JUDGMENT

Suriyadi Halim Omar J:

The plaintiff is a bank. For purposes of this case, it granted certain overdraft and trust receipt facilities to the 1st defendant, a company owned by the other two defendants who are husband and wife. The offer of the facilities were made vide a letter dated 21 January 1983. (pp. 1-2 Bundle A).

Pursuant to those facilities, the 2nd defendant charged two pieces of property in favour of the plaintiff, namely Lot No. 208 Geran No. 2769 Kawasan Bandar XXXI and Pajakan Negeri No. Pendaftaran 1243 Lot No. 176 Pekan Tanjong Kling Section 3. Apart from these two pieces of land charged, the 2nd and 3rd defendants also executed two Continuing Guarantee And Indemnity documents dated 7 November 1983, for the overdraft and the trust receipt facilities respectively. Due to the default in payments by the 1st defendant of both the facilities, and at the request of the 2nd defendant, and also by the subsequent acts of the plaintiff, the charged properties were foreclosed. Later this suit ensued as payments were not forthcoming in resolving the balance of the debts.

Four main points were aired by both parties during the hearing namely:

1. the issue of demand on the defendants;

2. whether the action was time barred;

3. there was any variation in the terms which affected the contract; and

4. whether the plaintiff's claim was premature.

At the outset, I must highlight that both parties in a substantial way, when submitting on the issues of one and three discussed extensively the clauses of the Continuing Guarantee and Indemnity documents signed by both parties. In short the question of construction played a prominent role.

The Necessity Of Demand Letters For Both The Facilities As Against The Borrower (1st Defendant)

The 1st defendant, as regards whether demand was made to it for either of the facility totally rejected that notion and brought my attention to the testimonies of PW1, PW3, DW1 and DW2 to support that stance. PW1 admitted receiving copies of the demand letters dated 7 May 1990 for the sum of RM728,152.15. PW3 did not know whether all the demand letters were ever returned although he did admit that D28 ie, the envelope addressed to the 1st defendant was returned. The 2nd defendant testified that he never received any demand letters on behalf of the 1st defendant. Similarly DW2 who is the 3rd defendant, also denied receiving B31, which is a demand letter. By virtue of para. 7 of A2, which is the letter of offer and of which nonadherence occurred, the defendants submitted that the action was therefore tainted and thus had absolved them from any liability. The 2nd and 3rd defendants ventilated that the notice of demand was a term in the agreement for each of the facility vis-a-vis the 1st defendant. The fact that D28 was confirmed to have been returned, as agreed by PW3, strengthened their assertion that no service of demand was made to the 1st defendant.

The plaintiff on the other hand submitted that as regards the borrower, a notice of demand was unnecessary, by reason of the silence of that requirement in the agreement. It further submitted that mere usage of the words "on demand" was insufficient to qualify it as a term of the agreement. In answer to this submission, suffice for me to opine that a provision in an agreement of this nature, the words "on demand" do not automatically make a demand a term of the relevant agreement. The intention of the parties must be gauged and it is therefore encumbent upon a judge to ascertain whether such a demand is a term by perusing the relevant documents. Suffice as a general introduction to this issue I refer to the case of N Joachimson (A Firm Name) v. Swiss Bank Corporation [1921] 3 KB 110 where Atkin LJ at p. 128 said:

The question is in every case whether the parties have stipulated that a request shall be made.

In the case of a note made payable on demand it is clear that the words "payable on demand" do not make a demand a term of the contract: ..