Mohamed Dzaiddin Hj Abdullah SCJ:

[1] This appeal arises from the decision of Zakaria J given on 5 December 1992, allowing an appeal by the respondents against the decision of the Registrar giving leave to the appellant to sign final judgment under O 14 Rules of the High against the respondents for the sum of RM2,745,455.32 as at 30 September 1988 with further interest and costs.

[2] The brief facts of the case are these. On 5 August 1983, the appellant granted to the first respondent banking facilities for a total amount of RM7,000,000 and in consideration thereof, the second and third respondents together with Kuah Sai Yok (deceased) executed a continuing guarantee and indemnity on 24 October 1983 in favour or the appellant for due repayment of the said total principal sum advanced to the first respondent together with interest. The first respondent defaulted in the repayment of these facilities. The appellant then sent notices of demand to the respondents and Kuah Sai Yok (deceased), demanding payment of the sum of RM2,619,032 due and owing as at 22 April 1988 together with interest. On 24 November 1988, the appellant commenced legal action against the respondents claiming for the sum of RM2,745,455.32 being the amount due and owing by the respondents as at 30 December 1988 together with interest and costs.

[3] On 9 January 1989, the respondents and Kuah Sai Yok (deceased) filed the defence, which was later amended on 5 March 1990 to include the counterclaim. For the sake of clarity, we quote the relevant paragraphs of the amended defence which are as follows:

6. On 30 March 1988, the plaintiff suddenly and without just cause recalled the facilities granted to the first defendant notwithstanding that the defendant's properties and the public quoted shares were still being held by the plaintiff.

10. In order to be able to comply with the conditions referred to above on 17 August 1989, the first defendant wrote to the plaintiff seeking permission to dispose off all their public quoted shares to repay the plaintiff RM750,000 as opposed to the RM500,000 requested by the plaintiff which proposal was rejected by the plaintiff.

11. On 7 September 1989, the first defendant wrote to the plaintiff once again requesting that the said shares be disposed off and again the plaintiff refused to accede to the first defendant's requests.

12. The defendants contend that had the plaintiff disposed off the shares as requested, they would have recovered a sum of no less than RM7 million which figure covers the amounts unreasonably demanded by the plaintiff and that it is as a result of the plaintiff's own negligence that it has had to resort to this legal action.

15. The defendants aver and will aver the plaintiff wrongfully recalled the said facilities and in breach of the agreements entered into between the plaintiff and the first defendant refused to allow the first defendant to liquidate its assets.

[4] The issues on the appeal, that is, whether or not the amended defence discloses an arguable or triable case, are dealt with by the learned Judge in his written judgment (pp 15-48 AR). The learned Judge approached the matter in the following manner. He addressed himself on two principal issues namely, whether the public-quoted shares were pledged or mortgaged by the first respondent to the appellant and, secondly, whether the appellant owed a duty of care to the respondent, and if so, whether that duty of care had been properly or reasonably exercised in obtaining the best price for the said shares.

[5] On the first issue, after considering the written submissions of Counsel and examining the relevant laws on the pledge and the affidavit evidence, the learned Judge was satisfied that the transaction between the parties in respect of the said public-quoted shares was not one of pledge but of a mortgage, and that the parties had intended that the said public-quoted shares were to be mortgaged and not pledged to the appellant.

[6] On the issue whe