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2010 MarsdenLR 3490
COURT OF APPEAL PUTRAJAYA
MELEWAR LEISURE SDN BHD – Appellant
Versus
DANAHARTA MANAGERS SDN BHD – Respondent
[Civil Appeal No: W-02-827-2006]
Summary judgment can be upheld when no triable issues exist. A party is estopped from contesting agreed terms or claiming duress when obligations are clear and previously accepted.
Headnote:(A) Civil Procedure - Order 14 RHC 1980 - Appeal against summary judgment - 1st defendant's appeal deemed without merit as no triable issues identified. The plaintiff's rights were vested through the Vesting Certificate, enabling recovery of debt. Conversion agreement established under clear terms. (Paras 12, 30)
(B) Claim Adjustment - Amendment not necessary for claims adjusted post-facility realization; variances in claims explained satisfactorily. 1st defendant's challenge based on collateral contract found baseless as no such contract was pleaded. (Paras 14-18)
(C) Duress - No evidence of coercion to accept exchange rates; estopped from contesting terms agreed upon in writing. (Paras 21-24)
(D) Certificate of Indebtedness - Binding unless manifest errors are demonstrated; 1st defendant failed to substantiate errors. (Paras 28-29)
Facts of the case:
The plaintiff claimed amounts owed by the 1st defendant related to a bank guarantee and subsequent loan conversion resulting in defaults. Summary judgment confirmed against the 1st defendant and guarantors after no viable defenses were raised.
Findings of Court:
The High Court affirmed the SAR's ruling, indicating no reasons to disturb the finding that debt was established without triable issues.
Issues: Key issues included the validity of claims, defenses regarding duress, and adherence to contract terms.
Ratio Decidendi: The court reasoned that the plaintiff's actions were lawful, and the estoppel applied; notwithstanding allegations of duress and errors, the appeal was dismissed.
Result: Appeal dismissed with costs.
| Table of Content |
|---|
| 1. factual background of the loan and guarantees. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10 , 11 , 12) |
| 2. defendant's appeal arguments on lower claim amount. (Para 13 , 14 , 15 , 17 , 18) |
| 3. court's observation on plaintiff's obligations. (Para 16 , 19 , 20) |
| 4. discussion of duress and estoppel in conversion rate agreement. (Para 21 , 22 , 23) |
| 5. contested conversion amount of loan. (Para 24 , 25 , 26) |
| 6. validity of the certificate of indebtedness. (Para 27 , 28) |
| 7. conclusion on summary judgment and appeal dismissal. (Para 29 , 30) |
[1] This is an appeal by the appellant company (1st defendant) against the summary judgment entered by the respondent (plaintiff) in the High Court under O. 14 RHC 1980 .
[2] On 31 December 1994 a Facility Agreement was executed between United Malayan Banking Corporation Berhad (UMBC) and the 1st defendant for a USD10 million Banker's Guarantee/10-Year Term Loan (the facility).
[3] The facility was for UMBC to issue a guarantee for the 1st defendant's term loan of USD10 million with UMBC International Bank (L) Ltd (UMBCL). The 1st defendant had the option to utilize the Facility to pay UMBCL and convert the same into a RM Term Loan with UMBC.
[4] As security for the Facility, the 1st defendant executed a land charge over its lease over a land (the charged property). Two persons, that is, the 2nd and 3rd defendant, also guaranteed the facility.
[5] On 29 March 1995, pursuant to the facility, UMBC issued a bank guarantee, on behalf of the 1st defendant, for USD10 million in favour of UMBCL (now known as Danaharta Managers (L) Ltd (DML).
[6] The plaintiff, by reason of its acquisition of non-performing loans and, the Vesting Certificate number 1999-00092-DM, issued under seal on 27 August 1999, had all the rights of UMBC with respect to the facility, vested upon it (the plaintiff).
[7] On 13 August 2001 the 1st defendant exercised its option to convert the USD Term Loan with DML to a Malaysian Ringgit Term Loan with the plaintiff. It faxed as follows:
...
Conversion Of USD7.5m Loan
We are pleased to advise that the Melewar Leisure Sdn Bhd Board has approved the proposed conversion of the above USD loan at the current exchange rate. Kindly proceed to do the necessary to convert the above loan into its RM equivalent immediately.
... (emphasis added)
[8] On 5 June 2001, in order to facilitate the conversion, and on DML's demand under the plaintiff's bank guarantee, the plaintiff effected payment to DML the sum of USD9,650,859.83 (equivalent of RM36,676,162.61). This payment was notified to the 1st defendant on 11 June 2001 as follows:
...
Bank Guarantee No. CUKL/BG No. 95/32/F/AMD/10E For Principal Sum Of USD7,500,000.00
Arising from your letter dated 13 April 2001 to Danaharta Managers (L) Ltd ("DMLL"), instructing DMLL to convert the USD loan to be denominated in Ringgit and consequent demand by DMLL through a letter dated 5 June 2001 (photocopy enclosed) on the abovementioned Bank Guarantee issued by us, we had on 5 June 2001 honoured a claim totalling USD9, 650,859.83 (MYR equivalent of RM36, 676,162.61) in favour of Danaharta Managers (L) Ltd.
...
[9] The 1st defendant thus became indebted to the plaintiff in the sum of RM36,676,162.61 as at 5 June 2001 together with interest thereon. The 1st defendant defaulted in repayment.
[10] On 10 March 2005 the plaintiff filed a writ of summons against the 1st defendant and its two guarantors. An amended statement of claim was filed on 26 May 2005.
[11] On 17 June 2005 the plaintiff exercised its rights as chargee of the charged property and realized the same for a sum of RM38.008 million, which was utilized towards reduction of the outstanding sums due from the 1st defendant.
[12] On 17 August 2005 the plaintiff applied for summary judgment against the 1st defendant and its two guarantors for the balance outstanding sum of RM10,960,008.90 as at 30 June 2005. The Senior Assistant Registrar (SAR) allowed the plaintiff's application with costs on 17 Jan
