292 Malayan Law Jouroal (2018) 2 Muy Iftikar Ahmed Khan (as the executor of the estate for Sardar Mohd Roshan Khan, deceased) v Perwira Affin Bank Bhd (previously known as Perwira Habib Bank Malaysia Bhd) FEDERAL COURT (PUTRAJAYA) — CIVIL APPEAL NO 02(0)-10 OF 2011(W) RAUS SHARIF CHIEF JUSTICE, SURIYADI, ZAINUN ALI, ABU SAMAH NORDIN AND RAMLY ALI ECJ} 6 NOVEMBER 2017 (Civil Procedure — Pleadings — sues not pleaded — Writ of action fled for declarations and refand of fixed deposit receipt (FDR) — Claim based on negligence — Whether bank at liberty to uplift FDR withous consent — Whether there was cause of action — Whether bank liable for breach of contract — Whether breach of contract stated in pleadings — Whether partes bound by pleadings — Whether decision based on issue not raised in pleadings liable to beset ‘The appellanc was, prior to his death, the sole proprietor ofa firm known as Omar Khayam Enterprise (OKE’). His son (‘PW2), was substituted as party to this appeal. OKE was given various banking facilities by the respondent amounting to RM15m. The appellant had authorised PW2 to sign all cheques ‘on behalf of OKE in respect of OKE’s account (the account). The respondent granted OKE an additional overdraft of RM300,000 (the OD’). Subsequently, the appellant applied co the respondent to transfer che banking faci enjoyed by OKE to Omar Khayam Enterprise Sdn Bhd (the company’). A fresh joint and several guarantee for RM15,300,000 was duly execuced by the appellant and PW2. The parties to the memorandum of deposit remain unchanged. The shareholders ofthe company, namely, PW2and Rajah Sultan, sold their shares to one Salim and two others, for RM550,000. The appellant later discovered that Sallim had, without his knowledge, used the company’s cheque to withdraw RM300,000 from the company’s OD account co purchase order in the name of the appellant. Sallim then gave the cashier's order to the appellant as part payment of the purchase price ofthe shares. Asa result of Sallim’s action, the overdraft facilities of RM300,000 given to the company was fully utilised for an unauthorised purpose, unknown to the appellant. The company’s cheque was signed by Sallim alone and this was in breach ofthe directors’ resolution which required that the company’s cheques must be signed by two signarories, namely Sallim and PW2. The appellant filed a writ of action against the respondent for certain declarations and for the refund of the fixed deposit receipt FDR’), alleging that the respondent hadIka Abed Khan vPerwia Ain Bark Bh (previously na eric bi Bank Malaysia Bhd) (2018) 2 ML (Abu Samah Nordin FC) 293 negligently and without his consent, uplified his FDR. The High Court dismissed the appellant's claim based on negligence, holding that the appellant had no cause of action in tore against the respondent as the overdraft was given to the company and not o che appellant. The High Court, however, found that the respondent was liable for breach of contract and accordingly granted the declaration that the respondent was not entitled to uplift che FDR without the appellant's consent and ordered the respondent to refund the FDR. Aggrieved, the respondent appealed to the Court of Appeal. The Court of Appeal allowed the respondent’ appeal and set aside the judgment of the Hiigh Court on the sole ground that the appellant had abandoned his claim based on the tore of negligence. The Court of Appeal held thatthe appellant's cause of action was not based on a breach of contract but on the tort of negligence and the parties were bound by their pleadings. The appellant thus appealed against the said decision and was granted leave to appeal to this court on the following questions of law: (a) when evidence was led without objections atrial, could an appellate court reverse the decision of the High Court on the sole ground that the cause of action in negligence had been abandoned: and (b) was the plaintiff entitled to declarations of rights as pleaded. Held, dismissing appeal with costs: (1) The appellant's cause of action was based on negligence and not on a breach of contract. There was no clear averment that the appellant’ case ‘was based on contract and that the respondent had, in breach of the contract, uplfied the FDR without the appellant's consent. Nota single word of ‘contract’ let alone the breach of it, was stared in the pleadings. Parties are bound by their pleadings and are not allowed to adduce facts and issues which they have nor pleaded. A decision based on an issue ‘which was not raised by the partes in their pleadings was liable to be set aside (see paras 25-27). (2) Theze was no evidence thatthe respondent had breached any term of the memorandum of deposit when it uplified the FDR without the appellant's consent, The appellant’ claim against the respondent was for the refund of his FDR which was uplifted to settle the outstanding amount in the overdraft account. The monies in the overdraft account were fully utilised due to the respondent's alleged negligence in honouring the cheque presented by Sallim without it being ‘countersigned by PW2, [twas patently clear that the claim was not based on a breach of contract (see para 39) @) ‘Theappellant could nor plead ignorance and conveniently say thathe did not know the terms of the agreement which he signed. Clause 6 of the memorandum of deposit expressly states that the respondent was at liberty, a any time, to withdraw the deposit and to apply the proceeds thereof in oF towards the discharge of the appellant's account withoutMalayan Law Journal (2016) 2a reference to him. The finding ofthe trial judge thatthe respondent was in breach of the contract in uplifting the FDR without the appellant’s consent was contrary to el 6 of the memorandum of deposit. [twas also against the weight of evidence. The memorandum of deposit was signed by the appellanc together with his son. The respondent had, before uplifting the FDR, written to the son for approval to uplift the FDR and the son consented to it in writing (see paras 42-43). (4) The first question in this appeal was framed on the supposition that ‘evidence is led without objections at trial’ In truth, there was no evidence adduced without objections to support the appellant's contention that the respondent was in breach ofthe contract, namely, the ‘memorandum of deposit by uplifting the FDR without the appellant's consent. The respondent was clearly at liberty to uplift the FDR without the consent of the appellant by virtue of cl 6 of the memorandum of deposit. Thus, this cours found that it was not necessary ro answer the first question posed. In view of that, it was also not necessary to answer the second question. The Court of Appeal did not err in reversing the decision of the High Court on the sole ground that the cause of action in negligence had been abandoned (see paras 44-45). (Bahasa Malaysia summary Sebelum kematiannya, perayu adalah pemilik tunggal sebuah firma, Omar Khayam Enterprise (OKE'). Anak lelakinya CPW2) telah diganti sebagai pihak dalam rayuan ini. OKE diberi pelbagai kemudahan perbankan oleh responden berjumlah RM1S juta. Perayu telah memberi kuasa kepada PW2 uuntuk menandatangani semua cek bagi pihak OKE berkenaan akaun OKE (akaun’). Responden memberi OKE overdraf tambahan RM300,000 (‘OT’). Kemudiannya, perayu memohon kepada responden untuk memindah milik kkemudahan perbankan yang dinikmati OKE kepada Omar Khayam Enterprises Sdn Bhd (syarikae). Satu jaminan baharu dan bersama berjumlah RMI5,300,000 dimeterai oleh perayu dan PW2. Pihak-pihak dalam memorandum deposit kckal dan tidak berubah. Syarikat tidak diganti sebagai pihak dalam memorandum deposit sebagai gantiperayu dan PW2, Seterusnya, ‘pemegang-pemegang saham syarikat,jaitu PW2 dan seorang bernama Rajah Sultan menjual saham mereka kepada seorang bernama Sallim dan dua orang Jagi uncuk RM550,000. Perayu kemudiannya mendapati bahawa Sallim telah, tanpa pengetahuannya, menggunakan cek syarikat untuk mengeluarkan wang sebanyak RM300,000 daripada akaun OT syarikat uncuk membeli perintah juruwang bawah nama perayu. Salim celah memberikan perintah jurswang, kepada perayu sebagai scbahagian bayaran harga belian saham-saham. Akibat tindakan Sallim, kemudahan overdraf RM300,000 yang diberikan kepada syarikac digunakan sepenubnya untuk cujuan yang tidak dibenarkan, canpa pengetahuan perayu. Cek syarikat ditandatangani oleh Sallim sahaja dan ini melanggar resolusi. pengarah yang menetapkan agar cele-cek syarikatkar Ahmed Khan v Peewire Affin Bank Bh (previously Too a Peers Habib Bank Malas Bhi) [2018] 2 Muy (Abu Samah Nordin FC] 295 ditandatangani och dua penandatangan, iaitu Sallim dan PW2, Perayu ‘memfailkan tindakan writ terhadap responden untuk beberapa pengisytiharan ddan untuk bayaran balik rest trap deposit FDR’), dengan dakwaan bahawa responden telah cuai dan tanpa kebenarannya mengeluarkan FDR Mahkamah Tinggi menolak rayuan perayu berdasarkan kecuaian, dengan ‘memutuskan bahawa perayu tidak mempunyai kausa tindakan dalam tort tethadap responden kerana overdraf telah diberikan kepada syarikat dan bukan perayu. Mahkamah Tinggi, walau bagaimanapun, mendapati bahawa responden bertanggungjawab atas pelanggaran kontrak dan membenarkan pengisytiharan bahawa responden tidal mempunyai hak mengeluarkan FDR tanpa kebenaran perayu dan memerintahkan responden membayar balik FDR. Terkilan,responden merayu ke Mahkamah Rayuan. Mahkamah Rayuan ‘membenarkan rayuan responden dan mengetepikan penghakiman Mahkamah ‘Tinggi atas alasan perayu telah meninggalkan cuncutannya berdasarkan cort cuai, Mahkamah Rayuanmendapatikausa cindakan perayubulkan berdasarkan_pelanggaran Kontrak tetapi ort cuai dan pihak-pihak cerikat dengan pliding mereka. Perayu dengan itu merayu cethadap keputusan tersebut dan memberi kebenaran merayu ke mahkamah ini atas persoalan undang-undang: (a) di mana keterangan dikemukakan tanpa bantahan semasa perbicaraan, bolehkah Mahkamah Rayuan mengakas kepucusan Mahkamah “Tinggi arasalasan tunggal bahawa kausa tindakan berdasarkan kecuaian telah diabaikan; dan (b) sama ada plaintif berhak atas pengisytiharan hak seperti yang diplidkan Diputuskan, menolak rayuan dengan kos: (1) Kausa tindakan perayu berdasarkan kecuaian dan bukan pelanggaran kontrak. Tiada penjelasan yang jelas bahawa kes perayw berdasarkan kontrak dan bahawa responden telah, dalam melanggar kontrak, rmengeluarkan FDR tanpa kebenaran perayu Tiada perkataan ‘kontrak’, atau pelanggarannya, dinyatakan dalam pliding. Pihak-pihak cerikat Ca Lid [1965] T WLR 1764, which was approved by Ang Koon Kau - nor 9 Law lang [Ngong and john Stin & Co Led v OHanlon (1965) AC.890. [36] The cases cited by both counsel to us clearly show that the law on the first question posed by the appellant is setled. It is this. In a case where the matter or material facts are not pleaded but evidence is led without objections at tral, the court is duty bound to consider such evidence although ic may be a departure from the pleading. Ichas the effec of curing defect in the pleading Tn such a case the opposite party is not taken by surprise, prejudiced, ‘embarrassed or misled. The exception is where the evidence represents a radical departure from the pleading and is not just a variation, modification or development of what has been alleged inthe pleading, Dato'Hamzah bin Abdul Majid v Omega Securities Sdn Bhd (2015] 6 MLJ 725; [2015] 9 CL} 677 isan illustration ofa case where there was a radical departure from the pleading. In that case, loan, which was not a pleaded defence but evidence of ic was adduced without objection was rejected as a defence as it was a radical departure from pleading, not just a variation, modification or development of what had been alleged in the pleading, [37] The next question is whether there was evidence led without objections a trial, as contended by learned counsel for the appellant, thatthe respondent ‘was in breach of contract by uplifting the FDR without the consent of the appellant. This isa question of fact which can only be determined by looking atthe evidence, (38) Learned counsel for the appellant did not pinpoint to us where, in the records of appeal that the appellant had led evidence, without objections that the respondent was in breach of contract by uplifting the FDR without his consent. Learned counsel forthe respondent contended that chere was no such evidence, PW1 or PW2 did not in their evidence allege that the respondent hadkar Ahmed Kian v Rerwita Ain Balk Bhd (previously own ere aby Bank Malaysia Bh) (2018) 2 May tabu Suman Noein FC 309 acted in breach ofthe terms of the memorandum of deposit when it uplifted the FDR without the appellant's consent. [39] The appellants case against the respondent was based on his own evidence (PW1) and his son's evidence (PW2). We have read PW1's and PW2's ‘wicnesses statements and their oral cetimony before the High Court. We are tunable to find any evidence from them alleging that the respondent had breached any term of the memorandum of deposit when it uplifted the FDR without the appellane’s consent. The appellant’ claim against the respondent is forthe refund of his FDR which was uplifted to settle the outstanding amount in the overdrafe account. The monies in the overdraft account were fully utilised due to the respondent’ alleged negligence in honouring the cheque presented by Sallim without it being countersigned by PW2. The appellant explained che nature of his claim in his witness statement as follows (60. So what is your claim today? ‘A. Lwant the st Defendant to refund the monies uplifted on 15.4.1993 amounting to RM233,155.60 and repay the same with incerest. 61. Why? ‘A. Because what the Ist Defendaac did was unlawl in that (2) They should noc have allowed Sallim o draw on the Overdraft Account of the company; and (b) They were negligens. Ie is patently clear that the claim is not based on a breach of contract. [40] Ic was contended that no fresh memorandum of deposit was executed when the banking facilities were transferred from OKE to the company. ‘Therefore the FDR was never pledged as a security for the overdraft facility of | RM300,000 which was transferred to che company. But this is contrary to the appellant’s own testimony. He admitted, during cross-examination that the memorandum of deposit was also transferred to Omar Khayam Enterprises Sdn Bhd. [41] This is what the appellant said in cross-examination: (Q¢ So thisis the Memorandum of deposit which you gave forthe overdraft Facility of RM300,000 is chis correc? AYes Q Wis this Memorandum of Deposit also transferred to Omar Khayam Enterprise Sdn Bhd? AsYes310 (2016) 2M Q Do you know that one ofthe terms ofthis Memorandum of Deposit is that the banks atliberty to withdraw from the fixed deposit receip without reference o you or Raja Itkar of Omar Khayam Enterprise? A:No (Bue you sign this agreement? AYes [42] The appellant cannot plead ignorance and conveniently said that he did not know the terms of the agreement which he signed. Clause 6 of the memorandum of deposit expressly states that the respondent i at liberty at any time to withdraw the deposit and to apply the proceeds thereof in or towards the discharge of the appellant's account without reference to him. [43] The finding ofthe learned trial judge thac the respondent was in breach of the contract in uplifting the fixed deposie receipt without the appellant's consent was contrary to the cl 6 of the memorandum of deposit. It is also against the weight of evidence. The appellant himself admitted that the ‘memorandum of deposit was also transferred to the company. It must be noted that che memorandum of deposic was signed by the appellant together with his son. The respondenc had, before uplifting the FDR, written to the son for approval to uplift the FDR and the son consented to it in writing. The respondent’ letter to the appellant approving the transfer of the banking facilities from OKE to the company was subject co the condition that, ‘All facilities together with liabilities will be transferred from Omar Khayam Enterprise to Omar Khayam Enterprises Sdn Bhd!” [44] Weagree with the contention of learned counsel for the respondent that the firse question was framed on the supposition that ‘evidence is led without objections a rial’. In truth we find that there was no evidence adduced without objections to support the appellant's contention that the respondent was in breach of the contract, namely, the memorandum of deposit by uplifing the FDR without the appellants consent. The respondent is clearly at liberty to uplift the FDR without the consent of the appellant by virtue of cl 6 of the ‘memorandum of deposit [45] _ For the abovesaid reasons, we do not find it necessary to answer the first question posed to us. In view of our decision with respect to the first question wealso do not find it necessary to answer the second question. In our judgment the Court of Appeal did not err in reversing the decision of the High Court on the sole ground thar the cause of action in negligence has been abandoned, Appeal dismissed with cost. Reported by Afiq Mohamad Noor