Rohana Yusuf J

INTRODUCTION

There are two sets of appeal that went before the Court of Appeal relating to Bai Bithaman Ajil (‘BBA’) contracts in Islamic banking. The first set of appeal involves 11 writs of summons and one originating summons. They were heard together and decided by the Court of Appeal on 26 August 2009 and reported in Bank Islam Malaysia Bhd v Lim Kok Hoe & Anor and other appeals Arab-Malaysian Finance Bhd v Taman Ihsan Jaya Sdn Bhd & Ors (Koperasi Seri Kota Bukit Cheraka Bhd, third party)

Another set of appeal came before another panel of the Court of Appeal on 20 October 2009. That panel followed its earlier decision and again the cases were sent to this court for determination of the quantum of plaintiff’s claim in the writs of summons, as well as the amount due under the originating summonses. The proceedings before me, which were actions in the second set of appeal, involve two writs of summons registered as D4–22A-263 of 2006 and D4–22A-195 of 2006, and two originating summonses registered as D4–22A-395 of 2005 and D4–22A-399 of 2005 respectively. Pursuant to the order of the Court of Appeal, parties were notified to appear before the learned deputy registrar for case management and all the cases were set to be heard together on a specified date. However, only the solicitors for the plaintiff were present on that date.

The plaintiff in each of these four cases is Bank Islam Malaysia Bhd (‘BIMB’). For the purpose of hearing before me on the issue of quantum, BIMB filed an affidavit for each of the cases stating the latest statement of account in support of its claim. On the day set for hearing, none of the defendants appeared, except Encik Azhar bin Osman, who is the defendant in the originating summons D4–22A-395 of 2005. He appeared in person. All the four cases are based on BBA contracts.

Learned counsel for BIMB, Encik Oommen Koshy (Encik Aedyla Bokari with him) contended that in a BBA contract the bank has a legal right to claim for the full sale price as stipulated in the property sale agreement (‘PSA’). Accordingly he argued that in an application pursuant to an originating summons, the court ought to grant an order for sale based likewise, on the full sale price, irrespective of a premature termination. The bases of Encik Oommen Koshy’s arguments are two. First, he contended that this court should honour and enforce the clear written terms of the contract and should not interfere with the intention of parties by imputing any other term. Since parties had agreed as to the amount of sale price as stipulated in the PSA, the defendant is under a legal obligation to pay the full sale price, irrespective of when a breach occurs. Secondly, by virtue of the doctrine of stare decisis, this court is bound by the decision of the Court of Appeal in Lim Kok Hoe which, according to Encik Oommen Koshy, upheld and acknowledged the obligation to pay the full sale price under the PSA.

Before I proceed to analyse the arguments of learned counsel, it would be appropriate for me to state here the practice of this court in determining the quantum of the plaintiff’s claim under a terminated BBA contract generally, both in an application for order for sale as well as a claim for a judgment sum in a writ of summons. It is worth noting also that writing a decision on Islamic banking cases can be rather challenging because of the scarcity of precedent to refer to. Perhaps this is because Islamic banking in Malaysia is still in its stage of infancy, with just over 30 years in practice, as compared to over 250 years of conventional banking. It is made more difficult in these cases when there is no opposing counsel to argue the defendant’s case and elucidate the issues that may cause injustice to the defendant. It is also my observation that typically the contract documents used in these transactions are, more often than not, a modified version of the standard banking document, which not surprisingly, made reading more arduous. B