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2012 MarsdenLR 1919
HIGH COURT MALAYA KUALA LUMPUR
RHB BANK BERHAD – Appellant
Versus
SENI MAJU SDN BHD & ORS – Respondent
[Civil Suit No: D22-27-2006]
Changes in bank identities do not relieve guarantors of their continuous liability; guarantees are binding irrespective of successive banking facilities' origins.
Headnote:(A) Companies Act 1965 - Section 23(6) - Banking and Financial Institutions Act 1989 - Section 50(3) - Guarantees - Liability of guarantors for joint and several debts under banking facilities - Evidence of indebtedness through bank statements required - Change in lending bank does not affect separate liabilities of guarantors. (Paras 34, 39, 46, 57, 144, 178)
(B) Joint and Several Liability - The court concluded that the guarantors are jointly and severally liable under the guarantees executed for the debts arising from the banking facilities taken, irrespective of the changes in lending entities and respective responsibilities. (Paras 41, 152)
Facts of the case:
The plaintiff pursued claims against the defendants for outstanding sums related to banking facilities provided by two banks, which merged into the plaintiff bank, with the defendants providing personal guarantees for these loans. (Paras 1-2, 23, 25)
Findings of Court:
The court maintained that despite changes in the lending institutions’ names and structures, each bank’s facilities stand separate; the personal guarantees executed remain binding, and the claims of the plaintiff are substantiated through proper documentation despite challenges raised by the defendants. (Paras 142-180)
Issues: The main issues examined were whether the defendants are liable for all outstanding sums regarding the banking facilities provided regardless of the identity of the lending bank, and the requirements for proving the claims against the guarantors. (Paras 36, 37)
Ratio Decidendi: The court confirmed that the guarantees provided by the defendants remain effective across changes in banking entities, and the plaintiff's claims are validly supported by the necessary documentation of debt, demonstrating that the defendants' defenses lacked merit against the clear contractual obligations of the guarantees. (Paras 178-182)
Result: Claims against the defendants upheld, with the court ordering liability for the full amounts claimed along with costs to be borne by the defendants.
| Table of Content |
|---|
| 1. overview of bank liabilities (Para 1 , 2) |
| 2. details of banking facilities with different banks (Para 3 , 4 , 10 , 11) |
| 3. details of dcb facilities granted. (Para 5 , 6 , 7 , 8 , 9) |
| 4. details of bu facilities granted. (Para 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19 , 20) |
| 5. guarantor involvement and implications. (Para 21 , 22) |
| 6. claims and amounts due (Para 23 , 25) |
| 7. defaults and consequences. (Para 24) |
| 8. defenses raised by the defendants. (Para 26 , 32 , 33) |
| 9. defendants' arguments regarding account discrepancies (Para 27 , 28 , 29) |
| 10. lack of proof regarding the claims (Para 30 , 31) |
| 11. court's observations on submitted facts (Para 34 , 41) |
| 12. legal arguments and issues identified. (Para 35 , 36 , 37 , 38 , 39) |
| 13. trial proceedings and testimonies. (Para 40 , 42 , 43) |
| 14. vesting orders and their implications. (Para 44 , 45 , 47 , 48 , 49 , 50 , 51) |
| 15. legal determination of liabilities (Para 46 , 58 , 60 , 62) |
| 16. legal impact of bank mergers on liability. (Para 52 , 53 , 54 , 55 , 56) |
| 17. court's analysis of vesting impacts. (Para 57 , 59 , 61) |
| 18. discussion on defectiveness of statement of claim. (Para 63 , 64 , 65 , 66 , 67) |
| 19. securities and their role in claims. (Para 68 , 69) |
| 20. assessment of plaintiff's claims and evidence. (Para 70 , 73 , 74 , 75) |
| 21. pleadings regarding securities (Para 71 , 72) |
| 22. evidence regarding account management. (Para 76 , 77 , 78 , 79 , 80 , 81) |
| 23. importance of documentation in claims. (Para 82 , 83 , 84 , 85 , 86 , 87) |
| 24. credibility of witness testimony. (Para 88 , 89 , 90 , 91) |
| 25. implications of missing documents. (Para 92 , 93 , 94) |
| 26. defendants' record-keeping failure. (Para 95 , 96 , 97) |
| 27. internal matters not affecting the plaintiff's claims. (Para 98 , 99 , 100) |
| 28. liability for debts and evidence provided. (Para 101 , 102 , 103 , 104) |
| 29. the absence of disputes in claims. (Para 105 , 106 , 107) |
| 30. efforts of the defendants to clarify positions. (Para 108 , 109 , 110) |
| 31. absence of contractual breach. (Para 111 , 112 , 113 , 114) |
| 32. burden of proof in claims. (Para 115) |
| 33. plaintiff's burden of proof (Para 116 , 138) |
| 34. credibility assessment of witnesses. (Para 117 , 118 , 119 , 120) |
| 35. statements of accounts' validity. (Para 121 , 122 , 123) |
| 36. confirmed indebtedness established. (Para 124 , 125 , 126 , 127) |
| 37. manifest error in account statements. (Para 128 , 129) |
| 38. collective understanding of financial obligations. (Para 130 , 131) |
| 39. plaintiff’s claim approval confirmed. (Para 132 , 133 , 134 , 135 , 136) |
| 40. liability established for first defendant. (Para 137 , 139 , 140) |
| 41. fourth defendant's limited involvement argument. (Para 141 , 142) |
| 42. seventh defendant's defense rejected. (Para 143 , 144 , 145) |
| 43. directors cannot disassociate from liabilities. (Para 146 , 147) |
| 44. continuing guarantees outlined. (Para 148 , 149 , 150 , 151) |
| 45. discharge of guarantors analyzed. (Para 152 , 153 , 154 , 155 , 156) |
| 46. second and third guarantees upheld. (Para 157 , 158) |
| 47. substitution conditions explained. (Para 159 , 160 , 161) |
| 48. impact of substitution considered. (Para 162 , 163 , 164) |
| 49. third and fourth guarantees analyzed. (Para 165 , 166 , 167) |
| 50. consolidation of guarantees debated. (Para 168 , 169) |
| 51. continuing guarantees reaffirmed. (Para 170 , 171 , 172) |
| 52. legal precedence reviewed. (Para 173 , 174 , 175) |
| 53. conclusion on liability reached. (Para 176 , 177) |
| 54. final orders stated. (Para 178) |
| 55. final orders and liabilities (Para 179 , 182) |
| 56. claims against multiple defendants. (Para 180 , 181) |
[1] First, there were two banks. Then, there was one. Over the course of some ten odd years, the 1st defendant entered into arrangements for various banking facilities with the two banks at different points in time. The 2nd to the 9th defendants stood as guarantors of the various banking facilities. The first set of banking facilities will be referred to as "the DCB facilities" while the second set will be referred to as "the BU facilities".
[2] The sin
