[1] I too would dismiss this appeal. But for reasons different from those given by my learned brother Suriyadi in his judgment. The appellant must, in my opinion, fail on the point of construction of the relevant endorsement which reads as follows:

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This guarantee will expire on 14 June 1991. Claims, if any, must be

received on or before this date.

[2] In my judgment, what the first sentence in this endorsement means is this. The appellant will be liable on the guarantee until 14 June 1991. If anything happens after that date no liability attaches. Next, what does the second sentence mean? It may mean one of three things. It may mean that the respondent must file its action against the appellant before 14 June 1991. Or it may mean that if there has been any breach by the contractor during the period expiring 14 June 1991, then the guarantee must be called upon on or before 14 June 1991. Or it may mean that the respondent may make a demand in respect of an event that occurred during the life of the guarantee and such demand may be made upon the appellant even after 14 June 1991.

[3] I do not think that the first meaning is correct. Assume that the event giving rise to liability occurred on 13 June 1991. It would mean that the respondent has only a day to institute proceedings. Or what if the respondent becomes aware of the event on 15 June 1991. It would be impossible then for the respondent to commence an action before 14 June 1991 and for that reason his claim would be barred. The first meaning produces an absurd result and therefore cannot possibly be the meaning intended. See Wickman Machine Tools Sales v L Schuler AG [1974] AC 235, per Lord Simon of Glaisdale: ‘On the other hand, to read ‘condition’ in cl 7(b) in what I regard as its primary sense as a term of art produces, as my noble and learned friend, Lord Reid, has shown, such absurd results that this cannot be the meaning to be ascribed to it, provided that it is reasonably capable of some other meaning.’ See also, Watson v Phipps [1985] 60 ALJR 1, per Lord Brightman: ‘The function of a court of construction is to ascertain what the parties meant by the words which they have used. For this purpose the grammatical and ordinary sense of the words is to be adhered to, unless they lead to some absurdity or to some repugnance or inconsistency with the rest of the instrument, in which case the grammatical and ordinary sense of the words may be modified so as to avoid that absurdity or inconsistency, but no further: see the speech of Lord Wensleydale in Grey v Pearson (1875) 6 HLC 61 at p 106, ([1875] 10 ER 1216 (HL)) repeated by Lord Blackburn in Caledonian Railway Co v North British Railway Co (1881) 6 App Cas 114 at p 131.’

[4] Take the second meaning. Again test it against the same assumed facts. And again it produces an absurd result. How could the respondent make a claim in respect of an event that occurred before 14 June 1991 of which it had notice only after that date? So the second meaning cannot hold.

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[5] Now take the third possible meaning. If the event occurred even on 13 June 1991, the appellant would remain liable and notice of it may be given after that date. I am hence inclined to the view that it is the third meaning that is correct.

[6] There is an alternate route by which I am equally inclined to arrive at the same conclusion. It is this. Since the material part of the endorsement is capable of having more than one meaning, it must be treated as being ambiguous. And since it is the appellant who seeks to rely on the terms of the ambiguous endorsement to defeat the respondent’s claim, its terms must be construed contra proferentum against it and be given the third meaning I have ascribed to it. As Abdul Malik Ishak J said in Lembaga Pelabuhan Johor v The Pacific Bank Bhd [1998] 5 MLJ 323 (at p 334):

.. if the words in the guarantee are ambiguous, the guarantee should be

construed stri