Cimb Bank Berhad v Goh Ah Thiam (P-02(W)-2073-12/2015 Heard Together with P-02(W)-2075-12/2015)

TETUAN OOI WENG HOOI & COMPANY …RESPONDENTS HEARD TOGETHER WITH CIVIL APPEAL NO. P-02(W)-2075-12/2015

MAGGIE GAN …APPELLANTS AND CIMB BANK BERHAD …RESPONDENT 2 [In the matter of High Court in Malaya at Pulau Pinang Civil Action No. 22-569-2009 Between Goh Ah Thiam …Plaintiff And CIMB Bank Berhad …Defendant

And Boo Choon Kooy …1st Third Party

Maggie Gan …2nd Third Party

Tetuan Ooi Weng Hooi & Company …3rd Third Party] CORAM : Umi Kalthum binti Abdul Majid, JCA Prasad Sandosham Abraham, JCA Hasnah binti Mohammed Hashim, JCA GROUNDS OF JUDGMENT

There were two appeals which were heard together before us – Civil Appeal No. P-02(W)-2073-12/2015 (Appeal 2073) between CIMB Bank Berhad (CIMB) as the Appellant/Defendant and Goh Ah Thiam (Goh)/1st Respondent/Plaintiff and Tetuan Ooi Weng Hooi & Company (Tetuan OWH)/2nd Respondent/3rd Third Party; Civil Appeal No. P-02(W)-2075- 12/2015 (Appeal 2075) between Boo Choon Kooy (Boo) who was the 3 1st Appellant/1st Third Party and Maggie Gan (Maggie) the 2nd Appellant/2nd Third Party as the Appellants and CIMB as the Respondent.

Both Appeals 2073 and 2075 emanated from one civil suit in the High Court at Pulau Pinang No. 22-569-2009 between Goh as the Plaintiff and CIMB as the Defendant. CIMB then brought in Boo, Maggie and Tetuan OWH as the 1st Third Party (PK1), 2nd Third Party (PK2) and the 3rd Third Party (PK3) respectively.

For ease of reference, we will refer the parties as they were in the High Court action.

In Appeal 2073, CIMB was appealing against the judgment of the High Court which allowed the Plaintiff’s/Goh’s claim against it with costs and dismissing CIMB’s claim against the 3rd Third Party. In Appeal 2075, Boo/PKI and Maggie/PK2 were appealing against the judgment of the High Court which held that PK1 and PK2 were to fully indemnify CIMB of its liability, damages and costs.

CIMB (formerly known as Southern Bank Berhad) had granted banking facilities to PKI and PK2 in 1996. As security for the facilities granted, 3 charges were created by CIMB on one property known as Lot 1710, Mukim 16, Daerah Seberang Perai Tengah (the Agri Land). 4

On 30.7.2002, PKI and PK2 entered into a sale and purchase agreement (SPA/P3) with Goh to purchase the Agri Land for the purchase price of RM1,116,640.00. PK3 was the solicitor who represented Goh in the SPA. In view of the SPA, a letter from PK3 to CIMB was issued on 27.2.2003 (P21), requesting the redemption statement for the Agri Land. A letter of indemnity dated 27.2.2003 (P22) was duly signed by PK1 and PK2 and attached to the request.

7.

7.1 execute the Discharge of Charge on the Agri Land;

7.2 forward the original title of the Agri Land and duplicate charges together with the duly executed Discharge of Charge;

7.3 to refund to Goh the redemption sum paid excluding the service charge of RM100.00 (without interest) in the event that the Discharge of Charge cannot be registered for any reason whatsoever attributable to CIMB provided that the aforesaid documents are first returned intact. 5

A redemption sum of RM478,600.00 was forwarded to CIMB by PK3’s letter dated 31.3.2003. Vide the same letter, PK3 requested from CIMB the duly executed Discharge of Charge, the original title of the Agri Land and other documents pertaining to the 3 charges. CIMB complied with PK3’s request vide letter dated 15.4.2003 (P8) by enclosing, amongst others, the original title of the Agri Land and the duly executed Discharge of Charge (1st Discharge of Charge).

In 2006, PKI went to CIMB’s Office in Kuala Lumpur and met CIMB’s Officers Tan Shing Lieu (SD1), Yeap Hoch Beng (SD2) and Hoo Wai Ying (SD3) with regard to banking facilities granted to PK1 in which 2 properties were charged to Ban Hin Lee Bank Berhad (BHL Properties). In the course of that meeting, PK1 also notified SD1, SD2 and SD3 of his other property, that is, the Agri Land, and that the 1st Discharge of Charge of the Agri Land was still not registered although the facility was fully settled. PK1 then requested CIMB to execute a fresh discharge since the account for the Agri Land was fully settled. PK1 informed CIMB that the previous 1st Discharge of Charge of the Agri Land was no longer available.

CIMB requested PK1 to produce the title deed and the title search to prove the ownership that the Agri Land still belong to PK1 and PK2. SD1 and SD2 also informed PK1 that all these documents and request to 6 execute a fresh discharge of charge must be officially made through a solicitor.

Some time later, PK1 went to CIMB’s office and produced what appeared to be an original copy of the title deed of the Agri Land, and a land office search on the Agri Land which confirmed that both PK1 and PK2 are still the registered owners of the Agri Land and the charge by Southern Bank Berhad/CIMB was still registered on the said property.

Based on the information furnished by PK1 (and ostensibly on behalf of PK2 as the co-landowner) during the meeting in Kuala Lumpur, CIMB executed a fresh discharge of charge (the 2nd Discharge of Charge) and forwarded the same to Messrs Teja Singh Penesar and Company vide letter dated 3.7.2006 when the discharge of charge Form 16N was forwarded for execution by Messrs Teja Singh Penesar and Company (being the solicitors for PK1 and PK2 and formerly cited as 4th Third Party but was subsequently withdrawn by CIMB) (Messrs Teja Singh).

Unknown to CIMB, on 7.7.2006, PK1 and PK2 had entered into another sale and purchase agreement in respect of the Agri Land (2nd SPA). The 2nd SPA was between PK1 and PK2, as the vendors, and one H.Sue Ee Corporation Sdn. Bhd. (H.Sue Ee) as the purchaser. The Agri Land was subsequently transferred to H. Sue Ee on 5.9.2006. 7

Goh then filed a claim against CIMB for breach on undertaking and negligence in executing the 2nd Discharge of Charge for PK1 and PK2 after CIMB had received full payment of the redemption sum in respect of the Agri Land from Goh. It was Goh’s case that the execution of the 2nd Discharge of Charge by CIMB had facilitated the sale of the Agri Land by PK1 and PK2 to a third party, H.Sue Ee, and the Agri Land had in fact been transferred and registered in the name of H.Sue Ee on 5.9.2006 after the 2nd Discharge of Charge was registered on 7.7.2006. Goh therefore claimed against CIMB for damages for the loss of the Agri Land together with interest and costs.

CIMB in its defence stated that it had discharged its obligations under the Letter of Undertaking (D13) by delivering the documents mentioned therein to PK3 on 15.4.2003. It denied having breached the said Undertaking and negligence on its part. That any loss and damage suffered by Goh were caused by the act of PK3 and/or misrepresentation by PK1 and PK2. Further and/or in the alternative, CIMB contended that Goh was guilty of contributory negligence by the following acts:

15.1 failed to register the 1st Discharge of Charge;

15.2 failed to inform CIMB the non-registration of the 1st Discharge of Charge;

15.3 failed to enter a caveat against and/or maintain a caused on the Agri Land; 8

15.4 failed to register the transfer of the Agri Land.

CIMB had filed third party proceedings against PK1, PK2 and PK3 to claim indemnity and contribution for the alleged fraud and/or conspiracy and/or misrepresentation by PK1 and PK2 against CIMB; and in respect of PK3, for negligence and/or breach of the terms contained in the letter dated 15.4.2003 resulting in the Agri Land being registered in H.Sue Ee’s name on 5.9.2006.

PK1, PK2 and PK3 generally denied CIMB’s allegations. C.

The learned High Court Judge in his judgment had addressed 5 issues in respect of the suit between Goh and CIMB, and another 5 issues in respect of CIMB’s suit against the 3 Third Parties. They are as follows:

18.1 suit between Goh and CIMB:

18.1.1 whether CIMB had acted in breach of D13 by executing the 2nd Discharge of Charge for PK1 and PK2 which facilitated the transfer of the Agri-Land to the third party/H.Sue Ee?

18.1.2 whether CIMB was negligent by executing the 2nd Discharge of Charge for PK1 and PK2 when the documents stated in D13 had been delivered to PK3 on 15.4.2003 after the payment of the redemption sum of the Agri-Land by Goh? 9

18.1.3 whether Goh has suffered loss and damage because of the execution of the 2nd Discharge of Charge for PK1 and PK2 by CIMB?

18.1.4 in the event Goh has suffered loss and damage, whether Goh was guilty of contributory negligence in respect of the loss and damage?

18.1.5 whether CIMB was under a duty of care to execute the 2nd Discharge of Charge for PK1 and PK2 when the Agri Land had been fully redeemed?

18.2 suit between CIMB and the Third Parties:

18.2.1 whether PK1 and PK2 had committed fraud and/or conspired and/or misrepresented to CIMB resulting in the act of re-executing and delivering the 2nd Discharge of Charge on Presentation Nos. 1848/96, 1190/98 and 16101/99?

18.2.2 whether PK3 was negligent and/or acted in breach of duty towards CIMB by failing to register the Discharge of Charge in respect of charge presentation No. 1848/96, 1190/98 and 1610/99 which was duly executed and forwarded by CIMB to PK3 vide letter dated 15.4.2003?

18.2.3 whether PK3 was negligent and/or acted in breach of the Letter of Undertaking dated 14.3.2003 by failing to inform CIMB that the 1st Discharge of Charge in respect of charge Presentation Nos. 10 1848/96, 1190/98 and 1610/99 which was duly executed and forwarded by CIMB to PK3 vide letter dated 15.4.2003, was not registered?

18.2.4 whether PK3 was negligent and/or in breach of the Letter of Undertaking dated 14.3.2003 by failing to return the original title of the Agri Land when the registration of the 1st Discharge of Charge in respect of the charge Presentation Nos. 1848/96, 1190/98 and 1610/99, which was duly executed and forwarded by the CIMB to PK3 vide letter dated 15.4.2003, was not effected after 2 years and 3 months?

18.2.5 whether CIMB is wholly negligent in failing to refer to PK3 regarding the 1st Discharge of Charge on Presentation Nos. 1848/96, 1190/98 and 1610/99, when they were approached by PK1 and PK2 for the re-execution and delivery of the 2nd Discharge of Charge?

In order to answer all the issues posed, the learned Judge had referred to the relevant correspondence between the relevant parties and as contained in Exhibits P21, P22, D13, P8 and D28. It is important that these Exhibits be reproduced herewith for a better understanding of the issues at hand. 11

The letter issued by PK3 dated 27.2.2003 (P21) and attaching PK1’s and PK2’s Letter of Indemnity (P22) dated 27.2.2003 are reproduced as follows: 12

CIMB had issued a letter dated 14.3.2003 and undertook certain obligations (D13) (Letter of Undertaking) and is reproduced as follows: 13

CIMB had issued a letter dated 15.4.2003 (P8) enclosing the duly executed 1st Discharge of Charge and is reproduced as follows: 14

Messrs Teja Singh’s letter dated 5.6.2006 to CIMB (D28) is reproduced as follows: 15

The learned Judge found the following facts to be undisputed between the parties: 16

24.1 there was a merger between Ban Hin Lee Bank Bhd and Southern Bank Bhd in the year 2000, and all assets and liabilities of Ban Hin Lee Bank Bhd were vested in Sourthern Bank Bhd and that Southern Bank Bhd is now known as CIMB Bank Bhd/the Defendant;

24.2 CIMB was aware of the sale of the Agri Land by PK1 and PK2 to Goh;

24.3 in the year 2006, PK1 met CIMB’s officer (SD1, SD2 and SD3) in Kuala Lumpur pertaining to his other properties, the BHL Properties, that were charged to Ban Hin Lee Bank Bhd (Lot and shoplots properties) which were then subject to foreclosure proceeding. It was in the course of this meeting PK1 told CIMB’s officers and confirmed by them, that the 1st Discharge of Charge was still not registered even though its facility had been fully settled;

24.4 that the Letter of Undertaking (D13) by CIMB was addressed and given to Goh and not to PK1 and PK2;

24.5 the payment towards the full redemption of the charge was made by Goh and not by PK1 and PK2;

24.6 the 1st Discharge of Charge, the original title of the Agri Land were forwarded to Goh vide letter dated 15.4.2003 (P8);

24.7 CIMB had proceeded to execute the 2nd Discharge of Charge and handed it to PK1’s and PK2’s solicitor Messrs Teja Singh; 17

24.8 the execution of the 2nd Discharge of Charge would have occurred had it not been for PK1 having requested SD1 and SD2 to issue the same and it was only executed upon PK1 producing copy of the extract Land Office Title of the Agri Land without him disclosing to SD1 and SD2 that the original title was actually with PK3.

Based on the undisputed facts as well as evidence adduced at trial, the learned Judge made the following findings of facts:

25.1 that CIMB’s Letter of Undertaking (D13) did not provide for a subsequent re-execution of the 1st Discharge of Charge and the delivery of the re-executed 1st Discharge of Charge to another party other than Goh/the Plaintiff;

25.2 the execution of the 2nd Discharge of Charge was in respect of the settlement of the same redemption sum and the same Agri Land;

25.3 since the Letter of Undertaking is from CIMB to Goh and to no other, and in construing strictly the Letter of Undertaking against CIMB [Public Bank Bhd v Perwira Affin Bank Bhd [2001] 7 CLJ 447 (Public Bank Bhd); United Malayan Banking Corporation v Warisan Niaga (M) Sdn. Bhd. & Ors [1990] 3 CLJ Rep 318, referred], the execution of the 2nd Discharge of Charge that was delivered to PK1 and PK2 was contrary to the intent and spirit of CIMB’s undertaking in D13; 18

25.4 as for SD1’s and SD2’s claim that they did not have the physical files in respect of the Agri Land and SD1’s claim not to have knowledge about the sale of the Agri Land by PK1 and PK2 to Goh, these were contrary to the agreed facts alluded to above as well as CIMB’s Statement of Defence in paragraph 3 where it was pleaded that – “ 3. Selain daripada dimaklumkan oleh Boo Choon Kooy [PK1] dan Maggie Chan [PK2] tentang perjanjian jual beli hartanah yang dikenali sebagai Lot No. 1710, Geran No. 46333, Mukim 16, Daerah Seberang Perai Tengah, Pulau Pinang (“Hartanah tersebut”), Defendan tiada pengetahun tentang perenggan 3 Pernyataan Tuntutan Terpinda. Defendan juga bukan pihak kepada perjanjian bertarikh 30/07/2002 tersebut.”;

25.5 as for SD2’s denial of knowledge of the whereabouts of the documents referred to in D13; SD1 and SD2 thinking that the extract of Land Registry title (D36) forwarded by PK1 to be the original Issues Document of Title; SD1 and SD2 admitted that they did not make inquiries with PK3 before the execution of the 2nd Discharge of Charge and had delivered the same to PK1 and PK2, had CIMB made the necessary inquiry with PK3 and in respect of D36 with CIMB’s own legal department CIMB would have discovered Goh’s right and claim over the Agri Land;

25.6 since SD1 and SD2 failed to verify with PK3 the matters referred to in paragraph 25.5 above, it clearly showed that CIMB was negligent and acted in breach of its duty towards Goh; 19

25.7 the explanation by SD1 and SD2 that they were then not in the possession of the relevant physical files on the Agri Land did not excuse them from verifying with PK3 about the 1st Discharge of Charge when Messrs Teja Singh’s letter (D28) was clearly self explanatory about PK3 having failed to register the 1st Discharge of Charge;

25.8 PK3 had decided not to register the 1st Discharge of Charge despite having received the fully executed relevant documents from CIMB in favour of the Agri Land which remained encumbered to serve as an added security in addition to the caveat of Goh pending resolution of the ongoing dispute between Goh and PK1 and PK2;

25.9 as for CIMB’s contention that PK3’s refusal to immediately register the 1st Discharge of Charge had contributed towards the execution of the 2nd Discharge of Charge, it was not the term of D13 which required PK3 to register the 1st Discharge of Charge immediately and to inform CIMB of the same. Moreover, for more than 3 years despite the 1st Discharge of Charge was not registered and the dispute between Goh and PK1 and PK2 with regard to the SPA which caused the registration of the transfer of the Agri Land be kept in abeyance, that Agri Land had remained encumbered. It was only when CIMB had executed the 2nd 20 Discharge of Charge that had resulted in the Agri Land becoming unencumbered and subsequently transferred to H.Sue Ee, causing loss and damage to Goh. So, it was the act of CIMB in negligently executing the 2nd Discharge of Charge being the effective cause of the loss of the Agri Land by Goh;

25.10 CIMB did not conspire with PK1 and PK2 in executing the 2nd Discharge of Charge;

25.11 even though PK1 was exonerated from the criminal charge of making false declaration, from his own testimony during trial, it was clear that PK1 knew that the original land title was then with PK3 but had failed to disclose it to SD1 and SD2. PK1 and PK2 had clearly misrepresented to CIMB which had resulted in the execution of the 2nd Discharge of Charge and the forwarding of the same to him.

In view of the above reasons, the learned Judge answered the issues posed as follows: in regard to suit between Goh and CIMB:

26.1 issues 18.1.1 to 18.1.3, in the affirmative;

26.2 issues 18.1.4, 18.1.5, in the negative; in regard to suit between CIMB and the Third Parties:

26.3 issue 18.2.1, in the affirmative;

26.4 issues 18.2.2 to 18.2.4, in the negative; 21

26.5 issue 18.2.5, in the affirmative.

The learned Judge therefore gave judgment for Goh and ordered damages for breach of undertaking and negligence to be assessed by the Senior Assistant Registrar, interest and 4% per annum from the date of filing of the suit and 5% from the date of judgment till full realisation, and costs of RM50,000.00 in favour of Goh.

With regard to PK1 and PK2, the learned Judge ordered both of them to fully indemnify CIMB of its liability, damages and costs, in addition to cost of RM50,000.00 to be paid to CIMB.

The learned Judge dismissed CIMB’s claim against PK3 with costs of RM30,000.00 to be paid to PK3.

Hence, the 2 Appeals 2073 and 2075 before us. D. THE APPEALS : Appeal 2073 : CIMB’s appeal against Goh

Learned counsel for CIMB had raised 5 issues vis à vis Goh’s case against it and as determined by the learned Judge. They are –

31.1 whether the learned Judge had erred in law and fact when he found that the execution of the 2nd Discharge of Charge that was issued to PKI and PK2 was an act of negligence; 22

31.2 whether the learned Judge erred in law and fact in failing to address the duty of care of the chargee bank/CIMB towards the borrowers chargors/PK1 and PK2 to discharge the charge upon the settlement of loan amount;

31.3 whether the learned Judge had erred in law in finding that the execution of the 2nd Discharge of Charge was contrary to the intent and spirit of the Letter of Undertaking/D13;

31.4 whether the learned Judge had erred in law and fact in finding that if CIMB had made necessary inquiry with PK3, CIMB would have discovered Goh’s right and claim over the Agri Land;

31.5 the learned Judge had erred in law and fact in failing to address the issue of contributory negligence on the part of Goh as the same was pleaded by CIMB and submitted during trial. As these 5 issues are interlinked, we will address them together.

CIMB contended that its contractual duty of care towards Goh had ended on 15.4.2003 when it forwarded the duly executed 1st Discharge of Charge vis letter dated 15.4.2003/P8, original title of the Agri Land and duplicate charge to PK3, being the solicitor representing Goh. It was also CIMB’s contention that its execution of the 2nd Discharge of Charge on 3.7.2006 could not be construed as a breach after complying with the Letter of Undertaking some 2 years before that. Further, it was submitted that by executing a fresh discharge of charge on its own would not cause 23 any loss to Goh. The loss/damage allegedly suffered by Goh was as a result of the transfer Form 14A was registered whereupon the Agri Land was transferred by PK1 and PK2 to H.Sue Ee. Therefore the loss/damage allegedly suffered by Goh was definitely not the direct cause of CIMB’s conduct in re-executing a fresh discharge of charge.

It was also submitted that as a chargee bank, CIMB owed a statutory duty of care towards its chargors/PK1 and PK2 pertaining to the property charged as security, that is, the Agri Land. So when PK1 and PK2 had instructed CIMB to re-execute a fresh discharge of charge, CIMB was statutorily obliged to adhere to their request after taking all reasonable steps as a prudent banker. SD1, SD2 and SD3 had requested for all necessary documents and has also checked their system to verify the status of the facility. Upon verification CIMB had confirmed the following:

33.1 the loan account was fully settled in 2003;

33.2 the charge by Southern Bank Berhad/CIMB on the Agri Land was still not discharged;

33.3 PK1 and PK2 were still the registered proprietors of the Agri Land.

Moreover, CIMB could not refuse to execute a fresh discharge of charge when CIMB had already received in full the debt secured by the chargors/PK1 and PK2 on the Agri Land. In the absence of any information conveyed to CIMB pertaining to the dispute between Goh and 24 PK1 and PK2 and the ongoing suits among them, CIMB should not be made liable for the act of re-executing a fresh discharge of charge as that act was guided and consistent with the provisions of law and any reasonable prudent banker would have acted in the same way as CIMB.

In regard to the issue of the execution of the 2nd Discharge of Charge was contrary to the intent and spirit of the Letter of Undertaking, CIMB could only submit that the actual reason leading to the non-registration of the 1st Discharge of Charge was never brought to CIMB’s attention and, presumably, CIMB could not be faulted for executing the 2nd Discharge of Charge.

As for the learned Judge’s finding that if CIMB had made the necessary inquiry with PK3, CIMB would have discovered Goh’s right and claim over the Agri Land, it was submitted by CIMB that it did not owe any duty to check and verify with PK3 when all information were presented by PK1 and PK2 that –

36.1 the loan facilities by Southern Bank Berhad/CIMB were fully settled;

36.2 PK1 and PK2 were still the registered proprietors at the material time; and 36.3 the Southern Bank Berhad’s/CIMB’s charge was still registered on the Agri Land. 25 That these information were more than sufficient to allow CIMB to exercise its statutory duty in executing a fresh discharge of charge (meaning the 2nd Discharge of Charge) on the Agri Land. Moreover, and citing the Singapore’s Court of Appeal case of Yogambikai Nagarajah v Indian Overseas Bank [1997] 1 SLR 258 as the authority, CIMB had no doubt whatsoever to suspect any misfeasance or fraudulent intention of PK1 and PK2 when CIMB’s officers attended to their request for a fresh discharge on the Agri Land.

In any case CIMB submitted that Goh was contributorily negligent since PK3 as solicitor for Goh had failed to register the 1st Discharge of Charge for 2 ½ years.

It was Goh’s submission that based on the express language of the Letter of Undertaking/D13, and in view of decided cases of Public Bank Bhd (supra) H.C., Micheal C. Solle v United Malayan Banking Corporation Bhd [1984] 1 CLJ (Rep) 267, F.C. and Good View Property Sdn. Bhd. v Standard Chartered Bank Malaysia Berhad [2014] 6 CLJ 965, C.A., D13 was a pledge, promise and guarantee by CIMB to deliver the documents stated therein to Goh upon the receipt of payment of the redemption sum from Goh. D13 did not provide for a subsequent re-execution of the discharge of charge and delivering of the re-executed discharge of charge to a party other than Goh; D13 did not admit of such 26 intention from Goh to CIMB as D13 was addressed to Goh and to no other. As such, D13 is and all acts done in pursuance thereof must be for the benefit of Goh; upon payment of the redemption sum, Goh is entitled to receive the documents stated therein, that is, the original title, discharge of charge and duplicate charge; the said documents shall be delivered to Goh and/or his agent only; all matters relating to the discharge of the Agri Land upon the payment of the redemption sum by Goh (which Goh did) including the subsequent execution of the 2nd Discharge of Charge by CIMB are governed by the terms of D13.

39.

Since – 1 D13 did not provide for the execution of the 2nd Discharge of Charge;

39.2 contrary to D13, CIMB had executed the 2nd Discharge of Charge for PK1 and PK2 and not for the benefit of Goh, CIMB had breached the terms and its duty under D13.

Further, it was submitted for Goh that CIMB did not dispute the existence of a duty of care to Goh by reason of D13. CIMB ought to have known the execution of the 2nd Discharge of Charge and the delivery thereof to PK1 and PK2 would have compromised and affected Goh’s right and claim over the Agri Land. The effect of the 2nd Discharge of Charge would be to unencumber and free the Agri Land for the benefit of PK1 and PK2. Therefore it was reasonably foreseeable by CIMB that the Agri Land 27 could be sold to a third party with the execution of the 2nd Discharge of Charge to the detriment of Goh.

It was therefore submitted for Goh that CIMB was negligent in executing the 2nd Discharge of Charge when SD1 denied having knowledge of the sale of the Agri Land to Goh; SD2 denied knowing the whereabouts of the documents reposed to in D13; SD1 and SD2 confirmed that they did not have the physical files in respect of the Agri Land nor did they make inquiries with PK3 before the execution of the 2nd Discharge of the Charge and delivered the same to PK1 and PK2; SD2 and SD3 thought that D36 (being the copy of title to the Agri Land) was the original title and did not make further inquiry to establish if D36 was indeed the original title. That if CIMB had made the necessary inquiry with PK3 and in respect of D36 with CIMB’s own legal department, CIMB would have discovered Goh’s right and claim to the Agri Land – see Financial Information Services Sdn. Bhd. v Hj Salleh Hj Janan [2012] 8 CLJ 885,

As for CIMB’s contention that it was under a legal duty to execute the 2nd Discharge of Charge for PK1 and PK2 as the redemption sum had been fully settled, it was Goh’s submission that such contention would only be tenable if the redemption sum was paid by PK1 and PK2. However, in this case, it was paid by Goh under the terms of D13 itself which was 28 issued by Southern Bank Berhad/CIMB itself. Moreover, PK1 and PK2 had given their consent as contained in P22 to Goh/PK3 obtaining D13 from CIMB; in other words CIMB’s duty towards PK1 and PK2 was superceded with the terms contained in D13 in favour of Goh. It was further submitted that the requirement for the return of the documents to CIMB intact in the event the Discharge of Charge could not be registered went to show CIMB knew and it was within the contemplation of the parties that the said documents were intended to be held by Goh as security for Goh’s claim and interest in the Agri Land. Therefore, CIMB cannot now contend that it was at liberty to execute the 2nd Discharge of Charge upon the request of PK1 and PK2 since by doing so it would compromise the security of Goh over the Agri Land.

With regard to CIMB’s contention that Goh was contributorily negligent, it was submitted by Goh that PK3 testified that the non-registration of the 1st Discharge of Charge would cause the Agri Land to remain encumbered which was an added security for Goh pending the resolution of the dispute which existed between Goh and PK1 and PK2. Moreover, CIMB did not lead any evidence to show that PK3 had failed to act as a reasonable prudent conveyancing lawyer and therefore CIMB’s stand on this issue is untenable. 29 Decision of the Court :

Since this suit had been fully heard by the learned trial Judge, we were very mindful of the general rule of non-interference by the appellate court of the trial judge’s finding of facts “unless the trial court is shown to be plainly wrong in arriving at its decision. But appellate interference will take place in cases where there has been no or insufficient judicial appreciation of the evidence” – see Lee Ing Chin @ Lee Teck Seng v Gan Yook Chin [2003] 2 MLJ 97 C.A. at page 116,120.

With regard to CIMB’s contention that its contractual duty of care towards Goh had ended on 15.4.2003 when it forwarded the duly executed 1st Discharge of Charge vis letter 15.4.2003/P8 etc. to PK3, we agreed with the learned Judge’s finding in paragraph 42 of his Grounds of Judgment as follows: “ 42. It is undisputed that the undertaking of D13 by the defendant is addressed and given to the plaintiff [Goh] and not to PKI and PK2. The payment towards the full redemption of the charge is also made by the plaintiff and not by PK1 and PK2. The first discharge of charge, the original title of the Agri-Land were also forwarded to the plaintiff by way of the letter dated 15.4.2003 (exh P8). The defendant contends that its obligation and duty under D13 had ended on 15.4.2003. Yes, I would have agreed [sic] with it, had the defendant did just that. But here, as undisputed [sic] the defendant proceeded to execute the second discharge of charge and handed it to the solicitor for PK1 and PK2, whereas its undertaking to the plaintiff does not provide for a subsequent re-execution of the discharge of charge and the delivery of the same to another party other than the plaintiff. It is salutary [sic] to remember the execution of the second discharge of charge is in respect of the settlement of the same redemption sum and the same [sic] Agri-Land.” 30

We were of the view that if CIMB’s contention was true (that CIMB’s obligation and duty under D13 had ended on 15.4.2003), it could not explain CIMB’s further action of issuing the 2nd Discharge of Charge in respect of the same loan, the same redemption sum and the same Agri Land after over 3 years later. The only difference that we could see was that when the 2nd Discharge of Charge was issued by CIMB, CIMB had issued it not to Goh (the payee of the redemption sum) nor his solicitors/PK3 but to the solicitors of PK1 and PK2. In doing so, CIMB had set the stage for PK1/PK2 to defraud Goh of the Agri Land when PK1 and PK2 entered the 2nd SPA with H.Sue Ee and pursuant to which the Agri Land was transferred to H.Sue Ee.

We agreed with Goh’s submission that –

47.1 when CIMB had issued D13,CIMB had pledged, promised and guaranteed to deliver the documents stated therein to Goh upon receipt of payment of the redemption sum from Goh;

47.2 D13 did not provide for a subsequent re-execution of the discharge of charge and the delivery of the re-executed discharge of charge to a party other than Goh;

47.3 D13 was addressed to Goh and to no other; 31

47.4 D13 and all acts done in pursuance thereof must be for the benefit of Goh;

47.5 all matters relating to the discharge of the Agri Land upon the payment of the redemption sum by Goh, including the subsequent execution of the 2nd Discharge of Charge by CIMB, are governed by the terms of D13;

47.6 by virtue of D13, CIMB owed a duty of care to Goh, which duty of care was breached when CIMB issued the 2nd Discharge of Charge to PK1 and PK2 without first taking the necessary action of inquiring from PK3 why the 1st Discharge of Charge was not registered. If CIMB had made the simple but very necessary inquiry from PK3, CIMB would have discovered Goh’s prior right to claim the Agri Land and not PK1 and PK2. This was more so when we referred to the letter from Southern Bank/CIMB dated 15.4.2003 addressed to PK3 and referring to Goh in P8 stating that, amongst others, that the loan facility by Boo Choon Kooy/PK1 was fully settled and the Bank had enclosed the original title of the Agri Land and 2 copies of the 1st Discharge of Charge duly executed;

47.7 in the circumstances as aforesaid, by issuing the 2nd Discharge of Charge to PK1 and PK2, it must necessarily mean that it was reasonably foreseeable by CIMB that the Agri Land would be 32 unencumbered and be sold to a third party by PK1 and PK2 to the detriment of Goh;

47.8 the transfer of the Agri Land to H.Sue Ee pursuant to the 2nd SPA could not have occurred but for CIMB’s breach of duty in executing the 2nd Discharge of Charge and consequentially “but for” the same Goh’s loss of the Agri Land would not have occurred. We noted the law of tort of negligence as espoused by the learned authors in Clerk and Lindsell on Torts, 17th edition, 1995, at pages 45 and 46, as follows: “ Tests of causation : the “but for” test. The courts are concerned, not to identify all of the possible causes of a particular incident, but with the effective cause of the resulting damage and so to assign responsibility for that damage. It has been said that the law seeks the causa causans (effective factor) rather than the causa sine qua non (factor(s) without which damage could not have occurred). In pursuit of the sometimes elusive effective cause the test commonly propounded is the famous (or infamous) “but for” test. Would the damage of which the plaintiff complains have occurred “but for” the negligence (or other wrongdoing) of the defendant? Or to put it more accurately, can the plaintiff adduce evidence to show that it is more likely than not, more than 50 per cent probable, that “but for” the defendant’s wrongdoing the relevant damage would not have occurred…” “Applying the “but for” test positively. Perhaps in the majority of cases, the “but for” test operates in practice to exclude the defendant’s conduct as a cause of the plaintiff’s damage. Nonetheless the test can on occasion conversely operate to impose liability. In Smith v. Leech Brain & Co. Ltd the defendants negligently failed to provide an employee with adequate protection for his face while working with molten metal. A fleck of metal splashed on his lip causing what at first appeared to be a minor burn. The burn activated a pre-malignant condition in the lip triggering the development of an ultimately fatal cancer. “But for” the burn, the malignancy would not have develop. The burn was held to have caused the cancer.”; 33

47.9 that Goh/PK3 was not contributorily negligent, if at all, for failing to register the 1st Discharge of Charge. In the absence of CIMB calling expert legal witness to testify on whether the failure of PK3 to register the 1st Discharge of Charge in the circumstances amounted to PK3 failing to act as a reasonable prudent conveyancing lawyer, we were unable to assess the veracity of CIMB’s allegations. In light of CIMB’s failure to call an expert legal witness in that field and after perusing the relevant documents referred to above, we were of the view that there was no legal obligation on the part of Goh/PK3 to register the 1st Discharge of Charge as soon as possible upon its receipt by PK3. See U Television Sdn. Bhd. & Anor v Comintel Sdn. Bhd. [2017] 10 CLJ 580, per Zulkefli Ahmad Makinudin PCA, Federal Court, at paragraph 50, where his Lordship held as follows: “[50] The High Court found that there was a need for technical evidence but, however, it preferred the evidence of the plaintiff on the basis of its so-called technical witnesses. It is our judgment, when it was determined that there was a need for technical evidence, it was incumbent on the plaintiff to lead evidence through experts. It did not do so and by reason of that failure had failed to discharge its “burden of proof” under ss. and 102 of the Act. Consequently the “onus of proof” did not shift to the defendants to dislodge the assertions made by the plaintiff as the claimant.” CIMB’s appeal against PK3

As for CIMB’s appeal against the learned Judge’s finding in favour of PK3/2nd Respondent, CIMB raised 1 issue as follows: 34

48.1 whether the trial judge had erred in fact and law by overlooking the practice and conduct of PK3 as advocate and solicitor –

48.1.1 by failing to register the 1st Discharge of Charge when he received it vide letter dated 15.4.2003;

48.1.2 when PK3 failed inform CIMB that the 1st Discharge of Charge was not registered due to the ongoing disputes between Goh and PK1 and PK2.

It was contended by CIMB that, based on the House of Lords decision in Hedley Byrne & Co. Ltd. v Heller & Partners Ltd [1964] AC 465 where the House of Lords ruled that – “…if in a sphere in which a person is so placed that others could reasonably rely on his judgment or his skill or on his liability to make careful inquiry, a person takes it on himself to give information or advice to, or allow his information of advice to be passed on to, another person who, as he knows or should know, will place reliance on it, then a duty of care will arise.”, there is a special relationship between a solicitor and the other party, namely in our case, CIMB. That the principle in Hedley Byrne is applicable to our case because since PK3 being a solicitor and acting as agent for Goh, owed a duty of case to CIMB to act diligently so as to prevent any loss. It was submitted that it is common conveyancing practice that CIMB would be relying on PK3 to attend to the 1st Discharge of Charge and if PK3 was not prepared to attend to this he should have 35 informed CIMB to appoint their own lawyers. The fact that PK3 undertook the task would make PK3 responsible and owed a duty of care to CIMB.

The duty of care which PK3 owed to CIMB arose from the time PK3 issued the letter P21 to CIMB requesting a redemption statement in respect of the Agri Land facilities, followed by CIMB’s Letter of Undertaking (D13). Since PK3 had failed to register the 1st Discharge of Charge, PK3 had breached his duty of care to CIMB and which resulted in the loss of the Agri Land.

Further, CIMB contended that PK3 was legally obliged to inform CIMB when the 1st Discharge of Charge was not registered due to the problems existing between Goh and PK1 and PK2 since PK3 is deemed to have assumed the statutory duty of CIMB as a chargee to discharge the security upon final settlement of facilities granted. Failure of PK3 to do so meant that PK3 was negligent.

Generally, PK3 took the position that he did not owe a duty of care to CIMB as he was never retained to act for CIMB. That nowhere in the Letter of Undertaking (D13) and P8 was there an undertaking by PK3 to inform CIMB that the 1st Discharge of Charge was not registered. As for CIMB’s contention that it is common conveyancing practice for CIMB to be relying on PK3 to attend to the registration of the 1st Discharge of Charge, 36 CIMB had failed to adduce evidence to this effect and therefore section 114(g) of the Evidence Act 1950 should be invoked. Decision of the Court :

Our observation in paragraph 44 above on the general rule against appellate intervention equally applies here. It must be remembered that PK3 at all material times was acting as Goh’s solicitor. Even though through case law it is an accepted principle that a solicitor may be liable in tort to a third party (see paragraph 8-77, Clerk & Lindsell on Torts, supra; Hedley Byrne, supra: Tetuan Abdul Aziz & Associates v Sunshine Haven Sdn. Bhd. [2016] 9 CLJ 385, C.A.), we were of the view that the circumstances of our present case do not give rise to a duty owed by PK3 to CIMB in the first place. This was because if it is true that it is the common conveyancing practice for CIMB to rely on PK3 to attend to the registration of the 1st Discharge of Charge on CIMB’s behalf, it is incumbent upon CIMB to call expert legal witness in the field to testify to that effect. CIMB’s failure to do so, as we have alluded to earlier had precluded us from considering whether by the accepted standard of the conveyancing practice, PK3 had breached his duty to CIMB. See U Television Sdn. Bhd. (supra). But what we had before us was the fact that there were no express undertaking by PK3 to do so on behalf of CIMB in the Letter of Undertaking (D13) let alone in the letter P8. We, therefore, 37 were of the view that PK3 did not owe a duty of care to CIMB and was not liable in negligence to CIMB.

If any blame was to be put on any person, we would have thought that CIMB, in failing to make the simple but necessary inquiry from PK3 as to why the 1st Discharge of Charge was not registered, let alone refer to its legal department on the status of the matter, should bear the blame. This was more so when PK1 and PK2’s solicitors, Messrs Teja Singh, had vide letter D28 dated 5.6.2006, specifically made reference to the fact that the 1st Discharge of Charge documents were forwarded to PK3 but PK3 had failed to register the same. We quote the express language of the said letter as follows: “ The loan amount has been fully settled on 04-04-2003 and the discharge documents were forwarded to M/s Ooi Weng Hooi & Company. M/s OOi Weng Hooi & Co., failed to register the Discharge of Charge.” Upon receipt of D28, CIMB should have been alerted on the possible complications that may arise from the fact that the 1st Discharge of Charge was as yet to be registered and be concerned about it by inquiring about it from PK3. By not doing so, it clearly showed that CIMB in the first place did not regard PK3 as acting on its behalf. Further, CIMB itself was not concerned with the fact that when P8 was issued to PK3, amongst the documents forwarded to PK3, other than the 1st Discharge of Charge, was 38 the original title to the Agri Land. CIMB instead was contented to accept from PKI, in the words of the learned Judge at paragraphs 39 and 40 of his Grounds of Judgment as follows: “ 39. Upon being told of the conditions for the fresh discharge of charge to be executed, PK1 came back to see the Bank officers and produced what appeared to be an original copy of the title deed of the said Agri-Land and also a land office search on the said “Agri-Land” confirming that PK1 and PK2 are still the registered owner of the Agri-Land and the charge by Sourthern Bank Bhd was still registered on the property.

The said original copy of the title deed produced by PK1 to SD1 turned out to be only a land office extract copy of original title deed which upon this trial PK1 said was obtained through the land office with the help of “an agent” who is the official of Pejabat Tanah itself. By him paying the agent RM240.00 and RM50.00. SD1 said based on this land office extract copy which he then thought was the original copy of the title and the letter from Messr Teja Singh (D28) acting for PK1 and PK2, he issued the second discharge of charge to Messr Teja Singh. Although in his cross examination he agreed at one stage that he issued the second discharge of charge in response to the said Messr Teja Singh’s said letter but he had also at the earlier stage said that Messr Teja Singh’s letter was received by the Bank following the said meeting with PK1 for he had also advised PK1 to engage a solicitor for the said purpose.” Conclusion in respect of Appeal 2073

In view of the above, we unanimously dismissed CIMB’s appeal against Goh and PK3 with costs of RM10,000.00 to each Respondent subject to payment of allocatur and affirmed the decision of the learned High Court Judge. We ordered the deposit to be refunded to CIMB. Appeal 2075

As stated earlier, in this Appeal 2075, PK1 and PK2 were appealing 39 against the judgement of the High Court holding them liable to indemnify CIMB of its liability, damages and costs.

At the High Court, there was only 1 issue to be tried between CIMB/Respondent and PK1 and PK2/Appellants, as follows: whether PK1 and PK2 had committed fraud and/or conspired and/or misrepresented to CIMB resulting in the act of re-executing and delivering of the 2nd Discharge of Charge? As stated earlier, the learned High Court Judge found in favour of CIMB against PK1 and PK2.

In their submission, PK1 and PK2 raised 13 issues, which essentially revolved around the findings of facts by the learned judge. Save for the finding by the learned Judge that PK2 was hand in glove with PK1 to commit fraud/conspiracy/misrepresentation to CIMB, we were of the view that there was no appealable error committed by the learned judge to occasion us to intervene in his finding of facts against PK1. This was more so in view of the learned Judge’s finding that the execution of the 2nd Discharge of Charge would not have occurred had it not been for PK1 having requested SD1 and SD2 to issue the same and it was duly executed only upon PK1 producing the copy of the extract Land Office Title of the Agri Land without disclosing to SD1 and SD2 that the original 40 title of the same was with PK3.

With regard to PK2, we found that the learned Judge had erred in coming to the conclusion that when PK1 met with CIMB’s officers in 2006 and thereafter, PK1 was not only representing himself but also PK2, being the co-owner of the Agri Land. We agreed with the submission of the Appellants that based on the evidence before the High Court, PK2 was never involved in the discussions between CIMB’s officers and PK1 in regard to the eventual issuance of the 2nd Discharge of Charge. In fact the officers of CIMB never met her in person. Conclusion in respect of Appeal 2075

In the premises, we unanimously allowed in part Appeal 2075 in that the High Court Judge’s decision in finding that PK2/2nd Appellant was liable to the Respondent/CIMB was set aside and we affirmed the rest of the learned Judge’s decision vis PK1. We allowed costs of RM50,000.00 for here and below, subject to the payment of allocatur fees. Deposit was ordered to be refunded to the Appellants/PK1/PK2. sgd (UMI KALTHUM BINTI ABDUL MAJID) Judge Court of Appeal Malaysia Putrajaya Dated: 31.10.2018 41 Counsels/Solicitors (P-02(W)-2073-12/2015) For the Appellants: Ghazi Ishak B. Jeyasingam Nurul Ishtar (Tetuan Ghazi & Lim) For the Respondent: Tung Mun Yeong (1st Respondent) (Tetuan Tung, Chan & Pts) Balver Bhar (2nd Respondent) (Syarikat Baldev Bhar) Counsels/Solicitors (P-02(W)-2075-12/2015)_ For the Appellant : Teja Singh Panesar Amit Singh Penesar (Tetuan Teja Singh Penesar & Co) For the Respondent: Ghazi Ishak B. Jeyasingam Nurul Ishtar (Tetuan Ghazi & Lim)