DI DALAM MAHKAMAH TINGGI MALAYA DI JOHOR BAHRU
DI DALAM NEGERI JOHOR DARUL TAKZIM
GUAMAN SIVIL NO. (MT-1) 22-210-2001
(consolidated with Civil Suit 22-207-2001 by an order dated
02.11.2010)
ANTARA
HONG LEONG FINANCE BHD
(No. Syarikat: 7797-V)
…PLAINTIF
DAN
PUA KENG SIANG
…DEFENDAN
DI DALAM MAHKAMAH TERBUKA
DI HADAPAN Y.A. VERNON ONG
HAKIM
GROUNDS OF JUDGMENT
The plaintiff’s claim is for RM343,847.11 and RM369,795.18 being
the amounts due and outstanding under two credit facilities granted to the
defendant.
Brief account of the facts
Under a letter dated 14.1.1997, the plaintiff approved and the
defendant accepted a Easyhome Credit facility of RM285,000.00 (‘the 1st
Facility’). In consideration thereof, the defendant executed a Facility
Agreement dated 17.1.1997. The 1st Facility was also secured under a
First Party legal charge on a 1½ storey workshop. Pursuant to a letter
dated 24.4.1997, the plaintiff further granted to the defendant another
Easyhome Credit facility of RM270,000.00 (‘the 2nd Facility’). As security
Page 1 of 8
for the 2nd Facility, the defendant created a First Party legal charge over
another 1½ storey workshop. The defendant defaulted in the repayment of
the facilities. The two charged properties were sold by the defendant under
private treaty with the consent of the plaintiff.
Plaintiff’s case
The defendant defaulted in the repayment of the credit facilities.
Consequently, the plaintiff issued a notice dated 1.9.2000 terminating and
recalling the facilities and demanding payment of the outstanding sum due
and owing.
The plaintiff agreed to the defendant’s proposal to dispose the
charged properties by private treaty for RM250,000.00 each. As the
proceeds of sale were insufficient to cover the principal sum, the plaintiff’s
solicitors issued a notice of shortfall dated 9.9.2003 demanding the balance
due. The plaintiff rejected the defendant’s proposal to settle only the
balance principal sum of RM55,000.00.
Defendant’s defence
The main plank of the defence is that a settlement or compromise
was reached through negotiations evidenced by contemporaneous
correspondences with the plaintiff’s senior manager one Yau Yin Wee.
Under the settlement, it was agreed that:
(i)
(ii)
(iii)
the plaintiff would accept the principal sum of RM555,555.00
as full and final settlement of the plaintiff’s claim against the
defendant;
the plaintiff would consent to the defendant disposing the
mortgaged properties at RM500,000.00 and the proceeds
thereof would be paid to the plaintiff in part settlement of the
principal loan sum; and
the defendant would settle the balance of the principal loan sum
amounting to RM55,000.00.
Pursuant thereto, the defendant sold the properties for
RM480,000.00. The defendant paid the shortfall of RM20,000.00 to the
plaintiff. When the defendant requested to pay the balance loan sum of
RM55,000.00 by instalments, the plaintiff reneged on the settlement or
Page 2 of 8
compromise and continued with the civil suits. The plaintiff is therefore
estopped from enforcing its claim
In the alternative, it is also contended that the plaintiff failed to furnish
the following notices to the defendant prior to instituting the actions herein:
(i)
(ii)
(ii)
notices of termination;
notice recalling the facilities; and
notice varying the base lending interest.
Findings of the Court
On the pleaded facts the principal issues to be tried relates to (1)
whether there was a settlement or compromise between the plaintiff and
the defendant for the payment of RM55,000.00 in settlement of the
plaintiff’s claim?; (2) whether the plaintiff issued the notice of demand,
notice of recall and notice of termination to the defendant pursuant to the
facility agreements?; (3) whether the plaintiff notified the defendant of the
change of the base lending rate?; and (4) whether the plaintiff’s claim is
substantiated?
(1) Whether there was a settlement or compromise between the plaintiff
and the defendant for the payment of RM55,000.00 in settlement of the
plaintiff’s claim?
In law the burden of proof as to any particular fact lies on the party
who wishes to make the court believe in its existence (s 103 Evidence Act
1950; Karam Singh v PP [1967] 2 MLJ 25, 28 FC). There is no burden on
the opposing party to disprove it (Eastern Enterprise Ltd v Ong Choo Kim
[1969] 1 MLJ 236). In this instance it is the duty of the defendant to
produce the necessary evidence in proof of his allegation there was a
settlement.
The defendant’s contention is that the settlement was reached
between the defendant’s father (DW1) and PW3. DW1 testified that he
was handling the purchase of the two charged properties, the 2 loans from
the plaintiff and the subsequent sale of the two charged properties on
behalf of the defendant; the defendant (DW2) confirmed that DW1 wrote to
the plaintiff on 17.10.2000 informing that he had secured a foreign buyer for
the properties for the purchase price of RM500,000.00. Subsequently, on
Page 3 of 8
15.10.2011 DW1 wrote to the plaintiff asking for their consent for the sale of
the properties. DW1 sent two reminders to the plaintiff on 6.11.2001 and
1.12.2001. DW1 also said that he intended to settle the outstanding loan
sum from the proceeds of sale but was informed by PW3 that the plaintiff
was not agreeable unless the total principal sum of RM550,000.00 is
settled. On 9.1.2002, the plaintiff consented to the sale of the properties for
the sum of RM500,000.00. The purchaser’s solicitors wrote to the plaintiff’s
solicitors on 15.1.2002 confirming the terms of the sale which had been
agreed upon between DW1 and PW3. The plaintiff’s solicitors also wrote to
the purchaser’s solicitors on 29.1.2002 confirming the plaintiff’s consent to
the proposed sale and the redemption statement. As DW1 could not
finalise the sale transaction within the proposed time frame given by the
plaintiff, DW1 wrote to the plaintiff on 18.8.2002 requesting for an extension
of time to complete the sale. In the meantime, the purchaser’s solicitors
had written to the plaintiff’s solicitors on 16.9.2002 informing that the
defendant had executed a sale and purchase agreement with the
purchaser on 12.9.2002. The plaintiff’s solicitors wrote to the purchaser’s
solicitors on 24.9.2002 consenting to a discharge of charge for the
properties subject to full payment of the redemption sum and other
conditions.
On 25.9.2002, the purchaser’s solicitors forwarded
RM50,000.00 to the plaintiff’s solicitors. Subsequently, on 12.11.2002
DW1 wrote to the plaintiff informing that the purchaser wanted to complete
the sale at RM480,000.00 only and that DW1 would nevertheless pay the
plaintiff RM500,000.00 within 5 months from the date of the sale and
purchase agreement together with agreed interest for the extended 2
months of RM3,334.00. On 6.6.2003, the plaintiff wrote to the purchaser’s
solicitors informing that the redemption sum due on or by 12.6.2003 was
RM456,668.00.
On 11.6.2003 the purchaser’s solicitors paid the
redemption sum to the plaintiff. Following the completion of the sale of the
properties, DW1 wrote to the plaintiff proposing to settle the balance
principal sum of RM55,000.00 by instalment payments. DW1 subsequently
received 2 letters of demand from the plaintiff’s solicitors dated 9.9.2003
demanding the short fall in relation to the two accounts. DW1 telephoned
PW3 who said that the plaintiff did not agree to the compromise reached
between PW3 and DW1. On 22.9.2003, DW1 wrote to the plaintiff
reminding of the compromise with PW3. On 20.1.2004, the plaintiff wrote
to DW2 rejecting DW1’s proposal to settle the balance principal sum of
RM55,000.00 and demanded the payment of the shortfall. DW1 replied on
26.1.2004 reminding of the compromise. On 29.1.2004, the plaintiff replied
denying the compromise and asserted that they only consented to the sale
Page 4 of 8
of the properties. DW1 replied on 6.2.2004 expressing shock and
disappointment with the plaintiff’s stand.
PW3 was the senior manager for the plaintiff. PW3 denied that there
was any settlement or compromise between him and DW1. PW3 said
DW1 made a proposal to settle the balance outstanding. PW3 agreed to
submit DW1’s proposal for headquarters’ approval. PW3 referred to the
DW1’s proposal letter dated 30.10.2001 to pay the balance of the principal
sum by 18 instalments from the date of the disposal of the charged
properties. PW3 did not orally agree to DW1’s proposal; instead he
forwarded it to headquarters for consideration.
The trail of evidence pertaining to this issue is to be found in the
chain of correspondences between the plaintiff, DW1, DW2, the plaintiff’s
solicitors and the purchaser’s solicitors. These correspondences in
question are the letters dated 17.10.2000, 15.10.2001, 30.10.2001,
26.11.2001, 1.12.2001, 15.1.2002, 29.1.2002, 9.2.2002, 18.2.2002,
16.9.2002, 24.9.2002, 25.9.2002, 27.9.2002, 11.10.2002, 12.11.2002,
6.6.2003, 11.6.2003, 27.8.2003, 4.9.2003, 9.9.2003, 22.9.2003, 20.1.2004,
26.1.2004, 29.1.2004, 6.2.2004, 17.2.2004, 27.2.2004, 11.6.2004 and
18.6.2004.
In the main, the letters written by DW1 and DW2 relates to the
defendant’s proposal to pay the balance of the principal sum of
RM55,000.00. In the same manner, the plaintiff’s letters to the defendant
consistently reiterated the plaintiff’s position that notwithstanding
consenting to the sale of the charged properties and payment of the
redemption sum, the defendant’s is still liable to pay the shortfall, interest
and other charges. The first reference to the alleged compromise appeared
in DW1’s letter dated 27.8.2003. In that letter DW1 said that PW3 agreed
that the balance of the principal sum of the two accounts can be discussed
after completion of the sale. DW1 appealed to the plaintiff for their kind
consideration to settle the balance of the debt in respect of the two
accounts. The alleged compromise further emerged in DW1’s letter dated
22.9.2003 where he said:
Refer to your client, Hong Leong Finance Berhad, Mr. Calvin Yau (Senior
manager) had promised and agreed with me (Dato’ Michael Pua) that two (2)
units workshop in Taman Desa Jaya need to be sold first at the amount of
RM500,000-00 with the condition that the purchaser must fully settle the
purchase price and he had also promised and agreed that the balance of the
Page 5 of 8
principle (sic) sum of RM55,000-00 can be discussed after the completion of
the sale. (This is verbally agreed between myself (Dato’ Michael Pua) and Mr.
Calvin Yau at his office).
In subsequent letters to the plaintiff dated 26.1.2004, 6.2.2004 and
11.6.2004, DW1 also alluded to the compromise. In reply thereto, the
plaintiff replied on 29.1.2004 stating that they only agreed on the disposal
of the charged properties whilst reserving the right to claim any shortfall,
interest and costs.
It is clear from DW1’s letter dated 22.9.2003 that what was agreed
was for the sale of the charged properties for RM500,000.00. The plaintiff
did not agree or make any commitment that payment of the balance
principal sum of RM55,000.00 would constitute full and final settlement of
the amounts due under the two accounts. In fact, it is evident in the
plaintiff’s letters that the plaintiff consistently held the defendant liable for
the short fall, interest and other charges.
On the totality of the evidence, the defendant’s assertion that there
was a compromise is not substantiated. Accordingly, the question is
answered in the negative.
(2) Whether the plaintiff issued the notice of demand, notice of recall and
notice of termination to the defendant pursuant to the facility
agreements?
The notices in question were sent by registered post and under
certificate of posting to the defendant at the defendant’s last known
address. The manner of posting is consistent with clause 4.03(b) of the
Loan Agreement and section 16.15.((d)) of the Facility Agreement. In the
premises, it is presumed that the notices reached the defendant in the
ordinary course of post (Alliance Bank Malaysia Bhd v Mukhriz Mahathir &
Another [2006] 2 CLJ 723). The defendant’s contention that he did not
receive the notices is a bare denial. In the premises, the question is
answered in the affirmative.
Page 6 of 8
(3) Whether the plaintiff notified the defendant of the change of the base
lending rate?
Pursuant to clause 7.02(a)(i) and 8.03(a)(i) of the Facility Agreements
dated 17.1.1997 and 29.4.1997, the plaintiff posted notice of such
variations in a daily national newspaper. Evidence was produced by PW1
to this effect. In the premises, the defendant’s complaint that he was not
notified of the change of the base lending rate is without merit. The
question is answered in the affirmative.
(4) Whether the plaintiff’s claim has been proven?
The defendant does not deny being indebted to the plaintiff under the
two accounts. The Statement of Accounts showing the defendant’s liability
under the two accounts was produced by the plaintiff’s senior executive
Nicholas Chua (PW1). PW1 prepared the Statement of Accounts and
confirmed that the figures therein are correct. PW1 also said that there
was no change in the interest rates saves for the base lending rates which
were revised by Bank Negara. PW1’s evidence remained consistent and
credible under cross-examination.
Learned counsel for the defendant
submitted that the plaintiff failed to amend their Statement of Claim upon
receiving the proceeds of sale of the charged properties. PW1 explained
that the statement of accounts took into account repayments made by the
defendant including the proceeds from the sale of the charged properties.
In the Statement of Accounts of both accounts, the sale proceeds have
been duly credited into the respective accounts. For the foregoing reasons,
the Court finds that the plaintiff’s claim have been proven on a balance of
probabilities.
In conclusion, the evidence clearly points to the fact that at all
material times, the defendant was indebted to the plaintiff. The defendant
made proposals to settle debt to the plaintiff. Save for consenting to the
sale of the charged properties, there was no oral agreement for the
settlement of the principal sum. The contemporaneous documents do not
corroborate DW1’s evidence. The defendant has failed to produce the
necessary evidence in proof of his allegation that there was a compromise.
Consequently, the Court finds that there was no compromise as contended
by the defendant. The plaintiff’s claim has been satisfactorily made out on
a balance of probabilities. The plaintiff’s claim is therefore allowed on the
following terms.
Page 7 of 8
(a)
(b)
(c)
(d)
RM343,883.98 calculated as at 10.1.2011;
RM369,795.18 calculated as at 10.1.2011;
contractual interest on the sums stated in para. (a) and (b) at
the rate of 0.9% + 1% above the Base Lending Rate from
11.1.2011 to the date of satisfaction on a daily rest basis.
costs to be taxed unless otherwise agreed.
(VERNON ONG)
JUDGE
HIGH COURT MALAYA
JOHOR BAHRU
DATED:
25TH APRIL 2011
COUNSEL
Ng Kian Pin and Mazni Mohamad Ikhwan - Tetuan Zaid Ibrahim & Co. Suite 31-01, Level 31,
Johor Bahru City Square, 106-108 Jalan Wong Ah Fook, 80000 Johor Bahru – for Plaintiff.
Mathews George - Tetuan Mathews George & Co. Suite 03-05, Tingkat 3, Wisma Maria, Jalan
Ngee Heng, 80000 Johor Bahru – for Defendant.
Wu Tern Yue - Tetuan Wu & Co., No. 67-A, Jalan Persisiran Perling, Taman Perling, 81200
Johor Bahru – for Defendant.
VO-j-22-210-2001/mj
Page 8 of 8