IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR IN THE FEDERAL TERITORY OF KUALA LUMPUR SUIT NO : 22M – 170 – 10/2015
KUWAIT FINANCE HOUSE (MALAYSIA) BERHAD
(NO. 672174-T) … PLAINTIFF
KOPERASI PERKHIDMATAN BERHAD
(W-5-0401) … DEFENDANT
GROUNDS OF DECISION
Azizah Nawawi, J:
 Enclosure  is the Plaintiff’s application for Summary Judgment pursuant to Order 14 of the Rules of Court 2012, to be entered against the Defendant in respect of a Murabahah Tawarruq Working Capital Financing-I facility granted by the Plaintiff to the Defendant, for a sum of RM10,824, 141.38 as at 30.9.2015 with a compensation fee at the Plaintiff’s current Islamic Money Market rate (the Plaintiff’s 12 months gross profit or R-rate) per annum on the balance Deferred Sale Price of RM10,824,141.38 on a non-compounded basis from 1.10.2015 until final settlement.
The grounds of the application are:
(i) that the Plaintiff has granted to the Defendant, who had duly utilised the Murabahah Tawarruq Working Capital Financing-I facility; and
(ii) that the Defendant has defaulted in its obligations to make full payment of the monies due to the Plaintiff in respect of the Murabahah Tawarruq Working Capital Financing-I facility and that the Defendant has no defence to the Plaintiff’s claim herein.
 The Plaintiff’s application for summary judgment was allowed by this Court.
Salient Facts of the Case
 The facts, as narrated in the written submission of the parties shows that the Plaintiff is an Islamic Financing Institution incorporated in Malaysia and the Defendant is a co-operative society and is in the business of providing loans to its members, who are the civil service employees.
 Pursuant to Letters of Offer dated 27.8.2007, 18.12.2007, 8.9.2008 and 19.10.2011 issued by the Plaintiff and duly accepted by the Defendant, the Plaintiff granted to the Defendant a revolving
Murabahah Tawarruq Working Capital Financing-I facility (‘Murabahah Tawarruq Facility’) of RM15,000,000.00, which was subsequently increased to RM65,000,000.00 and thereafter reduced from time to time to RM18,720,000.00 (‘the Initial MTQ Facility’) on the terms and conditions therein.
 Following the Letters of Offer, the Plaintiff and Defendant entered into, inter alia, the following agreements:
(i) Murabahah Tawarruq Facilities Agreement dated 4.10.2007; and
(ii) Supplemental Murabahah Tawarruq Facilities Agreement dated 22.1.2008.
 The initial MTQ Facility was secured by, inter alia, the following securities furnished by the Defendant in favour of the Plaintiff:
(i) a Deed of Assignment over Receivables dated 4.10.2007;
(ii) a Deed of Assignment of Designated Accounts (Escrow 1 and Escrow Account 2) dated 4.10.2007;
(iii) a Supplemental Deed of Assignment over Receivables dated 22.1.2008; and
(iv) a Supplemental Deed of Assignment of Designated Accounts (Escrow Account 1 and Escrow Account 2) dated 22.1.2008 (‘the Security Documents’)
 As part of the security arrangement for the initial MTQ facilities and pursuant to the Security Documents, the Defendant has agreed to the following:
(i) irrevocably and unconditionally instruct Angkasa to remit all payments (under the salary deduction system established between Angkasa and the Defendant) payable to the Defendant by its members (‘the Receivables’) to be paid directly to the Plaintiff, that is, into a collection/receivables account to be maintained with the Plaintiff, the Escrow Account 1; and
(ii) to create an Escrow Account 2 to be maintained with the Plaintiff for progressive placement by the Defendant of a deposit equivalent to 2 monthly instalment payable to the Plaintiff, to be utilised towards outstanding Deferred Sale Price.
 Therefore, from the said Security Documents, the Receivables and all claims there under have been assigned to the Plaintiff and that such Receivables would be utilized towards payment of the outstanding sum under the MTQ facility.
 At the request of the Defendant and by a Supplemental letter of Offer dated 9.7.2013, the Plaintiff agreed to restructure the outstanding sum under the Initial MTQ Facility and granted the Defendant a Murabahah Tawarruq Working Capital Financing-I Facility of RM 14,000,000.00 (“the Said MTQ Facility”), on such terms and conditions, including the provision that the security for the Initial MTQ Facility shall also be the same security for the said MTQ Facility.
 Under the said MTQ Facility and pursuant to the request of the Defendant, the Plaintiff sold palm oil related goods to the Defendant for, inter alia, a Deferred Sale Price of RM13,003,429.84, with the Defendant to pay the Deferred Sale Price by instalments, which is to be fully settled by the maturity date of 10.4.2015.
 Based on the full terms of the Agreements, the Defendant agreed with the Plaintiff, inter alia, as follows:
(i) that the defendant shall pay the Deferred Sale Price by monthly instalments according to the payment schedules;
(ii) that such Deferred Sale Price shale include profit at the rate of 2.00% above the Plaintiff’s Base Financing Rate per annum at the relevant purchase transaction date;
(iii) that in the event of default by the Defendant under the Murabahah Tawarruq facilities to the Plaintiff, the Deferred
Sale Price shall be immediately payable to the Plaintiff upon demand; and
(iv) that the Defendant shall pay the Plaintiff compensation fee (at ta’widh) at the rate of 1% per annum for all overdue instalment payments on a non-compounded basis for a period before maturity/termination of the Facility and thereafter at the Plaintiff’s current Islamic Money Market Rate on the balance Deferred Sale Price on a non-compounded basis.
 Subsequently, the Defendant has defaulted in payments on the due dates in respect of the Deferred Sale Price under the said MTQ Facility, and is in breach of its obligations there under.
 The Plaintiff vide its solicitors had issued a letter dated 14.7.2015 to the Defendant declaring that an Event of Default had occurred and that payment of all monies under the said MTQ Facility was immediately due and payable to the Plaintiff and demanding full payment of the same.
 Despite demands made by the Plaintiff, the Defendant failed to settle the outstanding sums due and owing to the Plaintiff with compensation due to the Defendant’s breach of its obligations. Instead, the Defendant responded by way of its letter of 3.8.2015 admitting that there was delay in payment of the monthly instalments but the default was due to deficiencies in the collection of the Receivables.
 The Plaintiff had subsequently issued a letter through its solicitors dated 19.8.2015 to the Defendant, stated that the deficiencies in the Receivables would not absolve the Defendant of its payment obligations and reiterated the Defendant’s liability to the Plaintiff.
 Pursuant to the terms and conditions of the Agreement, the Plaintiff had exercised its rights under the Assignment of Designated Accounts, whereby the Plaintiff had uplifted the monies therein and utilized the sum of RM539,145.90 in Escrow Account 1 and RM795,386.20 in Escrow Account 2 on 29.7.2015 to reduce the amount of indebtedness due and owing by the Defendant under the said MTQ Facility.
 On 30.9.2015, the Plaintiff further uplifted a sum of RM353,858.12 from Escrow Account 1, being monies credited via Angkasa after the first upliftment, for the same purpose. The Plaintiff alleged that the Defendant is indebted to the Plaintiff in connection with the said MTQ Facility in the sum of RM10,824,141.38 as at 30.9.2015 being the outstanding Deferred Sale Price due to the Plaintiff, with a compensation fee at the Plaintiff’s Current Islamic Money Market rate per annum on the balance Deferred Sale Price on a non-compounded basis from 1.10.2015 until full settlement.
The Findings of the Court
 In an application for summary judgment, this Court is guided by the principles laid down in National Company for Foreign Trade v. Kayu Raya Sdn Bhd  2 CLJ 220, where it was stated by the Federal Court as follows:
”… We think it appropriate to remind ourselves once again that in every application under O. 14, the first considerations are (a) whether the case comes within the order and (b) whether the plaintiff has satisfied the preliminary requirements for proceeding under O. 14. For the purposes of an application under O. 14, the preliminary requirements:-
(i) the statement of claim must have been served on the Defendant;
(ii) the defendant must have entered an appearance;
(iii) the affidavit in support of the application must comply with the requirements of r. 2 of the O. 14
… If the Plaintiff fails to satisfy either of these considerations, the summons may be dismissed. If however, these considerations are satisfied, the plaintiff will have established a prima facie case and he becomes entitled to judgment. This burden then shifts to the defendant to satisfy the court why judgment should not be given against him…”
 In the present case, the Plaintiff had satisfied the preliminary requirements as laid down in the Kayu Raya’s case that is:
the Statement of Claim have been served on been served on the Defendant;
(ii) the Defendant have entered appearance; and
(iii) the Affidavit in Support is in compliance with O. 14 r. 2 ROC 2012.
Therefore, the burden is then shifted to the Defendant to satisfy the Court why Judgment should not be entered against them.
 In Bank Negara Malaysia v Mohd Ismail  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 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. The Court will have to identify the issues of fact or law and to determine whether they are triable.
 Having considered the affidavits and the submission of the parties, I am of the considered opinion that the Plaintiff has established a prima facie case as it is not in dispute that the Defendant had defaulted in payment on the due dates to the Plaintiff in respect of the Deferred Sale Price under the said MTD Facility.
 Added to that, the Defendant in its letter dated 3.8.2015 has admitted that it had breached its payment obligation:
“Kelewatan bayaran ansuran bulanan Koperasi kepada Bank bukanlah disengajakan tetapi ianya bersangkut paut dengan potongan pembiayaan anggota yang tidak dikutip.”
 Therefore, the burden lies with the Defendant to raise triable issues which would require the case to proceed with trial. The Defendant raised the following issues in its written submission:
(i) that the Plaintiff ought to have produced its solicitors letter dated 25.8.2015 in its supporting affidavit;
(ii) that the Plaintiff has failed to furnish the Defendant with financial documents as it requested to enable the Defendant to prepare the explanation for the drop in Receivables; and
(iii) that the Plaintiff should realize its security before declaring an event of default.
Issue (i) letter dated 25.8.2015
 It is the Defendant’s contention that it is trite law that in summary judgment applications, all documents/facts supporting the litigant’s claim must be produced/disposed at the initial stage and not by instalment. The Defendant’s complain is that the Plaintiff’s Solicitor’s letter dated 25.8.2015 was not exhibited in its supporting affidavit but was produced in the Plaintiff’s corrective affidavit after the Defendant had exhibited the same in its Affidavit in Reply. Thus the
Defendant submits that the failure to exhibit this letter from the initial stage, in the supporting affidavit instead of the corrective affidavit, amounts to a triable issue.
 On this issue, I fail to see how the failure of the Plaintiff to disclose this letter at the initial stage can be a triable issue. If the Defendant is relying on this letter, then it may disclose the same. But to proceed on a full trial, just to ascertain the reason for the timing of the disclosure of a document, is clearly misguided.
Issue (ii) failure to furnish documents
 The Plaintiff’s Solicitor’s letter dated 25.8.2015 was issued to the Defendant demanding an explanation for the reduction in the Receivables beginning from the year 2007 and for an updated list of the Receivables and the status of payments.
 The Defendant has submitted that it has furnished the explanation required in their letters dated 4.6.2015 and 3.8.2015 where it has notified the Plaintiff that the reduction in the Receivables is caused by the uncollected deduction of the Plaintiff’s members funding.
 The Defendant further submit that it is unable to complete and furnish the complete updated list as it did not receive the financial documents from the Plaintiff, which are in the possession of the Plaintiff.
 However, I agree with the Plaintiff that the Defendant’s complaint that the Plaintiff has failed to furnish the Defendant with financial documents as it requested to enable the Defendant to prepare the explanation for the drop in Receivables is not a triable issue as the Defendant had issued a letter dated 3.8.2015 admitting that there was delay in payment of the loan instalments. Clause 5 of the Supplemental Letter of Offer dated 9.7.2013 for the said MTQ Facility clearly provided that the non-payment by the due date of the amount will result in the indebtedness under the MTQ Facility to become immediately due and payable.
 Added to that, the Defendant’s liability to settle the outstanding sum under the said MTQ Facility is not dependent on the report on the reduction of the Receivables.
Issue (iii) that the Plaintiff should realize its security before declaring an event of default.
 It is the submission of the Defendant that the Plaintiff’s action in declaring that an event of default had occurred on 14.7.2015 and demanding the payment of all monies under the said MTQ Facility so soon after the issuance of the Murabahah Letter of Acceptance and Offer on 12.1.2015 and also before the Defendant could prepare the said list is invalid and unreasonable.
 However, I am of the considered opinion and I agree with the Plaintiff that the Plaintiff’s declaration of an event of default was in
accordance with clause 2.9.1 of the Murabahah Tawarruq Facilities Agreement dated 4.10.2007 and the Supplemental Murabahab Tawarruq Facilities Agreement dated 22.1.2008 which requires the Defendant to pay the Deferred Sale Price on the respective payment dates and in the amount set out in the Murabahah Letter of Acceptance and Offer. As stated in the Murabahah Letter of Acceptance and Offer, the Deferred Sale price of RM13,003,429.84 was payable by the Defendant to the Plaintiff as follows:
(i) 25.2.2015 RM671,148.60
(ii) 25th day of the subsequent month RM223,716.20
(iii) on or before the maturity date RM12,108,565.04
 It is not in dispute that the Defendant has defaulted in payment of the Deferred Sale Price on the due dates to the Plaintiff and is therefore in breach of its obligations under the agreement.
 Therefore, pursuant to Clause 12 and Schedule 4 of the Murabahah Tawarruq Facilities Agreement, (which provides that it is an event of default upon the occurrence of, inter alia, default by the Defendant in payment of any sums/instalments due under the facilities) an Event of Default has occurred.
 Added to that, clause 12.2 also provides that upon the occurrence of an Event of Default, the Plaintiff may declare such an event and shall have the right to accelerate the payment of the Deferred Sale
Price and to require the Defendant to immediately pay the Deferred Sale Price or the balance thereof.
 In the premise, I am of the considered opinion and I agree with the Plaintiff that the Defendant’s contention that the Plaintiff should not have declared an event of default as soon as the issuance of the Murabahah Letter of Acceptance and Offer dated 12.1.2015 is untenable and does not amount to a triable issue. The Plaintiff’s declaration of an event of default was in accordance with the terms and conditions of the Agreements.
 It is also the submission of the Defendant that the Plaintiff should have uplifted the Monies in the Escrow Accounts first before declaring the Event of Default had occurred. As such, the Defendant contended that the Plaintiff’s action is wholly unreasonable.
 It is not in dispute that the terms for governing the utilization of the monies in Escrow Accounts 1 and 2 are contained in the Agreements and Security Documents, in particular the Assignment of Designated Accounts dated 4.10.2007. It is expressly agreed that the Plaintiff shall be entitled to deal with the monies in Escrow Accounts 1 and 2 and apply the same towards reduction of the outstanding Deferred Sale Price only upon the declaration of an Event of Default. Clause 12.3 of the Murabahah Tawarruq Facilities Agreement provides that:
“ Notwithstanding the foregoing and other provision to the contrary herein contained, upon KFHMB declaring that an Event of Default has occurred, the Customer shall be required to immediately pay the Secured Amounts and the Customer hereby waives any necessity for the presentation or further demand, notice or dishonour or protest and KFHMB may immediately enforce any or all remedies provided under the Security Documents, Provided That, any action taken by KFHMB shall be without prejudice to the rights of KFHMB to enforce any other claims against the customer.”
 Added to that, clause 2.3 of the Assignment of Designated Accounts clearly provides that at any time following a declaration of an Event of Default by KFHMB, “…KFHMB shall, without further notice or reference to the Assignor be entitled to withdraw any monies standing the credit of the Escrow Account 1 and Escrow Account 2 and shall apply such monies towards the payment of the facilities.”
 Therefore, premised on the provisions above it is not correct for the Defendant to submit that the Plaintiff should have utilized the monies in the Escrow Accounts first before declaring the event of default had occurred. The contractual provisions require the Plaintiff to declare an Event of Default before it can withdraw the monies in the escrow accounts towards payment of the facilities.
Certificate of Indebtedness
 The Federal Court in Cempaka Finance Bhd v Ho Lai Ying (Trading as KH Trading) & anor  2 MLJ 685 held that a Certificate of Indebtedness is conclusive proof unless the Defendant can show any manifest error on the face of the Certificate or an element of fraud. In the present case, under clause 11 of the Assignment Over Receivables, clause 8.11 of the Assignment of Designated Accounts and clause 6 of the Supplemental Letter of Offer dated 9.7.2013, the Defendant has agreed that any statement issued by the authorized officer of the Plaintiff, as to the amount of monies due and owing by the Defendant to the Plaintiff, shall be deemed to be accepted by the Defendant as final and conclusive for all purposes including legal proceedings.
 The Plaintiff had produced its Statement of Indebtedness dated 30.9.2015, showing the amount due and owing by the Defendant under the said MTD Facility and claimed by the Plaintiff herein. The Defendant has not disputed the amount in the Statement of Indebtedness produced by the Plaintiff. As such, I am of the considered opinion that Statement dated 30.9.2015 is final and conclusive and binding upon the Defendant and that the amount claimed is correct.
 Premised on the reasons enumerated above, I find that this is a proper case for summary application and allow the Plaintiff’s application with costs.
(AZIZAH BTE HAJI NAWAWI) JUDGE
HIGH COURT MALAYA (Commercial Division) KUALA LUMPUR
Dated: 17 June 2016
For the Plaintiff : G C Tan and K K Lum
Messrs Shook Lin & Bok Kuala Lumpur.
For the Defendant : Balraj Singh
Messrs Balraj Singh & Co Kuala Lumpur.