The court affirmed that a bank's compliance with AMLATFA orders prevented interest accrual on seized accounts, and a Settlement Agreement barred further claims for interest.

JUDGMENT

Atan Mustaffa Yussof Ahmad J:

Introduction

[1] This judgment concerns a dispute between a bank (the Plaintiff) and one of its customers (the Defendant) over the proper handling and accounting of the Defendant's investment accounts that were subject to anti-money laundering seizure orders. The key issues are whether the bank was required to continue crediting interest and other accretions to the seized accounts during the seizure period, and whether the Defendant's claim for such amounts is barred by res judicata or by the terms of a prior settlement agreement between the parties. The Defendant invested substantial sums through structured product accounts with the Plaintiff bank and also obtained lending facilities secured against those investments. However, in 2014 the Defendant's accounts were frozen pursuant to seizure orders issued under anti-money laundering laws while Malaysian authorities investigated suspected unlawful activities. This led to protracted litigation between the Plaintiff and the Defendant over the proper treatment of the seized accounts and the Defendant's outstanding loan obligations to the Plaintiff.

Background Facts

[2] Between December 2012 and March 2014, the Plaintiff ("CIMB") granted the Defendant ("Madam Tan") an Overdraft Facility with a limit of RM26,500,000 (Account No 8004998003) ("the Overdraft Facility') against Structured Deposits and a Flexi Loan Facility of RM3,500,000 (Account No 8005000924) ("Flexi Loan Facility').

[3] In February-March 2014, Madam Tan invested in 7 structured products under account RSP 15971 ("RSP 15971"). Out of the RM26,500,000 principal for the structured products (except RSP 118), RM19,600,000 was obtained from Madam Tan's Overdraft Facility with CIMB. The structured products, except RSP 118, were assigned, charged and pledged to CIMB as security for the Overdraft Facility.

[4] Pursuant to the terms of the structured products, coupon payments earned would be deposited into Madam Tan's Money Multiplier Current Account No 8004997963 ("MMA") quarterly and half-yearly. The MMA generates interest on the balances.

[5] On 30 April 2014, a first freezing order under s 44(1) of the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 ("AMLATFA") was issued by the police to freeze several of Madam Tan's accounts with CIMB, including Fixed Deposit accounts, a Savings Account (No 7031168993) ("SA"), Foreign Currency Current accounts and the MMA. On 15 May 2014, a second freezing order under s 44(1) AMLATFA was issued by the police to freeze Madam Tan's MMA with CIMB. The two freezing orders are referred to together as "the Freezing Orders."

[6] On 24 July 2014, a seizure order under s 50(1) AMLATFA was issued by the police to seize Madam Tan's Fixed Deposit accounts, MMA and RSP 15971 with CIMB ("the Seizure Order').

[7] CIMB admitted that due to the AMLATFA Orders and acting on the advice of its solicitors Shearn Delamore & Co ("Shearn"), it was prevented from moving, transferring or crediting any "accretions" earned from RSP 15971 and the Fixed Deposit Accounts to the MMA or SA.

[8] Between September 2015 and December 2016, Madam Tan defaulted on repayments under the Overdraft Facility and Flexi Loan Facility. CIMB issued demand letters dated 29 April 2015 and 17 September 2015 terminating the facilities and seeking repayment of the outstanding sums

[9] CIMB commenced a suit against Madam Tan and obtained summary judgment on 15 February 2016 in Kuala Lumpur High Court Suit No WA-22NCC-309-10-2015 (Suit 309") for the sums outstanding under the Overdraft Facility and Flexi Loan Facility as at 31 August 2015 with interest and costs. Madam Tan's application for leave to commence third party proceedings against the police, Attorney General and Government was dismissed on 20 June 2016.

[10] The summary judgment and dismissal of the third party proceedings in Suit 309 were upheld by the Court of Appeal on 23 November 2016. Leave to appeal to th