1. ) YONG KOK YEAP 2. ) FANG CHEE PENG v URUSWAJAR CONCRETE SDN BHD

Case Significance

Illustrates that directors who execute a continuing guarantee and indemnity alongside a company's credit-account application may be held liable for the principal company's debts, and reaffirms that parties are bound by their pleaded cases on appeal.

This High Court decision at Shah Alam concerns an appeal from the Sessions Court in a claim on a guarantee. The respondent, Uruswajar Concrete Sdn Bhd, had supplied concrete for an elevated-highway project to MKP Builders Sdn Bhd, of which the two appellants were directors. The supply followed a quotation accepted by MKP Builders, after which the supplier forwarded a set of application documents — an application for a credit account, terms and conditions of sale, a continuing guarantee and indemnity, and a consent for disclosure of credit information — which the two directors executed and returned, together with their identity cards and the company's statutory forms. The continuing guarantee and indemnity was dated 25 August 2017 and stamped in October 2017. After concrete was delivered against MKP Builders' purchase orders, the company owed the supplier an outstanding sum of RM561,471.40, which the supplier claimed against the two directors under the continuing guarantee.

The directors resisted the claim, contending that they had signed the continuing guarantee and indemnity in respect of a credit-account application for a different company, and that they had not agreed to guarantee MKP Builders' debts. The Sessions Court, after a full trial, allowed the supplier's claim. On appeal, the court reviewed the documentation and the pleaded cases, applying the settled principle that parties are bound by their pleadings and may not improve their case otherwise than by a proper amendment.

Having considered the cause papers and submissions, and noting that the guarantee and indemnity had been executed and returned by the directors together with the company's own statutory forms, the court found no basis to disturb the Sessions Court's decision and dismissed the directors' appeal with costs fixed at RM10,000.00, so that the directors remained liable to the supplier on the continuing guarantee and indemnity. The judgment illustrates how a continuing guarantee executed alongside a credit-account application binds the guarantors for sums owed by the principal company.