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2011 MarsdenLR 5048
HASNAH MOHAMMED HASHIM
MALAYAN BANKING BERHAD – Appellant
Versus
INTERGRATED GROWTH CAPITAL SDN BHD & ORS – Respondent
Guarantees limit liability to specified amounts, including interest, based on the explicit language of the guarantee agreements.
Headnote:(A) Rules of the High Court 1980 - Order 18, rule 19(1)(b), (c), and (d) - Application to strike out writ of summons and statement of claim - Guarantees - The obligations of guarantors limited to RM1,200,000 per terms of Personal and Corporate Guarantees - Liability for interest dependent on guarantee language. (Paras 5 to 8)
(B) Summary Dismissal - The court will only dismiss actions summarily in plain and obvious cases, confirming the standards for summary procedure as set in precedents. (Paras 9 and 10)
Facts of the case:
The Plaintiff granted certain banking facilities to the 1st Defendant, secured by personal and corporate guarantees from the 2nd and 3rd Defendants. After default, the Plaintiff demanded payment, which was contested by the Defendants claiming they were no longer liable after making partial payments.
Findings of Court:
The guarantees clearly limit liability, and claims for interest fall under that limit. The application to strike out the claims was allowed.
Issues: The main issue pertains to whether the 2nd and 3rd Defendants remain liable for interest on the amounts guaranteed despite partial payments.
Ratio Decidendi: The court found that the guarantees explicitly limit the liability of the 2nd and 3rd Defendants to the secured amount, which includes interest claims. The court emphasized that liability depends directly on the language of the guarantees.
Result: Application to strike out allowed with costs.
Background
Enclosure 59 is the 2nd and 3rd Defendants application to strike out the writ of summons and statement of claim both dated 19.11.2009 ("Writ of Summons and Statement of Claim") and reply dated 2.3.2010 ("Reply") under Order 18 rule 19(1)(b), (c) and (d) of the Rules of the High Court 1980 ("RHC").
By a letter of offer dated 29.3.2000, the Plaintiff granted overdraft facility of RM500,000 and short term revolving credit of RM2,500.000 ("Banking Facilities") to the 1st Defendant.
The Banking Facilities are secured by:
(a) a personal guarantee dated 30.7.1997 ("Personal Guarantee") executed by the 2nd Defendant; and
(b) a corporate guarantee dated 11.8.1997 ("Corporate Guarantee") executed by the 3rd Defendant.
By the Personal Guarantee, the 2nd Defendant, jointly and severally, guaranteed payment on demand all sums due and owing by the 1st Defendant to the Plaintiff under the Banking Facilities up to the principal sum of RM1,200.000 together with interest claimable from the 2nd Defendant at the rate levied on the 1st Defendant from the date of receiving the demand.
By the Corporate Guarantee, the 3rd Defendant, jointly and severally, guaranteed payment on demand all sums due and owing by the 1st Defendant to the Plaintiff under the Banking Facilities up to the principal sum of RM1,200.000 together with interest claimable from the 3rd Defendant at the rate levied on the 1st Defendant from the date of receiving the demand.
The Plaintiff by its solicitors letter dated 7.9.2001 to the 1st Defendant, cancelled the Banking Facilities and demanded payment of RM3,075,779.19 being the outstanding amount under Banking Facilities as at 31.8.2001 together with interest accruing thereon. However, the 1st Defendant failed to pay the sum demanded.
The Plaintiff also by its solicitors letters dated 7.9.2001 to the 2nd and 3rd Defendant respectively, demanded payment for the sum stated in paragraph 2.5 above which is the amount guaranteed by them under the Corporate Guarantee and the Personal Guarantee respectively.
However, the 2nd and 3rd Defendants failed to pay the sum demanded.
The Plaintiff by its solicitors letter dated 21.12.2001 to the 2nd and 3rd Defendants solicitors, subsequently demanded payment of RM1,200,000 together with interest levied on the 1st Defendant from the date of the demand until full settlement each from the 2nd and 3rd Defendants. However, the 2nd and 3rd Defendants again failed to pay the sum demanded.
On 13.11.2002, the 2nd Defendant made a payment of RM1,200,000 to the Plaintiff under the Personal Guarantee.
By a Court order dated 23.7.2009, the 1st Defendant was wound-up and the Director-General of Insolvency was appointed as liquidator of the 1st Defendant.
On 1.6.2010, the 3rd Defendant made a payment of RM1,200,000 to the Plaintiff under the Corporate Guarantee.
The Plaintiffs remaining claim against the 2nd and 3rd Defendants is for the interest on the sums guaranteed by the 2nd and 3rd Defendants pursuant to the terms of the Corporate Guarantee and Personal Guarantee respectively.
On 18.1.2011, the Plaintiffs application under Order 33, RHC for an order that the questions arise in the pleadings be tried before the trial was dismissed by the Court. In opposing the Plaintiffs application, Counsel for the 2nd and 3rd Defendants submitted that the issue whether the 2nd and 3rd Defendants are liable to the interest claimed by the Plaintiff ought to be determined at trial.
The main issue in this action is whether the 2nd and 3rd Defendants are liable to interest on the sum guaranteed by them under the Corporate Guarantee and Personal Guarantee respectively.
The 2nd and 3rd Defendants grounds for the striking out application is that the 2nd and 3rd Defendants are no longer liable as they have made a payment of RM1,200,000 respectively to the Plaintiff.
The Law
It is only in plain and obvious cases that the Court will dismiss an action summarily. In the case of Lee
