At the Court of appeal, the main issue is the respondents' action is out of time...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
At the Court of appeal, the main issue is the respondents' action is "out of time" limit. How does the Court differentiate the time limitation for filing for a guarantee and indemnity? Case Study Banking Securities (Guarantee and Indemnity) Sia Siew Hong & Ors v Lim Gim Chian & Anor [1996] 3 CLJ 26, Court of Appeal Facts: The appellants were the shareholders and directors of Siah Teong Loo & Sons Sdn Bhd (STLS S/B). The respondents were third party chargors of a piece of land charged to Interfinance Bhd which granted a loan to STLS S/B. The appellants executed a document described as "guarantee" to secure the due performance by them of the terms of the loan agreement which they had with Interfinance Bhd. STLS S/B defaulted in repayment of the loan sometime in September 1985. However, STLS S/B had made some payments in May 1992. Interfinance Bhd obtained an for sale of the charged land and the respondents' land was sold by public auction in 9 August 1993. In July 1994, Interfinance Bhd demanded the outstanding debt of RM616,754.57 from the respondents. In March 1994, the respondents sued the appellants based on the "guarantee". The appellants alleged that the claim was filed out of time, being more than six years from the breach of contracts and therefore attempted to raise a triable issue. On the hearing of the application for summary judgement, the learned Judicial Commissioner found that STLS S/B had breached the terms of the loan agreement in May 1992 and therefore, the respondents' claim was not filed out of time. There was therefore no triable issue and summary judgement was entered against the appellants. The appellants appealed to the Court of Appeal. The main issue before the Court of Appeal was whether the respondents' action had been commenced within the period of limitation. The main question was when time begun to run. If the document was a guarantee, then time began to run from the date of the breach of the contract (September 1985); but if the document was an indemnity, then time begun to run only from the date on which that loss was suffered, that is, at the sale by auction (9 August 1993). Held, dismissing the appeal, inter alia: (1) in the construction of contracts, the Court is not bound by the labels that the parties choose to affix onto the particular document. The duty of the Court is to construe the document as a whole and to determine from its language and any other admissible evidence its true nature and purport. In the present case the document executed by the appellants, when properly construed, appears to come within the definition contained in section 77 of the Contracts Act 1950. In the circumstances, the said document must be construed to be an indemnity rather than a guarantee. (2) Since the promise made by the appellants to the respondents was to indemnify the latter against the loss of the charged property, time begun to run only from the date that loss was suffered; that is, at the sale of the land by auction on 9 August 1993. As the writ was filed within six years from that date, the respondents' action was not barred by limitation. At the Court of appeal, the main issue is the respondents' action is "out of time" limit. How does the Court differentiate the time limitation for filing for a guarantee and indemnity? Case Study Banking Securities (Guarantee and Indemnity) Sia Siew Hong & Ors v Lim Gim Chian & Anor [1996] 3 CLJ 26, Court of Appeal Facts: The appellants were the shareholders and directors of Siah Teong Loo & Sons Sdn Bhd (STLS S/B). The respondents were third party chargors of a piece of land charged to Interfinance Bhd which granted a loan to STLS S/B. The appellants executed a document described as "guarantee" to secure the due performance by them of the terms of the loan agreement which they had with Interfinance Bhd. STLS S/B defaulted in repayment of the loan sometime in September 1985. However, STLS S/B had made some payments in May 1992. Interfinance Bhd obtained an for sale of the charged land and the respondents' land was sold by public auction in 9 August 1993. In July 1994, Interfinance Bhd demanded the outstanding debt of RM616,754.57 from the respondents. In March 1994, the respondents sued the appellants based on the "guarantee". The appellants alleged that the claim was filed out of time, being more than six years from the breach of contracts and therefore attempted to raise a triable issue. On the hearing of the application for summary judgement, the learned Judicial Commissioner found that STLS S/B had breached the terms of the loan agreement in May 1992 and therefore, the respondents' claim was not filed out of time. There was therefore no triable issue and summary judgement was entered against the appellants. The appellants appealed to the Court of Appeal. The main issue before the Court of Appeal was whether the respondents' action had been commenced within the period of limitation. The main question was when time begun to run. If the document was a guarantee, then time began to run from the date of the breach of the contract (September 1985); but if the document was an indemnity, then time begun to run only from the date on which that loss was suffered, that is, at the sale by auction (9 August 1993). Held, dismissing the appeal, inter alia: (1) in the construction of contracts, the Court is not bound by the labels that the parties choose to affix onto the particular document. The duty of the Court is to construe the document as a whole and to determine from its language and any other admissible evidence its true nature and purport. In the present case the document executed by the appellants, when properly construed, appears to come within the definition contained in section 77 of the Contracts Act 1950. In the circumstances, the said document must be construed to be an indemnity rather than a guarantee. (2) Since the promise made by the appellants to the respondents was to indemnify the latter against the loss of the charged property, time begun to run only from the date that loss was suffered; that is, at the sale of the land by auction on 9 August 1993. As the writ was filed within six years from that date, the respondents' action was not barred by limitation.
Expert Answer:
Answer rating: 100% (QA)
The Court of Appeal has ruled that the limitation period for filing an action for a guar... View the full answer
Related Book For
Smith and Roberson Business Law
ISBN: 978-0538473637
15th Edition
Authors: Richard A. Mann, Barry S. Roberts
Posted Date:
Students also viewed these accounting questions
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
The Crazy Eddie fraud may appear smaller and gentler than the massive billion-dollar frauds exposed in recent times, such as Bernie Madoffs Ponzi scheme, frauds in the subprime mortgage market, the...
-
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
-
Segment (Division) Evaluation In this assignment you will analyze the performance of PepsiCo's divisions. SFAS 131 requires publicly traded companies to disclose division information in the notes to...
-
Variable manufacturing costs are $ 126 per unit, and fixed manufacturing costs are $ 157,500. Sales are estimated to be 10,000 units. a. How much would absorption costing income from operations...
-
The canonical form of a shifted hyperbola in the \((\sigma, \mu)\) plane is \(\sigma^{2} / c_{\sigma}^{2}-\) \(\left(\mu-\mu_{0}ight)^{2} / c_{\mu}^{2}=1\). (a) Derive the expression for the two...
-
Describe the supply chain performance metrics that are used to track the supply chain performance of a project. What is the rationale for selecting these metrics?
-
The Furry Friends Foundation is a non-profit organization that finds homes for abandoned animals that are suitable for adoption. FFF began operations with a bequest from a wealthy gentleman who lived...
-
2. Forces and Friction 2.1 Two blocks of masses m1 = 2.7 kg and m2 = 3.3 kg are connected by a string as shown in the figure above. The horizontal surface is frictionless. A 15 N force directed at 18...
-
Identify the fallacies committed in the following dialogue. You should be able to find at least one case of each fallacy presented in this section. Food for Thought "Let's hit the produce section...
-
Emerson takes out a 30-year mortgage for $200,000 with a 3.48% APR. If Emerson takes the full 30 years to pay off the mortgage. How much would they have paid in total to the lender?
-
What will be the impact on Stellar in the current year if Martinezs belief in Conclusion 4 is correct? Compared with the previous year, Stellars: A. current ratio will increase. B. days sales...
-
Relative to the gross margins the subsidiaries report in local currency, Romuluss consolidated gross margin most likely : A. will not be distorted by currency translations. B. would be distorted if...
-
Based on the DuPont analysis, Abays belief regarding ROE is most likely based on: A. leverage. B. profit margins. C. asset turnover. Quentin Abay, CFA, is an analyst for a private equity firm...
-
Based on Ohalins estimates, the amount of the joint ventures 31 December 2010 total assets (in $ millions) that will be included on Supreme Healthcares consolidated financial statements will be...
-
To account for its foreign operations, Romulus has most likely designated the euro as the functional currency for: A. Julius only. B. Augustus only. C. both Julius and Augustus. Romulus Corp. is a...
-
Preview File Edit View Go Tools Window HIGHLIGHTS & NOTES Help 8. Case 4 - Coach Takes on China (2013).pdf (page 1 of 8) Coach Takes on China: Leveraging Distribution to Solve Unique Challenges Case...
-
Respond to the ethical judgments required based on the following scenarios. Scenario 1. Assume you have collected a sample using MUS and that you have evaluated that sample to calculate a total...
-
This is a stocklist case arising under 220(b) of our [Delaware] General Corporation Law. The issue is whether a shareholder states a proper purpose for inspection under our statute in seeking to...
-
Assume that Dinah draws a check on Oxford Bank, payable to the order of Pam; that Pam indorses it to Amy; that Amy deposits it to her account in Houston Bank; that Houston Bank presents it to Oxford...
-
Civil Code 1719, subdivision (a) provides in part that any person who draws a check that is dishonored due to insufficient funds shall be liable to the payee for the amount owing upon the check and...
-
(a) Describe the distinguishing characteristics of production systems where: (i) job costing techniques would be used, and (ii) process costing techniques would be used. (b) Job costing produces more...
-
(a) While the ascertainment of product costs could be said to be one of the objectives of cost accounting, where joint products are produced and joint costs incurred, the total cost computed for the...
-
South Africa is one of the top gold producers in the world, holding about 40 per cent of global reserves. According to Statistics South Africa, a government statistics agency, the value of gold sales...
Study smarter with the SolutionInn App