RHB Bank Berhad v Chan Tian Siak & 2 Lagi (WA-22NCC-160-05/2017)

CHAN TIAN SIAK (No. K/P: 600220-04-5315)

YAP KWEE CHAI (No. K/P: 610925-04-5189)

MUSTAFFA BIN MOHD SOM … DEFENDAN- (No. K/P: 431227-05-5057) DEFENDAN GROUNDS OF DECISION Introduction [1] The Plaintiff's claim against the Defendants (D1, D2 and D3) is for an outstanding sum of money that was allegedly owed by a company of which the Defendants stood as guarantors. [2] The suit was then struck out with liberty to file afresh with no order as to costs against D1 and costs of RM4,000.00 to be paid by the Plaintiff to D2 and D3 within 1 month hereof. Hence this appeal by D2 2 and D3 against the Order of the Court allowing the Suit to be withdrawn with liberty to file afresh. Brief Facts [3] The relevant facts are as follows. The Plaintiff is a licensed bank incorporated in Malaysia while the Defendants at all material times were the guarantors of the banking facilities granted by the Plaintiff to a company, Pembinaan JBBS Sdn Bhd (‘the Company/Borrower’). The 1st Defendant at all material times is one of the Directors for the Company. [4] The Plaintiff claimed that they have given the following banking facilities to the Company: Overdraft Facility 1 RM 1,288,788.00 Overdraft Facility 2 RM 2,000,000.00 Overdraft Facility 3 RM 3,750,000.00 Overdraft Facility 4 RM 1,200,000.00 Term Loan RM 10,000,000.00 Multi-Trade Line Facility RM 730,000.00 [5] According to the Plaintiff, as a security for such banking facilities, several continuing Personal Guarantees were executed by the Defendants in which the Defendants agreed to pay to the Plaintiff all sums owed by the Company to the Plaintiff as if they were the Principal Debtor. [6] On 15/6/2015, the Company was wound up in the Shah Alam High Court for failure to pay the outstanding amount under the banking facilities to the Plaintiff. The Plaintiff then proceeded to file an action against the 3 Defendants on 4/5/2017. 3 [7] On 26/5/2017, this Court had entered Judgment in Default against D1. Meanwhile on 6/7/2017, the Plaintiff filed an application pursuant to Order 14, Rules of Court 2012 (‘ROC 2012’) for summary judgment to be entered against D2 and D3 (encl.10) which was fixed for hearing on 21/8/2017. [8] However on 12/7/2017, D1 filed an application to set aside the Judgment in Default (encl.12). Subsequently, D2 and D3 had proceeded to file an application pursuant to Order 18, Rule 19(1)(a) or

or (c) or (d) ROC 2012 to strike out the Plaintiff’s Writ and Statement of Claim on 20/7/2017 (encl.15). Both encls.12 and 15 were fixed for case management on 21/8/2017 after the necessary directions for exchange of affidavits to be filed were given. Case management of the main Suit (encl.1) was likewise fixed on 21/8/2017. [9] Vide letter dated 3/8/2017, the Plaintiff’s solicitors among others informed the Court that they received instructions from their client to withdraw the Suit against the Defendants with liberty to file afresh. Enclosed therein were the following correspondences from which the following matters were gleaned: Messrs. Anad & Noraini, the Plaintiff’s solicitors had on 28/7/2017 written to the solicitors for D1, Messrs. Cheah Law Chambers and Solicitors for D2 and D3, Messrs. Andrew Davis & Co. informing them of their client’s instruction and seeking a response from them soonest as they would be writing to the Court notifying of the client’s instruction. Messrs. Andrew Davis & Co responded vide letter dated 1/8/2017 stating their clients’ instructions where D2 and D3 were agreeable to the withdrawal provided it was without liberty to file afresh. The Plaintiff’s solicitors vide the same letter 4 of 3/8/2017 then sought an appointment date from the Court to resolve the issue between the parties. The Court fixed the appointment on 15/8/2017. The Plaintiff’s Case [10] The Plaintiff claimed that as a result of the breach and winding up of the Company, the Defendants as guarantors are liable to pay the sum of money due and owing by the Company together with the interest payable thereon to the Plaintiff in accordance with the terms under the Personal Guarantees. [11] The Plaintiff through their solicitors had sent a letter dated 21/11/2016 to the Defendants in order to withdraw and terminate the banking facilities and claimed the entire sum due as at 31/8/2016 together with the accrued interest. [12] Furthermore, the Plaintiff also claimed that the change of Bank Utama (Malaysia) Berhad to RHB Bank Berhad was common knowledge and the same notice has been given to the general public through advertisement in daily newspapers published in Malaysia. Thus the action taken by the Plaintiff is valid and the Plaintiff has the locus standi to file this action. [13] The Plaintiff further claimed that D2 and D3 had signed continuing guarantees and the guarantees will operate to attach liability to a series of transactions or facilities provided by the Plaintiff to the Company. The Plaintiff also argued that it is not their obligation to provide any notice of the offer letter to D2 and D3. 5 [14] Further, the Plaintiff claimed that they have no obligation to furnish the details of the secured properties of the Company to the Defendants. The Plaintiff added that the securities in respect of the guarantees executed by D2 and D3 and the secured properties granted by the Company is a separate issue. The Defendants’ Case [15] D2 and D3 alleged that they had no knowledge of the Plaintiff's claim and contended that the Plaintiff does not have any locus standi to file this action. According to D2 and D3 the correct party to file this action is Bank Utama (Malaysia) Berhad. [16] Meanwhile D1 claimed that he was never served with the writ and statement of claim in this action at all material times. D1also argued that the Plaintiff has obtained judgment in default against D1 without a proper service on D1. Hence, the Plaintiff has deprived D1 of the right and opportunity to defend the action filed. [17] D2 and D3 also claimed that they had never been the guarantors to any of the facilities that the Plaintiff has allegedly given to the Company. Furthermore, they denied having any knowledge of the offer letters given by the Plaintiff and claimed that the Plaintiff has failed to submit a detailed description of the so-called secured properties of the Company that have been auctioned or redeemed. [18] Moving on, D2 and D3 claimed that the Plaintiff has failed to submit a detailed description of the so-called secured properties of the Company which have been awarded by third parties that have been auctioned or redeemed. 6 [19] Further, D2 and D3 also claimed the Plaintiff has failed to take into account the profits from the secured properties which have been awarded by the third parties and contended that the Plaintiff does not have any basis to claim any amount from them. [20] In addition to that, D2 and D3 claimed that the action has been filed out of time and is barred by Section 6(1) of the Limitation Act 1953. They argued that the offer letter has been awarded since 1995 which was about 22 years ago and the Plaintiff had just brought this claim now which would be tantamount to an abuse of process. [21] According to D2 and D3, there is a discrepancy between the sums of the loan stated in the offer letter. This indicated that the Plaintiff's claim is incorrect, inaccurate and inconsistent with the current document in which the Plaintiff could not exactly explain as the offer letter has been provided by Bank Utama (Malaysia) and not the Plaintiff itself. Findings [22] During the appointment on 15/8/2017, learned Plaintiff Counsel, Miss Navamalar reiterated that they wish to withdraw the Suit with liberty to file afresh; they have no objection to D1 setting aside the Judgment in Default and thereafter for the Plaintiff to be given liberty to file afresh and Plaintiff has cause of action against D2 and D3. [22.1] Learned Plaintiff Counsel informed the Court the basis for the withdrawal of the Suit with liberty to file afresh is as follows: “After perusing the documents, Plaintiff takes the view the amount outstanding is accurate as per Certificate of Indebtedness. However, the loan taken is not only from RHB but from Bank Utama. 7 This can be seen from O.14 application in Affidavit Sokongan which shows Letters of Offer from RHB and Bank Utama. See TBP-1 p.1 Bank Utama – p.55 From RHB – p.56-112 Bank Utama – p.113 etc. It is all consolidated. Instead of Plaintiff amending Statement of Claim we will have to particularise the Statement of Claim. Bank Utama – Assets and liabilities are vested with RHB. In the Statement of Claim Plaintiff to particularise the facilities taken from Bank Utama and RHB. Guarantee provided and show the amount outstanding”. [23] In relation to the withdrawal of the Suit against D1 without liberty to file afresh, learned Counsel for D1 said that D1 has no objection but requested that the withdrawal be made without liberty to file afresh as D1 has raised the issue of limitation and laches. [24] Learned Counsel for D2 and D3 reiterated their stand as per their letter dated 1/8/2017 that D2 and D3 are agreeable to the withdrawal of the Suit but with no liberty to file afresh for the following reasons:

The case has “progressed a bit in Court” in that pleadings are closed; D2 and D3 have filed the Affidavit in Reply to Plaintiff’s O.14 application; D2 and D3 had filed the striking out application for which directions as to exchange of affidavits were given;

The Plaintiff’s application to withdraw with liberty to file afresh is rather late in the day. In relation to the O.14 application, Messrs. Andrew Davis & Co, acting for D3 had vide letter dated 9/12/2016 written to the Plaintiff’s solicitors stating D3 denied and has no knowledge of the guarantees in respect of the banking facilities which are the subject matter in this Suit and requested for a copy of the alleged guarantees and relevant documents but there was no response thereto. 8

The Writ of Summons in the present Suit was filed on 4/5/2017. D2 (Yap Kwee Chai) in the present Suit had filed an earlier Suit 22NCVC- 34-01/2015 (‘Suit 34’) against the Plaintiff in this Suit (in Suit 34, D2 was the plaintiff and RHB Bank Berhad was the defendant). D2 in Suit 34 took the position that that there was no amount outstanding and property should have been redeemed. By prayer 28(c) of Suit 34, D2 sought for, among others, the following relief: “28. Oleh yang demikian, Plaintif (D2) dengan rendah diri memohon kepada Mahkamah yang Mulia ini suatu penghakiman dimasukkan terhadap Defendan (RHB Bank Berhad) seperti berikut -

…;

…;

satu perintah bahawa Defendan dalam masa 7 hari membekalkan kesemua dokumen-dokumen dan butiran yang diperlukan oleh Plaintif untuk membolehkan beliau menjalankan hak penebusan; …”. The Court of Appeal allowed the appeal against the dismissal by the High Court in Suit 34 based on the draft Court of Appeal Order dated 1/12/2015 (exh.YKC-5 in the Affidavit in Reply of D2 and D3 affirmed by D2 on 20/7/2017 (encl.14). The transaction in the Suit 34 is related to the present Suit. Learned Counsel for D2 and D3 argued that if those documents in para 28 (c) in Suit 34 had been provided, D2 will know for certain whether there is any amount outstanding by the Company in this present Suit and contended “there was a history of not providing documentation”.

In relation to the striking out application, learned Counsel for D2 and D3 drew the Court’s attention to exh.YKC-2 in Affidavit in Support affirmed by D2 on 20/7/2017 (encl.16). It is a letter dated 20/11/2013 from Messrs. Sabarudin Othman & Ho at paras 2, 3 and 4, particularly, para 4 “We have been informed that this present corporate loan to Pembinaan JBBS Sdn Bhd has been settled”. There was no reply to this letter. 9

The Plaintiff’s claim is barred by limitation and the doctrine of laches referred to in para 20 above. [25] Learned Plaintiff Counsel responded as follows:

The Statement of Claim could not be said to be inadequate; reiterating the Plaintiff’s position in para 22.1 above.

On the issue of limitation, learned Plaintiff Counsel said that if it applies, the parties can always raise it when a fresh Suit is filed or they can file a striking out application.

The letter of Messrs. Sabarudin Othman & Ho had been replied to. By Suit 34, D2’s redemption only relates to one part of the security and although it is related to this present Suit, the amount owed to the Plaintiff by the Company is not settled.

By para 9 of the Statement of Claim, the proceeds from the foreclosure/sale of the securities of the Guarantors and the Company were taken into account towards settlement of the Plaintiff’s claim but there is still outstanding amounts due under the banking facilities taken by the Company. [26] The issue before the Court is whether the withdrawal of the present Suit ought to be allowed with liberty as requested by the Plaintiff or without liberty as per D1 and D2 and D3’s request. [26.1] Based on exh.TBP-1, it is evident there are 6 banking facilities for the amounts therein stated provided to the Company by Bank Utama (pp.1-55 &113-117) and by RHB Bank Berhad (pp.56-112 & 118-141). There are also exhibited, exhs.TP-2 and TP-3, the Personal Guarantees of D1, D2 and D3. Plaintiff’s intention to withdraw is to particularise the respective banking facilities and the Guarantees to show the amount outstanding. 10 [26.2] The issue of limitation can always be addressed in the fresh Suit if the Plaintiff does file the same. [26.3] Although the Court has given directions for the exchange of Affidavits and filing of Submissions for the summary judgment application (encl.10), the exchange of Affidavits for D1’s setting aside application (encl.12) and D2 and D3’s striking out application (encl.15), I find the Plaintiff had vide their firm’s letter of 3/8/2017 notified the D1 and D2 and D3 of the Plaintiff’s intention to withdraw albeit with liberty to file afresh and will not be filing Affidavits to save costs and the time of the parties. I find there was no further compliance of the Court’s directions as follows: Encl.10 - Plaintiff did not file Affidavit in Reply and no Written Submissions filed by the Plaintiff and D2 and D3; Encl.12 - Plaintiff did not file Affidavit in Reply; Encl.15 - Plaintiff did not file Affidavit in Reply. [26.4] In my view the Plaintiff has duly notified the parties of their intention to withdraw the Suit well before the hearing date of the summary judgment application fixed on 21/8/2017 and before the hearing dates of the setting aside application and the striking out applications were fixed. Both the latter applications were fixed for case management on 21/8/2017. In my considered opinion there was no prejudice occasioned to the Defendants which could not be compensated by costs. [27] For completeness in so far as D1 is concerned, in relation to encl.12, as there was no objection from the Plaintiff, the Court granted the Judgment in Default entered against D1 to be set aside with no order as to cost. 11 [28] Learned Counsel for D2 and D3 requested costs of RM10,000.00 to RM15,000.00 stating that they had filed Memorandum of Appearance, Defence of D2 and D3, Affidavit in reply to the summary judgment application and the striking out application and attended Court 3 times. Learned Counsel for the Plaintiff proposed costs of RM3,000.00 because the applications were not heard yet. Conclusion [29] For the foregoing reasons, pursuant to Plaintiff’s withdrawal of the Suit, I granted the following order on 15/8/2017:

the Suit is struck out with liberty to file afresh;

(ii) no order as to costs against D1; and

(iii) costs of RM4,000.00 is to be paid by the Plaintiff to D2 and D3 within one month hereof. Dated: 10/1/2018 SGD. (LAU BEE LAN) Judge 12 Counsel for the Plaintiff: Cik G. Navamalar Messrs Anad & Noraini Advocates & Solicitors 12.01-12.09, Level 12 The Heritage House 33, Jalan Yap Ah Shak 50300 Kuala Lumpur Counsel for the 1st Defendant: Encik T E Cheah Messrs Cheah Law Chamber Advocates & Solicitors C-3A-01, Centum @ Oasis Corporate Park Oasis Damansara No. 2, Jalan PJU 1A/2, Ara Damansara 47301 Petaling Jaya Selangor Darul Ehsan Counsel for the 2nd and 3rd Defendants: Encik Andrew Davis Messrs Andrew Davis & Co. Advocates & Solicitors P-3-13, No. 60, Plaza Damas Jalan Sri Hartamas 1 (1/70A) Sri Hartamas 50480 Kuala Lumpur