Rhb Bank Berhad v 1. ) Dhanya Exim Sdn Bhd (WA-22NCC-242-06/2022)

DHANYA EXIM SDN BHD (Company No.: 960574-V)

SHANMUGHANATHAN A/L VELLANTHURAI (NRIC No.: 660204-71-5037)

TAILAMI A/P PALANIANDY (NRIC No.: 360523-71-5056)

TANALECHUMY A/P VELLANDURAI (NRIC No.: 690414-10-5808)

VIJAYALETCHUMY A/P VELLANDURAI (NRIC No.: 550908-08-5144) ... DEFENDANTS JUDGMENT (NO. 2) (Enclosure 13 – against 1st Defendant) [1] At request of the 1st Defendant, the Plaintiff granted to the 1st Defendant a term loan facility up to a limit of RM 3,040,000.00 (‘Term Loan’). The 2nd, 3rd, 4th and 5th Defendants are the guarantors of the 1st Defendant’s repayment obligations under the Term Loan. [2] At all material times, the Term Loan is governed by, among others, letter of offer dated 1.12.2015 (‘LO-1’) and Facilities Agreement dated 29.6.2016 (‘Facilities Agreement’). The terms and conditions in the LO-1 was later amended vide letters dated 5.1.2016 (‘LO-2’) and 11.7.2016 (‘LO-3’) (collectively LO-1, LO-2, LO-3 and the Facilities Agreement referred to as ‘Facilities’). [3] The Facilities are secured by:

Joint and several Personal Guarantee and Indemnity dated 29.6.2016 of the 2nd to 5th Defendants (‘Guarantee’);

(ii) Letter of Set-Off (First Party) dated 29.6.2016 between the Plaintiff and the 1st Defendant;

(iii) RHB Bank Berhad Fixed Deposit Placement Advice amounting to RM 220,000.00 under the 1st Defendant as the account holder dated 30.6.2016;

(iv) Open All Monies First Party Charge executed by the 1st Defendant registered on 13.7.2016 executed by the 1st Defendant (‘Charge’); and

First Party Assignment of Rental Income dated 18.7.2016 between the Plaintiff and the 1st Defendant. All facility documents and security documents mentioned above shall hereinafter be referred to collectively as ‘Transaction Documents’). [4] The existence and execution of the Facilities and the Transaction Documents abovenamed are admitted by the Defendants in their affidavits. [5] It is not disputed, that pursuant to the Facilities and as admitted by the Defendants, the repayment terms of the Facilities were for a 276-month term with monthly instalments of RM18,469.70. The interest rate was fixed at one point nine per centum (1.9%) per annum below the Plaintiff’s Base Lending Rate (‘BLR’) with daily rests. In the event of a default, the interest on the overdue sums were to be computed at a rate of 3.5% per annum. [6] It is further not disputed that pursuant to a letter dated 1.8.2017, the 1st Defendant was notified by the Plaintiff that in relation to the Facilities, despite the numerous reminders, the 1st Defendant had failed, neglected and or refused to pay the instalment payments as requested and that as a result the Plaintiff notified the 1st Defendant of the increase in the margin of interest to 3.5% per annum above the Plaintiff’s BLR with effect from 21.8.2017. [7] Again, it was not disputed that the 1st Defendant was once again notified vide a letter dated 4.6.2018 of the 1st Defendant’s default that the 1st Defendant was also to repay the total amount in arrears outstanding as at 4.6.2018. [8]

The existence of the Facilities and the Transaction

The Plaintiff had restructured the Facilities via the Repayment/Restructuring Agreement in an attempt to assist the Defendants;

That prior to the Repayment/Restructuring Agreement the 1st Defendant defaulted in the instalment payment as required, resulting the same to be in arrears and as a consequence thereof eventually the Plaintiff proceeded to revise the interest rate; and

That DDS on behalf of the 1st Defendant had requested for the Extension of Moratorium and Repayment Program. [26] Furthermore, the 1st Defendant is not disputing that:

That the 1st Defendant as borrower has utilized and benefitted from the Facilities;

That the 2nd to 5th Defendants have executed the Guarantee;

That the 1st Defendant had defaulted payments of the Facilities on various occasions since 2017;

That the Repayment/Restructuring Agreement was in default and that the Restructured Facilities were in arrears;

That DDS has failed to fully furnish all the documents requested by the Plaintiff vide its email dated 30.11.2020 in order to assess the Defendants’ request for the Extension of

That the 1st Defendant has failed, neglected and/or refused to comply with the terms of the Letter of Demand-1 and the

That the outstanding sum of RM 3,745,495.19 was due and owing under the Moratorium Facilities as at 28.2.2021; and

That the 2nd to 5th Defendants as guarantors failed, neglected and/or refused to comply with the terms of the Letter of Demand-2. [27] The Plaintiff has also issued a Certificate of Indebtedness on the outstanding sum claimed in the letters of demand issued by the Plaintiff. In this regard, Clause 12.12 of the Facilities Agreement provides: ‘It is hereby agreed that any admission or acknowledgement in writing by the Borrower, or any Security Party, or by any authorise person on their behalves or a judgment (by default or otherwise obtained against them) or a certificate or a statement of account in writing showing the indebtedness of the Borrower, or any Security Party, which is duly certified by an authorised officer of the Bank shall be binding and conclusive evidence against the Borrower for whatever purpose including as being conclusive evidence of the Indebtedness in a court of law.’ [28] Reliance was placed on the case of Cempaka Finance Berhad v Ho Lai Ying (berniaga atas nama K.H. Trading) and Anor [2005] MLJU 569, where the Court opined on the legal significance of a Certificate of Indebtedness as conclusive evidence of the sum claimed: ‘In the instant case, the relevant clauses 27 and 7.03 of the loan agreement and guarantee agreement respectively are sufficiently clear. A clause of this nature has been described as a conclusive evidence clause. Such a clause has been held to be binding and valid by courts in Australia and England. In Dobbs v National Bank of Australiasia (1953) 53 CLR 643, the Australian Court made the following observation which we think is instructive:-"… The bank could recover without the production of a certificate if, by ordinary legal evidence, it proved the actual indebtedness of the customer. But the (conclusive evidence) clause, if valid, enables the bank by producing a certificate to dispense with such proof. It means that for the purpose of fixing the liability of a surety, the customer's indebtedness may be ascertained conclusively by a certificate. … But the manifest object of the clause was to provide a ready means of establishing the existence and amount of the guaranteed debt and avoiding an inquiry upon legal evidence into the debits going to make up the indebtedness.’ [29] Therefore, the onus falls on the 1st Defendant to adduce evidence to challenge the Certificate of Indebtedness relied upon by the Plaintiff. It is submitted that the 1st Defendant has not discharged such onus, by just stating that the Plaintiff’s claim is incorrect and inconsistent with the Facilities Agreement without any proof of it. Thus, the 1st Defendant’s insinuation and/or allegation with regards to the certificate is merely bare allegation and does not raise to a triable issue. Triable Issues Raised by the 1st Defendant [30] The triable issues raised by the 1st Defendant are as follows:

The Plaintiff has unjustly exercised its right by increasing the interest rate to 3.5% per annum above the Plaintiff’s BLR;

(ii) The Covid-19 pandemic and the implementation of Movement Control Order (“MCO”) has severely affected the Defendants’ business; and

(iii) The Certificate of Indebtedness issued by the Plaintiff is not conclusive evidence of the indebtedness. [31] Each of these ‘triable issues’ will be taken in turn. [32] On the issue of the interest rate, the increase of the interest rate to 3.5% per annum above the Plaintiff’s BLR is pursuant to the terms in Clause 6 of the LOI-1 which reads as follows: “…if you shall default in the payment of any sums on their respective due dates you shall pay interest on such overdue sums at the rate of 3.5% per annum above the Bank’s Base Lending Rate or such other rate or rates as the Bank may, at its sole absolute discretion, at any time and from time to time, impose without notice to you, and such rate or rates of interest (“the Default Rate”) shall be payable by you, as well after as before judgment or demand, from the due date up to the date of actual repayment.” [33] The 1st Defendant had acknowledged and accepted the abovementioned terms unequivocally and followed by the execution of the Guarantee by the 2nd to 5th Defendants. [34] Moreover, the Defendants have also admitted the existence of the Facilities and the Transaction Documents. The Defendants knew and/or should have known the meaning, import and effect of the abovementioned Clause 6. Moreover, the Defendants had in fact consented and agreed to the variation of the interest rate under the Restructured Facilities to 2% + BLR per annum. It simply does not lie in the mouth of the Defendants to now contend that the very same interest rates agreed upon were unjustly exercised, especially in light of the default of said facilities. [35] On the second ‘triable issue’, the Defendants contended that the Covid-19 pandemic and the implementation of the MCO at that material time have caused the economy to be severely affected. [36] The Plaintiff has assisted the Defendants by offering financial relief as a result of the Covid-19 pandemic. In fact, when DDS requested for the Extension of Moratorium and Repayment Program, the Plaintiff has taken step to request for various documents via email dated 30.11.2020 to the Defendants in order to assess the said request. [37] However, it is DDS who had failed to fully furnish the requested documents despite numerous reminders issued. Instead, DDS only responded to parts of the requests, albeit without supporting documents, a point that was informed to him via the Plaintiff’s email dated 3.2.2021 specifically stipulating and identifying the supporting documents. [38] In any event, despite various extension(s) of time given, the 1st Defendant has repeatedly failed to comply with the terms and conditions set out by the Plaintiff via its Restructured Facilities and subsequently, the Moratorium Facilities. [39] In truth, even before the Covid-19 pandemic, the 1st Defendant had already defaulted payments of the Facilities on various occasions since 2017 and this fact is not disputed by the 1st Defendant. Thus, the 1st Defendant’s contentions with regards to the Covid-19 pandemic and the implementation of MCO are unmeritorious and do not amount to a triable issue. [40] Finally, the 1st Defendant’s contended that the Certificate of Indebtedness as at 28.2.2022 issued by the Plaintiffs consists of mistakes with regards to the interest rate and thus the certificate is deemed to be an inconclusive proof. However, the 1st Defendant has not shown the ‘mistakes’ especially when the rate of interests charged are in accordance with the agreement that was actually agreed or executed by the 1st Defendant. Thus, the 1st Defendant’s insinuation and/or allegation with regards to the certificate is merely bare allegation and does not raise to a triable issue. Conclusion [41] This is a clear and straightforward case whereby the Plaintiff is seeking to claim from the 1st Defendant as the Borrower and the 2nd to 5th Defendants as the Guarantors, for the outstanding sum due and owing which was defaulted by the Defendants under the Moratorium Facilities granted by the Plaintiff. [42] Based on the legal principles governing summary judgment; the undisputed facts supported by contemporaneous documents, the 1st Defendant has failed to raise any triable issues. In fact, the 1st Defendant has no real or bona fide defence whatsoever to the Plaintiff’s claim herein. [43] Accordingly, the Court grants order in terms of Enclosure 13 and for judgment to be entered against the 1st Defendant. Dated on the 4th day of April 2023 ONG CHEE KWAN J Judge of the High Court of Malaya High Court of Kuala Lumpur, NCC2 COUNSEL:

Mr. Gary Yap Vern Chieh for Plaintiff

Ms. Teng Mun Wei for Defendant Messrs. Prem & Associates (Kuala Lumpur)

Cempaka Finance Berhad v Ho Lai Ying (berniaga atas nama K.H.