IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR
(COMMERCIAL DIVISION)
CIVIL SUIT NO: 22NCC-623-10/2013
ANTARA
UNIVERSAL TRUSTEE (MALAYSIA) BERHAD
(No. Syarikat : 17540-D) …PLAINTIFF
DAN
1. LAMBANG PERTAMA SDN BHD
(No. Syarikat : 289527-H)
2. IDAMAN UNGGUL BERHAD
(No. Syarikat : 279343-W) ...DEFENDANTS
GROUNDS OF JUDGMENT
( Plaintiff’s application to strike out defendants’ counterclaim)
A. Parties
1. The plaintiff company ( Plaintiff ) is the trustee for AmBank (M) Bhd.
( AmBank ).

2
2. The first defendant company ( 1 st Defendant ) owns all the shares in
Idris Hydraulic (M) Bhd. ( IHB ). The second defendant company ( 2 nd
Defendant ) in turn owns all the shares in the 1st Defendant.
B. Legal proceedings
3. This suit has been filed by the Plaintiff on behalf of AmBank. In this suit, the Plaintiff claimed for recovery of sums due in respect of
Redeemable Secured Loan Stocks-A ( RSLS-A ) issued by 1 st
Defendant and guaranteed by 2 nd Defendant.
4. In this suit, the 1 st and 2nd Defendants ( Defendants ) filed their defence ( Defence ) and counterclaim ( Counterclaim ) against the
Plaintiff.
5. The Plaintiff filed an application for summary judgment against the
Defendants which was allowed by this Court (Nallini Pathmanathan
J, reported in [2014] 3 MLRH 681) ( Summary Judgment ).
6. The Plaintiff now applies to strike out the Counterclaim ( Plaintiff’s
Striking Out Application ).
C. Chronology of events

3
7. The material facts in this case are tabulated below in a chronological order:
Date Event
(a) Before 1999
(i) IHB w as granted a “ Sustainable Forest
Management License ” ( Forest Management
License ) by Sabah’s Chief Minister in respect of Forest Management Unit ( FMU ) nos. 8 and 13.
(ii) Various financial institutions had granted credit facilities to IHB and IHB had defaulted in repayment of those facilities.
(b) August 2000 to
October 2003 (i) IHB and its creditors entered into a scheme to restructure IHB’s debts which amounted to RM847.284 million ( Scheme ).
(ii) IHB’s listed company status was taken over by 2 nd Defendant.
(iii) Pursuant to the Scheme, IHB ’s debts were

4 settled by, among others, Redeemable
Secured Loan Stocks ( RSLS ) worth a total of RM233,989,000.00 issued by 1 st
Defendant to IHB ’s creditors. The 1st
Defendant issued the following RSLS –
1) RSLS-A in the value of
RM126,401,000.00;
2) RSLS-B in the value of
RM2,485,000.00;
3) RSLS-C in the value of
RM16,970,000.00; and
4) RSLS-D in the value of
RM88,133,000.00.
(iv) The repayment of the principal RSLS was guaranteed by 2 nd Defendant by way of a guarantee agreement dated 23.10.2003 signed by, among others, the Defendants,
Plaintiff and all RSLS holders ( Guarantee
Agreement ).
(v) By a trust deed dated 23.10.2003 ( Trust
Deed ), the Plaintiff was appointed a trustee for the holders of the RSLS.

5
(c) 20.11.2003
(e) 8.9.2006
The RSLS issued by 1 st Defendant were to be redeemed within a tenure of 2 years, namely by a maturity date of 18.11.2005.
(d) 18.11.2005
(i) The 1 st Defendant failed to redeem the RSLS and 1 st Defendant requested for an extension of the maturity date.
(ii) The Plaintiff and RSLS holders agreed to extend for 2 years the maturity date for redemption of the RSLS, namely from
18.11.2005 to 19.11.2007 ( 1st Extension ) subject to various terms and conditions, including a power of attorney ( PA ) dated
8.9.2006 granted by 1 st Defendant to the
Plaintiff to allow the Plaintiff to dispose of the shares of IHB in the event, among others, that 1 st Defendant failed to enter into an agreement for the sale of I HB’s shares by
19.11.2006.
2 nd Defendant executed a supplement to the
Guarantee
Agreement ).
( Supplemental Guarantee

(f) 5.10.2007
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(i) The Defendants requested from the Plaintiff for the maturity date to be extended for a further 18 months.
(ii) Subject to various terms and conditions, the
Plaintiff and the RSLS holders agreed to further extend the maturity date from
19.11.2007 to 19.5.2009 ( 2 nd Extension ).
(g) 16.5.2008 2 nd Defendant announced the 2 nd Extension to
Bursa Malaysia ( 2 nd Defendant’s Bursa
Announcement on 16.5.2008
). Attached to the
2 nd Defen dant’s Bursa Announcement was a resolution prepared by the Plaintiff to be circulated to all RSLS holders regarding the 2 nd
Extension and all the terms and conditions imposed by the Plaintiff and RSLS holders
( Plaintiff’s Resolution ).
(h) 1.8.2008 The Second Supplemental Trust Deed (RSLS-A) between the Plaintiff and 1 st Defendant was signed ( 2 nd Supplemental Trust Deed ). The 2 nd
Supplemental Trust Deed contained the terms and conditions for the 2 nd Extension.

7
(i) 5.8.2009 2 nd Defendant announced to Bursa Malaysia the execution of the 2 nd Supplemental Trust Deed
( 2 nd Defendant’s Bursa Announcement on
5.8.2009
).
(j) 19.5.2009 The following documents were executed -
(i) Second Supplemental Guarantee between the Plaintiff and 2 nd Defendant ( 2 nd
Supplemental Guarantee );
(ii) PA granted by 1 st Defendant to the Plaintiff to allow the Plaintiff to dispose of IHB’s shares in the event, among others, that 1 st
Defendant failed to enter into an agreement for the sale of IH B’s shares by 31.12.2008 or where any such agreement was subsequently aborted ( 1 st 2009 PA ); and
(iii) PA granted by 2 nd Defendant to the Plaintiff to allow the Plaintiff to dispose of the shares of 1 st Defendant in the event, among others, that 2 nd Defendant failed to enter into an agreement for the sale of shares of 1 st Defendant by 31.12.2008 or where any such agreement was subsequently aborted ( 2 nd 2009 PA ).

8
The 1 st and 2 nd 2009 PA’s will be hereinafter collectively referred to as “ 2009 PA ’s ”.
1 st Defendant failed to redeem RSLS-A on the second extended maturity date of 19.5.2009. The
Defendants requested for a third extension but the RSLS-A holder, AmBank, refused to grant any further extension of the maturity date.
(k) 31.7.2009 2 nd Defendant announced to Bursa Malaysia the execution of, among others, the 2 nd
Supplemental Guarantee Agreement and the
2009 PA’s ( 2 nd Defendant’s Bursa
Announcement on 31.7.2009
).
(l) 7.9.2009 The Plaintiff issued notice to the Defendants that the Plaintiff would be enforcing the 2009 PA ’s.
(m) 9.3.2010 AmBank sent a letter to 1 st Defendant stating that
AmBank would not consider any further extension of time to redeem RSLS-A.
(n) 25.6.2010 The Defendants filed a suit in Shah Alam High
Court Suit No. 22-933-2010 against the Plaintiff

(o) 23.7.2010
9 to challenge the validity of the 2009 PA ’s ( Shah
Alam Suit ).
The Plaintiff declared an event of default by the
1 st Defendant under the RSLS-A and the nominal value of RM120,870,000 together with the accrued unpaid coupon and default interest, was immediately due and payable ( Event of Default
Notice ).
(p) 12.6.2012 The Plaintiff ’s solicitor, Messrs Shook Lin & Bok, issued a letter of demand to 1 st Defendant demanding full payment of the total amount of
RM176,453,312.97 due under the RSLS-A ( 1 st
Legal Demand to 1 st Defendant ).
(q) 1.8.2012 The Plaintiff ’s solicitor issued a letter of demand to 2 nd Defendant demanding payment of the principal outstanding sum due to the Plaintiff under the RSLS-A ( 1 st Legal Demand to 2 nd
Defendant ).
(r) 14.10.2013 The Plaintiff ’s solicitor issued separate second demands to 1 st Defendant ( 2 nd Legal Demand to
1 st Defendant ) and 2 nd Defendant ( 2 nd Legal
Demand to 2 nd Defendant ).

10
(s) 24.10.2013 The Plaintiff filed this suit against the Defendants to recover outstanding sums under the RSLS-A.
(t) 5.12.2013 The Defendants filed their Defence and
Counterclaim.
D. Principles applicable to striking out applications
8. In considering the Plaintiff’s Striking Out Application, I bear in mind the following principles:
(a) a pleading can only be struck out in a plain and obvious case, namely where that pleading is obviously unsustainable – please see, for example, the Supreme Court’s judgment in Bandar
Builder Sdn Bhd & Ors v United Malayan Banking
Corporation Bhd [1993] 3 MLJ 36, at 43; and
(b) the mere fact that a pleaded case is weak and is not likely to succeed, is not a ground to strike out that pleading - Bandar
Builder Sdn Bhd , at p. 44.
9. In addition to the above principles, I am mindful that every litigant has a constitutional right of access to justice under article 5(1) of our
Federal Constitution – please see the Federal Court’s judgment in

11
Sivarasa Rasiah v Badan Peguam Malaysia [2010] 3 CLJ
507, at 514-515.
10. The Plaintiff’s Striking Out Application is premised on the following grounds under Order 18 rule 19(1)(a), (b) and/or (d) of the Rules of
Court 2012 ( RC ) as well as under the court’s inherent jurisdiction:
(a) the Defendants had no cause of action against the Plaintiff;
(b) the Counterclaim was frivolous;
(c) the Counterclaim was vexatious; and/or
(d) the Counterclaim constituted an abuse of court process.
11. Order 18 rule 19(2) RC provides that in considering whether a pleading discloses a reasonable cause of action, no evidence shall be admissible. It is to be noted that the Plaintiff’s Striking Out
Application relies on the court’s inherent jurisdiction. The High Court in Suppuletchimi v Palmco Bina Sdn Bhd [1994] 2 MLJ 368, at
380-381, has held that in deciding under the court’s inherent jurisdiction (as provided in the then Order 92 rule 4 of the Rules of the High Court 1980) on whether a pleading discloses a reasonable cause of action or not, the court may consider affidavit evidence.
12. In view of the severe consequences of summarily striking out a pleading, I am not inclined to follow Suppuletchimi . Furthermore, I am bound by a later Court of Appeal’s judgment in See Thong v
Saw Beng Chong [2013] 3 MLJ 235, at 241, which has decided

12 that the court should not consider affidavit evidence in deciding under Order 18 rule 19(1)(a) RC and can only consider affidavit evidence in determining under Order 18 rule 19(1)(b) and (d) RC.
13. If the court may consider affidavit evidence under Order 18 rule
19(1)(b), (c) and/or (d) RC, the question that arises is to what extent can the court scrutinise the affidavit evidence in deciding whether to strike out a pleading or otherwise.
14. The following 2 decisions of our highest courts have held that the court may scrutinise affidavits in determining whether to strike out a suit or not:
(a) in Tractors Malaysia Bhd v Tio Chee Hing [1975] 2 MLJ 1, at
1-3, on an appeal from Malaysia to the Privy Council, the Privy
Council reversed the Federal Court’s decision and restored the
High Court’s decision to strike out a suit by going through the affidavit evidence with a fine-toothed comb. According to the
Privy Council in Tractors Malaysia Bhd , at p. 1, the Federal
Court erred in law in not submitting the affidavit evidence to critical examination; and
(b) Tractors Malaysia Bhd was followed by the Supreme Court in
Raja Zainal Abidin bin Raja Haji Tachik & Ors v British-
American Life & General Insurance Bhd [1993] 3 MLJ 16, at
23-24, which held as follows –
“ In conclusion, with great respect, the learned judge could have avoided the pitfall as described by the Privy Council in Tractors.
The lower court should have also scrutinized the evidence in
order to decide whether the action was bound to fail. If so, it would have been otiose to send the case back to its starting point to start its long and expensive course albeit such a conclusion was reached on an application filed under O 18 r 19.
”

13
(emphasis added).
15. In Bandar Builder Sdn Bhd , at p. 43, the Supreme Court followed the English Court of Appeal’s judgment in Wenlock v Moloney &
Ors [1965] 2 All ER 871, and held that there should not be a
“ minute examination ” of the documents and facts of the case.
Bandar Builder Sdn Bhd did not refer to Tractors Malaysia Bhd and Raja Zainal Abidin .
16. It is to be noted that in Wenlock , at p. 871, there was a trial on affidavits as the learned Master (equivalent to our Deputy Registrars and Senior Assistant Registrars) in that case resolved the conflict in affidavit evidence and struck out the suit in question. According to
Danckwerts LJ in Wenlock, at p. 874 -
“
There is no doubt that the inherent power of the court remains; but this summary jurisdiction of the court was never intended to be exercised by a minute and protracted examination of the documents and facts of the case, in order to see whether the plaintiff really has a cause of action. To do that, is to usurp the position of the trial judge, and to produce a trial of the case in chambers, on affidavits only, without discovery and without oral evidence tested by cross-examination in the ordinary way. This seems to me to be an abuse of the inherent power of the court and not a proper exercise of that power [to strike out a suit].
”
It is clear from Wenlock that if there is a conflict in affidavit evidence, the court hearing a striking out application, should not resolve that conflict and decide the striking out application solely on affidavit evidence. The English Court of Appeal in Wenlock did not decide that the court hearing a striking out application, should not

14 scrutinise the affidavit evidence so as to determine whether there is a plain and obvious case to strike out a pleading.
17. In Bandar Builder Sdn Bhd , at p. 44, the Supreme Court was satisfied that it was not a plain and obvious case to strike out the 2 pleadings in question, namely the counterclaim and defence to counterclaim. The Supreme Court in Bandar Builder Sdn Bhd did not deprecate the need to scrutinise the affidavits adduced in the 2 striking out applications in Bandar Builder Sdn Bhd .
18. Based on the above reasons, I am of the considered view that
Tractors Malaysia Bhd and Raja Zainal Abidin are still good law and are binding on me. Accordingly, I will examine all affidavits in respect of the Plaintiff’s Striking Out Application under Order 18 rule
19(1)(b) and (d) RC. If there is a conflict in the affidavit evidence in this case, I should not resolve such a conflict and the Counterclaim must be allowed to stand, no matter how weak it is - Bandar
Builder Sdn Bhd , at p. 44.
E. The Counterclaim
19. In essence, the Counterclaim alleged as follows:
(a) the 2 nd Supplemental Guarantee Agreement was invalid – subparagraphs 99(a) to (f) and prayer (b) in paragraph 117 of the

15
Counterclaim;
(b) the 2009 PA’s were invalid – sub-paragraphs 99(a) to (f), prayers (b) and (d) in paragraph 117 of the Counterclaim.
Paragraph 107 of the Counterclaim also averred that the
Plaintiff was guilty of gross negligence and wilful misconduct in respect of the 2009 PA’s;
(c) there were representations given by the Plaintiff and AmBank to induce the Defendants to execute the 2 nd Supplemental
Guarantee Agreement and the 2009 PA’s ( Alleged
Representations ) – paragraphs 100, 102 and 104 of the
Counterclaim;
(d) the Plaintiff had caused the Defendants to have “ legitimate expectations ” that Defendants could continue to negotiate with third parties regarding, amon g others, the “ sale ” of IHB’s assets and rights in the Forest Management License in respect of
FMU nos. 8 and 13 ( Alleged Legitimate Expectations ) - paragraphs 51 and 58 of the Defence (which had been adopted by paragraph 98 of the Counterclaim) and paragraph 104 of the
Counterclaim;
(e) the refusal of the Plaintiff and AmBank to release charges registered over IHB’s assets in AmBank’s favour ( IHB’s
Charges ) – paragraphs 108 to 116, prayers (e) and (f) in paragraph 117 of the Counterclaim;

16
(f) the debenture between the Plaintiff and IHB ( IHB’s Debenture ) contravened, among others, clause 120 of the Forest
Management License ( Clause 120 ) and Sabah’s Forest
Enactment 1968 ( SFE 1968 ) – paragraphs 37, 38, 48, 49 and
66 of the Defence (which had been adopted by paragraph 98 of the Counterclaim) and prayer (a) in paragraph 117 of the
Counterclaim; and
(g) the Event of Default Notice was invalid - paragraphs 77, 91 and
92 of the Defence (which had been adopted by paragraph 98 of the Counterclaim) and prayer (c) in paragraph 117 of the
Counterclaim.
F. Is this court bound by earlier findings made in respect of
Summary Judgment?
20. The Plaintiff ’s learned counsel, Ms. Kong Chia Yee, has contended that except for the issue regarding the validity of the 2009 PA’s
(which Nallini Pathmanathan had refrained from deciding in the
Summary Judgment), all other issues raised in the Defence and
Counterclaim had been decided in the Plaintiff’s favour in the
Summary Judgment ( Earlier Findings ). Hence, the Plaintiff argued that based on the issue estoppel doctrine (which is part of the res judicata concept), in deciding the Plaintiff’s Striking Out Application, this court is bound by the Earlier Findings. The Plaintiff relies on the

17
Supreme Court’s judgment in Asia Commercial Finance (M) Bhd v Kawal Teliti Sdn Bhd [1995] 3 MLJ 189, at 197, as follows:
“
When a matter between two parties has been adjudicated by a court of competent jurisdiction, the parties and their privies are not permitted to litigate once more the res judicata, because the judgment becomes the truth between such parties, or in other words, the parties should accept it as the truth; res judicata pro veritate accipitur. The public policy of the law is that, it is in the public interest that there should be finality in litigation … It is only just that no one ought to be vexed twice for the same cause of action… ” .
21. During the hearing of the Plaintiff’s Striking Out Application, I drew the attention of learned counsel of all parties to the Court of
Appeal’s judgment in Hartecon JV Sdn Bhd & Anor v Hartela
Contractors Ltd [1996] 2 MLJ 57, at 66 –
“
We cannot over emphasize the proposition that once a judge makes a ruling, substantive or procedural, final or interlocutory, it must be adhered to and may not be reopened willy-nilly.
”
22. Hartecon JV Sdn Bhd has been affirmed by 2 subsequent Court of
Appeal’s decisions as follows:
(a) Syarikat Telekom Malaysia v Business Chinese Directory
[1997] 1 CLJ 596, at 599-600; and

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(b) Tenaga Nasional Bhd v Prorak Sdn Bhd & Anor [2000] 1
CLJ 553, at 563-566.
23. I am of the view that in deciding the Plaintiff’s Striking Out
Application, I am not bound by the Earlier Findings. My reasons are as follows:
(a) the issue estoppel doctrine only bars the court from re-visiting an issue which has already been previously decided. The judicial criteria in deciding a summary judgment application under Order 14 rule 1(1) RC (whether the defence raises a triable issue) is clearly different from considerations governing a striking out application under Order 18 rule 19(1) RC
(whether it is plain and obvious to strike out a pleading). In other words, the issue to be decided in a summary judgment application is different from the issue raised in a striking out application. Hence, there is no room for the application of the issue estoppel doctrine in this case;
(b) the material facts of Asia Commercial Finance (M) Bhd ,
Hartecon JV Sdn Bhd , Syarikat Telekom Malaysia and
Tenaga Nasional Bhd ( 4 Cases ) did not concern an earlier hearing of a summary judgment application followed by a striking out application. As such, the 4 Cases can be easily distinguished as follows –

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(i) in Asia Commercial Finance (M) Bhd , at p. 189, the
Supreme Court had previously dismissed an earlier suit by the borrower against the finance company and yet, the borrower filed a second suit based on the same grounds as the borrower’s first action. Accordingly, the borrower’s second suit was struck out due to the application of the res judicata doctrine;
(ii) in Hartecon JV Sdn Bhd , at p. 65 and 66, the respondent had raised a preliminary objection against the appellant’s mode of proceedings and this objection was dismissed by the High Court. On a subsequent hearing date, the respondent applied to the learned judge to re-open the issue regarding the mod e of the appellant’s proceedings.
The learned judge re-visited that issue and reversed himself! The Court of Appeal correctly held that the learned judge could not re-visit the preliminary objection;
(iii) in Syarikat Telekom Malaysia , at p. 599-600, the appellant’s application to cross-examine the deponent of the respondent’s affidavit had been refused by the High
Court. Accordingly, the appellant could not proceed with its notice to crossexamine the deponent of the respondent’s affidavit; and

20
(iv) in Tenaga Nasional Bhd , at p. 563-566, the Court of
Appeal held that once the appellant’s first application to set aside a default judgment was dismissed by the High Court and affirmed by the Court of Appeal, the appellant could not make a second application to set aside the same default judgment, even if the second application was based on a different ground;
(c) the 4 Cases applied the Common Law concept of res judicata . I am not inclined to follow case law regarding res judicata in view of the express statutory provision of Order 18 rule 19(1) RC mandating me to decide the Plaintiff’s Striking Out Application on its merits . If I were to accede to the Plaintiff’s submission in respect of the application of the issue estoppel doctrine, this would be tantamount to an abdication of my judicial duty and function to decide the Plaintiff’s Striking Out Application under
Order 18 rule 19(1) RC; and
(d) in view of the drastic nature of the striking out procedure and in the interest of justice, this court should consider afresh the
Plaintiff’s Striking Out Application and should not be bound by whatever earlier decision that this court has made in respect of the Summary Judgment application.
G. My approach

21
24. I will deal with the Plaintiff’s Striking Out Application in this manner:
(a) I will first consider whether the Plaintiff has succeeded in establishing Order 18 rule 19(1)(b) and (d) RC. For this purpose, in accordance with See Thong , I can consider the affidavits filed in respect of the Plaintiff’s Striking Out
Application; and
(b) to ascertain whether the Counterclaim discloses any reasonable cause of action against the Plaintiff under Order 18 rule 19(1)(a) RC, I will only consider the Counterclaim without taking into account the affidavits as provided in Order 18 rule
19(2) RC.
H. Issue regarding validity of 2009 PA’s
25. The Shah Alam Suit had been filed by the Defendants on
25.6.2010, nearly 3 years 4 months before the Plaintiff instituted this action. The validity of the 2009 PA’s is a live issue in the Shah Alam
Suit and yet, the Counterclaim raised this very same question. As rightly submitted by the Plaintiff’s learned counsel, there is therefore a duplicity of proceedings when the Defendants raise the same issue regarding the validity of the 2009 PA’s in both the Shah Alam
Suit and the Counterclaim.

22
26. The Supreme Court held in in Lai Kim Loi v Dato Lai Fook Kim &
Anor [1989] 2 MLJ 290, at 295, as follows:
“
Although the issues raised and the relief sought are not totally
similar yet we consider that the substantial duplication of issues and relief sought in both actions amounted to multiplicity of actions and in all the circumstances of this case, the petition presented is vexatious
and is an abuse of the process of the court and ought to be struck out
…
”
(emphasis added).
27. In Lesco Development Corp Sdn Bhd v Malaysia Building
Society Bhd [1987] 2 CLJ 290, at 291, the Supreme Court decided as follows:
“
It is undesirable to allow a situation where two different Courts would try and determine the same issues arising between the same parties relating to the same subject matter.
”
28. It is clear from Lai Kim Loi that the pleading in the Counterclaim regarding the validity of the 2009 PA’s –
(a) is vexatious under Order 18 rule 19(1)(b) RC; and
(b) constitutes an abuse of court process under Order 18 rule
19(1)(d) RC.

23
29. Accordingly, I have no hesitation to strike out the averments in the
Counterclaim concerning the 2009 PA’s. It is to be emphasised that the Defendants are not prejudiced in any manner by this court’s striking out the allegations in the Counterclaim regarding the 2009
PA’s as the Defendants can still proceed with such allegations in the
Shah Alam Suit.
30. Before I turn to the next question, it is pertinent to refer to paragraph
11 ( Paragraph 11 ) of the Schedule to the Courts of Judicature Act
1964 ( CJA ). Paragraph 11 provides an additional power to the High
Court as follows:
“
Power to dismiss or stay proceedings where the matter in question is
res judicata between the parties, or where by reason of multiplicity of proceedings in any court or courts the proceedings ought not to be
continued.
”
(emphasis added).
31. The question that arises is - can the court invoke its additional power in Paragraph 11 to dismiss or stay the suit in question on the ground of res judicata or duplicity of proceedings?
32. The proviso to s 25(2) CJA states that all the powers set out in the
Schedule to CJA “ shall be exercised in accordance with any written

24 law or rules of court relating to the same ”. In this case, Order 18 rule
19 RC has expresssly provided for striking out of actions.
Accordingly, the exercise of any power under Paragraph 11 is subject to Order 18 rule 19 RC. In Damodaran v Vasudevan [1975]
2 MLJ 231, at 232, the Federal Court held that the additional powers provided in the Schedule to CJA shall be exercised subject to the applicable written law.
I. Issues concerning IHB’s Charges and IHB’s Debenture
33. The validity of IHB’s Charges and IHB’s Debenture can only be raised by IHB and not by any other party, including the Defendants.
Even though IHB is a wholly owned subsidiary of the 1 st Defendant and all the shares in the 1 st Defendant are owned by the 2 nd
Defendant, IHB is a separate legal person from the Defendants – s
16(5) of the Companies Act 1965. The following cases have held that holding and subsidiary companies are separate legal entities:
(a) the Court of Appeal’s judgment in Perbadanan Perwira Harta
Malaysia & Anor v Mohd Baharin bin Hj Abu [2010] 5 MLJ
295, at 302; and
(b) the High Court case of People’s Insurance Co (M) Sdn Bhd v
People’s Insurance Co Ltd & Ors [1986] 1 MLJ 68, at 69-70.

25
34. It is to be noted that the Defence and Counterclaim did not contain averments to lift the corporate veil of IHB and the Defendants to reveal a single corporate entity controlling all 3 companies (please see High Court’s case of Tan Guan Eng v Ng Kweng Hee & Ors
[1992] 1 MLJ 487, at 502).
35. During the hearing of the Plaintiff’s Striking Out Application, I inquired from the Defendants’ learned counsel, Encik Mohaji bin
Selamat , on whether IHB could sue AmBank in respect of IHB’s
Charges and IHB’s Debenture. Encik Mohaji rightly conceded that
IHB could file a suit against AmBank to challenge the validity of
IHB’s Charges and IHB’s Debenture. Accordingly, even if I strike out the Counterclaim in respect of the allegations concerning IHB’s
Charges and IHB’s Debenture, there is no prejudice to IHB as IHB can still file a suit to challenge the validity of IHB’s Charges and
IHB’s Debenture.
36. The Federal Court held in Yeng Hing Enterprise Sdn Bhd v Liow
Su Fah [1979] 2 MLJ 240, at 244, that when a plaintiff has no cause of action against a defendant, that plaintiff’s suit is vexatious, frivolous and constitutes an abuse of court process. In respect of the averments in the Counterclaim i n respect of IHB’s Charges and
IHB’s Debenture, this court finds that such allegations are -
(a) vexatious;
(b) frivolous; and

26
(c) an abuse of court process.
37. In Karpal Singh v Sultan of Selangor [1988] 1 MLJ 64, at 67, the
High Court struck out a suit on the ground that the plaintiff had no locus standi . According to that case, “ an action may not be brought to Court by a stranger to it ”.
38. In this case, despite the Counterclaim challenging the validity of
IHB’s Charges and IHB’s Debenture which directly and adversely affects AmBank’s security interest, the Defendants have failed to cite AmBank as a defendant to the Counterclaim in accordance with
Order 15 rule 3(1) RC. Nor had the Defendants applied to this court under Order 15 rule 6(2)(b)(i) and/or (ii) RC to join AmBank as a codefendant (with the Plaintiff) to the Counterclaim. It is trite law that generally, the court cannot make an order against a non-party -
Court of Appeal ’s judgment in Re Thien Kon Thai [2008] 6 MLJ
278, at 282.
39. The Defendants co ntended that IHB’s Debenture contravened, among others, Clause 120. The Defendants are not parties in respect of the Forest Management License. Nor are the Defendants involved in the FMU. Accordingly, the Defendants cannot rely on
Clause 120 or any provision in the Forest Management License to impugn IHB’s Debenture.

27
J. Defendants’ abuse of court process by raising allegations in
Counterclaim
40. After perusing all the affidavits in this case, it is the considered view of this court that all the averments in the Counterclaim are not bona fide but have been instead made to stifle the Plaintiff’s suit. The reasons supporting this view are as follows:
(a) the Defendants were legally represented by Messrs Azmi &
Associates ( Defendants’ Corporate Solicitor ) in respect of the documentation of the contracts regarding RSLS, including the 2 nd Supplemental Guarantee Agreement. It is inconceivable for the Defendants’ Corporate Solicitor to have “ overlooked ” all the illegalities alleged in the Counterclaim;
(b) the Defendants fired the first legal salvo by filing the Shah Alam
Suit. In the Shah Alam Suit, the Defendants are represented by the same solicitors in this case. If the allegations in the
Counterclaim were true, the Defendants could have and should have raised them in the Shah Alam Suit before the filing of the
Plaintiff ’s action in this case;
(c) the 2 nd Defendant’s Bursa Announcements on 16.5.2009,
31.7.2009 and 5.8.2009 made no mention of any illegality whatsoever. The 2 nd Defendant as a public listed company, has stringent duties under the Capital Markets and Services Act

28
2007 and Bursa Malaysia’s Listing Requirements to make timely and material disclosure to the investing public. There is no affidavit evidence that the 2 nd Defendant has made any
Bursa announcement regarding any of the illegalities alleged in the Counterclaim;
(d) there was no response by the Defendants to the following legal demands by the Plaintiff’s solicitor –
(i) 1 st and 2 nd Legal Demands to 1 st Defendant; and
(ii) 1 st and 2 nd Legal Demands to 2 nd Defendant.
If the averments in the Counterclaim were genuine, the
Defendants would have responded to those legal demands and alluded to the averments in the Counterclaim, especially when the Defendants were legally represented at all material times;
(e) the Defendants’ conduct and various written requests in applying for and obtaining the 1 st and 2 nd Extensions do not lend credence to the allegations in the Counterclaim. The
Defendants’ conduct and correspondence in applying for a third extension of the maturity date of RSLS, further undermine the credibility of the allegations in the Counterclaim. If the averments in the Counterclaim were true, the Defendants

29 would have not applied for any extension of the maturity date of
RSLS and would have instead filed a suit in respect of such averments; and
(f) the timing of the filing of the Counterclaim, namely after the
Shah Alam Suit had been instituted by the Defendants and after the Plaintiff’s suit had been commenced, clearly showed the Defend ants’ oblique motive to file the Counterclaim to stifle the Plaintiff’s legitimate claim in this case.
41. Based on the above reasons, the Counterclaim was not made in good faith and constitutes an abuse of court process. Hence, the
Plaintiff’s Striking Out Application is also allowed on this ground too.
K. Validity of 2 nd Supplemental Guarantee Agreement
42. The Defendants have disputed the validity of the 2 nd Supplemental
Guarantee executed by the 2 nd Defendant on the following grounds:
(a) there was purportedly no consideration for the 2 nd
Supplemental Guarantee as that agreement was dated on the last day of the 2 nd Extension, namely on 19.5.2009;

30
(b) the Alleged Representations induced the Defendants to believe that the Defendants could continue indefinitely to negotiate the disposal of the shares in IHB or the 1st Defendant; and
(c) the Plaintiff had given the Alleged Legitimate Expectations to the Defendants.
K1. 2 nd Defendant was still liable under Guarantee Agreement
43. The 2 nd Defendant’s liability to the Plaintiff arose by virtue of clauses
5.1 and 5.2 of the Guarantee Agreement. The Defendants had not challenged the validity of the Guarantee Agreement. The 2 nd
Defendant cannot evade liability under the Guarantee Agreement by challenging the legality of the 2 nd Supplemental Guarantee. Even if the 2 nd Supplemental Guarantee is illegal and void as alleged by the
2 nd Defendant -
(a) the 1 st Defendant is still liable for the unredeemed RSLS-A to the Plaintiff;
(b) the 2 nd Defendant is still liable under the Guarantee Agreement to the Plaintiff; and
(c) the Defendants are still liable to the Plaintiff under the
Summary Judgment.

31
44. Clauses 4 and 9.7 of the 2 nd Supplemental Guarantee clearly preserve the Plaintiff’s rights under the Guarantee Agreement against the 2 nd Defendant -
“ 4. The Principal Guarantee Agreement is still subsisting …
9.7 No remedy conferred by any of the provisions of [the 2 nd
Supplemental Guarantee] is intended to be exhaustive of any other remedy which is otherwise available at law, in equity, by statute or otherwise, and each and every other remedy shall be cumulative and shall be in addition to every other remedy given hereunder … The election of any one or more of such remedies by any of the Parties hereto shall not constitute a waiver by such
Party of the right to pursue any other available remedy.
”
(emphasis added).
K2. There is lawful consideration for 2 nd Supplemental Guarantee
45. The date on the 2 nd Supplemental Guarantee is not relevant. This is clear from clause 12 of the 2 nd Supplemental Guarantee which provides that the 2 nd Supplemental Guarantee shall be effective
“ irrespective of the date of [the 2 nd Supplemental Guarantee] or the diverse dates upon which the Parties may have executed [the 2 nd
Supplemental Guarantee] ”. In Chong Hin Trading Co Sdn Bhd &
Ors v Malayan Banking Bhd [2004] 4 MLJ 453, at 463, the Court of Appeal held as follows:

32
“
It cannot be said that the consideration was past purely based on the date when contract of guarantee was executed.
”
46. In Chong Hin Trading Co Sdn Bhd , at p. 462 and 463, the respondent bank gave a letter of offer of credit facilities
( Respondent’s Offer ) dated 6.6.1996 to the first appellant company. The second and third appellants only executed the guarantee in favour of the respondent bank on 12.9.1996. The
Court of Appeal rejected the appellants’ contention that there was past consideration for the guarantee by considering, among others, the preamble of the guarantee which showed that the second and third appellants knew that they were executing a guarantee as a security for the respondent bank’s grant of credit facilities to the first appellant company.
47. Based on Chong Hin Trading Co Sdn Bhd , the following provisions in the 2 nd Supplemental Guarantee clearly showed that there was no past consideration in this case and instead, the 2 nd
Defendant executed the 2 nd Supplemental Guarantee as consideration for the 2 nd Extension:
(a) paragraphs (J) to (P) of the Recital to the 2 nd Supplemental
Guarantee stated, among others, that the Second
Supplemental Guarantee was to be executed as consideration for the 2 nd Extension. The Recital to the 2 nd Supplemental
Guarantee concluded as follows:

33
“
... in consideration of the RECITALS mentioned above And in consideration of the premises and to induce the Trustee and the
Loan Stockholders to enter into [the 2 nd Supplemental
Guarantee] and in consideration of the mutual covenants, representations, warranties and agreements contained herein, and for valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged by the respective parties, the
[Guarantee Agreement] shall be amended to read as follows:-
”
(emphasis added); and
(b) clause 1.3 of the 2 nd Supplemental Guarantee provides that the
Recitals “ constitute an integral part ” of the 2 nd Supplemental
Guarantee.
48. In any event, a mere mutual exchange of promises is lawful consideration according to Illustration (a) to s 24 of the Contracts
Act 1950 ( CA 1950 ) and the Federal Court’s judgment in K.
Murugesu v Nadarajah [1980] 2 MLJ 82, at 83, as follows:
“
A promise is made by one party in return for a promise made by the other; in such a case each promise is the consideration for the other. "A promise made without a consideration is void. But where there is a promise against a promise, one promise is consideration of the other because each may have his action against the other for non-performance;" per Holt C.J. in Harrison v Cage (1698) 12 Mod 214. The rule that consideration can consist of mutual promises is now too well established to be
questioned.
”
(emphasis added).

34
Accordingly, the 2 nd Supplemental Guarantee showed a mutual exchange of promises between the Plaintiff and 2 nd Defendant which constitutes lawful consideration under CA 1950.
49. The following contemporaneous documents showed that the 2 nd
Supplemental Guarantee had been executed by the 2 nd Defendant as consideration for the 2 nd Extension:
(a) clause 3 of the 2 nd Supplemental Trust Deed stated that all amendments and modifications in clause 2 of the 2 nd
Supplemental Trust Deed (reflecting the conditions of the 2nd
Extension) shall apply to the other “ Issue Documents ” (which included the Guarantee Agreement – the definitions of “ Issue
Documents ” and “ Security Documents (A) ” in clause 3 of the
Trust Deed read with Schedule 6 to the Trust Deed);
(b) 2 letters dated 29.10.2007 and 26.11.2007 from the 2 nd
Defendant to AmBank ( 2 nd Defendant’s 2 Letters ) which requested for the 2nd Extension; and
(c) 2 nd Defendant’s Bursa Announcements on 16.5.2008 (which attached the Plaintiff’s Resolution regarding the 2 nd Extension) and 31.7.2009.

35
50. As explained above, the Defendants had been represented by the
Defendants’ Corporate Solicitor in respect of the drafting of all documents. In fact, the first draft of the 2 nd Supplemental Guarantee had b een prepared by the Defendants’ Corporate Solicitor – e-mail dated 5.6.2008 from the Defendants’ Corporate Solicitor to AmBank and the Plaintiff ( Email dated 5.6.2008 from Defendant’s
Corporate Solicitor ).
51. In any event, s 2(d) CA 1950 clearly states that past consideration is valid if the act or abstinence in question is “ desired ” by the promisor -
“ when, at the desire of the promisor, the promisee or any other
person has done or abstained from doing, or does or abstains from doing, or promises to do or abstains from doing, something,
such act or abstinence or promise is called a consideration for the promise;
”
(emphasis added).
In South East Asia Insurance Bhd v Nasir Ibrahim [1992] 1 CLJ
(Rep) 295, at 300-302, the Supreme Court has held that past consideration is valid provided that the act in question is done at the request of the promisor. The contemporaneous documents in this case, especially the 2 nd Defendant’s 2 Letters, clearly proved that the 2 nd Extension was done at the 2 nd Defendant’s request or desire.

36
L. Alleged Representations could not invalidate 2 nd Supplemental
Guarantee Agreement
52. The 2 nd Supplemental Guarantee provided as follows:
(a) “ 6.1 The [2 nd Defendant] hereby confirms, represents and warrants to the [1 st Defendant], … the [Plaintiff] and the
Loan Stockholders [including AmBank] that in execution and delivery of [the 2 nd Supplemental Guarantee], the [2 nd
Defendant] has sought, obtained and relied upon its own independent legal advice and has not relied upon any representation, statement or advice from the solicitors or agents or officers of the [1 st Defendant], … the [Plaintiff]
and the Loan Stockholders … ”
(emphasis added) ( Clause 6.1
); and
(b) “ 9.3 The [2 nd Supplemental Guarantee], together with any documents referred to herein constitutes the whole agreement between the Parties hereto and it is expressly declared that no variation hereof shall be effective unless made by the Parties hereto in writing.
”
(emphasis added) ( Clause 9.3
)

37
53. I will first discuss the legal effect of an entire agreement clause such as Clause 9.3. The Court of Appeal in Master Strike Sdn Bhd v
Sterling Heights Sdn Bhd [2005] 2 CLJ 596, at 607-608, held that an entire agreement clause “ constitutes a binding agreement between [the parties] with regard to all matters mentioned in the contract and … the contract does not permit any term to be implied or import any other consideration not in the contract ”. The Court of
Appeal in Master Strike Sdn Bhd followed the High Court’s decision in Macronet Sdn Bhd v RHB Bank Bhd [2002] 4 CLJ
729.
54. In Macronet Sdn Bhd , at p. 735-736, the plaintiff alleged certain pre-contractual representations. The High Court held at p. 742-743, that the existence of an entire agreement clause precluded the plaintiff’s reliance on pre-contractual representations.
55. Based on Clause 9.3 as interpreted by Master Strike Sdn Bhd and
Macronet Sdn Bhd , the Defendants could not rely on the Alleged
Representations. A fortiori , the Defendants cannot counterclaim based on the Alleged Representations when the first draft of the 2 nd
Supplemental Guarantee was prepared by the Defendant’s
Corporate Solicitor – please see Email dated 5.6.2008 from
Defendant’s Corporate Solicitor.
56. The Defendants’ reliance on the Alleged Representations is further undermined by Clause 6.1 which has expressly provided that the 2 nd
Defendant has “ sought, obtained and relied upon its own

38 independent legal advice and has not relied upon any representation, statement or advice from the solicitors or agents or officers of the [Plaintiff] and [AmBank] ”.
57. It is to be noted that the 2 nd Defendant could not challenge Clauses
6.1 and 9.3 according to ss 91 and 92 of the Evidence Act 1950 ( EA
1950 ) - Federal Court’s judgment in Tindok Besar Estate Sdn Bhd v Tinjar Co [1979] 2 MLJ 229, at 227-228. Furthermore, the
Defendants have not adduced any evidence to justify the application of any of the provisoes to s 92 EA 1950. This is understandable as the first draft of the 2 nd Supplemental Guarantee has been prepared by the Defendant’s Corporate Solicitor (Email dated 5.6.2008 from
Defendant’s Corporate Solicitor).
58. I further find that the 2 nd Defendant is estopped from denying –
(a) the 2 nd Defendant’s 2 Letters; and
(b) the 2 nd Defendant’s Bursa Announcements on 16.5.2008 and
31.7.2009
- s 115 EA 1950 and the Federal Court’s decision in Boustead
Trading (1985) Sdn Bhd v Arab-Malaysian Merchant Bank
Bhd [1995] 3 MLJ 331, at 344 and 348.

39
The above documents from the 2 nd Defendant clearly negate the
Alleged Representations.
59. The Plaintiff ’s solicitors had requested the Defendants’ solicitors to provide details regarding the Alleged Representations, namely –
(a) who made the Alleged Representations;
(b) to whom were the Alleged Representations made;
(c) when were the Alleged Representations made; and
(d) where were the Alleged Representations made
( Requested Details ).
60. The Defendants did not provide the Requested Details. When I inquired why the Defendants did not provide the Requested Details, the Defendants’ learned counsel answered that the Requested
Details would be provided during the trial of the Counterclaim.
61. It is noted that under Order 18 rule 12(1)(a) RC, it is incumbent on the Defendants to give particulars of any misrepresentation. The
Defendants’ failure to provide the Requested Details despite prior demand by the Plaintiff’s solicitor, clearly showed that the Alleged
Representations constituted only a bare assertion by the
Defendants which should be struck out. In Abdol Mulok Bin
Awang Damit v Perdana Industri Holdings Bhd [2003] 4 MLJ
441, at 444-445, the Court of Appeal agreed with the High Court that the appellant’s alleged representations constituted a bare

40 assertion as the appellant failed to produce any evidence to support such representations.
62. The Defendants’ failure to provide the Requested Details not only meant that the Alleged Representations were an afterthought but also meant that the Alleged Representations could not have induced the
2 nd Defendant to enter into the 2 nd Supplemental Guarantee. I rely on the Court of Appeal ’s judgment in Sim Thong Realty Sdn Bhd v Teh
Kim Dar & Tee Kim [2003] 3 MLJ 460, at 465, as follows:
“Now the elements of an actionable misrepresentation are well settled. They are set out as follows in Professor
McKendrick’s Contract Law (3 rd Ed), a leading work on the subject:
A misrepresentation may be defined as an unambiguous, false statement of fact which is addressed to the party misled and which materially induces the contract. This definition may be broken down into three distinct elements.
The first is that the representation must be an unambiguous false statement of fact, the second is that it must be addressed to the party misled and the third is that it must be a material inducement to entry into the contract .”
(emphasis added).
63. In any event, even if the Alleged Representations are true, at the

41 most, the 2 nd Supplemental Guarantee is voidable at the 2 nd
Defendant’s option under s 19(1) CA 1950. As discussed earlier, the legality or otherwise of the 2 nd Supplemental Guarantee does not affect the liability of the 2 nd Defendant under the Guarantee
Agreement and the Summary Judgment.
M. Defendants cannot rely on Alleged Legitimate Expectations
64. The following evidence negative the Alleged Legitimate
Expectations:
(a) Clauses 6.1 and 9.3;
(b) the 2 nd Defendant’s 2 Letters; and
(c) the 2 nd Defendant’s Bursa Announcements on 16.5.2008 and
31.7.2009.
65. Public law has recognised the concept of legitimate expectations.
Having said that, such a concept is not applicable in the realm of private law which is governed by contracts and Common Law duty of care (not raised in the Counterclaim). It is clear that the
Defendants could not rely on the Alleged Legitimate Expectations as a legal concept in this case, much less to sustain the
Counterclaim.
N. Event of Default Notice was valid

42
66. The Defendants contended that the Event of Default Notice contravened the Forest Management License and SFE 1968. As explained above, the Defendants are not parties in respect of the
Forest Management License. Nor are the Defendants involved in the FMU. Accordingly, the Defendants cannot rely on Clause 120 or any provision in the Forest Management License as well as SFE to impugn the Event of Default Notice.
67. In any event, as AmBank did not grant a third extension, the
RSLS-A should be redeemed by the 1 st Defendant on 19.5.2009.
Despite the 1 st Defendant’s failure to redeem the RSLS-A with effect from 19.5.2009 ( 1 st Defendant’s Default ), the Event of
Default Notice was only issued on 23.7.2010, more than 14 months later after the 1 st Defendant’s Default! The 2 nd Defendant’s
2 Letters were sent after the Event of Default Notice and yet both letters did not aver that the Event of Default Notice was unlawfully or wrongfully issued. Accordingly, the Defendants’ averment regarding the invalidity of the Event of Default Notice is an afterthought to stifle the Plaintiff’s lawful claim in this case.
O. Whether Counterclaim disclosed reasonable cause of action
68. I will now consider the Plaintiff’s Striking Out Application under
Order 18 rule 19(1)(a) RC and as required by Order 18 rule 19(2)
RC, I shall only consider the Counterclaim without taking into account the affidavits.

43
69. On the face of the Counterclaim, this court finds that it is plain and obvious that the following averments in the Counterclaim do not disclose any reasonable cause of action against the Plaintiff:
(a) the Defendants clearly do not have the locus standi to challenge the validity of IHB’s Charges and IHB’s Debenture. In any event, the Defendants have not cited AmBank as a defendant to the Counterclaim;
(b) even if the 2 nd Supplemental Guarantee could be challenged on the ground of illegality, Alleged Representations and/or Alleged
Legitimate Expectations, as explained above -
(i) the 1 st Defendant would still be liable for the unredeemed
RSLS-A;
(ii) the 2 nd Defendant would still be liable under the Guarantee
Agreement; and
(iii) the Defendants would still be liable under the Summary
Judgment;
(c) the Alleged Legitimate Expectations could not be enforced in law; and
(d) the Defendants who were not parties in the Forest
Management License, could not invalidate the Event of Default
Notice on the allegations that the Event of Default Notice had contravened the Forest Management License.
P. Application of issue estoppel doctrine
70. In case I am wrong in deciding that I am not bound by the Earlier
Findings, my decision to strike out the Counterclaim will be fortified

44 by the application of the issue estoppel doctrine (as applied in the 4
Cases).
Q. Conclusion
71. Based on the above reasons, this court finds the following:
(a) it is plain and obvious for the Counterclaim to be struck out as the Counterclaim is bound to fail; and
(b) the Counterclaim does not raise any question of fact or question of mixed law and fact which should go for trial. Nor is there any intricate question of law involved in this case.
72. T he Plaintiff’s Striking Out Application is hereby allowed with costs.
DATE: 11 JULY 2014
Y.A. DATUK WONG KIAN KHEONG
Judicial Commissioner
High Court (Commercial Division)
Kuala Lumpur
For the Plaintiff:
For the Defendant:
Cik Kong Chia Yee (Messrs. Shook Lin & Bok)
En. Mohaji Bin Selamat & En. Noor Hazury Bin Mohd Zubir with him
(Messrs. Mohaji, Hazury & Ismail)