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2023 MarsdenLR 2875
HIGH COURT MALAYA KUALA LUMPUR
BANK PEMBANGUNAN MALAYSIA BERHAD – Appellant
Versus
ARIES TELECOMS (M) BERHAD & ORS – Respondent
[Suit No: WA-22NCC-313-07/2018]
The existence of a counterclaim or impeachment suit does not automatically justify a stay of execution; claims must be relevant and substantiated.
Headnote:(A) Rules of Court 2012 - Order 45 r 11 - Application for stay of execution - Counterclaim Plaintiffs sought to stay execution of judgment pending disposal of counterclaim and impeachment suit, citing special circumstances including alleged fraud and economic sabotage - Court found proposed amendments to application were not bona fide and constituted an afterthought, thus dismissing the application for stay. (Paras 13, 21, 35, 58)
(B) Special Circumstances - The mere existence of an impeachment suit does not automatically warrant a stay of execution; the court must assess the merits of the claims and their relevance to the judgment. (Paras 40, 44)
(C) Counterclaims - A substantial counterclaim does not inherently justify a stay of execution if it is distinct from the original claim and lacks a direct nexus. (Paras 46, 48)
(D) Liability of Guarantors - Guarantors remain liable under their agreements despite allegations against the principal debtor unless explicitly provided otherwise in the contract. (Paras 42, 54)
Facts of the case:
The case involved a RM400 million loan facility granted to a telecom company, which defaulted, leading to a judgment against the borrower and guarantors. The borrowers filed a counterclaim alleging fraud and economic sabotage by the lender. The court had to decide on the application for a stay of execution of the judgment pending the counterclaim and an impeachment suit.
Findings of Court:
The court found the application for a stay of execution was not made bona fide, and the proposed amendments were an afterthought, leading to the dismissal of the application.
Issues: The main issues included whether the existence of a counterclaim and an impeachment suit constituted special circumstances warranting a stay of execution.
Ratio Decidendi: The court ruled that the mere existence of an impeachment suit or a substantial counterclaim does not automatically warrant a stay of execution; the claims must be relevant and substantiated.
Result: Application for stay dismissed with costs.
| Table of Content |
|---|
| 1. overview of loan and litigation context. (Para 1 , 2 , 3 , 4 , 5 , 6) |
| 2. details of applications related to the judgment. (Para 7 , 8 , 9 , 10) |
| 3. purpose of application for stay of execution. (Para 11 , 12 , 13 , 14) |
| 4. details of amendment application. (Para 15 , 16 , 17) |
| 5. counterclaim plaintiffs' submissions. (Para 18 , 19 , 20) |
| 6. court's analysis on amendment application. (Para 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28 , 29 , 30) |
| 7. court's reasoning against late amendments. (Para 31 , 32 , 33) |
| 8. court's conclusion on the amendment application. (Para 34 , 35 , 36) |
| 9. counterclaim plaintiffs' arguments against execution. (Para 37 , 38) |
| 10. court's analysis on the counterclaim's relevance. (Para 39 , 40 , 41 , 42 , 43 , 44 , 45 , 46 , 47 , 48 , 49 , 50) |
| 11. court's observations on asset management. (Para 51 , 52 , 53 , 54 , 55) |
| 12. final decision on the stay application. (Para 56 , 57) |
[1] When a RM400 million loan turned sour, what ensued was a complex web of litigation involving claims, counterclaims and impeachment actions between borrower and lender. Now, the borrower and guarantors seek respite from the bank's recovery action by applying for a stay of execution of a judgment obtained against them. As allegations of fraud, deception and sabotage swirl, the court wades through the murky waters to determine if there exist "special circumstances" warranting such relief.
Background Facts
[2]Aries Telecoms (M) Berhad, the 1st Plaintiff in the Counterclaim ("Aries") was granted a term loan facility of RM400 million ("the Facility") from the 1st Defendant in the Counterclaim, Bank Pembangunan Malaysia Berhad ("BPMB"). Zavarco Berhad, the 2nd Plaintiff in the Counterclaim ("Zavarco") and Zulizman Bin Zainal Abidin, the 3rd Plaintiff in the Counterclaim ("Zulizman") guaranteed the Facility. To this effect, BPMB and Aries entered into a Facility Agreement dated 28 June 2012 ("the Facility Agreement'), Zavarco executed a Corporate Guarantee dated 28 June 2012 in favour of BPM ("the Corporate Guarantee") and Zulizman executed a Guarantee and Indemnity dated 17 April 2017 in favour of BPM ("the Personal Guarantee").
[3] On 26 July 2018, BPMB filed a suit (Writ dated 26 July 2018 and Statement of Claim dated 25 July 2018) against Aries, Zavarco and Zulizman. BPMB pleaded that Aries defaulted on the Facility. BPMB therefore claimed for the recovery of RM451,266,763.13 being the amount outstanding under the Facility as at 9 July 2018 against the principal borrower and guarantors.
[4] On 23 August 2018, Aries, Zavarco and Zulizman ("the Counerclaim Plaintiffs') filed their Defence and Counterclaim. In the Counterclaim they pleaded that BPMB, its officer Afidah Binti Mohd Ghazali, the 4th Defendant in Counterclaim ("Afidah"), Ranjeet Singh Sidhu, the 2nd Defendant in the Counterclaim ("RSS") and Tan Sri Syed Yusof Bin Tun Syed Nasir, the 3rd Defendant in the Counterclaim ("TSY') had conspired to commit economic sabotage to injure them. This was done to assist RSS and TSY to take control over Aries and its business so as to avoid having to pay substantial judgment sums obtained against them in other lawsuits. The Counterclaim Plaintiffs claimed the Defendants in the Counterclaim imposed unreasonable terms to frustrate Aries' listing exercise in London and leaked confidential information. They alleged Afidah abused her powers in BPMB to sabotage them. By reason of the conspiracy and economic sabotage, the listing exercise was disrupted causing them losses exceeding £100 million. The Counterclaim seeks an injunction against the bank to restrain BPMB from enforcing the loan facility and judgment for losses suffered, special damages of £100 million and other damages from the Defendants in the Counterclaim, costs and other relief deemed fit by court.
[5] On 9 May 2019, the High court allowed BPMB's Summary Judgment application against Aries, Zavarco and Zulizman ("the Judgment') while striking out the Counterclaim
