DALAM MAHKAMAH TINGGI MALAYA DI KUALA LUMPUR DALAM WILAYAH PERSEKUTUAN, MALAYSIA
GUAMAN NO: D8-22-1815-2006
DANAHARTA MANAGERS SDN BHD … PLAINTIF
(No. Syarikat: 471238-A)
1. ELEGANT RESIDENCE (M) SDN BHD (No. Syarikat: 256951-T)
2. ABD RAZAK BIN SAUB (No. KP: 430408-05-5081/2490479)
3. MUSTAFA BIN MOHD GHANI (No. KP: 630317-71-5669/7007329) … DEFENDAN DEFENDAN
GROUNDS OF DECISION
1. The parties agreed that this case be disposed by the determination of the following single issue:
“Whether the 2nd and 3rd Defendants had consented to the increase in the Margin Facilities from RM20 million to RM35 million granted to the 1st Defendant”.
2. Further, the parties agreed to both the authenticity and contents of the documents that will be referred to at trial. This is critical as the reading of the documents will be much affected by this agreement.
3. This is how the claim arose. The 2nd and 3rd Defendants who are guarantors to the margin facility enjoyed by the 1st Defendant that has since been wound-up, argued the issue posed in the negative. These Defendants relied on section 86 of the Contracts Act 1950 which discharges them from liability in the event there is shown present a variation of a material term of the contract. The amount of the facility enjoyed is said to be such a material term. The Plaintiff, on the other hand, contended that the variation of the facility was one done with the full knowledge and consent of these Defendants. As directors of the 1st Defendant, these Defendants could be said to be the alter ego of the 1st Defendant. Their knowledge can therefore be imputed to be that of the 1st Defendant. Moreover, the 2nd Defendant signed the pertinent letter requesting for the increase in the facility in the first place. He cannot now deny this requisite knowledge.
4. Having heard submissions and examined the evidence before me, these are my findings.
5. First of all, this is an on-demand guarantee. The obligations of these Defendants as guarantors are co-extensive with that of the 1st Defendant, the principal debtor. Secondly, I find that the Defendants indeed were fully aware of the goings-on in the 1st Defendant and cannot now deny the relevant knowledge. The letter requesting for the increase in the facility to RM35 million was signed by the 2nd Defendant and he cannot now refute knowledge. Thirdly, clause 15 of the guarantee clearly provides that the Defendants remain liable despite the change:
“This Guarantee is expressly intended to any shall be a continuing
guarantee for all money whatsoever now or from time to time owing
to you by the Client’s notwithstanding that the Client may at time or times cease to be indebted to you for any period or periods and notwithstanding any settlement of account or accounts.”
6. In my mind, it is clear that the Defendants have agreed to continue being liable “for any or all money whatsoever now or from time to time owing to” the Plaintiff by virtue of the 1st Defendant’s borrowings. These Defendants have in other words provided a continuing guarantee – see section 82 of the Contracts Act 1950. While at the time of the facility, the sum may and did stand at RM20 million, this provision meant the Defendants consented to be bound even if that sum was subsequently varied. In this case, it was; and the Defendants are therefore liable. See Algemene Bank Nederland N.V. v Kace Advertising Sdn Bhd  1 CLJ (Rep) 293.
7. In the circumstances, the issue posed is answered in the Plaintiff’s favour. Accordingly, the claim is allowed as per Encl. (17) save for the sum of RM121,120.00, together with costs of RM5,000.00.
Dated: 25th May 2010
(DATO’ MARY LIM THIAM SUAN)
JUDICIAL COMMISSIONER HIGH COURT KUALA LUMPUR (COMMERCIAL DIVISION)
Raiza binti Zakaria for the Plaintiff Messrs. Albar & Partners
Abdul Razak for the 2nd and 3rd Defendants Messrs. Abdul Razak & Partners