-1- [CSK.22-99-2006-II]
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
-2- [CSK.22-99-2006-II]
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.
-3- [CSK.22-99-2006-II]
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.
-4- [CSK.22-99-2006-II]
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
-5-
[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
-6- [CSK.22-99-2006-II]
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
-7- [CSK.22-99-2006-II]
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
-8- [CSK.22-99-2006-II]
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
-9- [CSK.22-99-2006-II]
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
-10- [CSK.22-99-2006-II]
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.
-11- [CSK.22-99-2006-II]
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