Hong Leong Bank Berhadhong Leong Bank Berhad v Ab Rahman Bin Zaharinab Rahman Bin Zaharin, 07-07-2011

• Judge: ROSILAH BINTI YOP
• Judgment Date: 07 July 2011
• Appellant: HONG LEONG BANK BERHAD
• Court: High Court (Malaysia)
• Record Number: S7-22-838-2006
• Respondent: AB RAHMAN BIN ZAHARIN

(Grounds of decision S7-22-838-2006)

IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR

WILAYAH PERSEKUTUAN

(CIVIL DIVISION)

SUIT NO: S7-22-838-2006

BETWEEN

HONG LEONG BANK BERHAD … PLAINTIFF

AND

AB RAHMAN BIN ZAHARIN … DEFENDANT

(I/CNO : 5128210)

GROUNDS OF DECISION

The Plaintiff’s Case:

1. Vide a Sale and Purchase Agreement dated 20.12.1995 (“the SPA”) the Defendant purchased from one Lai Mei Ling, a condominium unit (“the Subject Property”).

2. As a consideration for a RM272,300 housing loan facility from Credit Corporation (Malaysia) Berhad (“CCM”) to the Defendant and vide a Loan Agreement cum Deed of Assignment dated 11.7.1996 (“the LACA”) between the Defendant and CCM, the Defendant assigned absolutely his rights, title and interest in and to the Subject Property and the full and entire benefit of the SPA to CCM.

3. Under the terms of the LACA, the Defendant agreed, inter alia:-

(a) to repay the entire loan sum to the Plaintiff within 240 months by way of monthly instalments of RM2,454.30 each;

(b) to pay the Plaintiff interest at the rate of 9% per annum calculated on monthly rests (“the prescribed rate”);

(c) that the Plaintiff is entitled to impose late payment interest and / or additional interest at the rate of 1% per annum on overdue sums and / or interest;

(d) in the event the Defendant defaults in the payment of the principal sum or any interest thereon, the Plaintiff shall be entitled to recover from the Defendant the outstanding principal sum together with any interest thereon;

(e) to pay costs on a solicitor-client basis in the event legal proceedings are commenced against the Defendant.

4. The Plaintiff claims against the Defendant for the shortfall sum due under his loan facility with the Plaintiff after deducting the proceeds of the sale of the Subject Property by way of auction.

The Defendant’s Case:

5. On or about the month of September 2004, at the request of the Plaintiff to the Defendant to settle the outstanding amount due to the Plaintiff under a Housing Loan Facility granted by the Plaintiff to the Defendant vide Loan Agreement dated 11^th July, 1996 made between Credit Corporation (Malaysia) Berhad and the Defendant and Deed of Assignment dated 11^th July, 1996 both made between the Defendant and Credit Corporation (Malaysia) Berhad, new terms were re-negotiated between the Plaintiff and the Defendant in respect of the settlement of the amount due to the Plaintiff under the Housing Loan Facility.

6. Vide a letter dated 27^th September 2004, issued by the Plaintiff to the Defendant the Plaintiff renegotiated new terms with the Defendant to settle the Housing Loan Facility and proposed that the Defendant make the following payments to the Plaintiff to settle the Housing Loan Facility:-

(i) 12 monthly installments of RM5,500.00 per month commencing October 2004;

(ii) a lump sum of RM70,000.00 thereafter.

7. Vide a letter dated 8^th October 2004 issued by the Defendant to the Plaintiff the Defendant accepted the renegotiated terms as stated in the Plaintiff’s letter dated 27^th September 2004 on the Plaintiff’s undertaking that the same is accepted by the Plaintiff as full and final settlement of the amount due to the Plaintiff under the Housing Loan Facility.

8. The Defendant did make the payments under the renegotiated terms accordingly to the Plaintiff and the Plaintiff received and accepted those payments.

9. Vide a letter dated 27^th December 2005 issued by the Defendant to the Plaintiff the Defendant inter alia stated that the final payment of RM70,000.00 was made to the Plaintiff upon the Plaintiff’s undertaking to accept the same as full and final settlement of the Housing Loan Facility and also upon the Plaintiff’s undertaking to return the property which is the subject matter of the Housing Loan Facility to the Defendant.

10. The Defendant maintains that after the payment of RM70,000.00 the Housing Loan Facility was settled in full.

The Defendant’s Counterclaim:

11. Inspite of the Housing Loan Facility being settled in full by the Defendant the Plaintiff sold the property (i.e. the subject matter of the Housing Loan Facility) to a third party by way of a public auction on 17^th March 2007.

12. The sale of the property by way of public auction is unlawful and illegal and / or fraudulent and / or mala fide because inter alia the Housing Loan Facility was settled in full.

13. The Defendant suffered losses and damages as a result of the sale of the property by the Plaintiff by way of public auction.

14. The Defendant claims against the Plaintiff for :-

(i) an injunction restraining the Plaintiff, its servants or agents from disposing off the property by way of public auction;

(ii) an Order that the Plaintiff delivers possession and control of the property to the Defendant;

(iii) a Declaration that the Defendant has settled the Housing Loan Facility;

(iv) a Declaration that the property has been redeemed by the Defendant;

(v) an Order that the Plaintiff executes an assignment of the property to the Defendant and returns the original Agreement and other documents relating to the property to the Defendant;

(vi) general damages;

(vii) interest;

(viii) cost;

(ix) other relief.

The Plaintiff’s Reply / Defence to Counterclaim

15. The Plaintiff did not agree with the Defendant to accept RM136,000 as full and final settlement of the debt due.

16. The auction of the Subject Property was regular and in accordance with the terms of the LACA.

The Issues:

17 The issues for determination by this court are as follows:

i Whether the Plaintiff agreed with the Defendant to accept the sum of RM136,000 as full and final settlement of the Defendant’s indebtedness amounting to RM493,200 as at 15.9.2004 with interest thereon at the agreed rate of 10% per annum, under the Defendant’s housing loan account with the Plaintiff?

ii. Whether the Plaintiff was entitled to auction the property assigned to the Plaintiff by the Defendant (“the Subject Property”) as security for the said housing loan in the light of the Defendant’s non-payment of the full amount due under the Defendant’s housing loan account with the Plaintiff?

iii. Whether the auction of the Subject Property by the Plaintiff was unlawful and / or fraudulent and / or mala fide?

iv. Whether the Defendant had suffered any loss and damages arising from the auction of the Subject Property by the Plaintiff?

v. Whether it was the Plaintiff who caused the Defendant’s alleged loss and damage?

Analysis of Evidence:

18. Issue i: Whether the Plaintiff agreed with the Defendant to accept the sum of RM136,000 as full and final settlement of the Defendant’s indebtedness amounting to RM493,200 as at 15.9.2004 with interest theron at the agreed rate of 10% per annum, under the Defendant’s housing loan account with the Plaintiff?

19. SP1 has testified and corroborated by a letter dated 13.9.2004 (Bundle C at pages 1 and 2), the Defendant had proposed to settle the outstanding sum under the Term Loan as at 13.9.2004 in the following manner:-

1. by paying the Plaintiff double the amount of the monthly instalmetns as part-payment of the outstanding principal sum commencing from 1.10.2004 for 12 months;

(ii) by paying the Plaintiff within 12 months from 1.10.2004, the sum of RM70,000 as full payment of the outstanding interest;

(iii) by paying the balance outstanding principal sum within 12 months either by the sale of the Property or some other means.

20. The Plaintiff did not accept this proposal of settlement. Instead the Plaintiff had sent out a letter dated 27.9.2004 counter proposed to accept payment of increased monthly installments in the sum of RM5,500.00 permonth commencing from October 2004 from 12 consecutive months by way of post-dated cheques and another RM70,000.00 within 12 months as part payment of the total arrears.

21. It is a fact well established that no where stated in the Plaintiff’s letter of 27.9.2004 that the Plaintiff accepts RM136,000.00 as full and final settlement of the Defendant’s debt under the Term Loan.

22. DW1 admitted that as at 13.9.2004, he was in arrears from his housing loan for 72 months. DW1 admitted under cross-examination that he had not been repaying his Term Loan for 6 years when he issued his settlement proposal.

23. PW1 testified that there was no agreement between the Plaintiff and the Defendant for payment of the sum of RM136,000.00 as full and final settlement of the Defendant’s Term Loan. The Plaintiff did not give any undertaking to accept RM136,000.00 as full and final settlement of the Term Loan. The Defendant failed to adduce any evidence of the Plaintiff’s alleged undertaking.

24. DW1 admitted in cross-examination on that there was no undertaking from the Plaintiff to accept RM136, 000.00 as full and final settlement of the Term Loan.

25. By a letter dated 27.12.2005 (Bundle C at page 23) the Defendant states that the payment of RM64, 500.00 was made upon the undertaking of the Plaintiff to accept the same as full and final payment of the Term Loan.

26. The Plaintiff did not give the Defendant any undertaking to accept the said sum of RM64, 500.00 as full and final settlement of the Term Loan.

27 It is certain by odd that the undertaking that said be given by the Plaintiff was not...