Gopal Sri Ram JCA:

[1] This appeal was heard and dismissed on 6 June 1995, without calling upon Counsel for the respondents to reply. My reasons for the decision reached now follow.

[2] Siah Teong Loo & Sons Sdn Bhd ('the company') is a private limited company. At all material times, the appellants were its shareholders and directors. It is their family company. Encik Alvin John who appeared for the appellants, after narrating these facts, conceded, in response to a question put by me, that the appellants are in truth the alter ego of the company.

[3] The company was in need of funds. It applied for a loan to Interfinance Bhd ('the lender'). The lender agreed to grant a loan. One of the conditions of the loan was that there should be security in the form of a charge over land. The respondents had a piece of land. The appellants approached the respondents and asked them to create a charge in favour of the lender to secure the loan. The respondents agreed. But they required some security of the appellants that the loan will be repaid. The appellants agreed to provide a guarantee to secure the due performance by them of the terms of the loan agreement which they had with the lender.

[4] On 9 October 1984, the appellants executed a guarantee in favour of the respondents. It is a document of great importance and for that reason it is best that I reproduce the whole of it here.

Guarantee

To: Lim Gim Chain and Lim Kim Lian (f)

both of No 69, Jalan Tiga,

Taman Midah, Off Jalan Cheras,

Kuala Lumpur.

In consideration of both of you at our request entering into agreement of same date with Interfinance Bhd (hereinafter called 'the lender') as the chargors thereunder and having agreed as registered co-proprietors to have your property held under CT No 268, s 65 in the town and district of Kuala Lumpur (hereinafter called 'the said property') charged to the lender as security for the benefit of and/or for the use of Siah Teong Loo & Sons Sdn Bhd a private limited Company incorporated and carrying on business in Malaysia with its registered office at No 22-3, Jalan Segambut, Kuala Lumpur as at 12 December 1983 (hereinafter called 'the borrower') we the undersigned:

1. Sia Siew Hong @ Siah Cheng Kim

2. Chia Ching Hoo

3. Siah Teong Loo @ Chia Chong Loo

do hereby jointly and severally guarantee payment in the event of the borrower's default in its repayment of the loan secured by the said property taken from the lender of all moneys and liabilities to the extent of Ringgit Malaysia two hundred and fifty thousand (RM250,000) only (hereinafter referred to as 'the loan') whether certain or contingent now or hereafter owing or incurred to the lender from or by the borrower on any account or in any manner whether as principal or surety and whether alone or jointly with any other persons and in whatever name style or firm including:

(a) in the event of the winding up of the borrower or the borrower being in receivership, all sums which would at any time have been owing and due to the lender by the borrower;

(b) all money obtained from or liabilities incurred to the lender notwithstanding that the borrowing or incurring of such liabilities may be invalid or in excess of the powers of the borrower or of any director attorney agent or other purporting to borrow or act on behalf of the borrower and notwithstanding any other irregularity in such borrowing or incurring such liabilities;

together with interest on all such debts and liabilities to the date of payment, commission charges legal and other costs charges and expenses whether incurred in enforcing or seeking to enforce any security for or obtaining or seeking to obtain payment of all or any part of the money hereby guaranteed or otherwise howsoever. Such debts shall be deemed to be owing from us as principal debtor/s to you notwithstanding any defect informality or insufficiency in the borrowing powers of the borrower or in the exercise thereof which might be a defence as between the borrower and the lende