Mohd Ghazali Yusoff JCA:

[1] This is the majority judgment of the court.

[2] The appellant, a local bank, granted a secured loan of RM500,000 to the respondent, an advocate and solicitor, on an overdraft basis subject to certain terms and conditions contained in a letter of offer dated 20 March 1984. Amongst the terms and conditions were the following:

2. Interest : Adjustable, presently at 14.5% per annum on monthly rest.

3. Terms : 1 year.

4. Maturity: 1 year from the date of the first drawdown.

8. Repayment:

On Demand. You are to deposit at least $6,500.00 per month into the account to keep interest current and account active.

9. Security:

Against registered 1st legal charge on properties held under the following Titles Nos:

a) GFS 17064, Lot No. 280, Town Area XVIII Central District, Malacca.

b) SG 16099, Pt Lot No. 190, Mukim of Bukit Baru, Central District, Malacca.

c) HS(D) 5079, Plot No. 190, Town Area XX, Central District, Malacca.

16. Capitalisation of interest:

The interest is to be serviced monthly. Any non payment of the interest as stipulated shall cause it to be capitalised and added to the principal sum with interest chargeable thereon at the same rate as prescribed above.

17. Default charges:

At any one time, the loan outstanding shall not exceed the approved limit. Any excess amount shall be subjected to the default charges at 1 1/3 times and above interest rate and shall take effect from the date prescribed on the notice. (emphasis added)

[3] The respondent subsequently defaulted. By writ of summons dated 9 January 1991 the appellant sued the respondent for the sum of RM1,192,484.83 and interest at the rate of 13% per annum on monthly rests calculated from 1 December 1990 to date of realisation and costs. In his statement of defence, the respondent,inter alia, disputed the claim of the appellant that a notice of demand was sent to his goodself. That seemed to be the only defence canvassed.

[4] The notes of proceedings showed that the trial commenced on 26 August 1997. At the outset of the trial, the parties informed Augustine Paul JC (as he then was) that the following are agreed facts, namely:

(i) the loan, the subject-matter of the suit, was disbursed to the respondent;

(ii) the letter of offer and the 3 charge documents were duly executed.

[5] At the end of the day, the learned JC dismissed the appellant's case on the ground that as the appellant has failed to prove that the respondent was served with a notice of demand in respect of the claim against him, it has not succeeded in establishing a cause of action against him. In his grounds of judgment, the learned JC said:

In this case there is no evidence of any agreement between the parties with regard to the mode of service of the notice of demand. The only provision on this issue is contained in the Letter of Offer which merely states that repayment shall be on demand without condescending to particularise the form of service.This, to my mind, means that the notice of demand must be served personally on the Defendant in the absence of any agreement to the contrary.

I therefore hold that in the absence of any agreement to the contrary between the parties in this case there must be personal service of the notice of demand on the Defendant. The evidence shows that the mode of service attempted by the Plaintiffs was through the post. Consequently, it is my view that the Plaintiffs have failed to establish service of the notices on the Defendant. In any event they have failed to prove service of the notice of demand even on the mode of service adopted by them.

As the Plaintiffs have failed to prove that the Defendant has been served with a notice of demand in respect of their claim against him they have not succeeded in establishing a cause of action against him. (emphasis added)

[6] The learned JC seems to be of the view that a demand was a pre-requisite to recovery under the circumstances of this instant appeal; he found that no demand was made by