Sabah Development Bank Berhad v Yuhanis Kamil (WA-22NCC-841-11/2024)

This is the Plaintiff’s application for Summary Judgment under Order 14 of the Rules of Court 2012 to recover RM1,550,706.54, together with contractual interest and costs, from the Defendant under a Joint and Several Guarantee dated 24.3.2006. Page 2 of 14 A]

The Plaintiff (Sabah Development Bank Berhad) granted credit facilities to Hikmat Asia Sdn Bhd (“the Company”) pursuant to various facility agreements dated between 2006 and 2013, ultimately totalling RM21,226,672.28.

As security, the Defendant executed the Guarantee on 24.3.2006, jointly and severally with other guarantors including Ismail bin Sulaiman (“Ismail Sulaiman”), guaranteeing the Company’s obligations as principal debtor.

In 2016, there was a Share Sale Agreement dated 6.5.2016 (“Share Sale Agreement”) between Lanvik Sdn Bhd (“Lanvik”) (the parent company in which the guarantors were directors/shareholders) and Alam Dingin Sdn Bhd (“Alam Dingin”) (“Third Party”). Following this transaction, discussions ensued regarding possible substitution of guarantors.

The Plaintiff’s letters dated 10.6.2016, 23.1.2019, and 31.1.2019 show the chronology: i) the 10.6.2016 letter merely agreed to changes in shareholders and directors; ii) the 23.1.2019 letter stated a proposal for replacement was tabled for approval; and Page 3 of 14 iii) the 31.1.2019 letter agreed to substitution subject to four express conditions precedent, namely: board resolution, guarantor consent from Ismail Sulaiman, updated valuation report, and execution and stamping of documents.

The Company defaulted. Following enforcement by public auction on 21.5.2024, a shortfall of RM1,550,706.54 remained outstanding as at 31.10.2024.

Demand was made on the Defendant who has failed to pay. B]

The Defendant admits having signed the Guarantee but raises the following defences: i) that she was released or substituted as guarantor pursuant to the Share Sale Agreement in 2016; ii) that she seeks to rely on the third party proceedings she initiated against Alam Dingin for indemnity; and iii) that the Certificate of Indebtedness is inadequate evidence. Page 4 of 14 C]

The Defendant’s core defence is that she was substituted as guarantor by Alam Dingin in 2016 and is therefore released from liability. This defence fails entirely.

The Plaintiff’s letter dated 31.1.2019 states expressly that the Plaintiff agreed to substitute guarantors subject to the following conditions precedent: i) a certified true copy of the Company’s Board Resolution empowering the Company to apply and accept the replacement; ii) consent and acknowledgment from the guarantor, Ismail Sulaiman; iii) receipt of an up-to-date Valuation Report on the charged property; and iv) completion of execution and stamping of the Plaintiff’s letter and other relevant documents.

The Plaintiff avers that the said conditions are conditions precedent in the true legal sense, and that substitution would only take effect upon their fulfilment. As none of these conditions were fulfilled, the Guarantee remains valid and binding.

The Defendant argues that the Plaintiff has not shown that the conditions were not fulfilled. With respect, this argument fundamentally misunderstands the burden of proof in Order 14 applications.

Once the Plaintiff produces the Guarantee and the Certificate of Indebtedness, the evidential burden shifts to the Defendant.

The Plaintiff is not required to prove a negative.

Moreover, the Plaintiff has produced positive evidence: three letters showing the substitution process and the conditions attached, and an affidavit deposing that the conditions were not met.

The burden lies on the Defendant, who asserts the positive fact of a completed substitution - to adduce credible evidence showing that the conditions precedent were duly fulfilled. The Defendant was plainly in a position to do so. However, the Defendant failed to show that any of these matters were complied with: i) No board resolution was produced, ii) No guarantor consent from Ismail Sulaiman was shown, Page 6 of 14 iii) No valuation report was exhibited, and iv) No executed or stamped documents were produced.

The Defendant cannot rely on broad or speculative assertions. It is not a matter of what she thinks or believes, but what she can prove. Mere statements, however confidently made, cannot substitute for evidence.

The Defendant’s allegation remains a bare assertion wholly unsupported by documentary evidence. In this regard, the Court of Appeal in Microsoft Corporation v. Yong Wai Hong [2008] 6 CLJ 223 quoted Ackner LJ in Banque de Paris et Des Pays-Bas (Suisse) SA v. Costa de Naray [1984] 1 Lloyd’s Rep 21 and held as follows: “[10] In the present instance the bare assertions made in his affidavit filed in opposition to the summons for judgment are insufficient to raise a triable issue warranting the grant of leave to defend. To quote Ackner LJ in Banque de Paris et Des Pays-Bas (Suisse) SA v. Costa de Naray [1984] 1 Lloyd’s Rep 21: … the mere assertion in an affidavit of a given situation which is to be the basis of a defence does not, ipso facto, provide leave to defend; the court must look at the whole situation and ask itself whether the defendant has satisfied the court that there is a fair or reasonable probability of the defendant’s having a real or bona defence.” (own emphasis added)

Similarly, in Sinlexon Construction & Decoration Sdn Bhd v. MBO Cinema Sdn Bhd [2025] MLJU 1341, the High Court held that where there is nothing brought before the court as supporting documents to substantiate defences, they are nothing more than bare denial and afterthought. Bare denials can easily be differentiated from genuine defences: afterthought defences merely deny assertions without supporting documents, or if documents exist, they do not answer the claim (Rich Contracts Sdn. Bhd. v. Time Bio Resources Sdn. Bhd. [2021] MLJU 2020).

That is precisely the case here. The Defendant has failed to produce a single document evidencing fulfilment of the conditions for substitution. This failure is fatal to the defence. D]

The Defendant is bound by the terms of the Guarantee she signed. In CIMB Bank Bhd v. Anthony Lawrence Bourke & Anor [2019] 2 CLJ 1, the Federal Court affirmed that parties are bound by the terms of their contract and courts must give effect to the clear and plain meaning of contractual words. The principle of freedom of contract requires that contracts entered into freely and voluntarily shall be held sacred and enforced.

In Andrew Lee Siew Ling v. United Overseas Bank (M) Bhd [2013] 1 MLJ 449, the Federal Court emphasised that where guarantors undertake liability as principal debtors, their liability Page 8 of 14 does not depend on whether the principal debt is enforceable and can be more extensive than the principal borrower’s liability. The Guarantee here renders the Defendant liable as principal debtor jointly and severally.

The Guarantee remains valid and fully binds the Defendant. Apart from there being no substitution, there was also no discharge of the Guarantee as provided under the terms of the Guarantee itself (Clause 27). E]

The Defendant challenges the adequacy of the Certificate of Indebtedness. This challenge is misconceived.

Clause 23 of the Guarantee expressly provides that a certificate signed by the Plaintiff’s officer is binding and conclusive evidence of the sum due and owing to the Plaintiff.

The Federal Court has affirmed the validity of such conclusive evidence clauses in Cempaka Finance Bhd v. Ho Lai Ying (trading as KH Trading) & Anor [2006] 2 MLJ 685 (FC) and Hong Leong Bank Bhd v. M Muthiah @ Nagappan & Anor and Another Appeal [2014] 1 MLJ 1 (FC).

The Defendant has not shown fraud, manifest error, or any reason to displace the Certificate. Her challenge was unsupported by particulars and made only in general terms. Page 9 of 14 A defendant cannot simply cast doubt on a Certificate of Indebtedness without providing detail and supporting evidence, particularly since it is she who raises this issue. Bare assertions of this nature do not amount to a triable defence. F]

The existence of third party proceedings against Alam Dingin is no defence to the Plaintiff’s claim.

Third party proceedings are independent proceedings between the defendant as plaintiff and the third party as defendant. As held by the Federal in United Merchant Finance Bhd v. Majlis Agama Islam Negeri Johor [1999] 2 CLJ 151, the determination of third party proceedings must await determination of the plaintiff’s action against the defendant. Any statement by a defendant that he is entitled to be indemnified by a third party is no answer to the plaintiff’s claim in an Order 14 application, unless the third party has already discharged the plaintiff’s claim. That has not occurred here. The Federal Court made this point clear: “It should also be noted that any statement by a defendant that he is entitled to be indemnified by a third party is no answer to the plaintiffs claim in an O. 14 application, unless the third party has discharged the plaintiffs claim (Thorne v. Steel [1878] WN 215 CA). See The Supreme Court Practice 1997 Vol. 1 para 14/3 - 4/2 p. 156.” (own emphasis added)

The Defendant sought to rely on the Share Sale Agreement dated 6.5.2016 between Lanvik and the Third Party (Alam Dingin) by filing a Supplementary and Corrective Affidavit. The Share Sale Agreement does not involve the Plaintiff, who is not a party to the said Agreement, and it cannot in law operate to release the Defendant from her obligations under the Guarantee.

I would further add that the third party proceedings commenced by the Defendant, if anything, weakens rather than support her case. By instituting such proceedings, the Defendant implicitly acknowledges that her liability to the Plaintiff is distinct and independent from any claim she may have against the third party. This is to be contrasted with a situation where the Defendant seeks to join the Third Party (Alam Dingin) as a co-defendant under Order 15 rule 4(3) of the Rules of Court 2012.

Her chosen course of action is therefore inconsistent with, and undermines, her present defence of substitution. G]

The Defendant’s equitable plea that she has been left “alone” as guarantor is not a defence in law. Although the Company (Hikmat Asia Sdn Bhd) was wound up on 13.6.2022, one co-guarantor has become bankrupt and another has died, the Page 11 of 14 Guarantee nevertheless expressly renders her jointly and severally liable as principal debtor.

Clause 8(m) of the Guarantee provides that the Guarantee shall not be prejudiced, diminished or affected, nor shall the Defendant be released, by “the death, incapacity, insanity or bankruptcy of the Guarantors or any person to any security or document.”

This is an express contractual term to which the Defendant agreed. Her liability is absolute and not discharged by the circumstances of others. H]

The preliminary requirements under Order 14 have been met: the Defendant has entered appearance, the Statement of Claim was served, and the Plaintiff’s Affidavit in Support complies with Order 14 rule 2. As held in National Company for Foreign Trade v. Kayu Raya Sdn Bhd [1984] 1 CLJ Rep 283, once these requirements are satisfied, the Plaintiff has established a prima facie case and the burden shifts to the Defendant to show why judgment should not be granted.

The Defendant has failed to discharge this burden and has failed to raise any triable issue.

For the reasons given, I allowed the Plaintiff’s application for Summary Judgment in Enclosure 8 with costs. Dated this 5th day of November, 2025 -SGD- (WAN MUHAMMAD AMIN BIN WAN YAHYA) JUDGE HIGH COURT OF MALAYA, (COMMERCIAL DIVISION (NCC 3)) HIGH COURT OF KUALA LUMPUR IN THE FEDERAL TERRITORY, MALAYSIA PLAINTIFF : Kimberley Wong May Yen Messrs Jal & Lim Unit 507, Block D, Phileo Damansara 1, No. 9, Jalan 16/11, Seksyen 16, Off Jalan Damansara, 46350 Petaling Jaya, Selangor Tel: 03-76201218 Email: office@jalnlim.my Page 13 of 14 DEFENDANT : Vishal V Kumar (James P. Monteiro and Prem Sanghvi together with him) Messrs James Monteiro Unit D4-6-1, Solaris Dutamas No. 1, Jalan Dutamas 1, 50480 Kuala Lumpur Tel: 03-62079207/8 Email: info@jamesmonteiro.com 3RD PARTY : Joshua Ho Fung Lym (Nurul Hanani Azamuddin together with him) Messrs Raj, Ong & Yudistra Suite 50-4-13, 50-4-12 & 50-4-9, Wisma UOA Damansara, Jalan Dungun, Damansara Heights, 50490 Kuala Lumpur Tel: 03-20922399 Email: gen@roy.com.my LEGISLATION / RULES CITED Rules of Court 2012  Order 14 rule 2  Order 15 rule 4(3)

Andrew Lee Siew Ling v. United Overseas Bank (M) Bhd [2013]

Banque de Paris et Des Pays-Bas (Suisse) SA v. Costa de Naray [1984] 1 Lloyd’s Rep 21 3. CIMB Bank Bhd v. Anthony Lawrence Bourke & Anor [2019] 2

Cempaka Finance Bhd v. Ho Lai Ying (trading as KH Trading) &

Hong Leong Bank Bhd v. M Muthiah @ Nagappan & Anor and

Microsoft Corporation v. Yong Wai Hong [2008] 6 CLJ 223

National Company for Foreign Trade v. Kayu Raya Sdn Bhd [1984] 1 CLJ Rep 283

Rich Contracts Sdn. Bhd. v. Time Bio Resources Sdn. Bhd. [2021] MLJU 2020

Sinlexon Construction & Decoration Sdn Bhd v. MBO Cinema

United Merchant Finance Bhd v. Majlis Agama Islam Negeri