[1987] 1 MLRA Chung Khiaw Bank Ltd. v.

Tio Chee Hing 221

CHUNG KHIAW BANK LTD.

v.
TIO CHEE HING

Supreme Court, Kota Kinabalu

Lee Hun Hoe CJ Borneo, Wan Suleiman, George Seah SCJJ
[Civil Appeal No. 256 Of 1985]
2 May 1987

JUDGMENT
Wan Suleiman SCJ:
By summons-in-chambers dated 8 January 1985 the appellants in this appeal
applied under O. 18 r. 19 of the Rules of the High Court 1980 and under the
Court's inherent jurisdiction to strike out respondent/plaintiff's writ and statement
of claim dated 27 August 1982 as amended on 26 October 1984, on the grounds
that it either disclosed no reasonable cause of action or alternatively that it was
vexatious and an abuse of the process of the Court, and the matter relied on was
time-barred having occurred more than 3 years before the issue of the writ.
Learned Judge declined to grant the application, holding that there were triable
issues and undue influence to go to trial, and that the matter was far from plain and
obvious.
Before us learned Counsel for the appellants, dealing with the first four grounds of
the memorandum of appeal, submitted that the learned Judge had failed to look
into the whole history of this matter, pointing out that this is the fifth time this very
matter is coming up on appeal, and that O. 18 r. 19(b) i.e., that the writ was
scandalous, frivolous and vexatious, and (d) i.e. it is otherwise an abuse of the
process of the Court, had indeed been made out in the Court below. In addition,
Counsel also reiterated that (this refers to ground 6) the suit is time-barred, having
been brought more than 3 years too late.
Let us examine what the learned trial Judge had to say about the background of
this matter in his judgment. The respondent, he noted, is or was the owner of the
land which he referred to as the "subject land" enumerated in para. 1 of the
statement of claim, i.e. Lahat Datu Lease Nos. 10780, 10793, 10975, 10976,
10800, 10801, 10806, 10784, 10785, 10792 and 30809. Of these, land held under
Lease Nos. 10784, 10785, 10792 and 30809 had been subdivided into 81
subdivided titles. Some time prior to 1968 the respondent (Tio), his Lordship notes,
charged the said land to the Lahat Datu branch of appellants' bank for RM300,000
excluding interest and other charges for facilities extended to Southern Estate Sdn.
Bhd. with which he was associated. In 1968, Tio was developing Lahat Datu
township through a company called Southern Development Sdn. Bhd. (the
222 Chung Khiaw Bank Ltd. v. Tio Chee Hing [1987] 1 MLRA

company). The company being in need of money, Tio alleged that the appellant
bank agreed to provide RM1.4 million to him and or his company and such loan to
be secured by a charge to be created on the land. Tio executed the charge on 9
August 1968 (the first charge). He complains that the contents of the charge was
never explained to him. One should bear in mind his claim that he does not know
much English. The appellants' manager then said that the first charge was not
acceptable and that he wanted a separate charge to clear off the existing charge in
their favour. Accordingly, on 10 August 1968 Tio executed another charge (second
charge) again prepared by appellants' solicitors, and identical in terms with the first
charge apart from the amount, which was RM400,000, the property charged being
Tio's coconut estate held under CL 173397.
Appellants registered the first charge on 14 August 1968 (Memorial No. 92666)
and the second charge on 13 August 1968. Tio complains that the appellants had
fraudulently obtained the first charge. In para. 9 and 10 of his statement of claim
he set out the particulars of his charge of fraud alleging that the appellants had no
intention of providing money under that charge, no account was opened for it and
no money was paid under it. Appellants had, he added, consistently refused to
provide evidence of money allegedly provided under the first charge, and had
tricked him into executing the two charges and the appellants had made dishonest
use of the first charge and purported to realise it even though no loan had been
made under it.
His Lordship noted that para. 11 of the statement of claim alleged that appellants
took unfair advantage of Tio's financial difficulties in executing the first and second
charge and struck an unconscionable bargain. Tio maintained that whilst
appellants had independent legal advice he did not have any. In para. 12
respondent asserted that the appellants had exerted undue influence over him in
the transactions mentioned. He therefore claimed that the charge was never valid
and ought to be cancelled. In para. 14 Tio added that in Land Enquiry No. 3 of
1980, appellants applied for and obtained an order for sale and proceeded to sell by
public auction the property towards recovering repayment of the fictitious loan,
adding that he would suffer irreparable damage if the sale was allowed to proceed.
In para. 16 of the statement of claim Tio alleged that he first knew of the fraud at
the end of 1980 and on 12 February 1982 he lodged a police report at Sandakan,
and had made several unsuccessful attempts himself and through his solicitors for
further particulars about the alleged loan. He therefore prayed for an order for
delivery and cancellation of charge 92666, the first charge, and an injunction
restraining the appellants from proceeding with the sales of the property, as well as
an order to set aside the orders of the Collector in Land Enquiry Nos. 3, 4 and 5 of
1980.
Coming back to submissions by Counsel for the appellants, we were referred to the
English decision in Re Vernazza [1959] 2 All ER 200 the facts of which are as
follows:
[1987] 1 MLRA Chung Khiaw Bank Ltd. v. Tio Chee Hing 223

In 1935 V. sued a company for £158,982 for breach of contract and/or wrongful
dismissal. The action was dismissed in 1937. In 1938 V. brought an action in the
Chancery division, claiming that the judgment in the earlier action should be set
aside: in this action the statement of claim was struck out as vexatious. In 1938,
1939, 1940, 1952, 1953, 1957, 1958 and 1959 he took further proceedings or steps
in proceeding before the Courts arising out of the same claim as had been the
subject of action: all these were dismissed or refused. On a motion for an order
under s. 51(1) of the Supreme Court of Judicature (Consolidation) Act 1925, that
no legal proceedings should be instituted by V. without the leave of the High Court
or a Judge thereof, it was contended on V.'s behalf that as the process issued
disclosed a cause of action, except in the second action where the statement of
claim was struck out, the proceedings were not vexatious.

It was held that in determining whether proceedings were vexatious the Court
must look at the whole history of the matter, not solely at the question whether the
pleadings had disclosed a cause of action.
Another authority cited to support the same proposition is the Privy Council
decision inTractors Malaysia Berhad V. Tio Chee Hing [1994] 4 MLRH 381; [1975] 2
MLJ 1; [1993] 4 AMR 572 . The appellants there had obtained a consent judgment
against the respondent. Respondent applied in the same action to have the
judgment set aside but the application was dismissed. Subsequently respondent
brought an action to set aside the consent judgment in the former action. The
learned trial Judge set aside the proceedings on the ground that the action was
frivolous and vexatious and brought to defeat the course of justice in the hope of
delaying the execution of the judgment. On appeal to the Federal Court , it was
held that the respondent's statement of claim raised triable issues which were prima
facie sustainable. The Federal Court regarded themselves as precluded from
examining the evidence for the purpose of determining whether it was a clear
inference from the facts in evidence which were undisputed, that the action was
bound to fail. They therefore allowed the appeal so that the action should be
allowed to proceed to trial.
The Privy Council held that in not submitting the evidence to critical examination,
the Federal Court was in error. Had they done so, they would have come to the
same conclusion as the High Court Judge that the action was brought to defeat the
course of justice in the hope of delaying the execution of the judgment in the earlier
action.
The respondent bank were the plaintiffs in Civil Suits Nos. 181 and 182 of 1969
and Tio the defendant, on this very same subject matter as the instant appeal. The
bank obtained judgment in both suits and an order of execution had been made
against Tio. His appeal against the order of execution was dismissed.
Tio then filed Civil Suit No. 1520 of 1979 at the High Court in Kota Kinabalu
alleging that the present respondent was in breach of an agreement and prayed for
224 Chung Khiaw Bank Ltd. v. Tio Chee Hing [1987] 1 MLRA

an order that the judgment entered against him (Tio) in the two civil suits
aforementioned be set aside and all execution proceedings be stayed until the trial
of Civil Suit No. 1520 of 1979.
Soon after entering appearance respondents applied by way of
summons-in-chambers to have part of the indorsement of claim struck out. Those
parts the bank sought to strike out were:
(a) for an order that the judgment entered against the plaintiff (Tio) by the
defendant (the bank) in C.S. No. 181/69 and 182/69 be set aside; and
(b) that all execution proceedings so instituted or to be instituted in the future
in C.S. No. 181/69 and 182/69 be stayed until the suit be tried.

The learned trial Judge (Haji Wan Mohamed J) noted that Tio had in fact tried on
many occasions to stop the respondent bank from proceeding with the order of
execution and had invariably failed for lack of merit in each and every application.
The Judge therefore held that the indorsements earlier mentioned were frivolous
and vexatious and otherwise an abuse of the process of the Court, and accordingly
ordered them to be struck out.
Also in the same judgment the Judge considered Tio's application to reamend the
amended statement of claim to include an allegation of fraud.
He noted that on 5 February 1980 Counsel for the defendants (the present
respondent) had filed a written submission, a copy of which was provided to Tio
on 6 February 1980, and the relevant part of which is a citation from Halsbury's
Laws of England, Vol. 22, para. 1669 and 1670 which says that no final judgment
may be set aside in an action except in an action for fraud on fresh evidence which
would have material effect upon the decision of the Court. After that submission
had been made Tio sought leave to reamend his amended statement of claim to
include fraud. The learned Judge found that this prayer to reamend was not made
bona fide, remarking that since the judgment in the two earlier cases had been made
in 1970 it was most improbable that Tio had over ten years later just come to
realise that these judgments had been obtained fraudulently. He therefore
dismissed the application to reamend the amended statement of claim.
In the instant suit under appeal, C.S.S. 1170 of 1982, the learned trial Judge did
consider at some length the history of this whole matter, though unfortunately it
was examined through the eyes as it were of Tio, being confined to facts referred to
in his statement of claim. We need not set out in detail the facts so considered
except to say they are set out in pp. 184 to 190 of the record.
Therefore the Appellate Court is placed at no disadvantage in drawing its own
inferences as it would otherwise have been if it had been dealing with findings of
facts arising from viva voce testimony before the learned trial Judge. In addition this
Court has the added advantage that it could review the history as seen not merely
 [1987] 1 MLRA Chung Khiaw Bank Ltd. v. Tio Chee Hing 225

through the eyes of Tio, but also take into account a lot of other matters which Tio
himself can hardly dispute.
Having therefore given careful consideration to the whole history of this
unfortunate affair we must, with respect, say that the learned Judge had erred in
not holding that this suit brought by the respondent Tio discloses no reasonable
cause of action and is vexatious and an abuse of the process of the Court.
In the result this appeal on those counts alone should be allowed with costs here
and below.
It also follows that on the issue of limitation, the respondent should also fail, the
matter on which he relied of having occurred more than 3 years before the issue of
the writ.

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