Bank Industri & Teknologi (M) Bhd V Malayan Banking Berhad


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This is my judgment in respect of the plaintiff’s claim based on a purported letter of undertaking. This case was heard before the late Justice Dato’ Abdul Wahab Bin Said Ahmad. Before decision could be delivered the learned judge passed away. Parties have agreed to allow me to read the notes of evidence, witness statements, submission etc and pronounce the judgment.


Brief Facts


1. The Plaintiff had granted a bridging loan facility to its customer Ironwoods Shipyard Sdn. Bhd. Seri Mukali had engaged Ironwoods to build tugboats. The defendant had granted a term loan facility to




Seri Mukali to part finance the construction of one of the tugboats. The plaintiff says that the defendant has issued a letter of undertaking and claims that by this the defendant had undertaken to pay to the plaintiff the amounts due from Ironwoods, the plaintiff’s borrower. The said letter reads as follow:


“Subject to and conditional upon a valid and satisfactory documentary evidence (s) from Bank Industri Malaysia Berhad (BIMB) [the Plaintiff] that payments have been made to Ironwood Shipyard Sdn. Bhd and subject to the latter’s [Ironwoods’] confirmation that they have received the said payments, the Defendant will undertake to release the payments due to Ironwoods Shipyard for claims to be made for MT Sheta upon finalization of our [the Defendant’s] legal documentations, directly to you ”


2. Further the plaintiff says pursuant to the said letter the defendant had paid RM175, 856.40 but refused to pay a final sum of RM1, 619,950.00. The defendant in refusing to pay says that (a) the defendant did not issue any undertaking; (b) even if the said Letter is relied on by the plaintiff as the defendant’s undertaking, this is misconceived as there was no consideration for any such undertaking; (c) the terms of the said Letter were in any event vague and incapable of being ascertained with any certainty; (d) in any event, the terms and conditions under the said Letter were never fulfilled; (e) the claim of 06.04.2001 did not represent payments due to Ironwoods for the construction of the said Tugboat as no further payments were due to Ironwoods after 16.11.1999 as aforesaid; and (f) even if the said Letter was deemed to be a valid undertaking (which is denied), the request for payment by the plaintiff had already been made and the defendant




had already effected payment of RM175,856.40 to the plaintiff thus discharging any further obligation of the defendant to pay.


3. In response the plaintiff says that they are stopped from refusing to pay as they have acted on the letter of undertaking and their letter, conduct of seeking time to consider the matter and to avoid litigation, will bring into operation the doctrine of estoppel against them.


4. Preliminaries


2 witnesses gave evidence for the plaintiff and 2 for the defendant. It is clear from the evidence that the central issue is the said letter of undertaking and the construction thereof. The defendant says at the most it is only a letter of comfort and not a guarantee. The plaintiff says otherwise. However, there is evidence to show that the plaintiff has initiated an action against their borrower Ironwood and relevant parties; but the plaintiff in their evidence did not confirm the outcome of the said action which is crucial as that will also lead to issues such as multiplicity of proceedings, double recovery etc.


5. I do not think it is necessary to deal in detail with the evidence on the facts of the case as parties have adequately dealt with it in their submission, and the most important document which the plaintiff relies on is the said letter of undertaking. Otherwise there is no nexus between the plaintiff and defendant.




6. I have read the witness statements notes of proceedings, pleading documents, submission etc; I take the view the plaintiff’s claim must be dismissed. My reasons are as follows:


(a) It is trite that the letter of undertaking is strictly construed and a person who relies on a letter of undertaking must perform his part and/or to the strict terms of the letter of undertaking. Support for the proposition is found in a number of cases as well as the Contracts Act 1950.


(b) The said letter and the terms are conditional upon many events. It is trite that when the undertaking is conditional, the conditions must be fulfilled before the undertaking will be enforced. (See Dato Tan Kim Hor & Ors v. Tan Chong Consolidated Sdn. Bhd [2004] 1MLJ 690; Abdul Manaf Mohd Bin Ghows & Ors v. Nusantara Timur Sdn. Bhd. & Ors [1997] 3MLJ 661).


(c) In the instant case the said letter says payments have been made to Ironwoods. Evidence was led to show payment was not made to Ironwoods but on account of Ironwoods. This is a material departure from the terms stated in the said letter. Further there must be confirmation that Ironwoods received the payment. In the instant case Ironwoods did not receive any payments directly from the plaintiff.


(d) The terms stated in the letter are prima facie vague and unintelligible to construe that as a letter of undertaking in law. An undertaking must be clear in its terms. (See Oriental Bank Bhd v Abdul Razak Rouse [1986] 1MLJ 509).




(e) In this case, evidence was led to show that the plaintiff has


initiated a claim against Ironwoods and the guarantors for


recovery of the principal sum of RM1, 615,950.00 due under


the plaintiff’s loan to Ironwoods. There is much merit in the


submission of the defendant that the said suit taken by the


plaintiff against Ironwoods precludes the plaintiff from


pursuing from the defendant here for the same debt. Support


for the proposition can be found in the case of Nelson & Ors v


Larholt [1948] 1KB 339, where Lord Denning held that:


“The rightful owner can recover the amount from anyone who takes the money with notice, subject, of course, to the limitation that he cannot recover twice over. This principle has been evolved by the courts of law and equity side by side. ”


(f) In addition, it is trite that no party can benefit from bringing multiple actions for the same claim. If the plaintiff has recovered its loan under the said suit, any sums recovered under this action would be a double claim, which is not permissible in law. Further, if the plaintiff had recovered any monies from Ironwoods or its guarantors or any security given, the plaintiff had to account for the same such that there is no excess recovery from the defendant. By not producing evidence in this regard, despite the defendant’s challenge, is detrimental to the plaintiff’s claim.


7. For reasons stated above, the plaintiff’s action is dismissed with costs. The getting up fees shall not exceed RM70, 000.00. If costs cannot be agreed the defendant is at liberty to tax costs.




I hereby order so.






Judicial Commissioner High Court (Commercial Division)




01st June 2009


For the Plaintiff: Ms. Zuwita Kamaruzaman; Messrs. Noor Amran


For the Defendant: Ms. Yong Sin Min (Mr. Heng Yee Keat with her); Messrs.


Shook Lin & Bok



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