This is a Federal Court case on the nature of a certificate of indebtedness.
Facts of the Case
Under a loan agreement dated 17.07.1996, the Appellant agreed to grant the first respondent a fixed loan of RM1,500,000.00 with the condition that the second Respondent signed a guarantee agreement on the same date. The first Respondent defaulted. In consequence, the Appellant filled a suit against both Respondent at the High Court on 29.05.1998. On 19.04.1999, the Appellant filed a summon in chambers under O.14 of the Rules of the High Court 1980 for summary judgment.
The senior assistant registrar granted an order in terms of the application. The Respondents then appealed to the judge in chambers who upheld the decision of the senior assistant registrar. On further appeal by the Respondents, the Court of Appeal reversed the decision of the High Court. The Appellant appealed.
Issue of the Case
whether a certificate of indebtedness issued in accordance with the express provisions of the contract which provide that the certificate is final and conclusive of the matters stated therein is final and conclusive evidence of the amount in the absence of any manifest error on the certificate
whether apart from producing a certificate of indebtedness, the appellant had a further obligation to produce statements of account to prove the debt in an application for summary judgment.
Judgment of the Court
Under O.14, the burden is on the plaintiff to establish the following conditions:
that the defendant must have entered appearance;
that the statement of claim must have been served on the defendant;
that the affidavit in support must comply with r 2 of O 14 in that it must verify the facts on which the claim is based and must state the deponent’s belief that there is no defence to the claim
Once those conditions are fulfilled, the burden then shifts to the Defendant to raise triable issues.
The Federal Court held that a certificate of indebtedness operates in the field of adjectival law. It excuses the plaintiff from adducing proof of debt. Such a certificate shifts the burden onto the defendant to disprove the amount claim.
The Court referred to these cases which have consistence views on the nature and extent of a certificate of indebtness.
Chen Heng Ping & Ors v Intradagang Merchant Bankers (M) Bhd [1995] 2 MLJ 363 (CA)
Citibank NA v Ooi Boon Leong & Ors [1981] 1 MLJ 282
Dobbs v National Bank of Australiasia (1953) 53 CLR 643
The Court finds that there is nothing to indicate or suggest any manifest error on the face of the said certificate nor is any fraud shown. Therefore, the certificate of indebtedness is final and conclusive. The court also held that the Appellant had no further obligation to produce statements of account to prove the debt. Hence, the court allowed the appeal with cost.
Principles of the Case
Under O.14, the burden is on the plaintiff to establish the following conditions:
the defendant must have entered appearance;
the statement of claim must have been served on the defendant;
the affidavit in support must comply with r 2 of O 14 in that it must verify the facts on which the claim is based and must state the deponent’s belief that there is no defence to the claim
Once those conditions are fulfilled, the burden then shifts to the Defendant to raise triable issues.
A certificate of indebtedness issued in accordance with express provisions of contract is final and conclusive evidence of the amount in the absence of any manifest error on the certificate. Applicant of summary judgment had no further obligation to produce statements of account to prove the debt.