KUALA LUMPUR (May 23): Public Bank Bhd (KL:PBBANK) has lost a case against a house buyer, who sued the bank for terminating a loan facility agreement after the first disbursement.

The court found that the bank failed to provide documents of purported falsified supporting documents and claims that the customer inflated his income, which had resulted in the facility and house purchase to be terminated.

As a result, the Kuala Lumpur High Court ordered the bank to pay close to RM65,000 in damages to the house buyer, in addition to a sum the court will decide on after assessing the man’s loss of the property and his subsequent loss of reputation on being blacklisted by the Central Credit Reference Information System (CCRIS) and CTOS data system.

Judicial Commissioner (JC) Raja Datuk Ahmad Mohzanuddin Shah Raja Mohzan also allowed a declaration that the termination of the buyer’s facilities agreement on April 12, 2018 and other relevant agreements was wrongful and had no effect, and that the bank had breached its obligations under the agreement.

Raja Ahmad Mohzanuddin also ordered the bank to pay RM30,000 costs in allowing the house buyer’s claim, and dismissed the bank’s counterclaim over the first progressive payment made by the financial institution.

In allowing the total damages of RM64,965.60, the court said out of that sum, RM20,000 was general damages awarded for defamation following the bank’s action.

The JC in his written grounds for the February decision, which were released online this week, said the bank’s failure to support its claims — that 37-year-old K Ananthan had provided falsified supporting documents and inflated his income for the purchase of a RM825,000 property in Klang — was fatal.

The loan termination came after Ananthan paid a booking fee of RM1,000, after the bank approved a 90% loan (amounting to RM781,350), and when he had paid the bank a processing fee of RM6,813, where he signed the sales and purchase agreement (SPA) on Feb 27, 2018.

House buyer satisfied burden to prove case

Raja Ahmad Mohzanuddin ruled that Ananthan had clearly satisfied the burden of proving that a housing loan agreement first existed between him and the bank, and then the bank did not release the second, third, and fourth progressive payments.

“So having that in mind, what is the next issue that comes to mind? The answer is simply that it has now become the duty of the bank to negate the findings above, and prove that the loan was validly terminated or rescinded, because the supporting documents provided by Ananthan to them were indeed forged and inflated.

“As far as I can tell, there is no other way for the bank to deflect this issue than to prove it on the balance of probabilities. I consider it necessary for the bank to first present the relevant forged and inflated documents to the court for my verification of their existence, and only then can I proceed to determine their weight,” the JC said.

Raja Ahmad Mohzanuddin said the court was not only unable to peruse such documents in order to determine their existence, but also the weight they deserved.

“The bank was unfortunate enough not to have filed any such documents to support its defence and counterclaim. In this instance, I find the defendant has failed to prove its right to terminate or rescind the facilities agreement.

“This means Ananthan’s testimony over his position — that the facilities agreement and undertaking were breached — is intact and unchallengeable. It is obvious that the bank’s case is doomed if it fails to produce such important documents,” he said.

The JC added that the main issue remained that the bank must still prove the existence of the forged and inflated documents.

Raja Ahmad Mohzanuddin said this is the central issue that cannot be ignored, as the bank only decided to terminate the facilities agreement after the first disbursement.

He also said that before the court could consider evaluating the bank’s so-called assistance for Ananthan to resubmit the supporting documents, the court must first be satisfied with the events that led to the termination of the housing loan, as it is this issue that must be addressed first before others.

This follows the bank’s claim of a right to modify such a facility at any time, but despite this, the JC said it is important to note that since the bank had offered the grounds for the loan termination, it is responsible to prove the allegations, especially when a counterclaim is filed.

Judge puzzled over bank’s offer to reduce housing loan

The JC said he is also perplexed as to why the bank must still assist Ananthan to obtain a new reduced housing loan of 70% of the purchase price.

“This is a serious allegation of forgery against Ananthan, but the bank seems comfortable proceeding with a reduced amount despite the existence of such an issue. This is another reason why I require the production of the forged and inflated documents,” he said.

In allowing Ananthan’s claim, Raja Ahmad Mohzanuddin noted that the Shah Alam High Court (in a case brought by the developer) had allowed the house buyer a return of RM47,623.13, which is the balance of the deposit of RM82,500, where a sum of RM34,876.87 was forfeited by the developer.

He noted that the bank’s actions had resulted in the cancellation of Ananthan’s SPA as a result of the breach of the facilities agreement.

In allowing Ananthan’s claim of defamation, Raja Ahmad Mohzanuddin said this follows the bank’s claim of falsified documents, where the tone of the letter from the bank to the developer was not passive, and where a police report was lodged.

“In my opinion, therefore, the tone of the letter was not passive as suggested by the bank. It is unlikely that any reasonable developer would have ignored such a letter, especially if it came from a financier.

“Further supporting my conclusion is the fact the bank failed to prove the existence of the forged and inflated financing income documents in defending [itself against] the defamation claim,” the JC said, adding that it would be a different scenario if the bank had provided the documents for determination.

In this case, Ananthan was represented by lawyers Jennifer Jayalitha Chandran, Premalatha Arumugam, and Ahmad Hanafi Mohamed Isa, while the bank was represented by Bryan Chen Liang Yi.

The bank has filed a notice of appeal to appeal against Raja Ahmad Mohzanuddin’s decision.