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2025 MarsdenLR 1118
HIGH COURT SABAH & SARAWAK KUCHING
HONG LEONG BANK BERHAD – Appellant
Versus
UNIVERSAL CABLE (SARAWAK) SDN BHD & ANOR – Respondent
[Suit No: KCH-22NCvC-19-4/2024]
The court ruled that the statutory moratorium under judicial management does not extend to wholly owned subsidiaries, allowing the Plaintiff's summary judgment application against the 1st Defendant.
Headnote:(A) Companies Act 2016 - Sections 368 and 410 - Summary judgment application - The Plaintiff sought summary judgment against the 1st Defendant for RM2,500,745.23 due under Banking Facilities, which the 1st Defendant failed to repay, leading to default - The court found that the 1st Defendant's failure to respond to demand letters constituted an admission of debt - The statutory moratorium under judicial management of the 2nd Defendant does not extend to the 1st Defendant, a separate legal entity - The court ruled that the 1st Defendant failed to raise any triable issues against the Plaintiff's claim. (Paras 1, 10, 15, 26, 57)
(B) Summary Judgment - Legal principles - The burden lies on the Defendant to show why judgment should not be entered against them - Allegations inconsistent with contemporaneous documents must be rejected - The court must determine whether issues are triable based on the evidence presented. (Paras 15, 17, 19)
(C) Judicial Management - The court clarified that the statutory moratorium does not apply to wholly owned subsidiaries unless explicitly stated in the Companies Act - The Plaintiff's application for summary judgment against the 1st Defendant was valid as it did not apply for judicial management. (Paras 26, 36, 42)
(D)
Result: Summary judgment granted in favor of the Plaintiff for RM2,500,745.23 with costs awarded.
JUDGMENT
Introduction
[1] This is an application by the Plaintiff for summary judgment to be entered against the 1st Defendant pursuant to O 14 r 1 of the Rules of 2012.
[2] The 1st Defendant opposed this application mainly on the ground that leave of the Court is required during the period of the interim judicial management of the 2nd Defendant.
Brief Factual Back Ground
Banking Facilities Granted To The 1st Defendant
[3] At the request of the 1st Defendant, the Plaintiff granted various Banking Facilities to the 1st Defendant ("Banking Facilities").
[4] By way of a letter of offer dated 26 September 2006 which was duly accepted by the 1st Defendant, the Plaintiff granted various Banking Facilities to the 1st Defendant in the total limit of RM10,000,000.00.
[5] The terms of the Banking Facilities were further renewed, reviewed and/or revised by, inter alia, the following documents:
a. Supplemental Letter of Offer dated 23 January 2007;
b. Supplemental Letter of Offer dated 2 April 2008;
c. Supplemental Letter of Offer dated 22 April 2008;
d. Letter of Offer dated 14 December 2011;
e. Supplemental Letter of Offer dated 22 December 2011;
f. Letter of Notification dated 13 April 2015;
g. Letter of Notification dated 19 June 2017;
h. Letter of Notification dated 21 July 2017;
i. Letter of Notification dated 7 January 2019;
j. Letter of Notification dated 19 July 2019;
k. Letter of Notification dated 6 August 2019;
l. Letter of Notification dated 7 August 2019;
m. Letter of Notification dated 17 January 2020;
n. Letter of Notification dated 14 April 2020;
o. Letter of Notification dated 24 November 2020; and
p. Letter of Notification dated 1 March 2021.
(See: - Plaintiff's Affidavit in Support, pdf pp 22 to 42, exhibit "A-2"and pdf pp 44 to 89, exhibit "A-3")
[6] Pursuant there to, the 1st Defendant entered into a Facilities Agreement dated 26 July 2012 ("the Facilities Agreement") with the Plaintiff.
(See: - Plaintiff's Affidavit in Support, pdf pp 91 to 149, exhibit "A-4")
Guarantees By The 2nd Defendant
[7] In consideration of the Plaintiff's agreement to grant and continue to grant the Banking Facilities to the 1st Defendant, the 2nd Defendant executed, inter alia, the following guarantees in favour of the Plaintiff:
a) By a Letter of Guarantee dated 26 July 2012 executed by the 2nd Defendant, the 2nd Defendant irrevocably and unconditionally agreed to guarantee to the Plaintiff, inter alia, payment of all monies owing by the 1st Defendant under the Banking Facilities;
b) By a Letter of Guarantee dated 21 August 2015 executed by the 2nd Defendant, the 2nd Defendant irrevocably and unconditionally agreed to guarantee to the Plaintiff, inter alia, payment of all monies owing by the 1st Defendant under the Banking Facilities.
(collectively, "the Guarantees")
(See: - Plaintiff's Affidavit in Support, pdf pp 151 to 181, exhibit "A-5")
Other Securities
[8] In consideration of the Plaintiff's agreement to grant the Banking Facilities to the 1st Defendant, the 1st Defendant also executed negative pledges dated 13 February 1997 and 10 January 2007 respectively in favour of the Plaintiff (collectively, "Negative Pledges").
(See: - Plaintiff's Affidavit in Support, pdf pp 183 to 186, exhibit "A-6")
[9] The Banking Facilities Offer Letters, the Facilities Agreement, the Guarantees, and Negative Pledges aforementioned shall collectively be referred to as the "Security Documents". The Plaintiff will refer to the terms and conditions stated in the Security Documents for their full terms and effect at the hearing of the Plaintiff's Application.
Events Of Default
[10] The 1st Defendant has enjoyed the Banking Facilities granted by the Plaintiff but defaulted in its obligations to make repayments. Despite the time and indulgence granted by the Plaintiff to the Defendants to make repayment and/or to remedy their breach of terms and conditions under the Security Documents, the Defendants failed, refused and/or neglected to do so, thereby committed an event of d
