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2012 MarsdenLR 1111
HIGH COURT MALAYA JOHOR BAHRU
JAYAKUMARI JERAMAN – Appellant
Versus
CIMB BANK BERHAD & ANOR – Respondent
[23NCvC-139-2011]
Important Points
Subject
Civil Law - Breach of Contract and Negligence
Act Referred
Headnote
(B) Duty of care in negligence - In a banker-customer relationship, duty to take reasonable care is established; however, the 1st defendant did not breach said duty in dealing with foreclosure, as they acted within contractual rights and the relevant insurance assurance was not effective due to the deceased’s failure to furnish information (Paras 20, 26, 31).
(C) Counterclaims - The 1st defendant’s counterclaim for outstanding loan amount was upheld due to lack of evidence by plaintiff to contest the debt (Para 34).
Findings of Court:
The Court dismissed the plaintiff’s claims against both defendants, affirming that obligations for MRTA insurance coverage were unmet due to incomplete documentation and the necessary premium not being paid.
Result: Plaintiff's claim against 1st and 2nd defendants dismissed, and 1st defendant's counterclaim allowed.
| Table of Content |
|---|
| 1. plaintiff's status and loan details. (Para 1 , 2 , 3 , 4 , 5) |
| 2. plaintiff's claims against defendants. (Para 6 , 7 , 8 , 9) |
| 3. defendants' defenses and counterclaims. (Para 11 , 12 , 13) |
| 4. court's analysis on burden of proof. (Para 14 , 15 , 16 , 17 , 18) |
| 5. court's reasoning on breach of contract. (Para 19 , 20 , 21 , 22 , 23) |
| 6. negligence analysis by the court. (Para 24 , 25 , 26) |
| 7. court’s analysis on 2nd defendant’s obligations. (Para 27 , 28 , 29 , 30 , 31) |
| 8. final judgment and implications. (Para 33) |
[1] The plaintiff is the widow of Ganasanmurthi A/L Chinappan; (deceased). She is suing as the administrator of the Estate of the deceased for breach of contract and for negligence against the 1st defendant bank and the 2nd defendant insurer.
Brief Account Of The Facts
[2] The deceased was an employee of Syarikat Air Johor Sdn Bhd ('SAJ'). He applied for a housing loan ('the Loan') from the 1st defendant to finance the purchase of a low cost house. Pursuant to a letter of offer dated 22 August 1996, the 1st defendant offered to the deceased a loan facility of RM30,127.00 comprising of (i) a housing loan of RM29,301.00 and (ii) a Mortgage Reducing Term Assurance ('MRTA') of RM826.00. On 26 March 1997, the 1st defendant and the deceased entered into a Housing/Shophouse Agreement Term Loan Agreement for the Loan ('the Loan Agreement'); as security for the Loan, the house was charged in favour of the 1st defendant bank.
[3] At the material time SAJ had a housing loan scheme for its employees whereby SAJ would subsidise the Loan interest above the rate of 4% per annum imposed by the 1st defendant as well as bear the cost of the MRTA premium. To facilitate this scheme, on 20 April 1995 SAJ entered info an agreement ('the SAJ Agreement') with the 1st defendant under which the 1st defendant granted to SAJ a staff housing loan facility of RM30 million.
[4] The monthly instalments for the Loan were RM271.05. SAJ would pay RM88.51 per month and deduct from the deceased's monthly salary the balance instalment amount of RM 182.54 per month. The monthly instalments were made to the 1st defendant until the deceased's untimely demise on 7 May 2004.
[5] After the deceased's demise, the 1st defendant initiated foreclosure proceedings against the house. Later, the plaintiff was informed by the 1st defendant that the Loan was not covered by the MRTA insurance coverage.
Plaintiff's Case
Claim Against The 1st Defendant
[6] The plaintiff's pleaded case is that the 1st defendant breached the terms in the Loan Agreement and the SAJ Agreement and or was negligent in that:
(i) the 1st defendant demanded that the plaintiff pay the loan instalment payments after the deceased's demise even though the Loan was covered by MRTA;
(ii) the 1st defendant failed to enforce the terms relating to the MRTA insurance and failed to discharge the charge over the house;
(iii) the 1st defendant took out foreclosure proceedings even though the Loan was covered by MRTA;
(iv) the 1st defendant ignored the plaintiffs representations regarding the MRTA;
(v) the 1st defendant failed to contact its agent the 2nd defendant insurer to ensure that the documentation for the MRTA was in order; and
(vi) the 1st defendant failed to furnish the information sought by the 2nd defendant insurer vide their letter dated 23,10.1997 to the deceased even though the information was within their knowledge and a copy of the letter was sent to them by the 2nd defendant insurer.
Claim Against The 2nd Defendant
[7] The 2nd defendant became an agent or business associate of the 1st defendant when they were appointed to provide the MRTA insurance cover to the housing loan borrowers of the 1st defendant. The 2nd insurers had permitted the officers of the 1st defendant to use the MRTA proposal forms The 1st defendant's officers were authorised to fill up the particulars relating/ to the housing loan and other relevant particulars in the form.
[8] The 2nd defendant had breached their obliga
