In the High Court in Malaya at Kuala Lumpur [Commercial Division]
Suit No: D7-22-1661-2000
Kumpulan Bumiklas Sdn Bhd
[Company No: W252921] …Plaintiff
Kewangan Bersatu Berhad
[Company No: 46815-P] .Defendants
Grounds of Judgment
 The plaintiff’s claim against the defendant as set out in its statement of case was as follows [without corrections in language used]:
“1. The plaintiff refers and adopts the contents of the amended
writ and statement of claim dated 4.9.2000 and their amended reply to the defendant’s amended defence dated 19.9.2001.
2. The plaintiff’s cause of action against the defendant is for breach of contract wherein the plaintiff alleged that the
defendant has breached the terms stated in a loan
agreement dated 5.9.1997 and a letter of offer from the defendant to the plaintiff dated 25.7.1997 which were entered by both the defendant and the plaintiff when the defendant failed to disburse the relevant loan sum to the plaintiff even though the plaintiff has complied with all the terms under the said loan agreement and the said letter of offer.
3. As a result of the said breach as stated in the aforesaid
paragraph 2, the plaintiff has since suffered losses and now
claims from the defendant damages total to
RM8,466,500.00, particulars whereof are as follows:
Particulars of Loss
Discounts givens to purchasers as incentive to encourage them not to terminate the sale and purchase agreement
Variation orders in respect of the construction works for the plaintiff’s project on the said land
Consultancy fees paid to the plaintiff’s consultant namely M/s Ng Management Services in procuring a new loan for Bank Kerjasama Rakyat (M) Berhad
Site maintenance charges on the said project to KGP Enterprise [in consequence of the said project being forced to stop]
RM5,000.00 per month x 12 months RM 60,000.00
Loss occasioned by sale of plaintiff’s commercial land at Pekan Baru Serdang to Shanghai Properties Sdn Bhd in order to raise capital
to salvage the said project RM1,650,000.00
Payment of liquidated damages
to the plaintiff’s purchasers as a
result of late delivery of vacant
possession of their properties
to them within the time stipulated
in the relevant sale and purchase
4. The plaintiff will seek to prove the alleged breach of contract and the damages stated above during the trial proper by using all the documents filed herein as well as by calling the following witnesses –
(a) Mr Ramanee, ie a director of the plaintiff company;
(b) Mr Sarbjit Singh from Messrs Sarbjit Singh & Co, ie the solicitors in charge in handling all the loan documentations entered between the plaintiff and the defendant as well as other relevant documents;
(c) Mr Madurammal P from Aiswarya Construction Sdn Bhd, ie the plaintiff’s main contractor for the plaintiff’s relevant project herein;
(d) Mr Manap bin Makmun from GMC Architect, ie the plaintiff’s architect’s company;
(e) approximately 40 to 50 purchasers [names whereof are as consists in the common bundle of documents duly filed herein] who have since purchased the relevant houses developed by the plaintiff on the relevant land as the developer;
(f) director from Binaan Cheras Hartanah Sdn Bhd, ie the company responsible for all the variation orders in regards of the work done towards the plaintiff’s said project;
(g) Mr Yuvaraj s/o Munusamy, ie the director from KGP Enterprise who is responsible for the management of
the said plaintiff’s land when the plaintiff’s said housing project has to be stopped which was caused by the defendant’s failure to release the said loan pursuant to the said loan agreement;
(h) Mr Ganesh Chinnapan from Raine & Horne International Zaki & Partners Sdn Bhd, ie the valuer who valued the said plaintiff’s commercial land that was sold to the plaintiff [sic] at a price lower than the then market value of the said plaintiff’s commercial land; and
(i) Mr Lee Chee Keong, ie the solicitor from Messrs CK Lee & Associates who was in charge in handling the sale and purchase agreement entered between the plaintiff and Shanghai Properties Sdn Bhd dated 15.12.1998 in relation to the said plaintiff’s commercial land.”.
 Essentially, this was a claim by the plaintiff against the defendant bank [“the bank”] for alleged breach of a facilities agreement dated the 5th September 1997 between the plaintiff and the bank [“the
agreement”] whereby the bank was alleged to have breached the same in not releasing tranche 2 of the facility to the plaintiff, ie a bridging loan of RM4.5 million.
 The plaintiff’s cause of action was grounded on a breach of contract by the bank which purportedly resulted in the plaintiff suffering loss and damage.
 The plaintiff called one witness at trial, namely, PW1 Ramanee a/l Ramayah, while the bank called the following six witnesses:
(a) DW1 Suleyana Abd Rahman
(b) DW2 Christine Cho Oi Kwan
(c) DW3 Rajes a/l Raghavji
(d) DW4 Christopher Leong Sau Foo
(e) DW5 Nicole Wee Sue-Ren
(f) DW6 Khairul Muzamel Perera bin Abdullah
 The issues to be tried were specified in bundle “G” and the question was whether the bank breached the terms of the agreement
entered into when the bank refused to disburse the amount of RM520,000.00 from the bridging loan to the plaintiff.
 The bank’s defence was set out in detail in the defendant’s statement of case in bundle “I” as follows:
1. The defendant is a licensed financial institution and had granted to the plaintiff credit facilities of a term loan of RM2.5 million [tranche 1] and a bridging loan of RM4.5 million [tranche 2] on terms and conditions embodied in the facilities agreement dated 5.9.97 [hereinafter referred to as “the facilities agreement”].
2. On 19.9.1997 the term loan of RM2.5 million was fully disbursed to the plaintiff.
3. In breach of the terms of the facilities agreement, the plaintiff failed to service the interest in accordance [with] clauses 4.7.1 and 7.3 of the facilities agreement.
4. The plaintiff then applied to drawdown a sum of RM520,000.00 on the bridging loan when the plaintiff was
already in arrears of interest for 2 months totaling RM60,622.63 as at 28.2.1998.
5. Subsequently the plaintiff’s loan account was classified as a non-performing loan [NPL] and [the] defendant’s solicitors Messrs Raghavji & Pillai sent to the plaintiff a notice of demand dated 29.4.1998 demanding payment.
6. The plaintiff then paid the arrears from January 1998 – May 1998 but thereafter once again breached the terms of the facilities agreement when it failed to service the interest payable.
7. Due to the plaintiff’s breach of the facilities agreement, the defendant did not disburse the bridging loan and proceeded to recall the term loan.
8. Subsequently letters of demands including Form 16D under the National Land Code [NLC] were sent to the plaintiff on behalf of the defendant by its solicitors, Messrs Chooi & Co, and [the] defendant instituted [a] commercial suit for [the] recovery of the entire sum owing under the facilities agreement vide Kuala Lumpur High Court Civil Commercial [sic] No D6-22-1989-99 which was filed on 14.7.1999.
9. The plaintiff settled the loan account with the defendant and
the defendant discharged the charges and returned the title deeds to the plaintiff. The defendant had also waived
interest from 20.9.1999 – 9.11.1999 to facilitate the settlement. The commercial suit D6-22-1989-99 was discontinued on 20.12.1999.
10. About 9 months later, the plaintiff filed this suit against [the] defendant for breach of contract and damages amounting to RM8,646,500.00.
11. The defendant contends that it was the plaintiff who was in breach of the facilities agreement and not the defendant as alleged.
12. I crave leave to refer to the amended statement of defence [see pages 45 – 55 of bundle of pleadings ‘BOP’] which sets out the defence in detail.
13. The defendant will seek to call the following witnesses to give evidence at trial:
(a) Cik Suleyana Abd Rahman, the credit officer who managed the plaintiff’s loan account with the defendant;
(b) Mr Kevin Pereira, the defendant’s former manager of the loan recovery department;
(c) Miss Ivy Tay, manager of the loan recovery department [of the] defendant who negotiated the settlement with Mr Ramanee, the plaintiff’s director;
(d) Mr Rajes Raghavji, the defendant’s solicitor who issued the letters of demand dated 29.4.1998;
(e) Mr Christopher Leong, the defendant’s solicitor who was instructed to and instituted legal action against the plaintiff to recover the amount outstanding in the plaintiff’s loan account.”.
 The facts as adduced showed that after the drawdown of the term loan of RM2.5 million in tranche 1 on the 19th September 1997, the plaintiff fell in breach of clauses 4.7.1 and 7.3 of the agreement [see pages 65 to 66 and 69 to 70 respectively in bundle “B”] by failing to service monthly interest. The plaintiff then in March 1998 requested for drawdown of RM520,000.00 from the bridging loan by letter while the plaintiff was in breach of interest for two months amounting to RM60,622.63 on the 28th February 1998.
 The plaintiff’s account was classified as non-performing, ie the loan became a “non-performing loan,” and a letter of demand was issued on the 29th April 1998 by the bank’s solicitors demanding payment. The plaintiff updated its arrears for January to May 1998 and also requested for reduction of the bridging loan amount. Subsequently it defaulted further in repayment of the monthly installments of the term loan.
 The bank did not release the bridging loan and recalled the term loan and commenced the earlier action vide D6-22-1989-1999 to recover the amount outstanding under the term loan. The plaintiff then settled the facility with the bank, redeemed the charged properties and took the loan to Bank Kerjasama Rakyat (M) Berhad [“Bank Rakyat”] in November 1999. Nine months after the redemption, the plaintiff commenced this action.
 The issues to be tried as set out in bundle “G” were as follows:
“1. Did the defendant breach the terms of the written loan
agreement entered into between the plaintiff and the
defendant on 5.9.1997 when the defendant refused to
disburse the amount of RM520,000.00 from the bridging loan to the plaintiff?
2. In the event there was a breach by the defendant as mentioned above:
(a) did the breach cause the plaintiff to suffer damages and losses as pleaded in the plaintiff’s amended statement of claim?
(b) if there were damages and losses suffered by the plaintiff, does the plaintiff have the right to claim the damages and losses from the defendant?”.
 However, the parties agreed to issue 1 being determined first and the case proceeded to trial on that basis. Hence, the learned counsel for the bank refrained from cross-examining PW1 on the evidence of loss or damage to the plaintiff without waiving the bank’s right to do so in the event the issue of liability was decided in the plaintiff’s favour.
 To summarise, the plaintiff’s cause of action against the bank was for breach of contract whereby the plaintiff alleged that the bank had breached the terms stated in the agreement and in a letter of offer from
the bank to the plaintiff dated the 25th July 1997. The plaintiff contended that the bank failed to disburse the relevant loan sum to the plaintiff even though the plaintiff had complied with all the terms under the agreement and the said letter of offer. As a result of the breach, the plaintiff suffered losses and claimed damages as stated in its amended statement of claim.
 The bank’s response was that it had granted to the plaintiff credit facilities in the form of a term loan of RM2.5 million and a bridging loan of RM4.5 million on terms and conditions embodied in the agreement. On the 19th September 1997, the term loan of RM2.5 million was fully disbursed to the plaintiff. However, in breach of the terms of the agreement, the plaintiff failed to service the interest in accordance with clauses 4.7.1 and 7.3 of the agreement. The plaintiff then applied to drawdown a sum of RM520,000.00 on the bridging loan when it was already in arrears of interest for two months totaling RM60,622.63 as at the 28th February 1998.
 The bank further contended that owing to the plaintiff’s breach of the agreement, the bank did not disburse the bridging loan and
proceeded to recall the term loan. Subsequently, letters of demand, including a demand in Form 16 under the National Land Code 1965, were sent to the plaintiff and the bank instituted an action for the recovery of the entire sum under the agreement vide suit No: D6-22-1989-1999 which was filed on the 14th July 1999. However, the plaintiff then settled its loan account with the bank and the bank discharged the charges and returned the title deeds of the charged properties to the plaintiff. That suit as a result of the settlement was discontinued by the bank on the 20th December 1999. About nine months later, the plaintiff filed this suit against the bank for breach of contract and damages amounting to RM8,466,500.00. The bank contended that it was the plaintiff which was in breach of the agreement and not the bank, as alleged.
 I found as a fact that the bank successfully established during the course of the trial that the plaintiff was in breach of the agreement dated the 5th September 1997 after the release of the term loan to the plaintiff on the 19th September 1997: see clause 4.7.1 (a) of the agreement.
 During the trial, PW1 admitted that with the non-payment of interest for a period of five months from January to May 1998, the plaintiff was in breach of the agreement and that this was remedied in June 1998 and thereafter the plaintiff was in breach again. PW1 also testified that the bank had informed the plaintiff of the impending instalment of principal which was due on the 19th July 1998 and that the plaintiff was aware that its account was in the non-performing loan category and had later agreed to pay the term loan instalment on the 19th July 1998 but did not do so.
 PW1 also admitted that the purported drawdown application dated the 2nd March 1998 was not in the prescribed form which required a positive assertion by the plaintiff that:
“no event of default had occurred on or before that date or in the opinion of the lender will occur as a result of making the drawing;”.
 I found that the bank established the following two events of default by the plaintiff:
(a) non-payment of monthly interest from January to May 1998; and
(b) non-payment of monthly instalments and principal instalment payment of RM700,000.00 from July 1998.
PW1 also conceded that the agreement provided that, in accordance with clause 4.5 (b), in order for the plaintiff to drawdown on the bridging loan, there had to be no event of default.
 There was clear evidence of the plaintiff’s continuing default by the following contemporaneous documents and acts:
(a) letters of demand by the bank’s then solicitors addressed to the plaintiff and the proof of posting thereof by way of certificates of posting as exhibited;
(b) the filing of the earlier action by the bank against the plaintiff, of which PW1 was aware;
(c) the plaintiff’s act of paying the bank the loan amount and the redemption sum of the charged properties and then taking the loan to Bank Rakyat;
(d) the bank’s non-disbursement of further sums under the bridging loan due to the events of default by the plaintiff under the term loan;
(e) the plaintiff’s failure to reserve its position to institute proceedings against the bank when redeeming its properties;
(f) the plaintiff did not at any point protest in writing to the bank that it was unjustly withholding the release of the bridging loan.
 The plaintiff’s request for drawdown was not approved for the following reasons provided by DW1:
“13 Q: Why was the request not approved?
A: The management did not approve the request for the
(a) the defendant was almost about to consider legal action just two months prior to this request as the plaintiff was in arrears and the account classified bad paymaster and NPL;
(b) the first repayment for the principal was due on 19.7.1998 and the defendant had given plaintiff notice of the same and consequence of failure to pay the sum by letter dated 25.6.1998 [page 790 of bundle C3]; and
(c) the account ought to be reviewed because of the bad payment history.
14. Q: What happened alter that?
A: The plaintiff committed further default and did not
make any payment on 19.7.1998 and thereafter even failed to service monthly interest despite repeated reminders by me. The account was once again classified as NPL and we once again instructed solicitors to issue NOD. ”.
 DW1 further asserted that the plaintiff’s persistent delays in making monthly repayments resulted in the plaintiff being considered a bad paymaster:
“28. Q: Did the plaintiff remedy the event of default when it
regularised its term loan account at end of June 1998?
A: Yes but it was considered a bad paymaster. ”.
 Although at the end of June 1998 there was no continuing event of default, DW1 explained the powers of the bank as follows:
“32. Q: I put it to you that as there was no continuing event of
default by the plaintiff at the end of June 1998, the defendant had breached clause 4.4 of the facilities agreement at page 64 of bundle B. Do you agree?
A: No, I do not agree because the drawdown was subject
to review, modification and cancellation by the lender annually or from time to time as per page 63 of bundle B, clause 2 (c).”.
 There was clear uncontroverted evidence from DW2 that the plaintiff’s account was in breach of the agreement. This was corroborated by the documents exhibited and the other testimony
adduced on behalf of the bank.
 The evidence of the solicitors instructed by the bank, as testified to by three witnesses, all confirmed the issuance and proper service of the notices of demand. This evidence stood unchallenged.
 The bank’s statement of account of the plaintiff’s payment records in bundle “D” which was produced in accordance with section 90A of the Evidence Act 1950 was clear evidence that the plaintiff was in breach of the agreement. The Court of Appeal in the case of Delta Enterprises Sdn Bhd and others v Asia Commercial Finance (M) Bhd and another  1 CLJ 501, wherein the facts were similar to the facts in the present case, decided in favour of the bank. Clause 8.01 of the loan concerned in Delta Enterprises [supra] was in pari materia with clause 4.7.1 in this case and the court there held that the word “shall” is mandatory in nature. The clause on an event of default was similar to clause 13 of the agreement in this case and the requirements for further drawdown were similar.
 In these circumstances, I agreed with the submissions made on behalf of the bank that the plaintiff failed to prove that the bank acted unjustly and in breach of the agreement in not disbursing the bridging
loan to the plaintiff. The plaintiff’s conduct in not protesting at any point or reserving its rights on a claim against the bank was further evidence that it was now estopped from instituting this action as the bank had agreed to the redemption of the charged properties, provided discount on the interest payable, provided extensions of time and had done everything to facilitate the plaintiff taking its loan to Bank Rakyat. Against that background, it would be unjust and inequitable to allow the plaintiff nine months later to assert its perceived rights under the agreement when no protest whatsoever was made prior to that, especially when the plaintiff was at all material times represented by solicitors: see Boustead Trading (1995) Sdn Bhd v Arab-Malaysian Merchant Band Bhd  3 MLJ 331.
 The bank had in good faith discontinued the earlier suit against the plaintiff and the plaintiff’s claim in this suit was aimed at unjust enrichment when it was undisputed that it was the plaintiff and not the bank which was in breach of the agreement.
 The plaintiff’s main argument was that the bank ought to have release the bridging loan facility between the date of payment of the arrears on the 29th June 1998 and the first principal repayment becoming due on the 19th July 1998, which was barely twenty days later. However, it was very clear from the facts as highlighted that the plaintiff was in breach of the agreement and this constituted an event of default which entitled the bank to recall the facility as laid down in Delta Enterprises [supra]. The cases relied on by the plaintiff were all distinguishable on the facts and not applicable to the facts of the present case.
 In my view, the plaintiff here failed to discharge the burden of proof which lay on it to establish liability on the part of the bank on a balance of probabilities. On the other hand, the bank through oral evidence supported by contemporaneous documents showed that it acted at all times in accordance with the agreement and also proved that it was the plaintiff which was in breach of the agreement. I therefore dismissed the plaintiff’s claim with costs.
 This case was heard and disposed of by me while sitting as a judge of the High Court in Malaya at Kuala Lumpur.
Dated the 18th June 2010.
[Dato’ T Selventhiranathan] Judge of the Court of Appeal of Malaysia Putrajaya
For plaintiff Solicitors
…Mr Lee Teong Hooi and Mr Wong Chim Yiam Messrs Chim Yiam Lee & Associates
For defendant Solicitors
. Miss Anit Kaur Randhawa Messrs Asbir Hira Singh & Co