JUDGMENT

Vincent Ng Kim Khoay J:

By virtue of a sale and purchase agreement dated 8 April 1985 the 1st plaintiff purchased flat unit No. 161/1-1 (the said flat unit), Anson Apartment, Pulau Pinang from a developer namely Continental Trading Corp. (M) Sendirian Berhad (the Developer) through a financing loan of RM146,500 from the defendant bank (the defendants).

The said flat unit formed part of a block of apartments put up by the said developer under a joint-venture agreement dated 23 March 1981 on a piece of land known as Lots No. 002125 Section 12, Daerah Timur Laut, Penang (the said land) with the landowners, the Evangelical Lutheran Church in Malaysia and Singapore. The said land was charged in favour of the defendants vide two (2) charges for a bridging loan of RM2.3 million made to the developer. The development of the block of apartments was completed on or about early 1987.

On 26 January 1988 upon default of the 1st plaintiff in instalment payment the defendants issued a demand notice and commenced two legal actions to recover the sum of RM186,072.40, against the 1st plaintiff under Penang High Court Civil Suit No. 22-499-89, and against the 2nd and 3rd plaintiffs, who are guarantors of the financing loan, under Penang High Court Civil Suit No. 23-238-88. Upon obtaining judgment, the defendant then proceeded to file the following recovery proceedings:

(i) Penang High Court Winding-up Petition No. 28-38-88 against the 1st plaintiff. A default winding-up order was made on 17 January 1994 but subsequently set aside on 1 September 1994. The defendant's appeal to the Court of Appeal against the setting aside order dated 17 January 1994 was dismissed on 5 June 1995. Against this decision of the Court of Appeal the defendants have on 11 September 1995 obtained leave to appeal and have filed a Notice of Appeal on 22 September 1995 to the Federal Court.

(ii) Penang High Court Bankruptcy Petition No. 29-1146-91 against the 2nd plaintiff as a guarantor.

(iii) Penang High Court Bankruptcy Petition No. 29-1145-91 against the 3rd plaintiff as the other guarantor.

(iv) Penang High Court O.S. 31-448-88 for an order of sale of the said flat unit for recovery of RM177,952.69 due as at 24 May 1988.

Pursuant to this order for sale, the following six auction attempts were made:

Auction Date Reserve Price Outcome

17.5.89 RM200,000 Taken off

14.8.91 RM300,000 No Bidder

8.1.92 RM278,000 No Bidder

20.5.92 RM250,200 No Bidder

30.9.92 RM230,000 No Bidder

21.4.93 RM207,000 No Bidder

The plaintiffs have alleged that despite the fact that the above auctions were abortive, the defendant had by their failure to respond and negligent misrepresentations to prospective purchasers secured by the plaintiffs, precluded the 1st plaintiff from disposing of the said unit by private sale to repay the loan. And that the defendants had never at any stage when the property was subject to auction replied categorically as to how much was still due to them in respect of the said flat unit despite several attempts by the 1st plaintiff to sell the said flat unit by private sale.

Consequently, on 15 September 1993 the 1st plaintiff together with the 2nd and 3rd plaintiffs, filed the current suit against the defendant Company, where under the defendants have filed three applications - two for striking out and one for security for costs - viz. Encls. 13, 37 and 22 respectively, all of which this Court had dismissed with costs to the plaintiffs. Considering that the defendants have now appealed against my decision on Encls. 13 and 37, and in order to be well appraised of the real issues, it may be necessary here to set out, in so far as relevant, certain averments in the plaintiffs' statement of claim dated 15 September 1993.

8. On or about 8 February 1990 the 1st plaintiff entered into a sale/purchase agreement with one Chiang Tao-Fan for, the sale of said unit at a price of RM220,000 with a view to settle monies due to the defendant. This was intimated to and was in the