Hong Leong Bank Berhad v 1. ) Leadmont Properties Sdn. Bhd. (WA-22NCC-52-02/2023)

LEADMONT PROPERTIES SDN. BHD. (Company No.: 201401023126 / 1099213-U)

LEADMONT DEVELOPMENT SDN. BHD. (Company No.: 200001007888 / 510494-H) … DEFENDANTS JUDGMENT (Enclosure 7 – Application for Summary Judgement) Background Facts [1] At the request of the 1st Defendant and by way of the Plaintiff’s Letters of Offer dated 17.5.2016 and 26.5.2016 and a Facilities Agreement dated 13.6.2016 entered between the Plaintiff and the 1st Defendant, the Plaintiff granted a Fixed Term Loan 1 of RM8,000,000.00 and a Fixed Term Loan 2 of RM250,000.00 (collectively ‘the Facilities’) to the 1st Defendant for the refinancing of commercial property held under master title PN 101555, Lot 3 Seksyen 13 and PN101556, Lot 72 Seksyen 13 known as Developer’s Parcel No. Hall (Block B), 5th Floor together with accessory parcel, Centrestage @ PJ, Jalan Kemajuan, Section 13, 46200 Petaling Jaya (‘the Property’), subject to the terms and conditions therein. [2] The Facilities are secured by inter alia, the following in favour of the

a First Party Deed of Assignment (‘the Assignment’) and also a Power of Attorney both dated 13.6.2016 executed by the 1st Defendant where for the consideration as defined in the Assignment, inter alia, the 1st Defendant absolutely assigned to the Plaintiff the full and entire benefit of the Sale and Purchase Agreement dated 3.3.2015 together with all rights, titles and interests of the 1st Defendant in the Property;

two Deed of Assignment of Proceeds both dated 28.6.2016 executed by the 1st Defendant in respect of tenancies entered into between the 1st Defendant and 3rd parties concerning part of the Property; and

a Letter of Guarantee dated 13.6.2016 (‘the Guarantee’) executed by the 2nd Defendant. [3] By the Guarantee, the 2nd Defendant guaranteed to the Plaintiff not merely as surety but also as principal debtor, for the consideration therein set out, payment on demand by the Plaintiff, all monies owing under the Facilities or remaining unpaid on the general balance of the 1st Defendant’s account with the Plaintiff. [4] It was also a term of the Guarantee that the 2nd Defendant will irrevocably and unconditionally indemnify the Plaintiff in full against, inter alia, all losses, damages, costs and expenses which the Plaintiff may sustain or incur as a result of or arising from the Facilities. The 2nd Defendant had further agreed that the Guarantee shall not be affected by, inter alia, any time given or extended to or any arrangement with the 1st Defendant in respect of the Facilities. [5] By way of the Plaintiff’s Letter dated 16.7.2019, the Facilities were reviewed. [6] It is the Plaintiff’s case that under the Letters of Offer dated 17.5.2016 and 26.5.2016, the Facilities Agreement dated 13.6.2016 and the Plaintiff’s Letter dated 16.7.2019 (‘collectively referred as ‘the Agreements’), the 1st Defendant has covenanted and agreed, inter alia, as follows:

the Facilities are payable in accordance with the schedules of payment as set out in the Agreements;

in the event of any of the monthly instalments is in arrears for more than thirty (30) days, the Plaintiff reserves the rights to revise the prescribed rates of interest as follows:

Fixed Term Loan 1 – at the rate of 2% per annum above the Plaintiff’s Effective Cost of Funds (‘ECOF’) calculated on monthly rest until the date of full settlement;

(ii) Fixed Term Loan 2 – at the rate of 1% per annum above the Plaintiff’s Base Lending Rate (‘BLR’) calculated on monthly rest until the date of full settlement;

in the event of default or demand or recall of the Facilities, to pay default interest at the rate of 1% above the prescribed interest rates as specified in sub-paragraph (b) (i) and (ii) above;

the Indebtedness under the Facilities shall include, inter alia, all liabilities and obligations whether present or future or actual or contingent for the repayment and payment of all monies by the 1st Defendant in respect of or arising from the Facilities; and

to pay the Plaintiff all legal expenses (including legal fees on solicitors-clients basis) and other charges incurred in connection or incidental to, inter alia, the recovery of any monies due under the Facilities. [7]

Fixed Term Loan 1 - the sum of RM6,521,634.72 as at 22.12.2022 with interest thereon at the rate of 3% per annum above the Plaintiff’s ECOF per annum (inclusive of default rate of 1% per annum), calculated on monthly rest from 23.12.2022 to the date of full settlement.

Fixed Term Loan 2 - the sum of RM219,767.47 as at 22.12.2022 with interest thereon at the rate of 2% above the Plaintiff’s BLR per annum (inclusive of default rate of 1% per annum), calculated on monthly rest from 23.12.222 to the date of full settlement. [12] A copy of the Plaintiff’s Certificate or Statement of Indebtedness verifying the sums owing by the Defendants as at 22.12.2022 was issued to in support of the outstanding amounts. [13] Based on the aforesaid, the Plaintiff has applied under Order 14 of the Rules of Court 2012 to enter a summary judgement against the Defendants. Triable Issues Raised [14] The Defendants raised the following as triable issues to merit the Plaintiff’s claims going for trial:

the Plaintiff has failed to provide particulars and or state the nature of the Defendants’ breach and or default;

in reviewing the Facilities, the Plaintiff had acted beyond the bounds of the powers conferred to it pursuant to the Agreements and that no notice was given to the 2nd Defendant to that effect;

The state of the documents exhibited as ‘HLB-1’ and ‘HLB-2’ had allegedly hampered the Defendants’ solicitors from preparing a case and meeting the Plaintiff’s claim; and

The Plaintiff had failed to assert its belief that there is no defence to the claim. [15] Each of these issues shall be considered in turn. Adequacy of particulars to the claims [16] The Defendants contended that the Plaintiff has failed to provide any particulars as regards the cause of action in the SAHC Suit, the decision by the Court therein and to state how the SAHC Suit gave rise to an adverse effect on the Plaintiff’s rights to the Property. [17] The Defendants further contended that the Plaintiff has failed to particularise the date(s) in which the Defendants had defaulted in their payment obligations under the Facilities. More specifically, it is contended that the Plaintiff did not even bother to plead, particularise and or allude to any clauses in the Agreements. [18] The Defendants also questioned the manner in which the indebtedness of the Defendants was calculated. [19] With respect, I do not find any merits to the Defendants’ aforesaid complaints. [20] Based on the Statement of Claim filed by the Plaintiff, it is expressly stated that the 1st Defendant had defaulted in its payments under the Agreements. [21] The Statement of Claim made express reference to the Plaintiff’s letters of demand dated 8.12.2022, 23.12.2022 and 18.1.2023 that were issued by the Plaintiff’s solicitors to the 1st Defendant demanding for payment of arrears under the Facilities, and when the Defendants failed to regularise the accounts, the Plaintiff’s aforesaid letters stated that the Plaintiff had terminated the Facilities and demanded for the entire outstanding sums. The Defendants have not exhibited any letters responding to these letters of demand to query or seek the particulars of the Plaintiff’s demands. [22] It is not the Defendants’ case that they did not receive these letters of demand. In fact, the 2nd Defendant has expressly admitted to have received the letter of demand dated 18.1.2023 issued by the Plaintiff’s solicitors. Indeed, in the Defendants’ Defence, the Defendants had inter alia, admitted that:

by way of the Plaintiff’s Letters of Offer dated 17.5.2016 and 26.5.2016 and the Facilities Agreement dated 13.6.2016 entered between the Plaintiff and the 1st Defendant, the Plaintiff has granted the Facilities to the 1st Defendant for the refinancing of the Property;

the Facilities were secured by inter alia, the Guarantee executed by the 2nd Defendant; and

the Defendants had duly received the letters of demand dated 18.1.2023 issued by the Plaintiff’s solicitors. [23] The Defendants are not disputing the terms of the Agreements and the Guarantee at all. Thus, it cannot be said that the Defendants do not know the nature of the claims made by the Plaintiff against them in this action. Indeed, even if the Defendants were of the view that there are insufficient particulars in the Statement of Claim, the Defendant could have applied for further particulars from the Plaintiff in respect of its claims as pleaded in the Statement of Claim. The Defendants did not do so. [24] It is therefore disingenuous for the Defendants to now claim that the Plaintiff has not provided the necessary particulars in respect of its claims. [25] Similarly, in relation to the SAHC Suit, the Defendants do not dispute that the 1st Defendant was a party to the SAHC Suit. It is again incredulous for the Defendants to complain that the Plaintiff has failed to provide any particulars as regards the cause of action in SAHC Suit and or the decision by the Court in that suit. [26] Further, the Defendants must know of the terms of the judgment of the learned judge in the SAHC Suit and the effect of the same on the Property as security to the Plaintiff. [27] In any case, the Plaintiff’s claims in this action is premised mainly on the default in the Defendants’ payment obligations under the Agreement. [28] The case of Malaysia Debt Ventures Bhd v Ordyn Technologies Sdn Bhd & Anor [2018] 1 LNS 1377 cited by learned counsel for the Defendants in support of his submission for lack of particulars can be easily distinguished on its facts. In that case, the pleadings did not even make any reference to the specific agreement relied upon, let alone the express terms thereto. [29] AS regards the amount of indebtedness, the Defendants are bound by the express terms of the Agreements and the Guarantee to accept the Plaintiff’s Statement or Certificate of Indebtedness as final and conclusive proof or evidence of the Defendants’ indebtedness under the Facilities. [30] The conclusive nature of such Statement or Certificate of Indebtedness being binding has itself been conclusively determined by the Federal Court. In Cempaka Finance Berhad v Ho Lai Ying & Kor Toong Khoon [2006] 2 MLJ 685, at pages 686 and 691, at paragraph 11, the Federal Court held thus: “[11] The above dictum establishes firmly the conclusive nature and extent of a certificate of indebtedness. A certificate of indebtedness operates in the field of adjectival law. It excuses the plaintiff from adducing proof of debt. Such a certificate shifts the burden onto the defendant to disprove the amount claim.” (emphasis added) Again, in Citibank N.A. v Ooi Boon Leong & Ors [1981] 1 MLJ 282 at page 284, the Federal Court held further that the indebtedness of the borrower may be ascertained conclusively by such certificate: “In the present case the guarantee contains a clause which enables the bank by producing a certificate of indebtedness by its officer to dispense with legal proof of the actual indebtedness of the respondents. Clause 19 provides thus "A certificate by an officer of the bank as to the money and liabilities for the time being due or incurred to the bank from or by the customer shall be conclusive evidence in any legal proceedings against us or any one of us or our personal representatives." It means that, for the purpose of fixing liability of the respondents, the company's indebtedness may be ascertained conclusively by a certificate: see Dobbs v National Bank of Australasia Ltd (1935) 53 CLR 643; Bache & Co v Banque Vernes [1973] 2 LLLR 437. In the circumstances the respondents are bound under clause 19 to accept the certificate of indebtedness duly executed by the Assistant Vice-President of the Branch as conclusive evidence of the debt due to the bank. On this footing the bank would be entitled to judgment as prayed for.” (emphasis added) [31] Based on the aforesaid, the Defendants are indisputably, truly and justly indebted to the Plaintiff of the sums stated in the Statement or Certificate of Indebtedness. The Plaintiff had acted within its rights to review the Facilities [32] The Defendants contended that in reviewing the Facilities, the Plaintiff had acted beyond the bounds of the powers conferred to it pursuant to the Agreements and that no notice was given to the 2nd Defendant to that effect on the change in the rate of interest. [33] Again, I disagree. [34] The Plaintiff’s rights to review of the Facilities are expressly and clearly set out in the Agreements. The express terms in Section 8.03(b) of the Facilities Agreements dated 13.6.2016 allows the Plaintiff to, inter alia, “review the granting and/or continuation of the Facilities at any time and from time to time (irrespective of whether or not the Facilities or any part thereof has been utilised / disbursed or whether any Event of Default has occurred) and to exercise any of its rights or powers to withdraw, cancel, suspend, terminate or recall the Facilities or any part thereof, and the Borrower(s) hereby agree(s) to immediately accept such decision and/or repay to the Lender the Indebtedness then due and outstanding.” [35] More specifically, Section 8.03 stipulates: “SECTION 8.03 REVIEW OF ACCOUNTS

Nothing in the Letters of Offer or in this Agreement shall be deemed to impose on the Lender any obligation either at law or in equity to make or to continue to make available the Facilities to the Borrower(s). The Facilities and all other monies payable hereunder, including renewal fee thereon (where applicable) shall be payable on demand.

Notwithstanding anything to the contrary in the Letters of Offer or this Agreement, and further notwithstanding any specific purpose(s) for the Facilities agreed to in the Letters of Offer, the Lender shall be entitled to review the granting and/or confirmation of the Facilities at any time and from time to time (irrespective of whether or not the Facilities or any part thereof has been utilised / disbarred or whether any Event of Default has occurred) and to exercise any of its rights and powers to withdraw, cancel, suspend, terminate or recall the Facilities or any part thereof, and the Borrower(s) hereby agree(s) to immediately accept such decision and/or repay to the Lender the Indebtedness then due and outstanding.” [36] The rights to review are also expressly provided in Clause 15 of the Letter of Offer dated 17.5.2016. Such rights to review entitled the Plaintiff to vary the interest rates or impose additional terms in this case and not confined to just the Plaintiff’s rights and or powers to withdraw, cancel, suspend, terminate or recall the Facilities as contended by the Defendants. [37] As regards the contention raised by the Defendants that no notice was given to the 2nd Defendant of the review of the Facilities, the terms of the Guarantee expressly provide that the 2nd Defendant’s obligations and or liabilities under the Guarantee shall not be affected by the review of the Facilities and or any variation to the terms of the Agreements. The state of documents in exhibit ‘HLB-1’ and exhibit ‘HLB-2’ [38] The Defendants’ complaints in respect of the state or quality of documents produced and exhibited as ‘HLB-1’ and ‘HLB-2’ are a complete non-starter and a non-issue. The Defendants are not disputing that the said documents were received and executed by the Defendants. The Defendants are also fully aware of the terms of the Agreements and Guarantee. [39] There is therefore clearly no prejudice caused to the Defendants and the Defendants have failed to show otherwise. [40] In any case, the Plaintiff had reproduced the documents exhibited in exhibits ‘HLB-1’,’HLB-2’ and ‘HLB-3’ in exhibit ‘HLB-10’. There is no defence to the Plaintiff’s claims [41] The Defendant contended that the Plaintiff has omitted to mention that there are no triable issues and no defence in respect of the Plaintiff’s claim. [42] In this regard, in the Plaintiff’s affidavit filed in reply to the defendant’s affidavit, the Plaintiff’s authorised representative has averred and affirmed clearly and unequivocally that “there is no defence to this action”. [43] In any case, I hold that the omission by the Plaintiff to make an express averment that the Defendants have no defence to the Plaintiff’s claims in the affidavit filed in support of the Enclosure 7 is a mere irregularity under Order 1A of the Rules of Court 2012 which provides: “In administering these Rules, the Court or a Judge shall have regard to the overriding interest of justice and not only to the technical non-compliance with these Rules.” (emphasis added) [44] A similar point was taken up in Kerajaan Malaysia v Kumpulan Liziz Sdn Bhd (formerly known as Kumpulan Liziz Bhd) & Ors [2021] 10 MLJ 826 at 842 to 845 where the defendants’ technical objection relating to a purported non-compliance with Form 13 to depose that the defendant “has no defence to the claim” was raised. This was rejected by the Court on the basis that, if at all, the failure to satisfy a procedural condition is purely one of semantics or technical non-compliance and reliance was placed on the provisions of Order 1A of the ROC 2012 and summary judgment was entered against the defendants. [45] In Syarikat Islamiyah v Bank Bumiputra Malaysia Bhd [1988] 3 MLJ 218 at 221 a supplementary affidavit was accepted by the Court to correct defects in the affidavit filed in support of a summary judgment application. In that case, the court had accepted the plaintiff’s supplementary affidavit containing an averment that the defendant had no defence to the plaintiff’s claim, which was omitted from the plaintiff’s affidavit in support of the application for leave to enter summary judgment. [46] In our present case, the averment that ‘there is no defence’ to the Plaintiff’s claims is stated in the affidavit filed in reply as alluded to above. Conclusion [47] For the reasons set out above, this Court finds that the Defendants have failed to show that there are bone fide triable issues to merits the matter to go for trial and in the premises, Enclosure 7 is allowed with costs. Dated the 14th day of July 2023 ONG CHEE KWAN Judge of the High Court of Malaya High Court of Kuala Lumpur, NCC2 Counsel:

Ng Hooi Huang together with Deborah Lui Shien Mae for Plaintiff

Danial Hazizan together with Wong Li Wen (PDK) for Defendants

Malaysia Debt Ventures Bhd v Ordyn Technologies Sdn Bhd & Anor [2018] 1 LNS 1377 2. Cempaka Finance Berhad v Ho Lai Ying & Kor Toong Khoon [2006] 2 MLJ 685 3. Citibank N.A. v Ooi Boon Leong & Ors [1981] 1 MLJ 282 4. Kerajaan Malaysia v Kumpulan Liziz Sdn Bhd (formerly known as Kumpulan Liziz Bhd) & Ors [2021] 10 MLJ 826 5. Syarikat Islamiyah v Bank Bumiputra Malaysia Bhd [1988] 3 MLJ 218

Order 1A and 14 of the Rules of Court 2012