James Foong FCJ:

Introduction

[1] In this instant appeal, the respondent, a housing developer, has sued its banker, the appellant, for breach of contract. This suit was dismissed by the High Court. On appeal, the Court of Appeal (by majority) overturned the decision of the High Court and ordered damages to be assessed. Dissatisfied, the appellant sought leave from this Court to refer two questions of law (which we shall disclose in due course) to this Court. Leave was granted.

[2] As this appeal is substantially fact sensitive, we shall begin by setting out the chronology of the events that transpired between the parties.

[3] The respondent was the registered owner of a piece of property in Kuala Pilah, Negeri Sembilan. This said property was subdivided into 40 lots with individual document of title issued to each of them. Though there were 40 lots, only 36 houses were to be built in this housing estate to be known as Taman Dangi.

[4] Initially on 28 December 1983, the respondent was granted an overdraft facility of RM250,000 by the appellant. This facility was secured by a first legal charge over the 40 titles to the said property. The repayment of this loan was to be within tw