JUDGMENT

Hashim Yeop Sani CJ (Malaya):

The appellant company, Pembinaan KSY Sdn. Bhd. (KSY) were the contractors to Lian Seng Properties Sdn. Bhd. (the company) engaged for the development project of a property (now called K.L. Plaza) owned by the company.

The company had borrowed heavily from various financial institutions for the development project and by June 1986 the company owed KSY RM10,529,000 on account of unpaid architect's certificates. In fact work on the development project came to a standstill on account of the company's failure to pay and the banks refused to lend any more money to the company. After some negotiations which must have aborted KSY finally sued the company for the amount of RM10,529,000 in January 1987.

After various extensions of time granted by the Court for the company to file the defence KSY finally entered judgment in default on 31 March 1987 for the same sum and the company was duly informed of this fact.

On 22 April 1987 KSY and the company signed a lump sum agreement after negotiations with the various financial institutions where the company agreed that upon completion of the development project they would pay KSY a lump sum of RM26,050,000. KSY completed the balance of the work on the development project and a certificate of practical completion was issued on 1 December 1987 but no payment was made.

On 10 December 1987 a winding-up petition was filed by Morgan Guarantee Trust Company of New York against the company which was the subject of another appeal (Supreme Court Civil Appeal No. 02-454-89). KSY gave notice of intention to support the Morgan Guarantee Trust petition on 15 April 1988. In the appeal by Morgan Guarantee Trust we held that Morgan Guarantee Trust Company of New York was competent to file the petition on the date of the petition.

The winding-up petition was postponed a number of times and on 6 March 1989 the company filed a notice of motion to strike out KSY as a supporting creditor on the grounds that it had no locus standi to support the petition. The learned Judge granted the order in terms of the motion. Hence this appeal.

In his written judgment the learned Judge found that KSY founded its rights to be a supporting creditor on two judgments namely the default judgment entered on 31 March 1987 for RM10,529,000 and an O. 14 judgment obtained on 17 November 1988 for RM12,902,000. As the O. 14 judgment was granted subsequent to the date the company gave notice of intention to support the petition, that is 15 April 1988, we need only concern ourselves in this appeal with the default judgment.

The question is whether the default judgment is a sufficient basis for KSY's application to support the petition.

The learned Judge devoted a substantial part of his written judgment on the reasons why he found the default judgment to be "null and void" and should therefore be set aside. He concluded at p. 15 of his judgment:

Accordingly the said default judgment entered on 31 March 1987 was irregularly entered independent of the R.H.C. and should be set aside ex debito justitiae.

The reasons why he came to this conclusion was that he held that the company had seven days from 23 March 1987 to file the defence, that is, it had up to 2 April to file the defence. Since O. 3 r. 2(5) of the Rules of the High Court 1980 excludes Saturday and Sunday and purporting to apply Anlaby & Ors. v. Praetorius [1888] 20 QBD 164 and Syarikat Joo Seng & Anor. v. Habib Bank Ltd. [1986] 2 MLJ 129 the learned Judge ruled that the default judgment relied on by KSY was a nullity. Since the default judgment was a nullity the company had the option to ignore it or go to Court to set aside relying on Eu Finance Bhd. v. Lim Yoke Foo [1982] 2 MLJ 37.

With respect, the conclusion of the learned Judge was in our view misconceived.

Syarikat Joo Seng & Anor. was an appeal where judgment in default of defence was entered without obtaining leave from the Court or Judge. There the appellant had applied to set aside the default judgm