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2025 MarsdenLR 6051
HIGH COURT SABAH & SARAWAK KUCHING
HONG LEONG BANK BERHAD – Appellant
Versus
UNIVERSAL CABLE (SARAWAK) SDN BHD & ANOR – Respondent
[Suit No: KCH-22NCvC-19-4/2024]
A wholly owned subsidiary does not gain protection under its parent company's judicial management status; only the company under management is shielded from legal proceedings.
Headnote:(A) Banking and Financial Institutions Act, 1989 - Rules of Court 2012 - Summary judgment application - Defendants defaulted on repayment obligations under Banking Facilities and Guarantees - Plaintiff satisfied requirements for summary judgment, leading to judgment for owed sum of RM2,500,745.23. (Paras 15-25, 57)
(B) Judicial management - Defendant claimed protection under judicial management of parent company - Court held that separate legal entity of subsidiaries not affected by parent's judicial management status.
Facts of the case:
Plaintiff granted Banking Facilities to Defendant with guarantees from 2nd Defendant. Defendants defaulted in repayment, leading Plaintiff to seek summary judgment after demand letters went unanswered. (Paras 7-13)
Findings of Court:
1st Defendant failed to dispute debts asserted in demand letters, deemed to have admitted liability. Total sum owed confirmed at RM2,500,745.23 based on Plaintiff's Certificate of Indebtedness, deemed conclusive evidence. (Paras 21-24)
Issues: Whether the 1st Defendant can claim protection under the interim judicial management of the 2nd Defendant and whether there are triable issues to oppose the summary judgment. (Paras 25-26)
Ratio Decidendi: Separate legal status of a company is upheld; statutory moratorium for judicial management applicable only to the company under management, not its subsidiaries. Defendant's failure to contest the debt meant no triable issue existed. (Paras 30, 37-38)
Result: Summary judgment granted; Plaintiff awarded costs of RM5,000.00 against 1st Defendant.
| Table of Content |
|---|
| 1. facts related to the banking facilities and guarantees (Para 1 , 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10) |
| 2. events of default and demands made (Para 11 , 12 , 13 , 14) |
| 3. legal principles governing summary judgment (Para 15 , 16 , 18 , 19 , 20) |
| 4. court's stance on the rebuttal of debts (Para 17 , 25 , 28 , 30) |
| 5. court's final decision and order regarding judgment (Para 57) |
Introduction
[1] This is an application by the Plaintiff for summary judgment to be entered against the 1st Defendant pursuant to O 14 r 1 of the Rules of Court 2012.
[2] The 1st Defendant opposed this application mainly on the ground that leave of the Court is required during the period of the interim judicial management of the 2nd Defendant.
Brief Factual Back Ground
Banking Facilities Granted To The 1st Defendant
[3] At the request of the 1st Defendant, the Plaintiff granted various Banking Facilities to the 1st Defendant ("Banking Facilities").
[4] By way of a letter of offer dated 26 September 2006 which was duly accepted by the 1st Defendant, the Plaintiff granted various Banking Facilities to the 1st Defendant in the total limit of RM10,000,000.00.
[5] The terms of the Banking Facilities were further renewed, reviewed and/or revised by, inter alia, the following documents:
a. Supplemental Letter of Offer dated 23 January 2007;
b. Supplemental Letter of Offer dated 2 April 2008;
c. Supplemental Letter of Offer dated 22 April 2008;
d. Letter of Offer dated 14 December 2011;
e. Supplemental Letter of Offer dated 22 December 2011;
f. Letter of Notification dated 13 April 2015;
g. Letter of Notification dated 19 June 2017;
h. Letter of Notification dated 21 July 2017;
i. Letter of Notification dated 7 January 2019;
j. Letter of Notification dated 19 July 2019;
k. Letter of Notification dated 6 August 2019;
l. Letter of Notification dated 7 August 2019;
m. Letter of Notification dated 17 January 2020;
n. Letter of Notification dated 14 April 2020;
o. Letter of Notification dated 24 November 2020; and
p. Letter of Notification dated 1 March 2021.
(See: - Plaintiff's Affidavit in Support, pdf pp 22 to 42, exhibit "A-2"and pdf pp 44 to 89, exhibit "A-3")
[6] Pursuant there to, the 1st Defendant entered into a Facilities Agreement dated 26 July 2012 ("the Facilities Agreement") with the Plaintiff.
(See: - Plaintiff's Affidavit in Support, pdf pp 91 to 149, exhibit "A-4")
Guarantees By The 2nd Defendant
[7] In consideration of the Plaintiff's agreement to grant and continue to grant the Banking Facilities to the 1st Defendant, the 2nd Defendant executed, inter alia, the following guarantees in favour of the Plaintiff:
a) By a Letter of Guarantee dated 26 July 2012 executed by the 2nd Defendant, the 2nd Defendant irrevocably and unconditionally agreed to guarantee to the Plaintiff, inter alia, payment of all monies owing by the 1st Defendant under the Banking Facilities;
b) By a Letter of Guarantee dated 21 August 2015 executed by the 2nd Defendant, the 2nd Defendant irrevocably and unconditionally agreed to guarantee to the Plaintiff, inter alia, payment of all monies owing by the 1st Defendant under the Banking Facilities.
(collectively, "the Guarantees")
(See: - Plaintiff's Affidavit in Support, pdf pp 151 to 181, exhibit "A-5")
Other Securities
[8] In consideration of the Plaintiff's agreement to grant the Banking Facilities to the 1st Defendant, the 1st Defendant also executed negative pledges dated 13 February 1997 and 10 January 2007 respectively in favour of the Plaintiff (collectively, "Negative Pledges").
(See: - Plaintiff's Affidavit in Support, pdf pp 183 to 186, exhibit "A-6")
[9] The Banking Facilities Offer Letters, the Facilities Agreement, the Guarantees, and Negative Pledges aforementioned shall collectively be referred to as the "Security Documents". The Plaintiff will refer to the terms and conditions stated in the Security Documents for their full terms and effect at the hearing of the Plaintiff's Application.
Events Of Default
[10] The 1st Defendant
