The appellate court determined the burden of proof in friendly loans and the implications of silence in response to repayment demands, emphasizing the need for proper legal assessments in trial judgments.

[1] This is the appellant's appeal against the decision of the Kuala Lumpur High Court dated 14 April 2015 in dismissing the appellant's claim against the respondent.

[2] The appellant was the plaintiff and the respondent was the defendant at the High Court. In this judgment, we will refer to the parties as they were in the High Court.

Brief Facts

[3] The plaintiff's claim at the High Court was for the return of a sum of RM2,670,000.00 given by him to the defendant as personal loans.

[4] The plaintiff's pleaded case was that the said sum was effected under various payments made through telegraphic transfers between the years 2008 and 2009 (hereinafter collectively referred to as "Friendly Loan").

[5] The plaintiff sent two notices of demand to the defendant for the return of the Friendly Loan, the first in September 2011 and the second in May 2012, but there were no replies to the said notices.

[6] The defendant in his defence admitted receipt of the various payments but denied that they were for a Friendly Loan and the plaintiff was put to strict proof thereof.

[7] The case went on a full trial during which the plaintiff and the defendant testified on their own behalves. No other witness was called by both parties.

Decision Of The High Court

[8] At the conclusion of the trial, the learned trial judge dismissed the plaintiff's claim with costs of RM20,000.00 on the ground that the plaintiff failed to prove on a balance of probabilities that the said sum was for a Friendly Loan.

[9] Briefly the decision of the learned trial judge was premised on the following findings of fact and law:

(1) There was no documentary evidence that the payments made were in the nature of friendly loans except for the oral testimony of the plaintiff. The Court of Appeal's decision in Tan Aik Teck v. Tang Soon Chye , , relied on by the plaintiff, does not establish a general principle of law that, where the existence of a friendly loan was alleged, all that the party bearing the evidential burden needs to show is the fact of payment and receipt, which thereafter places the evidential burden on the other party to show that the payment was for some other purpose. Hence, it was not sufficient for the plaintiff to presume the existence of a loan merely by proving the fact of payment by the plaintiff and receipt by the defendant;

(2) The letters from the plaintiff dated September 2011 and May 2012 requesting for the return of the loans were inconsequential and cannot be evidence of a Friendly Loan, even though the respondent failed to reply, since it was issued more than two years from the date the payments were made and were most likely made with intention of litigation. The case of David Wong Hon Leong v. Noorazman Adnan , cited by learned counsel for the plaintiff ("plaintiff's counsel") is distinguishable based on the facts;

(3) The Settlement Agreement that was entered into between the parties meticulously dealt with not only the distribution of the assets of the joint venture but also the apportionment of liabilities. Yet it did not deal with, let alone acknowledge, the existence of any outstanding loans from the plaintiff to the defendant arising from the payments that were the subject matter of the dispute.

The Appeal

[10] The plaintiff appealed against the decision of the High Court and it came before us for determination. During the hearing before us, respective counsel had filed in written submissions supplemented by their oral submissions. We will allude to their submissions in the course of this judgment.

Decision Of This Court

[11] At the conclusion of hearing this appeal, after having taken into consideration the oral an