Small Medium Enterprise Development Bank Malaysia Berhad v 1. Primanora Medical Centre Sdn Bhd (22M-219-09/2017)

PRIMANORA MEDICAL CENTRE SDN BHD

KLINIK PAKAR WANITA DR. NORA SDN BHD

NOR ASHIKIN BINTI AHMAD MOKHTAR

AMINUDDIN BIN AHMAD

LIYANA DHAMIRAH BINTI AMINUDDIN (NO. K/P: 820222-14-5138) … DEFENDAN-DEFENDAN DI HADAPAN YA KHADIJAH BINTI IDRIS PESURUHJAYA KEHAKIMAN 2 GROUNDS OF JUDGMENT Introduction [1] This is a civil action filed by the Plaintiff to recover monies due and payable under an Islamic financing facility granted to the 1st Defendant. The Plaintiff’s application for summary judgment was allowed by this court. The Plaintiff subsequently filed an application to strike out the Defendants’ counter claim and the said application was also allowed. [2] The Defendants did not appeal against the decision of this court allowing the Plaintiff to enter judgment against them. However the Defendants appealed against the striking out of their Counterclaim. Salient facts Financing Facility 1 [3]

facility based on the principles of Bai’ Bithamin Ajil for a sum of RM 2,161,640.00 (hereinafter referred to as “the Bai’ Bithamin Ajil Facility”) with the Selling Price of RM 2,447,568.81; and

facility based on the principles of Bai’ Inah Mali for a sum of RM 500,000.00 (hereinafter referred to as “the Bai’ Inah Mali Facility”) with the Selling Price of RM 566,137.01. [4] In consideration of the financing facilities granted pursuant to the 1st Letter of Offer, the following documents were executed –

the Asset Purchase Agreement dated 6 September 2007 between the Plaintiff and the 1st Defendant in respect of Bai’

the Asset Sale Agreement dated 6 September 2007 between the Plaintiff and the 1st Defendant in respect of Bai’ Bithaman Ajil Facility (hereinafter referred to as “the BBA Asset Sale

the Asset Purchase Agreement dated 6 September 2007 between the Plaintiff and the 1st Defendant in respect of the Bai’ Inah Mali Facility; 4

the Asset Sale Agreement dated 6 September 2007 between the Plaintiff and the 1st Defendant in respect of the Bai’ Inah Mali Facility (hereinafter referred to as “the BIM Asset Sale

Debenture dated 6 September 2007;

Supplemental Deed of Assignment of Properties dated 6 September 2007 in respect of a property known as Unit Lot 29-1,29-2 & 29-3, S5 3 Storey, Shop Office Type A-ODD Lot 1, The Plaza Phase 6D3, Taman Tun Dr. Ismail, Kuala Lumpur held under Hakmilik Induk Geran 50101, Lot 57453, Mukim Kuala Lumpur, Daerah Kuala Lumpur, Negeri Wilayah Persekutuan measuring approximately 7,448 squares; and

Memorandum of Deposit in respect of Sijil Akaun Pelaburan Mudharabah for an amount of RM 150,000.00. [5] In consideration of the Bai’ Bithaman Ajil Facility and the Bai’ Inah Mali Facility, the 2nd, 3rd, 4th and 5th Defendants executed a joint and several Guarantee and Indemnity Agreement dated 6 September 2006 (hereinafter referred to as “the Guarantee and Indemnity Agreement 1”). 5 [6] At the request of the 1st Defendant, the Plaintiff changed the terms and conditions of the 1st Letter of Offer vide a Letter of Changes dated 17 March 2008 subject to the terms and conditions contained therein, duly accepted by the 1st Defendant on 26 March 2008. [7] At the request of the 1st Defendant, vide a Letter of Changes and Rescheduling dated 3 February 2009 the Plaintiff approved changes to the terms and condition and rescheduled the facility in the following manner –

The Bai’ Bithamin Ajil Facility was divided into:

Bai’ Bithaman Ajil Facility I amounting to RM 1,961,412.40 (“BBA Facility 1”);

(ii) Bai’ Bithaman Ajil Facility II amounting to RM 200,227.60 (“BBA Facility 2”); and

the Bai’ Inah Mali Facility remain subject to the terms and conditions contained in the said letter, duly accepted by the 1st Defendant on 4 February 2009. 6 [8] Subsequently, at the 1st Defendant’s request, the Plaintiff vide a Letter of Restructuring dated 20 June 2011 restructured the financing facilities in the following manner –

the BBA Facility I to RM 1,829,424.83 with the Sale Price of RM 2,200,242.34;

the BBA Facility II to RM 171,062.90 with the Sale Price of RM 208,875.58; and

the Bai’ Inah Mali Facility to RM 439,343.93 with the Sale Price of RM 527,393.30 subject to the terms and conditions contained in the said letter dated 20 June 2011, duly accepted by the 1st Defendant on 27 June 2011. [9] In relation to the said Letter of Restructuring dated 20 June 2011, the 1st Defendant executed –

Variation Agreement dated 20 July 2011 in respect of Bai’

Variation Agreement dated 20 July 2011 in respect of Bai’ Inah Mali Facility. 7 [10] Subsequently at the 1st Defendant’s request, the Plaintiff vide a Letter of Rescheduling dated 19 November 2014 rescheduled the facilities as follows –

BBA Facility I to RM 1,847,095.51;

BBA Facility II to RM 191,464.84; and

Bai Inah Mali Facility to RM 467,011.85 (hereinafter collectively referred to as “the Financing Facility 1”), subject to the terms and conditions contained in the said letter dated 19 November 2014, duly accepted by the 3rd Defendant as a director of the 1st Defendant. Financing Facility 2 [11] Via Letter of Offer dated 8 December 2010 (“hereinafter referred to as the “2nd Letter of Offer”), the Plaintiff granted to the 1st Defendant –

Bai’ Inah Mali Facility I amounting RM 470,000.00 with the Sale Price of RM 615,774.62;

Bai’ Inah Mali Facility II amounting RM 300,000.00 with the Sale Price of RM 393,047.63; and 8

Bai’ Inah Mali Facility III amounting RM 230,000.00 with the Sale Price of RM 301,336.52. [12] In consideration of the financing facilities granted via the 2nd Letter of Offer, the 1st Defendant inter alia executed the following –

the Asset Purchase Agreement dated 4 January 2011;

the Asset Sale Agreement dated 4 January 2011 (hereinafter referred to as the Bai’ Inah Asset Sale Agreement); and

the Supplemental Deed of Assignment of Properties dated 4 January 2011. [13] In consideration of the Bai’ Inah Mali facilities, the 2nd, 3rd, 4th and 5th Defendants executed a joint and several Guarantee and Indemnity Agreement dated 4 January 2011 (hereinafter referred to as “the Guarantee and Indemnity Agreement 2”). [14] At the 1st Defendant’s request, the Plaintiff changed the terms and conditions of the 2nd Letter of Offer twice, namely, – 9

vide a Letter of Changes dated 6 June 2011 subject to the terms and conditions contained therein, duly accepted by the 1st Defendant on 8 June 2011; and

vide a Letter of Changes dated 12 June 2013 subject to the terms and conditions contained therein, duly accepted by the 1st Defendant on 15 June 2013. [15] At the 1st Defendant’s request, the Plaintiff vide a Letter of Rescheduling dated 19 November 2014 restructured –

the Bai’ Inah Facility I to RM 326,987.92;

the Bai’ Inah Facility II to RM 299,780.89; and

the Bai’ Inah Facility III to RM 245,823.38. (hereinafter collectively referred to as “the Financing Facility 2”), subject to the terms and conditions contained in the said dated 19 November 2014, duly accepted by the 3rd Defendant being the director of the 1st Defendant. [16] The 1st Defendant defaulted in the repayment of the Financing Facility 1 and the Financing Facility 2 (hereinafter collectively referred to as “the said Financing Facilities”) which prompted the Plaintiff’s solicitors 10 to issue Letters of Demand dated 24 August 2017 to the Defendants demanding the total outstanding sum of RM 1,901,259.60 as at 22 August 2017 together with late payment charges thereon. Vide its solicitor’s letter dated 19 September 2007, the Defendants denied the sum demanded and claimed that the sum demanded is erroneous and unsubstantiated. [17] Due to the Defendants failure to pay the sum demanded, the Plaintiff initiated this civil action. [18] The Defendants’ pleaded defence is as follows –

it is the Plaintiff who tried to sell to the 1st Defendant the Plaintiff’s financial facility product based on Bai’ Bithamin Ajil and Bai’ Inah Mali principles and / or influenced the 1st Defendant to accept the said Financing Facilities;

the Defendants denies receiving and utilizing Bai’ Bithamin Ajil for a sum of RM 2,161,640.00 with the Selling Price of RM 2,447,568.81 and the Bai’ Inah Mali for a sum of RM 500,000.00 with the Selling Price of RM 566,137.01; 11

Plaintiff owes a duty of care to the Defendants. As the Plaintiff has breached the said duty therefore the Defendants are not obliged to pay any instalments towards the said

there are no sale of asset transaction in respect of the said

the Supplemental Deed of Assignment are no longer valid and enforceable as the properties are no longer under the master title and the Plaintiff failed to provide any evidence of the status of the strata title;

the Defendants allege that the Letters of Changes and Restructuring were purportedly made at the instance of the

that although the said Financing Facilities have been restructured and / or rescheduled, nevertheless the Plaintiff wrongfully blacklisted the 1st Defendant; 12

the Defendants denies the terms and conditions of the said

the Defendants allege that the Plaintiff ignored the letter of the Defendants' solicitor in reply to the Plaintiff’s Letter of Demand dated 19 September 2017;

the Defendants allege that the Plaintiff has failed to provide statement of account for the said Financing Facilities since

the Defendants allege that the potential investor lost patience and refused to purchase the assigned properties because Plaintiff failed to provide the redemption statement on time. This resulted in huge losses suffered by the Defendants;

the Defendants allege that the Plaintiff imposed compounding interest and penalty charges even though the said Financing Facilities are based on Shariah principles;

the Defendants allege that the Plaintiff forced the 1st Defendant to hand over signed blank cheques to the Plaintiff. The Defendants are not made aware of the purpose of the 13 said cheques nor Plaintiff provided any accounts for the said cheques; and

the Defendants allege that they have provided collaterals to the Plaintiff to secure the said Financing Facilities and till to-date the Plaintiff did not provide any information or status of the said collaterals. Defendants’ Counterclaim [19] The Plaintiff breached its duty of care in respect of the management of the said Financing Facilities. As a result, the Defendants suffer losses and damages. The Plaintiff’s breach is as follows –

failure to provide statement of account. Due to delay in providing the statement of account, the 1st Defendant’s auditor faced difficulty in filing the statutory documents to the

(CCM). The 1st Defendant was imposed with a fine of RM 10,022.92 and RM 3,922.80 by the Inland Revenue and CCM respectively; 14

failure to provide the redemption statement;

imposition of penalty charges which is in violation of Shariah principles; and

wrongfully blacklisted the 1st Defendant. [20] In its counter claim the Defendants sought, inter alia, the following –

that the Plaintiff supply to the Defendants the Statement of Accounts in respect of the said Financing Facilities granted;

that the Plaintiff pay to the Plaintiff the fine imposed by the Inland Revenue and CCM on the 1st Defendant; and

that the Plaintiff pay to the Defendants all profits and penalty charges that the Defendants had paid to the Plaintiff. Plaintiff’s contentions [21] Vide notice of application dated 28 November 2017 (enclosure 8) the Plaintiff applied for summary judgment (Summary Judgment Application) against the Defendants in the following terms – 15

under the Financing Facility 1 –

under the BBA Facility I, a sum of RM 1,178,344 as at 22 August 2017 and late payment compensation (ta’widh) at the rate of 1% par annum on any amount indebted from 23 August 2017 until the date of maturity or until judgment whichever is earlier at a gross dividend rate of the Islamic Investment Account of a 12 month period calculated on the balance of the Purchase Price until full settlement;

(ii) under the BBA Facility II, a sum of RM 8,516.77 as at 22 August 2017 and late payment compensation (ta’widh) at the rate of 1% par annum on any amount indebted from 23 August 2017 until the date of maturity or until judgment whichever is earlier at a gross dividend rate of the Islamic Investment Account of a 12 month period calculated on the balance of the Purchase Price until full settlement;

(iii) under the Bai’ Inah Mali Facility a sum of RM 206,546.68 as at 22 August 2017 and late payment compensation (ta’widh) at the rate of 1% par annum on any amount indebted from 23 August 2017 until the date of maturity or until judgment whichever is earlier at a gross dividend rate 16 of the Islamic Investment Account of a 12 month period calculated on the balance of the Purchase Price until full settlement.

under the Financing Facility 2 –

under Bai’ Inah Mali Facility I, a sum of RM 174,824.23 as at 22 August 2017 and late payment compensation (ta’widh) at the rate of 1% par annum on any amount indebted from 23 August 2017 until the date of maturity or until judgment whichever is earlier at a gross dividend rate of the Islamic Investment Account of a 12 month period calculated on the balance of the Purchase Price until full settlement;

(ii) under Bai’ Inah Mali Facility II, a sum of RM 183,023.75 as at 22 August 2017 and late payment compensation (ta’widh) at the rate of 1% par annum on any amount indebted from 23 August 2017 until the date of maturity or until judgment whichever is earlier at a gross dividend rate of the Islamic Investment Account of a 12 month period calculated on the balance of the Purchase Price until full settlement; 17

(iii) under Bai’ Inah Mali Facility III, a sum of RM 150,003.37 as at 22 August 2017 and late payment compensation (ta’widh) at the rate of 1% par annum on any amount indebted from 23 August 2017 until the date of maturity or until judgment whichever is earlier at a gross dividend rate of the Islamic Investment Account of a 12 month period calculated on the balance of the Purchase Price until full settlement. [22] After considering the Summary Judgment Application, the affidavits and submissions filed by both parties, this court allowed the said application in terms of the above prayers. In respect of such decision this court is not informed of any notice of appeal filed by the Defendants. [23] The Plaintiff subsequently filed an application under Order 18 rule 19 (1) (a) – (d) of the Rules of Court 2012 (Striking Out Application) for the Defendants’ Counterclaim be dismissed. The grounds put forward by the Plaintiff to justify the Striking Out Application are as follows –

the Defendants’ Counterclaim is res judicata as the said claim has already been adjudged; 18

the Defendants’ Counterclaim is a duplicity;

the Defendants’ Counterclaim did not disclose any reasonable cause of action; and

the Defendants’ action is scandalous, frivolous and vexatious and that is an abuse of the process of the court. [24] The Plaintiff submits that the Defendants relies on their Statement of Defence and Counterclaim to resist the Striking Out Application. The issues relating to the Defendant’s Defence and Counterclaim has already been argued and adjudged during hearing of the Summary Judgment Application. As such the Defendants are estop from raising again those issues. [25] In its affidavit (enclosure 29) resisting the Striking Out Application, the issues raised by the Defendants may be summarized as follows –

the Defendants had filed a notice of motion at the Court of Appeal seeking leave to appeal against the Summary Judgment entered against them;

if leave is granted, the Defendants intend to file an application to adduce fresh evidence, namely, a report 19 prepared by an accountancy firm titled “Forensic Accounting And Shariah Compliance Review For Financing Agreement Between SME Bank And Klinik Pakar Wanita Dr. Nora Sdn Bhd (“KPWDN”) and Primanora Medical Centre Sdn Bhd (“PRIMANORA”). The said report is hereinafter referred to as “the Forensic Accounting Report”. The firm of accountants was appointed on 12 April 2018 and the Forensic Accounting Report was dated 8 May 2018; and

breach of duty on the part of the Plaintiff. The Defendants repeated the alleged breaches that it has pleaded in its Statement of Defence and Counter Claim. However there appears to be a new issue raised in paragraph 11 of the Defendants’ affidavit – the imposition of “capitalization of interest” which was not pleaded in the Statement of Defence and Counter Claim. [26] It is argued by the Defendants that the issues of res judicata and duplicities of proceedings does not arise as the issues relating to the Defendants’ Counterclaim are entirely different from the issues relating to the Plaintiff’s claim. According to the Defendants, the Counterclaim is 20 very much alive especially in light of new evidence which emerged from the Forensic Accounting Report. The law [27] The Defendants’ Striking Out Application is premised on Order 18 rule 19 of the Rules of Court 2012 (hereinafter referred to as “the RoC 2012”). The said Order reads as follows –

Striking out pleadings and endorsements (O. 18 r. 19)

The Court may at any stage of the proceedings order to be struck out or amended any pleading or the endorsement, of any writ in the action, or anything in any pleading or in the endorsement, on the ground that-

it discloses no reasonable cause of action or defence, as the case may be;

it is scandalous, frivolous or vexatious;

it may prejudice, embarrass or delay the fair trial of the action; or

it is otherwise an abuse of the process of the Court, and may order the action to be stayed or dismissed or judgment to be entered accordingly, as the case may be.

No evidence shall be admissible on an application under subparagraph (1)(a).

This rule shall, as far as applicable, apply to an originating summons as if it were a pleading. 21 [28] As regards to the legal principles in respect of striking out application, the Supreme Court in Bandar Builder Sdn Bhd & Ors v United Malayan Banking Corporation Bhd [1993] 3 MLJ 36 held that the summary procedure under Order 18 rule 19 of the RoC 2012 can only be adopted when it can be clearly seen that a claim or answer is on the face of it ‘obviously unsustainable’. In Aras Jalinan Sdn Bhd v Tipco Asphalt Public Co Ltd & Ors [2012] 1 MLJ 510 the Court of Appeal referred to the principles laid in the case of Bandar Builder Sdn Bhd (supra) and held that a striking out application is not a trial on affidavits and the court should not conduct a minute examination of the documents and the facts of the case. It is further held that as long as the claim discloses some cause of action or raises some question fit to be tried it should not be struck out. The mere fact the case is weak and not likely to succeed is no ground for the pleadings to be struck out. [29] In respect of principles of the doctrine of res judicata, reference is made to the case of Asia Commercial Finance (M) Berhad v Kawal Teliti Sdn. Bhd. [1995] 3 CLJ 783; [1995] 3 CLJ 783 where it was stated by the Supreme Court as follows – What is res judicata? It simply means a matter adjudged, and its significance lies in its effect of creating an estoppel per rem judicature. When a matter between two parties has been adjudicated by a Court of 22 competent jurisdiction, the parties and their privies are not permitted to litigate once more the res judicata, because the judgment becomes the truth between such parties, or in other words, the parties should accept it as the truth; res judicata pro veritate accipitur. The public policy of the law is that it is in the public interest that there should be finality in litigation – interest rei publicae ut sit finis litium. It is only just that no one ought to be vexed twice for the same cause of action – nemo debet bis vexari pro eadem causa. Both maxims are rationales for the doctrine of res judicata, but the earlier maxim has the further elevated status of a question of public policy. Since a res judicata creates an estoppel per rem judicature, the doctrine of res judicata is really the doctrine of estoppel per rem judicatum, the latter being described sometimes in a rather archaic way is estoppel by record. Since the two doctrines are the same, it is no longer of any practical importance to say that res judicata is a rule of procedure and that no estoppel per rem judicatum is that of evidence. Such dichotomy is apt to give rise to confusion. The cause of action estoppel arises when rights or liabilities involving a particular right to take a particular action in Court for a particular remedy are determined in a final judgment and such right of action ie. the cause of action, merges into the said final judgment; in layman’s language, the cause of action has turned into the said final judgment. The said cause of action may not be re-litigated between the same parties because it is res judicata. In order to prevent multiplicity of actions and also in order to protect the underlying rationales of estoppel per rem judicatum and not to act against them, such estoppel of cause of action has been extended to all other causes of action (based on the same facts or issues) which should have been litigated or asserted in the original earlier action resulting in the final judgment and which were not either deliberately or due to inadvertence. 23 [30] In Farlim Properties Sdn Bhd v Goh Keat Poh & Ors (And Other Appeals) [2003] 4 CLJ 505; [2003] 4 CLJ 505 the Court of Appeal held – 6 (1) When the plea of res judicata is raised it is necessary to identify with precision the issue that was decided in the earlier proceedings. In Tong Lee Hwa & Anor v. Lee Yoke San [1979] 1 MLJ 24, [1981] 1 MLJ 54 Chang Min Tat FC held that to constitute a res judicata, the earlier judgment must, in terms of the Privy Council decision in Kok Hoong v. Leong Cheong Kweng Mines Ltd [1964] MLJ 49 ‘necessarily and with precision’ determine the point in issue. [31] Thus in order to determine whether there is merit in the Plaintiff’s contentions that the issues relating to the Defendants’ Counterclaim has been ventilated and res judicata steps in, this court will have to firstly identify the said issues and secondly to determine whether the said issues has been ventilated and adjudged upon at the Summary Judgment Application. Findings of court [32] The Defendants’ claim against the Plaintiff as evident in its Counterclaim is that the Plaintiff has breached its duty of care in relation to the said Financing Facilities in the following manner – 24

failed to supply statement of account resulted in the 1st Defendant being fined in the sum of RM 10,022.92 and RM 3,922.80 by the Inland Revenue and CCM respectively. The Defendants therefore sought for the Plaintiff be ordered to furnish the statement of accounts to the Defendants and pay the 1st Defendant the sum RM 10,022.92 and RM 3,922.80;

failed to provide statement of redemption;

blacklisted the 1st Defendant after the Plaintiff rescheduled the said Financing Facilities; and

wrongfully imposed penalty charges and therefore sought for an order that the Plaintiff to provide an account in respect of profit and penalty charges and that the Plaintiff pay to the Defendants all profits and penalty charges that had been paid the Defendants. [33] Having considered the grounds forwarded in respect of the Striking Out Application and the grounds resisting the same and the issues raised in the Summary Judgment Application, this court agree with the Plaintiff that the issues in relation to the Defendants’ Counterclaim has 25 been ventilated and adjudged at the hearing of the Summary Judgment Application. [34] For easy reference, the issues raised by the parties and the relevant paragraphs in their respective affidavits in respect of the Summary Judgment Application, the Striking Out Application and the Defendants’ Defence and Counterclaim are tabulated below – Item Issues Affidavit resisting Summary Judgment Application (enclosure 10) Affidavit resisting Striking Out Application (enclosure 29)

It was the Plaintiff who tried to sell to the 1st Defendant the Plaintiff’s financial product based on Bai’ Bithamin Ajil and Bai’ Inah Mali principles and / or influenced the 1st Defendant to accept the said Financing Facilities paragraph 7 & 13 - paragraph 3 read with 34

Plaintiff breach duty of care under the said Financing Facilities paragraph 8 & 14 paragraph 9 paragraph 35 read with 34 As such the Defendants are not obliged to make any instalment payment to the Plaintiff under the said Financing Facilities paragraph 20 & 24 - paragraph 27 read with 34 26 Item Issues Affidavit resisting Summary Judgment Application (enclosure 10) Affidavit resisting Striking Out Application (enclosure 29)

No sale of asset transacted under the said Financing Facilities paragraph 9 & 15 - paragraph 6 read with 34

The Deeds of Assignment executed is not enforceable because the commercial office shop lots is not under the master title. The Plaintiff failed to provide evidence in respect of the status of the title to the charged properties paragraph 10 & 16 - paragraph 7 read with 34

Defendants did not request for the change of the terms and conditions contained in the Plaintiff’s letter dated 17 March 2008 paragraph 11 & 17 -

The Plaintiff wrongfully blacklisted the 1st Defendant despite the said Financing Facilities being rescheduled at the instance of the Plaintiff. This has crippled the 1st Defendant’s financial standing. Thus the 1st Defendant’s default, if any, is contributed by the Plaintiff’s own act paragraphs 12 & 18 paragraphs 9 (c), 20 paragraph 9 read with 34, paragraph 36 (d)

The Plaintiff ignored the Defendants’ reply (via letter paragraph 19 - paragraph 30 read with 34 27 Item Issues Affidavit resisting Summary Judgment Application (enclosure 10) Affidavit resisting Striking Out Application (enclosure 29) Statement of Defence and Counter Claim dated 19 September 2017) to the Plaintiff’s Notice of Demand and Termination 8. the Plaintiff failed to provide statement of account since July 2013. paragraphs 21,

27.2.1 paragraph 9 (a), 21, paragraphs 11 and 26 read with 34, paragraph 36 (a) The very few statement sent contained significant discrepancy as the statement shows the Plaintiff imposed penalty charges which is against the Shariah principles - paragraph 22 paragraphs 11 read with 34, paragraph 36 (c)

The Plaintiff only provide the redemption statement 20 days after request made by the 1st Defendant. By then the potential investors has lost interest in the commercial office shop lots, which resulted in losses to the Defendants paragraph 22 paragraph 9 (b) paragraphs 12 and 24 read with 34, paragraph 36 (b)

Due to the Plaintiff’s negligence and breach of its duty of care, the 1st Defendant owe no obligations under the Guarantee and Indemnity Agreement 1 paragraph 24 - paragraph 27 read with 34 28 Item Issues Affidavit resisting Summary Judgment Application (enclosure 10) Affidavit resisting Striking Out Application (enclosure 29) Statement of Defence and Counter Claim 11. Due to the Plaintiff’s negligence and breach of its duty of care, the 2nd, 3rd, 4th and 5th Defendants owe no obligations under the Guarantee and Indemnity Agreement 2 paragraph 23 - paragraphs 13 and 25 read with 34 12. Plaintiff wrongfully forced the 1st Defendant to hand over blank signed cheque, the purpose of which is not known to the Defendants paragraph 25 paragraph 10 (a) paragraph 28 read with 34 13. Plaintiff failed to provide information on the status of the various collateral furnished by the Defendants for purpose of securing the said Financing Facilities paragraph 26 paragraph 10 (b) paragraph 29 read with 34 14. Plaintiff breached the following duty of care –

failed to supply statement of account resulted in the 1st Defendant being fined by the Inland Revenue and CCM paragraph 27.2.1 & 28 paragraphs 9 (a), 23 paragraphs 36 (a) and 37

failed to provide statement of redemption paragraph 27.2.2 paragraph 9 (b) paragraph 36 (b) 29 Item Issues Affidavit resisting Summary Judgment Application (enclosure 10) Affidavit resisting Striking Out Application (enclosure 29)

blacklisted the 1st Defendant after the Plaintiff rescheduled the said Financing Facilities paragraph 27.2.3 paragraphs 9 (c), 20 paragraph 36 (d)

wrongfully imposed penalty charges paragraph 27.2.4 paragraph 9 (a) paragraph 11 read with 34 [35] As can be seen from the table above the alleged breach of duty on the part of the Plaintiff was raised by the Defendants in the Summary Judgment Application as issues which they claimed to be triable and of meritorious in nature. This court has considered the alleged breach of duty at the hearing of the Summary Judgment Application and the findings of this court is as follows –

Failure to provide statement of accounts The documents exhibited by the Defendants goes to show that the statements of accounts were furnished to the Defendants. This can be seen from the exchange of emails between the 1st Defendant and the Plaintiff produced by the Defendants as Exhibit NAM-4 of enclosure 10 – 30

email dated 13 May 2015 at 4.03 pm where the 1st Defendant acknowledged receipt of statement of account ended 31 December 2014 although it was not the statement requested by the 1st Defendant which is

(ii) email dated 13 May 2015 at 14:44 from the Plaintiff to the 1st Defendant in respect of the subject “Primanora & Klinik Pakar Wanita - Statement 2014” where statements of accounts of the 1st Defendant was attached; and

(iii) various email dated 13 October 2015 sent by the Plaintiff to the 1st Defendant “accounts primanora” attaching statement of accounts. In fact based on the Defendants’ Exhibit NAM-3 enclosure 29, the Defendants has in their possession statement of accounts dated 28 February 2017 for the month of January and February 2017. Thus statement of accounts was provided by the Plaintiff. Considering the circumstance above this court is of the view the issue with regard to the statement of account is not triable. 31

Failure to provide statement of redemption It is not disputed that the Plaintiff has issued the statement of redemption albeit 20 days after the request was made. The Defendants’ complaint is that due to the delay in securing the statement of redemption, the potential investors was no longer interested in purchasing the commercial shop office lots which caused the Defendants to suffer huge losses. However such allegation was not substantiated and contrary to such allegations, the Plaintiff produced a letter dated 3 December 2015 (Exhibit A-29 enclosure 11) from the 1st Defendant to the Plaintiff which stated, among others, as follows –

the 1st Defendant’s hospital project was halted due to the change in the board of directors of Healthscope which is the 1st Defendant joint venture partner. The new board members were reluctant to continue with the project given the economic conditions at the material time. Thus the 1st Defendant did not receive the capital injection previously agreed; and

(ii) the 1st Defendant will continue to comply with the payment schedule required for its existing loans with the Plaintiff. 32 It is therefore clear the allegations that the Plaintiff caused the Defendants to suffer huge losses because of the delay in providing the statement of redemption is unfounded and baseless. The simple truth is that the Defendants’ joint venture partner, Healthscope, is no longer interested to invest because the new board of directors of Healthscope viewed such investment not viable and / or feasible due to the economic situation at that point in time. As pointed out by the Plaintiff, the 1st Defendant did not, prior to the institution of this instant case, suggest Healthscope reluctance was due to the Plaintiff’s delay in providing the statement of redemption or that the Plaintiff has breached its duty towards the Defendants. The contemporaneous evidence clearly provides the reason why the potential investor rejected to pursue the joint venture project and it is has nothing to do with the Plaintiff. As such there is just no merits in the Defendants’ allegations.

1st Defendant being blacklisted The Plaintiff explained the 1st Defendant did not make the necessary payment in accordance with the Letter of Rescheduling dated 19 November 2014 which was duly 33 accepted by the 3rd Defendant on behalf of the 1st Defendant (see Exhibit A-23 of enclosure 9) in respect of the Financing Facility 2. Pursuant to clause 1.2 and 1.3 of the said Letters of Reschedule, the 1st Defendant has agreed to pay monthly instalments from 1 December 2014. The 1st Defendant defaulted in payment since September 2016. As a financial institution the Plaintiff is subjected to the Central Credit Reference Information System (CCRIS) managed by Bank Negara Malaysia. Under the guidelines by Bank Negara Malaysia the Plaintiff is responsible of providing credit information to Bank Negara Malaysia. In this respect, it is evident the blacklisting of the 1st Defendant is due to its own default making payments of the Financing Facility 2, which triggered the reporting in CCRIS. Thus the allegation that the Plaintiff who had immediately and unreasonably caused the 1st Defendant to be blacklisted is unfounded. Under the circumstances the Defendants’ attempt to put the blame on the Plaintiff for the failure of the 1st Defendant to secure capital injection and to claim damages for such failure is simply mala fide. 34

Imposition of penalty charges and / or compounded interest / penalty It is to be noted in paragraph 27.2.4 of its affidavit enclosure 10 resisting the Summary Judgment Application, the Defendants alleged compounded interest / penalty was imposed. In the Defendants’ Statement of Defence and Counterclaim (paragraphs 23, 36 (c) ), the Defendants pleaded that the Plaintiff imposes interest (including penalty interest). Subsequently in their affidavit enclosure 29 resisting the Striking Out Application it was alleged that the Plaintiff had imposed “capitalisation of interest”. According to the Defendants the above impositions are in violation of Shariah principles. There is no affidavit evidence adduced to demonstrate and support the allegations that the penalty charges imposed is in violation of the Shariah principles. In any event “capitalisation of interest” was not pleaded in the Defendants’ pleadings and therefore the Defendants are estopped from raising the said issue. Importantly, the Defendants did not specifically dispute the provisions in the BBA Asset Sale Agreement (clause 10.19 read 35 with clause 3.1) BIM Sale Asset Agreement (clause 10.6 read with clause 3.1) and the Bai’ Inah Asset Sale Agreement (clause 10.6 read with clause 3.1) where the parties has agreed for the Plaintiff to impose late payment compensation fees for any late instalment payment of the respective Sale Price in accordance with the agreed schedule as provided in the respective Asset Sale Agreement. [36] Thus the issues raised by the Defendants in their Counterclaim had been ventilated by the parties at the hearing of the Summary Judgment Application. In deciding the Summary Judgment Application this court has considered the various alleged triable issues put forward by the Defendants and this includes the issues in relation to the Defendants’ Counterclaim for purpose of determining whether any of the said issues are indeed triable or ought to be investigated. The findings of this court in respect of the issues relating to the Defendants’ Counterclaim is as stated in paragraph 35 above. To put it summarily, such issues are not bona fide triable issues and the Defendants failed to show such issues and the other issues raised are meritorious and ought to be tried. 36 [37] In the Striking Out Application, the Defendants raised again the same issues relating to its Counterclaim and submits that they have a reasonable cause of action against the Plaintiff. In this respect I am not able to agree with the Defendants’ contentions that the issues relating to their Counterclaim is totally different from the claim made by the Plaintiff and the res judicata is not applicable. The relief sought in the Counterclaim may be different from the relief sought by the Plaintiff but the Counterclaim is premised on the same issues which in turn is premised on the same facts and evidence adduced before this court at the hearing of the Summary Judgment Application. As the same issues had been ventilated and adjudged, res judicata applies and the Defendants cannot reopen and reargue the same issues which had been determined previously to prevent duplicity of proceedings and abuse of the process of the court. Moreover this court is of the considered opinion that the facts as pleaded in the Defendants’ pleadings shows there is no reasonable cause of action against the Plaintiff. [38] A new ground forwarded by the Defendants for objecting the Striking Out Application is the fresh evidence in the form of the Forensic Accounting Report. According to the Defendants they have filed notice of motion dated 19 April 2018 for extension of time to appeal against the 37 summary judgment entered against them on 28 February 2018. Thereafter the Defendants intends to apply for the Forensic Accounting Report to be adduced as fresh evidence at the Court of Appeal. It appears that the Defendants are relying on the findings of the said report which according to them shows that the rescheduling of the Financing Facilities is null and void for violating the Shariah principles of uncertainty (gharar) and riba element. The Defendants produced the said report as Exhibit NAM-2 of enclosure 29. [39] As it is fresh evidence, the Forensic Accounting Report dated 8 May 2018 was not produced by the Defendants at the stage of the Summary Judgment Application. Neither is the findings of the report is pleaded in the Defendants’ pleadings. This is due to obvious reasons – the Defendants only chose to appoint the firm of Accountants on 12 April 2018 which is –

after 7 months of the Notice of Demand and Termination dated 24 August 2017 served on the Defendants;

after 12 months the writ was served on the Defendants on 6

after 4 months from the receipt of the Summary Judgment Application dated 28 November 2017; and 38

after 2 months summary judgment entered in favour of the Plaintiff on 28 February 2018. [40] As such the Defendants cannot be allowed to produce and rely on the said report for purpose of resisting the Striking Out Application. To allow the Defendants to do so would prejudice the Plaintiffs as they would not be in the position to properly challenge the Forensic Accounting Report. Even though the application to adduce the said report as fresh evidence is not before this court, this court cannot afford to ignore the complete silence on the part of the Defendants who failed to explain in their affidavits that the fresh evidence could not have been obtained with reasonable diligence at the hearing of the Summary Judgment Application (Asiatic Development Berhad & Anor v Balachandar a/l Palanysamay [1996] 1 AMR 1; Chai Yen v Bank of America National Trusts and Savubgs Association [1980] 2 MLJ 142). Conclusion [41] Based on the reasons stated above, it is the considered opinion of this court that the Defendants has no reasonable cause of action against the Plaintiff. Besides that, by reason of res judicata the Defendants are estop from re-litigating the issues relating to their Counterclaim as those 39 issues has been ventilated and adjudged in the Summary Judgment Application. The Plaintiff’s Striking Out Application was accordingly allowed with costs. ( KHADIJAH BINTI IDRIS ) JUDICIAL COMMISSIONER HIGH COURT (COMMERCIAL DIVISION) DATED 19 MARCH 2019 Counsel: Plaintiff : Datuk Ganesan Karuppanan of Messrs Ganesan & Irmohizam Defendants :