Raja Azlan Shah AG CJ (Malaya):

[1] This was an appeal from an order of the High Court at Kuala Lumpur allowing the application by the respondents, as the second defendants in the action, that the judgment entered against them in default of appearance be set aside. We dismissed the appeal on May 30, 1978.

[2] The appellants claimed a sum of $73,402.80 being the amount alleged to be owing by the first defendants, Syarikat Baiduri (M) Sdn Bhd, on an overdraft account. The respondents were sued as guarantors for the first defendants. The specially endorsed writ was filed on March 16, 1976 and served on the respondents on March 31, 1976. On June 23, 1976, the appellants obtained judgment against the respondents in default of appearance.

[3] The application to set aside the judgment was made by summons-in-chambers dated October 18, 1977. One ground stated in the affidavit in support of the application is that at the time when the writ was served the respondents were engaged in major administrative reorganisation, and from March 22, 1976 till the end of June 1976 they were busy transferring files and personnel from the Contracts Unit to the newly set up Overdraft Unit of the Loans Division and in the process this matter lost the attention which otherwise would have been given. Another ground is that the writ when served, was handed to an officer who was no longer with the relevant division and he had failed to forward it to the appropriate officer. All of these alleged facts were not refuted by the appellants. As to the merits of defence the respondents relied on cl 13 of the guarantee agreement executed by them on January 11, 1974, which reads as follows:

"This Guarantee shall be valid for a period of eight calendar months from the data hereof, computing for this purpose, the month in which this guarantee is executed by us (irrespective of the number of days of the month then remaining) as one calendar month and any demand hereunder to be valid shall be made not later than thirty days from the date of the expiry of the period of this Guarantee."

[4] According to evidence the demand was made on the respondents on June 17, 1975. It was therefore contended by them that the demand was made out of time. Learned counsel for the appellants argued that the time limit was null and void in view of s 29 of the Contracts Act, which reads:

"Every agreement, by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights, is void to that extent."

"Where judgment is entered pursuant to any of the preceding Rules of this Order, it shall be lawful for the Court or a judge to set aside or vary such judgment upon such terms as may be just."