UNITED OVERSEAS BANK (CHINA) LIMITED, CHENGDU BRANCH SIOW KWANG JOON@SIOW KWONG SHONG

23 August 2020 JA-22NCC-22-04/2019 DALAM MAHKAMAH TINGGI DI JOHOR BAHRU DALAM NEGERI JOHOR DARUL TAKZIM, MALAYSIA GUAMAN SIVIL NO: JA-22NCC-22-04/2019 BETWEEN UNITED OVERSEAS BANK (CHINA) LIMITED, CHENGDU BRANCH ws PLAINTIFF AND SIOW KWANG JOON @ SIOW KWONG SHANG (NO. KP: 470608-01-5873) ..D EFENDANT Hie RE RE A Se ee OE ae SNe Re RE Ae at Re He Ae ae ee at ae ae Re ae ae eae at ae ale ae ae ae GROUNDS OF JUDGMENT Fe SRE SE TS TS ee eee He He He ee ee ae ae at ae aie aie ate aie ae ae ale aie ait a ae ae a a [EVROL MARIETTE PETERS JC] | 23 August 2020 JA-22NCC-22-04/2019 This Application [1] This is an application (“this Application”) in Enclosure 10 by the Plaintiff for summary judgment pursuant to Order 14 of the Rules of Court 2012 (“Rules of Court”). This Application was allowed and the following are my reasons. The brief facts [2] [3] [4] The Plaintiff, a licensed Chinese financial institution, by way of two letters of offer dated 27 December 2012 and 9 May 2014, granted financing facilities to a Chinese company, Foh Chong (Guangxi) Chemical Co. Ltd. ("FCGC”) for an amount up to RMB 92.5 million (“FCGC Facilities”). The Defendant is a director of FCGC, and has an interest in it through his company, Foh Chong & Sons Sdn Bhd, where he is a shareholder. The Defendant executed a personal guarantee dated 9 May 2014 ("the Guarantee”) to secure repayment of the FCGC Facilities. FCGC defaulted in the FCGC Facilities since 31 January 2015, and in February 2019, the Plaintiff called on the Defendant's obligation under the Guarantee. Notices of demand were issued to the Defendant on 18 February 2019 and 25 February 2019, to which the Defendant had not replied. The Plaintiff filed the Writ and Statement of Claim on 30 April 2019, whilst the Defence was filed on 26 June 2019, and subsequently the Plaintiff's Reply and this Application were filed on 10 July 2019. It is also pertinent to note that on 14 January 2020, the Defendant had [EVROL MARIETTE PETERS JC] hae 23 August 2020 JA-22NCC-22-04/2019 filed an application to amend his Defence, which was dismissed on 25 June 2020. The Defendant’s case [5] Although, in resisting this Application, there were several grounds raised by the Defendant as triable issues in his Affidavit-In-Reply dated 30 August 2019, in his submission, the issues were reduced to one, that is, that there was a collateral contract to the effect that the Plaintiff would not act against the Defendant until after the Plaintiff had exhausted all avenues against FCGC and the other guarantors. Contentions and findings [6] [7] [8] It is trite law that the Court may give summary judgment only in plain and obvious cases. The burden is on the Defendant to prove that the Plaintiff's claim is not a plain and obvious one, and that the Defendant has raised triable issues of facts or law to be decided by the Court: Bank Negara Malaysia v Mohd Ismail [1992] 1 CLJ 14. On the issue of the collateral agreement, the Defendant claimed that it had arisen from purported discussions between one Kenny TP Lee (“Kenny”) and him, prior to signing the Guarantee. The Defendant’s contention was that Kenny had assured him that the Plaintiff would not act against him until after it had exhausted all avenues against FCGC and the other guarantors. It is established that a collateral contract comes into existence when a promise has been made, and accepted in accordance with its [EVROL MARIETTE PETERS JC] Bl 23 August 2020 JA-22NCC-22-04/2019 [9] [10] [11] terms. It is imperative to emphasise that the statement must have been promissory and not merely representational. It must also be borne in mind that a mere statement of opinion by itself does not constitute a promise and it cannot, therefore, form the basis of an agreement Although the Defendant had relied on the collateral agreement to resist this Application, he had not provided details of such discussion, such as its time and place, save for the production of a letter of offer ("the Letter’) dated 10 March 2006 (exhibited as SKJ1 to the Defendant's Second Affidavit-In-Reply which he affirmed on 4 November 2019). It is important to bear in mind that bare averments do not render an issue triable. These averments must be looked at it in the context of the affidavit evidence to determine if those averments are specific, precise and consistent. This was clarified by of Lord Ackner LJ in Banque Paris v. de Naray [1984] 1 Lloyd's Rep. 23, where he had stated: It is trite law that O. 14 proceedings are only decided by weighing the two affidavits. It is also trite law the mere assertion in an affidavit of a given situation which is to be the basis of a defence does not, ipso facto, give leave to defend; the Court must look at the whole situation and ask itself whether the defendant has satisfied the Court that there is a fair or reasonable probability of the defendant's having a real or bona fide defence. [EVROL MARIETTE PETERS JC] |—ClLh 23 August 2020 JA-22NCC-22-04/2019 [12] [13] [14] The bare averments in the Defendant's narrative affirmed in paragraphs 6 to 9 of the Defendant's Affidavit-In-Reply dated 4 November 2019, do not indicate when and where these assurances were given. Secondly, the Letter exhibited was not assistive to the Defendant, primarily since it was issued in 2006, which was eight years before the Guarantee was signed. Furthermore, the Letter which was a proposed financing to Foh Chong (Chengdu) Chemical Co. Ltd (and not FCGC), was issued by United Overseas Bank (China) Limited, Guangzhou branch, and not the Plaintiff. The Defendant referred to Eushun Properties Sdn. Bhd. & Ors. v. MBF Finance Bhd [1992] 1 CLJ Rep 104, and Tan Swee Hoe Co Ltd v. Ali Hussain Bros [1980] 2 MLJ 16 wherein reference was made to section 92(b) of the Evidence Act 1950, which reads: Section 92 — Exclusion of evidence of oral agreement When the terms of any such contract, grant or other disposition of property, or any matter required by law to be reduced to the form of a document, have been proved according to section 91, no evidence of any oral agreement or statement shall be admitted as between the parties to any such instrument or their representatives in interest for the purpose of contradicting, varying, adding to, or subtracting from its terms: Provided that- (b) the existence of any separate oral agreement, as to any matter on which a document is silent and which is not inconsistent with its terms, [EVROL MARIETTE PETERS JC] ee] 23 August 2020 JA-22NCC-22-04/2019 may be proved, and in considering whether or not this proviso applies, the court shall have regard to the degree of formality of the document; [15] However, before the effect of the collateral contract is addressed, it [16] must first be established that the parties had intended to be bound by it. Reference may be made to Chitty on Contracts (33 edition), in the following passage: An assurance given in the course of negotiation may therefore give rise to a_contractual obligation, provided that_an intention to be bound can be shown. The rules of evidence, however, frequently prevent such an assurance from being incorporated as part of a subsequent written agreement, since extrinsic evidence is as a general rule not admissible to vary or add to the terms of a written contract. [Emphasis added.] Based on the contemporaneous documentary evidence before me, it is my finding that the Defendant's averments taken in totality, were unsubstantiated. Reference on this point may be made to Bank Negara Malaysia v Mohd Ismail & Ors [1992] 1 MLJ 4004, where Mohd Azmi SCJ delivering the majority judgment, said: Under an O 14 application, the duty of a judge does not end as soon as a fact is asserted by one party, and denied or disputed by the other in an affidavit. Where such assertion, denial or dispute is equivocal, or lacking in precision or is inconsistent with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable in itself, then the judge has a duty to reject such assertion or denial, thereby rendering the issue_not triable. In our opinion, unless this principle is adhered to, a judge is in no position to exercise his discretion judicially in an O 14 application. Thus, apart from identifying the issues of fact or law, the court must go one step further and determine whether they are triable. ([EVROL MARIETTE PETERS JC] Gea 23 August 2020 JA-22NCC-22-04/2019 [17] [18] [19] [20] This principle is sometimes expressed by the statement that a complete defence need not be shown. The defence set up need only show that there is a triable issue. [Emphasis added.] On the facts of the present case, it is my finding that the bare averments were not indicative of anything precise or exact. The cases of Eushun Properties Sdn. Bhd. & Ors. v. MBF Finance Bhd and Tan Swee Hoe Co Ltd v. Ali Hussain Bros are, therefore, distinguishable as in those cases, the issue of whether bare averments were sufficient to form a collateral contract did not arise, as in this case where the issue was not merely whether there was a collateral contract, but whether the bare averments were sufficient to raise any triable issue. The case which | find relevant and applicable to the facts of the present case are Oriental Bank Bhd v Uniphoenix Corp Bhd [2005] 7 MLJ 3155, Bank Bumiputra Bhd v Malek & Joseph Au [1995] 4 MLJ 251, and Pengurusan Danaharta Nasional Bhd v Miri Salamjaya Sdn Bhd & Ors [2004] 4 MLJ 3277. In Oriental Bank Bhd v Uniphoenix Corp Bhd [2005] 7 MLJ 3155, it was stated that a mere statement of opinion does not constitute a promise and it cannot therefore form the basis of a collateral contract. In Bank Bumiputra Bhd v Malek & Joseph Au [1995] 4 MLJ 251, where there was no proof of the collateral contract, it was stated by Arifin Zakaria J (as he then was): [EVROL MARIETTE PETERS JC] JA-22NCC-22-04/2019 23 August 2020 But the issue is one of proof. On proof of the separate oral agreement, McElwaine CJ said in Gek Lau Choon Theatrical Company v. Hu Kiang Yan [1937] MLJ 25 at p. 26: Conversations leading up to the making of a contract are not presumed themselves to form a collateral contract. As Lord Haldane said in Heilbut, Symons & Co v. Buckleton [1913] AC at p. 37: ... And Lord Moulton at page 47 - "It is evident, both on principle and on authority, that there may be a contract the consideration of which is the making of some other contract, are therefore viewed with suspicion by the law. They must be proved strictly. Not only the terms of such contracts but the existence of an "animus contrahendi" on the part of all the parties to them must be clearly shown". [21] In Pengurusan Danaharta Nasional Bhd v Miri Salamjaya Sdn Bhd & Ors [2004] 4 MLJ 3277, it was held by the court that the claim of the existence of a collateral contract by the defendants was a bare assertion. [22] The purported collateral contract was also in direct contradiction with and deviated from several clauses in the Guarantee, which read: 9. This Guarantee shall be without prejudice to and shall not be affected nor shall we be released or exonerated by any of the matters following the variation exchange renewal release or modification of any such securities or the refusal or neglect to complete enforce or assign any judgment specialty or other security or instrument negotiable or otherwise and whether satisfied by payment or not; or any release or discharge given to any one or more co- guarantors whether with or without our consent or notice. [EVROL MARIETTE PETERS JC] 23 August 2020 JA-22NCC-22-04/2019 23. No delay or omission on your part in exercising any right power privilege or remedy in respect of this Guarantee shall impair such right power privilege or remedy or be construed as a waiver of it nor shall any single or partial exercise of any such right power privilege or remedy preclude any further exercise of it or the exercise of any other right power privilege or remedy. The rights powers privileges and remedies provided in this Guarantee are cumulative and not exclusive of any rights powers privileges or remedies provided by law. [23] In Oriental Bank Bhd v Uniphoenix Corp Bhd [2005] 7 MLJ 3155, it was made very clear that a collateral contract cannot be inconsistent with the main contract: In other words, an alleged collateral contract cannot be inconsistent with the terms of the main contract. There is a clear justification for this. It is this. That contracts co-exist and are equally enforceable. On very rare occasions have collateral contracts been found to exist even though they are inconsistent with the express terms of the main contract (City and Westminster Properties Ltd v. Mudd (supra)). [Emphasis added.] [24] This is consistent with section 92(b) of the Evidence Act which the Defendant himself relied on: Section 92 — Exclusion of evidence of oral agreement (b) the existence of any separate oral agreement, as to any matter on which a document is silent and which is not inconsistent with its terms, may be proved, and in considering whether or not this proviso applies, the court shall have regard to the degree of formality of the document; [Emphasis added.] [EVROL MARIETTE PETERS JC] | 23 August 2020 JA-22NCC-22-04/2019 [25] Furthermore, it is improbable that the Defendant, an undeniably [26] [27] astute businessman, by virtue of his substantial business interest in Malaysia, would have not confirmed in writing the purported assurances given by Kenny, especially when several clauses in the Guarantee were in direct contradiction with the purported collateral contract. This is fortified by paragraph 6 of his Affidavit-In-Reply dated 30 August 2019, where the Defendant had affirmed that that he was a mere nominee director, and was, therefore, reluctant to execute the Guarantee. Paragraph 6 reads: | was not actively involved in the management of FCGC. That was left to Mr Li. It was Mr Li who approached me to be a guarantor as | was informed by him that the Plaintiff wanted me to be a guarantor. | was reluctant as | was a mere nominee director but was was persuaded by Mr Li to execute the Guarantee on the basis that there were also other guarantors especially in China which were companies which could absorb any debt if things were wrong. It was on this basis that | proceeded to execute the Guarantee, after discussions with the Plaintiff's representative, Mr Kenny TP lee (“Kenny”) whom Mr Li introduced me to. At this juncture, | find instructive the case of Tan Sri Abdul Khalid bin Ibrahim v Bank Islam Malaysia Bhd and another suit [2009] 6 MLJ 4165, where the court, in rejecting the Defendant's argument based on the existence of a collateral contract, stated: In response the Federal Court acknowledges the need for the law to accommodate the ordinary people and not to expect response of astute businessman in all cases. However, such leaning in favour of the ignorant or innocent cannot apply in this case as it is a known fact that Tan Sri Khalid is an experienced and astute businessman. He was then the chief executive officer of Guthrie Bhd and now the Menteri Besar of Selangor. It [EVROL MARIETTE PETERS JC] ee) 23 August 2020 JA-22NCC-22-04/2019 is too preposterous to expect_a person of such standing to rely on oral promises which _contradict_ the agreements he signed freely and voluntarily. He surely must have understood and was fully aware of the implications of what he signed. [Emphasis added.] [28] Furthermore, notices of demand dated 18 and 25 February 2019 (exhibited as UOB(SJ)-9 to the Plaintiff's Affidavit-In-Support dated 1 August 2019) that were issued by the Plaintiff, were not denied by the Defendant. In fact, at that time he said nothing about any collateral contract. In my view, if there was indeed one, he would have alluded to it from the beginning, rather than to contend only now that the representations and warranties constituted a collateral contract or an estoppel. Conclusion [29] In Anglo-italian Bank v. Wells [1878] 38 LT 197 it was stated by Jessel MR that Order 14 "is intended to prevent a man, clearly entitled to money, from being delayed where there is no fairly arguable defence to be brought forward". For precisely that reason, | find that the Defendant had not raised any triable issue. [30] In the upshot, based on the aforesaid reasons, and after careful scrutiny of all the evidence before this Court, both oral and documentary, and submissions of Counsel for both parties, this [EVROL MARIETTE PETERS JC] Mu | 23 August 2020 JA-22NCC-22-04/2019 Application was allowed with costs in the sum of MYR10,000 (subject to allocatur fees). Dated: 23 August 2020 (EVROL MARIETTE PETERS) Judicial Commissioner High Court, Johor Bahru Counsel: For the Plaintiff - Andrew Chiew Ean Vooi and Nicola Tang Zhan Ying; Messrs Lee Hishammuddin Allen & Gledhill For the Defendant — Ranjit Singh and KC Tho; Messrs KC Tho Cases referred to: Anglo-italian Bank v. Wells [1878] 38 LT 197 Bank Bumiputra Bhd v Malek & Joseph Au [1995] 4 MLJ 251 Bank Negara Malaysia v Mohd Ismail & Ors [1992] 1 MLJ 4004 Banque Paris v. de Naray [1984] 1 Lloyd's Rep. 23 Eushun Properties Sdn. Bhd. & Ors. v. MBF Finance Bhd [1992] 1 CLJ Rep 104 >» Pengurusan Danaharta Nasional Bhd v Miri Salamjaya Sdn Bhd & Ors [2004] 4 MLJ 3277 VV VV WV [EVROL MARIETTE PETERS JC] 23 August 2020 JA-22NCC-22-04/2019 > Oriental Bank Bhd v Uniphoenix Corp Bhd [2005] 7 MLJ 3155 > Tan Sri Abdul Khalid bin Ibrahim v Bank Islam Malaysia Bhd and another suit [2009] 6 MLJ 4165 > Tan Swee Hoe Co Ltd v. Ali Hussain Bros [1980] 2 MLJ 16 Legislation referred to: > Evidence Act 1950, section 92(b) > Rules of Court 2012, Order 14 Other sources referred to: > Chitty on Contracts (33" edition) — Sweet and Maxwell [EVROL MARIETTE PETERS JC]