The obligations of a guarantor remain unaffected by changes in directorship or shareholding, and lenders owe no fiduciary duty unless contractually stipulated.

[1] Before the court are applications by two financial institutions to strike out a claim brought by a former director and shareholder of a borrower company who seeks to be released from his obligations as guarantor of certain loan facilities. The Plaintiff contends that he should be discharged as guarantor following the sale of his shares and directorship to a third party who had agreed to replace him as guarantor, and alleges negligence and breach of duty against the Defendants for failing to facilitate this change of guarantor. The Defendants argue that the plaintiff's obligations as guarantor are independent of his position as director/shareholder, that they were not privy to nor bound by any arrangement between the Plaintiff and the share purchaser regarding the guarantee, and that the Plaintiff's claims disclose no reasonable cause of action and are an abuse of process.

Background Facts

[2] The Plaintiff, Abdul Halim bin Mohamad was a former director and shareholder of the 3rd Defendant, Xorix Sdn Bhd ("D3"), a manufacturer of pharmaceutical products. In 2006, D3 obtained a financing facility of RM7 million ("Financing Facility') from the 1st Defendant, Small Medium Enterprise Development Bank Malaysia Berhad ("D1"). This was documented in a Facility Agreement dated 30 August 2006. As part of this facility, the directors of D3 at the time, including the Plaintiff, Syed Redzuan Bin Syed Salim Shatri ("Syed Redzuan"), Azmy Bin A. Hamid (''Azmy') and Rinol Azhar Bin Ridzuan ("Rinol Azhaf), signed a Joint & Several Guarantee & Indemnity Agreement dated 30 August 2006 ("Financing Facility Guarantee").

[3] Rinol Azhar left as director in 2008. D1 released him and replaced him with Kamaruddin bin Mat Desa ("Kamaruddin") as guarantor. Later in 2011 Kamaruddin left and D1 released him as guarantor without requiring a replacement.

[4] In 2009, D3 secured a hire purchase facility from D1 for equipment and machinery ("HP Facility'). This was documented in a Hire Purchase Agreement dated 9 July 2009. The directors at that time, including the Plaintiff, Syed Redzuan, Azmy and Kamaruddin, signed a Joint and Several Guarantee and Indemnity Agreement dated 9 July 2009 ("HP Guarantee").

[5] Pursuant to a Vesting Order dated 26 January 2015 ("Vesting Order'), D1 transferred D3's financing accounts to the 2nd Defendant, SME Asset Management Sdn Bhd ("DZ), a wholly-owned subsidiary of D1. When repayments fell into arrears, D2 filed two actions in 2016: Kuala Lumpur Sessions court Suit No.: WA-B52M-481-09/2016 ("Suit 481") in the Kuala Lumpur Sessions court on 28 September 2016 regarding the HP Facility, and Kuala Lumpur High court Suit No.: WA-22NCC-364-10/2016 ("Suit 364") in the Kuala Lumpur High court on 25 October 2016 regarding the Financing Facility. D2 obtained Judgment in Default in both suits on 3 November 2016 and 25 November 2016 respectively ("JIDs").

[6] On 14 January 2022, the Plaintiff wrote to D1/D2 informing them that the 4th Defendant, Dr Maryam Al-Batul Binti Azizuddin ("D4"), had agreed to buy his shares in D3 and would replace him as guarantor. On 25 February 2022, the Plaintiff and D4 entered into a Share Sale Agreement ("SSA"). Clause 6.3(c) of the SSA stated that D4 would assist in obtaining approval from D1/D2 and MARA to substitute and replace the Plaintiff's position as guarantor upon completion of the s