Defendants, as directors, are jointly liable under a Continuing Guarantee; evidence supported the enforceability of the credit agreement against them.

JUDGMENT

Ong Chee Kwan JC:

Introduction

[1] For the purpose of this judgment, the parties shall be referred to as they were before the Session Court below. This judgment deals with an appeal by the 3rd Defendant against the decision of the learned Session Court Judge allowing the Plaintiff's summary judgment application against her.

Background Facts

[2] On 20 March 2019, the 1st Defendant made an application to the Plaintiff for the supply of goods on credit basis. The application for credit facility was accepted, but was subjected to several conditions. Among them are:

(a) the 1st Defendant agreed to repay all the outstanding sums within 60 days from the date the accrued debts ("credit period");

(b) the 1st Defendant consented to interest on the outstanding debts at the rate of 1.5% per month;

(c) The interest shall be calculated on monthly basis from the date of maturity of the debts, ie at the end of credit period;

(d) The 1st Defendant further agreed to bear all the expenses incurred by the Plaintiff including legal costs (on full indemnity basis) for the repayment of outstanding debts.

[3] During the course of transactions, the Plaintiff delivered Monthly Debit Notes to the 1st Defendant which were duly accepted. The Monthly Debit Notes stated the outstanding debts and the interest rate of 18% per year being imposed on the accrued debts.

[4] On 2 April 2019, the 2nd Defendant and the 3rd Defendant, who are the Directors of the 1st Defendant executed a Continuing Guarantee to the Plaintiff. The consideration for the Continuing Guarantee was the Plaintiff's agreement to continue the supply of goods and provide credit facility to the 1st Defendant.

[5] The Continuing Guarantee provides that the 2nd and 3rd Defendants shall jointly and severally be liable to repay all outstanding sums owed by the 1st Defendant to the Plaintiff. Both the 1st and 2nd Defendants are also treated as principal debtors under the Continuing Guarantee.

[6] As of 31 December 2020, the total amount owed to the Plaintiff was RM501,833.21 consisting of:

(a) RM442,620.00 arising from the goods sold and delivered to the 1st Defendant;

(b) RM59,213.21 arising from the 18% interest rate imposed monthly on RM442,620.00.

[7] When the 1st Defendant failed to pay, the Plaintiff appointed its solicitor, Messrs. Cheong Yee & Partners, to issue Letter of Demand dated 11 November 2020 to the Defendants for the repayment of outstanding sums.

[8] After filing this action, the Plaintiff made an application for Summary Judgment (Encl 9) under O 14 Rules of 2012 against the 3rd Defendant. The application was allowed by the learned Session Court Judge. Being dissatisfied, the 3rd Defendant filed this appeal before this Court.

[9] After reading the written submissions and hearing oral submissions from counsel, I dismissed the appeal with costs.

Issues Raised

[10] The 3rd Defendant raised the following triable issues to contend that this is not a plain and obvious case which should be disposed summarily. They are:

(a) The 3rd Defendant had no knowledge of the transaction;

(b) The quantum and the correctness of the Respondent's purported claim are disputed;

(c) The uncertainty in due dates for payments;

(d) The Continuing Guarantee is unenforceable against the 3rd Defendant;

(e) The Debit Notes are not verified by 1st Defendant.

Court's Deliberation

[11] The law on this area is settled, but the application depends on the facts of each case. To obtain a Summary Judgment, the plaintiff must satisfy the Court that the defendant plainly and obviously has no bona fide defence to the plaintiff's claim. In the words of Hashim Yeop A Sani CJ in Koh Siak Poo v. Perkayuan OKS Sdn Bhd & Ors, :

'There has been a long line of authorities for the proposition that where all issues are clear and the matter of substance can be decided once and for all without going to trial, there is no reason why the Court hearing the application for summary judgment should not deal with the whole matter under the procedure in O 14