A bank's duty of care in executing instructions does not obligate it to sue third parties unless clearly specified in the assignment agreement, which must comply with statutory notice requirements.

[1] The appellant (bank) appeals against the decision of the learned High Court Judge who refused to enter judgment for the appellant against a claim for facility offered to the 1st respondent, Worthy Builders Sdn Bhd (Worthy), and entered judgment against the bank for debt owing from third parties to Worthy on the ground that the bank has breached its fiduciary duty of not carrying out Worthy's instructions to the bank. The 2nd and 3rd respondents are guarantors to the facility agreement. Other defendants in the original suit by Worthy (as plaintiff), ie Warisan Nusa Sdn Bhd (Warisan) and KUB Realty Sdn Bhd (KUB) are not appealing.

[2] In the instant case, the bank has given facility to Worthy in the sum of RM6 million and as security for the facility has obtained an assignment of proceeds for work to be done by Worthy for the UMNO building, the details of which are set out in para 4 below. By the judgment of the Court, the bank had been made liable to pay to Worthy for the proceeds which Worthy is entitled to receive for works done in relation to the UMNO building amounting to about RM13 million. In addition, the bank was not able to recover from Worthy the facility given. The benefit to Worthy is that it was able to get judgment relating to sum due from work done for the UMNO building to them through the bank. In addition, Worthy has benefited by not paying the facility amount. That is to say, Worthy has been enriched by the judgment. As it stands, there is no judicial precedent similar to the facts of the instant case cited by the parties or dealt by the learned trial judge. We will further elaborate on this issue in great detail.

Parties

[3] The title of the suit of parties in the High Court as well as the Court of Appeal needs to be set out to appreciate their interest and claim without confusion.

Original Action

[4] In the original action, Worthy sued the bank, Warisan and Nusa on the following basis, namely:

(a) KUB was awarded a contract to build UMNO building and KUB sub-contracted it to Warisan and Warisan sub-contracted it to Worthy.

(b) The bank had given Worthy the banking facility in the sum of RM6,144,000.00 for the purpose of the contract.

(c) KUB had assigned contract proceeds to Warisan. Warisan had given an irrevocable letter to KUB to channel the assigned proceeds to the 'Warisan designated collection account in the bank'. That is to say the assigned proceeds of KUB will not reach the hands of Warisan but will land in the designated collection account in the bank.

(d) Warisan had given the irrevocable letter to KUB stated at (c) above because Worthy had instructed Warisan to pay the contract proceeds to 'Worthy's designated collection account in the bank'.

(e) Basically from (c) and (d) it must be noted that there are two collection accounts, one for Warisan and the other for Worthy. The purpose was to allow the bank to take money from Warisan's account and place it at Worthy's account and debit whatever dues for its facilities and pay the balance to Worthy (if any).

(f) In respect of (e) above, Warisan had given an irrevocable instruction to the bank to the effect that, once the proceeds land into 'Warisan designated collection account', the bank was to split the sum in the ratio of 9.5% to Warisan and 90.5% to Worthy. The 9.5% of Warisan sum was to be credited into Warisan's current account in the bank whilst the 90.5% to be credited into 'Worthy's designated collection account'.

(g) As KUB has already assigned its proceeds to Warisan, Warisan had by an unconditional and irrevocable letter instructed UMNO to pay the progress payments directly to 'Warisan designated collect