1 JUDITH PRAKASH J

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15  Banque de Paris et Des Pays-Bas (Suisse) SA v Costa de Naray [1984] 1 Lloyd`s Rep 21:

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18 Hong Leong Finance Ltd v Goh Khim Teik [1994] 1 SLR 366 and Indian Bank v Raja Suria & Ors [1993] 2 SLR 497 . In my judgment neither case assisted the third defendant.

19  Hong Leong Finance case, the plaintiff finance company granted a loan to a company to be secured inter alia by a guarantee. The original intention was that the guarantee would be given by five persons. In fact, only three executed it. At the time of execution, the document bore the names of all five prospective guarantors. After it was signed by three of them, the names of the other two were deleted. The plaintiffs` claim against Mr Chan, one of the guarantors who had signed, was dismissed. It was held that where a surety had executed a document in the belief, derived from the form of the document, that it would be executed by all the sureties named as such in the document as persons who were to sign, he would be relieved from his obligation if all the others did not sign. Mr Chan had, in this case, executed the guarantee on the basis or understanding that all five persons would sign it and as the absence of the execution thereof by the other two persons had not been agreed to by him, Mr Chan was not bound by the guarantee.

20  Hong Leong Finance case were very different from those of the case before me. The guarantee which was found on p 4 of the hire purchase agreement had space only for execution by two guarantors. The fourth defendant`s name did not appear at all on that guarantee and therefore when the guarantee was presented to the third defendant he could not have thought that the same guarantee was to be executed by the fourth defendant. Further, in Hong Leong Finance the two other prospective guarantors did not become sureties at all. In this case, the fourth defendant signed a separate guarantee document and thereby became a surety. The separate guarantee document was executed on the same date as the guarantee which the second and third defendants signed and therefore if the third defendant had signed in thes. expectation that the fourth defendant would also become a guarantor, that expectation was completely fulfilled. The fact that the fourth defendant did not sign the same guarantee document as the third defendant did not mean that he was not equally a surety of the first defendants` obligations. By signing a guarantee for those same obligations which the first defendants owed the plaintiffs, the fourth defendant became a co-surety and became liable to contribute to any payment made by the third defendant as guarantor to the plaintiffs.

21  Indian Bank case might seem, on first sight, to be closer to the facts in this case. There a company called Wesmapack (S) Pte Ltd had requested the appellant bank to grant it overdraft facilities to be secured, inter alia, by the personal guarantee of all its directors. The seven directors were subsequently named in the bank`s standard form of guarantee as joint and several guarantors of the facilities granted to Wesmapack. On 19 January 1982, six of the directors signed the standard guarantee. The facilities were drawn on 1 February and on 14 March the seventh director signed a separate guarantee document in favour of the bank. Upon Wesmapack`s default, the bank sued all seven guarantors. It was unsuccessful. The Court of Appeal held that the two guarantees could not be read together as part of one transaction since neither document referred to the other and there was no evidence to show that the two were related. Further, all co-sureties of a joint and several guarantee had to sign it unless it was shown that there was no such intention or that the requirement had been waived. The trial judge found that two of the directors had been unaware at all times that the seventh director had not executed the standard guarantee and that it was never their intention to waive the requirement that all seven directors signed the guarantee. It is noteworthy that the court found that the intention of the parties had been that all guarantors should sign one document.

22  Indian Bank case to be distinguishable. First, there was a substantial time lag between the execution of the two guarantees. When the facilities were drawn down, only six of the intended guarantors had signed the standard guarantee and therefore if there had been a default shortly thereafter, the seventh would have been entirely free of liability. That was not the intention of the parties. In the present case, the two guarantees were executed on the same day and therefore the liability of all three guarantors arose at the same time. Secondly, as pointed out earlier, it does not appear from the documentation that it was contemplated that the fourth defendant would sign the same guarantee document as the second and third defendants. What was agreed was that all three of them would become guarantors and this was in fact achieved. Thirdly, in the Indian Bank case, two guarantors were able to assert that they had not known of the failure of the seventh to sign the document. No such assertion could be made in this case because first, it was clear from the face of the document that the third defendant signed and that the fourth defendant would not sign that document and, secondly, the fourth defendant in fact signed a document which had the same legal effect on the same day as the third defendant became a guarantor. Even if the third defendant`s original intention had been that all co-guarantors should sign the same document, he waived that requirement by signing a document which on the face of it provided for signature by only two out of the three guarantors.

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