Ambank (M) Berhad v Bina Puri Holdings Bhd (WA-22NCC-267-06/2020)

This was an application by the Plaintiff for summary judgment under Order 14 Rule 1(1) of the Rules of Court, 2012 (“ROC”) against the Defendant (Enclosure 7) (“this Application”).

At the request of the Defendant, the Plaintiff had vide a Letter of Offer dated 29.12.2010 (“the LO dated 29.12.2010") granted a General Banking Facilities not exceeding the limit of RM10,000,000.00 which comprises of the following facilities subject to the terms and conditions of the said LO dated 29.12.2010: Page 2 of 17 i) Overdraft Facility not exceeding limit of RM5,000,000.00 (“OD”); and ii) Bank Guarantee Facility not exceeding limit of RM5,000,000.00 (“BG”). (“the 1st General Banking Facilities”)

Further, vide a Letter of Offer dated 18.8.2016 (“LO dated 18.08.2016”), a Supplemental Letter of Offer dated 01.9.2016 (“Supplementary LO dated 1.9.2016”) and a Facility Agreement dated 23.9.2016 (“the FA dated 23.09.2016”), the Plaintiff had agreed to offer a Temporary Overdraft Facility not exceeding limit of RM25,000,000.00 (“Temporary OD”) to the Defendant, subject to the terms and conditions contained therein.

As a security and consideration of the payment of the Temporary OD, a Deed of Assignment (Business Agreement) dated 23.9.2016, a Memorandum of Deposit dated 23.9.2016 and a Letter of Set-Off dated 23.9.2016 were entered between the Plaintiff and the Defendant.

Subsequent to that, vide Supplemental Letter of Offer dated 30.8.2017, the Plaintiff had agreed to review the OD and the Temporary OD Facilities.

The Plaintiff, by way of Letter of Offer dated 07.9.2017, a Supplemental Letter of Offer dated 26.9.2017 and a Facilities Agreement dated 20.12.2017, offered a General Banking Facilities not exceeding the limit of RM53,000,000.00 to the Defendant which comprises of the following facilities: i) Revolving Credit 1 not exceeding limit of RM 15,000,000.00 (“RC1”); ii) Revolving Credit 2 not exceeding limit of RM 15,000,000.00 (“RC2”); iii) Performance Bank Guarantee not exceeding the limit of RM13,000,000.00; and iv) Multi Trade Facilities which comprises of the following facilities: Page 3 of 17 a) Letter of Credit not exceeding the limit of RM10,000,000.00; b) Trust Receipt not exceeding the sublimit within the approved LC limit of RM10,000,000.00; and c) Banker’s Acceptance not exceeding the sublimit within the approved LC limit of RM10,000,000.00. (“the 2nd General Banking Facilities”)

As a further security and consideration of the 2nd General Banking Facilities, a Deed of Assignment (Contract Proceeds) dated 20.12.2017, a Deed of Assignment (Insurances) dated 20.12.2017 and a Deed of Assignment and Charge over Accounts dated 20.12.2017 were entered between the Plaintiff and the Defendant.

Subsequent to that, vide a Supplemental Letter of Offer dated 4.12.2019 (“Supplementary LO of 4.12.2019”) issued by the Plaintiff, the Plaintiff had approved the restructuring of the Facilities, subject to the condition that the Defendant shall return the duly signed Supp LO within 7 days thereof.

The Defendant had vide its letter dated 12.12.2019 appealed to the Plaintiff to revise the terms and conditions of the Supplementary LO of 4.12.2019 (“the Defendant’s appeal”).

Subsequently, the Defendant vide its letter dated 29.5.2020 requested the Plaintiff to deduct RM650,000.00 from the AmBank Current Account No. 888-102159-7466 for late payment charges and interest payments due and owing under RC1 and RC2 Facilities.

The Plaintiff had vide its letter dated 5.6.2020 (“Plaintiff’s Letter of 5.6.2020”) informed the Defendant as follows: i) That the Plaintiff was unable to accommodate the Defendant’s appeal and that the offer in the Supplementary LO of 4.12.2019 was deemed lapsed; ii) Notwithstanding the same, the Plaintiff was amiable to revisit and review the restructuring of the Facilities, subject to the Page 4 of 17 following terms, failing which the Plaintiff would exercise its right for the recovery of the Facilities: a) The compliance to the Plaintiff’s Letter of 5.6.2020 addressed to the Bina Puri Sdn Bhd (a related company to the Defendant) vis-a-vis the settlement of RM3,362,946.97 as at 1.6.2020 together with interest accruing thereon and such other incidental cost and expenses incurred (if any) computed until settlement of the Facilities within 7 days from the date thereof; b) Latest status update on the Defendant’s settlement arrangement with Bank of China and the receipt by the Bank the original document of title in respect to Wisma Bina Puri on or before 15.6.2020; and c) Remittance of minimum RM5,000,000.00 to the Plaintiff being the overdue payment entitlement from Prima Corporation Malaysia as per Clause 3.1 of the Mutual Termination Agreement dated 17.3.2020 (to the Master En-Bloc Purchase Agreement dated 23.5.2016) on or before 15.6.2020.

However, the Defendant did not comply with the terms of the Plaintiff’s Letter of 5.6.2020 and as such according to the Plaintiff the Plaintiff’s offer in the Supplementary LO 4.12.2019 had lapsed.

It was further contended by the Plaintiff that further and as an alternative, the Defendant had thereafter breached Clause 13.1(g) of the Facility Agreement and Facilities Agreement, namely the "Cross Default clause”, as well as Clause 6(d) of the “Standard Terms and Conditions” (Annexure to the 1st, 2nd and 3rd Letters of Offer) whereby the Defendant (in its capacity as a corporate guarantor) had defaulted the Banking Facilities granted to Bina Puri Sdn Bhd by the Plaintiff.

In relation to this, the Plaintiff had commenced a legal action against the Defendant (in its capacity as a Guarantor) vide Kuala Lumpur High Court Suit No. WA-22NCC-265-06/2020 (“Suit 265”).

Therefore, arising from the Defendant’s breach under the terms and conditions of the said 1st, 2nd and 3rd Letters of Offer and the said Facility Agreements and Facilities Agreement, the Plaintiff had through its solicitors, Messrs Lee & Koh, issued Letter of Demand cum Termination and/or Recall dated 16.6.2020 (“the said Letter of Demand cum Termination and/or Recall”) to the Defendant to recall and/or to terminate all the aforesaid Facilities granted to the Defendant and demanded the total amount outstanding as at 15.06.2020 in the sum of RM30,425,687.49 (“the said outstanding sum”) under the OD, RC1 and RC 2 Facilities.

The Plaintiff’s principal claim against the Defendant was as follows: a) Under the OD: i) The Outstanding sum of RM5,071,251.64 as at 15.6.2020 under OD; ii) Interest at the rate of 3.50% per annum on the Plaintiffs Base Lending Rate (as at 15.6.2020 is 5.70% per annum) calculated on a daily rest from 16.06.2020 until date of full realisation; b) Under RC1: i) The Outstanding sum of RM14,624,095.95 as at 15.06.2020 under RC1; ii) Interest at the rate of 4% per annum on the Plaintiffs Base Lending Rate (as at 15.6.2020 is 5.70% per annum) calculated on a daily rest from 16.06.2020 until date of full realisation; c) Under RC2: i) The Outstanding sum of RM10,730,339.90 as at 15.6.2020 under RC2; ii) Interest at the rate of 4% per annum on the Plaintiffs Base Lending Rate (as at 15.6.2020 is 5.70% per annum) calculated on a daily rest from 16.6.2020 until date of full realisation.

The Defendant’s Defence can be summarised as follows: i) Parties are bound by the terms of the Supplementary LO of 4.12.2019 which has been accepted by the Defendant and is valid; ii) The Plaintiff's termination of the Facilities is premature. In order to comply with the terms of the Supplementary LO of 4.12.2019 which will only commence on 1.6.2020, on an earlier date, that is 29.5.2020, the Defendant instructed the Plaintiff to deduct the sum of RM650,000.00 from the Defendant’s bank account towards repayment of the said Facilities which sum was then deducted; iii) The Plaintiff should not be allowed to benefit from their own mistakes; and iv) It is an implied term of the Facilities that the Facilities will be paid by the Defendant from the proceeds of the project at Mukim Plentong, Masai Johor.

The above defences form the basis for the Defendant’s argument that there are triable issues in this case.

The arguments advanced on behalf of the Defendant on this issue can be divided into 3 parts: i) It is not stated anywhere in the Supplementary LO of 4.12.2019 that it will lapse or be terminated if the Defendant does not sign and return the letter within the stipulated time; Page 7 of 17 ii) The Defendant had by way of letter dated 12.12.2019, appealed to the Plaintiff on the certain terms of the Supplementary LO dated 4.12.2019 (“Defendant’s Appeal Letter of 12.12.2019”). iii) As there was no reply from the Plaintiff to the Defendant’s appeal letter of 12.12.2019, the Defendant had accepted the Supplementary LO of 4.12.2019 in February, 2020 and that is considered good acceptance.

I will deal with these arguments below.

The Defendant contended that the Supplementary LO of 4.12.2019 did not lapse because there were no terms therein that states it would lapse and or could be terminated.

The Defendant had, by way of Defendant’s Appeal Letter of 12.12.2019, appealed to the Plaintiff on certain terms of the Supplementary LO of 4.12.2019 as the Defendant found those terms not to be favourable to the Defendant.

The Defendant claimed that it only returned the Supplementary LO of 4.12.2019 to the Plaintiff in February, 2020, 2 months after the 7-day period expired, having failed to receive a response from the Plaintiff in respect of the Defendant’s Appeal Letter of 12.12.2019.

With respect, I found this argument advanced on behalf of the Defendant to be completely devoid of merits.

Just because the Supplementary LO of 4.12.2019 did not bear a specific clause for revocation or termination does not mean it cannot be revoked or terminated by operation of law.

The acceptance of Supplementary LO of 4.12.2019 was subject to the following conditions: Page 8 of 17 “Kindly signify your acceptance of this letter by signing and returning the duplicate copy to the Bank within seven (7) days of the date hereof, failing which the Bank reserves the right to review the terms and conditions stated herein.” (own emphasis added)

However, the Defendant did not signify its acceptance to the Supplementary LO of 4.12.2019 by signing and returning the duplicate copy to the Plaintiff within the 7-day period. Instead, the Defendant had vide the Defendant’s Appeal Letter of 12.12.2019 appealed on the terms of the Supplementary LO of 4.12.2019.

Therefore, by failing to sign and return the Supplementary LO of 4.12.2019 within the 7-day period and by issuing the Defendant’s Appeal Letter of 12.12.2019 which contains proposals for new terms, the Plaintiff’s offer in the Supplementary LO of 4.12.2019 is deemed to have lapsed and revoked.

Sections 6 and 7 of the Contracts Act 1950 (Revised 1974) stipulates as follows: Section 6 of the Contracts Act 1950 A proposal is revoked-

by the communication of notice of revocation by the proposer to the other party;

by the lapse of the time prescribed in the proposal for its acceptance, or, if no time is so prescribed, by the lapse of a reasonable time, without communication of the acceptance;

by the failure of the acceptor to fulfil a condition precedent to acceptance; or

by the death or mental disorder of the proposer, if the fact of his death or mental disorder comes to the knowledge of the acceptor before acceptance. Page 9 of 17 Section 7 of the Contracts Act 1950 In order to convert a proposal into a promise the acceptance must-

be absolute and unqualified;

be expressed in some usual and reasonable manner, unless the proposal prescribes the manner in which it is to be accepted. If the proposal prescribes a manner in which it is to be accepted, and the acceptance is not made in that manner, the proposer may, within a reasonable time after the acceptance is communicated to him, insist that his proposal shall be accepted in the prescribed manner, and not otherwise; but, if he fails to do so, he accepts the acceptance. (own emphasis added) [30] Thus, there was no absolute and unqualified acceptance of the Supplementary LO of 4.12.2019 within the time prescribed therein. [31] Further, the Defendant’s Appeal Letter of 12.12.2019 containing the new proposed terms constitutes a counter offer or counter proposal which rejects the earlier proposal in the Supplementary LO of 4.12.2019. This principle has been made clear in the Federal Court case of Seni Jaya Sdn Bhd & Anor v. Dato’ Hj Ahmad Tarmizi Hj Pateh & Anor [2019] 1 CLJ 713 where it was held as follows: [21] What s. 7(a) says is simply this. For any concluded agreement to come into existence, there must be a clear and definite offer by the proposer and an "absolute and unqualified" acceptance of the same by the offeree. The phrase "absolute and unqualified" is critical in that any acceptance coupled with any condition can never be an "absolute and unqualified" acceptance. It must be absolute in that all terms set out in the offer must be accepted. It must be unqualified in that acceptance attached with condition is a qualified acceptance. Once such conditional acceptance is on the negotiating table so to speak, the parties are simply back to the negotiating mode as there is now a counter-offer by the offeree which in effect rejects the proposal. Page 10 of 17 Withdrawal of the conditional acceptance per se would not revive the original offer. Only an absolute and unqualified acceptance of the counter offer by the proposer will there be a concluded contract between the proposer and offeree. (own emphasis added) [32] Therefore, the proposal in the Supplementary LO of 4.12.2019 had been rejected or revoked when the Defendant’s failed to signify its acceptance by signing and returning the duplicate copy to the Plaintiff within the 7-day period followed by the Defendant proposing new terms in the Defendant’s Appeal Letter of 12.12.2019. [33] The Supplementary LO of 4.12.2019 is no longer open for acceptance and hence is no longer valid. There is no binding agreement between parties as far as the Supplementary LO of 4.12.2019 is concerned. D] WHETHER THE TERMINATION OF THE FACILITIES WAS PREMATURE [34] The Defendant further contended that the Plaintiff’s Letter of Demand cum Termination and/or Recall dated 16.6.2020 issued to the Defendant was premature because the said termination was not in compliance with the terms of the Supplementary LO of 4.12.2019 and that the Defendant had started to make some payment under the Facilities. [35] Firstly, the proposal in the Supplementary LO of 4.12.2019 had already lapsed and is not binding on parties as I had stated earlier. [36] Secondly, due to the events of default committed by the Defendant, the Letter of Demand cum Termination and/or Recall was issued in accordance with the LO dated 7.9.2017 and FA dated 20.12.2017 which were binding on the parties. The said events of default include the following: Page 11 of 17 i) The Defendant’s failure to make repayment under RC1 and RC2 when it became due on the maturity date of the elected tenure. Clause 13.1(a) of the FA dated 20.12.2017 states as follows: “13.1 Events of Default

Non-payment: the Borrower, any related company or any Security Party fails to pay any amount due under the Financing Documents on the due date or on demand, if so payable;” (own emphasis added) ii) The Defendant’s cross default (in its capacity as a corporate guarantor) in the Banking Facilities granted to Bina Puri Sdn

Bhd by the Plaintiff and was named as a defendant in Suit Clause 13.1(a) of the FA dated 20.12.2017 states as follows “13.1 Events of Default

Cross-Default:

Indebtedness (i-i) any indebtedness of the Borrower or any Security Party, whether to the Bank or any company within the AmBank Group, or to any other creditor, is not paid when due, becomes due or capable of being declared due before its stated maturity" (own emphasis added) Page 12 of 17 [37] Therefore, the Defendant’s argument that the Plaintiffs Letter of Demand cum Termination and/or Recall was premature is wholly misplaced. [38] It must also be highlighted that despite receiving the Letter of Demand cum Recall and/or Termination, the Defendant had failed to respond to the same or make payment for the outstanding amount demanded. [39] In this regard the Court of Appeal in the case of Small Medium Enterprise Development Bank Malaysia v. Lim Woon Katt [2016] 9 CLJ 73 held as follows: “[8] We had read the appeal records and submissions of learned counsel. We thanked learned counsel for their able submissions. After giving much consideration to the submission of learned counsel for the respondent, we took the view that it was a fit and proper case to allow the appeal. Our reasons, inter alia, were as follows:

In the instant case, it was not in dispute that the respondent did not respond to the demand notice of the plaintiff and the defence alleging that he was not liable was only raised in the statement of defence. Evidently, failing to respond to the plaintiff's letter of demand, that too when the defence case was related to forgery, as well as the fact that the respondent did not lodge a police report upon receiving the demand, weakened the probative force of the defence case. weakened the probative force of the defence case. In David Wong Hon Leong v. Noorazman Adnan [1995] 4 CLJ 155, the Court of Appeal went to the extreme end to say that failure to respond on the facts of the case should lead to entering of judgment. Justice Gopal Sri Ram JCA at p. 159, had this to say:’’ (own emphasis added) [40] Thus, the failure of the Defendant to respond to the Letter of Demand cum Recall and/or Termination not only weakened its defence but can also be construed as an admission of the debt. Page 13 of 17 E] PAYMENT OF THE RM650,000/- BY THE DEFENDANT [41] It was submitted on behalf of the Defendant that in order to comply with the terms of the Supplementary LO of 4.12.2019 (which commences on 1.6.2020), on an earlier date that is 29.5.2020, the Defendant instructed the Plaintiff to deduct the sum of RM650,000.00 from the Defendant’s bank account towards repayment of the Facilities. That the Supplementary LO of 4.12.2019 shows that the Defendant was only required to pay a sum of RM250,000.00 per month commencing from 1.6.2020. However, the Defendant has made advanced payment for 2.5 months. [42] However, this argument by learned counsel for the Defendant is contradictory to the contents of the Defendant’s cover letter dated 29.5.2020 which accompanied the payment of the said RM650,000.00 in that: i) The Defendant’s cover letter dated 29.5.2020 did not refer nor make any reference to the Supplementary LO of 4.12.2019. Therefore, such payment was not paid with the intention to comply with the terms of the Supplementary LO of 4.12.2019. ii) It was clearly stated in the Defendant's cover letter dated 29.5.2020 that the sum of RM650,000.00 was for the payment of “late payment charges” and “interest payment” being the exact words used in the said letter. iii) Therefore, this contradicts the Defendant’s contention that the RM650,000.00 is an advanced payment for the Facilities. iv) In any event as stated earlier there was no concluded contract in respect of the Supplementary LO of 4.12.2019 which had lapsed and had further been revoked/rejected. Hence, the Defendant could not have made the repayment in compliance with the Supplementary LO of 4.12.2019. [43] Thus, I rejected learned counsel for Defendant’s argument on this issue. Page 14 of 17 F] OTHER ISSUES RAISED BY THE DEFENDANT [44] Several other issues were raised by the Defendant but I found them to be irrelevant and completely without merits. They are as follows: i) That there is an implied term of the Facilities that the Facilities will be paid by the Defendant from the proceeds of the project at Mukim Plentong, Masai Johor (said project). It is evident that there is no such term in the Facilities or specifically the LO dated 7.9.2017 and the FA dated 20.12.2017. In fact, the alleged implied term goes against the following clear express terms of: a) Clause 10.22(a)(i) of the LO dated 7.9.2017; b) Clause 11(a) of the LO dated 7.9.2017; c) Clauses 40.1(h) and 13.1(a) of the FA dated 20.12.2017. ii) That Defendant were further assured by the Plaintiff's representatives that the Defendant does not need to worry with the time frame of 7 days for the signed copy of the Supplementary LO dated 4.12.2019 to be returned to the Plaintiff. This a bare and unsubstantiated averment by the Defendant and it goes against the terms of the Supplementary LO of 4.12.2019. Further, there could not have been such an assurance given by the Plaintiff given that the Defendant’s Appeal Letter of 12.12.2019 is tantamount to a counteroffer rejecting the initial/original in the Supplementary LO of 4.12.2019. Additionally, the contemporaneous documents in this case do not support the Defendant’s contention of such an assurance being made. [45] The Defendant is bound by the Certificate of Indebtedness Clause in Clause 18.1 of the FA dated 20.12.2017 which Certificate allows the Plaintiff to dispense with legal proof of the actual indebtedness of the Defendant (Citibank N.A v. Ooi Boon Leong & Ors [1981] 1 MLJ 282). [46] In connection to this, the burden is on the Defendant to disprove the amount of claim by showing any manifest error in the Statement Page 15 of 17 of Account and the Certificate of Indebtedness (Cempaka Finance Bhd v. Ho Lai Ying (Trading as KH Trading) & Anor [2006] 2 MLJ 685). [47] However, the Defendant has failed to point out any manifest error in the Statement of Account and Certificate of Indebtedness issued by the Plaintiff. G] CONCLUSION [48] The Plaintiff has fulfilled the requirements of an Order 14 ROC application thus shifting the burden to Defendant to show satisfactory explanation as to why summary judgment should not be entered against it. In this regard, the Defendant has failed to raise any triable issue or some other reason to be a trial (Bank Negara Malaysia v. Mohd Ismail & Ors [1992] 1 MLJ 400 and National Company for Foreign Trade v. Kayu Raya Sdn Bhd [1984] 2 MLJ 300). [49] For the reasons stated above, I allowed prayers (a), (b) and (c) of this Application in Enclosure 7 and in respect of prayer (d) on the issue of costs, after hearing arguments from both parties, I awarded costs of RM5,000/- in favour of the Plaintiff. Dated this 9th day of March, 2022 -SGD- (WAN MUHAMMAD AMIN BIN WAN YAHYA) Judicial Commissioner High Court of Malaya, Kuala Lumpur (Commercial Division (NCC 3)) Page 16 of 17 COUNSEL FOR THE PLAINTIFF Chong Kar Man (Justin Leong together with him) Messrs Lee & Koh Suite 29-01, Premier Suite, Menara 1MK Kompleks 1 Mont Kiara No. 1, Jalan Kiara 50480 Kuala Lumpur. Tel.: 03-61432252 Email: lk@leekoh.com.my COUNSEL FOR THE DEFENDANT Velvashini Vembarasan Messrs Natasha & Co. No. 314 A, Jalan Negara Melawati Square, Taman Melawati 53100 Kuala Lumpur Tel.: 03-4107 6216 Emel: natasha@natasha-co.com LEGISLATION / RULES CITED Rules of Court, 2012 ▪ Order 14 Rule 1(1) Contracts Act 1950 ▪ Section 6 ▪ Section 7 Page 17 of 17 CASES CITED

Seni Jaya Sdn Bhd & Anor v. Dato’ Hj Ahmad Tarmizi Hj Pateh & Anor [2019] 1 CLJ 713 2. Small Medium Enterprise Development Bank Malaysia v. Lim Woon Katt [2016] 9 CLJ 73 3. Citibank N.A v. Ooi Boon Leong & Ors [1981] 1 MLJ 282 4. Cempaka Finance Bhd v. HO Lai Ying (Trading as KH Trading) & Anor [2006] 2 MLJ 685 5. Bank Negara Malaysia v. Mohd Ismail & Ors [1992] 1 MLJ 400 6. National Company for Foreign Trade v. Kayu Raya Sdn Bhd [1984] 2