Back
2022 MarsdenLR 1012
HIGH COURT MALAYA JOHOR BAHRU
RHB BANK BERHAD – Appellant
Versus
INSTANT ACHIEVEMENT SDN BHD & ORS – Respondent
[Suit No: JA-22NCC-71-08/2021]
Plaintiff's obligation to ensure authenticity of loan disbursements primarily lies in the contractual terms, with no fiduciary duty to investigate beyond what’s stipulated.
Headnote:(A) Rules of Court 2012 – Order 18 rule 19(1)(b), (c) and (d) – Application to strike out counter-claim – The court examines whether the counter-claim is plainly and obviously unsustainable – The Defendants alleged fraudulent disbursement of Term Loans by the Plaintiff; however, obligations under Term Loans remain binding – Duty of the Plaintiff to investigate the authenticity of progress claims not established – No valid claim under the circumstances as the Defendants failed to rebut Plaintiff’s entitlement under loan agreements. (Paras 19, 20, 26, 36, 39)
Facts of the case: The Plaintiff provided several Term Loans totaling RM41,429,000.00 to the 1st Defendant, which defaulted on payments. The Defendants counterclaimed for damages alleging fraudulent disbursement of the loans.
Findings of Court: The Defendants' counter-claim was found to be obviously unsustainable, and the Plaintiff’s application to strike it out was allowed with costs.
Issues: Whether the counter-claim disclosed a reasonable cause of action or was simply an afterthought.
Ratio Decidendi: The Plaintiff, as a lender, is not obliged to investigate the validity of every payment against the architect's certificate; the Defendants failed to meet their contractual obligations.
Result: Plaintiff's application allowed, with costs.
JUDGMENT
[Enclosure 29]
Introduction
[1] This is the Plaintiff's application to strike out the Defendants' counter-claim under O 18 r 19(1)(b), (c) and (d) of the Rules of 2012 (" ROC ").
[2] As a brief background, the Plaintiff had granted the following Term Loans ("Term Loans") to the 1st Defendant:
(a) Term Loan 1 of RM18,921,000.00;
(b) Term Loan 2 of RM10,448,000.00; and
(c) Term Loan 3 of RM12,060,000.00.
[3] The Term Loans were granted pursuant to:
(a) the letter of offer dated 21 November 2016 ("Letter of Offer") (at pp 19 to 36 of encl 6);
(b) the supplemental letters of offer dated 1 December 2016, 12 December 2019 and 1 April 2019 (at pp 37 and 38, pp 39 to 62, pp 63 and 64 of encl 6) (collectively referred to as the "Supplemental Letters of Offer");
(c) the letters dated 9 August 2019, 18 September 2019 and 20 September 2019 (collectively referred to as the "Letters") (at p 65 to 68 of encl 6); and
(d) the Facilities Agreement dated 19 December 2016 ("Facilities Agreement") between the Plaintiff and the 1st Defendant (at pp 70 to 133 of encl 6).
[4] The Letter of Offer, the Supplemental Letters of Offer, the Letters and the Facilities Agreement shall hereinafter be collectively referred to as the "Agreements" and are seen as Exhibits "RHB-1" and "RHB-2" of encl 6.
[5] The Term Loans were, inter alia, secured by the following in favour of the Plaintiff:
(a) the 2nd and 3rd Defendants' Personal Guarantee dated 11 April 2019 ("Guarantee") (at pp 136 to 149 Exhibit "RHB- 3" of encl 6);
(b) the first party legal charge registered on 25 January 2017 executed by the 1st Defendant over lands held under Geran 95642, Lot 1958 ("Land 1") and Geran 95643, Lot 2510, Mukim Pulai, District Johor Bahru, State of Johor ("Land 2") (the Land 1 and Land 2 shall collectively be referred to as the "Charged Lands");
(c) the Deed of Assignment of Sales Proceeds dated 22 December 2016 executed by the 1st Defendant; and
(d) the Specific Deed of Debenture dated 22 December 2016 executed by the 1st Defendant.
[6] Each Term Loan was granted to the 1st Defendant for its respectivepurposes namely:
(a) the Term Loan 1 - to part finance for the purchase of the Land 1;
(b) the Term Loan 2 - to part finance for the purchase of Land 2; and
(c) the Term Loan 3 - to part finance for the foundation works (including earthworks, piling and substructure works and podiumcar park) for the high-rise residential units.
[7] The disbursement of Term Loans 1 and 2 assisted the 1st Defendant to purchase and acquire the Charged Lands and the 1st Defendant is now the registered proprietor of the Charged Lands. The Charged Lands were used for the construction of a development project known as the Fullerton Residences Project ("Project").
[8] It is not disputed that the 1st Defendant is the developer for the said Project and had appointed Pembinaan Intra Vista Sdn Bhd ("Pembinaan Intra Vista") as the main contractor.
[9] At all material times, the utilisation of each Term Loan is subject to its own repayment terms which constitutes separate and independent payment obligations (See: Section 12.16 of the Facilities Agreement, p 120 (PDF) of encl 6).
[10] By the Guarantee, the 2nd and 3rd Defendants jointly and severally guaranteed, not merely as sureties but also as principal debtors to pay the Plaintiff on demand all sums of monies due and owing by the 1st Defendant to the Plaintiff together with interest due thereon and all costs incurred by the Plaintiff including legal costs (See: Clauses 9 and 22 of the Guarantee at pp 139 and 143 of encl 6).
[11] Undoubtedly, the 1st Defendant has utilised the Term Loans. However, the 1st Defendant was in breach of its obligations as it has defaulted in making payments under the Term Loans on due dates, despite the Plaintiff's demands.
[12] The Plaintiff has through its solicitors issued letters dated 22 April 2021 and 4 May 2021 to the Defendants demanding full payment of all sums due and payable thereunder to the Plaintiff.
[13] Sinc
