the Facility Agreement be paid to the Plaintiff from the S/N yFx4/fqJRka2SrE7Yus0bA Defendants in accordance with the terms of the agreements referred to earlier.

At the request of the 1st Defendant, the Plaintiff agreed to schedule the repayment of the sums due as seen in the letter dated 12-1-2024. This was agreed to by the 1st Defendant as seen in the resolution dated 18-1- 2024 that was executed by the directors of the 1st Defendant. The guarantors of the said Facility were notified of the scheduled of payments agreed to as seen in the notice dated 19-2-2024.

However, the 1st Defendant failed to pay the sums that were agreed to and rescheduled as mentioned above. This caused the Plaintiff to issue the notice of termination of the rescheduled payments as seen in the solicitor’s letter dated 29-3-2024 and that the Plaintiff demanded that payment be made in full of the sums due under the terms of the said Facilities. The notice was issued to all the Defendants by the solicitors for the Plaintiff. S/N yFx4/fqJRka2SrE7Yus0bA

The Plaintiff had also issued a Certificate of Indebtedness dated 19- 6-2024 confirming the amount due by the Defendants to it and this was further explained in the affidavit affirmed on 26-9-2024 in Enclosure 34. D. DEFENCE ALLEGED BY THE DEFENDANTS D4’s Defence 17. The 4th Defendant had suggested that the claim for summary judgment against him should be dismissed on the following grounds: -

That he had resigned from the board of directors of the 1st Defendant.

(ii) There was a variation of the Facility Agreement when the Plaintiff agreed to the reschedule the payment of the amount due to the Plaintiff as seen in the letter dated 12-1-2024 – reliance on section 86 of the Contracts Act 1950.

(iii) The claims by the 4th Defendant against the other Defendants for minority oppression.

I find that the above defences raised by the 4th Defendant do not justify denying the Plaintiff’s application for summary judgment. S/N yFx4/fqJRka2SrE7Yus0bA

Resignation from the Board of the 1st Defendant 19. On the first issue, I accept that the 4th Defendant did resign from the board of directors of the 1st Defendant. This does not mean that the 4th Defendant has a valid defence to the Plaintiff’s claim.

Clause 4.2 (c) of the Guarantee and Indemnity Agreement clearly states that the parties agreed that the changes in the constitution of the 1st Defendant will not cause the guarantee to cease or change the obligation of the 4th Defendant to the Plaintiff for the facilities granted to the 1st Defendant. This obligation remains as agreed to by the 4th Defendant.

Therefore, the cases of Standard Chartered Bank Malaysia Bhd v Menora Music (M) and 2 Ors [2010] MLJU 1904 and Kwong Yik Bank Bhd v Sa’adiah bte Mastan [1994] 2 MLJ 830 do not assist the 4th Defendant.

Instead, as agreed to by the 4th Defendant, he is bound to the terms of the said Guarantee and Indemnity even if he has resigned from the board of the 1st Defendant. I refer to Hong Leong Bank Bhd v HGM S/N yFx4/fqJRka2SrE7Yus0bA Machinery Sdn Bhd (Previously known as Handee Engineering & Consultancy Services Sdn Bhd) & Ors [2013] 9 MLJ 412 and Indian Overseas Bank v Goh Teng Hoon [1988] 3 MLJ 372. These two cases show that when there exists a clause that renders the obligation of the guarantee to continue despite his or her resignation from the board or employment of the debtor, this event does not release the guarantor from his obligations.

(ii) Alleged Variation of the Facility – Settlement dated 12-1-2024 23. On the issue of the alleged variation and the 4th Defendant’s reliance on Section 86 of the Contracts Act 1950 as well as on Affin Bank Berhad v KLT Pesat Bumi Sdn Bhd & Ors [2018] 1 LNS 1564 is of no assistance to the 4th Defendant.

I find that the fact that there was an agreement to provide a scheduled payment of the sums due under the Facility does not change the obligation of the 4th Defendant or even entitles him to be discharged from his obligation to the Plaintiff. Clause 4, clause 5 and clause 10 of the Guarantee and Indemnity executed by the 2nd to 5th Defendants provides that they are liable as a continuing guarantor for the Facilities granted to S/N yFx4/fqJRka2SrE7Yus0bA the 1st Defendant and they are required to pay to the Plaintiff all of the sums due under the terms of the said Facilities. The said Defendants are subject to what they have agreed to.

(iii) Internal Strife within the 1st Defendant 25. I also find that the alleged internal strife between the 1st Defendant and the other Defendants which led to the filing of the suit by the 4th Defendant for minority oppression, does not justify the dismissal of the application for summary judgment.

The dispute between the Defendants, does not negate their obligations to the Plaintiff for the facilities granted to the 1st Defendant. This continues to be an internal matter and has no impact on the Defendants’ obligation to pay the sums due to the Plaintiff in accordance with the terms of the agreements referred to earlier. D2, D3 & D5’s Defence 27. The other Defendants suggest that the claim against them by way of summary judgment should be dismissed. The said Defendants put forth the following defences: - S/N yFx4/fqJRka2SrE7Yus0bA

Whether the alleged outstanding sum claimed in the Statement of Claim is correct?

(ii) Whether the 1st Defendant had failed to make the monthly instalments due under the Facilities Agreement?

(iii) Whether Plaintiff is entitled to terminate the loan facilities despite 1st Defendant never neglected to pay the instalments of the loan facilities to Plaintiff?

(iv) Whether the 2nd, 3rd and 5th Defendants are liable when the claim against the 1st Defendant has not been proven?

Whether the inconsistency in the Plaintiff’s claim is valid and true?

(vi) Whether the outstanding amount stated is correct as the amount paid was not considered by the Plaintiff?

I find that the said defences raised are without any merit. I find that the affidavits filed in these proceedings have shown that the Defendants are liable to the Plaintiff for the sums due under the Facilities Agreement and the Guarantee and Indemnity Agreements referred to earlier.

As seen in clause 1 of the Guarantee and Indemnity Agreement executed by the 2nd to 5th Defendants, all of them agreed to act as the S/N yFx4/fqJRka2SrE7Yus0bA guarantor and as the principal of the sums due to the Plaintiff under the earlier referred Facility Agreement. The terms of the Guarantee and Indemnity Agreement have been fully complied with by the Plaintiff as the required notices for payments were issued to the Defendants. The receipt of these notices was not denied credibly by any of the Defendants.

I also find that Plaintiff has also proven that the 1st Defendant did fail to make the payments that are due under the terms of the Facility Agreement. Despite the agreement by the Plaintiff to reschedule payments of the sums due, the 1st Defendant failed to make the required payments as agreed. I also do not find any evidence that the 1st Defendant had complied with the terms of the Facility Agreement or any reason why the termination of the said agreements for the said facilities was wrongly undertaken by Plaintiff.

In the circumstances, as the Plaintiff had provided the required notices of demand to the 2nd to 5th Defendants, the said Defendants are legally required to pay the sums due to the Plaintiff in accordance with the terms of the Guarantee and Indemnity Agreement. S/N yFx4/fqJRka2SrE7Yus0bA

With regard to the alleged dispute as the validity of the Certificate of Indebtedness issued by the Plaintiff, I find that the defence raised is without merit.

On this issue, I find that the Certificate of Indebtedness is final and binding on the Defendants unless the Defendant is able to show that the said certificate contains any manifest error or that the calculation of the sums allegedly due was wrongly undertaken by the Plaintiff. This must be shown by the Defendants before this Court could reject the said certificate issued by the Plaintiff.

This is clearly explained in the decision of the Federal Court in Cempaka Finance Bhd v Ho Lai Ying & Anor [2006] 3 CLJ 544 where Steve Shim CJ (Sabah and Sarawak) held: - “[6] Although the case of Chen Heng Ping & Ors v. Intradagang Merchant Bankers (M) Bhd [1995] 3 CLJ 690 (CA), was relied on by the High Court in holding a certificate of indebtedness to be binding unless manifest error on the face of it or fraud is shown, the Court of Appeal in the instant case, seems to place no significance on this. Nor has it considered the fact that in Chen Heng Ping the court was S/N yFx4/fqJRka2SrE7Yus0bA able to distinguish the factual peculiarities in Bank of Commerce. It was a case where an error was manifested on the face of the certificate of indebtedness because the guarantee agreement had limited the guarantor's liability to RM140,000 whereas the suit had claimed for RM259,000. Indeed, the Court of Appeal in Chen Heng Ping cited with approval the observation expressed by VC George J in D & C Nomura Merchant Bankers Bhd v. Gunung Kuari Sdn Bhd [1990] 2 CLJ 58; [1990] 1 CLJ (Rep) 752 when he said: ... it was agreed that a certificate of indebtedness by an authorised officer of the plaintiff shall be binding and conclusive against the guarantors of the amount payable by the 1st defendant. In the instant case, there is such a certificate of indebtedness under the hand of an authorised officer of the plaintiff bank. The judgment of Shankar J in MIMB v. G & C Securities (unreported) and the judgment of Bank Bumiputra Malaysia Bhd v. Doric Development Sdn Bhd [1988] 1 CLJ 361 (Rep); [1988] 1 CLJ 311; [1988] 1 MLJ 462, 463 provided authority for the proposition that such a certificate is indeed binding unless there is manifest error. S/N yFx4/fqJRka2SrE7Yus0bA This observation appeared to has escaped the attention of the Court of Appeal in the present case. In the result, the Court of Appeal took the position that the conclusiveness of the certificate of indebtedness exh. P3 was binding only upon the parties and that the court would still have to determine whether sufficient evidence had been adduced to prove quantum and the correctness of the amount claimed. With respect, such a proposition goes against the entrenched principles enunciated by Raja Azlan Shah CJ (Malaya) (as His Highness then was) in Citibank N.A. v. Ooi Boon Leong & Ors [1980] CLJU 168; [1980] 1 LNS 168; [1981] 1 MLJ 282 when he said inter alia: We have often said in this court many a time that where the issues are clear and the matter of substance can be decided once and for all without going to trial there is no reason why the Assistant Registrar or the judge in chambers, or, for that matter, this court shall not deal with the whole matter under the R.S.C. Order 14 procedure. In the present case, the guarantee contains a clause which enables the bank by producing a certificate of indebtedness by its officer to dispense with legal proof of the actual indebtedness of the respondents.... It means that, for the purpose of fixing liability S/N yFx4/fqJRka2SrE7Yus0bA of the respondents, the company's indebtedness may be ascertained conclusively by a certificate. The above dictum establishes firmly the conclusive nature and extent of a certificate of indebtedness. A certificate of indebtedness operates in the field of adjectival law. It excuses the plaintiff from adducing proof of debt. Such a certificate shifts the burden onto the defendant to disprove the amount claimed. [7] In the instant case, the relevant cls. 27 and 7.03 of the loan agreement and guarantee agreement respectively are sufficiently clear. A clause of this nature has been described as a conclusive evidence clause. Such a clause has been held to be binding and valid by courts in Australia and England. In Dobbs v. National Bank of Australiasia [1953] 53 CLR 643, the Australian Court made the following observation which we think is instructive:- ... The bank could recover without the production of a certificate if, by ordinary legal evidence, it proved the actual indebtedness of the customer. But the (conclusive evidence) clause, if valid, enables the bank by producing a certificate to S/N yFx4/fqJRka2SrE7Yus0bA dispense with such proof. It means that for the purpose of fixing the liability of a surety, the customer's indebtedness may be ascertained conclusively by a certificate.... But the manifest object of the clause was to provide a ready means of establishing the existence and amount of the guaranteed debt and avoiding an inquiry upon legal evidence into the debits going to make up the indebtedness.”

It is therefore for the Defendants to show that the said certificate or the amount claimed is wrong or contains material errors that must be investigated at trial.

In this case, the Defendants have also failed to show material errors or any form of errors in the Certificate of Indebtedness. This must be shown by way of affidavit evidence filed by the Defendants. Since they did not do so, this Court accepts the said Certificate filed by the Plaintiff to be correct based on the balance of probabilities and evidence before this Court. More so, when the Plaintiff had filed an affidavit explaining how the said Certificate was calculated and that all sums paid have been considered. S/N yFx4/fqJRka2SrE7Yus0bA Summary – No Serious Issue to be Tried / No Bona Fide Defence and No Reason why the Claim for summary judgment should not be allowed 37. For the above reasons, I find that the Defendants have failed to prove the existence of any bona fide defence to the claim. As Plaintiff has shown that the sums claimed are due to it and that there are no bona fide defences to Plaintiff’s claim or the existence of any serious issue to be tried, judgment as prayed for by Plaintiff should be entered against the 2nd to 5th Defendants.

With regard to the 1st Defendant, I am informed that the said company was recently wound up by the High Court. Therefore, the claim against the 1st Defendant is struck out with liberty to file afresh.

For the above reasons, the following orders are entered against the 2nd to 5th Defendants: - S/N yFx4/fqJRka2SrE7Yus0bA Overdraft Facility under account no. 8881045111674

Amount of RM 425, 243.38 as at 30-4-2024 under the Overdraft Facility under account no. 8881045111674 together with default interest at the rate of 3.50% per annum based on the Base Lending Rate (BLR) (BLR as at 30-4-2024 is at 6.70% per annum and is subject to change from time to time) imposed on the amount due from 1-5-2024 until the date of full settlement. Multi Trade (Trust Receipt) Facility

(ii) Amount of RM 3, 088, 933.23 as at 30-4-2024 under the Multi Trade (Trust Receipt) Facility together with interest calculated based on the principal amount of RM 2, 776, 606.62 at the rate of 2.50% per annum based on the Base Lending Rate (BLR) (BLR as at 30-4- 2024 is at 6.70% per annum and is subject to change from time to time) and penalty interest at the rate of 1.00% per annum imposed on the outstanding amount from 1-5-2024 until the date of full settlement.

(iii) Solicitor’s cost based on a solicitor-client basis. S/N yFx4/fqJRka2SrE7Yus0bA

(iv) Cost of RM5,000 to be paid by each set of Defendants to Plaintiff subject to the allocator. Dated 19th November 2024 Dato’ Indera Mohd Arief Emran bin Arifin Judge High Court of Malaya at Kuala Lumpur NCC 5 S/N yFx4/fqJRka2SrE7Yus0bA Counsel: Yuganiya a/p Rajalingam for the Plaintiff Messrs. Azhar & Wong Advocates & Solicitors Atiqah Maisarah together with Nabila Zakariah for the 1st to 3rd and 5th Defendants Messrs. Ben Lee & Sharen Advocates & Solicitors Kamarul Akmal for the 4th Defendants Messrs. Rajes Hisham Rahim & Gopal Advocates & Solicitors S/N yFx4/fqJRka2SrE7Yus0bA