Abdul Kadir Sulaiman JC:

Lau Ching Leh, Lau Pik Kiong and Wong Hock Sing (the borrowers) applied for loan from the defendants bank in the sum of RM150,000 to finance their trawler boat project. By a letter dated 11 September 1978, the defendants invited the borrowers to their office for the execution of the loan closing. The letter also requires "All collaterals/securities for the loan as stated in our letter of offer must be also be submitted for our execution".

By a letter of authorization dated 30 September 1978 addressed to the defendants, both plaintiffs authorised and consented Lau Ching Leh, one of the borrowers, to charge the title deeds in respect of two pieces of land belonging to the plaintiffs in favour of the defendants bank as security for the "loan closing referred to in your letter of 11 September 1978".

On 27 October 1978, the loan agreement was executed between the borrowers on the one part and the defendants bank on the other part. Under Clause 2 of the loan agreement the disbursement of the loan money will be done by the defendants based on withdrawal schedule to be drawn up by the defendants and would be paid to the borrowers from time to time depending on