[2018] 1 CLJ Iftikar Ahmed Khan v.

Perwira Affin Bank Bhd 415

A IFTIKAR AHMED KHAN v. PERWIRA AFFIN BANK BHD

FEDERAL COURT, PUTRAJAYA
MD RAUS SHARIF CJ
SURIYADI HALIM OMAR FCJ
ZAINUN ALI FCJ
B ABU SAMAH NORDIN FCJ
RAMLY ALI FCJ
[CIVIL APPEAL NO: 02(f)-10-2011(W)]
6 NOVEMBER 2017

C CIVIL PROCEDURE: Pleadings – Issues not pleaded – Writ of action filed for
declarations and refund of fixed deposit receipt (FDR) – Claim based on negligence
– Whether bank at liberty to uplift FDR without consent – Whether there was
cause of action – High Court found bank liable for breach of contract – Court of
Appeal set aside judgment of High Court on grounds that negligence claim was
D abandoned – Whether breach of contract stated in pleadings – Whether parties
bound by pleadings – Whether decision based on issue not raised in pleadings liable
to be set aside
CIVIL PROCEDURE: Appeal – Appeal to Federal Court – Questions of law –
Issues not pleaded – Pleadings – Writ of action filed for declarations and refund of
E fixed deposit receipt (FDR) – Claim based on negligence – Whether bank at liberty
to uplift FDR without consent – Whether there was cause of action – High Court
found bank liable for breach of contract – Court of Appeal set aside judgment of High
Court on grounds that negligence claim was abandoned – Whether breach of
contract stated in pleadings – Whether parties bound by pleadings – Whether
F decision based on issue not raised in pleadings liable to be set aside
The appellant was, prior to his death, the sole proprietor of a firm known
as Omar Khayam Enterprise (‘OKE’). His son, PW2, was substituted as a
party to this appeal. Briefly, the facts were that OKE was given various
banking facilities by the respondent amounting to RM15 million. The
G 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 to the respondent to transfer the banking facilities enjoyed by OKE
to Omar Khayam Enterprise Sdn Bhd (‘the company’). A fresh joint and
H several guarantee for RM15,300,000 was duly executed by the appellant and
PW2. The parties to the memorandum of deposit remain unchanged. The
shareholders of the company, namely, PW2 and Rajah Sultan, sold their
shares to one Sallim and two others, for RM550,000. The appellant later
discovered that Sallim had, without his knowledge, used the company’s
I cheque to withdraw RM300,000 from the company’s OD account to
purchase a cashier’s order in the name of the appellant. Sallim then gave the
416 Current Law Journal [2018] 1 CLJ

cashier’s order to the appellant as part payment of the purchase price of the A
shares. As a 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 of the directors’ resolution which required that the
company’s cheques must be signed by two signatories, namely Sallim and B
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 negligently and without his consent, uplifted his
FDR. The High Court dismissed the appellant’s claim based on negligence,
holding that the appellant had no cause of action in tort against the C
respondent as the overdraft was given to the company and not to the
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 the FDR without the appellant’s consent
and ordered the respondent to refund the FDR. Aggrieved, the respondent
D
appealed to the Court of Appeal. The Court of Appeal allowed the
respondent’s appeal and set aside the judgment of the High Court on the sole
ground that the appellant had abandoned his claim based on the tort of
negligence. The Court of Appeal held that the 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 E
decision and was granted leave to appeal to this court on the following
questions of law (i) when evidence was led without objections at trial, 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 (ii) was the
plaintiff entitled to declarations of rights as pleaded. F

Held (dismissing appeal with costs)

Per Abu Samah Nordin FCJ delivering the judgment of the court:
(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’s case
G
was based on contract and that the respondent had, in breach of the
contract, uplifted the FDR without the appellant’s consent. Not a single
word of ‘contract’, let alone the breach of it, was stated in the pleadings.
Parties are bound by their pleadings and are not allowed to adduce facts
and issues which they have not pleaded. A decision based on an issue
which was not raised by the parties in their pleadings was liable to be H
set aside. (paras 27-29)
(2) There was no evidence that the respondent had breached any term of the
memorandum of deposit when it uplifted the FDR without the
appellant’s consent. The appellant’s claim against the respondent was for
I
the refund of his FDR which was uplifted to settle the outstanding
amount in the overdraft account. The monies in the overdraft account
 [2018] 1 CLJ Iftikar Ahmed Khan v. Perwira Affin Bank Bhd 417

A were fully utilised due to the respondent’s alleged negligence in

honouring the cheque presented by Sallim without it being
countersigned by PW2. It was patently clear that the claim was not
based on a breach of contract. (para 41)
(3) The appellant could not plead ignorance and conveniently say that he
B 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, 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. The finding of the trial judge that the respondent was
C in breach of the contract in uplifting the FDR without the appellant’s
consent was contrary to cl. 6 of the memorandum of deposit. It was also
against the weight of evidence. The memorandum of deposit was signed
by the appellant together with his son. The respondent had, before
uplifting the FDR, written to the son for approval to uplift the FDR and
D the son consented to it in writing. (paras 44 & 45)
(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 of the contract, namely, the
E 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 court found that it was not necessary to answer the
first question posed. In view of that, it was also not necessary to answer
F 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. (paras 46 & 47)
Bahasa Malaysia Headnotes
Sebelum kematiannya, perayu adalah pemilik tunggal sebuah firma, Omar
G
Khayam Enterprise (‘OKE’). Anak lelakinya, PW2, telah diganti sebagai
pihak dalam rayuan ini. Secara ringkas, fakta menunjukkan bahawa OKE
diberi pelbagai kemudahan perbankan oleh responden berjumlah RM15 juta.
Perayu telah memberi kuasa kepada PW2 untuk menandatangani semua cek
bagi pihak OKE berkenaan akaun OKE (‘akaun’). Responden memberi OKE
H overdraf tambahan RM300,000 (‘OT’). Kemudiannya, perayu memohon
kepada responden untuk memindah milik kemudahan perbankan yang
dinikmati OKE kepada Omar Khayam Enterprises Sdn Bhd (‘syarikat’). Satu
jaminan baharu dan bersama berjumlah RM15,300,000 telah dimeterai oleh
perayu dan PW2. Pihak-pihak dalam memorandum deposit kekal dan tidak
I berubah. Syarikat tidak diganti sebagai pihak dalam memorandum deposit
sebagai ganti perayu dan PW2. Seterusnya, pemegang-pemegang saham
418 Current Law Journal [2018] 1 CLJ

syarikat, iaitu PW2 dan seorang bernama Rajah Sultan menjual saham A
mereka kepada seorang bernama Sallim dan dua orang lagi untuk
RM550,000. Perayu kemudiannya mendapati bahawa Sallim telah, tanpa
pengetahuannya, menggunakan cek syarikat untuk mengeluarkan wang
sebanyak RM300,000 daripada akaun OT syarikat untuk membeli perintah
juruwang bawah nama perayu. Sallim telah memberikan perintah juruwang B
kepada perayu sebagai sebahagian pembayaran harga belian saham-saham.
Akibat tindakan Sallim, kemudahan overdraf RM300,000 yang diberikan
kepada syarikat digunakan sepenuhnya untuk tujuan yang tidak dibenarkan,
tanpa pengetahuan perayu. Cek syarikat ditandatangani oleh Sallim sahaja
dan ini melanggar resolusi pengarah yang menetapkan agar cek-cek syarikat C
ditandatangani oleh dua penandatangan, iaitu Sallim dan PW2. Perayu
memfailkan tindakan writ terhadap responden untuk beberapa
pengisytiharan dan untuk bayaran balik resit tetap deposit (‘FDR’), dengan
dakwaan bahawa responden telah cuai dan tanpa kebenarannya
mengeluarkan FDR. Mahkamah Tinggi menolak rayuan perayu berdasarkan
D
kecuaian, dengan memutuskan bahawa perayu tidak mempunyai kausa
tindakan dalam tort terhadap 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 tidak mempunyai hak
mengeluarkan FDR tanpa kebenaran perayu dan memerintahkan responden E
membayar balik FDR. Terkilan, responden merayu ke Mahkamah Rayuan.
Mahkamah Rayuan membenarkan rayuan responden dan mengetepikan
penghakiman Mahkamah Tinggi atas alasan perayu telah meninggalkan
tuntutannya berdasarkan tort cuai. Mahkamah Rayuan mendapati kausa
tindakan perayu bukan berdasarkan pelanggaran kontrak tetapi tort cuai dan F
pihak-pihak terikat dengan pliding mereka. Perayu dengan itu merayu
terhadap keputusan tersebut dan memberi kebenaran merayu ke mahkamah
ini atas persoalan undang-undang (i) di mana keterangan dikemukakan tanpa
bantahan semasa perbicaraan, bolehkah Mahkamah Rayuan mengakas
keputusan Mahkamah Tinggi atas alasan tunggal bahawa kausa tindakan G
berdasarkan kecuaian telah diabaikan; dan (ii) sama ada plaintif berhak atas
pengisytiharan hak seperti yang diplidkan.
Diputuskan (menolak rayuan dengan kos)
Oleh Abu Samah Nordin HMP menyampaikan penghakiman mahkamah:
(1) Kausa tindakan perayu berdasarkan kecuaian dan bukan pelanggaran H
kontrak. Tiada penjelasan yang jelas bahawa kes perayu berdasarkan
kontrak dan bahawa responden telah, dalam melanggar kontrak,
mengeluarkan FDR tanpa kebenaran perayu. Tiada perkataan ‘kontrak’,
atau pelanggarannya, dinyatakan dalam pliding. Pihak-pihak terikat
dengan pliding dan tidak dibenarkan mengemukakan fakta dan isu yang I
tidak diplidkan oleh mereka. Keputusan berdasarkan isu yang tidak
dibangkitkan oleh pihak-pihak dalam pliding mereka boleh diketepikan.
 [2018] 1 CLJ Iftikar Ahmed Khan v. Perwira Affin Bank Bhd 419

A (2) Tiada keterangan bahawa responden telah melanggar apa-apa terma

memorandum deposit apabila responden mengeluarkan FDR tanpa
kebenaran perayu. Tuntutan perayu terhadap responden untuk bayaran
balik FDRnya yang telah dikeluarkan untuk menyelesaikan jumlah
tertunggak dalam akaun overdraf. Wang dalam akaun overdraf telah
B digunakan akibat kecuaian responden menunaikan cek yang diberi oleh
Sallim tanpa tandatangan PW2. Amat jelas tuntutan bukan berdasarkan
pelanggaran kontrak.
(3) Perayu tidak boleh memplid kejahilan dan menyatakan bahawa dia tidak
mengetahui terma-terma perjanjian yang ditandatanganinya. Klausa 6
C memorandum deposit dengan jelas menyatakan responden bebas pada
bila-bila masa untuk mengeluarkan deposit dan menggunakan hasilnya
untuk pelaksanaan akaun perayu tanpa rujukan kepadanya. Dapatan
hakim bicara bahawa responden melanggar kontrak dengan
mengeluarkan FDR tanpa kebenaran perayu bertentangan dengan kl. 6
D memorandum deposit. Ini juga bertentangan dengan keterangan yang
dikemukakan. Memorandum deposit ditandatangani oleh perayu
bersama-sama dengan anaknya. Responden telah, sebelum
mengeluarkan FDR, meminta kelulusan anaknya untuk mengeluarkan
FDR dan anak perayu telah membenarkannya secara bertulis.
E (4) Soalan pertama dalam rayuan ini dibentuk atas anggapan bahawa
‘keterangan dikemukakan tanpa bantahan semasa perbicaraan’.
Sebenarnya, tiada keterangan dikemukakan tanpa bantahan untuk
menyokong hujahan perayu bahawa responden telah melanggar kontrak,
iaitu, memorandum deposit dengan mengeluarkan FDR tanpa kebenaran
F perayu. Responden mempunyai kebebasan mengeluarkan FDR tanpa
kebenaran perayu menurut kl. 6 memorandum deposit. Oleh itu,
mahkamah ini memutuskan bahawa tiada keperluan untuk menjawab
soalan pertama yang diajukan. Dengan itu, tiada keperluan juga untuk
menjawab soalan kedua. Mahkamah Rayuan tidak salah apabila
mengakas keputusan Mahkamah Tinggi atas alasan tunggal bahawa
G
kausa tindakan cuai telah diabaikan.
Case(s) referred to:
Albion Hotel (Freshwater) Ltd v. Silva & Another [2002] IRLR 200 (refd)
Boustead Trading (1985) Sdn Bhd v. Arab Malaysian Merchant Bank Bhd [1995] 4 CLJ
283 FC (refd)
H Dato’ Hamzah Abdul Majid v. Omega Securities Sdn Bhd [2015] 9 CLJ 677 FC (refd)
Hadmor Productions Ltd & Ors v. Hamilton & Anor [1982] 2 WLR 322 (refd)
Hock Hua Bank (Sabah) Bhd v. Yong Liuk Thin & Ors [1995] 2 CLJ 900 CA (refd)
Lee Ah Chor v. Southern Bank Bhd [1991] 1 CLJ 667; [1991] 1 CLJ (Rep) 239 SC (refd)
Pekan Nenas Industries Sdn Bhd v. Chang Ching Chuen & Ors [1998] 1 CLJ 793 FC
(refd)
I
Perniagaan Kinabalu (S) Sdn Bhd v. Sua Ah Yoke & Ham Jon See [2002] 1 LNS 348
HC (refd)
420 Current Law Journal [2018] 1 CLJ

Philip v. Philips (1878) 4 QBD 127 (refd) A

Raja Abdul Malek Muzaffar Shah Raja Shahruzzaman v. Setiausaha Suruhanjaya
Pasukan Polis & Ors [1995] 1 CLJ 619 CA (refd)
Rosita Baharom (An Infant Suing By Her Father And Next Friend Baharom bin Ismail)
& Anor v. Sabedin Salleh [1993] 2 CLJ 300 SC (refd)
Samuel Naik Siang Ting v. Public Bank Bhd [2015] 6 MLJ 1 (refd)
State Government of Perak v. Muniandy [1985] 1 LNS 117 SC (refd) B
Superintendent of Lands and Surveys, 4th Division & Anor v. Hamit Matusin & Ors [1994]
3 CLJ 567 SC (refd)
The Chartered Bank v. Yong Chan [1974] 1 LNS 178 FC (refd)
The County Council of Hereford and Worcester v. Neale [1986] ICR 471 (refd)
Veronica Lee Ha Ling & Ors v. Maxisegar Sdn Bhd [2009] 6 CLJ 232 FC (refd)
Yew Wan Leong v. Lai Kok Chye [1990] 1 CLJ 1113; [1990] 1 CLJ (Rep) 330 SC (refd) C

Legislation referred to:

Rules of the High Court 1980, O. 15 r. 16, O. 18 rr. 7(1), (2), 10, 11, 12
Other source(s) referred to:
Halsbury’s Law of England, 4th edn, Reissue, paras 13, 26 D
For the appellant - Bastian Pius Vendargon & Gene Anand Vendargon; M/s YS Woo &
Proctor
For the respondent - Ben Chan; M/s Mah-Kamariyah & Philip Koh
[Editor’s note: For the Court of Appeal judgment, please see Perwira Affin Bank Bhd v.
Sardar Mohd Roshan Khan [2011] 5 CLJ 886 (affirmed).] E

Reported by Suhainah Wahiduddin

JUDGMENT
Abu Samah Nordin FCJ: F

[1] This is an appeal by the appellant, Sadar Mohd Roshan Khan (plaintiff
in the High Court) against the decision of the Court of Appeal which had set
aside the judgment of the Kuala Lumpur High Court given in his favour. He
had since passed away. On 18 March 2013, his son Raja Iftikar Ahmad Khan
was substituted as a party to this appeal. G

[2] The High Court had allowed the appellant’s claims for a declaration
that Perwira Affin Bank Berhad (the respondent) was not entitled to uplift his
fixed deposit receipt no. 049675 (‘FDR’) which was pledged to the
respondent as security for an overdraft facility of RM300,000, without his
H
consent and accordingly ordered the respondent to refund the FDR to him
with interest at 8% per annum from 18 March 1993 until realisation. The
High Court found that the respondent was in breach of contract by uplifting
the FDR without the appellant’s consent. The Court of Appeal, however,
allowed the respondent’s appeal and set aside the judgment of the High Court
on the ground that the appellant’s cause of action was for the tort of I
negligence, which it had abandoned and not for breach of contract.
 [2018] 1 CLJ Iftikar Ahmed Khan v. Perwira Affin Bank Bhd 421

A [3] On 27 January 2011 the appellant was granted leave to appeal to this
court against the decision of the Court of Appeal on the following questions
of law:
(a) When evidence is led without objections at trial, can an appellate court
reverse the decision of the High Court on the sole ground that the cause
B of action in negligence has been abandoned?; and
(b) Is a plaintiff entitled to declarations of rights as pleaded?
Background Facts
[4] The undisputed facts of the case are as follows:
C
(a) Sadar Mohd Roshan Khan (PW1) was, prior to his death, the sole
proprietor of a firm known as Omar Khayam Enterprise (“OKE”).
(b) On 18 March 2013 his son, Raja Iftikar Ahmad Khan (PW2) was
substituted as a party to this appeal.
D
(c) OKE was given various banking facilities by the respondent amounting
to about RM15 million as at August 1990.
(d) On 13 April 1990 the appellant informed the respondent that he had
authorised PW2 to sign all cheques on behalf of OKE in respect of
E OKE’s account no. 1102052687 (“the account”).
(e) By another letter dated 16 April 1990 the appellant informed the
respondent that he had authorised PW2, to operate the account and to
do all things necessary to protect the respondent’s interest. The letter
further states that the appellant;
F
agree to be responsible for due repayment of money due to you
on the account or otherwise and purported to have been incurred
on my/our behalf or on behalf of my/our firm by the authorised
person whether such liabilities have been or shall be incurred in
usual course of business or not and notwithstanding any default,
G omission, negligence or fraud on the part of the authorised person.
(f) On 22 December 1990 the respondent granted OKE an additional
overdraft of RM300,000 (“the OD”).
(g) The OD was secured by the FDR of RM200,000 vide FDR No. 049675
dated 15 January 1991; and a personal guarantee of PW2.
H
(h) The terms and conditions of the FDR are contained in the memorandum
of deposit dated 15 January 1991 which was executed by PW1 and PW2
in favour of the respondent. Paragraph 6 of the memorandum of deposit
states:
I You are at liberty at any time to withdraw the deposit made under
the said Deposit Receipt No. 049675 or any Fixed Deposit from
time to time substituted for or replacing the same and to apply the
proceeds thereof in or towards the discharge of my/our accounts
422 Current Law Journal [2018] 1 CLJ

without reference to one/us. And a statement signed by anyone A

of your officer as the amount for the time being owing on my/our
account shall be final and conclusive evidence against me/us for
all purposes.
(i) On 31 January 1991 the appellant applied to the respondent to transfer
the banking facilities enjoyed by OKE to Omar Khayam Enterprises Sdn B
Bhd (“the company”), which the respondent agreed, subject to the
conditions that:
(a) A fresh joint and several guarantees for RM15,300,000, to be
executed by Mr Sardar Mohd Roshan Khan and Mr Raja Iftikar
Ahmad Khan; and C

(b) All facilities together with liabilities will be transferred from Omar
Khayam Enterprise to Omar Khayam Enterprises Sdn Bhd.
(j) A fresh joint and several guarantees for RM15,300,000 was duly
executed by the appellant and PW2. The parties to the memorandum of D
deposit dated 15 January 1991 however remain unchanged. The
company, Omar Khayam Enterprises Sdn Bhd, was not substituted as a
party to the memorandum of deposit in place of the appellant and PW2.
[5] On 15 May 1991, the shareholders of the company, namely, PW2 and
Rajah Sultan sold their shares to one Sallim bin Mohamed (‘Sallim’) and two E
others for RM550,000. PW2 was then the majority shareholder, holding
715,001 shares of the company. Rajah Sultan held only 1 share in the
company. A deposit of RM100,000 was paid upon execution of the sale and
purchase agreement.
[6] The balance of RM450,000 was to be paid by 15 July 1991. Sallim F
paid the appellant another sum of RM300,000 by way of a cashiers order
dated 26 July 1991. The cashier’s order was not paid to PW2 as he was
actually holding the shares in trust for the appellant.
[7] The balance of RM150,000 was not paid as Sallim was arrested in
G
Singapore on fraud charges and imprisoned for six years. Sallim’s solicitors
later told PW2 that nothing could be done as her fees and disbursement had
not been paid by Sallim.
[8] The appellant later discovered that Sallim had, without his knowledge,
used the company’s cheque to withdraw RM300,000 from the company’s H
OD account to purchase a cashiers order in the name of the appellant. Sallim
then gave the cashiers order to the appellant as part payment of the purchase
price of the shares. As a 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
I
 [2018] 1 CLJ Iftikar Ahmed Khan v. Perwira Affin Bank Bhd 423

A Sallim alone. This was in breach of the director’s resolution dated 25 July
1991 which required that the company’s cheques must be signed by two
signatories, namely Sallim and PW2.
[9] On 4 March 1999 the appellant filed a writ of action against the
respondent for certain declarations and for the refund of the FDR, alleging
B that the respondent had negligently and without his consent uplifted his FDR.
The appellant named PW2 as the second defendant, alleging that PW2 had
consented to the uplifting of the FDR without his authorisation. The
appellant later withdrew the suit against PW2, leaving the respondent as the
sole defendant.
C
[10] The appellant sought the following reliefs against the respondent:
(a) An order and declaration that the respondent should have obtained the
consent from the appellant before uplifting the said FDR No. 049675;
(b) An order and declaration that the respondent was negligent in honouring
D Perwira Habib Bank Malaysia Bhd cheque no. 531000 dated 26 July
1991 when the same had not been countersigned by his son and
accordingly the respondent was not entitled to uplift the said deposit
receipt no. 049675 against the said overdraft facility of RM300,000;
(c) An order and declaration that the respondent refund to the appellant the
E
sum of RM231,155.60 with interest at 8% per annum from 18 March
1993 to date of judgment and realisation; and
(d) Costs.
[11] It is to be noted that in prayer (b), the appellant, quite surprisingly,
F is not asking the respondent to refund the sum of RM300,000 withdrawn
from the overdraft account due to the respondent’s negligence in honouring
the said cheque without being countersigned by PW2. Instead, the appellant
sought a declaration that the respondent was not entitled to uplift the FDR
and for an order that the respondent refunds the FDR.
G
The High Court
[12] The High Court dismissed the appellant’s claim based on negligence,
holding that the appellant has no cause of action in tort against the respondent
as the overdraft was given to the company and not to the appellant. This is
H
what the learned trial judge said:
When the cash cheque of RM300,000.00 was negligently and wrongfully
honoured by the 1st Defendant on 26.7.91 then only the company was
entitled to sue the 1st Defendant for negligence and for the recovery of
the said sum of RM300,000.00. The plaintiff has no cause of action in tort
against the 1st Defendant as the OD was given to the company and not
I to the plaintiff.
424 Current Law Journal [2018] 1 CLJ

[13] The High Court however found that the respondent was liable for A
breach of contract and accordingly granted the declaration that the
respondent was not entitled to uplift the FDR without the appellant’s consent
and ordered the respondent to refund the FDR. The High Court held that the
appellant has a cause of action for breach of contract and that the cause of
action on contract arose when the respondent uplifted his FDR without his B
consent and in breach of the terms of the memorandum of deposit. The High
Court held that the memorandum of deposit was between the appellant and
the respondent and not between the company and the respondent. The High
Court pointed out that the respondent failed to request the appellant to
execute a fresh memorandum of deposit when the banking facilities were C
transferred to the company. This is how the learned trial judge justified his
finding against the respondent for breach of contract:
Although the plaintiff has pleaded negligence on the part of the 1st
Defendant in honouring the cheque for RM300,000.00 the plaintiff’s
cause of action is for breach of contract and the cause of action only arose
D
when the 1st Defendant uplifted the FD and set it off against the OD
of RM300,000.00 given to the company. Since no monies had been
utilized by the company the 1st Defendant was not entitled under the
terms of the Memorandum of Deposit to uplift the FD. The act of
uplifting the FD on 15.4.1993 was a breach of contract by the 1st
Defendant. E
[14] At pp. 41 and 42 of his judgment the learned trial judge further
explained:
At page 41
The Memorandum of Deposit was a contract by which the plaintiff agreed F
that if any monies were owing by OKE the 1st defendant was at liberty
to withdraw the FD and apply it to settle sums owing by OKE. In breach
of contract the 1st defendant uplifted the FD on 15.4.1993 and set off
same against the OD of the company.
At page 42
G
Since the FD belonged to PW1 the consent of PW1 should have been
obtained and not that of PW2. The FD did not belong to PW2 or the
company. Even if PW2 had agreed to the upliftment of the FD it was not
within his power to do so. The plaintiff’s consent was never obtained.
[15] The respondent, being aggrieved by the decision of the High Court, H
appealed to the Court of Appeal. The principal ground of appeal was that the
learned trial judge erred in law and in fact in holding that the appellant’s
cause of action was for breach of contract (which was not pleaded) whereas
the appellant’s pleaded cause of action was based on the tort of negligence.
I
 [2018] 1 CLJ Iftikar Ahmed Khan v. Perwira Affin Bank Bhd 425

A The Court Of Appeal

[16] The Court of Appeal allowed the respondent’s appeal and set aside the
judgment of the High Court on the sole ground that the appellant had
abandoned his claim based on the tort of negligence. The Court of Appeal
held that the appellant’s cause of action was not based on a breach of contract
B but on the tort of negligence. The parties were bound by their pleadings.
[17] Learned counsel for the appellant however urged the Court of Appeal
to enter a declaratory judgment for the appellant pursuant to O. 15 r. 16 of
the Rules of the High Court 1980, based on a breach of contract, contending
that the Court of Appeal could still make a declaratory order in the absence
C
of such pleading. Learned counsel for the respondent submitted that the
appellant’s cause of action was for the tort of negligence and not for breach
of contract. As the appellant’s counsel had conceded in his written
submission before the High Court that the appellant has no cause of action
in the tort of negligence, which was the appellant’s pleaded case, the appeal
D by the respondent should therefore be allowed. The Court of Appeal agreed
with the respondent that the appellant’s cause of action was based on
negligence as can be seen from paras. 11, 12, 16 and 18 of the appellant’s
statement of claim and that the appellant had abandoned his claim based on
negligence. At para. 23 of its judgment, the Court of Appeal said:
E
The omnipotent words “negligently”, “negligence” and “negligent”
appear in the aforesaid paragraphs of the plaintiff’s statement of claim. It
is as clear as crystal that the plaintiff’s statement of claim is an illustration
of a classic case based on the tort of negligence, and not based on a
breach of contract. The expression “breach of contract” had never
F appeared at all, to say the least, it is non-existent.
The Federal Court
[18] There are two questions of law for our determination, namely:
(i) When evidence is led without objections at trial, can an appellate court
G reverse of decision of the court on the sole ground that the cause of
action in negligence has been abandoned?; and
(ii) Is a plaintiff entitled to declaration of rights as pleaded?
[19] Learned counsel for the appellant submitted that the appellant’s
pleaded case against the respondent was based on negligence as well as breach
H
of contract.
Negligence
[20] It was contended before us that the Court of Appeal erred in setting
aside the judgment of the High Court on the sole ground that the appellant
I had abandoned his action based on the tort of negligence as this was not
raised in the memorandum of appeal nor submitted upon. The court, in an
426 Current Law Journal [2018] 1 CLJ

adversarial system of justice should never decide a case on a point or issue A

not raised or submitted upon by counsel unless they have been given an
opportunity to address that point first: See Hock Hua Bank (Sabah) Berhad v.
Yong Liuk Thin & Ors [1995] 2 CLJ 900, Hadmor Productions Ltd & Ors v.
Hamilton & Anor [1982] 2 WLR 322, Albion Hotel (Freshwater) Ltd v. Silva &
Another [2002] IRLR 200, The County Council of Hereford and Worcester v. B
Neale [1986] ICR 471.
[21] This is disputed by learned counsel for the respondent who pointed out
to us that the respondent’s memorandum of appeal against the decision of the
High Court stated clearly that the learned judge erred in law and in fact in
allowing the appellant’s claim based on a breach of contract (which was not C
pleaded) whereas his pleaded case was based on negligence.
[22] We find that the contention by learned counsel for the appellant is
without merit for the following reasons. Firstly, the respondent’s
memorandum of appeal against the decision of the High Court expressly
stated that the learned trial judge erred in allowing the appellant’s claim D
based on a breach of contract when his pleaded case against the respondent
was based on negligence. Secondly, the claim that the appellant was denied
the opportunity of being heard is unfounded as it was the appellant himself
who abandoned his cause of action based on negligence. Thirdly, the
appellant did not appeal against the trial judge’s ruling that the appellant has E
no cause of action in negligence.
Breach Of Contract
[23] The next thing to consider is whether the appellant’s pleaded case is
also based on a breach of contract. Order 18 r. 7(1) and (2) of the Rules of F
the High Court 1980 lays down the basic rules of pleading:
(i) Subject to the provisions of this rule and rr. 10, 11 and 12 every pleading
must contain, and contain only a statement in a summary form of the
material fact on which the party pleading relies for his claim or defence,
as the case may be, but not the evidence by which these facts are to be G
proved, and the statement must be as brief as the nature of the case
admits.
(ii) Without prejudice to para. (1) the effect of any document or the purpose
of any conversation referred to in the pleading must if material, be
briefly stated, and the precise words of the document or conversations H
shall not be stated, except insofar as those words are themselves
material.
[24] The function of pleading is to give fair notice of the case which has
to be met: Rosita Baharum v. Sabedin Salleh [1993] 2 CLJ 300; [1993] 1 MLJ
I
393, Perniagaan Kinabalu (S) Sdn Bhd v. Sua Ah Yoke & Ham Jon See [2002]
1 LNS 348; [2002] MLJU 601. This is to prevent the opposing party from
 [2018] 1 CLJ Iftikar Ahmed Khan v. Perwira Affin Bank Bhd 427

A being taken by surprise by evidence which departs from pleaded material

facts, for such evidence if allowed, will prejudice and embarrass or mislead
the opposing party: See Superintendent of Lands and Surveys, 4th Division &
Anor v. Hamit b. Matusin & Ors [1994] 3 CLJ 567; Raja Abdul Malek Muzaffar
Shah Raja Shahruzzaman v. Setiausaha Suruhanjaya Pasukan Polis & Ors [1995]
B 1 CLJ 619; [1995] 1 MLJ 308. A good pleading should contain a statement
of (1) facts, not law, (2) material facts only, (3) facts, not evidence, and
(4) facts stated in a summary form: See Halsbury’s Laws of England, 4th edn,
Reissue, para. 13.
[25] What are material facts? All facts which must be proved in order to
C establish the ground of claim or defence are material: Philip v. Philips [1878]
4 QBD 127 at 133, 134. Parties are bound by their pleadings. This is a rule
which will be strictly enforced by the court. Thus, where a party’s case is
based on a contract and the other party to the contract is in breach of it, these
material facts must be pleaded.
D [26] Halsbury’s Law of England, supra at para. 26 illustrates how a case based
on contract should be pleaded:
In pleading a contract it must be stated whether it is express or implied.
The pleading should state the date of the alleged agreement and the
names of all the parties to it. If the contract is express, it must be shown
E whether the contract is oral or in writing, and if the contract or any part
of it is in writing, the document or documents must be identified. If the
contract is not under seal, the consideration should be stated. If any
contract or any relationship is to be implied from a series of letters or
conversations, or otherwise from a number of circumstances, the effect of
the letters or conversations, or reference generally to the circumstances
F should be pleaded briefly, but not set out in detail. If the person pleading
desire to rely in the alternative upon more contracts or relationships than
one, each contract or relationship which is to be implied may be stated
in the alternative.
[27] We agree with the Court of Appeal that the appellant’s cause of action
G was based on negligence and not on a breach of contract. We have looked
at the averments in the appellant’s statement of claim. We are unable to find
any clear averment that the appellant’s case was based on contract and that
the respondent had, in breach of the contract, uplifted the FDR without the
appellant’s consent. The appellant’s cause of action based on negligence is
H clearly stated in paras. 11 and 12 of the statement of claim:
11. Notwithstanding the abovestated instructions, the 1st Defendant
negligently allowed the said Sallim Bin Mohamad to cash a cheque
No. 53100 dated 26.7.1991 belonging to the said Limited Company
for RM300,000 without the signature of the Second Defendant. As
I a consequence the said Overdraft Facility was completely utilised.
428 Current Law Journal [2018] 1 CLJ

12. Despite the 1st Defendant’s above negligence, the 1st Defendant A
then wrote to the 2nd Defendant stating that the 1st Defendant
intended to uplift the said FDR which at that point of time
amounted to RM231,393.00 in order to reduce the said Overdraft
Facility of RM300,000.00.
[28] Not a single word of “contract”, let alone the breach of it, is stated B
in the pleading. The appellant blamed his son (second defendant) and sued
him for unlawfully authorising the respondent to uplift the FDR. He later
withdrew the suit against the son, leaving the respondent as the sole
defendant in the suit.
[29] It is settled law that parties are bound by their pleadings and are not C
allowed to adduce facts and issues which they have not pleaded: Samuel Naik
Siang Ting v. Public Bank Bhd [2015] 6 MLJ 1, State Government of Perak
v. Muniandy [1985] 1 LNS 117; [1986] 1 MLJ 490, Veronica Lee Ha Ling &
Ors v. Maxisegar Sdn Bhd [2009] 6 CLJ 232. In Lee Ah Chor v. Southern Bank
Bhd [1991] 1 CLJ 667; [1991] 1 CLJ (Rep) 239 it was held that where a vital D
issue was not raised in the pleadings, it could not be allowed to be granted
and to succeed on appeal. A decision based on an issue which was not raised
by the parties in their pleadings is liable to be set aside: Yew Wan Leong v.
Lai Kok Chye [1990] 1 CLJ 1113; [1990] 1 CLJ (Rep) 330; [1990] 2 MLJ
152. In The Chartered Bank v. Yong Chan [1974] 1 LNS 178; [1974] 1 MLJ
E
157 the Federal Court set aside the judgment of the trial judge as it was
decided on an issue not raised on the pleadings. In that case, the trial judge
erred in concluding that the pleadings included a claim for breach of contract
as well as a claim for libel.
[30] Learned counsel for the appellant could not pinpoint to us that breach F
of contract was also the appellant’s pleaded case against the respondent. He
candidly admitted in his written submission that the appellant’s “plea of
breach of contract lacked elegance”. Thus the appeal before us is not directly
based on the ground that the Court of Appeal erred in disregarding the
appellant’s pleaded case based on a breach of contract as that is bound to fail.
G
[31] The appellant’s contention is that evidence of contract between the
appellant and the respondent and the breach of it by the latter had been led
at trial without objections and as such the court is duty bound to consider
the said evidence. The opposing party is deemed to have waived the
requirement that the material facts relating to the contract must be pleaded. H
In such circumstance, there was no element of surprise and prejudice.
Learned counsel for the appellant relied on Boustead Trading [1985] Sdn Bhd
v. Arab Malaysian Merchant Bank Bhd [1995] 4 CLJ 283; [1995] 3 MLJ 331,
Perniagaan Kinabalu (S) Sdn Bhd v. Sua Ah Yoke & Ham Jon See [2002] 1 LNS
348; [2002] MLJ 601, Pekan Nenas Industries Sdn Bhd v. Chang Ching Chuen
I
& Ors [1998] 1 CLJ 793; [1998] 1 MLJ 465 in support of his contention.
 [2018] 1 CLJ Iftikar Ahmed Khan v. Perwira Affin Bank Bhd 429

A [32] In Boustead Trading (1985) Sdn Bhd’s case the Federal Court at p. 292
(CLJ); p. 342 (MLJ) ruled that:
Thirdly, where there is no pleaded case of estoppel, but there is let in,
without any objection, a body of evidence to support the plea, and
argument is directed upon the point, it is the bounden duty of a court to
B consider the evidence and the submissions and came to a decision on the
issue. It is no answer, in such circumstances, to say that the point was not
pleaded.
[33] In Pekan Nenas Industries Sdn Bhd’s case the plaintiffs ie, Chang Ching
Chuen & Ors (respondents in the appeal before the Federal Court) brought an
C action in the High Court against the defendants, seeking inter alia a
declaration that the sale of the lands to the purchaser, namely Pekan Nenas
Industries Sdn Bhd was null and void. The plaintiffs obtained an injunction
to prohibit the sale. The purchaser was allowed to intervene merely for the
purpose of setting aside the injunction. The purchaser was not made a party
D to the suit between the plaintiffs and the defendants. At the trial, the
purchaser through its chairman gave evidence without objection that the
purchaser was a bona fide purchaser without notice. The High Court allowed
the plaintiff’s claim and set aside the sale but it ruled against the purchaser
holding that the purchaser/intervenor was not a bona fide purchaser. The
Court of Appeal affirmed the decision of the High Court. The defendants did
E
not appeal. But the purchaser appealed to the Federal Court. The respondents
contended that the purchaser/intervenor was never a party to the proceedings
in the High Court and that the evidence on behalf of the purchaser was not
supported by the pleadings. The Federal Court, in response to the contention
that the matter was not pleaded, at p. 823 (CLJ); p. 503 (MLJ) said:
F
No objection was taken to evidence being led on behalf of the intervenor/
purchaser and the case was argued both in the High Court and on appeal
to the Court of Appeal, as though the intervenor/purchaser was a co-
defendant which had filed a pleading and it was on this basis that the case
was heard and determined.
G
[34] Learned counsel for the appellant further stressed the point that
evidence given at the trial could, in appropriate circumstance, overcome
defects in the pleadings where the net result of such evidence is to prevent
the other side from being taken by surprise. One exception to the rule that
evidence given at trial without objection could overcome defects of pleading
H is when such evidence represents a radical departure from the pleadings, and
it is not just a variation, modification or development of what has been
alleged in the pleading in question: See Perniagaan Kinabalu Sdn Bhd’s case.
[35] Learned counsel for the respondent submitted that the law on the
question posed by the appellant is settled and had been adequately answered
I
by this court in Superintendent of Lands and Surveys 4th Division & Anor v.
Hamit Matusin & Ors [1994] 3 CLJ 567. In that case, the respondents
(plaintiffs) claimed that they have acquired native customary rights over
430 Current Law Journal [2018] 1 CLJ

certain lands by virtue of Sarawak Land Code. They sought an injunction to A

restrain the appellants (defendants) from building on their lands. The
defendants in their defence denied that the appellants had acquired native
customary rights over the said lands. This defence was just a mere denial
without further particulars as to any reason for such mere denial. But at the
trial, evidence was given and admitted without objection as to why they B
denied the respondents’ claim that they had acquired native customary rights
over the said land. One of the reasons was that the lands were within a river
bank reserve on which no one can claim any title thereon by virtue of
Sarawak Land Code. The other reason was that the lands belonged to
Sarawak Shell Oil Ltd. C
[36] It was only in the final submission after the conclusion of all evidence
that an objection was raised by the respondents for the first time that such
defence was not pleaded. One of the issues which the Supreme Court in that
case had to decide was this:
Whether by allowing the appellants to adduce the evidence without any D
objection until such a late stage and not objecting to the evidence as and
when the evidence emerged, the respondent was deemed to have waived
the impropriety of admitting such evidence.
[37] The Supreme Court, at p. 571 said:
E
Generally in civil cases only, both parties can validate any mode of
adducing evidence by consent, express or inferred, even when such mode
is irregular, for any irregularity is deemed to be waived by such consent.
Technical rules of evidence can be to a limited extent, even dispensed
with by a Court without such consent also, please see Baerlein v. Chartered
Mercantile Bank [1895] Ch D 488; similarly with technical rules of F
procedure. Therefore when such evidence represents a departure from
pleading, it should be objected to as when and where it is adduced, and
it will be too late when it only objected to later on, as in the final
submission at the close of evidence as in the instant appeal. In these
circumstances, the party facing such evidence at variance from pleading,
by failing to object cannot be said to be taken by surprise, prejudiced, G
misled or embarrassed. Otherwise, the other side of the coin would be,
in the event of such objection raised at the stage of final submission being
accepted by the Court, that the party adducing such evidence may face
the great risk of being denied leave to amend his pleading in question at
that stage.
H
Such evidence when given without any objection by the opposing party
will further have the effect of curing the absence of such plea in the
relevant pleading, in other words, the effect of overcoming such defect in
such pleading. As was stated by Federal Court in Ang Koon Kau & Anor
v. Lau Piang Ngong [1984] 2 MLJ 277, FC at page 278:
Evidence given at the trial can therefore in appropriate I
circumstance overcome defect in the pleadings where the net result
of such evidence is to prevent the other side from being taken by
surprise.
 [2018] 1 CLJ Iftikar Ahmed Khan v. Perwira Affin Bank Bhd 431

A There is however, at least one important exception to such curing of

defect of pleading by evidence departing from such pleading without
objection then and there to such evidence.
The exception is when such evidence represents a radical departure from
the pleading, and is not just a variation, modification or development of
B what has been alleged in the pleading in question, please wee Waghorn
v. George Wimpey & Co. Ltd [1969] 1 WLR 1764, which was approved by
Ang Koon Kau & Anor v. Lau Piang Ngong, supra, and John Stein & Co. Ltd
v. O’Hanlon [1965] AC 890.
[38] The cases cited by both counsel to us clearly show that the law on the
C
first question posed by the appellant is settled. It is this. In a case where the
matter or material facts are not pleaded but evidence is led without objections
at trial, the court is duty bound to consider such evidence although it may
be a departure from the pleading. It has the effect of curing defect in the
pleading. In such a case, the opposite party is not taken by surprise,
prejudiced, embarrassed or misled. The exception is where the evidence
D
represents a radical departure from the pleading and is not just a variation,
modification or development of what has been alleged in the pleading. Dato’
Hamzah Abdul Majid v. Omega Securities Sdn Bhd [2015] 9 CLJ 677 is an
illustration of a case where there was a radical departure from the pleading.
In that case, loan, which was not a pleaded defence but evidence of it was
E 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.
[39] The next question is whether there was evidence led without
objections at trial, as contended by learned counsel for the appellant, that the
F
respondent was in breach of contract by uplifting the FDR without the
consent of the appellant. This is a question of fact which can only be
determined by looking at the evidence.
[40] Learned counsel for the appellant did not pinpoint to us where, in the
G
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 for the respondent contended that there was no
such evidence. PW1 or PW2 did not in their evidence allege that the
respondent had acted in breach of the terms of the memorandum of deposit
when it uplifted the FDR without the appellant’s consent.
H
[41] The appellant’s 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 witnesses statements and their oral testimony before the High Court.
We are unable to find any evidence from them alleging that the respondent
I
had breached any term of the memorandum of deposit when it uplifted the
FDR without the appellant’s consent. The appellant’s claim against the
432 Current Law Journal [2018] 1 CLJ

respondent is for the refund of his FDR which was uplifted to settle the A
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. The appellant explained the nature of his claim in his witness
statement as follows: B
Q40: So what is your claim today?
A. I want the 1st Defendant to refund the monies uplifted on 15.4.1993
amounting to RM233,155.60 and repay the same with interest.
Q41. Why? C
A. Because what the 1st Defendant did was unlawful in that:
a) They should not have allowed Sallim to draw on the
Overdraft Account of the company; and
b) They were negligent.
D
It is patently clear that the claim is not based on a breach of contract.
[42] It 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 the company. But this is contrary E
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.
[43] This is what the appellant said in cross-examination:
F
Q: So this is the Memorandum of deposit which you gave for the
overdraft facility of RM300,000 is this correct?
A: Yes
Q: Was this Memorandum of Deposit also transferred to Omar
Khayam Enterprise Sdn Bhd? G

A: Yes
Q: Do you know that one of the terms of this Memorandum of
Deposit is that the bank is at liberty to withdraw from the fixed
deposit receipt without reference to you or Raja Iftikar or Omar
Khayam Enterprise? H

A: No
Q: But you sign this agreement?
A: Yes
I
 [2018] 1 CLJ Iftikar Ahmed Khan v. Perwira Affin Bank Bhd 433

A [44] 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 is 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.
B [45] The finding of the learned trial judge that the respondent was in breach
of the contract in uplifting the fixed deposit 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
C noted that the memorandum of deposit was signed by the appellant 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. The
respondent’s letter to the appellant approving the transfer of the banking
facilities from OKE to the company was subject to the condition that, “All
D facilities together with liabilities will be transferred from Omar Khayam
Enterprise to Omar Khayam Enterprises Sdn Bhd”.
[46] We agree with the contention of learned counsel for the respondent
that the first question was framed on the supposition that “evidence is led
without objections at trial”. In truth, we find that there was no evidence
E adduced without objections to support the appellant’s contention that the
respondent was in breach of the contract, namely, the memorandum of
deposit by uplifting the FDR without the appellant’s 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.
F [47] 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, we also 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 that the cause of action in negligence has
G been abandoned.
[48] In the result, the appeal is dismissed with costs.