Wakil Diri Kepada Harta Pusaka Simati, Salleh Bin Saring v Teo Tiam Teng (BA-12B-94-06/2019)

This is an appeal brought by the personal representatives of the estate of Salleh bin Saring, deceased. (“Salleh”). The estate of Salleh was sued in the Sessions Court for the repayment of a friendly loan of RM 600,000 which he took from the Plaintiff. Salleh died prior to the filing of this suit. The Sessions Court, after a trial of the matter, found for the Plaintiff.

For ease of reference, the parties here will be referred to as they were, in the court below.

The Plaintiff’s case is premised on the following facts. The Plaintiff advanced two friendly loans to Salleh. The first loan was advanced 2 on 25.2.2008 for the amount of RM 200,000 (“1st loan”), and the second on 27.2.2009 (“2nd loan”), for the amount of RM 400,000.

The 1st loan was evidenced by a statutory declaration (“1st SD”) signed by Salleh on 25.2.2008 in which he admitted having taken an interest free loan of RM 200,000 from the Plaintiff. He promised to repay by 3.6.2008.

As for the 2nd loan, the Plaintiff relied on a friendly loan agreement titled Perjanjian Pinjaman Wang (“FLA”) dated 27.2.2009, in which Salleh agreed that a loan of RM 400,000 in cash had been advanced to him without interest. Salleh also agreed to repay the loan within a month of the agreement. A statutory declaration (“2nd SD”) of the same date was also signed by Salleh in which he admitted to receiving the amount of RM 400,000.

Salleh passed away on 25.8.2013. The Plaintiff claims that at the time of Salleh’s death, the loans had yet to be repaid. The Plaintiff thereupon filed the present suit on 25.2.2014 citing the personal representatives of the estate of Salleh as the Defendant. Judgment was sought for the sum of RM 600,000 together with interest at 5% to run from date of judgment to realization.

The Defendant denied the existence of the 1st and 2nd loans. The defence case was that Salleh only took 2 loans. The first was a loan of RM 200,000 which was secured by way of a sale and purchase agreement dated 2.3.2009 of Salleh’s property identified as H.S.(M) 996, P.T. 52 Mukim Dengkil, Daerah Sepang, Negeri Selangor. A Power of Attorney in favour of the Plaintiff together with the SPA 3 was executed on 2.3.2009. The Plaintiff filed a suit to recover this loan vide Sepang Sessions Court Suit No:.S1-52-21-02/2012. (“1st Suit”). On 13.6.2012, parties entered into a consent judgment.

The second loan of RM 220,000 was taken by Salleh from Valuable Concept Sdn. Bhd. a moneylending firm of which the Plaintiff was a director and shareholder. The loan has since been recovered against Salleh vide a judgment of the Sepang Sessions Court in Suit No:. 52-16-02/2013 (“2nd Suit”) on 28.11.2013.

Apart from these two loans, there were no other loans taken by Salleh from either the Plaintiff or Valuable Concept Sdn. Bhd. In addition, the Defendant also alleges the following:-

the Plaintiff was not a licensed moneylender at the material time. He was not in a position to advance loans. The 1st SD, 2nd SD and FLA documents were never given to Salleh. Further no notice was ever given to Salleh to repay the alleged 1st and 2nd loans;

the alleged loans did not exist;

the sums claimed in these proceedings had been satisfied in the 1st Suit; and

the Plaintiff was guilty of laches in taking action to recover the alleged 1st and 2nd loans. [10] At the trial, 3 witnesses testified for the Plaintiff. Both the Commissioner for Oaths who affirmed the 1st and 2nd SD on 25.2.2008 and 27.2.2009 respectively were called as witnesses. They confirmed having witnessed Salleh’s signature and that he understood the contents of the statutory declarations. The Plaintiff also testified. [11] The defence had only one witness, the wife of Salleh (DW1). Her testimony was consistent with her defence filed. She said that none of the documents evidencing the alleged loans were given to Salleh. Neither did he receive any notice to repay the loans. She was aware of the 1st and 2nd Suits and the judgments obtained. She stated that on 8.12.2011, Salleh filed a police report stating that the sale and purchase agreement referred to in the 1st Suit was merely a security for the RM 200,000 loan he took from the Plaintiff. DW1 herself also made a police report on 17.6.2014 stating that she was aware of only 2 loans taken by Salleh, namely the loans which were the subject matter of the 1st Suit and 2nd Suit. Salleh did not borrow the alleged RM 600,000. She suspected the documents executed for the 2 prior loans to be now used by the Plaintiff to support his claim for RM 600,000. [12] In addition, she stated that for the 1st Suit the loan amount was RM 200,000. However, consent judgment was entered for an amount of RM 316,000. She said that “Simati…telah membayar jumlah tuntutan Plaintif sebanyak RM 200,000 serta jumlah sebanyak RM 116,000 bagi bayaran “pinjaman lain” atas permintaan Plaintif berserta faedah dan kos tindakan melalui Penghakiman Persetujuan bertarikh 13.6.2012.” She surmised that the 1st Suit had incorporated other pending claims of the Plaintiff. [13] At the conclusion of the trial, on 10.5.2019, the Sessions Court found for the Plaintiff. Hence, the instant appeal by the Defendant. The decision of the Sessions Court [14] The Sessions Court dealt with a legal issue raised by Defendant before proceeding to consider the merits of the parties’ case. The defence raised the issue of non-compliance with Order 15 rule 6A(4)(a) of the Rules of Court 2012 as there was no person named as the personal representative to the estate of Salleh. [15] However, having duly considered the issue, the Sessions Court decided that the overriding interest of justice must prevail over the non-compliance, and applied the provisions of Order 2A of the Rules of Court 2012. [16] On the evidence, he found that the Plaintiff had established his claim on a balance of probabilities. Firstly, he found that the friendly loans existed. This was proved from the oral evidence of both the Commissioners for Oaths before whom Salleh signed the 1st SD and 2nd SD. The objection taken by the Defendant as to the admissibility of the documents on the basis that the stamp duty was insufficient, was without merit. Secondly, based on the contents of these documents, Salleh had in fact received the loan amounts, as he admitted so in the Statutory Declarations (“SDs”) and the FLA. Thirdly, he found that the additional RM 116,000 which Salleh agreed to pay for the 1st Suit notwithstanding a loan of only RM 200,000, was unrelated to the present claim. Consequently, there was no evidence that the 1st and 2nd loans had been repaid. He also found the submission of laches on the Plaintiff’s part to be baseless as the suit was filed within the limitation period. He then concluded that on a balance of probabilities, the Plaintiff’s claim was established, and thereupon allowed it. The grounds of appeal [17] The grounds upon which this appeal is brought, evidenced from the Memorandum of Appeal can be broadly stated as follows:-

the Plaintiff’s suit was defective for non-compliance with Order 15 rule 6A(4)(a) of the Rules of Court 2012;

(ii) the evidence in support of the existence and disbursement of the loans was not cogent;

(iii) the Sessions Court failed to consider the significance of the judgment entered for the 1st Suits which included an additional amount of RM 116,000;

(iv) the SDs and FLA ought not to be admissible as insufficient stamp duty was paid; and

the loan given was a moneylending transaction which was not enforceable for non-compliance with the Moneylenders Act, 1951 Analysis and decision of this court [18] An appellate court will not, generally speaking, intervene unless the trial court is shown to be plainly wrong in arriving at its conclusion. Matters of finding of facts and legitimate exercise of discretion by the courts of original jurisdiction are often not interfered with by the appellate courts. (See: Wee Lian Construction Sdn Bhd v Ingersoll-Jati Malaysia Sdn Bhd [2010] 3 MLJ 425, Master Jaya Environmental Sdn Bhd v Pentas Flora Sdn Bhd [2020] 2 MLJ 117). [19] However, appellate interference is warranted where the trial judge has made a decision which is plainly wrong. A decision is plainly wrong if it is one which no reasonable judge could have reached. [20] The Federal Court in S Quarry Sdn Bhd v Desaru Development Corporation Sdn Bhd & Ors [2019] MLJU 99 laid down several instances when decisions are considered to be plainly wrong or perverse. Some of the instances where the trial judge’s decision is perverse, are where he had:-

misdirected itself on the evidence;

(ii) failed to judicially appreciate the evidence;

(iii) failed to consider any material evidence;

(iv) acted on some irrelevant evidence as to render the decision wholly erroneous;

made wrong inference from facts;

(vi) misapprehended the facts;

(vii) gave reasons which are wholly unsatisfactory or contradictory of each other. (See also: Lee Ing Chin @ Lee Teck Seng & Ors v Gani Yook Chin and Anor [2003] 2 MLJ 97) [21] This court in hearing this appeal will therefore have to decide if the decision of the Sessions Court ought to be interfered with, bearing in mind the principles in which appellate interference is warranted. [22] I shall now deal with the grounds raised in this appeal and the respective submission of the parties. Non-compliance with Order 15 rule 6A(4)(a) of the Rules of Court 2012 [23] The relevant rule is set out below:- Proceedings against estates (O. 15, r. 6A)

(1) Where any person against whom an action would have lain has died but the cause of action survives, the action may, if no grant of probate or administration has been made, be brought against the estate of the deceased.

Without prejudice to the generality of paragraph (1), an action brought against “the personal representatives of A. B. deceased” shall be treated, for the purposes of that paragraph, as having been brought against his estate.

An action purporting to have been commenced against a person shall be treated, if he was dead at its commencement, as having been commenced against his estate in accordance with paragraph (1), whether or not a grant of probate or administration was made before its commencement.

In any such action as is referred to in paragraph (1) or (3)—

the plaintiff shall, during the period of validity for service of the summons, apply to the Court for an order appointing a person to represent the estate of the deceased for the purpose of the proceedings or, if a grant of probate or administration has been made for an order that the personal representative of the deceased be made a party to the proceedings, and in either case for an order that the proceedings be carried on against the person appointed or, as the case may be, against the personal representative, as if he had been substituted for the estate;

the Court may, at any stage of the proceedings and on such terms as it thinks just and either of its own motion or on application, make any such order as is mentioned in subparagraph (a) and allow such amendments, if any, to be made and make such other order as the Court thinks necessary in order to ensure that all matters in dispute in the proceedings may be effectually and completely determined and adjudicated upon. [24] The Defendant submits that the Plaintiff had failed to apply to the Court for an order appointing a person to represent the estate of the deceased for the purpose of the proceedings, as required by sub-paragraph 4(a). He relied on several authorities, principally Kerajaan Malaysia v Yong Siew Choon [2006] 1 MLJ 1 and Poriavappan a/l Arunasalam Pillay (suing as administrator of estate of the late Nadarajah a/l Sithambaram Pillai) v Periasamy a/l Sithambaram Pillai & Ors (on behalf of the personal representatives of the estate of Ponnamalai a/p Ramasamy the deceased) [2015] 4 MLJ 285. The Defendant contends, premised on the principle decided in these cases, the non-compliance with the provisions of sub-paragraph 4(a) would render the Plaintiff’s suit a nullity. [25] It is trite law that generally, the death of the defendant does not extinguish the cause of action against him. The cause of action survives, notwithstanding his death. O 15 r 6A provides a remedy for a suit to be brought in the event of the defendant’s death. The rules allow the action to be brought against his estate, by citing the personal representatives of the estate of the said deceased as the defendant. [26] Salleh died before this suit was commenced. The suit was then brought against “Wakil Diri Kepada Harta Pesaka Simati, Salleh bin Saring”. There is due compliance with paragraphs (1) and (2) of rule 6A. The Defendant complains that this is insufficient as the Plaintiff must go one step further to apply to name a specific person to represent Salleh’s estate during the period of validity for service of the summons. In Kerajaan Malaysia v Yong Siew Choon (supra), the Federal Court held that “if the provisions of O 15 r 6A are not complied with then any order or judgment is useless as it would be wholly unenforceable against the estate of the deceased.” [27] However, the concern for which the rule is designed to achieve as expressed Kerajaan Malaysia v Yong Siew Choon (supra) does not arise here. Paragraph 3 of the Statement of Defence states, Kandungan perenggan 3 Pernyataan Tuntutan diakui oleh Defendan dan Defendan memplidkan bahawa Defendan sedang dalam proses memohon Surat Kuasa Mentadbir bagi harta pesaka Allahyarham Salleh bin Saring (“Simati”) setelah mengenal pasti harta-harta dan tanggungan-tanggungan simati.” [28] DW1, Salleh’s wife, confirmed whilst giving evidence, that she represented Salleh’s estate. I find that even if she was not named specifically by way of an application pursuant to paragraph 4(a), she has been clearly identified. Further, as the defence has specifically pleaded that the application for administration is under way, rule 4(a) allows for any personal representative who is to be appointed subsequently, to be named in the proceedings. This can be done at any stage of the proceedings. The failure to do so during the period of validity for service of the summons cannot be fatal. [29] In Yong Siew Choon’s case (supra), the principal issue was not the effect of the non-compliance of paragraph 4(a). The defendant in that case was sued for unpaid taxes incurred by her late husband. However, she had not taken out letters of administration. The Federal Court held that as she fell within the definition of executor in the Income Tax Act, 1967, an action could be brought against her. O 15 r 6A will have no application if there is, in law, a person who can be sued. Therefore the question of the effect of non-compliance of O 15 r 6A did not arise. [30] In Poriavappan a/l Arunasalam Pillay (supra), an application was made under O 15 r 6A to appoint one Periasamy to represent the deceased’s estate for the purpose of the proceedings. The application was allowed. The Federal Court held that the application was properly made. It was of the view that it is only in an action against the duly appointed legal representative of the estate of a deceased that a judgment may be obtained which may be enforced against the estate. Again, as in Yong Siew Choon’s case (supra), the facts of the case did not warrant a determination of the effect of non-compliance of paragraph 4(a). [31] The Sessions Court held the non-compliance not to be fatal, taking into consideration the provisions of Order 1A which provide as follows, Regard shall be to justice (O. 1A) In administering these Rules, the Court or a Judge shall have regard to the overriding interest of justice and not only to the technical non-compliance with these Rules. [32] Although I am of the view that the issue of non-compliance does not arise, I agree on the approach taken. The merits of the case ought to prevail over any objection taken on the non-compliance of the rules. The existence and disbursement of the 1st and 2nd loans [33] The Sessions Court found that the loans existed based on the evidence of both the Commissioners for Oaths who witnessed the SDs. He was persuaded by their evidence, and found Salleh to have signed the SDs. [34] The SDs were affirmed in 2008 and 2009 respectively. PW1 and PW2 testified at the trial 10 years later. Both stated they witnessed the signature of Salleh and confirmed their own signature on the SDs shown. Both were certain that Salleh understood the contents of the SD. However, neither of them produced the register which they are obliged to maintain under the requisite law regulating the functions of a Commissioner for Oaths. [35] I would be circumspect to accept the fact that Salleh signed in front of them and understood the contents merely on the basis that PW1 and PW2 could identify their own signatures on the SDs. The event transpired 10 years prior. I would expect a Commissioner for Oath to see numerous deponents in a day. Unless there was something exceptional about the document or the deponent, it is unlikely for PW1 and PW2 to distinctly remember something so routine. [36] DW1 denied the existence of any other loans apart from the subject matter of the 1st and 2nd Suits. In view of this, the Sessions Court Judge ought to have carefully weighed the evidence of PW1 and PW2 before being satisfied as to the proof of the loan of RM 600,000. [37] The Plaintiff relied on the contents of the documents to establish receipt of the loan. Apart from the SDs and the contents of the FLA in which Salleh agreed that he had taken the loan sums, there is no other documentary evidence of this fact. [38] The Plaintiff (PW3) testified that he gave the loan to Salleh. The loan amount is not insubstantial. In 2008 and 2009, it would have been regarded as a huge sum. The Plaintiff said he gave the monies in cash. I find his evidence to be inherently incredible. Even if he gave cash to Salleh, he failed to produce evidence as to how these sums were procured by him. He was asked in cross examination if he could produce any documents as to how he obtained the monies, to which he replied in the negative. It is implausible that a lender of a huge sum of money would have no other documentary proof apart from an admission of the borrower on paper. It clearly demonstrates a lack of prudence, particularly when PW3 owns a moneylending company. I find his evidence unbelievable. [39] In the circumstances, I find the Sessions Court failed to judicially appreciate the evidence in coming to a finding that the loans existed based on the available evidence. [40] The loans were said to be interest free friendly loans. The 1st SD for the loan of RM 200,000 states that Salleh promised to return the loan by 3.6.2008, less than 3 months after it was allegedly given. The 2nd loan of RM 400,000 was according to the FLA, to be repaid a month later, on 27.3.20009. However, no action to recover these loans was taken until 2014. I find that this beggars belief that a loan given without interest would be allowed to remain unpaid for a duration of 5 to 6 years. I find the allegation of a friendly loan to be unbelievable. The significance of the 1st Suit [41] The defence alleged that the Plaintiff’s claim in the present suit was related to the 1st Suit, in that the claim in the present suit has been catered for in the 1st Suit. The Sessions Court did not find any merit in this contention. [42] I find that the Defendant’s contention ought not to have been dismissed outright. Upon scrutinising the Statement of Claim in respect of the 1st Suit, the Plaintiff pleaded that a statutory declaration dated 27.2.2009 was executed by Salleh. Coincidentally, the 2nd loan of RM 400,000 in this suit is also premised on a statutory declaration of the same date. [43] In addition, the parties entered consent judgment in the 1st Suit for an amount far beyond that of the loan advanced of RM 200,000. The suit was settled for RM 316,000. The evidence is troubling. It is suggestive of interest charged. The Sessions Court however appeared to have missed the significance of the evidence. Inadmissibility of the SDs and the FLA [44] The Defendant contends that the SDs and FLA were not paid the requisite stamp duty. The documents adduced showed that stamp duty of only RM 10.00 was paid. The relevant provisions of the Stamp Act 1949 provide for stamp duty of RM 1,000 to be paid for the 1st SD and RM 2,000 for the FLA. On the authority of Randhir Singh a/l Bhajnik Singh v Sunildave Singh Parmar (the administrator of the estate of K Surjit Kaur a/p Gean Kartar Singh, deceased) [2018] 12 MLJ 166, a doubt has been raised as to the validity of these documents. The Sessions Court Judge ought to have held the documents to be inadmissible. [45] I disagree with the Defendant’s contention. Having perused the authority cited, I am of the view that the Court of Appeal in stating that “if ad valorem duty is not paid, the statutory declaration as admission of loan may not be worth the paper it is written on..” to mean that it impacts the probative value of the document, rather than its admissibility. [46] In this regard, I am guided by the Supreme Court case of American Express International Banking Corporation v Tan Loon Swan [1992] 1 MLJ 727 which held as follows, We were referred to and agree with the decision of the Federal Court in Malayan Banking Bhd v Agencies Service Bureau Sdn Bhd & Ors 3, in which the Federal Court held at p 200 that it was clear that under s 52(1) of the Stamp Ordinance 1949, except for certain types of instruments, prohibition against admissibility of an instrument on account of not being duly stamped is not an absolute prohibition but conditional on payment of a duty or a penalty, if any, under ss 43 and 47 of that Ordinance. We would also agree with the views of the Federal Court that it is the responsibility of the court under s 51 of that Ordinance to impound unstamped documents, if produced, and to admit them under proviso (a) to s 52(1) on payment of stamp duty or penalty, if any. [47] Following the views expressed by the Supreme Court, the mere fact of insufficient stamp duty does not render a document inadmissible in evidence. In any event, I have already determined earlier that the SDs and FLA are not cogent evidence to establish the existence of the loans. The fact that the appropriate amount of stamp duty was not paid only strengthens my doubt as to the genuineness of the loans. Non-compliance of the Moneylenders Act, 1951 [48] The Defendant contends that even if the loan is proved to be taken, it was a moneylending transaction for which there was no compliance with the Moneylenders Act, 1951. I find merit in the contention. The facts of the Plaintiff’s case suggest a moneylending transaction. I do not find any convincing evidence of a friendly loan. [49] The Plaintiff’s own evidence was that Salleh had borrowed from him on more than one occasion. This fact leans towards a moneylending transaction, coupled with the fact that the Plaintiff is a director of Valuable Concept Sdn Bhd, a moneylending company. In the Federal Court case of Ngui Mui Khin & Anor v Gillespie Bros & Co. Ltd, [1979] 1 MLRA 186, the court held that the definition of moneylending in section 2 is fulfilled when there are similar or repetitive transactions. The onus is on the Plaintiff to prove otherwise by evidence. (See also: Sadhu Singh v Sellathurai [1955] 21 MLJ 117). [50] The next question to consider is the effect of the court’s finding of a moneylending transaction. This question was dealt with by the Court of Appeal in Global Globe Property (Melawati) Sdn Bhd v Jangka Prestasi Sdn Bhd [2020] 6 CLJ 1. The court held that once a transaction is found to be a moneylending transaction, then the provisions in the Moneylenders Act 1951 must be complied with. No such evidence was adduced from the Plaintiff. [51] The Sessions Court did not deal with this issue raised, notwithstanding that it was raised in the Statement of Defence and counsel’s submission at the close of the proceedings. I therefore conclude that the Sessions Court Judge did not address his mind to it. Had he done so, he might well come to a different conclusion. [52] On the totality of the evidence adduced, the probability of the Plaintiff’s claim arising from a moneylending transaction cannot be disregarded. Conclusion [53] Premised on the foregoing reasons, I find appellate interference is warranted. I therefore allow the appeal and reverse the decision of the Sessions Court. Costs of RM 10,000 here and below is also ordered to be paid to the Defendant. Dated : 22nd of May 2023 -sgd- ...………………..….... Alice Loke Yee Ching Judge High Court of Malaya at Shah Alam Counsel for the Plaintiff : Mr. M Kunasegaran Tetuan Kuna & Co. Counsel for Defendant : Mr. Razali bin Md Nor