The validity of certificates of indebtedness as conclusive evidence of debt was upheld, emphasizing that contractual obligations must be met to claim facility drawdown.

JUDGMENT

1. The Plaintiff's Claim

1.1. From time to time, commencing from 5/8/04 the Plaintiff granted Term Loan and Overdraft facilities to the 1^st Defendant that were guaranteed by the 2^nd, 3^rd and 4^th Defendants.

1.2. The 2^nd Defendant executed a Corporate Guarantee dated 26/9/07 for RM9 million while the 3^rd and 4^th Defendants executed joint and several guarantees dated 6/5/05 for RM5.27 million and 12/9/07 for RM9 million to guarantee the banking facilities granted to the 1^st Defendant.

1.3. As security, the 1^st Defendant inter alia entered into 5 Facility Agreements namely:-

(a) Term Loan (TL) facility for RM5,270,000.00 as shown in the Facility Agreement dated 6/5/05 [Bundle B1 - pages 25 - 78] (hereinafter referred as "FA(1)");

(b) Overdraft (OD), Letter of Credit (LC), Trust Receipt (TR) and Banker's Acceptance (BA) facilities for a total sum of RM3,000,000.00 as shown in the Facility Agreement dated 6/5/05 [Bundle B1 - pages 79 - 123] (hereinafter referred as "FA(2)"). The OD limit was up to RM1,000,000.00;

(c) LC, TR and BA facilities for RM1,000,000.00 as shown in the Facility Agreement dated 6/5/05 [Bundle B1 - pages 125 - 166] (hereinafter referred as "FA(3)");

(d) LC, TR and BA facilities for RM1,000,000.00 as shown in the Facility Agreement dated 18/9/06 [Bundle B1 - pages 201 - 265] (hereinafter referred as "FA(4)") and

(e) LC, TR and BA facilities for RM4,000,000.00 as shown in the Facility Agreement dated 26/9/07 [Bundle B1 - pages 289 - 335] (hereinafter referred to as "FA(5)").

and created third party first legal charges in favour of the Plaintiff.

1.4. (a) The Plaintiff's claim against the 1^st, 3^rd and 4^th Defendants was for:-

(i) the sum of RM4,765,823.09 being the sum owing under the TL facility as at 30/9/09 together with interest;

(ii) the sum of RM9,350,683.81 being the sum owing under the OD facility as at 30/9/09 together with interest and

(iii) costs.

(b) The Plaintiff's claim against the 2^nd Defendant was for the guaranteed sum of RM9 million together with interest and costs.

2. The Defendants' Defence and Counterclaim

2.1. The Defendants denied liability and disputed the Plaintiff's 2 Certificates of Indebtedness exhibited in Bundle B2 pages 100 and 101 as being invalid, inconclusive and containing manifest errors in the amount claimed.

2.2. In the Counterclaim, the Defendants averred that the Plaintiff by failing and/or refusing to allow the 1^st Defendant to drawdown on the RM2 million facility offered through the Letter of Offer dated 18/7/08 (Bundle F - pages 1 to 18) the Plaintiff was in breach of the contract.

2.3. As a result of the breach by the Plaintiff, the 1^st Defendant was unable to fulfill its contracts and suffered loss and damage. This in turn caused the 1^st Defendant to breach the 5 Facility Agreements as the 1^st Defendant was not able to repay the sums owing.

3. Decision of the Court

3.1. At the trial the Plaintiff called 2 witnesses. PW1 was the Plaintiff's officer in charge of the 1^st Defendant's accounts from 2004 till February 2009 while PW2 was the officer in charge of supervising the recovery of the loan sums and interest.

3.2. The Defendants also called 2 witnesses. DW1 is the husband of the 3^rd Defendant and the Operations Director of the 1^st and 2^nd Defendants while DW2 was the 4^th Defendant, a director of the 1^st and 2^nd Defendants.

3.3. Upon hearing the evidence of the witnesses, perusing the documentary exhibits, reading the written submissions and hearing the oral submissions of both Counsel, the Court held that the Plaintiff had proven its case on a balance of probabilities and entered judgment in its favour. The Court also held that the Defendants had failed to prove its Counterclaim on a balance of probabilities and the Counterclaim was accordingly dismissed with costs.

3.4. The Defendants being dissatisfied with the decisions now appeal against the said decisions.

4. Reasons for the Decision

4.1. In essence, there were 4 main issues to be decided by the Court, namely:-

4.1.1. whether the