Datuk Lim Kheng Kim, the first defendant herein, seeks to set aside a default judgment dated 18 March 1986 entered against him for the recovery of $1,243,859.44 with interest thereon at the rate of 14% pa from 1 October 1985 to date of realization and costs.

It appears from the statement of claim herein that the first defendant, along with the second, third and fourth defendants, had executed a joint and several guarantee, whereby in consideration of the plaintiff making or affording loan facilities to an incorporated company ('the borrower'), they had agreed that if the borrower shall in any respect fail to perform any of its obligations, then the defendants as guarantors shall indemnify the plaintiff, the sum of $1,500,000 together with interest, costs, charges and all sums payable by the borrower to the plaintiff.

Other provisions of the joint and several guarantee material to this application were as follows.

Paragraph (c) of the preamble provides:

The borrowers have applied to the society for a loan of ringgit one million and five hundred thousand ($1,500,000) only (hereinafter referred to as 'the said loan') for the purpose of financing the development of the said estate and at the request of the guarantors the society has agreed to grant to the borrowers the said loan upon the security of a first legal charge of even date executed by the borrowers over the said lands in favour of the society (hereinafter referred to as 'the said charge').

Clause 1 provides:

In consideration of the society having at the request of the guarantors agreed to make the said loan of ringgit one million and five hundred thousand ($1,500,000) only to the borrowers the guarantors hereby guarantee jointly and severally as principal debtors and not merely as sureties to the society the repayment by the borrowers of the said loan together with interest costs charges and all other sums payable by the borrowers to the society under or pursuant to the said charge and the due performance and observance of all the agreements covenants and undertaking on the part of the borrowers therein contained.

Clause 3 provides:

It is hereby agreed and declared that in the event that the borrowers shall:

(i) make default in payment of any one or more of the instalments or any part thereof or any interest thereon or other sums of moneys payable under the said charge; or

(ii) fail to make payment of the balance of the moneys owing to the society after the expiry of the notice of demand provided under the said charge; or

(iii) be wound up whether compulsorily or voluntarily; or

(iv) in any respect fail to observe or perform any of the agreements covenants terms and conditions thereof contained in the said charge or shall commit any breach of its covenants or obligations thereunder

then and in any of such case the society shall have the right to enforce this guarantee against the guarantors, for the whole amount of the outstanding loan inclusive of all interests costs expenses and charges whether legal costs or other costs incurred in the realization of the security/securities under the said charge. The society shall not be bound or required to proceed against the security first before enforcing this guarantee against the guarantor.

Clause 4 provides:

Any admission or acknowledgment in writing by the borrowers or any person on behalf of the borrowers of the amount of the indebtedness of the borrowers or otherwise in relation to the subject matter of this guarantee or any judgment or award obtained by the society against the borrowers or proof by the society in winding-up which is admitted, or any statement of account by the society certified correct under the hand of any one of the managers or any duly authorized officer of the society shall be binding and conclusive evidence against the guarantors of amount for the time being due to the society from the borrowers.

Clause 5 provides:

This guarantee shall be in addition to and shall not be in any way pre