Credit Guarantee Corporation Bhd v 1. Pwy Builders Sdn Bhd (WA-22NCC-49-02/2017)

PWY BUILDERS SDN BHD (No. Syarikat: 727707-T)

CHONG WAN YONG (No. K/P: 6300108-10-8045/7063838) ...DEFENDAN BEFORE YANG ARIF TUAN MOHD NAZLAN MOHD GHAZALI JUDGE JUDGMENT Introduction [1] This case concerns an application by the plaintiff for summary judgment against the third, fourth and fifth defendants, as documented in enclosure 9. I allowed the same at the conclusion of the hearing. This judgment contains the full reasons for my decision. Key Background Facts [2] The plaintiff is Credit Guarantee Corporation Malaysia Berhad. The plaintiff primarily facilitates small and medium enterprises access to financing by providing guarantee schemes. [3] In pursuance of a letter of offer dated 18 July 2007 issued by Malayan Banking Berhad (“Maybank”) and duly accepted by PWY Builders Sdn Bhd (“the first defendant”), Maybank agreed to extend to the first defendant, as the borrower, banking facilities for Page 2 of 19 RM1,000,000.00 (RM500,000.00 for overdraft facilities, and the other RM500,00.00 for letters of credit/trust receipts, and bank guarantee facilities) (“the Facilities”) under the Direct Access Guarantee Scheme (“DAG Scheme”). [4] The DAG Scheme essentially involved the plaintiff guaranteeing to Maybank the obligations of the first defendant borrower under the Facilities. It was specifically stipulated that the terms of the Facilities were expressly subject to the rights of the plaintiff under the DAG Scheme. [5] As envisaged under the said letter of offer, Maybank and the first defendant then executed a Facility Agreement for the said amount on 2 October 2007. The security arrangement for the Facilities included the 100% guarantee coverage by the plaintiff under the DAG Scheme, pledge of upfront fixed deposit receipt of RM200,000.00, debenture over the entire assets of the first defendant for RM1,000,000.00, security trust deed, letter of set off, and general letter of indemnity for banker’s guarantee, all dated 2 October 2007. In addition, significantly for present purposes, the arrangement also included the joint and several personal guarantee of even date executed by each of the second, third, fourth and sixth defendants, who were directors of the first defendant at the material time (“the Guarantee”). [6] No less crucially, the Facility Agreement also contains an express provision on subrogation in Clause 19.24 which stated in plain terms, that the plaintiff “shall be allowed for subrogation of all rights of the Lender against the Borrower in respect of any amount paid by CGC in accordance with the DAGS Scheme”. [7] The first defendant defaulted. It failed to adhere to its repayment obligations under the Facility Agreement. This the first defendant did not dispute, for it sent a letter dated 3 January 2011 agreeing that Maybank freeze the utilisation of the Facilities, and for the fixed deposit receipt be uplifted and set-off as appropriate. [8] By a letter dated 18 October 2011 to all defendants, Maybank confirmed that the Facility Agreement had been subrogated to the plaintiff. The outstanding amount was RM807,562.57. [9] The first defendant, in a letter signed by the third defendant and received by the plaintiff on 14 September 2012 proposed a Page 3 of 19 repayment of the Facilities, by making a monthly payment of RM3,000.00. Following therefrom, payments were then made by the first defendant to the plaintiff on monthly basis from October 2012 to September 2013, totalling RM36,000.00. [10] However, no further payments were forthcoming from the first defendant thereafter. The plaintiff had, through its solicitors, issued two letters to all of the defendants, dated 30 November 2012 and 20 October 2016 demanding outstanding paymentof RM896,945.80 as at 30 September 2012 and RM1,256,396.02 as at 31 July 2016 respectively. [11] All went unheeded. This then resulted in the filing of a writ action by the plaintiff against the defendants, and this instant application for summary judgment against them. [12] On 27 March 2017, the plaintiff obtained a judgment in default of appearance against the second defendant. The plaintiff also subsequently discovered that the first defendant has since been wound up. As such, the summary judgment application is only pursued against the third, fourth and fifth defendants. Evaluation and Findings of this Court The Law [13] A brief mention of the law on summary judgment is not out of place. For this is an application for summary judgment under Order 14 of the Rules of Court 2012 (“the RC 2012”). It is already settled law that once an Order 14 application is demonstrated to have been correctly filed, the burden shifts and thus rests on the defendant who wishes to oppose the application to raise a defence which shows a “bona fide triable issue”, in the sense of being an issue which justifies and warrants the matter to be considered at the trial proper. [14] This is entirely in consonant with the requirements of Order 14 r 3 of the RC 2012 which provides that unless the defendant satisfies the Court with respect to the claim, or the part of a claim, to which the application relates that:-

there is an issue or question in dispute which ought to be tried; or

there ought for some other reason to be a trial of that claim or part, the Court may give such judgment for the Plaintiff against the Defendant on that claim or part as may be just having regard to the nature of the remedy or relied claimed. [15] As such, in the often quoted decision of the former Supreme Court in National Company For Foreign Trade vs. Kayu Raya Sdn Bhd [1984] 2 MLJ 300 it was authoritatively ruled as follows:- “We think it appropriate to remind ourselves once again that in every application under Order 14 the first considerations are (1) whether the case comes within the Order and (b) whether the plaintiff has satisfied the preliminary requirements for proceeding under Order 14. For the purposes of an application under Order 14 the preliminary requirements are:-

the defendant must have entered an appearance;

(ii) the statement of claim must have been served on the defendant; and

(iii) the affidavit in support of the application must comply with the requirements of Rule 2 of the Order 14. ... If the plaintiff fails to satisfy either of these considerations, the summons may be dismissed. If however, these considerations are satisfied, the plaintiff will have established a prima facie case and he becomes entitled to judgment. The burden then shifts to the defendant to satisfy the Court why judgment should not be given against him”. [16] As the plaintiff in the instant application before me has satisfied these preliminary requirements, and this is not disputed by the defendants, the burden is now firmly on the defendants to show that there is a triable issue that does not justify summary judgment to be entered against them. If the defendants can show even one triable issue, this Court will not grant summary judgment. But it has to be a genuinely triable issue. As made clear by the Federal Court in Voo Min En & Ors v Leong Chung Fatt [1982] 2 MLJ 241, it is not enough for a defendant to raise an issue or any issue. The defendant must instead raise such an issue as would require a trial in order to determine it. The Issues Raised by the Defendants [17] I shall next consider each of the issues raised by the defendants in their single affidavit affirmed by the third defendant on Page 5 of 19 behalf of the first, third, fourth and fifth defendants, and as repeated in the written submissions and highlighted in the oral submissions at the hearing, in resisting the summary judgment application. First Issue – The defendants were not advised of the DAG Scheme [18] The defendants argued that they were not advised about the DAG Scheme. I find this averment unsubstantiated and contradicted by contemporaneous documents. All relevant contractual documents, particularly the letter of offer and the Facility Agreement as originally executed by the defendants with Maybank stated that the Facilities were approved by Maybank under the Direct Access Guarantee Scheme with the plaintiff, and that the Facilities were subject to the DAG Scheme. The documents also contained the subrogation clause, as mentioned earlier. The second and third defendants executed all contractual documents on behalf of the first defendant. [19] Thus, in respect of the third, fourth and fifth defendants, an examination of the Guarantee dated 2 October 2007 would readily reveal that first, the presence of a specially incorporated subrogation clause in respect of the DAG Scheme. Secondly, all three defendants signed on the same Guarantee. Thirdly, the signatures of the three were each witnessed by an advocate and solicitor. Fourth, there is also a clause on “Explanation to Signatories” where the same lawyer certified by again signing his name, that he had read and explained the contents of the Guarantee, and that the three defendant guarantors acknowledged to the lawyer that they understood the terms and implications of the Guarantee. Fifthly, there is also a box stating to be an important notice, which appeared just before the execution section of the Guarantee, where it is specifically stated that signatories to the document (namely, the Guarantee) may be liable instead of the customer borrower, and that signatories are advised to seek independent legal advice. [20] Furthermore, there were clear evidence of communication by way of letters between the plaintiff and the first defendant upon the exercise of the subrogation right. The defendants never denied receiving letters dated 23 June 2011, 8 September 2011, 14 September 2012 and 11 October 2012 from the plaintiff which contained repayment proposals for the Facilities to the plaintiff. In fact, the first defendant also wrote to the plaintiff on its repayment proposal as referred to earlier. Page 6 of 19 [21] In any event, the defendants never contended that they did not sign any of the documents. The law is however settled on the effect of the execution of agreements. It binds the parties regardless of whether the parties have read or understood the contents. Thus it is immaterial even if the defendants had not read, let alone understood, any of the various documents, in the absence of any allegation of fraud or coercion. [22] As correctly highlighted by the plaintiff, in the case of Serangoon Garden Estate Ltd v. Marian Chye [1958] 1 MLRH 212 the High Court held that in the absence of fraud or misrepresentation, one is bound by the terms of the document which he had signed. Whether or not he read the documents is not important. [23] I also had the occasion to refer to this principle in the case of Hap Seng Credit Sdn Bhd v Mohamed bin A Ralim & Ors [2016] 10 MLJ 761, as follows:- “[46] I should, for completeness, add that the argument that the respondents had not been in the know of the transactions and that the first respondent having merely signed blank forms and did not understand English, and thus ought not to be responsible for the same is not only unsupported with evidence, but also not justified under the law. It is well-established in the law of contract that a person who is a party to a written contract is bound by the terms of the contract whether or not he understands the language in which it is documented, in the absence of fraud or misrepresentation (see Subramaniam v Retnam [1966] 1 MLJ 172). No allegation of fraud or misrepresentation had been raised, let alone evidenced in the instant case. In the case of UMW Industries (1985) Sdn Bhd v Kamaruddin Abdullah & Anor [1989] 2 CLJ Rep 619, the High Court observed pointedly that: As for the second defendant’s contention that he only signed blank guarantee forms, he has only himself to blame as the plea of non est factum does not work in favour of a person who has shown himself to be negligent. The law cannot thus permit the respondents to be excused from the performance of their expressly stated promise as contained in a valid written agreement on the basis of this contention. The following passage from the case of Imbangan Utama Sdn Bhd v Lotan Engineering Works Sdn Bhd [2002] 2 MLJ 313; [2002] 8 CLJ 497 is no less instructive: It really takes a litigant of unusual temerity or cheerful insouciance to register a plea of non est factum, for such plea rarely if ever succeeds. There is a whole pack of legal cards Page 7 of 19 stacked against such plea. As a defence or a cause of action the onus rests heavily and onerously on the party who alleges non est factum. The signer must establish his lack of competence due to illness or innate incapacity or defective education and he was not negligent or had acted nonchalantly or with want of care (see Saunders v Anglia Building Society [1971] AC 1004 (HL). And, he must further establish that he had thought that he was signing a document which was so radically or fundamentally or basically or essentially different in substance or in kind from the document signed (see also Polygram Records Sdn Bhd v Hillary Ang & Ors [1994] 3 CLJ 806 and Goh Jong Cheng v MB Melwani Pte Ltd [1991] 1 MLJ 482; [1990] 1 LNS 160)”. [24] Neither could the defendants be entitled to rely on the defence or plea of non est factum because the defendants had failed to specifically plead such defence. In any event, not an iota of evidence was proffered to establish non est factum (see also Fui Lian Credit & Leasing Sdn Bhd v Kim Leong Timber Sdn Bhd & Ors [1991] 2 CLJ (Rep) 614). [25] As such, the assertion that they were not advised of the DAG Scheme is entirely without basis and wholly contrived. This argument does not raise any triable issue. Second Issue – The Action against the Second, Third, Fourth and Fifth Defendants is Pre-mature [26] The defendants contended in the affidavit and the written submissions that the claim against the second, third, fourth and fifth defendants is irregular. They argued that as guarantors under the Guarantee, the liability of the said defendants only arises after the plaintiff had proven its indebtedness against the first defendant borrower or had exhausted all avenues to recover the alleged indebtedness against the first defendant. Thus, the present action would be pre-mature as against the second, third, fourth and fifth defendants. [27] This contention is clearly misconceived. Firstly, the second, third, fourth and fifth defendants did not deny signing the Guarantee. Clause 30 plainly stated that each and every one of them agreed to indemnify the plaintiff (following subrogation) for all losses arising from the Facilities granted to the first defendant. It reads as follows:-

As a separate and additional obligation I/we hereby irrevocably and unconditionally undertake to indemnify and keep you fully indemnified against all losses, damages, liabilities costs and expenses Page 8 of 19 whatsoever which you may sustain or incur as a result of or arising from your advances, credit or other banking facilities granted to the customer. [28] The question whether the indebtedness of the first defendant borrower had been proven is therefore irrelevant. The obligation of the guarantors is separate and independent from that of the borrower, in light of the above provision. This is made more unmistakably so in the other terms contained in the Guarantee, as follows:-

Until and unless determined as herein this Guarantee provided, my/our guarantee herein shall be a continuing guarantee notwithstanding that the Customer may at any time or times cease to be indebted to you for any period or periods and notwithstanding any settlement of account or accounts or otherwise. ……………………………….

As a separate and independent stipulation, I/we agree that any sum or sums of money which may not be recoverable from me/us on the footing of a guarantee whether by reason of any legal limitation disability or incapacity on or of the Customer or by any other fact or circumstances and whether known to you or not shall nevertheless be recoverable from me/us or each of us as sole or principal debtors and shall be paid by me/us on demand. [29] It is a basic rule in the law of contract that what have been agreed by contracting parties should be given effect to. The Federal Court in Michael C. Solle vs. United Malayan Banking Corporation [1986] 1 MLJ 45 (TAB 3 IOP) had ruled thus:- “The principles of construction to be applied to the undertaking are similar to those applied to an ordinary contract. The intentions of the parties are to be gathered from the language used. They are presumed to have intended what they said. The common and universal principle is that an agreement ought to receive that construction which its language will admit, which willbest effectuate the intention of the parties, to be collected from the whole agreement.” [30] The defendants cannot be allowed to raise objection against the plain language of the agreements which it had previously accepted in writing and benefitted from. In Malayan Banking Berhad vs. Chua Keng Leng t/a New Fortune Enterprise [1991] 3 CLJ 224 the High Court held that:- Page 9 of 19 “Parties ought to admit facts as to which there is no controversy. A defendant should not deny plain and acknowledged facts which it is neither in his interest nor in his power to disprove. In an action for a debt a mere denial of the debt is wholly inadmissible”. [31] Secondly, that the plaintiff has the right to pursue its recovery against the second, third, fourth and fifth defendants as guarantors is plainly stated in the Guarantee itself. Each of the second, third, fourth and fifth defendants had jointly and severally agreed to comply with the terms of the Guarantee, which is stated in unambiguous terms, as not imposing on the plaintiff the need to enforce any of the remedies that could instead be exercised concurrently under clause 7A of the Guarantee. The clause reads:-

You shall have the right to exercise all or any of the remedies available whether by this Guarantee or by statute or otherwise and shall be entitled to exercise such remedies concurrently, including pursuing all remedies pursuant to this Guarantee and civil suit against the Customer or other security party to recover all moneys due and owing to you, PROVIDED THAT nothing herein contained shall be construed as imposing any obligation (whether at law or in equity) upon you to exhaust your remedy to enforce any of the securities or against any other security party before commencing any action against us AND we hereby irrevocably and unconditionally agree and consent to you commencing separate proceedings, enforcing other remedies and exercising any other rights which you may have against us, the Customer or any other security party simultaneously or consecutively in any order as you deem fit. [32] This is also consistent with the rule that a creditor has the right to commence bankruptcy proceedings against the guarantors separately or simultaneously with its enforcement of other security arrangement. It is not for the defendants (borrower or guarantor), to dictate which remedy the creditor should pursue first. As established by the Supreme Court in Bank Bumiputra Malaysia Berhad v. Esah binti Abdul Ghani [1985] CLJ Rep 41, a guarantor (other than a social guarantor) has no special right to demand that the creditor go against the principal debtor first to pay off the debt before asking the guarantor to pay. [33] The said defendants, as guarantors had also agreed to make payments to the plaintiff any sum outstanding from the first defendant borrower, whenever demanded of them by the plaintiff. More pertinently, the guarantors had given an undertaking under Clauses 17 and 30 of the Guarantee, as referred to above, in their capacity as principal debtors, Page 10 of 19 thus rendering the ability of the plaintiff to take action against the third, fourth and fifth defendant guarantors, as principal debtors themselves, to be even more manifest. [34] The effect of a "principal debtor clause" was explained by the Federal Court in the case of Andrew Lee Siew Ling v. United Overseas Bank (M) Bhd [2012] 3 CLJ 708 as follows:- "It is our considered view that in the present case the appellant, being a person who has given a guarantee and more importantly an indemnity, is primarily liable for losses which the principal borrower could not have been made liable. His liability is not dependent or secondary to the liability of the principal borrower. He is a principal debtor himself. The liability under a contract of indemnity does not depend on whether the principal debt is enforceable. It has no reference in law to the obligation of any third person. In essence, the liability of the person who has given an indemnity can be more extensive than that of the liability of the principal borrower (see the cases of (1) Yeoman Credit Ltd v. Latter & Anor [1961] 2 All ER 294 and (2) Chung Khiaw Bank Ltd v. Soi Huan & Ors [1985] 1 LNS 71; [1986] 1 MLJ 188)." [35] Accordingly, this contention of the defendants is clearly untenable and thus cannot validly constitute a triable issue. Third Issue – The Plaintiff did not deduct from the demand the sum already received from the first defendant earlier and whether the amount claimed is accurate [36] This allegation that the sum demanded from the defendants had failed to take into account the payments already made earlier by the first defendant to the plaintiff is of little substantive worth. It is true that as mentioned earlier, the first defendant had paid on monthly basis the aggregate amount of RM36,000.00 to the plaintiff. But there is a total absence of any substantiation by the defendants as to the basis of their allegation that the plaintiff had failed to deduct the payments already made. [37] In order to challenge the sum claimed by the plaintiff in a summary judgment application, the defendants must be able to condescend into the particulars and contend more meaningfully why the sum is argued to be wrong (see the High Court decision in Commerce International Merchant Bankers Berhad v Tan Hua Peng [2012[ 8 MLJ 442). This the defendants did not do at all. Page 11 of 19 [38] Instead, on the contrary, the plaintiff’s statement of accounts dated 16 August 2016 as at 31 July 2016 clearly included the credit of the amount of RM3,000.00 on twelve occasions during the period that more than clearly demonstrated the plaintiff’s acceptance of the RM36,000.00 as part payment of the indebtedness. [39] The said statement of accounts even contained a clause at the end of the listing of transactions that “all balances shown above are considered correct unless CGC is notified of any discrepancies within 14 days.” But there is no evidence proffered by the defendants to show that they had expressed their disagreement on any details in the statement then. [40] In fact, Clause 11 of the Guarantee states this:-

Any admission acknowledgement in writing by the Customer or any person authorised by the Customer of the amount of indebtedness of the Customer to you and any judgment recovered by you against through Customer in respect of such indebtedness shall be binding and conclusive against me/us. A statement signed by your manager, secretary or any one of your officers as to the moneys and liabilities for the time being due or incurred to you from or by the Customer shall be final and conclusive evidence against me/us for all purposes including legal proceedings. [41] As such, Clause 11 renders any admission by the first defendant such as in respect of its letter on repayment proposal (referred to earlier) to be binding on the other defendants as guarantors. No less crucially, it also makes any written statement on the liabilities and indebtedness of the first defendant issued by the plaintiff to be conclusive evidence against the other defendants. [42] However, it is observed that the statement of accounts was not signed. If it had been, then the onus would be on the defendant who challenges the action to show manifest error. In Cempaka Finance Bhd v Ho Lai Yin (trading as KH Trading) & Anor [2006] 2 MLJ 685, the Federal Court reversed the Court of Appeal’s decision requiring the plaintiff to tender further proof of the defendant’s indebtedness and held that when a conclusive certificate of indebtedness is issued, such a certificate shifts the burden onto the defendant to disprove the claim. It was further held as follows:- “[11] The above dictum establishes firmly the conclusive nature and extent of a certificate of indebtedness. A certificate of indebtedness Page 12 of 19 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 claim. …………………………….. [13] The certificate of indebtedness, exh P3, issued in accordance with cll 27 and 7.03 aforesaid, are lucid enough. There is nothing to indicate or suggest any manifest error on the face of the said certificate nor is any fraud shown. In the circumstances and given the authorities cited, we take the firm view that the answer to the first question must be in the affirmative whereas the second question has to be answered in the negative. Having considered the questions in the context of the established facts, it is appropriate, we think, to allow this appeal with costs…” [43] I accept the fact that the statement is not signed by anyone from the plaintiff with authority meant that the Clause 11 cannot validly be invoked against the defendants. This however merely means that the statement cannot in this case operate as conclusive evidence of the indebtedness of the defendants. But at the same time, the defendants were not able to demonstrate any form of error in the statement of accounts in any event. Neither could they proffer any justifications that could disprove the conclusive nature of the same. In fact, no credible challenge has been made by the defendants against the statement. [44] More importantly, the first defendant did make such part payments. It even arose from the first defendant’s own repayment proposal to the plaintiff as evidenced in its letter received by the plaintiff on 14 September 2012, as mentioned above. The first defendant had clearly therefore admitted its indebtedness. The defendants cannot now be heard as challenging the same. Their opposition to the instant suit is thus a convenient but blatant afterthought. This the Court cannot and will not countenance. [45] In my view, the legal principle of estoppel should rightfully operate to prevent and disapprove of the inequitable conduct of the defendants in attempting to mount such a challenge at this juncture. Reference ought to be made to the decision of the Court of Appeal in KGN Jaya Sdn Bhd vs. Pan Reliance Sdn Bhd [1996] 1 MLJ 233, which held as follows:- “We are of the view that it would be a travesty of justice if we were to accede to the appellant’s arguments. We are left in no doubt that the undisputed facts of this case admit of the conclusion that the Page 13 of 19 respondent was, by the conduct of the appellant, lulled into the belief that the appellant had no challenge to the accounts, leave alone the legal relationship between the parties. To put it another way, the appellant, by its silence coupled with other circumstances of the case, encouraged the respondent to believe that it intended to raise no challenge to the existence of a prior legal relation between the parties or to the figure which the account showed as owing by it. Having do so, it ought not to be permitted to now contend otherwise. It follows that it does not, therefore, lie in the mouth of the appellant to now deny the respondent’s claim. It would be plainly inequitable to do so. An examination of the facts leads us to this conclusion. The legal basis upon which such a conclusion may be sustained is well-settled and it is now beyond question. See Boustead Trading [1985] Sdn Bhd v Arab-Malaysian Merchant Bank Berhad [1995] 3 MLJ 331.” [46] Furthermore, neither did any of the defendants reply to the plaintiff’s letter of demand dated 20 October 2016 which had been sent to all defendants as mentioned earlier, to deny their liability. The Courts have held that in commercial and business relationships, the failure of one party to deny a solicitor’s demand by the opposing party would amount to an implied admission. [47] In David Wong Hon Leong v Noorazman bin Adnan [1995] 4 CLJ 155, Gopal Sri Ram JCA (as he then was) held instructively as follows:- “During argument, we registered our surprise at the learned Judge's reluctance to enter judgment for this sum of RM100,000. After all, the appellant had failed to respond to the letter of 17 December. If there had never been an agreement as alleged, it is reasonable to expect a prompt and vigorous denial. But, as we have pointed out, there was no response whatsoever from the appellant. In this context, we recall to mind the following passage in the judgment of Edgar Joseph Jr. J. in Tan Cheng Hock v. Chan Thean Soo [1986] 1 LNS 42 [1987] 2 MLJ 479-487: In Wiedemann v. Walpole [1891] 2 Q.B. 534, 537 an action for breach of promise of marriage, it was held, that the mere fact that the defendant did not answer letters written to him by the plaintiff in which she stated that he had promised to marry her, was no evidence corroborating the plaintiff's testimony in support of such promise. Lord Esher M.R., in his judgment, remarked, Page 14 of 19 Here, we have only to see whether the mere fact of not answering the letters, with nothing else for us to consider is any evidence in corroboration of the promise. (Emphasis added). Earlier, in his judgment, he said, 'Now there are cases - business and mercantile cases in which the Courts have taken notice that, in the ordinary course of business, if one man of business states in a letter to another that he has agreed to do certain things, the person who receives that letter must answer it if he means to dispute the fact that he did so agree. (The emphasis is ours.)” [48] More recently, in the Court of Appeal case of Small and Medium Enterprise Development Bank Malaysia v Lim Woon Katt [2016] 9 CLJ 73, Hamid Sultan Abu Backer JCA stated thus:- “(a) In the instant case, it was not in dispute that the respondent did not respond to the demand notice of the plaintiff and the defence alleging that he was not liable was only raised in the statement of defence. Evidently, failing to respond to the plaintiff's letter of demand, that too when the defence case was related to forgery, as well as the fact that the respondent did not lodge a police report upon receiving the demand, weakened the probative force of the defence case. In David Wong Hon Leong v. Noorazman Adnan [1995] 4 CLJ 155, the Court of Appeal went to the extreme end to say that failure to respond on the facts of the case should lead to entering of judgment……. .

In abundance of caution we must say that failure to respond must not be equated to admission of the claim under s. 17 of the Evidence Act 1950 (EA 1950). Failure to respond will relate to conduct under s. 8 of the EA 1950. Conduct is a relevant fact for the court to take into account to give the relevant probative force to the version of the plaintiff and/or defendant's case. It is well-settled that not all demand notices must be responded. In Wiedmann v. Walpole [1891] 2 QB 534, in an action for breach of promise of marriage, it was held, that the mere fact that the defendant did not answer letters written to him by the plaintiff in which she stated that he had promised to marry her, was no evidence corroborating the plaintiff's testimony in support of such promise.

It must also be noted that in commercial cases (not civil), courts have taken notice that, in the ordinary course of business, if one man of business states in a letter to another that he has agreed to do certain things, the person who receives that letter must answer it if he means to dispute the fact that he did so agree. (See PECD Construction Sdn Bhd v. Freehold Point Sdn Bhd [2008] 3 CLJ 215). ………………………” Page 15 of 19 [49] Accordingly, this argument of the defendants too is without substance and cannot thus succeed. This ground is entirely misconceived and not tenable. Again, there is manifestly no triable issue. Fourth Issue – The defendants did not receive the demand letters [50] This allegation was averred in the affidavit affirmed on behalf of the defendants, very simply as a denial of having received the demand letters issued by the plaintiff’s solicitors. This complaint was however not repeated in the written submissions of the third, fourth and fifth defendants. Nevertheless, I shall address this in summary fashion. [51] The relevant parts of Clause 22 of the Guarantee states as follows:-

Any demand for payment or service of any legal process may be made or effected by prepaid registered or ordinary post addressed to me/us or each of us at my/our address specified herein or at my/our last known place of business or registered address and such demand or legal process shall be deemed to have been duly served on the fifth (5th) day following that on which it is posted, notwithstanding that the said demand or legal process may subsequently be returned undelivered by the postal authorities….. [52] The third, fourth and fifth defendants now denied having been served with the letter of demand dated 20 October 2016 demanding payment of RM1,256,396.02 as at 31 July 2016. But it is in affidavit evidence that the demand letter was sent by registered post to each of the three defendants herein to their respective addresses as they appeared under their signatures on the execution page of the Guarantee. [53] The plaintiff has also exhibited evidence in the form of the Post Office document on Resit Pengeposan Pos Daftar Dalam Negeri in respect of each of the three defendants, which listed out the names and addresses of the three defendants, vis-à-vis the demand letter. [54] Thus, Clause 22 above would operate to deem that these letters had been duly served five days after their respective dates of evidence of postage. Further Clause 22 also meant that the proof of giving any notice is discharged by showing that the notice has been duly addressed and posted by registered post. Page 16 of 19 [55] Case-law authorities have also settled this point in clear terms. In the case of Yap Ke Huat & Ors v Pembangunan Warisan Murni Sejahtera Sdn Bhd & Anor [2008] 4 CLJ 175, the Court of Appeal held that proof of sending prepaid AR registered is sufficient and said as follows in respect of service or writ of summons by AR registered post:- “[20] In this instance, the plaintiffs had elected to serve the writ and statement of claim on this defendant by way of sending it by prepaid A.R. registered post. This defendant did not challenge that such process was never undertaken. Once this process was carried out, it is our view that there is no provision in law to say that the plaintiffs must also prove that the person so named in the post had received it. This opinion is shared by Suriyadi Halim J (as he then was) when he said in Pengkalan Concrete Sdn Bhd v. Chow Mooi & Anor [2003] 6 CLJ 326: In fact under sub-r. 1(1) of O. 10, nothing is indicated that the plaintiff must evidentially prove that the named person in the writ must be the very person who had received it i.e, if it was sent by prepaid AR registered post. I therefore was satisfied that as in this case, if all the prerequisites were fulfilled, as the plaintiff had done so, the recipient being "Yanti" (not the name of the defendants) did not vitiate that service”. [56] The Federal Court has also earlier in Amanah Merchant Bank Bhd (formerly known as Amanah-Chase Merchant Bank Bhd) v Lim Tow Choon (through Official Assignee) [1994] 2 CLJ 1 held authoritatively as follows:- “Although the words “shall be deemed” in the above case was considered in the context of the statutory provisions, in our view, we can draw an analogy from this case that, in the present appeal, it is sufficient to prove the notice of demand by sending it through the post in an envelope addressed to the last known place of address of the defendant, and once this is established the deeming provision would apply as in the cases cited above.” [57] It has also been ruled by the High Court in MBF Finance Bhd v Tiong Kieng Seng [2001] 4 CLJ 38 that if delivery is by post, showing proof of posting is sufficient to rely on presumption of service. [58] Further, in any event, the defendants did not show evidence of non-delivery of the registered letters. In the case of HSBC Bank (M) Bhd v. Wui Ling Timber (Bintulu) Sdn Bhd and Anor [2000] 8 CLJ 197, the High Court stated thus:- Page 17 of 19 “Letter of demand was sent by registered post to an agreed address of the 1st respondent and deemed under cl. 21 to have been received by the 1st respondent. It is not enough for the 1st respondent to merely say they have not received it but they must go further to procure a letter from the postal authority to state that such a registered letter was not posted or delivered to the said address”. [59] Accordingly, the defendants’ assertion on the non-receipt of the letters of demand is wholly unsustainable and devoid of merit. This is thus not a triable issue. Additional Observations [60] The observations I made in another summary judgment case of Affin Bank Bhd v Tes Steel Products Sdn Bhd & Ors [2017] 8 MLJ 733 are similarly applicable here. I said:- “[35] When viewed in totality, the averments and arguments raised by the first defendant are considerably inflicted by various shortcomings that do little, if at all, to advance its resistance to this summary judgment application. [36] Above all, the case of the defendants is also riddled with averments which are not substantiated. These are bare averments without real support. No documents were produced by the first defendant to corroborate its stance on virtually all the arguments to challenge this summary judgment application. It is trite that mere bare denials or assertions do not constitute evidence and they cannot give rise to triable issues (see the Court of Appeal decision in Chen Heng Ping & Ors v Intradagang Merchant Bankers (M) Bhd [1995] 2 MLJ 363)”. [61] In my view, denials of plain and non-controversial facts ought to be deprecated for they are often a clear sign of the absence of any valid issues of real dispute, more so when the defendants had, I repeat, undoubtedly benefitted from the disbursement of the Facilities. [62] I cannot but also refer to the leading judgment of the former Supreme Court on summary judgment in Bank Negara Malaysia v. Mohd Ismail & Ors [1992] 1 CLJ 627 which held as follows:- “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 on 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 Page 18 of 19 improbable in itself, then the Judge has a duty to reject such assertion or denial, thereby rendering the issue as not triable. In our opinion, unless this principle is adhered to, a Judge is in no position to exercise his discretion judicially under 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”. [63] Having evaluated the facts and considered the law applicable to this instant case, I have, in the foregoing, determined that the defendants have so clearly failed to raise any triable issue or reasonable defence. I additionally find that all the arguments raised by the defendant to be entirely at variance from and not consistent with either the clear position in law or the undisputed contemporaneous documents, being the various agreements governing the Facilities and the correspondences on subrogation and repayment proposals. The resistence of the third, fourth and fifth defendants is futile, cannot succeed and must therefore fail. Conclusion [64] For the reasons that I have discussed in the foregoing, I find that the defendants have fallen very considerably short, and not succeeded, on a balance of probablilities, in demonstrating that they had any triable issue to resist the plaintiff’s summary judgment application. [65] Accordingly, I allow enclosure 9 and grant the Order 14 summary judgment for the plaintiff, with costs. Dated: 4 October 2017 t.t (MOHD NAZLAN BIN MOHD GHAZALI) Judge High Court NCC1 Kuala Lumpur Page 19 of 19 Counsel: Counsel for Plaintiff Melisa Chua Messrs N K Tan & Rahim Petaling Jaya Counsel for Defendants