IN THE HIGH COURT OF MALAYA IN KUALA LUMPUR

IN THE STATE OF WILAYAH PERSEKUTUAN, MALAYSIA

(COMMERCIAL DIVlSION)
SUIT NO: WA-22M-338-10/2020

BETWEEN

MME REALTY & MANAGEMENT SDN BHD

(Company No.: 226414-T) (IN LIQUIDATION) … PLAINTIFF

AND

BANK KERJASAMA RAKYAT MALAYSIA …DEFENDANT

BHD

JUDGMENT

[1] This judgment concerns the application of the Defendant,

Bank Kerjasama Rakyat Malaysia Berhad in encl. 8
pursuant to O. 18 r. 19(1) Rules of Court 2012 (“ROC
2012”) against the Plaintiff, MME Realty & Management
Sdn Bhd to strike out a writ action filed by the Plaintiff
against the Defendant in this suit. The Writ action arose
from Islamic financing facilities that were also the subject
matter of a previous suit between the Plaintiff and the
Defendant, where judgment was given in favour of the
Defendant who was the plaintiff in the previous suit.

1
[2] Due to the role reversal of parties from the previous suit
which may give rise to confusion, I shall refer to the Plaintiff
as “MME” and to the Defendant as “Bank Rakyat” for clarity
and disambiguity.

Background facts

[3] MME is an experienced “Class A” developer and a general

contractor based in Kuala Terengganu, Terengganu who
has undertaken and completed projects within and beyond
the State of Terengganu. It was wound up on 12.1.2017 by
the Kuala Lumpur High Court vide case no: WA-28NCC-
912-10/2016 and obtained leave on 29.9.2020 from the
Winding Up Court to commence the present action against
Bank Rakyat.

[4] Bank Rakyat is a financial institution registered under the

Cooperative Act 1993.

[5] Between March 2009 until November 2012 Bank Rakyat

granted MME a total of 6 facilities as follows:

a) Facilities amounting to RM11,782,000.00 (“the 1st

Facility”), documented by a letter of offer dated
18.3.2009, comprising a Contract Financing-i Facility
of RM8 million to finance payment of material
supplies, project consultancy, building construction
works and/or other works in relation to the contract
awarded by Jabatan Kerja Raya to MME known as

2
 “Cadangan membina dan menyiapkan Klinik
Kesihatan 3” (“the KK3 Project”) in Hulu
Terengganu under the Bai’ Al-Inah principle, a
Jaminan Bank-i (BG-i) convertible to Kemudahan
Berjangka-i Facility of RM2,847,441.68 under the Al-
Kafalah principle to guarantee the Bank Guarantee
(Advance Payment) Facility to be taken with a
Commercial Bank for the KK3 Project and a
Berjangka-i (TF-i) Facility for the amount of
RM934,483.34 under the Bai’ Al-Inah principle to
settle the amount due in the event that the Bank
Guarantee (Performance) to be taken with the
Commercial Bank is invoked.

b) Financing-i Facilities of RM13,486,512.65 (“the 2nd

Facility”), documented by a letter of offer dated
18.7.2012, comprising a Jaminan Bank-i (BG-i)
(Performance Guarantee) Convertible to Berjangka-i
(TF-i) Facility of RM1,533,585.44 under the Al-
Kafalah principle, a Jaminan Bank-i (BG- i) (Advance
Payment) covertible to Berjangka-i (TF-i) Facility of
RM4,952,927.21 under the Al-Kafalah principle and a
Kontrak-i (CF-i) (Revolving) Facility of RM7 million
under the Bai’ Al-Inah principle to part finance
payment for works in relation to a contract awarded
by JKR Malaysia, Kuala Lumpur known as “Naiktaraf
Depot Tahanan Imigresen Kemayan, Pahang” (“the
DTIK Project”) with a contract value of
RM30,671,708.82.

3
c) Financing-i Facilities of RM5,255,000.00 (“the 3rd
Facility”), documented by a letter dated 9.11.2012,
comprising a Jaminan Bank-i (BG-i) (Performance
Guarantee) convertible to Berjangka-i (TF-i) Facility
of RM625,500.00, a Jaminan Bank-i (BG-i) (Advance
Payment) convertible to Berjangka-i (TF-i) Facility of
RM2,602,500.00 and a Kontrak-i (CF-i) Facility of
RM2 million to part finance payment for works in
relation to a project known as “Kerja-kerja
pembaikian Stadium Sultan Mizan Zainal Abidin, di
Kompleks Sukan Negeri Terenganu-Fasa 1” (“the
SKS Project”) with a contract value of
RM13,050,000.00.

d) Financing-i Facilities of RM5,300,348.83 (“the 4th

Facility”), documented by a letter of offer dated
9.11.2012, comprising a Jaminan Bank-i (BG-i)
(Performance Guarantee) Convertible to Berjangka-i
(TF-i) Facility of RM625,891.47 under the Al-Kafalah
principle, a Jaminan Bank-i (BG-i) (Advance
Payment) covertible to Berjangka-i (TF-i) Facility of
RM2,674,457.36 under the Bai’ Al-Inah principle and
a Kontrak-i (CF-i) Facility of RM2 million under the
Bai’ Al-Inah principle to part finance payment a
project known as “Projek cadangan membina dan
menyiapkan sebuah Sekolah Menengah
Kebangsaan Kuala Berang diatas Lot PT 7274,
Mukim Tanggol, Daerah Hulu Terengganu” (“the

4
 SMKB Project”) with a contract value of
RM12,517,829.45.

e) Bridging Financing-i Facility of RM6.20 million (“the

5th Facility”) and Penyambung-i Facility of RM3
million (“the 6th Facility”) both under the Bai’ Al-
Istisna principle, documented by a letter of offer
dated 30.5.2008 (“the 5th Facility Letter of Offer”),
a letter of offer dated 1.11.2011 and Istisna' Facility
Agreement dated 21.11.2011 in respect of of the 6th
Facility respectively, the purpose of which was to
part finance the construction costs of a proposed
mixed residential development project known as
“Taman Kemang Tiruk” (“the TKT Project”) in Mukim
Serada, District of Kuala Terengganu.

[6] As security for the Six Financing Facilities, MME entered

into the relevant Asset Sale Agreements, Asset Purchase
Agreements, Istisna' Sale Agreement, Istisna' Purchase
Agreement, Bank Guarantees, Assignment of Contract
Proceeds, Memoranda of Deposit and Letters of Set-Off for
each of the Six Financing Facilities.

[7] The 1st Facility to 6th Facility are referred to together as

“the Six Financing Facilities” and the KK3, DTIK, SKS,
SMKB and TKT Projects are referred to together as “the
Projects”. The definitions of each of the Six Financing
Facilities are based on what was averred in Bank Rakyat’s
affidavit in support and stated in Bank Rakyat’s Written

5
 Submissions as there appears to be an inconsistency from
MME’s pleadings, affidavits and Written Submissions as
MME only referred to and described 5 facilities which were
not in the correct chronological order when defining each
facility.

[8] The Six Financing Facilities were all disbursed to MME.

[9] MME failed to repay the sale prices for the Six Financing
Facilities. Bank Rakyat, by way of letters of demand dated
7.7.2014 and 3.9.2014 demanded payment of
RM16,017,143.21 and RM16,280,080.73 respectively to be
paid within 14 days. Subsequent demands were issued by
way of letters dated 4.3.2015 and 25.3.2015. These
payments were not forthcoming thus Bank Rakyat was
prompted to terminate the Six Financing Facilities through
Notices of Termination dated 26.3.2015 (“the Notices of
Termination”) issued through Bank Rakyat’s previous
solicitor Messrs. Shukor Baljit & Partners for each of these
facilities.

[10] Bank Rakyat commenced an action against MME under a

Writ of Summons dated 19.10.2015 filed in the Kuala
Lumpur High Court recorded as Suit No. 22M-176-10/2015
(“Suit 176”) for the recovery of the amount owed by MME to
Bank Rakyat under the Six Financing Facilities. After a full
trial of Suit 176, on 10.4.2017 the Kuala Lumpur High Court
decided that:

6
 a) All Bai’ Al-Inah facilities (the 1st to 4th Facilities)
offered to MME were declared void but MME was
obliged to repay to Bank Rakyat the balance of its
indebtedness under the Bai’ Al-Inah facilities
pursuant to s. 66 of the Contracts Act 1950;

b) MME shall pay Bank Rakyat the sum of money for

the facilities under the Bai’ Al-Inah principle for the
1st, 2nd, 3rd and 4th Facilities of RM11,841,577.32
as at 31.5.2015 and late payment charge at the rate
of 5% per annum on RM11,841,577.32 from the date
of judgment until full settlement;

c) MME shall pay to Bank Rakyat the sum of money for

the facilities under the Bai’ Al-Istisna principle for the
5th and 6th Facilities of RM7,161,259.61 as at
31.5.2015 and late payment charge at the rate of 1%
on RM7,161,259.61 from 1.6.2015 until full
settlement; and

d) Costs of RM50,000.00 to be paid by MME to Bank

Rakyat and costs of RM20,000.00 to be paid by
Bank Rakyat to MME.

[11] Bank Rakyat was not satisfied with part of the High Court’s
decision and filed a Notice of Appeal to the Court of Appeal
on 9.5.2017 (“the Appeal”).

7
[12] The Appeal was heard and on 19.3.2018 the Court of
Appeal ordered that the Judgment in Suit 176 dated
10.4.2017 be set aside and further ordered that the
Judgment be entered against the Respondent (MME) for
the amount owed of RM21,560,323.45, the same amount
claimed by Bank Rakyat in Suit 176, as at 31.5.2015 and
late payment penalty at the rate of 1% on RM21,560,323.45
from 1.6.2015 until full settlement (“the Court of Appeal
Judgment”). MME did not file any appeal to the Federal
Court against the Court of Appeal Judgment.

[13] On 27.10.2020, MME filed the present action against Bank

Rakyat contending, in gist, as follows:

a) In each of the Six Financing Facilities offered by

Bank Rakyat there is an implied term on the need for
constant cash flow for MME in these facilities to
sustain the execution for all the Projects for which
this funding is provided;

b) The said implied terms shall continue until the

Projects are completed corresponding to the tenure
of the facilities provided by Bank Rakyat, thus, it is
implied that Bank Rakyat in making available the Six
Financing Facilities, any delay in the disbursement of
the facilities and unfair deduction from the contract
proceeds will affect the working capital meant for
completing the Projects and impede MME’s work
progress;

8
c) For the duration of the Six Financing Facilities, Bank
Rakyat had breached the express and/or implied
terms of the Six Financing Facilities by delaying the
timely disbursement of the facilties to MME in the
completion of the Projects;

d) In many instances Bank Rakyat knowingly caused

repeated wrongful deductions to be made from
contract proceeds paid into an account with Bank
Rakyat;

e) Bank Rakyat wrongfully applied the contract

proceeds interchangeably between each of these
facilities affecting the cash flow of MME, leaving no
monies left for MME in the proceeds for the use in
the Projects;

f) In so doing, Bank Rakyat, in further breach of the

express and/or implied terms of the Six Financing
Facilities, failed to recognise that the facilities
provided are distinct and separate given for different
purposes with terms and conditions peculiar to the
types of projects awarded to MME;

g) Due to the distinct nature the Six Financing Facilities,

Bank Rakyat was wrong to combine and consolidate
all the facilities and terminate any one of them at any
given time;

9
 h) For the duration of the Six Financing Facilities, Bank
Rakyat refused to respond to communications and
letters sent by MME seeking extension of time and
renewal of the facilities when the facilities expired;

i) The conduct of Bank Rakyat brought about the

failure of all the Projects and the eventual collapse of
MME as a going concern;

j) Subsequent to Bank Rakyat’s letter of demand on

7.7.2014, both parties negotiated further to continue
the facilities whereby for the 4th Facility which was
for the SMKB Project, Bank Rakyat proceeded to
make payment to the Principal vide a letter on
17.7.2014 and debited MME’s revolving facility with
Bank Rakyat; and

k) Thereafter, Bank Rakyat, subsequent to several

rounds of negotiation to reconsider the termination of
the Six Financing Facilities terminated the same in
the Notices of Termination on 26.3.2015 which was
wrongful and against the terms of the Six Financing
Facilities offered.

[14] In the present action, MME claims against Bank Rakyat as

follows:

a) RM5,042,735.76 for the 1st Facility;

10
 b) RM6,574,032.82 for the 2nd Facility;

c) RM3,176,312.59 for the 3rd Facility;

d) RM2,507,634.04 for the 4th Facility;

e) RM14,432,761.70 for the 5th Facility and 6th Facility;

and

f) RM125,594,204.98 losses for DTIK, SKS and SMKB

Projects.

g) An order for account to be taken in respect of the

contract proceeds of each of the Six Financing
Facilities taken out by Bank Rakyat to pay for
projects other than for which each of the Six
Financing Facilities were offered;

h) Further orders upon account taken on all such

payments deducted from the contract proceeds of
each of the Six Financing Facilities taken out to be
refunded to MME forthwith;

i) Damages; and

j) Interest and Costs.

[15] On 26.11.2020, Bank Rakyat filed the application in encl. 8

to strike out the present action of MME.

11
The Application

[16] Bank Rakyat’s application in encl. 8 is made pursuant to

para.s (a), (b) and (d) of O. 18 r. 19(1) ROC 2021 mainly for
the following prayers:

a) That Bank Rakyat’s Writ of Summons and Statement

of Claim dated 26.10.2020 (“the Writ of Summons
and Statement of Claim”) be struck out against
MME pursuant to O. 18 of r. 19(1) (a) of the ROC
2012 as it does not disclose any reasonable cause of
action; and/or

b) That the Writ of Summons and Statement of Claim

be struck out against MME pursuant to O. 18 of r.
19(1) (b) of the ROC 2012 as it is scandalous,
frivolous or vexatious; and/or

c) That the Writ of Summons and Statement of Claim

be struck out against MME pursuant to O. 18 of r.
19(1) (c) of the ROC 2012 as it is otherwise an
abuse of Court process.

[17] Bank Rakyat’s application was filed on the following

grounds:

a) MME has no reasonable cause of action;

12
 b) MME’s claim herein involves the same or newly
pleaded issues between the same parties and for the
same facilities that have been raised by MME which
are barred by the doctrines of res judicata and
estoppel; and

c) MME’s claim is scandalous, frivolous or vexatious or

an abuse of court process as MME had reasonable
opportunity to dispute MME’s claim in Suit 176 and
the Appeal which has already been adjudicated.

Issues for the court’s determination

[18] Upon an examination of the affidavits and submissions filed

by both parties, I find that the issues to be determined by
the court fall into 2 broad categories:

a) Whether MME’s action is barred by the doctrine of

res judicata; and

b) Whether MME’s action has merits which warrant the

action to go to trial.

Law on striking out under O. 18 r. 19(1) ROC 2012

[19] The rules on striking out pleadings are provided in O. 18 r.

19(1) ROC 2012 which is reproduced below for
convenience:

13
 “19. Striking out pleadings and endorsements (O. 18
r. 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, and may order the action to be stayed or
dismissed or judgment to be entered accordingly, as
the case may be.”

[20] The Federal Court in Tan Wei Hong (A Minor Suing

Through Guardian Ad Litem And Next Friend Chuang Yin E)
& Ors v. Malaysia Airlines Bhd And Other Appeals [2018] 9
CLJ 425 has succinctly laid out the test for striking out
pleadings, referring to the locus classicus Bandar Builders
Sdn Bhd. v. United Malayan Banking Corporation Bhd
[1993] 4 CLJ 7. Ramly Ali FCJ delivering the judgment of
the court, stated as follows:

“The tests for striking out application under O. 18 r.

19 of the ROC, as adopted by the Supreme Court in
Bandar Builders 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;

14
 (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;

(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;

(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

(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.”

[21] The Court of Appeal, in Sivarasa Rasiah & Ors v. Che

Hamzah Che Ismail & Ors [2012] 1 CLJ 75 adopted the
well-settled principle of striking out in the following passage:

“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] 3 CLJ 305; [1997] 2
MLJ 565 (FEDERAL COURT)).”

Analysis and findings of the court

Res judicata

[22] Counsel for Bank Rakyat submits that as the Court of

Appeal Judgment which reversed the decision of the High
Court in Suit 176 is a final judgment, the doctrine of res
judicata applies in Plaintiff's action. The proceedings here

15
 are scandalous, frivolous or vexatious or an abuse of court
process pursuant to O. 18 of r. 19(1) (b) and (d) of the
Rules of Court 2012.

[23] Counsel for Bank Rakyat referred the court to the case of
Asia Commercial Finance (M) Berhad v. Kawal Teliti Sdn
Bhd [1995] 3 CLJ 783 (Federal Court) for the proposition
that res judicata creates an estoppel per rem judicature, the
effect of which is that 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 matter that has been adjucated upon.

[24] Bank Rakyat maintains that the Plaintiff's action is an abuse

of Court process. The Plaintiff's claim in the proceedings
here is in respect of the Six Financing Facilities between the
same parties which have already been heard and decided
earlier in the Court of Appeal. As the claim in respect of the
Six Financing Facilities had already been adjudicated in the
Court of Appeal, the Plaintiff should not be allowed to re-
litigate the matter. The findings of the court is the truth of
the matter and parties must accept it. It is res judicata.

[25] Bank Rakyat contends that the issues in Suit 176 have
already been decided and should not be determined again
by the court in the present action. The issues in Suit 176 are
reproduced in their original form as below:

16
 “Sama ada MME Realty & Management Sdn Bhd
adalah terikat dengan perjanjian-perjanjian bagi
keenam-enam kemudahan tersebut?
Sama ada MME Realty & Management Sdn Bhd
telah mengingkari dan memecahkan terma-terma
perjanjian-perjanjian bagi keenam-enam kemudahan
tersebut?

Sama ada MME Realty & Management Sdn Bhd

adalah berhutang kepada plaintif?

Sama ada MME Realty & Management Sdn Bhd

memasuki perjanjian-perjanjian bagi keenam-enam
kemudahan tersebut akibat pernyataan silap cuai
plaintif?

Sama ada plaintif memasuki enam kontrak kolateral

dengan MME Realty Management?

Sama ada kemudahan-kemudahan Prinsip Bai' Al-

Innah di dalam kemudahan satu hingga empat
mengikut peruntukan Shariah Advisory Council
Guidelines dari Bank Negara Malaysia?

Sama ada asset sale agreement dan asset purchase

agreement yang terkandung di dalam perenggan 4(i)
dan (ii), 7(i) - (iii), (vi), (viii) dan (ix), 10 (ii), (iii), (vi),
(vii), (ix), (x) dan 13 (ii), (iii), (vi), (vii), (ix), (x)
pernyataan tuntutan tidak sah kerana
ketidaktentuan?”

[26] Counsel for Bank Rakyat submits that these issues in Suit
176 are premised on the cause of action, facts and the Six
Financing Facilities relating to the breach of contract which
are the same as MME’s claim in the present action.

[27] To support the argument that there matters should not be

relitigated after adjudication and should be finality in
litigation, Bank Rakyat referred the court to the cases of
CIMB Islamic Bank Berhad v. Ravichantiran a/l Ganesan
[2020] 1 LNS 415 (High Court), Dato' Sivananthan a/l
Shanmugam v. Artisan Fokus Sdn Bhd [2016] 3 MLJ 122
17
 (Court of Appeal), Ho Hup Construction Company Berhad v.
Zen Courts Sdn Bhd & Anors [20181 1 LNS 340 (High
Court), Acetrend Corporation Sdn Bhd v. Rosmawati Abdul
Halim [20161 1 LNS 1104 (High Court) and CIMB
Investment Bank Berhad v. Ernst & Young & Anor [2020]
MLJU 1450 (High Court).

[28] Further, counsel for Bank Rakyat submits that MME is

barred from raising the new issues raised in the present
action on the principle of cause of action estoppel which is a
form of res judicata. MME’s action here is an abuse of
process of court when cause of action estoppel operates.
Bank Rakyat relies again on the case of Asia Commercial
Finance (M) Berhad v. Kawal Teliti Sdn Bhd [supra] to
argue that cause of action estoppel is applicable in relation
to the issues raised in the case. Counsel for Bank Rakyat
further submits that:

a) Res judicata means “a matter that has been decided”

and its importance lies in its effect on estoppel per
rem judicature in the form of “cause of action
estoppel” or “issue estoppel”;

b) In this case, the principle of res judicata gives rise to

“cause of action estoppel” as the right of a litigant to
bring a certain action in court for the adjudication of a
particular right which has been adjudged in a prior
final judgment and the right to bring an action for the
cause the action in the instant case merges into the

18
 final judgment in Suit 176 and the previous Court of
Appeal Judgment; and

c) The doctrine of res judicata also applies to causes of

action or issues which relate to the same Six
Financing Facilities that have not yet been decided
by the Court when these issue could have but was
not brought to the attention of the court in the prior
case due to MME’s negligence.

[29] Bank Rakyat maintains that the issues raised by MME in the
present action should have been raised from the outset
when the Six Financing Facilities were disbursed. However,
MME continued to apply for financing and executed
agreements for the 1st Facility through to the 6th Facility. As
a consequence of MME’s breaches to repay the facilities as
agreed in the terms of the agreement and as stipulated by
Bank Rakyat and set out in the Assignment of Contract
Proceeds in each Facility Agreement, Bank Rakyat
commenced Suit 176.

[30] Counsel for Bank Rakyat submits that as Bank Rakyat

commenced Suit 176 against the Plaintiff in 2015, MME
should have raised the current issues since 2015. MME
contended that it became aware of the issues only when
MME’s accounts were audited or completed but when Suit
176 went to trial, MME was not yet wound up and MME had
access to the accounts during this time. MME should have

19
 beeen responsible in scrutinizing the company accounts of
MME when the matter went for trial in Suit 176.

[31] Further, counsel for Bank Rakyat submits that by filing this
new action, MME intends to cause the Court of Appeal
Judgment to lose its effect and be set aside. This is an
abuse of court process as according to procedure, the
Plaintiff was to file an appeal against the decision of the
Court of Appeal as explained in the Supreme Court case of
Adzmi Ali & Anor v. Mohd Isa Kasad [1987] CLJ (Rep) 37
where the Supreme Court ruled that when an aggrieved
party was dissatisfied with the decision of a judge to not set
aside a default judgment or an interlocutory judgment with
damages to be assessed, the proper procedure to be
followed was by way of an appeal to the Supreme Court.

[32] According to Bank Rakyat, the Court of Appeal on

19.3.2018 ordered that the Suit 176 Judgment be set aside
and further ordered that the judgment be entered against
the Respondent (MME) for the sum of RM21,560,323.45 as
at 31.5.2015 and late payment penalty at the rate of 1% on
RM21,560,323.45 from 1.6.2015 until full settlement to be
paid by MME to Bank Rakyat.

[33] Bank Rakyat maintains that the judgment sum of

RM21,560,323.45 is the same amount as claimed by Bank
Rakyat in Suit 176 and was in respect of the same Six
Financing Facilities. MME’s claim here involves the same
six facilities, subject matter, parties, witnesses which have

20
 been decided in the Court of Appeal earlier. The doctrine of
res judicata is applicable in these proceedings as MME is
raising issues relating to the Six Financing Facilities which
were adjudicated in the Court of Appeal. If these
proceedings are continued, it will result in the Court of
Appeal Judgment being ineffective.

[34] Bank Rakyat contends that no appeal was filed by MME

against the decision of the Court of Appeal on 19.3.2018
and MME filed this claim almost 3 years later. MME is thus
barred by the doctrine of res judicata.

[35] Counsel for Bank Rakyat submits that the doctrine of res
judicata is a factor for the court to take into account to
dismiss MME’s claim on the basis that the claim is
scandalous, frivolous or vexatious or an abuse of court
process as decided by the Court of Appeal in Sungai Dinar
Sdn Bhd v. Koperasi Pekebun Kecil Wilayah Johor Selatan
Bhd [2017] 1 CLJ 333 (Court of Appeal).

[36] Counsel for Bank Rakyat also submits that allowing MME’s
claim in the present action in respect of the Six Financing
Facilities, which is the subject matter of Suit 176, to proceed
will provide an opportunity to any customer who has been
previously sued by banks and found liable in a full trial to
relitigate the matter. Bank Rakyat referred the court to the
case of Chin Wai Leong & Ors v. PP & Other Applications
[2020] 7 CLJ 322 (Court of Appeal) which stated that
allowing a party to re-litigate a matter will open the floodgate

21
 to endless re-litigation before the same court which causes
decisions of the court to become doubtful and uncertain.

[37] Counsel for Bank Rakyat submits that the decision of the
Court of Appeal is binding on the parties and filing a new
claim in respect of the same Six Financing Facilities is an
injustice which results in no end to the litigation process.
Allowing MME’s claim to proceed will open a floodgate of
cases especially in banking cases in Malaysia because
there is no finality of cases between the parties despite the
matter having been tried fairly and equitably in court.

[38] Counsel for MME submits that Bank Rakyat’s action in Suit
176 is not the same as MME’s action in the present action.
For this purpose MME referred the court to a table of
comparison which was put forward by Bank Rakyat in its
affidavit in support. Through this, MME sought to
demonstrate that the issues and contentions raised by MME
relating to Suit 176 are different from the issues in this
present action. MME maintains that res judicata does not
apply when the issues or questions in Suit 176 are not
present in the present action. These are summarised below.

[39] In respect of of the issue of breach of implied terms by Bank

Rakyat, in Suit 176 MME contended that there was an oral
representation and assurance by Bank Rakyat which
resulted in the Plaintiff accepting the facilities provided by
Bank Rakyat. In consequence of this Bank Rakyat breached
the 1st Facility, 3rd Facility, 4th Facility, 5th Facility and 6th

22
 Facility. However in the present action MME contends that
there were implied terms relating to the constant cash flow
requirements for MME and Bank Rakyat had breached
estimated these implied terms for the duration of all the
facilities granted, particularly for the 2nd Facility, 3rd Facility
and 5th Facility.

[40] In respect of of the issue of unlawful termination of the Six

Financing Facilities, MME’s Defence in Suit 176 concerns
agreements between Bank Rakyat and MME but on the
other hand in this action it is the Notices of Termination
which are disputed and not the actual agreements. In Suit
176 MME contended that the 2nd Facility, 3rd Facility and
6th Facility are invalid and void whereas in the present
action the contention of MME is that terminations of the 1st
Facility and 4th Facility are unlawful. Further in Suit 176 the
main issue is whether the agreements and their execution
of the agreements comply with Shariah principles whereas
in the present action the issue raised is the unlawful and
wrongful termination notices and Bank Rakyat’s
consolidating all the Six Financing Facilities.

[41] In respect of of the issues of unfair deductions from contract

proceeds, in Suit 176 MME referred to the Contract
Financing-i facilities for all Six Financing Facilities which
MME contended to be void for uncertainty. However, in the
present action, MME contends that Bank Rakyat had
deducted the contract proceeds to pay for other projects
which was not agreed to by MME for all the Six Financing

23
 Facilities, resulting in MME not having constant cash flow to
complete the Projects.

[42] On the issue of Bank Rakyat’s delay in the disbursement of

the facilities and Bank Rakyat’s failure to extend the
financing period, in Suit 176 MME contended that Bank
Rakyat failed to extend the period of the Penyambung-i (PF-
i) Facility for the 6th Facility and to extend the Jaminan
Bank-i Facility for the 3rd Facility. MME also contended that
Bank Rakyat claimed against MME pursuant to the Bridging
Financing-i Facility for 5th Facility as it did not receive
payment from the end financier. However in the present
action MME contends that Bank Rakyat had delayed the
payment of disbursements under the Penyambung-i (PF-i)
Facility for the 3rd Facility and Bank Rakyat refused to
revise the disbursement limit under the Jaminan Bank-i
Facility for the 4th Facility. MME also contends that Bank
Rakyat had delayed the payment of disbursement under the
Jaminan Bank-i Facility for the 5th Facility.

[43] MME maintains that a new issue is raised in the present

action, contending that Bank Rakyat has increased the
redemption amount under the Bridging Financing-i Facility
for the 1st Facility.

[44] MME further contends that Bank Rakyat in providing the

facilities had breached the standard on business conduct
relating to the promotion of the financial services and
provision of recommendations or advice including

24
 assessment of suitability and affordability of financial
services offered to MME within s.42C of the Development
Financial Institutions Act 2002 (“DFIA”). In relation to this,
MME contends that the manner in which Bank Rakyat
utilized the funds in the contract proceeds paid into the
Designated Account solely managed by Bank Rakyat for the
facilities amounted to prohibited business conduct as set
out in the Second Schedule within s. 42D of DFIA. These
matters are pleaded in para.s 92 and 93 (a) to (o) of the
Statement of Claim.

[45] In respect of this issue the contentions of MME include the

following:

a) Bank Rakyat abused its dominant position to dictate

in 5th Facility Letter of Offer relating to the 5th
Facility under “Special Condition” in cl. 16 that Bank
Rakyat shall be one of the end-financiers for the
above project and at least 40% of the end financing
must be allotted to Bank Rakyat’s branches which
prevented MME from spreading its risk in the end
financing including obtaining better competitive rates
from other banks.

b) Acting as the de facto and/or shadow director of

MME, Bank Rakyat arbitrarily increased the
redemption amount for the individual units sold until it
received 82% of the redemption amount for the
individual units sold in the TKT Project when

25
 additional bridging finance was made available. This
resulted in there being no meaningful balance left for
MME to pay its suppliers and contractor in the
housing development from the sales proceeds.

c) Bank Rakyat became joint signatory to the Housing

Development Account (“HDA”) of MME for the TKT
Project contrary to the Housing Development
(Control and Licensing) Act 1966 as the monies for
Bank Rakyat as the end financiers were not paid into
the HDA and paid directly to Bank Rakyat.
Effectively, MME did not have any funds either in the
1st Facility or the redemption proceeds or the HDA to
complete the TKT Project.

d) Between 2008 to 2014, Bank Rakyat being in control

of MME’s contract proceeds wrongly deducted the
contract proceeds interchangeably between these
projects, for example funds were deducted from the
DTIK Project to pay for UMT Project, KK3 Project,
SMKB Project, SKS Project and the TKT Project.
Also contract proceeds in the SKS Project and the
SMKB Project were deducted to pay for other
projects.

e) Bank Rakyat breached the standard of business

conduct relating to provision for recommendation or
advice including assessment of suitability and
affordability of the 3rd Facility and 4th Facility as by

26
 applying the contract proceeds of the DTIK Project to
pay for other projects since 19.9.2012 an impression
of default was created and Bank Rakyat could not
have offered MME the 3rd Facility and 4th Facility if
the existing facilities are in default and that there is
likelihood of further default.

f) The cause of action in respect of the responsibility

and business standards in providing financial
services was never raised in Suit 176. This cause of
action has to be tried because the breach of the
implied terms by Bank Rakyat cumulatively amounts
to the breach of financial services standards under
the DFIA.

[46] To support the submissions that a cause of action which

has not been raised and adjudicated in a previous suit can
still be tried and raised in a subsequent suit counsel for
MME referred the court to the cases of Syarikat Sebati Sdn
Bhd v. Pengarah Jabatan Perhutanan & Anor [2019] 3 CLJ
(Federal Court), Chee Pak Choy & Ors v. Scotch Leasing
Sdn Bhd [2001] 2 CLJ 321 (Court of Appeal), Metroplex
Holdings Sdn Bhd v. Commerce International Merchant
Bankers Bhd [2013] 8 CLJ 329 (Court of Appeal), Kompleks
Perkayuan Kelantan Sdn Bhd v. Tian Chuan Sen & Yang
Lain [2020] 2 CLJ 781 (Court of Appeal) and Sunshine Fleet
Sdn Bhd v. GM Healthcare Sdn Bhd & 2 Lagi [2015] 1 LNS
657.

27
[47] I have considered the submissions of counsel in respect of
the issue of whether res judicata will bar MME from raising
the issues in the present action. The first consideration of
the court is whether the issues that are raised in the present
action are the same issues that have previously been raised
in Suit 176. If the same issues are raised then it is clear that
MME is not allowed to re-litigate the matter as it would be
seeking to reopen the litigation in Suit 176 that has already
been concluded by the Court of Appeal decision on
19.3.2018.

[48] There is no dispute that the parties in the present action are
the same as the parties in Suit 176. In the present action,
Bank Rakyat, the defendant in Suit 176 has become the
plaintiff and MME, the defendant in Suit 176 has become
the plaintiff. The subject matter of the dispute is also the
same – the Six Financing Facilities. While in Suit 176 MME
raised a number of Bank Rakyat’s breaches as defences to
Bank Rakyat’s claim, in the present action, MME alleges a
number of breaches by Bank Rakyat in respect of the Six
Financing Facilities to establish its causes of action.

[49] In Suit 176, the issues to be tried were considered by the

High Court and then at the Appeal. The English translation
of the issues would read as follows:

“Whether MME is bound by the agreements for the

Six Financing Facilities?

28
 Whether MME has breached the terms of the
agreements for the Six Financing Facilities?

Whether MME is indebted to Bank Rakyat?

Whether MME entered into the agreements for the

Six Financing Facilities as a result of Bank Rakyat’s
negligent misrepresentation?

Whether Bank Rakyat entered into six collateral

contracts with MME?

Whether the Bai’ Al-Innah facilities in 1st Facility to

4th Facility are in accordance with the provisions of
the Shariah Advisory Council Guidelines from Bank
Negara Malaysia?

Whether the relevant asset sale agreements and

asset purchase agreements are void for
uncertainty?”

[50] At the Appeal, the Court of Appeal found in favour of Bank

Rakyat and granted judgment for Bank Rakyat on terms
stated in the Court of Appeal Judgment. This would mean
that in arriving at the decision, the issues would have been
decided in Bank Rakyat’s favour. Particularly, in respect of
the first 3 issues, these would have been determined as
follows:

a) MME is bound by the agreements for the Six

Financing Facilities;

b) MME has breached the terms of the agreements for

the Six Financing Facilities; and

c) MME is indebted to the Plaintiff.

29
[51] Only with these issues being decided in the positive that
MME could be found liable for the full amount as claimed by
Bank Rakyat in Suit 176 and for the Court of Appeal
Judgment to be given against MME. This is the truth of the
matter. Despite the present action being dressed up in new
clothes in the form of the current issues raised by MME
relating to, inter alia, the breach of implied terms on the
need for constant cash flow for MME, timely disbursements
and not applying contract proceeds interchangeably, any
finding for MME in relation to these new issues would run
contrary to the finding of the Court of Appeal that MME is
bound by the agreements for the Six Financing Facilities,
that MME has breached the terms of the agreements for the
Six Financing Facilities and that MME is indebted to the
Plaintiff. This is because the termination of the Six
Financing Facilities would be unlawful if MME did not
breach the terms of the agreements for the Six Financing
Facilities.

[52] In the present action, as pleaded by MME, an integral part

of MME’s case is that the termination of the Six Financing
Facilities by way of the Notices of Termination was wrongful
and against the terms of the facilities offered and that the
reliefs sought by MME was founded on this termination
being unlawful. How can the termination be lawful in Suit
176 but unlawful in the present action? MME has to accept
that the truth of the matter is that the termination was lawful
as accepted by the Court of Appeal and raising new issues

30
 seemingly unrelated to the earlier case cannot change that
truth.

[53] Premised on this reasoning, it is my considered view that

res judicata operates to bar MME from claiming under this
action. MME is relitigating this action premised on the same
facilities, facts and circumstances involving the same
parties in Suit 176. The present action and Suit 176 will also
involve the same documents and the same witnesses. The
rights and obligations of parties have already been
determined in Suit 176, particularly on the termination of the
Six Financing Facilities which was lawful, and there should
be a finality in the litigation. The judgment by the Court of
Appeal for Suit 176 becomes the truth between the MME
and Bank Rakyat and the parties should accept it as the
truth.

[54] In Asia Commercial Finance (M) Berhad v. Kawal Teliti Sdn

Bhd [supra] the Supreme Court held that a decision of the
court is final and becomes the truth between the parties.
Peh Swee Chin FCJ said this:

“What is res judicata? It simply means a matter

adjudged, and its significance lies in its effect of
creating an estoppel per rem judicature. 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 -
31
 interest rei publicae under the 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
further elevated status of a question of public policy.

(Emphasis added)

[55] This was similarly observed by the Court of Appeal in

Ahmadi Yahya v. PP [2012] 7 CLJ 113. Azahar Mohamed
JCA (now FCJ) stated:

“[40] ...The instant application is in actual fact an

attempt to re-litigate the substantive merits of the
appeal and re-open and re-examine a final decision
that had already been given by this Court on 13
December 2011. It seems to me that the applicant
was attempting to have the proverbial second bite of
the cherry in filling the application herein. The
judicial process has come to an end. There is no
longer any ‘live’ issue to be determined.
Furthermore, by the doctrine res judicata, once
the appeal was heard and decision given, and
there being no provision for a further appeal to
the Federal Court on the matter, the appeal
cannot be reheard, since the decision is final and
becomes the truth between the parties. The
principle of res judicata is based on the necessity
of giving finality to judicial decisions. It would
not promote the due administration of the law or
the promotion of justice for this court to have a
power to re-hear and appeal afresh of which it
has finally disposed. It is in the public interest
that there should be finality in an appeal before
this court. It is imperative to the due administration
of our system of justice that once an appeal has
been properly concluded, it is no longer before the
court; if not there can be no end to litigation. It would

32
 otherwise open the floodgate to endless re-litigation
before the same court. The value and usefulness of
a decision of this court becomes doubtful and
uncertain if the appeal can be reopened at any time
and the court is permitted to make a different order”.

(Emphasis added)

[56] Further, even if the causes of action or the issues in the

present action are different from the issues ventilated in Suit
176 and not already decided, these are causes of action or
issues that are so clearly part of the subject matter of the
litigation in Suit 176 and so clearly could have been raised
in Suit 176 which MME had not done. Thus MME is
estopped by issue estoppel from raising these issues now.
The principle of res judicata is not only applicable to matters
which have been adjudicated by a court but also matters
and/or issues which were not raised in the earlier
proceedings which a litigant could and should have done
so.

[57] Peh Swee Chin FCJ explained the principle of issue

estoppel in Asia Commercial Finance (M) Berhad v. Kawal
Teliti Sdn Bhd [supra] as follows:

“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. …..

33
…. There is one school of thought that issue
estoppel applies only to issues actually decided by
the Court in the previous proceedings and not to
issues which might have been and which were not
brought forward, either deliberately or due to
negligence or inadvertence, 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 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. It is warranted by the weight of
authorities to be illustrated later. It is completely in
accord or resonant with the rationales behind the
doctrine of res judicata, in other words, with the
doctrine of estoppel per rem judicatum. It is
particularly important to bear in mind the question of
the public policy that there should be finality in
litigation in conjunction with the exploding population;
the increasing sophistication of the populace with the
law and with the expanding resources of the Courts
being found always one step behind the resulting
increase in litigation.

It is further necessary at this stage to understand the

import of the words in the said famous statement ie
“... every point which properly belonged to the
subject of litigation... “ which Somervell LJ explained
in Greenhalgh v. Mallard [1947] 2 All ER 255, 257 as
follows:

... res judicata for this purpose is not confined to

the issues which the Court is actually asked to
decide, but it covers issues or facts which are
so clearly part of the subject matter of the
litigation and so clearly could have been raised
that it would be an abuse of the process of the
Court to allow a new proceeding to be started in
respect of them.”

(Emphasis added)

34
[58] In Dato' Sivanathan a/l Shanmugam v. Artisan Fokus Sdn
Bhd [supra] the Court of Appeal stated:

“[29] We would further add at this point that, even if

there has been no actual decision as to the issues
involved in the instant action, but if the respondent
did not raise these issues in the earlier proceedings
which it could and should have done so, in our view
the plea of this doctrine of res judicata in its amplified
and wider sense is available to the appellant to
prevent an abuse of the process of the court.”

[59] MME in this suit, by raising these purported new causes of

actions and issues, is attempting to reverse the effect of the
judgment in Suit 176 where Bank Rakyat who was the
plaintiff in Suit 176 successfully claimed a sum of
RM21,560,323.45 as at 31.5.2015 after Bank Rakyat’s
appeal was allowed in the Court of Appeal through this
action. In this action, MME, in addition to seeking orders for
accounts of contract proceeds to be taken, is claiming a
total sum of RM157,327,681.89 for losses under the Six
Financing Facilities and losses under the Projects, far
exceeding to the judgment sum of RM21,560,323.45 in Suit
176. MME attempts to do this by bringing to the surface,
after the Court of Appeal Judgment relating to Suit 176,
supposed breaches by Bank Rakyat committed while
handling the Six Financing Facilities together with breaches
of financial services standard under the DFIA and creating
purportedly new causes of action against Bank Rakyat to
mount a fresh suit. These are causes of action which were
not raised in the earlier proceedings which MME could and

35
 should have done so via a counter claim or raised as
defences to Bank Rakyat’s claim in Suit 176.

[60] MME contends that the causes of action raised in the

present action were not raised in Suit 176 as they were only
known to MME after MME’s account were completed after it
was wound up and after a contributors’ meeting. This was
averred in paras 13 and 14 of the MME’s affidavit in reply:

“13. Saya rendah diri menyatakan kausa-kausa

tindakan diatas tidak pernah dibangkitkan oleh
plaintif semasa Guaman 176 dan pertama kali
dibangkitkan d isini terutama sekali berhubung
dengan defendan menyalahgunakan kedudukan
mereka mengambii “contract proceeds” dari satu
projek untuk membayar Projek- projek lain. Ini adalah
kerana defendan mengawal akaun Projek-projek dan
satu-satunya penandatangan tunggal akaun tersebut
dan mempunyai kawalan sepenuhnya ke atas
akaun-akaun “contract proceeds” semua
kemudahan- kemudahan tersebut.

14. Saya juga mejelaskan perkara ini hanya

diketahui oleh Lembaga Pengarah plaintif apabila
satu perakaunan disiapkan mengenai perbelanjaan
dan kerugian syarikat selepas penggulungan plaintif
dan semua penyumbang-penyumbang bermesyuarat
dan mendapati defendan bertanggungjwab secara
langsung mengakibatkan plaintif digulung oleh
pembekal salah satu projek yang dibiayai oleh
defendan.”

[61] No other evidence is before the court to substantiate MME’s

rather bare averments relating to its discovery of the alleged
abuse of position by Bank Rakyat.

36
[62] I am not persuaded that these are matters which MME has
discovered only recently as the facts MME relies on in the
present action which allegedly caused the failure of MME to
service the financings which led to Suit 176 had occurred
earlier during the time MME was breaching its obligation to
repay under the Six Financing Facilities. I agree with Bank
Rakyat’s submission that MME should have scrutinized the
company accounts when the matter went for trial in Suit
176.

[63] In my view, MME cannot, by turning possible defences in

Suit 176, into fresh causes of action in a fresh suit, say that
it is entitled to file a separate action against Bank Rakyat
(the plaintiff in Suit 176) for damages and other reliefs when
these new causes of action clearly relate to the subject
matter of the litigation in Suit 176. If this is allowed, losing
litigants, particularly in banking recovery suits, will always
have a second bite of the cherry by filing a fresh suit after
digging up seemingly new causes of action to then sue the
victors to reverse the effect of the previous judgments or
simply put pressure on the successful party to settle.

[64] In Sungai Dinar Sdn Bhd v. Koperasi Pekebun Kecil

Wilayah Johor Selatan Bhd [supra] the Court of Appeal
held:

“[17] In our judgment, one of the grounds upon

which an application under O. 18 r. 19 of the
Rules of Court 2012 can be made is provided in
para. (1)(b) which states that an action is
scandalous, frivolous as vexatious and the most
37
 common instance of matters which are struck out
on this ground are those which are res judicata.
We are satisfied that the present action is an attempt
by the plaintiff to reagitate, regurgitate or otherwise
relitigate the same issue which had already been
litigated in the first suit and decided by the High
Court on 20 November 2009. The plaintiff should
have appealed against the said decision. By not
appealing, the Plaintiff is precluded from canvassing
the same argument that the lease was null and void
and of no effect. The principle of res judicata
therefore applies to estop the plaintiff from reagitating
and relitigating this issue in the second suit”.

(Emphasis added)

[65] Premised on the above, it is the finding of the court that

MME’s action barred by res judicata and therefore is
scandalous, frivolous or vexatious or an abuse of court
process. Thus the court exercises its power under paras (b)
and (d) of O. 18. r. 19(1) ROC 2012 to strike out MME’s Writ
of Summons and Statement of Claim.

Merits of MME’s claims

[66] I do find that if not for res judicata barring MME’s claim in
this action and if this was a genuinely fresh action, there is
force in MME’s arguments that the issues relating to the
deduction of contract proceeds, delays in the disbursements
and increase in the redemption amount of the 1st Facility
are matters which ought to go to trial and cannot be
determined by affidavit evidence alone. However, MME’s
claim must be struck out on the basis of res judicata alone
as discussed above.

38
Conclusion

[67] Considering the totality of the facts and circumstances of

the case as disclosed in the affidavit evidence, it was quite
clear to me that Bank Rakyat had met the requirements in
an O. 18 r. 19(1) ROC 2012 application in accordance with
the principles established by Bandar Builders Sdn Bhd. v.
United Malayan Banking Corporation Bhd [supra].

[68] As the court is conferred with the powers to summarily

arrest the abuse of relitigating spent causes and a claim
barred by res judicata is a claim that is scandalous, frivolous
and vexatious, premised on the discussions in the above,
this court allows Bank Rakyat’s application in encl. 8 and
strikes out MME’s claim with costs of RM15,000 ordered
against MME.

13 September 2021

ATAN MUSTAFFA YUSSOF AHMAD

Judicial Commissioner
Kuala Lumpur High Court
(Commercial Division)

39
Counsel:

For the Plaintiff: Shahabudin Shaik Alaudin, Rosnida Che

Ibrahim & Siti Nurazwani
(Messrs Shahabudin & Rozima)

For the Defendant: Yusfarizal Yussoff & Sa'eed Khaliq

(PDK)
(Messrs. Yusfarizal Aziz & Zaid)

40