JUDGMENT

George Seah FJ:

The only question to be decided in this appeal involves the interpretation of an assignment made on 18 February 1978 between the appellant, as assignor of the one part and the Public Bank, as assignee of the other part.

The relevant facts do not appear to be in dispute and may be briefly stated. On 1 April 1977 the appellant, as purchaser entered into a sale agreement with the developer, Tan Kim Chua Realty (M) Sdn. Bhd. whereby the latter sold one shop/office unit described as Lot 222 in a multi-storey shopping and office complex now known as Merlin Tower to be erected on land held under Grant 5531 Lot 730 in the township of Johore Bahru to the appellant for the sum of RM184,320 (hereinafter referred to as the said property). Subsequently an arrangement was arrived at whereby the Public Bank would grant to the appellant a fixed loan of RM92,160 to enable the appellant to pay to the developer the balance of the purchase price. This arrangement was carried through by means of two documents dated 18 February 1978. The first was a loan document and the second was an assignment, which is the subject of the appeal. Not only the developer had express notice it had in fact expressly consented to the assignment.

It is not disputed that in 1980 the respondent, Faber Development Sdn. Bhd. purportedly purchased from the developer the whole shopping/office complex (Merlin Tower) including the car park and hotel floors but excluding the shop/office units already sold by the developer.

On 17 November 1982 the appellant commenced proceedings in the High Court at Muar seeking from the respondent certain declaratory relief. After the filing of the originating summons the assignment was revoked on 21 April 1983 following the repayment and settlement of the fixed loan by the appellant to the Public Bank. At the hearing of the originating summons preliminary objection was taken by the respondent that at the time of the filing of the originating summons and having regard to the terms of the assignment of 18 February 1978 the action could not be maintained in the name of the appellant as assignor. The learned Judicial Commissioner upheld the objection and struck out the proceedings with costs. Hence this appeal.

As is well known, an ordinary debt or chose in action before the Judicature Act 1873 was not assignable so as to pass the right of action at law, but it was assignable so as to pass the right to sue in equity. In his suit in equity the assignee of a debt, even where the assignment was absolute on the face of it, had to make his assignor, the original creditor, party in order primarily to bind him and prevent his suing at law, and also to allow him to dispute the assignment if he thought fit. This was a fortiori the case where the assignment was by way of security, or by way of charge only, because the assignor had a right to redeem. Further, the assignee could not give a valid discharge for the debt to the original debtor unless expressly empowered to do so. Now it was in order to afford some remedy for this state of the law that subsection 6 s. 25 was passed. It is plain on reading it that it does not apply to every case of equitable assignment of a debt or chose in action (Chitty LJ in Durham Brothers v. Robertson [1898] 1 QB 765 at p. 769 and 770).

The law on assignment is governed by s. 4 (3) of the Civil Law Act 1956 and it reads as follows:

Any absolute assignment, by writing, under the hand of the assignor, not purporting to be by way of charge only of any debt or other legal chose in action, of which express notice in writing has been given to the debtor, trustee or other person from whom the assignor would have been entitled to receive or claim the debt or chose in action, shall be, and be deemed to have been, effectual in law, subject to all equities which would have been entitled to priority over the right of the assignee under the law as it existed in the State before the date of the coming into force o