VC George J:

Pursuant to a credit facilities agreement of 13 September 1982 and a settlement thereto dated 21 April 1983 the plaintiff provided the 1st defendant with a term loan and a revolving credit facility. There were agreed terms of repayment which included the payment of interest on the amounts advanced to the 1st defendant.

The 2nd, 3rd and 4th defendants by a letter of guarantee dated 13 September 1982 and a supplement thereto dated 21 April 1983 guaranteed the repayment of all amounts payable by the 1st defendant. The 4th defendant's liability was however restricted to 50% of the amount repayable by the 1st defendant.

Pursuant to the agreements various advances were made on both the term and the revolving credit facility to the 1st defendant. The 1st defendant ran into difficulties. By letter dated 12 August 1984 the 1st defendant informed the plaintiff of their problems and ended the letter with an indication that the 1st defendant would be seeking a restructuring of the facility which it was said would possibly involve a deferment of the repayment schedule.

The 4th defendant wrote its letter of 13 September 1984 to the plaintiff referring to the 1st defendant's said letter and pointing out that they had previously advised the plaintiff of the deterioration of the financial circumstances and that they were opposed to any restructuring of the facility or deferment of the repayment schedule. They ended the letter by giving notice that the 4th defendant would consider themselves discharged from their position as guarantors should the plaintiff restructure the facility or defer the repayment schedule.

By another letter dated 23 October 1985 the 4th defendant complained of the alleged inertia on the part of the plaintiff vis-a-vis the 1st defendant and alleged that the plaintiff had agreed with the 1st defendant and the 2nd and 3rd defendants not to take any action against any of them. The 4th defendant ended the letter stating that it considered itself discharged from its liabilities as a guarantor.

The writ herein was caused to be issued against the borrower and all the guarantors on 6 March 1986. Judgment as prayed was obtained against the 1st, 2nd and 3rd defendants. The proceedings against the 4th defendant was delayed as apparently there were difficulties in effecting service of the writ on the 4th defendant particularly as the 4th defendant was outside the jurisdiction.

The plaintiffs sought O. 14 proceeding against the 4th defendant and failed. They now appeal against the Senior Assistant Registrar's decision in this Court.

Now, apparently there was a debenture creating a fixed and a floating charge of all the assets of the 1st defendant. For the 4th defendant it is contended that upon the 4th defendant as a guarantor calling upon the plaintiff bank to proceed against the borrowers and the banks failing to do so either by foreclosure or by crystallising the debenture and appointing a receiver and or a receiver and manager the 4th defendant had been discharged of its liability. It is contended that in any event that contention provides a triable issue. It is also contended that because the plaintiff had restructured the facility and had deferred the repayment schedule the 4th defendant was discharged. In any event, whether it was so discharged is, it is contended, another triable issue. For the 4th defendant ss. 92 and 94 of the Contracts Act were relied on and as authority inter alia my judgment given in D & C Bank v. Almas Motor Corp. (M) Sdn. Bhd. & Ors. [1988] 3 MLJ 229 was cited.

In that case, for the plaintiff it had been argued that cl. 17 of the guarantee did away with the effect of ss. 92 and 94. Clause 17 there was as follows:

The bank shall be under no liability to marshall in our favour any securities or any of the funds or assets which the bank may be entitled to receive or upon which the bank has a claim.

That clause only dealt with priorities of proceedings to be affected and did not dispo