Ian Chin J:

Introduction

This is an application by Sandakan Plywood & Veneers Co. SDN BHD ("the defendants") for a stay of execution as a result of the striking out by John Chong J on 30 July 1994 of the counterclaim of the defendants. A little of the history of the suit herein has to be narrated to put into perspective the issues that call for determination.

History of Case

The plaintiffs took out the writ herein against the defendants claiming for fees due for the extraction and transportation of timber. Judgment for the plaintiffs was on 11 June 1987 ordered to be entered against the defendants, upon their admission, for the sum of

RM1,718,731.65 together with costs and interests but the order giving judgment further states that "the execution of the said judgment be stayed pending the trial of the defendants' counterclaim". There was also an application of the plaintiffs to strike out the counterclaim which was dismissed. One of the allegations of the counterclaim was that the plaintiffs were in breach of the agreement (under which the plaintiffs were owed the said sum for which judgment was ordered to be entered) by failing to submit to the defendants monthly reports of all timber logs extracted giving the quantity, species and volume of the logs that were extracted by the plaintiffs. The defendants had contracted to extract and transport the timber logs with a concession owner and the defendants had in turn subcontracted the works to the plaintiffs for which the said sum was owed. The gist of the counterclaim was that the plaintiffs had failed to comply with the terms of the subcontract agreement when the plaintiffs failed to submit monthly reports of the quantity, specie and volume of timber extracted and that the plaintiffs after terminating the said subcontract agreement remained on the land concerned and continued to extract and remove timber and dealt direct with the concession owner for their payment. The defendants counterclaimed "the amount of the difference of the agreed prices of timber logs extracted to be paid by SFI to the defendants under the principal agreement and the agreed prices of timber logs extracted to be paid by the defendants to the plaintiffs under the sub-contract agreement from August 1985 until judgment". The fees payable for the extraction and transportation of timber by the defendants to the plaintiffs were: (a) Small logs and logs of grade above - RM70 per cubic metre (b) Low grades - RM44 per cubic metre.

As against this, the fee payable by the concession owner to the defendants was RM73.50 per cubic metre for all commercial timber. It is this difference in the contract fees that the defendants counterclaimed against the plaintiffs. As for the rest of the history I can do no better than to reproduce what was stated by John Chong J in his judgment of 30 July 1994, viz:

Thus, from 11 June 1987 the action proceeded only as respects the defendants' counterclaim, and under O 25, r 1(1) read together with r 1(6), the defendants, as the party making the counterclaim, were required to take out a summons for directions within one month after the close of the pleadings, but they failed to do so. What followed next appears from the case docket is that on 3 April 1989 the plaintiffs as the defendants to the counterclaim took out a summons for directions, and this the plaintiffs were entitled to do under r. 1(5). The summons for direction was fixed for hearing before the Senior Assistant Registrar on 10 October 1989 but it was adjourned upon intimation from Counsel for the plaintiffs that the sealed copy of the summons had not been returned by the High Court Registry to them for service on the defendants. It came up for hearing next on 25 June 1990, but was adjourned to 26 July 1990 and upon the application of the plaintiffs' Counsel made orally in the absence of defendants' Counsel, the Senior Assistant Registrar struck out the summons for directions. On 18 August 1992 the plaintiffs took out a summ