The court upheld the enforceability of the Loan Agreement, affirming that contractual terms, including default interest, were lawful and agreed upon, dismissing claims of unfair treatment and public policy violations.

Introduction

[1] In this action, the Plaintiff (interchangeably "the bank") sought to recover from the Defendant (interchangeably "the borrower") an alleged outstanding sum of RM1,266,551.17 as at 25 December 2019; Interest at the rate of 7.85% [which is1.00% above the Bank's Base Lending Rate (the Bank's Current Base Lending Rate is 6.85% and is reviewed from time to time)] calculated from 26 December 2019 until the date of full settlement; and costs on a solicitors-client basis and full indemnity pursuant to a Facility for the sum RM3,600,000.00 ("the Facility") granted to the Defendant.

[2] During trial lasting 4 days, the bank called 2 witnesses to adduce evidence ie PW1 (Lim Chew Liang), PW2 (Tan Lay Juan) whilst the Defendant ("DW1") gave evidence as well as called DW2, Datuk Tan Kwe Hee in support of the defence.

[3] I had on 13 April 2023 allowed the Plaintiff's claim and given broad grounds. This judgment contains the full reasons for my decision. At the outset, I ought to say that on the facts of the present case, I am in accord with the arguments canvassed by the bank's counsel, Ms Jagjit Kaur and adopt parts of her submissions in these grounds.

Background

[4] By a Letter of Offer dated 23 July 2012, the bank approved a Facility for the sum RM3,600,000.00 ("the Facility") to the DW1 to refinance his Country Heights property ("the property"). DW1 subsequently executed a Housing/Shophouse Overdraft (Flexi) (1st Party) Loan Agreement dated 3 August 2012 ("the Loan Agreement") and as a security, executed a First Party Charge ("the Charge") over the property in favour of the Plaintiff.

[5] When the Defendant fell into arrears on the monthly instalments, the Plaintiff through its solicitors demanded payment of the arrears. When no payment was received, the Plaintiff proceeded by notice dated 4 December 2015 to terminate the loan and demanded repayment of the whole outstanding sum of RM3,255,595.39 as at 1 December 2015 together with interest at the rate of 7.85% per annum from 2 December 2015 until the full settlement date.

[6] The bank-initiated foreclosure proceedings through Originating Summons No WA-24FC-83-01/2016 and an Order for Sale was granted on 22 February 2016. It is not in dispute that based on the Plaintiff's Notice of Application dated 7 March 2016 for Court's Directions, the Property was scheduled for public auction initially on 21 November 2016 but vacated following the Defendant's request taking into consideration that the Defendant has proposed settlement via emails and letters between the Defendant and the Plaintiff, however to no avail. The second Auction, fixed on 24 October 2017 was not successful as there was no bidder. The property was successfully auctioned off at the third public auction on 10 April 2018 at the auction price of RM2,730,000.00.

[7] Aggrieved by the auction and reserve price of the property, ten days after the auction, on 20 April 2018, the Defendant filed Kuala Lumpur High Court Civil Suit No: WA-22NCvC-219-04/2018 (the 2018 suit) for damages, alternatively for a declaration that the Order for Sale was null and void alleging inter alia that the property was sold at a gross undervalue and contrary to the provisions of the National Land Code.

[8] After a full trial, the 2018 Suit was dismissed on 4 October 2019 with costs of RM60,000.00 to the bank. The Defendant did not appeal against the decision.

Current Suit

[9] Ensuing the dismissal of the 2018 Suit, the instant suit was commenced by the Plaintiff for a balance outstanding sum of RM1,266,551.1 being allegedly the shortfall still owing by the Defendant as at 25 December 2019 together with interest at