Summary suit and continuing guarantee principles support refusal of leave to defend where liability is admitted and defence is sham.
A summary suit founded on a written acknowledgment and rescheduling agreement may proceed where the defendants fail to show a bona fide triable issue, and a sham or unsupported plea of fraud will not justify leave to defend. The continuing guarantee remained enforceable because the contractual documents preserved the guarantors' liability despite indulgence to the principal debtor and expressly continued the guarantees until full payment, including after a guarantor's death. On that basis, the admitted liability was recoverable with contractual interest at the agreed rate until realization.
Issues: (i) Whether the defendants disclosed a substantial defence so as to warrant leave to defend in the summary suit founded on the written acknowledgment and rescheduling agreement; (ii) Whether the guarantors remained liable under the continuing guarantee, and whether the plaintiff was entitled to the decreed amount with contractual interest.
Issue (i): Whether the defendants disclosed a substantial defence so as to warrant leave to defend in the summary suit founded on the written acknowledgment and rescheduling agreement.
Analysis: The suit was based on a written agreement by which the principal debtor acknowledged the outstanding liability and agreed to reschedule payment. The defendants did not dispute default under the underlying arrangements and failed to establish that the acknowledgment agreement was forged or fabricated. The defence that the agreement was the product of fraud or manipulation was found to be unsupported and frivolous. In a summary suit, leave to defend is refused where the defence is sham, illusory, or does not raise a bona fide triable issue.
Conclusion: The defendants did not disclose a substantial defence and were not entitled to leave to defend.
Issue (ii): Whether the guarantors remained liable under the continuing guarantee, and whether the plaintiff was entitled to the decreed amount with contractual interest.
Analysis: The guarantee deeds provided that indulgence to the principal debtor would not affect the guarantors' liability, and the later acknowledgment agreement expressly preserved all personal guarantees until full payment. The guarantee also stated that it would not be affected by the death of any guarantor. The contractual documents further provided for interest at 16% per annum and additional interest of 2% in the event of extension or default, supporting the plaintiff's claim to interest at the agreed rate.
Conclusion: The guarantors remained liable, and the plaintiff was entitled to recover the acknowledged sum with interest at 18% per annum from the date of institution of the suit till realization.
Final Conclusion: The summary suit was decreed on the basis of the admitted liability under the acknowledgment agreement, and the defence set up by the defendants was rejected as unsubstantial.
Ratio Decidendi: In a summary suit based on a written acknowledgment of liability, leave to defend can be refused where the defence is sham or does not raise a bona fide triable issue, and a continuing guarantee expressly preserved by contract remains enforceable until full payment is made.
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