Mohamed Dzaiddin Abdullah SCJ:

[1] These are two appeals against the decision of Shaik Daud J, given in chambers on 27 August 1992, on an appeal from the Registrar's decision, refusing to strike out the counterclaim and the reply and defence to counterclaim made pursuant to O 18 r 19 of the Rules of the High .

[2] Since we are concerned here with the question of striking out pleadings under O 18 r 19, we do not propose to go into the facts and documents in any more detail than is necessary. From the writ of summons and the statement of claim, it is clear to us that the respondent's claim against the appellants in this civil suit is for recovery of the amount due and owing under the various banking facilities as at 30 September 1988 with interest, granted by the respondent to the first appellant and guaranteed by the second and third appellants and one Kuah Sai Yok (deceased). The following facts are not in dispute. As at 16 July 1984, the following facilities were granted to the appellants:-

(a) a secured overdraft facility (OD) of RM750,000

(b) a Letter of Credit facility (LC) of RM1.0 million;

(c) a Trust Receipt facility (TR) of RM500,000; and

(d) a Letter of Guarantee facility (LG) of RM3.5 million.

[3] The above facilities were secured by legal charges over several pieces of land and a duly executed Letter of Guarantee and Indemnity of the second and third defendants and Kuah Sai Yok (deceased) dated 10 September 1984. Originally, it was agreed between the parties that the LG facility would be secured by personal guarantees of the second and third appellants and a counter-indemnity of an insurance company. Later, the parties agreed that the said LG facility be secured up to 50% of its value by legal charges over various pieces of land to secure RM530,000 and a fixed deposit of RM1,597,000. However, on 5 November 1985, the securities were varied, whereby the fixed deposit of RM1,597,000 was replaced with publiclisted shares having a market value of approximately RM2.0 million. Consequently, on 7 May 1987, the respondent recalled the OD and TR facilities. It is also common ground that between 13 May 1987 and 9 August 1988, there were exchange of communications between the parties for the respondent to dispose of the shares pledged as settlement of the appellants' liabilities.

[4] From the pleadings, we note that the respondent filed the present action on 24 November 1988, and on 9 January 1989, the appellants filed their defence, which was amended on 5 March 1990 to include the counterclaim. On 30 June 1990, the respondent filed their reply and defence to counterclaim. Finally, on 5 November 1990, the appellants, pursuant to an order of Court of even date, filed a further amended defence and counterclaim. In the further amended defence and counterclaim, the appellants stated that as a consequence of the respondent recalling the said facilities, the appellants on two occasions sought the respondent's permission to dispose all the said shares pledged with the respondent which, at the material time, was quoted at RM2.40 per share and therefore necessarily indicating that the sale of the said shares would fetch monies which would then be utilised to repay the OD and TR facilities. Prior to the appellant's second appeal for permission to sell the said shares, the respondent agreed to sell only RM1.75 million worth of the shares and they did not allow the first appellant to sell the balance of the said shares in order to repay the recalled facilities. The appellants therefore averred that the respondent, in breach of their duty of care, unreasonably delayed the granting of the approval for the disposal of the said shares until some five months after the share market crashed in October 1987, resulting in the said shares being dropped in value. By their counterclaim, the appellants repeated these allegations and averred that as a direct and foreseeable consequence of the respondent's failure to promptly approve the sale of the shar