JUDGMENT

Mahadev Shankar JCA

The respondents ('the Borrowers') wanted to buy a house in Kota Tinggi ('the said house') from a developer with whom they entered into a sale and purchase agreement dated 11 April 1983. The Borrowers did not have enough money to complete the purchase. So they borrowed RM78,400 ('the loan') from the appellant ('the bank'). The loan was the subject of a loan agreement cum assignment dated 26 January 1985 ('the loan agreement').

The Borrowers insisted on using their own solicitors M/s. Lee, Loo & Bakarudin in the preparation and implementation of the loan agreement, and requested the bank to deal with these solicitors ('the Borrowers' solicitors'). The loan agreement is a formal document which is very comprehensive in its terms. The Borrowers admit they executed the loan agreement and were therefore fully bound by its terms.

By a letter dated 25 February 1985 the Borrowers' solicitors sent the loan agreement and all other collateral documents connected with the loan to the bank. In this letter they stated that they would inform the bank when the loan could be released to the developer which was to be as soon as the Borrowers had paid the differential sum