JUDGMENT

Hasnah Mohammed Hashim J:

The Claim

[1] Plaintiff's claim against the defendant is for fraudulently misrepresenting that the company the defendant was representing was financially sound when it applied for the loan from the plaintiff:

"Bagi tujuan untuk mendapatkan pinjaman tersebut, defendan yang mewakili peminjam membuat representasi secara fraud bahawa peminjam berada di dalam kedudukan kewangan yang kukuh dan semua surat cara yang dikemukakan untuk menyokong permohonan tersebut adalah benar."

[2] As a result of the alleged false statements made in the statutory declaration the plaintiff suffered loss and damages as follows:

"Setakat 22 Ogos 2011 jumlah yang terhutang adalah seperti berikut:

BUTIR-BUTIR

(a) Penghakiman atas prinsipal setakat 31 Oktober 2010 ...".

Background

[3] The defendant is a Director of a company known as "Digital Integrated System Sdn Bhd. Sometime in 2007/2008 the defendant applied for a loan from the plaintiff. For the purpose of obtaining the loan the defendant made a statutory declaration on 12 November 2011 as follows:

"I, Cheah Yew Keat (IC No 570406-09-5017) a Director of Digital Integrated System Sdn Bhd (385791-X) a company incorporated in Malaysia and having its registered office at 58A-1, Jalan Cantonment, 10250 Penang (the "company") DO HEREBY SOLEMNLY AFFIRM AND DECLARE as follows:

1. ...

2. ...

8. That all information, documents and oral representations furnished or to be furnished by or on behalf of the company, its employees, agents and consultants in connection with the company's application to MDV for financing, are true, complete, accurate and valid.

9. That the company has fully disclosed all information, facts and circumstances which the company knows or should reasonably know an which might reasonably be expected to influence MDV in deciding whether to provide financing to the company."

[4] The plaintiff alleged that they had relied on the statutory declaration and had approved the loan application of RM10 million to Digital Integrated System Sdn Bhd. The letter of offer dated 11 January 2008 reads as follows:

[5] By a supplementary letter of offer dated 25 September 2008 the plaintiff agreed to increase the loan to RM20 million. The parties executed the following documents:

1) Assignment of Sales Proceeds dated 1 December 2008;

2) First Supplemental Agreements dated 1 December 2008;

3) Corporate Guarantee dated 1 December 2008, between the plaintiff and DIS Technology Holdings Berhad;

4) Negative Pledge Agreement dated 1 December 2008.

Plaintiff's Case

[6] The main basis of the plaintiff's claim is that the defendant fraudulently misrepresented certain facts with regards to the borrower in the statutory declaration (SD) that was submitted. The plaintiff had relied on the representations made in the SD and had approved the initial loan of RM10 million and followed by an approval to increase the loan to RM20 million.

[7] According to the plaintiff, the defendant and the borrower breached the terms of the negative pledge and the deed of assignment when they assigned the purchase order to Al Rajhi Bank on 28 April 2008 for a loan of RM25 million. The breach was only remedied by the borrower and the defendant six months after it was made known to the plaintiff. In a meeting that was held on 1 July 2010 the plaintiff discovered that certain facts were misrepresented and fraudulently stated by the defendant in its loan application:

"Plaintiff telah menjumpai beberapa fakta yang disalahnyata dan dimasukkan oleh defendan dalam permohonan untuk pinjaman kepada syarikat peminjam."

[8] The deed of assignment between the plaintiff and the borrower stipulated that the payment of the loan must be made by Starlight Marketing Limited directly to the project account of the plaintiff. The defendant did not disclose that the payments were made directly to DIS accounts. As a result of the misrepresentation the plaintiff had suffered damages and loss.

[9] PW1, Nazli Abdul Hamid, Naib Presiden, Pengurusan Kredit expl