KAWAN ENGINEERING SDN BHD v 1. ) NYEW KAM CHENG 2. ) TAN MEE YUAN

Case Significance

Instructive on proving the due execution of a personal guarantee against a bare denial, and on the limited evidential effect of a certificate of indebtedness issued after proceedings have commenced where quantum is independently proved.

This High Court decision at Shah Alam concerns a claim on a personal guarantee given by two company directors for the liabilities of their company. The plaintiff, Kawan Engineering Sdn Bhd, had supplied engineering works, materials and related services for several industrial projects undertaken by another company, and it sued the two defendants, who were directors of that other company, in their personal capacities on a document titled a guarantee by individuals dated February 2020, seeking to recover a substantial sum said to have been guaranteed. The central issues were whether the letter of guarantee had been duly executed by the defendants and was valid and binding on them, and whether a certificate of indebtedness dated after the commencement of proceedings constituted conclusive proof of the amount due. The court, per Noor Hayati binti Haji Mat J, allowed the plaintiff's claim. On execution, it found that the letter of guarantee had been duly executed and therefore existed, was valid, and was binding on the defendants according to its express terms, under which they undertook to be jointly and severally liable as guarantors and principal debtors on the company's default; the defendants had not adduced cogent evidence to rebut the plaintiff's case on execution, and a bare denial was insufficient. On the certificate of indebtedness, the court held that a certificate issued after the commencement of proceedings could not, by itself, be treated as conclusive evidence of the amount due in this case, but that the quantum had nonetheless been independently proved by the evidence. It further held that an alleged loan and caretaking arrangement did not affect the plaintiff's rights, the plaintiff's involvement in the company's financial management having been carried out with the company's sanction and authority while the defendants as directors retained overall control, so that this did not discharge the defendants from liability. The court accordingly entered judgment against both defendants jointly and severally for the sum claimed, with costs. The judgment is instructive on proof of the due execution of a guarantee against a bare denial and on the limited effect of a post-action certificate of indebtedness.