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2013 MarsdenLR 1227
COURT OF APPEAL PUTRAJAYA
AFFIN BANK BERHAD – Appellant
Versus
ACP INDUSTRIES BERHAD – Respondent
[Civil Appeal No: W-02-604-11]
Valid assignment under Section 4(3) of the Civil Law Act 1956 establishes rights transfer without strict notice formalities if there is consent.
Headnote:(A) Civil Law Act 1956 - Section 4(3) - Appeal against High Court dismissal - The appellant provided a loan secured by assignment from the subcontractor, which the respondent acknowledged - Dismissal was based on an independent contract claim - Courts confirmed valid assignment under s 4(3), including written agreement and respondent's consent. (Paras 1-8, 17, 18)
(B) Assignment requirements - An assignment must be absolute, in writing, and proper notice given - A valid assignment transfers the right to sue and receive payments - The notice does not need to adhere to strict formalities as long as the party is informed. (Paras 9, 10, 15, 16)
Facts of the case:
The appellant extended a banking facility of RM3,000,000 to LKOC, who sub-contracted building works and assigned payment rights to the appellant - The respondent consented to the assignment but later disputed payments citing a lack of endorsement from LKOC.
Findings of Court:
The court found the assignment valid, rejecting the respondent's arguments regarding lack of notice and endorsement requiremnts, confirming payment was owed to the appellant.
Issues: Determining the validity of assignment under s 4(3) of the CLA and dependency on LKOC's endorsement of claims.
Ratio Decidendi: The court emphasized that the assignment under s 4(3) of the CLA is effective and binding upon the respondent, regardless of endorsement and notice technicalities, as the respondent had consented.
Result: Appeal allowed.
| Table of Content |
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| 1. claim arising from assignment (Para 1 , 2 , 3 , 4 , 5 , 6) |
| 2. issues raised in the appeal (Para 7 , 8) |
[1] This is an appeal against the decision of the High Court in Shah Alam which dismissed the claim of the appellant, pursuant to an assignment made under s 4(3) of the Civil Law Act 1956 .
[2] The respondent sub-contracted some building works to LK Ooi Construction Sdn Bhd (LKOC) in relation to the construction of apartment 3B-1 at the Proposed Games Village, Bukit Jalil Kuala Lumpur (sub-contract). To finance the sub-contract works, LKOC obtained an overdraft banking facility from the appellant for a sum of RM3,000,000.00.
[3] For the purposes of securing repayment of the said banking facility, it is a term in cl 4.01(1)(a) of the facility agreement that, LKOC (borrower) was to execute an absolute assignment to the appellant/bank, all monies, interest and rights due to or become due and payable to LKOC under the sub-contract. LKOC executed a deed of assignment in favour of the appellant which forms part of the securities to the banking facility.
[4] Two days after obtaining the letter of offer for the banking facility from the appellant, LKOC notified and requested the respondent (vide a letter dated 3 February 1996) for consent to remit payment of the proceeds under the sub-contract directly to the appellant bank. The respondent indicated its consent to it on the last page of the notification letter. There is also a document titled consent and confirmation of awarder completely endorsed and attested by the respondent, which in essence consents and acknowledges the assignment.
[5] Following that, the respondent paid RM2,821,189.53 out of the progressive payment to the appellant in the account of LKOC but failed to repay all the other progressive payment under the sub-contract. The appellant issued a notice of demand to the respondent, but there was no response.
[6] The appellant filed a suit at the High Court seeking for a declaration that all progress payments due and owing to LKOC by the respondent under the sub-contract, legally belongs to the appellant. In its defence the respondent denied knowledge of the assignment and said that it had already paid the amount due to LKOC in full. The respondent further contended that it could not pay the appellant because there was no endorsement on the progressive payment billing by LKOC as agreed in the said notification letter between them.
[7] The learned High Court Judge dismissed the claim of the appellant. In his judgment the learned judge found that, the case of the appellant was premised on an absolute assignment pursuant to s 4(3) of the Civil Law Act 1956 (CLA). He however dismissed the claim of the appellant on the ground that its pleading as well as the evidence before the Court showed a cause of action based on an independent contract.
[8] The appellant in appealing against the decision of the High Court raised the following four issues as stated in the written submission.
(i) Whether the letter of offer, consent notice, agreement, assignment and consent forms part of the same transaction.
(ii) Whether the appellant satisfied s 4(3) CLA.
(iii) Whether the appellant is entitled to claim against without the endorsement of LKOC's claim to the respondent.
(iv) Whether the appellant has a separate cause of action premised on the consent as an independent contract.
