Clement Skinner JC:

This is an appeal by the plaintiffs (hereafter the appellants) against the decision of the learned magistrate, who on 18 March 1998, on a preliminary objection being taken by the defendant (hereafter the respondent) struck out the plaintiffs' claim on the grounds that the appellants had no locus standi to initiate these proceedings against the respondent. The facts leading to the striking out are these.

The respondent is a developer who on 19 October 1989 entered into a sale and purchase agreement (hereafter the sale agreement) with the appellants wherein the appellants were sold one unit of semi detached industrial lot in Pengkalan Light Industrial Park, Ipoh (hereafter the said property) for RM95,000. It was a term of the sale agreement that the respondent would complete and deliver vacant possession of the said property to the appellants within 24 months of 19 October 1989. In the events that transpired, the respondent delivered vacant possession only on 29 October 1992. The appellants accordingly on 26 October 1993 commenced these proceedings to claim damages against the respondent.

When this case came on for trial on 4 March 1998, the respondent took a preliminary objection based on the following facts. To enable them to finance the purchase of the said property, the appellants obtained a loan from Malayan Banking Bhd. (hereafter the bank) of RM40,000 (hereafter the said loan). In obtaining the said loan, the appellants were required to enter into what is termed a "Loan Agreement cum Deed of Assignment" with the bank (hereafter the Loan cum Assignment). In its recitals the Loan cum Assignment makes reference to the fact that the appellants have entered into the sale agreement, that a separate document of title has yet to be issued to the said property and that the bank has agreed to grant the appellants the said loan on condition that the plaintiffs assign to the bank all their rights title and interest to the said property and under the sale agreement. Clause 4 of the Loan cum Assignment then reads:

4. Assignment

For the consideration (sic) the borrower hereby absolutely assigns to the Bank the said property and the full and entire benefit of the Sale Agreement together with all rights title and interests of the Borrower therein PROVIDED ALWAYS that notwithstanding the Assignment herein before contained or any other provision of this Agreement the Borrower shall and hereby undertake to continue to observe, perform and be bound by all whatever conditions convenants and stipulations therein on the part of the Borrower expressed and contained in the Sale Agreement.

Before the learned magistrate, the respondent submitted that as the appellants had effectively assigned all their rights title and interest in the sale agreement to the bank, the appellants were incompetent to bring this action on their own. It is the respondent's stand that the appellants should have either joined the bank as co-plaintiff and if they refused the bank could be joined as codefendant. Not having done, either the appellants had no locus standi to bring this action.

The submission of the respondent found favour with the learned magistrate who upheld the preliminary objection and struck out the appellants claim. Hence this appeal.

Before me, Mr. James Devadason, learned counsel for the appellants submitted that unless the assignment executed by the appellants in favour of the bank was an absolute assignment (and not by way of charge only) within the meaning of s. 4(3) Civil Law Act (hereafter the Act) then it cannot have the effect in law that the respondent contends it has. It is learned counsel's submission that the assignment is not absolute for two reasons:

(a) the word "absolute" appearing in cl. 4 of the Loan cum Assignment should not lead the court to conclude that the assignment is in fact absolute. Whether or not it is so must be determined not just by looking at cl. 4 but the whole language of the documen