VISI SEMPENA SDN BHD & 5 LAGI BANK KERJASAMA RAKYAT (M) BERHAD

IN THE HIGH COURT OF MALAYA AT ALOR SETAR IN THE STATE OF KEDAH DARUL AMAN, MALAYSIA SUIT NO. KA-22NCVC-63-09/2020 BETWEEN BANK KERJASAMA RAKYAT (M) BERHAD ..... PLAINTIFF (NRIC No.: 760822-02-5023) AND 1. PERTAMA PERDAGANGAN SDN BHD ..... DEFENDANTS (NO SYARIKAT: 34408-H) 2. IR JAMES LOH TIENG KOH @ LOH TIENG KANG (NO. K/P: 570618-02-5029) 3. LOH TIENG HOCK (NO. K/P: 580709-02-5103) 4. ISMAIL BIN IDRIS (NO. K/P: 520316-02-5503) 1 5. LOH TENG HAI (NO. K/P: 610801-02-5215) 6. LOH TENG SUN (NO. K/P: 641012-02-5353) 7. VISI SEMPENA SDN BHD (NO SYARIKAT: 933334-H) 8. SAIFUL BIN ABD RAHIM (NO. K/P: 790713-07-5889) 9. MOHD RIZAL BIN AHMAD (NO. K/P: 860318-12-5277) 10. LOH BOON PING (NO. K/P: 860106-02-5709) 11. LOH SHY MING (NO. K/P: 890502-02-5556) 12. LOH BOON GINN (NO. K/P: 910522-02-5145) 2 JUDGMENT INTRODUCTION [1] There are two separate appeals filed by the Defendants No. 1 – 6 (“Appeal No. 1”) and the Defendants No. 7 – 12 (“Appeal No. 2”) against the decision of this Court in not allowing the Defendants’ No. 1 – 12 (“the Defendants”) application, vide Enclosure 24 and Enclosure 25 respectively, to strike out the Plaintiff’s Writ (Enclosure 1) and Statement of Claim (Enclosure 2) pursuant to Order 18 rule 19(1)(a), (b) and/or (d) of the Rules of Court 2012 (“ROC 2012”) with costs of RM5,000.00 for each application. [2] The Grounds of Decision of this Court for both appeals are combined as the following. FACTUAL BACKGROUND [3] The Plaintiff is a co-operative society registered under the Co- operative Societies Act 1993 carrying out Islamic banking and finance business with a registered address at 35th Floor, Menara 1, Menara Kembar Bank Rakyat, No. 33, Jalan Rakyat, 50470 Kuala Lumpur. 3 [4] The 1st Defendant is at all material times a private limited company having its registered address at No. 939 A & B, Lorong Merpati, 05200 Alor Setar, Kedah Darul Aman and its business address at Wisma Sentosa, No. 65, Ground Floor, Jalan Kampung Perak, 05100 Alor Setar, Kedah. [5] The 2nd, 5th and 6th Defendants were the directors of the 1st Defendant. [6] The 3rd and 4th Defendants are the current directors of the 1st Defendant. [7] The 7th Defendant is at all material times a company with a registered address at 22, 1st Floor, Jalan Putra, 05100 Alor Setar, Kedah and its business address was at Wisma Sentosa Jalan Kampung Perak, 05100 Alor Setar Kedah. Its recent business address is at No. 4, Ground Floor, Jalan Melaka Raya 15, 75000 Melaka and/or D-3A-7, Capital 4, Oasis Square, No. 2, Jalan PJU 1A/7A, Ara Damansara, 47301 Petaling Jaya, Selangor. [8] The 8th and 9th Defendants are at all material times the directors of the 7th Defendant. 4 [9] The 10th, 11th and 12th Defendants were the directors of the 7th Defendant. [10] It was not disputed by the Defendants No. 1 – 6 that according to the Statement of Claim, pursuant to a Letter of Offer dated 7/07/2004, an Asset Sale Agreement dated 9/09/2004 and an Asset Purchase Agreement dated 9/09/2004 (collectively referred to as “the Facility Agreements”), the Plaintiff had granted the 1st Defendant a Bridging Financing Facility under the Al Bai Bithaman Ajil principle in the total sum of RM15,000,000.00 (“the Original Facility”). [11] The Original Facility provided by the Plaintiff was for the construction of a 18 storey apartment block known as Sri Ampang Apartment (“the Project”). [12] As a security for the Original Facility granted by the Plaintiff, the 1st Defendant on 13/09/2004 had created a charge in favour of the Plaintiff (“the Charge”) in respect of a parcel of land held under H.S. (D) 14968 No PT.816, Mukim Bandar Alor Setar, Kedah (previously held under H.S (D) 1685/67, Mukim Telok Chengai, Kedah) (“the Charged Land”) and a Joint and Several 5 Guarantee of the 2nd to 4th Defendants dated 9/09/2004 (“the Original Facility Guarantee”). [13] In March 2008, the 1st Defendant had defaulted in paying the Original Facility. [14] At the 1st Defendant’s request, the Plaintiff through a Letter of Offer dated 31/10/2008 had agreed to restructure the Original Facility to RM19,000,000.00 (“the Restructured Facility”) on conditions that the 1st Defendant pays the shortfall in the sum of RM753,758.53 being the outstanding amount in relation to the Original Facility and the 2nd to 4th Defendants execute a Joint and Several Guarantee for the Restructured Facility. [15] The Plaintiff and the 1st Defendant had subsequently executed the Asset Sale Agreement dated 31/12/2008 and the Asset Purchase Agreement dated 31/12/2008 whilst the 2nd to 4th Defendants had executed the Joint and Several Guarantee dated 31/12/2008 in respect of the Restructured Facility (“the Guarantee”). 6 [16] The 1st Defendant had defaulted in its obligation to pay the sum of RM753,758.53. Therefore, the Plaintiff had commenced legal proceedings against the 1st Defendant vide Civil Suit No. 22A-563-2011 to recover the said sum of RM753,758.53 in respect of the Original Facility (“563 Action”). On 8/08/2011, the Plaintiff had obtained a Judgment in Default against the 1st Defendant relating to the 563 Action (“563 Judgment”). [17] The 1st Defendant had also defaulted in the payment of the Restructured Facility of the total sum of RM19,846,041.42. Hence, the Plaintiff had commenced legal proceedings against the 1st Defendant vide Civil Suit No. 22A-566-2011 for the recovery of the said sum of RM19,846,041.42 in regard to the Restructured Facility (“566 Action”). On 15/03/2012, a consent judgment was recorded between the Plaintiff and the 1st to 4th Defendants in relation to the 566 Action (“566 Judgment”). [18] On 16/03/2012, the Project was certified as an abandoned project by the Minister of Housing and Local Government. [19] It was also not disputed between the Plaintiff and the Defendants No. 1 – 6 that the 1st Defendant did not comply with the terms of the 566 Judgment. Thus, the Plaintiff had filed an Originating Summons dated 7 6/10/2013 under Order 83 of ROC 2012 for an order for sale of the Charged Land (“the Foreclosure Proceedings”). [20] From December 2013 to May 2014, there were negotiations between the Plaintiff and the 1st Defendant to settle the dispute. However, none of the discussion was materialized. [21] Vide a letter dated 14/12/2013, it was contended by the Plaintiff that the 7th Defendant had notified the Plaintiff that the 7th Defendant had purchased the Project from the 1st Defendant. The Plaintiff was also informed by the 7th Defendant that Kuwait Finance House Malaysia (“KFHM”) had granted the 7th Defendant a financing facility amounting to RM15,000,000.00 for the 7th Defendant’s working capital requirement to undertake a housing and property development project (“the KFHM’s Financing Facility”). In the same letter, the 7th Defendant undertook to use a sum of RM10,000,000.00 from the KFHM’s Financing Facility to complete the Project within 12 months from June 2014. However, according to the Defendants No. 7 – 12, the KFHM’s Financing Facility did not materialise. 8 [22] By a letter dated 24/12/2013, the 7th Defendant had requested to redeem from the Plaintiff the Charged Land for RM5,000,000.00 which was to be paid by the 7th Defendant to the Plaintiff within 18 months after a Certificate of Fitness for the Project was issued. Further, the 7th Defendant had requested the Plaintiff to refund the redemption sum to the existing purchasers. [23] The 1st Defendant by a letter dated 27/01/2014 also proposed the outstanding sum to be reduced to RM5,000,000.00 and this would be paid within 18 months from the date the Certificate of Fitness was issued as full and final settlement of the outstanding sum in respect of the Original and the Restructured Facilities granted to the 1st Defendant. [24] By a letter dated 18/04/2014, the Plaintiff had counter proposed the 1st Defendant’s proposal, inter alia, as follows: (a) the 1st Defendant would pay monthly instalments of RM100,000.00 from April 2014 until the full settlement of all amount outstanding; 9 (b) the Project would be completed by the 7th Defendant within 12 months from the date of the acceptance of this proposal; (c) the full settlement of the outstanding sum was to be made within 18 months from the date the Project was completed and the Certificate of Fitness was issued; (d) the full settlement would be paid through the redemption of units of the Project or in one lump sum; and (e) the total amount to be paid by the 1st Defendant to the Plaintiff was RM20,555,943.63. [25] Vide a letter dated 25/04/2014, the 1st Defendant had agreed with the Plaintiff’s proposal as stipulated in the said letter dated 18/04/2014. Hence, on 28/05/2014, the Plaintiff and the 1st Defendant had recorded a consent judgment in respect of the Foreclosure Proceedings (“the Foreclosure Consent Judgment”). On 8/09/2015, upon the 1st Defendant’s application, the Foreclosure Consent Judgment was amended by the High Court of Alor Setar (“the Amended Foreclosure Consent Judgment”) as follows: 10 “(a) hartanah kepunyaan Defendan yang dipegang di bawah hakmilik H.S (D) 1685/87 (kini dikenali H.S (D) 14968), PT No. 816, Mukim Teluk Chengai, Daerah Kota Setar, Negeri Kedah Darul Aman (selepas ini dirujuk sebagai “hartanah tersebut”) ditetapkan untuk lelongan pada 31/12/2014 pada harga dasar RM20,555,943.62; (b) sebelum tarikh lelongan, Defendan seterusnya akan menjual hartanah tersebut secara triti persendirian kepada Visi Sempena Sdn Bhd pada harga RM20,555,943.62 atau jumlah yang lebih rendah yang dipersetujui antara Plaintif dan Defendan sebagai penyelesaian muktamad tuntutan Plaintif terhadap Defendan; (c) jika Defendan gagal untuk menandatangani triti sebelum tarikh lelongan awam di atas atau gagal menyempurnakan triti tersebut maka Plaintif bebas untuk meneruskan lelongan awam tersebut atau memohon Perintah Jualan/Perintah Minta Arahan yang selanjutnya daripada Mahkamah tanpa perlu merujuk kepada Defendan lagi; dan (d) tiada perintah berkenaan kos.”. 11 [26] The parties however had disputed the express and/or implied terms of the Foreclosure Consent Judgment and/or the Amended Foreclosure Consent Judgment. According to the Plaintiff’s version – (a) the 1st Defendant would pay monthly instalments of RM100,000.00 from April 2014 until full settlement of all amounts outstanding; (b) the Project would be completed by the 7th Defendant within 12 months from the date of acceptance of the said letter dated 18/04/2014 i.e. on 25/04/2014; (c) full settlement of the outstanding sum was to be made within 18 months from the date the Project was to be completed and Certificate of Fitness issued; (d) full settlement would be paid through the redemption of units of the Project or in one lump sum; (e) the total amount to be paid by the 1st and/or the 7th Defendants to the Plaintiff would be RM20,555,943.63; 12 (f) the terms of the said private treaty between the 1st Defendant and the 7th Defendant must be to give effect to and/or should not be contrary to the said letter dated 18/04/2014; (g) the Plaintiff's approval should have been sought before the terms of the intended private treaty between the 1st Defendant and the 7th Defendant were agreed and executed between them; (h) alternatively, the Plaintiff would be a party to any intended private treaty as the Plaintiff was the beneficiary of the sum of RM20,555,943.63; and (i) the terms of any intended private treaty sale and purchase agreement would allow the Plaintiff to recover the sum of RM20,556,943.63. [27] The Defendants had denied the implied terms of the Amended Foreclosure Consent Judgment and stated that the express terms of the Amended Foreclosure Consent Judgment bound the Plaintiff and the 1st Defendant. Thus, the Plaintiff’s allegation with regard to the express and/or implied terms of the Amended Foreclosure Consent Judgment are without basis and frivolous. The alleged terms are not necessary for implementation, 13 enforcement and/or execution of the Amended Foreclosure Consent Judgment. [28] The Defendants No. 7 – 12 are neither party nor privy to the consent judgment. [29] By letters dated 13/10/2014 and 21/10/2014 respectively, the Plaintiff had reminded the 1st Defendant that the Plaintiff had not received any proof of a private treaty having been entered between the 1st Defendant and the 7th Defendant pursuant to the Foreclosure Consent Judgment and/or the Amended Foreclosure Consent Judgment. [30] By a letter dated 5/11/2014, the 1st Defendant had forwarded to the Plaintiff a copy of the Sale and Purchase Agreement (“SPA”) dated 25/09/2014 between the 1st Defendant and the 7th Defendant. The Plaintiff had received the said letter together with the SPA on 6/11/2014. [31] By a letter dated 21/11/2014, the Plaintiff had informed the 1st Defendant that the SPA was not in accordance with the terms of the Foreclosure Judgment and the Plaintiff would proceed with the public auction to sell the Charged Land. 14 [32] Subsequently, the Plaintiff contended that the 1st Defendant and the 7th Defendant had purportedly entered into a Supplemental Agreement dated 27/11/2014 (“the Supplementary SPA”). However, the Defendants averred that the 1st Defendant and the 7th Defendant had duly executed the Supplementary SPA. [33] By a letter dated 11/12/2014, the 1st Defendant forwarded to the Plaintiff a copy of the SPA and the Supplementary SPA stating that the total Purchase Price would be varied from RM1 to RM20,555,943.62. [34] The Plaintiff had contended that the Plaintiff was neither consulted nor informed by the 1st Defendant regarding the terms of the SPA and the Supplementary SPA and/or before the said SPA and the Supplementary SPA were executed and the terms of the SPA and the Supplementary SPA were contrary to what was agreed in the said letter dated 18/04/2014 and the express and/or implied terms of the Foreclosure Consent Judgment and/or the Amended Foreclosure Consent Judgment. The Plaintiff’s contention however was denied by the Defendants. [35] Apart from the issue of private treaty entered into between the 1st and 7th Defendants pursuant to the Foreclosure Judgement and/or Amended 15 Foreclosure Judgment, the Plaintiff had also raised the issues of the bankruptcy proceedings against the 2nd, 3rd and 4th Defendants, the execution of the 563 Judgment and the 566 Judgment and there were no genuine steps taken by the 1st and/or 7th Defendants to complete the Project since the SPA and the Supplementary SPA were executed in 2014, in the Plaintiff’s Statement of Claim. [36] Further, the issues of the alleged fraud committed by the 1st and 7th Defendants in the execution of the SPA and the Supplementary SPA and that both the SPA and the Supplementary SPA were void and/or terminated and/or repudiated, were also pleaded by the Plaintiff in the Statement of Claim. [37] Hence, the Plaintiff’s claim – (a) against the 1st Defendant and 7th Defendant are as follows: (i) a declaration that the Foreclosure Judgment dated 28/05/2014 and the Amended Foreclosure Judgment dated 8/09/2015 between the 1st Defendant and the 7th Defendant are null and void; and/or (ii) a declaration that the Sale and Purchase Agreement dated 16 25/09/2014 and the Supplemental Agreement dated 27/11/2014 between the 1st Defendant and the 7th Defendant are null and void; (iii) consequently, the Plaintiff is at liberty to proceed with the foreclosure proceeding of the land held under H.S. (D) 14968 No PT.816, Mukim Bandar Alor Setar, Kedah (previously held under H.S (D) 1685/67, Mukim Telok Chengai, Kedah); (iv) a declaration that the Sale and Purchase Agreement dated 25/09/2014 and the Supplemental Agreement dated 27/11/2014 between the 1st Defendant and the 7th Defendant are terminated and of no further effect; (v) consequently, a declaration that the Foreclosure Judgment dated 28/05/2014 and the Amended Foreclosure Judgment dated 8/09/2015 have not been complied with by the 1st Defendant and the Plaintiff is at liberty to proceed with the foreclosure proceeding of the land held under H.S. (D) 14968 No PT.816, Mukim Bandar Alor 17 Setar, Kedah (previously held under H.S (D) 1685/67, Mukim Telok Chengai, Kedah); (b) alternatively, against all the Defendants jointly and/or severally as follows: (i) a sum of RM20,555,943.62 to be paid to the Plaintiff; (ii) general damages; (iii) exemplary damages; (iv) aggravated damages; (c) interest of 5% per annum on the sum of RM20,555,943.62 calculated from 28/05/2014 until the date of judgment; (d) interest of 5% per annum on RM20,555,943.62 calculated from the date of judgment until full and final settlement; (e) all legal costs incurred by the Plaintiff shall be borne by the Defendants; and 18 (f) further and other reliefs that the Court deems fit and proper. [38] On the other hand, the Defendants’ No. 1 – 6 striking out application (Enclosure 11) prays for the following orders – (a) that the Plaintiff’s Statement of Claim dated 26/05/2020 be struck out and the action herein be dismissed; (b) costs of this application and the action herein be paid by the Plaintiff to the Defendants on the indemnity basis; and (c) such other or further order be given as the Court deems fit and proper. [39] The grounds of the Defendants’ No. 1 – 6 application are as follows: (a) the Statement of Claim displays no cause of action against the 1st to the 6th Defendants; (b) the Statement of Claim is scandalous, frivolous or vexatious; and 19 (c) further or in the alternative, the Plaintiff’s action herein is an abuse of the Court’s process. [40] Whilst the Defendants’ No. 7 – 12 application for striking out (Enclosure 25) prays as follows: (a) that the Statement of Claim and the endorsement of the writ filed herein be struck out; (b) that the writ filed herein be set aside; (c) alternatively, the Plaintiff’s claim against the 7th to 12th Defendants as pleaded in the Statement of Claim be struck out; (d) costs of this application and of the Plaintiff’s action against the 7th to 12th Defendants; and (e) such further or other orders and/or relief be given by the Court as deemed fit and proper. [41] Here are the basis of the Defendants’ No. 7 – 12 application – 20 (a) the Statement of Claim does not disclose any or any reasonable cause of action against the 7th to 12th Defendants; (b) further or in the alternative, the Plaintiff’s pleading against the 7th to 12th Defendants is scandalous, frivolous or vexatious; and (c) the present suit against the 7th to 12th Defendants is otherwise an abuse of the process of the Court. [42] For reference, the cause papers that had been filed by the parties in this proceeding are as follows: (a) the Writ of Summons dated 26/05/2020 (Enclosure 1); (b) the Statement of Claim dated 26/05/2020 (Enclosure 2); (c) the 1st to 6th Defendants’ Defence dated 16/07/2020 (Enclosure 8); (d) the 7th to 12th Defendants’ Defence dated 16/07/2020 (Enclosure 6); 21 (e) the Reply to the 1st to 6th Defendants’ Defence dated 1/08/2020 (Enclosure 9); (f) the Reply to the 7th to 12th Defendants’ Defence dated 1/08/2020 (Enclosure 10); (g) the Notice of Application (The 1st to 6th Defendants’ Application for Striking Out) dated 28/10/2020 (Enclosure 11); (h) the Notice of Application (The 7th to 12th Defendants’ Application for Striking Out) dated 28/10/2020 (Enclosure 25); (i) the 1st to 6th Defendants’ Affidavit in Support of the Striking Out Application affirmed by Ismail bin Idris on 1/11/2020 (Enclosure 28); (j) the 7th to 12th Defendants’ Affidavit in Support of the Striking Out Application affirmed by Mohd Rizal bin Ahmad on 1/11/2020 (Enclosure 27); (k) the Plaintiff’s Affidavit No. 1 [in respect of the D1 to D6’s Application For Striking Out] affirmed by Marinah binti Arshad on 1/12/2020 (Enclosure 31); 22 (l) the Plaintiff’s Affidavit No. 1 [in respect of the D7 to D12’s Application For Striking Out] affirmed by Marinah binti Arshad on 1/12/2020 (Enclosure 33); (m) the 1st to 6th Defendants’ Affidavit in Reply affirmed by Ismail bin Idris on 16/12/2020 (Enclosure 35); and (n) the 7th to 12th Defendants’ Affidavit in Reply affirmed by Mohd Rizal bin Ahmad on 16/12/2020 (Enclosure 36). ISSUES TO BE DECIDED BY THE COURT [43] The issue to be decided by this Court is whether the Plaintiff’s case ought to be struck out on the ground that the Plaintiff’s Writ and Statement of Claim raised no reasonable cause of action against the Defendants No. 1 – 6 and the Defendants No. 7 – 12 respectively and is frivolous, vexatious and/or an abuse of the process of the Court pursuant to Order 18 rule 19(1)(a), (b) and/or (d) of ROC 2012. 23 DECISION OF THE COURT [44] After considering both the Defendants’ striking out applications and hearing the submissions of the learned counsels for the Plaintiff and the Defendants, this Court had dismissed both applications under Order 18 rule 19(1)(a), (b) and/or (d) of ROC 2012 for the reasons stated below. The applicable law [45] For ease of reference, Order 18 rule 19(1)(a), (b) and (d) of ROC 2012 reads as follows – “Striking out pleadings and endorsements (0. 18 r. 19) 19. (1) The Court may at any stage of the proceedings order to be struck out or amended any pleading or the endorsement, of any writ in the action, or anything in any pleading or in the endorsement, on the ground that– (a) it discloses no reasonable cause of action or defence, as the case may be; (b) it is scandalous, frivolous or vexatious; (c) it may prejudice, embarrass or delay the fair trial of the action; or (d) it is otherwise an abuse of the process of the Court, 24 and may order the action to be stayed or dismissed or judgment to be entered accordingly, as the case may be.”. [46] The law and principles governing the striking out of pleadings under Order 18 rule 19(1) of ROC 2012 are trite and well settled. The Supreme Court in the case of Sim Kie Chon v. Superintendent of Pudu Prison & Ors. [1985] 2 MLJ 385, through the speaking judgment of Abdul Hamid C.J. (Malaya) (as he then was), has held as the following: “The principle governing the striking out of pleadings is clear in that it is only in plain and obvious cases that recourse should be had to the summary process under Order 18 Rule 19 of the Rules of the High Court 1980: “the summary procedure under this Rule can only be adopted when it can clearly be seen that a claim or answer is on the face of it ‘obviously unsustainable’.” (Attorney-General of Duchy of Lancaster v. L. & N.W. Railway Co.) (Supreme Court Practice 1985). On an application to strike out the statement of claim and dismiss the action, the right course for the court is to strike out the claim if it satisfied that a claim does not disclose a reasonable cause of action.”. [Emphasis added] [47] The above principle was adopted in another Supreme Court case Bandar Builder Sdn Bhd & Ors v. United Malayan Banking Corporation Bhd [1993] 3 MLJ 36, where Mohamed Dzaiddin SCJ (as he then was) has decided that – 25 “The principles upon which the court acts in exercising its powers under any of the four limbs of O 18 r 19(1) of the RHC are well settled. It is only in plain and obvious cases that recourse should be had to the summary process under this rule (per Lindley MR in Hubbuck & Sons Ltd v Wilkinson, Heywood & Clark Ltd), and this summary procedure can only be adopted when it can be clearly seen that a claim or answer is on the face of it ‘obviously unsustainable’ (see AG of Duchy of Lancaster v L & NW Rly Co). It cannot be exercised by a minute examination of the documents and facts of the case, in order to see whether the party has a cause of action or a defence (see Wenlock v Moloney & Ors).”. [Emphasis added] [48] Similar approach was followed by the Court of Appeal in Pengiran Othman Shah bin Pengiran Mohd. Yussof & Anor. v. Karambunai Resorts Sdn. Bhd. & 3 Ors. [1996] 1 CLJ 257. In delivering the decision of the Court, Siti Norma Yaakob JCA (as she then was) had stated as follows: “The discretionary power to dismiss an action summarily under O. 18, r. 19 and under the inherent jurisdiction of the Court is a drastic power which should only be exercised in plain and obvious cases, as the effect of the exercise of such a power is to shut out the plaintiff altogether from pursuing his claim. Tractor (M) Bhd. v. Tio Chee Hing [1975] 2 MLJ 1. Whether a case is plain or obvious does not depend upon the length of time it takes to argue the case but that when the case is argued on the affidavit evidence available, it becomes plain and obvious that the case has no chance of success. Mckay & Anor. v. Essex Area Health Authority & Anor. [1982] 2 AER 771. When a question of law becomes an issue, this in itself will not prevent the Court from granting the application for as long as the Court is satisfied that the issue of law is unarguable and unsustainable it may proceed to determine that question. See Bank Negara Malaysia v. Mohd Ismail & Ors. [1992] 1 SCR 445.”. [Emphasis added] 26 [49] Further, the Federal Court in Seruan Gemilang Makmur Sdn Bhd v. Kerajaan Negeri Pahang Darul Makmur & Anor [2016] 3 CLJ 1, through the speaking judgment of Ramly Ali FCJ, has set out the principles for striking out under Order 18 rule 19 of ROC 2012 as follows: “[25] The principles for striking out pleadings pursuant to O. 18 r. 19 of the ROC are well settled. It is only in a plain and obvious case that recourse should be had to the summary process under this rule; and this summary process can only be adopted when it can clearly be seen that a claim on the face of it is obviously unsustainable (see: Bandar Builder (supra), Hubbuck & Sons Ltd v. Wilkinson, Heywood & Clard Ltd [1899] 1 QB 86; Attorney General of the Duchy of Lancaster v. London and North Western Railway Company [1892] 3 Ch 274). [26] The tests for striking out application under O. 18 r. 19 of the ROC, as adopted by the Supreme Court in Bandar Builder (supra) are, inter alia as follows: (a) it is only in plain and obvious cases that recourse should be had to the summary process under the rule; (b) this summary procedure can only be adopted when it can be clearly seen that a claim or answer is on the face of it ‘obviously unsustainable’ (emphasis added); (c) it cannot be exercised by a minute examination of the documents and facts of the case in order to see whether the party has a cause of action or a defence; and (d) if there is a point of law which requires serious discussion, an objection should be taken on the pleadings and the point set down for argument under O. 33 r. 3 of the ROC; and 27 (e) the court must be satisfied that there is no reasonable cause of action or that the claims are frivolous or vexatious or that the defences raised are not arguable.”. [Emphasis added] [50] It was further held in Seruan Gemilang Makmur Sdn Bhd (supra) that – “[28] The basic test for striking out as laid down by the Supreme Court in Bandar Builder (supra) is that the claim on the face of it must be ‘obviously unsustainable’. The stress is not only on the word ‘unsustainable’ but also on the word ‘obviously’ ie, the degree of unsustainability must appear on the face of the claim without having to go into lengthy and mature consideration in detail. If one has to go into lengthy and mature consideration in detail of the issues of law and/or fact, then the matter is not appropriate to be struck out summarily. It must be determined at trial. [29] The established rule on this point is that the court should not examine the evidence in this summary proceedings in such a way as to amount to conducting a trial on the conflicting affidavit evidence. As rightly said by Lord Diplock in the House of Lords in American Cyanamid Co v. Ethicon Ltd [1975] AC 396 at p. 407: ... The court no doubt must be satisfied that the claim is not frivolous or vexatious; in other words, that there is a serious question to be tried. It is no part of the court’s function at this stage of the litigation to try to resolve conflicts of evidence on affidavit as to facts on which the claims of either party may ultimately depend nor to decide difficult questions of law which call for detailed argument and mature considerations. These are matters to be dealt with at the trial ... 28 This passage was cited with approval by the Privy Council in a Malaysian case of Eng Mee Yong v. Letchumanan [1979] 1 LNS 18; [1979] 2 MLJ 212.”. [Emphasis added] [51] From the above authorities, it is abundantly clear that the Court may exercise its discretionary power to strike out a claim in a plain and obvious case and if the Court is satisfied that the case has no chance of success, there is no serious question to be tried and the claim does not disclose any reasonable cause of action. [52] With regard to the proper approach to be taken where a striking out application is made on multiple limbs of Order 18 rule 19(1) of ROC 2012, as in the Defendants’ applications in Enclosure 11 and Enclosure 12, Ramly Ali JCA (as he then was) in delivering the judgment of the Court of Appeal in See Thong & Anor v Saw Beng Chong [2013] 3 MLJ 235 has explained as the following: “(9) An applicant for striking out under O 18 r 19 can rely on any one or more than one sub-paras (a)–(d). So far, there is no authority to say otherwise. Halsbury’s Laws of Malaysia clearly confirms that an applicant under this rule is entitled to rely on any or all of the grounds specified in the rule. An application under this rule is not void and ineffective merely because sub-para (a) had been pleaded together with sub-paras (b)–(d). The only limitation imposed under sub-r (2) is that for an application under sub-para (a), no evidence is admissible. However, where the court proceeds to decide an application under any other sub- paragraph, affidavit evidence should be admissible. Even though sub-paras (b)– 29 (d) are to be read disjunctively, it does mean that an applicant cannot rely on more one sub-paragraph in his application, (see Malayan United Finance Bhd lwn Cheung Kong Plantation Sdn Bhd dan lain-lain [2000] 2 MLJ 38; [2000] 2 CLJ 601; Pegasus Engineers Sdn Bhd v Sambu (M) Sdn Bhd [1998] 4 MLJ 129 and Malaysian Court Practice 2007 Desk Edition (High Court) p 239).”. [Emphasis added] Analysis and finding of the Court [53] Upon scrutinising the Plaintiff’s Statement of Claim and the Defendants’ striking out applications in Enclosure 11 and Enclosure 12, and analysing the submissions of both parties and the relevant applicable laws, it is the finding of this Court that this is not a fit and proper case to allow the striking out application under Order 18 rule 19(1)(a), (b) and/or (d) of ROC 2012 against the Plaintiff’s claim. [54] This is because this Court is satisfied that, based on the pleadings and the cause papers, the Plaintiff’s claim has disclosed a reasonable cause of action against the Defendants, has a chance to succeed, has a serious question to be tried and is not frivolous, vexatious and/or an abuse of the process of the Court. Therefore, in the interest of justice, this Court is of the opinion that this matter should go for full trial and witnesses be called to testify on the averments of the parties and the disputed facts and evidence. 30 [55] The finding of this Court that the Plaintiff has a reasonable cause of action against the Defendants and the Plaintiff’s claim is not frivolous, vexatious and/or an abuse of the process of the Court, is premised on four main grounds. [56] Firstly, the Plaintiff had pleaded fraud against the Defendants in the Statement of Claim. The Plaintiff, inter alia, averred that – (i) the 1st Defendant had fraudulently and/or with deceit induced the Plaintiff to enter into the Foreclosure Judgment and/or Amended Foreclosure Judgment on terms and upon the representation that the SPA and/or Supplementary SPA would be executed with the 7th Defendant in accordance with letter dated 18.04.2014 and/or with the express and/or implied terms of the Foreclosure Judgment and/or Amended Foreclosure Judgment; (ii) the 1st Defendant had fraudulently and/or with deceit induced the Plaintiff to enter into the Foreclosure Judgment and/or Amended Foreclosure Judgment on terms and upon the representation that the SPA and/or Supplementary SPA would be executed with the 7th Defendant in accordance with letter dated 18.04.2014 and/or with the express and/or implied terms of the Foreclosure 31 Judgment and/or Amended Foreclosure Judgment but the 1st Defendant and/or the 7th Defendant had omitted material facts regarding the relationship between the directors of the 7th Defendant which evinced the 1st and 7th Defendants’ intention to prevent the Plaintiff from recovering the proceeds of the sum of RM20,555,943.62 from the sale or auction of the Charged Land; (iii) in forwarding the SPA and Supplementary SPA to the Plaintiff on 05.11.2014 and 11.12.2014 respectively, the 1st Defendant, the 6th Defendant, the 7th Defendant, the 8th Defendant and the 9th Defendant had jointly and/or severally fraudulently represented to the Plaintiff that the SPA and Supplementary SPA would give effect to the terms of the letter dated 18.04.2014 and/or with the express and/or implied terms of the Foreclosure Judgment and/or Amended Foreclosure Judgment; and (iv) the Foreclosure Judgment and/or Amended Foreclosure Judgment the SPA and Supplementary SPA were mere shams and/or tools for the 1st Defendant to 4th Defendant to avoid their respective obligations as guarantors pursuant to the Original Facility Guarantee and the Guarantee from repaying the Plaintiff 32 the sum owed by the 1st Defendant and to avoid any execution proceedings from being taken against the 2nd to 4th Defendants. [57] Relying on the Federal Court case of Seruan Gemilang Makmur Sdn Bhd (supra) and Chee Pok Choy & Ors v Scotch Leasing Sdn Bhd [2001] 4 MLJ 346, the law is clear that any allegation of fraud could not be resolved summarily through a striking out process. The fraud needs to be proved by evidence in a trial. Hence, this is not a fit and proper case to grant the Defendants’ striking out applications. [58] Secondly, the Plaintiff averred that a trial is necessary to determine whether the 2nd to 6th Defendants and the 8th Defendant had colluded to defraud the Plaintiff. It is based on the following assertions – (i) the 2nd to 4th Defendants, as directors of the 1st Defendant at the material time had colluded with the 8th to 12th Defendants, as the directors of the 7th Defendant; (ii) the 1st and 7th Defendants as at 28/11/2016 had shared the same business address at Wisma Sentosa, Jalan Kampung Perak, Alor Setar Kedah and they had one common shareholder namely Harta Sentosa Sdn Bhd; 33 (iii) the directors of the 7th Defendant and Harta Sentosa Sdn Bhd at the material times were the same persons, namely the 8th and 9th Defendants; and (iv) the directors of the 1st Defendant and 7th Defendant were family related. The 2nd Defendant, 3rd Defendant, 5th Defendant, 6th Defendant, 10th Defendant, 11th Defendant and 12th Defendant have the same family surname and it is likely that they have familial relationship. [59] Thus, to determine whether the 2nd to 6th Defendants and the 8th to 12th Defendants had colluded to defraud the Plaintiff, it is the view of this Court that a proper trial should be held and witnesses be called to give evidence. [60] Thirdly, a trial should be set up to determine whether the 7th Defendant had breached the express and/or implied terms of the SPA and/or the Supplementary SPA by not paying the sale price and/or failing to implement the terms of the SPA and/or the Supplementary SPA within a reasonable time. The Plaintiff, amongst others, has made the following averments in his pleading – 34 (i) the 7th Defendant did not have a valid development license from the Jabatan Perumahan Negara in order to continue with the construction of the Project; (ii) the 7th Defendant did not apply to the Jabatan Perumahan Negara for a license to continue with the construction of the Project; (iii) the 7th Defendant has failed to undertake the following: (a) to submit and obtain the Planning Permission from the Alor Setar City Council (“ASCC”); (b) to submit Borang B for the purpose of continuing the construction work of the Project to ASCC for its approval; (c) to submit the engineering plan and subsidiary plan to the ASCC for its approval; and (d) to submit the electric supply system plan to Tenaga Nasional Berhad for its approval. 35 [61] Since there are a lot of disputed facts and serious issues of facts and law been raised by both the Plaintiff and the Defendants, and the documents that have been filed in this case are voluminous and require lengthy argument, it will only be fit and appropriate to resolve this matter through a proper trial so that witnesses can be called to adduce evidence in the Court. [62] This position has been approved by the Court of Appeal in Sivarasa Rasiah & Ors v Che Hamzah Che Ismail & Ors [2012] 1 MLJ 473 where it was held by Ramly Ali JCA as follows: “[15] A striking out order should not be made summarily by the court if there is issue of law that requires lengthy argument and mature consideration. It should also not be made if there is issue of fact that is capable of resolution only after taking viva voce evidence during trial, (see Lai Yoke Ngan & Anor v Chin Teck Kwee & Anor [1997] 2 MLJ 565 (Federal Court)).”. [Emphasis added] [63] Fourthly, on the issue of res judicata, the Defendants contended that the Plaintiff’s action is barred by the doctrine of res judicata and estoppel as the Plaintiff attempts to relitigate the issues of the Foreclosure Proceedings and the Application for Directions which had already been raised and fully ventilated and disposed of by the High Court of Kuala Lumpur. 36 [64] The doctrine of res judicata has been clearly defined and explained by Peh Swee Chin FCJ in the Federal Court case of Asia Commercial Finance (M) Bhd v Kawal Teliti Sdn Bhd [1995] 3 MLJ 189 as follows: “[19] The Latin term ‘res judicata’ literally translated means ‘a matter adjudged’. The full maxim is res judicata pro veritate accipitur which means ‘a matter adjudged is taken as truth’. In explaining what is res judicata, in Asia Commercial Finance (M) Bhd v Kawal Teliti Sdn Bhd [1995] 3 MLJ 189, the Supreme Court said: What is res judicata? It simply means a matter adjudged, and its significance lies in its effect of creating an estoppel per rem judicatum. When a matter between two parties has been adjudicated by a court of competent jurisdiction, the parties and their privies are not permitted to litigate once more the res judicata, because the judgment becomes the truth between such parties, or in other words, the parties should accept it as the truth; res judicata pro veritate accipitur. The public policy of the law is that, it is in the public interest that there should be finality in litigation — interest rei publicae ut sit finis litium. It is only just that no one ought to be vexed twice for the same cause of action — nemo debet bis vexari pro eadem causa. Both maxims are the rationales for the doctrine of res judicata, but the earlier maxim has the further elevated status of a question of public policy. Since a res judicata creates an estoppel per rem judicatum, the doctrine of res judicata is really the doctrine of estoppel per rem judicatum, the latter being described sometimes in a rather archaic way as estoppel by record. Since the two doctrines are the same, it is no longer of any practical importance to say the res judicata is a rule of procedure and that an 37 estoppel per rem judicatum is that of evidence. Such dichotomy is apt to give rise to confusion. The starting point ought to be the celebrated passage by Wigram VC in the case of Henderson v Henderson (1843) 3 Hare 100 at p 115 which is: The plea of res judicata applies, except in special cases, not only to points upon which the court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation and which the parties, exercising reasonable diligence might have brought forward at the time.”. [Emphasis added] [65] The above principle of res judicata was adopted and approved in another Federal Court case of Kerajaan Malaysia v Mat Shuhaimi bin Shafiei [2018] 2 MLJ 133 where Ahmad Maarop CJ (Malaya) (as he then was) in delivering the speaking judgment of the Court had held that – “[19] The Latin term ‘res judicata’ literally translated means ‘a matter adjudged’. The full maxim is res judicata pro veritate accipitur which means ‘a matter adjudged is taken as truth’. In explaining what is res judicata, in Asia Commercial Finance (M) Bhd v Kawal Teliti Sdn Bhd [1995] 3 MLJ 189, the Supreme Court said: What is res judicata? It simply means a matter adjudged, and its significance lies in its effect of creating an estoppel per rem judicatum. When a matter between two parties has been adjudicated by a court of competent jurisdiction, the parties and their privies are not permitted to litigate once more the res judicata, because the 38 judgment becomes the truth between such parties, or in other words, the parties should accept it as the truth; res judicata pro veritate accipitur.”. [Emphasis added] [66] Based on the principles laid down in the abovementioned cases, it is crystal clear that under the doctrine of res judicata, once a matter between two parties has been adjudicated by the Court, they are not allowed to relitigate the res judicata as no one to be tried twice for the same cause of action. This is in line with the public policy which requires that there should be finality in litigation. [67] With regard to the meaning of estoppel, Peh Swee Chin FCJ in delivering the judgment of the Federal Court in Asia Commercial Finance (M) Bhd v Kawal Teliti Sdn Bhd (supra) had stated that – “On the other hand, the issue estoppel literally means simply an issue which a party is estopped from raising in a subsequent proceeding. However, the issue estoppel, in a nutshell, from a consideration of case law, means in law a lot more, ie that neither of the same parties or their privies in a subsequent proceeding is entitled to challenge the correctness of the decision of a previous final judgment in which they, or their privies, were parties. ... ... while another school of thought holds the contrary view that such issues which might have been and which were not brought forward as described, though 39 not actually decided by the court, are still covered by the doctrine of res judicata, ie doctrine of estoppel per rem judicatum. We are of the opinion that the aforesaid contrary view is to be preferred; it represents for one thing, a correct even though broader approach to the scope of issue estoppel.”. [Emphasis added] [68] The principle of estoppel is also applied in the case of Double Advantage Sdn Bhd v. Paduan Hebat Sdn Bhd & Anor [2017] 1 LNS 1391. In this case, the Court of Appeal is of the view that estoppel would be applicable to any person from asserting or denying a fact or a right and it can arise in many circumstances. Harmindar Singh Dhaliwal JCA (as he then was) in delivering the speaking judgment of the Court has stated as follows: “[33] We also agree that, in this context, the learned judge had failed to consider or address the issue of estoppel. Estoppel is basically a legal principle which bars a person, as the name suggests, from asserting or denying a fact or a right. Such a prohibition arises from a person's conduct, silence, acquiescence or concealment of material facts. There are however many types of estoppel which can arise due to the myriad of circumstances. It is first and foremost an equitable doctrine. Its underlying purpose is to prevent injustice.”. [Emphasis added] [69] The Plaintiff however submitted that his action against the Defendants in this case is not barred by the principle of res judicata as the issues raised 40 in the Plaintiff’s action herein are substantially different from the High Court decision in the Application for Directions. [70] According to the Plaintiff, the issue that had been adjudicated by the High Court of Kuala Lumpur was whether the 1st Defendant had complied with the terms of the Consent Judgment and/or the Amended Consent Judgment in determining the Plaintiff’s Application for Directions before the Plaintiff could proceed with the auction. [71] In contrast, the Plaintiff submitted that, as pleaded in the Statement of Claim, the causes of action in the present action are premised on fraud and breach of contract which have not been adjudicated by any court of law. [72] It was further submitted that the parties are different in the previous Foreclosure Proceedings and the present civil action. In the Foreclosure Proceedings, the action was only against the 1st Defendant, whereas in the present action it is not only against the 1st Defendant but also against the 2nd to the 12th Defendants. 41 [73] In view of the above contentions, this Court is of the view that in order to determine the issue of res judicata and estoppel, it would be fit and appropriate to adjudicate this issue in a proper trial. CONCLUSION [74] In conclusion, for the reasons adumbrated above, this Court finds that as the Plaintiff has successfully disclosed a reasonable cause of action in the Writ and Statement of Claim against the Defendants and this action is not frivolous, vexatious and an abuse of the process of the Court, this is not a plain and obvious case that recourse should be had to the summary process under Order 18 rule 19(1) of ROC 2012. [75] Based on the guiding principles enunciated in the cases of Bandar Builder Sdn Bhd & Ors (supra) and Seruan Gemilang Makmur Sdn Bhd (supra), this is a fit, proper and appropriate case to go for full trial where the evidence of material witnesses is necessary to be adduced before the Court. 42 [76] In the upshot, the Defendants’ applications to strike out the Plaintiff’s Writ and Statement of Claim in Enclosure 1 and Enclosure 2 respectively, pursuant to Order 18 rule 19(1)(a), (b) and/or (d) of ROC 2012, are dismissed with costs of RM5,000.00 for each application. Dated: 16 July 2021 (DR. ARIK SANUSI BIN YEOP JOHARI) Judicial Commissioner High Court of Malaya, Alor Setar Kedah Darul Aman 43 Counsels – Counsel for the Plaintiff: Encik Abdul Rashid Ismail (Bersama Puan Azreen Ahmad Rastom) Tetuan Rashid Zulkifli Advocates and Solicitors D2-5-5, Block D Solaris Dutamas No. 1, Jalan Dutamas 1 50480 Kuala Lumpur Counsels for the 1st Defendant – 6th Defendant: Encik Chan Kay Ding, Damien (Bersama Encik Tai Jun Yan) Tetuan Kevin & Co Advocates and Solicitors 1030-A (GF), Jalan PSK3 Kompleks Simpang Kuala Pekan Simpang Kuala 05400 Alor Setar Kedah Darul Aman Counsels for the 7th Defendant – 12th Defendant: Encik David Yii Hee Kiet Tetuan Chooi, Saw & Lim Advocates and Solicitors Suite 19.03, Level 19 Menara Haw Par Jalan Sultan Ismail 50250 Kuala Lumpur 44