Kenanga Investors Berhad v Chan Weng Fui (WA-22NCC-438-07/2025)

CHAN WENG FUI (NRIC No.: 740505-14-5023)

YU KUAN CHON (NRIC No.: 620914-08-6435) …DEFENDANTS GROUNDS OF JUDGMENT (Enclosure 6)

This is the Plaintiff’s application for summary judgment pursuant to Order 14 of the Rules of Court 2012 against the Second Defendant (“D2”). The claim arises from a Put and Call Option arrangement entered into between the Plaintiff and the First Defendant (“D1”). That arrangement was secured by a personal guarantee executed by D2 in favour of the Plaintiff.

The Plaintiff’s claim concerns the alleged failure of D1 to comply with his obligations under what is known as a Rapid 2 Option Agreement, and D2’s corresponding liability under the Guarantee.

D2 resists the summary judgment application on several grounds including alleged discharge of the Guarantee by reason of the Consent Judgment entered into between the Plaintiff and D1 in another suit, the alleged non-materialisation of the settlement arrangement, and the contention that issues concerning the enforceability and scope of the Guarantee ought properly to proceed to trial.

After hearing parties, and having read the affidavits and written submissions, I allowed the Plaintiff to enter summary judgment against D2.

The Plaintiff is a company involved in, inter alia, investment and financing transactions. D1 entered into a Put and Call Option Agreement dated 17 May 2022 together with a term sheet dated 17 May 2022 (“Rapid 2 Option Agreement”) with the Plaintiff in respect of shares in Rapid Synergy Berhad. Under the arrangement, D1 granted to the Plaintiff an irrevocable Put Option entitling the Plaintiff, within the stipulated Put Option Period, to require D1 or his nominee to purchase the option shares at a pre-agreed price.

The Rapid 2 Option Agreement concerned 10,000,000 shares in Rapid Synergy Berhad acquired at a transaction price of RM100 million. The agreement further provided for a Put Option Share Price of RM134 million upon exercise of the put option.

In order to secure D1’s obligations under the Rapid 2 Option Agreement, D2 executed a personal guarantee dated 17 May 2022 (“Rapid 2 Guarantee”) in favour of the Plaintiff. Under the Guarantee, D2 irrevocably and unconditionally guaranteed the due performance by D1 of the obligations under the Rapid 2 Option Agreement and further undertook to indemnify the Plaintiff for all losses and liabilities arising from D1’s breach.

8.

The Plaintiff alleges that despite the exercise of the Put Option, the Defendants failed, neglected and/or refused to complete the purchase of the shares and to pay the agreed consideration. As a consequence, the Plaintiff commenced the present proceedings against the Defendants.

The Plaintiff further relies on subsequent conduct on the part of D2, including a settlement proposal dated 2 September 2024 and a further settlement arrangement dated 12 December 2024. These, the Plaintiff contends, amounted to clear and unequivocal admissions of liability by D2 under the various guarantees. The Plaintiff also contends that D2 had made part payment pursuant to the settlement arrangement.

Separately, the Plaintiff and D1 recorded a Consent Judgment on 30 September 2025 concerning D1’s liabilities in the present and various other related suits.

The present claim therefore is only against D2.

The starting point is Order 14 of the Rules of Court 2012. The Court is not concerned merely with whether the Defendant has asserted a dispute. The question is whether the Defendant has raised a bona fide triable issue on the affidavit evidence that merits a trial (see: Bank Negara Malaysia v Mohd Ismail & Ors [1992] 1 MLJ 400).

In National Company for Foreign Trade v Kayu Raya Sdn Bhd [1984] 2 MLJ 300, the Federal Court held that once the plaintiff satisfies the preliminary requirements, the plaintiff establishes a prima facie case and “the burden then shifts to the defendant to satisfy the Court why judgment should not be given against him”.

At the oral hearing of this application, Learned Counsel for D2 confirmed that the Plaintiff’s application for summary judgment complies with the requirements of Order 14 Rule 2 of the Rules of Court 2012. Learned Counsel then proceeded to submit on those issues which he contended merit a trial of the action.

D2 contends that the Consent Judgment entered into between the Plaintiff and D1 materially varied the underlying contractual arrangements without D2’s consent and thereby discharged D2 from liability pursuant to Section 86 of the Contracts Act 1950.

D2 argues that the Consent Judgment fundamentally altered the contractual landscape by consolidating several suits and introducing obligations and remedies not originally contemplated under the Rapid 2 Guarantee. It is contended that the underlying obligations guaranteed by D2 had merged into and been superseded by the Consent Judgment, thereby extinguishing the Plaintiff’s cause of action against D2.

D2 further submits that the Guarantee does not entitle the Plaintiff to seek specific performance against a guarantor. According to D2, the Guarantee contemplates only monetary liability and indemnity obligations, and not the completion of the share sale transaction itself.

In addition, D2 contends that the alleged settlement arrangement dated 12 December 2024 never became binding because it was expressly conditional upon the withdrawal of separate proceedings involving the Plaintiff and D1. As this condition was never satisfied, D2 contends that no concluded settlement ever arose.

Finally, D2 argues that there are serious issues to be tried, including whether the Plaintiff had in fact paid the RM10.00 consideration recited in the Guarantee and whether the Plaintiff’s claims are legally enforceable in light of the various alleged contractual and statutory defects. WHETHER THE CONSENT JUDGMENT DISCHARGED D2 UNDER

The principal defence mounted by D2 is that the Consent Judgment entered into between the Plaintiff and D1 constituted a material variation of the underlying contract, thereby discharging D2 as guarantor under Section 86 of the Contracts Act 1950. D2 relies on Citibank NA v Ooi Boon Leong [1981] 1 MLJ 282 and Holme v Brunskill (1878) 3 QBD 495.

Section 86 of the Contracts Act 1950 reads: Discharge of surety by variance in terms of contract Any variance, made without the surety's consent, in the terms of the contract between the principal debtor and the creditor, discharges the surety as to transactions subsequent to the variance.

The above provision was considered in Malayan Banking Bhd v Poh Yang Hong [2021] MLJU 2909. There, the Court held that where the guarantor was acting as a principal debtor and not a mere surety, sections 86 and 88 of the Contracts Act 1950 were of no assistance. The Court relied on Mahzan bin Othman v Perbadanan Usahawan Nasional Berhad [2012] 1 LNS 587, where it was held that Section 86 of the Contracts Act 1950 has no application because the party was “not a mere surety but a principal debtor” and had undertaken to be liable for the whole debt or such amount outstanding.

More importantly, the Federal Court in Andrew Lee Siew Ling v United Overseas Bank (M) Bhd [2013] 1 MLJ 449 held that a person who gives a guarantee and indemnity may be primarily liable, and that such liability is not dependent upon nor secondary to the liability of the principal borrower. The Federal Court stated: “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.”

That principle was followed by the Court of Appeal in Bank Pembangunan Malaysia Bhd v Ketheeswaran a/l M Kanagaratnam [2022] 5 MLJ 393, where the Court held that a guarantor who contracts as a principal debtor assumes primary liability irrespective of the principal borrower’s status.

Applying those authorities, Section 86 of the Contracts Act 1950 does not assist D2. This is not a case of a bare surety being held to an altered bargain. D2 signed a Guarantee which made him liable as a principal debtor. His liability was primary. It was not dependent upon the Plaintiff first preserving, pursuing or enforcing the precise original obligation against D1 in one particular way.

The Consent Judgment between the Plaintiff and D1 did not release D2. It did not rewrite D2’s Guarantee. Nor did it turn his primary obligation into a secondary obligation which could be discharged under Section 86. The Section 86 defence is therefore misconceived and does not merit a trial. WHETHER THE CONSENT JUDGMENT EXTINGUISHED THE

D2 further contends that the Consent Judgment caused the underlying contractual obligations to merge into the judgment and thereby extinguished the Plaintiff’s cause of action against D2. This is, in substance, the doctrine of merger argument.

The Plaintiff’s answer is that the Consent Judgment binds the Plaintiff and D1; it does not release D2 from his contractual liabilities under the separate Guarantee. I accept the Plaintiff’s submission.

What is the doctrine of merger? In CIMB Bank Berhad v Voo Sin Pei [2020] MLJU 126, the Court explained the doctrine of merger in the following terms: “It is the judgment that operates to merge the cause of action upon which action is brought with the judgment that is pronounced… The principle of merger, if it applies, prevents a second action from being brought for the same cause of action. The principle does not operate when there is another separate cause of action.”

A perusal of the Plaintiff’s claim shows that the claim against D2 is not a second action against D1 on the same cause of action already merged into the Consent Judgment. It is a claim on a separate contractual instrument executed by D2 himself. The Guarantee is an independent promise and indemnity.

It follows that the liability of D2 does not disappear merely because the Plaintiff has recorded a Consent Judgment against the principal debtor.

I therefore find that the doctrine of merger does not assist D2. There is no merger of the Plaintiff’s separate cause of action against D2 under the Guarantee. This defence is untenable and raises no triable issue.

D2 next argues that the Settlement Agreement dated 12 December 2024 never materialised because certain pre-conditions were not fulfilled, including D1’s alleged failure to withdraw the related suit against the Plaintiff.

First, this issue was not raised in D2’s Affidavit in Reply.

Notwithstanding, it is my finding that this argument does not withstand the scrutiny of documentary evidence. The Plaintiff relies on D2’s unconditional acceptance of the settlement terms, the repayment schedule, and the first payment of RM1 million. This is captured in the submissions as follows:

These documents are admissions. They show that D2 acknowledged liability, agreed to a repayment schedule, and acted upon it by making the first payment of RM1 million. In the context of an Order 14 application, a party cannot create a triable issue merely by seeking to recast clear, contemporaneous documentary admissions as non-binding after the event.

The law on admission supports this conclusion. In Malayan Banking Berhad v Red Box (Malaysia) Berhad [2000] 6 CLJ 21, it was held: “An admission of a particular fact may either be express or implied. In whatever form it takes, the admission must be clear and unequivocal (Ellis v. Allen [1914] 1 Ch 904, 909; Ash v. Hutchinson & Co. (Publishers) [1936] Ch 489, 503; and Technistudy v. Kelland[1976] 1 WLR 1042 [1976] 3 All ER 632 C.A.). Thus, if a defendant admits a document but does not admit its full contents, the plaintiff may still succeed by obtaining judgment if the document, on production, clearly establishes and supports the plaintiff 's claim (Barnard v. Wieland [1882] 30 WR 947; Rutter v. Tregent [1879] 12 Ch.D. 758; and Smith v.

The same principle applies here. D2’s later assertion that the settlement never materialised is inconsistent with his own contemporaneous conduct. It is not a defence of substance. It is a post hoc attempt to resile from an admitted liability.

I therefore find that the settlement point does not raise a bona fide triable issue. WHETHER SPECIFIC PERFORMANCE CAN BE ORDERED AGAINST

D2 submits that specific performance cannot be enforced against him because he was not a party to the Rapid 2 Option Agreement. D2 relies on Section 26(b) of the Specific Relief Act 1950 arguing that specific performance may only be enforced against a party to the contract or a person claiming under such party by a subsequently arising title.

Section 26(b) reads: Relief against parties and persons claiming under them by subsequent title Except as otherwise provided by this Chapter, specific performance of a contract may be enforced against-

…;

any other person claiming under a party to the contract by a title arising subsequently to the contract, except a transferee for value who has paid his money in good faith and without notice of the original contract;

I do not accept D2’s submission on specific performance. It proceeds on the wrong footing.

The Plaintiff’s claim against D2 is not an attempt to make D2 the purchaser under the Rapid 2 Option Agreement. D2 was not sued because he was D1. He was sued because he signed the Guarantee. That Guarantee contained his own promise to answer for D1’s default and to indemnify the Plaintiff for losses arising from that default.

In any event, the application also seeks monetary relief. The alternative prayer is for payment of RM134 million or any shortfall if the shares are disposed of, together with interest. Even if the prayer for specific performance is viewed narrowly, that does not defeat the Plaintiff’s monetary claim under the Guarantee.

For that reason, the specific performance point does not provide D2 with a real defence to the summary judgment application. WHETHER THE ALLEGED NON-PAYMENT OF RM10

D2’s final principal contention is that the recited consideration of RM10.00 in the Guarantee was not actually paid. In his affidavit and submissions, D2 contends that the Plaintiff has failed to prove actual payment of the RM10.00, and that the Guarantee is therefore void for want of consideration under Section 26 of the Contracts Act 1950.

I am unable to accept this submission as a genuine defence. The Guarantee records the consideration and D2’s acknowledgment of receipt and sufficiency. The exact term of the Guarantee reads: “In consideration of RM10 (the receipt and sufficiency of which I hereby acknowledge), I, the undersigned and whose name (s), address (es) and particulars are set out in Part Three of the Schedule ("Guarantor") hereby:…”

D2 signed the instrument. That acknowledgment in the Guarantee is important. The Guarantee formed part of a much larger commercial transaction. It is not commercially realistic for D2, having signed the Guarantee, having thereafter engaged in settlement discussions, and having made payment, to now say that the whole instrument is void because the nominal sum of RM10.00 was allegedly not physically paid. A party who has signed a commercial document containing clear terms is ordinarily bound by those terms (see: L’Estrange v F Graucob Ltd [1934] 2 KB 394 and Chin Well Fasteners Co Sdn Bhd v Sampath Kumar Vellingiri & Ors [2006] 1 MLJ 117).

In any event, D2’s argument proceeds on the erroneous footing that the only consideration for the Guarantee was the physical payment of RM10.00. The Guarantee formed part of the wider Rapid 2 transaction. The Plaintiff’s entry into and performance of the commercial arrangement with D1, secured by D2’s Guarantee, furnished sufficient consideration. The alleged non-payment of the nominal RM10.00 does not, without more, render the Guarantee void.

The RM10.00 point is therefore not a genuine defence. It is technical, belated and contradicted by the contemporaneous documents and D2’s own conduct. Applying Bank Negara Malaysia v Mohd Ismail (supra), I am entitled to reject a denial that is inconsistent with undisputed documents and inherently improbable.

D2 also seeks to challenge Clause 9(b) of the Guarantee on the basis that it contains an untruth. Primarily, D2 asserts that it is untrue that he has obtained independent legal advice prior to executing the Guarantee. Allegedly, D2 was never given a copy of the Guarantee. I reject this contention for the same reasons. Having executed the Guarantee, acted consistently with liability under it and kept silent for an inordinate amount of time, it is not open to D2 to belatedly disown the terms or seek to impeach them when it suits D2.

Standing back, D2’s defences fall into two broad categories. The first consists of legal arguments which do not apply once the Guarantee is properly construed as imposing primary liability on D2. This includes the Section 86 argument, the discharge argument, the merger argument, and the specific performance argument.

The second consists of factual denials contradicted by contemporaneous documents, including the alleged non-materialisation of the settlement and the alleged absence of consideration.

This is therefore not a case where the Court is shutting out a defendant with a real defence. It is a case where the Defendant has raised points which are either legally unsustainable or factually contradicted by contemporaneous documents. In such circumstances, Order 14 is not only available; it is designed precisely for this kind of case.

For the reasons given, the application succeeds. I entered summary judgment against D2 with costs.

After I delivered my broad grounds allowing the Plaintiff’s application, Learned Counsel for D2 moved this Court orally for a stay of the judgment. I refused the oral application. If D2 intends to pursue a stay when judgment has been entered for a monetary claim, the proper course is to file a formal application supported by affidavit evidence showing special circumstances why a stay ought to be granted. Dated the 28th day of May 2026 -sgd- ……………………………………………………………………… MUHAMMAD ADAM BIN ABDULLAH Judicial Commissioner (Commercial Division NCC 4) High Court of Malaya In the Federal Territory of Kuala Lumpur, Malaysia Counsel for the Plaintiff : Shaikh Abdul Saleem together with Khor Wan Yin Messrs. Shaikh David & Co. Counsel for the Defendants : Leong Kwong Wah together with Goik Kenwayne, and Lee Wei Kang Messrs. Dennis Nik & Wong

Andrew Lee Siew Ling v United Overseas Bank (M) Bhd [2013] 1 MLJ 449 2. Bank Negara Malaysia v Mohd Ismail & Ors [1992] 1 MLJ 400 3. Bank Pembangunan Malaysia Bhd v Ketheeswaran a/l M Kanagaratnam [2022] 5 MLJ 393 4. CIMB Bank Berhad v Voo Sin Pei [2020] MLJU 126 5. Citibank NA v Ooi Boon Leong [1981] 1 MLJ 282 6. Chin Well Fasteners Co Sdn Bhd v Sampath Kumar Vellingiri & Ors [2006] 1 MLJ 117 7. Holme v Brunskill (1878) 3 QBD 495 8. L’Estrange v F Graucob Ltd [1934] 2 KB 394 9. Mahzan bin Othman v Perbadanan Usahawan Nasional Berhad [2012] 1 LNS 587 10. Malayan Banking Bhd v Poh Yang Hong [2021] MLJU 2909 18 11. Malayan Banking Berhad v Red Box (Malaysia) Berhad [2000] 6 CLJ 21 12. National Company for Foreign Trade v Kayu Raya Sdn Bhd [1984] 2 MLJ 300

Order 14 and Order 14 Rule 2 of the Rules of Court 2012 2. Section 26; Section 86 and Section 88 of the Contracts Act 1950 3. Section 26(b) of the Specific Relief Act 1950