The court upheld the lower court's discretion in dismissing an application to set aside a default judgment due to significant delay and merits lacking trial value.

This is an appeal directed against the order of the High Court in Penang dismissing an application to set aside the judgment in default entered against the appellant as long ago as 13 November 1986.

The facts that form the background to this case have been dealt with in extenso by the learned judge in his judgment.We find it unnecessary to repeat them here.Suffice to say that the respondent had on 26 September 1986 commenced an action against the appellant and two other persons for recovery of a loan made by it to the appellant.The 2nd and 3rd defendants in the Court below had guaranteed that loan.After the writ had been served, the 2nd and 3rd defendants entered an appearance.We have been advised by counsel that there were proceedings for summary judgment between the respondent and those defendants.There is another appeal pending before this Court in respect of those proceedings with which we are not concerned here today.In the meantime, judgment in default was entered against the appellant on 13 November 1986.

It was not until after the respondent had commenced winding-up proceedings that the appellant's solicitors realised that they had neither entered an appearance nor delivered a defence.Steps were then taken to enter an appearance and to set aside the judgment.It may be added for good measure that although appearance was entered on 25 November 1986, the summons to set aside the default judgment was not taken out until 23 September 1991.

In declining to set aside the judgment in default, the learned judge relied on two grounds.First the delay of some five years in the making of the application.In this context, he referred to and relied on the judgments of Edgar Joseph Jr. J, (as he then was) in Malaysian Building Society Bhd. v. Lim Kheng Kim 1988 MarsdenLR 128 , 1988 MarsdenLR 1041 and in Hong Leong Equipment Sdn. Bhd. V. Manfo Development Sdn. Bhd & Anor. 1985 MarsdenLR 393 ; 1986 MarsdenLR 674 .He also relied on the judgment of this Court Khor Cheng Wah V. Sungai Way Leasing Sdn. Bhd. 1996 MarsdenLR 809 ; ; [1997] 1 CLJ 396; [1996] 1 AMR 846 - 3 AMR 3640 and that of the Federal Court in Tuan Haji Abdul Rahman v. Arab Malaysian Finance Berhad 1995 MarsdenLR 623 ; ; [1996] 1 CLJ 241; [1996] 1 AMR 215. Of these, the last two were plainly binding on him.After a careful scrutiny of the explanation advanced by the appellant, the learned judge came to the conclusion that the delay was unreasonable.

The second point on which the judge proceeded was the merits of the case itself.He came to the conclusion the rate of interest upon which complaint had been made before him was really a matter upon which the respondent had a discretion.In other words, there was a contractual power in the respondent to vary the interest.After careful consideration of the evidence led before him, he concluded there was no merit in the sense there were no issues that merited a trial.

Before us, Mr. Mahinder Singh Dulku has argued with much force that the judgment in default was a nullity.He has drawn our attention to what he says is a serious deficiency in the statement of claim.He submits that the judgment in default is ambiguous just as the judgment in default was in Tuan Haji Ahmad Abdul Rahman's case (supra). The mainstay of his argument is that since the judgment in default is a nullity, he is entitled to have it set aside ex debito justitae notwithstanding the delay complained of by the respondent.

The other complaint is that the impugned judgment includes default interest which, it is said, the respondent was plainly not entitled to recover.It follows, counsel argues, that judgment was entered for too much and is therefore a nullity.However, Mr. Mahinder Singh readily concedes that these arguments were not canvassed before the learned judge but contends that since it is a matter upon which further evidence is not required, it may be raised at the appellate stage. ( Yong Mok Hin V. United Malay States Sugar Industries Ltd.