TF Land Sdn Bhd v Shengbao Enterprise Sdn Bhd & 1 Lagi (P-02(IM)(NCvC)-2375-11/2018)

Shengbao Enterprise Sdn Bhd

OSK Capital Sdn Bhd Defendan-Defendan 2 CORAM BADARIAH BINTI SAHAMID, JCA HARMINDAR SINGH DHALIWAL, JCA (Now FCJ) NOR BEE BINTI ARIFFIN, JCA JUDGMENT OF THE COURT INTRODUCTION [1] There are two appeals before us against two decisions of the learned Judge of the High Court at Penang, delivered on 26.10.2018. These two appeals which were heard together are as follows:

Civil Appeal No. P-02 (IM) (NCVC)-2375-11/2018 (‘Appeal No. 2375’) is an appeal against the learned Judge’s decision to allow the Plaintiff’s (‘TF Land’) application made pursuant to Order 14A of the Rules of Court 2012 to determine questions of law without full trial of the suit.

(ii) Civil Appeal No. P-02 (IM) (NCVC) -2384-11/2018 (‘Appeal No.2384’) is an appeal against the decision of the learned Judge to dismiss the 2nd Defendant’s (‘OSK Capital’) application to strike out the Plaintiff’s Writ and Statement of Claim pursuant to Order 18 Rule 19 of the Rules of Court 2012. 3 [2] For ease of reference, parties will be referred to as they were in proceedings before the High Court: TF Land Sdn Bhd (‘TF Land’) as the Plaintiff and OSK Capital Sdn Bhd (‘OSK’) as the Defendant. BACKGROUND FACTS [3] The following undisputed facts are derived from the learned Judge’s decision, with suitable modifications. [4] TF Land is the registered proprietor of five (5) pieces of land which are the subject matter of the High Court action: Lot 3512, Lot 3513, Lot 6314, Lot 3515 and Lot 3516, all of which are located in Mukim 16, Daerah Seberang Perai Tengah, Negeri Pulau Pinang. [5] In October 1997, OSK granted a credit facility of RM2, 915,810.00 to five borrowers, namely, Gooi Boon Teik & Gooi Boon Eng, Hasan Albakri, Tan Phaik Guan, Tan Back Chuah and Ang Bah Ah. These five borrowers authorised Shengbao Enterprise Sdn Bhd. (‘Shengbao’) to operate and transact all matters relating to the said facility. 4 [6] The following properties were pledged as securities to OSK:

No. G.M. 288 Lot No. 822, Mukim 16, Daerah Seberang Perai Tengah, Negeri Pulau Pinang (‘Lot 822’) in which Team Four Sdn Bhd. (‘Team Four’) is the registered owner;

(ii) The five properties in which TF Land is the registered owner. [7] On 19.12.1997, OSK had registered a lien holder’s caveat on Lot 822 and the five properties abovementioned. [8] Subsequently, Shengbao took over the liabilities of the borrowers under the abovementioned credit facility. Shengbao defaulted in settling the amounts due and owing under the said credit facility. [9] In 2005, OSK had filed a civil action No. 22-412-2005 against Shengbao for the default of the said facility by Shengbao. [10] On 19.5.2006, summary judgment was entered against Shengbao wherein Shengbao was ordered to pay the sum of RM 2,930,971.60 with 5 interest rate of 12% per annum from 1.4.2005 until full and final settlement. [11] On 22.1.2013, OSK had filed Originating Summons No. 24 NCVC 153-01/2013 against Team Four and Shengbao for an order to sell Lot 822 by public auction. [12] On 30.10.2014, an Order for Sale was granted to OSK to auction Lot 822 through a public auction to settle the judgment sum of RM2,930,484.10 together with 12 % interest per annum that was granted under the said Summary Judgment. [13] Team Four had appealed against the judgment. The Court of Appeal had allowed the appeal in part and amended the Order for Sale by limiting the calculation of interest on the judgment sum to six years from 1.4.2005. [14] Premised on the Court of Appeal’s Order, the total amount due and owing by Shengbao to OSK under the said Summary Judgment is RM 4,590,920.22, excluding costs. 6 [15] On 21.12.2015, Lot 822 was sold by public auction to GTM Property Management Sdn Bhd for the price of RM 6,000,000 and the surplus of RM903, 099.93 was to be refunded to Team Four by OSK. [16] In July 2012 TF Land filed Civil Suit No. 22 NCVC -507-7/2012 against Shengbao and OSK for execution of all the said five properties. On 9.10.2012, the High Court granted an Order for Sale in favour of OSK to auction the five properties to settle the amount due and owing by Shengbao to OSK under the said Summary Judgment with 12 % interest per annum on the sum of RM2, 305,484.19, until full and final settlement. [17] TF Land appealed against the Order for Sale to the Court of Appeal. Among the grounds of appeal, TF Land appealed against the part of the Order for Sale granting 12% interest per annum from 1.4.2005 until full and final settlement on the basis that the interest awarded is barred by limitation and should be varied and limited to 6 years. On 26.8.2015. The Court of Appeal dismissed the Appeal and affirmed the Order for Sale.TF Land did not appeal against the decision of the Court of Appeal. 7 [18] Premised on the Summary Judgment decision dated 9.10.2014 and the Order dated 26.8.2015, OSK in its capacity as a lien holder’s caveator had commenced execution proceedings to auction off the five said properties. [19] Thereafter, TF Land filed an action in the High Court to set aside/ vary part of the Order for Sale dated 9.10.2014 which had allowed OSK to claim for the judgment sum and the 12 % interest per annum until full and final settlement under the said Summary Judgment. [20] On 26.3.2014, TF Land had filed an application under Order 14A of the Rules of Court 2012 to determine questions of law in relation to the issue of limitation. On 12.6.2018, OSK filed an application to strike out TF Land’s claim pursuant to Order 18 Rule 19 of the Rules of Court 2012. [21] On 26.10.2016, the High Court allowed TF Land’s Order 14A application and dismissed OSK’s application to strike out TF Land’s claim pursuant to Order 18 Rule 19 of the Rules of Court, 2012. 8 [22] On 8.6.2018, a Stay Order was granted by the High Court in respect of the five execution proceedings pending disposal in the High Court, and further extended pending the disposal of these appeals. QUESTIONS OF LAW [23] The questions of law raised by the Plaintiff to be determined by the High Court are as follows: “(i) Sama ada kadar faedah yang boleh dituntut didalam Penghakiman Mahkamah Tinggi Pulau Pinang bertarikh 9.10.2014 di dalam Guaman Sivil No. 2 NCvC -507-07/2012 adalah ditetapkan pada kadar 12% setahun ke atas wang sejumlah RM2,305,484.19 selama enam tahun sahaja dari 1.4.2005; [English Translation: whether the rate of interest that can be claimed under the Order of the High Court, Penang dated 9.10.2014 in Civil Suit No. 2 NCVX-507-07/2012 is fixed at 12% per annum on the sum of RM 2, 305,484.19, is limited to a period of six years only from 1.4.2005]

(ii) sama ada Perintah bahawa Penghakiman Mahkamah Tinggi Pulau Pinang bertarikh 9.10.2014 didalam Guaman Sivil No. 22 NCvC - 9 507-07/2012 setakat mana yang diperuntukkan bahawa jumlah yang terhutang kepada Defendan Kedua oleh Defendan Pertama menurut Penghakiman Mahkamah Tinggi Pulau Pinang bertarikh 19.5.2006 didalam Guaman Sivil No. 22-415-2005 setakat 9.10.2014 adalah RM 5,566,424.25 ( tidak termasuk kos) bersama dengan faedah pada kadar 12% setahun keatas wang berjumlah RM2, 305,484.19 dikira dari tarikh Penghakiman ( 9.10.2014) sehingga tarikh penyelesaian penuh adalah batal, tidak sah, dan harus diketepikan; [English Translation: Whether the amount due and owing under the Order of the High Court, Penang dated 9.5.2006 in Civil Suit No. 22- 415-2005 as of 9.10.2014 is RM 5,566,424.25 (costs excluded) together with 12 % interest per annum in respect of RM2, 305,484.19 is calculated from the date of Judgment (9.10.2014) till full and final settlement is void, illegal and should be set aside]

(iii) sama ada isu ketidaksahan (illegality) mengatasi doktrin res judicata dan/atau isu estopel; dan [English translation: whether the issue of illegality supersedes the doctrine of res judicata and /or issue estoppel and] 10

(iv) sama ada doktrin res judicata dan/atau isu estopel terpakai dalam keadaan Perintah Mahkamah yang bercanggah dengan undang-undang bertulis.” [English translation: Whether the doctrine of res judicata and/or issue estoppel applies when an Order of the Court is inconsistent with written law] FINDINGS AND DECISION OF THE HIGH COURT [24] The findings and decision of the learned Judge on the questions of law in the Plaintiff’s Order 14A application may be summarised as follows. [25] TF Land’s action sought to restrict the interest claimable by OSK in the Order for Sale to 6 years to be computed from the Date of Writ i.e.

1.4.2005. TF Land’s action and its O14A application are both premised on the second limb of section 6 (3) of the Limitation Act 1953 which reads as follows: “(3) An action upon any judgment shall not be brought after the expiration of twelve years from the date on which the judgment becomes enforceable and no arrears of interest in respect of any 11 judgment debt shall be recovered after the expiration of six years from the date on which the interest became due”. [26] The learned Judge found that the Order for Sale should be varied in that the interest that can be claimed by OSK should be limited to 6 years starting from 1.4.2005, i.e the date OSK commenced its civil action against Shengbao,( ‘Date of Writ). At para 45 of the High Court Decision, the learned Judge had stated as follows: “45.Jadi, saya dapati kadar faedah yang boleh dituntut oleh Plaintif didalam penghakiman bertarikh 9.10.2014 adalah ditetapkan pada kadar 12 % setahun keatas wang sejumlah RM2, 305,484.19 selama enam tahun dari 1.4.2005.” [27] In arriving at the abovementioned finding, the learned Judge had stated that reliance was placed on the interpretation of section 6(3) of the Limitation Act, 1953 in the Federal Court case of United Malayan Banking Corp Bhd v Ernest Cheong Yong Yin [2002] 2 MLJ 385 (‘Ernest Cheong’), and held that a Court could not make an Order in respect of interest that is contrary to a provision of law. 12 GROUNDS OF APPEAL [28] Dissatisfied with the decision of the learned Judge, OSK appeals against the decisions in both TF Land’s O14A application and OSK’S application to strike out TF Land’s claim pursuant to Order 18 Rule 19 of the Rules of Court, 2012. [29] The crux of the issue in these two appeals is whether the learned Judge was correct to vary the Order for Sale to limit the interest claimable to 6 years, the 6 year period to be computed from the date OSK commenced action against the defaulting borrower (1.4.2005- the ‘Date of Writ), instead of the date computed from the date OSK obtained Summary Judgment (19.5.2006- the ‘Judgment Date’). OUR DECISION [30] After careful consideration of counsels’ oral and written submission, the Appeal records as well as relevant authorities, our unanimous decision is as follows. [31] In respect of Appeal 2375, we agree with the learned Judge’s decision to allow TF Land’s application for Order 14A, as we are of the 13 view that the matter is appropriate to be disposed by a consideration of questions of law without the necessity of full trial of the action. [32] In respect of Appeal 2384, in our considered view, we agree with counsel for the Appellant that the learned Judge had erred in her Ladyship’s reading of Ernest Cheong (supra). In fact, in para.35 of the learned Judge’s decision the following passage from Ernest Cheong (supra) was quoted: “(2) The second limb of s6 (3) of the Act provided that an action to recover arrears of interest must be brought within six years of the judgment date…” (Emphasis added) [33] While the learned Judge had correctly referred to the case of Earnest Cheong (supra), the learned Judge had failed to take into consideration the correct interpretation of section 6(3) of the Limitation Act that the 6 year limitation period is to be computed from the date of judgment, not the date of the writ. Abdul Malek Ahmad FCJ at p.398 had stated as follows: “The Court of Appeal had decided that the date on which the interest became due was the date of the breach which would be before the 14 judgment date. We are of the considered view that this finding is erroneous as the arrears of interest are in respect of a judgment debt, which as we have stated earlier is the principal sum and the prejudgment interest, and so the date on which the interest on the judgment debt becomes due must surely mean the judgment date.” [34] In support of the above interpretation of section 6(3) abovementioned, the Court of Appeal in Captain Ho Fooi v Standard Chartered Bank Malaysia Bhd [2009] 4 MLJ 511 had referred to the Federal Court case of Ernest Cheong (supra) and held at para. 40 as follows: “From the aforesaid authority, it is obvious to us that for the purpose of computing the six year limitation period under s 6 (3) of the Limitation Act 1953 for the recovery of interest in respect of a judgment debt, time begins to run from the date of judgment. Such limitation only applies to a post judgment interest and not to pre-judgment interest.” [Emphasis added] 15 [35] There is a plethora of authorities which have consistently held the 6 year period of limitation is be computed from the date of judgment and not from the date of the Writ. Amongst them are these: ; Perwira Affin Bank Bhd v Lim Ah Hee @ Sim Ah Hee [2004] 3 MLJ 253( FC); Re Yau Kin Mun; ex p Public Bank Bhd [1999] 5 MLJ 497, at p.503: Re Low Tung Kwai ; ex parte Perwira Affin Bank Bhd [2001] 6 MLJ 39 . [36] We are therefore of the view that although section 6(3) of the Limitation Act, 1953 limits interest which can be claimed to a period of 6 years, the 6 year period is to be computed as starting from the date of judgment i.e. from 19.5.2006 and not from the Date of the Writ, i.e.

1.4.2005. The learned Judge had clearly erred in law in her interpretation of section 6(3), which makes the learned Judge’s decision unsustainable in law and warrants our appellate intervention. [37]For the foregoing reasons we conclude as follows: In respect of Appeal 2375, we affirm the decision of the learned Judge to allow TF Land’s application for Order 14A on the construction of section 6(3) of the Limitation Act, 1953. However, the Order of the High Court is varied in that the interest to be computed at 12 % per annum which is limited to 6 years 16 commences from the Judgment Date i.e. 19.5.2006, and not from the Date of Writ i.e.1.4.2005. [38] We make no order as to costs. T.T BADARIAH BINTI SAHAMID, JUDGE, COURT OF APPEAL, PUTRAJAYA DATE: 8 September 2020 17 For The Appellant : Kelvin Seet Wan Nam Choo Jun Lin Verene Tan Yeen Yi Tetuan Tan Chuah Shuaib & Co 5021B, Tingkat Satu, Jalan Raja Uda, 12300 Butterworth, Pulau Pinang. For The Respondent: Karin Lim Shamshul bin Jamil Lee Kar Kheng Tetuan Presgrave & Matthews Tingkat 1, No. 2 Lebuh Pantai 10300 Pulau Pinang