1. ) SELVARAJ A/L SANDOSHOM 2. ) DEVATHAN JAMAL LILY v ALLIANCE BANK MALAYSIA BERHAD

Case Significance

Applies the doctrine of merger: once a lender obtains judgment (here an amended default judgment) on a borrower's breach of a loan facility, the cause of action merges in the judgment and is extinguished, so a fresh suit on the same breach is barred — and the later sale of the charged property gives rise to no new cause of action.

This High Court decision at Kuala Lumpur (Commercial Division), delivered by Judge Ong Chee Kwan, concerns the doctrine of merger of a cause of action in a judgment, raised as a preliminary question of law. The appellants, borrowers under a loan facility, had been sued by the respondent, Alliance Bank Malaysia Berhad. In the Sessions Court they had applied under Order 14A rule 1 and Order 33 rules 2 and 5 of the Rules of Court 2012 to have two legal questions determined as preliminary issues, contending that the respondent's present claim was not maintainable. The Sessions Court dismissed that application, and the appellants appealed. The core question was whether, the respondent having earlier obtained an amended judgment in default in a first suit founded on the appellants' breach of the loan facility, the respondent's cause of action had merged in that judgment so as to preclude a further suit on the same footing.

The court allowed the appeal. It held that when the respondent obtained the amended judgment in default in the first suit, its cause of action based on the appellants' breach of the loan facility merged with that judgment, thereby extinguishing the original cause of action. Applying the principle, reflected in authorities such as Dato' Sivanathan a/l Shanmugam v Artisan Fokus Sdn Bhd, that a cause of action once reduced to judgment can no longer be sued upon, the court held that the respondent was no longer entitled to file a similar cause of action based on the same breach, and that the subsequent sale of the charged property did not give rise to any fresh cause of action. Answering the preliminary question in the appellants' favour, the court allowed the appeal with costs and dismissed the present suit with costs. The judgment is a clear application of the merger doctrine to bar a second action on a cause already reduced to judgment.