IN THE HIGH COURT OF MALAYA AT SHAH ALAM
IN THE STATE OF SELANGOR DARUL EHSAN, MALAYSIA
CIVIL SUIT NO. : MT2-22-375-1997
BETWEEN
STANDARD CHARTERED BANK
…
MALAYSIA BERHAD
PLAINTIFF
AND
1.
INTER FRESH MEAT CENTRE SDN BHD
2.
GIEVE FIROZE NANAVATI
3.
WAN KASSIM BIN AHMAD
…
DEFENDANTS
GROUNDS OF JUDGMENT
INTRODUCTION
The Plaintiff’s claim is for the sum of RM3,697,672.22 being sums
due and owing for banking facilities furnished by the Plaintiff to the 1st
Defendant pursuant to a letter of offer dated 5.10.1995. The 3rd Defendant
stood as guarantor and agreed to guarantee all sums due and owing to the
Plaintiff by the 1st Defendant to a maximum principal sum of RM7,
800,000.00. The Plaintiff then recalled the banking facilities granted to the
1st Defendant and demanded payment of all sums due and outstanding
1
from the 1st Defendant. The 1st and 3rd Defendant responded by making a
counter claim for specific performance and damages for breach of contract.
This court allowed the Plaintiff’s claim and dismissed the Defendants
counter claim. The Defendants then appealed against the decision of this
court.
FACTS OF THE CASE
1.
The Plaintiff is a licensed bank. The 1st Defendant is a company
incorporated in Malaysia, the 2nd Defendant is a director and a
shareholder of the 1st Defendant’s company and the 3rd Defendant is
the executive chairman and a shareholder of the 1st Defendant.
2.
The Plaintiff has not been able to serve the writ and statement of
claim on the 2nd Defendant and have therefore not proceeded with the
claim against the 2nd Defendant. The proceedings hence only relate to
the 1st and 3rd Defendants.
3.
By a letter of offer dated 5.10.1995 issued by the Plaintiff to the 1 st
Defendant, the following banking facilities were offered to the 1st
Defendant and was accepted by the 1st Defendant:
(a)
an overdraft facility of RM1,000,000.00;
(b)
pre-shipment
advance
RM3,000,000.00;
2
up
to
a
maximum
of
(c)
the Plaintiff agreed to purchase third party documentary
usance bills with periods not exceeding 90 days drawn on
approved drawees up to a maximum of RM3,000,000.00
(d)
RM500,000.00 facility for the negotiation of discrepant
documents where the Plaintiff has been given complete
sets of Bills of Lading;
(e)
RM300,000.00 facility being 10% of forward foreign
exchange facilities worth up to RM3,000,000.00.
4.
In consideration of the Plaintiff granting the facilities, the 2 nd and 3rd
Defendants executed a guarantee dated 5.10.1995 in favour of the
Plaintiff whereby the 2nd
and 3rd Defendants jointly and severally
agreed to guarantee all sums of money owing to the Plaintiff by the 1st
Defendant up to a maximum principal sum of RM7,800,000.00.
5.
The facilities were utilized by the 1st Defendant in the following
manner:
i)
overdraft
-
RM916,424.08
ii)
pre-shipment advances
-
RM2,152,000.86
iii)
DA bills
-
USD855,669.20
(converted at the rate of RM2.4950 to USD1.00)
3
6.
By a letter dated 3.6.1996, the Plaintiff formally recalled all banking
facilities granted to the 1st Defendant and demanded payment of all
sums outstanding.
7.
Pursuant to a compromise agreement reached between the Plaintiff
and the 1st Defendant, they both agreed:
(a)
that the 1st Defendant will agree to repay the amount
outstanding under its overdraft and Export Pre-Shipment Loan
accounts amounting to a sum of RM3,288,992.74 with interest
thereon at the rate of 2% over the bank base lending rate + 1%
in default interest until the date of full settlement;
(b)
that after the clearance of 6 post- dated cheques issued by the
1st Defendant to the Plaintiff, the 1st Defendant will submit a
repayment arrangement or schedule to the Plaintiff for the
residual debt remaining on terms which are agreeable to the
Plaintiff before 31.1.1997.
8.
The said 6 post-dated cheques amounting to a total sum of
RM2,142,379.65 were presented and honoured.
9.
The 1st Defendant failed to submit a repayment arrangement or
schedule for the residual debt remaining on terms which was
agreeable to the Plaintiff by 31.1.1997 and requested an extension of
time from the Plaintiff.
4
10.
The Plaintiff agreed to vary the terms of the compromise agreement
on the terms set out in the Plaintiff’s letter dated 30.4.1997 and
addressed to the 1st Defendant, but the 1st Defendant did not agree
to the terms of the Plaintiff’s letter dated 30.4.1997.
11.
Therefore the Plaintiff’s claim for:
a)
the indebted amount of RM3,697,672.22;
b)
interest on the said sum of RM3,697,672.22 at the rate of
12.45% per annum from 7.7.1997 until the date of full
realization.
ISSUES TO BE TRIED
Parties agreed that the issues to be tried are as follows:
1.
Whether or not a compromise agreement was reached by the Plaintiff
and the 1st Defendant as set out in the Plaintiff’s letter of 13.9.1996
(P5) and the 1st Defendant’s response of 20.9.1996 (P8) and if so on
what terms.
2.
Whether or not the 1st Defendant failed to submit a repayment
arrangement or schedule for the residual debt on terms which are
agreeable to the Plaintiff by 31.1.1997 and sought an extension of
time from the Plaintiff.
5
3.
Whether or not the Plaintiff
had agreed to vary the terms of the
compromise agreement referred to at paragraph 1 above on the
terms of the Plaintiff’s letter dated 30.4.1997(P19).
4.
Whether the 1st Defendant agreed to the terms of the said letter dated
30.4.1997(P19).
5.
Whether the 1st Defendant is in breach of the terms of the
compromise agreement.
6.
Whether the 3rd Defendant is liable to the Plaintiff upon the Guarantee
referred to at paragraph 6 of the statement of claim.
7.
Whether or not the Plaintiff is entitled to the relief as set out in the
prayers of the statement of claim against the 1st and 3rd Defendants.
8.
Whether the 1st Defendant is entitled to the relief as set out in the
counterclaim.
DECISION OF THE COURT
1.
There was a compromise agreement which terms are found in CBD
213 (P5). Prior to that there was an offer for settlement by the 2nd
Defendant CBD 212 (P25) dated 6.9.1996. The Plaintiff counter
offered in CBD 213 (P5) dated 13.9.1996 and the 2nd Defendant
accepted the counter offer in CBD 215 (P8) dated 20.9.1996. The
terms of the compromise agreement are therefore found in P5.
6
2.
P5 is a letter from the Plaintiff’s manager of Special Assets
Management, Mr Richard Kong Mun Choy to the 2nd Defendant, Mr
Gieve Firoze Nanavati setting out the terms of settlement and P8 is
the letter of acceptance by Mr Gieve Firoze Nanavati of the said
terms. The letters P5 and P8 are set out below:
“
Inter-Fresh Meat Centre Sdn Bhd
Rumah Sembelih Shah Alam
Jabatan perkhidmatan Haiwan
Jalan Utas Section 15/7
42000 Shah Alam.
Attention: Mr Geive F Nanavati.
WITHOUT PREJUDICE
13th September 1996
SAM/LCH
Dear Sirs,
Inter-Fresh Meat Centre Sdn Bhd (IFMC)
Settlement Arrangement
We refer to your letter of the 6th September 1996 enclosing 6 post-dated cheques
in payment of the outstanding D/A Bills.
The present amount outstanding due to the Bank as at 12th September 1996 is as
follows:-
1)
D/A Bills Purchased
2,231,079.65
Plus interest accrued
36,279.40
2,267,377.05
From 26.7.96 to 12.9.96
2)
Overdraft
924,770.86
Plus interest accrued
20,885.51
945,656.37
From 1.7.96 to 12.9.96
3 (i)
EPL 312-140000294
512,000.86
Plus interest accrued
59,330.90
From 20.11.95 to 12.9.96
7
571,331.76
(ii)
EPL 312-140000329
950,000.00
Plus interest accrued
85,695.21
1,035,695.21
From 29.11.95 to 12.9.96
(iii)
EPL 312-140000436
690,000.00
Plus interest accrued
46,309.40
From 9.2.96 to 12.9.96
736,309.40
-----------------5,556,369.79
==========
Without prejudice to our rights against yourselves, the Bank is prepared to
accept these 6 post-dated cheques on the following conditions precedent:1.
That IFMC agree to repay the amount outstanding under its overdraft
and Export Pre-shipment Loan accounts amounting to a sum of
RM3,288,992.74 with interest thereon at the rate of 2% over the Bank’s
Base Lending Rate (BLR) plus 1% in default interest until the date of
full settlement.
2.
That IFMC will submit a repayment arrangement for the residual debt
in item (1) above to be agreed with the Bank before 31st January 1997.
In the event we receive your confirmation of the above we will be prepared to
withhold further action against yourselves but in the event any of the 6 cheques
tendered are dishonoured and or if the repayment arrangement in items (1) and (2)
above is breached, this agreement to withhold action against IFMC and its
guarantors will immediately terminate and the Bank will be entitled to initiate legal
proceedings against all parties concerned and any other action it deems
necessary.
This offer is valid until the 20th of September 1996 only and shall lapse at 5.00
p.m. on the 20th of September 1996.
Your faithfully,
8
tt
…………………………….
Richard Kong Mun Choy
MANAGER SPECIAL ASSETS MANAGEMENT ”
-------------------------------------------------------------------------------------------------------------------
“Standard Chartered Bank Malaysia Berhad
The Manager of Special Assets Management
No. 2, Jalan Ampang
P.O Box 11001,
50732 Kuala Lumpur.
20 September 1996.
Attention:
Mr Richard Kong Mun Choy
Dear Sirs,
RE: SETTLEMENT ARRANGEMENT
We refer to your letter SAM / LCH dated 13th September 1996 and confirm acceptance.
Thank you.
Yours faithfully,
For And On Behalf Of:INTER-FRESH MEAT CENTRE SDN BHD
tt
………………………….
GEIVE NANAVATI
Director ”
3.
As can be seen, P5, the compromise agreement proposed by the
Plaintiff are in two parts. In gist P5 states:
a)
that the 1st Defendant will agree to repay the amount
outstanding under its overdraft and Export Pre-Shipment
Loan accounts amounting to a sum of RM3,288,992.74 with
interest thereon at the rate of 2% over the bank base
9
lending rate + 1% in default interest until the date of full
settlement;
b)
that after the clearance of 6 post- dated cheques issued by
the 1st Defendant to the Plaintiff, the 1st Defendant will
submit a repayment arrangement or schedule for the
residual debt remaining on terms which are agreeable to
the Plaintiff before 31.1.1997.
4.
There was no agreement by the Plaintiff that it agreed to convert the
Plaintiff’s remaining debts to a term loan repayable by monthly
payments of RM100,000.00. CBD 220 (P12) is a letter dated
24.1.1997 by Gieve Firoze Nanavati to Richard Kong Mun Choy
requesting or proposing the residual debt to be converted to a term
loan at a monthly repayment of RM100,000.00 commencing from
March 1997. The Plaintiff by letter dated 25.1.1997, P13 had refused
the 1st Defendant’s proposal to repay the remaining debts by monthly
instalments of RM100,000.00. CBD 221 (P13) is a letter of refusal by
Low Chye Huat, Plaintiff’s account manager dated 25.1.1997 stating
the proposal which would mean a repayment period of more than 3
years “is unacceptable to us.”
5.
The Defendant failed to submit a repayment arrangement or schedule
on terms which was agreeable to the Plaintiff and requested Plaintiff
for an extension of time.
10
6.
The Plaintiff agreed to vary the terms of the compromise agreement
P5 on terms set out in a letter dated 30.4.1997 (CBD 225 (P19). In
the letter signed by Low Chye Huat, the Plaintiff acknowledged
receipt of a cheque for $100,000.00 which is accepted without
prejudice to their rights against the 1st Defendant and their
guarantors in the event a firm repayment arrangement for the residual
debt is not agreed with the Bank by 12.5.1997. The outstanding debt
due to the Bank as at 30.4.1997 was $3,708,324.84. The letter ended
with the rider that the Plaintiff will consider further indulgence as
required subject to:
i)
a remittance of $100,000.00 before 12.5.1997
ii)
a firm repayment arrangement for the residual debt to be
agreed with the Bank by 12.5.1997.
7.
Therefore it is clear in P19 that the acceptance of the cheque of
RM100,000.00 was without prejudice to the Plaintiff’s right that the
Defendant must submit a schedule for repayment of the residual debt
for the Plaintiff’s acceptance on or before 12.5.1997. The Plaintiff at
no time agreed to convert the remaining debt into a term loan.
8.
The 1st Defendant did not agree to the terms of the Plaintiff’s letter
dated 30.4.1997(P19). The Plaintiff then offered the 1st Defendant a
final repayment schedule as set out in the letter dated 16.5.1997
(pg 162 Bundle A, P20 (1-2). In the letter the Plaintiff (Low Chye
Huat) offered to settle the remaining debt outstanding to the Bank as
at 13.5.1997 to the amount of RM3,955,218.69 if the 1st Defendant
11
send to the Plaintiff 12 post- dated cheques to the said amount before
23.5.1997.
9.
The conditions of P20 was never
met and the 1st Defendant
responded with a letter dated 23.5.1997 requesting for time and in the
meantime will forward a cheque for RM100,000.00 by 30.5.1997. The
Plaintiff replied and agreed to give the 1st Defendant a week’s
extension
until
31.5.1997
and
requested
for
a
cheque
of
RM200,000.00.
10.
No payments were made by the 1st Defendant and no repayment
schedule was agreed upon. The1st Defendant instead wrote a letter
to the Plaintiff through their solicitor, Messrs Sri Ram & Co alleging
that the Plaintiff was in breach of the compromise agreement by
refusing to accept the payment made in May 1997 as well as
proposing other terms of settlement which was not acceptable to the
1st Defendant. This letter is found in CBD 51-52 (P21). The Plaintiff
then proceeded to institute legal action.
11.
Therefore the main issue raised by the 1st Defendant relates to
the terms of the compromise agreement, P5, whether the
Plaintiff breached P5 or not.
12.
P5 as stated in paragraph 3 above has 2 parts. The 1st Defendant
had complied partly by paying RM2,142,379.65 by 6 post-dated
cheques which cheques has been honoured. However, the 1st
Defendant had not fully complied with the terms of P5 since the 1st
Defendant had failed to submit a repayment arrangement or schedule
12
for the residual or the outstanding remaining debt due which
arrangement or schedule was acceptable or agreeable to the Plaintiff
by 31.1.1997. Therefore, the 1st Defendant had in fact breached the
compromise agreement P5, and not the Plaintiff.
13.
From the documents, even after both the Plaintiff and the 1st
Defendant had agreed on P5, they were still negotiating on part 2 of
P5; that is, the manner of payment of the outstanding remaining debt
due to the Plaintiff. Therefore parties were still negotiating on a
settlement agreement on part 2 of P5. In the end there was no
finalised agreement in this matter between the parties.
14.
As such, there was no compromise between the parties since the 1st
Defendant did not adhere to the terms proposed in P5, P19 and P20.
In this case it is clear that the contemporaneous documents
supported the Plaintiff’s case. These documents clearly speak for
themselves. Where the oral evidence of a party contradicts the
contemporaneous documents as is the case here, then such oral evidence
must be rejected in favour of the contemporaneous documents. The
correspondence is clear and explicitly supported the Plaintiff’s contention in
this case. (See Guan Teik Sdn Bhd v Haji Mohd Noor Bin Haji Yakub &
Ors [2000] 4 MLJ 433, headnote (1) and pg 439 para G to I; Foo San
Ming v Marchi Environ Partnership [2004] 2 AMR 241 at pg 241 and
also at paragraph 6 pg 245, the decision of Tindok Besar Estates Sdn
Bhd v Tinjar Co [1979] 2 MLJ 229 and at paragraph 7 of pg 245, the
13
decision of Grace Shipping Inc & Anor v C F Sharp & Co (Malaya) Pte
[1987] 1 MLJ 257.
CONCLUSION
Therefore the answers to the issues raised are as follows:
1.
Q:
Whether or not a compromise agreement was reached by
the Plaintiff and the 1st Defendant as set out in the
Plaintiff’s letter of 13.9.1996 (P5) and the 1st Defendant’s
response of 20.9.1996 (P8) and if so on what terms.
A:
Yes, and the terms are as in P5 (refer to paragraph 3
under the heading decision of the court).
2.
Q:
Whether or not the 1st Defendant failed to submit a
repayment arrangement or schedule for the residual debt
on terms which are agreeable to the Plaintiff by 31.1.1997
and sought an extension of time from the Plaintiff.
3.
A:
Yes.
Q:
Whether or not the Plaintiff had agreed to vary the terms
of the compromise agreement referred to at paragraph 1
above on the terms of the Plaintiff’s letter dated
30.4.1997(P19).
A:
Yes.
14
4.
Q:
Whether the
1st
Defendant agreed to the terms of the said
letter dated 30.4.1997(P19).
5.
A:
No.
Q:
Whether the 1st Defendant is in breach of the terms of the
compromise agreement.
6.
A:
Yes.
Q:
Whether the 3rd Defendant is liable to the Plaintiff upon the
Guarantee referred to at paragraph 6 of the statement of
claim.
7.
A:
Yes.
Q:
Whether or not the Plaintiff is entitled to the relief as set
out in the prayers of the statement of claim against the
1st
and 3rd Defendants.
8.
A:
Yes.
Q:
Whether the Defendant is entitled to the relief as set out in
the counterclaim.
A:
No since the 1st Defendant breached the compromise
agreement which terms are found in P5.
In the final analysis, there was no compromise since the terms in P5,
P19 and P20 were not adhered to by the 1st Defendant. The 1st Defendant
was actually in breach of P5 (the compromise agreement) since it did not
adhere to the terms of part 2 of P5 in submitting a repayment arrangement
15
or schedule of the residual debt due and remaining to the Plaintiff in terms
which are acceptable or agreeable to the Plaintiff.
Therefore the Plaintiff’s claim against the 1st and 3rd Defendants are
allowed. Costs is in the cause.
COUNTERCLAIM
The Defendants claimed that the Plaintiff has breached the
compromise agreement and prayed for specific performance of the
compromise agreement and damages for the said breach.
FINDINGS:
Since the court finds the 1st Defendant in breach of P5, the
counterclaim is hereby dismissed with costs.
Plaintiff’s claim allowed with costs.
Defendant’s counter claim dismissed with costs.
SURAYA OTHMAN
Judge, Civil Court 4,
High Court of Malaya
Shah Alam, Selangor.
Dated this 1st day of September, 2010.
16
Case(s) referred to:
1.
Guan Teik Sdn Bhd v Haji Mohd Noor Bin Haji Yakub & Ors [2000] 4 MLJ 433
headnote (1) and pg 439 para G to I
2.
Foo San Ming v Archi Environ Partnership [2004] 2 AMR at 241
3.
Tindok Besar Estates Sdn Bhd v Tinjar Co [1979]2 MLJ 229
4.
Grace Shipping Inc & Anor v C F Sharp & Co (Malaya) Ptd Ltd [1987] 1 MLJ 257.
Solicitors:
Mr. Nad Segaran and Miss Soo Siew Mei [Messrs Shearn Delamore & Co] for Plaintiff
Mr. Sharnton.Selva [Messrs Kumar Partnership] for 1st and 3rd Defendants.
17