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2020 MarsdenLR 412
HIGH COURT MALAYA KUALA LUMPUR
LONPAC INSURANCE BHD – Appellant
Versus
KORIDOR PADU SDN BHD & ORS – Respondent
[Suit No: WA-22NCC-57-01/2020]
The court ruled that extrinsic oral representations cannot undermine properly executed indemnity agreements. The burden to establish triable issues lies with the Defendants in Summary Judgment applications.
Headnote:(A) Contract Law – Indemnity Agreements – The Plaintiff, as guarantor, sought Summary Judgment against the Defendants under letters of indemnity concerning a performance guarantee of RM4,124,349.05. The court determined that the Defendants failed to establish triable issues relating to oral representations and execution of indemnity letters. The Plaintiff’s obligation arose from the duly executed documents and the demand made was appropriate following the lapse of an injunction. (Paras 5, 11, 12, 30, 35)
(B) Summary Judgment – The principles governing motions for Summary Judgment emphasize that the burden lies on the Defendant to raise genuine triable issues. Assertions lacking supporting evidence may not suffice to meet this burden. (Paras 8, 9, 20)
Facts of the case: The Plaintiff, an insurance Company, extended a performance guarantee to the Principal on behalf of D1, against which the Defendants had indemnified the Plaintiff. Following breaches by D1, a demand was made under the guarantee, leading to the Plaintiff's application for Summary Judgment. (Paras 5.1-5.13)
Findings of Court: The Defendants failed to raise any triable issues, resulting in the grant of Summary Judgment for RM2,433,679.54 against all Defendants. (Paras 34, 35)
Issues: The core issues addressed were whether oral representations were made regarding the guarantee's release, the nature of the guarantee, and the signing of indemnity letters by the Defendants. (Paras 11, 18, 24)
Ratio Decidendi: The court reinforced that unsubstantiated assertions cannot create triable issues, and the existence of proper documentation invalidates claims of oral terms that contradict written agreements. (Paras 12, 31)
Result: Summary Judgment for the Plaintiff against the Defendants in the sum of RM2,433,679.54.
JUDGMENT
(Order 14)
Introduction
[1] This is an action commenced by the Plaintiff against the three Defendants premised on letters of indemnities executed on the 8th September, 2015 whereby the Defendants had agreed to indemnify the Plaintiff against all claims and actions against the Plaintiff arising out of a performance guarantee given by the Plaintiff to Perbadanan Kemajuan Negeri Selangor ("the principal") in the amount of RM4,124,349.05.
[2] Upon the Defendants entering appearance and prior to the filing of the Statement of Defence, the Plaintiff filed an application for Summary Judgment supported by an affidavit. The Defendants thereafter filed their Statement of Defence and Counterclaim and several affidavits were exchanged in respect of the Summary Judgment application (Encl 10).
[3] Parties had filed their respective Written Submissions and learned counsel had submitted orally further before me on the 10th July, 2020 whereupon, I had reserved my decision to the 20th July, 2020.
[4] This is now my decision on encl 10. I will at the outset set out the facts of the matter, the issues raised by the Defendants and thereafter apply the law to the facts and render my Judgment as to whether or not upon my analysis, the Defendants have succeeded in raising triable issues so as to defeat encl 10.
The Facts
[5] The facts in this matter are not complicated and they are as follows:
5.1 The Plaintiff is an insurance Company whereas D2 and D3 were/are the Directors of D1 at all material times;
5.2. D1 was the contractor appointed by the principal for a construction project in Dengkil for the amount of RM82,486,981.00 and D1 was required to provide a performance guarantee for 5% being the sum of RM4,124,349,05;
5.3. It is not disputed that D3 as Director of D1 had met one Encik Hashim Ismail who was a representative of the Plaintiff with a view of the Plaintiff providing such performance guarantee to the Principal on behalf of D1;
5.4 Pursuant thereto, the Defendants had provided the Plaintiff a duly executed Contract Guarantee Proposal form, a Resolution by the Board of Directors of D1, a Letter of Undertaking as well as three separate letters of indemnity signed by all three Defendants (see: exhibit SYY-2 of encl 11). These documents provided by the Defendants were all signed by the Defendants and had the rubber stamp of D1 and the letters of indemnity were duly witnessed by a Commissioner for Oath;
5.5 It was not disputed by the parties that whilst it was agreed that the Plaintiff would be providing the principal with a performance guarantee of RM4,124,349.05, the Defendants were required to deposit a sum of RM1,462,174.53 as a collateral sum with the Plaintiff to be placed in a fixed deposit account. This was duly paid by the Defendants and placed in a fixed deposit account as agreed;
5.6 In fact, at paragraph 2.4 of the Statement of Defence, the Defendants admit that it had applied to the Plaintiff to provide such a guarantee to the Principal;
5.7 The Plaintiff then does provide the performance guarantee to the principal in writing vide a guarantee dated 8th September, 2015. For ease of reference, the said guarantee is reproduced here (see: exhibit SYY-1 of enclosure 11):
5.8 Thereafter, pursuant to requests by the Defendants, the performance guarantee was extended with the last extended period to 4th November, 2019 vide the Plaintiffs letter dated 8th April, 2019;
5.9 Subsequently, due to alleged breaches by D1 of its contractual terms with the Principal, the Principal had through its letter dated 23rd August, 2019 made a call on the payment of the performance guarantee from the Plaintiff (see: Exhibit SYY-3 of the Plaintiff's Affidavit in Support);
5.10 As a result, the Plaintiff through its letter of demand dated 10th September, 2019 made a claim against D1, D2 and D3 for the sum of RM2,662,174.52 being RM4,124,349.05 less the cash collateral of RM1,462,174.53 (see: Exhibit SYY-4 of the Plaintiff's Affidavit in Support);
5.
