1. ) Metallurgical Corporation of China Ltd 2. ) MCC Overseas (M) Sdn Bhd 1. ) Malayan Banking Berhad 2. ) Malayan Banking Berhad, Beijing Branch

WA-24NCC-473-04/2022 Kand. 68 08/12/2022 09:28:06 IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR IN THE FEDERAL TERRITORIES OF MALAYSIA (COMMERCIAL DIVISION) ORIGINATING SUMMONS NO: WA-24NCC-473-04/2022 In the matter of Sections 41, 51, 52 and 53 of the Specific Relief Act, 1950 And In the matter of Order 15 Rule 16 and Order 29 of the Rules of Court, 2012 And In the matter of a Counter Guarantee dated 20-12-2017 bearing the reference number 00101/2017/000003 And In the matter of a Bank Guarantee for Due Performance of Contract dated 29-12-2017 bearing the reference 99140BGJ6230024 BETWEEN 1. METALLURGICAL CORPORATION OF CHINA LTD 2. MCC OVERSEAS (M) SDN BHD ...PLAINTIFFS AND 1. MALAYAN BANKING BERHAD 2. MALAYAN BANKING BERHAD, BEIJING BRANCH ...DEFENDANTS 1 S/N HgRbPemAkUecjug3bzfyQ **Note : Serial number will be used to verify the originality of this document via eFILING portal JUDGMENT Introduction [1] In this action, the 1st Plaintiff, Metallurgical Corporation of China Ltd (“MCCL”) and the 2nd Plaintiff, MCC Overseas (M) Sdn Bhd (“MCCOSB”) sought certain declaratory orders and injunctions to restrain the 2nd Defendant, Malayan Banking Berhad, Beijing Branch (“Maybank Beijing”) from making a payment to the 1st Defendant, Malayan Banking Berhad (“Maybank Malaysia”) and any other third parties under a Counter Guarantee. [2] A demand was made by Maybank Malaysia, the beneficiary under the Counter Guarantee, on Maybank Beijing and the main issue before the Court was whether the Counter Guarantee was an on-demand bond, which entitles Maybank Malaysia to be paid immediately upon demand or a contract of indemnity, which only entitles Maybank Malaysia to be paid upon the occurring of certain events. Background facts [3] Damai City Sdn Bhd (“Damai”), as the employer, entered into a construction agreement with MCCOSB as the contractor (“the Construction Contract”), in relation to the construction of a project called the “8 Conlay Project” in Malaysia on or around 19.5.2017. Damai appointed MCCOSB as the main contractor for the project. MCCL, 2 S/N HgRbPemAkUecjug3bzfyQ **Note : Serial number will be used to verify the originality of this document via eFILING portal incorporated and based in China, is the ultimate parent company of MCCOSB. In China, the banker for MCCL is Maybank Beijing, with is Maybank Malaysia’s branch in Beijing. MCCOSB and Maybank Malaysia, also part of the Maybank Group, entered into a Facilities Agreement dated 29.6.2017 which was accepted by MCCL on 10.7.2017. [4] By the Construction Contract, Damai required a performance bond for the 8 Conlay Project. Pursuant to the Construction Contract, if there is any breach of the Construction Contract, Damai may call on the performance bond. In consideration of Maybank Malaysia issuing a performance bond in favour of Damai at the request of Maybank Beijing, Maybank Beijing issued a Counter Guarantee dated 20.12.2017 in favour of Maybank Malaysia (“the Counter Guarantee”). The Counter Guarantee, governed by the laws of Malaysia, provides that Maybank Beijing is irrevocably and unconditionally obligated to pay Maybank Malaysia a sum in USD19,576,271.19 upon receipt by Maybank Beijing of Maybank Malaysia’s demand. [5] Pursuant to Maybank Beijing’s Counter Guarantee, Maybank Malaysia issued a performance bond dated 29.12.2017 for a sum up to RM71,400,000.00 (“the Sum”) in favour of Damai (“the Performance Bond”). The Performance Bond provides that Maybank Malaysia is irrevocably and unconditionally obligated to pay Damai the Sum upon receipt of a demand in writing. 3 S/N HgRbPemAkUecjug3bzfyQ **Note : Serial number will be used to verify the originality of this document via eFILING portal [6] Under the Performance Bond, Damai agreed to immediately assign all benefits, rights and powers under the Performance Bond to Maybank Malaysia. By the Counter Guarantee, Maybank Beijing had likewise undertaken to honour claims made by Maybank Malaysia although the benefit of the Performance Bond has been assigned to Maybank Malaysia. The assignment was consented to by MCCOSB. The Performance Bond was then assigned by Maybank Malaysia to Maybank Investment Bank Berhad (“Maybank IB”) who is the current beneficiary of the Performance Bond. By way of a SWIFT message dated 2.9.2019 from Maybank Beijing to Maybank Malaysia, the Counter Guarantee was amended whereas Maybank Beijing had undertaken to honour claims made by Maybank Malaysia although the benefit of the Performance Bond was assigned to Maybank IB. [7] On 12.8.2020, Damai made a demand on the Performance Bond on the basis that MCCL failed to execute the Construction Contract and has committed breaches of its obligations thereunder. This demand was rejected by Maybank Malaysia on 14.8.2020 as the rights, powers and benefit under the Performance Bond had already been assigned to Maybank IB. On 14.8.2020, Damai requested for Maybank IB to make a demand on the Performance Bond. On 17.8.2020, Maybank IB made a demand on the Performance Bond for immediate payment of the Sum or equivalent to USD17,317,487.27 (“Maybank IB’s Demand”), which was received by Maybank Malaysia on 4 S/N HgRbPemAkUecjug3bzfyQ **Note : Serial number will be used to verify the originality of this document via eFILING portal the same day of 17.8.2020. On the same day of 17.8.2020 at 2:47 p.m, by a SWIFT message, Maybank Malaysia called on the Counter Guarantee via its demand dated 17.8.2020, informing Maybank Beijing that it had received Maybank IB’s Demand. [8] Prior to this, MCCOSB filed Kuala Lumpur High Court Originating Summons No. WA-24C(ARB)- 28-08/2020) (“OS 28”) on 14.8.2020 against Maybank Malaysia, Maybank IB and Damai for: a) An injunction to restrain Maybank Malaysia from making payment of the Sum under the Performance Bond, pending the disposal of the arbitral proceedings initiated by MCCOSB against Damai (“the Arbitral Proceedings”); and b) An injunction to restrain Maybank IB and Damai from receiving and/or utilizing any monies that may have been received from Maybank Malaysia under the Performance Bond pending the disposal of the Arbitral Proceedings. [9] Pursuant to an interlocutory injunction application (“the Injunction Application”) for similar reliefs as OS 28 that on 17.8.2020, MCCOSB obtained an ex-parte interim injunction order (“the Ex-Parte Interim Injunction Order”) from the Kuala Lumpur High Court to restrain Maybank IB and Damai from receiving and/or utilizing any monies that may 5 S/N HgRbPemAkUecjug3bzfyQ **Note : Serial number will be used to verify the originality of this document via eFILING portal have been received from Maybank Malaysia under the Performance Bond pending the disposal of OS 28. [10] Before Maybank Malaysia could make such payment pursuant to Maybank IB’s Demand, Maybank Malaysia was served with the Ex-Parte Interim Injunction Order on 17.8.2020 at/about 4:31 p.m. Therefore, Maybank Malaysia’s irrevocable and unconditional payment obligations under the Performance Bond were immediately suspended pending the resolution of the OS 28. [11] As for the Counter Guarantee, Maybank Beijing took the position that its irrevocable and unconditional payment obligations under the Counter Guarantee were likewise immediately suspended pending the resolution of the OS 28. Maybank Beijing issued a SWIFT message dated 24.8.2020 to Maybank Malaysia stating that Maybank Beijing will hold off on further processing of Maybank Malaysia’s claim pending the court judgement in OS 28 due to the Ex-Parte Interim Injunction Order on Maybank IB’s Demand. [12] The Ex-Parte Interim Injunction Order was then extended by an Ad-Interim Injunction Order dated 28.8.2020. On 27.8.2020, Damai filed an application dated 17.8.2020 to set aside the Ex-Parte Interim Injunction Order (“the Setting Aside Application”). On 17.5.2021, the Kuala Lumpur High Court allowed the said injunction in paragraph 8(b) above, restraining Damai and Maybank IB and other 6 S/N HgRbPemAkUecjug3bzfyQ **Note : Serial number will be used to verify the originality of this document via eFILING portal third parties, whether by themselves, their directors, managers, officers, employees, servants, agents or otherwise howsoever, from receiving and / or utilising any monies that may have been received from Maybank Malaysia under the Performance Bond pending the arbitral proceedings between MCCL and Damai. The said injunction in paragraph 8(a) above was not allowed by the High Court. The High Court also disallowed the Setting Aside Application. [13] On 6.4.2022, upon Damai’s appeals, the Court of Appeal allowed the appeals, finding that the call on the Performance Bond was lawful, and set aside the High Court Order dated 17.5.2021. By consent of all parties on 6.4.2022, the Court of Appeal also gave an order that the monies held under the Performance Bond be paid out to an interest-bearing account designated and controlled by Maybank IB within five working days and to be held in escrow by Maybank IB pending the disposal MCCL’s formal Erinford Injunction Application, filed earlier on 7.4.2022, by the Court of Appeal. [14] Maybank Malaysia took the position that the Court of Appeal Order dated 6.4.2022 which lifted the injunction granted by the Kuala Lumpur High Court also lifted the suspension on both Maybank Malaysia and Maybank Beijing’s irrevocable and unconditional payment obligations under the respective Performance Bond and Amended Counter Guarantee. Pursuant to this, on 7.4.2022, Maybank 7 S/N HgRbPemAkUecjug3bzfyQ **Note : Serial number will be used to verify the originality of this document via eFILING portal Malaysia sent an update to Maybank Beijing on the Court of Appeal Order and by way of a SWIFT message dated 7.4.2022 stated that Maybank Malaysia is required to remit the Sum and requested Maybank Beijing to remit to Maybank Malaysia and amount of USD17,618,853.86, which is the USD equivalent to the Sum based on the exchange rate on 7.4.2022. [15] On 12.4.2022, the Plaintiffs filed this Originating Summons (“this OS”) and on 13.4.2022 the Court granted an ad- interim injunction whereby Maybank Malaysia, whether by themselves, or their directors, managers, officers, employees, servants, agents be restrained from receiving and/or utilising any monies that may have been received from Maybank Beijing under the Counter Guarantee, pending the disposal of this OS. [16] On 28.4.2022, MCCOSB filed an application for leave to appeal to the Federal Court against the said decision of the Court of Appeal (“MCCOSB’s FC Leave Application”). [17] Since Maybank Malaysia’s payment obligations under the Performance Bond were no longer suspended, Maybank Malaysia proceeded on 10.5.2022, pursuant to the Court of Appeal Order dated 6.4.2022, the Performance Bond and Maybank IB’s Demand to pay into a Maybank IB account the Sum. Maybank IB placed the said monies in the Money Market Deposit with Maybank Malaysia on 11.5.2022. 8 S/N HgRbPemAkUecjug3bzfyQ **Note : Serial number will be used to verify the originality of this document via eFILING portal [18] On 18.5.2022, the Court of Appeal heard MCCL’s Erinford Injunction Application and by consent of all parties, the Court of Appeal gave an Order that the Sum is to be continued to be held in escrow by Maybank IB, pending the disposal of MCCOSB’s FC Leave Application. The Plaintiffs’ action [19] In this OS, the Plaintiffs prayed, inter alia, for the following: a) A declaration that the demand by Maybank Malaysia on the Counter Guarantee on 17.8.2020 is premature, ineffectual, and accordingly unenforceable; b) A declaration that the Counter Guarantee having expired on 12.7.2021, and that any demand on the Counter Guarantee after 12.7.2021, including the one made by Maybank Malaysia on 7.4.2022 is invalid, and accordingly unenforceable; c) An injunction restraining Maybank Beijing whether by themselves, or their directors, managers, officers, employees, servants, agents or otherwise howsoever from making payments of USD17,618,853.86 or sum equivalent to it and/or any sums in any manner to Maybank Malaysia and any other third parties under the Counter Guarantee; and 9 S/N HgRbPemAkUecjug3bzfyQ **Note : Serial number will be used to verify the originality of this document via eFILING portal d) An injunction restraining Maybank Malaysia and any other third parties, whether by themselves, or their directors, managers, officers, employees, servants, agents or otherwise howsoever from receiving and/or utilising any monies that may have been received from Maybank Beijing under the Counter Guarantee. The Plaintiffs and the Defendants’ respective cases [20] The Plaintiffs’ case is primarily that the Counter Guarantee is a contract of indemnity and not an on-demand bond. Therefore, Maybank Malaysia must first suffer loss by reason of the issuance of the Performance Bond. Because Maybank Malaysia has not yet paid out the Sum on Maybank IB’s Demand, the demand made by Maybank Malaysia to Maybank Beijing on the Counter Guarantee is premature and unenforceable. [21] The Plaintiffs also contended that there was unconscionable conduct on the part of Maybank Malaysia in demanding on the Counter Guarantee as it had also made a demand on the Counter Guarantee on 7.8.2020, before there was any demand on the Performance Bond. [22] In relation to the prayer stated in para 19(b) above, the Plaintiffs contended that a demand was made by Maybank Malaysia to Maybank Beijing on the Counter Guarantee on 7.4.2022 and this was invalid and unenforceable as the Counter Guarantee was valid only until 12.7.2021. 10 S/N HgRbPemAkUecjug3bzfyQ **Note : Serial number will be used to verify the originality of this document via eFILING portal [23] Maybank Malaysia instead contended that the Counter Guarantee is an on-demand bond and not a contract of indemnity. Maybank Malaysia can pay out the Sum on Maybank IB’s demand as no loss needs to be suffered first by Maybank Malaysia by reason of the issuance of the Performance Bond. [24] Maybank Malaysia denied there was ever any demand made on the Counter Guarantee on 7.8.2020. In respect of the demand which the Plaintiffs said was made by Maybank Malaysia to Maybank Beijing on the Counter Guarantee on 7.4.2022, Maybank Malaysia’s contention that this is only an update on the Court of Appeal Order dated 6.4.2022 and a reminder for Maybank Beijing for the payment under the Counter Guarantee pursuant to Maybank Malaysia’s demand dated 17.8.2020. Findings and analysis of the Court Whether the Counter Guarantee is an on-demand bond [25] The Plaintiffs’ position is that the Counter Guarantee is a contract of indemnity and not an on-demand bond. The Plaintiffs’ submitted that from the words “hold you harmless from any claim, charges and expenses”, “you” referring to Maybank Malaysia indicates that the parties’ objective intention is to treat the Counter Guarantee as a contract of indemnity. 11 S/N HgRbPemAkUecjug3bzfyQ **Note : Serial number will be used to verify the originality of this document via eFILING portal [26] The Plaintiffs argued that being a contract of indemnity, the Counter Guarantee is intended to indemnify Maybank Malaysia in the event Maybank Malaysia suffers any loss by reason of the issuance of the Performance Bond. Therefore, in order for Maybank Malaysia to make a valid demand on the Counter Guarantee, it must have already paid out the Sum upon a demand being made on the Performance Bond and any demands made prior to Maybank Malaysia suffering actual loss is premature and unenforceable. [27] The Court does not accept the position taken by the Plaintiffs and finds that the Counter Guarantee is an unconditional and on-demand bond, not an indemnity. Therefore, there is no restriction for Maybank Beijing to pay the Sum to Maybank Malaysia upon receipt by Maybank Beijing of Maybank Malaysia’s demand dated 17.8.2020. [28] Maybank Malaysia’s demand of 17.8.2020 on the Counter Guarantee, was made on the basis that Maybank Malaysia had received Maybank IB’s Demand dated 17.8.2020 sent earlier on the Performance Bond without first paying out the Sum or suffered any loss. [29] The relevant part of the Counter Guarantee reads: “In consideration of your issuing the Bank Guarantee in favour of Damai City Sdn Bhd (Company No. 1041322-H) at our request, we Malayan Banking Berhad, Beijing Branch of 32nd Floor, China World Tower A, No.1 Jianguomenwai Revenue, Beijing, China hereby issue our Counter 12 S/N HgRbPemAkUecjug3bzfyQ **Note : Serial number will be used to verify the originality of this document via eFILING portal Guarantee no. 00101/2017/000003 in your favour and hereby irrevocably and unconditionally guarantee to pay you and to hold you harmless from any claim, charges and expenses which may arise by reason of your doing so the sum in USD19,576,271.19 (say USD Nineteen Million Five Hundred and Seventy Six Thousand Two Hundred and Seventy One and Nineteen Cents only) upon receipt by us of your demand notwithstanding any contestation or protest by our customer Metallurgical Corporation of China Ltd, No.28 Shuguangxili, Chaoyang District, Beijing, China or any other third party and without any further proof or conditions. We hereby undertake to honour claims made by you although the benefit of your Bank Guarantee has been assigned to Malayan Banking Berhad, notwithstanding any contestation or protest by Applicant or by any other third party without proof or conditions. [30] There is no condition stated in the Counter Guarantee that before Maybank Malaysia could make such demand Maybank Malaysia has to suffer loss by making payment on the Performance Bond. The Court will not rewrite the terms of the Counter Guarantee, to which the Plaintiffs are not parties. [31] The International Chamber of Commerce (ICC) Uniform Rules for Demand Guarantees (UDRG 758) is incorporated in the Counter Guarantee as in the Counter Guarantee (by way of a SWIFT message dated 27.12.2017), it was clearly stated that URDG 758 was applicable. The SWIFT message is reproduced below: 13 S/N HgRbPemAkUecjug3bzfyQ **Note : Serial number will be used to verify the originality of this document via eFILING portal [32] It was held by the English Commercial Court in WS Tankship II BV v Kwangju Bank Ltd and another [2011] EWHC 3103 (Comm) that the incorporation of the ICC Uniform Rules for Demand Guarantees (UDRG) is likely to be conclusive as to the nature of the instrument. Therefore, it is conclusive that the instrument in question here, the Counter Guarantee, is an unconditional and on-demand bond and not an indemnity. 14 S/N HgRbPemAkUecjug3bzfyQ **Note : Serial number will be used to verify the originality of this document via eFILING portal [33] The relevant articles in UDRG 758 which are applicable to the Counter Guarantee are Article 5, Article 15 and Article 4(c) and I shall explain the applicability of each of the articles below. [34] Article 5 of the UDRG 758 provides: “(a) A guarantee is by its nature independent of the underlying relationship and the application, and the guarantor is in no way concerned with or bound by such relationship. (b) ... The undertaking of a counter- guarantor to pay under the counter-guarantee is not subject to claims or defences arising from any relationship other than a relationship between the counter-guarantor and the guarantor...” [35] Pursuant to Article 5, the autonomy principle applies to the Counter Guarantee, whereby it was independent of the underlying Construction Agreement and not subject to any defences that there is a condition that Maybank Malaysia had to incur actual loss or had to pay out the Sum first, before being entitled to demand on the Counter Guarantee. [36] In Sumatec Engineering and Construction Sdn Bhd v Malaysian Refining Company Sdn Bhd [2012] 4 MLJ 1, it was stated in the bonds in question that the payment by the guarantor shall be without without any proof and conditions. The Federal Court held the bonds to be unconditional and on-demand performance bonds. Abdull Hamid Embong FCJ stated the principles governing performance bonds as follows: 15 S/N HgRbPemAkUecjug3bzfyQ **Note : Serial number will be used to verify the originality of this document via eFILING portal “[18] Of the various propositions on the concept of unconscionability that emerged from the case authorities adverted to in the judgment of the Court of Appeal, three entrenched principles may be discerned, as observed by Kartigesu JA speaking for the Singapore Court of Appeal in Bocotra. They are: (a) the autonomy principle — the guarantee constitutes a separate contract from the underlying transaction between the account party and the beneficiary; its privity being only between the beneficiary and the issuing bank; (b) the 'cash in hand' principle — reflecting the importance of promoting commercial efficacy and certainty in the use of letters (of credit) guarantees and bonds. This ties in with the autonomy principle; and (c) the 'fraud' exception — the sole exception to the autonomy and cash in hand principles arises where the plaintiff can establish fraud in the circumstances of the call or payment. This permits injunctive relief.” [37] The autonomy principle as stated in Article 5 is thus consistent with the principle stated above by the Federal Court in Sumatec (supra). Coming back to Article 5, as it is incorporated into the Counter Guarantee and the autonomy principle applies to the Counter Guarantee, it was independent of the underlying Construction Contract for the 8 Conlay Project and was not subject to any defences. By extension, this also meant that the Counter Guarantee was not subject to the condition that Maybank Malaysia had to incur actual loss or had to pay out the Sum first, before being entitled to demand on the Amended Counter Guarantee, as alleged. 16 S/N HgRbPemAkUecjug3bzfyQ **Note : Serial number will be used to verify the originality of this document via eFILING portal [38] Article 15 of URDG 758 provides: “(b) A demand under the counter-guarantee shall in any event be supported by a statement, by the party to whom the counter-guarantee was issued, indicating that such party has received a complying demand under the guarantee ...” [39] Applying Article 15 to the circumstances of this case, so long as a demand was made on the Performance Bond, Maybank Malaysia was entitled to make a demand on the Counter Guarantee. There was no such additional condition or requirement for Maybank Malaysia to have incurred loss first, or to have paid out the Sum first. [40] Para [990] of UDRG 758 explains: “...By choosing to instruct a guarantor to issue a demand guarantee subject to URDG, applicants renounced their ability to obstruct payment for reasons derived from their relationship with the beneficiary.” [41] The principles in URDG 758, in particular Article 15 of URDG 758 were affirmed by the Singapore High Court and Court of Appeal in Boustead Singapore Ltd v Arab Banking Corp [2015] 3 SLR 38 (Singapore High Court). Here, the Singapore High Court affirmed the principles found in Article 15 of URDG 758 when it considered URDG 458, the predecessor to UDRG 758: 17 S/N HgRbPemAkUecjug3bzfyQ **Note : Serial number will be used to verify the originality of this document via eFILING portal “The experts agreed that three fundamental principles of demand guarantee law were applicable: (a) that the demand guarantee is autonomous from the counter- guarantee, which is, in turn autonomous from the underlying contract; (b) that the issuer of a demand guarantee (or counter-guarantee) is concerned with documents and not external facts; and (c) that the issuer of a demand guarantee (or counter-guarantee) is only concerned with apparent conformity. These three principles also find expression in the URDG 458 which was incorporated into the CGs.” [42] The Singapore High Court decision was subsequently upheld by the Singapore Court of Appeal in Arab Banking Corp v Boustead Singapore Ltd v Arab Banking Corp [2016] 3 SLR 557 which held: “Where demand guarantees are concerned, it is well-established that a guarantor bank is obliged to pay promptly upon a demand being made by the beneficiary, so long as the demand falls within the terms of the guarantee. This is so irrespective of any dispute between the account party and the beneficiary, except where there is fraud.” [43] Article 4(c) of URDG 758 provides: “The beneficiary may present a demand from the time of issue of the guarantee ...” 18 S/N HgRbPemAkUecjug3bzfyQ **Note : Serial number will be used to verify the originality of this document via eFILING portal [44] Therefore, the Counter Guarantee being an unconditional and on-demand bond, there are no conditions to be satisfied before Maybank Malaysia can make a demand on the Counter Guarantee. [45] The words “hold harmless” present in the instant Counter Guarantee do not necessarily point towards the Counter Guarantee being an indemnity. In ACH Shipping Co Ltd v Ferry Charter Florida Co Ltd and others [1994] Lexis Citation 3950, the English High Court held that despite the words “hold you harmless against any loss or damage or expenses suffered by you upon receipt of your written request” used in an bank guarantee for which ship owners in a time charter were the beneficiary, the instrument is in effect a first demand guarantee where the bank's obligation to pay is triggered by the a written request from the owners rather than the fact that the owners have sustained the loss, damages or expense. [46] When the wording in the Counter Guarantee is read in totality, with particular emphasis given to the words “notwithstanding any contestation or protest by our customer Metallurgical Corporation of China Ltd, No.28 Shuguangxili, Chaoyang District, Beijing, China or any other third party and without any further proof or conditions” the resultant effect is that Maybank Beijing was irrevocably and unconditionally obligated to pay under the Counter Guarantee upon receipt of Maybank Malaysia’s demand dated 17.8.2020, notwithstanding any contestation or 19 S/N HgRbPemAkUecjug3bzfyQ **Note : Serial number will be used to verify the originality of this document via eFILING portal protest by the MCCL or any other third party (which would include MCCOSB) and without any further proof or conditions. This wording is in line with URDG 758, in particular Article 15, showing that the Counter Guarantee is an unconditional and on-demand bond, and not an indemnity as alleged. [47] In conclusion, Maybank Malaysia is entitled to make a demand on the Counter Guarantee as done by Maybank Malaysia via Maybank Malaysia’s demand dated 17.8.2020 upon receipt of Maybank IB’s Demand dated 17.8.2020 on the Performance Bond without first having paid out the Sum or suffering any loss. [48] As the Counter Guarantee is not an indemnity, there is no necessity for Maybank Malaysia to prove any loss it suffered by reason of the issuance of Performance Bond by having already paid out the Sum before making demand on the Counter Guarantee. [49] Even if the Counter Guarantee was an indemnity, upon receipt of Maybank IB’s Demand dated 17.8.2020 on the Performance Bond, Maybank Malaysia had suffered a loss as it incurred an irrevocable obligation and/or irrevocable liability to pay under the Performance Bond. Maybank Malaysia’s loss was imminent when Maybank IB’s Demand dated 17.8.2020 was received and it was an eventuality that the Sum would be paid out, which Maybank Malaysia did on 20 S/N HgRbPemAkUecjug3bzfyQ **Note : Serial number will be used to verify the originality of this document via eFILING portal 10.5.2022. This entitled Maybank Malaysia to claim on the “indemnity”, if it were one. [50] In equity, a contract of indemnity can be enforced by the party being indemnified, as soon as the liability covered by the indemnity has arisen as held by the Singapore Court of Appeal in Management Corporation Strata Title Plan No. 1933 v Liang Huat Aluminium Ltd [2001] 2 SLR(R) 91. LP Thean JA stated: “13 ...In equity, a contract of indemnity can be specifically enforced by the one indemnified, as soon as the liability covered by the indemnity has arisen. The indemnified need not have to pay out first before he seeks relief. … The position was summarized by Lord Brandon of Oakbrook in Firma C Trade SA v Newcastle Protection and Indemnity Association ... There is further no doubt that since the passing of the Supreme Court Judicature Acts 1873 and 1875, the equitable remedy has prevailed over the remedy at law.” [51] In Malaysia, the same position is accepted by the High Court in SWM Greentech Sdn Bhd v Ketua Pengarah Jabatan Pengurusan Sisa Pepejal Negara & Anor [2020] MLJU 2460 where it was held that the actual obligation of an indemnifier is to prevent the indemnity holder from sustaining any loss or expense in the first place rather than merely to reimburse the indemnity holder once he has sustained the loss. 21 S/N HgRbPemAkUecjug3bzfyQ **Note : Serial number will be used to verify the originality of this document via eFILING portal Unconscionability [52] It is the Plaintiffs’ contention that there was unconscionable conduct on the part of Maybank Malaysia in demanding on the Counter Guarantee as it had made a demand on the Counter Guarantee on 7.8.2020, before Maybank Malaysia received a demand on the Performance Bond from Damai on 12.8.2020 which was declined by Maybank Malaysia. The Plaintiffs sought to prove that there was a demand dated 7.8.2020 made on the Counter Guarantee by referring to a letter from Maybank Beijing to MCCL dated 9.6.2021 and another letter from Maybank Beijing to MCCL dated 8.4.2022. [53] In the letter dated 9.6.2021, Maybank Beijing stated: “4. We had on 7th August 2020 and 17th August 2020 received notices of demand (sent via SWIFT message, “Maybank Malaysia Demand”) issued by Maybank Malaysia, requesting us to pay the sum under the Counter Guarantee” [54] In the letter dated 8.4.2022, Maybank Beijing stated: “4. We had on 7th August 2020 and 17th August 2020 received notices of demand (sent via SWIFT message, “Maybank Malaysia First Demand”) issued by Maybank Malaysia, requesting us to pay the sum under the Counter-Guarantee, with the sum demanded being USD 17.317.587.27. On 17th August 2020 and 28th August 2020, we have twice sent email to you, forwarding the Maybank Malaysia First Demand we received, and requested that you pay the relevant amount. However, as of the date of this notice, we have yet to receive any amount from you.” 22 S/N HgRbPemAkUecjug3bzfyQ **Note : Serial number will be used to verify the originality of this document via eFILING portal [55] This is the only evidence provided by the Plaintiffs to support the contention that such a demand dated 7.8.2020 was made on the Counter Guarantee. The alleged demand dated 7.8.2020 was not produced by the Plaintiffs. [56] The Plaintiffs argued further that Maybank Malaysia had a strong incentive to make this premature demand as it intended to use Maybank Malaysia’s monies to better secure the indebtedness of the loan facilities provided by Maybank Malaysia to Damai and its wholly owned subsidiary, Infinite Holding and reduce the financial exposure of Maybank Malaysia under these loan facilities. [57] The Plaintiffs submitted that the alleged 7.8.2020 demand made by Maybank Malaysia on the Counter Guarantee is unconscionable and therefore is a valid ground to restrain Maybank Beijing from paying the Sum to Maybank Malaysia under the Counter Guarantee, relying on Sumatec. [58] I do not accept the contention of the Plaintiffs. [59] The Plaintiffs’ submissions on the unconscionable conduct of Maybank Malaysia was solely premised on the fact that there was supposedly a demand dated 7.8.2020 made on the Counter Guarantee and this was based only on references by Maybank Beijing, in the letters dated 9.6.2021 and 8.4.2022, to a demand made dated 7.8.2020 by Maybank Malaysia to Maybank Beijing on the Counter Guarantee. What the Plaintiffs are saying is that Maybank 23 S/N HgRbPemAkUecjug3bzfyQ **Note : Serial number will be used to verify the originality of this document via eFILING portal Malaysia had quietly made a demand to Maybank Beijing on 7.8.2020 on the Counter Guarantee, without the Plaintiffs’ knowledge, and this was uncovered when the Plaintiffs had sight of Maybank Beijing’s subsequent letters to Maybank Malaysia dated 9.6.2021 and 8.4.2022. [60] I find that, despite the references to a demand dated 7.8.2020 in the letters dated 9.6.2021 and 8.4.2022, there was no such demand dated 7.8.2020 made on the Counter Guarantee. [61] Maybank Malaysia corroborated this by averring in para 37(d) its affidavit in reply (Enclosure 20) that “Maybank Malaysia did not make any demand on 7.8.2020 on the Counter Guarantee/Amended Counter Guarantee, as alleged.” Maybank Beijing averred in para 14 of its affidavit in reply (Enc 19): “With regard to paragraph 30 of the Plaintiffs' 1st Affidavit, I state that the 2nd Defendant did not receive any demand from the 1st Defendant (on the Counter- Guarantee) on 7 August 2020. In this regard, I state that:- (a) the 2nd Defendant made a mistake in paragraph 4 of the 2nd Defendant's letter dated 08 April 2022 issued to the 1st Plaintiff when the 2nd Defendant inadvertently and incorrectly stated that the 2nd Defendant received a demand from the 1st Defendant on the Counter-Guarantee on 7 August 2020; (b) the date of 7 August 2020 stated therein was meant to refer to the date of the First Demand (received on 17 August 2020).” 24 S/N HgRbPemAkUecjug3bzfyQ **Note : Serial number will be used to verify the originality of this document via eFILING portal [62] The Plaintiffs attempted to persuade the Court that Maybank Malaysia and Maybank Beijing’s explanation is unconvincing as in para 4 of Maybank Beijing’s letters dated 9.6.2021 and 8.4.2022 there are references to 2 different dates in para 4 and the Plaintiffs invited the Court make an inference that Maybank Malaysia was aware of Damai or Maybank IB’s impending demand on the Performance Bond. [63] However, if such a demand was in fact made on 7.8.2020, why did Maybank Beijing not pay the Sum to Maybank Malaysia immediately? After all, there was nothing to restrain Maybank Beijing from doing so. Equally, the Court could also infer that there was no such demand dated 7.8.2020. [64] The upshot of this is that the Plaintiffs have not produced such a demand and chose to merely rely on a typographical error and speculative assertion to argue the point of unconscionability premised on a premature demand. [65] I find that there is credible opposition to the Defendants to the Plaintiffs’ assertion that there is a demand dated 7.8.2020 from Maybank Malaysia to Maybank Beijing. Therefore, the Court only accepts that there was only one demand i.e Maybank Malaysia’s demand of 17.8.2020. See Serac Asia Sdn Bhd v Sepakat Insurers Sdn Bhd [2013] 5 MLJ 1: When faced with credible counter allegations in affidavit evidence the courts should only confine themselves 25 S/N HgRbPemAkUecjug3bzfyQ **Note : Serial number will be used to verify the originality of this document via eFILING portal and decide the outcome of the case by considering only the incontrovertible facts. [66] The Plaintiffs’ allegations on Maybank Malaysia unconscionably making a demand on the Counter Guarantee on 7.8.2020, without waiting for a demand on the Performance Bond (i.e., Maybank IB’s Demand dated 17.8.2020), are clearly speculative and without any basis. The 7.4.2022 “Demand” [67] The Plaintiffs took the position that there was a demand made by Maybank Malaysia to Maybank Beijing on the Counter Guarantee dated 7.4.2022 despite the Counter Guarantee being valid only until 12.7.2021. The “demand” dated 7.4.2022 that the Plaintiffs refer to is a SWIFT message dated 7.4.2022 from Maybank Malaysia to Maybank Beijing which was referred to in a letter dated 8.4.2022 from Maybank Malaysia to MCCL. In the letter dated 8.4.2022, Maybank Beijing informed MCCL that it had received a demand from Maybank Malaysia to honour the Counter Guarantee on 7.4.2022, and accordingly demanded MCCL to pay the Sum or equivalent to USD17,618,853.86 to Maybank Beijing for the purpose of honouring the Counter Guarantee. The Plaintiffs submitted that the Counter Guarantee having expired on 12.7.2021, any demand on the Counter Guarantee after that date, including Maybank Malaysia’s 7.4.2022, is invalid, and accordingly unenforceable. 26 S/N HgRbPemAkUecjug3bzfyQ **Note : Serial number will be used to verify the originality of this document via eFILING portal [68] In the SWIFT message dated 7.4.2022 from Maybank Malaysia to Maybank Beijing, it was stated: “WE REFER TO OUR EARLIER DEMAND TO YOU ON 17/8/2020. ON 6TH APRIL 2022, THE COURT OF APPEAL IN MALAYSIA HAS MADE AN ORDER IN THE FOLLOWING TERMS: AN ORDER THAT THE MONIES HELD UNDER THE PERFORMANCE BOND BE PAID OUT TO AN INTEREST-BEARING ACCOUNT DESIGNATED AND CONTROLLED BY THE 3RD RESPONDENT WITHIN FIVE (5) WORKING DAYS FROM THE DATE HEREOF AND THE SAID MONIES ARE HELD IN ESCROW BY THE 3RD RESPONDENT PENDING THE DISPOSAL OF THE FORMAL ERINFORD INJUNCTION APPLICATION BY THE COURT OF APPEAL OR ONE MONTH FROM THE DATE HEREOF, WHICHEVER IS LATER. PURSUANT TO THE ORDER BY THE COURT OF APPEAL, WE ARE REQUIRED TO REMIT THE AMOUNT RM71,400,000.00 (RINGGIT MALAYSIA SEVENTY-ONE MILLION AND FOUR HUNDRED THOUSAND ONLY) BY 13TH APRIL 2022. THEREFORE, PLEASE REMIT TO US IMMEDIATELY IN FULL WITHOUT ANY DEDUCTION, USD17,618,853.86 (INCLUDING OUR HANDLING CHARGES FOR USD100.00) THROUGH OUR AGENT STANDARD CHARTERED BANK NEW YORK (SWIFT : SCBLUS33) FOR CREDIT TO MAYBANK KUALA LUMPUR QUOTING OUR REFERENCE NUMBER 99140BGJ6230024 LATEST BY 12TH APRIL 2022.” [69] The Sum of RM71.4 million was subsequently paid out by Maybank Malaysia on 10.5.2022 and placed by Maybank IB in a Money Market Deposit with Maybank IB as stakeholders pending the outcome of MCCL’s Leave 27 S/N HgRbPemAkUecjug3bzfyQ **Note : Serial number will be used to verify the originality of this document via eFILING portal Application at the Federal Court. The Plaintiffs submitted that despite the payment by Maybank Malaysia on 10.5.2022, Maybank Malaysia has yet to suffer any real loss and damage, as the Sum has not left the Maybank group of companies, and was merely paid to Maybank Malaysia’s sister company, Maybank IB as stakeholders. Given that Maybank Malaysia has yet to suffer any real loss and damage it would be premature for Maybank Malaysia to make any further demand on the Counter Guarantee, and to request MCCOSB to pay the monies thereunder to Maybank Malaysia. [70] Therefore, the Plaintiffs prayed for a declaration in the OS that the Counter Guarantee having expired on 12.7.2021, and that any demand on the Counter Guarantee after 12.7.2021, including Maybank Malaysia’s 7.4.2022, is invalid, and accordingly unenforceable. [71] The Court declines to make this declaration as prayed as there was no demand made after 12.7.2021. The Defendants submitted, and the Court accepts that the SWIFT message sent by Maybank Malaysia to Maybank Beijing on 7.4.2022 was not a demand but merely an update on the Court of Appeal Order dated 6.4.2022 which lifted the injunction granted by the Kuala Lumpur High Court in OS 28, obliging both Maybank Malaysia and Maybank Beijing to immediately honour their respective payment obligations under the Performance Bond and the Counter Guarantee respectively. The SWIFT message also served 28 S/N HgRbPemAkUecjug3bzfyQ **Note : Serial number will be used to verify the originality of this document via eFILING portal to remind Maybank Beijing about the payment under the Counter Guarantee pursuant to Maybank Malaysia’s dated 17.8.2020. [72] At the first page of the SWIFT message dated 7.4.2022, Maybank Malaysia expressly referred to its demand dated 17.8.2020, stating, “WE REFER TO OUR EARLIER DEMAND TO YOU ON 17/8/2020.” The only demand on the Counter Guarantee for the Sum was validly made on 17.8.2020 before the expiry of the Counter Guarantee on 12.7.2021. [73] Therefore, while the Counter Guarantee expired on 12.7.2021, no fresh demand was made after the expiry and Maybank Malaysia is entitled to issue updates and reminders for payment based on the demand dated 17.8.2020. [74] The Plaintiffs’ argument on Maybank Malaysia not suffering any real loss and damage, as the Sum has not left the Maybank group of companies is inconsequential. It was already determined by the Court, particularly in paras 25 to 27 above that the Counter Guarantee is an unconditional and on-demand bond, not an indemnity and the issue of Maybank Malaysia not having suffered any loss yet is immaterial. 29 S/N HgRbPemAkUecjug3bzfyQ **Note : Serial number will be used to verify the originality of this document via eFILING portal Conclusion [75] In summary, the Court made the following findings: a) The Counter Guarantee is an on-demand bond and not a contract of indemnity and therefore Maybank Malaysia can pay out the Sum Maybank IB having made a demand to Maybank Malaysia on the Performance Bond, and in turn upon Maybank Malaysia’s demand to Maybank Beijing on the Counter Guarantee; b) There was never any demand made on the Counter Guarantee on 7.8.2020 before any demand on the Performance Bond and there was no unconscionable conduct on the part of Maybank Malaysia; and c) There was no new demand made by Maybank Malaysia to Maybank Beijing on the Counter Guarantee on 7.4.2022 and Maybank Malaysia’s SWIFT message to Maybank Beijing on 7.4.2022 was only a reminder for Maybank Beijing for the payment under the Counter Guarantee. 30 S/N HgRbPemAkUecjug3bzfyQ **Note : Serial number will be used to verify the originality of this document via eFILING portal [76] In the premise, this OS is dismissed with costs of RM20,000.00 for Malaybank Malaysia and RM10,000.00 for Maybank Beijing. 5 December 2022 ATAN MUSTAFFA YUSSOF AHMAD Judge Kuala Lumpur High Court (Commercial Division) Counsel: For the Plaintiffs: Tan Sri Tommy Thomas, Michael Yap Chih Hong and Theodore Wong Siong (Messrs. Tommy Thomas) For the 1st Poh Choo Hoe and Freddy Choy Kay Defendants: Chun (Messrs Shook Lin & Bok) For the 2nd John Mathew and Heng Yee Keat Defendant: (Messrs Christopher Lee & Ong) 31 S/N HgRbPemAkUecjug3bzfyQ **Note : Serial number will be used to verify the originality of this document via eFILING portal