Rhb Bank Berhad v 1. ) Ascend I-Corp Sdn Bhd (WA-22NCC-811-11/2023)

Ascend I-Corp Sdn Bhd (Company No.: 200101004776

Sivanthy a/p Muthaiha (NRIC No.: 730215-14-5296)

Timothy Navin Posperass (NRIC No.: 940228-14-6779)

Jeremy Eshwarr Posperass (NRIC No.: 950613-14-6483) ...Defendants JUDGMENT [1] This judgment concerns the Plaintiff's application for summary judgment under Order 14 Rules 1 and 3 of the Rules of Court 2012 (“ROC 2012”) against the Defendants in respect of a loan facility granted by the Plaintiff to the 1st Defendant and guaranteed by the 2nd to 4th Defendants. The Plaintiff seeks recovery of the outstanding sums due under the loan, totaling RM4,132,762.22 as at 5.11.2023, together with interest and costs. The Defendants resist the application, contending that there are bona fide triable issues that warrant a full trial, namely discrepancies in the loan restructuring amounts, failure by the Plaintiff to update the Defendants' account statements, wrongful imposition of late payment interest by the Plaintiff, and the need for the Plaintiff to first pursue foreclosure proceedings before commencing this suit. The central issues before this court are whether the Defendants have raised any genuine triable issues requiring a trial, and whether the Plaintiff is entitled to summary judgment in the circumstances. Background facts [2] The Plaintiff, RHB Bank Berhad, granted loan facilities to the 1st Defendant, Ascend I-Corp Sdn Bhd, via a series of

Letters of Offer dated 25.8.2014, 18.9.2014, 2.10.2014,

10.2014, 12.3.2015, 23.3.2015, 11.11.2016, 7.3.2017,

8.10.2018, 1.10.2019, 31.1.2020, 7.4.2020, 23.9.2020,

9.3.2021 and 7.4.2021 (collectively, “the Letters of Offer”). These were to be read together with Letters of Variation issued by the Plaintiff dated 27.7.2021, 19.5.2022,

21.1.2022 and 10.3.2023 (“the Letters of Variation”). [3]

the defendant must have entered an appearance;

(ii) the statement of claim must have been served on the 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 Defendants. Thus, the burden is now firmly on the Defendants to show that there is a triable issue that does not justify summary judgment to be entered against it. If the Defendants 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] CLJU 47; [1982] 1 LNS 47; [1982] 2 MLJ 241 (Federal Court)]. Issues [15] There are a number of triable issues put forward by the Defendants in this matter listed as follows: a) Whether there are discrepancies between the loan restructuring amounts and the Plaintiff's failure to update the Defendants' account statements that warrant a full trial; b) Whether the Plaintiff is contractually entitled to unilaterally impose late payment interest on the Defendants outside of what has been agreed in the written agreements between the parties; and c) Whether the Plaintiff is required to first pursue foreclosure proceedings and exhaust all remedies before commencing this civil suit against the Defendants. Analysis and findings of the court Variance in the loan restructuring amounts and the Plaintiff's failure to update the Defendants' account statements [16] The Plaintiff submits that the Defendants' allegations regarding variance in the loan restructuring amounts and the Plaintiff's failure to update the Defendants' account statements do not constitute valid defences to the Plaintiff's claim. The Plaintiff contends that the Defendants have agreed to and accepted the terms in the Letters of Offer, Letters of Variation, Facility Agreement and Personal Guarantees, and are therefore estopped from disputing the provisions therein which were never contested until the filing of the Defendants' Affidavit in Reply. The Plaintiff argues that unless the Defendants are able to produce documentary evidence proving otherwise, their allegations amount to bare denials and afterthoughts. [17] The Plaintiff avers that the Letters of Variation were offered by the Plaintiff and accepted by the 1st Defendant to restructure the repayment of the Loan Facility, upon the 1st Defendant's request and affordability. Under these Letters of Variation, the Defendants were only required to service the instalments according to the terms stipulated therein. As such, there was no need for the Defendants to contact the Plaintiff to make such payments or verify the Plaintiff's accounting system. [18] The Plaintiff further submits that despite admitting to receiving the Letter of Termination and Demand dated 17.10.2023 which was issued following the Defendants' breach of the Letter of Variation dated 10.3.2023, the Defendants took no action nor raised any issues as alleged in their Affidavit in Reply. Moreover, no evidence has been adduced to support the Defendants' assertion of “informing the Plaintiff” of the alleged discrepancies and failure to update the account statements, if such allegations are true, which the Plaintiff maintains they are not. The Plaintiff thus contends that the Defendants' allegations are mere afterthoughts aimed at confusing the focus of this court. [19] The Defendants on the other hand aver that there are discrepancies between the Plaintiff's Statements of Account and the amounts claimed by the Plaintiff against the Defendants which ought to be proven at trial. The Defendants contend that the Plaintiff has failed to comply with all the agreed terms of the loan variations, particularly regarding the restructuring of repayments and interest. The Defendants also allege that the Plaintiff failed to update the Defendants' account statements in their accounting system despite being informed, leading to the Defendants having to frequently contact the Plaintiff to obtain the actual amounts. The Defendants thus submit that these events clearly show that witnesses need to be called to give evidence on these matters and the court cannot rely merely on the affidavits filed without a full trial. [20] Upon consideration of the affidavit evidence, I find that the Defendants have failed to produce any documentary proof to substantiate their allegations of discrepancies in the loan restructuring amounts and that the Plaintiff had failed to update their account statements despite being informed. The Defendants' Affidavit in Reply is bereft of any documents that provide a basis for comparison to prove the alleged 'discrepancies' raised, or to support their contention that they had “frequently contacted the Plaintiff” and “informed the Plaintiff” regarding the purported irregularities. In the absence of any supporting evidence, the Defendants' assertions amount to mere bare allegations that may be put forth by anyone as they please. [21] I accept the Plaintiff's submission that the Defendants have admitted in their Affidavit in Reply that under the Letters of Variation, the Defendants were only required to service the instalments according to the terms therein. Specifically, paragraph 11 of the Defendants' Affidavit in Reply states: “Tambahan lagi, atas persetujuan Plaintif, Defendan Pertama hanya perlu membuat bayaran ansuran mengikut terma surat-surat variasi pinjaman tersebut dan bukanlah diwajibkan membayar jumlah principal sepenuhnya seperti yang didakwa oleh Plaintif dan Defendan-Defendan tidak memungkiri perjanjian dengan Plaintif.” [22] There was therefore no necessity for the Defendants to contact the Plaintiff to make payments or verify the Plaintiff's accounting system. [23] I find that the Defendants have clearly failed to discharge the burden of proof in respect of their allegations, as they have not adduced any documentary evidence to support their claims. The cases of Hong Leong Finance Bhd v Rextex Rubber Products (M) Sdn Bhd & Anor [1996] 4 CLJ 580 and Alloy Automative Sdn Bhd v Perusahaan Ironfield Sdn Bhd [1986] 1 MLJ 382 were cited by the Defendants to support the proposition that a triable issue may be established by showing that there is a dispute on the facts. [24] Specifically, in Hong Leong Finance Bhd v Rextex Rubber Products (M) Sdn Bhd & Anor, the court held that a triable issue may be established by showing that there is a defence to the claim, a dispute on the facts, or that a point of law requires determination. The court's role at the hearing of an application for summary judgment is not to delve into the merits of the issues raised by the defendant, but to determine whether an issue has been raised. [25] The Defendants are relying on these authorities to argue that their allegations regarding discrepancies in the loan restructuring amounts and the Plaintiff's failure to update account statements constitute disputes of fact that should be tried in a full trial, rather than being disposed of through summary judgment. However, these cases are wholly distinguishable and inapplicable to the facts of this case in the absence of documentary proof of the alleged “disputes of fact”. [26] Pertinently, despite receiving the Letter of Termination and Demand dated 17.10.2023, which was admitted by the Defendants in paragraph 9 of their Defence, the Defendants failed to take any action or raise any issues as alleged in their Affidavit in Reply. I find that the Defendants are estopped from raising these unsubstantiated allegations belatedly, as held in Tay Kwee Joo Enterprise Sdn Bhd v Yung Lung Hardware Sdn Bhd [2011] MLJU 1177 (HC). Pertinently, despite receiving the Letter of Termination and Demand dated 17.10.2023, which was admitted by the Defendants in paragraph 9 of their Defence, the Defendants failed to take any action or raise any issues as alleged in their Affidavit in Reply. I find that the Defendants are estopped from raising these unsubstantiated allegations belatedly, as held in the Tay Kwee Joo case. The High Court emphasised that in this day and age, it should be difficult for any party in an active business relationship with another to come to court and have their complaint accepted that invoicing, statements and appropriation of payments rendered are wrong and sums are not due, unless manifest fraud is shown. The appellant therein was estopped from querying such matters at a late stage to raise a triable issue. The court stated: “It being now apparent here that after the previously active business relationship between the appellant and the respondent had ended in June 2007 then did the appellant see fit to query the appropriation of their payments and the validity of the invoices even though statements of accounts and invoices had been rendered to them by the respondent throughout the period of dealings with payments interspersed. In this day and age when computers and emails runs business efficiently real time replacing the manual recording in journals and posting of previous years, it should be difficult for any party in an active business relationship with another party to come to court today and for the court to accept his complaint and defence that invoicing, statements and appropriation of payments rendered are wrong and sums are not due unless there is manifest fraud shown. The appellant under such circumstances is estopped from querying all these matters now to raise a triable issue.” [27] The chronology of the Plaintiff's case, which is well-supported by documentary evidence, strongly suggests that the Defendants' allegations raised herein are mere afterthoughts aimed at confusing the focus of this court. The Plaintiff had issued various Letters of Offer to the 1st Defendant from 25.8.2014 to 7.4.2021, which were accepted by the 1st Defendant, followed by Letters of Variation dated 27.7.2021, 19.5.2022, 21.1.2022 and 10.3.2023 to restructure the repayment terms of the Loan Facility. The 1st Defendant defaulted in repayment under the varied terms, leading the Plaintiff to issue the Letter of Termination and Demand dated 17.10.2023 to terminate the Loan Facility and demand payment of the outstanding sums of RM4,108,482.07 as at 15.10.2023. Despite admittedly receiving this letter, the Defendants did not respond or raise any issues with the Plaintiff. It was only in their Affidavit in Reply filed in response to this application that the Defendants belatedly raised unsubstantiated allegations of discrepancies in loan restructuring amounts and failure by the Plaintiff to update account statements, without any documentary proof. In the absence of any credible evidence to the contrary, I am satisfied that the Defendants have not established any triable issues warranting a full trial vis-à-vis their unsubstantiated allegations regarding the variance in loan restructuring amounts and the Plaintiff's purported failure to update their account statements. The Plaintiff's application for summary judgment on these issues is therefore allowed. Imposition of late payment interest [28] The Defendants argues that the Plaintiff cannot unilaterally impose late payment interest outside of what has been agreed, particularly when there are written agreements between the parties clearly stipulating the terms of the contract. The Defendants submit that there are written agreements between the Plaintiff and Defendants, and the Plaintiff cannot rely on anything not contained in those agreements. To support this contention, the Defendants rely on the parol evidence rule in Section 92 of the Evidence Act 1950 and the High Court case of Roti Segar (M) Sdn Bhd v Mahalli Zuhdi Mahmud Zahudi & Anor [2013] 1 LNS 158. [29] The Plaintiff submits that it is contractually entitled to impose late payment interest on the Defendants under the terms of the Facility Agreement and Letters of Offer. The Plaintiff contends that the Defendants have agreed to, signed and acknowledged the existence, validity and binding effect of the Letters of Offer, Letters of Variation, Facility Agreement and Guarantees in their Affidavit in Reply. With the Defendants' agreement to the execution, entry and binding effect of the Facility Agreement, the Plaintiff avers that it has the right to increase the interest on the Loan Facility as provided in Clause 6 of the Plaintiff's Letters of Offer dated 25.8.2014 and 12.3.2015 respectively. [30] The Plaintiff further submits that the Defendants' reference to Section 92 of the Evidence Act 1950 and the case of Roti Segar (M) Sdn Bhd v Mahalli Zuhdi Mahmud Zahudi & Anor is misconceived, misplaced and inapplicable herein as the Plaintiff's right to increase the interest rate upon the Defendants' default is a key term under the Loan Facility which the Defendants have willfully disregarded, despite acknowledging the existing contractual provisions and terms prior to this. The Plaintiff thus contends that unless the Defendants are able to adduce documentary evidence proving otherwise, their allegations amount to bare denials and afterthoughts, especially when the Defendants have through their actions accepted and admitted the contents of the Letter of Termination and Demand dated 17.10.2023. [31] Having considered the affidavit evidence and the submissions of both parties, I find that the Plaintiff is contractually entitled to impose late payment interest on the Defendants under the terms of the Facility Agreement and Letters of Offer. The Defendants have admitted in their Affidavit in Reply that they have agreed to, signed and acknowledged the existence, validity and binding effect of the Letters of Offer, Letters of Variation, Facility Agreement and Guarantees. Pursuant to Clause 6 of the Plaintiff's Letters of Offer dated 25.8.2014 and 12.3.2015 respectively, the Plaintiff has the clear right to increase the interest rate on the Loan Facility upon the Defendants' default in payment. The said Clause 6 unequivocally provides that in the event of default in payment by the Borrower, the Borrower shall pay interest on the overdue sums at the rate of 3.50% per annum above the Bank's Base Lending Rate or such other rate as the Bank may impose at its discretion without notice to the Borrower, and such rate of interest shall be payable by the Borrower as well after as before judgement or demand, from the due date up to the date of actual repayment. [32] The Defendants' reliance on Section 92 of the Evidence Act 1950 and the case of Roti Segar (M) Sdn Bhd v Mahalli Zuhdi Mahmud Zahudi & Anor [supra] is misplaced and inapplicable to the facts of the present case. The Roti Segar case concerned a claim by the plaintiff against the defendants for alleged delay in crediting loan sums, which the plaintiff claimed resulted in substantial losses to its company. An issue that arose was whether an alleged oral representation by the first defendant regarding loan disbursement, which contradicted the written loan agreement, was admissible as evidence. The court held that once the terms of the agreement had been reduced to writing, any oral agreement to contradict those terms was inadmissible by virtue of section 92 of the Evidence Act

However, the present case is clearly distinguishable as the Plaintiff is not seeking to adduce any oral evidence to contradict the terms of the Letters of Offer, Letters of Variation, Facility Agreement or the Personal Guarantees, but is instead relying on the express terms therein which the Defendants have acknowledged and agreed to at the time of execution of those documents. [33] The Plaintiff's entitlement to increase the interest rate upon the Defendants' default is a key term under the Loan Facility which the Defendants have acknowledged and agreed to at the time of execution of the Letters of Offer and Facility Agreement. The Defendants cannot now conveniently disregard the express provisions and contractual terms which they have accepted earlier. In the absence of any documentary proof adduced by the Defendants to show otherwise, I agree with the Plaintiff that the Defendants' allegations are mere bare denials and afterthoughts, particularly when the Defendants have through their conduct accepted and admitted the contents of the Letter of Termination and Demand dated 17.10.2023. [34] Based on the Plaintiff's submissions which are well supported by documentary evidence, I am satisfied that the Plaintiff is contractually entitled to impose late payment interest on the Defendants under the clear and unequivocal terms of Clause 6 of the Letters of Offer dated 25.8.2014 and 12.3.2015 respectively, read together with the Facility Agreement. The Defendants have not shown any triable issue in this regard that warrants a full trial. Accordingly, the Plaintiff's application for summary judgement on this issue is allowed. Foreclosure proceedings before commencing this civil suit [35] The Defendants submit in paragraph 7 of their Affidavit in Reply that the Plaintiff should have first pursued foreclosure proceedings and exhausted all remedies before commencing this civil action. The Defendants aver that they have been advised by their solicitors that any variation of the loan by the Plaintiff must be notified to and obtain the consent of the 2nd, 3rd and 4th Defendants as guarantors, which the Plaintiff has failed to do. [36] In response, the Plaintiff contends that the Defendants' argument that the Plaintiff must first pursue foreclosure proceedings before commencing this civil suit is misconceived, irrelevant and erroneous in law. The Plaintiff submits that the remedies of foreclosure and the Plaintiff's monetary claim herein are two distinct actions which are not in conflict with each other. [37] The Plaintiff argues that under Clause 11.02 of the Facility Agreement and Clause 16 of the Personal Guarantees, upon the occurrence of a default in repayment of the Loan Facility, the Plaintiff is entitled and has the right to pursue civil proceedings and foreclosure actions simultaneously against the Defendants at the Plaintiff's discretion. The Plaintiff thus maintains that its action herein is proper following the event of default in accordance with the provisions of the security documents. [38] The Plaintiff relies on the Court of Appeal case of Low Lee Lian v Ban Hin Lee Bank Bhd [1997] 2 CLJ 36 to support its position that it is trite law that a chargee/creditor may pursue any or all remedies to recover monies lent, including enforcing the charge against the chargor, suing the principal debtor upon the personal covenant in the loan agreement, proceeding against the guarantor, and pursuing all these courses simultaneously or successively. [39] The Plaintiff further submits that notwithstanding the above, the Defendants' assertion that foreclosure proceedings must first be taken by the Plaintiff has effectively demonstrated the Defendants' admission of their default in repayment of the Loan Facility which entitles the Plaintiff to take action against the Defendants. [40] Having considered the affidavit evidence and the submissions of the parties, I find that the Defendants' contention that the Plaintiff must first pursue foreclosure proceedings before commencing this civil suit is devoid of merit and legally unsustainable. I accept the Plaintiff's submission that foreclosure proceedings and the present monetary claim are two distinct causes of action which are not in conflict with one another. [41] Clause 11.02 of the Facility Agreement and Clause 16 of the Personal Guarantees expressly provide that upon the occurrence of a default in repayment of the Loan Facility, the Plaintiff is entitled and has the right to pursue civil proceedings and foreclosure actions simultaneously against the Defendants at the Plaintiff's discretion. [42] Clause 11.02 of the Facility Agreement states: “Notwithstanding any provision hereof, it is hereby expressly agreed that upon default or breach by the Borrower of any term, covenant, stipulation and/or undertaking herein provided and on the part of the Borrower to be observed and performed, the Bank shall thereafter have the right to exercise all or any of the remedies available whether by this Agreement or the other Security Documents or by statute or otherwise and shall be entitled to exercise such remedies concurrently, including pursuing all remedies of sale or possession pursuant to this Agreement or the other Security Documents and civil suit to recover all monies due and owing to the Bank.” [43] Clause 16 of the Personal Guarantees provides: “The Borrower agrees that upon the occurrence of an event of default, the Bank is entitled to simultaneously commence proceedings against the Borrower and/or the Guarantor and/or enforce all or any of the security(ies) held by the Bank in any manner that the Bank in its sole discretion deems fit. The Bank may exercise its rights and remedies concurrently, including pursuing a civil suit and all remedies to sell or possess the security(ies) held.” [44] The Plaintiff's action herein following the Defendants' default is therefore proper and in accordance with the clear and unambiguous terms of the Facility Agreement and Personal Guarantees. [45] I am persuaded by the authority of Low Lee Lian v Ban Hin Lee Bank Bhd cited by the Plaintiff which clearly recognises that a chargee/creditor may pursue any or all remedies to recover monies lent by enforcing the charge against the chargor, suing the principal debtor based on the personal covenant in the loan agreement, proceeding against the guarantor, and pursuing all these courses simultaneously or successively. The Court of Appeal stated: “Now, it is trite that a chargee/creditor may pursue any or all remedies to recover monies lent by him. He may enforce his statutory charge against the chargor by way of proceedings in rem under s. of the Code. He may sue the principal debtor (who may or may not be the chargor) upon the personal covenant contained in any loan agreement that was entered into between the parties. He may proceed against the surety who has guaranteed the loan. And he may pursue all of these courses simultaneously, contemporaneously or successively…” [46] Applying the principle laid down in Low Lee Lian, I find that the Plaintiff is well within its rights to commence the present civil suit irrespective of whether foreclosure proceedings have been initiated. [47] I further agree with the Plaintiff that the Defendants' very assertion that foreclosure proceedings ought to have been first taken by the Plaintiff has in effect established the Defendants' admission of their default in repayment of the Loan Facility which entitles the Plaintiff to take action against the Defendants. [48] Accordingly, I find that the Defendants have not shown any triable issue to warrant a full trial in respect of their legally misconceived argument that the Plaintiff must first pursue foreclosure proceedings before commencing this civil suit. The Plaintiff's application for summary judgment on this issue is allowed. Conclusion [49] 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 Order 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 CLJ 627. Accordingly, I held that the contentions of the Defendants do not amount to triable issues or constitute any reasonable defence. [50] It is therefore ordered that the Plaintiff's claim in the Statement of Claim is allowed whereby the Defendants shall pay to the Plaintiff as follows: a) The sum of RM4,132,762.22 as of 5.11.2023; b) Interest on the amount of RM4,132,762.22 at the rate of 3.50% per annum above the Plaintiff's Base Lending Rate, calculated on a monthly rest basis from 6.11.2023 until the date of full settlement; and c) Costs amounting to RM5,000.00 to be paid by the 1st Defendant, 2nd Defendant, 3rd Defendant, and 4th Defendant to the Plaintiff. 11 July 2024 ATAN MUSTAFFA YUSSOF AHMAD Judge Kuala Lumpur High Court (Commercial Division) Counsel: For the Plaintiff: Ch'ng Zi Xuan (Messrs Che Mokhtar & Ling) For the Defendants: W.A Shashila (Messrs Caroline Sha & Syah)