Majlis Amanah Rakyat (MARA) v SHABRI BIN SULONG (WA-22M-131-02/2024)

The Qardhul Hasan facility was meant to be Islamic finance's simplest transaction: lend RM5 million, return RM5 million, no profit element, no strings attached. Yet this benevolent loan has metastasized into procedural warfare over whether the borrower can wield res judicata as an impenetrable vault door against the lender’s claim. This requires the court to determine whether such principle operates as an absolute bar in circumstances where the earlier judgment was not a determination on the substantive merits but rather a finding that the action was procedurally defective and prematurely commenced.

The factual matrix underlying this dispute is relatively straightforward, though the procedural history is somewhat complex. On 14 March 2013, the Plaintiff granted the Defendant a financing facility amounting to RM5,000,000 under a program known as "The Baron," structured under the Islamic concept of Qardhul Hasan. The facility was documented in a Facility Agreement dated 17 April 2013, which contained specific provisions regarding repayment, default, and the Plaintiff's remedies. The Defendant, a director and major shareholder of My Impaxt Sdn Bhd, had applied for this facility intending to utilise it for business purposes.

The Facility Agreement required the Defendant to make monthly installments of RM41,666.00 for 119 months, with a final installment of RM41,746.00 in the 120th month. The Defendant provided security for this facility by executing a Charge on Shares and a Memorandum of Deposit of a fixed deposit of RM500,000 with Bank Islam (M) Berhad. Additionally, on 15 July 2019, the parties entered into a restructuring arrangement documented in a "Borang Perbincangan Bersama Peminjam/Penjamin/Penyewa/Pelanggan," whereby the Defendant agreed to resume payments of RM3,000.00 per month.

Despite these arrangements, the Defendant defaulted on his payment obligations. The Plaintiff issued several demand letters through its solicitors, including a notice dated 11 September 2020 demanding settlement of arrears amounting to RM2,288,680.82 and notifying the Defendant of its intention to enforce the security. The Plaintiff subsequently successfully encashed the fixed deposit, receiving RM629,853.07 on 18 November 2020. However, the charge over the Defendant's shares could not be enforced as the company had ceased operations and was being wound up.

On 9 February 2024, the Plaintiff commenced the first action (WA-22M-6-01/2022) seeking recovery of the entire outstanding sum. That matter proceeded to full trial, where two witnesses testified: Mohd Salleh bin Hussin for the Plaintiff and the Defendant himself. The learned Judge hearing that matter delivered a decision on 20 September 2023, dismissing the Plaintiff's claim with costs. The court found that the Defendant had indeed breached the Facility Agreement by failing to make the required payments. However, the court concluded that the Plaintiff was not entitled to recover the entire outstanding amount because it had failed to comply with Clause 10 of the Facility Agreement. Specifically, the Plaintiff had not issued a formal termination notice to the Defendant as required by the agreement. The court held that without such notice, the facility remained alive, and the indebtedness had not crystallised into an amount "due and payable." The judgment emphasised that the Plaintiff was at liberty to issue the required termination notice and thereafter commence fresh proceedings if the Defendant remained in default.

Following this decision, the Plaintiff, on 22 January 2024, issued a formal Termination Notice and Demand to the Defendant, which was served by registered post at the Defendant's address as stipulated in the Facility Agreement. The notice expressly terminated the facility and demanded payment of the entire outstanding sum of RM3,452,287.13 as at 15 January 2024. The Defendant failed to comply with this demand, prompting the Plaintiff to file the present action on 9 February 2024.

Upon the full trial of the matter, I had on 14 January 2026 allowed the Plaintiff’s claim with costs of RM25,000.00. The Defendant thereafter filed his Notice of Appeal on 23 January 2026.

The following issues fall for determination by this court:

(i) Whether the Plaintiff's present action is barred by the doctrine of res judicata and/or cause of action estoppel;

Learned counsel for the Defendant, Encik Huzir Bin Shamsul Bahrin maintains that the doctrine of res judicata operates as a complete bar to the Plaintiff's claim. He submits that the parties are identical, the subject matter is the same Qardhul Hasan facility, and the documents relied upon are indistinguishable from those in the first action. He argues that the only distinction i.e. the issuance of a termination notice after the first judgment, is an impermissible "afterthought" designed to circumvent the previous adverse decision.

In support of this proposition, counsel relies heavily on the Supreme Court decision in Asia Commercial Finance (M) Bhd v Kawal Teliti Sdn Bhd [1995] 3 MLJ 189 (SC), which established that where a cause of action has been determined in a final judgment, the same parties cannot relitigate matters that were or ought to have been raised in the earlier proceedings. Counsel further cites Dato' Sivananthan a/l Shanmugam v Artisan Fokus Sdn Bhd [2016] 3 MLJ 122 (CA) for the proposition that issue estoppel can apply even where the parties differ, and Metreco Industries Sdn Bhd v Muhammad Fadhil bin Ab Wahid and another appeal [2019] 12 MLJ 164 (CA) for the principle that res judicata applies where the matrix of facts is identical.

Learned counsel for the Defendant also challenges the validity of the Certificate of Indebtedness relied upon by the Plaintiff, arguing that it does not comply with Clause 16.2 of the Facility Agreement and is merely a computer-generated statement rather than a conclusive certificate. He contends that the Plaintiff's failure to call the officer who prepared the certificate renders the document inadmissible hearsay. Plaintiff’s Contentions

Learned counsel or the Plaintiff, Encik Mohd Munzeer Biin Zainul Abidin contends that the doctrine of res judicata has no application to the present circumstances. He submits that the first action was dismissed not on its substantive merits but purely on the ground of prematurity i.e. the Plaintiff had failed to issue a termination notice as mandated by Clause 10. Counsel relies on the Court of Appeal decision in The Pacific Bank Bhd v Chan Peng Leong [1998] 2 MLJ 613 (CA), which held that where an action is brought prematurely because a required demand or notice has not been issued, the dismissal does not create a cause of action estoppel. The Plaintiff is at liberty to issue the required notice and subsequently commence fresh proceedings if the Defendant remains in default.

Learned counsel further distinguishes the authorities relied upon by the Defendant, arguing that Asia Commercial Finance involved identical causes of action with no new element, whereas the present case involves a fundamentally different factual matrix i.e. the existence of a termination notice which transforms the legal relationship between the parties by crystallising the debt.

Counsel further submits that to apply res judicata would be unjust and contrary to public policy, citing Ng Kim Gek & Anor v New Age Portfolio Sdn Bhd [2022] 3 MLRA 48 (CA) for the proposition that courts have discretion to decline applying the doctrine where injustice would result.

The court must first address the threshold objection raised by the Defendant regarding res judicata. This doctrine, rooted in public policy considerations of ensuring finality in litigation and preventing vexatious multiplicity of actions, is not an absolute rule but must be applied with regard to the justice of the particular case. As the celebrated judgment in Asia Commercial Finance explains, the doctrine encompasses two forms of estoppel: cause of action estoppel, which prevents the reassertion of a cause of action that has merged in a final judgment; and issue estoppel, which prevents contradiction of a previous determination. The critical question is whether the first judgment "necessarily and with precision" determined the points now in contention, to adopt the language of the Privy Council in Kok Hoong v Leong Cheong Kweng Mines Ltd [1964] MLJ 49 (PC), as applied by the Court of Appeal in The Pacific Bank.

The Defendant's reliance on Asia Commercial Finance is misplaced. In that case, the borrower claimed damages for the lender's failure to release the full loan amount. The first proceeding was an originating motion to set aside the lender's enforcement action; the second was a writ action claiming damages. The Federal Court found both proceedings rested on identical facts and issues concerning the lender's refusal to release the balance of the loan. The distinction between the present case is stark. The first action was not dismissed because the Plaintiff lacked substantive entitlement to the debt, but because it had failed to satisfy a procedural precondition to enforcing that entitlement. The court specifically held that the Plaintiff could issue the required termination notice and thereafter commence fresh proceedings. The present action is the direct consequence of the Plaintiff following that precise course of action.

The Defendant's submission that the termination notice is a mere "afterthought" fundamentally misconceives the nature of the earlier judgment. The learned Judge did not suggest that the Plaintiff's failure to issue a termination notice was a minor technicality that could be ignored; rather, it was a condition precedent to the accrual of a cause of action. Until the facility was properly terminated in accordance with Clause 10, the entire outstanding amount had not become "due and payable." The Defendant, in his evidence, acknowledged that he was aware the facility remained alive after the first judgment and that he continued to be bound by its terms. His subsequent failure to comply with the termination notice, served in accordance with the agreement, gave rise to a fresh breach and a new cause of action.

The case of The Pacific Bank is directly on point. There, a guarantee required a demand to be made before action could be instituted. The Plaintiff's first action failed because the demand was defective. The Court of Appeal held that the dismissal did not bar a second action based on a proper demand, as no cause of action existed until a valid demand was made. Court of Appeal referred to the case of Ruben v Royal Bank of Canada (1980) 110 DLR 501 (CA), where Hughes CJ NB, delivering the judgment of the New Brunswick Court of Appeal, observed as follows: “Under para 12 of the guarantee, no cause of action under the guarantee could be instituted ‘until demand of payment has been made’. In his defence, the defendant did not specifically deny or plead as a defence the absence of the demand of payment, and it appears from the material before us, that the issue as to the sufficiency of the letter of 27 May 1977, as a demand, was not specifically raised until the hearing of the plaintiff's application to Mr Justice Stevenson for judgment on certain admissions made by the defendant upon his examination for discovery, whereupon the parties agreed Mr Justice Stevenson should consider and determine whether the letter was a sufficient demand. In his judgment on that issue, he held it was not. If that decision is correct, the action was brought prematurely, and had the action been continued and been dismissed on the ground of the absence of a demand, judgment therein would not have been a bar to a second action brought after a proper demand had been made. (Emphasis added.)”

This reasoning applies with equal force to the present case. The first action was premature because the Plaintiff had not issued the termination notice required to crystallise the debt. The dismissal was therefore not a determination on the substantive merits and does not create a cause of action estoppel.

The Defendant's reliance on Dato' Sivananthan is similarly misplaced. That case concerned a situation where two different entities were claiming the same sum of money, leading to the risk of double recovery. The court applied issue estoppel to prevent an abuse of process. The present case involves no such risk. The Defendant acknowledges the debt and does not dispute that only one payment is due. The only issue is whether the Plaintiff has now satisfied the procedural requirements to enforce that debt. The termination notice has been validly issued and served in accordance with Clause 16.6 of the Facility Agreement. The Defendant admitted in cross-examination that he received the notice and that it was served at his address. He further acknowledged that under the agreement, service by registered post is deemed effective three days after posting.

The Defendant's attempt to distinguish The Pacific Bank on the basis that it involved a guarantee rather than a loan agreement is unconvincing. The legal principle articulated in that case is not confined to guarantees but applies generally to situations where a cause of action accrues only upon the occurrence of a specified event or the issuance of a required notice. The facility agreement in this case expressly requires termination before the entire indebtedness becomes due and payable. The Plaintiff's cause of action therefore accrued only upon valid termination.

The court must also consider whether the doctrine of res judicata should be applied in the wider sense, as articulated in Lin Wen-Chih & Anor v Pacific Forest Industries Sdn Bhd & Anor [2023] 5 MLJ 422 (FC), which extends the doctrine to matters that could have been raised with reasonable diligence in the earlier proceedings. The Defendant argues that the Plaintiff could have issued the termination notice before the first trial and should be estopped from doing so now. However, this argument ignores the court's own recognition in the first judgment that the Plaintiff's interpretation of Clause 10.2 was erroneous. The Plaintiff genuinely, though mistakenly, believed that the clause entitled it to proceed without a formal termination notice. The court's decision corrected this misinterpretation. To now punish the Plaintiff for following the court's guidance would be manifestly unjust and would defeat the purpose of the litigation process, which is to achieve substantive justice, not merely procedural finality.

The court is fortified in this conclusion by the decision in Ng Kim Gek & Anor v New Age Portfolio Sdn Bhd (supra) where the Court of Appeal expressly recognised that the doctrine of res judicata is not an inflexible rule and that courts may decline to apply it where injustice would result. The court there stated: "the purpose of the doctrine of res judicata is to achieve justice, [and] a court may decline to apply it where to do so would lead to an unjust result." To apply res judicata in this case would allow the Defendant to retain the benefit of the financing facility while avoiding his obligation to repay, merely because of the Plaintiff's initial procedural misstep which has now been rectified.

Turning to the substantive merits of the Plaintiff's claim, the Defendant has not seriously disputed that he executed the Facility Agreement and defaulted on his payment obligations. In cross-examination, he admitted that he signed the offer letter and facility agreement, that he stopped making payments after November 2016, and that he remains in arrears. He also acknowledged that the facility was intended to be repaid over ten years and that all payments are now due. The Defendant's only substantive defence appears to be that he disputes the precise amount claimed, but he has failed to adduce any evidence to contradict the Certificate of Indebtedness issued by the Plaintiff.

The Defendant's challenge to the Certificate of Indebtedness is without merit. Clause 16.2 of the Facility Agreement expressly provides that a statement certified by an authorised officer of MARA "shall, unless otherwise provided in this Agreement, and save for manifest error, be conclusive and binding on the Customer for whatever purpose including as being conclusive evidence of indebtedness in the court of law." The clause further provides that such statement may be computer-generated and require no signature. The certificate produced by the Plaintiff (at Bundle 1, page 252) is a computer-generated statement signed by Fadzil bin Kamarudin, an authorised officer of the Plaintiff, certifying that the Defendant is indebted in the sum of RM3,452,287.13 as at 15 January 2024. The Defendant has not demonstrated any manifest error in this calculation. His counsel's suggestion that the officer who prepared the certificate should have been called as a witness ignores the explicit contractual provision that such certificate is conclusive evidence, shifting the burden to the Defendant to prove error. The Plaintiff's witness, Mohd Salleh bin Hussin, confirmed his knowledge of the certificate and its contents. The Defendant had ample opportunity to challenge the accuracy of the certificate during cross-examination but failed to do so.

The court must also address the Defendant's reliance on Cempaka Finance Bhd v Ho Lai Ying (trading as KH Trading) & Anor [2006] 3 CLJ 544 (FC). That case concerned the conclusive effect of a certificate of indebtedness under a financing agreement. The Federal Court held that such clauses are valid and binding, operating in the field of adjectival law to excuse the Plaintiff from adducing detailed proof of debt. The Defendant's attempt to distinguish that case on the basis that the Plaintiff here failed to call the certifying officer is unavailing. The agreement explicitly contemplates that the certificate may be computer-generated and that no signature is required. The Plaintiff has exceeded the minimum contractual requirements by having the certificate signed by an authorised officer. The Defendant has failed to discharge the heavy burden of proving manifest error.

The Defendant's submission that the Plaintiff's action is an abuse of process is also rejected. An abuse of process occurs where proceedings are initiated for an ulterior motive or in a manner that would bring the administration of justice into disrepute. The Plaintiff's action is brought to enforce a legitimate commercial debt. The fact that it follows an earlier unsuccessful attempt does not render it abusive, particularly when the earlier judgment expressly contemplated this course of action.

For the foregoing reasons, the court finds that the Defendant's objection based on res judicata must fail. The first action was dismissed because it was premature; the court's judgment did not determine the substantive merits of the Plaintiff's claim but merely identified a procedural defect. That defect has now been cured by the issuance of a valid termination notice in accordance with the Facility Agreement. A new cause of action has therefore accrued, and the Plaintiff is entitled to pursue it.

On the substantive merits, the Plaintiff has established:

(a) A valid and binding Facility Agreement with the Defendant;

(b) The Defendant's breach of the payment obligations under the agreement;

(c) Valid termination of the facility in accordance with Clause 10;

(d) The Defendant's continuing default despite termination; and

(e) A conclusive Certificate of Indebtedness establishing the quantum of debt, which the Defendant has failed to challenge by proof of manifest error.

The Defendant has admitted in evidence that he is the party to the agreement, that he defaulted on payments, and that he remains in arrears. He has not adduced any credible evidence to dispute the amount claimed. The court therefore finds that the Defendant is indebted to the Plaintiff in the sum of RM3,452,287.13 as at 15 January 2024.

Accordingly, the court enters judgment for the Plaintiff against the Defendant for:

(a) The sum of RM3,452,287.13;

(b) Interest thereon at the rate of 5% per annum from the date of judgment until full realisation; and

(c) Costs of RM25,000.00 to the Plaintiff. Dated: 28th January 2026 Yusrin Faidz Bin Yusoff Judicial Commissioner High Court of Malaya Kuala Lumpur Counsel for the Plaintiff: Mohd Munzeer Biin Zainul Abidin (Together with Nabilah Binti Din & Amrah Binti Mohd Khairul Anuar) Messrs Yusfarizal Aziz & Zaid, Unit 01-26 & 01-27, Maxim Citylights Sentul, No. 25 Jalan Sentul Perdana, 51000 Kuala Lumpur. Counsel for the Defendant: Huzir Bin Shamsul Bahrin & (Together with Nur Neena Chirani Binti Aqmar Hisham) Messrs. Azam Baba & Aqmar 3-1, Jalan 10/23A, Medan Makmur, Off Jalan Usahawan, 53200 Setapak, Kuala Lumpur. CASE REFERENCE:

Asia Commercial Finance (M) Bhd v Kawal Teliti Sdn Bhd [1995] 3 MLJ 189 (SC).

Dato' Sivananthan a/l Shanmugam v Artisan Fokus Sdn Bhd [2016] 3 MLJ 122 (CA).

Metreco Industries Sdn Bhd v Muhammad Fadhil bin Ab Wahid and another appeal [2019] 12 MLJ 164 (CA).

The Pacific Bank Bhd v Chan Peng Leong [1998] 2 MLJ

Ng Kim Gek & Anor v New Age Portfolio Sdn Bhd [2022] 3

Kok Hoong v Leong Cheong Kweng Mines Ltd [1964] MLJ

Ruben v Royal Bank of Canada (1980) 110 DLR 501 (CA).

Lin Wen-Chih & Anor v Pacific Forest Industries Sdn Bhd & Anor [2023] 5 MLJ 422 (FC).

Cempaka Finance Bhd v Ho Lai Ying (trading as KH Trading) & Anor [2006] 3 CLJ 544 (FC).