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2020 MarsdenLR 1035
HIGH COURT SABAH & SARAWAK SANDAKAN
SABAH DEVELOPMENT BANK BERHAD – Appellant
Versus
INTEGRAL ACRES SDN BHD & ORS AND ANOTHER CASE – Respondent
[Suit No: SDK-22NCC-4-3-2019 & SDK-22NCC-5-7-2019]
Court emphasized that amendment applications should be bona fide and not tactical manoeuvres, and obligations under banking facilities remain despite claims of frustration.
Headnote:(A) Banking facilities contractual obligations – Plaintiff sued for recovery of amounts owed totaling RM362,757,524.16 with interest – Defendants counterclaimed for declaration of frustration of the banking facilities based on political changes. (Paras 4, 6)
(B) Amendment applications – Court held that amendments must not be tactical manoeuvres to defeat previous applications – Previous cases cited on principles of bona fide amendments. (Paras 10, 11, 18)
(C) Legal privity and frustration – Court emphasized that Defendants failed to prove how JVA’s frustration linked to banking liabilities. (Paras 21, 25)
Facts of the case: Plaintiff sought recovery of amounts due from 1st Defendant, who was backed by several guarantees from the Defendants, who argued frustration of agreements due to political events.
Findings of Court: The court found the amendment application was a tactical move to undermine the Plaintiff's summary judgment effort and dismissed it.
Issues: Mainly concerned with whether the amendments were bona fide and if they changed the nature of the Plaintiff's claim.
Ratio Decidendi: Court ruled that amendments should not serve ulterior motives and the obligations under the banking facilities remained unaffected regardless of the alleged frustration of the JVA.
Result: Application dismissed with costs.
JUDGMENT
[Enclosure 32]
Introduction
[1] The parties are the same in these 2 actions which have been, by order of this Court, consolidated on 3 October 2019.
[2] Enclosure 32 is an application by the 1st, 2nd, 3rd, 4th and 5th Defendants (hereinafter referred to as "the Defendants" unless specifically stated otherwise) to further amend their Amended Defence and Counterclaim in both suits.
[3] This application is being opposed by the Plaintiff.
Background
[4] The Plaintiff sued the Defendants in these 2 suits for the recovery of the amount outstanding in various banking facilities extended by the Plaintiff to the 1st Defendant totalling RM240,004,287.70 (in Suit 4/3) and RM122,753,236.46 (in Suit 5/7) as at 21 June 2019 with interests and costs.
[5] The 2nd Defendant is sued in its capacity as a corporate guarantor while the 3rd, 4th and 5th Defendants are sued in their capacity as joint and several guarantors to the said banking facilities.
[6] The Defendants pleaded that the Plaintiff's recall of the banking facilities was unlawful and counterclaimed for a declaration that the banking facilities granted by the Plaintiff to the 1st Defendant through the Letter of Offer dated 29 June 2012, the Credit Facilities Agreement dated 7 September 2012, Corporate Guarantee dated 7 September 2012 and Joint and Several Guarantee dated 7 September 2012 had been frustrated and unenforceable. The Defendants pleaded intervening events and change of political circumstances as a result of the 14th General Election as grounds for the frustration.
The Proposed Amendments
[7] By this application, the Defendants, inter alia, proposed to add Majlis Perbandaran Sandakan ("MPS") as the 2nd Defendant in the Defendants' Counterclaim in both suits.
[8] In consequent of the proposed addition of MPS as a defendant, averments pertaining to the Joint Venture Agreement dated 15 June 2012 between the 1st Defendant and MPS on the project known as Sandakan City Centre Project ("the JVA") are also proposed.
[9] By the proposed amendments, the Defendants sought for an additional prayer for a declaration that the JVA had also been frustrated and was unenforceable.
This Court's Decision
Is The Application Bona Fide?
[10] Learned counsel for the Plaintiff contended that the application was not bona fide as it amounted to a tactical manoeuvre designed to defeat Encl 24, the Plaintiff's application for summary judgment of its claims and to strike out the Defendants' counterclaim which had been filed earlier on 11 October 2019.
[11] In para 3(1), (2) and (3) of the Defendants' affidavit in support of this application, the deponent who is the 3rd Defendant in the Plaintiff's claim (and the 3rd Plaintiff in the counterclaim) explained as to why the present application is being made at this stage.
[12] In brief, it was averred that it was the 1st Defendant's General Manager who was giving instructions to the Defendants' solicitors when the Defence and Counterclaim was first filed. It was only when the 3rd Defendant was preparing his own affidavit in opposition to Encl 24 that he had met with the Defendants' solicitors and discussed the case in detail with them. Upon being appraised by the 3rd Defendant of the historical details of the case, the Defendants' solicitors advised that further amendments were necessary to the Defendants' Amended Defence and Counterclaim.
[13] With respect, I did not find the explanation convincing.
[14] For one, this Court took judicial notice of the fact that the 3rd Defendant had in fact affirmed the Defendants' affidavit to support the application to consolidate the 2 suits - see Encl 19. The affidavit was dated 26 August 2019.
[15] Thus, the suggestion that the 3rd Defendant was not involved in instructing their solicitors prior to the filing of his affidavit in opposition (to Encl 24) which was dated 29 October 2019 is contrary to the evidence.
[16] In submission, learned counsel for the Defendants referred to the Defendants' exhibit "LNF
