JUDGMENT

Tengku Maimun Tuan Mat J:

[1] BSN Merchant Bank Bhd, MBf Finance Bhd and Public Finance Bhd had agreed to grant to the first defendant a Bank Guarantee and a Term Loan under syndicated facilities agreement. In consideration of the first defendant executing the Facility Agreement, the second defendant and the third defendant executed a guarantee agreement dated 18. 10. 1996 to make payable monies and sum due and payable by the first defendant in the event of the first defendant's default.

[2] The facilities to be provided under the Facility Agreement consisted of:

(i) a Bank Guarantee amounting to RM45,000,000. 00 to be provided by BSN Merchant Bank Bhd, MBf Finance and Public Finance to the first defendant;

(ii) a Term Loan amounting to RM8,000,000. 00 to be provided by MBf Finance and Public Finance in the respective portions of one half to the first defendant;

[3] The availability period of the Bank Guarantee facility was for 6 months beginning 18. 10. 1996. The first defendant has failed to request for the issuance of the bank guarantee during the availability period and it expired on 18. 4. 1997. As for the Term Loan, it was agreed that it shall be repaid by 16 monthly installments of RM500,000. 00 each after the date of first drawdown which drawdown of the entire term loan of RM8,000,000. 00 was disbursed by BSN Merchant Bank Bhd on behalf of MBf Finance and Public Finance on 23. 10. 1996. Pursuant to the Facility Agreement the first installment on the principal sum became due on 23. 10. 1997. The first defendant breached the Facility Agreement by defaulting to pay the interest and installment and failed to settle the outstanding sums to date.

[4] By a vesting certificate issued pursuant to the Pengurusan Danaharta Nasional Berhad Act 1998 (the Act), all the rights, title and interest of BSN Merchant Bank Berhad have been vested in Pengurusan Danaharta Nasional Berhad (Danaharta). Pursuant to a court order dated 14. 7. 2000, BSN Merchant Bank was substituted by Danaharta as the plaintiff. Pursuant to a vesting order dated 8. 1. 2001 all assets and liabilities of BSN Merchant Bank were transferred to Affin Bank.

[5] The land of the first defendant which was charged as security for the facilities was sold to Arena Flora Sdn Bhd for RM12,000,000. 00. After deducting the costs and expenses in connection with the sale, the proceeds of the sale were credited into the first defendant's account. Vide this suit the plaintiff is claiming against the first defendant the outstanding sum plus interest. The claim against the second and the third defendants is under the guarantee agreement.

[6] The first defendant filed a counterclaim against the plaintiff, Affin Bank and BSN Merchant Bank for loss of profits, damages and expenses due to the failure to provide and make available the Bank Guarantee of RM45,000,000. 00 to the first defendant.

The Evidence

[7] PW1 gave evidence that all the rights, title and interest relating to the facility given to the first defendant has been acquired by Danaharta and notice of the acquisition was given to the first defendant; that the first defendant made several proposals to restructure the loan but Danaharta was not able to accommodate as the proposals were not in compliance with the Loan Structuring guidelines; that Danaharta is not liable for the counterclaim as it was not a disclosed obligation. It was also the evidence of PW1 that the assets of Danaharta is now being managed by Prokhas Sdn Bhd.

[8] PW2 testified that notice was given to the first defendant on the failure to make payment and for the first defendant to remedy the breach, failing which the land will be sold pursuant to s 57 of the Act; that the sale was advertised and tenders were received; that the land was sold to Arena Flora Sdn Bhd for the price of RM12,000,000. 00; that notice of completion of sale was given to the first defendant vide a letter dated 16. 5. 2002; that RM11,740,569. 76 has been credited into the account of the firs