Popular Synergy Sdn Bhd v Affin Hwang Investment Bank Berhad (WA-22NCC-363-09/2017)

This is an application by the Defendant Affin Hwang Investment Bank Berhad pursuant to Order 14 A of the Rules of Court 2012 (“ROC”) for the determination of questions of law or the construction of documents. I had allowed the application. These are the full reasons for my decision. 2

The Plaintiff is a company incorporated in Malaysia under the Companies Act 1965 and having its registered address at No. 01-30, Jalan Austin Perdana 2/23, Taman Austin Perdana, 81100 Johor Bahru, Johor.

The nexus between Antara Discount Berhad and the Defendant are as follows:

on 1.7.1996 Antara Discount Berhad changed its name to

subsequently, pursuant to a Court Order of 28.6.2006, the business and assets of Affin Discount Berhad were transferred to and vested in Affin Merchant Bank Berhad;

on 3.7.2006, Affin Merchant Bank Berhad changed its name to Affin Investment Bank Berhad;

then pursuant to a Court Order of 3.6.2014, the business and assets of Affin Investment Bank Berhad were transferred to and vested in HwangDBS Investment Bank Berhad; and 3

on 18.9.2014, HwangDBS Investment Bank Berhad changed its name to Affin Hwang Investment Bank Berhad, the Defendant as named herein.

Kemayan Corporation Berhad (“KCB”) had issued bonds and coupons to various investors/bondholders (collectively “the Bonds”). PAB Trustee Berhad (“the Trustee”) acted as trustee for the holders of the Bonds.

By a Guarantee Facility Agreement dated 13.2.1996 (“the Guarantee Facility Agreement”), a guarantee facility of RM184,950,000.00 (“the Guarantee Facility”) was granted by various financial institutions (“the Guarantor FIs”) to guarantee the payment of monies due under the Bonds by KCB.

6.

To secure all monies which are to be paid by the Guarantor FIs under the Guarantee Facility, inter alia, the following lands were charged to the Defendant as a Security Agent of the Guarantor FIs: i) with regard to the land held under HS(D) 215661 PTD No. 26778 Mukim Plentong (“the Plentong Land”), it was charged by the Plaintiff to the Defendant and registered on 28.2.1996 (“the Plentong Land Charge”); ii) with regard to the land held under P.N.No. 1362 Lot 6983, Mukim Setul, Daerah Seremban (“the Setul Land”), it was charged by Mechgreen Development Sdn Bhd to the Defendant and registered on 28.2.1996 (“the Setul Land Charge”); iii) with regard to the land held under HS(D) 97557, 96727, P.T. No. 10404 9574 (“the Rasah Lands”), it was charged by Kemayan Resources Sdn Bhd to the Defendant and registered on 28.2.1996 (“the Rasah Lands Charge”); and iv) with regard to the land held under Geran 20703, Lot No. 912, Mukim Rasah (“Lot 912”), it was charged by Mazly Realty Sdn Bhd to the Defendant and registered on 28.2.1996 (“Lot 912 Land Charge”). 5

KCB had defaulted in making payments of the Bonds when due, which resulted in the Guarantor FIs having to pay the sum of RM1894,950,000.00 to the Trustee. No interest was charged on the said principal sum of RM184,950,000.00 (“Principal Sum”).

When KCB defaulted in repaying the Principal Sum, the Defendant commenced recovery and enforcement processes (“the Recovery and Enforcement Processes”) pursuant to the provisions contained in the Guarantee Facility Agreement and the Legal Charges aforementioned.

Despite the Defendant‟s demand, KCB has been unable to settle the Principal Sum. KCB has since been ordered to be wound up on 19.5.2009.

The Defendant‟s Appeal to the Court of Appeal against the Order given in the First Foreclosure Action was withdrawn on 17.5.2012 (“the First Civil Appeal”).

The Defendant then filed a Second Foreclosure Action against the Plentong Land at the Johor Bahru High Court vide Originating Summons No: 24F-12-2011 („the Second Foreclosure Action”). In the Second 6 Foreclosure Action the Defendant produced a Certificate of Indebtedness (“COI dated 4.5.2011”) that the total amount due under the Charge as at 4.5.2011 was RM71,037,036.35. The Second Foreclosure Action was dismissed by the High Court on 28.6.2012.

The Defendant‟s Appeal to the Court of Appeal against the Order given in the Second Foreclosure Action was allowed on 13.5.2013 vide Civil Appeal No: J-02-1667-07/2012 (“the Second Civil Appeal”) and the Court of Appeal ordered that the Plentong Land be auctioned to recover the principal sum of RM19,073,980.46 due and owing to the Defendant as at 13.5.2013. Details of the COI dated 28.6.2012 produced by the Defendant are as follows: Description Amount (RM) Amount (RM) Amount advance as at 26.4.1999 184,950,000.00 Less: Repayments Made i. Funds from the sinking fund (as replacement security for the Syarikat Perantau Enterprise Sdn Bhd‟s charge) (38,879,681.45) ii. Proceeds from disposal of land belonging to Malaysian Agricultural Products Sdn Bhd (26,967,676.20) iii. Proceeds from the sale of Menara Kemayan (32,659,106.00) (98,506,463.65) Outstanding principal sum as at 19.3.2010 (Letter of Demand) and 15.11.2010 (Form 16D) 86,443,536.35 7 Less: Repayments Made iv. Proceeds from redemption of land charged by Kemayan Resources Sdn Bhd (10,000,000.00) v. Deposit from auction of land charged by Mechgreen Development Sdn Bhd (auction on 21.4.2011) (1,920,000.00) vi. Deposit from auction of land charged by Kemayan Resources Sdn Bhd (auction on 21.4.2011) (3,486,500.00) (15,406,500.00) Outstanding Principal Sum as at 4.5.2011 (Plaintiff’s Affidavit in Support (3) affirmed by Ruzilin Binti Hashim on 14.6.2011) (71,037,036.35 Less: vii. Balance net proceeds from auction of land charged by Mechgreen Development Sdn Bhd on 21.4.2011 (14,842,914.94) viii. Balance net proceeds from auction of land charged by Kemayan Resources Sdn Bhd on 21.4.2011 (28,129,117.79) ix. Net proceeds from the auction of land charged by Kemayan Resources Sdn Bhd on 23.9.2011 (8,991,023.16) (51,963,055.89) Total Repayments Made (165,876,019.54) Amount Due under the Charge as at 28.6.2012 (principal only) 19,073,980.46

After the payment of a sum of RM25,459,663.65 was made, the Defendant executed the discharge of charge of the Plentong Land charge. The court deposit of RM1,200,000.00 was forwarded by the Defendant to the Plaintiff on 6.1.2015. 8

After the payment of the sum of RM25,459,663.65 was made by the Plaintiff, the Plaintiff again requested for details of the breakdown of the Redemption Sum. On 21.1.2015 and 23.3.2015, the Defendant provided the details of the breakdown to the Plaintiff, which comprised the outstanding principal sum of RM19,073,980.46 and an additional sum of RM6,385,683.19.

The dispute between the parties relates to the sum of RM 6,385,683.19 which the Defendant says are in respect of costs and expenses incurred by the Defendant (“the said Expenses”). Because of the refund of the sum of RM1,200,000.00 to the Plaintiff, the actual sum in dispute is RM 5,185,683.19.

In paragraph 15 of the Amended Statement of Claim, the Plaintiff pleaded that the said Expenses included expenses (statutory and contractual) for other properties/securities, which ought to have been paid from the proceeds of sale or proceeds of auction of the other properties/securities pursuant to the provisions contained in the Guarantee Facility Agreement and section 268 of the National Land Code 1965. 9

In this regard, the Plaintiff alleged that the Said Expenses was an overpayment and is now claiming for a refund of the same. Such sum claimed is now less, as a court deposit of RM1,200,000.00 has since been forwarded to and received by the Plaintiff. Such balance sum now claimed by the Plaintiff is in the amount of RM5,185.683.19 (“Balance Said Expenses”).

The Plaintiff contends that on the undisputed facts, the Plaintiff is estopped from brining this action because it had agreed to pay the Redemption Sum based on the agreement between the parties that the Defendant need not give a detailed breakdown of the same. The Plaintiff further says that in essence, the main issue is whether there was any overpayment by the Plaintiff in respect of the said Expenses. If affirmative, the said Expenses would have to be paid to the Plaintiff. If negative, the Defendant retains the same and the Plaintiff‟s claim ought to be dismissed. 10

The Defendant‟s main contention is that the outgoings and charges incurred in respect of the other charged properties should not be added onto the Redemption Sum to be paid by the Plaintiff. The Plaintiff contends that the Defendant should have paid and in fact did pay the said Expenses or part thereof earlier than the date of its Certificate of Indebtedness dated 28.6.2012 which showed that the amount due under the charge as at that date was only

The Defendant also raised other issues such as that there are other securities apart from those referred to by the Defendant and there was also the sinking fund and escrow account which had moneys.

This application is made pursuant to Order 14 A of the ROC. Order 14 A provides that: 11 “The Court may, upon the application of a party or of its own motion, determine any question of law or construction or any document arising in any cause or matter at any stage of the proceedings where it appears to the Court that-

Such question is suitable for determination without the full trial of the action; and

Such determination will finally determine the entire cause or matter or any claim or issue therein.”

In Lembaga Pembangunan Industri Pembinaan Malaysia v Konsortium JGC Corporation & Ors [2015] 9 CLJ 273, the Federal Court held as follows: “...O14A of the Rules. This Order enables the High Court to determine any question of law or construction of documents arising in any cause or matter at any stage of the proceedings, where to the court such questions are suitable for determination without going through a full trial, and that determination will dispose of the entire matter. In order to do that it is crucial that all the necessary and material facts relating to the subject matter of the question have been duly proved or admitted.” 12

At the outset, in relation to the issue of whether the said Expenses ought to have been accounted for earlier than 28/6/2012 or later, the Defendant has shown that regardless of whether the said Expenses were accounted for earlier or later, the Redemption Sum would still remain the same. This is the due to the fact that the amount due to the Defendant was the principal sum of RM19,073,980.46, without any interest accruing thereon. This is illustrated by the following 2 scenarios: a) Scenario 1 – where the Said Expenses were deducted from the earlier sale proceeds received from the other lands Description Total Principal Sum due to the Defendant under the Guarantee Facility 184,950,000.00 Repayments: Repayments received 98,506,463.65 Proceeds received from disposal of Lot 912 10,000,000.00 13 Proceeds received from disposal of the Setul Land 16,762,914.95 Proceeds received from disposal of the Rasah Lands 40,606,640.95 Deduct the Said Expenses from the aforesaid repayments (6,385,683.19) Less: total repayments (154,490,336.35) The Redemption Sum payable 25,459,663.65 b) Scenario 2- where the said Expenses were claimed later by the Defendant by including the same into the Redemption Sum b) Scenario 2 – where the Said Expenses were claimed later by the Defendant by including the same into the Redemption SumDescription Total Principal Sum due under the Guarantee Facility 184,950,000.00 14 Repayments: Repayments received 98,506,463.65 Proceeds received from disposal of Lot 912 10,000,000.00 Proceeds received from disposal of the Setul Land 16,762,914.95 Proceeds received from disposal of the Rasah Lands 40,606,640.95 Less: total repayments (165,876,019.54) Balance Principal Sum 19,073,980.46 Add: The Said Expenses 6,385,683.19 The Redemption Sum payable 25,459,663.65

I shall now deal with the questions posed by the Defendant. a) Question 1 – whether the Plaintiff is estopped from disputing the Redemption Sum of RM 25,459,663.65 which included the said Expenses of RM 6,385,683.19. 15

In this respect, the following facts disclosed by way of the correspondence between parties‟ solicitors or parties are relevant.

At the material time in 2014, the Defendant had already realized the other charged lands, save for the Plentong Land.

The auction of the Plentong Land was fixed for 23.6.2014. On 28.5.2014, the Plaintiff requested for a redemption statement for a discharge of the Plentong Land Charge from the Defendant.

On 30.5.2014, the Defendant issued its redemption statement to the Plaintiff‟s solicitors, Messrs Tea, Kelvin Kang & Company, stating that the Redemption sum was RM25,459,663.65, i.e. comprising the balance of the Principal sum of RM19,073,980.46 plus the Said Expenses of RM6,385,683.19.

It was also stated in the said redemption statement that the Plaintiff was required to settle the Redemption Sum by 20.6.2014, which was before the scheduled auction date of 23.6.2014. 16

In the Plaintiff‟s said solicitors‟ replies dated 5.6.2014 and 12.6.2014, the Plaintiff agreed to the Redemption Sum without any objection thereto. a) in the said letter of 12.6.2014, the Plaintiff‟s said solicitors informed that the Plaintiff had entered into a sale and purchase agreement on 12.6.2014, with Pinegate Development Sdn Bhd in respect of the Plentong Land; b) as such, the Plaintiff requested for the said auction date to be postponed for three months in order for the Plaintiff to redeem the Plentong Land; and c) in consideration for the adjournment of the auction date, the Plaintiff agreed to pay a sum of RM2,600,000.00 as part-payment of the Redemption sum.

In reply to the Plaintiff‟s aforesaid request for the said auction date to be adjourned, the Defendant issued another redemption letter dated 16.6.2014 to the Plaintiff‟s solicitors: a) to confirm that the Redemption Sum for the Plentong Land remained the same i.e. RM25,459,663.65; and 17 b) to state the terms for adjourning the said auction which included: i) the payment of RM3,150,000.00 to the Defendant by 20.6.2014 for the postponement of the auction on 23.6.2014. Such sum of RM3,150,000.00 shall form part of the Redemption Sum; ii) that the balance of the Redemption Sum had to be fully settled by 20.9.2014, which was more than three months after the said sale and purchase agreement dated 12.6.2014; and iii) that the Defendant shall withhold the foreclosure proceedings during the redemption period.

On the same date of 16.6.2014, the Plaintiff wrote to its said solicitors (a copy of which was forwarded to the Defendant), stating that the Plaintiff unconditionally confirmed and agreed to the terms and conditions as stated in the Defendant‟s letter of 16.6.2014.

After unconditionally confirming and agreeing to the terms and conditions of the Defendant‟s redemption statement of 16.6.2014 and 18 after paying the said initial sum of RM3,150,000.00 to the Defendant, the Defendant procured the postponement of the auction in the Johor Bahru High Court scheduled on 23.6.2014.

Thus, after the auction was adjourned, the balance of the Redemption Sum would have to be paid by the Plaintiff by 20.9.2014.

On 2.9.2014, the Plaintiff‟ solicitors informed the Defendant that the Plaintiff requested a breakdown on the redemption sum in its Redemption Letter i.e. actual outstanding, interest etc.

On the 8.9.2014, the Plaintiff through its said solicitors requested for a breakdown of the Redemption Sum and for a further extension of time until 20.10.2014 for the Plaintiff to settle the balance of the Redemption Sum.

In the accompanying email, the Plaintiff‟s solicitors again asked that the Defendant revert to it in relation to the breakdown of the Redemption Sum and the issue with the additional costs as spoken earlier. 19

The Defendant by its email of 17.9.2014 replied to Mr See Wee Lee, a lawyer from the Plaintiff‟s said solicitors‟ firm, stating that the Defendant was agreeable to the Plaintiff‟s said request for an extension of time to settle the Redemption Sum on the following conditions, amongst others: a) that the Plaintiff agreed that the Redemption Sum was fixed; and b) that there was no necessity for the Defendant to provide a breakdown thereof.

Thereafter, the Defendant continued to withhold proceeding with further action to realize the Plentong Land Charge in view of the pending redemption of the said Plentong Land Charge.

The aforesaid terms of the Defendant were accepted by the Plaintiff for the Plaintiff did not affect payment of the balance of the Redemption Sum by 20.9.2014.

On 21.11.2014, the Plaintiff through its said solicitors informed the Defendant, without any protest and objection, that on 19.11.2014, the 20 Plaintiff had paid the balance of the Redemption Sum to the Defendant, and requested, inter alia, for the discharge of the Plentong Land Charge.

Since the balance Redemption Sum was paid without protest or any objection, the Defendant then executed the discharge of charge of the Plentong Land Charge. The Defendant‟s Plentong Land Charge was discharged on 22.12.2014.

On 1.12.2014 the Plaintiff‟s solicitors continued to ask for a breakdown of the Redemption Sum.

On the 2.12.2014, the Plaintiff‟s solicitors again asked for a breakdown.

On 5.1.2014 the Defendant informed the Plaintiff‟s solicitors that, as informed to him on 31.12.2014, the Defendant conveyed the lenders‟ decision not to provide the breakdown of the Redemption Sum.

By letter dated 12.1.2015, the Plaintiff demanded from the Defendant a justified breakdown failing which it will proceed with an official complaint with Bank Negara Malaysia and proceed with legal action against the Defendant for a justified breakdown. 21

By letter dated 2.1.2015, the Defendant wrote to the Plaintiff and provided a summary of the breakdown of the Redemption Sum.

By letter from the Plaintiff to the Defendant dated 9.2.2015, the Plaintiff requested of the Defendant a summary of how, when and why the said Expenses have to be paid by it, since the Defendant has refused to furnish it with all the documents, invoices and receipts to support the said Expenses.

By letter dated 23.3.2015, the Defendant forwarded to the Plaintiff a Statement of Account as at 31.5.2014 which sets out the computation of the said Expenses.

The Plaintiff relies on the case of Boustead Trading Sdn Bhd v Arab-Malaysian Merchant Bank Bhd [1995] 3 MLJ 331 in support of its contention that the Plaintiff should be estopped from disputing the Redemption Sum as it was led by the Plaintiff to believe that there would be no dispute over the Redemption Sum to discharge the Plentong Land Charge. 22

The Defendant on the other hand, alleged fraudulent and negligent misrepresentation and fraudulent concealment on the part of the Defendant.

I find that the Plaintiff has not shown any fraudulent or negligent misrepresentation on the part of the Defendant. The Defendant at the time merely contended that it would not give a breakdown. There is no misrepresentation on the part of the Defendant. There is also no concealment, let alone any fraudulent concealment on the part of the Defendant.

The Boustead case considers the application of the doctrine of estoppel. In that case: “The Appellant bought goods on credit from Chemitrade Sdn Bhd („Chemitrade‟). Chemitrade then entered into a factoring agreement with the respondent under which the respondent agreed to factor Chemitrade‟s book debts, ie the debts owed by the appellant to Chemitrade were assigned to the respondent. Notice of the assignment was given to the respondent. Chemitrade gave the respondent copies of the invoices in respect of each sale and delivery of goods to the appellant. The respondent then stamped the invoices with the indorsement that any objection was to be reported to the 23 respondent within 14 days of its receipt, („the indorsement‟) and sent them to the appellant. The appellant did not complain about any of the invoices within the 14-day period nor challenge the respondent‟s right to impose the 14-day period by way of the indorsement. The appellant paid the respondent on several of the invoices but later refused to make payment on 20 invoices („the invoices‟). The appellant argued that nothing was payable on the invoices due to a statement on the appellant‟s purchase orders that the amounts stated were to be offset against the cost of stocks returned to Chemitrade („the statement‟). The respondent denied knowledge of the statement and argued that since the appellant had not protested about the validity of the indorsement, it was entitled to assume the appellant had accepted it. The trial judge found for the respondent. The appellant appealed to the Federal Court on the grounds that the respondent, as assignee, could not unilaterally impose the 14-day limit, and that the agreement was not a valid assignment. The appellant also argued that the respondent‟s argument was in essence of estoppels, but since it was not pleaded, the trial judge erred in relying on it. On the other hand, the respondent cross-appealed against the refusal of the trial judge to enter judgment in its favour on two other items claimed for, which amounted to RM95,000”.

The Federal Court in dismissing the appeal and cross appeal held as follows: “(1) A reasonable man in the respondent‟s position would be entitled to assume that the appellant had agreed to the imposition of the 14-day period 24 as it did not merely remain silent by not objecting to it but had in fact made payment on some invoices. The appellant should not be allowed to question the validity of the indorsement after seven months as it would be unconscionable and inequitable for it to do so.

The doctrine of estoppel is a flexible principle by which justice is done according to the circumstances. It is a doctrine of wide utility and has been resorted to in varying fact patterns to achieve justice. The maxim „estoppel may be used as a shield but not a sword‟ does not limit the doctrine of estoppels to defendants alone. Plaintiffs too may have recourse to it. Estoppel may assist a plaintiff in enforcing a cause of action by preventing a defendant from denying the existence of some fact which would destroy the cause of action.

There was no evidence to suggest that the respondent had knowledge of the statement and therefore, it was entitled to assume that the invoices were good for payment because the appellant had not informed it otherwise. It was unjust for the appellant to suggest that the respondent ought not to have paid Chemitrade on the invoices and the respondent should therefore be estopped from asserting that nothing was due on the invoices.

There were documents to suggest that the appellant, Chemitrade and the respondent had proceeded upon the assumption that the factoring agreement was a valid assignment. It would be unjust and unconscionable to 25 permit the appellant to now challenge the meaning which the parties gave to the document.”

By way of obiter the court said that: “(1) The doctrine applies to both representations of fact and of law.

All that a litigant who invokes the doctrine of estoppels must do is to show that he was so influenced by the encouragement or representation that it would be unconscionable for the representor to enforce his strict legal rights. There is no need to show that he was induced to act in a particular way.

The detriment element does not form part of the doctrine of estoppels. All that need be shown is that it would be unjust to permit the representor or encourager to insist upon his strict legal rights. A judicial arbiter would be entitled to have regard to the conduct of the litigant raising the estoppels. This may include the determination whether the particular litigant had altered his position, although such alteration need not be to his detriment.”

On the undisputed facts of this case, I find that it would not be inequitable or unjust for the Plaintiff to enforce its strict legal rights. The Plaintiff had a right to ask for a breakdown of the Redemption Sum and the Defendant was not reasonable in refusing to give a breakdown. I accept that the Plaintiff had no choice but to accept the condition 26 imposed by the Defendant (that the Defendant will not give a breakdown) as it wanted to transfer the Plentong land to a third party by way of sale. In any event, the issue here would be whether the Plaintiff is estopped from demanding a breakdown but that issue is no longer a live one because the Defendant had subsequently given the Plaintiff a breakdown of the Redemption Sum. Having done so, the Defendant cannot say that the Plaintiff cannot rely on the breakdown of the Redemption Sum to make a claim against the Defendant. I would answer question No. 1 in the negative.

Question No. 2 is whether the said Expenses of RM 6,385,683.19 were incurred and paid by the Defendant and/or the Guarantor FI. Because of the refund of RM 1,200,000.00, the Defendant‟s counsel has on 4.5.2018 made an oral application to amend the sum to RM 5,185,683.19 which I allowed.

In its Affidavit in Support of the application, the Defendant has provided copies of all the relevant documents in support of the breakdown of the said Expenses. None of the expenses have been seriously disputed by the Defendant who merely said that certain payments were made prior to 28.6.2012 (which has been shown to make no difference to the Redemption Sum). 27

The following expenses were incurred by the Defendant and/or the Guarantor FIs: a) in respect of the Plentong Land, quit rent for the years 1998 to 2014 amounting to RM2,134,369.01 were incurred and paid by the Defendant and/or Guarantor FIs; b) in respect of the Rasah Lands, the Setul Land and the Lot 912 Land, quit rent for the years 2007 to 2010 amounting to RM1,679,413.49 were incurred and paid by the Defendant and/or the Guarantor FIs; c) at the outset, AIBB (formerly known as Antara Discount Berhad, i.e. the Defendant herein) was appointed as the Facility and Security Agent for the Guarantee Facility, including the assets that were furnished as security for the Guarantee Facility. Sometime in the year 2004, AIBB (the Defendant) resigned as Facility Agent, whilst maintaining its role as Security Agent. In this regard, from year 2004 onwards, the office of the Facility Agent was assumed by BDO Capital Consultants Sdn Bhd, Sinesinga Sdn Bhd and Malaysian Trustees Berhad successively; 28 d) AIBB‟s (the Defendant‟s) agency fees for the years up to 2014 amounting to RM300,000.00 were incurred and paid by the Guarantor FIs; e) BDO Capital‟s agency fees (i.e. as Facility Agent) for the years 2005 to 2009 amounting to RM119,109.22 were incurred and paid by the Guarantor FIs; f) SSB‟s agency fees (i.e. as Facility Agent) for the years 2010 to 2013 amounting to RM100,000.00 were incurred and paid by the Guarantor FIs; g) MTB‟s agency fees (i.e. as Facility Agent) for the year 2014 amounting to RM30,000.00 were incurred and paid by the Guarantor FIs. h) legal fees and expenses totalling RM514,643.60 were incurred and paid by the Defendant and/or the Guarantor FIs in connection with the various actions to recover the sums due to the Guarantor FIs and the realization of the Charges; i) a total sum of RM74,570.22 of Court-ordered costs were incurred by the Defendant and/or the Guarantor FIs in connection with the realization of the Plentong Land Charge; j) in respect of the Rasah Lands and Setul Land, the total valuation fees amounting to RM26,990.00 were incurred and 29 paid by the Defendant and/or the Guarantor FIs. These were necessary to obtain the valuation of the said lands for the realization actions in respect of the various land charges; k) in respect of the Plentong Land, fees for the valuation conducted in the year 2013 amounted to RM8,700.00 were incurred and paid by the Defendant and/or the Guarantor FIs; and l) the total costs and expenses incurred in respect of auctioneers‟ fees and advertisements for the attempted auction of the Plentong Land, which amounted to RM197,887.65 were incurred and paid by the Defendant and/or the Guarantor FIs.

When I added up the expenses, they come up to RM5,185,683.19. Accordingly, on Question No. 2, based on the undisputed documents, I find that a sum of RM5,185,683.19 was incurred and paid. Accordingly, Question No. 2 is answered in the affirmative.

Question No. 3 is whether the Plaintiff had agreed and/or is obligated to pay or reimburse the said Expenses to the Defendant and/or the Guarantor FIs. The Defendant‟s counsel amended the figure concerned to RM5,185,683.19. 30

With regard to quit rent for the Plentong Land, the Plaintiff had agreed to pay the same under clause 7(a) of the Plentong Land Charge which reads as follows: “7. The Chargor further covenants with the Agent that it will during the continuance of this Charge –

Punctually pay all quit rents, rates, taxes and all outgoings payable in collection with our arising out of the Land...In the event of the Chargor failing to pay any money herein covenanted to be paid, it shall be lawful for but obligatory upon the Agent to pay the same or any part thereof and all moneys expended by the Agent together with interest thereon...from the date of such payments shall be recoverable from the Chargor and shall be repaid on demand being made by the Agent...”

With regard to quit rent for the said other lands, i.e. the lands that were charged to the Defendant by Mechgreen Development Sdn Bhd, Kemayan Resources Sdn Bhd and Mazly Realty Sdn Bhd, the Plaintiff had also agreed to pay the quit rents for the said lands: a) by clause 10.4(b) of the Plentong Land Charge, the Plaintiff agreed that: “the proceeds of the sale of the Land shall ... be 31 applied ... in payment ... of any feees and any out-of-pocket expenses referred to in Clauses 7 and 8 of the Guarantee Facility Agreement due to the Agent for itself and the Guarantors”; b) by clause 8(b) of the Guarantee Facility Agreement, the Plaintiff agreed to pay: “all reasonable costs and expenses ... incurred by the Agent or any of the Guarantors in protecting or enforcing any rights under ... the Security Documents ...”; and c) by clause 1(a) of the Guarantee Facility Agreement, „Security Documents‟ was defined to mean collectively: “... the Kemayan Resources Charge,... the Mazly Realty Charge, ... the Mechgreen Charge...”.

I agree that payment of quit rents for the said other lands that were charged to the Defendant under the Kemayan Resources Charge, the Mazly Realty Charge, and the Mechgreen Charge was for the purpose of protecting the same from being forfeited by the Government.

In Talam Corp Bhd v Bangkok Bank Bhd [2016] 8 MLJ 491, 518, it was held as follows: 32 “[101] ... Thus, as a prudent financial institution, the bank acted in protecting its interest over the property against any risk of the land being forfeited back by the state under s 100 of the National Land Code, 1965. [102] The payment was made purely to protect the bank‟s interest ... It was CHDSB‟s failure to pay the quit rents that puts the land at risk of forfeiture. And this risk is exactly the sole reason the bank was cornered to pay the quit rent.”

With regard to the agency fees, the Plaintiff had agreed to pay the same under clause 10.4(b) of the Plentong Land Charge read together with clause 7(c) of the Guarantee Facility Agreement, which reads as follows: a) Clause 10.4(B) of the Plentong Land Charge “After the security created by this Charge becomes enforceable, the proceeds of the sale of the Land shall (subject to the payment of debts which by law have priority) be applied –

...

secondly, in payment to the Agent and the Guarantors of the amount of any fees and any out-of-pocket expenses referred 33 to in Clauses 7 and 8 of the Guarantee Facility Agreement due to the agent for itself and the Guarantors...” b) Clause 7(C) of the Guarantee Facility Agreement: “(C) Agency and Management Fees This issue shall, within seven (7) days of the date of this Agreement, pay to the Agent the agency and management fees as previously agreed between the Agent and the Issuer.”

With regard to legal fees and Court-ordered costs, the Plaintiff had agreed to pay the same under clauses 10.4(a), 14.11(a) and 14.15 of the Plentong Land Charge which reads as follows: a) Clause 10.4(a) of the Plentong Land Charge: “After the security created by this Charge becomes enforceable, the proceeds of the sale of the Land shall (subject to the payment of debts which by law have priority) be applied –

firstly, in payment of all outgoings property paid by the Agent and all other costs charges and expenses including legal fees (on a solicitor client basis) and legal costs incurred by the Agent in recovering the moneys due under the Guarantee Facility..” 34 b) Clause 14.11(a) of the Plentong Land Charge: “(a) All costs, charges and expenses incurred under this Charge by the Agent...and all other moneys whatsoever paid by the Agent in respect of the said costs, charges and expense and expenditure otherwise howsoever and all or any other sums and moneys paid or expended by the Agent...shall be payable by the Chargor and/or the Issue to the Agent on demand.” c) Clause 14.15 of the Plentong Land Charge: “..If the Indemnified Amount shall be required to be recovered to be recovered by any process of law...the Chargor shall pay (in addition to the moneys then due and payable under the Guarantee Facility Agreement or this Charge) the Agent‟s solicitors‟ fees (on a solicitor and client basis) and any other fees and expenses incurred in respect of such collection.”

With regard to the valuation fees, auction expenses such as auctioneer‟s fees and advertisements, the Plaintiff had agreed to pay the same under clause 14.11(a) of the Plentong Land Charge. 35

The Defendant has satisfied me that the Plaintiff had agreed to pay all the relevant expenses. In particular, I find that the Plaintiff is liable to pay even the costs and expenses incurred in relation to the enforcement of the other securities pursuant to the provisions of the Plentong Land Charge read together with the Guarantee Facility Agreement. Accordingly, I find that the Plaintiff had agreed and/or is obligated to pay or reimburse the said sum of RM5,185,683.19. Accordingly, question No. 3 is to be answered in the affirmative.

In the circumstances, I would answer Question No. 4 which is whether the Plaintiff‟s claim herein ought to be dismissed with costs in the affirmative.

In addition, I have found that there are some facts in dispute, for instance, the Defendant did not exactly respond to the Plaintiff‟s allegation that there are other charges over other properties which were not referred to in the Defendant‟s Statement of Account and the Plaintiff also mentioned the escrow account (the sinking fund proceeds have been duly accounted for in the certificate of indebtedness set out in the Agreed Facts). However, those facts do not relate to the said Expenses and, from the Amended Statement of Claim it can be seen that the 36 subject matter of the Plaintiff‟s claim relates solely to the said Expenses. The disputed facts are not pertinent or material facts.

As for the allegation of delay on the part of the Defendant in filing the Order 14 A application and the case of Dayapi Holdings Sdn Bhd v Arab-Malaysian Finance Bhd & Anor [2009] 7 MLJ 627, the Defendant responds that an Order 14A application can be filed at any stage of the proceedings and the application herein was filed pursuant to the directions given by the Court at the case management on 20.11.2017.

In this regard, the decision of Dayapi Holdings Sdn Bhd & Anor v Arab-Malaysian Finance Bhd & Anor [2008] 3 MLRH 328; [2009] 7 MLJ 627; [2009] 1 CLJ 916; [2009] 1 AMR 336 at 642 is distinguishable because the Order 14A application therein was made some sixteen (16) years after the writ was filed and on the day when the trial of the action was supposed to commence.

In various parts of the Plaintiff‟s Submission, the Plaintiff had made references to sections 268 and 268A of the National Land Code, 1965. The said provisions are not applicable to the instant case, for the reason that such provisions are applicable only to a situation where the charged land was auctioned off pursuant to an order for sale. 37

However, in the instant case, even though the Defendant did obtain the Order for Sale for the Plentong Land, the same was not auctioned off pursuant to the Order for Sale, but was redeemed by the Plaintiff by way of a private treaty sale between the Plaintiff and Pinegate Properties Sdn Bhd.

In the circumstances of the case, I answer Question No. 1 in the negative and Questions No 2, 3 and 4 in the affirmative. The claim is accordingly dismissed with costs of RM5,000.00 subject to allocator. Wong Chee Lin Judicial Commissioner Kuala Lumpur High Court Commercial Division Dated : 9th April 2018 38 Solicitors for the Plaintiff Messrs H.H Long & Co Advocates & Solicitors 59-02, Jalan Tun Abdul Razak Susur Satu/1 80000 Johor Bahru, Johor Tel : 07-2244888 / 07-2244111 Fax: 07-2243933 Solicitors for the Defendant Messrs Shook Lin & Bok Advocates & Solicitors 20th Floor, Ambank Group Building No. 55, Jalan Raja Chulan 50200 Kuala Lumpur