Ambank (M) Berhad v Faro Industries (M) Sdn Bhd & 2 Ors (22NCC-357-09/2017)

FARO INDUSTRIES (M) SDN BHD (Previously known as DAHE Engineering (M) Sdn Bhd)

FATIMAH BINTI ABDUL RAHIM

NIK MOHD ‘AFI RUSYAIDI BIN ROSMAN (NRIC NO: 860918-29-6117) … DEFENDANTS BEFORE YA KHADIJAH BINTI IDRIS JUDICIAL COMMISSIONER 2 GROUNDS OF JUDGMENT Introduction [1] The Plaintiff’s cause of action is premised on breach of contract in respect of financing facilities granted to the First Defendant. In consideration of granting of such facilities, the Second and Third Defendants who are, at all material times, directors of the First Defendant agreed to provide personal guarantee and indemnity in favour of the Plaintiff to guarantee the First Defendant’s obligation for the repayment of the financing facilities granted. [2] The Plaintiff’s application for summary judgment (Enclosure 9)

by letters of offer dated 7 January 2011, 30 May 2012, 26 December 2012 and General Agreements By Customer (GA 4 II) dated 27 January 2011, 28 June 2012 and 11 January 2012 the Plaintiff granted and the Defendant accepted an overdraft facility in the sum of RM900,000.00 (OD Facility) with account number 1462012002962. The OD Facility is subject to the terms and conditions stated in the said letters of offer and agreements; and

by letters of offer dated 14 December 2011, 30 May 2012 and General Agreements By Customer dated 28 June 2012 the Plaintiff granted and the Defendant accepted a Multi Trade Facility, which includes among others, Trust Receipt in the sum of RM1,500,000.00 subject to the terms and conditions contained therein. [7] In consideration for the financing facilities granted, the following securities are provided by the Defendants –

in respect of the OD Facility –

Fixed Deposit in the sum of RM200,000.00 through a sinking fund by instalment of RM10,000.00 every three months together with a Memorandum of Deposit and Letter of Set-Off; 5

(ii) a Memorandum of Deposit and Letter of Set-Off for the creation of a lien over a fixed deposit in the sum of RM50,000.00 which is to be charged;

(iii) a Memorandum of Deposit and Letter of Set-Off for the creation of a lien over a fixed deposit in the sum of RM150,000.00 accumulated by way of sinking fund of quarterly instalments of RM10,000.00;

(iv) a Memorandum of Deposit and Letter of Set-Off for the creation of a lien over a fixed deposit in the sum of RM250,000.00 accumulated by way of sinking fund of half yearly instalments of RM25,000.00; and

via Guarantees dated 27 January 2011, 28 June 2012 and 11 January 2013 the 2nd and 3rd Defendants agreed to, inter alia, to jointly and severally guarantee and indemnify the Plaintiff for all monies owed by the 1st Defendant to the Plaintiff and all costs, charges and expenses incurred in relation to the guarantee.

in respect of the Multi Trade Facility –

a Factoring Agreement dated 3 February 2012 which expired on 31 December 2012 without the 1st 6 Defendant assigning any of their debt books and invoices to the Plaintiff;

(ii) Deed of Assignment (Contract Proceed) dated 3 February 2012 which was never executed by the 1st Defendant at all material times;

(iii) a Memorandum of Deposit and Letter of Set-Off for the creation of a lien over a fixed deposit in the sum of RM50,000.00 which is to be charged;

(iv) a Memorandum of Deposit and Letter of Set-Off for the creation of a lien over a fixed deposit in the sum of RM150,000.00 accumulated by way of sinking fund of quarterly instalments of RM10,000.00; and

via Guarantees dated 3 February 2012 the 2nd and 3rd Defendants agreed to, inter alia, to jointly and severally guarantee and indemnify the Plaintiff for all monies owed by the 1st Defendant to the Plaintiff and all costs, charges and expenses incurred in relation to the guarantee. [8] Details of the fixed deposit provided by the 1st Defendant are stated in paragraph 9 of the Plaintiff’s Statement of Claim and the total 7 amount of the said fixed deposit was RM165,130.93. As the 1st Defendant failed to fully provide securities in the form of fixed deposit, the Plaintiff reduced the limit of the OD Facility from RM900,000.00 to RM835,000.00. [9] The 1st Defendant had breached the terms and conditions as contained in the letters of offer and the agreements in the following manner –

failed to regularise the OD Facility in a satisfactory manner as the said OD facility was in excess to the tune of RM230,415.61 as at 30 June 2017;

failed to settle the Trust Receipt bills on their respective due dates; [10] Details of monies owing under the Multi Trade Facility is stated in paragraph 13 of the Plaintiff’s Statement of Claim and the sum owing as at 31 August 2017 was RM1,680,737.16. [11] Thus the Plaintiff vide its solicitor issued separate letters of demand dated 30 October 2013 (Letters of Demand) to the 1st Defendant as well as to the 2nd and 3rd Defendants respectively – 8

demanding all the 1st Defendant and the 2nd and 3rd Defendants as guarantor to regularise and settle the excess amount in the OD Facility within 14 days from the date of the

notifying all the Defendants that the OD Facility shall be terminated and recalled and that the securities in the form of fixed deposits pledged shall be uplifted and realised in the event the 1st Defendant fail to regularise and settle the excess therein. [12] Via letter dated 10 July 2017, the Plaintiff recalled the OD Facility and the Multi Trade Facility with immediate effect and demanded from the 1st Defendant –

RM1,065,415.61 as at 30 June 2017 or RM1,082,083.26 as at 31 August 2017 together with interest agreed thereto being the outstanding sum under the OD Facility; and

RM1,662,629.31 as at 30 June 2017 or RM1,680,737.16 as 31 August 2017 together with interest agreed thereto being the outstanding sum under the Multi Trade Facility. 9 [13] The Plaintiff also made the above demand against the 2nd and 3rd Defendants vide a separate letter of demand dated 2 August 2017. The Plaintiff’s cause of action against the 2nd and 3rd Defendants is premised on the various guarantee agreements executed by the 2nd and 3rd Defendants. [14] On 29 November 2017 the Plaintiff uplifted and realised the securities in the form of fixed deposits amounting to RM165,130.93 (inclusive of accrued interest) whereby the proceeds were utilised to reduce the outstanding amounts under the OD Facility. [15] By its Statement of Claim dated 7 September 2017 the Plaintiff claims against the 1st, 2nd and 3rd Defendants, among others, the following –

in respect of the OD Facility –

RM1,082,083.26 as the amount due and outstanding as at 31 August 2017; and

(ii) interest at the rate of 1.5% per annum above the Plaintiff base lending rate (which is at the rate of 6.7% per annum) and penalty interest at 1.0% per annum above the prescribed rate (which is 9.2% per annum) 10 payable on the sum RM1,082,083.26 on daily rest and capitalised on monthly basis commencing 1 September 2017 to date of full settlement.

In respect of the Multi Trade Facility –

RM1,680,737.16 as the amount due and outstanding as at 31 August 2017; and

(ii) interest at the rate of 1.5% per annum above the Plaintiff base lending rate (which is at the rate of 6.7% per annum) and penalty interest at 1.0% per annum above the prescribed rate (which is 9.2% per annum) payable on the principal sum RM1,161,982.50 commencing 1 September 2017 to date of full settlement. Plaintiff’s contentions [16] The OD Facility of RM900,000.00 and the Multi Trade Facility consisting of Trust Receipts in the sum RM1,500,000.00 was granted subject to the terms and conditions contained in the respective letters of offer and agreements. 11 [17] The 1st, 2nd and 3rd Defendants furnished to the Plaintiff the 1st Defendant’s directors’ resolution dated 10 January 2011, 14 December 2011, 1 June 2012 and 27 December 2012 approving the OD Facility and Multi Trade Facility (Exhibit K of Enclosure 10). [18] As the 1st Defendant failed to fully provide the required securities in the form of fixed deposits by way of sinking fund, the Plaintiff gradually reduce the limit of the OD Facility from RM900,000.00 to RM835,000.00 which is in accordance with clause 5.3 of the Plaintiff’s letter of offer dated 30 May 2012 (Exhibit A(ii)-2 of Enclosure 10) and clause 5.2 of the Plaintiff’s letter of offer dated 26 December 2012 (Exhibit A(iii)-2 of Enclosure 10). [19] As a result of the failure of the 1st, 2nd and 3rd Defendants to regularise and settle the excess amount in the OD Facility, pursuant to the provisions in the Memorandum of Deposit and the Letters of Set-Off (Exhibits G of Enclosure 10) the Plaintiff is entitled to uplift and realise without giving any notice to the 1st Defendant the securities in the form of fixed deposit amounting to RM165,130.93 which was utilised to reduce the outstanding amount in the OD Facility. In any event the Plaintiff had, vide its letters dated 30 October 2013 given prior notice to the 1st as well 12 as the 2nd and 3rd Defendants before uplifting and realising the fixed deposit. [20] The sum claim against the 1st, 2nd and 3rd Defendants as stated in the Statement of Claim is the final and conclusive proof of the amount due and outstanding as at 31 August 2017 under the OD Facility and Multi Trade Facility as certified by the Plaintiff in its Certificate of Indebtedness (Exhibit J of Enclosure 10) pursuant to the following provisions –

Clause 19 of “General Agreement By Customer (GA II)” dated 27 January 2011 (Exhibit “A(iv)-5” of Enclosure 10);

Clause 19 of “General Agreement By Customer (GA II)” dated 28 June 2012 (Exhibit “A(v)-5” of Enclosure 10);

Clause 19 of “General Agreement By Customer (GA II)” dated 11 January 2013 (Exhibit “A(vi)-5” of Enclosure 10);

Section 2.08 of Facilities Agreement dated 3 February 2012 (Exhibit “B(iii)-10” of Enclosure 10);

Clause 15 of “General Agreement By Customer” dated 27

Clause 11 of Guarantee dated 27 January 2011 (Exhibit “C(i)-2” of Enclosure 10); 13

Clause 11 of Guarantee dated 28 June 2012 (Exhibit “C(ii)-2” of Enclosure 10);

Clause 15 of Guarantee And Indemnity dated 11 January 2013 (Exhibit “C(iii)-10” of Enclosure 10); and

Clause 11 of Guarantee dated 28 June 2012 (Exhibit “F(ii)-2” of Enclosure 10). [21] The Plaintiff claims that the 1st Defendant had, at all material times duly and clearly acknowledged and admitted their liability and indebtedness to the Plaintiff. The Plaintiff refers to the various letters sent by the 1st Defendant in 2014, 2015 and 2016 to the Plaintiff as produced in Exhibit R of Enclosure 12. The said letters and the relevant parts are reproduced below –

Defendant’s letter dated 8 July 2014 [Exhibit R-1 of Enclosure 12]: BANKING FACILITIES: PROPOSED PAYMENT FOR TERM LOAN/OVERDRAFT & MTF FACILITY ... In line with management’s efforts to reduce the company outstanding, we wish to make proposal on the above facilities. ... At this juncture, we humbly seek your cooperation and consideration on our above proposals. It is our intention to discharge this 14 outstanding at the earliest possible and therefore, we assure you our commitment to strictly adhere to our proposed settlement.”

Defendant’s letter dated 22 September 2014 [Exhibit R-2 of Enclosure 12]: APPEAL LETTER FROM COMPANY: FARO INDUSTRIES (M) SDN BHD ... However, we facing slow progress on receiving payment which entirely affected our commitment with AmBank. ... it is our intention to discharge this outstanding at earliest possible ... we appeal to allow us settle the remaining outstanding through proposed restructure amount.”

Defendant’s letter dated 29 September 2015 [Exhibit R-3 of Enclosure 12]: APPEAL LETTER FROM COMPANY: FARO INDUSTRIES (M) SDN BHD ... the slow progress of our collections has adversely affected our commitments. ... ... it is our intention to discharge this outstanding at earliest possible but at this juncture, we unable to fulfill the amount demanded by the Rehab dept. ... ... We again seek your consideration on our appeal, as executing the legal action against our company and directors will jeopardize our entire operations. 15

Defendant’s letter dated 29 March 2016 [Exhibit R-5 of Enclosure 12]: PROPOSAL FOR FARO INDUSTRIES OUTSTANDING ACCOUNT MULTI TRADE FACILITIES AND TERM LOAN ... we are proposing the restructuring monthly payment of RM81,481.00 effective October 2016 until January 2019. ... At this juncture, we humbly seek your cooperation to consider our proposal and give us the opportunity to rebound our business ... Defendants’ contentions [22] The Defendants resisted the Plaintiff’s application for summary judgement by raising the following issues which the Defendants claim to be triable issues –

the Multi Trade Facility is given in the sum of RM1,000,000.00 to the 1st Defendant for the purpose of the contract in relation to Shin Eversendai Engineering (M) Sdn Bhd and not in the sum of RM1,500,000.00 as pleaded by the Plaintiff. The 1st Defendant had already settled the facility given for the sum RM1,000,000.00. As such the Plaintiff cannot claim under the Multi Trade Facility on a different 16 contract except for the contract in relation to Shin Eversendai Engineering (M) Sdn Bhd in the amount RM1,000.000.00;

the Plaintiff failed to prove and/or explain its claim for RM1,082,083.26 under the OD Facility and RM1,680,737.16 under the Multi Trade Facility at 31 August 2017 and the interest thereto. Besides that the rate of interest claim is beyond the Defendants’ knowledge, unreasonable, excessive and oppressive;

the agreements in respect of the OD Facility and the Multi trade Facility was not given to the 1st Defendant. The 2nd and 3rd Defendants were also not given copies of the Guarantee agreement, the Memorandum of Deposit and Letter of Set-Off and Trust Receipt. Thus the Defendants are not aware of the terms and conditions contained in the said agreements;

based on clause 5.2 of the Plaintiff’s letter of offer dated 30 May 2012, the Plaintiff had wrongfully uplifted and realised the fixed deposit account no. 146-003-029381-1 without the 17 Defendants’ consent and knowledge. This has caused losses to the 2nd and 3rd Defendants in the form of dividend from the said account;

the Plaintiff had wrongfully reduced the limit of the OD Facility from RM900,000.00 to RM835,000.00. The utilisation of RM165,130.93 from the fixed deposit to reduce the limit of the OD Facilty was done without any prior notice to the Defendants;

in its claim against the Defendants, the Plaintiff failed to take into account the sum RM35,747.01 paid by the Defendants for the restructuring of the OD Facility to “term loan”. The Defendants are not aware that they are required (imposed by the Plaintiff) to settle the differential sum amounting to RM124,000.00 (as at 15 July 2017) for the restructuring purposes. Instead, the Defendants was asked to settle the hire purchase account number 80245100347494, which the Defendants had done so. The Plaintiff’s rejection of the restructuring of the account was only made known to the Defendants via the Plaintiff’s affidavit in this proceedings; 18

the Plaintiff had wrongly debited an amount RM11,871.00 to account number 1462012002962 on 22 December 2014. Such debit is stated in the Statement of Account December 2014 produced by the Defendants as Exhibit FAR-3 of Enclosure 11 and the Defendants had objected to it. The said amount which the Plaintiff alleged is the legal fees for civil action in Kuala Lumpur Sessions Court No A52NCC- 2887-09/2014 was debited for transactions not related to the Plaintiff’s case and without the Defendants’ consent; and

the Plaintiff failed to provide details and particulars in respect of the Plaintiff’s claim as stated in the Statement of Claim. Based on the cases of Perwira Affin Bank Bhd v Orison Sdn Bhd [2004] 5 CLJ 256 and Soon Peng Yam & Anor v Bank of Tokyo-Mitsubishi (Malaysia) Sdn Bhd [2004] 1 CLJ 532 the Plaintiff must provide details and particulars and cannot solely rely on the Certificate of Indebtedness produced as Exhibit J of Enclosure 10. 19 The law [23] Pursuant to Order 14 rules 1 and 2 of the RoC 2012, in an application for summary judgment, it is incumbent on an applicant seeking the same to prove the following –

the statement of claim has been served on the defendant;

the defendant has entered appearance; and

the applicant has affirmed an affidavit verifying the facts on which the statement of claim is based. The applicant is also required to affirm his belief that the defendant has no defence to the statement of claim. [24] Upon the fulfilment of the above requirements the burden is on the defendant to prove under Order 14 rules 3 and 4 of the RoC 2012 that there is an issue or question in dispute which ought to be tried (National Company For Foreign Trade v. Kayu Raya Sdn Bhd [1984] 1 CLJ (Rep) 283; Cempaka Finance Bhd v. Ho Lai Ying & Anor [2006] 3 CLJ 544). An application for summary judgement may also be dismissed by the court if the defendant satisfies the court that there ought for some other reason to be a trial namely there are circumstances that ought to be 20 investigated by the court (United Merchant Finance Bhd v. Majlis Agama Islam Negeri Johor [1999] 2 CLJ 151; [1999] 1 MLJ 657). [25] In this respect reference is made to the principles laid in Bank Negara Malaysia v Mohd Ismail & Ors [1992] 1 MLJ 400 at page 408 – In our view, basic to the application of all those legal propositions, is the requirement under O 14 for the court to be satisfied on affidavit evidence that the defence has not only raised an issue but also that the said issue is triable. The determination of whether an issue is or is not triable must necessarily depend on the facts or the law arising from each case as disclosed in the affidavit evidence before the court. Under an O 14 application, the duty of a judge does not end as soon as a fact is 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. In our opinion, unless this principle is adhered to, a judge is in no position to exercise his discretion judicially in an O 14 application. Thus, apart from identifying the issues of fact or law, the court must go one step further and determine whether they are triable. This principle is sometimes expressed by the statement that a complete defence need not be shown. The defence set up need only show that there is a triable issue. (emphasis added) 21 Preliminary requirements [26] With regard to the preliminary requirements as laid down by the Federal Court in the case of Cempaka Finance Bhd, it is not an issue that the Plaintiff’s Statement of Claim has been duly served on all the Defendants. Pursuant thereto the 1st, 2nd and 3rd Defendants filed their Memorandum of Appearance on 20 September 2017 as in Enclosures 5, 6 and 7 respectively. In respect of the summary judgment application Enclosure 9, the Plaintiff had filed an affidavit (Enclosure 10) verifying the facts upon which reliance is placed by the Plaintiff to support its application for a summary judgment. In the said affidavit the Plaintiff affirmed its belief that the 1st, 2nd and 3rd Defendants has no defence to the statement of claim. As such a prima facie case has been established by the Plaintiff and therefore entitled to judgment. [27] Accordingly it is for the Defendant to prove that there are issue or question in dispute which ought to be tried or there ought for some other reason to be a trial, namely, there are circumstances that ought to be investigated by the court. As stated above the Defendant need not raise a complete defence, suffice for the Defendant to show there is a triable issue or question. In South East Asia Insurance Bhd v Kerajaan 22 Malaysia [1998] 1 CLJ 1045 it was held if a defendant in an Order 14 application succeeds in raising even a single triable issue, it will not be a fit and proper case to enter summary judgment. Findings of the court [28] The Plaintiff’s claim against the Defendants is premised on the contractual relationship entered by the Plaintiff and the 1st Defendant for the OD Facility and Multi Trade Facility granted by the Plaintiff to the 1st Defendant. Their contractual relationship is governed by the various letters of offer and the General Agreements By Customer identified by the Plaintiff in its affidavits in support of its application for summary judgment (Exhibits A and B of Enclosure 10) and the Memorandum of Deposit and Letter of Set-Off. [29] Whereas the claim against the 2nd and 3rd Defendants is premised on the joint and several guarantee and indemnity provided by the 2nd and 3rd Defendants in favour of the Plaintiff for agreeing to provide the OD Facility (Exhibit C of Enclosure 10) and the Multi Trade Facility (Exhibit F of Enclosure 10) to the 1st Defendant. Thus the issues raised by the Defendants must be addressed in the context of the terms and 23 conditions of the said various documents which forms the contract between the Plaintiff and the Defendants. Purpose of the Multi Trade Facility [30] Based on letter of offer dated 14 December 2011 (Exhibit B(i)-1 of Enclosure 10), the Multi Trade Facility was provided for the following purposes –

letter of credit (LC) – for issuance of irrevocable LCs covering local purchase/import of raw materials/stocks and other goods related to the contract;

trust receipt (TR) – complimentary Trust Receipt financing for a period of not exceeding 60 days; and

sales ledger maintenance facility for collection (SLM). For this particular purpose the said facility is provided for purpose of collection service for invoices/certified progress claims due to Shin Eversendai Engineering (M) Sdn Bhd in relation to the contract Sabah Oil & Gas Terminal – Shop Drawing, Supply, Fabrication, Galvanizing, Labelling, Packing Into Containers & Delivery of Grating Materials for Petronas Carigali Sdn Bhd (PCSB). 24 [31] In so far as the Plaintiff’s claim against all the Defendants is concerned, as pleaded and particularised in paragraphs 12 and 13 of the Plaintiff’s Statement of Claim, it is respect of the outstanding amounts under the Trust Receipt due to the Defendants’ failure to settle the Trust Receipt bills in question on their respective due dates. The details and particulars of the Trust Receipt and the monies outstanding under the Trust Receipt is set out in paragraph 13 of the Statement of Claim. The Plaintiff’s claim is not in respect of the sales ledger maintenance facility for collection services for invoices/certified progress claims due to Shin Eversendai Engineering (M) Sdn Bhd. Thus for this proceedings this purported issue regarding the purpose of the Multi Trade Facility is a non-starter what more a triable issue. Unreasonable, excessive and oppressive interest rate [32] In respect of the OD Facility, the Plaintiff refers to the following provisions which entitle the Plaintiff to charge interest in question at the rate of 1.5% per annum above the Plaintiff’s base lending rate and default interest of 1.0% per annum on daily rest and compounded on monthly basis – 25

Clauses 6 and 14 of Plaintiff’s Letter of Offer dated 7 January 2011 (Exhibit “A(i)-1” and “A(i)-3” of Enclosure 10);

Clause 2 of the Annexure to the Plaintiff’s Letter of Offer dated 7 January 2011 (Exhibit “A(i)-6” of Enclosure 10);

Clause 4 of Plaintiff’s Letter of Offer dated 30 May 2012 (Exhibit “A(ii)-2” of Enclosure 10);

Clauses 3.1 and 5.2(3) of the Annexure to the Plaintiff’s Letter of Offer dated 30 May 2012 (Exhibit “A(ii)-6” and “A(ii)- 7” of Enclosure 10);

Clause 4 of Plaintiff’s Letter of Offer dated 26 December 2012 (Exhibit “A(iii)-1” of Enclosure 10);

Clauses 3.1 and 5.2(d) of the Annexure to the Plaintiff’s Letter of Offer dated 26 December 2012 (Exhibit “A(iii)-5” and “A(iii)-6” of Enclosure 10); and

Clause 2 of the General Agreement By Customer (GA II) dated 27 January 2011, 28 June 2012 and 11 January 2013 (Exhibits “A(iv)-2”, “A(v)-2” and “A(vi)-2” of Enclosure 10). [33] Whist in respect of the Multi Trade Facility, the Plaintiff refers to the following provisions which entitle the Plaintiff to charge interest under 26 the Trust Receipt in question at the rate of 1.5% per annum above the Plaintiff’s base lending rate and default interest of 1.0% per annum on the principal amount outstanding –

Clause 4 of Plaintiff’s Letter of Offer dated 14 December 2011 (Exhibit “B(i)-2” of Enclosure 10);

Clauses 3.1 and 5.4(a) and 5.4(b) of the Annexure to the Plaintiff’s Letter of Offer dated 14 December 2011 (Exhibit “B(i)-8” and “B(i)-9” of Enclosure 10);

Clause 4 of Plaintiff’s Letter of Offer dated 30 May 2012 (Exhibit “B(ii)-2” of Enclosure 10);

Clauses 3.1 and 5.4(a) and 5.4(b) of the Annexure to the Plaintiff’s Letter of Offer dated 30 May 2012 (Exhibit “B(ii)-6” and “B(ii)-7” of Enclosure 10); and

Sections 2.01(c)(ii) and 2.03 of the Facilities Agreement dated 3 February 2012 (Exhibit “B(iii)-6” and “B(iii)-9” of Enclosure 10). [34] The Defendants alleged they were not given copies of the various documents and therefore denies knowledge of the interest rate imposed. It is pertinent to note all the Defendants took a common position of denying having knowledge of the respective vital documents concerning 27 their obligations as principal debtor, guarantor and indemnifier of the OD Facility and Multi Trade Facility. All the Defendants allege they only received and sighted the documents when the said documents are produced by the Plaintiff as exhibits in the Plaintiff’s affidavit. Yet the Defendants never, at all material times, deny signing the documents. [35] However it is to be noted that the Defendants produced Statement of Account dated 31 December 2014 as Exhibit FAR-3 of Enclosure 11. The Statement of Account was sent to the 1st Defendant at Lot 3264 Sungai Machang Jalan Mantin Lenggeng 71700 Mantin Negeri Sembilan. If indeed it is true the Defendants had not received the documents in relation to the OD Facility and Multi Trade Facility (and therefore the Defendants alleges they have no knowledge of the contents thereto) then upon receipt of the said Statement of Account one would have expected the Defendants to immediately queried the Plaintiff as to the basis of the entries (credit and debit) in the Statement of Account which clearly relate to the OD Facility because an amount of RM6,718.70 was debited as overdraft interest. However there is no evidence to that effect. 28 [36] It is also very strange that the Defendants alleges they did not receive all the documents that the Plaintiff had referred to in its affidavits but somehow the Defendants produced a letter, dated 15 December 2016 (Exhibit FAR-3 of Enclosure 11) from the Plaintiff to the 1st Defendant, which was sent to the same address. It would appear that the Defendants have in their possession a letter which is not in their favour to refute the Plaintiff’s claim but somehow they do not have all documents/letters which are not in their favour (even though the documents/letters was executed/acknowledged by them) thus denying knowledge and liability. Taking into consideration the affidavit evidence as a whole it is my finding that the Defendants’ allegations that they did not receive the documents/letters are bare denial and not credible. Uplifting and realisation of the securities in the form of fixed deposit Account number 146-003-029381-1 [37] Based on the documents executed by the Defendants and the Plaintiff, the Plaintiff is entitled to uplift and realise the fixed deposit without any reference to the Defendants because the Defendants has breached the terms and conditions of the OD Facility when the 29 Defendants failed to regularise and conduct the said OD Facility in a satisfactory manner when the account of the OD Facility was in excess. [38] The relevant provisions can be found in the Memorandum of Deposit (Exhibits G(i), G(iv), G(vi) ) which governs the contractual relationship between the Plaintiff and the Defendants in relation to the securities pledged by the 1st and 2nd Defendants in the form of fixed deposit. The provision read as follows – “... I/WE HEREBY JOINTLY AND SEVERALLY AUTHORISE AND REQUEST you [Plaintiff] upon any default by [the 1st Defendant] in discharging [the 1st Defendant’s] indebtedness to you when due, forthwith and without further notice to me/us to utilize and apply the sum(s) and any interest thereon standing to the credit of the said deposit account(s) or any part or parts thereof in or towards the satisfaction of the indebtedness of [the 1st Defendant] to you.” (emphasis added) [39] Despite the said provision the Plaintiff had vide its solicitor’s letters dated 30 October 2013 (Exhibits L of Enclosure 12) notified the 1st as well as the 2nd and 3rd Defendants of its intention to uplift and realise the fixed deposit in the event the Defendants failed to regularise their accounts under the OD Facility. It is noted the letter to the 1st Defendant (Exhibit L-1 to L-2 of Enclosure 12) is addressed to the 1st Defendant 30 registered address at No. 2102, Tingkat 1, Jalan 3/1, Bandar Baru Sg. Buloh, Sg. Buloh 47000 Selangor and at its place of business at Lot 3264, Sungai Machang, Jalan Mantin Lenggeng, 71700 Mantin Negeri Sembilan. In paragraph 3 of the Statement of Defence, the 1st Defendant admits that the said address is the 1st Defendant’s address for service. Whilst the letter to the 2nd and 3rd Defendants (Exhibit L-3 to L-4 of Enclosure 12) was sent to No. 29, Jalan Desa Mewah 17, Taman Desa Mewah, 43500 Semenyih, Selangor which, in paragraph 3 of the Statement of Defence, the 2nd and 3rd Defendants admit as their address for service. In fact based on their affidavits Enclosures 11 and 14, the said address is indeed the current address of both the 2nd and 3rd Defendants. Premised on the above and the proof of posting as shown in Exhibit L-5 of Enclosure 10, there is overwhelming evidence that the Defendants were notified of the Plaintiff’s intention to exercise its right to reduce the limit of the OD Facility should the 1st Defendant fail to regularise the OD Facility account. Reduction of the limit of the OD Facility [40] In respect of this issue the Plaintiff pointed out the limit of the OD Facility was reduced due to the failure of the 1st Defendant to fully 31 provide to the Plaintiff the required security in the form of fixed deposit by way of sinking fund. The Plaintiff relies on the following provision –

clause 5.3 of the Plaintiff’s letter of offer dated 30 May 2012 (Exhibit A(ii)-2 of Enclosure 10) which provides as follows –

5.3 Memorandum of Deposit and Letter of Set-Off to create lien over fixed deposit of RM150,000.00 (‘FD II’) accumulated by way of sinking fund of quarterly installments of RM10,000.00. First such instalment shall commence on 1st day of the 4th month from the date of activation of the OD Facility. The FD II pledged with interest shall be accumulated and retained by the Bank until the facility is fully settled. [If this condition is not complied with, the Bank shall be entitled at its sole discretion to reduce the OD Facility limit by the corresponding amount.]

clause 5.2 of the Plaintiff’s letter of offer dated 26 December 2012 (Exhibit A(iii )-2 of Enclosure 10) which provides similar provision as in clause 5.3 of the Plaintiff’s letter of offer dated 30 May 2012. [41] Both letters of offer is in respect of the OD Facility which the Defendants did not, at all material times, deny signing. In fact on both letters of offer (see Exhibit A(ii)-4 of Enclosure 10 in respect of letter of offer dated 30 May 2012 and Exhibit A(iii)-3 of Enclosure 10 in respect of 32 letter of offer dated 26 December 2012) the 2nd and 3rd Defendants had confirm their acceptance of the terms and conditions contained in the letters of offer by placing their signature and affixing the 1st Defendant’s rubber stamp. The confirmation and acceptance in respect of letter of offer dated 30 May 2012 read as follows – “I/We hereby confirm the acceptance of the above terms and conditions and the terms and conditions contained in the attached Annexure. Enclosed together is a cheque for RM1,400.00 (Ringgit Malaysia : One Thousand Four Hundred Only) being the Facility Fee.” tt FATIMAH BT ABDUL RAHIM tt NIK MOHD ‘AFI RUSYAIDI BIN ROSMAN Sgd ............................................................ (Authorised Signatories and affix Company’s rubber stamp) Name : FATIMAH BT ABDUL RAHIM/NIK MOHD ‘AFI RUSYAIDI BIN ROSMAN Date : 4TH JUNE 2012 [42] The 2nd and 3rd Defendants had also confirmed and accepted the terms and conditions in the letter of offer dated 26 December 2012 in 33 similar words as the above save and except the amount of the Facility Fee which was RM1,000.00. [43] As such the Defendants are bound by the contractual provision which allows the Plaintiff, at its sole discretion, to reduce the limit of the OD Facility if the 1st Defendant fail to comply with the requirements of providing securities in the form of fixed deposit and in the sum stipulated in the letters of offer. In this respect it must be noted that the Defendants did not at all material times deny that they had failed to comply with the securities requirement in the manner stated in the letters of offer. Purported restructuring of the OD Facility and Multi Trade Facility into term loan [44] The Defendants allege the Plaintiff did not take into account the sum RM35,747.01 which the Defendants had paid for purpose of restructuring of the OD Facility and the Multi Trade Facility into term loan. The Defendants relies on the letter of offer dated 15 December 2016 (Exhibit FAR-1 of Enclosure 11) they received from the Plaintiff and claim that even though they have complied with all the requirements stated in the letter dated 15 December 2016 including paying legal fees 34 for the restructuring process in the sum RM35,747.01, the Plaintiff failed to restructure the OD Facility and the Multi Trade Facility into a term loan facility. [45] With regard to this particular issue, contemporaneous evidence produced by the Plaintiff as can be seen in Exhibit N of Enclosure 12 clearly shows there was “negotiation” carried out by the Defendants with the Plaintiff in relation to the proposed conversion of the OD Facility and the Multi Trade Facility into term loan. Based on the letter dated 7 June 2017 issued by the Plaintiff’s solicitor (in response to the letter of the 1st Defendant’s solicitor dated 5 June 2017), the proposed conversion is subject to the 1st Defendant furnishing the following –

forward to the Plaintiff a duly executed withdrawal of private caveat;

quit rent and assessment receipts for 2017; and

pay the sum of RM100,000.00 being the outstanding sum due and owing to the Plaintiff. [46] In response to the said requirement, the 1st Defendant requested vide letter dated 13 June 2017 an extension of time to fulfil the said conditions. Via letter dated 14 June 2017, the Plaintiff agreed with the 35 said request for extension of time (on without prejudice basis) subject to the 1st Defendant paying RM50,000.00 to the Plaintiff by 15 June 2017. However, via letter dated 16 June 2017 the 1st Defendant informed it is not able to pay the RM50,000.00 and instead requested for time to settle the amount of RM100,00.00 by end of June 2017. Via letter dated 19 June 2017 the Plaintiff, agreed to the said request for time but imposed condition that the 1st Defendant pay the sum of RM124,000.00 (consisting of RM49,000.00 outstanding under the OD Facility and RM75,000.00 outstanding under the Multi Trade Facility) by 30 June 2017 failure of which the proposed conversion is deemed lapse. [47] It is interesting to note the Defendant’s selective approach in producing documents for the purpose of this proceedings. It is obvious the 1st Defendants completely and conveniently ignored the various written request that it had made to the Plaintiff for extension of time and the Plaintiff’s conceding to the request subject to the conditions imposed by the Plaintiff as stated in the Plaintiff’s letters. [48] Eventually the proposed conversion of the OD Facility and Multi Trade Facility did not materialised due to the 1st Defendant’s failure to comply with the conditions imposed by the Plaintiff. As such it is not true 36 that the 1st Defendant has complied with all the requirements for purpose of restructuring the OD Facility and the Multi Trade Facility into term loan. [49] In respect of payment made by the 1st Defendant in the sum RM35,747.01, the Plaintiff explained the said sum is the costs incurred for the legal fees for purpose of preparing loan documentation for the proposed restructuring. Pursuant to clause 13(c) of the letter dated 15 December 2016 (Exhibit FAR-1 of Enclosure 11) and clause 4.1 of the Annexure to the letter dated 15 December 2016, the 1st Defendant is contractually obliged to pay for the costs incurred regardless whether the proposed restructuring materialise or otherwise. The said provisions are as follows –

clause 13(c) of the letter dated 15 December 2016

COSTS All fees (which legal fees shall include the Bank’s solicitors fees on a solicitor and client basis), costs, charges, stamp duties, expenses and disbursements incurred hereunder by the Bank including any expenditure incurred in the creation, enforcement and/or preparation of this Letter or in the giving of any notice or in the making of any demand under pursuant to or in respect of the Term Loan and all other monies whatsoever paid by the Bank in respect of the said costs, charges, expenses and expenditure or otherwise howsoever and all or any other 37 sums and monies paid or expended by the Bank under or pursuant to terms and conditions expressly or impliedly stated herein shall be payable by the Borrower to the Bank on demand shall bear interest thereon at the Default interest rate calculated from the date the sums are so paid or expended and such sums and interest shall on demand be paid to the Bank by the Borrower and until payment shall be deemed and taken to be similarly secured in addition to the principal sum of the Term Loan advanced under this Letter of Offer.

clause 4.1 of the Annexure to the letter dated 15 December 2016

4.1 All legal fees, disbursements, stamp duties, levies, charges and other incidental expenses for the preparation, stamping and registration of the Security Documents shall be paid by the Borrower, even if the Borrower fails to execute the Security Documents for any reason. Premised on the explanation by the Plaintiff which is supported by the above provisions there is no issue of the said legal fees incurred in the sum of RM35,747.01 being deducted from the amount the Plaintiff is claiming against the Defendants. Debit of RM11,871.00 into the OD Facility accounts [50] In respect of this issue, the Plaintiff explained the said sum is the legal fees incurred by the Plaintiff’s solicitor Heiley Hassan, Tan & 38 Partners in respect of a previous legal suit which was filed by the Plaintiff against the 1st, 2nd and 3rd Defendants in the Sessions Court (Suit No. A52NCC-2887-09/2014, see Exhibit O of Enclosure 12) to recover the sum RM263,746.23 as the outstanding amount due and owing by the 1st Defendant to the Plaintiff under another facility granted by the Plaintiff to the 1st Defendant pursuant to the Plaintiff’s letter of offer dated 11 October 2011 (Exhibit Q of Enclosure 12). The Sessions Court civil suit was settled and the Plaintiff withdrew its writ and its application for summary judgment. [51] The sum RM11,871.00 which the Plaintiff had debited into the 1st Defendant OD Facility is the legal fees incurred in respect of the Kuala Lumpur Sessions Court civil suit. The Plaintiff relies on clause 4.2 (Exhibit Q-5 of Enclosure 12) and 9.1 (Exhibit Q-11 of Enclosure 12) in the Annexure to the Plaintiff’s letter of offer dated 11 October 2011 (Exhibit Q-5 of Enclosure 12) to justify the said debit. Clause 4.2 provides as follows –

4.2 All legal fees, disbursement, stamp duties, levies, charges and other incidental expenses for the recovery of any sums defaulted by the Borrower or the enforcement of any rights by AmBank shall be paid on a solicitor-client and full indemnity basis. Such fees and expenses shall bear interest from the date the same is incurred by AmBank and 39 the Borrower authorises AmBank to debit Borrower’s Facility account for the same. Clause 9.1 provides as follows –

9.1 The Borrower agrees that AmBank shall have the right (without being obliged to) at any time without prior notice to debit the Borrower’s deposit account or Facility account with AmBank to debit any charges, fees and outgoings. If such debiting causes the Borrower’s deposit account or Facility account to be overdrawn, then additional interest at the Default Rate shall be payable accordingly. [52] The 1st Defendant produced the Statement of Account dated 31 December 2014 (Exhibit FAR-3 of Enclosure 11) in which the sum RM11,871.00 was captured as being debited into the account of the OD Facility. Since this particular Statement of Account was produced by the Defendants, the reasonable inference that could be drawn is that the 1st Defendant had, as early as January 2015, received the Statement of Account. It is pertinent to note the reminder placed at the bottom of the Statement of account which reads – All items and balance shown in the statement will be considered correct unless the Bank is notified of any discrepancies within 14 dys from the date of the statement. Any change of address or telephone number must be promptly advised to the Bank in writing. 40 However there is no evidence adduced to show that the 1st Defendant had queried the Plaintiff regarding the said issue and/or dispute and/or challenge the Plaintiff’s action debiting quite a big amount into the 1st Defendant’s OD Facility account. Certificate of Indebtedness [53] The Defendants contends it is not sufficient for the Plaintiff to merely produce the Certificate of Indebtedness as in Exhibit J of Enclosure 10 as the Plaintiff is required to prove the indebtedness by providing details and particulars as to how the Plaintiff arrived at the sum of indebtedness. The Defendants relies on the cases of Orison Sdn Bhd and Soon Peng Yam. [54] The sum stated in the Certificate of Indebtedness is certified as the sum which the Defendants are jointly and severally, just and truly indebted to the Plaintiff under the OD Facility and Multi Trade Facility. The said sum corresponds with the sum claim by the Plaintiff in its Statement of Claim. 41 [55] The Plaintiff cited provisions relating to Certificate of Indebtedness in the various General Agreement by Customer (GA II) and Facilities Agreement entered between the Plaintiff and the 1st Defendant as well as in the guarantee documents executed by the 2nd and 3rd Defendants in favour of the Plaintiff. The said provisions although in different documents, are similar and of the same effect. Some of the provisions are reproduced below –

Clause 19 of “General Agreement By Customer (GA II) dated 27 January 2011 (Exhibit A(iv)-5 of Enclosure 10)

Notices Any notice or demand for payment by the Bank hereunder shall without prejudice to any other effective mode of making the same be deemed to have been sufficiently made hereunder on me/us if sent by post to my/our last known place of business or (in the case of a limited company) its Registered Office and shall be assumed to have reached the addressee within three (3) days from the date of posting and in proving such service it shall be sufficient to prove that the notice or demand was properly addressed and posted. Any such notice or demand or any certificate as to the amount of any time secured hereby shall be conclusive and binding upon me/us if signed by an officer of the Bank. (emphasis added) 42

Clause 2.08 of the Facilities Agreement dated 3 February 2012 executed between Plaintiff and the 1st Defendant (Exhibit B(iii)– 10 of Enclosure 10) SECTION 2.08 EVIDENCE OF INDEBTEDNESS As statement by the General Manager, Manager, Assistant manager, Account or any other duly authorised officer of the Bank for the time being as to the amount of the Indebtedness or the balance thereof and the money and liabilities for the time being incurred or due to the Bank by or from the Borrower shall, in the absence of manifest error, be accepted by and binding against the Borrower as final and conclusive for all purposes whatsoever including for purpose of legal proceedings.

Clause 11 of Guarantee dated 27 January 2011 executed by the 2nd and 3rd Defendants in favour of the Plaintiff (Exhibit C(i)- 2 of Enclosure 10)

It is agreed that a copy of the account of the Customer contained in the Bank’s book of account signed by any officer of the Bank shall be conclusive evidence against me/us of the amount for the time being due to the Bank from the Customer.

Clause 15 of Guarantee and Indemnity dated 11 January 2013 executed by the 2nd and 3rd Defendant for the benefit of the Plaintiff (Exhibit C(iii)-10 Enclosure 10) 43

Evidence of Guaranteed Sum A certificate on the indebtedness shall, in the absence of manifest error, be binding on and conclusive against the Borrower and or the Surety for all purposes (including but not limited to legal proceedings) and shall be final and binding on all parties. [56] In Cempaka Finance Berhad v Ho Lai Ying & Anor [2006] 3 CLJ 544) the Federal Court discussed at great length the legal position in so far as certificate of indebtedness is concerned. In the said case, in its application for summary judgment the appellant/lender had relied on two clauses found in clause 27 of the loan agreement and in clause 7.03 of the guarantee agreement to establish the conclusiveness of the certificate of indebtedness in support of its application for summary judgment under O. 14 RHC against the respondent/borrower. The application was allowed by the High Court. On appeal the High Court decision was reversed. The Court of Appeal took the position that the conclusiveness of the certificate of indebtedness 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. The appellant/bank was granted leave to appeal. 44 [57] The Federal Court allowed the appeal by the appellant/bank. The relevant passages in the judgment of the Federal Court which relate to the certificate of indebtedness is reproduced below – 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. 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] 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 45 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 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 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. 46 The certificate of indebtedness, exh. P3, issued in accordance with cls. 27 and 7.03 aforesaid, is lucid enough. There is nothing to indicate or suggest any manifest error on the face of the said certificate nor is any fraud shown. [58] As pointed out by the counsel for the Plaintiff the two cases upon which the Defendant place reliance, namely, Orison Sdn Bhd and Soon Peng Yam were decided prior to the Federal Court decision in Chempaka Finance Berhad. Importantly, by the doctrine of stare decisis, this court is bound by the decision of the Federal Court in Chempaka Finance Berhad. [59] Thus it is for the Defendant to show there is manifest error on the face of the certificate of indebtedness produced by the Plaintiff or fraud. As stated above the Defendants questioned the Plaintiff’s failure to consider the sum RM35,747.01 alleged to have been paid by the Defendant for the purpose restructuring, the sum RM11,871.00 alleged to have been wrongly debited and that the interest claim by the Plaintiff is excessive, unreasonable and oppressive. As discussed above the Plaintiff has provide satisfactory explanation in relation to the issues raised in that the actions taken by the Plaintiff is based on the contractual provisions which governs the relationship between the 47 Plaintiff and the Defendant. As such it is my considered opinion the issues raised are not triable issues. Thus, in the absence of any manifest error or fraud, the amount of indebtedness stated in the Statement of Accounts is final and conclusive evidence of the Defendant’s indebtedness towards the Plaintiff. [60] It must be noted that the Defendants did not raise any of the issues above when it communicated with the Plaintiff via its various letters referred to in paragraph 21 above (Exhibit R of Enclosure 12). The most recent letter sent by the 1st Defendant via its guarantor/director was dated 28 March 2016 where the Defendants essentially admitted their indebtedness to the Plaintiff and proposed to settle it by instalment payment and restructuring the facilities in anticipation of the 1st Defendant securing incoming projects worth a total of RM14.3 million. As such I am constraint to draw the inference that the above issues are afterthought to deny the Plaintiff of its remedies due to the Defendants’ breach of the contracts executed between the Plaintiff and the Defendants. 48 Conclusion [61] Premised on the aforesaid reasons it is my considered view that there are no triable issues. I accordingly allowed the Plaintiff’s application for summary judgment in terms of Enclosure 9 with costs. ( KHADIJAH BINTI IDRIS ) JUDICIAL COMMISSIONER HIGH COURT (COMMERCIAL DIVISION) DATED 29 JUNE 2018 Counsel: Plaintiff : Kingston T.K. Tan with Kwong Ho Qong of Messrs Heiley Hassan, Tan & Partners Defendant :