2014 MarsdenLR 2554

COURT OF APPEAL PUTRAJAYA
FISAR HAJI ABDULLAH – Appellant
Versus
MALAYAN BANKING BERHAD – Respondent
[Civil Appeal No: C-02-2489-09-2011]

A guarantor is liable only for the proven actual amount owed after all borrower accounts are consolidated; a proper demand must be established to claim from the guarantor.

Headnote:(A) Contracts Act 1950 - Section 94 - Guarantor's liability - Appeal allowed and the High Court's decision set aside due to lack of proved debt owed by the borrower - The guarantee terms indicate the guarantor is liable only for the actual amount owed after consolidation of accounts. - The respondent failed to substantiate the claimed amounts due to uncertainties in the evidence regarding the borrowers' accounts and properties disposed of by the liquidator. (Paras 31, 32)

(B) Demand Guarantee - Proper demand and proof of debt - A valid demand must be made to establish a claim against a guarantor. The demand on the borrower was questioned and uncertainties about claimed amounts led to the appeal's success. (Paras 34, 44)

Facts of the case:
The appellant appealed against a High Court order favoring a bank's claim as a guarantor for amounts tied to an overdraft and loan facilities. The borrower was wound-up, and the respondent bank sought repayment without clarity on the exact sums owed after the borrower’s liquidation.

Findings of Court:
The evidence failed to establish the claimed amount accurately, resulting in the need to set aside the High Court's order with costs awarded to the appellant.

Issues: Whether the bank proved the amount claimed, the validity of the sales of properties by the liquidator, the bank's duty to mitigate losses, and whether a valid demand was made.

Ratio Decidendi: The court held that a bank must prove the specific amount claimed to hold a guarantor liable, and that the respondent bank’s failure to establish the correct amount led to the judgment in favor of the appellant.

Result: Appeal allowed and the order of the High Court set aside.