This case is about methods of taking a security.

Different securities have different methods,

rights, and the ay it is registered. Therefore, looking at the case of Bank Bumiputra Malaysia
Bhd v Syarikat Kejuruteraan Hong Huat Sdn Bhd & Ors (1988) 3 MLJ328, High Court, it can
be summarized that a security may be taken include a charge, pledge, lien, legal assignment, set-
off, hypothecation, guarantee and indemnity. According to this case, assignment was the chosen
as the security. An assignment is the transfer of a debtor's entitlement to receive a benefit
(typically money) to a new assignee. Failure to pay the moneys due under the contract to the
assignee can result in a claim in the courts against a party that has recognised the assignments,
according to the law. This notion is illustrated in Bank Bumiputra Malaysia Bhd v Syarikat
Kejuruteraan Hong Huat Sdn Bhd & Ors. The only way to tell if an assignment is absolute and
not just for the sake of charging is to look at the four corners of the instrument.

This case concerns a loan arrangement between the first defendant and the plaintiff, in
which the latter agreed to offer the first defendant an overdraft facility up to RM2,800,000 for
principal only, according to the terms and circumstances set forth in the agreement. The first
defendant filed a charge under the National Land Code of 1965, and its directors signed a joint
and several guarantee as a result. As further security for the overdraft facility, the first defendant
executed two deeds of assignment in favour of the plaintiff of all revenues from a project known
as the Malacca Seafront Reclamation Project, which was conducted by the first defendant.
Rather than pursuing any of the securities, the plaintiff elected to issue a write against the first
defendant and four others, claiming RM3,710,380.68 in interest and costs.

The plaintiff argued that the deeds of assignment were not absolute, and therefore the
assignee could not sue the assignor's debtors. It further claimed that the right to sue for the debt
had not been transferred, and that only a portion of the RM12,000,000 and RM15,470,000 debts
had been assigned for the overdraft facilities, resulting in a payment of RM2,800,000. The
plaintiff filed an Order 14 motion for summary judgement against the first defendant, as well as
motions for summary judgement against two other defendants. The senior assistant registrar
heard both applications and dismissed them. The plaintiff filed a motion with the judge.

In BBMB v Syarikat Kejuruteraan Hong Huat Sdn Bhd & Ors, the court concluded that
the only way to determine whether an assignment is absolute (not pretending to be by way of
charge merely) within the meaning of section 4(3) of the Civil Law Act 1956 is to look at the
four corners of the instrument itself. Furthermore, the learned court concluded that the
documents were absolute assignments and not pretending to be by way of charge solely within
the meaning of section 4(3) of the Civil Law Act after reviewing the entire set of deeds of
assignment dated October 12, 1983.

The assignments were absolute in that the assignor intended to transfer to the assignee "all
money, interest, and privileges now or hereafter due and payable to all assignor." Even if the
assignments were not absolute, clause 7 of the deeds of assignment provided the plaintiff the
right to sue the assignor at any time for the recovery of the banking facilities or any part thereof,
plus interest, without having to enforce the security given under the loan arrangement. The
plaintiff was allowed to sign the judgement against the first, fourth, and fifth defendants as he
wished.

According to Gunn Chit Tuan J, the only way to tell if an assignment is absolute within the
sense of section 4(3) of the Civil Law Act 1956 is to look at the four corners of the instrument
itself. In this case, the two assignments of October 12, 1983 were signed by the first defendant as
assignor and the plaintiff as assignee in the form of a deed. After stating that the assignor has
been awarded the Malacca Seafront Reclamation Project worth RM12,000,000 and
RM15,470,000, respectively, payable by Messrs Pembinaan Bandar Melaka Sdn Bhd and Messrs
Pembinaan Kota Laksamana (Melaka) Sdn Bhd, and that the assignor has requested the assignee
to provide banking facilities in the form of an overdraft facility, the assignee up the sum of
RM2,800,000 with interest at 2.5% above the plaintiff’s base lending rate.