To establish a loan, the party claiming it bears the burden of proof, and silence in response to demands does not automatically imply admission of liability.

Introduction

[1] The plaintiff, Gerard Pereira, sought the return of the sum of RM2,670,000 from the defendant, Dato' Kasi Palaniappan, which sum the plaintiff alleged was paid as part of the friendly loan to the defendant.

[2] It was never in dispute that the sum of RM2,670,000 was received by the defendant from the plaintiff. The defendant however argued that the sum was not in fact paid as part of a loan from the plaintiff to the defendant, but was instead part of a financial arrangement, the details of which will be described further, post.

[3] The crux of this case was therefore the issue of the nature of the payments made to defendant.

Salient Facts

[4] The parties were once friends, and together held shares in a number of joint venture companies. They had a falling out, and entered into a settlement agreement on 10 August 2009 (the settlement agreement) to document, among others, the distribution of the assets of the joint venture. The details of the joint venture and of the settlement need not detain us for the purposes of this judgment, except that the observation may be made that even though the settlement agreement spelled out in a fair degree of detail the manner of the distribution of the assets and liabilities of the joint venture, it was silent on the subject matter of the so-called friendly loans.

[5] The plaintiff gave evidence that, before their relationship broke down, it was not unusual for them to borrow from each other. These loans were not documented in writing.

[6] However, in respect of the money that was the subject matter of the dispute, the defendant in his testimony gave evidence that the money was not transferred for the purposes of a friendly loan, but was instead a financial arrangement that he had with the plaintiff for the purposes of channelling profits from a project called "Ritze Perdana". An important legal issue arose from this evidence, as the counsel for the plaintiff argued that such a defence was not pleaded and therefore cannot be raised at trial.

[7] Based on the evidence adduced at trial, money was transferred by the plaintiff to the defendant over a period of approximately ten months, from June 2008 to April 2009. In September 2011, the plaintiff wrote to the defendant requesting for repayment of the so-called loan sums. In May 2012, the plaintiff's solicitors wrote to the defendant demanding repayment. The defendant did not reply to either letter. I note for completeness that the sums claimed in this action were lower than the figures specified in the two letters, again for reasons that need not concern us for the purposes of this judgment.

The Decision Of This Court

[8] On 14 May 2015, I dismissed the plaintiff's claim with costs. The plaintiff filed a notice of appeal on 10 June 2015. The reasons for my decision are set out in the following paragraphs.

The Plaintiff's Submissions

[9] In the course of submissions, counsel for the plaintiff conceded there was no evidence that the payments were in the nature of loans to the defendant, apart from the testimony of the plaintiff himself.

The Unreplied Letters

[10] Nonetheless, it was advanced on behalf of the plaintiff that the fact that the two letters to the defendant in September 2011 and May 2012 were left unreplied by the defendant would tantamount to an admission by the defendant that such sums were indeed owed by him to the plaintiff. If the defendant did not owe any money to the plaintiff, then surely, argued counsel for the plaintiff, the defendant would have replied with an indignant denial.

[11] Support for this interpretation of events is found in the case of David Wong Hon Leong v. N