Ramly Ali J:

The plaintiff is and was at all material times an insurance company carrying on business as insurer in accordance with the Insurance Act 1963. The plaintiff's claim against the defendants is for arrears of premium as at 31 August 1989, for a sum of RM1,284,018.26 for Motor Insurance and RM157,538.49 for Non-Motor Insurance (total of RM1,441,556.75) arising out of a chief agency agreement dated 13 March 1987. The plaintiff and the 1st defendant entered into a chief agency agreement dated 13 March 1987 and in consideration of the plaintiff entering into the chief agency agreement, the 2nd and 3rd defendants, who were the shareholders and directors of the 1st defendant executed a letter of guarantee, to guarantee and indemnify the payment of all insurance premiums which shall be due and owing to the plaintiff in respect of the chief agency agreement. The plaintiff contends that in breach of the chief agency agreement the 1st defendant failed to remit insurance premiums to the plaintiff as stipulated under the said agreement.

By mutual consent, the said chief agency agreement was terminated as a result of the 1st defendant's breaches of the express terms, conditions and stipulations of the agreement. In furtherance to the said termination, the plaintiff has complied with s. 44A(3)(b) of the Insurance Act 1963by way of a notice of advertisement in the Star Newspaper on 3 July 1989, thus notifying the general public on the termination and repudiation of the assumption of risks undertaken by the 1st defendant.

The defendants deny the claim on the grounds that the plaintiff's accounts, which form the basis of the plaintiff's claim are in error and that the plaintiff's termination was invalid and wrong in law. The defendants also filed their counter-claims against the plaintiff. The defendants' counter-claim is essentially one in defamation arising out of the said advertisement which appeared in the Star Newspaper on 3 July 1989. Each of the defendants claims from the plaintiff for aggravated damages, exemplary damages, general and special damages, interest and costs.

The following are inter aliathe express terms and conditions of the chief agency agreement:

a) that the 1st defendant shall have the power to bind the plaintiff on insurance except reinsurance;

b) that the 1st defendant shall at all times transact all business on behalf of the plaintiff as chief agent of the plaintiff;

c) that the 1st defendant shall submit copies of all policies issued on behalf of the plaintiff together with the premium bordereau forthightly;

d) the mode of collection and payment of premiums to the plaintiff shall be of s. 14(A) of the Insurance Act 1963;

e) that all monies due to the plaintiff under any term of business transacted in the name of or on behalf of the plaintiff by the defendant shall be due and paid up to the plaintiff within 90 days from the issuance of the cover;

f) that the plaintiff may at any time terminate the said agreement if the 1st defendant is in breach of any of the terms and conditions of the said agreement by giving 14 days written notice to the 1st defendant.

The following are inter aliathe express terms and conditions of the said letter of guarantee:

a) that the liability of the guarantors shall be joint and several on the arrears of both motor and non-motor insurance premiums due and owing from time to times by the 1st defendant and payable to the plaintiff in respect of the chief agency agreement;

b) that the guarantors agreed to unconditionally and irrevocably guarantee as principal debtors and not merely as sureties in the event for any reason whatsoever the said 1st defendant fails to cause the payment of insurance premium to the plaintiff on cover notes issued by the 1st defendant in furtherance to the said agreement;

c) that the guarantors to pay all such arrears of insurance premium for both motor and non-motor insurance cover under the agreement; and

d) that the guarantors agree to pay all mo