Documents marked 'without prejudice' can be admissible in trial if no ongoing dispute existed at their creation, reflecting genuine attempts at settlement.

[1] This is yet another problem arising out of the issuance of some bonds with no proper ring-fencing in place. In this case the bonds called Murabahah Underwritten Notes of up to RM200,000,000.00 ("MUNIF") were issued by one Straight A's Portfolio Sdn Bhd ("SAP"). They were fully subscribed by MIDF Amanah Investment Bank Berhad ("MIDF") and Bank Kerjasama Rakyat Malaysia Berhad ("Bank Rakyat") collectively called ("noteholders") equally. Under the Trust Deed that was executed by the parties, the plaintiff was appointed as the trustee of the MUNIF. The 1st defendant ("D1") and the 2nd defendant ("D2") D'Tiara Corp Sdn Bhd are not parties to the Trust Deed or any related documents prepared to secure the payments to the plaintiff as trustee.

[2] Under the Trust Deed the Issuer SAP was to open and maintain a Master Revenue Account which shall be operated solely by the plaintiff for the purpose of capturing all proceeds from invoices assigned by one Oil-Line Engineering & Associates Sdn Bhd ("OLEA") and its subsidiaries ("OLEA Group"). As usual, upon a declaration of an event of default under the Trust Deed, the plaintiff shall have the right to demand for all sums due and owing from the issuer and to take such legal proceedings against the parties liable. As security for the MUNIF, there were some assignments of certain income and receivables from the OLEA Group to the plaintiff.

Problem

[3] In breach of the assignments in or about 2009, a portion of the Assigned Proceeds amounting to about RM14 million and about RM3 million were wrongly applied towards D1's land and D2's lands respectively instead of being paid into the Master Revenue Account, which details are found in para 11 of the statement of claim. Plaintiff further pleaded that both D1 and D2 knew or ought to have known that the sums of about RM14 million and RM3 million respectively that were applied towards their lands respectively have been assigned to the plaintiff and that they knew or ought to have known of the terms of the assignments. The plaintiff detailed in para 12 of its statement of claim as follows:

12.1 At the material time, the issuer SAP as well as D1 and D2 share the same holding or ultimate holding company in Oilcorp Berhad;

12.2 At the material time, Oilcorp Berhad, the Issuer and both D1 and D2 have common Directors;

12.3 The wrongful application of proceeds was admitted and acknowledged by Oilcorp Berhad, D1 and D2 and the common director of Oilcorp Berhad, the Issuer and D1 and D2, ie one Ng Huat Tian;

12.4 In an attempt to remedy the wrongful application of proceeds, on or about November 2009, D1 and D2 had at the material time agreed to create legal charges over the lands in favour of the plaintiff for the amounts of RM14 million for D1's land and RM3 million for D2's lands;

12.5 The legal charges were ultimately not created as D1 and D2 were unable to pay the then outstanding quit rent and assessment on their respective lands that would need to be settled to the local authorities first before the land authorities would register the charges.

[4] The plaintiff further pleaded that there was a common intention amongst the plaintiff and D1 and D2 that the plaintiff was to have a legal and/or beneficial interest in the lands and that both D1 and D2 would hold their respective lands upon trust for the plaintiff for the respective sums of RM14 million and RM3 million wrongly applied to their lands. For the reasons aforesaid, the plaintiff argued that D1 and D2 are liable to the plaintiff as constructive trustees of the plaintiff.

[5] The plaintiff 's thus prayed for inter alia a declaration that D1 and D2 hold their respective lands in trust for the plaintiff and for consequential reliefs for the sale of the lands or the retention of proceeds of sale of the lands to the amount identified as having been wrongfully applied to D1's land and D2's lands for payments over to the plaintiff. The plaintiff also prayed for an injunction to restrain D1 and D