GRANSTEP DEVELOPMENT SDN BHD TAN CHONG HENG & 4 LAGI

GRANSTEP DEVELOPMENT SDN BHD TAN CHONG HENG & 4 LAGI

The instrument was ambiguous and irreconcilable as between provisions that suggested pay-on-demand and provisions requiring proof of default and indemnity for actual loss; applying contra proferentem against the plaintiff who drafted the guarantee, the court construed it as a conditional contract of indemnity (not a performance bond), requiring proof of contractor default and loss; plaintiff's claim was premature and summary judgment was dismissed and the suit struck off.

Citation
WA-222-116-11/2020 (Mahkamah Tinggi)
Parties
Plaintiff: Granstep Development Sdn Bhd; Defendant: Tan Chong Heng; Defendant: Tan Soon Lin; Defendant: Tan Soon Cher; Defendant: Tan Chui Hoon; Defendant: Lee Tien Lit
Court
High Court
Jurisdiction
Malaysia
Judgment Date
24 August 2021
Case Number
WA-222-116-11/2020 (Mahkamah Tinggi)
Procedural Posture
Civil Suit Construction Contract and Enforcement of Guarantee / Applications Under Order 14 (summary Judgment) and Order 14 a (preliminary Point of Law); Decision and Striking Off of Suit
Outcome
Order 14 application dismissed; Order 14A questions answered: guarantee is a conditional contract of indemnity and prior proof of contractor default/loss required; suit struck off
Legal Topics
Performance Guarantee, Interpretation of Contract, Summary Judgment, Duress, Unconscionability, Indemnity Vs Guarantee
Source Language
Malay/English
Contract Law Construction Law Civil Procedure Suretyship and Guarantees Equity Performance Guarantee Interpretation of Contract Summary Judgment +3 more

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Parties

Granstep Development Sdn Bhd

Plaintiff

Tan Chong Heng

Defendant

Tan Soon Lin

Defendant

Tan Soon Cher

Defendant

Tan Chui Hoon

Defendant

Lee Tien Lit

Defendant

Procedural Posture

Civil Suit Construction Contract and Enforcement of Guarantee / Applications Under Order 14 (summary Judgment) and Order 14 a (preliminary Point of Law); Decision and Striking Off of Suit

Legal Issues

  1. 1 Whether the instrument is an unconditional demand performance bond or a conditional guarantee/indemnity
  2. 2 Whether plaintiff must prove default by the contractor before claiming under the guarantee
  3. 3 Whether prior judgment or arbitration against the contractor is required before claiming

Ratio Decidendi

The instrument was ambiguous and irreconcilable as between provisions that suggested pay-on-demand and provisions requiring proof of default and indemnity for actual loss; applying contra proferentem against the plaintiff who drafted the guarantee, the court construed it as a conditional contract of indemnity (not a performance bond), requiring proof of contractor default and loss; plaintiff's claim was premature and summary judgment was dismissed and the suit struck off.

Court Disposition

Order 14 application dismissed; Order 14A questions answered: guarantee is a conditional contract of indemnity and prior proof of contractor default/loss required; suit struck off

Orders

  • O14 application dismissed with costs RM5,000.00 subject to usual allocator
  • Order 14A: questions (1)(a) and (b) answered that the instrument is a conditional contract of indemnity; question (1)(c) answered in the affirmative; no order as to costs on O14A