Reebok (M) Sdn Bhd v Cimb Bank Berhad (W-02(NCVC)(W)-2459-12/2017)

This appeal arises from an order made by the learned High Court judge in Kuala Lumpur High Court on 10.11.2017, which requires the court to consider the construction of a settlement agreement reached by the parties.

In this proceeding, the appellant’s complains that they had overpaid the respondent RM532,746.75 under a settlement agreement. The appellant claimed they had paid RM5,522,746.75 when the settlement sum was only

After a full trial, the learned judge dismissed the appellant’s claim. The learned judge found there was no overpayment. The appellant now appeals against that decision.

For convenience, we will refer to the parties in this judgment as they were referred to in the High Court.

We heard the parties on 21.2.2019, and reserved our judgments. Having considered the matter as well as the written submission of the parties, we will now give our reasons in respect of the appeal. In short, we dismiss the plaintiff’s appeal. 3

We now turn to the facts of the present case and how it was decided in the court below.

The plaintiff is a customer of the defendant.

The plaintiff is the registered proprietor of the lands (Land 1, Land 2, Land 3, and Land 4).

On 24.9.2010, the High Court allowed the defendant’s application for summary judgment against the plaintiff with 2 others in Kuala Lumpur High Court Civil Suit No. D-22 NCC-551-2010 for overdraft facilities and term loan (the said Judgment). The plaintiff was ordered to pay the defendant (a) for the overdraft facilities, a sum of RM5,329,067.93 as at 6.7.2010 and interest and (b) for the term loan, a sum of RM589,074.67 as at 6.7.2010 and interest (the Judgment Sum).

By a letter from the defendant dated 18.3.2011 (the Settlement Letter), the plaintiff and the defendant then agreed to settle the outstanding Judgment sum pursuant to the said Judgment (the Settlement). In gist, the agreed settlement sum to be paid by the plaintiff was RM4,990,000.00 to be paid over a period of 72 months, that is, 71 monthly instalments of 4 RM50,000.00 per month starting on 1.5.2011 with a bullet payment for the balance for the last instalment. All payments to be completed by 1.4.2017.

The plaintiff failed to comply with the settlement terms. On 22.5.2015 the defendant took out foreclosure proceedings for an Order for Sale vide Originating Summons No. 24F-492-05/2015 (the OS) on the charge held on Land 2. Exhibited in the OS were the said Judgment and a statement of account as at 30.11.2014 stating that the amount received by the defendant from the plaintiff as at 30.11.2014 was RM5,522,746.75. The defendant subsequently discontinued the foreclosure proceedings because UOB had already obtained an Order for Sale over the same property.

The plaintiff claimed that with the admission that the amount of RM5,522,746.75 was received by the defendant, the plaintiff has overpaid the defendant RM532,746.75 in excess of the agreed settled account of RM4,990,000.00 (RM5,522,746.75 – RM4,990,000.00) and was entitled to a refund of the excess payment. The plaintiff pleaded that there were accord and satisfaction by the plaintiff.

The plaintiff also claimed that the Settlement Letter did not refer to post-judgment interest on the principal sum of RM4,990,000.00. 5

The defendant’s pleaded case is that there is no case of an overpayment by the plaintiff.

The issues for determination by this court are as follows:

whether the plaintiff had overpaid the defendant in respect of the judgment sum or the settlement agreement entered into between them on 18.3.2011;

(ii) whether the defendant cannot claim interest on the judgment sum;

(iii) whether the defendant is to first terminate the settlement agreement before it can execute the judgment and proceed with foreclosure proceedings. THE JUDGMENT OF THE HIGH COURT

At the hearing before the learned High Court Judge, the plaintiff maintained that the issue of the outstanding Judgment Sum has been compromised by the terms of the settlement agreement and that the defendant is precluded by the terms of the agreement from imposing post interest. The defendant resisted the claim, contending that there was no 6 overpayment and that there was nothing in that agreement which precluded them from imposing post interest.

The learned High Court Judge preferred the submissions made on behalf of the defendant and conclude that the plaintiff had failed to pay RM4,990,000.00 as agreed in the settlement agreement.

In this appeal, learned counsel for the plaintiff contended that the learned judge fell into errors at every stage of her analysis which we will elaborate in more details later.

Learned counsel for the plaintiff essential proposition in support of this appeal is straight forward and simple. The learned High Court Judge was wrong to conclude that there was no overpayment by the plaintiff on the settlement sum. The evidence shows that a total of RM1,224,100.00 had been paid to the respondent out of which RM619,145.16 was utilized to pay the term loan and the balance sum of RM614,954.84 was utilized for part payment towards the judgment on the overdraft.

We begin by considering the settlement agreement and whether the plaintiff had overpaid the defendant in respect of the judgment sum or the 7 settlement agreement entered into between them on 18.3.2011 which we have summarized the relevant background earlier in this judgment, so we now turn to the provisions of the agreement itself. The settlement agreement is a letter from the respondent to the appellant for the settlement of the judgment dated 24.9.2010 in Kuala Lumpur High Court Suit No. D-22-NCC- 551-2010.

The Settlement Letter provides as follows: “Our Ref: BCPDM/1414/2011/072/SK/TF 18 March 2011 The Director Reebok (M) Sdn Bhd (162388-T) 9E, Wisma Tai Yoon Lorong Medan Tuanku 1 50300 Kuala Lumpur (Attention: Dato’ Sri Ram Sarma) Dear Sirs,

24.

9.2010 KUALA LUMPUR HIGH COURT SUIT NO: D-22NCVC-551-2010 We refer to your request and wish to inform that the Bank is agreeable to your request to settle the outstanding Judgment Sum on the following terms:

The Overdraft is to be repaid in monthly installments of RM50,000.00 permonth over 71 months with 72nd payment being the final bullet payment for the balance of the total outstanding sum. OVERDRAFT a) Amount b) Payment Tenor c) Commencement of Payment d) Completion of Payment e) Monthly installment : RM4,990,000.00 AS AT 18.3.2011 : 72 months : 1st May 2011 : 1st April 2017 : RM50,000.00 f) Repayment-Repayment over 71 month installments of RM50,000.00 each with final bullet payment for the balance of the total outstanding sum. 8

The above is subject to the Bank receipt of the following together with the acceptance of this Letter, i) Six (6) postdated cheques of RM50,000.00 commencing from 1.5.2011 and thereafter ii) A Letter of Undertaking from Reebok (M) Sdn Bhd to forward 90% of the proceed of sales for a sum of RM747,000.00 by 31.10.2011 obtained from the sale of the properties held under 25, Lorong Sri Gambut 2, KL Techno-Industrial Park, Klang 42450 Selangor and Lot 22, Jalan Ferum 27/31 Shah Alam, 40000 Selangor.

The Bank will proceed with execution of the Judgment and Foreclosure proceeding in the event of default of any one or more of the said installment payments. The above is strictly without prejudice to the Bank’s right to enforce the Judgment against you and the above said Guarantors and to proceed with Foreclosure proceedings should you fail to accept this letter and adhere to the above terms and conditions within the stipulated deadline strictly. Kindly signify your understanding and acceptance of the above settlement terms and conditions by initiating every page and signing on the last page and returning the duplicate of this Letter to us within seven (7) days from the date hereof, failing which the offer shall lapse automatically. Thank you. Yours faithfully, for CIMB Bank Berhad (13491-P) ……………………………………. …………………………………. SHERLY KAM GARRY LAM YAT FOU COMMERCIAL CREDIT MANAGER AREA COMMERCIAL MANAGER We hereby confirm our acceptance of the offer and the accompanying terms and conditions as stated hereinabove. REEBOK (M) SDN BHD (162388-t) ……………………………… Name of Company Date: 25.3.2011” 9

In our opinion, a settlement agreement such as this must be construed in just the same way as any other contract. The aim is to ascertain what a reasonable person would have understood the parties to mean by using the language of the agreement (per Edgar Joseph Jr FCJ in Ayer Hitam Tin Dredging Malaysia Bhd v. YC Chin Enterprise Sdn Bhd [1994] 3 CLJ

133.

Also, in Berjaya Times Square Sdn Bhd v M. Concept Sdn Bhd [2010] 1 CLJ 269, Federal Court has stated that it is trite that an agreement must be construed by the words used in the agreement and the court is not empowered to improve upon the instrument which it is called upon to construct. This was again reiterated in the recent Federal Court case CIMB Bank Berhad v Anthony Lawrance Bourke & Anor [2019] 2 CLJ 1 (FC).

In our judgment, the inescapable conclusion from the foregoing is that parties intended by the settlement to compromise all issues in dispute between them, the issues on the outstanding judgment sum and the foreclosure proceeding.

By the terms of the settlement agreement, the appellant was to pay RM50,000.00 per month for 71 months commencing on 1.5.2011 with a final 10 bullet payment for the balance remaining on the 72nd payment on 1st of April 2017 in respect of the judgment on the overdraft.

There was no dispute that under the settlement dated 18.3.2011, the amount outstanding was accepted by the parties to be ‘RM4,990,000 as at 18.3.2011’. Since the settlement on 18.3.2011, the undisputed evidence shows that the plaintiff had only paid the defendant RM4,804,391.91. Therefore, the learned judge was right to say that there has clearly been no overpayment under the settlement as alleged.

The plaintiff’s allegation of the overpayment is based on payments made before the settlement on 18.3.2011. It is, without doubt, their payments made before the settlement on 18.3.2011 cannot be included when considering whether there has been any overpayment under the settlement. The payments made before the settlement have already been taken into account in deriving the outstanding settlement amount of ‘RM4,990,000 as at 18.3.2011’ as stated in the settlement letter.

In fact, DW2 in her examination-in-chief gave evidence on all payments made by the plaintiff between 18.3.2011 until the last payment on 28.5.2014. This evidence was not challenged by the plaintiff. The undisputed evidence shows that the total sum paid by the plaintiff since 18.3.2011 between 11

18.3.2011 and 28.5.2014 amounts to only RM4,804,391.91. Therefore, there has clearly been no overpayment under the settlement agreement.

It is worth noting that the plaintiff’s allegation that they had paid a total sum of RM5,522,746.75 includes the 2 amounts they paid some time before the settlement letter dated 18.3.2011. RM604,854.84 was paid on 15.11.2010 and RM113,500 was paid on 18.1.2011. These two amounts were clearly not paid under the settlement agreement.

There is no evidence whatsoever that the plaintiff has paid more than RM4,990,000 under the settlement agreement. Therefore, the learned Judge was correct to reject the plaintiff’s allegation of overpayment for reasons set out below: “Was there overpayment of the settlement sum?

That the plaintiff had failed to pay RM4,990,000 as agreed in the settlement agreement is beyond doubt.

The payments as set out at pages 39 to 40 in Bundle A and in Annexure A in WS-DW2 clearly show that –

the plaintiff did not pay RM4,990,000 since 18.3.2011; and

the plaintiff only paid the sum of RM4,804,391.91 since 18.3.2011. 12

Therefore, the plaintiff could not have complied with all the terms of the Settlement and paid the full amount thereafter.

PW1 agreed by reference to the defendant’s reply that the plaintiff has paid RM718,354.84 between 24.9.2010 and 18.3.2011. This was before the settlement letter.

Between 18.3.2011 i.e. from the date of the settlement letter and 28.5.2014, the plaintiff only paid a total of RM4,804,391.91. There was no more payment after 28.5.2014. Therefore, there cannot be an overpayment. …

Even if assuming that the plaintiff’s allegation that they were only required to pay RM4,990,000 as the full and final settlement is accepted, there is no overpayment of the settlement sum because the plaintiff had not even paid that amount. The plaintiff has only paid a total sum of RM4,804,391.91 since 18.3.2011 until 28.5.204. There was no payment thereafter. Thus, there cannot be overpayment and premised on this alone, the plaintiff’s claim must fail because their whole case was about overpayment based on the Settlement that was no longer in force.”

In the light of all the factors that we have mentioned, there are no grounds to interfere in the findings of fact of the learned trial judge. As can be seen the findings of fact are based on the uncontroverted oral and 13 documentary evidence that clearly shows that there had been no overpayment as alleged.

It is well settled that an appellate court will only intervene with a trial court’s findings of fact if it is plainly wrong - Dream Property Sdn Bhd v Atlas Housing Sdn Bhd [2015] 2 MLJ 441, 464 (FC) (See also LCY v TWY [2019] 1 LNS 165 (CA); Daud Arshad & Ors v FELCRA Berhad [2018] 1

There was an issue between the parties as to whether the plaintiff could claim interest on the judgment sum.

Learned counsel for the plaintiff contended that the settlement agreement is clear on this terms that the settlement sum is RM4,990,000.00 to be paid over 72 months. The settlement agreement has been reduced into writing, it does not state any interest.

In support of his submission, learned counsel referred to the case of Keng Huat Film Co. Sdn Bhd v. Makhanlall (Properties) Pte. Ltd. 1984 1 MLJ 243 (FC) where Mohd Azmi FJ (as he then was) held that: 14 “….. As far as our law is concerned, the exclusion of oral by documentary evidence, is governed by section 91 to 99 of the Evidence Act 1950. Section 91 provides that the content of a document must be proved by the document itself, and section 92 provides that subject to certain provisos, no evidence of any oral agreement or statement shall be admitted for the purpose of contradicting, varying, adding to, or subtracting from its terms. Section 93 further provides that when the language used in a document is on its face ambiguous is defective, evidence may not be given of facts which would show its meaning or supply its defects.”

We are unable to accept the plaintiff’s submission. We say that for the following reasons. In our view, nowhere in the settlement letter is it stated that this is the full and final settlement sum. The amount of RM4,990,000.00 stated in the settlement letter dated 18.3.2011 is expressly stated to be merely the amount ‘as at 18.3.2011’. Therefore, there can be no doubt, that it is not the full and final settlement sum to be paid. We are therefore satisfied that the terms of the agreements are sufficiently broad to include the defendant from claiming interest on the judgment sum. In our judgment, the parties are taken to have intended that the interest should apply to claims of the kind now in issue. 15

It is convenient here to point out that by a letter dated 29.1.2015, the plaintiff said it will: “…settle RM200,000.00 in February 2015 and continue to pay RM50,000.00 per month till September 2015 whereby we will make another RM350,000.00 to update our status to current leaving a balance of approximately RM1 million owing to your bank.”

In our opinion, it is obvious from the contemporaneous conduct of the plaintiff that the plaintiff was never under the impression that the RM4,990,000.00 was a full and final settlement sum but only the amount outstanding as at the date of the settlement letter on 18.3.2011 as expressly stated in the settlement letter.

It is we think important to note that even assuming that the settlement sum under the settlement agreement can be said to be a full and final settlement sum of RM4,990,000.00 as alleged by the plaintiff the undisputed evidence shows that the plaintiff has not even paid the sum of RM4,990,000.00 under the settlement, let alone RM5,522,746.75. 16

The final point raised by the plaintiff was the fact that the defendant is to first terminate the settlement agreement before it can execute the judgment and proceed with foreclosure proceedings.

With respect, we do not agree with the plaintiff’s submission.

Under the settlement letter dated 18.3.2011, it is expressly provided that the defendant is entitled to proceed with execution of the judgment and foreclosure proceeding in the event of default of any one or more of the said installment payment. It is also expressly provided that the settlement is strictly without prejudice to the Bank’s right to enforce the judgment and to proceed with foreclosure should the plaintiff fail to adhere to the settlement terms within the stipulated deadline strictly.

The evidence demonstrated that:

By a letter dated 15.1.2015, the plaintiff sought indulgence to defer payment under the settlement.

(ii) The defendant by its letter dated 26.1.2015 stated it will only consider withholding legal action subject to an immediate and minimum payment of RM200,000. The defendant also stated that ‘until settlement is reached between the parties, the Bank shall proceed’ accordingly. 17

(iii) It is not disputed that the plaintiff did not make immediate payment of the minimum RM200,000 stipulated by the defendant for withholding legal action. Instead, PW1 admitted this during cross-examination.

(iv) The plaintiff then proceeded to commence foreclosure proceedings on 22.5.2015

We agreed with the defendant that the proper conclusion on these facts is that the settlement has broken down and no longer in force when the plaintiff requested for indulgence for not complying with the terms of the settlement but did not comply with the condition on which the defendant was willing to grant the indulgence sought. In the event, the defendant proceeded with foreclosure proceedings which it was expressly entitled to do if the plaintiff failed to comply with the settlement terms. Therefore, the settlement is clearly no longer valid after this.

In our opinion, in the event of any settlement or compromise between parties, any court proceedings already started shall be terminated. A party who wishes to revive his original claim in the event of the other party’s inability to comply with his obligation under the terms of the settlement should incorporate such term in the settlement agreement to give effect. The learned Author David Foskett’s in The Law and Practice of Compromise which was 18 referred to by the court in Ace Heights (M) Sdn Bhd & Ors v BSNC Leasing (M) Sdn Bhd [2015] 1 LNS 1480 (CA) opined as follows: “Generally speaking, therefore, an agreement of compromise will discharge all original claims and counterclaims unless it expressly provides for their revival in the event of breach. Reference had been made previously to a compromise defeasible upon condition subsequent. Where a party is anxious to be able to revive his original claim in the event of the other party’s failure to comply with his obligations under the compromise, a term to that effect (which will, in effect, be one defeating the compromise upon the failure of the subsequent condition) should be incorporated. This applies to mere agreements and those effectuated by a judgment or order reflecting finality.” (See also: Kuala Lumpur Landmark Sdn Bhd v Standard Chartered

In the present case, the settlement agreement expressly provides for the revival of the defendant’s rights to proceed with foreclosure proceedings in the event of default. Therefore, there can be no question that the defendant was entitled to commence foreclosure proceedings after the plaintiff had defaulted on the settlement. 19

It follows that the appeal must be dismissed with costs and the decision of the High Court is affirmed. Dated 6 August 2019 Signed HANIPAH BINTI FARIKULLAH Judge Court of Appeal Malaysia PUTRAJAYA Solicitors for the Appellant : Messrs K. Kulasekar & Associates No. 2, 3/59, Jalan Aman, 46000 Petaling Jaya, Selangor Darul Ehsan Solicitors for the Respondent: Messrs Lee Hishamuddin Allen & Gledhill Level 6, Menara 1 Dutamas, 1, Jalan Dutamas 1, Solaris Dutamas, 50480 Kuala Lumpur