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2021 MarsdenLR 1118
HIGH COURT MALAYA KUALA LUMPUR
EXPORT-IMPORT BANK OF MALAYSIA BERHAD – Appellant
Versus
PR BUILDERS SDN BHD & ORS – Respondent
[Suit No: WA-22M-224-05/2020]
The court ruled that summary judgment is appropriate when no genuine triable issues are raised, confirming the enforceability of joint and several guarantees regardless of claims of non-reference to underlying agreements.
Headnote:(A) Rules of Court 2012 – Order 14 – Summary judgment application – The Plaintiff successfully obtained summary judgment against the Defendants for the outstanding amount of USD40,916,804.19 under Islamic Financing Facility guarantees after considering preliminary requirements under ROC – The Defendants' raised triable issues were found to be without merit, including the applicability of arbitration provisions and service of notices. (Paras 11-30, 45)
(B) Corporate guarantees – Joint and several guarantees – The guarantees executed by the Defendants were deemed valid and enforceable despite the Defendants' claims regarding non-references to the Facility Agreement in the guarantees. The Court reaffirmed the principle that claims against guarantors could be actioned independently. (Paras 32-44)
Facts of the case: Plaintiff provided an Islamic financing facility to a customer, secured by guarantees from various Defendants, who failed to repay the amounts due. The Plaintiff's action ensued following the Customer's breach and failure to respond to demands. (Paras 3-9)
Findings of Court: Summary judgment was granted in favor of the Plaintiff as the Defendants did not raise any genuine triable issues. (Paras 45)
Issues: The Court addressed whether the Defendants' claims, including the standstill provision of the Facility Agreement and other procedural defenses, constituted triable issues warranting a trial. (Paras 15-24)
Ratio Decidendi: The Court determined that perceived triable issues submitted by the Defendants were either without merit or not raised sufficiently in prior pleadings; thus, the summary judgment against the Defendants was justified. (Paras 10-44)
Result: Summary judgment granted in favor of the Plaintiff for the amount of USD40,916,804.19 against the Defendants.
JUDGMENT
[1] This judgment concerns the Plaintiff's summary judgment application (encl 8) against the Defendants arising from a writ action filed by the Plaintiff against the Defendants in this suit for recovery under guarantees given by the Defendants in respect of an Islamic Financing Facility provided by the Plaintif to a customer.
[2] At the hearing of this application I granted summary judgment for the Plaintiff. This judgment contains the full grounds for my decision.
Background Facts
[3] At the request of HCD-PRBSB Co Ltd ("the Customer'), a private limited company incorporated in Cambodia the Plaintiff granted the Customer and the Customer accepted an Islamic Financing Facility under Overseas Project Financing-i amounting to USD46,000,000.00 ("the Facility') by way of an offer letter dated 7 November 2014 ("the Offer Letter'). Subsequently the terms contained in the Offer Letter were amended by way of a supplemental letter of offer dated 9 March 2016.
[4] Another supplemental letter of offer dated 9 August 2016 was then issued which further amended the terms of the Offer Letter and supplemental letter of offer dated 9 March 2016 wherein the financing amount was now stated as USD42,000,000.00. On 24 August 2016, the Plaintiff and the Customer entered into a Facility Agreement ("the Facility Agreement') for the Facility amounting to USD42,000,000.00 provided by the Plaintif to the Customer. Thereafter on 4 June 2018, the Plaintiff agreed to amend the terms and conditions under the Facility as set out in a letter dated 4 June 2018.
[5] As part of the security arrangement under the Facility the following guarantees were executed:
(a) Corporate Guarantee dated 24 August 2016 executed by Hassan (Cambodia) Development Co Ltd;
(b) Corporate Guarantee dated 24 August 2016 executed by the 1st Defendant ("the Corporate Guarantee");
(c) Joint and Several Guarantee dated dated 24 August 2016 executed by the 2nd Defendant and 3rd Defendant ("the Joint and Several Guarantee"); and
(d) Joint and Several Guarantee dated dated 24 August 2016 executed by the H.E Okhna Othsman Hassan, Mohammad Olvy bin Othsman and Nasiet bin Othsman
whereby the guarantors agreed to guarantee payment of all outstanding sums due and owing by the Customer to the Plaintiff.
[6] Additonally the Facility was secured by assignments documented by the following:
a) Deed of Assignment of Rental Proceeds dated 24 August 2016 executed by Hassan (Cambodia) Development Co Ltd in favour of the Plaintif; and
b) Deed of Assignment of Project Account dated 24 August 2016 executed by Hassan (Cambodia) Development Co Ltd in favour of the Plaintif.
[7] The Customer breached its repayment obligation under the Facility. Upon the Customer's default, the Plaintiff issued a letter of demand dated 17 October 2019 inter alia demanding that the Customer pay an outstanding amount of USD40,748,165.21 within 14 days and copied the letter to Defendants.
[8] The Customer failed to make repayment under the Facility and comply with Plaintiff's demand within the stipulated time. Thus the Plaintiff, via its solicitor, issued the following letters of demand:
a) A letter dated 9 December 2019 to the Customer declaring an event of default, recalling and terminating the Facility and demanding that the Customer to pay the amount outstanding of USD40,916,804.19 as at 7 December 2019 under the Facility;
b) A letter dated 9 December 2019 to the 1st Defendant demanding that the 1st Defendant pay the amount outstanding of USD40,916,804.19 as at 7 December 2019 under the Facility pursuant to the Corporate Guarantee; and
c) A letter dated 9 December 2019 to the 2nd and 3rd Defendants demanding that they pay the amount outstanding of USD40,916,804.19 as at 7 December 2019 under the Facility pursuant to the Personal Guarantee.
[9] No payment was forthcoming from all the Defendants and the Plaintiff filed this action on 19 May 2020 against all of the Defendants claiming the amount outstanding of U
