Affin Bank Berhad V Ewt Corporation Sdn. Bhd & 2 Lagi

  

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DALAM MAHKAMAH TINGGI MALAYA DI KUALA LUMPUR

 

BAHAGIAN DAGANG GUAMAN NO. D5-22-332-2004

 

ANTARA

 

AFFIN BANK BERHAD (No.Syarikat:25046-T)

 

(Dahulu di kenali sebagai Perwira Affin Bank Berhad) …PLAINTIFF

 

DAN

 

1. EWT CORPORATION SDN. BHD.

 

2. MOHD NAZARALLAH BIN MOHD NASIR

 

3. ABDUL RAHMAN BIN NASIR …DEFENDAN-

 

DEFENDAN

 

GROUNDS OF JUDGMENT

 

Introduction

 

The Plaintiff, Affin Bank Berhad, a bank (‘the Bank) afforded banking facilities to the 1st Defendant, EWT Corporation Sdn. Bhd. (‘the Company’) in 1998 and 1999. Several letters of offer and facility agreements were executed between the Bank and the Company evidencing the provision of these facilities as well as the terms and conditions upon which the facilities

 

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were granted. Various types of facilities were afforded including an overdraft facility and a Bank Guarantee facility. The over draft facility was extended at the request of the Company to the extent of RM800,000-00 on terms and conditions contained in the letters of offer and facility agreements.

 

The facilities afforded to the Company were to be utilised as capital for the construction and completion of several projects awarded by the Jabatan Kerja Raya to be carried out by the Company.

 

The security for the grant of such facilities, is as set out in the several letters of offer and the facility agreements executed by the Company and the Bank. Of particular relevance to this claim is the joint and several guarantee dated 10 November 1999 executed by the Second Defendant, Mohd Nazarallah bin Mohd Nasir (‘D2’) and the Third Defendant, Abdul Rahman Bin Nasir (‘D3’). In consideration of the grant of facilities to the Company D2 and D3 agreed to repay all monies due and owing by the Company to the Bank.

 

The Company defaulted in the repayment of monies due under the overdraft facility. Vide letter dated 12 December 2003 the Bank recalled and terminated the facilities afforded to the Company and claimed from it the repayment of the sum of RM741,566.29 as of 30 November 2003 for the overdraft facility. Receiving no response the Bank instructed its solicitors to issue a letter of demand which they duly did on 20 January 2004 for the same sum. They issued a supplementary letter of claim on 10

 

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March 2004 to the Company. Letters of demand dated 20 January 2004 were also issued to the two guarantors, D2 and D3.

 

As security for these facilities the Company had previously placed by way of fixed deposit, monies in the sum of RM207,271.58 with the Plaintiff. The Plaintiff, pursuant to the Letters of Set-Off entitling to utilize these fixed deposits on, inter alia default, lifted the same on 27 April 2004 and credited the Company’s overdraft account with the said monies so as to reduce the sum then outstanding. By reason of such crediting the quantum now outstanding and claimed by the Plaintiff against the Company as principal debtor and D2 and D3 as guarantors is RM563,598.86 as of 30 April 2004 together with interest at the rate of 3.5% above the Base Lending Rate computed on daily rests.

 

The Trial

 

The trial of this action took one day. Each party called one witness. The documents produced in support of and in opposition to the claim were largely in Part B, meaning that although the authenticity of the documents was not in issue, the contents remained in dispute. As a consequence the makers of these documents could be dispensed with. A few documents were relegated to Part C which required the makers to be called. These documents, largely produced by the Defendants were individually marked. The Bank called one witness to testify in its favour, namely Morthy Applanaidu (NRIC No:550801-08-6761) the Vice President – Special Asset Management who had been working with the Bank since 2002. His

 

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knowledge of this claim is therefore based entirely on the records of the Bank to which he has complete access. His testimony related to the history of the account and the various letters of offer, facility agreements and security documents that had been executed between the parties. He went on to explain that the Company defaulted in repayments due under the overdraft facility resulting in the recall and termination of the facility. Thereafter letters of demand were issued to all three Defendants as borrower and guarantors respectively.

 

The Company and D2 were represented at trial. D3 had been adjudicated a bankrupt prior to trial and the Official Assignee sent its representative to advise of D3’s status. As such the Plaintiff could not proceed with its claim against D3 and chose to file a proof of debt form. It had not in any event procured leave to proceed against D3. Accordingly the claim against D3 is struck off.

 

The Company and D2 who were represented, disputed liability for the debt, in their capacities as borrower and guarantor respectively. The Defence also called one witness, Mohd. Nazarallah Bin Mohd Nasir, i.e. D2. The thrust of the defence put forward on behalf of the Company and D2 was that:-

 

(a) The Bank had failed to take into consideration or deduct additional security alleged to have been afforded to the Bank by way of a second legal charge on a piece of land known as Lot 596, section 47 Kuala Lumpur comprising one unit of shoplot at Kompleks Damai (‘the shoplot’).

 

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(b) The Plaintiff had failed to plead the existence of this second legal charge;

 

(c) The notices of demand issued by the Plaintiff to the Defendant were defective in that the quantum claimed was incorrect;

 

(d) The Notices of Demand were also defective because the Plaintiff had failed to make reference to two salient agreements;

 

(e) The Notices of Demand were defective as the Plaintiff had failed to wait until the time granted to the 1st Defendant borrower to effect repayment had lapsed prior to issuance of the demands under the guarantees to D2 and D3;

 

(f) The Statement of Account produced by the Plaintiff was erroneous and inaccurate by reason of the base lending rates imposed which differed. Accordingly it was not conclusive evidence of the amount due and owing;

 

(g) The Plaintiff had failed to particularize the basis for its claim, which the Defendants contended was a claim for a global sum.

 

(h) Finally D2 maintained that the Bank had failed to give notice of the alteration in the rate of interest to the Company in accordance with the terms of the facility agreements.

 

The trial of this matter was completed in one day. At the close of trial the following issues arose for adjudication:-

 

(a) Does the 2nd legal charge dated 17 March 1997 created over the property namely the shoplot comprise security for the provision of the

 

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overdraft facilities sought to be recovered by the Bank in this suit? Alternatively is it security for some other facility?

 

(b) In any event are there proceeds of sale from the auction sale of this property available to the Plaintiff as the second legal chargee?

 

(c) Are the letters of demand issued to the guarantors, i.e. D2 and D3 deficient or defective?

 

(d) Is the Certificate of Indebtedness issued by the Bank erroneous and if so, does such error affect the accuracy of the certificate and the conclusive nature of the quantum stated to be due and owing by the Plaintiff?

 

(e) Did the Bank comply with the requirements in the facility agreements in relation to the variation of the rates of interest for this loan?

 

(f) Failure to particularize the breakdown of the claim

 

Salient Facts

 

The Company, the first Defendant in this suit applied for credit facilities from the Plaintiff in or around 13th January 1998. The facilities sought included a performance bond facility, an overdraft facility and an Advance against Document facility for a tenor of ninety days comprising RM6,000,000 in total. The facilities were sought to finance in part the construction of several projects. The security requirements imposed included, inter alia, the execution of a joint and several guarantee for RM6 million by D2 and D3. D2 was the managing director of D1. After issuance of this initial letter of offer, the Plaintiff varied the security terms on 14th January 1998 and again on 23 February 1998. These variations in the

 

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terms of the security to be afforded were accepted by the Defendants. The requirement for a joint and several guarantee remained. The terms of these letters of offer were incorporated into a Facilities Agreement dated 27th February 1998 executed between the Plaintiff and the Company.

 

On 26th of November 1998 the credit facilities afforded to the Company were revised to RM5 million together with other terms and conditions which was accepted by the Company as of 26 November 1998. As of 19th December 1998, the Plaintiff entered into a Supplementary Facilities Agreement with the Company reflecting the revision of the facilities from RM6 million to RM5 million.

 

On the 8th October 1999 the parties entered into a second supplementary agreement whereby the facility was amended and varied by cancelling the overdraft facility of RM2 million through the upliftment of the fixed deposit receipts held by the Bank leaving the Company with an overdraft facility of up to RM 500,000-00 and a bank guarantee facility of up to RM2.4 million making a combined aggregate principal sum of RM3 million.

 

On 12th October 1999, the Plaintiff agreed to grant to the Company additional ad hoc banking facilities up to an aggregate limit of RM1.3 million comprising an ad hoc letter of credit of RM500,000 and an overdraft facility up to a limit of RM800,000-00.

 

On 10 November 1999 the parties entered into a second facilities agreement recording the above. As such the total combined limit of monies made available to the Company was RM4,300,000-00.

 

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The 2nd and 3rd Defendants executed an individual guarantee dated 10 November 1999 whereby they agreed to be jointly and severally liable for all monies due and owing by the Company to the Plaintiff.

 

In or around October 2003 it became apparent that the Company was experiencing difficulty in keeping up with the repayments required to be made to the Plaintiff. On 6th October 2003 the Company wrote to the Plaintiff stating inter alia, that it was aware that its account had not been serviced for some months but that this was due to financial constraints which it hoped to resolve. Essentially the Company sought further time to make the requisite payments and annexed as proof of potential income, its proposed new projects which were expected to propagate profits. This did not materialize because on 12 December 2003, the Plaintiff wrote to the Company advising that the Company had failed to make payment towards settlement of outstanding sums due to it. As such the Plaintiff communicated the fact that it had decided to recall the facility afforded to the Company with immediate effect. As a consequence of such recall the Company was required to settle the then outstanding sum under the overdraft facility amounting to RM741,566.29 as of 30th November 2003. Vide the same letter the Plaintiff also advised that the bank guarantee facility had expired earlier on that year and sought cancellation of the same.

 

Receiving no response, the Plaintiff instructed its solicitors to issue a letter of demand. This was duly done on 20 January 2004 when letters of demand were issued to the 1st Defendant as well as the guarantors, D2 and

 

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D3. In these letters of demand the Plaintiff’s solicitors referred to the series of letters of offer and agreements executed by the parties. They did not however make reference to the facilities agreement of 10 November 1999 and the Supplementary Agreement dated 8 October 1999. They subsequently wrote to the 1st Plaintiff on 10 March 2004 making express reference to these agreements as well.

 

Vide the letters of demand to the borrower and the guarantors the Plaintiff sought the return of monies due under the overdraft facility in the sum of RM741,566.29 and a sum of RM475,238.65 under the bank guarantee facility which they explained expired on 14 August 2003 and remained to be returned to the Plaintiff for cancellation. The Bank guarantee facility was subsequently cancelled but the overdraft facility was not settled. It is this latter facility which comprises the subject matter of the current claim.

 

After the filing of the claim in this action which was initially for the said sum of RM741,566.29, the Plaintiff uplifted several fixed deposits that had been deposited with it by way of security in the sum of RM207,271.58 thereby reducing the quantum due and owing to it to RM563,598.86. The Statement of Claim was amended to reflect the existence and the uplifting of these fixed deposit receipts.

 

It is relevant that for the purposes of this action and in keeping with the conclusive evidence clause, the Plaintiff produced a statement of account signed by, inter alia, PW-1 which stipulated the amount due and owing to the Plaintiff as of 31 August 2005.

 

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The foregoing then comprises the history of the Company’s dealings with the Plaintiff leading up to the initiation of this action.

 

The Issues

 

Each of the issues set out above will be considered in turn.

 

Issue (a):- Does the 2nd legal charge dated 17 March 1997 created over the property namely the shoplot comprise security for the provision of the overdraft facilities sought to be recovered bv the Bank in this suit? Alternatively is it security for some other facility?

 

In the statement of claim the Plaintiff has made no reference to the subsistence of a second legal charge over the said shoplot as comprising security for the facilities comprising the subject matter of this suit. Neither is it raised in the defence. A perusal of all the letters of offer and facilities agreements as well as the supplementary agreements relevant to the provision of facilities to the Company in respect of this suit do not disclose the creation or subsistence of any such charge.

 

However immediately prior to the trial of this matter, the Defendants sought to introduce in evidence extracts from the title to this shophouse (see Page 6, BOD2), which was not disputed which disclosed that a second and third legal charge had been created in favour of the Plaintiff. The date of the creation of these charges however was 17 March 1997, well before the first

 

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letter of offer issued to the Company in respect of the facilities sought to be recovered.

 

In the course of cross-examination, PW-1, the witness for the Plaintiff concurred that indeed a second legal charge had been created in favour of the Bank. He did not however specify that it was in respect of the current facilities. He simply assumed that this was the case. The Plaintiff too did not seek to clarify this issue in the course of re-examination. Both the Plaintiff and the Defendant, without further clarification, simply assumed that the said second legal charge over the shoplot comprised security in respect of the facilities granted which comprised the subject matter of this suit. To that end, the Defendant produced letters from solicitors for EON Bank, which bank enjoyed a first legal charge over the property to show that the said property had been auctioned and a total of RM1,540,000 received by way of auction proceeds. The Defendants maintained that after EON Bank had taken its share of the proceeds, the balance sum ought to be available to the Plaintiff to reduce or extinguish the sum now claimed in this suit. In response to this the Plaintiff’s solicitors corresponded further with the solicitors for EON Bank (see Exhibit P-1) and produced a further letter which showed that the quantum due and owing to EON Bank exceeded RM3 million. This effectively meant that there were no monies available for the reduction or extinguishing of the current debt.

 

Notwithstanding the position taken by learned counsel, it appeared to this Court that there was a fundamental mistake in relation to this matter which had not been sufficiently examined. The Court was unable to comprehend

 

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how or why the charge document pre-dated quite considerably the first letter of offer in respect of the facilities comprising the subject matter of this suit. Additionally it was puzzling that no mention was made of a second legal charge or the said shoplot in any of the somewhat voluminous loan documentation produced as evidence of the terms and conditions for the grant of the facility to the Company. Accordingly, the Court directed the Plaintiff’s witness, PW-1, who had not brought the original records of the Plaintiff with him, to ascertain and verify why there was no mention of the second legal charge in the Plaintiff’s documentation.

 

After the Court had re-convened, PW-1 testified further whereupon he produced two further documents, namely P-3 and P-4 which are letters dated 21 May 1996 and 22 October 1996. These letters relate to the grant of other credit facilities to the Company which stipulated the creation of a charge over the said shophouse as security for the grant of the facilities under those letters of offer. Exhibits P-3 and P-4 therefore explained the creation of a second and third legal charge.

 

Learned counsel for the Defendant sought to object to the production of Exhibits P-3 and P-4 on the grounds that the author or maker of those letters was not in Court. He maintained that PW-1 had no personal knowledge of the contents of those letters

 

I overruled the objection and allowed the exhibits into evidence because these two exhibits dated back to 1996 and it was unreasonable and impractical to expect the Plaintiff to produce the makers. The Defendant in any event had made no objection to PW-1 testifying in relation to loans

 

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granted in 1998 and 1999 despite the fact that he had no personal knowledge of the grant of those loans either. In cases such as this, particularly banking cases which are several years old, where the witnesses give evidence primarily on the records and documents of the bank to which they have complete access it is not feasible to insist on the maker of each and every document to be called. Hence the existence of the Bankers Books’ Evidence Act as well as the cognizance accorded to conclusive evidence clauses. The purpose is to simplify the production of evidence relating to banking records. The records themselves comprise evidence of the transactions undertaken over the years. As such I allowed these documents to be produced by the Plaintiff. Further the necessity for the Court to arrive at the truth of matters dictated that these documents be inspected to enable the parties to ascertain whether or not the shoplot really comprised security for the current disputed loan facility.

 

It should also be mentioned that it would have been open to the Court to disallow the Defendant to even bring into evidence the title deeds relating to the creation of the second and third legal charges over the shoplot, as their pleadings made no mention of this issue. However in the interests of justice, the Defendant was allowed to raise this issue so that it could be ascertained whether indeed there was such security for this facility which had been overlooked. Given the leeway accorded to the Defendant, it was only right that the Plaintiff be accorded an opportunity to rebut the Defendant’s contention. After verification the Plaintiff’s witness was able to explain the existence of the second and third legal charge satisfactorily. It is evident and I so find, that these charges are not in respect of the current

 

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facility sought to be recovered but for other facilities afforded to the Company.

 

In the context of this second legal charge, the Defendants made several submissions. The Defendants maintained that the Plaintiff ought to have pleaded the existence of the second legal charge and that the failure to do so was fatal, relying on UMBC v Palm &Vegetable Oils M9831 1 MLJ 206. It is evident from the foregoing that as my finding is that the subject property does not comprise security for the facility forming the subject matter of this suit, the Plaintiff had no duty to so plead. In fact to so plead would have been erroneous. As such this contention is without merit. As stated above, it is relevant that the Defendants themselves made no such plea until days prior to the trial. This was the case because the said shoplot is not security for the subject loan facility.

 

The Defendants also contended that the express words in the individual guarantee executed by D2 and D3 stipulate that all securities now or at any time held by the Bank are to be treated as security for the general balance. This clause therefore enables the Bank to realize any security held by it and apply the proceeds thereof towards reducing any indebtedness. While this affords the Bank the option to utilize such proceeds of realization, should they be available, this does not render the shoplot security for the current facility. In any event as explained below there is no evidence before the Court that the Plaintiff has received any monies from the auction sale of this property which it could seek to apply to reduce the Defendants’ indebtedness. Therefore this contention is also without merit.

 

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Issue (b):- In any event are there proceeds of sale from the auction sale of this property available to the Plaintiff as the second legal chargee?

 

Even if I am wrong in my conclusion above it is evident from the evidence now available to this Court that there are no proceeds for sale which have been made available to the Plaintiff or which are proposed to be so made. Exhibit P-1 discloses that another bank enjoys priority over the Plaintiff and its claim greatly exceeds the quantum of monies recovered from the auction sale. Accordingly there are no monies which have been received or to be received by the Plaintiff in respect of the reduction of the current facility. Accordingly this cannot be taken into account.

 

Issue (c):- Are the letters of demand issued to the guarantors, i.e. D2 and D3 deficient or defective?

 

Contention that sum claimed under notices of demand issued is incorrect; omission to specify agreement under which monies were disbursed

 

The Defendants contend that the letters of demand issued to both the borrower Company and the guarantors are deficient and therefore defective in several ways. First they maintain that the letters of demand claim the sum of RM741,566.29 under the overdraft facility as well as RM475,238.65 under the bank guarantee facility totaling RM1,216,864.94. However the Defendants complain that these letters of demand make no reference to

 

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two specific facilities agreements related directly to these facilities namely the facilities agreement dated 10 November 1999 and supplementary agreement dated 8 October 1999. As such it is maintained that the failure to mention these agreements renders the notice defective. Although the Plaintiff’s solicitors wrote to the Company subsequently in March 2004 making reference to these two latter agreements, the Defendants maintain that this does not rectify the original letters which are effectively nullified by their omission to stipulate the precise agreements under which those monies were disbursed.

 

The Plaintiff in response maintains that as there was a rectification of the original letters of demand the letters are not rendered defective.

 

The fact that the letters of demand issued by the Plaintiff’s solicitors initially omitted mention of the agreements under which the overdraft facility and bank guarantee facility were disbursed does not in itself render those demands defective or deficient. The purpose of a notice of demand is to put the borrower and guarantor on notice that the Bank seeks a return of monies due and owing to it, failing which further steps will be taken to recover those monies. The demand therefore serves as notification of this fact. It is not a requirement albeit in the loan documentation or elsewhere that the claimant must set out with full particulars all details in relation to the loan afforded. To impose such a requirement would be to inflict a considerable burden on the party seeking to recover monies due. It would be akin to enforcing rigid requirements prior to the recovery of a debt. There is no such contractual requirement in the loan agreement or the guarantees and therefore no basis for this Court to impose such a rigid

 

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requirement. It appears that the Company and the guarantors knew or ought to have known the basis for the letters of demand. It was also open to them at all times to make the necessary enquiries of the Plaintiff if any doubts arose. Further there was clarification a few days later. In all these circumstances I cannot agree that the notice of demand either to the Company or the guarantors was rendered defective.

 

Failure to wait for seven days to lapse before issuance of notice of demand to guarantors

 

The next contention put forward by the Defendant is that the notices of demand are defective because the Plaintiff after issuing the first notice of demand to the Company on 20 January 2004 ought to have waited for seven days to expire prior to issuing demands to the guarantors. Their contention is that the Company only breached its obligation to repay seven days after the issuance of the notice of demand on 20 January 2004. Accordingly they maintain that notices should only have been issued to the guarantors well after the lapse of seven days, approximately on or after 30 January 2004.

 

This contention is flawed because there is nothing in the agreements again that precludes the Plaintiff from issuing notices simultaneously to the borrower and guarantors. It is incorrect to state that the Company only breached its obligation to repay seven days after the issuance of the notice of demand on 20 January 2004. The breach of the Company’s obligations to repay arose considerably earlier when they conceded themselves in

 

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October 2003 that they had failed to effect the requisite repayments so as to maintain their facilities in order. The breach did not therefore arise after the issuance of the letter of demand. The letter of demand sought rectification of a breach which had occurred considerably earlier.

 

As such there is no defect or flaw on the part of the Plaintiff in issuing simultaneous demands to the Borrower and the guarantors. This contention also lacks merit.

 

Error in quantum claimed in the notices of demand is fatal

 

Finally the Defendants claim that the quantum claimed in the notice of demand is wrong and that such error is fatal because the Defendants need to know precisely the quantum claimed by the Plaintiff. A perusal of the demands show that the Plaintiff sought repayment of monies due under the overdraft facility amounting to RM741,566.29 as well as a return of the bank guarantee facility amounting to RM475,238.65. However this latter facility had expired as of August 2003, so there were no actual monies sought under the bank guarantee facility. In other words it is erroneous of the Defendants to contend that the Plaintiff sought the recovery of a total of RM1,216,804.94. At all times the Plaintiff sought the return of the bank guarantee facility which had expired for cancellation. So the quantum of money sought at all times was RM741, 566.29. And this indeed was the sum claimed in the statement of claim prior to amendment, namely the monies due under the overdraft facility. It is therefore incorrect to contend that there was between the issuance of the notices of demand and the filing

 

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of the writ any change in the sum due and owing from the Defendants to the Plaintiff. At all times the quantum of monies due and claimed was under the overdraft facility. Therefore the contention that the notices of demand were defective for this reason is also without merit.

 

Failure to issue a fresh demand after realization of security

 

The further point raised by the Defendants is that the Plaintiff failed to issue a fresh notice of demand after it amended the Statement of Claim to take into account the reduction in the quantum claimed as a consequence of the set-off of fixed deposit monies which were uplifted. The Defendants basically contend that the Plaintiff ought to have set out a fresh notice for the reduced sum then due. There is however no requirement in law or under the contracts of loan or guarantee for such a fresh demand to be issued. The original demand when sent out was accurate because at that time the quantum due and owing was as set out there. The Defendants rely on the case of Public Finance v Natcom Communications [1997] MLJU 319 in support of their contention that the Plaintiff’s claim ought to be dismissed by reason of the foregoing ‘defects’ in the demand issued to D2. However a perusal of that case reveals that in that case the bank not only failed to establish the guarantee on which its cause of action against the defendants there rested, but also failed to establish whether a proper notice of demand under the guarantee was issued to the defendants. In those circumstances the plaintiff’s case there was dismissed. It is entirely distinguishable from the facts here where there is no dispute that the guarantee was executed by D2 and that a notice of demand setting out the

 

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correct sum due at the material time, was issued to D2. As such there is no basis here for dismissing the Plaintiff’s claim on that basis.

 

Issue (d):- Is the Certificate of Indebtedness issued by the Bank erroneous and if so, does such error affect the accuracy of the certificate and the conclusive nature of the quantum stated to be due and owing by the Plaintiff?

 

The Defendants contention is that the Certificate of Indebtedness or Statement of Account issued by the Plaintiff is wrong. In the course of evidence the Defendants made reference to a statement of account at page 3 of BOD2 which they contrasted with the Statement of Account at page 132 of BOD1. A perusal of both these documents discloses that they are identical in every respect save that the Base Lending Rate differs. At page 132 the BLR effective 26 May 2003 to 31 August 2005 is stated to be 6% while at page 3 of BOD2, the BLR effective 26 May 2003 is stated to be 6.4%.

 

In the course of his evidence, PW-1 explained that the Bank had produced both documents and that the one at page 3 of BOD2 contained a typographical error and that therefore this document had been withdrawn immediately and replaced with the account at page 132 of BOD1. In the course of cross-examination, PW-1 maintained that this was a typographical error and there is no reason to disbelieve him. More importantly that typographical error has no effect on the quantum claimed from the Defendants because in both documents the amount outstanding

 

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as at 31 August 2005 is stated to be RM639,567.60. The Defendants were therefore in no way misled or prejudiced by the said typographical error. There has also not been shown to be any mistake in the computation by the Bank.

 

In the course of cross-examining PW-1, the Defendants did produce their own computation of the quantum due and owing by them to the Bank, Exhibit D-1. Their computation disclosed that the difference between that computed by the Bank and themselves differed by only RM4555.97. PW-1 accepted that the Plaintiff was prepared to accept the sum of RM639,567.60 less the sum of RM4555.97 i.e. RM635,011.63. Therefore the contention that the Certificate of Indebtedness is so flawed that it cannot be relied upon, affords no defence to this claim and stands dismissed. The Defendants concede by virtue of Exhibit D-1 that a sum of RM635,011.63 is due and owing to the Plaintiff.

 

Issue (e):- Did the Plaintiff comply with the requirements in the facility agreements in relation to the variation of the rates of interest for this loan?

 

The Defendants also contend that the Plaintiff failed to comply with the requirements in the facility agreements vis a vis communicating the variation in the rates of interest for this loan. However a perusal of the letter at page 131 of BOD1 shows that on 12th December 2003, the Bank wrote to the 1st Defendant stating that with effect from 13 December 2003, i.e. the following day, the interest rate for the overdraft facility would be revised to

 

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3.5% above BLR. This letter was moreover copied to D2 and D3. As such it would appear that there has been compliance with the terms and conditions set out in the facility agreements as the borrower or the Company was duly notified of the change in interest rates. PW-1 stated that it was not the Plaintiff’s normal practice to keep guarantors informed of this change in interest rate. A perusal of the relevant agreements discloses that there is no duty on the part of the Plaintiff to keep the guarantors advised of the change in the interest rates. The Plaintiff only contracted with the borrower, i.e. the Company to keep the Company advised of such changes. As such even if there had been no issuance of such notification of variation to the guarantors this would not have been fatal or defective. In the instant case however there appears to have been issuance of such notification to D2 and D3. Accordingly it appears that there has been compliance with the requirements of the facility agreements in relation to the variation of the rates of interest for this loan.

 

Issue (f):- Failure to particularize the breakdown of the claim

 

The Defendants contend that the Plaintiff’s statement of claim is defective because it makes claim for a global sum which has not been particularized. Relying on Wharf Properties Ltd. V Eric Cumine Associates and Ors (No. 2) 52 BLR 8 the Defendants maintain that the claim is an insufficient pleading.

 

It is evident that the Plaintiff’s claim against the Defendants is for recover of monies loaned under one facility, namely the overdraft facility. There is

 

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nothing further that requires particularization as the claim is in respect of that one facility and no other. There can be no further particularization. In Wharf Properties (above) the Court concluded that the pleading there was insufficient because there was no way in which the defendant was able to ascertain with any precision what the case is that was being made against them. That is most certainly not the case here where the Plaintiff’s case against the Defendants is amply evident from the statement of claim. The said case is simply not applicable on the facts of the instant case. This contention is entirely without merit and stands dismissed.

 

In conclusion the Defendants, i.e. the Company and D2 have shown no reasonable defence to the claim made against them by the Plaintiff. Accordingly I allow judgment for the Plaintiff against the 1st Defendant as borrower and the 2nd Defendant as guarantor in the sum of RM563,598.86 as at 30 April 2004 together with interest on the said sum at 3.5% above BLR on daily rests from the date of issuance of the writ until the date of judgment and thereafter at 8% per annum as well as costs of RM40,000-00. The claim against the 3rd Defendant is struck off.

 

Nallini Pathmanathan J. 2nd April 2010

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