[1] This is an appeal against the decision of the High COURT in which the learned Judge dismissed the Appellant's application for summary judgment premised on a guarantee agreement given by the Respondent in respect of a loan granted by the Appellant to one Diam Ubi Sdn Bhd (Diam Ubi).

[2] We heard the appeal and after due consideration of the respective submissions of counsel, we allowed the appeal and now give our reasons.

Background Facts

[3] Diam Ubi was granted a banking facility in the form of an overdraft in the sum of RM3,000,000.00. As part of the securities, the Appellant required guarantees from the directors of Diam Ubi. The Respondent being one of the directors executed a letter of guarantee dated 17 December 1979 (the letter of guarantee).

[4] The overdraft facility was terminated by the Appellant sometime in 1985 whereupon demands were made for the payment of the outstanding sum from Diam Ubi and the Respondent. The subject matter of dispute in this appeal is the letter of demand dated 30 May 1986 (1986 demand) issued to the Respondent. Premised on the 1986 demand, the Appellant initiated a legal suit against the Respondent, Diam Ubi, the chargor and three other director