Exclusion clauses that prevent enforcing rights under a contract are void under section 29 of the Contracts Act 1950.

[1] This case deals with the issue of whether an exclusion clause in an agreement entered into between two parties, a house buyer and a bank may be struck out by the provisions of s 29 of the Contracts Act 1950 .

Salient Facts

[2] The parties in this appeal will be referred to as they were in the High Court.

[3] The plaintiffs are husband and wife. They are foreigners and living in the United Kingdom. To finance the purchase of a property, they applied for and was granted a term loan facility of RM715,487.00 by the defendant bank. The loan was provided under the Housing/Shop house Loan Agreement dated 22 April 2008 (Loan Agreement). The property purchased was still under construction and payment was to be made progressively against the certificate of completion issued by the architect at each progress billing. The defendant, under the Loan Agreement is obligated to make direct payment on a progressive basis to the developer on behalf of the plaintiffs, whenever such sums become due for payment.

[4] On or about 12 March 2014, the developer sent an Invoice No: IV000003408 which contained an architect's certificate dated 28 February 2014 and sought payment of RM25,557.12. The notice was received by the defendant on 13 March 2014 and the due date for payment was 25 March 2014 (Due Date). Eight days after receipt of the invoice, that is on 20 March 2014, the disbursement department of the defendant sent an email requesting its branch to conduct site visit inspection on the property.

[5] Three months after the invoice Due Date, there was no confirmation of any site visit inspection being conducted on the property. The defendant's disbursement department sent several other internal emails dated 24 April 2014, 17 May 2014, 29 May 2014, 11 June 2014 and 25 June 2014 to its branch to conduct the site visit. Still, there was no response to any of these emails.

[6] The defendant did not notify either the developer or the plaintiffs on the need of a site visit inspection as an additional condition to disburse payment on the Invoice. The defendant also had never made any request to the developer to extend the invoice Due Date in order for them to conduct the site visit. After about a year, the sum remained unpaid and by a notice of termination dated 10 April 2015 sent to the plaintiffs, the Sale and Purchase Agreement was terminated.

[7] The plaintiffs filed a claim against the defendant seeking for damages suffered resulting from the termination of the SPA. The claim was premised on a breach of contract and/or negligence and breach of fiduciary duty.

[8] The plaintiffs' claim was dismissed. The learned Judicial Commissioner (JC) found cl 12 of the Loan Agreement absolved any liability against the defendant.

[9] Dissatisfied with the decision of the High Court, the plaintiffs appealed to the Court of Appeal.

[10] The appeal was allowed. the Court of Appeal found that despite her analysis of the facts and evidence before her, the learned JC did not make any findings of fact as to whether or not the defendant was in breach of the Loan Agreement or was in breach of its duty of care under the tort of negligence to the plaintiffs. The learned JC merely placed whole reliance on the effect of cl 12 of the Loan Agreement.

[11] The Court of Appeal then proceeded to do so and finally concluded that the defendant had breached its main obligation under the Loan Agreement when it failed to fulfil the terms to pay the invoice issued dir