Mohamed Dzaiddin FCJ:

This was an appeal of United Merchant Finance Bhd., the defendants in the High Court, against the decision of the Court of Appeal given on 22 July 1996, allowing an appeal of the plaintiffs, Majlis Agama Islam Negeri Johor (hereinafter referred to as "the Majlis"), from the decision of the High Court Johor Bahru, given on 29 April 1995, dismissing their application for summary judgment against the defendants under O. 14 r. 1 RHC 1980. Leave to appeal to this court was granted on 28 July 1997, but without any specific issues formulated.

We heard the appeal on 18 November 1998. After hearing counsel, we allowed the appeal with costs, set aside the order of the Court of Appeal and granted the defendants unconditional leave to defend the action. We now give our reasons.

The Court Proceedings

By their statement of claim dated 5 January 1994, the Majlis claimed against the defendants a sum of RM1 million together with interest thereon at the rate of 8% per annum from November 1985 till the date of full payment. The Majlis averred that on or about 2 November 1985 they had deposited a total sum of RM1 million by way of fixed deposit with the defendants' branch at No. 87-88, Jalan Rahmat, Batu Pahat, Johor. The latter acknowledged receipt of the deposited sum and issued to the Majlis two fixed deposit receipts of RM500,000 each in the name of "Pengerusi Jawatankuasa Zakat dan Fitrah" maturing on 2 February 1986. The fixed deposits were renewed on various dates between 2 February 1986 and 18 August 1987, the last expiry date being 2 February 1988. On 30 January 1988, the Majlis demanded the refund of the said sum of RM1 million with interest, but the defendants failed to comply. The Majlis contended that the defendants were liable under the two fixed deposit receipts to refund the RM1 million with interest and added that they were entitled to assume that all things connected with the transactions and pertaining to the fixed deposits had been validly done upon the issuance of the two fixed deposit receipts by the defendants' branch. Alternatively, they contended that the defendants by accepting the said deposit of RM1 million were constructive trustees of the said fund for and on behalf of the Majlis.

On 14 April 1994, the defendants entered an appearance and on the same date filed a defence, denying the Majlis's claim. The defendants denied as follows:

(1) that the Majlis had deposited RM1 million in fixed deposit with the defendants;

(2) that the defendants had received the RM1 million from the Majlis and issued two fixed deposit receipts. Further and/or in the alternative, the defendants claimed that the fixed deposit receipts were issued without due authority of the defendants and/or issued in fraud of the defendants, and therefore were null and void and unenforceable against the defendants;

(3) that the fixed deposit receipts were renewed as alleged; and

(4) that they were constructive trustees for the said deposit for and on behalf of the Majlis.

On 7 June 1994, the Majlis filed the O. 14 summons for summary judgment against the defendants supported by an affidavit of their President, Dato' Haji Lokman Thany, affirmed on 28 May 1994. These were served on the defendants' solicitors on 14 July 1994. The defendants, however, took time to respond which they finally did by filing an affidavit in opposition affirmed on their behalf by Chuah Ai Huah on 3 February 1995 and duly served on the Majlis's solicitors on 6 February 1995. It is common ground that the Majlis's O. 14 application was filed about 23 days after the defendants filed the defence on 14 April 1994. The defendants were equally late in filing their affidavit in opposition to the Majlis's application. This issue was, however, resolved during the O. 14 hearing on 9 February 1995 when the learned trial judge rejected the defendants' affidavit in opposition.

High Court Decision

On 29 April 1995, the learned judge dismissed the Majlis's sum