SKS Credit Sdn Bhd v 1. ) Chin Lin Sheng 2. ) LOW KHIM JOO

Case Significance

Illustrates appellate reversal of a chargee's liability to a purchaser founded on unjust enrichment, and confirms that where the primary finding is overturned an appellate court may revisit the costs below to give effect to the principle that costs follow the event.

This High Court decision at Johor Bahru concerns an appeal by a chargee finance company against a Sessions Court judgment in a dispute arising from the sale of a charged property. After a full trial, the Sessions Court had allowed the purchaser's claim against the finance company for RM217,635.53 with costs, and had allowed in part the finance company's third-party claim against the chargor. The purchaser's claim arose from a sale transaction involving property that the chargor had charged to the finance company; questions arose about the redemption sum required to discharge the charge, the bank-purchaser relationship, any implied undertaking, the doctrine of privity of contract, unjust enrichment, and the authority of solicitors acting in a dual representation. On appeal, the Court examined the basis on which the Sessions Court had held the finance company liable to the purchaser and concluded that, in substance, the purchaser ought not to have succeeded against the finance company at all, the finding of liability in restitution or unjust enrichment being erroneous. Because the purchaser's claim against the finance company failed entirely on appeal, the Court also revisited the costs orders below. It observed that the finance company had been compelled to join the chargor as a third party in order to protect its position on the redemption sum and the underlying loan account, and that the modest costs awarded to it on the third-party claim did not reflect the true event of the litigation once the primary claim had failed. Holding this to be a proper case for appellate intervention on costs — the Sessions Court's discretion having been premised on findings that were now overturned, and the resulting orders not according with the principle that costs should generally follow the event — the Court allowed the appeal, ordering that the purchaser bear the finance company's costs in the Sessions Court and that the finance company receive a fair and proportionate sum on the third-party proceedings.