Rampai Maluri Sdn Bhd v Bank Pertanian Malaysia Berhad (WA-22M-96-02/2020)

This judgment concerns the Plaintiff’s summary judgment application (encl. 8) against the Defendant arising from a writ action filed by the Plaintiff against the Defendant for recovery as a surety under a Deed of Assignment to secure a Al-Bai Bithaman Ajil Financing Facility granted by the Plaintiff to a customer of the Plaintiff.

At the hearing of this application I granted summary judgment for the Plaintiff and ordered costs of RM10,000.00 to be paid by the Defendant based on a reasonable estimation of costs on a solicitor client basis. This judgment contains the full grounds for my decision. 2

By an agreement which was documented by Letters of Offer dated 30.03.2011 and 9.11.2011 issued by the Plaintiff to Organic Aquaculture Sdn Bhd (“the Customer”), an Asset Purchase Agreement dated 14.7.2011 executed by the Plaintiff and the Customer and an Asset Sale Agreement dated 14.7.2011 executed by the Plaintiff and the Customer, the Plaintiff agreed to extend and avail an Al-Bai Bithaman Ajil Financing Facility of RM5,000,000.00 (“the Financing”) to the Customer.

In consideration of and as security for the Plaintiff having granted and availed the above Financing to the Customer, the Defendant by a Deed of Assignment dated 14.7.2011 (“the Deed of Assignment”) agreed to pay on demand the aggregate of all monies due, owing and payable by the Customer to the Plaintiff in respect of the Financing and as security for due payment assigned absolutely to the Plaintiff all its rights, title and interest in the units identified as 01-04, 01-05, 01-07, 01-08, 01-09, 01-10 and 01-15 within a commercial complex known as Pontian Plaza erected on the land held under Master Title No. HS (D) 12068, PTB 15894, Mukim Bandar Pontian Kecil, District of Pontian, State of Johor Darul Takzim (“the Plaza Pontian Properties”). 3

Section 5 of the Deed of Assignment provides as follows: “Section 5 Covenant To Pay In consideration of the Bank having agreed at the request of the Assignor to grant and make available the BBA Facility to the Customer and/or Assignor, the Assignor as principal obligor and not merely as sureties hereby agrees, covenants and undertakes to pay the Bank, on demand, the Secured Amounts in accordance with the Asset Sale Agreement and to pay such sums and monies as are or may become payable under the BBA Facility.”

In breach of the terms and conditions of the Agreement, the Customer failed and neglected to make payment of the sums falling due and payable under the Financing and in the Kuala Lumpur High Court Suit No. 22M-96-06/2015, a Judgment dated 21.10.2015 (“the Suit 96 Judgment”) was entered against the Customer and its Guarantors pursuant to Order 14 Rules of Court 2012 for the following sums: a) Balance Selling Price of RM5,826,285.74 due and owing as at 30.11.2014 under the Financing; b) Compensation for late payment on the sums of RM1,141,280.00 at 1% per annum from 24.10.2014 until maturity of the Financing as at 01.08.2018 and/or date of Judgement whichever is earlier and thereafter on the Balance Selling Price of RM5,826,285.74 until the date of full and final settlement at the interbank Islamic Money Market Rate or any other method of calculation approved by 4 the Syariah Advisory Council of Bank Negara Malaysia; and c) Cost of RM5,000.00 to be paid by the Customer and its Guarantors to the Plaintiff.

In 2014 and 2017, there were High Court proceedings in Johor which were Suit No: 21C-1-06/2014 (“the Johor 2014 High Court Proceedings”) and Suit No: JA-22NCVC-16- 01/2017 (“the Johor 2017 High Court Proceedings”) which involved Majlis Daerah Pontian, the Defendant, the directors of the Defendant and the Plaintiff. The facts in relation to these proceedings which are not disputed by the Defendant are summarized as follows: a) In the Johor 2014 High Court Proceedings, Majlis Daerah Pontian brought an action against the Defendant seeking various declaratory orders including inter alia that the Development Agreement dated 22.12.2003 (“the Development Agreement”) on Plaza Pontian entered into between Majlis Daerah Pontian and the Defendant stands terminated and an Order that the entire Plaza Pontian and all units therein which were subject to the Development Agreement be returned and be vested absolutely in the Majlis Daerah Pontian without any conditions thereto. 5 b) The Plaintiff obtained leave to intervene and was added as 2nd Defendant in the Johor 2014 High Court Proceedings vide a Court of Appeal Order dated 19.7.2016 by reason of the Plaintiff’s interest as Assignee of the Plaza Pontian Properties subject to the Deed of Assignment. Thereafter in its Defence dated 2.8.2016 the Plaintiff pleaded inter alia, that in consideration of the Plaintiff agreeing to extend and avail the Financing to the Customer and as continuing security, the Defendant, by the Deed of Assignment absolutely assigned all the Defendant's rights, title and interest in the Plaza Pontian Properties and all interest in the Plaza Pontian Properties therefore lied with the Plaintiff. c) Majlis Daerah Pontian in its Re-Amended Statement of Claim dated 22.5.2017 excluded the Plaza Pontian Properties assigned to the Plaintiff under the Deed of Assignment and the Johor 2014 High Court Proceedings was withdrawn as against the Plaintiff. d) In the Johor 2017 High Court Proceedings, Amanahraya Development Sdn Bhd (“Amanahraya”) brought an action against the Defendant, Mohamed bin Long, Ab Rahim bin Ghalim (“Rahim”) and Mohamad Nasir Padzil bin Muda (“Mohamad Nasir Padzil”) wherein Majlis Daerah Pontian was an intervener. Mohamed bin Long and Mohamad Nasir Padzil are current directors of the Plaintiff from 6

3.12.2002. Rahim is a former director of the Defendant who became a director on 31.7.2003. e) The Johor 2014 High Court proceedings continued to be heard together with the Johor 2017 High Court Proceedings by way of a consolidation order dated 2.8.2017 in the Johor 2017 High Court Proceedings. By way of a Consent Judgment dated 10.4.2018 in the consolidated proceedings, in which the Defendant, Rahim and Mohamad Nasir Padzil were still defendants, it was ordered, inter alia, that the Defendant was to complete and deliver to Amanahraya the applications for the issuance of strata titles in respect of 26 units in Plaza Pontian which did not include the Plaza Pontian Properties assigned to the Plaintiff under the Deed of Assignment. [8] After obtaining the Suit 96 Judgment the Plaintiff exercised its rights under the above Deed of Assignment to sell the said Plaza Pontian Properties by way of public auction on 25.5.2017, 11.7.2017, 21.8.2017, 20.8.2018 and 24.2.2020 but the Plaza Pontian Properties remained unsold. [9] The Plaintiff then through its solicitors by its letter dated 22.08.2019 demanded, pursuant to the terms and conditions of the Deed of Assignment, that the Defendant within 14 days from the date of the said letter make payment of the sum of RM6,147,079.82 due on the 7 Financing and Suit 96 Judgment as at 8.8.2019 and all further costs incurred as at 8.8.2019 amounting to RM235,002.50 both amounting to RM6,147,079.82 together with all continuing charges and expenses due, owing and payable to the Plaintiff. [10] The payment as demanded was not forthcoming and the Plaintiff filed this action on 5.2.2020 and thereon the application for summary judgment on 29.5.2020 by way of encl. 8. The Plaintiff prayed for judgment of: a) The total balance outstanding of RM6,147,079.82 due and owing as at 8.8.2019 on the Financing Facility availed to the Customer; b) Other costs and outgoings of RM235,002.50; c) Compensation (ta'widh) continuing from 9.8.2019 until date of full and final settlement at the Interbank isiamic Money Market Rate (3.21% per annum as at 01.12.2014) or any other method of calculation approved by the Syariah Advisory Council of Bank Negara Malaysia. d) Costs on a solicitor client basis. Law on Summary Judgment (Order 14) [11] It is trite that once an application under O. 14 of the Rules of Court 2012 (“ROC”) is shown to have been correctly and 8 properly filed, the burden shifts and thus rests on the defendant who desires to resist the application to raise a defence which shows a “bona fide triable issue”, in the sense of an issue which justifies and warrants the matter to be considered at the trial proper. [12] Order 14 r. 3 of the ROC provides that unless the defendant satisfies the Court with respect to the claim, or the part of a claim, to which the application relates that:-

there is an issue or question in dispute which ought to be tried or

there ought for some other reason to be a trial of that claim or part, 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 relied claimed. [13] It is useful to refer once again to the often quoted decision of the former Supreme Court in National Company For Foreign Trade v. Kayu Raya Sdn Bhd [1984] 2 MLJ 300 which 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 9 proceeding under Order 14. For the purposes of an application under Order 14 the preliminary requirements are:- i. the defendant must have entered an appearance; ii. defendant; and iii. the affidavit in support of the application must comply with the requirements of Rule 2 of the 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.” [14] The Plaintiff has satisfied these preliminary requirements, and this is not disputed by the Defendant. Thus the burden is now firmly on the Defendant to show that there is a triable issue that does not justify summary judgment be entered against them. If the Defendant can demonstrate even one triable issue, this Court will not grant summary judgment. But it has to be a genuinely triable issue as would require a trial in order to determine it (see Voo Min En & Ors v. Leong Chung Fatt [1982] 2 MLJ 241). Defendant’s contentions [15] The Defendant’s contentions are summarized as follows: a) One the directors’ signatures on the Deed of Assignment executed by the defendant in favour of 10 the Plaintiff was forged and it was not signed by Rahim although his signature appears to be on the Deed of Assignment. b) A police report was lodged by Rahim on 18.6.2020, stating that he was only aware about the Deed of Assignment on or about 2.5.2020 and someone had forged his signature in the Deed of Assignment. c) The issue of forgery on the Deed of Assignment is only raised at this juncture because Rahim was committed to prison from 2016 until 2018 and he was only made aware of the execution of the said Deed of Assignment when this action was brought up. He had informed one of the directors of the Defendant that he had never signed the Deed of Assignment as well as the Board of Directors Meeting Attendance List for the Defendant’s Board of Directors Meeting on 16.6.2011. Issues [16] The single triable issue advanced in the Defendant’s submissions is that the validity and the existence of the Deed of Assignment is questionable and triable thus witnesses need to be called. 11 Analysis and findings [17] The circumstances surrounding the signing of the Deed of Assignment do not support the contention of the Defendant that Rahim’s signature on the Deed of Assignment was forged: a) The Plaintiff's letters of offer dated 30.3.2011 and 9.11.2011 to the Customer for the Financing was accepted by Mohamad Nasir Padzil as Managing Director on behalf of the Customer. b) The Asset Purchase Agreement and Asset Sale Agreement both dated 14.7.2011 were executed by Mohamad Nasir Padzil and Mahiza bt Bakri as directors of the Defendant on behalf of the Customer. c) The Deed of Assignment forms part of the Security Documents provided on the Financing, and is an express requirement of the financing agreement between the Plaintiff and the Customer. This was executed by Mohamad Nasir Padzil and Rahim as co-signatory/director of the Customer. The Board of Directors minutes dated 16.6.2011 confirmed the same. d) Auctions pursuant to the Deed of Assignment and other proceedings have passed with reference to the Deed of Assignment since December 2017 without 12 the Defendant challenging the Financing or the Deed of Assignment. [18] The Court observes that Mohamad Nasir Padzil is still a director of the Defendant, as shown in the SSM search within exh. “CKC-3” of the Defendant’s affidavit in reply (encl. 22). The best person to explain the circumstances relating to signing of the Deed of Assignment that Mohamad Nasir Padzil co-signed is Mohamad Nasir Padzil himself, yet there is no affidavit affirmed by him for the purpose of this application. The Defendant here is content to rely on the bare averments of Chung Kek Chen (the deponent of the Defendant’s affiavits) who at the time the Deed of Assignment was executed was not involved in the Defendant and only became a director of the Defendant on 6.12.2018. [19] The Deed of Assignment was referred to in the Johor 2014 High Court Proceedings and the Johor 2017 High Court Proceedings. No challenge was ever raised by the Defendant in those proceedings. The Defendant is judicially estopped from now challenging the Deed of Assignment when no such challenge was ever raised in the Johor 2014 High Court Proceedings and the Johor 2017 High Court Proceedings. In fact the contention by the Defendant that Rahim’s signature was forged rings hollow because Rahim was a defendant in the Johor 2017 High Court Proceedings which was consolidated with the Johor 2014 High Court 13 Proceedings and was party to the Consent Judgment dated 10.4.2018. [20] I agree with the Plaintiff’s submission that the Defendant cannot take a different position from that pleaded in an earlier suit. Judicial estoppel is operative to prevent intentional inconsistency to address the incongruity of allowing a party to assert a position in one court and the opposite in another. [21] In Leisure Farm Corp Sdn Bhd v. Kabushiki Kaisha Ngu (formerly known as Dai-lchi Shokai) & Ors [2017] 5 MLJ 63 (Court of Appeal) the appellant had taken the position during the prior committal application that its appeal had been rendered nugatory and academic but subsequently, sought to put forth a completely inconsistent position, that is, its appeal was not academic and was therefore estopped from doing so. The Court of Appeal per Idrus Harun JCA (as he then was) explained the principle of judicial estoppel as follows: “.. in view of its earlier stand in the committal proceedings, judicial estoppel would operate to now estop the appellant from taking an inconsistent position during the appeal. It is clear to this court that the object of judicial estoppel is to prevent a party who assumes a particular position in litigation to take an inconsistent position in later litigation.” 14 [22] His Lordship then quoted the relevant excerpts from OJSC Oil Co Yugraneft (in liquidation) v. Abramovich and others [2008] EWHC 2613 (Comm) which was guided by the judgment of Court of Appeals for the Sixth Circuit in Edwards v. Aetna Life and Casualty 690 F2S 595 (1982) speaking through Christopher Clarke J: “The doctrine of judicial estoppel applies to a party who has successfully and unequivocally asserted a position in a prior proceeding; he is estopped from asserting an inconsistent position in a subsequent proceeding.... Unlike equitable estoppel, judicial estoppel may be applied even if detrimental reliance or privity does not exist. ... This distinction reflects the difference in the policies served by the two rules. Equitable estoppel protects litigants from less than scrupulous opponents. Judicial estoppel, however, is intended to protect the integrity of the judicial process. ... Scarano v Central R Co, 203 F 2d 510, 512-13 (3rd Or 1953) (‘such use of inconsistent positions would most flagrantly exemplify that playing ‘fast and loose with the courts' which has been emphasized as an evil the court should not tolerate'). The essential function of judicial estoppel is to prevent intentional inconsistency; the object of the rule is to protect the judiciary, as an institution, from the perversion of judicial machinery. ... Collateral estoppel is essentially a finality rule, which serves to conserve judicial resources by precluding the litigation of issues previously decided. Judicial estoppel addresses the incongruity of allowing a party to assert a position in one tribunal and the opposite in another tribunal, if the second tribunal adopted the party's inconsistent position, then at least one court has probably been misled ... (emphasis added) 15 [23] In Zulpadli bin Mohammad & Ors v. Bank Pertanian Malaysia Bhd [2013] 2 MLJ 915 the Court of Appeal applied judicial estoppel even where different parties were involved in prior proceedings to prevent the respondent from taking a position different from that pleaded in its defence in the earlier suit as below: “[22] The respondent’s own admission in the earlier suit as well as the amended statement of claim in the present suit show that the appellants were innocent victims as much as the respondent was. The respondent is estopped from taking a position different from that pleaded in its defence in the earlier suit.” [24] The Court will not allow the Defendant to challenge the Deed of Assignment in these proceedings as allowing the Defendant to raise such challanges at this juncture tantamounts to perversion of judicial machinery and ought not be sustained by this Court. Conclusion [25] Considering the totality of the facts and circumstances of the case as disclosed in the affidavit evidence, It was quite clear to me that the Plaintiff had clearly met the preliminary requirements in an O. 14 application in accordance with the principles established by National Company For Foreign Trade v. Kayu Raya Sdn Bhd [supra] and further, applying the leading Supreme Court case of Bank Negara Malaysia v. Mohd Ismail Ali Johor & Ors [1992] 1 MLJ 400. Accordingly I hold that the contention of the Defendant does 16 not amount to a triable issue or constitute any reasonable defence. 22 February 2020 ATAN MUSTAFFA YUSSOF AHMAD Judicial Commissioner Kuala Lumpur High Court (Commercial Division) Counsel: For the Plaintiff: Datin Jeyanthini & Ms Chan Jia Lin (Messrs Shearn Delamore & Co) For the Defendant: Ms. Caryn Shua & Ms. Chua Jun Yu (Messrs. Richard Tee & Chin)