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2025 MarsdenLR 4355
HIGH COURT MALAYA GEORGETOWN
PUBLIC BANK BERHAD – Appellant
Versus
GOH GIAP PING & ORS – Respondent
[Civil Suit No: PA-22NCC-21-03/2024]
A guarantor remains liable for guaranteed amounts unless they can conclusively prove forgery, which the defendant failed to substantiate.
Headnote:(A) Banking facilities - Guarantees - Recovery action against guarantor for amounts due under guarantees for banking facilities amounting to RM6,700,000.00 - Borrower defaulted; bank validly called for repayment - Defendant did not dispute liability for Loan Facilities 1 to 5 - Allegation of forgery regarding Loan Facilities 6 and 7 rejected - Defendant deemed liable for the entire amount due under the guarantees, including interest and costs. (Paras 1-6, 30, 80)
(B) Burden of proof - Allegation of forgery - Burden lies on the party alleging forgery - Defendant failed to provide conclusive evidence of forgery, contradicting own documentary evidence - Statements regarding resignation as director deemed inaccurate based on official documentation. (Paras 32, 34, 73-78)
Facts of the case:
The plaintiff bank extended various loan facilities amounting to RM6,700,000.00 to the borrower, secured by guarantees from the defendant. Following the borrower's default and winding-up, the bank sought to recover outstanding debts from the defendants, including claims of forgery by the defendant regarding certain guarantees. (Paras 3-10)
Findings of Court:
The court acknowledged the defendant's liability for Loan Facilities 1 to 5, while rejecting claims of forgery concerning Loan Facilities 6 and 7. Judgment was awarded against the defendant for the total outstanding amount, along with interest and costs. (Paras 30, 80, 81)
Issues: Whether the defendant was liable under Loan Facilities 1 to 7; validity of the defendant's claims of forgery regarding guarantees for Loan Facilities 6 and 7; and whether the defendant's resignation as director impacted liability. (Paras 1-10, 30, 73-78)
Ratio Decidendi: The court ruled that a guarantor’s liability remains despite allegations of forgery unless proven. The court emphasized the importance of documentary evidence indicating the defendant's directorship at relevant times and established the defendant's ongoing liability under both disputed and non-disputed guarantees. (Paras 32, 80)
Result: Judgment entered against the defendant for RM5,269,029.74, with interest and costs awarded to the bank.
| Table of Content |
|---|
| 1. recovery action for amounts due to the bank. (Para 1 , 2) |
| 2. banking facilities details and agreements. (Para 3 , 4 , 5 , 6) |
| 3. details of borrower's default and demand. (Para 7 , 8 , 9 , 10 , 11) |
| 4. d2's defense based on alleged forgery. (Para 12 , 30 , 31) |
| 5. d2 admits liability for loan facilities 1 to 5. (Para 13 , 14 , 15 , 16 , 24) |
| 6. bank's rights to recover without first exhausting other remedies. (Para 25 , 27 , 28) |
| 7. burden of proof lies on d2 to show forgery. (Para 32 , 36 , 39 , 40) |
| 8. signed documents cannot be proved forged without sufficient evidence. (Para 44 , 46 , 70) |
| 9. failure to call d2's co-director affects d2's credibility. (Para 58 , 59 , 60) |
| 10. judgment entered for the bank against d2. (Para 80 , 81) |
Introduction
[1] This is a recovery action by the plaintiff ("Bank") against the 2nd Defendant ("D2") for the amounts due to the Bank in connection with banking facilities that were granted by the Bank to a borrower. D2 is sued as a guarantor. He had guaranteed the repayment of the banking facilities granted by the Bank to the borrower.
[2] After a full trial, I allow the Bank's claim. Here are the grounds of my judgment.
Background Facts
[3] Upon the request of Eco Paperboard Sdn Bhd ("borrower"), the Bank's branch at Prai, Penang approved various banking facilities to the borrower amounting to RM6,700,000.00. The banking facilities consist of the following seven loan facilities:
(a) Loan Facility 1 for RM2,000,000.00:
(i) Fixed Loan (1) for the sum of RM700,000.00.
(ii) Overdraft (1) for the sum of RM300,000.00; and
(iii) Trade Bills (1) for the sum of RM1,000,000.00.
(b) Loan Facility 2 for RM200,000.00:
(i) Trade Bills (2) for the sum of RM200,000.00.
(c) Loan Facility 3 for RM300,000.00:
(i) Trade Bills (3) for the sum of RM300,000.00.
(d) Loan Facility 4 for RM500,000.00:
(i) Trade Bills (4) for the sum of RM500,000.00.
(e) Loan Facility 5 for RM500,000.00:
(i) Trade Bills (5) for the sum of RM500,000.00.
(f) Loan Facility 6 for the sum of RM2,200,000.00:
(i) Fixed Loan (2) for the sum of RM1,700,000.00; and
(ii) Trade Bills (6) for the sum of RM500,000.00.
(g) Loan Facility 7 for the sum of RM1,000,000.00:
(i) Overdraft (2) for the sum of RM500,000.00;and
(ii) Trade Bills (7) for the sum of RM500,000.00.
[4] Pursuant to the letters of offer, the Bank and the borrower entered into several facilities agreements dated (i) 17 July 2008, (ii) 4 November 2009, (iii) 24 August 2010, (iv) 5 December 2011, (v) 5 November 2012, (vi) 13 January 2014 and (vii) 20 August 2015 respectively (collectively the "facilities agreements").
[5] The banking facilities were secured by:
(a) seven individual guarantees dated (i) 17 July 2008, (ii) 4 November 2009, (iii) 24 August 2010, (iv) 5 December 2011, (v) 5 November 2012, (vi) 13 January 2014 and (vii) 20 August 2015 respectively, executed jointly and severally by D2 and the 1st defendant in favour of the Bank (collectively the "individual guarantees"); and
(b) seven corporate guarantees dated (i) 17 July 2008, (ii) 4 November 2009, (iii) 24 August 2010, (iv) 5 December 2011, (v) 5 November 2012, (vi) 13 January 2014 and (vii) 20 August 2015 respectively, executed by the 3rd Defendant ("company") in favour of the Bank (collectively the "corporate guarantees")
(the individual guarantees and the corporate guarantees are collectively referred to as the "guarantees").
[6] The banking facilities were also secured by a first party legal charge over a piece of property owned by the borrower situated at Baling, Kedah ("charge").
[7] The borrower defaulted in repayment of the banking facilities to the Bank. Via its solicitors' letters dated 14 July 2023 and 2 November 2023, the Bank demanded payment of arrears under the banking facilities from the borrower as well as the defendants as guarantors to the banking facilities.
[8] The Bank then recalled the banking facilities vide its solicitors' notice of recall and demand dated 15 November 2023. The Bank demanded that the ou
