Aceside (Malaysia) Sdn. Bhd. v Saini Bin Ali (JA-22NCvC-25-02/2022)

SAINI BIN ALI [NRIC NO. : 610309-13-5359]

ZAINAL ABIDIN BIN AHMAD (NRIC NO. : 580328-13-5413) …DEFENDANTS GROUNDS OF JUDGMENT 08/07/2026 12:33:37 JA-22NCvC-25-02/2022 Kand. 62

This is the plaintiff's claim against the first and second defendants in their capacity as guarantors. The plaintiff, Aceside (Malaysia) Sdn Bhd, was the main contractor for a State privatisation housing project. The defendants, Saini bin Ali and Zainal Abidin bin Ahmad, guaranteed the payments owed to the plaintiff by the developer of that project, YMN Properties Sdn Bhd (now in liquidation), under a guarantee dated 31 July 2015 (“the Guarantee”). By this action the plaintiff seeks to recover from the defendants, jointly and severally, the sum of RM4,393,824.71, said to be the balance due from YMN for Phases 1, 2 and 3A of the project, together with interest and costs.

YMN Properties Sdn Bhd (“YMN”) was appointed by the Johor State Authority, under a privatisation arrangement, as the developer of land belonging to the State Authority. By a letter of award dated 3 August 2011, YMN in turn appointed the plaintiff as the main contractor to build 639 units of double-storey low-medium cost terrace houses (Type 1000KP) at Taman Setia Indah, Mukim Tebrau, Johor Bahru (“the Project”) for a contract sum of RM41,150,000.00 (“the Main Contract”). The letter of award was executed on behalf of YMN by its executive director, Haji Murad bin Bujang, who is a cousin of both defendants.

The Project was carried out in phases. The works in issue in this action concern Phase 1, Phase 2 and Phase 3A. The original date for completion under the Main Contract was 14 March 2014.

It is common ground that the works were not completed by the original completion date. In or about July 2015 the plaintiff and YMN entered into further arrangements concerning payment and completion of the remaining works (which the defendants describe as a Supplementary Agreement). Under those arrangements, following payment of RM500,000.00 to the plaintiff, the plaintiff undertook to proceed with and complete the outstanding works for Phases 1, 2 and 3A and YMN agreed to make staged payments tied to the issuance of the Certificate of Practical Completion (“CPC”) for each phase.

It was against that background that the defendants executed the Guarantee dated 31 July 2015 in favour of the plaintiff. The material terms of the Guarantee - in particular Clauses 2, 4 and 15 - are not in dispute as to their existence. Their meaning and effect are, however, very much in dispute and I return to them later in these grounds.

The plaintiff's case is that it completed the works in accordance with the Main Contract and the relevant variation orders and that completion was acknowledged by YMN through the issuance of Progress Payment Certificates No. 1 to No. 39. The defendants' case is that the plaintiff failed to complete Phases 2 and 3A under the Main Contract, that YMN's contract was thereafter terminated and that the project was completed only later, under a separate contract with entities associated with Kumpulan Prasarana Rakyat Johor (“KPRJ”), to which the plaintiff was re-engaged. These competing positions lie at the heart of the dispute.

It is not in dispute that YMN was subsequently wound up by an order of this Court dated 1 April 2019 in Companies (Winding-Up) No. : JA- 28NCC-8-01/2019, that the Official Receiver was appointed as its provisional liquidator and that its liquidation is now conducted by the Joint and Several Liquidators of YMN.

The plaintiff had earlier obtained judgment in respect of Phase 1 of the Project in High Court Johor Bahru Suit No. : JA-22NCC-23- 07/2017, in the sum of RM3,051,066.40. In the present action the plaintiff's computation of the amount claimed proceeds from the certified value of the works (Progress Payment Certificates No. 1 to No. 39 totalling RM29,487,173.14, against which YMN paid RM23,301,395.82), together with additional works and retention sums, arriving at a gross figure of RM7,444,891.11. From that figure the plaintiff deducts the RM3,051,066.40 the subject of the earlier Phase 1 judgment, leaving the balance of RM4,393,824.71 now claimed against the defendants under the Guarantee.

The plaintiff issued demands on the defendants dated 7 January 2022 and 15 February 2022. The defendants did not pay, and this action followed. The Issues to be Tried

The parties agreed on the issues to be tried, which were filed and are reproduced below –

Whether the first and second defendants are guarantors under the Guarantee dated 31 July 2015, on the terms that the guarantee was given in consideration of the plaintiff completing the works for Phases 1, 2 and 3A up to the issuance of the CPC, and that it guaranteed (among other sums) payment of the amount certified under Interim Certificate No. 37 of RM6,415,108.34 and the costs there set out;

Whether the defendants are liable to pay the specific sums claimed in paragraph 9 of the Statement of Claim;

Whether the plaintiff fulfilled the condition precedent, namely the completion of the works up to the issuance of the CPC for Phases 2 and 3A;

Whether the defendants are liable where the plaintiff abandoned and/or failed to complete the works for Phases 2 and 3A up to CPC, and/or the contract was terminated on account of the plaintiff's breach;

Whether the plaintiff failed to fulfil the condition precedent by not completing the works up to the Certificate of Completion and Compliance (“CCC”) and the Certificate of Making Good Defects (“MGC”) for Phases 2 and 3A, for the release of the retention sum;

Whether the defendants are liable under Clause 15 of the Guarantee where the plaintiff failed to complete, and could not obtain the CPC for, Phases 2 and 3A;

Whether there is a total failure of consideration for the Guarantee by reason of the plaintiff's failure to complete Phases 2 and 3A up to CPC;

Whether the defendants are liable where YMN itself is not liable for the sums claimed, the plaintiff having abandoned the works and/or the contract having been terminated for the plaintiff's breach;

Whether the Guarantee is discharged under section 92 of the

Whether the Guarantee is discharged under section 94 Act 136.

While ten issues were framed, they overlap substantially and need not be addressed seriatim. Many of them are different formulations of the same underlying questions. For the purposes of these grounds, and without diminishing any of the agreed issues, I find it convenient to consolidate them into three core questions.

First, the question of scope : whether, and upon what terms, the defendants undertook liability as guarantors under the Guarantee, and whether the sums claimed in paragraph 9 of the Statement of Claim fall within that liability. This addresses Issues (a) and (b).

Secondly, the question of condition precedent and consideration : whether the plaintiff's entitlement to enforce the Guarantee was conditional upon completion of the works for Phases 2 and 3A up to the issuance of the CPC (and, for the retention sum, the CCC and MGC) under the Main Contract; and, if so, the consequences of any non-fulfilment of that condition. Whether by reason of non-completion or abandonment, termination of the contract, a total failure of consideration, or the absence of any underlying liability on the part of YMN. This addresses Issues (c), (d), (e), (f), (g) and (h). Embedded within this question is the central controversy between the parties : whether the CPC, CCC and MGC contemplated by the Guarantee are confined to certificates issued under the Main Contract with YMN, or whether they may be satisfied by the certificates subsequently issued under the KPRJ contract.

Thirdly, the question of statutory discharge: whether, in any event, the defendants as sureties are discharged from liability under section 92 and/or section 94 Act 136. This addresses Issues (i) and (j).

I propose to address the three consolidated questions in that order, after first setting out my findings on the evidence.

The matter proceeded to a full trial before me on 21 and 22 April 2026.

The plaintiff called three witnesses and the defendants two. I summarise the material parts of their evidence below, taking together each witness's written statement and the evidence given under cross-examination. I have considered the whole of the evidence, whether or not specifically mentioned. The plaintiff's witnesses

PW1, Gopal Ranjan a/l Nagapan, a Senior Compliance and Operations Executive, gave evidence on behalf of the Joint and Several Liquidators of YMN under a letter of authorisation admitted as Exhibit P1. His evidence-in-chief concerned the liquidation of YMN rather than the conduct of the works : that the liquidators had been unable to obtain a complete Statement of Affairs from YMN's directors; that their recoveries had been limited; and that YMN, with some 18 creditors and debts of approximately RM29 million, has insufficient funds to meet its creditors and cannot pay the plaintiff the sum now claimed. He also spoke to the transition of the development from YMN to KPRJ, in the course of which, on his account, KPRJ bypassed the liquidators in concluding the novation. His evidence went to YMN's ability to pay rather than to whether the guaranteed obligation arose at all, which is the question on which this case turns; for that reason nothing material to my decision turned upon it, and it was tested only briefly in cross-examination.

PW2, Azlawati binti Mohamad Jamil, is the General Manager (Contracts) of KPRJ E&C Sdn Bhd, formerly KPRJ Builders Sdn Bhd. Her evidence-in-chief was that the Johor State Authority appointed KPRJ Development Sdn Bhd to replace the original developer in order to ensure the project's completion; that KPRJ Development appointed KPRJ Builders as contractor; that the project had been abandoned before KPRJ took it over; and that KPRJ Builders engaged the plaintiff as a sub-contractor for part of the works, described as the rehabilitation and completion of 427 units for Phases 2 and 3A. In cross-examination she confirmed that KPRJ bears no associate or subsidiary relationship to YMN; that the completion certificates were issued under the KPRJ Contract; and that this was an abandoned project whose house buyers had purchased under the YMN project and were not taken over by KPRJ. Her evidence in chief and under cross-examination was to the same effect.

PW3, Chua Tiong Whee, is the Managing Director of the plaintiff and was its principal witness. His evidence-in-chief was that the plaintiff was the main contractor appointed by YMN for the Project; that YMN was wound up on 1 April 2019; that the defendants executed the Guarantee dated 31 July 2015 to secure the staged payments due to the plaintiff in the event of YMN's default, the Guarantee having come about because YMN was in financial difficulty; and that the plaintiff had complied with all the terms of the Guarantee. Critically, his evidence-in-chief was that the Certificates of Practical Completion for Phases 1, 2 and 3A had in fact been issued, and he identified documents in the Common Bundle as the CPC and the Certificate of Completion and Compliance for each of the three phases. He also advanced the build-up of the sum claimed, resting in part on the value said to be certified under Interim Certificate No. 37 of

That account did not survive cross-examination. PW3 conceded that the phases had not been completed by the completion dates in their respective letters of award. He conceded that Interim Certificate No. 37 does not in fact state the phase figures on which his statement relied, whether for Phase 1, Phase 2, Phase 3A, or in the aggregate sum of RM6,415,108.34. And when it was put to him squarely that the plaintiff had not completed Phases 2 and 3A up to the issuance of the CPC, he ultimately agreed. The central proposition in his evidence-in-chief - that CPCs for Phases 2 and 3A had been issued under the contract - was thus not maintained by the time his cross-examination concluded. The defendants' witnesses

DW1, Haji Murad bin Bujang, was the Executive Director and Managing Director of YMN and signed the letter of award on its behalf. His evidence-in-chief was that the Project was awarded in sub-phases, each governed by a separate letter of award –

Phase 1A (109 units, 5 December 2011);

Phase 1B (103 units, 23 December 2011);

Phase 2 (136 units, 16 April 2012);

Phase 3A (156 units, 6 July 2012); and

Phase 3B (136 units, 26 July 2012), the last terminated by mutual consent. He said that, notwithstanding extensions of time, the plaintiff failed to complete the Project and the phases in issue; that without the CPC for each phase YMN was not in a position to pay; and that it was to address this that YMN agreed to pay RM500,000.00 to enable completion up to CPC, with a balance of RM5,671,658.54 then payable in stages tied to the CPC for each phase. In cross-examination by the plaintiff he agreed only to formal matters : that the defendants signed the Guarantee and agreed to its terms, and that it was expressed as a continuing guarantee. He otherwise maintained his account and no concession was extracted that displaced his evidence-in-chief.

DW2, Saini bin Ali, is the first defendant and one of the two guarantors. His evidence-in-chief was that he executed the Guarantee dated 31 July 2015 on YMN's representation that the plaintiff required it; that the Guarantee was at all times understood to be strictly conditional upon the plaintiff completing Phases 2 and 3A up to the issuance of the CPC under the Main Contract; that it was not a demand guarantee and would be of no effect if that CPC was not issued; and that the plaintiff obtained the Phase 1 CPC on 15 February 2016 but never obtained the CPC for Phases 2 and 3A under the Main Contract, having abandoned the works, such that, YMN's ability to pay depending on proceeds from purchasers which themselves required the CPC for each phase, there could be “no CPC, no payment, and therefore no liability”. In cross-examination he confirmed that he is a professional engineer; that he, the second defendant and Haji Murad's wife are related; and that he signed the Guarantee. When it was put to him that the Guarantee was a continuing guarantee, he agreed, but at once added that it ceases to operate upon an event under Clause 15(a) or 15(b). His position that the only matter in dispute was liability under the Guarantee, and not its execution, was consistent throughout.

The burden of proving the claim on the balance of probabilities lies on the plaintiff. Where the defendants assert facts in support of their defence, the evidential burden of those facts lies on them. The existence and terms of the Guarantee are not in dispute. What is in dispute is whether, on the proper construction of the Guarantee and on the facts, the guaranteed liability arose and subsists.

Certain matters are not in serious controversy and I find them established. The plaintiff was the main contractor appointed by YMN for the Project, carried out in the sub-phases described by DW1. The original completion date was not met. In or about July 2015, against the background of YMN's financial difficulty, the plaintiff and YMN reached the further payment arrangement involving payment of RM500,000.00 and a balance of RM5,671,658.54 payable in stages tied to the CPC for each phase. The defendants executed the Guarantee dated 31 July 2015. YMN was wound up on 1 April 2019. The plaintiff obtained judgment for Phase 1 in Suit No. : JA-22NCC- 23-07/2017, for which credit has been given in the present computation.

The pivotal factual question is narrow: under which contract were the works for Phases 2 and 3A carried to completion and certified? The plaintiff's case in chief, through PW3, was that the CPCs and CCCs for Phases 1, 2 and 3A were issued and are in the Common Bundle. The defendants' case, through DW1 and DW2, was that the plaintiff never obtained the CPC for Phases 2 and 3A under the Main Contract, having abandoned the works and that those phases were completed only later under a separate contract.

On this question the evidence points firmly in one direction, and from three independent sources. First, PW2 - the plaintiff's own witness, and an officer of the KPRJ contractor - gave evidence that the State Authority replaced the developer because the project had been abandoned, that KPRJ engaged the plaintiff as a sub-contractor and that the completion certificates were issued under the KPRJ Contract. Secondly, the documents in the Plaintiff's Supplementary Bundle show that the works for Phases 2 and 3A were carried out under a KPRJ sub-contract for “making good and rectification” works, commencing 18 March 2020 and completing 17 December 2020, with the Certificate of Making Good Defects (19 November 2023) and the Statement of Final Account (22 April 2024) issued by KPRJ E&C - not under the Main Contract with YMN. Thirdly, and decisively, the plaintiff's own Managing Director, PW3, conceded in cross-examination that the plaintiff did not complete Phases 2 and 3A up to the issuance of the CPC.

I therefore find, as a matter of fact, that the plaintiff did not complete the works for Phases 2 and 3A up to the issuance of the CPC under the Main Contract with YMN, and that the completion of and certification for, those phases occurred subsequently and under the separate KPRJ Contract. To the extent that PW3's evidence-in-chief suggested otherwise, that evidence was not maintained under cross-examination and I prefer the evidence of PW2 and the contemporaneous documents, with which PW3's eventual concession accords.

Whether that finding defeats the plaintiff's claim is a separate question. It turns on the proper construction of the Guarantee - in particular, whether the certificates the Guarantee contemplates are confined to certificates under the Main Contract.

I turn to the consolidated questions. The First Question - The Scope of the Guarantee [Issues (a) and (b)]

The first question is one of scope : whether, and upon what terms, the defendants undertook liability as guarantors, and whether the specific sums claimed in paragraph 9 of the Statement of Claim fall within that liability.

The principles governing the construction of a guarantee are not in dispute. A guarantee is construed according to the ordinary principles applicable to written contracts. The court seeks the meaning the words would convey to a reasonable person having the background knowledge reasonably available to the parties, giving the words their ordinary and natural meaning, read in the context of the instrument as a whole and against the relevant factual matrix and in a manner that yields to business common sense. [See : SPM Membrane Switch Sdn Bhd v Kerajaan Negeri Selangor [2016] 1 MLJ 464 and Berjaya Times Square Sdn Bhd (formerly known as Berjaya Ditan Sdn Bhd) v M Concept Sdn Bhd [2010] 1 MLJ 597; and, on the factual matrix, Prenn v Simmonds [1971] 3 All ER 237].

To these is added a settled feature of suretyship. A guarantee is a secondary or accessory obligation and where its terms are genuinely ambiguous they are construed strictly and in favour of the surety, who is entitled to insist that the terms of the bargain be observed.

Applying those principles, the threshold part of the first question admits of a short answer. The defendants executed the Guarantee dated 31 July 2015. DW2 confirmed his and the second defendant's execution of it and DW1 confirmed that the defendants signed and agreed to its terms. The point was never in dispute. I find that the defendants are guarantors under the Guarantee and that Issue (a) is answered accordingly. They undertook the obligations of guarantors on the terms the Guarantee sets out.

The terms the Guarantee sets out are, however, not unconditional. On its own language, the Guarantee was given in consideration of the plaintiff's agreement, at YMN's request –

to complete all the contract works for the Project up to the issuance of the CPC;

it guaranteed YMN's payment of the staged sums tied to the CPC for each phase;

it provided (Clause 2) for the release of the retention sums upon the issuance of the CCC and later the MGC;

it was expressed (Clause 4) to be a continuing guarantee; and

it provided (Clause 15) for its own cessation upon the occurrence of specified events. The scope of the defendants' undertaking is therefore defined by and inseparable from, those conditions. That the consideration for the Guarantee was the plaintiff's completion of the works up to CPC was, in substance, common ground –

it appears on the face of the instrument, and

it was the proposition PW3 accepted when the recital was put to him in cross-examination.

The second limb of the first question - whether the specific sums claimed in paragraph 9 fall within that liability [Issue (b)] - cannot be answered in the plaintiff's favour merely by establishing that the defendants are guarantors. Two difficulties stand in the way. The first is one of construction and is logically anterior : whether the conditions to which the guaranteed sums are tied (completion up to CPC, and the issuance of the CCC and MGC) were satisfied, and by reference to which contract - the very matter that forms the second consolidated question. The second is one of proof. Even taken at face value, the plaintiff's quantification was shown in evidence to be unreliable : PW3 accepted that Interim Certificate No. 37 does not state the phase sums, nor the aggregate of RM6,415,108.34, on which the statement of claim's computation in part depends. The plaintiff bearing the burden of proving the sums claimed, that concession is not immaterial.

I therefore hold, on the first question, that the defendants are guarantors under the Guarantee [Issue (a)], but that whether they are liable for the specific sums claimed [Issue (b)] does not follow from their status as guarantors and falls to be determined by the construction and condition-precedent question to which I now turn. To the extent that the answer to Issue (b) depends on quantum, the plaintiff's evidence as it stood at the close of trial did not establish the sums claimed to the standard required. The Second Question - Condition Precedent, Consideration and the Certificates [Issues (c)–(h)]

The second question is where this case is decided. It asks whether the plaintiff's entitlement to enforce the Guarantee was conditional upon completion of the works for Phases 2 and 3A up to the issuance of the CPC (and, for the retention, the CCC and MGC) under the Main Contract; and if so, what follows from the fact, which I have found, that those phases were not completed to CPC under the Main Contract, but only later under the separate KPRJ Contract. The agreed issues within this question [Issues (c) to (h)] are best addressed through three steps : whether the condition exists; which contract's certificates can satisfy it; and the consequences for liability, including the construction of Clauses 4 and 15.

Is completion up to CPC a condition of the guaranteed liability?

In my judgment it plainly is. The Guarantee does not stand alone; it secures YMN's obligation to pay the plaintiff, and that obligation was itself conditional. On the language of the instrument, the Guarantee was given in consideration of the plaintiff's agreement to complete the contract works up to the issuance of the CPC, and the sums it guarantees are the staged payments tied to the CPC for each phase, with the retention sums tied to the CCC and the MGC. The payment obligation that the defendants guaranteed was therefore one that accrued, phase by phase, only upon the issuance of the relevant certificate. That this was the bargain is confirmed by the contemporaneous payment arrangement spoken to by DW1 - RM2,500,000.00 on the Phase 1 CPC, RM1,671,658.54 on the Phase 2 CPC, and RM1,500,000.00 on the Phase 3A CPC - and by DW2's unchallenged account of the commercial logic : YMN could pay only from purchasers' proceeds, which were released against the CPC for each phase. The completion of each phase up to CPC was thus a condition precedent to the accrual of the corresponding payment obligation, and hence to any liability under the Guarantee in respect of it.

(ii) Which contract's certificates can satisfy the condition?

This is the true battleground. The plaintiff's answer to the condition is that the CPCs and CCCs were in due course issued, and that completion under the KPRJ Contract satisfies the Guarantee. The defendants say the certificates that count are those under the Main Contract with YMN and that the KPRJ certificates are nothing to the point. The question is one of construction, to be answered by asking what the parties to the Guarantee would reasonably have understood "the CPC" to mean, judged as at the date of the Guarantee and against the factual matrix then existing. [See : SPM Membrane Switch].

Approached in that way, the answer is clear. As at 31 July 2015, the only contract in contemplation was the Main Contract between the plaintiff and YMN. The KPRJ entities were not parties to anything; KPRJ Development was appointed to replace the developer only later, after YMN's default and the abandonment of the project and the plaintiff's re-engagement under the KPRJ Contract did not occur until

A reasonable person with the parties' background knowledge in 2015 would have understood the CPC, the CCC and the MGC referred to in the Guarantee to be the certificates issued under the Main Contract - the contract whose payment obligations the Guarantee secured. There is nothing in the language of the Guarantee to suggest that completion under some future, then-unknown, contract with a different employer would do.

The evidence reinforces that construction rather than displacing it. PW2 confirmed that KPRJ bears no associate or subsidiary relationship to YMN; that the project KPRJ took over had been abandoned; and that the completion certificates were issued under the KPRJ Contract. The certificates in the Plaintiff's Supplementary Bundle bear this out : they relate to a separate, re-scoped contract for the “making good and rectification” of 427 units, and they were issued by KPRJ E&C. By the time those certificates were issued - the Certificate of Making Good Defects in November 2023 and the Statement of Final Account in April 2024 - YMN had been in liquidation for more than four years. Certificates issued under a contract to which YMN was not a party, conferring no benefit on YMN and generating no payment obligation upon it, cannot satisfy a condition the purpose of which was to fix the point at which YMN's own obligation to pay arose. I hold that the CPC, CCC and MGC contemplated by the Guarantee are confined to certificates issued under the Main Contract, and that the KPRJ certificates do not satisfy the condition.

(iii) The consequences for liability

It follows from the finding of fact and that construction that the condition precedent was not satisfied. The works for Phases 2 and 3A were not completed up to the issuance of the CPC under the Main Contract [Issue (c)] and the CCC and MGC for the release of the retention sums were likewise not issued under the Main Contract [Issue (e)]. The payment obligations that the Guarantee secured in respect of those phases therefore never accrued.

That conclusion disposes of the bulk of the claim through the accessory nature of the guarantee. By section 81 Act 136, a surety's liability is co-extensive with that of the principal debtor, unless the contract otherwise provides. The plaintiff, relying on s.81 and on authority concerning continuing guarantees containing a principal-debtor clause, submitted that the defendants undertook liability as principal debtors and remain liable irrespective of any claim against YMN; and the Guarantee does contain a clause entitling the plaintiff to act as though the defendants were the principal debtors, with a waiver of their rights as sureties. I have given that clause full weight, but it does not assist the plaintiff here. A principal-debtor clause operates to prevent a surety from escaping liability on grounds otherwise open to a surety - for example, that indulgence was granted to the principal - by treating the surety's liability as primary. It does not bring into existence a liability that never arose. The defendants guaranteed YMN's payment of sums that were to accrue upon the issuance of the CPC and the CCC and MGC, under the Main Contract; those conditions not having been met, no such payment obligation arose, and there was no debt - whether of YMN as principal or of the defendants as deemed principal - to answer for. The clause is in any event subject to the Guarantee's own express cessation provision in Clause 15(a). The defendants cannot be liable, whether as sureties or as deemed principal debtors, for a sum that never became due [Issue (h)].

The defendants also rely on the consequence of the plaintiff's failure to complete [Issue (d)]. On the evidence, the works for Phases 2 and 3A were not completed under the Main Contract; the project was abandoned and the developer replaced. Whether the more accurate characterisation is that the plaintiff abandoned the works or that the contractual structure collapsed on YMN's side, the result for present purposes is the same : the condition on which the guaranteed obligation depended was not fulfilled and the defendants are not to be fixed with liability for the consequences of a non-completion that defeats the very basis of the bargain they guaranteed. I do not need to make any finding apportioning responsibility for the non-completion in order to decide the case, and I decline to do so.

(iv) Clauses 4 and 15: the “continuing guarantee” argument

The plaintiff's principal answer on the law is that Clause 4 makes the Guarantee a continuing guarantee, so that it subsists notwithstanding the matters relied on by the defendants. The defendants respond that Clause 4 must be read with Clause 15, which expressly provides for the Guarantee to cease on the occurrence of the specified events, and that the continuing character of the Guarantee is subject to and does not override, those cessation provisions.

I prefer the defendants' construction, which is the more natural one and does no violence to either clause. A "continuing guarantee" is, by section 82 Act 136, simply one that extends to a series of transactions; the label describes the temporal reach of the security across a running account, not its indefeasibility and liability under it endures only until the contemplated transactions are exhausted or the guarantee is terminated in accordance with its terms. It does not immunise the Guarantee from the express terms that govern its cessation. Clauses 4 and 15 are not in conflict: Clause 4 addresses the kind of guarantee it is and Clause 15 the events on which it ceases. The specific cessation provision in Clause 15 prevails over the general description in Clause 4, consistent with the maxim generalia specialibus non derogant, on which the defendants relied. [See : Qatar Islamic Bank v Asian Finance Bank Bhd & Ors [2015] 7 MLJ 445]. To read Clause 4 as overriding Clause 15 would deprive Clause 15 of effect. The continuing nature of the Guarantee therefore yields to Clause 15 where its conditions are met.

As to Clause 15(a), the event on which the defendants rely is the non-issuance of the CPC under the Main Contract following the breakdown of the YMN contractual structure. On my construction of the Guarantee and my findings of fact, that event occurred : the CPC for Phases 2 and 3A was not issued under the Main Contract. To the extent that the guaranteed obligation might otherwise be said to have survived, I find that the Guarantee ceased to be of effect in respect of those phases under Clause 15(a) [Issue (f)]. DW2's evidence, that the Guarantee was understood to become of no effect if the CPC under the Main Contract was not issued, is consistent with this construction; and his concession that the Guarantee was a continuing guarantee does not assist the plaintiff, since, for the reasons given, that characterisation is not inconsistent with cessation under Clause 15.

Total failure of consideration [Issue (g)]

The defendants put their case in the further, or alternative, way of a total failure of consideration : the consideration for the Guarantee being the plaintiff's completion of Phases 2 and 3A up to CPC, and that completion never having occurred under the Main Contract, the consideration wholly failed. There is force in the point so far as the Phase 2 and 3A guaranteed sums are concerned. I am, however, conscious that a total failure of consideration is a demanding test, and that the plaintiff did perform part of the bargain - Phase 1 was completed and its CPC issued and that phase has been separately litigated. In those circumstances the safer and more precise basis for decision is the one I have already given : that the conditions on which the guaranteed obligations depended were not satisfied, that those obligations did not accrue, and that the Guarantee in any event ceased under Clause 15(a). It is unnecessary to rest the decision on a total failure of consideration as a free-standing ground and I prefer not to do so. Issue (g) does not, on this analysis, require a separate affirmative finding. Conclusion on the second question

On the second consolidated question I conclude as follows. Completion of Phases 2 and 3A up to the issuance of the CPC under the Main Contract was a condition precedent to the guaranteed liability (and the CCC and MGC under the Main Contract were conditions precedent to the release of the retention). Those conditions were not satisfied. The certificates subsequently issued under the separate KPRJ Contract do not satisfy them. The guaranteed payment obligations of YMN in respect of those phases therefore did not accrue; the defendants, as sureties, cannot be liable where YMN is not; and in any event the Guarantee ceased to be of effect under Clause 15(a). Issues (c), (e), (f) and (h) are answered in the defendants' favour; Issue (d) is resolved on the basis that the consequences of non-completion under the Main Contract do not fall on the defendants; and Issue (g) need not be decided as a separate ground. The Third Question - Discharge under Sections 92 and 94 [Issues (i) - (j)]

The third consolidated question concerns the statutory discharge of the sureties under sections 92 and 94 Act 136. In their written submission, however, the defendants expressly stated that they were not proceeding with their defence under those provisions. Issues (i) and (j) were accordingly not pursued.

In those circumstances and having regard to my conclusion on the second question, it is neither necessary nor appropriate to decide whether the Guarantee would have been discharged under section 92 or section 94 of Act 136. I record only that the defendants did not press these grounds, and I make no finding upon them. Issues (i) and

do not arise for determination. CONCLUSION

In conclusion, I draw the following findings together. The defendants are guarantors under the Guarantee dated 31 July 2015. But their liability was conditional upon completion of the works for Phases 2 and 3A up to the issuance of the CPC under the Main Contract and upon the issuance of the CCC and MGC under that contract for the retention. On the facts I have found, including the concession of the plaintiff's own Managing Director, those conditions were not satisfied. The certificates issued under the separate KPRJ Contract do not satisfy them. The guaranteed payment obligations of YMN did not accrue. The defendants, as sureties, cannot be liable where YMN is not and in any event the Guarantee ceased to be of effect under Clause 15(a). The plaintiff also failed to establish the quantum of the sums claimed to the requisite standard. The defences under sections 92 and 94 of Act 136 were not pursued.

For these reasons, the plaintiff's claim is dismissed with costs of RM100,000.00 subject to the allocatur. Dated : 19 June 2026 -signed- (DR NORADURA BINTI HAMZAH) Judicial Commissioner High Court Civil 2 Johor Bahru Counsel for the Plaintiff : : Mandave Singh Gill together with Nurrul Nadia binti Norrizan Messrs. K. Siladass & Partners Counsel for the Defendants : : William Leong Jee Keen Messrs. William Leong & Co.