Affin Bank Bhd V Europlus Bhd. & 1 Lagi


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The Plaintiff is seeking to enter summary judgment against the 1st and 2nd Defendant pursuant to O.14 Rules of the High Court 1980 application as per Enel 4. The application is supported by an affidavit affirmed on 6.2.2009.




By a letter of offer dated 28.3.1994 the Plaintiff granted to the 1st Defendant an Overdraft and a Revolving Credit Facilities amounting to RM5 million (“Credit Facilities”). The Credit Facilities were subject to certain terms and conditions. The terms and conditions were duly accepted by the 1st Defendant. The said Credit Facilities are repayable on demand. At the request of the 1st Defendant the Plaintiff by way of another Letter of Offer dated 12.12.1995 agreed to enhance the limit of the Credit Facilities increasing it to RM11million.


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The Credit Facilities were further renewed by Letters of Offer dated 4.12.1998 and 9.3.2005.One of the considerations for the renewal under


the Letter of Offer dated 9.3.2005 was the requirement that the 2nd Defendant provide a personal guarantee to guarantee the full payment of all outstanding sums under the Credit Facilities and that the 1st Defendant was to repay the Credit Facilities to reduce the principal sum on a gradual basis in accordance to a Schedule commencing on 31.3.2005. All other terms and conditions remaining the same. A Guarantee was executed by the 2nd Defendant dated 6.4.2005 and the Credit Facilities were thus renewed. However the 1st Defendant defaulted in payment and at the request of the Defendant the Credit Facilities were restructured and a Letter of Offer dated 26.1.2006 was issued and duly accepted by the 1st Defendant.


As a consideration to the terms of the Restructuring a 3rd party 3rd legal charge over a property held under Geran No. 44761, Lot 9012, Seksyen 20 Daerah Ulu Selangor, Negeri Selangor was created as security for the said Credit Facilities and was created by the 3rd party, Juara Tiasa Sdn. Bhd. on 2.7.2007. The full terms and conditions of the said Term Loan were set out in the Facility Agreement dated 2.2.2007.


The Term Loan of RM10,585,562.00 was fully disbursed on 18.12.2007 which completely paid the outstanding Revolving Credit in the sum of RM10,524,909.67 and the partially paid off the Overdraft in the sum of RM60,652.33.There was however an outstanding sum of RM2,004,487.99 in the Overdraft account which despite the demands for payment by the Plaintiff the 1st Defendant failed to make pay the sum


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demanded. The Plaintiff then initiated this action claiming for the following:


i. the excess sum of RM2,062,518.02 due as at 30.6.2008 together with interest thereon at the rate of 3.5% per annum above the BLR calculated on a daily basis monthly rests from 1.7.2008 to date of full payment;


ii. the sum of RM10, 763,915.09 under the Term Loan Facility together with overdue interest at the rate of 4%per annum above the BLR calculated on a daily basis monthly rests from 1.7.2008 to date of full payment.


The Defendant contends that there are triable issues namely:-


i. that the Guarantee is not supported by a good consideration;


ii. that the Plaintiff had not relied on the Guarantee dated 9.3.2005; and


iii. the Loan had been settled.


The Affidavits filed clearly show that the guarantee was supported by good consideration. The Credit Facilities were fully utilized and the 2nd Defendant, the director of the Company had duly signed and therefore subjected himself to the terms and conditions of the said Guarantee.


The 2nd Defendant contended that the Credit Facilities was approved on 9.3.2005 and the Guarantee was executed on 6.4.2005 and therefore at the time the Guarantee was given there was no consideration. However, from the facts set out and the documents exhibited in the Affidavit in Support the Guarantee further sets out in detail the terms and conditions


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which the Plaintiff and the 2nd Defendant had agreed upon in the Letter of Offer. In the recent case of Affin Bank Berhad v. Percision Tube Product (Malaysia) Sdn. Bhd. [2010] LNS 98 it was held that in deciding whether consideration is past, the court should not take a strictly chronological view if the consideration and the promise are in actual fact the same transaction. In the case of Hong Kong and Shanghai Banking Corporation v. Syarikat United Leong Enterprise Sdn. Bhd. & Anor [1993] 2 MLJ 66 it was held that past consideration could still be good consideration,


“Past consideration could still be good consideration even if the benefit was not given at the time of the execution of the guarantee in a one-off transaction provided the benefit that was given before the execution of the guarantee was given ‘at the desire’ of the guarantor.”


In this case the Letter of Offers and the Guarantees were part of the same transaction and were duly accepted and executed by the Parties.


The 2nd Defendant also contended that as the 1st Defendant had fully settled the Loans and therefore the 2nd Defendant is not liable. The Certificate of Indebtedness produced by the Plaintiff however shows otherwise. Since there is no manifest error shown therefore the said Certificate shall form final and conclusive evidence of the indebtedness of the 2nd Defendants to the Plaintiff. The law in this respect is well settled as can be seen in the Federal Court decision in Cempaka Finance v. Ho Lai Yin [2006] 2 MLJ 685.


In Bank Negara Malaysia v. Mohd Ismail [1992] 1 CLJ 627 the


Supreme Court held that the duty of a Judge does not end as soon as the fact is asserted by one party, or denied or disputed by the other on


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affidavit. The Judge has a duty to reject such assertion or denial if such assertion or denial is equivocal or lacking in precision or is inconsistent with undisputed contemporary documents or is inherently improbable.


“….Under an O.14 application, the duty of a Judge does not end as


soon as a fact is asserted by one party, and denied or disputed by the other on affidavit. Where such assertion, denial or dispute is equivocal or lacking in precision or is inconsistent with undisputed contemporary documents or other statements by the same deponent or is inherently improbable in itself, then the Judge has a duty to reject such assertion or denial, thereby rendering the issue as not triable. In our opinion, unless this principle is adhered to, a Judge is in no position to exercise his discretion judicially under an O.14 application. Thus, apart from identifying the issues of fact or law, the Court must go one step further and determine whether they are triable. This principle is sometimes expressed by the statement that a complete defence need not be shown. The defence set up need only show that there is a triable issue.”


Having considered the affidavits filed and the submissions by both Counsels, and applying the principle expounded in the aforesaid case I find that this is an appropriate case for Summary judgment against the 2nd Defendant and therefore the application by the Plaintiff in Encl. 4 is allowed with cost.




Judicial Commissioner


High Court of Malaya at Kuala Lumpur.


12 May 2010


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