Zakaria Yatim J:

This is an appeal against the decision of the Senior Assistant Registrar, who refused to give leave to the plaintiffs to enter judgment against the defendants for the full sum RM350,000 claimed by the plaintiffs. Instead, she gave judgment in the sum of RM79,700.70 for the plaintiffs and ordered a trial of the balance of the claim together with the defendants' set-off and counter-claim.

The plaintiffs' claim was for a sum of RM350,000, which, according to them, was advanced to the defendants in four installments in 1981. The money was advanced to the defendants for the purpose of providing the Royal Malaysian Customs with bank guarantees. The defendants admitted receiving the RM350,000 from the plaintiffs, but stated in their counter-claim that the plaintiffs, too, owed them money in the sum of RM270,299.30. The defendants claimed in their defence that they were entitled to set-off this amount against the plaintiffs' claim.

Counsel for the plaintiffs submitted that, since the defendants had admitted receiving the sum of RM350,000, the plaintiffs were entitled to have judgment against the defendants in the sum claimed under O. 27 r. 3 of the Rules of the High Court 1980. According to him, the defendants' counter-claim and set-off were not connected with the plaintiffs' claim, but should be brought in another suit pending before the Court in Suit No. C 1063/1982. In the instant case, the plaintiffs' claim was based on an agreement contained in four letters written by the plaintiffs to the defendants. These letters stated that sums of money totalling RM350,000 were advanced to the defendants. According to the plaintiffs, the letters were duly endorsed by the defendants, thereby accepting the terms and conditions stated therein. In the other civil suit, the plaintiffs were claiming damages against the same defendants for breach of an agreement. This agreement was separately concluded between the parties on 30 June 1981. The agreement was for the supply of MAWA coconut seeds to the plaintiffs. The defendants' counter-claim and set-off in the present case were based mainly on the MAWA seeds supply agreement. It was the contention of the plaintiffs that the counter-claim and set-off had no relation to the present claim. The plaintiffs, therefore, sought to set aside the order of the Senior Assistant Registrar, and asked for judgment to be entered in their favour in the sum of RM350,000.

Counsel for the defendants submitted that the defendants were admitting the plaintiffs' claim of RM350,000 subject to the set-off. According to the defendants, the counter-claim and set-off were interwoven with the plaintiffs' claim in the present case. They contended that the sum of RM350,000 advanced to them by the plaintiffs was to provide bank guarantees to the Royal Malaysian Customs for the purpose of exporting the MAWA coconut seeds to the plaintiffs pursuant to the agreement dated 30 January 1981. The defendants claimed that they had supplied the plaintiffs with MAWA coconut seeds and the plaintiffs still owed them RM223,756 being the cost of 34,424 seeds. In addition, a sum of RM5,362.95 was due to the defendants being part of the charges incurred by them for the despatch of MAWA seeds to the plaintiffs. A sum of RM370 was also due to the defendants, being the cost of air passage paid by the defendants at the request of the plaintiffs, in respect of an employee of the plaintiffs. The defendants also claimed RM810.35, being charges incurred by them for the despatch of medical apparatus to the plaintiffs. In their counter claim, the defendants also stated that the plaintiffs owed them RM40,000, being the cost of rock phosphate supplied by them to the plaintiffs. The total amount claimed by the defendants as stated in their counter-claim, was RM270,299.30. According to the defendants, out of this amount, the sums of RM223,756 and RM5,362.95 were connected with the plaintiffs' claim and arose out of the supply of MAWA co