ALLIANCE BANK MALAYSIA BERHAD vs ACTION SUPERSTORE SDN. BHD, GOO KEI SENG @ GOH KUI SENG , LO KEE FEN @ PETER LO (MJLR 2009b3) Clement Skinner, 14/1/2009, SS

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5 MALAYSIA

IN THE HIGH COURT IN SABAH AND SARAWAK

AT KOTA KINABALU

CIVIL SUIT NO. K22-99-2006

10 BETWEEN

ALLIANCE BANK MALAYSIA BERHAD … PLAINTIFF

AND

ACTION SUPERSTORE SDN. BHD. … 1st DEFENDANT

15 GOO KEI SENG @ GOH KUI SENG … 2nd DEFENDANT

LO KEE FEN @ PETER LO … 3rd DEFENDANT

BEFORE THE HONOURABLE JUSTICE

20 DATUK CLEMENT SKINNER IN CHAMBERS

JUDGMENT

This is the hearing of an appeal to the Judge in Chambers

25 from the decision of the learned Deputy Registrar given on

04.05.2007 dismissing the plaintiff’s application for summary

judgment against the 3rd defendant under Ord. 14 Rules of the

High Court 1980 (‘the RHC’).

30



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5 The plaintiff had granted banking facilities to the 1st defendant

company as principal borrower. The banking facilities were

evidenced by a letter of offer dated 08.04.2005 which was duly

accepted by the 1st defendant, and a Facility Agreement dated

05.05.2005. The 2nd and 3rd defendants stood as guarantors of the

10 facilities granted to the 1st defendant. The guarantee is

dated 05.05.2005. The 2nd and 3rd defendants were

Directors and Shareholders in the 1st defendant. The plaintiff also

took security in the form of a charge over land, to secure the banking

facilities granted to the 1st defendant.

15

The plaintiff, alleging that the 1st defendant was in default of its

obligations under the banking facilities recalled the same and

demanded payment from the 1st, 2nd and 3rd defendants of the

outstanding amount of the facilities. When the defendants did not

20 pay as demanded, the plaintiff commenced this action on 08.06.2006

claiming from the defendants:

(1) The sum of RM1,255,378.10;

(2) Interest on the sum of RM1,255,378.10 at the plaintiff’s

Prescribed Rate of 10.0% per annum (calculated on the

25 basis of 3.5% per annum above the plaintiff’s

Base Lending Rate that is currently at 6.5% per annum

from 01.04.2006 until the date of full payment);

(3) Costs incurred by the plaintiff including the plaintiff’s legal

fees on a solicitors and client’s basis in accordance with

30 the Advocates Remuneration Rules 1988 on a full

indemnity basis.



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5 The 3rd defendant filed a defence in the action, but the plaintiff

has obtained judgment against the 1st and 2nd defendants.

The plaintiff filed this application for summary judgment against

the 3rd defendant under Ord. 14 RHC which was dismissed by the

10 learned Deputy Registrar. Hence this appeal.

In National Company for Foreign Trade v Kayu Raya Sdn. Bhd.

[1984] 2 MLJ 300, the Federal Court held that once the plaintiff

satisfies the requirements under Ord. 14 i.e.:

15 (i) that the defendant has 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 Ord. 14;

20 the plaintiff has established a prima facie case and becomes

entitled to judgment. The burden shifts to the defendant to

satisfy the Court why judgment should not be given against

him.

25 I am satisfied that the plaintiff’s application here has satisfied all

the requirements stated in the National Company for Foreign Trade

case. It has established a prima facie case for summary judgment

against the 3rd defendant. The burden has shifted to the 3rd

defendant to show cause why judgment should not be given against

30 him.





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5 The 3rd defendant sought to satisfy that burden by raising

several issues which he contends has given rise to bona fide triable

issues which need to be further investigated at a trial.

I will now consider each of the issues raised.

10

He did not sign the guarantee.

The 3rd defendant denied he signed the guarantee. To show

15 that such an assertion was nothing more than a bare denial by the

3rd defendant, the plaintiff produced an affidavit affirmed by

Mr. Chia Yaw Phin, the lawyer who witnessed the 3rd defendant’s

signature on the guarantee. Mr. Chia stated that the 3rd defendant

did sign the guarantee in his presence. The 3rd defendant has tried to

20 take issue with what Mr. Chia has stated by saying that Mr. Chia did

not state the time, place and date on which the guarantee was

signed. The real question here is whether the 3rd defendant did sign

the guarantee. As to that fact, Mr. Chia has positively affirmed that

the 3rd defendant has done so before him.

25

Apart from Mr. Chia’s assertion, there are other factors which

show that the 3rd defendant’s denial is unsustainable. The

3rd defendant is a Director and Shareholder of the 1st defendant who

obtained the banking facilities for its business purposes. The plaintiff

30 has produced the following documents that were signed in connection

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[CSK.22-99-2006-II]

5 with the banking facilities obtained by the 1st defendant, all of which

were signed by the 3rd defendant. These documents were:

(1) The Letter of Offer of banking facilities which was duly

accepted by the 1st defendant (MC 1);

(2) Facility Agreement (MC 2);

10 (3) Resolution of the 1st defendant’s Board of Directors

confirming and ratifying the letter of offer (MC 8);

(4) Specimen signature card of the 1st defendant’s current

account (MC 9);

(5) Trade Finance General Agreement (MC 11(a)) and

15 Master Trust Receipt Agreement (MC 11(b)).

As I said earlier, all these documents bear the signature of the

3rd defendant but it was only after these documents were produced in

these proceedings as exhibits to the affidavit affirmed on 20.12.2006

20 by Martina Chin on behalf of the plaintiff that on 23.01.2007, the

3rd defendant made a police report alleging that he never signed

these documents and that his signature in these documents are

forgeries.

25 Does the mere fact that the 3rd defendant denies he signed

these documents raise a triable issue regarding his denial of having

signed the guarantee? I find not. The context in which this

question arises is that banking facilities were granted by the

plaintiff to the 1st defendant of which the 3rd defendant is a

30 Director and Shareholder. It is reasonable to infer that the

1st defendant would not have been in a position to accept the banking





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5 facilities or utilize the banking facilities or operate its account in

relation to those facilities unless these documents were executed.

The 3rd defendant must in all probability have known that

these documents particularly the acceptance of the letter of offer

(which clearly includes a reference to the requirement of the

10 3rd defendant’s guarantee) had been furnished to the plaintiff

otherwise the plaintiff would not have allowed the banking facilities to

be utilized. But the 3rd defendant did not take any steps to deny that

he signed the guarantee until more than 1 year after the

banking facilities were utilized and he only denied that he had signed

15 these documents after they were produced in Court in the course of

this application. His lodging of the police report was,

in my judgment, an attempt to bolster his claim that his signature was

forged. But I find his assertion of whole scale forgery of his signature

on all the above documents in the possession of the bank so

20 inherently improbable that it is not worthy of any belief.

Instead I find the assertion of Mr. Chia Yaw Phin that the

3rd defendant had signed the guarantee in his presence is more

consistent with the probabilities of the case i.e. that the guarantee

25 and the other documents earlier referred to were signed by the

3rd defendant as part of the documentation for the banking facilities

obtained by the 1st defendant.

30



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5 Alleged alteration of the guarantee.

The 3rd defendant alleged that the guarantee was on a standard

printed form of the plaintiff. However, on the front page of the

guarantee, certain words were typed in. According to the

10 3rd defendant, this and the insertion of the signature and name of the

plaintiff’s solicitor as a witness to the execution of the guarantee had

materially altered the guarantee without his consent thereby

rendering it void. I find this allegation of the 3rd defendant quite

perverse.

15

In the first place, Mr. Chia Yaw Phin who witnessed the

3rd defendant’s execution of the guaranteed has stated in his affidavit

that the type written words were inserted before the 2nd and

3rd defendants executed the guarantee before him. The 3rd defendant

20 would therefore have seen those typewritten words when he signed

the document, thereby consenting to those words. In the second

place, the signature of Mr. Chia Yaw Phin was appended as a

witness to the execution of the guarantee by the 3rd defendant and it

had nothing to do with the terms of the guarantee. Therefore, there

25 was no need for the 3rd defendant to give his “consent” to such

attestation. In the third place, even if the typed words can be

regarded as having altered the guarantee, the learned authors of

Chitty on Contract Vol. 1 26th Edn. 1989 at para 1754 state that: “An

instrument is not discharged by an immaterial alteration, that is to

30 say, one which does not alter the legal effect of the instrument or

impose a greater liability on the promissor”. It was not alleged at all





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5 by the 3rd defendant that any of the typed words had the effect

referred to in Chitty’s. In the forth place, Clause 7 and 14 of the

guarantee states that the 3rd defendant consented to the plaintiff

making an alteration to the agreement. The 3rd defendant is clearly

bound by such clauses.

10

Alleged conduct of the plaintiff leading to a discharge of

3rd defendant as guarantor.

15 The 3rd defendant alleged that:

(a) the plaintiff’s letter of offer to the 1st defendant had

contained certain conditions precedent which must be

complied with before the banking facilities could be

utilized by the 1st defendant, but the plaintiff had allowed

20 the banking facilities to be drawn down despite the fact

that the 1st defendant had not provided “40% margin

deposit as security” for each draw down, for example;

(b) the plaintiff had knowingly assisted in the perpetration of

fraud on the 1st and 3rd defendants when despite the

25 conditions stated in the letter of offer not being complied

with, the plaintiff had allowed the entire portion of the

bankers acceptance facility to be used and exhausted by

knowingly releasing funds upon fictitious sales

documents;

30





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5 (c) the plaintiff had breached s. 60(4) of the Banking and

Financial Institutions Act 1989 (‘BAFIA’) which provides

that the security for a credit facility shall “consist of

property of a value which is not less that the amount of

the credit facility given to such person”. Hence the loan

10 given to the 1st defendant was illegal.

According to the 3rd defendant as a result of the matters

complained of above, his rights as guarantor or surety under the

guarantee had been seriously impaired or he had been discharged of

15 this liability as guarantor and it would be unconscionable for the

plaintiff to now insist on its strict rights under the guarantee.

I find absolutely no merit in any of the points taken above.

They do not give rise to any bona fide triable issue. I say so for the

20 following reasons.

As far as the 3rd defendant’s complaints about the plaintiff

having allowed the banking facilities to be used before the “conditions

precedent” stated in the letter of offer were fulfilled is concerned,

25 including the allegation that the plaintiff had assisted in the

perpetration of fraud against the 1st and 3rd defendants by so allowing

the banking facilities to be used; even assuming for the sake of

argument only that those conditions had not been complied with as

alleged, that would still not discharge the 3rd defendant from his

30 liability and obligation as a guarantor because Clause 19.1 of the

plaintiff’s Standard Terms and Conditions for Credit Facilities which





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5 formed part of the letter of offer and Clause 4.3 of the Facility

Agreement allow the plaintiff to waive compliance with those

conditions by the 1st defendant. Further, by Clause 7 of the

guarantee, the 3rd defendant consented to the plaintiff abstaining from

taking or perfecting any securities or rights which the plaintiff may

10 have from the 1st defendant.

With regard to the 3rd defendant’s assertion that there was a

breach of s. 60(4) of BAFIA, Clause 25 of the plaintiff’s Standard

Terms and Conditions for Credit Facilities attached to the letter of

15 offer as well as Clause 19.4 of the Facility Agreement provides that if

any of the terms shall be void or illegal or unenforceable, then the

same shall be considered as severed from the other terms which

otherwise remain in full force and effect.

20 Accordingly, I find that it does not lie in the mouth of the

3rd defendant to complain about the above matters. None of the

points taken by the 3rd defendant have been raised as genuine and

bona fide points to oppose the plaintiff’s claim. Instead, when they

are subjected to curial scrutiny, I find they have been raised to merely

25 create issues where none existed.

In the result, I find that the 3rd defendant has not discharged the

burden of showing why summary judgment should not be entered

against him. None of the points taken by him raise a bona fide triable

30 issue which requires to be tried.



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5 I accordingly allow the plaintiff’s appeal with costs. I set aside

the Order of the learned Deputy Registrar. I order that judgment be

entered for the plaintiff in terms of its prayers in its Statement of

Claim

10

15

DATUK CLEMENT SKINNER

Judge

20 Date : 14th January 2009

Counsel

25 For Plaintiff : Encik Mohd. Azahari

Messrs. Ho Chong Yong

Advocates and Solicitors

KOTA KINABALU

30 For 3rd Defendant: Mr. Mau Kam Peng

Messrs. Mau & Kadir

Advocates and Solicitors

KOTA KINABALU