OCBC Al-Amin Bank Berhad v Credence Property Management Sdn Bhd & 2 Yang Lain (22M-99-05/2017)

CREDENCE PROPERTY MANAGEMENT

2.

GAN LAI MENG (NRIC NO. 621103-05-5306/6917732) … DEFENDANTS BEFORE YA KHADIJAH BINTI IDRIS JUDICIAL COMMISSIONER 2 GROUNDS OF JUDGMENT Introduction [1] The First, Second and Third Defendants filed an application (Enclosure 24) seeking an order for the execution of the Summary Judgment obtained against them be stayed pending their appeal to the Court of Appeal against the decision granting Summary Judgment. [2] The First, Second and Third Defendants application was dismissed. Aggrieved by the said decision, all the Defendants appealed (Rayuan Sivil No. W-02(IM)(MUA)-1122-05/2018). Parties [3] Plaintiff, OCBC Al-Amin Bank Berhad, is a company incorporated in Malaysia and it is in the business of providing Islamic banking services. 3 [4] The First Defendant, Credence Property Management Sdn Bhd (1st Defendant) and the Second Defendant, Elitprop Sdn Bhd (2nd Defendant) are both body corporate incorporated in Malaysia. [5] The Third Defendant, one Gan Lai Meng (3rd Defendant) an individual who at all material time stood guarantor for the 1st Defendant. Factual background [6] The plaintiff vide letters dated 28 April 2013 and 16 June 2014 granted to the 1st Defendant a financing facility under the Ijarah Muntahiah bi Al-Tamlik in the sum of RM4,500,000.00 for the purchase of a property held under GM5486, Lot 1866, Mukim Klang. [7] Pursuant thereto the Plaintiff and the 1st Defendant executed the following documents –

Plaintiff’s Product Terms dated 29 April 2014;

Asset Purchase Agreement dated 16 July 2014;

Ijarah Agreement dated 16 July 2014; and

Facilitiy Agreement dated 16 July 2014. 4 [8] In consideration of the Plaintiff’s agreement to grant the facilities, the 2nd and 3rd Defendants executed a joint and several guarantee in favour of the Plaintiff via two separate Letter of Guarantee both dated 10 July 2014. Under the terms of the guarantee the 2nd and 3rd Defendants agreed that they are not merely sureties but also as principal debtors in respect of the facility obtained by the 1st Defendant. [9] The Plaintiff vide its solicitor’s letter dated 13 March 2017 declared an event of default pursuant to the Facility Agreement and demanded for the sum of indebtedness amounting to RM3,811,167.99 as at 28 February 2017. The 1st, 2nd and 3rd Defendants have failed, refused and/or neglected to pay the amount demanded under the said letter. [10] The Plaintiff commenced civil action against all the Defendants via WA-22M-99-05/2017 wherefore the Plaintiff claim jointly and severally against the 1st to the 3rd Defendants, inter alia, the following –

RM3,811,167.99 as at 28 February 2017;

compensation/ta’wid at the rate of 1% per annum on all the indebted sum from 1 March 2017 up to (1) day before date of judgment; and 5

compensation/ta’wid then at current overnight rate of Islamic Interbank Money Market (IIMM), review every month, from the date of judgment until the date of full realization. [11] On 27 October 2017, the Plaintiff’s application for summary judgment was allowed against the 1st to the 3rd Defendants. As the norm, all the Defendants filed their appeals in the Court of Appeal (Notice of Appeal dated 24 November 2017) against the Summary Judgment. This is followed by the 1st to the 3rd Defendants’ application (Enclosure 24) under Order 92 rule 4 of the RoC 2012 seeking for stay of execution of the Summary Judgment pending disposal of their appeals in the Court of Appeal. Enclosure 24 [12] The 1st to the 3rd Defendants cited the following reasons to justify the stay of execution of the Summary Judgment –

the appeal in the Court of Appeal will be rendered nugatory if stay is not granted 6

if stay is not granted all the Defendants will be adversely prejudiced which cannot be compensated with costs. All the Defendants will lost their reputation, companies and the assets thereto. The Defendants’ financial standing will also be adversely affected

the Defendants submit their appeals lodged with the Court of Appeal are meritorious and cited the following issues:

the Plaintiff’s claim is unlawful and unfounded as the Defendants are not indebted to the Plaintiff in the sum of RM3,811,167.99. The Plaintiff failed to provide to the Defendants the quantification and justification of the sum RM3,811,167.99

(ii) the Plaintiff failed to serve on the Defendants a certification or confirmation in respect of the amount owed by the Defendants to the Plaintiff under the Facility Agreement

(iii) the Defendants did not receive any notice or letters or reminder from the Plaintiff in relation to the Facility Agreement. The Defendants believe they could have settled the debt (if any) to the Plaintiff amicably 7

(iv) the Plaintiff via its representation has agreed to the Defendants’ request for the facility be restructured and that legal proceedings against the Defendants be suspended. Pursuant to the agreement, the 1st Defendant had made payment vide cheque No. MBB 855103 on 12 May 2017. However the Plaintiff proceeded with legal proceedings

the Plaintiff’s claim against all the Defendants will result in unjust enrichment and it is oppressive and malicious

(vi) the Plaintiff will not be prejudiced if the execution is stayed

(vii) the stay is required to maintain the status quo between Plaintiff and Defendant. Plaintiff’s contentions [13] The Defendants’ appeal at the Court of Appeal is not a special circumstances. The Plaintiff cited s. 73 of the Courts of Judicature Act 1964 (CJA) which provides that an appeal itself shall not operate as a stay of execution (Perwira Affin Bank Berhad v Haji Zakaria Bin Haji Ismail & 7 Ors [1998] 3 AMR 2719). 8 [14] The Defendants’ application for a stay of the Summary Judgment is an abuse of the process of court intended to delay the Plaintiff’s claim under the Facility Agreement. By the conduct of the Defendants the Plaintiff is being deprived from enjoying the fruits of its litigation. Thus the Plaintiff is prejudiced. [15] The Defendants allegations in respect of the facility (stated at paragrapah 12(c) above) has been ventilated at the Summary Judgment stage and as such the issues raised is not relevant and ought to be ignored by the court. [16] The issue of re-structuring of the facility was never raised by the Defendants at the hearing of the Summary Judgment stage. The law [17] The 1st to the 3rd Defendants applied for this court to exercise its inherent power to grant a stay of execution of the Summary Judgment. Power of the court to grant a stay is discretionary and such power must be exercised judiciously. It is trite law that for the court to grant stay, the applicant must demonstrate the existence of special circumstances. 9 [18] As to what amount to special circumstances, the Court of Appeal in Ming Ann Holdings Sdn Bhd v Danaharta Urus Sdn Bhd [2003] MLJ 49 held – … the special circumstances must be special, not ordinary, common or usual circumstances and that go to the execution of the judgment and not to the validity or correctness of the judgment (or merits of the appeal). (emphasis added) [19] The Federal Court in Kosma Palm Oil Mill Sdn Bhd & Ors v Koperasi Serbausaha Makmur Bhd (2004) 1 MLJ 257 FC; [2003] 4 CLJ 1 FC held there are many factors that may constitute special circumstances and the fact that an appeal would be rendered nugatory if stay was refused is the most common one. It is an example of special circumstances. [20] Essentially what amounts to special circumstances would depend on the facts of each case. As in most application for stay, the Defendant raises the issue of nugatory to support its application for stay. Although it is a common ground/issue it does not necessarily and automatically means it cannot be considered as a special circumstances. Again, it all depends on the facts and circumstances of each particular case. 10 Whether the Defendant has demonstrate the existence of special circumstances to support its application Merits in the appeal against dismissal of the setting aside Summary Judgment [21] In this respect reference is made to the case of Kosma Palm Oil Mill where the Federal Court held that the special circumstances must relate to the enforcement of the Summary Judgment and not as to whether the Summary Judgment was valid or correct. The Court had this to say – Mr Lipfriend raised a further point. He said that under RSC Ord 47 r. 1, there is power, in the case of a writ of fi fa, or elegit, to stay proceedings if there are special circumstances which render it inexpedient to enforce the judgment or in case the applicant is unable from any cause to pay the money. I think that is appropriate here. The circumstances there again are circumstances which go to the enforcement of the judgment: and not those which go to its validity or correctness. As Abdul Hamid Mohamad JCA (as he then was) said in Ming Ann Holdings Sdn Bhd v. Danaharta Urus Sdn Bhd [2002] 3 CLJ 380 at p. 403: The weight of authorities appears to me to say that the special circumstances must be special, not ordinary, common or usual circumstances and that go to the execution of the judgment and not to the validity or correctness of the judgment (or merits of the appeal). 11 Lee Hun Hoe CJ (Borneo) said in the Federal Court in Re Kong Thai Sawmill (Miri) Sdn Bhd; Ling Beng Sung v. Kong Thai Sawmill (Miri) Sdn Bhd & Ors (No 2) [1974] 1 LNS 136; [1976] 1 MLJ 131 at p. 132: Allegations that there has been misdirection that the verdict of judgment was against the weight of evidence, or that there was no evidence to support the verdict or judgment, are not special circumstances on which the court will grant the application. See Monk v. Bartram [1891] 1 QB

It is therefore unnecessary for me to consider the merits of the respective case of the applicants and respondents. (emphasis added) [22] Accordingly the factors forwarded by the 1st to the 3rd Defendants that it has a meritorious appeal is irrelevant for the purpose of its application to stay the execution of the Summary Judgment. Thus merits of the appeal is not special circumstances. Moreover, the appeal itself is not supposed to operate as a stay of execution (s. 73 CJA). Execution of the Summary Judgment will adversely affect the 1st to the 3rd Defendant’s reputation, companies and the assets thereto and will cause irreparable damage which cannot be compensated with costs [23] Having perused the 1st to the 3rd Defendant’s affidavits, I am of the view the Defendants has failed to discharge the burden of demonstrating, to the satisfaction of the court, there exist special 12 circumstances that go to the enforcement of the Summary Judgment. I say so for the following reasons –

There is no evidence adduced by the 1st Defendant that it is a reputable entity. In their written submission the 1st and 2nd Defendants claim to be an active housing as well as commercial developer with a lot of on-going projects which in turn involved a lot of purchasers who are members of the public. Both 1st and 2nd Defendants claim any winding up proceedings will have a disastrous impact on the purchasers, contractors and end financier.

However it must be noted that the above issues were not raised by the 1st and 2nd Defendants in their affidavits enclosures 25 and 30. As such the 1st and 2nd Defendants are estop from raising the said issues in their submissions. In any event there is not an iota of evidence adduced to show the 1st and 2nd Defendants are active housing and commercial developer which is of a reputable standing.

There is no evidence adduced to show the companies of the 1st to the 3rd Defendants, the assets of the said companies 13 and the financial standing of all the Defendants which the Defendants alleged will be adversely affected if stay is not granted. [24] It is obvious the averment of alleged loss of reputation, companies, assets and financial standing are mere allegation without any credible evidence to substantiate it. It is the 1st to the 3rd Defendants’ fear of losing their purported reputation, companies and assets. In this respect reference is made to the case of Kosma Palm Oil Mill where what was said about the applicant’s fear is relevant and applicable to the 1st to the 3rd Defendants’ situation – As Abdul Hamid Mohamad JCA (as he then was) said in Ming Ann Holdings Sdn Bhd v. Danaharta Urus Sdn Bhd [2002] 3 CLJ 380 at p. 407: The grounds relied on by the appellants are nothing more than 'fear of losing'; fear of losing business, fear of losing customers, fear of losing suppliers, fear of losing goodwill, fear of not being able to collect its debts from third parties, in case the appellant company is wound up. All that the applicant has to do to avoid such 'fears' is to settle the judgment debt. (emphasis added) 14 [25] The 1st to the 3rd Defendants alleged they will suffer irreparable damage which cannot be compensated with costs. However the Defendants failed to provide evidence to show the purported damage to their reputation, companies and assets (if any). [26] The 1st to the 3rd Defendants also failed to adduce evidence that the Plaintiff would not be in a position to compensate the 1st Defendant in the event no stay is granted and the 1st Defendant won the appeal. In this respect reference is made to the following passage of the Federal Court judgment in the case of Kosma Palm Oil Mill – The onus is on the applicants to demonstrate the existence of special circumstances to justify the grant of a stay of execution. The reasons must relate to the enforcement of the judgment. They must be deposed in the affidavit filed in support of the application (see Syarikat Berpakat v. Lim Kai Kok [1983] 1 MLJ 406). Where it is alleged that there is a danger of the unsuccessful party not being repaid if its appeal is successful for any reason like, for instance, the insolvency of the other party, this must be shown in the affidavit (see The Annot Lyle [1886] 11 PD 114). This issue was dealt with articulately by Malik Ishak J in Wu Shu Chen (sole executrix of the estate of Goh Keng How, deceased) v. Raja Zainal Abidin Raja Hussain & Anor [1996] 2 CLJ 353… (emphasis added) 15 Plaintiff is not prejudiced if execution of the Summary Judgment is stayed and stay is required to maintain status quo [27] The Summary Judgment obtained by the Plaintiff is valid and good judgment unless it is set aside on appeal (Sri Jeluda Sdn Bhd v Pentalink Sdn Bhd [2008] 3 MLJ 692; Patel Holding Sdn Bhd v Estet Pekebun Kecil Sdn Bhd [1990] 2 CLJ Rep 611, [1990] 2 CLJ 280). Thus the Plaintiff is entitled to enforce the Summary Judgment and ought not to be prejudiced by depriving it from its fruits of litigation. [28] With regards to maintaining status quo, due to the 1st to the 3rd Defendants’ failure to prove there are special circumstances which justify stay of the execution of the Summary Judgment, I am of the view maintaining status quo is a non-issue. Conclusion [29] Having considered the affidavit evidence and submission by counsels it is my considered opinion that the 1st to the 3rd Defendants has failed to discharge the burden to demonstrate the existence of special circumstances which warrant this court to exercise its discretionary power to order for the execution of the Summary Judgment 16 be stayed pending the Defendants’ appeal in the Court of Appeal. Thus Enclosure 24 was accordingly dismissed with costs. ( KHADIJAH BINTI IDRIS ) JUDICIAL COMMISSIONER HIGH COURT (COMMERCIAL DIVISION) DATED 13 JUNE 2018 Counsel: Plaintiff : Shantini Koshy of Messrs Yong & Rakan-Rakan Defendant : Muhammad Faris Abrar bin Othman and Jason Wee Chuan Yuan of Messrs Asyraf, Vivek & Wee (for the 1st, 2nd and 3rd Defendants)