This is an appeal by the plaintiff against the decision of the senior assistant registrar given on 24 August 1988, ordering that their application for summary judgment against the second defendant be dismissed with costs.

There are three defendants in this suit. The first defendant, a limited company, was granted an overdraft facility for $1,600,000 by the plaintiff for a period of two years, vide a letter of approval dated 14 December 1987. By a letter of guarantee dated 18 December 1978 the second and third defendants jointly and severally guaranteed the repayment of the overdraft facility to the plaintiff.

The second defendant, in his statement of defence, admits executing the letter of guarantee. He avers that by reason of the first defendant's default in repaying the loan by 31 December 1980 the said guarantee became effective and enforceable, but since the period of limitation had expired sometime before 31 December 1986 the said guarantee ceased to be binding or enforceable against him. According to him the letter of guarantee is null and void and unenforceable. In his affidavit affirmed on 12 August 1988 the second defendant states:

I admit being a guarantor for the loan granted by the plaintiff to the first defendant by the letter of approval dated 14 December 1978 and the terms therein ...

It is not in dispute that the plaintiff, by a letter dated 14 December 1978 granted to the first defendant an overdraft facility of $1,600,000 under account number 001-12646-91 for a period of two years. It is not in dispute that the first defendant had defaulted in the terms of the overdraft facility in that they failed to make repayments on the due date, that is 14 December 1980 or soon thereafter. It is also not in dispute that the second defendant signed the letter of guarantee on 18 December 1978 as one of the two guarantors for the overdraft facility. Both counsel for the plaintiff and counsel for the second defendant asked the court to decide on one point only, viz whether the plaintiff's action against the second defendant was time-barred. In the course of their submissions, however, they also touched on the allegation made by the second defendant that there had been a variation in the terms of the letter of approval. I shall deal with the question of limitation first.

Miss S Roy submitted that under the letter of approval dated 14 December 1978 the facility was granted for a period of two years. The expiry date was 14 December 1980. According to her, the six-year period started to run from 15 December 1980 which, she said, was the date that the cause of action arose. She then cited Nasri v Mesah [1971] 1 MLJ 32 where the Federal Court held that a cause of action on a contract accrued on the date of the breach and in the case of actions founded on contact, the time ran from the breach. In my view Nasri's case, applies to the borrower, who is the first defendant in the instant case but does not apply to the second defendant. The next case cited was Nadefinco Ltd v Kevin Corp Sdn Bhd [1978] 2 MLJ 59. In that case the Federal Court held that the cause of action accrued the instant the mining company failed to pay the first instalment due. The action was barred by limitation as it was commenced more than six years after the cause of action had arisen. In that case a contract was entered into between the plaintiff, the mining company and the defendant and two others. Under the contract the mining company was to pay the plaintiff monthly instalments and the first instalment was to be paid on 20 January 1968. The three defendants jointly and severally guaranteed the repayment of the money to the plaintiff in the event of default. In that case it was the term of the contract that the cause of action against the guarantors accrued as soon as the defendants failed to pay the first instalment due. The next case relied upon by the second defendant was Sim Siok Eng v Kong Ming Bank Bhd [1980] 2 MLJ 21.

In that case the F