High Court awards RM46 million to Maybank in claim against Government
30 January 2020
On 24 January 2020, the High Court awarded a sum of approximately RM35.5 million in favour of the plaintiff in Malayan Banking Berhad v Government of Malaysia (KLHC Suit No. WA-27NCC-46/12/2018). This decision is of significance to receivers and managers and the banking industry.
The plaintiff had granted banking facilities to a shipbuilding company (‘shipbuilder’) to finance the construction of two naval vessels (’subject vessels’) for the defendant. The plaintiff appointed a receiver and manager over the shipbuilder after the latter defaulted on the banking facilities provided by the plaintiff. The shipbuilder was subsequently wound up by another of its creditors.
Upon the request of the Ministry of Defence (‘MINDEF’) and its representations and assurance that it would procure the Government to formally waive its claim against the shipbuilder for liquidated ascertained damages of about RM43 million for the delay in completing the subject vessels, the plaintiff agreed to refrain from exercising its rights to discontinue funding the construction of the subject vessels. On the basis of MINDEF’s assurances, the plaintiff continued to provide post-receivership funding of RM20,208,151.67 for the construction of the subject vessels.
Subsequently, the defendant terminated the shipbuilding contract with the shipbuilder on grounds that the latter was under receivership and had been wound up. The defendant claimed that approximately RM44 million was owed to it by the shipbuilder as liquidated ascertained damages. The defendant also called upon a performance bond issued by the plaintiff, resulting in the payment of a sum of RM15,389,726.41 by the plaintiff to the defendant.
The plaintiff commenced action against the defendant, seeking the sum of RM20,208,151.67 by way of post-receivership funding and RM15,389,726.41 paid under the performance bond plus interest. The plaintiff, inter alia, founded its action on unjust enrichment and breach of collateral contract.
After a full trial, the learned trial judge was satisfied that the plaintiff had proven, on the balance of probabilities, that a collateral contract existed between the parties and that the defendant had breached the terms of such contract. The High Court was also satisfied that the defendant had been unjustly enriched as it enjoyed the benefit of the subject vessels at the expense of the plaintiff without paying for them. Accordingly, the High Court allowed the plaintiff’s claim for RM20,208,151.67 being the post-receivership funding, RM15,389,726.41 being the amount paid under the performance bond, accrued interest of about RM10,500,000.00 plus further interest at 5% p.a. until the date of full settlement and costs.
The plaintiff was represented by our Partners, Leong Wai Hong and Claudia Cheah Pek Yee, and Associate, Brenda Chan.