Court of Appeal revives RM451mil fraud suit, orders full trial

 Bench says allegations of deliberate concealment raise disputed facts that cannot be resolved at the striking-out stage.

The Court of Appeal said the suit seeking to set aside a RM451.3 million judgment arising from a RM400 million financing facility must be tested at a full trial, before ordering it to be heard before a different High Court judge.

PUTRAJAYA:

The Court of Appeal has reinstated a suit seeking to set aside a RM451.3 million judgment arising from a RM400 million financing facility, ruling that allegations of deliberate concealment of material information must be tested at a full trial.

A three-member bench comprising Justices Faizah Jamaludin, Lim Hock Leng and Aliza Sulaiman unanimously allowed the appeal by telecommunications company Zavarco Bhd and its guarantor, Zulizman Zainal Abidin.

In delivering the ruling, Faizah said the Kuala Lumpur High Court had gone beyond the permitted scope of a striking-out application by resolving disputed issues concerning the bank’s knowledge, alleged non-disclosure, the effect of guarantees, and the appellants’ involvement.

She said striking out a claim was an exceptional power to be exercised only where the claim was clearly and obviously unsustainable.

The suit seeks to set aside a summary judgment entered on May 9, 2019 for RM451,266,763. The judgment, arising from the RM400 million facility, had earlier been affirmed on appeal.

Counsel Gavin Jayapal, representing Zavarco and Zulizman, argued that their case was not simply based on alleged bribery surrounding the financing transaction.

He said the financier, Bank Pembangunan Malaysia Bhd, had knowingly concealed material information while maintaining the summary judgment.

The appellants relied on the bank’s receipt of receiver and manager findings in September 2020, information concerning alleged bribery in January 2022, and subsequent pleadings in a separate suit (Suit 264) involving allegations of bribery, fraud, conspiracy, and misuse.

Bank counsel Kumar Kanagasabai argued that the allegations and news reports had already been considered in the earlier appeal and that the present suit (Suit 395) was an attempt to reopen a final judgment.

Faizah said Suit 395 was a “Badiaddin-type” independent action that could, in exceptional circumstances, challenge a judgment founded on actual fraud or a breach of natural justice.

She was referring to the case of Badiaddin Mahidin & Anor v Arab Malaysian Finance Bhd, which established the principle.

“These particulars disclose an arguable independent claim,” she said.

She said whether the bank possessed the alleged knowledge, deliberately concealed material information, or thereby affected the judgment were disputed matters requiring evidence to be tested at trial.

“In the pleaded case, Suit 395 may ultimately succeed or it may fail. It cannot presently be said to be plainly and obviously unsustainable,” she said.

The court ordered the suit to be restored for trial before a different High Court judge.

Sasha Nameera Sabtu and Parveena Kaur also appeared for Zavarco and Zulizman, while Chia Oh Sheng, Wong Han Wey and Michelle Louis represented the bank. - FMT