Tan Sew Cheng v Worldwide Platinum Records Sdn Bhd (P-02(IM)(NCVC)-1404-07/2018)

Originally, three related appeals were fixed for hearing before us. However, in view of the lifting of the interlocutory order of a mareva injunction, Appeal No. P-02(IM)(NCVC) 516-03/2018 was withdrawn and accordingly struck out with no order as to costs. What was left were Appeals No. P-02(IM)(NCVC)-1404-07/2018 and No. P-02(IM)(NCVC)- 1436-07/2018; the first was in respect of a dismissal of an application to strike out the respondent’s claim, the second was in respect of the grant of summary judgment against the appellant. 4

After hearing both sides, we unanimously dismissed the appeal on the dismissal of the striking out application; and allowed the appeal in respect of the entry of summary judgment.

The respondent’s claim arises from an agreement that it made with a company known as Noble Mettle LLC, an American company which was part of the Noble Mettle Trust Group, for a loan of €102 million. The respondent claimed that the appellant, as the representative and/or agent of Noble Mettle in Malaysia, had represented to the respondent that this loan of €102 million would be approved on the condition that the respondent paid a refundable administrative and due diligence fee of €2 million, where €100,000 was to be paid by wire transfer on 30.12.2016, €900,000 to be paid by cash deposit on 30.12.2016, and the balance of €1 million to be deducted from the first drawdown initial €1 million.

The respondent claimed that the appellant further represented that if the €102 million loan was not released to the respondent according to what is known as a ‘Funding Schedule’, the refundable administrative and due diligence fee would be fully refunded together with a sum of €1 million. The appellant followed this up with a written undertaking dated 30.12.2016 where she undertook to pay any damages, bear any loss including the €900,000 in the event Noble Mettle ‘fail, omit and/or negligent’ in disbursing the loan of €102 million, and fully refund any payments made.

Despite having paid a sum of SGD1,362,850.00 which is equivalent to €900,000, the respondent claimed it never received the loan of €102 million. The respondent’s solicitors issued the appellant a notice of 5 demand invoking payment under the written undertaking. This proved unsuccessful. The respondent sued the appellant for refund of its money including a sum of €1 million together with interest at the rate of 10% per annum, damages for deception, and general damages for unjust enrichment as well as aggravated and exemplary damages.

The appellant filed a Defence pleading inter alia that Noble Mettle only acknowledged the respondent’s payment on 9.10.2017; that the respondent’s remedy and claim lay against Noble Mettle; that it was the respondent’s failure to comply with the instructions of Noble Mettle in the due diligence conducted that resulted in the non-release of the loan; that the transaction between Noble Mettle and the respondent was illegal and contrary to the provisions of the Exchange Control Act 1953 and the Guidelines issued by the Ministry of International Trade and Industry and those issued by the Central Bank; that the respondent had not informed the appellant that its payments would be in Singapore currency.

By enclosure 20, the respondent sought leave to enter summary judgment on the basis that the appellant had no defence of merit. The learned Judge agreed with the respondent finding that the appellant had acknowledged receipt of the payment of SGD1,362,850.00 which is equivalent to €900,000 being payment of the refundable administrative and due diligence fee; that the appellant had agreed to refund that sum; and that the respondent did not obtain the loan of €102 million. As for the issue of illegality, the learned Judge was of the view that this did not concern the immediate parties but would only be relevant in a claim between the respondent and Noble Mettle. The learned Judge further 6 disagreed with the appellant that she had discharged her obligations when the respondent’s payment of €900,000 was handed over to Noble Mettle

With respect, we must disagree with the learned Judge. The law on the entry of summary judgment is trite. See Bank Negara v Mohd Ismail & Ors [1992] 1 CLJ 627. Whether or not an issue that merits further exploration and determination in a manner other than summarily is one which is not cast in stone, it necessarily depends on the particular facts or law rising from each case as disclosed in the affidavit evidence before the Court or from the pleadings.

Here, the defence is not one of mere platitude; it raises serious issues on the validity of the very agreement which the respondent entered with Noble Mettle, that the undertaking is necessarily one which is to be read together with that agreement, whether contextual or more; that divorced of the underlying agreement between the respondent and Noble Mettle, there really would have been no need for such an undertaking, written or even verbal. After all, the material part of the letter of undertaking reads as follows: “I hereby agree to indemnify and keep fully indemnified for the full payment of the said Sum in the event I fail, omit and/or negligent in the remittance of the Sum to the abovementioned Account and the said Sum shall be refunded to you immediately upon your written demand.” [emphasis added] 7

The appellant had argued that the obligation under the letter of undertaking pertained to the obligation to ensure that the sum of SGD1,362,850.00 received from the respondent was remitted to Noble Mettle. As noted by the learned Judge, it was so remitted – see paragraph 21 of the grounds of decision. This, in itself, indicates an arguable defence on what exactly was the appellant’s obligation and whether there has been due performance by the appellant.

However, despite that payment which was acknowledged many months later in October of the following year for unexplained reasons, which delay is not disputed or even the subject of any complaint by the respondent, the respondent did not obtain that loan of €102 million.

The appellant has raised concerns and questions over the respondent’s payment of the €900,000 in cash of SGD1,362,850.00. Prior to this payment, the respondent had itself remitted directly to Noble Mettle the sum of €100,000. The sum of SGD1,362,850.00 was given in cash by the respondent’s director to the appellant to remit to Noble Mettle.

The agreement, though seemingly simple and straightforward was without legal assistance, and this has raised concerns as to the propriety of the agreement and the related arrangements including the undertaking by the appellant and the payment and onward remittance of €900,000 by the appellant to Noble Mettle.

This €900,000 is a very substantial sum by any measure and the circumstances surrounding its payment and the arrangement for its payment and remittance to Noble Mettle, a foreign institution merits proper examination and consideration through a trial. Even the loan sum of €102 8 million requires examination. The payment of €900,000 would, amongst others, be relevant to the issue of whether there are any violations or contraventions of any monetary regulations including those under the Financial Services Act 2013, Exchange Control Act and even under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001. The appellant has adduced evidence to the effect that the respondent’s director who made the payment was fully aware of the strict enforcement by Bank Negara and that its approval would be required before the monies could leave or enter our shores.

It would seem to us that if that payment of SGD1,362,850.00, paid by the respondent to Noble Mettle under its agreement with Noble Mettle was in any way contrary to any of those laws mentioned, then surely any refund would similarly suffer the same fate under the principle of ex turpi causa non oritur actio and that the respondent may possibly be in pari delecto to the illegality or wrongful act, or at the very least, this issue warrants further examination.

It was also erroneous for the learned Judge to say that the loan agreement with Noble Mettle had no connection whatsoever with the letter of undertaking; the two were plainly and obviously inter-related. At this point, we are incline to say that the appellant has raised very real and serious questions of illegality which must be examined properly for its full facts and circumstances. The respondent’s knowledge or awareness of those facts would also be material to that determination.

We cannot shut our eyes to the plainly unusual arrangements pertaining to the substantial loan in a foreign currency which required prior payment from the potential borrower in the person of the respondent even 9 before it receives any part of that substantial loan; and which suggest some real concerns on its validity and legality that must be scrutinized by the Court. The lending transaction in the agreement is even questioned as being an unauthorized transaction or even an illegal money lending/laundering transaction. See cases such as Norihan Talib & Ors v Mohd Nasir Hassan & Ors [2017] MLRAU 1 and Lim Xue Shan & Anor v Ong Kim Cheng [1990] 3 MLJ 449.

All these concerns and issues are defences of merit, none of which are plainly and obviously unsustainable. We were thus of the unanimous view that the learned Judge had plainly erred in the exercise of discretion in allowing the application for summary judgment for the reasons set out in the grounds of judgment. This is certainly not a plain and obvious case of illegality raised by the appellant. The circumstances warrant full examination at trial.

The appeal [No. P-02(IM)(NCVC)-1436-07/2018] is therefore allowed and the decision of the High Court in respect of enclosure 20 is set aside. Further to this decision, the appeal in respect of the striking out [No. P-02(IM)(NCVC)-1404-07/2018] must consequently fail and must be dismissed. Dated: 13th February 2020 sgd (MARY LIM THIAM SUAN) Judge Court of Appeal Malaysia 10 Counsel/Solicitors For the appellant: Walter Pereira (R Rameswaran with him) Messrs Kamarudin & Partners No. 10-1, First Floor Jalan 30/70A, Desa Sri Hartamas 50490 Kuala Lumpur For the respondent: Jimmy Geh Messrs Ismail Khoo & Associates No. 10, First Floor Premier Centre (Opposite Jones Road/Lancia Holdings) No. 253G, Burmah Road 10350 Penang