Ambank (M) Berhad v Tee Sze Ping & Lee Yuh Yun (12BNCC-43-10/2016)

In this writ action the learned Sessions Court Judge (SCJ) allowed the Plaintiff’s claim, among others, for a sum of RM229,798.72 as at 12 June 2003 as the amount due and owing by the Defendants to the Plaintiff under a housing loan facility agreement obtained by the Defendants from the Plaintiff. The learned SCJ had also dismissed the Defendants’ counterclaim.

Plaintiff is a financial institution which was previously known as MBf Finance Berhad (MBf Finance).

The First Defendant, an advocate and solicitor, and the Second Defendant are individuals who had obtained financial facility from the Defendant to finance the purchase of a condominium unit.

The parties will be referred to as they were in the Sessions Court. 3

In 1993, Kabra Holding Sdn Bhd (Kabra), a property developer launched a housing project known as Ampang Hilir Condominium (the Project). Kabra appointed MBf Property Services Sdn Bhd (MBf Property) as their Attorney and Project Manager. At the material time, there was a scheme offered to the purchasers whereby the purchasers are required to pay 10% of the purchase price of the property as deposit and exempted from any progressive interests until the issuance of the Certificate of Fitness. In order to enjoy such scheme, the purchasers are required to obtain loan from the Plaintiff which was then known as MBf Finance.

Vide Letter of Offer dated 12 May 1993, Plaintiff offered and Defendants accepted a housing loan facility totalling RM132,000 for the purchase of one unit of the Project known as Parcel B-2-B, Storey No.2, Building No. Block B, Ampang Hilir Condominium (the Property). The parties then entered into a Loan Agreement dated 22 September 2013 and executed a Deed of Assignment dated 22 September 1993 in which Defendants assigned all of the Defendants’ rights, title and interest in the Property to the Plaintiff as security for the housing loan. 4 [7]

Kabra had given an undertaking to MBf Finance that Defendants are only required to pay a 10% deposit and that the Defendants are not required to pay any interest during 7 the construction stage of the Project if the Defendants obtain the financing facility from MBf Finance. At all material times Kabra will pay the interest for the Defendants.

The instalments payment will only commence after the Certificate of Fitness (CF) and/or Certificate of Completion and Compliance is issued. In so far as the Defendants are concerned the said certificate was not issued. [15] It was further pleaded that MBf Finance no longer exist and as such the undertaking given by Kabra (which had already been wound up) is no longer enforceable and accordingly Plaintiff has no locus to enforce the undertaking. If the Plaintiff had taken over the Project from MBf Finance, the Plaintiff is bound to honour the undertaking. [16] The Defendants did not receive the letter of demand and letter of termination. The Defendants were not asked to pay the monthly instalment because the Project was not in operation. [17] The Property was wrongfully auctioned by the Plaintiff. The auction was done without the Defendants’ knowledge as the cause papers in relation to the auction of the Property was not served on the 8 Defendants. The proceeds from the auction of the Property was paid to the Plaintiff. [18] In their counterclaim the Defendants sought the following:

a declaration that –

the Plaintiff’s action is time barred and/or wrongful and illegal; and

(ii) the Plaintiff’s prosecution is malicious.

an order that the Plaintiff has no right and/or the capacity to file the writ action against the Defendant; and

special damages and costs. Defendants’ grounds of appeal [19] Perusing the Defendants’ Memorandum of Appeal dated 26 October 2016, I am in agreement with the Plaintiff that the Defendants’ appeal essentially requires determination of the following issues –

whether Kabra Holdings Sdn Bhd, MBf Property Services Sdn Bhd dan MBf Finance Berhad were from the same group of companies and therefore the undertaking given by 9 MBf Property that the Defendants need not pay interests during construction period and until the issuance of Certificate of Fitness is binding on the Plaintiff

whether non-delivery of vacant possession and/or not duly informed of the issuance of the Certificate of Fitness entitle the Defendants not to repay the loan obtained from the

whether service of the Disbursements Advice and Letters of Demand was done in accordance with the Loan Agreement

whether exhibits ID3, ID4 dan ID5 were properly admitted as secondary evidence under s. 65(1)(c) Evidence Act 1950

that the Plaintiff’s claim was filed out of time and that the Plaintiff’s action against the Defendant is mala fide. The law [20] With regards to the duty and function of an appellate court, cases of high authority has held that as a general principle, an appellate court will be slow to interfere with the findings of facts and judicial appreciation of the facts of the trial judge unless it appears that those findings are clearly wrong (China Airlines Ltd. v Maltran Air Corp. Sdn. Bhd. & Another Appeal [1996] 3 CLJ 163, Perembun (M) Sdn Bhd v Conlay 10 Construction Sdn Bhd [2012] 1 LNS 1416, Sivalingam a/l Periasamy v Periasamy & Anor [1995] 3 MLJ 395). Findings of the court Whether Kabra Holdings Sdn Bhd, Mbf Property Services Sdn Bhd and MBf Finance Berhad were from the same group of companies and as such the undertaking given by MBf Property to the Defendants that the Defendants need not pay interests during construction period and until the issuance of Certificate of Fitness is binding on the Plaintiff [21] It is the Defendants’ case that the three companies were from the same group of companies. It would appear the Defendants took such approach in order to deny their liability in relation to the payment of interest and instalment consistent with the undertaking given by Kabra which the Defendants claims bind the Plaintiff. [22] As regards to the status of the three companies, the Plaintiff’s witness PW4 who is an officer of the Plaintiff bank, in his cross-examination had explained (at page 114 of the Record of Appeal) that Kabra was the developer of the Project and that MBf Property was the manager for Kabra vide a Power of Attorney. As regards to the relationship between MBf Property and MBf Finance, PW4 testified both 11 companies are in the same group of companies under MBf Holdings. Although in his written submission learned counsel for the Defendants contends that PW4 has agreed that “all of them [Kabra, MBf Property and MBf Finance] have grouped together and runned the said Project” and therefore the said three companies were from the same group of companies, the notes of proceedings taken does not show that PW4 had agreed as contended by the Defendants. For clarity purposes PW4’s cross-examination is reproduced below – Bolehkah Encik Azli terangkan kepada Mahkamah, siapakah itu Kabra Holdings? Kabra Holding adalah Pemaju bagi pembinaan condominium Ampang Hilir. Dan siapakah MBf Property Services? MBf Property Services adalah Power of Attorney ataupun wakil kuasa kepada Kabra Holdings. Apakah hubungan MBf Property Services dengan MBf Finance? Ianya bersama dalam group ataupun holding dengan MBf Holding. MBf Holding? Ya. Yang mempunyai entiti yang berbeza. 12 [23] Based on the notes of proceedings, the point on “grouping together and running the Project” was not posed to PW4. In fact PW4’s testimony about the status of the three companies being separate entities were not challenged by the Defendants’ learned counsel. PW4 admits that MBf Property and MBf Finance were in the same group of companies but the fact remains the two companies were two separate entities. As such there is no sufficient evidence to show the three companies has agreed to implement and run the Project in the context of the Defendants’ “grouping together and running the Project”. Assuming Kabra, MBf Property and the Plaintiff has agreed to group together and run the Project it does not necessarily mean the individual act or conduct of each of the parties bind the other parties unless there is clear evidence to that effect. [24] The Defendants relies on the Letter of Undertaking dated 23 August 1993 executed between the Defendants, Kabra and its manager MBf Property to show that the Plaintiff was fully aware of the undertaking. The Letter of Undertaking (LoU) dated 23 August 1993 is reproduced below – 13 _______________________________________________ MBf PROPERTY SERVICES SDN. BHD. _______________________________________________ DEVELOPER’S UNDERTAKING TEE SZE PING AND LEE YUH YUN c/o Messrs Mah Weng Kwai & Associates Advocates and Solicitors 35 3rd Floor Jalan Medan Tuanku 50300 Kuala Lumpur Date 23rd August 1993 Dear Sirs/Madam Re : SALE AND PURCHASE AGREEMENT OF UNIT NO : B-02-8B PROJECT : AMPANG HILIR CONDOMINIUM -------------------------------------------------------------------------------------------- We refer to your purchase of the above unit. We are pleased to inform you that in consideration of you purchasing the said unit we agree to pay all the interest accrued on your loan disbursed to pay for the purchase price of the above unit during the period of construction of the unit and until your loan is fully drawdown with the Certificate of Fitness being issued. The agreement to pay is not assignable by you and subject to you complying with the terms and conditions of your Loan Agreement with your end financier. The payment of this interest will be made by us directly to your end financier with whom we shall be making arrangement to pay with your consent. Your end financier will keep you informed of the payment. 14 Please note that our agreement to pay interest is also subject to that the interest rate from your end financier for the loan must not be more than the prevailing rate of interest imposed by MBf Finance Berhad for this type of unit. If the interest rate of your loan is higher than the rate of MBf Finance Berhad, you will have to bear the difference of any excess. Finally signify your acceptance of our agreement to pay the interest and your consent to communicate with your end financier. (emphasis added) Thank you. Yours faithfully sgd ......................................... Authorised Signatory sgd ......................................... I./we (Purchaser) hereby agree to the above and consent to you to deal with my/our end financier. sgd ......................................... c.c. End Financier [25] PW4 testified (at page 114 Record of Appeal) that the Plaintiff had received a copy of the LoU because a copy of the said letter was sent to the Plaintiff. PW4 agreed that based on the contents of the LoU, MBf Property had given an undertaking that it will pay all interest on the loan disbursed until Certificate of Fitness is issued. The Defendants contends since the Plaintiff had received the LoU, the Plaintiff was fully 15 aware of the undertaking given by MBf Property and as such the Plaintiff can only claim the accrued interest on the loan from the Defendants after the loan is fully withdrawn, vacant possession delivered and Certificate of Fitness issued. [26] The question here is whether by being copied and in receipt of the LoU the Plaintiff is bound by the undertalings given by MBf Property. It is not disputed by the Plaintiff that they received the letter and was aware of the contents of the same. But does that make them a party to the agreement/arrangement between the Defendants and MBf Property and agreed to be bound by the undertaking given by MBf Property to the Defendants?. [27] As can be seen from the LoU, it is a letter issued by MBf Property addressed to the Defendants stating the undertaking made by MBf Property and Kabra. Based on the letter alone, it is an agreement and arrangement between the Defendants as the purchaser, Kabra the developer and MBf Property the manager of Kabra. The agreement was that MBf Property and Kabra “agree to pay all the interest accrued on your loan disbursed to pay for the purchase price of the above unit during the period of construction of the unit and until your loan is fully drawdown with the Certificate of Fitness being issued.” and the 16 arrangement was that “The payment of this interest will be made by us directly to your end financier with whom we shall be making arrangement to pay with your consent.”. As such whatever that is being said in the LoU, it is obviously between the Defendants, Kabra and MBf Property. PW4 testified in re-examination that the undertaking in respect of interest is between the Defendants and MBf Property – Encik Azli juga telah memberikan keterangan di mana muka surat 70 yang merupakan Developer’s undertaking di mana faedah semasa pengeluaran berperingkat-peringkat while pinjaman kepada pemaju, faedah tersebut akan dibayar oleh pihak MBf Property Services. Itu yang telah dicatatkan dalam muka surat 70 ini. Jadi soalan saya adalah boleh Encik Azli jelaskan surat developer, undertaking ini adalah antara siapa dan siapa? Surat yang ditandakan muka surat 70 ini, adalah surat daripada MBf Property Services kepada Defendan-Defendan, bukan kepada AmBank ataupun MBf Finance pada masa tersebut. Jadi perjanjian tersebut adalah antara MBf Property dengan Defendan, tidak melibatkan MBf Finance. [28] The legal issue is whether knowledge can impute consent?. Based on s. 13 the Contracts Act 1950, “consent” is said to have been given when two or more persons are said to have agreed upon the same thing in the same sense. The LoU was executed by the Defendants and MBf Property which represents Kabra. The undertaking was given by MBf Property on behalf of Kabra. As the LoU had stated, the 17 undertaking was given in consideration of the Defendants purchasing the Property from Kabra the developer of the Project. Based on the LoU alone it is crsytal clear the Plaintiff was not a party to the LoU. This is fortified by the statement of MBf Property (stated in the LoU) that they will deal with the Plaintiff to make direct payment to the Plaintiff. MBf Property even asked for the Defendants’ consent to communicate with the Plaintiff. Under such circumstances can the undertaking given by MBf Property and Kabra be binding on the Plaintiff or can inference be made that the Plaintiff has agreed to the undertaking given such circumstances?. I am of the view there is no credible evidence to show that the Plaintiff had agreed or consented either expressly or impliedly to the undertakings stated in the LoU. [29] Moreover as pointed out by the Plaintiff, the Plaintiff and Defendants are bound by the Loan Agreement (P7) executed between them on 22 September 1993 in relation to the loan obtained by the Defendants to purchase the Property, including on the issue of interest payment. In this respect PW4’s testimony is as follows – Ok, sekarang kita pergi atas isu tuntutan bank terhadap Defendan-Defendan yang melibatkan faedah yang sepatutnya dibayar oleh pihak pemaju atau pihak MBf Property Services Sdn Bhd. Jadi soalan saya adalah ini, Encik Azli telah dirujuk kepada muka surat 18 70, iaitu Developer’s undertaking di mana pihak peguamcara Defendan telah menyoal Encik Azli dan menyatakan bahawa pihak Defendan hanya perlu membayar selepas CF keluar dan bukan sebelum tersebut. Apa Encik Azli ingin jelaskan? Surat muka surat 70, yang sebagai yang saya cakap tadi, surat daripada MBf Property kepada Defendan, bukan kepada MBf Finance. Ini ikut letter of offer yang bertarikh 12/05/1993, under Clause, muka surat 28, under Clause 8, instalment akan bermula selepas full disbursement ke atas akuan ini lah. Dan Encik Azli telah mengesahkan bahawa berdasarkan kepada penyata akaun yang disediakan, bahawa segala faedah-faedah yang telah dibayar oleh pihak MBf Property Services Sdn Bhd, ok, itu adalah Encik Azli telah sahkan. Soalan saya adalah sekiranya faedah tidak dibayar oleh MBf Property Services, tanggungjawab siapa untuk membayar? Defendan. Mengapa Encik Azli mengatakan sedemikian? Ini berdasarkan Letter of Offer kita kepada Defendan bersama dengan loan pinjaman kita. [30] PW4 further testified that under the Loan Agreement, the Defendants are obliged to pay the progressive interest and not MBf Property – 19 Encik Azli juga ditanya berkenaan dengan tuntutan faedah yang sepatutnya dibayar oleh pihak MBf Property Services. Namun, pihak Plaintif telah menuntut terhadap pihak Defendan-Defendan. Soalan saya adalah kenapa Encik Azli katakan faedah tersebut dituntut terhadap pihak Defendan dan bukan terhadap MBf Property Services? Berdasarkan Agreement Pinjaman daripada Defendan... Perjanjian Pinjaman? Ya, Perjanjian Pinjaman daripada MBf Finance, yang menyatakan semua faedah ataupun progressive interest sepatutnya dibayar oleh Defendan. Atau peminjam? Ya, ataupun peminjam. [31] It is not disputed by the Defendants that they had executed the Loan Agreement (P7) with MBf Finance for purpose of financing their purchase of the Property. The Defendants in their statement of defence however denied of any contractual relationship with the Plaintiff because the Loan Agreement was executed with MBf Finance and not the Plaintiff. However it is noted this particular issue is not listed as one of the grounds of appeal in their Memorandum of Appeal (at pages 8 – 12 of the Record of Appeal). As such the Defendants are not pursuing the 20 said issue as one of their grounds of appeal and there is no necessity to dwell on the matter. [32] Based on the Loan Agreement, the provision in respect of payment of interest states as follows – SECTION 6.01 PAYMENT OF INTEREST The Borrower covenants and agrees that until commencement of the repayment of the Loan as provided in Section 7.01 the Borrower shall without notice from the Lender pay interest at the Prescribed Rate to the Lender on such amount of the Loan as might have been disbursed on each Interest Payment Date and mutatis mutandis upon full disbursement of the Loan. (emphasis added) [33] Pursuant to the contractual provision in clause 6.01, the Defendants are required to pay interest on the amount of loan disbursed. Obviously this contractual provision is contrary to the undertaking given by MBf Property to the Defendants. [34] For the terms of the undertaking to be bound on the Defendants, the Plaintiff must consent to be bound by the LoU especially so when the undertaking given by MBf Property essentially means the Plaintiff will have to agree to waive the imposition of interest during construction 21 period which would affect the Plaintiff financially. As such it would require an express intention on the part of the Plaintiff to agree to such undertaking and not merely to be imputed on the Plaintiff. In this respect reference is made to Section 6.06 of the Loan Agreement which reads – SECTION 6.06 VARIATION OF DATES FOR PAYMENT OF INTEREST It is hereby expressly agreed and declared by the parties hereto that notwithstanding the provision of Section 6.01 hereof, the dates therein provided for the payment of interest may at any time and from time to time be varied with the consent of the Lender by mutual exchange of letters and thereupon variation in the manner aforesaid, such amended dates shall be deemed to become effective and the Interest Payment Date shall be deemed to have been amended accordingly and shall be read and construed as if such amended dates had been incorporated in and formed part of this Agreement at the date of execution thereof. [35] It is to be noted that the Housing Loan Agreement was executed on 22 September 1993 which was issued a month after the issuance of the LoU. If it is true the Plaintiff had consented to the undertaking as claim by the Defendants, the 1st Defendant (DW1), who is an advocate and solicitor, ought to have raised the undertaking with the Plaintiff and make sure that the Housing Loan Agreement is consistent with the undertaking purportedly consented to by the Plaintiff. DW1 ought to have insisted that his obligation to pay interest to the Plaintiff will only be 22 triggered when Certificate of Fitness issued and delivery vacant possession delivered to the Defendants. There was no such evidence, in particular there was no evidence of the mutual exchange of letters between the Defendants and the Plaintiff to vary section 6.01 of the Housing Loan Agreement to give effect to the terms of the LoU. [36] The 1st Defendant (DW1) was referred to the Housing Loan Agreement and was asked to identify the term which provides that the Defendants are only to pay interest after full disbursement of the loan. During cross-examination DW1 reluctantly admitted that there is no such provision in the Housing Loan Agreement. DW1’s testimony is as follows – Now, if you look at the agreement at Page 32, it’s the loan agreement signed isn’t it between you and your wife with MBf Finance Berhad, right? Yes Now would you be able to show anywhere in the terms or the agreement itself which showed that you and your wife are not liable to pay any interest until full disbursement is completed? I believe it is not in the loan agreement. 23 Ok. Now, you have actually referred to Page 70, which is the Letter of Undertaking you just talking, 70. 70? Ya. Alright, this is the document which you are referring to, isn’t it? Yes. Mr. Richard, you would agree that this is the Developer’s Letter of Undertaking given by MBf Property Services Sdn Bhd being the Attorney for the Developer, agree? Yes. Alright. Would you agree with me, that it is not the letter from MBf Finance Berhad to you? It is not the letter from MBf Finance Berhad, yes. But it is the letter was copied to MBf Finance Berhad. It is only copied? Yes [37] Also, DW1 could not produce any letter from the Plaintiff to prove that the Plaintiff has agreed for the Defendants not to pay interest during construction period – 24 Now, do you have any letter from MBf Finance Berhad which give such undertaking that you and your wife are not liable for any interest during construction? No, besides the Letter of Offer, we did not receive anything else from MBf Finance Berhad. No, Mr. Richard, my question is, No, there is nothing. Do you have any letter? Dw1: No. [38] As such there is no evidence to show the Plaintiff has consented to be bound by the LoU which is between the Defendants and MBf Property. In so far as the Plaintiff and the Defendants are concerned, they are bound by the terms of the Loan Agreement which provides for the payment of interest by the Defendants on the amount of loan disbursed. Premised on the aforesaid it is my finding that LoU is not binding on the Plaintiff. [39] The learned SCJ in her judgment (pages 20 – 21 of the Record of Appeal) had duly considered that the Plaintiff was not a party to the LoU 25 and as such the LoU is not binding on the Plaintiff. Although the learned SCJ did not in her judgment considered the fact that the Plaintiff was aware of the LoU, such omission, to my mind, is not fatal as being aware of the contents of the LoU does not tantamount to agreeing to the contents of the LoU. The lower court is right when it made a finding of fact the three companies are separate entities and that the Plaintiff was not a party to the undertaking made by MBf Property to the Defendants. Non-delivery of vacant possession and/or not duly informed of the issuance of the Certificate of Fitness [40] It is the Defendants’ argument it is MBf Property that are liable to pay the interest on behalf of the Defendants until Certificate of Fitness issued and vacant possession delivered to the Defendants. Since the Defendants were not informed that the Certificate of Fitness has been issued and vacant possession is not delivered to the Defendants, the Defendants are not liable to pay the instalment and the interest. [41] It is my finding that the terms of the LoU is not binding on the Plaintiff. As such the above issue must be considered in the light of the contractual relationship between the Plaintiff and Defendants as contained in the Loan Agreement which is the basis of the Plaintiff’s 26 claim against the Defendants, namely, breach of the terms of the Loan Agreement. This was confirmed by PW4 who had testified that the Plaintiff’s action against the Defendant is due to the Defendants’ failure to pay any of the monthly instalment. [42] In this respect I agree with the Plaintiff that the Defendants’ contentions that they are not liable to pay to the Plaintiff the monthly instalment and the interest because they have not been notified of the issuance of Certificate of Fitness and that vacant possession has not been delivered to them is not a defence against the Plaintiff who had released the loan under the Housing Loan Agreement. Plaintiff’s cause of action against the Defendants is for breach of the Housing Loan Agreement while delivery of vacant possession is the developer’s obligations under the Sale and Purchase Agreement. As such the Defendants cannot fault the Plaintiff for the failure of the developer/Kabra. Under the circumstance I am of the view there is no merits in the Defendants’ defence in so far as the issue of Certificate of Fitness and vacant possession is concerned. [43] The lower court at pages 11 – 12 of the Record of Appeal had considered the evidence of PW1 and the Certificate of Fitness (P1) and held that the Defendants are bound by the terms of the Housing Loan 27 Agreement. Considering the evidence adduced I do not find such decision to be wrong as it is consistent with the weight of evidence adduced. [44] In any event PW1 (Penolong Pegawai Seni Bina Kanan, Majlis Perbandaran Ampang Jaya) had testified that the Certificate of Fitness (P1) in respect of the Project was issued on 13 February 2001. The original copy of the said certificate was handed over to Kabra via letter dated 13 February 2001 (P2). Even DW1 admitted during cross-examination that he is not challenging the validity of the Certificate of Fitness. DW1’s issue is that he was not informed of the issuance of Certificate of Fitness which as stated above is not a defence to the Plaintiff’s claim for the Defendant’s breach of the Housing Loan Agreement. Whether service of the Disbursement Notices, Letter of Demand and Letter of Recall was done in accordance with the Loan Agreement [45] Under the Loan Agreement, the provision for service of documents is as follows – 28 SECTION 15.02 SERVICE OF LEGAL PROCESS

The service of any Legal Process may be given by prepaid registered post sent to the respective Address for Service of the parties hereto and such Legal Process shall be deemed to have been duly served after the expiration of five (5) days from the date it is posted.

No change in the Address for Service howsoever brought about shall be effective or binding on either party unless that party has given to other actual notice of the change of Address for Service and nothing done in reliance on Section 15.02(a) shall be affected or prejudiced by any subsequent change in the Address of Service over which the other party has no actual knowledge of at the time the act or thing was done or carried out. [46] By the above provision it was contractually agreed that service of any legal process may be effected by prepaid registered post sent to the address for service provided in the Loan Agreement and such service is deemed to be duly effected after the expiration of five days from the date of posting. Any change in address for service is only effective or binding if actual notice is given by the party concerned. In Alliedbank (Malaysia) Bhd v Yau Jiok Hua [1998] 2 CLJ it was held where there had been an agreement on the mode of service, proof that the notice was duly posted would suffice to prove service. 29 [47] The address for service provided by the Defendants in the Housing Loan Agreement can be found at the Schedule of the said agreement (page 258 of the Record of Appeal) and it is at “c/o Messrs A. K. Lee & Co, Advocates and Solicitors, 6th Floor Lee Yan Lian Building, Jalan Tun Perak 50050 Kuala Lumpur”. [48] The Plaintiff through PW2 had produced documents to show that the Plaintiff, through its solicitor, had sent a letter of demand dated 5 June 2003 (Letter of Demand) and a letter of recall dated 12 June 2003 (Letter of Recall) to the Defendants. PW4 in his evidence in chief confirmed that the Disbursement Advice at pages 319 – 331 of the Record of Appeal were sent to the Defendants. It would appear the demand for the loan facility granted and all the amount due and payable under the Housing Loan Facility made via the Letter of Recall was pursuant to section 7.01 of the said loan agreement – SECTION 7.01 REPAYMENT OF LOAN Without prejudice to Section 11.02, the Loan together with interest and all monies payable thereon, so far as not otherwise repaid or discharged under the provisions of this Agreement shall be repaid by the Borrower on demand by the Lender and until such demand is made, the Borrower shall repay the Loan together with interest thereon at the Prescribed 30 Rate by the Instalments timeously and on each of the Instalment Payment Dates without notice from the Lender such that the Indebtedness of the Borrower shall have been fully discharged latest on the expiry of the Term. [49] Both the Letter of Demand (demanding the outstanding amount as at 4 June 2003) and Letter of Recall were sent by registered post and ordinary mail and proof of posting of the two letters were produced by PW2. At the material time PW2 was the chief clerk in the firm of the Plaintiff’s solicitor and was charged with the recording all incoming documents. PW2 had prepared both the said letters and the proof of posting in the format provided by the post office. As to the proof of posting, PW2 testified that the document is an acknowledgment by the post office that they had received the letters from the legal firm and for the post office to post it to the recipients (Notes of Proceedings at page 84 of the Record of Appeal). Both the letters were sent to “c/o Messrs A K Lee & Co, 6th Floor Lee Yan Lian Building, Jalan Tun Perak 50050 Kuala Lumpur”. The Defendants’ pleaded case is that they have not received both the letters. [50] The Defendants objected to the admissibility of the Letter of Demand (ID3), Letter of Recall (ID4) and proof of posting in the format provided by the post office of both the letters (ID5) because the original documents were not produced in court and the person who signed the 31 letters were not called to testify. In this respect PW2 testified that the original letter was sent to the Defendants and copies of the letter were enclosed in the relevant files. With regard to the proof of posting, PW2 testified that the original copy of the proof of posting could not be produced because it was lost when the boxes of documents were moved to a bigger store in 2008. Nevertheless the proof of posting were scanned in 2003 as it is the practice and policy of the firm to scan the documents before it was kept in the store. [51] The Plaintiff relies on s. 65(1)(c) of the Evidence Act to admit the Letter of Demand and Letter of Recall. The said provision provides as follows – 65 Cases in which secondary evidence relating to documents may be given

Secondary evidence may be given of the existence, condition or contents of a document admissible in evidence in the following cases:

when the original is shown or appears to be in the possession or power-

of the person against whom the document is sought to be proved;

(ii) of any person out of reach of or not subject to the process of the court; or

(iii) of any person legally bound to produce it, and when after the notice mentioned in section 66 such person does not produce it;

when the existence, condition or contents of the original have been proved to be admitted in writing by the person 32 against whom it is proved or by his representative in interest;

when the original has been destroyed or lost, or when the party offering evidence of its contents cannot for any other reason not arising from his own default or neglect produce it in reasonable time;

when the original is of such a nature as not to be easily movable;

when the original is a public document within the meaning of section 74;

when the original is a document of which a certified copy is permitted by this Act or by any other law in force for the time being in Malaysia to be given in evidence;

when the originals consist of numerous accounts or other documents which cannot conveniently be examined in court, and the fact to be proved is the general result of the whole collection.

(a) In the cases referred to in subsection (1)(a), (c) and (d) any secondary evidence of the contents of the document is admissible.

In the case referred to in subsection (1)(b) the written admission is admissible.

In the case referred to in subsection (1)(e) or (f) a certified copy of the document but no other kind of secondary evidence is admissible.

In the case referred to in section (1)(g) evidence may be given as to the general result of the documents by any person who has examined them and who is skilled in the examination of such documents. [52] The Plaintiff contends that PW2 who has knowledge of the documents and had prepared both letters is the maker of the letter even though the letter was signed by another person who is a lawyer in the 33 said legal firm. It is noted that the letters produced in court are the file copy and not the original copy as the original had been sent to the Defendants. Sending the original copy of a letter to the intended recipient is a normal and universal practice. Thus it is of no fault of the Plaintiff that the original copy could not be produced. In so far as the maker is concerned, I am in agreement with the Plaintiff that PW2 is the maker of the document as the letters was prepared/drafted by PW2. Although PW2 did not sign the two letters she had testified she has knowledge of the matter. [53] In respect of the proof of posting, I am in agreement with the Defendants that there is no sufficient evidence adduced to show that the original copy had been lost and the reasonable effort made to locate the lost proof of posting. The proof of posting is a document handled and managed by the legal firm acting for the Plaintiff at the material time. It is obvious that the said document (proof of posting) is something beyond the Plaintiff’s control and supervision. As such the failure to provide the original copy (because it was lost while the said legal firm was moving to a bigger store) is not due to the Plaintiff’s own default and neglect. 34 [54] Under the circumstances I am of the view that the document proof of posting is admissible under the second limb of s. 65(1)(c) Evidence Act. Sarkar Law of Evidence Volume II at page 1850 says – CLAUSE (c): “When the Original has been destroyed or Lost” - Under this clause secondly evidence may be given when the original has been destroyed or lost, or when the party offering evidence of the contents cannot for any other reason not arising from his own default or neglect produce it in reasonable time. The two alternative requirements are disjunctive in nature and the element of ‘default’ or ‘neglect’ in the second limb is not a requirement under the first limb [Augustine Paul, Evidence: Practice and Procedure (LexisNexis, 4th Edn p 660]. Where an original document has been lost there is no requirement to show that there was no default or neglect with regard to the loss [see Kwang Boon Keong Peter v. P.P., (1998) 2 SLR 592 (Singapore HC)]. Section 65(2) provides that in the cases referred to in subsection (1)(a),

and (d) any secondary evidence of the contents of the document is admissible. [55] Coming back to the Defendants’ claim that they did not received the two letters, it must be noted that the Defendants had contractually agreed that service of any legal process is to be effected in the manner provided under section 15.02 of the Housing Loan Agreement. Accordingly service of the Letter of Demand and Letter of Recall was deemed to have been duly served after the expiration of five days from the date the said letters were posted. Under the circumstances, the Defendants’ issue that there was no acknowledgement of receipt by the Defendant or that the documents was not personally served on him or 35 the Plaintiff was aware of the Defendant’s other addresses is totally irrelevant and a non-issue. [56] The Defendants claim they had moved out from the address stated in the Housing Loan Agreement and the new address is the address as stated in the LoU. However it must be noted that this fact was never pleaded by the Defendants in their pleadings. As parties are bound by their pleadings, Defendants cannot raise this new issue. Be that as it may and for completeness I will discuss the said issue. [57] Based on Section 15.02(b) of the Housing Loan Agreement, the Defendants are obliged to give actual notice to the Plaintiff of any change in the address for service. DW1 testimony in relation to the change of address is as follows – Now, have you actually inform MBf Finance Berhad the change of you address or correspondence address? I did inform the solicitors that was handling the documentation. Documentation? Ya. Yes, the loan documentation. And who is the Solicitors? 36 I believe it was Cheang & Ariff then. Cheang & Ariff. Then, I can’t remember who who was the lawyer. But I believe the firm Cheang & Ariff. It was the panel of MBf Finance. And how did you actually inform them? I don’t have any letter with me now, because I basically can’t find the file at all. But it’s probably also verbally. Ok. Now, you said you did not receive the Letter of Demand, the Letter of Termination. Nothing at all. Alright. Would you agree with me, the address which appears on that documents are address of A K Lee & Co. Yes. Alright. Now, would you agree with me, that you had not, you or the Defendant, your wife did not inform in writing to MBf Finance Berhad of any change of address? DW1 We informed the Solicitors. No, my question is this We did not write. 37 [58] It is clear that the Defendants did not inform the Plaintiff of the change in address but they informed the Plaintiff’s solicitor instead, which the Defendants contends is suffice. I am of the view such contention is not tenable for the simple reason that parties to the Housing Loan Agreement had mutually agreed on a certain mode of service and therefore parties are obliged to comply with the mode they had agreed. [59] DW1 referred to the LoU which he said was sent to the correct address (at c/o Messrs Mah Weng Kwai & Associates, Advocates and Solicitors, 35 3rd Floor, Jalan Medan Tuanku, 50300 Kuala Lumpur) and that the Plaintiff are aware of the Defendants address in the Sale and Purchase Agreement (at 11-1-1 Putra Apartment Taman Setiawngsa, 54200 Kuala Lumpur) and the Supplemental Agreement (also at c/o Messrs Mah Weng Kwai & Associates). The Defendants further pleaded it is easy for the Plaintiff to check the latest firm address of DW1 with the Bar Council as DW1 is a senior lawyer and the 2nd Defendant is a banker. [60] With respect, I am of the view it is not right for the Defendants to depart from what was agreed in section 15.02 of the Housing Loan Agreement and unilaterally expand the scope of the said provision and 38 read into it ‘other mode of service’ and impose obligations on the Plaintiff to make effort to check, be aware and be alert at all times of the Defendants’ current address including checking agreements executed by the Defendants with Kabra/MBF Property where the Plaintiff is not a party. By the wordings of the said Section 15.02, such can never be construed to be the intention of the parties. The simple truth is that the Defendants did not comply with the provision of Section 15.02(b) to effect the change in his address which are binding on the Defendants (OCBC Bank (Malaysia) Berhad v Lian Ak Glass Sdn Bhd & Ors [2011] 1 LNS 1370; Amanah Merchant Bank v Lin Tow Choon [1994] 2 CLJ 1; Alliance Bank v Mukhriz Bin Mahathir [2006] 4 MLJ 451). [61] In Amanah Merchant Bank v Lin Tow Choon [1994] 2 CLJ 1, the Supreme Court had to deal with the interpretation of a clause in a letter of guarantee dealing with the service of a notice of demand which provides as follows –

Any notice may be served on the undersigned or his/their executors administrators or legal representatives either personally or by sending the same through the post in an envelope addressed to the last known place of address of the person to be served and a notice so sent shall be deemed to be served on the day following that on which it is posted. 39 [62] The bank/appellant's solicitors sent to the respondent, who is a guarantor to a banking facility granted to the company where the respondent was a director, a notice of demand by AR registered post to his last known address, demanding payment of the amount owing. The High Court dismissed the bank/appellant claim on the ground of non-effective service of the notice of demand. The High Court held that the deeming provision of cl. 17 was only good for notices sent by ordinary post and based on the facts it was only upon the return of the AR card with the acknowledgment of receipt that it could truly be said that the letter of demand had been effectively served on the guarantor. Anything short of that could never amount to the letter of demand having been served on the guarantor where posting was done through AR registered post. [63] The appellant argued that since the notice of demand was correctly addressed, prepaid and delivered to the post office and acknowledged by the postal authority, a presumption arose that the said notice had reached the respondent at the given address and was deemed to have been received by him on the following day, a day after the postal authority acknowledged receipt of the notice for service. 40 [64] On appeal, the Supreme Court said this is respect of the finding of the High Court – With respect, we do not agree with the finding of the learned Judge. In construing the words of the guarantee, in our view, the learned Judge should have adopted a liberal approach by giving a reasonable construction to them, having regard to the surrounding circumstances (Kong Ming Bank Bhd. v. Leong Ho Yuen [1982] 2 MLJ 111; Bank Bumiputra Malaysia Bhd. v. Esah binti Abdul Ghani [1986] 1 MLJ 16 SC, following the judgment of Fry J. in Lloyd's v. Harper [1880] 16 Ch. D 290. O'Donovan & Phillips, in their treatise on the law of guarantee, The Modern Contract of Guarantee, 1985 Edn., stated at p. 145 as follows: Thus the guarantee should be given a reasonable, business meaning and should not be construed so as to render the guarantee ineffective or illusory… [65] With regards to the service of notice the Supreme Court had this to say – It must, however, be borne in mind that the mode of service of a notice of demand in a given case will depend on the words of the relevant clause in the guarantee, as it is quite common for the guarantee to expressly provide the manner in which a notice is to be given to the guarantor. 41 [66] As regards to clause 17 of the guarantee, the Supreme Court held – … on the proper construction of cl. 17, since any notice may be served by sending the same through the post addressed to the last known address of the addressee, in our view, the deeming provision applies to the said notice, whether or not it is sent by AR registered post. Cl. does not provide that the notice should either be sent by registered post or AR registered post, and the fact that these words were omitted from cl. 17 cannot justify the Court reading those words in cl. 17 as was done by the learned Judge. In the context of cl. 17 of the said guarantee, we are further of the view that it is not necessary that the appellant must show that the AR card has been returned duly acknowledged to constitute effective service of the notice of demand. It is sufficient for the appellant to show that the notice was correctly addressed, prepaid and delivered to the post office and acknowledged for service by the postal authority. Once these facts have been established, the deeming provision will inevitably apply. [67] Although the case dealt with a clause in a letter of guarantee, the principle in relation to the interpretation of a clause on service of documents is applicable in the instant case which also concerned a provision on service of document/legal process. Based on the above principles, it is not open to the Defendants to read into Section 15.01 words which are not intended to be in the said provision, rendering the Housing Loan Agreement ineffective. Section 15.01 requires service to be given by prepaid registered post, sent to the address for service as 42 provided by the parties and service is deemed to have been duly served after the expiration of five days from the date it is posted. [68] Based on the facts I am of the considered opinion that the service of the Letter of Demand and Letter of Recall was effected in accordance with the provision of Section 15.01 of the Housing Loan Agreement. As such a proper demand was made on the Defendants for the amount in arrears as stated in the Letter of Demand and subsequently for the loan facility and all monies payable plus all interest under the Housing Loan Agreement as stated in the Letter of Recall. [69] As regards to the Disbursement Advice (pages 319 – 331 of the Record of Appeal), I am of the view such documents are inadmissible on the following grounds –

based on the Record of Appeal, the original documents were not produced and no explanation in respect of the status of the original document. Thus the requirement under s. 65(1)(c) of the Evidence Act 1950 is not met;

no proof of posting of the Disbursement Advice to the Defendants; and 43

based on the Disbursement Advice as shown at pages 319, 322 and 325 which was addressed to the Defendants at the address provided in the Housing Loan Agreement, there is no indication that the said advices were sent by registered post, a requirement under section 15.02 of the Housing Loan Agreement. [70] Be that as it may, I am of the view failure to produce the Disbursement Advice is not detrimental to the Plaintiff’s case as the obligation of the Defendants to pay the loan by monthly instalments pursuant to section 7.02 of the Housing Loan Agreement is not an “on demand” obligation. The obligation to pay the monthly instalment is also without notice from the Plaintiff that the indebtedness of the Defendants under the said agreement is fully discharged. Whether Plaintiff’s claim was filed out of time and that the Plaintiff’s action against the Defendant is mala fide [71] As regards to the issue of limitation, the Plaintiff argues that the Defendants are precluded from raising such issue as the said issue has been disposed at the Sessions Court in an application under Order 14A filed by the Defendants. According to the Plaintiff the issue of limitation 44 raised by the Defendants was dismissed with costs and there was no appeal filed by the Defendants against the dismissal. The Plaintiff submits res judicata applies and cited the infamous case of Asia Commercial Finance (M) Berhad v Kawai Teliti Sdn Bhd [1995] 3 CLJ which explain the doctrine of res judicata. [72] The Defendants in their Written Submission made no reference whatsoever to their Order 14A application and did not reply to the issue of res judicata raised by the Plaintiff. [73] While the case Asia Commercial Finance (M) Berhad explained in detail the doctrine of res judicata In Farlim Properties Sdn Bhd v Goh Keat Poh & Ors (And Other Appeals) [2003] 4 CLJ 505 the Court of Appeal held - 6(1) When the plea of res judicata is raised it is necessary to identify with precision the issue that was decided in the earlier proceedings. In Tong Lee Hwa & Anor v. Lee Yoke San [1979] 1 MLJ 24, [1981] 1 MLJ 54 Chang Min Tat FC held that to constitute a res judicata, the earlier judgment must, in terms of the Privy Council decision in Kok Hoong v. Leong Cheong Kweng Mines Ltd [1964] MLJ 49 ‘necessarily and with precision’ determine the point in issue. 45 [74] Accordingly, in order to determine whether the issue of limitation had been adjudged and ventilated, it is necessary to examine the Defendants’ application under Order 14A and the judgment of the Sessions Court. However there is no documents in the Record of Appeal which provide details in respect of the Defendants’ Order 14A application. In the judgment of the lower court, at paragraph 6 the learned SCJ briefly said (page 27 of the Record of Appeal) the issue of limitation had been dealt with at the Order 14A stage without any details whatsoever. It is also noted from the written submission by both parties (pages 346 – 431 of the Record of Appeal) that the issue of limitation was also raised by the Defendants in the lower court and doctrine of res judicata was also raised by the Plaintiff. However the said issue was not addressed in the grounds of judgment of the Sessions Court (pages 16 – 29 of the Record of Appeal). As such I am not in the position to agree with the Plaintiff’s stance on the issue of res judicata and will need to address the issue of limitation. [75] In essence the Defendants’ position is that the Plaintiff’s action is premised on the Housing Loan Agreement dated 22 September 1993.

the Letter of Demand and Letter of Recall were sent to the c/o Messrs A K Lee & Co, 6th Floor Lee Yan Lian Building Jalan Tun Perak 50050 Kuala Lumpur when the said legal firm had already ceased practice

the Plaintiff failed to take steps to check with the Bar Council the latest address of DW1 who is a senior lawyer

Plaintiff’s action is time barred, frivolous and vexatious

Plaintiff had commenced bankruptcy proceeding against Defendant pursuant to a judgment dated 3 September 2003. [82] In respect of the grounds at (a), (b) and (c) of the preceding paragraph, based on the grounds stated above, I am of the view there is no mala fide intention on the part of the Plaintiff when it sent the Letter of Demand, Letter of Recall to the Defendants at the address provided by 49 the Defendants which is in accordance with section 15.04 of the Housing Loan Agreement with the Plaintiff. The evidence shows it was the Defendant who did not comply with section 15.04 of the said agreement when the failed to inform the Plaintiff that there was a change in their mailing address. Contrary to the Defendants’ claim, section 15.04 does not impose an obligation on the part of the Plaintiff to check with the Bar Council the latest address of DW1 or that the Plaintiff is required to check other agreements (Sale and Purchase Agreement and Supplemental Agreement) to which Plaintiff was not a party when issuing notice/legal process on the Defendants. [83] With regard to issue of bankruptcy, the DW1 testified that the bankruptcy proceedings was commenced pursuant to a judgment in default of appearance was obtained by the Plaintiff in 2003. According to the Defendants, they had successfully obtained court order to set aside the judgment and the bankruptcy proceedings. It is apparent the bankruptcy proceeding is one of the way for the Plaintiff to execute the judgment it obtained against the Defendants. The judgment is good and valid judgment unless and until it is set aside on appeal and as such the Plaintiff has every right to pursue the execution of the judgment and ought not to be deprived from the fruits of its litigation (Sri Jeluda Sdn 50 Bhd v Pentalink Sdn Bhd [2008] 3 MLJ 692; Patel Holding Sdn Bhd v Estet Pekebun Kecil Sdn Bhd [1990] 2 CLJ Rep 611, [1990] 2 CLJ 280). [84] It is noted that the learned SCJ had also considered the evidence that the judgment in default was entered due to the Defendants’ failure to enter appearance. She had also considered that the Plaintiff had agreed to the Defendants’ for the judgment to be set aside and that the Plaintiff also had agreed to withdraw the bankruptcy notice filed against the Defendants. The testimony of DW1 is as follows – Now, question 22, you said that “I have applied to have tis Judgment and application for bankruptcy proceeding against me set aside.” I applied, yes. And you obtained order, the said Order with cost, alright? Yes. Now, would you agree with me, that the Plaintiff had actually agreed to your application to set aside Judgment in Default as well as the application to set aside the bankruptcy proceeding? Judgment in Default, I agree. Bankruptcy, yes ar? Yes. 51 Then that is yes. I am sorry, I can’t remember that. Then if is a yes, then yes. [85] Premised on the evidence aforesaid I am in agreement with the finding of the learned SCJ that the Defendants failed to prove mala fide on the part of the Plaintiff. [86] As such I am of the view the Defendants has failed to prove on balance of probabilities their counterclaim for declaratory relief that the Plaintiff’s claim is time barred and malicious prosecution. [87] In relation to the Plaintiff’s claim, it is noted that a statement of account for the period of 27 September 1993 to 30 September 2015 was prepared and produced by PW4 (pages 305 – 318 of the Record of Appeal which is marked as P11 and certificate under s. 90A of Evidence Act 1950 accompanying it P13). As at the statement of account was prepared pursuant to section 14.15 of the Housing Loan Agreement which reads as follows – SECTION 14.15 CERTIFICATE OF INDEBTEDNESS It is hereby agreed that any admission or acknowledgement in writing by the Borrower or by any person authorised on behalf of the Borrower or a judgment (by default or otherwise obtained against the 52 Borrower) or a statement of account in writing showing the indebtedness of the Borrower which is duly certified by an officer of the Lender shall be binding and conclusive evidence against the Borrower for whatever purpose including as being conclusive evidence of indebtedness to a court of law. [88] During cross-examination of PW4 (pages 119 – 121 of the Record of Appeal), the Defendants’ counsel did not challenged the statement of account as having any manifest error. The only point raised by the Defendants in respect of the statement of account was that the statement of accounts had accounted for the interest payment paid by MBf Property (which was confirmed by PW4) as such the Plaintiff ought to have go against MBf Property and not the Defendants. As stated above since the LoU was between the Defendants and MBf Property and the Plaintiff was not a party, the Plaintiff’s cause of action is against the Defendants and not MBf Property. Conclusion [89] Having considered the issues and the reasoning of the learned SCJ as stated in her grounds I am of the view she did not erred in allowing the Plaintiff’s claim and dismissing the Defendants’ counterclaim. Given the facts and evidence adduced I do not think such a decision is plainly wrong or unreasonable. As such I find no valid 53 reason for this court to interfere with such decision. I therefore affirmed the decision of the learned SCJ and dismiss the Defendants’ appeal with costs. ( KHADIJAH BINTI IDRIS ) JUDICIAL COMMISSIONER HIGH COURT (COMMERCIAL DIVISION) DATED 13 JUNE 2018 Counsel: Defendants/Appellants : Caryn Shua of Messrs Richard Tee & Chin Plaintiff/Respondent : Pramjit Singh of Messrs JS Ling,