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2022 MarsdenLR 1269
COURT OF APPEAL PUTRAJAYA
OCBC BANK (MALAYSIA) BERHAD – Appellant
Versus
NZ BINA SDN BHD & ANOR – Respondent
[Civil Appeal No: J-02(IM)(NCVC)-1544-07-2018]
The Deed of Assignment remains valid despite payments, affirming that its absolute nature under the Civil Law Act prevails against claims of extinguishment.
Headnote:(A) Rules of Court 2012 – Order 14A – Legal interpretation of documents – Appeal by OCBC Bank against High Court's decision on NZ Bina's O 14A application regarding the extinguishment of a Deed of Assignment (DOA) – Court affirmed that the DOA remains valid despite prior payments exceeding RM223 million, emphasizing the absolute nature of the assignment under the Civil Law Act 1956. (Paras 1, 27, 58)
(B)
Judicial interpretation – Suitability of O 14A application – Court clarified that legal issues based on document interpretation can be resolved without a full trial, distinguishing cases where factual disputes arise. (Para 22)
Facts of the case:
NZ Bina claimed against OCBC Bank regarding the validity of the DOA and the obligation to assign contract proceeds following alleged contract termination. (Paras 4-4)
Findings of Court:
The Court found that the DOA constituted an absolute assignment, contrary to the High Court’s conclusion. (Paras 40-44)
Issues
: Whether the payment of RM223 million extinguishes the DOA and whether NZ Bina still owes any obligations under the contract. (Paras 1-2, 59)
Ratio Decidendi:
The Court emphasized that the use of 'absolute' in legal documents indicates an irrevocable assignment regardless of prior payments and the importance of contractual obligations. (Paras 38-39, 58)
Result:
Appeal allowed; High Court's decision set aside.
JUDGMENT
Introduction
[1] This is an appeal by OCBC Bank (Malaysia) Berhad ("Bank"), the 2nd Defendant in the High Court against the decision of the High Court Judge whereby the learned Judge has allowed the O 14A Rules of 2012 (" ROC 2012") application filed by the plaintiff, NZ Bina Sdn Bhd ("NZ Bina").
[2] NZ Bina has posed two (2) Questions in the application:
(i) Whether by the payment of the sum of RM223,079,523.00 or in excess thereof by JKR into NZ Bina's account with the Bank, NZ Bina's Deed of Assignment (of contract proceeds) dated 3 June 2014 is extinguished and of no effect (Q1)
(ii) By the Notice of Termination dated 30 October 2017, from NZ Bina to Reaplite Industry Sdn Bhd ("Reaplite") and the Bank respectively, whether NZ Bina has any obligation to continue to assign any contract proceeds from JKR to the Bank (Q2)
[3] The learned Judge had answered the first question (Q1) in the affirmative and the second question (Q2) in the negative. However, in the Grounds of Judgment ("GOJ"), the learned Judge had maintained the affirmative answer to the first question (Q1) but declined to answer the second (Q2).
[4] Having considered the appeal records and the submissions of the parties, we have allowed the Bank's appeal and set aside the decision of the learned Judge. At the same time, apart from dismissing NZ Bina's claim against the Bank, we have also made the following consequential orders:
(i) The Deed of Assignment dated 3 June 2014 is revived;
(ii) Within 30 days, NZ Bina is to furnish to the Bank complete details of all sums paid by JKR to it from the date the Deed of Assignment was cancelled by the High Court up to the date of the Court of Appeal decision;
(iii) Within 30 days, NZ Bina is to pay into the DCA Account the sums in paragraph (ii) above; and
(iv) All monies stated above is frozen until the disposal of the action in the High Court or until further Orders.
The Salient Facts
[5] By a letter of award dated 18 December 2013, Jabatan Kerja Raya ("JKR") had awarded a project known as 'Membina Jalan Baru 4 Lorong 2 hala dari FT 092 ke Pularek Kota Tinggi (Reka dan Bina)' ("Pularek Project") for the sum of RM229,978,889.70 to NZ Bina.
[6] By a letter of award dated 31 December 2013, NZ Bina then sub-contract the Pularek Project to the Reaplite, the 2nd Defendant, for the sum of RM223,079,523.00 (a difference of about RM6,000,000.00 from the JKR contract).
[7] NZ Bina and Reaplite jointly approached the Bank to grant banking facilities to Reaplite to carry out the Pularek Project as a sub-contractor. NZ Bina and Reaplite had produced the main contract dated 18 December 2013 between NZ Bina and JKR as well as the sub-contract dated 31 December 2013 between NZ Bina and Reaplite for the purpose of the banking facilities.
[8] By a letter of offer dated 7 March 2014, OCBC offered credit facilities to Reaplite for the sum of RM66,499,000.00 or approximately 29% of the sub-contract award of RM223,079,523.00. The credit facilities included as follows:
(i) Letter of Guarantee for a Performance Bond of RM11,499,000.00;
(ii) Letter of Guarantee for Advance Payment Bond of RM10,000,000.00;
(iii) Overdraft 2 (Checking) of RM3,000,000.00;
(iv) Overdraft 3 (Non-checking) of RM2,000,000.00; and
(v) Local Bill Purchased (with sub-limit of RM5,000,000.00 for Invoice Financing) of RM40,000,000.00.
[9] Pursuant to the credit facilities granted by OCBC and as security for the aforesaid banking facilities, NZ Bina executed a Master Security Agreement dated 16 June 2014 ("MSA"). NZ Bina's Board of Directors had passed a resolution dated 8 March 2014 to authorize NZ Bina to execute the Master Security Agreement.
[10] NZ Bina had also executed a Deed of Assignment of Contract Proceeds dated 3 June 2014 in favour of OCBC. The said Deed of Assignment ("DOA") was executed to assign absolutely all contract proceeds from the main JKR contract for the Pularek Project to one Designated Collection Account ("DCA Account") held by the NZ Bina with th
