Bank Muamalay Malaysia Berhad v 1. Aliran Wibawa Sdn Bhd (WA-22M-53-04/2016)

ALIRAN WIBAWA SDN BHD (No. Syarikat: 526359-K)

MOHD BADROL AFANDI B ABDUL RAHMAN (No. K/P: 410311-08-5649)

NOR LIZAM BIN MAT SAAT (No. K/P: 730424-07-5167)

ROSLIZA BINTI ISMAIL (No. K/P: 790917-08-5789) … DEFENDAN-DEFENDAN Grounds of Judgment Azizah Nawawi, J: Introduction [1] The plaintiff’s claim against the 1st Defendant is for the Istisna banking facilities dated 19.2.2003 in the sum of RM579,569.00 as at 14.9.2004. The plaintiff’s claim against the 4th defendant is premised on the letter of guarantee and indemnity dated 19.2.2003. 2 [2] The defence of the 4th defendant is that she had never signed the Letter of Guarantee and Indemnity as her signature has been forged and had lodged several police reports on the same. The 4th defendant also filed a counterclaim against the plaintiff premised on negligence for failing to ensure proper documentation in the istisna facilities, resulting in the suit against the 4th defendant, thereby causing her to suffer emotional trauma. The 4th defendant’s claim is for general damages limited to RM1million, punitive and exemplary damages and solicitor and client cost. [3] After considering the evidence, this court has allowed the plaintiff’s claim against the 4th defendant and dismissed the 4th defendant’s counterclaim. The Salient Facts [4] The plaintiff is a licensed financial institution with its registered address at Menara Bumiputra, Jalan Melaka, Kuala Lumpur. [5] The 1st defendant is a company incorporated in Malaysia with its business address in Taiping, Perak. [6] The 2nd, 3rdand 4th defendants are the guarantors of the financial facilities taken by the 1st defendant. The 4th defendant’s last known address is 99, Lorong Muzaffar Shah, Asam Kumbang, 34000 Taiping, Perak and/or No. 101, Jalan Station, 34000 Taiping, Perak. 3 [7] Upon the request of the 1st defendant, the plaintiff has provided the 1st Defendant a loan of RM1,362,362.78 based on Istisna facilities to complete a contract with the Ministry of Works, “Projek Menaikkan Taraf Jalan Air Mawang-Renggoh (N113) Fasa 2, Daerah Kuala Pilah, Negeri Sembilan” in the sum of RM687,000.00 and the sum of RM675,362.78 for the purpose of a performance guarantee in favour of the Ministry of Works. [8] The plaintiff and the 1st defendant then executed Istisna Purchase Agreement and Istisna Sale Agreement, both dated 19.2.2003. [9] The 2nd, 3rdand 4th defendants have executed a Letter of Guarantee and Indemnity dated 19.2.2003. [10] When the 1st Defendant defaulted in the payments under the facilities, the plaintiff’s Solicitor issued a letter of demand dated 28.9.2004 to secure the sum of RM579,569.14 under the said Istisna facilities as at 14.9.2004. The plaintiff’s claim against the 4th defendant is based on the Letter of Guarantee and Indemnity dated 19.2.2003. [11] A Judgment in default was entered against the 4th Defendant. However, the judgment in default was set aside by the Court of Appeal and hence this trial proceeded with regards to the plaintiff’s claim against the 4th defendant and the 4th defendant’s counterclaim against the plaintiff. 4 The Findings of the Court [12] Having considered evidence before me, I find that the plaintiff has proven on the balance of probability that under the Istisna banking facilities, the plaintiff has disbursed the loan sum to the 1stdefendant. I also find that the 1stdefendant has breached the facilities agreement when they failed to make the payments. [13] The Certificate of Indebtedness is also conclusive of the amount owing under the said facilities, which is RM579,569 as at 14.9.2004.Therefore, pursuant to the case of Chempaka Finance Bhd v Ho Lai Ying & Anor [2006] 2 MLJ 685, I am of the considered opinion that the Certificate of Indebtedness is prima facie evidence of the sum owing. The onus then lies with the 4th defendant to disprove the amount claimed. However, the 4th defendant failed to dispute the same. In Arab – Malaysian Finance Bhd v Siva Subramaniam Appupillai [1999] 8 CLJ 23, the Court said this: - “The appellant had produced a statement of account showing the amount outstanding. In the light of the conclusive evidence clause in the guarantee, it would not be open for the respondent to dispute the amount as stated by the appellant in the final account.” 5 [14] As against the 4th defendant, the plaintiff’s case is that 4th defendant had signed the Letters of Guarantee and Indemnity dated 19.2.2003. [15] In Bank Pembangunan Malaysia Berhad v Mensilin Holdings [2015] MLHRU 202, the Court held that where the parties have signed the contract, they are bound by the terms of the contract unless they can establish the elements of fraud, undue influence or misrepresentation. [16] In Smallholders Corp Sdn Bhd & Ors v Utusan Transport Sdn Bhd [1995] 4 MLJ 587, the court held that: “When documents containing contractual terms are signed, then in the absence of fraud or misrepresentation the party signing it is bound, and it is wholly immaterial whether he has read the document or not. In this case no plea of fraud or misrepresentation has been raised and the defendant is bound by his own admission.” (emphasis added) [17] It is the 4th defendant’s pleaded case that she did not sign the Letters of Guarantee and Indemnity dated 19.2.2003, the basis of the plaintiff’s claim. It is the pleaded case of the 4th Defendant that fraud was committed in this case, and that her signature on the Letters of Guarantee and Indemnity dated 19.2.2003 had been forged. In paragraph 10 (iv) and (v) of the Statement of Defence, the 4th defendant pleaded that: 6 “iv. Defendan Keempat membuat laporan-laporan polis bertarikh 19.10.2004, 29.01.2013 dan 28.08.2014 bahawa tandatangan beliau dipalsukan. v. Sekitar tahun 2004-2008, Inspektor Zambri dari Balai Polis Taiping datang menemui Defendan Keempat dan mengambil contoh-contoh tandatangan Defendan Keempat untuk siasatan. Defendant Keempat diberitahu oleh Inspektor Zambri dari Balai Polis Taiping bahawa tandatangan beliau telah dipalsukan oleh setiausaha abang beliau, iaitu Azmi Bin Ismail bagi tujuan pinjaman dengan Plaintif”. [18] As the 4th defendant has pleaded fraud, then the onus is on her to establish fraud. In the case of Sinnaiyah & Sons Sdn Bnd v. Damai Setia Sdn Bhd [ 2015] 7 CLJ 584, the Federal Court held that the standard of proof to establish fraud in a civil claim is on the balance of probabilities. The court held that: “[52] We therefore reiterate that we agree and accept the rationale in In re B (Children) (supra) that in a civil claim even when fraud is alleged the civil standard of proof, that is, on the balance of probabilities, should apply. And perhaps it is not out of place here to restate the general rule at common law that, "in the absence of a statutory provision to the contrary, proof in civil proceedings of facts amounting to the commission of a 7 crime need only be on a balance of probabilities". (See Boonsom Boonyanit v. Adorna Properties Sdn Bhd [1997] 3 CLJ 17, at p. 32; [1997] 2 MLJ 62, at p. 74). [19] It is the pleaded case of the 4th defendant that she was informed by Inspector Zambri from Taiping Police Station that her signature was forged on the bank documents and that the person who forged her signature is the secretary of her brother, Azmi bin Ismail. [20] However, when Inspector Zambri (PW3) gave evidence in court, he was not questioned on this by the learned counsel for the 4th defendant, that it was PW3 who informed the 4th defendant that her signature was forged by her brother’s secretary. [21] Instead, PW3 was referred to the police report lodged by the 4 th defendant on 29.1.2013: “Q: Di dalam report polis ada dinyatakan bahawa Rosliza binti Ismail tidak tandatangan dokumen dan dokumen ditandatangan oleh Azmi bin Ismail atau isteri kedua beliau. Ada apa-apa yang boleh Tuan Zamri beritahu Mahkamah? A: Untuk makluman kita tidak dapat berkenaan itu memandangkan pihak kimia pun hanya mengatakan tidak dapat menentukan siapakah yang membuat tanda tangan tersebut. Saya tidak dapat memberi keterangan.” 8 [22] Therefore, the plaintiff has failed to establish her pleaded case that she was informed by PW3 that her signature was forged by her brother’s secretary. [23] Another issue is that the 4th defendant’s evidence contradicts her pleaded case that it was her brother’s secretary cum second wife who had forged her signature. In her evidence, she said that she was informed by PW3 that it was her brother who had signed the bank documents: Pada laporan polis pada muka surat 168, puan secara spesifik menyebut nama Azmi bin Ismail sebagai peminjam? Bagaimana puan dapat maklumat ini? Saya dapat maklumat dari Insp. Zambri sendiri. Beliau menyatakan bahawa abang saya mengaku menangatangani perjanjian berkenaan dan saya sedia maklum bahawa pihak bank juga mengetahui Azmi bin Ismail yang menandatangani perjanjian itu.” (page 50 NOP) [24] In fact, the 4th defendant also gave evidence that her brother had used not just her name but also the names of her other siblings: Encik Azmi ada menggunakan nama orang lain selain puan? Ada Ada? Nama siapa yang dia gunakan? Semua adik beradik saya. Semua adik beradik puan? 9 Digunakan oleh Encik Azmi? Siapa nama pertama yang digunakan oleh Encik Azmi? Itu saya tak pasti tapi saya tahu semua nama ada. Semua nama ada dan semua disaman oleh bank? (see pages 59-60 NOP) [25] Yet, despite knowing that her brother had used her name, where she claimed that her signature had been forged by her brother (in evidence) or her sister in law (as pleaded), the 4th defendant said that she has not filed any suit against her brother. [26] Added to that, despite knowing that the bank has issued a legal notice against her in 2004, it was only in 2013 that she lodged another police report stating that she was informed (by the police) that her signature was forged by her sister in law.The first police report that she lodged was in 2004, after she received a legal notice issued by the plaintiff’s solicitor. In the 2004 police report, she never made any allegation against Azmi, despite knowing that the party taking the loan, the 1st defendant belonged to her brother Azmi bin Ismail. This can be seen from her evidence at page 52 of NOP: Puan, abang puan ni, Azmi ni memang dia seorang kontraktor? Puan tahu bahawa Aliran Wibawa ini adalah syarikat Encik Azmi? 10 Puan tahu kan? Puan tengok muka surat 13. Puan dapat surat ini pada 28.9.2004. dia ada sebut pelanggan Aliran Wibawa Sdn Bhd. Puan ada berjumpa tak dengan abang puan, Encik Azmi untuk bertanya dekat dia kenapa puan terima notis ini? Ketika puan dapat ni, puan jumpa taka bang? Tanya dia kenapa pulak dia pula dapat surat ini? Saya ada Tanya tetapi dia cakap itu urusan dia dengan bank dan saya rasa pihak bank sedia maklum akan hal ini. Daripad apercakapan beliau, beliau sangat tahu mengenai selok belok bank. Jadi setuju saya katakana puan dapat surat ini dan puan tahu Aliran Wibawa Sdn Bhd ni adalah syarikat abang dan puan tanya dia kenapa dapat notis ini, so dia kata itu urusan dia? So dia akan uruskan dengan bank? [27] The 4th defendant also agreed that the police report that she had lodged in 2013, implicating her brother Azmi bin Ismail for the first time, was lodged for the purpose of defending against the bankruptcy notice issued by the plaintiff’s solicitor (see NOP p. 58): Puan rujuk muka suart 71. Ini surat puan kepada Urusetia Jabatan Siasaan Jenayah Kommersial, ya puan? 11 …. Puan tengok di perenggan pertama tu, puan kata “saya ingin memohon satu laporan siasatan bertulis dari pihak tuan di dalam membantu saya menafikan saman bankrap yang dikemukakan kepada saya” …. Jadi puan, setuju saya katakan laporan polis puan buat pada 2013 semata-mata untuk mempertahankan saman kebankrapan yang difailkan? [28] Despite the serious allegations against her brother and her sister in law, the 4th defendant has failed to call any of them to give evidence to support her allegations, that either her brother or her sister in law had forged her signature. I find that both Azmi bin Ismail and his second wife are crucial witnesses in this case and that the non-calling of these two important witnesses by the 4th defendant would attract the invocation of the adverse inference in section 114(g) of the Evidence Act 1950 against the 4th defendant. In Munusamy v. Public Prosecutor [1987] 1 MLJ 492, Mohamad Azmi SCJ held at page 494: “It is essential to appreciate the scope of section 114(g) lest it be carried too far outside the limit. Adverse inference can only be drawn if there is withholding or suppression of evidence and not merely on account of failure to obtain evidence. It may be drawn from withholding not just any document, but material document by a party in his possession, or for non-production of not 12 just any witness but an important and material witness to the case.” [29] Section 114 (g) of the Evidence Act 1950 was applied by the Court of Appeal in Husaini Yaacob v. Tan Teo Siang [2014] MLRAU 216, where the Court of Appeal held as follows: “The reference to Sidek Petronas’s role in the repayment of the loan was never pleaded and therefore should not be taken into account to support the Respondent’s claim. And in any case, we agree with the Appellant’s submission that the non-calling of Sidek Petronas by the Respondent would attract the invocation of s 114(g) of the Evidence Act against the Respondent.” [30] However, the 4th defendant says that the reason why she did not call her brother is because she feared her brother, the alleged forger. But I am of the considered opinion that there is simply no attempt made to subpoena the alleged forger, Azmi bin Ismail. If a subpoena was applied for but the said Azmi bin Ismail refused to attend court, then it may be different. The same applies to the failure of the 4th defendant to call the secretary (and second wife) of Azmi bin Ismail, against whom she pleaded to be the forger of her signature. If there is such fear of calling Azmi bin Ismail as a witness, no such evidence of fear was launched against the calling of Azmi’s secretary/second wife. As such, I would invoke an adverse inference against the 4th defendant for failing to call either her brother or her sister in law in this case. 13 [31] Added to that, the evidence of PW3, the police officer does not support the contention of the 4th defendant. PW3 has confirmed that Azmi bin Ismail has not been charged for the forgery. Under cross examination PW3 gave the following evidence at page 44 NOP: Di dalam repot polis ada dinyatakan bahawa Rosliza Ismail tidak tandatangan dokumen dan dokumen ditandatangani oleh Azmi bin Ismail atau isteri beliau. Ada apa-apa yang Tuan Zamri beritahu Mahkamah? Untuk makluman, kita tidak dapat berkenaan itu memandangkan pihak kimia pun hanya mengatakan tidak dapat menentukan siapakah yang membuat tandatangan tersebut. Saya tidak dapat memberi kenyataan …. Adakah Azmi Ismail telah dicaj? Tidak ada [32] Further, the chemist, PW4 confirms that an analysis on the signature specimen of the 4th defendant (given by the 4th defendant) and the signature on the Letter of Guarantee and Indemnity is not conclusive, in that it cannot be confirmed as to whether the signature has been forged or not. Therefore, according to PW4, there is no conclusive proof that the 4th defendant’s signature on the Letters of Guarantee and Indemnity had been forged. [33] I am also of the considered opinion that from the evidence before this court, PW2 was the lawyer who prepared the contractual documents including the Letters of Guarantee and Indemnity. PW2 has confirmed in evidence that she has signed on the legal 14 documents (see page 154 of the CBD) and confirmed that the all the three (3) Guarantors signed the Letters of Guarantee and Indemnity in her presence. PW2 also confirmed that in practice she will check the Identity Cards of the Guarantors, including the 4th defendant. She maintained her evidence under cross examination although she admitted that she forgot how the 4th defendant look like, bearing in mind that the documents were signed in 2003, which is more than 13 years ago. [34] On the 4th defendant’s contention that the plaintiff’s officer had given an assurance to the 4th defendant that no legal action will be taken against her, the same was denied by PW1, who was one of the officers who was in the meeting with the 4th defendant. Added to that, PW4 has also confirmed that she did not receive anything in writing from the plaintiff on the purported release from legal action. On the 4th defendant’s allegation that a former officer of the plaintiff’s had informed the 4th defendant’s mother of the fraud, I am of the considered opinion that the same is merely hearsay evidence. [35] Therefore, based on the evidence before me, I am of the considered opinion and I find that the 4th defendant has failed to establish the element of fraud on the balance of probabilities, that her signature on the Letters of Guarantee and Indemnity have been forged by her brother or sister in law. [36] In the premise, on the balance of probability, I find that the plaintiff has established its case against the 4th defendant and therefore I will allow the plaintiff’s claim against the 4th defendant. 15 [37] For the Counterclaim, the 4th defendant’s claim is premised on negligence of the plaintiff in respect of the followings: “i. gagal dan/atau cuai untuk memastikan kesemua prosedur-prosedur untuk pinjaman dan/atau jaminan telah dipatuhi dan dokumen-dokumen dilengkapkan sebelum pelepasan pinjaman kepada Defendan Pertama. ii. gagal dan/atau cuai untuk memastikan maklumat-maklumat oleh peminjam dan penjamin sahih atau melalui prosedur bank yang betul. iii. gagal mengesahkan Peminjam dan/atau Penjamin dan/atau maklumat-maklumat yang diberikan adalah bukan maklumat palsu. iv. gagal dalam prosedurnya untuk memastikan bahawa tandatangan di dokumen perjanjian tidak dipalsukan. v. gagal dan/atau cuai untuk mematuhi standard prosedurnya untuk mengesahkan (‘verify’) tandatangan penjamin Defendan Keempat di hadapan peguam atau pegawai bank. vi. gagal mengurangkan risiko identity syarikat adalah satu penipuan (‘scam’). 16 vii. gagal dan/atau cuai dalam standard bank yang biasa dalam meluluskan dan/atau melepaskan kemudahan Pinjaman atau Pembiayaan kepada Defendan Pertama tanpa memastikan kesemua prosedur-prosedur untuk pinjman dan/atau jaminan dipatuhi.” [38] In Glengrove Development Sdn Bhd v. Lee Kong Fee & Co And Anor [2013] 1 LNS 963, Justice Nallini Pathmanathan held as follows: “58. The trite position in law, namely that it is incumbent upon the Plaintiff to establish that it was D1's act that was the 'effective' or 'proximate' cause of the loss or damage suffered is set out in the Court of Appeal case of Chua Seng Sam Realty Sdn. Bhd. v. Say Chong Sdn. Bhd. & Ors and other appeals [2012] 7 CLJ 337; [2013] 2 MLJ 29:- It is trite law that in an action for negligence the plaintiff has to prove that the defendants' act was the effective cause of the injury suffered by the plaintiff. Without a causative link being established by the plaintiff, the claim cannot succeed. The passage found in para 2- 01 of the text of Clerk & Lindsell on Tort (20th Ed), states this basic principle in the following manner: In the majority of torts, the claimant must show that the defendant's wrongdoing caused him actual damage. In these torts, and indeed in torts actionable per se if 17 substantial damages are sought the claimant must establish that:

the defendant's conduct did in fact result in the damage of which he complains, and

the damage is not in law too remote a consequence of the defendant's wrongdoing. As such the plaintiffs' are duty bound to prove that it was the defendants' act which caused the damage and that the damaged caused is not too remote to the defendants' act."

I have little hesitation in concluding that the Plaintiff has failed to establish that but for D1's two letters, it would not have paid the deposit of RM2,935,640-00. Therefore, this element of the tort of negligent misstatement is not established. Further and in any event the damage or loss suffered by the Plaintiff is too remote to be said to be entirely attributable to D1's misstatements. The direct cause or proximate cause of the Plaintiff's loss is D2, who misrepresented to all the parties that he acted for the vendor and who converted or utilised almost the entirety of the said deposit, save for the broker's fees, which in any event have been refunded to the Plaintiff, at D1's behest. 18 [39] Having considered the evidence, I am of the considered opinion that the 4th defendant has failed to establish the alleged negligent acts of the plaintiff. The 4th defendant did not call any witness to give evidence on the standard procedures and documentation for loans submission and/or approval in the banking industry. The 4th defendant did not call any witness from the banking industry to testify if the process and/or documentations of the plaintiff are lacking and/or below the normal standards of any financial institution. [40] On the other hand, the plaintiff’s witnesses, PW1 is an officer of the bank who has explained the process and PW2 is the lawyer who had done the legal documentations in this case. In the circumstances, I am of the considered opinion that the 4 th defendant has failed to prove on the balance of probabilities that the plaintiff was negligent in the manner complained of. [41] Added to that, I find that the 4th defendant has failed to establish that the alleged negligence of the plaintiff had cause her to suffer loss and damages. In any event, the 4th defendant’s alleged trauma is not supported by any medical evidence at all. Conclusion [42] Premised on the reasons enumerated above, I find that the plaintiff has establish its case against the 4th defendant on the balance of probabilities premised on the Letters of Guarantee and Indemnity. I also find that the 4th defendant has failed to establish 19 fraud and her counterclaim against the plaintiff premised on negligence. (AZIZAH BINTI HAJI NAWAWI) JUDGE HIGH COURT MALAYA (Appellate and Special Powers Division 2) KUALA LUMPUR Dated: 19th February 2018 For the Plaintiff : Nasrul Hadi Bin Mat Saad Messrs Adnan Sharida & Associates Bandar Baru Bangi, Selangor D.E. For the 4th Defendant : Budiah Kartika Bte Che Kadir Messrs Faizan & Co. Selayang 1, Selangor D.E. Cases referred:

Chempaka Finance Bhd v Ho Lai Ying & Anor [2006] 2 MLJ 685.

Arab – Malaysian Finance Bhd v Siva Subramaniam Appupillai [1999] 8 CLJ 23.

Bank Pembangunan Malaysia Berhad v Mensilin Holdings [2015]

Smallholders Corp Sdn Bhd & Ors v Utusan Transport Sdn Bhd [1995] 4 MLJ 587.

Sinnaiyah & Sons Sdn Bnd v. Damai Setia Sdn Bhd [ 2015] 7 CLJ

584.

Munusamy v. Public Prosecutor [1987] 1 MLJ 492. 20

Husaini Yaacob v. Tan Teo Siang [2014] MLRAU 216.

Glengrove Development Sdn Bhd v. Lee Kong Fee & Co And Anor [2013] 1 LNS 963.