Note: On 21 December 1998, Cimb Bank Berhad (Lender) granted a banking facility (First Facility) comprising a letter of credit/trust receipt facility of RM 2,000,000 to Ausmal Meat (M) Sdn. Bhd. (Borrower). The facility was secured by a guarantee issued by Norlia Binti Mohd Yusof (Guarantor). Lender granted a separate banking facility to Guarantor (Second Facility) on 29 January 1999. On 28 June 2001, Lender obtained a replacement guarantor for the First Facility.

Borrower later experienced financial difficulties and was wound up on 25 January 2005. Guarantor failed to pay Lender under the First Facility's guarantee, and Lender sued Guarantor for wrongful dishonor. The High Court (Kuala Lumpur), Hashim, J., granted Lender's application for summary judgment.

Guarantor argued that the statute of limitations on Lender's action had passed in 2007, six years after the banking facilities had expired. Lender contended that Guarantor was liable not only as a guarantor but also as principal debtor under the Second Facility. The High Court held that Lender's claim was not time-barred because under Malayan common law, the Statute of Limitations for Lender's claim against Guarantor only started to run after Lender demanded payment. Guarantor then argued that she was no longer bound by her guarantee in the First Facility because she had been replaced as guarantor. The Judge rejected that argument, noting that Guarantor had failed to provide documentary proof to show that Borrower had signed and accepted Lender's 28 June 2001 Letter of Offer for the replacement.

Lastly, Guarantor argued that that she was no longer liable because Lender had failed to exhibit any statements of accounts to enable her how Lender had calculated the amount due, and because Borrower had already been wound up. The Judge disagreed, finding that the Certificate of Indebtedness from Borrower's wind up was conclusive evidence of indebtedness, and noting that a guarantor remains liable for the entire outstanding due, even though a borrower has been wound up.


The Opinion contained the following clauses from the guarantee:

Clause 1.1: "The Guarantor/Guarantors hereby unconditionally and irrevocably, guarantee as principal debtor(s), jointly and severally, and not merely as surety(ies) to pay and satisfy the Bank on demand . . .".

Clause 2(a): ". . . the Bank shall be at liberty to ac as though to Guarantor/Guarantors was/were the principal debtor(s) for all sums guaranteed by the Guarantor/Guarantors as aforesaid".

Clause 2(m): "That all sums of monies not recovered or recoverable from the Guarantor/ Guarantors or any of the Guarantor/Guarantors for any reason whatsoever under this Guarantee and Indemnity shall nevertheless be recoverable from the Guarantor/Guarantors or any of the Guarantor/Guarantors as principal debtor(s) . . .".

Clause 2(o): "That a written statement from the Bank as to the amount due and owing by the Borrower shall be accepted by the Guarantor/Guarantors as conclusive evidence that the amount thereby appearing is due from the Borrower(s) to the Bank and payable to the Bank by the Guarantor/Guarantors".



The views expressed in this Case Summary are those of the Institute of International Banking Law and Practice and not necessarily those of ICC or the other partners in DC-PRO.