JUDGMENT

KN Segara JCA:

[1] This is an appeal against the decision of the learned Judge High Court at Kuala Lumpur given on 26 January 2005 after a full trial.

[2] The 1st appellant is SamaWorld Asia Sdn Bhd (hereinafter referred to as the 1st defendant). The 2nd appellant is Lim Kut Sheong @ Lim Tuck Fatt (hereinafter referred to as the 2nd defendant). The respondent is RHB Bank Berhad, previously known as DCB Berhad (hereinafter referred to as the plaintiff).

[3] The plaintiff bank claimed against the 1st and 2nd defendants:

(a) the sum of RM3,645,154.48;

(b) interest on the principal of RM3,000,000 at the rate of 2.0% per annum above the plaintiff's costs of funds calculated on a daily basis from 1 October 1996 to the date of full payment;

(c) additional default interest on the outstanding interest charged on the sum of RM3,000,000 at the rate of 3.0% per annum over and above the plaintiff's costs of funds calculated on a daily basis with monthly rests from 1 October 1996 to date of full payment.

[4] The 1st defendant was at all material times a customer of Rakyat Merchant Bankers Berhad (RMBB). On or about 4 November 1992 RMBB granted a RM3.0 million short term loan facility to