Malayan Banking Berhad V Emilite Industries Sdn. Bhd&3lagi


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GUAMAN NO: D11-22-964-2002




















The Plaintiff’s (the Bank’) claim in the trial of this action is against the Second Defendant only. Judgment has been obtained against the First & Fourth Defendant, and the Third Defendant has been adjudicated bankrupt resulting in the suit against him being withdrawn. A perusal of the guarantee executed by Second Defendant dated 26.11.1998 discloses that it is a continuing guarantee to the extent of RM500,000.00 only.




I have heard and considered the evidence of Nur Hafizah Kasim (PW1) from which the chronology relating to the grant and utilisation of the loan facility is evidenced. An overdraft facility in the sum of RM500,000.00 was granted to the First Defendant. The security for the facility included a third party first legal charge on leasehold property as well as letters of guarantee by the directors of the First Defendant. The letter of guarantee Exhibit P, was duly executed by inter alia the Second Defendant on the same date as the execution of the facilities agreement between First Defendant and the Bank. It is evidenced from a resolution executed by the directors that the First Defendant was authorized to accept the overdraft facility. The 2nd Defendant executed a resolution in his capacity as director to that effect on 29th October 1998.


Subsequently there was default in the repayment of monies due on the facility whereupon it was terminated, and demands issued. With respect to the Second Defendant, a notice of demand was sent to his address as stipulated in both the Document of Guarantee and his witness statement. It is not in dispute that the demand was sent by both registered post and certificate of posting. In the demand, the Bank sought payment of the then outstanding sum within 7 days from the date of the letter. The Notice of Demand was posted out to the Second Defendant on the 21st June 2002.


Legal proceedings were instituted by way of the filing of a writ on 26.6.2002 namely on the fifth day after the Notice of Demand had been posted. No repayment was received from any of the Defendants. On 26.5.2009, the leasehold property comprising security for the facility was auctioned at the price of RM144,000.00. Notwithstanding this, there remains to date an




outstanding sum of RM1,209,680.38 claimed to be due and owing by the Bank.


The issues that arise by way of defence in this case have been summarized by En. Saifuddin learned counsel for the Second Defendants as follows:-


1. That the writ filed on 26.6.2002 is premature and accordingly that the Bank’s claim here is pre-mature.


2. That the Bank failed to comply with the provisions of the Facility Agreement with respect to the variation of interest. Accordingly, it is contended that the sum claimed by the bank is questionable and unjustifiable.


3. That no notice was given to the 2nd Defendant of the proposed auction of the property resulting in prejudice to the 2nd Defendant.


Mr. Chan learned Counsel for the bank responds to this contention by submitting as follows:-


1. The Bank’s claim is not pre-mature as there has been compliance with the terms of the facilities.


2. The net effect of a failure to advertise the variation of the Base Lending Rate would be that the original Base Lending levied would prevail levied would prevail.




3. As the Second Defendant has no interest in the land property which was auctioned, the bank had no duty to advise him of the date of auction.


I have considered the submissions of learned counsel for 2nd Defendant and the Plaintiff. I find as follows in respect of the 3 main issues raised:-


1. With respect to the contention of the writ being filed pre-maturely, it is evident that while the NOD was dated 17.6.2002 it was only posted to the Second Defendant on the 21.6.2002. The Writ in this action was filed on the fifth day thereafter. Clause 22 of the Guarantee Document stipulates that the demand is deemed served on the fifth day following that on which it is posted. That is all the Clause says. It does not prohibit the filing of the Writ or preclude the institution of the legal process. As matters stand, therefore, the Second Defendant had notice of the demand and the cancellation of the facility on or by 26.6.2002. The complaint of the Second Defendant is that he was not accorded an opportunity to either meet the demand or challenge it, particularly as the Notice of Demand gives him an additional 7 days to do so. The reality of the matter, as is evidenced from the Second Defendant’s own evidence, is that he has made no attempt to either repay or challenge the Letter of Demand at any point of time until after institution of legal proceedings from 2002 until July 2010. No attempt has been made to effect any such repayment. In these circumstances. I fail to see how the Second Defendant is prejudiced by the filing of the Writ of




Summons prior to the expiry of the time period stipulated in the Notice of Demand. As I have stated above, I do not agree that Clause 22 of the Guarantee Document has been breached as it merely stipulates the date of effective service of the demand.


Turning to the Second issue on the variation of interest, I am advised at this stage by learned counsel for Second Defendant that he is not pursuing the point on interest. Accordingly I make no decision on this point.


On the third point that the Second Defendant was not notified of the auction, I note from the evidence of PW1 that the fact of the auction was advertised in the Land Office gazette and the newspaper by the auctioneers. This appears to this Court to be sufficient notice to the relevant parties. In any event there is no requirement under the guarantee that the Second Defendant be expressly notified of the auction. It was sought to be suggested that in the event the Second Defendant had been appraised of the auction he could have done something about it or procured a higher price. I disallowed questioning on this as it appeared to be a matter of opinion and speculative. It is therefore clear to me that this issue does not afford a defence to the Second Defendant.


As I have stated at the outset the Second Defendant’s liability is limited to a sum of RM500,000.00. The Statement of Claim seeks judgment in the far larger sum of RM1,209,680.38 together with interest. This is clearly wrong. Accordingly, I exercise my discretion to grant judgment to the Plaintiff in the sum of RM500,000.00 only together with interest at the prevailing rate. I am satisfied that the Bank has proved its case and that the Second




Defendant has no defence to this action to the extent of the sum granted only. In so far as costs is concerned, having heard the parties, I conclude that a sum of RM8,000.00 for the entire proceeding is fair. This will include the cost of all previous applications. Judgement for the Bank in the sum of RN500,000.00 together with interest and costs of RM8,000.00.


Nallini Pathmanathan J. 5 July 2010

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