Consent of the debtor is a prerequisite for a valid assignment under Section 4(3) of the Civil Law Act 1956, making any assignment without consent unenforceable.

[1] This is an appeal against the judgment of the Court of Appeal dated 28 March 2013 which allowed the 2nd defendant's appeal against the decision of the High Court with costs. At the High Court the plaintiff, Merita Merchant Bank Singapore Ltd (Merita) sued the 2nd defendant, Dewan Bahasa Dan Pustaka (DBP) as an assignee of certain debts due and payable by DBP to the 1st defendant, Benatulin Timur Sdn Bhd (Benatulin) who had supplied printing papers to DBP.

[2] On 6 April 2010, the learned High Court Judge after a full trial allowed Merita's claim against DBP and entered judgment in the sum of RM6,206,547.62 and RM584,000.00 with interest and costs. Earlier, Merita had, on 14 August 2008 obtained a judgment in default against Benatulin for the sum of RM2,235,768.58.

[3] On 21 November 2013, this Court granted Merita leave to appeal on a sole question of law which reads as follows:

"In the assignment under s 4(3) of the Civil Law Act 1956 , whether consent of the Debtor is a legal requirement in order for the assignment to be valid in law."

Background Facts

[4] In 1996-1997, DBP awarded three contracts to Benatulin for the supply of paper and cardboard to DBP, namely:

a) Contract for Tender 3/96 (D-21) and Contract for Tender 7/96 (0-22) up to 31 December 1996 (1996 Contracts); and

b) Contract from 3rd September 1997 (D-28) (1997 Contract)

[5] In order to honor its supply obligations to DBP, Benatulin sought a financing facility from Merita, and as security, Benatulin assigned all payments due to it by DBP to Merita.

[6] The contracts between DBP and Benatulin expressly provided under cl 24 in the 1996 Contracts and cl 23 in the 1997 Contract that no assignment could be made without the prior written consent of DBP. Clause 24 and cl 23 which were similarly worded expressly provides as follows:

"24 SUBKONTRAK, SERAHHAK DAN LAIN-LAIN

24.1 Kontraktor tidak boleh mensubkontrakkan perjanjian ini atau mana-mana bahagiannya dengan tidak terlebih dahulu mendapat persetujuan bertulis DEWAN DENGAN SYARAT BAHAWA kelulusan sedemikian itu jika diberikan oleh Dewan hendaklah tidak menyentuh atau meluputkan kewajipan dan tanggungan Kontraktor kepada Dewan dibawah perjanjian ini dan DENGAN SYARAT SELANJUTNYA Kontraktor hendaklah bertanggungjawab terhadap apa-apa kesalahan, kegagalan, kemungkiran, kecuaian dan kelalaian pihak yang kepadanya subkontrak diberikan.

24.2 Kontraktor tidak boleh memindah milik perjanjian ini atau mana-manna bahagiannya, menyerahhak, menggadai janji, menggadai atau apa-apa juga wang yang kena dibayar kepada Kontraktor di bawah perjanjian ini dan apa-apa faedah yang terbit darinya dengan tidak terlebih dahulu mendapat kelulusan bertulis Dewan DENGAN SYARAT BAHAWA kelulusan sedemikian itu jika diberikan oleh Dewan hendaklah tidak menyentuh atau meluputkan kewajipan dan tanggungan Kontraktor kepada Dewan dibawah perjanjian ini."

[7] In the context of the above contracts the words "Dewan" referred to DBP and "Kontraktor" referred to Benatulin. From the above clause, it could be surmised that:

7.1 there could be no assignment of rights by Benatulin under the contract without the prior written consent of DBP. The prior written consent was a pre-condition to any assignment of the benefits under the contract; and

7.2 In the event the written consent was given, such conse