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2013 MarsdenLR 2327
HIGH COURT MALAYA KUALA LUMPUR
ZAQ CONSTRUCTION SDN BHD – Appellant
Versus
CIMB BANK BERHAD & ORS (ENCL 18) – Respondent
[Suit No: 22NCC-1324-08/2012]
The court affirmed that a plaintiff's claim must clearly establish a cause of action. Claims deemed frivolous and vexatious lack merit to proceed in court, underscoring secured creditors' rights in bankruptcy context.
Headnote:(A) Rules of the Court 2012 (RHC) - Order 18 Rule 19(1)(b) and (d) - Application to strike out plaintiff's writ and amended statement of claim as scandalous and an abuse of the court process - No cause of action established against the secured creditor - Allegations considered frivolous and vexatious - Court endorsed summary dismissal in plain and obvious cases with emphasis on lender rights and obligations under facilities agreements. (Paras 1, 2, 10, 20, 40)
(B) Abuse of Process - Definition and key elements outline - Plaintiff's claims strategically unsupported by evidence, failing to demonstrate motive or unjust delay in winding up proceedings by the 1st Defendant. (Paras 25, 31)
(C) Conspiracy - Legal requirements outlined - Absence of evidence for unlawful agreement or intent to injure Plaintiff's business claim - Claims rejected due to lack of substantive proof. (Paras 34, 39)
Facts of the case:
The Plaintiff, managing contractor on a petroleum project, alleged wrongful disposal of secured assets by the 1st Defendant, a creditor of the 2nd Defendant, in response to a prior suit regarding default on loan facilities. The Plaintiff's claims were challenged as lacking substantial basis.
Findings of Court:
The Court found the Plaintiff's claims were without merit and could be resolved without a full trial, allowing the 1st Defendant's application to strike out based on the established rights under the facilities agreement and summarizing the nature of claims as frivolous.
Issues: The main issues included whether the Plaintiff had a valid cause of action against the 1st Defendant and if the claims for retention sums and abuse of process were sustainable.
Ratio Decidendi: The court held that the Plaintiffs claims were insufficiently supported, and as a secured creditor, the 1st Defendant was entitled to enforce its rights without interference. The action was deemed purely an attempt to thwart legitimate creditor recovery processes.
Result: Application allowed; Plaintiff's claims struck out.
| Table of Content |
|---|
| 1. factual background on credit facilities (Para 1 , 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8) |
| 2. standards for summary dismissal of actions (Para 10 , 11 , 12 , 13 , 14) |
| 3. claims of retention sums and their premature nature (Para 15 , 16 , 17 , 18 , 19 , 20) |
| 4. ownership of temporary facilities (Para 23 , 24) |
| 5. abuse of court process allegations by the plaintiff (Para 25 , 26 , 27 , 28 , 29) |
| 6. conspiracy and abuse of process claims addressed. (Para 30) |
| 7. no abuse of process found; claims unsustainable. (Para 32) |
| 8. elements of conspiracy and their failure in this case (Para 34) |
[1]Encl 18 is the 1st Defendant's application is pursuant to O 18 r 19 (1)(b) and (d) of the Rs of the 2012 (RHC) for an O to strike out the Respondent's/Plaintiff's Writ and Amended Statement of Claim ("SOC") on the grounds that it was scandalous, frivolous and vexatious and or an abuse of the process of the Court. For the purpose of the hearing of Encl 18 the following documents were considered by this Court:
(a) 1st Defendant's Affidavit affirmed by Lau May Ling on 8 October 2012 (Encl 19);
(b) Plaintiff's Affidavit in Reply affirmed by Zamani Bin Mohd Rafique on 17 October 2012 (Encl 21);
(c) 2nd and 3rd Defendants Affidavit in Reply affirmed by Lim San Peen on 4 October 2012 (Encl 17); and
(d) 1st Defendant's Affidavit in Reply affirmed by Lau May Ling on 31 October 2012.
[2] Encl 18 was premised on the following grounds:
(a) The 1st Defendant is a secured creditor of the 2nd Defendant and had granted various credit facilities to the 2nd Defendant to finance a project undertaken by the 2nd Defendant to develop and operate a petroleum hub on a reclaimed island in Tanjung Bin, Johor ("the Project"). The Plaintiff was appointed by the 2nd Defendant as the Managing Contractor in respect of the Project.
(b) The 1st Defendant had on 15 June 2012 filed Kuala Lumpur High Court Originating Summons No. 24NCC-207-06/ 2012 ("the 1st Defendant's Suit") against the Plaintiff for wrongful disposal of assets charged to the 1st Defendant and to recover the value of the sale proceeds of the said steel plates.
(c) The Plaintiff filed the action raising various complaints pertaining to the Project in respect of which the 1st Defendant has no knowledge, is not involved in and/or is not liable to the Plaintiff.
(d) The Plaintiff is seeking to prevent the 1st Defendant, a secured creditor, from realizing its own security to recover the amounts due and owing by the 2nd to the 1st Defendant.
(e) The Plaintiff clearly has no cause of action against the 1st Defendant and this action is obviously frivolous and/or vexatious and is an abuse of Court process. The suit, with the allegations against the 1st Defendant, is clearly an afterthought and is an attempt to vex the 1st Defendant and to thwart the 1st Defendant in the 1st Defendant's Suit against the Plaintiff.
Background
[3] The 1st Defendant had granted various credit facilities totaling RM1,479,500,000.00 to the 2nd Defendant to finance the project undertaken by the 2nd Defendant. To secure the said credit facilities, the 2nd Defendant granted, inter alia, charges over all its asset, including the rights to the Projects, to the 1st Defendant under three Debentures dated 22 June 2006, 23 April 2007 and 23 May 2008 ("the said Debentures"). The Plaintiff was the managing contractor appointed by the 2nd Defendant the Project. The Plaintiff engaged the 4th Defendant to complete parts of the Project.
[4] The 2nd Defendant utilized the credit facilities that were granted by the 1st Defendant. The 1st Defendant Bank made payments in respect of the Project from time to time as requested via drawdown notice issued to it under the facilities. The 2nd Defendant however breached various terms under the said Facilities Agreements. By letters dated 4 May 2011 and 22 December 2011 the 1st Defendant declared that an Event of Default had occurred and demanded full payment of the amounts due and owing under the said facilities from the 2nd Defendant.
