Malayan Banking Berhad v LYF Brothers Construction Sdn Bhd & 2 Lg (WA-22NCC-241-06/2018)

LYF BROTHERS CONSTRUCTION SDN BHD (Company No.: 971160-P)

LAI YUEN FATT (NRIC No.: 761027-14-5135)

LAI YUN TUNG (NRIC No.: 800522-14-5705) … DEFENDANTS

This case concerns an application by the Plaintiff for summary judgment against the Defendants. I have allowed the application as against the 2nd and 3rd Defendants and struck out the action against the 1st Defendant with liberty to file afresh. These are the full reasons for my decision. 2

The Plaintiff is Malayan Banking Berhad.

Plaintiff has granted the 1st Defendant three (3) banking facilities of Overdraft Flexi 1 (OD Flexi 1) for RM1,717,200.00 (Account No. 512361- 523250), Overdraft Flexi 2 (OD Flexi 2) for RM858,600.00 (Account No. 512361-523243) and Overdraft Flexi 3 (OD Flexi 3) for RM858,600.00 (Account No. 512361-520731) through Letter of Offer dated 6.10.2016 and All Monies Facility Agreement dated 20.12.2016, which were guaranteed and indemnified by three (3) separate Letters of Guarantee and Indemnity all dated 20.12.2016 executed by the 2nd and 3rd Defendants for Overdraft Flexi 1 Facility (OD Flexi 1) (Account No. 512361-523250), Overdraft Flexi 2 Facility (OD Flexi 2) (Account No. 512361-523243) and Overdraft Flexi 3 Facility (OD Flexi 3) (Account No. 512361-520731) respectively.

The Defendants defaulted in their repayments of the Facilities and the amount outstanding is stated in the Plaintiff’s Certificate of Indebtedness as at 30.4.2018 . 3

Due to the default by the Defendants, the Plaintiff through its Solicitor issued a Letter of Demand dated 1.6.2018 addressed to the 1st Defendant and to the 2nd and 3rd Defendants to terminate the Facilities and demand from the Defendants the amount outstanding, interest and costs.

This is an application for summary judgment under Order 14 of the Rules of Court 2012 (ROC 2012). It is established law that once an Order 14 application is demonstrated to be properly filed, the burden shifts and rests on the Defendant who seeks to resist the application to raise a defence which shows a “bona fide triable isuse”, in the sense of an issue which justifies and warrants the matter to be considered at a full trial.

This is in keeping with the requirements of Order 14 r 3 of the ROC 2012 which provides that unless the Defendant satisfies the Court with respect to the claim, or part of a claim, to which the application relates that: 4 a) There is an issue or question in dispute which ought to be tried; or b) There ought for some other reason to be a trial of that claim or part thereof; c) 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.

In the often quoted decision of the former Supreme Court in National Company For Foreign Trade v Kayu Raya Sdn Bhd [1984] 2 MLJ 300 it was authoritatively 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; 5 The statement of claim must have been served on the Defendant; and The affidavit in support of the application must comply with the requirements of Rule 2 of 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.”

In this case, the Plaintiff has satisfied these preliminary requirements and this is not disputed by the Defendant. The burden is now firmly on the Defendant to show one or more triable issues that does not justify summary judgment to be entered against the Defendant. If the Defendant can show even one triable issue, this Court will not grant summary judgment. But it has to be a genuine triable issue. As stated by the Federal Court in Voo Min En & Ors v Leong Chung Fatt [1982] 2 MLJ 241, it is not enough for a defendant to raise an issue or any issue. The defendant must instead raise such an issue as would require a trial in order to determine it. 6

I would also like to refer to the leading judgment of the former Supreme Court on summary judgment applications in Bank Negara Malaysia v Mohd Ismail & Ors [1992] 1 MLJ 400 which held as follows: “In an application under O. 14, the court has to be satisfied on affidavit evidence that the defence has not only raised an issue but also that the said issue is triable. The determination of whether an issue is or is not triable depends on the facts or the law arising from each case as disclosed in the affidavit evidence before the court. A complete defence need not be shown. The defence set up need only show that there is a triable issue. Under an O 14 application, the duty of a judge does not end as soon as a fact is asserted by one party and denied or disputed by the other in an affidavit. Where such assertion, denial or dispute is equivocal, or lacking in precision or is inconsistent with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable in itself, then the judge has a duty to reject such assertion or denial, thereby rendering the issue not triable. Unless this principle is adhered to, a judge is in no position to exercise his discretion judicially in an O 14 application.”

The 1st Defendant has been wound up and the Plaintiff cannot proceed against the 1st Defendant. Accordingly, I have struck out the claim against the 1st Defendant with liberty to file afresh. 7

The Defendants only raised 2 issues. Firstly, the Defendants submit that the interest was calculated erroneously. The Defendants did not condescend to particulars. Pursuant to the agreement between the Plaintiff and the 1st Defendant, the Plaintiff is entitled to charge interest and late payment charges. In the case of HSBC Bank Malaysia Bhd (formerly known as Hong Kong Bank Malaysia Bhd) v L H Timber Products Sdn Bhd ( formerly known as Ho Lim Sawmill Sdn Bhd) & Ors [2005] 6 MLJ 625, the court held as follows: “[52] The plaintiff vehemently denied that the late interest charges amount to a penalty clause. According to the plaintiff, the defendants did not adduce evidence that that was the case in their affidavits. The stand of the plaintiff was quite simple. That the said agreements contained terms and conditions that the plaintiff was and is entitled to late interest charges. It would be ideal, at this juncture, to refer to the case of Perbadanan Pembangunan Ekonomi Sarawak v Sarawak Motor Industries Bhd [1989] 3 MLJ 246 where the High Court criticised the affidavit affirmed by the defendants there which did not condescend into particulars as to how or why the interests claimed were said to be without basis. The same would equally be true in regard to the affidavits of the defendants here. [53] The plaintiff further submitted that the defendants have not proven that the interests charged were excessive in nature or that it was never agreed 8 upon. It must be borne in mind that by virtue of the said agreements the plaintiff was and is entitled to charge late interest charges. In the words of Siti Norma Yaakob JCA (now Chief Judge of Malaya) in Pusat Bandar Damansara Sdn Bhd & Anor v Yap Han Soo & Sons Sdn Bhd [2000] 1 MLJ 513 (CA) at p 524: To bring that increased or penalty clause within the ambit of s 75, it must first be shown that it was excessive in nature. The fact that it was an agreed penalty interest as opposed to one that was fixed unilaterally by the appellants, lends support to my conclusion that it could not have been that excessive to enable the respondent to agree to that rate of interest to be charged. [54] Now, applying what her Ladyship had said in Pusat Bandar Damansara Sdn Bhd, it would be appropriate to say that the parties have agreed that the plaintiff was and is entitled to charge late interest charges and, consequently, it was not open to the defendants to raise an objection to the very idea which they had agreed upon”.

I am of the view that this issue is not a triable issue.

As for the Plaintiff relying on the certificate of indebtedness, clause 11 of the Guarantee provides that a statement signed by the Plaintiff’s manager, secretary or any one of its officers as to the moneys and 9 liabilities for the time being due or incurred to the Plaintiff from or by the 1st Defendant shall be final and conclusive evidence against the 2nd and 3rd Defendants for all purposes including legal proceedings.

In the case of Cempaka Finance Bhd v Ho Lai Ying ( trading as KH Trading ) & Anor [2006] 2 MLJ 685, the Federal Court held as follows: [10] This observation appeared to have escaped the attention of the Court of Appeal in the present case. In the result, the Court of Appeal took the position that the conclusiveness of the certificate of indebtedness exh P3 was binding only upon the parties and that the court would still have to determine whether sufficient evidence had been adduced to prove quantum and the correctness of the amount claimed. With respect, such a proposition goes against the entrenched principles enunciated by Raja Azlan Shah CJ (Malaya) (as His Highness then was) in Citibank NA v Ooi Boon Leong & Ors [1981] 1 MLJ 282 when he said, inter alia: We have often said in this court many a time that where the issues are clear and the matter of substance can be decided once and for all without going to trial there is no reason why the assistant registrar or the judge in chambers, or, for that matter, this court shall not deal with the whole matter under the RSC O 14 procedure. In the present case, the guarantee contains a clause which enables the bank by producing 10 a certificate of indebtedness by its officer to dispense with legal proof of the actual indebtedness of the respondents. … It means that, for the purpose of fixing liability of the respondents, the company's indebtedness may be ascertained conclusively by a certificate. [11] The above dictum establishes firmly the conclusive nature and extent of a certificate of indebtedness. A certificate of indebtedness operates in the field of adjectival law. It excuses the plaintiff from adducing proof of debt. Such a certificate shifts the burden onto the defendant to disprove the amount claim.”

The Plaintiff is entitled to rely on the certificate of indebtedness to prove the indebtedness of the Defendants. This is also not a triable issue.

In the premises, I am of the view that the Defendants have not raised any triable issues and I allowed the summary judgment against the 2nd and 3rd Defendants with costs. Wong Chee Lin Judge Kuala Lumpur High Court Dated: 14th September, 2018 11 Solicitors for the Plaintiff Yeap Cheng Hoe Messrs CH Yeap Maluda Cheh Advocates & Solicitors No. 18-3A, Udarama Komplek Jalan 3/64A, Off Jalan Ipoh 50350 Kuala Lumpur Tel : 03-4041 0405 Fax: 03-4041 1536 Solicitors for the Defendants Khoo Ai Teng Messrs Ng Kee Way & Co Advocates & Solicitors No. 29-2, Jalan Puteri 5/7 Bandar Puteri, 47100 Puchong