ISSUE

The issue in this case is whether any evidence of negotiations became admissible
when action is taken by the parties after the conclusion of an agreement.
FACTS
In this case, plaintiffs (Malayan Banking Berhad) issued out a writ for money owed
by the defendants on 3 over-draft accounts and together with interest. On 17 July
1970, plaintiff signed a final judgement in default of defence. Bank later on 30
December 1978 applied for in order to levy execution since six years had elapsed
from the date of judgment. The banks solicitor later applied for the notes of the
arguments taken by the judge and the ground of his decision; however after
despairing in his effort to obtain both, he filed an appeal record without them 17
months later.
A copy of the judges note argument was available two days before the dated
hearing and it lacks the reasons of the dismissal of the banks application for leave. It
is essential for the Federal Court to know contain of the notes.
Defendant contended that the debt had been fully paid with the sum of $750,000.
Plaintiff denied stating it is a blatant lie. Plaintiff failed to defend the claim and also at
the same having considerable properties which the judgement could be performed
and hes also in view at the time he was bound contractually to sell properties which
formed part the of a housing developed by him, thus defendant had to prevent the
execution of the judgment.
The best solution for the defendant was to enter into negotiations with the bank for
time to make payment and the payment may be made by way of instalments.
Negotiations between them were put down in several letters, prudently expressed to
be without prejudice.
In the first letter, defendant made a proposal a sum in full and final settlement agreed
at the amount of $850,000.00, an aura of $700,000.00 to be paid to the bank
forthwith and upon payment the bank shall discharge all securities excepts the lot
belongings to our clients. Besides, defendants proposed the balance sum of

$150,000.00 to be paid on or before 30 September 1975 and costs to be paid by our

client.
The first letter contained proposals and in reply the Bank made a counter proposal
without prejudice. The letter contained main proposal by the defendant for payment
of $850,000.00 by way of full settlement was therefore acceptable though the
amount due at that time had increased to $961,175.25 but other terms as to costs
and the result of delay or default were added.
The next letter from defendant to the bank is on the matter of mediation of the issue
by way of appointing committee from Chinese Chamber of Commerce Kota Bharu
and it was not made by way of without prejudice. It can be said made by way of
deliberate omission and for good reason. Thus, in conclusion an agreement had
been reached, and it was on the terms of the Banks counterproposals.
The amount of $850,000 was agreed to be paid in two instalments which was
$800,000.00 had been paid and the balance of $50,000.00 must be paid in second
settlement remained unsettled. Defendant contended that he needed time to gather
the money from the purchasers of his lands and houses he developed. However, he
had met with some delay and encountered with some difficulties as several actions
taken against him by purchasers.
Defendant wrote to the Bank on 29 January 1976 stated that he is disappointed by
the action taken by the Bank demanded the amount of $50,000 regardless of the
explanation given for the delay.
In reply, the bank gave him time instead of rescinding the contract. On 10 May 1978,
the bank rescinded the agreement and demanded the amount of $50,000.00
together with interest. Clearly, the bank had exercised it equitable discretion and
applied to the court. However, the court had dismissed the application for leave.
Plaintiff appeal.
JUGDMENT
Firstly, Chan Min Tatt FJJ, Salleh Abbas FJJ and Abdul Hamid FJJ commented on
the failure by the judge in lower court in dismissing the application for leave. No
contention on the ground of interest was made and court cited the case of Yourell v

Hibernian Bank1 on the practice of the bankers in debiting interest. The judges also
agreed that the issue of limitation was not vital here.
Now, the important question under evidence law is with regards to the admissibility
of the letters for negotiations between plaintiff and defendant. Here, the letters
without prejudice contained negotiations between the parties were inadmissible. This
is because not to restraint but to expand the scope for negotiations and thus the
solution will be easily obtained between both parties. Nevertheless, if the
negotiations between parties lead to a settlement, the evidence of negotiations will
be admissible.
Judges held that on the facts the learned judge had not judicially exercised his
discretion to dismiss the application and on the matter of payment of compound
interest on an overdrawn account was a usual and perfectly legitimate mode of
dealing between banker and customer and this fact was irrelevant as a ground for
the refusal of the leave sought. Thus, the court allows the appeal with costs.
The issue here is with regard of the admissibility of without prejudice evidence in the
court. Section 23 of Evidence act stated that in civil cases no admission is relevant if
is made either upon express condition that evidence of it is not to be given or under
circumstances from the which the court can infer that the parties agreed together
that evidence of it should not be given. This case illustrated the notable exceptions
under section 23 with regards where the issue is whether the without prejudice
communications had resulted in a concluded compromise settlement. Here, it is
stated in this case, if the negotiations conducted without prejudice lead to a
settlement then the letters will become admissible in evidence.
In conclusion, the court will consider the surrounding circumstances and the
relevancy of the evidence before admitting its admissibility as it is not clear whether
the evidence is really made without prejudice.

[1918] AC 372