Ketheeswaran A/L M. Kanagaratnam v Bank Pembangunan Malaysia Berhad (BA-22NCC-63-05/2023)

This is the Defendant’s application to strike out the Plaintiff’s Writ of Summon and Statement of Claim under Order 18 rule 19(1)(b) and/or (d), and Order 92 rule 4 of the Rules of Court 2012 (ROC 2012).

Upon reviewing the cause papers and considering both the written and oral submissions by the parties, this Court allowed the Defendant’s application.

Dissatisfied with the decision, the Defendant subsequently filed this appeal.

The pivotal question in this application is whether the Plaintiff's current action falls under the doctrine of res judicata, rendering it an obviously unsustainable action.

At the request of Asian Broadcasting Network (M) Sdn. Bhd. (Borrower), Bank Pembangunan Malaysia Berhad (BPMB/the Defendant) granted a Term Loan Facility of RM450 million (the Facility) to partially finance the costs of operating a digital interactive television and data services project over a hybrid fibre coaxial cable network in Malaysia (the Project).

The Facility is secured by securities, including a Debenture dated 5 December 2012, executed by the Borrower, which creates fixed and floating charges over its assets in favour of BPMB, and a Guarantee dated 5 December 2012 (the Guarantee), executed by the Plaintiff in favour of BPMB.

At the Borrower's request, BPMB subsequently agreed to vary the terms of the Facility.

On 8 May 2017, the Borrower was wound up by the High Court at Kuala Lumpur, Companies Winding-Up No. WA-28NCC-3-01/2016, triggering an event of default under the terms of the Facility. Consequently, BPMB, through its solicitors’ letter dated 26 July 2017, demanded that the Plaintiff pay the amount due under the Facility pursuant to the Guarantee. The Plaintiff, however, failed to pay the demanded sums.

On 16 January 2019, BPMB initiated a suit against the Plaintiff in the High Court at Shah Alam (Civil Suit No.: BA-22NCC-8-01/2019) to recover amounts owed under the Guarantee. In his Statement of Defence filed on 6 February 2020, the Plaintiff claimed he was discharged from the Guarantee due to BPMB's alleged wrongful and unconscionable conduct regarding the Facility.

BPMB subsequently filed for summary judgment against the Plaintiff under Order 14, ROC 2012 (O.14 Application). On 15 September 2020, the High Court dismissed the O.14 Application.

On 18 September 2020, BPMB appealed against the dismissal of the O.14 Application to the Court of Appeal in Civil Appeal No. B- 02(IM)(NCC)-1302-09/2020 (Appeal 1302). On 27 July 2021, the Court of Appeal allowed the appeal and entered summary judgment against the Plaintiff for RM275,337,614.42, plus interest and costs (the Judgement). The Court concluded that the Plaintiff, as guarantor and principal obligor, had waived his rights under the Guarantee and could not use the defences available to the Borrower.

Dissatisfied with the Court of Appeal's decision, the Plaintiff applied for leave to appeal to the Federal Court on 25 August 2021. However, on 28 July 2022, the Federal Court dismissed the Leave Application, finding that the issues raised were governed by settled law and did not meet the requirements for leave to appeal under section 96 of the Courts of Judicature Act 1964.

While Appeal 1302 was pending, the Borrower initiated a suit against BPMB in Shah Alam High Court Civil Suit No.: BA-22NCC- 23-03/2021 (Borrower’s Suit) for alleged breach of contract and negligence, raising similar allegations to those in the Plaintiff's Statement of Defence in the Recovery Suit. BPMB filed its Statement of Defence to the Borrower’s Suit on 16 April 2021. Subsequently, on 1 September 2021, BPMB applied to strike out the Borrower’s Suit, arguing it was void ab initio because the liquidator lacked the authority to sanction the Borrower's directors to commence an action against BPMB.

On 8 February 2023, the High Court granted BPMB’s application to strike out the Borrower’s Suit, ruling that the Suit was void ab initio since the Liquidator lacked the authority to sanction the Borrower's directors to initiate the Suit against BPMB. The Borrower has appealed this decision, and the appeal is currently pending. Bankruptcy Proceedings against Plaintiff

Following the Judgment, On 10 August 2022, BPMB demanded payment of the Judgment sum from the Plaintiff. The Plaintiff failed to pay any portion of the Judgment sum, leading BPMB to apply for leave to commence bankruptcy proceedings against the Plaintiff in Shah Alam High Court Bankruptcy No. BA-29NCC-2972-11/2022 on 30 November 2022 (Bankruptcy Proceedings). On 29 March 2023, the High Court granted BPMB leave to proceed with the Bankruptcy Proceedings.

On 28 April 2023, the Bankruptcy Notice was personally served on the Plaintiff. Subsequently, on 5 May 2023, the Plaintiff applied to set aside the Bankruptcy Notice. The said application was dismissed on 20 September 2023.

On 29 May 2023, nearly two years after the Judgment was delivered and while the Application to Set Aside the Bankruptcy Notice was still pending, the Plaintiff initiated the current action to seek discharge from the Guarantee. This action was based on the same allegations raised in his Statement of Defence in the Recovery Suit and in opposing BPMB's application for leave to commence Bankruptcy Proceedings. All these issues had already been adjudicated and rejected by the respective courts.

The principles of law on striking out of pleadings are trite and well-settled. The Court’s power to strike out a claim should be exercised sparingly. The test for striking out is laid down in the case of Bandar Builder Sdn. Bhd. & Ors v United Malayan Banking Corporation Bhd. (1993) 3 MLJ 36, the Supreme Court held that this summary procedure could only be exercised when it can be clearly seen that a claim or answer is on the face of it is plainly and ‘obviously unsustainable’. The Court must be satisfied that there is no reasonable cause of action, or that the claims are frivolous or vexatious, or that the defences raised are not arguable. This principle has been reiterated in a plethora of cases. (see: Seruan Gemilang Makmur Sdn. Bhd. v Kerajaan Negeri Pahang Darul Makmur & Anor (2016) 3 MLJ 1; Sivarasa Rasiah & Ors v Che Hamzah Che Ismail & Ors (2012) 1 MLJ 473, CA; Sivakumar a/l Varatharaju Naidu v Ganesan a/l Retanam (2011) 6 MLJ 70, CA)

Upon perusal of the cause papers filed by the parties and having considered the written and oral submissions by the Plaintiff and the Defendant, it is evident that the Plaintiff’s case is plainly and obviously unsustainable and is liable to be struck out. This conclusion stems from the fact that the issues raised by the Plaintiff fall under the doctrine of res judicata. My reasons are expounded below.

The Plaintiff argued that he is not liable for the principal debt as a guarantor because the principal agreement was varied without his consent. To support his argument, the Plaintiff cited the Supreme Court of Canada’s decision in Bank of Montreal v Wilder and Others [1987] LRC (comm) 537 and the English Court of Appeal’s decision in Polack and another v Everett [1874-80] All ER Rep 991.

The Plaintiff further contended that he is merely a guarantor and not a principal obligator, denying every allegation made by the Defendant that the Plaintiff is supposed to indemnify the Defendant.

The Plaintiff contended that the current action was filed against the Defendant based on the gross negligence and wilful misconduct of the Defendant, including through its agents, managers, officers, employees, delegates, and advisers, as per clause 15.7 of the Guarantee. According to clause 15.7, the Defendant and its agents, managers, officers, employees, delegates, and advisers are not exempted from any claim, demand, liability, loss, damage, cost or expense incurred or arising in connection with their gross negligence or wilful misconduct, which connotes fraud. Clause 15.7 of the Guarantee states as follows: “15.7 Exclusion Neither BPMB nor its agents, managers, officers, employees, delegates and advisers will be liable for any claim, demand, liability, loss, damage, cost or expense incurred or arising in connection with the exercise or purported exercise of any rights, powers, and discretion hereunder in the absence of gross negligence or wilful misconduct.”

Therefore, the Plaintiff claimed that the Defendant's assertion that the Plaintiff is barred by res judicata is unfounded and irrelevant, as this action marks the first instance where the Plaintiff has invoked clause 15.7 of the Guarantee as a legal argument and the foundation of his claim against the Defendant.

Regarding the Recovery Suit previously filed by the Defendant against the Plaintiff, the Plaintiff contended that it is undisputed that no counterclaim was filed by him in that Suit. Therefore, he is not legally barred from filing the current action against the Defendant based on clause 15.7 of the Guarantee. To support his argument, the Plaintiff cited the High Court case of Perbadanan Pengurusan 3 Two Square v. 3 Two Square Sdn Bhd [2021] (ENCL 116)

The Plaintiff also contended that he recently became aware of the specific details regarding the variation and/or alteration of the Facility Agreement through due diligence conducted on the Borrower, arising from the Borrower's Suit filed against the Defendant in the High Court at Shah Alam. This current action does not involve clause 15.7. Therefore, any allegations by the Defendant that the Plaintiff’s current action is barred by limitation and/or res judicata are baseless and vexatious.

The Borrower’s Suit against the Defendant on 3 March 2021, seeking general damages exceeding RM145,000,000.00 for breach of duty of care. The Plaintiff argued that the Borrower’s appeal against the High Court’s decision to strike out the said Suit is still pending at the Court of Appeal; thus, the Suit has not been fully resolved.

The Plaintiff stated that by filing the Plaintiff's Statement of Defence to oppose the Defendant's claim in the Recovery Suit, the Plaintiff was merely exercising a portion of their rights under the Guarantee. This does not imply a waiver of the Plaintiff's entitlement to initiate the current action against the Defendant for gross negligence and/or wilful misconduct. According to clause 15.9 of the Guarantee, the parties' intention was clear: the Plaintiff does not forfeit a right solely due to partial exercise, delay, or failure to exercise that right.

The Plaintiff contended that the current claim is not an abuse of process nor an attempt to initiate a collateral attack on any judgment, and vehemently denies any related allegations made by the Defendant as untenable. The Plaintiff further asserted that the Defendant’s allegations in its striking out application are merely attempts to obscure the true facts: the Defendant was grossly negligent and engaged in wilful misconduct by failing to disburse the sums of RM18,814,592.01 for Tranche 1, RM14,784,937.35 for Tranche 1’s Project Costs/Purchase Price (Claim No. 23/Drawdown No. 23), RM75,000,000.00 for Tranche 2, and RM150,000,000.00 for Tranche 3.

The Defendant's primary basis for seeking to strike out the Plaintiff’s current action is the doctrine of res judicata.

The Defendant contended that the allegations in the Statement of Claim in the current action mirror those raised in the Plaintiff's Statement of Defence in the Recovery Suit. Undeniably, these allegations have already been adjudicated and dismissed by both the Court of Appeal and the Federal Court. To illustrate these parallels, the Defendant has included a comparative table of the Plaintiff’s arguments in both the Recovery Suit and the current action. For clarity, I am reproducing the aforementioned table for ease of reference. Defence in Recovery Suit Allegations in the Statement of Claim (See: Encl. 8 – pages 297 to 298) (See: Encl. 2 – pages 26 to 28) (See: Encl. 8 – pages 299 and 307) (See: Encl. 2 – pages 27 and 28) Defence in Recovery Suit Allegations in the Statement of Claim (See: Encl. 8 – pages 310 and 311) (See: Encl. 2 – pages 38 and 39)

The same allegations were ventilated and determined by the Court of Appeal and the Federal Court. The Court of Appeal held, amongst others–

The liability of the Plaintiff must be gathered from the express terms of the Guarantee. It is clear that the Guarantee was executed with the intention of protecting BPMB against non-payment by the Borrower and the terms must be given strict interpretation.

(b)

Further, pursuant to clause 5.2 of the Guarantee, the Plaintiff expressly agreed that his liabilities will not be reduced, discharged or adversely affected by “any termination, amendment, variation, novation, supplement or release of or to any of the Security Documents” or “any act or omission which but for this provision might operate to exonerate or discharge or otherwise reduce or extinguish” the liability of the Plaintiff. Therefore, the Plaintiff has contracted his rights away and is precluded from contending that he is entitled to be discharged in equity. The Plaintiff also contracted to pay BPMB without any set-off or counterclaim under clause 8.1.

The Plaintiff’s complaint that BPMB had jeopardised the Project and caused the winding-up of the Borrower are issues that could be raised by the Borrower in the Borrower’s Suit. However, these matters do not affect the liabilities of the Plaintiff under the Guarantee.

The Plaintiff’s liability under the Guarantee is independent of the Facility Agreement. Any claim the Borrower may have against BPMB does not discharge the Plaintiff from his obligation to pay BPMB. (The Court of Appeal’s full judgment can be found in enclosure 8, exhibit BPM-13, pages 458 to 491)

Additionally, the Borrower has raised identical allegations in its Suit. The Defendant argued that despite the Plaintiff not being involved in that Suit, the doctrines of res judicata and estoppel should apply because both the Borrower’s Suit and the present action stem from the same set of facts, background, issues, and circumstances. To substantiate this position, the Defendant referenced the case of Dato’ Sivananthan a/l Shanmugam v Artisan Fokus Sdn Bhd, CA [2016] 3 MLJ 122. I am reproducing a comparative table for easy reference, highlighting the similar allegations raised in both Suits. Borrower’s claim in Borrower’s Suit Allegations in the Statement of Claim (See: Encl. 10 – pages 802 to 803) (See: Encl. 2 – pages 26 to 28) Borrower’s claim in Borrower’s Suit Allegations in the Statement of Claim (See: Encl. 10 – pages 803 to 804 and 816) (See: Encl. 2 – pages 27 and 28) Borrower’s claim in Borrower’s Suit Allegations in the Statement of Claim See: Encl. 8 – pages 816 and 817 See: Encl. 2 – pages 38 and 39

The High Court dismissed the Borrower’s Suit, ruling, inter alia, that it was void ab initio because the Liquidator lacked the authority to sanction the Borrower’s directors to initiate legal action against

Undeterred, the Plaintiff reiterated and relied on the same allegations to contest the Defendant’s Bankruptcy Proceedings against him. I am providing a table once more to highlight the similarities between the Plaintiff’s pleadings in the Bankruptcy Proceedings and the current action. Plaintiff’s allegations in Bankruptcy Proceedings Allegations in the Statement of Claim (See: Encl. 10 – page 950) (See: Encl. 2 – pages 26 to 28) (See: Encl. 10 – pages 953 and 954) (See: Encl. 2 – pages 38 and 39)

The Defendant argued that having unsuccessfully raised these allegations in the Recovery Suit, the Borrower’s Suit, and the Bankruptcy Proceedings, the Plaintiff is now barred by res judicata and estoppel from re-litigating these issues in the current action.

The Defendant argued that the Plaintiff’s claim constitutes an abuse of process. Firstly, the Plaintiff has exhausted all avenues of appeal against the Judgment, which is now final and binding, supported by legal precedents including Badiaddin Mohd Mahidin & Anor v Arab Malaysian Finance Bhd [1998] 2 CLJ 75 (FC); Shahrul Iman bin Abdullah v Pacific & Orient Insurance Co Bhd and another appeal [2020] MLJU 1877 (CA); and Josu Engineering Construction Sdn. Bhd. v TSR Bina Sdn. Bhd. [2014] 11 MLJ 916 (HC). By seeking a discharge from the Guarantee through the current action, the Plaintiff is attempting to challenge the final judgment and mount a collateral attack on the same grounds. This action marks the fifth time the Plaintiff has raised these allegations against BPMB, having previously done so in the Recovery Suit, before three different courts, and in opposing BPMB’s application for leave to commence Bankruptcy Proceedings, all without success. The Plaintiff is merely rebranding the same allegations as "gross negligence or wilful misconduct", which is an attempt to disguise the same baseless allegations.

The Defendant alleged that the Plaintiff only initiated this action against BPMB shortly after being served with the Bankruptcy Notice and after filing his Application to Set Aside the Bankruptcy Notice. Despite having known all the relevant facts from the outset as the Group Chairman of ABN Media Group Sdn Bhd, the Plaintiff’s timing strongly suggests that the current action was filed with a collateral purpose: to attack the Judgment and hinder the Bankruptcy Proceedings. The Defendant argued that the current action was not a genuine attempt to seek redress against BPMB. Hence, based on established legal principles, the Plaintiff's claim is susceptible to being struck out because it clearly constitutes an abuse of the process of the court. [see Malaysia Building Society Bhd v Tan Sri General Ungku Nazaruddin bin Ungku Mohamed, [1998] 2 MLJ 425 (CA); Jasa Keramat Sdn Bhd & Anor v Monatech (M) Sdn Bhd, [1999] 4 CLJ 533 (CA)].

It is well-established that the Defendant should not be subjected to double vexation, and the Plaintiff is precluded from re-litigating identical issues in the current action under the guise of gross negligence and/or wilful misconduct. Permitting such conduct would amount to endorsing multiple actions and piecemeal litigation. In the locus classicus case of Asia Commercial Finance (M) Berhad v. Kawal Teliti Sdn. Bhd., [1995] 3 CLJ 783 the Supreme Court held: - What is res judicata? It simply means a matter adjudged, and its significance lies in its effect of creating an estoppel per rem judicatum. When a matter between two parties has been adjudicated by a Court of competent jurisdiction, the parties and their privies are not permitted to litigate once more the res judicata, because the judgment becomes the truth between such parties, or in other words, the parties should accept it as the truth; res judicata pro veritate accipitur. The public policy of the law is that it is in the public interest that there should be finality in litigation – interest rei publicae ut sit finis litium. It is only just that no one ought to be vexed twice for the same cause of action – nemo debet bis vexari pro eadem causa. Both maxims are the rationales for the doctrine of res judicata, but the earlier maxim has the further elevated status of a question of public policy. Since a res judicata creates an estoppel per rem judicatum, the doctrine of res judicata is really the doctrine of estoppel per rem judicatum, the latter being described sometimes in a rather archaic way as estoppel by record… … The cause of action estoppel arises when rights or liabilities involving a particular right to take a particular action in Court for a particular remedy are determined in a final judgment and such right of action ie. the cause of action, merges into the said final judgment; in layman's language, the cause of action has turned into the said final judgment. The said cause of action may not be re-litigated between the same parties because it is res judicata. In order to prevent multiplicity of actions and also in order to protect the underlying rationales of estoppel per rem judicatum and not to act against them, such estoppel of cause of action has been extended to all other causes of action (based on the same facts or issues) which should have been litigated or asserted in the original earlier action resulting in the final judgment and which were not either deliberately or due to inadvertence. … On the other hand, the issue estoppel literally means simply an issue which a party is estopped from raising in a subsequent proceeding. However, the issue estoppel, in a nutshell, from a consideration of case law, means in law a lot more ie. that neither of the same parties or their privies in a subsequent proceeding is entitled to challenge the correctness of the decision of a previous final judgment in which they, or their privies, were parties. This sounds like explaining a truism, but it is the corollary from that statement that is all important and that could have given birth to the controversies alluded to above; the corollary being that neither of such parties will be allowed to adduce evidence or advance any argument to contradict such decision. In this respect, we respectfully agree with Peter Gibson J in Lawdor v. Gray [1984] 3 All ER 345, 350 who said: “Issue estoppel... prevents contradiction of a previous determination, whereas cause of action estoppel prevents reassertion of the cause of action”.” [emphasis added] (see also: Orchard Circle Sdn Bhd v Pentadbir Tanah Daerah Hulu Langat & Ors, FC [2021] 1 MLJ 180; Crest Worldwide Sdn Bhd v Mudajaya Corporation Berhad, HC [2016] 1 LNS 425)

This Court finds that the Plaintiff's assertion regarding new legal points, including whether he remains liable as a principal debtor when the Facility Agreement has been altered without his consent, lacks merit.

Upon examining the Plaintiff’s pleadings in the current action, it becomes evident that they consist of identical allegations and legal arguments that have been raised multiple times in previous proceedings and consistently dismissed by the courts.

It is apparent that the Plaintiff has repetitively raised the same allegations concerning erratic disbursement, unilateral variation of the Facility, and undervalued sale by the Receiver & Manager (Repeated Allegations) in the Recovery Suit, Borrower’s Suit, and Bankruptcy Proceedings, as illustrated in the comparative tables above.

Undeniably, the Plaintiff’s liability under the Guarantee has been firmly and conclusively established by the Court of Appeal in the Recovery Suit. The Court of Appeal meticulously examined the Repeated Allegations vis-à-vis the express provisions of the Guarantee, confirming the Plaintiff’s obligation to BPMB. The Court’s detailed analysis in its written grounds leaves no doubt that the Plaintiff not only bore liability under the Guarantee but also waived his rights under clause 5.2, thereby precluding any claim for discharge. The pertinent excerpt from the Court of Appeal’s grounds is as follows (see enclosure 8, exhibit BPM-13, pages 458 to 491): “Principal Obligor/Debtor [24] Therefore, from a reading of both clauses 2.2 and 2.3 of the Guarantee, the respondent had given both a guarantee and an indemnity as a principal obligator or principal debtor. This has been reaffirmed by clause 5.3, which provides that the obligations and liabilities expressed to be undertaken by the Respondent/Guarantor under the Guarantee are those of a primary obligor and not merely as a surety. [25] The effect of a principal obligor clause or “principal debtor” ‘clause has been explained by the Federal Court’s judgment delivered by Zulkefli Makinuddin CJ (Malaya) (as he then was) in Andrew Lee Siew Ling v United Overseas Bank (M) Bhd [2013] 1 CLJ 24; [2013] 1 MLJ 449; where it was held that a principal obligor is primarily liable for the principal borrower’s indebtedness to a lender and such a liability is not dependent or secondary to the liability of the principal borrower… [26] In other words, even if the lender (Bank) cannot recover the loan from the principal borrower (ABN) for any reason, the principal obligor (Respondent) is still liable to the lender (Bank) under the principal obligor clause. Accordingly, we are of the considered opinion that the Respondent is primarily liable to the bank under the principal obligor clause for the principal borrower, ABN’s indebtedness. The respondent’s liability is not dependent on or secondary to the liability of the principal borrower, ABN. The guarantee is a stand-alone agreement where the respondent has agreed to be the principal debtor himself…” … [28] However, despite making a finding that the provisions in the Guarantee is in absolute term and that the Respondent is liable for any default in payment by the ABN, the learned Judicial Commissioner had dismissed the Bank’s application for summary judgment on the basis that as a surety, the Respondent is protected under the law of equity when the Bank is said to be acting in an unequitable and unconscionable manner against the borrower, ABN. The learned Judicial Commissioner had accepted the Respondent’s contention that he is discharged from the Guarantee due to the Bank’s unconscionable conduct and failure to act in good faith which he claimed to be the triable issues in this case. [29] The Respondent’s complaint against the Bank is that the Bank had jeopardized the ABN Project and ultimately caused the winding up of ABN by Sony Malaysia Sdn Bhd by the following acts:

the delayed and the erratic disbursement of the Term Loan during the critical gestation period of the ABN

(ii) the unilateral imposition of unreasonable timelines;

(iii) the proposed Equity Capitalization that altered the character of financing;

(iv) the suspension of the Term Loan when the Equity Capitalization was not accepted; and

the rejection of the section 176 Scheme which ultimately led to the Winding-Up Order against ABN .… [31] We are of the considered opinion and we agree with the Bank that the complaints raised by the respondent are issues that can be raised by ABN in Suit No. BA-22NCC-23-03-2021. However, under clause 5.2 of the Guarantee, the respondent has agreed that his liabilities will not be reduced, discharged or adversely affected by “any termination, amendment, variation, novation, supplement or release of or to any of the Security Documents:” Any alleged unilateral variation to the loan agreement executed by ABN has no bearing on the guarantee. Added to that, clause 5.2 also provides that the respondent’s liabilities would not be discharged by “any act or omission… which but for this provision might operate to exonerate or discharge the Guarantor or otherwise reduce or extinguish its liability under this Guarantee.” [32] Further, pursuant to clause 8.1, all sums payable by the Respondent under the Guarantee will be paid in full without any set-off, counterclaim or condition whatsoever. Therefore, pursuant to the said provisions under the Guarantee, the Respondent has clearly contracted his rights away and he is therefore precluded from raising any complaint that he is entitled to be discharged in equity. The learned Judicial Commissioner has clearly erred in law in her finding that the Respondent is protected under the law of equity.” … [34] In Citibank N.A v Ooi Boon Leng & Ors (supra) the Federal Court at 284 held that where the guarantor has abrogated his rights, he cannot resile from his position: “In any event, the contract of guarantee contains express provisions giving the bank the right to do or omit to do certain things without thereby prejudicing its right against the respondents. Clause 8 provides that the bank may recover from the respondents notwithstanding any failure on its part to take any security or that any security given to the bank is invalid. Clause 16 enables the bank at its absolute discretion and without notice to or consent of the respondents to vary or alter the contract between the bank and the company and that any right of the respondents which is inconsistent with the terms of the contract has been waived by them. In other words there was a voluntary waiver of the rights of the respondents to be subrogated on payment of the loan. Accordingly where the respondents have promised to waive any variation or alteration and the bank has proceeded with the performance of the contract on that basis it would be in our opinion inequitable to allow them to resile from the contract.” [emphasis added]

The learned counsel for the Plaintiff argued that there are no issues of res judicata, estoppel, or re-litigation applicable to this present action, which is also not time-barred. This action is rooted in the alleged fraud and fraudulent misconduct by the Defendant. Crucially, the Plaintiff acquired detailed knowledge about the alteration of the Facility Agreement through recent due diligence related to the Borrower's Suit, filed on 3 March 2021. Therefore, the Plaintiff's claim centres on the Defendant’s purported gross negligence and/or wilful misconduct, involving its agents, managers, officers, employees, delegates, and advisers under clause 15.7 of the Guarantee. It is my considered view that the said issue (if any) should have been raised at the earliest opportunity, i.e. during the Recovery Suit. The Plaintiff is precluded from initiating a new action to litigate an issue that was neglected in the previous suit. As established in Asia Commercial Finance (M) Berhad v Kawal Teliti Sdn. Bhd. (supra), the principle of res judicata applies not only to issues that were raised and decided but also extends to issues that could have been raised but were not, whether deliberately or due to negligence or inadvertence, though not actually decided by the court. It is well-established that public policy favours finality in litigation to prevent abuse of the judicial process. Therefore, res judicata encompasses not only issues raised but also those that could have been raised. The Federal Court affirmed this principle in Lin Wen-Chih & Anor v Pacific Forest Industries Sdn. Bhd. & Anor [2023] 5 MLJ 422, upholding the trite principle set forth in Asia Commercial Finance (M) Berhad v Kawal Teliti Sdn. Bhd. (supra) and held as follows: “[35] The Supreme Court preferred the view that issues which might have been and which were not brought forward, either deliberately or due to negligence or inadvertence, though not actually decided by the court, are still covered by the doctrine of res judicata. The justification for holding to such view is, as aptly stated that: “…it represents for one thing, a correct even though broader approach to the scope of issue estoppel. It is warranted by the weight of authorities to be illustrated later. It is completely in accord or resonant with the rationales behind the doctrine of res judicata, in other words, with the doctrine of estoppel per rem judicatum. It is particularly important to bear in mind the question of the public policy that there should be finality in litigation in conjunction with the exploding population; the increasing sophistication of the populace with the law and with the expanding resources of the courts being found always one step behind the resulting increase in litigation.” … [46] To conclude, we think it is appropriate to cite a passage by Lord Shaw (delivering the judgment of the Judicial Committee) in Hoystead and Others v Taxation Commissioner [1926] A C 155 in respect of the application of res judicata, in the following statement: “In the opinion of their Lordships it is settled, first, that the admission of a fact fundamental to the decision arrived at cannot be withdrawn and a fresh litigation started, with a view of obtaining another judgment upon a different assumption of fact; secondly, the same principle applies not only to an erroneous admission of a fundamental fact, but to an erroneous assumption as to the legal quality of that fact. Parties are not permitted to begin fresh litigations because of new views they may entertain of the law of the case, or new versions which they present as to what should be a proper apprehension by the Court of the legal result either of the construction of the documents or the weight of certain circumstances. If this were permitted litigation would have no end, except when legal ingenuity is exhausted. It is a principle of law that this cannot be permitted, and there is abundant authority reiterating that principle. Thirdly, the same principle - namely, that of setting to rest rights of litigants, applies to the case where a point, fundamental to the decision, taken or assumed by the plaintiff and traversable by the defendant, has not been traversed. In that case also a defendant is bound by the judgment, although it may be true enough that subsequent light or ingenuity might suggest some traverse which had not been taken. The same principle of setting parties’ rights to rest applies and estoppel occurs.” [emphasis added]

Notably, the Plaintiff’s claim that he initiated the current action only after recently discovering the variation of the Facility terms through the Borrower’s Suit is both inconsistent and inaccurate. Firstly, the allegations raised by the Borrower in the Borrower’s Suit are identical to those the Plaintiff raised in his Statement of Defence in the Recovery Suit, making his claim of newfound knowledge illogical. Secondly, the Plaintiff himself accepted the terms and conditions stipulated in Letter of Changes 3, which referred to Letters of Changes 1 and 2. Lastly, in his Affidavit in Support of the Application to Set Aside the Bankruptcy Notice, the Plaintiff deposed that he had agreed to the amendments and variations contained in the Letter of Changes. Therefore, the Plaintiff's contention is unfounded.

Additionally, I agree with the Defendant’s argument that the Plaintiff’s reliance on clauses 15.7 and 15.9 of the Guarantee and the absence of a counterclaim in the Recovery Suit, as justifications for the current action, is fundamentally flawed and contrary to established legal principles. The doctrine of res judicata applies here: clause 15.7 is an exclusion clause, and clause 15.9 pertains to the waiver of rights, neither of which permits the Plaintiff to initiate the current action against BPMB. The Plaintiff’s attempt to reframe the same allegations under the guise of gross negligence and/or wilful misconduct under clause 15.7 does not alter the fact that these allegations were previously raised and rejected by the High Court, Court of Appeal and Federal Court.

Moreover, a review of the reliefs sought by the Plaintiff in the current action reveals that his claim essentially aims to impeach or set aside the Judgment granted by the Court of Appeal. It is trite that once a regularly obtained judgment has been perfected, the Court is functus officio, and the matter cannot be re-litigated. In Serac Asia Sdn. Bhd. v Sepakat Insurance Brokers Sdn. Bhd. [2013] 5 MLJ 1, the Federal Court held: “[44] We conclude by saying that once a regularly obtained order or judgment has been perfected, the court is functus officio. The matter as decided vide encl 6 is thus res judicata and cannot be re-litigated. It needs to be emphasised that the order made under encl 6 was appealed and affirmed right up to the Federal Court. It cannot now be revisited or reasserted under any guise in a subsequent proceeding. The issues raised by the respondent in encl 29 could have been brought up during the appeal process. The law does not allow the respondent to have a second bite of the cherry and in the manner as it did. This passage from Tenaga Berhad explains the rationale:… … In our judgment too, the re-litigation of a regularly and properly concluded matter as determined by the court is prohibited by the wide doctrine of res judicata. The judicial process rests on the twin pillars of certainty and finality. A final order or a judgment must therefore be vigorously protected by this doctrine, a position taken by the common law courts ever since Henderson (1843).” [emphasis added]

Thus, a judgment obtained through due process can only be impeached or set aside if the party seeking to do so meets the stringent criteria under section 44 of the Evidence Act 1950 and demonstrates the presence of actual positive fraud practised upon the court. In this case, the Plaintiff did not allege that the Judgment was obtained through fraud, misrepresentation, or suppression of facts. The Defendant cited the Court of Appeal’s decision in Pembangunan Tanah dan Perumahan Sdn Bhd v Raja Qahaarruddin bin Raja Abdul Aziz [2020] 2 MLJ 462. The Court of Appeal held: “[49] An impeachment suit is not to be launched unadvisedly and more so when there is nothing shown of fraud being practised on the court or that the defendant below in Raja Qahaar had misrepresented and suppressed material facts in any way. [50] We are not unaware of the dicta in Chee Pok Choy & Ors v Scotch Leasing Sdn Bhd [2001] 4 MLJ 346 which states as follows: … [51] However this is not a case of active concealment of any material facts or a practice of deceit on the court but rather a case where Raja Qahaar has his version of what happened and PTDP has its version and had the matter gone for trial the sessions court in the initial suit would have to decide whether Raja Qahaar had proved on the balance of probabilities his version or that his version is more probable than that PTDP. [52] Based on the evidence in the affidavits of the parties, at best each one had a different version as to what happened with respect to the ownership of the subject land and whether the plaintiff had failed in its obligation, if any, to transfer the subject land to Raja Qahaar when the subdivided title had been issued. [53] The stage to ascertain which of the two versions is right had come and gone and it is too late to re-litigate the issue by resorting to impeaching the default judgment. The ship has sailed and the horse has bolted.” [emphasis added]

Furthermore, the Federal Court in Seruan Gemilang Makmur Sdn. Bhd. v Kerajaan Negeri Pahang Darul Makmur & Anor [2016] 3 MLJ 1 held: “[39] Our view is that the fraud of which s 44 of the Act speaks refers to an actual fraud and not constructive fraud ie fraud practised by the other side must have prevented the respondents from placing their case before the court. [40] The fraud must be actual positive fraud, a meditated and intentional contrivance to keep the parties and the court in ignorance of the decree by the contrivance (see Patch v Word). [41] The earlier judgment cannot be impeached or set aside on a mere general allegation of fraud. It must be shown with sufficient details how, when, where and in what way the alleged fraud was committed.” [emphasis added]

In the current action, I find that the Plaintiff has significantly failed to meet the high threshold to impeach or set aside the judgment of the Court of Appeal based on fraud.

Upon reviewing the Plaintiff's current action and the cause papers in the previous proceedings, I agree with the Defendant’s assertion that the initiation of the current action by the Plaintiff lacks bona fides. The Plaintiff has instituted this present action, ostensibly alleging gross negligence and/or wilful misconduct by the Defendant by raising issues previously addressed and decided or should have been raised in the Recovery Suit. As argued by the Defendant, it is evident that the filing of the current action serves the collateral purpose of subverting the ongoing Bankruptcy Proceedings. Therefore, it constitutes an abuse of the process of the court. It is trite that such action, not brought in bona fide for obtaining genuine relief but instead for an ulterior or collateral purpose is liable to be struck out as an abuse of the process of the court.

I have considered the authorities relied upon by the Plaintiff in his submission to support the Plaintiff’s contention. In alignment with the Defendant’s argument, I agree that the authorities cited by the Plaintiff are not relevant to the present case and are distinguishable.

As mentioned earlier, the Plaintiff’s action plainly falls under the purview of res judicata, both in its narrow and broad interpretation, as determined in Asia Commercial Finance (M) Berhad v. Kawal Teliti Sdn. Bhd. (supra) and Lin Wen-Chih & Anor v Pacific Forest Industries Sdn. Bhd. & Anor (supra). Therefore, it is plainly and obviously unsustainable. For this reason alone, the Plaintiff’s current action should be struck out accordingly.

Additionally, I find that the Plaintiff’s argument regarding the Defendant’s alleged failure to disclose the original creditor's petition, which was subsequently set aside, does not affect the validity of the Defendant's Notice of Application to strike out the Plaintiff's current action. The creditors' petition was struck out due to a procedural issue, not on its merits, and the validity of the petition is not part of the Plaintiff's pleaded claim against BPMB. Moreover, the allegation of material non-disclosure concerning the creditors' petition was not previously raised by the Plaintiff in his affidavit but was only raised for the first time in the Plaintiff's submission. Thus, I find the argument raised was made from the Bar and it should be rejected accordingly. (see: Ng Hee Thoong & Anor v Public Bank Bhd, CA [1995] 1 MLJ 281 and Yeoh Theam Poh & Anor v Bench Win Sdn Bhd & Anor and other suits, HC [2013] 8 MLJ 109).

On the issue of limitation, this Court agrees with the Defendant’s contention that the Plaintiff’s claim is time-barred. The crux of the Plaintiff’s claim is based on allegations of gross negligence and/or wilful misconduct concerning the erratic disbursement and unilateral variation of the terms of the Facility Agreement.

In accordance with section 6(1) of the Limitation Act 1953, actions based on contract or tort must be initiated within 6 years from the date the cause of action accrued (see: Vista Specialist Eye Center Sdn. Bhd. v Dato’ Loo Son Yong and another appeal, CA [2016]

It is trite that a cause of action based on a contract accrues on the date of breach (see: Nasri v Mesah, FC [1971] 1 MLJ 32; Bounty Dynamics Sdn. Bhd. (formerly known as Media Development Sdn. Bhd.) v Chow Tat Ming & 175 Ors, CA [2016] 1 MLJ 507).

The Plaintiff's claim centres obviously on allegations of delayed disbursement, unilateral imposition of time limits on disbursement, and suspension of the Facility, all occurring before 3 September

Consequently, any potential causes of action for breach of contract or negligence against BPMB based on these allegations (which are denied by BPMB) would have expired by September 2021 at the latest. Even if the Plaintiff’s allegations were true (which are denied by BPMB), the current claim, filed more than 7½ years after the alleged incidents of negligence or misconduct, is time-barred.

Hence, for the abovementioned reasons, I find the Plaintiff’s action is plainly and obviously unsustainable and an abuse of the process of the court. Thus, it ought to be struck out. Therefore, I granted the Defendant’s application in enclosure 6 to strike out the Plaintiff’s claim, with costs awarded to the Defendant in the amount of RM8000.00. Dated: 21 June 2024 -sgd-JAMHIRAH ALI JUDICIAL COMMISSIONER High Court of Malaya at Shah Alam (NCVC 1) To the parties’ solicitors: For the Plaintiff : Maurice Ernest Scully & Tan Wee Jiun (Messrs M Scully) For the Defendant : Chia Oh Sheng, Wong Han Wey & Michelle Louis (Messrs Lee Hishammuddin Allen & Gledhill)