1. ) LEE SUIT YIN 2. ) SRITHARAN NAIDU A/L SUNDARA RAJOO v HONG LEONG BANK BERHAD

Case Significance

Illustrates that a conclusive-evidence clause making a bank's statement of account final proof of indebtedness can support summary judgment on the bank's counterclaim and a striking-out of the borrower's claim where no triable issue is raised.

This High Court decision concerns a bank's twin applications, in a suit brought by borrowers, for summary judgment on its counterclaim and to strike out the borrowers' claim. The first plaintiff had purchased a three-storey terrace house from a developer and approached the defendant bank for a loan to part-finance the purchase; the loan was approved and, upon execution of the letter of offer, facilities agreement, deed of assignment and power of attorney, the bank released the loan in accordance with the payment schedule under the sale and purchase agreement. The borrowers later sued the bank, but the bank applied under Order 14 rule 5 of the Rules of Court 2012 for summary judgment on its counterclaim for the outstanding indebtedness, and under Order 18 rule 19 to strike out the borrowers' claim. The court heard both applications together. It accepted the bank's contention that the statement of account it issued was, by the terms of the facilities agreement, final and conclusive proof of the borrower's indebtedness, so that the outstanding balance was established and the borrowers had no defence on the merits to the counterclaim; it also applied the principle that a party is bound by an agreement she has signed even if she could not read the language in which it was drafted. Finding no triable issue raised by the borrowers, the court allowed both applications, entering summary judgment against the borrowers on the bank's counterclaim and striking out their claim, with costs of RM5,000.00 on each application, subject to allocatur. The judgment illustrates that a contractual conclusive-evidence clause in a facilities agreement can establish indebtedness for summary judgment where the borrower raises no genuine triable issue. The court's approach illustrates the interaction between Order 14 and Order 18 rule 19 in lending litigation: where a conclusive-evidence clause fixes the debt and the borrower's pleaded case discloses no bona fide defence, the bank may both enter summary judgment on its counterclaim and have the borrower's own action struck out as disclosing no reasonable cause of action.