JUDGMENT

Haji Mohd Jemuri bin Serjan CJ(Borneo):

There are only two basic important issues which call for our determination in this appeal, one being whether the judgment in default entered by the appellants against the respondent was irregular and thereby may be set aside under O. 19 r. 9 of the Rules of the High Court 1980, and the other whether assuming that the judgment is regular, it nevertheless may be set aside on the ground that the respondent has a good defence on merits.

The facts of the case may be briefly stated as follows. The 1st appellant is a private limited company and engaged in the business of a housing developer in respect of a housing project in Taman Seri Buloh. The 2nd appellant, also a private limited company, signed a guarantee on 26 August 1986 to guarantee all monies granted by the respondent to the 1st appellant and all the liabilities incurred by the 1st appellant in respect of the loans not exceeding RM6.3 million, namely, the total amount of the secured overdraft facility. The 3rd, 4th, 5th and 6th appellants are also guarantors under a guarantee dated 12 August 1986 for the same sum of RM6.3 million secured overdraft facility granted by the respondent to the 1st appellant. At the written request of the 1st appellant dated 10 November 1983, the respondent on 17 May 1984 approved and granted credit facilities to the 1st appellant as a financing credit line amounting to RM10 million, and an overdraft facility amounting to RM4.3 million which later was revised to RM6.3 million as a bridging-finance loan for the construction of 236 low-cost houses/flats; 148 single-storey terrace houses and 13 two-storey shophouses. The revised amount of the end-finance facility was in response to a request from the 1st appellant for a restructured facility and approved by the respondent by his letter of offer dated 3 July 1986.

On 22 December 1990 the appellants filed a writ against the respondent claiming damages in the sum of RM29.1 million, being loss of profits, loss of sales, interests imposed by the respondent on account of delay or stoppage in the work, compensation paid to purchasers because of delay in granting possession, solicitors' fees, management costs, compensation to guarantors, accummulated interests, withdrawal of offer and loss of reputation on the part of the 1st appellant on the averment that the respondent was guilty of breach of its obligation under the provisions of the agreement dated 22 July 1985 and the letter of offer dated 3 July 1986 both of which will be discussed later and referred to in this judgment as "banking contract". It was averred in the statement of claim that on the basis of the application dated 10 November 1983 whereby the 1st appellant applied for credit facilities it was crucial that the 1st appellant obtained credit facilities from the respondent in order to implement the housing scheme successfully and an immediate payment of RM2.4 million was required for the purpose of statutory and professional fees. Further, it was averred that under the terms of the agreement dated 22

July 1985 the respondent had agreed to release the total amount of the end-finance facility that the respondent had offered to the qualified purchasers of the subdivided lots together with the buildings thereon not exceeding RM10 million direct to the 1st appellant, and that the respondent was aware that this end-finance facility was to be utilized for the repayment of the overdraft facilities upon acceptance of the application for the bridging-finance and end-finance facility by the respondent. On that understanding the 1st appellant had commenced development of the housing scheme.

The 1st appellant had submitted 223 applications for the end-finance facility and it was averred that if all the applications were to be approved a sum of RM7.07 million would be made available to the 1st appellant. However, the respondent had failed to meet its obligations as a banker under the agreement and the term