Malaysia Case Law: Decisions & Judgments

Topic

Over-securitisation

Legal area

Court

20 Nov 2023

PESTECH TECHNOLOGY SDN BHD 1. ) MAYBANK ISLAMIC BERHAD 2. ) SYARIKAT PEMBENAAN YEOH TIONG LAY SDN BHD

Citation

WA-24C-92-06/2023 (Mahkamah Tinggi)
Court

High Court
Case number

WA-24C-92-06/2023 (Mahkamah Tinggi)

Plaintiff failed to discharge the high threshold to establish fraud or unconscionability; the Performance Bond is an unconditional on‑demand bond and the demand was prima facie made in accordance with its terms (termination relied upon); the contested factual and contractual issues are suited to arbitration; therefore injunctive relief to restrain payment was refused and the applications dismissed with costs.
20 Nov 2023

PESTECH TECHNOLOGY SDN BHD 1. ) MAYBANK ISLAMIC BERHAD 2. ) SYARIKAT PEMBENAAN YEOH TIONG LAY SDN BHD

Citation

WA-24C-92-06/2023 (Mahkamah Tinggi)
Court

High Court
Case number

WA-24C-92-06/2023 (Mahkamah Tinggi)

The Court refused to grant an injunction because the plaintiff failed to establish the high threshold for fraud or unconscionability: the Performance Bond is an unconditional on‑demand guarantee, the demand by D2 was prima facie made in accordance with the bond and termination cited, the disputes are essentially contractual and properly for arbitration, and there was insufficient cogent evidence of fraud/unconscionability or over‑securitisation to justify restraining payment or receipt; accordingly the originating summons was dismissed with costs.
27 Sept 2023

CHINA CONSTRUCTION YANGTZE RIVER (MALAYSIA) SDN BHD 1. ) MULTIBAY DEVELOPMENT SDN BHD 2. ) CHINA CONSTRUCTION BANK (MALAYSIA) BERHAD

Citation

WA-24NCC-78-02/2023 (Mahkamah Tinggi)
Court

High Court
Case number

WA-24NCC-78-02/2023 (Mahkamah Tinggi)

The court dismissed the Plaintiff's Amended Originating Summons because the 1st Defendant subsequently adduced credible post-demand evidence (re-tender documents and an Assessment Report) quantifying losses (RM67,083,500.58) that demonstrated the demand would not result in over-securitisation; the court allowed fresh evidence to be considered when assessing unconscionability and concluded there were no exceptional circumstances to restrain payment under the performance bonds.
27 Sept 2023

CHINA CONSTRUCTION YANGTZE RIVER (MALAYSIA) SDN BHD 1. ) MULTIBAY DEVELOPMENT SDN BHD 2. ) CHINA CONSTRUCTION BANK (MALAYSIA) BERHAD

Citation

WA-24NCC-78-02/2023 (Mahkamah Tinggi)
Court

High Court
Case number

WA-24NCC-78-02/2023 (Mahkamah Tinggi)

The Court dismissed the Plaintiff's Amended Originating Summons because, on consideration of post-demand evidence (the 1st Defendant's assessment report and the completed re-tender resulting in new contracts), the 1st Defendant had ascertained and quantified losses (RM67,083,500.58) arising from its determination of the contracts such that payment under the performance bonds would not produce over-securitisation or be unconscionable; the Court also held it was entitled to consider evidence adduced after the demand and there were no exceptional circumstances to restrain payment, therefore the…
12 May 2023

SYARIKAT ONG YOKE LIN SDN BHD GRAND DYNAMIC BUILDERS SDN BHD

Citation

WA-24NCC(ARB)-57-12/2022 (Mahkamah Tinggi)
Court

ARB
Case number

WA-24NCC(ARB)-57-12/2022 (Mahkamah Tinggi)

The bank guarantee is a conditional guarantee read together with the subcontract; the Defendant failed to establish or produce the contractual pre-condition (written notice of breach under Clause 22.6) required to call the guarantee; the Plaintiff placed sufficient manifest prima facie evidence of unconscionability and over-securitisation given admitted certified sums and recurring costs far exceed the guarantee amount, therefore an interim injunction under s.11 Arbitration Act 2005 is justified to restrain the Defendant from calling or receiving payment under the guarantee, subject to the co…
30 May 2022

CHINA CONSTRUCTION PEARL RIVER (M) SDN BHD 1. ) INDUSTRIAL AND COMMERCIAL BANK OF CHINA (MALAYSIA) BERHAD 2. ) SEMANGAT GLOBAL SDN. BHD.

Citation

WA-24C(ARB)-50-09/2021 (Mahkamah Tinggi)
Court

ARB
Case number

WA-24C(ARB)-50-09/2021 (Mahkamah Tinggi)

The Bond, on its proper construction, is an on-demand guarantee payable upon the beneficiary's written assertion of default; however, on the balance of convenience the Plaintiff demonstrated unconscionability by reason of over-securitisation because certified sums and unpaid interim claims produced a net credit in the Plaintiff's favour such that restraint of encashment was justified pending arbitration, therefore an interlocutory injunction restraining pay-out/receipt was granted with costs allocated.
12 Jan 2022

SSANGYONG ENGINEERING & CONSTRUCTION CO. LTD. OXLEY RISING SDN BHD

Citation

WA-24C(ARB)-53-10/2021 (Mahkamah Tinggi)
Court

ARB
Case number

WA-24C(ARB)-53-10/2021 (Mahkamah Tinggi)

The court found sufficient prima facie evidence of unconscionable conduct and over‑securitisation in the Defendant's immediate call on the on‑demand BG (call made same day as termination, unsupported speculative estimates of losses), and accordingly granted interim injunctive relief under section 11 Arbitration Act 2005 to maintain the status quo pending arbitration; contractual disputes were left for arbitration.
17 May 2021

MCC OVERSEAS (M) SDN BHD MALAYAN BANKING BERHAD & DUA LAGI

Citation

WA-24C(ARB)-28-08/2020 (Mahkamah Tinggi)
Court

ARB
Case number

WA-24C(ARB)-28-08/2020 (Mahkamah Tinggi)

Although the Bond is prima facie an on‑demand guarantee enforceable on a conforming demand, the court identified unresolved, material and complex issues from successive assignments and incomplete financing documentation that could render encashment unconscionable and unjust at this interlocutory stage; accordingly the balance of convenience favoured restraining the beneficiary/assignee from receiving or utilising Bond proceeds pending resolution of those issues in arbitration or further declaratory proceedings, while not restraining the issuer bank from payment per se.