BANKING: Banks and banking business - Guarantees - Banking facilities - Borrower's default in repayment - Liability against guarantors - Notice of demand - Purpose of - Whether must state precise amount due and owing by guarantors - Guarantee agreement - Interpretation of - Whether guarantors deemed to be principal debtors - Certificate of indebtedness - Whether binding and sufficient proof of amount due - Whether liabilities of guarantors include interest arising from loan plus other charges - Whether guarantors liable for whole sum due and owing by borrower
HONG LEONG BANK BHD v. M MUTHIAH & ANOR AND ANOTHER APPEAL
FEDERAL COURT, PUTRAJAYA
ARIFIN ZAKARIA CJ, RAUS SHARIF PCA, ABDULL HAMID EMBONG FCJ, AHMAD MAAROP FCJ, ZALEHA ZAHARI FCJ
[CIVIL APPEALS NO: 02-8-03-2013(W) & 02-9-03-2013(W)]
7 NOVEMBER 2013
There were two appeals herein which arose out of the same suit and with the agreement of the parties, were heard together. The appellant (`plaintiff'), a bank, had granted three banking facilities to Sri Tanjung Travel Sdn Bhd (`the borrower') upon terms as contained in two separate letters of offer. The facilities comprised of a bank guarantee of RM100,000, a term loan of RM565,000 and an overdraft of RM3 million. The respondents (`defendants') stood as guarantors for the facilities granted, but only to the limit of RM5,665,000. Problems arose when the borrower defaulted in repayment of the banking facilities. As a result, the plaintiff commenced a suit in the High Court against all the parties involved and claimed for, inter alia, (i) RM8,834,348.11 for the overdraft facility as at 31 January 2006 (with interest); and (ii) RM207,752.01 for the term loan facility as at 31 January 2006 (with interest). Since the borrower was wound-up pursuant to a petition filed by a third party, the trial proceeded against the second to the fourth defendants as guarantors. It was the defendants' contention (a) that their liability was limited to the sum of RM5,665,000 based on the proviso to cl. 1 of the guarantees; and (b) that the notice of demand was defective and invalid since the demand was for RM9,059,767.17. The High Court decided in favour of the plaintiff and held that the cause of action accrued against the defendants for failure to pay upon demand since there was a valid or real demand for the payment made. Further, it was held that the certificate of indebtedness was binding and sufficient proof of the amount due. On appeal, the Court of Appeal reversed the decision of the High Court and held that although it may not be necessary to state the actual amount in the demand addressed to the principal debtor, ie, the borrower, the same did not apply to a demand against a guarantor wherein the creditor was required to specify the exact amount. On that premise, it was decided that the notice of demand was bad in law. The Court of Appeal also decided that the certificate of indebtedness was not binding on the guarantors since their liabilities were governed by the maximum liability proviso in cl. 1 of the guarantees. Dissatisfied, the plaintiff appealed to this court. Leave to appeal was granted based on the following questions: (i) where a guarantee is made payable "on demand", whether a notice of demand issued to a surety must state the precise amount due and owed by the surety to the creditor (`first question'); and (ii) in the event the answer to the first question is in the negative, whether the precise amount due and payable by a surety can be subsequently adjudicated upon in court proceedings and the surety be made liable to pay the amount adjudicated to be due and owed under the guarantee (`second question').
Held (allowing appeal with costs; setting aside decision of Court of Appeal)
Per Arifin Zakaria CJ delivering the judgment of the court:
(1) The guarantee in this case was an on demand guarantee. As such, there is a stringent requirement that the demand must be issued notifying the debtor that the creditor is demanding repayment of the debt. The purpose of the demand is to give notice to the debtor that the creditor is demanding repayment of the sum borrowed. Contrary to the finding of the Court of Appeal, it was not mandatory for the notice of demand to state the exact amount due and payable to the creditor. In Shell Marketing Co of Borneo Ltd v. Wee Boon Ping, the judge was not prevented from giving summary judgment for the plaintiff even though the amounts stated in the letters of demand were more than the amount finally claimed. Accordingly, the first question was answered in the negative (Co-operative Central Bank Ltd (In Receivership) v. Meng Kuang Properties Bhd; dist). (paras 25, 26, 28 & 29)
(2) The approach to be adopted in interpreting the proviso to cl. 1 was to read the guarantee agreement as a whole. The expression "together with such further sum for interest" in the proviso clearly indicates that the extent of the defendants' liabilities were not limited to the sum of RM5,665,000 but should also include other sums comprising of interest on the loan, commission or other charges named therein. Apart from that, cl. 4 stipulates that the guarantee was a continuing guarantee upon each of the guarantors. As a continuing guarantee, the liabilities of the guarantors were not confined to the principal sum alone but should include interest arising from the loan plus other charges. This was further fortified by the provision in cl. 1 to the effect that "the guarantors shall for the purpose of the debt be deemed to be principal debtors". As principal debtors, the defendants' liability was not restricted to the sum of RM5,665,000 but for the whole sum due and owing to the creditor by the principal debtor, ie, the borrower. (paras 34-36)
(3) Clause 19 of the guarantees provides that the certificate of indebtedness was conclusive evidence as against the defendants. In the circumstances, the certificate of indebtedness was binding and sufficient as proof of the amount due by the defendants (Cempaka Finance Bhd v. Ho Lai Ying & Anor; refd). It was thus not necessary for the court to answer the second question posed in this appeal. (paras 37 & 38)
Bahasa Malaysia Translation Of Headnotes
Terdapat dua rayuan di sini yang berbangkit daripada guaman yang sama dan dengan persetujuan semua pihak, telah didengar bersama. Perayu (`plaintif'), sebuah bank, telah memberi tiga kemudahan perbankan kepada Sri Tanjung Travel Sdn Bhd (`peminjam') atas terma yang terkandung dalam dua surat tawaran berasingan. Kemudahan tersebut meliputi jaminan bank sebanyak RM100,000, pinjaman berkala sebanyak RM565,000 dan overdraf sebanyak RM3 juta. Responden-responden (`defendan-defendan') merupakan penjamin bagi kemudahan tersebut, tetapi hanya untuk jumlah RM5,665,000. Masalah timbul apabila peminjam gagal membuat bayaran balik bagi kemudahan perbankan tersebut. Dengan itu, plaintif telah memulakan tindakan guaman di Mahkamah Tinggi terhadap kesemua pihak yang terlibat dan menuntut, antara lain, (i) RM8,834,348.11 bagi kemudahan overdraf setakat 31 Januari 2006 (dengan faedah); dan (ii) RM207,752.01 bagi kemudahan pinjaman berkala setakat 31 Januari 2006 (dengan faedah). Memandangkan peminjam digulung berikutan suatu petisyen yang difailkan oleh pihak ketiga, maka perbicaraan diteruskan terhadap defendan-defendan kedua sehingga keempat sebagai penjamin. Adalah hujahan pihak defendan (a) bahawa liabiliti mereka terhad kepada jumlah RM5,665,000 berdasarkan proviso kl. 1 jaminan-jaminan; dan (b) bahawa notis tuntutan adalah cacat dan tidak sah memandangkan tuntutan yang dinyatakan adalah bagi jumlah RM9,059,767.17. Mahkamah Tinggi memberi penghakiman bagi pihak plaintif dan memutuskan bahawa kausa tindakan berbangkit terhadap defendan-defendan atas kegagalan untuk membayar tuntutan memandangkan terdapatnya tuntutan sah bagi bayaran yang dibuat. Tambahan, ia diputuskan bahawa sijil keterhutangan adalah mengikat dan merupakan bukti kukuh bagi jumlah terhutang. Atas rayuan, Mahkamah Rayuan mengakas keputusan Mahkamah Tinggi dan memutuskan bahawa walaupun jumlah sebenar tidak perlu dinyatakan dalam tuntutan yang dituju kepada penghutang utama, iaitu, peminjam, prinsip yang sama tidak terpakai bagi tuntutan terhadap penjamin di mana pemiutang perlu menyatakan jumlah sebenarnya. Berdasarkan itu, adalah diputuskan bahawa notis tuntutan adalah tidak sah dari sisi undang-undang. Mahkamah Rayuan juga memutuskan bahawa sijil keterhutangan tidak mengikat penjamin-penjamin kerana liabiliti mereka dikawal oleh proviso liabiliti maksimum dalam kl. 1 jaminan. Tidak puas hati, plaintif merayu ke mahkamah ini. Kebenaran merayu dibenarkan berdasarkan soalan-soalan berikut: (i) di mana jaminan perlu dibayar atas tuntutan, sama ada notis tuntutan yang dikeluarkan kepada penjamin mesti menyatakan jumlah sebenar yang dihutang oleh penjamin kepada pemiutang (`soalan pertama'); dan (ii) jika jawapan kepada soalan pertama adalah dalam bentuk negatif, sama ada jumlah sebenar yang dihutang oleh penjamin boleh ditentukan semasa prosiding mahkamah dan penjamin bertanggungjawab untuk membayar jumlah yang dihakimi di bawah jaminan (`soalan kedua').
Diputuskan (membenarkan rayuan dengan kos; mengenepikan keputusan Mahkamah Rayuan)
Oleh Arifin Zakaria KHN menyampaikan penghakiman mahkamah:
(1) Jaminan dalam kes ini adalah berdasarkan "on demand guarantee". Oleh itu, terdapat keperluan ketat bahawa tuntutan mesti dikeluarkan untuk memaklumkan penghutang bahawa pemiutang menuntut bayaran balik hutang tersebut. Fungsi tuntutan ini adalah untuk memberi notis kepada penghutang bahawa pemiutang menuntut bayaran balik jumlah yang dipinjam. Berbeza dengan dapatan Mahkamah Rayuan, adalah tidak mandatori untuk menyatakan jumlah sebenar yang terhutang kepada pemiutang dalam notis tuntutan. Dalam Shell Marketing Co of Borneo Ltd v. Wee Boon Ping, hakim tidak dihalang daripada memberi penghakiman terus bagi plaintif walaupun jumlah yang dinyatakan dalam surat-surat tuntutan adalah lebih daripada jumlah yang akhirnya dituntut. Dengan itu, soalan pertama dijawab dalam bentuk negatif (Co-operative Central Bank Ltd (In Receivership) v. Meng Kuang Properties Bhd; dibezakan).
(2) Pendekatan yang diambil untuk mentafsirkan kl. 1 adalah untuk membaca perjanjian jaminan secara keseluruhannya. Kenyataan "together with such further sum for interest" dalam proviso jelas menunjukkan bahawa tahap liabiliti defendan-defendan adalah tidak terhad kepada jumlah RM5,665,000 tetapi melibatkan jumlah-jumlah lain seperti faedah atas pinjaman, komisyen atau bayaran-bayaran lain yang terkandung dalamnya. Selain daripada itu, kl. 4 memperuntukkan bahawa jaminan adalah jaminan berterusan terhadap setiap penjamin. Sebagai jaminan berterusan, liabiliti penjamin-penjamin tidaklah terhad kepada jumlah utama sahaja malah meliputi faedah yang berbangkit daripada pinjaman dan bayaran-bayaran lain. Maka, ia terbukti melalui peruntukan kl. 1 bahawa penjamin-penjamin merupakan penghutang utama bagi kehendak hutang tersebut. Sebagai penghutang utama, liabiliti defendan-defendan tidaklah terhad kepada jumlah RM5,665,000 tetapi bagi jumlah keseluruhan yang terhutang kepada pemiutang oleh penghutang utama, iaitu peminjam.
(3) Klausa 19 jaminan memperuntukkan bahawa sijil keterhutangan merupakan keterangan muktamad terhadap defendan-defendan. Dalam keadaan ini, sijil keterhutangan itu adalah mengikat dan mencukupi sebagai bukti bagi jumlah yang dihutang oleh defendan-defendan (Cempaka Finance Bhd v. Ho Lai Ying & Anor; dirujuk). Maka, tidak ada keperluan untuk menjawab soalan kedua dalam rayuan ini.
Case(s) referred to:
Bache & Co (London) Ltd v. Banque Vernes et Commerciale De Paris SA [1973] 2 Lloyd's Rep 437 (refd)
Bank of Baroda v. Panessar And Others [1987] Ch 335 (refd)
Bank Pembangunan (M) Bhd v. Limpo Sdn Bhd [1997] 1 LNS 435 HC (refd)
Bunbury Foods Pty Ltd and Another v. National Bank of Australasia Ltd And Another [1984] 51 ALR 609 (refd)
Cempaka Finance Bhd v. Ho Lai Ying & Anor [2006] 3 CLJ 544 FC (refd)
Chung Khiaw Bank Malaysia Berhad v. Raju Jayaraman Kerpaya [1995] 1 LNS 51 HC (refd)
Co-operative Central Bank Ltd (In Receivership) v. Meng Kuang Properties Bhd [1991] 2 CLJ 1144; [1991] 2 CLJ (Rep) 467 HC (dist)
Nik Che Kok v. Public Bank Bhd [2001] 2 CLJ 157 CA (refd)
O'Day v. Commercial Bank of Australia (1993) 50 CLR 200 (refd)
Public Bank Bhd v. Chan Siok Lie & Ors [1988] 1 LNS 179 HC (refd)
Shell Marketing Co of Borneo Ltd v. Wee Boon Ping [1990] 1 CLJ 564; [1990] 3 CLJ (Rep) 88 HC (refd)
Soon Peng Yam & Anor v. Bank Of Tokyo-Mitsubishi (Malaysia) Berhad [2003] 1 LNS 614 CA (refd)
The Pacific Bank Bhd v. Chan Peng Leong [1998] 2 CLJ 440 CA (refd)
YM Orang Kaya Menteri Paduka Dato' Wan Ahmad Isa Shukri Wan Rashidi v. Kwong Yik Bank Bhd (2) [1989] 2 CLJ 1288; [1989] 1 CLJ (Rep) 187 SC (dist)
(Civil Appeal No: 02-08-03(W))
For the appellant - John Wong Yok Hun (Chan Hwee Li with him); M/s Azim Tunku Farik & Wong
For the respondents - Lim You Shyang; M/s Lim You Shyang & Co
(Civil Appeal No: 02-09-03(W))
For the appellant - John Wong Yok Hun (Chan Hwee Li with him); M/s Azim Tunku Farik & Wong
For the respondents - Ahmad Moosdeen (Goh Keng Tat with him); M/s Chan Moosdeem & Partners
[Appeal from Court of Appeal; Civil Appeal No: W-02-2791-2010 & W-02-2793-2010]
Reported by Kumitha Abd Majid
CRIMINAL PROCEDURE: Sudden death - Inquest - Car and driver crushed into underground hole - Circumstantial evidence showed driver might have been crushed to death - Search and rescue called off without finding body of driver - Whether inquest on death could be conducted by Coroner - Proper verdict - Whether death by misadventure - Criminal Procedure Code, ss. 329, 337 - Evidence Act 1950, s. 108
IN RE INQUEST INTO THE DEATH OF LIM CHIN AIK, DECEASED
SESSIONS COURT, PULAU PINANG
KHAIRUL ANUAR ABD HALIM SJ
[CORONER'S INQUEST NO: 88-2-2013]
29 NOVEMBER 2013
At about 6.40pm, 14 June 2013, one Lim Chin Aik (`LCA') was driving his car in Georgetown to fetch his daughter from a school. A few minutes later, as LCA was driving along Jalan Macalister, a lightning arrester structure on a building by the side of the road fell down and crushed onto LCA's car. The crushing structure had created an 8-foot deep hole in the ground and apparently, had also burst open an underground water pipe. The facts further showed that, whilst remnants of LCA's car were recovered, LCA's body, or body tissues, had not been found or recovered from the scene of the incident. It was also evident that the rescue and recovery operation could not dig any deeper into the hole, as the soil structure was porous and could harm the surrounding buildings. Be that as it may, following a sudden death report on the case, and the ensuing inquest before the Coroner herein, a significantly noble question arose as to whether an inquest into the death of LCA could properly be carried out by the Coroner when LCA's body was never recovered, and if so, as to the proper verdict to be returned by the Coroner.
Held (death by misadventure):
(1) Notwithstanding the provision of s. 108 of the Evidence Act 1950 (presumption of death seven years after a person was unheard of etc), the court may make a finding that the death of a person occurred before the expiry of the seven years if circumstantial evidence existed which showed that death had indeed taken place before the period. This apart, s. 329(6) of the Criminal Procedure Code provides a getaway from the normal inquest proceeding where the body of the dead person could not be found. (paras 7-10)
(2) Considering the evidence of LCA's wife who confirmed that LCA would be taking Jalan Maclister on his way to fetch their daughter, of S1-17 who said that he saw LCA driving the said car `at about after 6 pm' that day and was then alone in the car, and of S1-16 and SI-23 who testified that they saw a car being crushed by the structure that fell from the building, this court would hold that in all probabilities the driver of the car that was crushed by the said structure on that day was none other than LCA. (para 29)
(3) It was unfortunate that the wreckage was being cleaned by the Fire Department before the arrival of the forensic expert and his team. This wrong procedure as adopted by the Fire Department had deprived the forensic team from finding human tissue at the scene, should there was any. In any case, considering the evidence as a whole, this court is prepared to conclude that, in all probabilities, the body of LCA might still be buried inside the hole, and that the body could not be extracted for fear of public safety. (paras 32, 33, 37 & 39)
(4) The evidence presented before this court is sufficiently adequate, cogent and exact to enable the court to make the following findings on what happened on that 14 June 2013, namely, that: (i) LCA was at the material time driving his car bearing registration number PJD 8271 to pick his daughter at Jalan Pulau Tikus; (ii) while driving along Jalan Maclister, a structure fell down from a building known as Menara UMNO and crushed unto the said car; and (iii) the crush had created a big hole in the road, and incidentally had also buried LCA to death. Hence, upon the obtained facts and evidence, the inevitable verdict of this inquiry would be death by misadventure and the cause of death was as a result of being crushed by the fallen structure. (paras 44 & 45)
Case(s) referred to:
Ex parte Minister of Justice; Re Malcolm; Re Inglis [1965] NSWR 1598 (refd)
In Re Inquest Into The Death Of Sujatha Krishnan, Deceased [2009] 5 CLJ 783 (refd)
Inquest into the death of Azaria Chantel Loren Chamberlain [2012] NTMC 020 (refd)
PP v. Shanmugam & 5 Others [2002] 1 LNS 160 HC (refd)
Prudential Assurance Co v. Edmonds [1877] 2 App Cas 487 (refd)
Re Loh Kah Kheng [1990] 1 CLJ 823; [1990] 2 CLJ (Rep) 156 HC (refd)
Re Osman Bachit [1997] 2 CLJ Supp 269 HC (refd)
Legislation referred to:
Births and Deaths Registration Act 1957, s. 24
Criminal Procedure Code, ss. 328, 329(1)(b), (6), 337
Evidence Act 1950, s. 108
Other source(s) referred to:
Jervis on Coroners, 9th edn, p 83
For the PP - Suhaimi Ibrahim (Lim Cheah Yit & Nurdeeni Abd Rashid with him); DPPs
Watching brief for the deceased's family - Gobind Singh Deo
Watching brief for JKP Sdn Bhd - Fareed Abdul Ghafar (Nur Liza Mohd Ali with him)
Reported by Wan Sharif Ahmad