Cimb Bank Berhad v Chan Kim Goh (WA-22NCC-163-03/2024)

CHAN KIM GOH

CHAN KUM CHONG … DEFENDAN - (NO. K/P: 550328-10-6383) DEFENDAN JUDGMENT (Enclosure 7) [1] This was the Plaintiff's application for summary judgment under Order 14 of the Rules of Court 2012 (“ROC”) filed via Enclosure 7 dated 25.3.2024 (“this Application”). A] SALIENT BACKGROUND FACTS [2] The Defendants are guarantors (“Guarantors”) for banking facilities granted by the Plaintiff to Crimson Legend (M) Sdn Bhd (“Borrower”). The facilities consisted of Term Loan 1 of RM38,000,000.00 (“TL 1”) and Term Loan 2 of RM4,000,000.00 (“TL 2”) (collectively, “the Facilities”). S/N c5kMF9j/zE6WE6rh/gzm6Q Page 2 of 9 [3] The Facilities are secured by: i) A guarantee dated 3.5.2016 executed by the Defendants (“Guarantee”); ii) A debenture dated 3.5.2016 executed by the Borrower ("Debenture"); iii) Four first party first legal charges executed by the Borrower over lands in Batu Feringgi, Pulau Pinang (“Batu Feringgi Land”); iv) A third party first legal charge executed by the 2nd Defendant over a property known as Mutiara Oriental Condominium; and v) A third party first legal charge executed by Chan Peng Hoong, Chan Mei Ling and Lau Yen Fan @ Low Yin Fong over properties known as Shamelin Shop Office. [4] The Borrower defaulted in payment of instalments under the Facilities from 17.1.2018/14.2.2018. Despite letters of demand dated 17.8.2018, 13.9.2018, 8.10.2018 and 25.10.2018, the Borrower failed to regularise the payments. [5] Due to the default, the Plaintiff issued a letter dated 31.1.2019 to recall the Facilities and demanded payment of RM39,148,978.56 for TL 1 and RM3,380,139.96 for TL 2. [6] On 4.2.2020, pursuant to the Debenture, the Plaintiff appointed Lim Keng Peo of Deloitte Corporate Solutions Sdn Bhd as receiver and manager (“R&M”) of the Borrower’s property. [7] The Plaintiff's solicitors issued letters of demand dated 5.12.2019 and 30.1.2024 to the Defendants pursuant to the Guarantee, demanding payment of RM44,586,724.33 and RM59,948,805.53 respectively. The Defendants failed to comply with both demands. [8] The Plaintiff then commenced this action on 8.3.2024. S/N c5kMF9j/zE6WE6rh/gzm6Q Page 3 of 9 B] THE DEFENDANTS’ CONTENTIONS [9] The Defendants raised several grounds to resist the summary judgment application and they are summarised as follows: i) The Plaintiff ought to dispose of all charged properties before commencing this action; ii) The claim is time-barred under Section 6 of the Limitation Act 1953; iii) The Defendants as Guarantors did not have knowledge of the Facilities and the Plaintiff had varied the terms without their consent; and iv) Mr. Aanantha Sambu Maravu, the Plaintiff's Head of Commercial Recovery, had represented to the Borrower that repayment could be made when the charged properties were sold. C] ANALYSIS AND FINDINGS Whether the Plaintiff Must First Dispose of Charged Properties [10] The Defendants’ contention that the Plaintiff must first dispose of the charged properties is without merit. Clause 11 of the Facilities Agreement expressly provides that the Plaintiff has the right to exercise all remedies concurrently. This is reinforced by Clause 2(j) of the Guarantee which states that the Bank may enforce the Guarantee either after resorting to other means of payment or for the balance due notwithstanding that other means have not been resorted to. [11] This position is supported by the Supreme Court in Low Lee Lian v. Ban Hin Lee Bank Bhd [1997] 2 CLJ 36 held that a chargee/creditor may pursue any or all remedies to recover monies lent, including enforcing the charge, suing the principal debtor, or proceeding against the surety “simultaneously, contemporaneously or successively.” S/N c5kMF9j/zE6WE6rh/gzm6Q Page 4 of 9 [12] The Federal Court in Chan Boi Loi v. Public Bank Bhd and Another Application [2009] 6 CLJ 81 further affirmed this principle, holding that a lender is entitled to pursue all available remedies simultaneously unless there is an agreement to the contrary. [13] This principle was clearly articulated in Bank Bumiputra Malaysia Bhd v. Esah binti Abdul Ghani [1985] CLJ Rep 41, which emphasised that a creditor must be left in possession of all remedies provided by the original contract and cannot be required to limit their course of legal action by any person who remains their debtor. Whether the Claim is Time-Barred [14] The Defendants argue that the cause of action accrued on 17.1.2018 when the Borrower defaulted on instalment payments. This argument is misconceived. [15] Under Clause 1 of the Guarantee, the Guarantors’ liability only arose upon demand. The Court of Appeal in Mayland Lending Sdn Bhd v. Pua Woon Kee [2021] 9 CLJ 104 held that for guarantors, the cause of action accrues from the date of the letter of demand and the resultant non-compliance. [16] The first letter of demand to the Defendants was issued on 5.12.2019. The filing of this action on 8.3.2024 is therefore well within the 6-year limitation period under Section 6 of the Limitation Act 1953. Variation of Terms and Knowledge of Facilities [17] The Defendants’ contention regarding lack of knowledge of the Facilities is untenable as the Guarantee expressly states that the Facilities were granted at the Guarantors’ request. Furthermore, the Defendants were directors of the Borrower who executed the facilities documents. [18] Regarding variation of terms, Clause 2(c) of the Guarantee specifically allows the Plaintiff to vary the terms without the Guarantors’ consent. The Defendants’ reliance on Section 86 of S/N c5kMF9j/zE6WE6rh/gzm6Q Page 5 of 9 the Contracts Act 1950 is misplaced as parties are free to contract out of its provisions, as held in Citibank N.A. v. Ooi Boon Leong & Ors [1981] 1 MLJ 282. Alleged Representation by Plaintiff's Officer [19] The Defendants’ bare allegation regarding representations made by Mr. Aanantha Sambu Maravu is unsupported by any documentary evidence. The Plaintiff has denied this allegation in paragraph 25 of its Affidavit in Reply (Enclosure 12). [20] The deponent of the Plaintiff's affidavits, Ms. Ho Yoke Teng as Unit Head of Commercial Recovery, is authorised to affirm affidavits on behalf of the Plaintiff pursuant to Order 41 Rule 5 and Order 14 Rule 2(2) ROC. The Role and Actions of the Receiver and Manager [21] A crucial point raised by the Defendants concerns the alleged failures of the R&M in disposing of the charged properties. This argument is fundamentally flawed. Clause 12.4 of the Debenture explicitly provides that the R&M is deemed to be the agent of the Borrower, not the Plaintiff. More importantly, it specifically states that “the Bank shall not, in any circumstances whatsoever, be in any way responsible for any misconduct, negligence or default of the Receiver.” [22] Multiple attempts were made to dispose of the charged properties. For the Batu Feringgi Land, six tender sale exercises were conducted. In respect of the 6th tender exercise, there were two offers received but both were declined after the R&M considered the revised offers. [23] For the other properties, the Plaintiff obtained Orders for Sale. For the Mutiara Oriental Condominium, the Order for Sale was dated 9.4.2021, following which two auctions were held but were cancelled due to lack of bidders. Similarly, for the Shamelin Shop Office, after obtaining the Order for Sale dated 27.5.2021, two auctions were conducted but were also cancelled due to no bidders. The foreclosure proceedings and attempts to dispose of these properties are ongoing. S/N c5kMF9j/zE6WE6rh/gzm6Q Page 6 of 9 The Plaintiff's Claim [24] The Plaintiff's claim of RM59,948,805.53 as at 3.1.2024 is supported by a Statement of Account/Certificate of Indebtedness which is conclusive evidence pursuant to Clause 14.3 of the Facilities Agreement and Clause 2(p) of the Guarantee. [25] Following the Federal Court in Cempaka Finance Bhd v. Ho Lai Ying & Anor [2006] 3 CLJ 544, the burden lies on the Defendants to disprove the amount claimed. The Defendants have failed to adduce any evidence to demonstrate any manifest error in the Certificate of Indebtedness. D] CONCLUSION [26] The Plaintiff has fulfilled the requirements of an Order 14 ROC application thereby shifting the burden to the Defendants to show satisfactory explanation as to why summary judgment should not be entered against. In this regard, the Defendants have failed to raise any triable issue or some other reason to be a trial (Bank Negara Malaysia v. Mohd Ismail Ali Johor & Ors [1992] 1 CLJ (Rep) 14; National Company for Foreign Trade v. Kayu Raya Sdn Bhd [1984] 1 CLJ (Rep) 283). [27] The Defendants defences are either contradicted by express terms of the relevant agreements or unsupported by evidence. [28] On the other hand, the Plaintiff has established its claim through clear documentary evidence. [29] The ongoing nature of the foreclosure proceedings and attempts to dispose of the charged properties does not affect the Plaintiff’s right to obtain judgment against the Guarantors. When the properties are eventually sold, the amounts realised will naturally be credited against the judgment sum. The Plaintiff can pursue all available remedies while maintaining its rights against the Guarantors who, as primary obligors under the Guarantee, are independently liable for the debt. S/N c5kMF9j/zE6WE6rh/gzm6Q Page 7 of 9 [30] For the reasons stated above, I allowed this Application with costs. Dated this 27th day of January, 2025 -SGD- (WAN MUHAMMAD AMIN BIN WAN YAHYA) Judge High Court of Malaya, Kuala Lumpur (Commercial Division (NCC 3)) COUNSEL FOR THE PLAINTIFF Ramesh Sathasivam (Muhammad Amir Arif bin Mawardy together with him) Messrs Ramesh Dipendra Jeremiah Law No. 9-2, 2nd Floor, Jalan Medan Setia 1, Plaza Damansara, Bukit Damansara, 50490 Kuala Lumpur Tel: 03-20956505 Emel: info@rdj-law.com S/N c5kMF9j/zE6WE6rh/gzm6Q Page 8 of 9 COUNSEL FOR THE DEFENDANTS Rejinder Singh A/L Gurdev Singh Messrs Rejinder Singh & Associates 568-8-38 & 39, Tingkat 8, Kompleks Mutiara, Batu 3 ½ Jalan Ipoh, 51200 Kuala Lumpur Tel: 03-62575597 Emel: rsalaw@gmail.com LEGISLATION / RULES CITED Rules of Court 2012 ▪ Order 14 ▪ Order 41 Rule 5 Limitation Act 1953 ▪ Section 6 Contracts Act 1950 ▪ Section 86

Low Lee Lian v. Ban Hin Lee Bank Bhd [1997] 2 CLJ 36

Chan Boi Loi v. Public Bank Bhd and Another Application [2009] 6

Bank Bumiputra Malaysia Bhd v. Esah binti Abdul Ghani [1985] CLJ

Mayland Lending Sdn Bhd v. Pua Woon Kee [2021] 9 CLJ 104

Citibank N.A. v. Ooi Boon Leong & Ors [1981] 1 MLJ 282 S/N c5kMF9j/zE6WE6rh/gzm6Q

Cempaka Finance Bhd v. Ho Lai Ying & Anor [2006] 3 CLJ 544

Bank Negara Malaysia v. Mohd Ismail Ali Johor & Ors [1992] 1 CLJ (Rep) 14

National Company for Foreign Trade v. Kayu Raya Sdn Bhd [1984] 1 CLJ (Rep) 283 S/N c5kMF9j/zE6WE6rh/gzm6Q