The Guarantee Agreement is enforceable despite claims of coercion, as the terms were clear and agreed upon by the parties.

Introduction

[1] This is an appeal against the decision of the Sessions Court which had after a full trial allowed the claim filed by the respondent herein (the plaintiff in the Sessions Court below) for payment of outstanding sums for goods sold and delivered to the first appellant, and guaranteed by the second appellant (the first and second defendants in the proceedings before the Sessions Court respectively). The appeal was also against the dismissal of the counterclaim by the defendants for sums allegedly overpaid to the plaintiff in a sale of a property.

[2] After having heard the appeal, I dismissed the same, and stated the main grounds in support thereof. This judgment contains the full reasons for my decision.

Key Background Facts

The Parties

[3] Both the respondent and the first appellant are private limited companies. The second appellant is a key director and shareholder of the latter.

[4] He was formerly, prior to his divorce, the brother in law of one Toe Bok Peng ("TBP"). TBP is the managing director and also a major shareholder of the respondent company.

[5] It is common ground that there was a long standing business relationship between the respondent and the companies under the control of the second appellant, which included the first appellant.

The Transactions

[6] As at 2014 the outstanding debt of the first appellant to the respondent was RM443,144.25 and a higher sum of RM1,213,168.29 was due from other companies under the control of the second appellant.

[7] It was claimed that the parties agreed that as settlement of the debts to the respondent, TBP agreed to purchase the second appellant's property at No 15, Jalan Villa Perdana 3, Taman Villa Perdana in Kajang ("the Property") valued at RM1.7 million, which became the purchase price of the same.

[8] TBP needed only to take a loan of RM700,000 to redeem the Property. In respect of the balance of RM1 million, the relevant parties agreed to have this amount payable by TBP to the second appellant be set off against the debt of RM1,213,168.29 owing by various companies of the second appellant to the respondent. THP decided to forego the rest, which amount was about RM213,168.29.

[9] In relation to the debt of RM443,144.25 due from the first appellant to the respondent, parties agreed for this to be carried forward to the following year and paid by 8 February 2016. In order to provide the necessary assurance, and given that payment would not be immediate, the second appellant agreed to sign a guarantee in respect of this sum in favour of the respondent.

[10] With the assistance of solicitors, the relevant documentation on the purchase and transfer of the Property were then prepared and executed in the second half of 2015. The sale and purchase agreement on the Property between TBP and the second appellant was executed on 25 September 2015 ("the Sale and Purchase Agreement"), as was the guarantee for RM443,144.25 executed by the second appellant in favour of the respondent ("the Guarantee Agreement").

[11] In order to provide further assurance to THP, the second appellant also agreed to pay interest for the sum of RM20,000, which was documented by the payment of two CIMB Bank cheques for RM10,000 each, both dated 30 November 2015.

[12] As it eventually turned out, the appellants failed to pay RM443,144.25, and the second appellant also stopped payment for the two cheques.

The Suit

[13] As the appellants did not satisfy the notice of demand of 28 March 2016 issued by the solicitors for the respondent, the respondent initiated a writ action for recovery. In response