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2021 MarsdenLR 2821
COURT OF APPEAL PUTRAJAYA
BANK KERJASAMA RAKYAT MALAYSIA SDN BHD – Appellant
Versus
CHONG VOON CHUNG – Respondent
[Civil Appeal No: W-02(MUA)(W)-1709-09-2019]
A Certificate of Indebtedness is conclusive evidence of liability in a Guarantee Agreement, shifting the burden to the guarantor to disprove the claim.
Headnote:(A) Joint and Several Guarantee Agreement - The court reaffirms that a Certificate of Indebtedness constitutes conclusive evidence of a debtor's liability unless disproven by credible evidence (Paras 25-30).
(B) The burden of proof lies with the defendant to refute the amount recorded in the Certificate of Indebtedness (Para 29).
(C) The findings underlined that the respondent failed to provide acceptable evidence to support allegations regarding the forgery of his signature (Paras 10, 16-22).
Facts of the case: The appellant/plaintiff sought to enforce a guarantee against the respondent for a debt of RM49,089,836.20 stemming from Islamic financing facilities provided to Instyle Furniture Industries Sdn Bhd. The respondent contended that he did not sign the Joint and Several Guarantee Agreement.
Findings of Court: The court found the respondent's signature valid and enforceable. The Certificate of Indebtedness was deemed binding and the respondent was unable to disprove the amount owed.
Issues: The key issues revolved around the enforceability of the Guarantee Agreement and whether the respondent's signature was forged.
Ratio Decidendi: The court emphasized that the Certificate of Indebtedness serves as binding evidence, shifting the burden of proof onto the guarantor, who must provide clear evidence to the contrary.
Result: Appeal allowed with judgment entered for the appellant against the respondent.
Introduction
[1] This is an appeal against the decision of the learned High Court Judge ("HCJ") delivered at the Kuala Lumpur High Court on 30 August 2019 which dismissed the appellant/plaintiff 's claim against the respondent/4th defendant for breach of the Joint and Several Guarantee Agreement (Exhibit P 1).
[2] Initially the appellant/plaintiff obtained a judgment in default dated 11 December 2015 against Instyle Furniture Industries Sdn Bhd (No.Syarikat 587703-A) ("the 1st defendant"), Chua Ser Liang (No.K/P: 530419-01- 5139) ("the 2nd defendant"), Soh Piaw Tuan @ Soh Fi Toan (No.K/P: 431123-01-5259) ("the 3rd defendant") and Chong Voon Chung (No. K/P: 671111-01-6257) ("the 4th defendant") who is the respondent here. Only the respondent/4th defendant applied to set aside the said judgment in default. Having successfully set aside the judgment in default after appealing to the Court of Appeal, the case between the appellant/plaintiff and the respondent/4th defendant was remitted back to the High Court for full trial.
[3] After a full trial, the learned HCJ dismissed the appellant/plaintiff 's claim against the respondent/4th defendant.
[4] Having considered the appeal records and the submissions of the parties, this Court has allowed the appellant/plaintiff 's appeal with costs. Our decision was unanimous and these are our grounds. For ease of reference, parties will be referred to as they are in this appeal.
The Salient Facts
[5] The respondent is one of the three guarantors in respect of various Islamic financing facilities granted to the 1st defendant, Instyle Furniture Industries Sdn Bhd (No. Syarikat 587703-A) by the appellant.
[6] Vide a Letter of Offer dated 29 October 2008, the appellant granted Islamic financing facilities to Instyle Furniture Industries Sdn Bhd as stated below:
[a] Term Financing-i Facility under the Shariah principle of Bai Al-Istisna in the amount of RM12,800,000.00 (Term Financing-i Facility). Pursuant to the Term Financing-i Facility the plaintiff and 1st defendant executed the Istisna Sale Agreement and Istisna Purchase Agreement both dated 4 March 2009. Under the Istisna Purchase Agreement it was agreed, inter alia, that the Purchase Price shall be RM 19,663,355.62 which is to be paid by the 1st defendant in 120 instalments;
[b] Revolving Credit facility under the Shariah principle of Bai Al-Inah in the amount of RM18,600,000.00 ("Revolving Credit-i"). Pursuant to the Revolving Credit-i, the plaintiff and 1st defendant executed the Asset Sale Agreement and Asset Purchase Agreement both dated 4 September 2009; and
[c] Bank Guarantee-i Convertible to term Financing-i under the Shariah principle of Bai-Inah and Al-Kafalah in the amount of RM18,600,000.00 ("Bank Guarantee-i"). Pursuant to the Bank Guarantee-i, the plaintiff and 1st defendant executed the Bank Guarantee Agreement (Al-Kafalah), Asset Purchase Agreement (Al- Kafalah) and Asset Sale Agreement (Al-Kafalah) all dated 4 March 2009. [The Term Financing-i Facility, Revolving Credit-i and Bank Guarantee-i are collectively referred to as the "Financing Facilities"].
[7] In consideration of the Financing Facilities, the following securities were executed:
[a] a Debenture dated 4 March 2009 whereby Instyle Furniture Industries Sdn Bhd created a fixed and floating charge over Instyle Furniture Industries Sdn Bhd's, inter alia, properties, assets, stocks, bonds both present and future; and
[b] a Joint and Several Guarantee dated 4 March 2009 ("Joint and Several Guarantee Agreement") executed by Chua Ser Liang (No.K/P: 530419-01-5139) Soh Piaw Tuan @ Soh Fi Toan (No.K/P: 431123-01-5259) and the respondent, who were all directors of Instyle Furniture Industries Sdn Bhd, at the material time in favour of the plaintiff.
[8] Instyle Furniture Industries Sdn Bhd breached the terms of the Financing Facilities when they failed to make payment in respect of the Financing Facilities. Via their solicitor, appellant issued a Letter of Demand
