SMEB Asset Management Sdn Bhd v Mohd Norizam Bin Md Salleh & 2 Lagi (22NCC-419-12/2016)

MOHD NORIZAM BIN MD SALLEH

TAN LEE WAN

JAAFAR BIN MAHADI (NO. K/P BARU: 550715-04-5373) … DEFENDAN DI HADAPAN YA KHADIJAH BINTI IDRIS PESURUHJAYA KEHAKIMAN 2 JUDGMENT Introduction [1] This is an appeal filed by the Defendants who are aggrieved with my decision allowing the Plaintiff’s application for summary judgment under Order 14 Rules of Court 2012 (RoC 2012). Parties [2] Plaintiff, SMEB Asset Management Sdn Bhd is a company. In January 2015 it acquired and took over some of the accounts in the Small Medium Enterprise Development Bank Malaysia (formerly known as Bank Perusahaan Kecil & Sederhana Malaysia Berhad) vide a Vesting Order dated 26 January 2015. [3] The First Defendant, Mohd Norizam bin Md Salleh (1st Defendant) and the Third Defendant, Jaafar bin Mahadi (3rd Defendant) are at all material time directors of a company known as Rightgas Sdn Bhd (RSB). The 1st and 3rd Defendant had stood guarantor for various banking facilities RSB obtained from the Plaintiff. 3 [4] The Second Defendant, Tan Lee Wan (2nd Defendant), is another guarantor who had also guaranteed RSB’s obligation under the various banking facilities. [5] The parties will hereinafter be referred to as they are in the Sessions Court. Summary Judgment application (Enclosure 8) [6] The prayers sought by the Plaintiff against the 1st, 2nd and 3rd Defendants are as follows -

Pihak Plaintif menuntut daripada Defendan Pertama dan Kedua secara bersesama dan berasingan untuk:-

jumlah sebanyak RM7,648,208.24 setakat 30.09.2016 untuk

(ii) Faedah pada kadar 2.4% setahun secara kiraan bulanan atas kadar Prima Semasa (kadar semasa pada kadar 6.85% setahun) bermula dari 01.10.2016 sehingga penyelesaian penuh;

Pihak Plaintif menuntut daripada Defendan Pertama dan Defendan Ketiga secara bersesama dan berasingan untuk:

jumlah sebanyak RM1,948,554.72 setakat 30.09.2016 untuk

(ii) Faedah pada kadar 1.5% setahun secara kiraan bulanan atas kadar Prima Semasa (kadar semasa pada kadar 6.85% 4 setahun) bermula dari 01.10.2016 sehingga penyelesaian penuh;

Pihak Plaintif menuntut daripada Defendan Pertama secara bersesama dan berasingan untuk:-

jumlah sebanyak RM1,236,794.45 setakat 30.09.2016 untuk

(ii) Faedah pada kadar 2.4% setahun secara kiraan bulanan atas kadar Prima Semasa (kadar semasa pada kadar 6.85% setahun) bermula dari 01.10.2016 sehingga penyelesaian penuh;

Pihak Plaintif menuntut daripada Defendan Pertama secara bersesama dan berasingan untuk:-

jumlah sebanyak RM1,059,485.43 setakat 30.09.2016 untuk

(ii) Faedah pada kadar 1.5% setahun secara kiraan bulanan atas kadar Pinjaman Asas (kadar semasa pada kadar 6.85% setahun) bermula dari 01.10.2016 sehingga penyelesaian penuh;

Pihak Plaintif menuntut daripada Defendan Pertama dan Defendan Kedua secara bersesama dan berasingan untuk:-

jumlah sebanyak RM1,082,259,68 setakat 30.09.2016 untuk

(ii) Faedah pada kadar 1.5% setahun secara kiraan bulanan atas kadar Pinjaman Asas (kadar semasa pada kadar 6.85% setahun) bermula dari 01.10.2016 sehingga penyelesaian penuh;

Pihak Plaintif menuntut daripada Defendan Pertama dan Defendan Kedua secara bersesama dan berasingan untuk:-

jumlah sebanyak RM304,112.72 setakat 01.10.2016 untuk Kemudahan Modal Kerja Tetap; 5

(ii) Faedah pada kadar 2.4% setahun secara kiraan bulanan atas kadar Prima Semasa (kadar semasa pada kadar 6.85% setahun) bermula dari 01.10.2016 sehingga penyelesaian penuh. Factual Background [7] The Plaintiff had granted to the RSB six banking facilities where the Defendants has agreed to guarantee the payment of the said facilities by RSB to the Plaintiff. Each of the banking facility and the brief facts relating to each of the facility are set out below. [8] Facility 1 the details of which is as follows - Purpose : Working capital of RM5,000,000.00 Letter of Offer : dated 11 May 2006 Date of Agreement : Loan Agreement dated 15 June 2006 Security : Joint and Several Guarantee and Indemnity dated 15 June 2006 executed by the 1st and 2nd Defendants 6 [9] In relation to Facility 1 –

Clause 5 of the Letter of Offer was amended vide letter dated 11 July 2006. Pursuant thereto –

three Supplemental Deed of Assignment of Contract Payment dated 17 July 2006 was executed between the Plaintiff and RSB; and

(ii) a Deed of Assignment of Contract Payment was executed on 17 August 2006 between Plaintiff and Defendant.

Clause 4 and 5 Letter of Offer was amended vide letter dated 3 October 2006 and 21 December 2006. The following documents were executed between Plaintiff and RSB pursuant to the amendment to clause 4 and 5 –

Deed of Assignment of Contract Payment dated 29

(ii) Supplemental Facility Agreement dated 1 March 2007; and

(iii) Deed of Assignment of Contract Payment (in relation to Contracts from Fiberail Sdn Bhd and Celcom (Malaysia) Berhad) dated 8 May 2007. 7

(c)

four Deed of Assignment of Contract Payment dated 10 September 2007; and

(ii) four Deed of Assignment of Contract Payment dated 21 February 2008.

Vide letter dated 6 May 2008 Clause 7, 1, 2 and Lampiran A of the Letter of Offer was amended. Pursuant thereto a Supplemental Loan Agreement dated 23 January 2009 was executed between Plaintiff and RSB.

Vide letter dated 11 August 2008 the tenure of Facility 1 was extended until 20 July 2009.

Vide letter dated 27 October 2009 Plaintiff agreed the revolving working capital to be changed to fixed working capital. Plaintiff has also agreed to restructure Facility 1 subject to, among others, the following conditions –

Amount to be restructured – RM5,175,436.73;

(ii) Interest rate – ECOF + 1.5% per annum on monthly balance; and 8

(iii) Repayment period – 60 months commencing from date of restructuring of facility.

Vide letter dated 3 November 2011, Plaintiff agree to further restructure Facility 1 subject to, among others, the following conditions –

Amount to be restructured – RM5,676,839.63;

(ii) Interest rate – “Prime” + 2.4% per annum on monthly balance; and

(iii) Repayment period – 60 months commencing from date of restructuring of facility. [10] Facility 2 the details of which is as follows - Purpose : Revolving Working capital of RM4,000,000.00 Letter of Offer : dated 18 June 2007 Security : Guarantee and Indemnity Agreement dated 12 December 2008 executed by the 1st Defendant [11] Variations were also made to the terms in the Letter of Offer. This includes the following – 9

Vide a Supplemental Agreement dated 11 November 2010 executed between Plaintiff and RSB, it was agreed that the financing facility is rescheduled into a bank guarantee of and revolving working capital of RM2,000,000.00.

Vide letter dated 12 December 2011 (Exhibit SMEB-34) the Plaintiff agreed to extend the tenure of Facility 2. A Deed of Assignment of Contract Payment (Fiberail Sdn Bhd) dated 2 February 2012 was executed by RSB.

Vide letter dated 10 January 2013 Plaintiff agreed to extend for the second time the tenure of Facility 2 until 15 December (Exhibit SMEB-39 of Enclosure 9) where it was agreed that the 3rd Defendant replaced the 2nd Defendant as guarantor.

RSB had executed a Deed of Assignment of Contract Proceeds dated 3 May 2013. 10 [12] Facility 3 the details of which is as follows – Purpose : Kemudahan pembiayaan harta tetap of RM1,500,000.00 Letter of Offer : dated 22 June 2007 Date of Agreement : Loan Agreement dated 8 August 2007 Exhibit SMEB – 42 Security : dated 8 August 2007 (SMEB-42) Indemnity Agreement dated 8 August 2007 where 1st Defendant agreed to jointly and severally guarantee the payment of the facility [13] Variations were also made to the terms in the Letter of Offer. This includes the following –

Vide letter dated 13 December 2010 the Plaintiff agreed to re-structure Facility 3 subject to, among others, the following conditions –

Amount to be restructured – RM807,000.00;

(ii) Interest rate – “Prime” + 2.4% per annum on monthly balance; and 11

(iii) Repayment period – 60 months commencing from date of restructuring of facility.

Vide letter dated 3 November 2011 the Plaintiff agreed to further re-structure Facility 3 subject to, among others, the following conditions -

Amount to be restructured – RM934,195.72;

(ii) Interest rate – “Prime” + 2.4% per annum on monthly balance; and

(iii) Repayment period – 60 months commencing from date of restructuring of facility. [14] Facility 4 the details of which is as follows – Fixed Working Capital : Letter of Offer : Dated 13 December 2007 Agreement : Loan Agreement dated 3 January 2008 (Exhibit SMEB-49 of Enclosure 9) Security : Defendant who agreed to jointly and severally guarantee RSB’s repayment obligation under Facility 4 (Exhibit SMEB-50 of Enclosure 9) 12

Deed of Debenture dated 3 January 2008 executed by RSB in favour of the Plaintiff [15] As in the Facilities stated earlier, Facility 4 also went through some variations which includes –

The tenure of Facility was first extended vide latter dated 3 December 2008 and subsequently vide letter dated on 19 April 2010. The first extension was until 10 January 2010 and the second extension was until 13 April 2011.

Vide letter dated 3 November 2011 (Exhibit SMEB-57) the Plaintiff agreed to re-structure Facility 4 subject to, among others, the following conditions –

Amount to be restructured – RM1,969,756.36;

(ii) Interest rate – “BLR” +1.5% per annum on monthly balance; and

(iii) Repayment period – 60 months commencing from date of restructuring of facility. 13 [16] Facility 5, the details of which is as follows – Fixed Working Capital : Letter of Offer : Dated 18 August 2008 Agreement : Loan Agreement dated 22 September 2008 (Exhibit SMEB-59 of Enclosure 9) Security : (Exhibit SMEB-60 of Enclosure 9) [17] There were some variations made to the terms in respect of Facility 5 which includes the following –

Vide letter dated 3 November 2011 the Plaintiff agreed to extend the tenure of Facility 5 until 20 October 2010.

Vide letter dated 3 November 2011 (Exhibit SMEB-65) the Plaintiff agreed to re-structure Facility 5 subject to, among others, the following conditions – 14

Amount to be restructured – RM312,844.49;

(ii) Interest rate – “BLR” +1.5% per annum on monthly balance; and

(iii) Repayment period – 60 months commencing from date of restructuring of facility. [18] Facility 6, the details of which is as follows – Fixed Working Capital : RM1,000,000.00 Letter of Offer : Dated 28 October 2008 Agreement : Loan Agreement dated 27 November 2008 (Exhibit SMEB-67 of Enclosure 9) Security : (Exhibit SMEB-68 of Enclosure 9) [19] Vide letter dated 3 November 2011 the Plaintiff agreed to re-structure Facility 6 subject to, among others, the following conditions – 15

Amount to be restructured – RM774,239.91;

(ii) Interest rate – “Prime” + 2.4% per annum on monthly balance; and

(iii) Repayment period – 60 months commencing from date of restructuring of facility. [20] For ease of reference Facility 1 to Facility 6 are hereinafter collectively referred to “the Facilities”. The various Guarantee and Indemnity Agreements executed by the 1st, 2nd and 3rd Defendants are hereinafter collectively referred to as “the Guarantee Agreements”. [21] The Defendants failed to regularise the Facilities and/or fail to make re-payment under the Facilities. The Plaintiff through its solicitor issued Letter of Demand cum Termination, to the Defendants in their capacity as guarantor under the Guarantee Agreements, in the following manner –

vide letter dated 14 October 2016 to the 1st Defendant claiming a sum of RM13,279,415.24 as the amount due and payable as at 30 September 2016 in respect of the Facilities; 16

vide letter dated 14 October 2016 to the 2nd Defendant claiming a sum of RM9,034,580.64 as the amount due and payable as at 30 September 2016 in respect of Facility 1,

vide letter dated 14 October 2016 to the 3rd Defendant claiming a sum of RM1,948,554.72 as the amount due and payable as at 30 September 2016 in respect of Facility 2. The Letters of Demand Cum Termination can be found at Exhibit SMEB- 70 of Enclosure 9. [22] Two Certificates of Indebtedness dated 24 February 2017 (Exhibits SMEB-71 and SMEB-75 of Enclosure 9) was issued by the Plaintiff certifying the amount due and payable, as at 30 September 3016, by the borrower RSB is RM13,279,415,24. [23] The Plaintiff avers that the Defendants has no meritorious issue and defence and that the amount claim remains due and payable by the Defendants to the Plaintiff. 17 Defendant Defence [24] The Defendants raise the following issues which they contend are triable issues –

Plaintiff failed to prove that the debt claim by the Plaintiff is in the IF Portfolio of the Vesting Order dated 26 January 2015. As such Plaintiff has no cause of action against the Defendants.

In respect of Facility 1 –

the Defendants admit Plaintiff had approved Facility 1 and the execution of the Loan Agreement between

(ii) the 1st and 2nd Defendant admit executing the Joint and Several Guarantee and Indemnity Agreement on 16 June 2006 and agreed to be bound by the terms and conditions contained therein. However they had never agreed to the variations of any terms of the Letter of Offer dated 11 May 2006 made after they had executed the Joint and Several Guarantee and Indemnity Agreement because the variations will 18 change the nature and purpose of the Loan Agreement;

(iii) in particular the Defendants pointed out they had never agreed to the variation in the interest rate from “Prime Rate” plus 1.5% per annum on monthly balance to “Prime Rate” plus 2.4% per annum on monthly balance. They had never agreed to the period of repayment to be varied from 36 months to 60 months. They were also not informed of the variations made; and

(iv) therefore the 1st and 2nd Defendant are discharged from their obligations as guarantor in respect of Facility 1.

In respect of Facility 2 –

the Defendants admit Plaintiff had approved Facility 2 vide Letter of Offer dated 18 June 2007;

(ii) the 1st Defendant admit executing the Guarantee and Indemnity Agreement dated 12 December 2008 and agreed to be bound by the terms and conditions contained therein. However the 1st and 3rd Defendants had never agreed to the variations of any terms of the 19 Letter of Offer dated 18 June 2007 made after they signed the Guarantee and Indemnity Agreement because the variations will change the nature and purpose of the Loan Agreement between Plaintiff and RSB. They were also not informed of the variations made;

(iii) the 3rd Defendant denies that he had executed the Supplemental Guarantee Agreement dated 3 May 39 of Enclosure 9 is not dated and the pages in the said agreement were not signed by the 3rd Defendant. As such the contents of those pages are disputed; and

(iv) therefore the 1st and 3rd Defendants are discharged from their obligations as guarantor in respect of Facility 1.

In respect of Facility 3 –

the Defendants admit Plaintiff had approved Facility 3 vide letter dated 22 June 2007 and the execution of the Loan Agreement between Plaintiff and RSB dated 8 August 2007; 20

(ii) the Defendants admit as a security to Facility 3, a Deed of Debenture (First Fixed Charge) dated 8 August 2007 was executed by RSB;

(iii) although the 1st Defendant admit that he is a guarantor to the said facility as stipulated in the Guarantee and Indemnity Agreement dated 8 August 2007, he only agreed to the terms and conditions as provided in the said Guarantee and Indemnity Agreement;

(iv) the 1st Defendant had never agreed to the variations of any terms of the Letter of Offer dated 22 June 2007 made after he had executed the Guarantee and Indemnity Agreement dated 8 August 2007 because the variations will change the nature and purpose of the Loan Agreement between Plaintiff and RSB;

the 1st Defendant emphasise he had never agreed to the variation in the interest rate from “Prime Rate” plus 1.5% per annum on monthly balance to “Prime Rate” plus 2.4% per annum on monthly balance. He had never agreed to the period of repayment to be varied from 60 months from the date of the agreement to 60 months from date of re-structuring of Facility 3; and 21

(vi) therefore the 1st Defendant is discharged from his obligations as guarantor in respect of Facility 3.

In respect of Facility 4 –

the Defendants admit Plaintiff had approved Facility 4 vide Letter of Offer dated 13 December 2007 and the execution of the Loan Agreement between Plaintiff and RSB dated 3 January 2008;

(ii) the 1st Defendant admit executing the Guarantee and Indemnity Agreement on 3 January 2008 and agreed to be bound by the terms and conditions contained therein. However he had never agreed to the variations of any terms of the Letter of Offer dated 13 December 2007 made after he executed Guarantee and Indemnity Agreement on 3 January 2008 because the variations will change the nature and purpose of the Loan Agreement; and

(iii) therefore the 1st Defendant is discharged from his obligations as guarantor Guarantee and Indemnity Agreement in respect of Facility 4. 22

In respect of Facility 5 –

the Defendants admit Plaintiff had approved Facility 5 vide Letter of Offer dated 18 August 2008 and the execution of the Loan Agreement between Plaintiff and RSB dated 22 September 2008;

(ii) the 1st and 2nd Defendants admit executing the Guarantee and Indemnity Agreement 22 September 2008 and agreed to be bound by the terms and conditions contained therein. However both the 1st and 2nd Defendants had never agreed to the variations of any terms of the Letter of Offer dated 22 September 2008, Loan Agreement and any re-structuring of Facility 5 after they had executed the Guarantee and Indemnity Agreement because the variations changes the nature and purpose of the Loan Agreement. The 1st and 2nd Defendants were also not informed of the variations made; and

(iii) As such both the 1st and 2nd Defendants submit they are discharged from their obligations as guarantors under the Guarantee and Indemnity Agreement in respect of Facility 5. 23

In respect of Facility 6 –

the Defendants admit Plaintiff had approved Facility 6 vide Letter of Offer dated 28 October 2008 and the execution of the Loan Agreement between Plaintiff and RSB dated 27 November 2008;

(ii) the 1st and 2nd Defendants admit executing the Guarantee and Indemnity Agreement 27 November 2008 and agreed to be bound by the terms and conditions contained therein;

(iii) the 1st and 2nd Defendants however emphasise they had never agreed to the re-structuring of the said Facility as the variation has changed the nature and the original terms of the Loan Agreement. In particular the 1st and 2nd Defendants pointed out the interest rate was varied from “Prime Rate” plus 1.5% per annum on monthly balance to “Prime Rate” plus 2.4% per annum on monthly balance and the period of repayment was varied from 60 months from the date of the Loan Agreement to 60 months from date of re-structuring of Facility 6; and 24

(iv) therefore the 1st and 2nd Defendants are discharged from their obligations as guarantors under the Guarantee and Indemnity Agreement.

The Defendants also contend –

the Defendants are not responsible to maintain and regularise the Facilities as it is RSB’s obligations to do so. It is the Plaintiff who failed to regularise the repayment of the Facilities;

(ii) there was no demand made by the Plaintiff against the Defendants in respect of the repayment of the Facilities;

(iii) no statement of accounts in respect of the Facilities were sent to the Defendants;

(iv) the Defendants dispute the Notice of Demand sent by the Plaintiff as it is defective. According to the Defendants, their obligations as guarantor will only be triggered when RSB as the borrower failed to repay the Facilities. The notices of demand did not state that RSB has failed to make repayment. As such Plaintiff has no cause of action against the Defendants and the notices issued are pre-mature and unlawful; and 25

the Certificate of Indebtedness is defective for the following reasons – (aa) it was issued after the filing of the Writ and after Notice of Demand issued; (bb) it was not sent to the Defendants as to enable the Defendants to dispute the amount;

(cc) the date of indebtedness and the date of calculation is not stated; and

(dd) the indebtedness is said to be owing to Small Medium Enterprise Development Bank Malaysia (which no longer exists) and not to the Plaintiff. The law [25] Under Order 14 rule 1(1) and 2(1) of RoC 2012 an applicant seeking for summary judgment is required to prove the following –

the statement of claim has been served on the defendant;

the defendant has entered appearance; and

the applicant has affirmed an affidavit verifying the facts on which the statement of claim is based. The applicant is also 26 required to affirm his belief that the defendant has no defence to the statement of claim. [26] Upon the fulfilment of the above requirements the burden is on the defendant to prove under Order 14 rule 3(1) and 4(1) of the RoC 2012 that there is an issue or question in dispute which ought to be tried (National Company For Foreign Trade v. Kayu Raya Sdn Bhd [1984] 1 CLJ (Rep) 283; Cempaka Finance Bhd v. Ho Lai Ying & Anor [2006] 3 CLJ 544). An application for summary judgement may also be dismissed by the court if the defendant satisfies the court that there ought for some other reason to be a trial namely there are circumstances that ought to be investigated by the court (United Merchant Finance Bhd v. Majlis Agama Islam Negeri Johor [1999] 2 CLJ 151; [1999] 1 MLJ 657). Findings of the court Compliance with Order 14 rule 1(1) and 2(1) of the RoC 2012 [27] It was not an issue of contention between the parties that the Plaintiff’s Statement of Claim dated 14 December 2016 was served on the Defendants. Besides that, the Memorandum of Appearance of all 27 the Defendants were duly filed (Enclosures 4, 5 and 6). With regards to the facts which forms the basis of the Plaintiff’s claim, this can be found in the Plaintiff’s Affidavit in Support affirmed on 1 March 2017 (Enclosure 9) of the Order 14 application. The deponent of the said affidavit is Mohd Yahaya bin Ab Majid who is the Assistant Deputy President / Head of Operation of the Plaintiff company. [28] In the Affidavit in Support the Plaintiff/deponent has averred his belief that the amount claim is still due and payable to the Plaintiff and that the Defendant has no meritorious defence to the Plaintiff’s claim. [29] Since the Plaintiff has complied with the requirements of the said Order 14, the burden shifted on the Defendants to prove there is a triable issue or there ought for some other reason to be a trial. Whether the debt claim by the Plaintiff is in the IF Portfolio of the Vesting Order dated 26 January 2015 [30] My perusal of the Defendant’s Defence dated 1 February 2017 shows that this particular issue was never pleaded by the Defendants. Since parties are bound by their pleadings, the Defendants are estopped 28 from raising this issue (Lee Ah Chor v Southern Bank Berhad [1919] 1 MLJ 428; K.E.P. Mohamed Ali v Mohamed Ismail [1981] 2 MLJ 10). [31] In any event the Plaintiff has explained and shown at paragraph 6 of Enclosure 12 that the accounts in respect of the Facilities taken over by the Plaintiff from Small Medium Enterprise Development Bank are listed in Annexure A to the Vesting Order dated 26 January 2015 (Exhibit SMEB-2 of Enclosure 9 page 4 – 54). Whether the Defendants’ obligations as guarantor under the various guarantee and indemnity agreement are discharged as a result of the variations to the terms of the loan agreements which were made after the execution of the guarantee and indemnity agreements by the Defendants [32] The Defendants submits their obligations under the various Guarantee Agreements was discharged because of the variations made to the Facilities which has changed the nature and purpose of the Loan Agreement. In response to such contention the Plaintiff pointed out the relevant provisions in the Guarantee Agreements where the Defendants as guarantor to the Facilities has agreed to guarantee the payment by RSB of the Facilities including the interest. The guarantee given by the Defendants includes the payment of interest at the rate set out in the 29 various loan agreements in respect of the Facilities or such other rate as may from time to time be stipulated by the Plaintiff at its absolute discretion. The relevant provision, which is identical in all the Guarantee Agreements executed by the Defendants, read as follows – HEREBY JOINTLY AND SEVERALLY UNCONDITIONALLY AND IRREVOCABLY AGREE WITH AND UNDERTAKE AND GUARATEE WITH YOU AS FOLLOWS:-

To pay and keep you indemnified and satisfy you on demand as principal debtors and not merely as sureties the punctual payment by the Borrower of the Loan Facilities and interest thereon at the rate set out in Item 3 of the Schedule hereto or such other rate as may from time to time be stipulated by you at your absolute discretion, and all sum of money which hereafter may time to time be owing or remain due and unpaid to you from the Borrower together with all costs, charges and expenses which you may incur in enforcing or seeking to enforce any security for or obtaining or seeking to obtain payment of all or any part of the Loan Facilities. You shall not be bound or required to proceed against any of the other securities taken for the Loan Facilities before enforcing this Joint and Several Guarantee and Indemnity Agreement against us. [33] By the above provision the Defendants has agreed –

to jointly and severally guarantee and indemnify as principal debtor and not merely as sureties;

to guarantee payment by the borrower RSB of the Facilities and interest at the rate specified in the loan agreement or 30 such other rate as determined by the Plaintiff at its absolute discretion; and

the Plaintiff is not bound or required to proceed against any of the other securities before enforcing the Guarantee Agreements against the Defendants. [34] Identical provision as the above appears as clause 1 in the various Guarantee Agreements and can be found at the following – a) Joint And Several Guarantee and Indemnity Agreement in respect of Facility 1 at Exhibit SMEB-5 of Enclosure 9 at page 106; b) Guarantee and Indemnity Agreement in respect of Facility 2 at Exhibit SMEB-29 of Enclosure 9 at page 387; c) Guarantee and Indemnity Agreement in respect of Facility 3 at Exhibit SMEB-44 of Enclosure 9 at page 601; d) Guarantee and Indemnity Agreement in respect of Facility 4 at Exhibit SMEB-50 of Enclosure 9 at page 676; e) Guarantee and Indemnity Agreement in respect of Facility 5 at Exhibit SMEB-60 of Enclosure 9 at page 805; and f) Guarantee and Indemnity Agreement in respect of Facility 6 at Exhibit SMEB-68 of Enclosure 9 at page 892. 31 [35] As such the Defendants’ complaint about the change in interest rate is a non-issue as the Defendants had actually consented to the Plaintiff to determine the interest rate in respect of the Facilities from time to time. [36] With regards to the Defendants’ contention that they had never agreed for the terms of the loan agreement be varied after they had executed the guarantee agreements, the Plaintiff refers to the following provision which appears in all the Guarantee Agreements –

Our liability shall not be affected nor shall this Joint and Several Guarantee and Indemnity Agreement be discharged or diminished by reason of:-

any alteration, variation by you whether with or without our consent in the obligations, terms, stipulations, covenants and undertakings imposed on the Borrower in connection with the granting of the Loan Facilities to the Borrower. [37] Again, identical provision as the above appears in all the Guarantee Agreements either as clause 4(e) or clause 4(d). It can be found at the following – 32 a) Joint and Several Guarantee And Indemnity Agreement in respect of Facility 1 at Exhibit SMEB-5 of Enclosure 9 at page 107 (clause 4(e) ); b) Guarantee and Indemnity Agreement in respect of Facility 2 at Exhibit SMEB-29 of Enclosure 9 at page 388 (clause 4(e) ); c) Guarantee and Indemnity Agreement in respect of Facility 3 at Exhibit SMEB-44 of Enclosure 9 at page 602 (clause 4(d) ); d) Guarantee and Indemnity Agreement in respect of Facility 4 at Exhibit SMEB-50 of Enclosure 9 at page 677 (clause 4(d) ); e) Guarantee and Indemnity Agreement in respect of Facility 5 at Exhibit SMEB-60 of Enclosure 9 at page 806 (clause 4(e) ); and f) Guarantee and Indemnity Agreement in respect of Facility 6 at Exhibit SMEB-68 of Enclosure 9 at page 893 (clause 4(e) ). [38] It is apparent from the above provisions that the Defendants has agreed to be bound by any variations made to the terms and conditions of the Facilities, regardless whether such variations were made with or 33 without the Defendants’ consent. In particular, the Defendants had agreed that the interest rate of the loan obtained by RSB may be varied from time to time at the absolute discretion of the Plaintiff who is the lender. By the above provision the Defendants has expressly and unequivocally agreed that their liability under the guarantee agreements shall not be affected, discharged or diminished by reason of the variations. Under the circumstances it is not open to the Defendants to complain now about the variations. [39] With regards to the Defendants’ issue that no demand was made on the Defendants, there is evidence to show that separate Notice of Demand Cum Termination letters were sent to each one of the 1st, 2nd and 3rd Defendants (see Exhibit SMEB-70 of Enclosure 9 page 912). The letters, produced and marked as Exhibit SMEB-70 of Enclosure 9 (pages 906 – 911) was sent by registered post at the address provided by the Defendants in the Guarantee Agreements which is as follows –

1st Defendant – at No. 1 Tingkat Mezzanine, 1, 2 and 3, Taman Rimau, Jalan Buloh Kasap, 85000 Segamat Johor;

2nd Defendant – at No.1, Lorong Manggis, Segamat, 85000 Johor; and 34

3rd Defendant – at No. 2, Jalan 8/19, Seksyen 8, 43650 Bandar Baru Bangi Selangor. [40] In so far as service of documents under the Guarantee Agreements is concerned an identical provision in the form of clause 17 appears in all the Guarantee Agreements where it provides as follows –

The service of notice and/or any legal process which includes pleadings, all forms of originating processes, interlocutory applications of whatever nature, affidavits, orders and such documents other than the aforesaid which are required to be served under the Rules of High Court, 1980, Subordinate Court Rules, 1980 of Companies Act, 1965 and the rules made thereunder by prepaid registered post sent to the address as stated therein and shall be deemed to have been duly served and duly received upon the expiry of three (3) days after the same is effected. We further agree that no change of address of any of us shall be effective on you unless actual notice of the change of address have been given by us. [41] Premised on clause 17 of the respective Guarantee Agreements the respective Letter of Demand Cum Termination is deemed to have been served on the 1st, 2nd and 3rd Defendants (OCBC Bank (Malaysia) Berhad v Lian Ak Glass Sdn Bhd & Ors [2011] 1 LNS 1370; Amanah Merchant Bank v Lin Tow Choon [1994] 2 CLJ 1; Alliance Bank v Mukhriz Bin Mahathir [2006] 4 MLJ 451). Therefore the necessary 35 demand was duly made on the 1st, 2nd and 3rd Defendants under the respective Guarantee Agreements. [42] In fact in their Statement of Defence dated 1 February 2017 the 1st, 2nd and 3rd Defendants admit the said addresses to be their address. The said letters which were of the same date, namely, 14 October 2016 demanded –

From the 1st Defendant (who stood guarantor for all the Facilities) the total sum of RM13,279,415.24 as at 30 September 2016. This letter is found at Exhibit SMEB-70 of Enclosure 9 at pages 906 to 907;

From the 2nd Defendant (who stood guarantor for Facility 1, 5 and 6) the total sum of RM9,034,580.64 as at 30 September at pages 908 to 909; and

From the 3rd Defendant (who stood guarantor for Facility 2) the total sum of RM1,948,554.72 as at 30 September 2016. This letter is found at Exhibit SMEB-70 of Enclosure 9 at pages 910 to 911. 36 [43] The claim against the Defendants as stated in the Statement of Claim and the Notice of Application for Order 14 is in respect of the same sum stated in the Letter of Demand Cum Termination. [44] A Certificate of Indebtedness dated 24 February 2017 was issued by the Plaintiff’s Manager, Mohd Supian Baharon who had certified and confirmed the amount due and payable to the Plaintiff. There were two Certificates of Indebtedness issued by the Plaintiff on the same date – page 913 - 914 which reads as follows: Date : 24/02/2017 CERTIFICATE OF INDEBTEDNESS It is hereby certified and conclusively confirmed that the amount outstanding due and payable to the Small Medium Enterprise Development Bank Malaysia Berhad from RIGHTGAS SDN BHD, the Borrower as per particularized below : a) Borrower : RIGHTGAS SDN BHD b) Facility : 37 NO. FACILITY ACCOUNT NO. AMOUNT OUTSTANDING @ AS AT 30/09/2016 (RM)

GF/MODAL KERJA TETAP 09801003140040197 7,648,208.24 2. 09801003140040196 1,059,485.43 3. 09801003140040207 1,082,259,68 4. 09801003140040219 304,112.72 5. GF / HARTA TETAP 09801003140040208 1,236,794.45 6. 9805116141630501 642,649.67 7. 09801003140040228 605,545.73 8. 09801003140040227 700,359.32 TOTAL 13,279,415.24 Yours faithfully, For SMEB ASET MANAGEMENT SDN BHD sgd (MOHD SUPIAN BAHARON) MANAGER

Certificate of Indebtedness as in Exhibit SMEB-75 of Enclosure 12 which reads as follows: Date : 24/02/2017 CERTIFICATE OF INDEBTEDNESS It is hereby certified and conclusively confirmed that the amount outstanding due and payable to the SMEB Asset Management Sdn Bhd from RIGHTGAS SDN BHD, the Borrower as per particularized below : 38 a) Borrower : RIGHTGAS SDN BHD b) Facility : NO. FACILITY ACCOUNT NO. OLD ACCOUNT NO. AMOUNT OUTSTANDING @ AS AT 30/09/2016 (RM)

GF/MODAL KERJA TETAP 09801003140040197 27000/10/2042/71 7,648,208.24 2. 09801003140040196 27000/10/2102/90 1,059,485.43 3. 09801003140040207 27000/10/2104/52 1,082,259,68 4. 09801003140040219 27000/10/2103/71 304,112.72 5. GF / HARTA TETAP 09801003140040208 27000/10/2106/14 1,236,794.45 6. 9805116141630501 - 642,649.67 7. 09801003140040228 2700010/2060/33/37053 605,545.73 8. 09801003140040227 2700010/2060/33/36848 700,359.32 TOTAL 13,279,415.24 Yours faithfully, For SMEB ASET MANAGEMENT SDN BHD sgd (MOHD SUPIAN BAHARON) MANAGER SUPPORT & ADMIN. [45] The Defendants pointed out in their Written Submission dated 20 April 2017 (Enclosure 14) the column “Old Account No.” which appears in Exhibit SMEB-75 does not appear in Exhibit SMEB-71. As such the Defendants conclude that there is an attempt to tamper with the evidence and therefore the contents of the Certificate of Indebtedness is disputed. 39 [46] Based on the flow of affidavits filed by the parties, it is obvious that the certificate in Exhibit SMEB-75 was re-issued by the Plaintiff after it was pointed out by the Defendants in their Affidavit in Reply (Enclosure 11) to the Plaintiff’s Affidavit in Support (Enclosure 9) that the sum certified in SMEB-71 is stated as outstanding due and payable to Small Medium Enterprise Development Bank Malaysia and not to the Plaintiff. The Plaintiff in their affidavit Enclosure 12 admit the mistake, thus another certificate was issued which certified the same amount RM13,279,415.24 as the amount outstanding and payable to the Plaintiff as at 30 September 2016. Thus in so far as the amount outstanding is concerned it remains the same. [47] However the Plaintiff did not explain the insertion of the new column “Old Account No.” which the Defendants subsequently in their submission took issue. If the Defendants are serious about raising this issue they ought to have filed an affidavit. However no affidavit filed. Thus I am of the view it is not open to the Defendant to raise it in their submission. In any event such statement which is made from the bar is of no probative value. More so when it is a general and bare statement without any proof to substantiate the Defendants’ allegation. 40 [48] I note that the certificate which the Plaintiff re-issued as in SMEB- 75 bears the same date as the earlier certificate in SMEB-71, namely, 14 October 2016 when in actual fact SMEB-75 was issued after 24 March 2017 (date of Defendants Affidavit in Reply Enclosure 11) but before 10 April 2017 (date of Plaintiff’s Affidavit in Reply Enclosure 12). Be that as it may I am of the view this does not prejudice the Defendants as the amount claim remains the same. Simply put, it does not amount to manifest error on the face of the certificate which is discussed below. [49] It is apparent that the Certificate of Indebtedness was issued pursuant to clause 14 of the various Guarantee Agreements which reads as follows –

It shall not be necessary for you to advise us of any details relating to the administration of the Borrower’s account with you or of any default thereunder of which you may have knowledge. We further agree that any admission or acknowledgement in writing by the Borrower or any authorised person on the Borrower’s behalf or a statement of account in writing showing the indebtedness of the Borrower signed on your behalf by any of your Officers shall be conclusive and binding on us or any of us as to any amount due to you by the Borrower. [50] Identical provision as the above appears in the Guarantee Agreements as clause 14 and can be found at the following – 41 a) Joint and Several Guarantee And Indemnity Agreement in respect of Facility 1 at Exhibit SMEB-5 of Enclosure 9 at page 108; b) Guarantee and Indemnity Agreement in respect of Facility 2 at Exhibit SMEB-29 of Enclosure 9 at page 389; c) Guarantee and Indemnity Agreement in respect of Facility 3 at Exhibit SMEB-44 of Enclosure 9 at page 603; d) Guarantee and Indemnity Agreement in respect of Facility 4 at Exhibit SMEB-50 of Enclosure 9 at page 678; e) Guarantee and Indemnity Agreement in respect of Facility 5 at Exhibit SMEB-60 of Enclosure 9 at page 807. [51] However in the Guarantee and Indemnity Agreement in respect of Facility 6 at Exhibit SMEB-68 of Enclosure 9 at pages 891 – 897, the particular page where clause 14 (and also part of clause 7, 8 until part of clause 16) is supposed to be found is missing. Looking at the Guarantee and Indemnity Agreement (dated 27 November 2008) itself, the missing page is Page 3 of 4. Considering the evidence adduced on the documentation in regards to all the Guarantee Agreements executed by the Plaintiff and the Defendants in relation to the Facilities and the flow between page 893 and 894 in Exhibit SMEB-68 and the arrangement of the paragraphs in the two pages, it can be reasonably 42 inferred that there is supposed to be a clause 14 which is identical with clause 14 which appears in the other Guarantee Agreements. [52] By the above provision, the Defendants as guarantor has agreed that a statement of account in writing signed by the Plaintiff’s Officers showing the indebtedness of RSB shall be conclusive and binding on the Defendants as to any amount due to the Plaintiff from the borrower RSB. [53] Provision couched in the like of clause 14 the Guarantee Agreements is described as conclusive evidence clause. The objective of such clause is succinctly stated in the case of Cempaka Finance Bhd v Ho Lai Ying & Anor [2006] 3 CLJ 544 where the court stated as follows – … A certificate of indebtedness operates in the field of adjectival law. It excuses the plaintiff from adducing proof of debt. Such a certificate shifts the burden onto the defendant to disprove the amount claimed. [7] In the instant case, the relevant cls. 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 Doobs v National Bank of Australiasia [1953] 53 CLR 643, the Australian Court made the following observation which we think is instructive: 43 ... 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. [54] It is settled law that the conclusiveness of the indebtedness can only be displaced if the 2nd Defendant can show any manifest error on the face of the statement of account or certificate of indebtedness (Hong Leong Bank Bhd v Bennes Machinery Sdn Bhd & Ors [2010] 10 CLJ 164; Cempaka Finance Bhd v Ho Lai Ying (trading as KH Trading) & Anor [2006] 2 MLJ 685; Citibank NA v Ooi Boon Leong (1981) 1 MLJ 282). [55] As stated in paragraph 24 above the Defendants contend that the said Certificate is defective on the following grounds –

it was issued after the filing of the Writ and after Notice of Demand issued; 44

it was not sent to the Defendants as to enable the Defendants to dispute the amount;

the date of indebtedness and the date of calculation is not stated; and

the indebtedness is said to be owing to Small Medium Enterprise Development Bank Malaysia (which no longer exists) and not to the Plaintiff. [56] I am of the view that the above grounds do not tantamount to manifest error on the face of the Certificate of Indebtedness. The complaints mounted by the Defendants on the said Certificate did not in any way disproved the Plaintiff’s claim. Even though the Certificate of Indebtedness was issued after the filing of the Writ, the total amount RM13,279,415.24 certified as the amount due and payable by borrower RSB to the Plaintiff is the same amount stated in the Letter of Demand Cum Termination dated 14 October 2016 sent to each of the 1st, 2nd and 3rd Defendants. The Defendants had prior notice as to the amount outstanding under the Facilities as early as 14 October 2016. However there is no evidence adduced to show that the Defendants had raised issue or dispute the total amount demanded. They cannot now complain they are not in the position to dispute the amount. On the contrary, evidence shows that the Defendants has admitted the debt claim against 45 them and had made various proposal and payments made by the 1st, 2nd and 3rd Defendants between 23 November 2015 and 9 January 2017 to settle the debt outstanding and payable by RSB to the Plaintiff. This can be seen at Exhibit SMEB-74 of Enclosure 12 [57] As to the amount claim in the Certificate of Indebtedness which is stated to be due and payable to Small Medium Enterprise Development Bank Malaysia and not the Plaintiff, this cannot be considered as a manifest error on the face of the said certificate. It may be a typographical error which does not prejudice the Defendants. In any event as stated in paragraph the Plaintiff has rectified the mistake which, based on the facts, I consider it to be a bona fide mistake. Importantly, be it SMEB-71 or SMEB-75 the amount due and payable remain the same and both the certificates identified the borrower is Rightgas Sdn Bhd, the company in which the 1st and 2nd Defendants are directors at all material time and together with the 3rd Defendants had agreed to jointly and severally guarantee the repayment of the Facilities obtained by RSB from the Plaintiff. [58] The Defendant also claim the Plaintiff’s Statement of Claim is not complete and detail, defective and lack material facts especially the terms and conditions as contained in the various Letters of Offer and 46 loan agreements. They questioned the Plaintiff’s action in filing 6 separate claims (presumably the six Facilities granted by the Plaintiff to RSB) in one claim which has 65 paragraphs. [59] It is noted that this issue (and other issues raised in Part A of their Written Submission Enclosure 14) were never raised by the Defendants in their Statement of Defence (Enclosure 7) and Affidavit in Reply (Enclosure 11). As such the Defendants are estopped from raising it in their submission. Be that as it may, it is pertinent to note that it was never disputed by the Defendants that they had willingly executed the Guarantee Agreements in respect of the Facilities and they admit being bound by their obligations as guarantor as contained in the terms and conditions of the Guarantee Agreements. In their defence and opposing the summary judgment application, the Defendant had firmly said (even though they said they have not agreed and not informed of the variations made) that the variations made to the terms and conditions has changed the nature and purpose of the loan obtained by RSB from the Plaintiff (there is no evidence to show how and in what manner the nature and purpose of the loan has changed). But later in their submission they said no details of the terms were provided to them. It is obvious that the Defendants are blowing hot and cold for purpose of raising issues which to my mind are not genuine. 47 [60] In yet another desperate attempt to absolve from liability, the 3rd Defendant dispute the content of the Supplemental Guarantee Agreement dated 3 May 2013 (Exhibit SMEB-39 of Enclosure 9 pages 490 – 496). This is because he did not sign on each and every page of the said guarantee agreement. It is inconceivable that the 3rd Defendant took issue on his own failure to sign on each and every page of the said agreement when he did not at all dispute that he had executed the said guarantee agreement. He also did not dispute his signature which appears on the signatory page (page 494 of Enclosure 9). The law does not require for each and every page of an agreement or contract to be signed or initialled by parties to the agreement. Except and perhaps to indicate that one has read the content, there is no legal significance to it in the sense that failure to sign on each and every page nullify the whole agreement or contract so much so the 3rd Defendant is absolved from his obligations and liabilities under the said guarantee agreement. This argument by the 3rd Defendant is simply untenable and to call the solicitor to testify (as proffered by the Defendants) on this issue is purely unwarranted. [61] The Plaintiff’s Statement of Claim may not be perfect and complete but I am of the view it contain sufficient material facts in respect of the claims made against the Defendants for the Defendants to reply and 48 rebut. Although the Defendants may find it impractical or convenient to ‘lump up’ all the six banking facilities in one suit, there is no legal impediment for such an approach to be adopted. The Defendants ought to have applied for the Statement of Claim to be struck off if indeed the Statement of Claim is lacking. In so far as the Plaintiff’s application for summary judgment is concerned the affidavits filed by the Plaintiff to my mind has set out the basis of their claim upon which the Defendants are required to raise bona fide triable issues. This the Defendants has failed to do so. Conclusion [62] Having considered the issues raised and the factual circumstances, the issues raised by the Defendants though abundant, are not substantiated and therefore devoid of merits. As such there are no bona fide triable issues which warrant a full trial. Accordingly I allowed, with costs, the Plaintiff’s application for summary judgment in terms of Enclosure 8. ( KHADIJAH BINTI IDRIS ) JUDICIAL COMMISSIONER HIGH COURT (COMMERCIAL DIVISION) DATED 7 MARCH 2018 49 Counsel: Plaintiff : Amirus Anis of Messrs Sidek Teoh Wong & Dennis Defendants : Zul Helmi Wagiman of Messrs Nor Fadilah & Azizah