LIM HONG LONG v RHB DELTA FINANCE BHD (MJLR2009a19) Ravinthran,SS
[CA-12-29-2007-II]
1
MALAYSIA
IN THE HIGH COURT IN SABAH AND SARAWAK
AT KUCHING
CIVIL APPEAL NO. 12-29-2007-II
5
BETWEEN
LIM HONG LONG …. APPELLANT/2ND DEFENDANT
AND
RHB DELTA FINANCE BHD .… RESPONDENT/PLAINTIFF
10
JUDGMENT
This is an appeal from the decision of the Sessions Court after a full trial
to grant judgment in favour of the respondent for the sum of
RM72,103.60. The appellant was one of the two guarantors to the hire
purchase agreement that was entered between Lim Kheng Huat (1st 15
defendant) and the respondent. Judgment in default was entered against
1st defendant for non appearance in the lower court. The respondent did
not proceed against the other guarantor, Chai Kian Chai, because he was
adjudged a bankrupt on 2nd November 1998.
20 Preliminary
The respondent raised two points at the outset of the appeal in respect of
the Record of Appeal. The appellants had included the affidavits that
were used in the interlocutory proceedings inside the Record of Appeal.
Counsel for respondent submitted that they are not relevant and they were
25 not given notice of it. The second point counsel for respondent submitted
is that a draft of the index of the documents to be included in the Record
of Appeal was not given to them. These two issues are cannot impair the
[CA-12-29-2007-II]
2
competency of the appeal before the court. Even if the affidavits have
been wrongly included in the Record of Appeal, they can be ignored if
found to be not relevant during the argument on the merits of the appeal.
It is not a ground to knock out the appeal. In respect of the failure to
supply the index of the documents to the respondent5 , the Subordinate
Court Rules 1980 and the Rules of High Court 1980 do not provide for it.
Brief facts of claim
I shall now move on to consider the appeal on the merits. The claim of
the respondent was founded on a hire purchase loan they had given to 1st
10 Defendant to purchase a car, i.e. a Toyota Celica. The agreement was
signed on 11th July 1996. The appellant herein and Chai Kian Chai
executed the guarantee to secure the loan for the respondent. The total
price was RM308,125.00. The hirer paid an initial deposit of
RM85,000.00. On 20th September 1996, the hirer assigned his rights
15 under the agreement to one of the co-guarantors, the said Chai Kian Chai.
The respondent consented to this assignment. Subsequently the new hirer
defaulted in his monthly instalments and on 2nd November 1998, he was
adjudged a bankrupt at the instance of another financier, Asia
Commercial Finance (M) Bhd. Respondent took steps under the Hire
20 purchase Act 1967 to sell the vehicle but there was a shortfall of
RM72,103.60. After judgment in default was entered against the original
hirer, the trial proceeded against the appellant who was one of the
guarantors. The appellant testified before the trial court that after the
vehicle was assigned to him, he “sold” the vehicle to one Mr. Wan Kiap
25 Yap who in turn “sold” the car to a certain Mr. Jackie. Mr. Wan heard
that Jackie later “sold” the car to a Datuk’s son. The respondent only
acknowledged the first assignment to the appellant. Their position is that
they never consented to the so-called subsequent “assignments”. The
[CA-12-29-2007-II]
3
respondent’s senior manager at the Kuching branch was the sole witness
on their behalf. The officer who attended to the signing of the hire
purchase documents was Mr. William Ling but he was not called during
the trial as he had emigrated to Australia by that time. The recovery
officer who was in charge of the account was Mr. Hii 5 but he had retired
and his whereabouts were not known to the respondent.
Issues
Counsel for appellant submitted six grounds in this appeal. The issues
however overlap and I shall consider them together where necessary. The
10 core issues that the learned Sessions Court Judge considered are:
1. Whether the plea of non-est factum of the appellant had merit and;
2. Whether the transfer of the vehicle from the appellant to Wan Kian
Nyap was with the bank’s knowledge and consent.
15 Plea of non-est factum
The appellant did not deny signing the guarantee agreement when the 1st
defendant took the hire purchase loan. However he said that he did not
know what he signed as he does not understand English. He said Mr.
Ling, the officer who attended to the signing of the hire purchase
20 documents did not explain to him in Mandarin. The learned Sessions
Judge rejected this defence after considering several well known
authorities on the plea of non-est factum and I am of the view that she
cannot be faulted for doing so. The respondent was unable to call Mr.
Ling to contradict him as he had left the country. However, that does not
25 mean that the plea of non-est factum had been established. The appellant
is a man of full age and understanding. The hirer was his friend and he
was aware that he had been called to become his guarantor. He went to
[CA-12-29-2007-II]
4
the respondent’ office on his volition and had signed the document.
Therefore he is deemed to know that the respondent had given the hire
purchase loan to his friend on the strength of his guarantee and that the
document he had signed would have legal consequences in the case of
default of payment of hire purchase installments. The 5 plea of non-est
factum cannot succeed on the mere assertion that the signatory did not
read the contractual document or that he did not understand English
unless there was fraud or misrepresentation (see Ooi Yoke In (f) & Anor v
Public Finance Berhad [1993] 3 MLJ 135. The plea would not succeed
10 also if the signer was careless or negligent (Saunders v Anglia Building
Society [1971] AC 1004). In the instant case if the appellant could not
read English as he claimed and if it is true that Mr. Ling did not explain
the contents of the guarantee agreement as he alleged, he could have
obtained the services of someone to translate the contents to Mandarin
15 before executing it as it is common sense that the guarantee agreement to
a loan facility would entail legal consequences. The appellant has only
himself to blame and he cannot absolve himself of liability after the
respondent had relied on his guarantee to release the hire purchase to the
1st defendant.
Whether the transfer of the car to the 1st 20 defendant was with the consent
of the appellant?
The respondent agreed that they consented to the transfer of the vehicle
only to the Chai Kian Chai, the co-guarantor. After the transfer, the Chai
Kian Chai became the hirer and receipts for payment of the installments
25 were issued in his name. The appellant did not accept that he consented
to the transfer despite the production of the Consent Form which bears his
signature. He did not deny that it was his signature but he said he was
asked to sign a blank form. His counsel said that the date on the Consent
[CA-12-29-2007-II]
5
Form is the same date as the original agreement and that the “assignment”
was signed in Miri. The appellant’s case is that when he signed the
guarantee he did not intend and did not know that he would be consenting
to the transfer of the car to Chai Kian Chai. In my opinion, the appellant
cannot be heard to say that he did not agree to the assignment 5 of the hire
purchase agreement to Chai Kian Chai as he voluntarily signed the
Consent Form. If the form was blank as he claims, he should not have
signed it. His negligence in signing a blank form in a language he
allegedly was not familiar with cannot avail him the plea of non-est
10 factum (see UMW Industries (1985) Sdn Bhd v Kamaruddin bin Abdullah
& Anor [1989] 2 CLJ 1278). As stated in (Saunders v Anglia Building
Society [1971] AC 1004):
A person who signs a document and parts with it so that it may come
into other hands, has a responsibility, that of a normal man of
15 prudence, to take care what he signs, which if neglected, prevents him
from denying his liability under the document according to its tenor.”
However, Counsel for appellant submitted that the learned Sessions Court
Judge failed to consider:
20 (a) whether the document the appellant signed was significantly
different from what the signer believed it to be, and
(b) whether the signer had been negligent.
The reason for this argument is that the appellant had been told by Mr.
Ling that he was guaranteeing only the 1st 25 defendant and no others. Since
the appellant was also asked to sign a blank Consent Form which was
used to transfer his guarantee to Chai Kian Chai, counsel for appellant
argued that “there was a radical difference between what he signed and
what he thought he had signed”. I am of the opinion that there is no merit
[CA-12-29-2007-II]
6
in this submission. Although Chai Kian Chai’s name was not filled in at
that point of time, by signing the Consent Form, the appellant had
signalled his assent to a future assignment of the vehicle. Therefore it is
wrong of him to say now that he only intended to guarantee the 1st
defendant. Moreover respondent is relying on the very 5 same documents
the appellant had executed, i.e. the guarantee agreement and the Consent
Form. The Consent Form was used to transfer the guarantee to the new
hirer. Therefore the appellant is estopped from repudiating it as he
voluntarily signed it. If it was blank as he claimed, the plea of non est
10 factum cannot assist him as he was negligent in signing a blank form
which can be used to transfer his guarantee to a subsequent hirer. These
are the core issues before the lower court and they were correctly dealt
with by the learned Sessions Judge.
Other issues
15 Counsel for appellant submitted that adverse inference should be invoked
against the respondent for the failure to call Mr. Ling and Mr. Hii since
the appellant testified they did not explain the contents of the guarantee
agreement. As the learned Sessions Court Judge correctly held, it is trite
law that adverse inference can only be invoked if there was suppression
20 of evidence. In Munusamy v PP [1987] 1 MLJ 492, Mohd Azmi SCJ
administered the following caution in respect of invoking section 114(g)
of the Evidence Act 1950:
It is essential to appreciate the scope of s 114(g) lest it be carried too
far outside its limit. Adverse inference under that illustration can only
25 be drawn if there is withholding or suppression of evidence and not
merely on account of failure to obtain evidence. It may be drawn from
withholding not just any document, but material document by a party
in his possession, or for non-production of not just any witness but an
important and material witness to the case.
[CA-12-29-2007-II]
7
The respondent’s witness testified that the Mr. Ling had emigrated to
Australia two months before the trial and Mr. Hii’s whereabouts are not
known as he had retired. The respondent had, however, taken the trouble
to supply their last known addresses to the appellant. I therefore fail to
see why adverse inference should be invoked. Even if 5 there was ground
to invoke adverse inference, it would not bolster the plea of non est
factum as the appellant should not have signed the documents in question
if their contents were not explained to him. In respect of Mr. Hii, the
appellant and his witnesses alleged that he had condoned the further
10 “assignments” of the car to others and therefore the appellant is not liable.
There is no merit in this submission. The documentary evidence points to
the fact that the respondent only consented to the assignment of the car to
Chai Kian Chai. The Consent Form that the appellant signed was used to
transfer the guarantee as well. The car was duly transferred to Chai Kian
15 Chai and receipts for payment of further instalments were issued in his
name. It was alleged by the appellant that Mr. Hii condoned the transfer
to others as he collected instalments from them at his office and on
occasions even in a coffee shop. However the appellant could not
produce a single receipt that was issued in the name of any of the so20
called subsequent “buyers”. The Road Transport Department registration
card also showed that the vehicle was not transferred to anyone apart
from Chai Kian Chai. In the premises, as found by the learned Sessions
Court Judge, it did not matter that the respondent was unable to call Mr.
Hii to the witness stand. There was no ground to invoke adverse
25 inference.
Counsel for appellant submitted that the affidavit of Mr. Ling dated 8th
March 2003 used in the interlocutory proceeding was wrongly admitted
into evidence by the court. He submitted at length that it was wrong but I
[CA-12-29-2007-II]
8
need not consider it here. The short answer to this point is found in the
judgment of the Sessions Court Judge. She said that she did not admit the
affidavit into evidence and the notes of proceedings did not indicate that
they were admitted into evidence. The affidavit in question was merely
referred to during the trial but were not admitted or marked 5 as exhibits.
As pointed out by the learned Sessions Court Judge, the affidavit was not
necessary in considering the plea of non est factum.
In respect of the alleged “assignments” to other buyers, as I had said
earlier, there was no documentary evidence to support it. Chai Kian Chai
10 and the others had flouted the provisions of hire purchase agreement and
the Hire Purchase Act 1967 by treating the car as any other chattel. Such
a sale or assignment would not be valid under the law. However that
cannot absolve the appellant from liability in this case. By signing the
Consent Form, he had legally become the guarantor to Chai Kian Chai. If
15 Chai Kian Chai had defaulted or had wrongly released the vehicle to third
parties, the appellant can seek contribution from him as a guarantor but it
is no answer to the claim by the respondent under the guarantee.
The appeal is hereby dismissed with costs.
20
(TUAN RAVINTHRAN PARAMAGURU)
Judicial Commissioner
25 Date of Delivery of Judgment: 19.2.2009
Date of Hearing: 4.11.2008
4.2.2009
[CA-12-29-2007-II]
9
For Appellant/2nd Defendant: Mr. Dominique Ng
Messrs Dominique Ng & Associates
Advocates,
Kuching
5
For Respondent/Plaintiff: Mr. Stephen Chung
Messrs Stephen Robert & Wong Advocates,
Kuching
10
15
20
25
30
35
40
Notice: This copy of the Court's Reasons for Judgment is subject to
typographical revision.
1
MALAYSIA
IN THE HIGH COURT IN SABAH AND SARAWAK
AT KUCHING
CIVIL APPEAL NO. 12-29-2007-II
5
BETWEEN
LIM HONG LONG …. APPELLANT/2ND DEFENDANT
AND
RHB DELTA FINANCE BHD .… RESPONDENT/PLAINTIFF
10
JUDGMENT
This is an appeal from the decision of the Sessions Court after a full trial
to grant judgment in favour of the respondent for the sum of
RM72,103.60. The appellant was one of the two guarantors to the hire
purchase agreement that was entered between Lim Kheng Huat (1st 15
defendant) and the respondent. Judgment in default was entered against
1st defendant for non appearance in the lower court. The respondent did
not proceed against the other guarantor, Chai Kian Chai, because he was
adjudged a bankrupt on 2nd November 1998.
20 Preliminary
The respondent raised two points at the outset of the appeal in respect of
the Record of Appeal. The appellants had included the affidavits that
were used in the interlocutory proceedings inside the Record of Appeal.
Counsel for respondent submitted that they are not relevant and they were
25 not given notice of it. The second point counsel for respondent submitted
is that a draft of the index of the documents to be included in the Record
of Appeal was not given to them. These two issues are cannot impair the
[CA-12-29-2007-II]
2
competency of the appeal before the court. Even if the affidavits have
been wrongly included in the Record of Appeal, they can be ignored if
found to be not relevant during the argument on the merits of the appeal.
It is not a ground to knock out the appeal. In respect of the failure to
supply the index of the documents to the respondent5 , the Subordinate
Court Rules 1980 and the Rules of High Court 1980 do not provide for it.
Brief facts of claim
I shall now move on to consider the appeal on the merits. The claim of
the respondent was founded on a hire purchase loan they had given to 1st
10 Defendant to purchase a car, i.e. a Toyota Celica. The agreement was
signed on 11th July 1996. The appellant herein and Chai Kian Chai
executed the guarantee to secure the loan for the respondent. The total
price was RM308,125.00. The hirer paid an initial deposit of
RM85,000.00. On 20th September 1996, the hirer assigned his rights
15 under the agreement to one of the co-guarantors, the said Chai Kian Chai.
The respondent consented to this assignment. Subsequently the new hirer
defaulted in his monthly instalments and on 2nd November 1998, he was
adjudged a bankrupt at the instance of another financier, Asia
Commercial Finance (M) Bhd. Respondent took steps under the Hire
20 purchase Act 1967 to sell the vehicle but there was a shortfall of
RM72,103.60. After judgment in default was entered against the original
hirer, the trial proceeded against the appellant who was one of the
guarantors. The appellant testified before the trial court that after the
vehicle was assigned to him, he “sold” the vehicle to one Mr. Wan Kiap
25 Yap who in turn “sold” the car to a certain Mr. Jackie. Mr. Wan heard
that Jackie later “sold” the car to a Datuk’s son. The respondent only
acknowledged the first assignment to the appellant. Their position is that
they never consented to the so-called subsequent “assignments”. The
[CA-12-29-2007-II]
3
respondent’s senior manager at the Kuching branch was the sole witness
on their behalf. The officer who attended to the signing of the hire
purchase documents was Mr. William Ling but he was not called during
the trial as he had emigrated to Australia by that time. The recovery
officer who was in charge of the account was Mr. Hii 5 but he had retired
and his whereabouts were not known to the respondent.
Issues
Counsel for appellant submitted six grounds in this appeal. The issues
however overlap and I shall consider them together where necessary. The
10 core issues that the learned Sessions Court Judge considered are:
1. Whether the plea of non-est factum of the appellant had merit and;
2. Whether the transfer of the vehicle from the appellant to Wan Kian
Nyap was with the bank’s knowledge and consent.
15 Plea of non-est factum
The appellant did not deny signing the guarantee agreement when the 1st
defendant took the hire purchase loan. However he said that he did not
know what he signed as he does not understand English. He said Mr.
Ling, the officer who attended to the signing of the hire purchase
20 documents did not explain to him in Mandarin. The learned Sessions
Judge rejected this defence after considering several well known
authorities on the plea of non-est factum and I am of the view that she
cannot be faulted for doing so. The respondent was unable to call Mr.
Ling to contradict him as he had left the country. However, that does not
25 mean that the plea of non-est factum had been established. The appellant
is a man of full age and understanding. The hirer was his friend and he
was aware that he had been called to become his guarantor. He went to
[CA-12-29-2007-II]
4
the respondent’ office on his volition and had signed the document.
Therefore he is deemed to know that the respondent had given the hire
purchase loan to his friend on the strength of his guarantee and that the
document he had signed would have legal consequences in the case of
default of payment of hire purchase installments. The 5 plea of non-est
factum cannot succeed on the mere assertion that the signatory did not
read the contractual document or that he did not understand English
unless there was fraud or misrepresentation (see Ooi Yoke In (f) & Anor v
Public Finance Berhad [1993] 3 MLJ 135. The plea would not succeed
10 also if the signer was careless or negligent (Saunders v Anglia Building
Society [1971] AC 1004). In the instant case if the appellant could not
read English as he claimed and if it is true that Mr. Ling did not explain
the contents of the guarantee agreement as he alleged, he could have
obtained the services of someone to translate the contents to Mandarin
15 before executing it as it is common sense that the guarantee agreement to
a loan facility would entail legal consequences. The appellant has only
himself to blame and he cannot absolve himself of liability after the
respondent had relied on his guarantee to release the hire purchase to the
1st defendant.
Whether the transfer of the car to the 1st 20 defendant was with the consent
of the appellant?
The respondent agreed that they consented to the transfer of the vehicle
only to the Chai Kian Chai, the co-guarantor. After the transfer, the Chai
Kian Chai became the hirer and receipts for payment of the installments
25 were issued in his name. The appellant did not accept that he consented
to the transfer despite the production of the Consent Form which bears his
signature. He did not deny that it was his signature but he said he was
asked to sign a blank form. His counsel said that the date on the Consent
[CA-12-29-2007-II]
5
Form is the same date as the original agreement and that the “assignment”
was signed in Miri. The appellant’s case is that when he signed the
guarantee he did not intend and did not know that he would be consenting
to the transfer of the car to Chai Kian Chai. In my opinion, the appellant
cannot be heard to say that he did not agree to the assignment 5 of the hire
purchase agreement to Chai Kian Chai as he voluntarily signed the
Consent Form. If the form was blank as he claims, he should not have
signed it. His negligence in signing a blank form in a language he
allegedly was not familiar with cannot avail him the plea of non-est
10 factum (see UMW Industries (1985) Sdn Bhd v Kamaruddin bin Abdullah
& Anor [1989] 2 CLJ 1278). As stated in (Saunders v Anglia Building
Society [1971] AC 1004):
A person who signs a document and parts with it so that it may come
into other hands, has a responsibility, that of a normal man of
15 prudence, to take care what he signs, which if neglected, prevents him
from denying his liability under the document according to its tenor.”
However, Counsel for appellant submitted that the learned Sessions Court
Judge failed to consider:
20 (a) whether the document the appellant signed was significantly
different from what the signer believed it to be, and
(b) whether the signer had been negligent.
The reason for this argument is that the appellant had been told by Mr.
Ling that he was guaranteeing only the 1st 25 defendant and no others. Since
the appellant was also asked to sign a blank Consent Form which was
used to transfer his guarantee to Chai Kian Chai, counsel for appellant
argued that “there was a radical difference between what he signed and
what he thought he had signed”. I am of the opinion that there is no merit
[CA-12-29-2007-II]
6
in this submission. Although Chai Kian Chai’s name was not filled in at
that point of time, by signing the Consent Form, the appellant had
signalled his assent to a future assignment of the vehicle. Therefore it is
wrong of him to say now that he only intended to guarantee the 1st
defendant. Moreover respondent is relying on the very 5 same documents
the appellant had executed, i.e. the guarantee agreement and the Consent
Form. The Consent Form was used to transfer the guarantee to the new
hirer. Therefore the appellant is estopped from repudiating it as he
voluntarily signed it. If it was blank as he claimed, the plea of non est
10 factum cannot assist him as he was negligent in signing a blank form
which can be used to transfer his guarantee to a subsequent hirer. These
are the core issues before the lower court and they were correctly dealt
with by the learned Sessions Judge.
Other issues
15 Counsel for appellant submitted that adverse inference should be invoked
against the respondent for the failure to call Mr. Ling and Mr. Hii since
the appellant testified they did not explain the contents of the guarantee
agreement. As the learned Sessions Court Judge correctly held, it is trite
law that adverse inference can only be invoked if there was suppression
20 of evidence. In Munusamy v PP [1987] 1 MLJ 492, Mohd Azmi SCJ
administered the following caution in respect of invoking section 114(g)
of the Evidence Act 1950:
It is essential to appreciate the scope of s 114(g) lest it be carried too
far outside its limit. Adverse inference under that illustration can only
25 be drawn if there is withholding or suppression of evidence and not
merely on account of failure to obtain evidence. It may be drawn from
withholding not just any document, but material document by a party
in his possession, or for non-production of not just any witness but an
important and material witness to the case.
[CA-12-29-2007-II]
7
The respondent’s witness testified that the Mr. Ling had emigrated to
Australia two months before the trial and Mr. Hii’s whereabouts are not
known as he had retired. The respondent had, however, taken the trouble
to supply their last known addresses to the appellant. I therefore fail to
see why adverse inference should be invoked. Even if 5 there was ground
to invoke adverse inference, it would not bolster the plea of non est
factum as the appellant should not have signed the documents in question
if their contents were not explained to him. In respect of Mr. Hii, the
appellant and his witnesses alleged that he had condoned the further
10 “assignments” of the car to others and therefore the appellant is not liable.
There is no merit in this submission. The documentary evidence points to
the fact that the respondent only consented to the assignment of the car to
Chai Kian Chai. The Consent Form that the appellant signed was used to
transfer the guarantee as well. The car was duly transferred to Chai Kian
15 Chai and receipts for payment of further instalments were issued in his
name. It was alleged by the appellant that Mr. Hii condoned the transfer
to others as he collected instalments from them at his office and on
occasions even in a coffee shop. However the appellant could not
produce a single receipt that was issued in the name of any of the so20
called subsequent “buyers”. The Road Transport Department registration
card also showed that the vehicle was not transferred to anyone apart
from Chai Kian Chai. In the premises, as found by the learned Sessions
Court Judge, it did not matter that the respondent was unable to call Mr.
Hii to the witness stand. There was no ground to invoke adverse
25 inference.
Counsel for appellant submitted that the affidavit of Mr. Ling dated 8th
March 2003 used in the interlocutory proceeding was wrongly admitted
into evidence by the court. He submitted at length that it was wrong but I
[CA-12-29-2007-II]
8
need not consider it here. The short answer to this point is found in the
judgment of the Sessions Court Judge. She said that she did not admit the
affidavit into evidence and the notes of proceedings did not indicate that
they were admitted into evidence. The affidavit in question was merely
referred to during the trial but were not admitted or marked 5 as exhibits.
As pointed out by the learned Sessions Court Judge, the affidavit was not
necessary in considering the plea of non est factum.
In respect of the alleged “assignments” to other buyers, as I had said
earlier, there was no documentary evidence to support it. Chai Kian Chai
10 and the others had flouted the provisions of hire purchase agreement and
the Hire Purchase Act 1967 by treating the car as any other chattel. Such
a sale or assignment would not be valid under the law. However that
cannot absolve the appellant from liability in this case. By signing the
Consent Form, he had legally become the guarantor to Chai Kian Chai. If
15 Chai Kian Chai had defaulted or had wrongly released the vehicle to third
parties, the appellant can seek contribution from him as a guarantor but it
is no answer to the claim by the respondent under the guarantee.
The appeal is hereby dismissed with costs.
20
(TUAN RAVINTHRAN PARAMAGURU)
Judicial Commissioner
25 Date of Delivery of Judgment: 19.2.2009
Date of Hearing: 4.11.2008
4.2.2009
[CA-12-29-2007-II]
9
For Appellant/2nd Defendant: Mr. Dominique Ng
Messrs Dominique Ng & Associates
Advocates,
Kuching
5
For Respondent/Plaintiff: Mr. Stephen Chung
Messrs Stephen Robert & Wong Advocates,
Kuching
10
15
20
25
30
35
40
Notice: This copy of the Court's Reasons for Judgment is subject to
typographical revision.
