Hsbc Amanah Malaysia Berhad v 1. ) Onyx Engineering Sdn Bhd (WA-22M-32-02/2021)

ONYX ENGINEERING SDN BHD [COMPANY NO.: 200301001792 (604212-P)]

MOHAMED ASHARI BIN ABAS [NRIC NO.:521128-08-5773]

AHMAD NIDZAR BIN HAMZAH [NRIC NO.:721019-05-5061] ... DEFENDANTS JUDGMENT [1] This judgment concerns the Plaintiff’s summary judgment application (Enclosure 8) against the Defendants, arising from a writ action filed by the Plaintiff against the Defendants for recovery under Bai Al-Inah and Commodity Murabahah financings granted by the Plaintiff to the 1st Defendant and related guarantees. [2] At the hearing of this application, I granted summary judgment for the Plaintiff. This judgment contains the full grounds for my decision. Facts [3] The Plaintiff, a licensed bank, extended to the 1st Defendant a Cash Line-i Financing of RM3,000,000.00 (“the Cash Line-i Financing”) and Export Line-i Financing of RM2,000,000.00 (“the Export Line-i Financing”). Together, these will be referred to as “the Financings”. [4] These were documented by the Plaintiff's letters of offer dated 21.4.2014 and 4.11.2015 and the Plaintiff’s supplemental letters of offer dated 7.5.2018 and 19.12.2018 issued to the 1st Defendant and agreed to by the 1st Defendant. [5] As part of the security arrangement under the Financings, the 2nd and 3rd Defendants jointly and severally executed a Limited Guarantee By Individual(s) and Partners dated 14.8.2014 and a Limited Guarantee By Individual(s) and Partners dated 18.3.2016 (“the Guarantees”). The 2nd Defendant and 3rd Defendant, in consideration of the Plaintiff inter alia granting or continuing to make available the Financings to the 1st Defendant, jointly and severally guaranteed and agreed unconditionally and irrevocably to pay on demand all and any sums due and owing by the 1st Defendant to the Plaintiff on the Financings advanced by the Plaintiff including all commission, costs, charges and expenses including legal costs. [6] The 1st Defendant failed to make payment of the arrears sum and late payment charges falling due, on Accepted Bills-i that had matured and fallen due for payment on the above Export Line-i Financing and sums above the approved limit on the Cash Line-i Financing. The 1st Defendant proposed a payment arrangement to pay RM1,700,000.00 by 30.9.2020 with the shortfall of approximately RM550,000.00 to be addressed separately. This was not honoured by the 1st Defendant. [7] The Plaintiff’s solicitors by its letter dated 21.10.2020 demanded payment from the 1st Defendant within 14 days of the sums in excess of the Approved Cash Line-i Financing and the sums payable on Accepted Bills-i which had matured and fallen due together with compensation (ta'widh), charges and expenses under the Financings, giving notice that in the event of continued breach, an event of default under the Financings would have occurred entitling the Plaintiff to exercise all its rights including the right to uplift the Time Deposit held as security for the above Financings toward part payment of the said outstandings without further notice to the Defendants. The 1st Defendant did not make the required payment. [8] The Plaintiff’s solicitors further, by its letter of demand dated 16.11.2020 to the 1st Defendant, gave notice that by reason of the said breach and ensuing default, all monies due, owing and payable on the above Financings together with all compensation (ta'widh) for late payment and all other monies covenanted to be paid on the above Financings including all costs and charges amounting to RM2,216,102.45 as at 13.11.2020 (following the uplifting and application of the Time Deposit) was due and owing and sought payment of such sums within 14 days and in default thereof the Plaintiff would exercise all its rights and remedies and commence legal action against the Defendants. The Plaintiff also gave notice that the entire Financings stood terminated and no longer available for utilisation by reason of the 1st Defendant's breach. [9]

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 relief claimed. [14] It is useful to refer once again to the often quoted decision of the former Supreme Court in National Company For Foreign Trade v. Kayu Raya Sdn Bhd [1984] 2 MLJ 300 which 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.” [15] The Plaintiff has satisfied these preliminary requirements, and this is not disputed by the Defendants. Thus 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 demonstrate even one triable issue, this Court will not grant summary judgment. But it has to be a genuinely triable issue as would require a trial in order to determine it (see Voo Min En & Ors v. Leong Chung Fatt [1982] 2 MLJ 241). Defendants’ submissions [16] The Defendants submitted that the Plaintiff's claim is founded on calculations which are misleading, dubious, unclear and inaccurate. [17] The Defendants contended that for the Cash Line-i Financing the profit is calculated on a monthly profit basis), as provided in Annexure 1 of the letter of offer dated 21.4.2014 according to the following calculation: [18] Further, pursuant to the Cash Line-i Financing letter of offer (First Schedule Part A) the Monthly Profit shall be paid on or before the 26th of each month, and the 1st Defendant agrees that it shall be debited to the 1st Defendant’s current or other account with the Plaintiff without need for prior notice to the 1st Defendant. [19] According to the Defendants, the calculation of financing profit for the Cash Line-i Financing is dependent and subject to the actual amount of financing that has been fully utilised by the Defendants. Therefore, for the Plaintiff's claim against the Defendants for arrears of Cash Line-i Financing to be allowed, the Defendants submitted that the actual amount of financing that has been fully utilised by the Defendants has to be determined. [20] The Defendants further contended that: a) The Plaintiff's claim for the Cash Line-i Financing is RM1,539,870.09 as of 10.2.2021 but the Plaintiff's Statement of Claim and affidavit in support does not disclose the actual amount of Cash Line-i Financing utilised by the Defendants and documentary evidence in support despite the dispute by the Defendants that having used all such funding amounts. The Plaintiff has not explained and proved how the outstanding amount for the Cash Line-i Financing financing was calculated. b) The Plaintiff’s averment in Paragraph 4.2.2 of the affidavit in reply that RM3,000,000 was utilised by the 1st Defendant for the Cash Line-i Financing was not supported with any evidence. c) For the Export Line-i Financing the Plaintiff also failed to disclose details of the particulars of the transaction account for the financing. [21] The Defendants submitted that the Plaintiff's failure to do so creates doubts and disputes as to the accuracy of the Plaintiff's claim amount which is a triable issue. [22] In the Defendants’ affidavit in reply, they also contended that the Export Line-i Financing was repaid in full by the 1st Defendant but no submission was made in furtherance to this. Due to the lack of submission by the Defendants, the court will not address this contention. Plaintiff’s submissions Unclear calculation [23] The Plaintiff submitted that it is not incumbent on the Plaintiff to provide a breakdown of the outstanding sums (including interest and payments made) claimed as the Plaintiff has a exhibited Certificate of Indebtedness pursuant to the clause recognising the validity of such Certificate. The Certificate of Indebtedness dated 6.4.2021 showing the outstanding amount as at 10.2.2021 was RM1,539,870.09 for the Cash Line-i Financing and RM682,280.10 for the Export Line-i Financing is produced as Exhibit HSBCA-7 to the Plaintiff's affidavit in support. The applicable clause is Clause (l) to Annexure II to both Letters of Offer for the Cash Line-i Financing and Export Line-i Financing respectively which provides: “Conclusive Evidence Clause A certificate signed by an officer of the Bank as to any amount(s) payable hereunder shall be conclusive evidence save for manifest error.” [24] The Plaintiff further submitted that in this respect the outstanding amount due and outstanding on the 1st Defendant's Financings is accurate as set out in the Certificate of Indebtedness stands binding and conclusive against the Defendants. [25] The Plaintiff submitted that it is not obliged to provide a breakdown of the outstanding sums (including interest and payments made) or to provide further evidence or corroboration of the outstandings and that instead, the onus falls on the Defendants to show any “manifest error” in the Certificate of Indebtedness when there is a clause recognising the validity of such Certificate. The Plaintiff referred the court to the case of Federal Court case of Cempaka Finance Berhad v. Ho Lai Yin (trading as KH Trading) & Anor [2006] 2 MLJ 685 to support this submission. Non-utilisation of the Cash Line-i Financing [26] The Plaintiff, in response to the Defendants’ contention that the 1st Defendant did not utilise the Cash Line-i Financing in full, submitted that the Cash Line-i Financing was disbursed and utilised to the extent sought by the 1st Defendant with no objection nor protest by the Defendants through the tenure of the Financings. In this respect, the RM3,000,000 Cash Line-i Financing was fully disbursed and by the time of issuance of the Plaintiff’s solicitors’ letter of demand for arrears dated 21.10.2020 for sums outstanding and payable as at 18.10.2020, a sum of RM13,972.45 was outstanding and in excess of the limit of RM3,000,000 on the Financing. [27] The Plaintiff submitted that the Defendants’ allegations of no full utilisation of the Cash Line-i Financing cannot stand as this was not supported by documents or events contemporaneous to the transaction. According to the Plaintiff the Defendants, at all times contemporaneous to the Financings did not deny or challenge the Financings but instead admitted to the non-payment of the Financings by way of the 1st Defendant’s letters dated 14.9.2020 and 19.10.2020. The Defendants also never challenged the Plaintiff's requests for payment terms and now cannot allege differing methods in calculating interest, uncertain calculation. The 1st Defendant’s admissions were as follows: a) In the Plaintiff’s email dated 14.9.2020 the Plaintiff responded to 1st Defendant's 14.9.2020 letter/email and asked how the RM550,000 shortfall will be paid; b) In the Plaintiff’s email dated 11.9.2020 it asked for confirmation on the payment arrangement discussed of RM1,7000,000 by way of the Defendants' internal funds by 30 September and on the RM550,000 shortfall; c) In the 1st Defendant's letter dated 14.9.2020, the 1st Defendant stated that it would endeavour to make a payment of RM1,700,000 before 30.9.2020 and the shortfall of RM550,000 was to be settled separately in full or by installments; and d) In the 1st Defendant's letter dated 19.10.2020, the 1st Defendant apologised for not meeting the payment schedule and promised to make payment by 2 weeks, before the end of October. Findings and analysis of the court [28] The court finds the Defendants’ submissions that the Plaintiff's claim is founded on calculations which are misleading, dubious, unclear and inaccurate are without merit. [29] The court agrees with the Plaintiff that there is no obligation on the Plaintiff to provide a breakdown of the outstanding sums. The Plaintiff has exhibited a Certificate of Indebtedness pursuant to Clause (l) to Annexure II to the letters of offer which provides that such a certificate signed by the Plaintiff’s officer as the amount payable under the Cash Line-i Financing shall be conclusive evidence save for manifest error. [30] All that the Defendants have done in their affidavit was to state that the Plaintiff did not supply or disclose the particulars of the position of the transactional account for the Cash Line-i Financing and the Export Line-i Financing. There was no challenge made by the Defendants to the outstanding sums stated in the Certificate of Indebtedness. Even if the raising of this issue is to be treated as a challenge, the Defendants have failed to satisfy its onus to show that there is any manifest error in the Certificate of Indebtedness by way of contemporaneous evidence as prescribed in Cempaka Finance Berhad v. Ho Lai Yin (trading as KH Trading) & Anor [supra]. [31] Further, the Defendants cannot allege that the 1st Defendant has utilised the Cash Line-i Financing in full. I agree with the Plaintiff that this allegation was not supported by documents or events contemporaneous to the transaction. Given that at all times contemporaneous to the Financings, the Defendants’ did not deny or challenge the Financings, I cannot accept the Defendants’ contention. When an assertion is inconsistent with undisputed contemporary documents or other statements by the same deponent or is inherently improbable in itself, then the court has a duty to reject such assertion rendering the issue not triable. See Bank Negara Malaysia v. Mohd Ismail & Ors [1992] 1 MLJ 400. [32] Also, as the 1st Defendant has admitted to the non-payment of the Financings by way of the Defendants' letters dated 14.9.2020 and 19.10.2020, the Defendants cannot raise the non-utilisation of the Cash Line-i Financing in full and uncertain calculation as a triable issue. The Defendants in their affidavit did not deny or address this admission which was clearly averred by the Plaintiff in its affidavit in support. [33] The 1st Defendant's admission of liability forms a strong basis for this Court to enter a summary judgment against the Defendants. The court can allow a summary judgment when there is an admission of liability by the defendant. See Bank Negara Malaysia v. Mohd Ismail & Ors [supra]; Malacca Precast Concrete Works v. William Tacks & Co (M) Sdn Bhd [1970] 2 MLJ 111; Jessen & Jessen (South East Asia) Pte Ltd & Anor v. Citranet Sdn Bhd [2019l] MLJU 1757; The Hong Kong & Shanghai Banking Corporation Limited v. Tan Sock Gin [1997] 7 CLJ 450; Associated Tractors Sdn Bhd v. PMB (Kulim) Sdn Bhd & Ors [1989] 1 MLJ 245; Lien Chong Credit & Leasing Sdn Bhd v. Sri Saga Holdings Sdn Bhd & Ors [1997] 1MLJ 367. Conclusion [34] Considering the totality of the facts and circumstances of the case as disclosed in the affidavit evidence, it was quite clear to me that the Plaintiff had clearly met the preliminary requirements in an O. 14 application in accordance with the principles established by National Company For Foreign Trade v. Kayu Raya Sdn Bhd [supra] and further, applying the leading Supreme Court case of Bank Negara Malaysia v. Mohd Ismail Ali Johor & Ors [supra]. Accordingly I held that the contentions of the Defendants do not amount to triable issues or constitute any reasonable defence. Dated: 28 December 2021 ATAN MUSTAFFA YUSSOF AHMAD Judicial Commissioner Kuala Lumpur High Court (Commercial Division) Counsel: For the Plaintiff: Datin Jeyanthini Kannaperan (Messrs Shearn Delamore & Co) For the Defendants: Puan Norazalina Hairuddin (Messrs. Amir Ruhana & Khairuddin)