Current Law Journal

328 March 1994 [1994] 1 CLJ

The order of the learned Registrar made a HASIL

a BUMI PERUMAHAN
on 3 January 1991 and upheld by the SDN. BHD. & 5 ORS.
learned Judge in the High Court is there-
v.
fore set aside and is substituted therefor,
the order dated back to 3 January 1991 as UNITED MALAYAN BANKING BHD.
follows:
(1) Loss of expectation of life ... RM 6,500.00 SUPREME COURT, KUALA LUMPUR
b b
TAN SRI DATUK AMAR HAJI MOHD
(2) Funeral expenses ... RM 4,500.00
(3) Cost of applying for letters JEMURI BIN SERJAN CJ (BORNEO),
of administration ... RM 400.00 DATO' PEH SWEE CHIN SCJ,
(4) Loss of future earnings ... RM65,000.00 DATO' MOHAMED DZAIDDIN BIN HJ
ABDULLAH SCJ
All sums above shall carry interest at the
[CIVIL APPEAL NO. 02-41-1992]
usual rates of 4% p.a. and 8% p.a. except
c c 2 DECEMBER 1993
for the loss of future earnings which shall
carry no interest. PRACTICE AND PROCEDURE: Setting aside
On the question of costs, the plaintiffs judgment in default - Whether judgment ir-
regular - Whether there is good defence on
have succeeded in part, but they in fact merits - Standard of proof - When a order is
recover less than what was awarded to entered.
them by the learned Registrar earlier. We
therefore make no order as to costs here d d appellant, a housing developer,
The 1st
but the costs in the Court below remains was granted a bridging finance loan by
payable by the defendants and be paid to the respondent. The 2nd, 3rd, 4th, 5th
the plaintiffs by the defendants after and 6th appellants guaranteed repayment
taxation. of the loan. It was alleged that the respon-
dent had breached its obligations under
e the loan
e agreement and letter of offer and
as a result of this the 1st appellant in-
curred loss of profits, loss of sales and
other damages. The appellants filed a
writ against the respondent.
The writ of summons and statement of
claim was served on the respondent's so-
f f
licitors on 22 February 1991. On 23
February 1991 appearance was entered
and served. When defence was not filed by
16 March 1991, the appellant's solicitor served,
on the respondent's solicitors the custom-
ary 48 hours notice, requiring the defence
g to be gfiled. The respondent's solicitors
attempted to seek an extension of three
weeks to file the defence but it was futile.
On 26 March 1991 the defence was filed
and served. On 19 April 1991 judgment in
default was entered by the appellants’
solicitor but the judgment itself was dated
h h
23 March 1991.

Held:
[1] In a case under O. 19 r. 3, there is no
statutory obligation on the part of the
solicitors for the appellants to file a draft
judgment which is required only in a case
i underi O. 42 r. 8. What was done here was
 Hasil Bumi Perumahan Sdn. Bhd. & 5 Ors. v.
United Malayan Banking Bhd.
[1994] 1 CLJ Haji Mohd. Jemuri bin Serjan CJ (Borneo) 329

ex-abundanti cautela. The relevant rule a kewangan bersambung oleh respondent. Perayu-
applicable in the instant case is r. 10(1), perayu kedua, ketiga, keempat, kelima
(2) and (3). The solicitors for the appel- dan keenam telah menjamin pembayaran
lants need only draw up the judgment balik pinjaman tersebut. Dikatakan bahawa
under r. 10 (2) and present it to the SAR responden telah melanggar obligasinya di
for entry and under r. 10(1) the SAR bawah perjanjian pinjaman tersebut dan su-
should enter in the cause book kept for the rat tawaran dan akibatnya perayu pertama
purpose. Under this rule sub-rule, on en- b telah menanggung kehilangan keuntungan,
tering such judgment the SAR should file kehilangan jualan dan lain-lain kerugian. Para
the judgment and return the duplicate perayu telah memfailkan writ terhadap
thereof to the appellants solicitor. At the responden.
time of entering the judgment the pre-
Writ saman dan pernyataan tuntutan telah
scribed Court fees under O. 91 for entry of
disampaikan kepada peguamcara responden
such judgment must first be paid by means c pada 22 Februari 1991. Pada 23 Februari
of the prescribed praecipe which will be
1991 kehadiran telah dimasukkan dan
duly registered and impressed on copy of
disampaikan pada hari yang sama. Apabila
the judgment. On the proper construction
pembelaan tidak difailkan menjelang 16 Mac
of O. 42 r. 10(1) , (2) and (3) the judgment
1991, peguamcara perayu menyampaikan
in default was irregular and must be set
kepada peguamcara responden, notis
aside ex debito justitiae.
48 jam yang diwajibkan itu, meminta
d
[2] In order to succeed in his application supaya pembelaan difailkan. Peguamcara
under O. 13 r. 8 and O. 19 r. 9 the appli- responden cuba memohon lanjutan masa
cant must show that he has a defence selama tiga minggu untuk memfailkan
which has some merits and which the pembelaan tetapi tidak berjaya. Pada 26 Mac
Court should try. To use common and 1991 pembelaan difailkan dan disampaikan.
plain language, the applicant must show Pada 19 April 1991 penghakiman ingkar telah
that his defence is not a sham defence but e dicatatkan oleh peguamcara perayu tetapi
one that is prima facie, raising serious penghakimannya bertarikh 23 Mac 1991.
issues as bona fide reasonable defence
that ought to be tried because obviously if Diputuskan:
the defence is a sham defence there is no [1] Dalam kes di bawah Aturan 19 kaedah
defence and the application must fail. 3, t i a d a o b l i g a s i s t a t u t o r i d i p i h a k
peguamcara bagi perayu untuk memfailkan
[3] All the issues which are substantial f draf penghakiman yang mana hanya
and have merits ought to be tried at a dikehendaki di bawah A. 42 k. 8. Apa yang
proper trial so that witnesses may be telah dilakukan di sini ialah ex-abundanti
called to explain to the Court what is the cautela. Kaedah relevan yang terpakai dalam
nature of banking commercial practice in kes ini ialah kaedah 10(1), (2) dan (3).
processing and approving the loan and Peguamcara bagi perayu hanya perlu
other relevant issues. The justice of the menggubal penghakiman di bawah kaedah
case, bearing in mind the substantial claim g 10(2) dan mengemukakannya kepada
of the damages, demands nothing less Penolong Kanan Pendaftar (PKP) untuk
than a proper trial of all the issues. dicatatkan dan di bawah kaedah 10(1) PKP
harus mencatatkannya dalam buku kausa
[Appeal dismissed with costs].
yang disimpan untuk tujuan tersebut. Di
[Bahasa Malaysia Translation of Headnote] bawah sub-kaedah ini, atas pencatatan
h penghakiman yang sedemikian PKP perlu
AMALAN DAN PROSEDUR: Mengenepikan memfailkan penghakiman tersebut dan
penghakiman ingkar - Sama ada penghakiman memulangkan salinan penduanya kepada
di luar aturan - Sama ada terdapat pembelaan peguamcara perayu. Semasa pencatatan
yang baik atas merit - Standard kebutikan - Bila penghakiman tersebut fee Mahkamah
sesuatu perintah dicatatkan. yang ditetapkan di bawah A. 19 bagi
pencatatan penghakiman yang sedemikian
Perayu pertama, sebuah syarikat pemaju
i mestilah dibayar melalui praesipi yang
perumahan, telah diberikan pinjaman
ditetapkan yang mana akan didaftarkan
 Current Law Journal
330 March 1994 [1994] 1 CLJ

dengan sempurnanya dan dicatatkan a Legislation referred to:

pada salinan penghakiman tersebut. Atas Rules of High Court 1980, O. 14, O. 19 rr. 3, 8 & 9,
pentafsiran betul akan A. 42 k. 10(1), (2) dan O. 13 rr. 7 & 8, O. 42 rr. 1, 7 , 8, 10(1), (2), (3), (4),
(5), O. 53 & O. 91
(3) penghakiman ingkar tersebut adalah di
luar aturan dan harus diketepikan ex debito For the appellants - C.V. Das (Anthony Leong with
justitiae. him); M/s. Riza Leong & Partners
For the respondent - T. Thomas (Aznam bin Mansor
[2] Untuk berjaya dalam permohonannya b with him); M/s. Skrine & Co.
di bawah A. 13 k. 8 dan A. 19 k. 9, pemohon
mestilah menunjukkan bahawa beliau mem- JUDGMENT
punyai pembelaan yang ada merit dan yang
mana Mahkamah harus bicarakan. Dalam Haji Mohd Jemuri bin Serjan CJ(Borneo):
bahasa yang lebih mudah, pemohon mestilah There are only two basic important issues
menunjukkan bahawa pembelaannya which call for our determination in this
bukanlah sesuatu yang palsu tetapi c appeal, one being whether the judgment
ialah prima facie, membangkitkan isu-isu in default entered by the appellants
yang serius sebagai bona fide pembelaan against the respondent was irregular and
munasabah yang harus dibicarakan dan thereby may be set aside under O. 19 r. 9
pastinya jika pembelaan tersebut adalah of the Rules of the High Court 1980, and
palsu maka tiadalah pembelaan dan the other whether assuming that the judg-
permohonan itu akan gagal. ment is regular, it nevertheless may be
d
set aside on the ground that the respon-
[3] Segala isu yang substansial dan mem-
dent has a good defence on merits.
punyai merit haruslah dibicarakan di per-
bicaraan yang sepatutnya agar saksi-saksi The facts of the case may be briefly stated
dapat dipanggil untuk menerangkan kepada as follows. The 1st appellant is a private
Mahkamah apakah jenis amalan bank limited company and engaged in the busi-
perdagangan dalam memproses dan ness of a housing developer in respect of a
meluluskan pinjaman dan lain-lain isu yang e housing project in Taman Seri Buloh. The
relevan. Demi keadilan kes ini, dengan 2nd appellant, also a private limited com-
mengambil ingatan tuntutan substansial akan pany, signed a guarantee on 26 August
kerugian, maka perbicaraan yang wajar 1986 to guarantee all monies granted by
perlulah diadakan berhubung dengan the respondent to the 1st appellant and
isu-isunya. all the liabilities incurred by the 1st ap-
f pellant in respect of the loans not exceed-
[Rayuan ditolak dengan kos]. ing RM6.3 million, namely, the total
amount of the secured overdraft facility.
Cases referred to:
The 3rd, 4th, 5th and 6th appellants are
Tatchee Machinery Agency v. Posan Timber Trading
Sdn. Bhd. [1989] 1 MLJ 388 (foll) also guarantors under a guarantee dated
Jasabena Sdn. Bhd. v. Beh Hing Poo [1985] 1 MLJ 12 August 1986 for the same sum of RM6.3
394 (dist) million secured overdraft facility granted
Evans v. Bartlam [1937] AC HL (E) 473 (foll) g by the respondent to the 1st appellant. At
Apline Bulk Transport Co. Inc. v. Saudi Eagle Ship- the written request of the 1st appellant
ping Co. Inc. [1986] LLR Vol. 2 (CA) 221 (cit) dated 10 November 1983, the respondent
Fira Development Sdn. Bhd. v. Goldwyn Sdn. Bhd. on 17 May 1984 approved and granted
[1989] 1 CLJ 1/[1989] 1 MLJ 40 (cit)
credit facilities to the 1st appellant as a
P.L. Construction Sdn. Bhd. v. Abdullah Bin Said
[1988] 2 CLJ 808/[1989] 1 MLJ 60 (cit) financing credit line amounting to RM10
East Asiatic Co. (M) Bhd. v. Kamanis Sdn. Bhd. million, and an overdraft facility amount-
h ing to RM4.3 million which later was re-
[1985] 2 MLJ 227 (cit)
Eng Mee Yong v. Letchumanan [1979] 2 MLJ vised to RM6.3 million as a bridging-fi-
216 (cit) nance loan for the construction of 236 low-
American Cyanamid Co. v. Ethicon Ltd. [1975] Ac cost houses/flats; 148 single-storey ter-
396 (cit) race houses and 13 two-storey shophouses.
Independent Automatic Sales Ltd. v. Knowels & The revised amount of the end-finance
Foster [1962] 3 All ER 27 (cit)
Hadley v. Baxendale [1854] 9 Ex. 341 (cit) i facility was in response to a request from the
1st appellant for a restructured facility
 Hasil Bumi Perumahan Sdn. Bhd. & 5 Ors. v.
United Malayan Banking Bhd.
[1994] 1 CLJ Haji Mohd. Jemuri bin Serjan CJ (Borneo) 331

and approved by the respondent by his a failed to meet its obligations as a banker
letter of offer dated 3 July 1986. under the agreement and the terms agreed
upon in the application letter and offer
On 22 December 1990 the appellants filed
letter when it rejected 62 applications nine
a writ against the respondent claiming
months after receipt of the applications, and
damages in the sum of RM29.1 million,
saw fit to approve only 109 applications
being loss of profits, loss of sales, inter-
eight months after the date of submission
ests imposed by the respondent on ac- b of the applications. Even after granting
count of delay or stoppage in the work,
approval to the 109 applications, and af-
compensation paid to purchasers because
ter 30% - 50% of the progressive works
of delay in granting possession, solicitors’
had been certified to have been completed
fees, management costs, compensation to
the respondent still failed, refused or ne-
guarantors, accummulated interests,
glected to disburse the end-finance sum to
withdrawal of offer and loss of reputation
c the 18 purchasers and to the 1st appel-
on the part of the 1st appellant on the
lant. Besides, the fate of 52 other applica-
averment that the respondent was guilty
tions had not been made known by the respon-
of breach of its obligation under the pro-
dent. Thus, it was averred that the failure on
visions of the agreement dated 22 July
the part of the respondent to observe and
1985 and the letter of offer dated 3 July
fulfil its obligations under the banking
1986 both of which will be discussed later
contract was mainly due to management
and referred to in this judgment as "bank-
d and financial problems faced by the re-
ing contract". It was averred in the state-
spondent with the result that the 1st ap-
ment of claim that on the basis of
pellant could not continue to complete the
the application dated 10 November 1983
housing scheme. Hence, under the cir-
whereby the 1st appellant applied for
cumstances, the 1st appellant suffered
credit facilities it was crucial that the 1st
damages in the sum of RM29.10 million
appellant obtained credit facilities from
due solely to the breach by the respondent
the respondent in order to implement the e of the banking contract.
housing scheme successfully and an im-
mediate payment of RM2.4 million was On 22 February 1991 a writ of summons
required for the purpose of statutory and endorsed with the statement of claim was
professional fees. Further, it was averred served on Messrs. Skrine & Co., the solici-
that under the terms of the agreement tors for the respondent. On 23 February
dated 22 July 1985 the respondent had 1991 appearance was entered on behalf of
agreed to release the total amount of the f the respondent and served on the solici-
end-finance facility that the respondent tors for the appellant on the same day.
had offered to the qualified purchasers of The last day for filing the defence was 16
the subdivided lots together with the March 1991, but when no defence was
buildings thereon not exceeding RM10 filed on that date the appellants’ solici-
million direct to the 1st appellant, and tors by letter dated 19 March 1991 served
that the respondent was aware that this on the respondents’ solicitors the custom-
g
end-finance facility was to be utilized for ary 48 hours’ notice requiring the defence
the repayment of the overdraft facilities to be filed. Upon receipt of this letter and
upon acceptance of the application for the after futile efforts to communicate with
bridging-finance and end-finance facility the appellants’ solicitors the respondents'
by the respondent. On that understand- solicitors wrote to seek an extension of
ing the 1st appellant had commenced de- time of three weeks to file the defence.
velopment of the housing scheme. h Notwithstanding this request, a defence
was nevertheless prepared and filed on 26
The 1st appellant had submitted 223 ap-
March 1991. It was served on the appel-
plications for the end-finance facility and
lants’ solicitors on the same day. Three
it was averred that if all the applications
weeks later, on 19 April 1991 a judgment
were to be approved a sum of RM7.07
in default was entered by the appellants’
million would be made available to the 1st
solicitors but the judgment itself was dated
appellant. However, the respondent had i 23 March 1991.
 Current Law Journal
332 March 1994 [1994] 1 CLJ

The question for our determination on the a Court also failed to note the distinction
first issue is, therefore, whether the judg- between "drawing up" and "entering".
ment in default dated 23 March 1991 but Counsel submitted that O. 42 r. 10 (4) and
actually entered as a fair-copy on 19 April (5) made it clear that an order had to be
1991 is an irregular judgment and thereby drawn up before being entered; "drawing
may be set aside on that score. Relying on up" being the physical preparation of the
the authority of the decision of V.C. George draft order and "entering" being the filing
J. in the case of Tatchee Machinery Agency b of the draft order. On the proper interpre-
v. Posan Timber Trading Sdn. Bhd [1989] tation, according to Counsel, of O. 42 fil-
1 MLJ 388 his Lordship in the High Court ing should be equated with entering so
below decided that the judgment in de- that the date of a default judgment was
fault of appearance should have been dated the date on which the draft default judg-
after 19 April 1991 and not 23 March ment was filed in Court, quoting Edgar
1991, that is, the date stated in the draft c Joseph J. (as he then was) in Jasabena
judgment by which time there was al- Sdn. Bhd. v. Beh Hing Poo [1985] 1 MLJ
ready a defence filed and the Senior As- 394. Therefore, in effect, what was sub-
sistant Registrar, therefore, should have mitted was that the date when the draft
rejected the application for a default judg- was filed was the date when it should be
ment. His Lordship continued to say that entered, namely 23 March 1991 and not
in spite of that there was still a remedy 19 April 1991. In any event, Tatchee
available to the appellants by applying to d Machinery Agency’s case (supra) was a
have the defence struck out for not com- default in appearance that was decided
plying with the rules and such application under O. 13 r. 7 which rule did not apply
would be heard inter partes. to the instant case which was a default in
defence case under O. 19 r. 8 He, there-
It is worthy of note that in Tatchee Ma-
fore, submitted that the default judgment
chinery Agency’s case (supra) a distinc-
was regular and that the respondent must
tion was drawn between judgments or e show the defence on merits in order to
orders that were pronounced, given or
succeed in its application to set aside the
made, and judgments that were entered.
default judgment.
In the case of judgments to be pronounced,
the pronouncement, giving or making of the We must admit that the proposition was
judgments or orders, had to be made before persuasive but, with respect, we cannot
the judgments or orders could be drawn accept it as it lacked substance, and put-
up. Such judgments or orders take effect f ting it at its highest, it had the trappings
from the day of their dates and should be of an ingenious proposition.
dated on the day on which they were pro-
It did not escape our attention that there
nounced, given or made. (See O. 42 r. 7).
were two occasions when the filing of the
On the other hand, in the case of judg-
judgment took place, one on 23 March
ments or orders that are entered they
1991 when the draft judgment was filed
have to be drawn up first before they are
g and the other on 19 April 1991 when the
entered, and they take effect on their
fair copy was filed. If Counsel was right in
being entered. The date of the judgments
his submission then there should be two
or orders must necessarily be the date
separate dates when "entering", was made
they are entered. (See O. 42 r. 10(2)).
since "entering", according to him, meant
With respect, Tatchee Machinery Agency’s
"filing". Surely it is beyond argument that
case was correctly decided. Before us
there should not be two separate dates of
Counsel for the appellants advanced h entering the same judgment and we can-
the argument that Tatchee Machinery
not accept the draft judgment for the pur-
Agency's case (supra) was wrongly de-
pose of the entry under O. 42 r. 10(1) as
cided because O. 42 r. 10(5) was not con-
the solicitors for the 1st appellant chose
sidered in holding that in dating the de-
to have a draft faired in the first instance.
fault judgment, the date when the draft
It must be the fair copy of the judgment
judgment was filed, that is, 23 March
i that should be presented for entry in
1991, the Senior Assistant Registrar was
complying with all the requirements of
backdating the judgment. In that case the
the Rules of the High Court.
 Hasil Bumi Perumahan Sdn. Bhd. & 5 Ors. v.
United Malayan Banking Bhd.
[1994] 1 CLJ Haji Mohd. Jemuri bin Serjan CJ (Borneo) 333

In our view, in a case under O. 19 r. 3 as a copy of the judgment was filed was not
is the case in this appeal, there is no statutory correctly grounded and could not be sus-
obligation on the part of the solicitors for tained and we reject it as being without
the appellant to file a draft judgment basis. The weakest point in the appel-
which is required only in a case under lants' arguments was on the submission
O. 42 r. 8 What was done here was ex that the learned Judge did not take into
abundanti cautela. The relevant rule ap- consideration r. 10(4) and (5). The answer
plicable in the instant case is r. 10(1), (2) b to this is simple. Rule 10(4) and (5) are
and (3). The solicitors for the appellants only clearly applicable to orders and not
need only to draw up the judgment under to the judgments and the learned Judge
r. 10(2) and present it to the Senior Assis- was absolutely right to ignore the two
tant Registrar for entry and under r. 10(1) sub-rules. For the sake of completeness
the Senior Assistant Registrar should we should interpolate to say that
enter it in the cause book kept for that c Jasabena’s case has no application to cases
purpose. Under this sub-rule, on entering under O. 42 as it concerns a case under
such judgment the Senior Assistant Reg- O. 53 which is distinguishable, not only in
istrar should file the judgment and return its terms but also on the facts obtaining in
the duplicate thereof to the appellant's the present case. Equating filing with
solicitors. It must, however, also be em- entering under such order is fully justi-
phasised here that at the time of entering fied in the context of that order.
the judgment the prescribed court fees d
In our view, on the proper construction of
under O. 91 for entry of such judgment
O. 42 r. 10(1), (2) and (3) the judgment in
must first be paid by means of the pre-
default was irregular and must be set
scribed praecipe which will be duly regis-
aside ex debito justitiae and we, therefore,
tered and impressed on the copy of the
order that the judgment be accordingly
judgment. The praecipe in this case was
set aside. This would be a sufficient ground
registered on the day the fees were paid
e for us to dismiss the whole appeal but
and the judgment should only be entered
then the learned Judge went on to con-
after the payment of the prescribed fees.
sider, assuming he was wrong to hold the
There was uncontroverted evidence that the
default judgment irregular, whether on
judgment was entered on 19 April 1991,
the merits of the defence the judgment
the day it was presented and signed by the
should also be set aside in the exercise of
Senior Assistant Registrar after the pre-
his discretion under O. 19 r. 9.
scribed fees had been paid. It should also f
be obvious from the above that the deter- It must be pointed out at this juncture
mining factor for the purpose of deciding that it is not unusual to read in English
when such judgment is entered under law reports of plaintiff’s solicitors sign-
O. 42 r. 10 is the payment of the pre- ing judgments in default of appearance
scribed court fees without which the judg- and perhaps in default of defence as well
ment could not be entered and signed by (see Evans v. Bartlam [1937] AC HL (E)
the Senior Assistant Registrar. The Se- g 473 at p. 477), giving the impression
nior Assistant Registrar was labouring that it is actually so in practice, but in
under a mistaken belief that he was under Malaysia, strictly in compliance with
a duty to accept the draft judgment and O. 42, it is not the plaintiff's solicitors
sign it for approval. At any rate, in our who sign such a judgment but the Senior
view, that for the purpose of O. 42 r. 10(1) Assistant Registrar on the presentation
a draft judgment is not a judgment since of the judgment and payment of the court
a draft implies that it needs perfection h fees. The plaintiff's solicitors do not sign
and approval. It follows that the argu- the judgment but such a judgment is en-
ment that the judgment was entered when tered by the Senior Assistant Registrar,
the draft was filed for the approval of the to use the technical term.
Senior Assistant Registrar and that the
date of filing the fair judgment could be His Lordship held that he was satisfied
related back to the date when the draft that the respondent had shown that he
i had a defence on merits and on that score
 Current Law Journal
334 March 1994 [1994] 1 CLJ

also the judgment was set aside citing a defence must show that there was an
Evans v. Bartlam on the assumption that "arguable defence" which must carry some
he was wrong in deciding that the default degree of conviction. Even if we accept that
judgment was irregular. these standards are mere options for the
court to take, Sir Roger Ormrod appeared
On the second issue the starting point in
to us to depart from the standard that was
the light of the provisions of O. 19 r. 9 is
to be met by a defendant in such a case
whether the learned Judge is right in the b although he claimed that the standard he
exercise of his discretion when he set
formulated was based on a construction of
aside the default judgment and in doing
the words used by the Law Lords in Evans
so did his Lordship correctly interpret
v. Bartlam in that the standard as we
and apply the guidelines formulated by
understand them in Malaysia as formu-
the Law Lords in the case of Evans v.
lated by way of guidelines in Evans v.
Bartlam (supra). It seems to us that coun-
c Bartlam guidelines is much lower.
sel for the appellants did not dispute the
correctness of Lord Atkin's dictum that A scrutiny of the case of Evans v. Bartlam
unless and until the court has pronounced would show that different Law Lords used
judgment upon the merits or by consent, different terms but they all seem to agree
it is to have the power to revoke the that for the defendant to succeed in his
expression of its coercive power where application to set aside a default judg-
that has been obtained only by a failure to ment he must show that the defence had
d
follow any of the rules of procedure. What merits that ought to be tried by the court.
counsel for the appellants urged upon us In other words, in popular language, the
was that in order for the court to set aside defence was not a sham defence. Lord
a default judgment under O. 19 r. 9 the Atkin was of the view that it was suffi-
court should apply the test as formulated cient for the defendant to file an affidavit
by Roger Ormrod in Alpine Bulk Trans- on merits, meaning that the applicant
port Co. Inc. v. Saudi Eagle Shipping Co. e must produce to the court evidence that
Inc. [1986] LLR Vol. 2 (CA) 221. In that case he had a prima facie defence. (See page
Sir Roger Ormrod expressed the view that 480). Lord Wright, on the other hand, at p.
on its proper interpretation the Law Lords 489 was of the view that the primary
in the case of Evans v. Bartlam clearly consideration was whether the defendant
contemplated that a defendant who was had merits to which the court should pay
asking the court to exercise its discretion heed, and if the merits were shown the
to set aside the default judgment should f court would not prima facie desire to let a
show that he had a defence which had a judgment pass on which there had been no
real prospect of success. Therefore, Coun- proper adjudication. If the defendant
sel for the appellants urged us to accept showed merits, then he clearly showed an
Sir Roger Ormrod’s view that in order to issue which the court should try. Lord
arrive at a reasoned assessment of the Russell of Killowen, on his part, reminded
justice of the case the court must form the courts not to fail to consider whether
g
a professional view of the probable outcome any useful purpose could be served by
of the judgment if the judgment were to be setting aside the judgment and that obvi-
set aside and the defence develop, and ously no useful purpose would be served
that the "arguable defence" must carry if there were no possible defence to the
some degree of conviction. However, it action. In other words, the standard laid
behoves us to point out from the outset down by Lord Russell is not that much
that Sir Roger Ormrod himself did not h lower and that it is sufficient if the defen-
appear to be firm as to which standard dant can show he has possible serious
should be applied because at one point in defence.
his judgment he was talking about a "real
In Malaysia the tendency of the courts
prospect of success" and at another "rea-
hitherto is to follow the guidelines
sonable prospect of success", and in be-
enunciated in the case of Evans v. Bartlam,
tween he ventured another test that in
i bearing in mind also that this is a House
order to set aside a default judgment the
 Hasil Bumi Perumahan Sdn. Bhd. & 5 Ors. v.
United Malayan Banking Bhd.
[1994] 1 CLJ Haji Mohd. Jemuri bin Serjan CJ (Borneo) 335

of Lords' case while Saudi Eagle's case is a case by forming a professional view of the
the decision of a Court of Appeal. In probable outcome of the case, but this
Malaysia, we are not bound by the decisions is stating the obvious. It involves a
of the House of Lords but the courts al- mental process that goes through the mind
ways accept those authorities as persua- of a Judge when making a decision in any
sive authorities which may be followed. case, weighing the evidence of a litigant
Indeed, this Court has occasion to con- against that of another on the facts
sider the question whether a judgment in b alleged by a party against those of the
default should be set aside under O. 13 other before finally coming to a decision.
r. 8 and did in fact approve and follow At any rate whether we follow Saudi Eagle
Lord Atkin’s dictum. Thus, in Fira Devel- or Evans v. Bartlam, both cases only lay
opment Sdn. Bhd. v. Goldwyn Sdn. Bhd. down, not rules of law, that must be strin-
[1989] 1 MLJ 40 Lee Hun Hoe, CJ (Borneo) gently complied with but merely guide-
(as he then was) held that a defence on the c lines to assist a Judge in the exercise of
merits meant merely raising only an ar- his discretion. So long as the Judge exer-
guable or triable issue, not unlike any cises his discretion according to principles
O. 14 cases and that a judgment in default of law the appellate court would hesitate
was not a judgment on merits. In other to interfere with the Judge’s exercise of
words, it was decided in that case that a discretion. It is for the appellants to con-
judgment in default may be set aside if vince us that this is a proper case for our
the facts show a defence has merits. Fira's d interference with the learned Judge’s exer-
case was followed by Zakaria Yatim J. in cise of his discretion under O. 19 r. 9.
P.L. Construction Sdn. Bhd. v. Abdullah
Now it is true that in matters of discre-
bin Said [1989] 1 MLJ 60. Again, V.C.
tion no one case can be authority for an-
George J. in East Asiatic Company (M)
other (per Lord Wright in Evans v.
Bhd v Kamanis Sdn. Bhd. [1985] 2 MLJ
Bartlam ) and in deciding this appeal we
227 used such expression as "bona fide
e have to examine the facts as they appear
reasonable defence" to describe the stan-
on the pleadings and in the affidavits of
dard of the defence that must be met for
the parties, but before we go into them in
the applicant to succeed to set aside a
detail we also remind ourselves that where
default judgment, although he cited no
there is a conflict of evidence on affidavits
authority for his proposition, and it
it would not be proper for us to believe one
seemed to us the proposition was redolent
side and disbelieve the other. Such con-
of Lord Atkin's dictum. Consistent with f flict should be resolved at the trial as it is
the decision of our own courts in the past
not our function to try to resolve conflicts
in dealing with issues such as those under
of evidence on affidavits at this stage.
O. 13 r. 8 and O. 19 r. 9 the guidelines in
(See Eng Mee Yong v. Letchumanan [1979]
Evans v. Bartlam (supra) should be ac-
2 MLJ 216 and American Cyanamid Co. v.
cepted. In our view, in order to succeed in
Ethicon Ltd. [1975] AC 396.)
his application under these Orders the
applicant must show that he has a de- g Casting our minds back to the statement
fence which have some merits and which of claim and the opposing affidavits of
the Court should try. To use common and Encik Chien Kien Chuen, a Director of the
plain language, the applicant must show 1st and 2nd Appellants, and on a careful
that his defence is not a sham defence but analysis of the averments, the irresistable
one that is prima facie, raising serious conclusion that is to be drawn therefrom
issues as bona fide reasonable defence is that the basis on which the cause of
that ought to be tried because obviously if h action arose contain two elements. The
the defence is a sham defence there is no appellants started off with the premise
defence and the application must fail. It that the 1st appellant had categorically
can hardly be emphasised that in order stated in its letter of application dated
for the Court to arrive at a decision that 10 November 1983 that the release of
the defence has merits it must perforce make the credit facilities were crucial to the
a reasoned assessment of the justice of the i implementation of the said housing
 Current Law Journal
336 March 1994 [1994] 1 CLJ

project. The full text of the letter is a The above gentlemen are all experienced
reproduced: businessmen and professionals.
Our company had earlier taken a term
10th November 1983
loan in 1980 from your bank (Your Ref.
Mr. K.C. Boon, CRO/CBK/KLE/SC) which had since been
Executive Director, fully repaid.
United Malayan Banking It is crucial that our company must ob-
Corporation Bhd., b tain credit facilities in order to imple-
UMBC Building, ment the scheme successfully and imme-
Jalan Sulaiman, diate payment in the form of statutory
Kuala Lumpur. and professional fees amounting to RM2.4
million is required. Infrastructural work
Dear Mr. Boon,
is expected to commence early in 1984
Proposed Housing Scheme On Lot 14679, and the whole scheme is expected to be
Mukim Of Sungei Buloh, Selangor completed in two years. Details are indi-
c
Application For Credit Facilities cated in the cash flow projections.
Further to our recent meeting in your As shown in the study by our quantity
office together with your Mr. P.K. Sim, surveyor, the company will require
we are pleased to enclose the following: funding facilities as follows:
1. Letter of approval from the Pengarah 1. Bank overdraft for
Tanah dan Galian, Selangor approv- immediate drawdown. RM 3 million
ing the above mentioned housing d 2. Bridging loan to be
scheme. disbursed based on
2. A copy of the report and valuation architect's/engineer's
prepared by Khong & Jaafar Sdn. certificates commencing
Bhd. placing a value of RM9 million from early 1984. RM12 million
on the land. 3. End financing to
3. A copy of the layout plan of the pro- assist buyers. RM34 million
posed development prepared by our
architect, Jurubina Sinar Murni Sdn.
e As security for the above facilities, the
Bhd. company will create a first legal charge
4. A copy of the economic viability study on the subject property in favour of your
including cash flow projections bank together with joint and several guar-
prepared by our quantity surveyor, antees to be given by all directors of the
Nik Farid Dan Loh Sdn. Bhd. company.
You will note from the enclosed docu- We would be grateful if you could ap-
ments that it is a very attractive and f prove these facilities as soon as possible
viable scheme comprising mainly of low- to assist our company to complete the
cost and medium low-cost houses which proposed development.
the Government is encouraging develop-
ers to build. Our company is bumiputra Yours faithfully,
majority held and the main beneficiary Hasil Bumi (Perumahan) Sdn. Bhd.
shareholders are as follows:
(Signed)
1. Tengku Mustaffar Ibni Tengku Idris g (K.C. CHEAH)
Shah - a businessman. Director.
2. Encik Abdul Aziz bin Yahaya - a pro-
fessional manager and company di- Enc.
rector.
3. Mr. Lim Fung Chee - managing di- As will be discussed later only the follow-
rector of Kumpulan Emas Sdn. Bhd. ing facilities were approved, namely:
and a director of several companies. h
4. Mr. K.C. Cheah - a chartered/profes-
sional civil engineer with over 15 (1) Secured overdraft to the limit of
years construction and property de- RM6.3 million which was the
velopment experience. Currently is refund figure at the request of the
the managing director of Siang 1st appellant; and
Management Services Sdn. Bhd. pro-
(2) End-finance facility up to RM10
viding property and construction
management services. i million.
 Hasil Bumi Perumahan Sdn. Bhd. & 5 Ors. v.
United Malayan Banking Bhd.
[1994] 1 CLJ Haji Mohd. Jemuri bin Serjan CJ (Borneo) 337

The secured overdraft facility was meant a the affidavits in opposition, were the di-
to be utilized for financing the development rect cause of the abandonment of the hous-
of the housing estate, consisting of 236 ing project and the resultant damages
low-cost flats/houses, 148 single-storey they suffered.
terrace houses, 177 double-storey terrace
On their face value, the alleged breaches
houses and 13 double-storey shophouses.
on the part of the respondent to disburse
On obtaining and securing the commitments
b the facilities could also include the breach
of the respondent to grant and release the
on the part of the respondent to release
said credit facilities, the 1st appellant
the secured overdraft, although Counsel
commenced work and sales of the house to
for the appellant in his argument never in
be constructed. The appellant specifically
fact alluded to it. This was because the
laid stress on their averments that the
appellants claimed the housing project
respondent held themselves out to the 1st
failed because they did not get the facili-
appellant purchasers that they were the c ties which had been promised them and be-
end-financiers of the housing scheme, and
cause it was the secured overdraft that was
on the strength of this assumption 223
meant to be used to finance the develop-
applications were submitted to the re-
m ent and c om pl et i on of t he hous ing
spondent for approval. Out of this number
scheme and not the end-finance. If there
of applications, only 109 applications were
are any merits at all on these allegations
approved, but so far no drawdowns had
it seems to us the respondent equally has
ever been made. d
a prima facie good defence which would be
The appellant averred further that the discussed later. That it was contemplated
breach of the banking contract was attrib- by the appellants the breach of disbursing
uted directly to management and finan- the bridging-finance facility was also a
cial problems faced by the respondent. basis for the claim to damages was fur-
Thus, by paragraph 14 of the statement of ther explained by the citation of the 2nd,
claim and paragraph 11 of the affidavit e 3rd, 4th, 5th and 6th appellants as par-
dated 14 May 1991 of Encik Chien Kien ties to the action. The 2nd appellant, it
Chuen, it was averred that the respon- must be recalled, was the corporate guar-
dent had breached their duties under the antor for the loan of RM6.3 million under a
arrangement, the cumulative effect of guarantee dated 26 August 1986 and the
which resulted in the failure of the 1st 3rd, 4th, 5th and 6th appellants were
appellant to continue and complete the guarantors under a guarantee dated 12
housing project, thereby suffering the dam- f August 1986 in respect of the same
ages claimed for in the writ of summons. amount, being the bridging-finance facil-
ity to be utilised to finance the develop-
To our minds the two elements constituting
ment of the housing project. On the other
the basis on which the cause of action was
hand, the guarantors for the end-finance
based can be summarised as follows:
facility were the 3rd appellant, Encik Hoo
On the premise that the release of the Ke Ping @ Hoo Khi Ping, Encik Cheah Kok
g
facilities, (which particular facilities were not Cheong, Encik Lim Fung Chee and Tengku
specifically pleaded) was crucial to the Mustaffar Ibni Tengku Idris Shah, in re-
development and completion of the hous- spect of the RM10 million end-finance
ing scheme, firstly, the failure on the part facility which was to be used to repay the
of the respondent to release these facili- bridging-finance facility. It is somewhat
ties and, secondly, based on the same baffling why if the cause of action is fail-
premise the failure on the part of the h ure to release this amount or such amount
respondent to release the approved end- as had already been approved, except for
finance loans when the applicants had the 3rd appellant, the rest of the guaran-
complied with the conditions for the ap- tors were never cited as parties to the
proval of the end-finance loans, at least in action.
respect of the 109 approved applications
Thus, on the alleged breach to disburse
led to breaches of the banking contract.
i the facilities agreed to be offered to the
The cumulative effect of these breaches,
1st appellant, the respondent’s defence
therefore, according to the pleadings and
 Current Law Journal
338 March 1994 [1994] 1 CLJ

was that they had released the secured Purpose : The secured overdraft is for financing the
a development of a housing estate known as
overdraft, namely, the bridging-finance Taman Sri Buloh with 236 low cost flats/
loans in the sum of RM6.3 million, and as houses, 148 single storey terrace houses,
177 double storey terrace houses and 13
such it was averred by the respondent double storey shophouses to be constructed
that they had performed their obligations under Phase I and II of the project.

under the banking contract, and if the Interest rate : Interest on the secured overdraft is to be at
housing estate could not be completed it 2.5% above our Base Lending Rate (BLR)
b calculated on the daily overdraft balance.
certainly was not due to the failure of the
Our current BLR is 10% per annum subject
respondent to release the bridging-finance to changes at the Bank's discretion.
loan and therefore the respondent could
Commitment fee : A commitment fee of 1.0% per annum will
not be made accountable for any damages be levied on the unutilised portion of the
as a result of the abandonment of the overdraft facility.

project for lack of funds or for any other Disbursement : The secured overdraft is to be released in the
following manner:
reasons. By way of amplification to the c
defence to show that the failure on the (i) RM200,000 on completion of legal and
security documentations.
part of the 1st appellant to continue and (ii) RM1,300,000 against production of sat-
complete the housing project was not due isfactory evidence for the payment of
conversion premium and statutory
to the breach of the banking contract on fees.
the part of the respondent, the respon- (iii) balance of RM4,800,000 progressively
against architect's certificate for works
dent, by way of an affidavit of Encik Azizan done with advance not exceeding 70%
bin Adam, the Manager of the respondent, d of the value per certificate.
averred that it was due to the incompe- Security : The secured overdraft is to be secured by
tent and inefficient management of the legal charge on land of 37.09 acres, valued
at RM9 million by Khong & Jaafar per report
scheme and that on 17 March 1988 the 1st dated 30 September 1983 to be developed
appellant had entered into a contract with into the said housing estate known as Taman
Sri Buloh.
Ingeback (Malaysia) Sdn. Bhd. to com-
Guarantees : (i) A fresh letter of continuing guarantee
plete the project within twelve months, and indemnity is to be executed by the
and that on 23 April 1988 Bank Utama e new directors of the company for the
overdraft facility.
(M) Bhd. gave a loan of RM9.5 million (ii) The secured overdraft facility is also
including the end-finance to the 1st ap- to be against the corporate guarantee
of Fai Chuen Corporation Sdn. Bhd.
pellant. With all these additional bridg-
ing-finances there was no reason why the Redemption : The secured overdraft is to be repayable by
way of redemption monies in respect of the
housing project could not be completed. aforesaid 236 low cost flats/houses, 148 single
Prima facie this certainly is more than f
storey terrace houses, 177 double storey
deluxe terrace houses and 13 double storey
just an arguable defence. It is a good shophouses as follows:
defence which has merits and which the
Type Redemption sum
court should pay heed. per unit

At this juncture, it would be appropriate Low Cost Flats/Houses RM 7,200

Single Storey Terrace House RM16,000
to look at the relevant terms of the letter Double Storey Deluxe
of offer relied on by the 1st appellant Terrace House RM25,000
g Double Storey
to ascertain the terms of the banking Shophouse RM52,000
contract. The relevant part of the letter is Interest on the overdraft facility is to be
reproduced for convenience: serviced monthly.

Date: 3 July 1986 Conditions of : The end-financing RM10 million facility is

loans accorded to be granted to the individual purchasers of
Hasil Bumi (Perumahan) Sdn. Bhd., under End- the proposed development in Taman Sri
4th Floor, Financing Buloh as follows:
Lobby B. Wisma Segar,
No. 9, Jalan Thamby Abdullah Dua,
h (i) (a) RM9 million for houses costing less
Brickfields, 50470 Kuala Lumpur. than RM100,000 each with at least
RM3 million being to finance
Dear Sir, Bumiputra buyers in this category.
(b) RM1 million for shophouses subject
Re: Approval of revised credit facilities to the payment of a fee of 1/2% on the
unutilised portion of the facility one
We are glad to inform you that we have approved the following year after the date of its acceptance
revised facilities in your favour, with terms and conditions as by the company.
follows:
i (ii) against legal charge of individual titles
Type and limit : Secured Overdraft RM 6,300,000 or assignment of sales and purchase
of facilities End-financing RM10,000,000
 Hasil Bumi Perumahan Sdn. Bhd. & 5 Ors. v.
United Malayan Banking Bhd.
[1994] 1 CLJ Haji Mohd. Jemuri bin Serjan CJ (Borneo) 339

agreement cum loan agreement and the 1st appellant to repay the overdraft
charge in escrow pending issuance of
a
strata titles, in the case of flats. facilities by whatever means and the re-
(iii) against the guarantee of your com- demption monies out of the end-finance
pany as well as the personal, joint and
several guarantee of all the directors loan was only one of them. We note that it
of your company until the issuance of was not provided either in the letter of
the certificate of fitness for occupation
to each respective building. offer or in the banking contract that the
(iv) on the merits of each case in accor- redemption monies were exclusively to be
dance to our Bank’s normal guidelines b
for housing loans. However, the mar- utilized to repay the bridging-finance loan.
gin of advance on housing loans to non-
bumiputra purchasers is to be consid- What struck us as a seeming oddity in this
ered at 80% instead of 75% for units
priced between RM25, 000 - RM100,000. argument was that if it was the appellant’s
(v) the end-financing facility is to be made case that the failure by the respondent
available up to 31 December 1987 after
which the unutilised balance will be to release the approved end-finance
treated as cancelled. loans which was meant for servicing the
c bridging-finance loans, such argument
It is clear from this letter that the sum of would provide the appellants with a good
RM6.3 million was meant for financing defence in the event they were sued for
the development of the housing estate failing to repay the bridging-finance loan.
which sum had already been disbursed But, the appellants’ case here was that
and, prima facie, it should be sufficient such failure culminated in the failure of
to see the housing project through to the appellants to continue with and com-
completion and if this amount was not d
plete the housing project. This is the pith
sufficient for the completion of the whole and substance of the appellant’s case be-
project certainly no blame could justifi- fore us, namely, its sheet-anchor.
ably be laid on the respondent on account
of the incompetence of the 1st appellant. Coming back to the letter of offer dated 3
July 1986, it was noted that the other
The other element of the breach of the conspicuous feature of the letter was that
banking contract is straightforward. The e of-the specific and exclusive mode of re-
allegation was that the respondent payment of both facilities were not stipu-
adopted dilatory tactics in approving the lated therein though there was a provi-
109 applications for the end-finance loans. sion that the secured overdraft, namely,
Even after the Architect had duly certi- the bridging-finance loan was to be repay-
fied to the respondent that the progres- able by way of redemption monies in re-
sive works had been completed and all spect of the 574 units of low-cost houses,
other contractual requirements for the f
single-storey terrace houses, double-
release of those loans had been met, the storey deluxe terrace houses and double-
respondent still refused to release the storey shophouses. It should be explained
approved end-finance loans. It was on by evidence in the absence of clear provi-
this second breach that the appellant pur- sion as to the mode of repayment whether
sued and canvassed before us, emphasis there is a common practice adopted by all
specifically laid upon the essential terms g banking and financial institutions in the
of the banking contract, embodied in the country that payment of the bridging-
letter of offer dated 3 July 1986 that the finance loan is exclusively by way of re-
overdraft was to be serviced from the demption monies or from any other avail-
redemption monies to come from the end- able sources as in any ordinary loans.
finance thereto. It was strenuously ar- There is nothing sham about the defence
gued that when the respondent failed to raised by the respondent that the repay-
provide the end-finance loans, the 1st h ment of the bridging-finance loan may be
appellant was unable to service the over- made by other means at the disposal of
draft account, thereby entitling the 1st the 1st appellant and not exclusively by
appellant to damages for the breach of the way of the redemption monies.
banking contract.
It is also relevant to note that the RM10
In their defence an affidavit in support of the million end-finance loans were to be granted,
application under O. 19 r. 9 the respondent i amongst other things, on the merits of each
averred that it was the responsibility of
 Current Law Journal
340 March 1994 [1994] 1 CLJ

case in accordance with the respondent’s a of banking practice which postulates and
normal guidelines for housing loans. This demands caution in processing any appli-
condition was further amplified and rein- cation for loan, that the respondent, and
forced by Clause 16 of the agreement dated for that matter any other prudent banks,
22 July 1985 entered into on the one part should take into account various factors
by the 1st appellant, referred to therein before deciding whether to approve a loan
as the "company", Chien Kien Chuen, Hoo to a particular applicant under the end-
Ke Ping @ Hoo Khi Ping, Cheah Kok b finance facility such as:
Cheong, Lim Fung Chee and Tengku
(a) whether the information supplied by
Mustaffar Ibni Tengku Idris Shah and his
the individual purchasers in their ap-
guarantors and United Malayan Banking
plication forms provided sufficient ma-
Corporation Bhd. on the second part which
terial for the respondent to make a
agreement was concerned merely with the
conceded decision one way or the
terms and conditions relating to the end- c other;
finance facilities. Again, the absence of
(b) whether the individual purchasers
the mode of repayment of the end-finance
were in a financial position to repay;
facilities in this Agreement was conspicu-
and
ous. Clause 16 of the Agreement on which
(c) if approved, the amount of any loan,
the respondent relies as its defence on the
which to a large extent depended
question of their application to release
on the individual purchaser's fi-
the end-finance facility reads: d
nancial ability to service the loan;
(16) Notwithstanding anything to the
contrary contained in this agreement then there is no absolute certainty that
the Bank shall be entitled at its abso- all the 223 applications will be approved.
lute discretion to refuse to grant or con- There must inevitably be some applicants
tinue to advance and release any of the who fail to measure up or meet the
loans or any part thereof to any of the respondent’s commercial standard to of-
Borrowers and nothing contained in this e fer such loans. In any event, the respon-
Agreement shall be deemed to render it
dent by way of the affidavit of Encik Azizan
obligatory upon the Bank either in law
or in equity to grant or to continue to bin Adam disputed even the number of
advance and release the loans or any the approved purchasers. According to
part thereof and the company’s and him the respondent only received 201 and
guarantors’ respective liabilities under not 203 applications of which 98 applica-
this Agreement shall not be discharged tions were approved while some were first
f
or released by virtue of the Bank refus- approved and subsequently cancelled and
ing to grant or to continue to advance the rest totally rejected. Of the approved
and release any of the loans or any part
applications the amount due to the appli-
thereof.
cants and indirectly to be paid to the 1st
This clause, in our view, offers the re- appellant would be in the region of
spondent a good defence which has merits RM2,661,500 and not RM7.07 million as
and which the court should pay heed also. g alleged by the 1st appellant. Accordingly,
We assume without deciding that the arithmatically this sum would not be suf-
terms of this clause negate specifically ficient to repay the RM6.3 million bridg-
absolute obligation on the part of the re- ing-finance loan and the 1st appellant
spondent to approve any application for would still be liable to be sued for the
the end-finance to any applicant and that settlement of the balance of that loan
no applicant is entitled as of right to any together with interest, if any. This de-
loan applied for. Under the circumstances,
h fence certainly has substance, providing a
how could it be argued that the repayment bona fide reasonable defence, and goes to
of the bridging-finance must, to the exclu- reinforce the respondent’s contention that
sion of all other methods of payment, be the repayment of the bridging-finance loans
by redemption monies, accruing to the was not solely and exclusively by way of
qualified borrowers but payable direct to redemption monies.
the 1st appellant. If it is true, as a matter i
 Hasil Bumi Perumahan Sdn. Bhd. & 5 Ors. v.
United Malayan Banking Bhd.
[1994] 1 CLJ Haji Mohd. Jemuri bin Serjan CJ (Borneo) 341

In our view, it is only proper that all these a are matters to be argued in detail at the
issues which are substantial and have trial.
merits ought to be tried at a proper trial
Under the circumstances, we see no ground
so that witnesses may be called to explain
is shown to justify us to interfere with the
to the court what is the nature of banking
learned Judge’s exercise of his discretion
commercial practice in processing and ap-
under O. 19 r. 9 of the Rules of the High
proving the loan and other relevant is-
b Court 1980 although admittedly, his Lord-
sues. The justice of the case, bearing in
ship in his brief judgment did not discuss
mind the substantial claim of the dam-
in detail the various questions of the mer-
ages, demands nothing less than a proper
its of the defence. We, therefore, for the
trial of all the issues.
reasons above dismiss the appeal with
There is another matter that we should costs. The deposit is to be paid to the
address our minds to, and that is the respondent on account of taxed costs.
question of remoteness of damages which c
really is a question of law for the trial
Judge to decide. Again, assuming without
deciding the question, whichever way the
trial judge would decide the question of
the real cause of action, either the total
failure of the breach due to the breach of
d
the respondent in not disbursing the
bridging-finance facility to the 1st appel-
lant or their failure to meet the require-
ments of the banking contract to release
the end-finance facilities to 109 or 98
approved applications, as the case may
be, or the combination of both breaches, e
the question of the remoteness of dam-
ages would have to be considered. But, the
respondent denied the damages as claimed
by the 1st appellant was due to the breach
of the banking contract, thereby without
explicitly pleading the issue which, in any
event is a question of law and may not be f
pleaded specifically, (see Independent
Automatic Sales Ltd. v. Knowels & Foster
[1962] 3 All ER 27), raised the question of
remoteness of damages. The test of re-
moteness of damages is relevant in the
law of contract the basic principle of which
g
had already been enunciated by Alderson
B. in the case of Hadley v. Baxendale
[1854] 9 Ex. 341. Remoteness of damages
would certainly provide an arguable de-
fence (per Sir Roger Ormrod) or a prima
facie defence (per Lord Atkin). To put it
concisely, the respondent has an explana- h
tion to all the allegations, the truth of
which is denied by the 1st appellant.
At this stage we are in no position to believe
or disbelieve either party, merely on con-
flict of affidavits and mere interpretation
of the agreement dated 22 July 1985 and
other contemporaneous documents. These i