Return to sender: Court throws out bank's RM3.5mil claim on loan guarantors over wrong addresses
Justice Alexander Siew, sitting in Kota Kinabalu on Friday (July 11), dismissed the claim by the bank against two personal guarantors of a bai bithaman ajil (BBA) Islamic facility worth RM2.8mil granted to a company to finance the purchase of land in Kampung Ganggarak, Labuan.
The bank sued both the company and its guarantors on Nov 9, 2018, seeking full repayment, interest and costs after claiming the company allegedly defaulted in repayment.
Justice Siew, in his judgment, found that the bank's notices of demand had been addressed to the wrong addresses and, as such, the bank failed to make a demand on the defendants for repayment.
"As the guarantees were on-demand in nature, the failure to serve valid demand notices was fatal to the bank's case," he said in dismissing the claim against the guarantors, awarding RM10,000 in costs to each.
The guarantors' counsel Datuk Seri K. Rakhbir Singh had submitted to the court that the bank's notices of demand were fundamentally defective.
'The plaintiff (bank) keeps repeating that it had issued the notices. However, this is not the point of contention. The point of contention is that the notices were all sent to the wrong addresses," he argued.
The court, however, allowed the bank's claim against the company with costs on separate grounds, in line with the position that the writ itself could constitute sufficient demand against a principal borrower.
Rakbhir later said the ruling reaffirms that strict compliance with procedural requirements is not a mere technicality, but a fundamental element in the enforcement of guarantees.
"The case stands as a timely reminder to lenders that shortcuts in service and notice can prove costly, even in claims worth millions," he added.
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