IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR

IN THE FEDERAL TERRITORY, MALAYSIA

(COMMERCIAL DIVISION)

SUIT NO. WA-22NCC-588-10/2019

BETWEEN

CIMB BANK BERHAD … PLAINTIFF

AND

1. RELIANCE SHIPPING & TRAVEL AGENCIES

SDN BERHAD
2. DATO’ GAN ENG KWONG
3. DATIN IRENE TAN ... DEFENDANTS

BEFORE
YA KHADIJAH BINTI IDRIS
JUDGE

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 GROUNDS OF JUDGMENT

(Enclosure 11)

Introduction

[1] Plaintiff’s cause of action against the 1st Defendant is premised on

breach of contract in respect of financing facilities granted to the 1st

Defendant as borrower. Whereas against the 2nd Defendant and 3rd

Defendant, it is premised on breach of a guarantee and indemnity

agreement.

[2] The monetary claim against the Defendants are as follows –

(a) the sum of RM 3,838,664.8 and RM 5,187,384.30;

(b) interest on the sum of RM 3,838,664.18 and

RM 5,187,384.30 at the rate of 1.75% per annum on the

Plaintiff's Cost of Fund calculated on daily basis on monthly

rest from 1 August 2019 until the full settlement;

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 (c) additional interest on the sum of RM 3,838,664.18 and RM

5,187,384.30 at the rate of 1% per annum calculated on daily

basis on monthly rest from 1 August 2019 until the full

settlement;

(d) cost; and

(e) cost on solicitor-client basis.

Plaintiff’s pleaded case

[3] The Plaintiff granted to the 1st Defendant the following facilities –

(a) Revolving Credit Facility (“RCF”) in the sum

RM 3,700,000.00 (“1st RCF”); and

(b) a second revolving credit facility in the sum of

RM 5,000,000.00 (“2nd RCF”).

Both the 1st RCF and 2nd RCF will collectively referred to as “RCF

Facilities”.

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[4] The RCF Facilities are evidenced by the following documents –

(a) Letters of offer dated 12 December 2001, 1 July 2003, 6

March 2006, 16 March 2009, 20 May 2010, 28 October

2011, 13 December 2012, 20 May 2014 and 11 May 2015;

(b) General Facility Agreement based on letter of offer dated 12

December 2001;

(c) Additional Facility Agreement dated 18 August 2003; and

(d) Facility Agreement dated 22 November 2010.

[5] The terms and conditions of the RCF Facilities, includes,

inter alia –

(a) the interest chargeable is 1.75% per annum above the

Plaintiff’s Cost of Fund payable at the end of each month;

(b) default interest at the rate of 1% per annum will be imposed

on any principal sum or interest overdue until full settlement

of the principal sum or interest;

(c) the Plaintiff is entitled, at its sole discretion, vary the interest

rate;

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 (d) in the event of default, all outstanding sum including interest

shall be due and payable forthwith and the Plaintiff is entitled

to terminate and recall the facilities;

(e) upon default of the 1st Defendant, the Plaintiff shall be

entitled to exercise all or any of the remedies under the RCF

Facilities agreement, security agreement and to exercise

such remedies concurrently including remedies of sale or

possession; and

(f) the 1st Defendant agree that a written statement of account

certified by the Plaintiff’s officer is binding and conclusive as

to the 1st Defendant’s indebtedness.

[6] In consideration of the Plaintiff granting the RCF Facilities, the 2nd

and 3rd Defendants executed the Guarantee and Indemnity dated 27

December 2011 (“Guarantee and Indemnity Agreement”) in favour of the

Plaintiff.

[7] It is not disputed that the RCF Facilities was duly disbursed by the

Plaintiff and the 1st Defendant has accepted and utilized the same.

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[8] The 1st Defendant defaulted in its repayment obligations under the

RCF Facilities. Despite letters of demand dated 25 September 2019

issued by the Plaintiff, the Defendants failed to settle the sums due and

owing to the Plaintiff.

[9] The Statement of Account dated 27 November 2019 (see

enclosure 12, Exhibit NHH-7) issued by the Plaintiff sets out the debt

owed by the Defendants, which debt remains unsatisfied which result in

the filing of the present action by the Plaintiff.

Defendant’s pleaded case

[10] The Defendants’ defence may be summarised as follows –

(a) there are no event of default and therefore deny any breach

under the RCF Facilities and the Guarantee and Indemnity

on the Defendants’ part;

(b) the General Facility Agreement exhibited in Exhibit NHH-2

ASP (Encl 12) were not properly stamped; and

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(c) there is manifest error in the Statement of Account dated 27

November 2019 (see Exhibit NHH-7 ASP of enclosure 12).

The Defendants thus dispute the amount of claim and

computation of the alleged outstanding amount (either

principal or interest). The alleged manifest error is due to the

following –

(i) in the Plaintiff’s letter of demand dated 25 September

2019 (see Exhibit NHH-6 of enclosure 12) the claim

demanded against the Defendants is stated as

follows –

(aa) interest on the accrued debt of RM 3,838,664.18

and RM 5,187,384.30 at the rate of 1.75% per

annum on the Plaintiff's Cost of Fund from 1

August 2019 until full settlement. It is stated

current Plaintiff Cost of Fund as at 25 September

2019 was 4.51% per annum;

(bb) additional interest at the rate of 1% per annum on

the accrued debt from 1 August 2019 until full

settlement.

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 (ii) however in the Plaintiff’s Writ and Statement of Claim,

the claim is stated as follows –

(aa) the interest on the sum of RM 3,838,664.18 and

RM 5,187,384.30 at the rate of 1.75% per annum

on the Plaintiff's Cost of Fund calculated on a

daily basis with monthly rest from 1 August 2019

until full settlement. The Plaintiff's Cost of Fund

for three (3) month as at 1 August 2019 was

3.66% per annum and from 18 November 2019

was 3.64% per annum;

(bb) additional interest on the sum of

RM 3,838,664.18 and RM 5,187,384.30 at the

rate of 1% per annum calculated on daily basis

with monthly rest from 1 August 2019 until the full

settlement date.

[11] Looking at the claim made in the Letter of Demand and the one

made in the Statement of Claim, the Defendants’ complaint relate to the

rate of interest (charged on the outstanding sum) which in turn comprise

of the rate agreed by the parties and the prevailing Cost of Fund of the

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Plaintiff. The rate of the chargeable interest which is in questioned is on

1 August 2019.

The law

[12] Pursuant to Order 14 rules 1 and 2 of the RoC 2012, in an

application for summary judgment, it is incumbent on an applicant

seeking the same to prove the following –

(a) the statement of claim has been served on the defendant;

(b) the defendant has entered appearance; and

(c) the applicant has affirmed an affidavit verifying the facts on

which the statement of claim is based. The applicant is also

required to affirm his belief that the defendant has no

defence to the statement of claim.

[13] Upon the fulfilment of the above preliminary requirements, the

applicant will have established a prima facie case and the burden is on

the defendant to prove under Order 14 rules 3 and 4 of the RoC 2012

that there is an issue or question in dispute which ought to be tried

(National Company For Foreign Trade v. Kayu Raya Sdn Bhd [1984] 1

CLJ (Rep) 283, [1984] 2 MLJ 300; Cempaka Finance Bhd v. Ho Lai Ying
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& Anor [2006] 3 CLJ 544, [2006] 2 MLJ 685). An application for

summary judgement may also be dismissed by the court if the defendant

satisfies the court that there ought for some other reason to be a trial

namely there are circumstances that ought to be investigated by the

court (United Merchant Finance Bhd v. Majlis Agama Islam Negeri Johor

[1999] 2 CLJ 151, [1999] 1 MLJ 657).

[14] Whether the issues raised are triable or otherwise is essentially a

question of facts as disclosed in the affidavit evidence (Bank Negara

Malaysia v Mohd Ismail & Ors [1992] 1 MLJ 400; [1992] 2 CLJ Rep 186;

[1992] 1 CLJ 653.

Findings of court

Whether Plaintiff has fulfilled the preliminary requirements

[15] It is not disputed that the Plaintiff’s Statement of Claim was served

on the Defendants. It is also not disputed that the Defendants have

entered their Memorandum of Appearance (see enclosure 6 and 7).

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[16] In its affidavit supporting the summary judgment application, the

Plaintiff’s deponent has affirmed his belief that the Defendants has no

defence to its claim.

[17] However this court is of the view the Plaintiff’s affidavit in support

(which is a four-page document) has failed to verify the material facts on

which the Plaintiff’s claim is based –

(a) crucially, the relevant terms and conditions upon which the

RCF Facilities was granted to the 1st Defendant were not

specifically stated. At paragraph 7 of the affidavit in support

enclosure 12, the Plaintiff merely listed and produced as

exhibits the various letters of offer and 3 facilities agreement.

Unfortunately the salient terms relevant to the Plaintiff’s

monetary claim was not specifically stated. At the time the

Plaintiff’s application for summary judgement was filed, the

Plaintiff is fully aware of the Defendants’ defence, in

particular the issue raised on the interest rate charged on the

outstanding amount. Despite this, the relevant provisions in

the relevant agreement which entitled the Plaintiff to impose

interest and the interest rate was not disclosed by the

Plaintiff. To make matter worse, the Plaintiff’s second

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 affidavit enclosure 15 (replying to the Defendants’ affidavit

which, inter alia, challenge the interest rate) merely

states “ … the Plaintiff is entitled to charge interest and / or

penalty interest in accordance with the terms and conditions

of the facilities granted and which terms and conditions the

Defendants agreed to.”. Again no attempt was made to

identify the relevant provisions in the relevant agreement;

(b) the Plaintiff produced a Statement of Account dated 27

November 2019 (see Exhibit NHH-7 enclosure 12) to support

its monetary claim against the Defendants. However the

Plaintiff failed to demonstrate the significance of such

statement under the RCF Facilities, namely, whether such

statement amounts to conclusive evidence of the

Defendants’ indebtedness under the RCF Facilities and the

statement is binding on the 2nd Defendant and 3rd Defendant;

and

(c) in so far as the 2nd Defendant and 3rd Defendant are

concerned, even though the Guarantee and Indemnity

Agreement was produced as an exhibit, none of the salient

terms was identified to show the guarantee provided, the

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 obligations and liabilities of the 2nd Defendant and 3rd

Defendant in relation to the RCF Facilities.

[18] It is not sufficient for the Plaintiff to simply produce the letters of

offer, agreements, Guarantee and Indemnity Agreement and letter of

demand as exhibits without any explanation. While the Plaintiff is not

required to prove its case in an application for summary judgment under

Order 14 ROC, the law requires the Plaintiff to verify, via an affidavit, the

facts on which they rely so as to prove a prima facie case which may be

rebutted by the Defendant. Premised on the affidavit evidence of the

Plaintiff as contained in enclosures 12 and 15, it is this court considered

opinion that the Plaintiff failed to verify adequately the facts on which

they based their claim for summary judgment.

[19] In the case of Supreme Leasing Sdn Bhd v Dior Enterprise & Ors

[1990] 2 MLJ 36 it the learned High Court Judge said –

Order 14 r 2(1) provides that the affidavit in support of an O 14

application should do two things: (1) verify the facts on which the claim is
based; and (2) state that the defendant has no defence. Verification of
the facts in the context of O 14 r 2 is not to be understood to mean
proving the facts. The plaintiff has in effect to swear to the truth of the
facts on which the claim is based. It is not sufficient to swear that the

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 amount claimed is owed. It is the cause of action that has to be verified
and not the results or consequences of the alleged cause of action….

[20] The facts in the case of Supreme Leasing Sdn Bhd v Dior

Enterprise can be gathered from the following paragraphs of the

judgment –

By the statement of claim, the plaintiff had contended that, pursuant to a

cheque discounting facility agreement, the plaintiff had to purchase the
first defendant's customers' cheques 'upon terms and conditions set
forth in a letter dated 11 March 1982'. It was also averred that the first
defendant had agreed to pay interest at the rate of 3% per mensem on
the amount represented by [*37] dishonoured cheques from the date of
maturity of the said cheques until full settlement. The plaintiff then went
on to contend that the second, third and fourth defendants had by a
'guarantee and indemnity dated 11 March 1982 agreed to guarantee and
indemnify the plaintiff against all losses, damages and expenses which
the plaintiffs may suffer'. The statement of claim ended with a statement
of the amount said to be owing as principal and as interest as at 28
February 1986 which, it was contended, had not been paid in spite of
demands. Judgment for the said amounts was prayed for.

The plaintiff took out its O 14 application against all the defendants
which was supported by the affidavit of the plaintiff's operations manager
who on oath confirmed that the first defendant was 'justly and truly
indebted to the plaintiff in the sum set out in the summons-in-chambers'
and went on to state that the 'particulars of the said claim appear in the
statement of claim filed herein'.

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[21] In its affidavit supporting the Order 14 application the plaintiff

exhibited a copy of the letter that contained the terms and conditions of

the cheque discounting facility between the parties as well as a copy of

the letter of guarantee. The defendants contended that the O 14

application was lacking in that there had not been a verification of the

facts on which the claim was based and that some documents (the

cheques which is said to have been discounted, the statement of

account between the plaintiff and the first defendant) were not exhibited

the Plaintiff, with leave of the court, filed a further affidavit to exhibit the

said documents.

[22] The High Court in dismissing the defendant’s appeal against

decision of the senior assistant registrar’s allowing summary judgment in

favour of the plaintiff said the senior assistant registrar would have been

justified in giving summary judgment to the plaintiff on the basis of the

first affidavit filed in support of the application which had met all the

requirements presented by O 14. The learned Judge said –

Order 14 r 2(1) provides that the affidavit in support of an O 14

application should do two things: (1) verify the facts on which the claim is
based; and (2) state that the defendant has no defence. Verification of
the facts in the context of O 14 r 2 is not to be understood to mean

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 proving the facts. The plaintiff has in effect to swear to the truth of the
facts on which the claim is based. It is not sufficient to swear that the
amount claimed is owed. It is the cause of action that has to be verified
and not the results or consequences of the alleged cause of action.
What the verification has to amount to was explained in an old Irish case
called Murphy v Nolan 18 LR (Ireland) 468 where Lord Ashbourne said
at p 470:

Now, there is no question but that the affidavit in support of a

motion for judgment must do two things – (1) verify the cause of
action; and (2) state that the defendant has no defence. The
contention here is that the cause of action was not sufficiently
verified. The way the cause of action was verified was this:

'The defendant herein is indebted to me in the sum of $24.16s

as per particulars specially indorsed on the writ of summons
herein.'

The judge went on to refer to and distinguish the judgment of Andrews J

in M'Conville v Nolan 17 Ir LT Rep 24 where the verification was of the
amount due (and not of the cause of action) in respect of which the
learned judge had held that there was no verification as required in a
motion for summary judgment. He said:

Now, the authority before Andrews J would apply if the paragraph

stopped at the words 'the sum of $24.16s'; but it does more than
that: it says, 'as per particulars specially [*38] indorsed on the writ
of summons herein'. That incorporates the special indorsement,
admitted to be sufficient, which I have already read.

That was the position in Ireland and that is the position here as well.

The practice of exhibiting, for example, a copy of the written contract on

which the claim is based or the correspondence between the parties or the
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 invoices and delivery orders in a goods sold and delivered case may have
some relevance in anticipating a contention that the plaintiffs' claim is not
bona fide or some other defence, but is not necessary to meet any
requirement of the O 14 procedure. In an O 14 application, the plaintiff is
not required to prove his claim. In the instant case, the learned senior
assistant registrar would have been justified in giving summary judgment to
the plaintiff on the basis of the first affidavit filed in support of the
application which had met all the requirements presented by O 14.

[23] The approach of the court in Supreme Leasing Sdn Bhd v Dior

Enterprise seems to suggest that exhibiting the relevant documents

which supports a case for summary judgment is not necessary in order

to meet the requirement under Order 14 as the plaintiff is not required to

prove its claim. However it must be noted, the court in the said case did

not discuss the adequacy of the facts verified in the plaintiff’s affidavit

(supporting the plaintiff application for summary judgment) in the context

of a prima facie case which is the position of the law now. Surely for

purpose of a prima facie case, verifying facts would require more than

merely exhibiting documents without any explanation and identification

of the relevant and material facts which support and form the basis of

the plaintiff’s claim for summary judgment.

[24] In the instant case the affidavit failed to verify adequately and

satisfactorily the material facts upon which the Plaintiff relies on to

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secure a summary judgment. On this ground alone, the Plaintiff’s

application for summary judgment is dismissed.

[25] Assuming the Plaintiff has fulfilled the preliminary requirement and

a prima facie case is proven, it is this court’s view that the issue raised

by the Defendants in respect of the interest rate charged by the Plaintiff

is an issue which ought to be investigated by the court.

[26] In September 2019 it is stated by the Plaintiff (via their Letter of

Demand) the interest chargeable on the outstanding sum is at the rate of

1.75% per annum above the Plaintiff’s Cost of Fund from 1 August 2019.

In the said letter the prevailing Plaintiff’s Cost of Fund was stated as

4.51%. Thus, based on the Plaintiff’s Letter of Demand and by simple

calculation the interest rate chargeable is 6.26% (1.75% + 4.51%).

[27] In the Plaintiff’s Statement of Claim and the application for

summary judgment (enclosure 11) the rate of interest chargeable on the

outstanding sum is stated as 1.75% per annum above the Plaintiff’s Cost

of Fund from 1 August 2019. According to the Plaintiff their Cost of

Fund at 1 August 2019 is 3.66% and from 18 November 2019 the rate is

3.64%. Thus by simple calculation the interest rate chargeable –

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 (i) at 1 August 2019 the interest chargeable is 5.41% (1.75% +

3.66%); and

(ii) from 18 November 2019 the interest chargeable is 5.39%

(1.75% + 3.64%).

[28] In response to the Defendants’ complaint on the rate of the

chargeable interest, the Plaintiff in their affidavit enclosure 25 averred as

follows –

6. Saya mengesahkan bahawa surat tuntutan yang diekshibitkan sebagai

“NHH-6” dalam Lampiran 12, yang menyatakan 4.51% merupakan
faedah yang dikenakan ke atas Defendan-defendan yang terdiri
daripada 1.75% melebihi Kos Dana sebanyak 3.66% (setakat
25.09.2019)

7. Saya kekal menyatakan bahawa Kos Dana Plaintif sebanyak 3.66%

(setakat 01.08.2019 dan 25.09.2019) dan 3.64% (setakat 18.11.2019)
adalah juga tepat dan betul.

8. Saya dinasihatkan oleh peguamcara Plaintif bahawa terdapat hanya

suatu kesilapan yang ketara dalam Penyata Akaun Plaintif yang
diekshibitkan sebagai “NHH-7” dalam Lampiran 12.

(emphasis added)

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[29] The Statement of Account at Exhibit NHH-7 states as follows –

It is hereby stated and certified that Reliance Shipping & Travel

Agencies Sdn Berhad, Dato’ Gan Eng Kwong and Datin Irene Tan are
indebted and liable to CIMB Bank Berhad (“CIMB”) in respect of the facilities
granted in the following sums:

1. the sums of RM 3,838,664.18 and RM 5,187,384.30 due as at

31.07.2019;
2. interest on the said sums of RM 3,838,664.18 and
RM 5,187,384.30 at the rate of 1.75% per annum above CIMB’s
Cost of Funds calculated on a daily basis at monthly rests from
01.08.2019 till the date of full settlement;
3. additional interest on the said sums of RM 3,838,664.18 and
RM 5,187,384.30 at the rate of 1% per annum on a daily basis
at monthly rests from 01.08.2019 till the date of full settlement.

CIMB’s 3 months Cost of Funds as at 01.08.2019 was 3.66% per

annum and with effect from 18.11.2019 is 3.64% per annum.

[30] There appears to be conflicting and / or contradiction as to the

interest chargeable on the outstanding sum. In their affidavit the Plaintiff

insisted that the chargeable interest at 1 August 2019 was 4.51% (which

is also the rate stated in the Plaintiff’s Letter of Demand). However it

must be noted the Plaintiff’s averment at paragraph 6 enclosure 26

which states the interest chargeable as at 1 August 2019 is 4.51% which

is 1.75% above the Cost of Fund of 3.66% is wrong because 1.75%

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above Cost of Fund of 3.66% is 5.41% and not 4.51%. Whereas the

chargeable interest stated in the Statement of Account would be 5.41%

(1.75% + 3.66%) as at 1 August 2019. Thus in so far as the chargeable

interest on 1 August 2019, there appears to be 3 different rates, namely,

6.26%, 5.41% and 4.51%.

[31] The matter could have been easily sorted out had the Plaintiff

provide evidence to show the Plaintiff’s prevailing Cost of Fund at the

relevant time. However there was no attempt made by the Plaintiff to

produce the same. On the contrary the Plaintiff is adamant that the

chargeable interest is correct. Importantly the Plaintiff failed to

specifically identified the relevant provisions in the agreement which

entitled them to charge interest in the said manner.

[32] This court views such conflicting evidence in respect of the

chargeable interest is material as it will eventually determine the amount

that the Defendants are liable to pay under the RCF Facilities. Under

the circumstances oral evidence is required for purpose of determining

the rate of the interest chargeable on the outstanding sums.

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Conclusion

[33] Premised on all the reasons stated aforesaid, Plaintiff’s application

for summary judgement was dismissed with costs.

( KHADIJAH BINTI IDRIS )

JUDGE
HIGH COURT
(COMMERCIAL DIVISION)

DATED 18 AUGUST 2020

Counsel:

Plaintiff : Yenne Chow of Messrs Raja, Darryl & Loh

Defendants : Rachel Cheah Kit Yee of Messrs Tze & Yee

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