Soon Lay Kheng (P) v 1. Teh Seng Bian (P) (BA-22NCVC-430-10/2019)

This is the Plaintiff’s application under Order 14 of the Rules of Court 2012 35 for summary judgment against the Defendants via Enclosure 9 claiming for a sum of RM 1,191,649.66 being amount owing to the Plaintiff. 2

The relevant cause papers pertaining to an application in Enclosure 9 are as follows :- 5 a) Plaintiff’s Notice of Application dated on the 22nd of November 2018; b) Plaintiff’s Affidavit in Support affirmed on the 5th of December 2019 (Enclosure 10); 10 c) The 4th dan 5th Defendant’s Affidavit in Reply affirmed on the 30th of December 2019 (Enclosure 12); d) The 4th and 5th Defendant’s Affidavit in Reply (2) affirmed on the 13th January 2020 (Enclosure 13); 15 e) Plaintiff’s Affidavit in Reply affirmed on the 14th of January 2020 (Enclosure 14); f) Notice of Appeal filed by the Plaintiff dated on the 13th of October 20 2020 (Enclosure 39); g) Notice of Appeal filed by the Plaintiff dated on the 30th of November 2020 (Enclosure 41); and 25 h) Sealed Order for Enclosure 9 (Enclosure 50). Summary of facts pleaded

The Plaintiff has supplied, delivered and sold the floor coatings products and the relevant materials (“the Products”) to the 1st Defendant at the request of the 1st Defendant via its own purchase orders dated on the 30th of January 2017 and 13th of July 2017 which were issued, signed and affixed with company stamp by the 1st Defendant. 35 3

The 1st Defendant had acknowledged receipt of the Products and signed and affixed its company stamp on the following documents without any objection and rejection :- a) the sales orders dated 30th of January 2017 and 13th of July 2017; 5 b) the delivery orders dated 7th of January 2017 and 21st of July 2017;

The 1st Defendant had also acknowledged receipt and agreed to the terms stated on the Delivery Orders and the Tax Invoices without objection. Further, the 2nd and 3rd Defendants also signed a Guarantee and Indemnity 10 dated on the 22nd of July 2015 in favour of the Plaintiff. In addition, the 2nd, 3rd, 4th and 5th Defendants also signed a Supplemental Guarantee and Indemnity dated on the 8th of August 2016 with the Plaintiff.

As at 10th of September 2019, the Defendants was indebted to the Plaintiff in 15 the sum of RM 1,191,649.66 as per the letters of demand issued by the Plaintiff’s solicitors.

The Defendants have failed to pay the said outstanding sum or any part of the sum to the Plaintiff nor raised or complained about the Products and the 20 orders to the Plaintiff.

As I will be dealing with both, the Plaintiff’s preliminary objection and the main application herein, namely, application for summary judgment, the relevant Orders, namely, Order 32 Rule 13 (2) and Order 14 of the Rules of Court and the case laws are highlighted below :-

The principles of granting an order for summary judgment have been illustrated in the case of Ambank (M) Berhad v Oilfield Technical Inspection Sdn Bhd & Ors [2019] MLJU 375, the Court held that: - 4 “[34] It is clear that applications for summary judgment cannot be defeated merely upon bare assertions by Defendants. Subject to the nature of the assertions made, the Court may reject denials of liability or assertions and disputations that are equivocal, lacking in precision, inconsistent with contemporaneous documents or inherently improbable (see Bank Negara Malaysia v Mohd Ismail & Ors [1992] 1 MLJ 400). [35] Equally, mere denials and unsubstantiated assertions and reliance placed merely on the defences pleaded are insufficient to be considered as triable issues (see Chen Heng Ping @ Tian Seow Hock & 5 Ors v Intradagang Merchant Bankers (M) Berhad [1995] 3 CLJ 690; Huo Heng Oil Co (EM) Sdn Bhd v Tang Tiew Yong [1987] 1 MLJ 139 and Cheng Heng Ping & Ors v Intradagang Merchant Bankers (M) Bhd [1995] 2 MLJ 363; Banque de Paris et des Pays-Bas (Suisse) SA v de Narray [1984] 1 Lloyd’s Rep 21 and National Westminster Bank plc v Daniel and others [1994] 1 All ER 156).”

Further, in the case of Bank Negara Malaysia v Mohd Ismail & Ors [1992] 1 MLJ 400 held as follows :- 5 “Where the issue raised is solely a question of law without reference to any facts or where the facts are clear and undisputed, the Court should exercise its duty under O 14. If the legal point is understood and the Court is satisfied that it is unarguable, the Court is not prevented from granting a summary judgment merely because 'the question of law is at first blush of some complexity and therefore takes a little longer to understand'. (See Cow v Casey 6 and European Asian Bank AG v Punjab & Sind Bank 7 at p 516.)” 5

In the case of Cempaka Finance Bhd v Ho Lai Ying (trading as KH Trading) & Anor [2006] 2 MLJ 685 at page 689, para 5, Federal Court quoted from National Company for Foreign Trade v Kayu Raya Sdn Bhd [1984] 2 MLJ 300 held that :- 5 “For the purposes of an application under Order 14 the preliminary requirements are:

the Defendant must have entered an appearance;

(ii) the statement of claim must have been served on the Defendant; and

(iii) the affidavit in support of the application must comply with the requirements of Rule 2 of the Order 14. … If the Plaintiff fails to satisfy either of these considerations, the summons may be dismissed. If, however, these considerations are satisfied, the Plaintiff will have established a prima facie case and he becomes entitled to judgment. The burden then shifts to the Defendant to satisfy the Court why judgment should not be given against him.”

Order 32 Rule 13(2) of the Rules of Court 2012 read as follows:- “Service or use of affidavit (O. 32, r. 13)

Save as otherwise provided in these Rules, or unless otherwise directed by the Court :-

an affidavit intended to be used in support of an 6 application shall be filed and served on the other party within fourteen days from the date of filing of the application;

a party intending to reply to an affidavit intended to be used in support of an application shall file his affidavit and serve it on the other party within fourteen days from the date the sealed application and the affidavit in support of that application were served on him whichever is later;

a party intending to reply to an affidavit served on him shall file his affidavit and serve it on the other party within fourteen days from the date the affidavit he intends to reply was served on him; and

if an affidavit or an exhibit is deposed or affirmed by a deponent out of Malaysia, then the time fixed by this rule for a party to file and serve a reply to an affidavit shall be twenty-one days.”.

In the case of Majlis Daerah Dungun v Tenaga Nasional Berhad [1998] 1 AMR 516, Mohd Noor b Hj Ahmad J was of the view that Order 32 Rule 13(2) of the Rules of Court 2012 applies only to an affidavit filed in support of 5 an application in chambers and to an affidavit in reply to the affidavit in support of such application, but not a subsequent affidavit. FINDINGS 10 A. Preliminary Objection: The filing and service of both the Defendant’s Affidavits, namely Affidavit in Reply affirmed on the 30th December 2019 (Affidavit in Reply-1) and the other affirmed on the 13th January 2020 (Affidavit in Reply-2) are out of time and without leave 7

Upon hearing both the Plaintiff and Defendant’s counsel submission, the Plaintiff’s preliminary objection against Affidavit in Reply-1 and Affidavit in Reply-2 are hereby dismissed. My reasons are as follows:- a. I am of the view that there is no substantial miscarriage of justice or 5 occasion prejudiced to the Plaintiff in the delay of filing and service of the Affidavit in Reply-1. b. I am inclined to agree with the submission of the Plaintiff that since the gradual amendments of the Rules of Court in 2002, I found that there 10 is a shift in the approach of the Court in dealing with objection by a party due to a breach of procedural provision or technical non compliance of the rules. The emphasis is on the overriding interest of justice as opposed to technical to non-compliance of the rules. This shift of approach can be seen in the case of Chong Keat Realty Sdn 15 Bhd v. Ban Hin Lee Bank Bhd [2003] 3 MLJ 321, where the Court of Appeal had enunciated that :- “So, when a party to litigation complains of breach of a procedural provision by his opponent, the primary question is not whether the particular provision is to be regarded as mandatory or directory according to the terms of the language in which it is couched. The correct question that the judicial arbiter should ask himself is this: What injustice has the party complaining suffered by reason of the procedural breach? It is the answer to this the question that will ultimately determine where the Court should uphold or reject a procedural complaint.“ 20 8 c. In the case of Megat Najmuddin Bin Dato Seri (Dr) Megat Khas v Bank Bumiputra (M) Bhd [2002] 1 MLJ 385, the Federal Court held:- “The duty of the Federal Court, as the apex Court, to ensure that justice is done for outweighs any procedural technically preventing it from being done. When a case in brought before the Federal Court, the Court is seized of jurisdiction over the case. So seized, the Federal Court must decide the case in the interest of justice, to redress wrong and uphold the right, uninhibited by the technicalities strewn in its path.” 5 d. Other decisions of the Court which reflect the shift of approach of the Court can be found in the decision of the Court in the case of Public Bank Bhd v. Heng Weng Chin & Ors (2002) 6 MLJ 49 where the Court held :- 10 “Thus, objections in matters of form, time or procedure ought not to be accepted by the Courts to defeat or override the substantive merits of the case “ e. In the case of Abd Hamid bin Jaafar (Trading As Sole Proprietor As Bintang Enterprise) v Shamsiah Dan Keluarga Sdn Bhd [2004] 5 MLJ 349 wherein it was held as follows: 15 9 “34. As we move towards the era of facilitating the process of litigation, the raising of preliminary objections on technical grounds would certainly and clearly be a thing of the past.” f. In the present case, as I found there is no substantial miscarriage of justice to the Plaintiff herein for the one-day delay (as claimed by the Defendants) or for the 4 days delay (as claimed by the Plaintiff) in the 5 Defendants’ filing and service of Affidavit in Reply–1, therefore, the preliminary objection against Affidavit in Reply-1 is not allowed. g. In respect of the preliminary objection against Affidavit in Reply- 2, the Plaintiff submitted that Affidavit in Reply-2 was filed without due notice 10 and the Plaintiff was caught by surprised. Further, the Plaintiff claims that it had deprived the Plaintiff’s right to reply and adduced evidence. I am inclined to agree with the Defendants’ counsel submission that no leave is required to file and served Affidavit in Reply-2 as Order 32 Rule 13 (2) of Rules of Court is not applicable to a further affidavit. 15 This proposition of law can be found in the case of Majlis Daerah Dungun v. Tenaga Nasional Bhd [1998] 1 MLJ 708. The Court held inter alia:- “….Sub rule (1) of rule 13 Sub rule (2) applies only to an affidavit in support of an application in chambers and to an Affidavit in Reply to the Affidavit in Support of an application but not to subsequent affidavit….” 20 10 h. Another case that echo the said proposition of the law in relation to Order 32 Rule 13(2), is the case of Citibank Berhad v. Leoang Wey Pyu & Anor [1998] 3 CLJ SUPP 1, whereby the Court held :- “Further, it applies only to an affidavit filed in support of an application in chambers and to an Affidavit in Reply to the Affidavit in Support of such application, but not to a subsequent affidavit as in the case of encl. (5)……..” 5 i. Thus, applying the principles above, I am of the view that Affidavit in Reply-2 is not caught by the said Order 32 Rule 13 (2) Rules of Court, as Affidavit in Reply-2 is a further affidavit or a subsequent affidavit. 10 j. In any event, even if there is a delay in the filing of the Affidavit in Reply-2 or the Affidavit in Reply-2 is caught by the said Order 32 Rule 13 (2) of Rules of Court, I am of the view there is no substantial miscarriage of justice caused to the Plaintiff in this present case. The Plaintiff claimed that they were caught by surprised by the filing of 15 Affidavit in Reply-2 and they were deprived of replying to the said affidavit and/or to adduce evidence; however, I am unable to accept the said Plaintiff’s contention. As rightly pointed by the Defendants’ counsel, the Plaintiff had ample time which is almost one month to reply to Affidavit in Reply-2 before the Plaintiff were to file their written 20 submission and had more than 6 months before the hearing of this application herein. The Court observed that the Plaintiff could have easily filed their Affidavit in Reply to the Defendants’ Affidavit in Reply- 2 but chose not to do so. Instead, the Plaintiff chose and insisted to pursue on a technical objection. This Court is of the view, this 25 certainly goes against the spirit of the amendments or the evolvement of the Rules of Court, which placed an emphasis on the overriding objective of enabling the Court to deal with cases justly on its merits, 11 By Order 2 Rule 2 of Rules of Court 2012, the parties are required to assist the Court to achieve this overriding objective.

With the above legal principles on summary judgement in mind and looking into the pleading and affidavits of both parties, at the outset, I am of the view and find that this is not a fit and proper case to grant an order for a summary judgement against the Defendants herein. My reasons are set below:

In this present case, I am satisfied the Defendant has succeeded in raising a triable issue which merits a full trial.

Triable issue: Whether the transactions between the Plaintiff and the 1st Defendant is a genuine sale and purchase transaction or money 15 lenders transaction disguised as sale and purchase transaction

It is the contention of the Defendants that the Plaintiff is an unlicensed money lender and the transaction between the Plaintiff and the 1st Defendant were in reality unlawful loan facilities. Further, the Defendants contended 20 that they were no goods transacted and documents relied by the Plaintiff are sham to camouflage an unlawful money lending activity.

The Defendant highlighted to this Court, the modus operandi to conceal the alleged unlawful transaction, which are reproduced below:- 25

Upon the request by the 1st Defendant, the Plaintiff would issue its Purchase Order to a related company of the 1st Defendant, namely Swansbeck Systems Sdn Bhd (formerly known as Viacor Systems Sdn Bhd)(“the said Viacor”) in respect of the certain products having a 30 “value” in the amount of the loan requested by the 1st Defendant.

Thereafter, the said Viacor would issue a delivery order to the Plaintiff for the Products. The Plaintiff, upon receipt of the delivery order and 12 tax invoice of the said Viacor, will make payment to the said Viacor. Subsequently, the said Viacor will transfer this payment by the Plaintiff to the 1st Defendant. As such, this amount as paid by the Plaintiff constituted and was in fact a loan granted by the Plaintiff to the 1st Defendant.

Viacor is a company related to the 1st Defendant and shares the same registered address and premises with the 1st Defendant. The 4th Defendant is a majority shareholder of Viacor and the 4th Defendant holds the shares in Viacor, as nominee of the 1st Defendant.

Contemporaneous with the delivery order and tax invoice of the said Viacor, the Plaintiff will then issue a delivery order and tax invoice to the 1st Defendant for the same products but at a higher price. The difference between the price stated in the tax invoice of the said 15 Viacor and the tax invoice of the Plaintiff constituted the interest payable by the 1st Defendant to the Plaintiff.

It does not make sense and defies logic that the 1st Defendant, through its related company, the said Viacor, sells the Products to the 20 Plaintiff and immediately buys back the same Products from the Plaintiff at a higher price.

Therefore, the 1st Defendant was required by the Plaintiff to acknowledge “receipt” of the Products by signing and affixing its 25 company stamp on the sales order, delivery orders and tax invoices to give the documents a semblance of their being commercial documents for commercial transactions, when in fact and in truth, there were all made-up to conceal and obfuscate unlawful moneylending transactions.

The Court observed that the Defendants had in their affidavits produced and exhibited several documents to support their contentions that the said 13 transaction was a money transaction disguised as sale and purchased transaction.

On the other hand, the Plaintiff alleged that the assertions raised by the Defendants are inconsistent with the undisputed contemporary documents. 5 The Defendant’s contention is without merits and afterthought. The Defendants also had failed to lodge any discrepancies.

In reply, the Defendants highlighted to this Court that even the Plaintiff’s solicitor who prepared the Supplemental Guarantee & indemnity has vide 10 their letter dated 7th of September 2016 (Exhibit HFC-9 in Affidavit In Reply- 1) refer to the matter as a “FRIENDLY LOAN AND OPTION AGREEMENT”.

In an application for summary judgment, the duty of the Court is to decide whether the Defendant had succeeded in raising triable issue and “At this 15 stage, the Defendants need not prove their defences. All that is required is to raise a triable issue” (see the case Sigur Ros Sdn Bhd below). As this case is not an easy and straightforward case but involves the issue of unlawful moneylending, all the transactions made pursuant to the agreements entered by the Plaintiff and the Defendants, I am of the view that this case ought to 20 be decided in a full-blown trial. This issue raised is not suitable to be resolved by way of affidavit evidence in light of the stark contrast of the contentions of each party herein.

In the case of Sigur Ros Sdn Bhd & Anor v Maybank Islamic Bhd & Anor 25 [2018] MLJU 642 which refer to the case of Azlin bin Khalid v Mohamad Najib Ishak And Other Appeals (2017) 6 MLJ 537 whereby the Court held:- “It is well established that among the principles applicable for summary judgment is that if the affidavits filed by a Defendant raises one bona fide triable issue, then the suit between the parties should proceed to a full-blown trail. At this stage, the Defendants need not prove their defences. All that is required is to raise a triable issue…”. 14

In light of the aforesaid reasons, the Plaintiff’s application for summary judgment against the Defendants herein is dismissed with cost of RM 3,000.00. 5 Dated 20th of August 2021 signed (KHAIRIL AZMI BIN HAJI MOHAMAD HASBIE) 10 Judicial Commissioner High Court Shah Alam 15 For the Plaintiffs : Encik Clement Chong (Messrs EZ Pang & Co.) 20 For the 1st-5th Defendants : Encik Tan Leng (Messrs T.J. Chin & Co.) CASE REFERENCE 25

Ambank (M) Berhad v Oilfield Technical Inspection Sdn Bhd & Ors [2019]

Bank Negara Malaysia v Mohd Ismail & Ors [1992] 1 MLJ 400.

Cempaka Finance Bhd v Ho Lai Ying (trading as KH Trading) & Anor [2006] 2 MLJ 685. 15

National Company for Foreign Trade v Kayu Raya Sdn Bhd [1984] 2 MLJ

300.

KS Chua & Co v Chui Miang Chew & Ors [1995] 4 MLJ 436.

Majlis Daerah Dungun v Tenaga Nasional Berhad [1998] 1 AMR 516, 1 MLJ

708.

Chong Keat Realty Sdn v. Ban Hin Lee Bank Bhd [2003] 3 MLJ 321.

Megat Najmuddin Bin Dato Seri (Dr) Megat Khas v Bank Bumiputra (M) Bhd [2002] 1 MLJ 385.

Public Bank Bhd v. Heng Weng Chin & Ors (2002) 6 MLJ 49.

Abd Hamid bin Jaafar (Trading As Sole Proprietor As Bintang Enterprise) v Shamsiah Dan Keluarga Sdn Bhd [2004] 5 MLJ 349.

Citibank Berhad v. Leoang Wey Pyu & Anor [1998] 3 CLJ SUPP 1.

Sigur Ros Sdn Bhd & Anor v Maybank Islamic Bhd & Anor [2018] MLJU 642.

Azlin bin Khalid v Mohamad Najib Ishak And Other Appeals (2017) 6 MLJ

25

Order 14 of the Rules of Court 2012.

Order 32 Rule 13(2) of the Rules of Court 2012.

Order 2 of the Rules of Court 2012.

Moneylenders Act 1951 (Revised 1989).