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2009 MarsdenLR 4163
K ANANTHAM
PENGURUSAN DANAHARTA NASIONAL BERHAD – Appellant
Versus
TAN SRI DATO TAJUDDIN RAMLI (NO 4) – Respondent
A terminated settlement agreement allows recovery of the original claim where expressly permitted, reaffirming the Defendant's indebtedness despite his objections to the claimed amount.
Headnote:(A) Pengurusan Danaharta Nasional Bhd Act 1988 - Settlement Agreement - Defendant executed a facility agreement for RM1,792,000,000 to acquire a stake in Malaysia Airline System Berhad - Defaulted payment led to debt being transferred to Plaintiffs - Plaintiffs terminated the Settlement Agreement and claimed RM1,611,346,644.44 after Defendant's non-compliance with payment terms - Defendant attempted to raise triable issues regarding the debt and applicability of the Settlement Agreement - Court determined that upon termination, the Plaintiffs were entitled to claim under the Facility Agreement, reaffirming admission of debt by the Defendant. (Paras 10 - 16)
Facts of the case:
The Defendant failed to service the original loan, resulting in it becoming a Non-Performing Loan, later acquired by the Plaintiffs. Following failure to settle his indebtedness under the Settlement Agreement, the Plaintiffs sought recovery through legal action.
Findings of Court:
The Plaintiffs are authorized to claim the sum of RM1,410,175,765.43 under the terms of the Facility Agreement following termination of the Settlement Agreement due to Defendant's default.
Issues: The court addressed the enforceability of the terms of the terminated Settlement Agreement and the validity of the Plaintiffs' claims despite the Defendant's assertions of an alternative settlement.
Ratio Decidendi: The court affirmed that termination of an agreement does not preclude recovery under its terms when expressly allowed, establishing the entitlement to pursue claims despite the Defendant’s objections.
Result: Leave granted to the Plaintiffs for final judgment against the Defendant.
Background Facts To The Defendant's Indebtedness
The Defendant executed a facility agreement on 13th July 1994 to borrow RM1792,000,000 (original loan) from a group of syndicated lenders (the Lenders). This original loan was undertaken in his own name to finance the purchase by him of a 32 % stake in the shares of Malaysia Airline System Berhad (MAS). The original loan is evidenced by this facility agreement three memorandums of deposits and a charge over a cash deposit. By a supplemental agreement the syndicated lenders and the Defendant thereafter agreed to vary some of the terms and conditions of the facility agreement. At all material times from 1994 to 1998 the Defendant failed to service the original loan causing it to become a Non Performing Loan (NPL) in the books of the lenders. In 1988, Danaharta acting pursuant to the powers under the Pengurusan Danaharta Nasional Bhd Act 1988 ("the Danaharata Act") acquired the Defendant's NPL from the Lenders, including all rights and securities under the Loan Agreement. After the acquisition, the Plaintiffs issued 3 Vesting Certificates causing to be vested in them the original loan and rights, title and interest in the assets secured to repay the original loan together with all the contracts.
From 1998 to 2001, the Defendant failed to settle his indebtedness to Plaintiffs, On 8th October 2001, the Defendant executed a Settlement Agreement with the Plaintiffs (the Settlement Agreement), whereby the Defendant admitted that he had been in default of the Original Loan, and that a sum of RM1,410,175,765.43 was due and owing by him to Plaintiffs as at 8th October 2001. (see recital D and clause 2.1 of the Settlement Agreement). Under the terms of the Settlement Agreement the three Plaintiffs agreed to give the Defendant a 'hair-cut' by discounting the sum of RM 468,175,765.43 from the original indebtedness of RM1,410,175,765.43, provided he complied strictly with the terms of the Settlement Agreement. The Settlement Agreement required the Defendant to pay the reduced debt of RM942,000,000 in four installments spread over 3 years, with interest payable quarterly, in the interim. The Settlement Agreement provided for the original debt to be reinstated upon default if such default was not remedied by him within a 30 day notice period. As part of the Settlement Agreement, the Defendant executed a power attorney; assets schedule and a statutory declaration. One of the terms of the Settlement Agreement permitted the Defendant to redeem the charged shares at a minimum price per share stated therein but otherwise subject to such terms and conditions as shall be imposed by the Plaintiffs in their absolute discretion. The minimum redemption price stated for the Naluri shares was RM1.30 per share or the weighted average closing price for the preceding five trading days, whichever is the higher. The price in the case of the shares of Technology Resources Industries Berhad (TRI) was RM3.50 and that for Promet (Langkawi) Resort RM1.95 per share subject to the same provision relating to the weighted average closing price, in the case of the Defendant shares. The sale proceeds arising from any such redemption to be applied to reduce the Defendant's indebtedness to the Plaintiffs (see clause 7.1 of the Settlement Agreement). The Defendant defaulted in the payment of the quarterly interest payable under the Settlement Agreement leading to the Plaintiffs issuing a demand letter on 11th February 2001. This, in turn, led to the Defendant filing High Court Originating Summons number Dl-24-66-02 (O.S) for a permanent injunction to restrain the Plaintiffs from enforcing the Settlement Agreement and selling the charged shares. The Defendant also sought an interim injunction pending the disposal of the prayers in the O.S. On 27th March 2002, the Plaintiff served a notice of default on the Defendant pursuant to the terms of the Settlement Agreement requiring him to remedy his default within 30 days
