Back
2021 MarsdenLR 2571
HIGH COURT MALAYA SHAH ALAM
SABAH DEVELOPMENT BANK BERHAD – Appellant
Versus
JITU ENIGMA SDN BHD & ORS (ENCL 39) – Respondent
[Civil Suit No: BA-22NCC-167-11/2019]
Summary judgment granted against guarantors without prior formal demand; certified Statements of Accounts are conclusive evidence of indebtedness.
Headnote:(A) Loan Agreement – Condition precedent – Summary judgment application under Order 14 Rules of 2012 – Plaintiff seeks judgment against directors as guarantors due to defaults by the corporate borrower – Guarantees obligate directors to settle outstanding debts on demand despite corporate insolvency (Paras 1-19).
(B) Conclusiveness of Statements – Certainty of amounts owed from certified Statement of Accounts as binding on guarantors – Certifications by authorized bank officers reiterated to be sufficient proof of indebtedness without further legal evidence (Paras 29-37).
Facts of the case: The Plaintiff applied for summary judgment against the 2nd and 3rd Defendants due to defaults by the 1st Defendant regarding various loan facilities granted, with amounts confirmed due under multiple guarantees.
Findings of Court: The court found no triable issues raised; evidence showed guarantees required directors to pay on demand, and Statements of Accounts complied with contractual binding requirements.
Issues: Whether the action was pre-mature, the conclusiveness of the Statement of Accounts, and disclosure requirements in Loan Agreements.
Ratio Decidendi: The court clarifies that a formal demand is not required to initiate recovery under guarantees; certified Statements of Accounts establish debtor liability conclusive against guarantors (Paras 17-21, 29-31).
Result: Application for summary judgment is granted, ordering payment of various amounts due with specified interest rates and costs.
JUDGMENT
Introduction
[1] By a Notice of Application dated 17 November 2020 [Encl 39], the Plaintiff seeks to enter summary judgment against the 2nd and 3rd Defendants for amounts due and owing by them as guarantors for financing facilities taken by the 1st Defendant.
Background facts
[2] The 1st Defendant is a company incorporated in Malaysia with a registered address at 51-21-A, Menara BHL Bank, Jalan Sultan Ahmad Shah, 10500 Georgetown, Pulau Pinang. It was, at all material times, a customer of the Plaintiff. The 2nd and 3rd Defendants were directors of the 1st Defendant.
[3] At the request of the 1st Defendant, the Plaintiff granted it banking facilities, comprising of a loan facility pursuant to a Loan Agreement dated 29 January 2013 and supplemented by two supplemental Loan Agreements dated 9 April 2014 and 12 February 2015 ("1st Loan Agreement"). The 1st Loan Agreement incorporates the following facilities:
(i) A term loan facility in the principal sum of RM 50,000,000.00 ("the TL1 Facility");
(ii) Another term loan facility in the principal sum of RM 5,000,000.00 ("the TL2 Facility''); and
(iii) A bridging loan facility in the principal sum of RM 20,000,000.00 ("the BL Facility")
[4] At a further request of the 1st Defendant, the Plaintiff granted an additional term loan facility of RM 20,000,000.00 ("the TL3 Facility") pursuant to a Loan Agreement dated 18 March 2014 ("2nd Loan Agreement").
[5] The TL1 Facility, TL2 Facility, BL Facility and TL3 Facility will hereinafter be referred to collectively as "the Facilities" and the 1st and 2nd Loan Agreement as "the Loan Agreements".
[6] The 2nd and 3rd Defendants guaranteed the Facilities, the details of which are as follows:
(i) The TL1, TL2 and BL Facilities were secured inter alia, by a Joint and Several Guarantee dated 29 January 2013 ("the 1st Guarantee") for a maximum principal sum of RM 75,000,000.00; and
(ii) The TL3 Facility was secured, inter alia by a Joint and Several Guarantee dated 18 March 2014 ("the 2nd Guarantee") for a maximum principal sum of RM 20,000,000.00.
[7] The 1st Guarantee and the 2nd Guarantee are hereinafter collectively referred to as the Guarantees. The relevant express terms of the Guarantees state as follows:
(i) Pursuant to clause 1 of the Guarantees, the 2nd and 3rd Defendants agreed to pay and discharge to the Plaintiff on demand the maximum aggregate principal amount of the Facilities advanced to the 1st Defendant under the Loan Agreements together with interest thereon, fees, damages, charges, costs and liabilities for late payments including without limitation overdue interest from the due date up to the date of payment and all other charges expenses and costs incurred in enforcing the Guarantees or any other security for the indebtedness;
(ii) Pursuant to clauses 2 and 3 of the Guarantees, it was agreed that the Guarantees would be a continuing guarantee and that the 2nd and 3rd Defendants would be principal debtors for all sums of money, the payment of which was thereby secured;
(iii) Pursuant to clause 10 of the Guarantees, the 2nd and 3rd Defendants also agreed that any statement of account in writing showing the indebtedness and liability of the 1st Defendant to the Plaintiff which is duly certified by any officer of the Plaintiff will be conclusive and binding against the 2nd and/or 3rd Defendant.
[8] The Facilities were additionally secured by the following:
(a) Debenture dated 29 January 2013 entered into between the 1st Defendant and the Plaintiff to secure the TL1, TL2 and BL Facilities;
(b) 1st legal Charge vide Charge Presentation Nos. 18838/2013, 41353/15, 41336/2015, 41338/2015, 41344/2015, 41340/2015, 41346/2015, 41348/2015, 41364/2015 and 122104/2015 with Annexure over various properties as more particularly described in the Schedules to the 1st Charges to secure the TL1 , TL2 and BL Facilities;
(c) Debenture dated 18 March 2014 entered into between the 1st Defendant and the Plaintiff to secure the TL3 Facility; an
