Orion Care Supplies (M) Sdn Bhd v Aztec Laboratories Sdn Bhd (WA-24NCvC-2920-08/2024)

ORION CARE SUPPLIES (M) SDN BHD

2.

NEVILLE ANTHONY FERNANDEZ ... APPLICANTS AND AZTEC LABORATORIES SDN BHD (COMPANY NO.: 201101016706 (944842-K)) ... RESPONDENT GROUNDS OF JUDGMENT [1] In these grounds of Judgment, the parties shall be referred to as they were in the Sessions Court, namely “Plaintiff” for the Respondent and “Defendants” for the Applicants. [2] On 8.2.2024, the Sessions Court entered judgment for the Plaintiff against the Defendants under O. 14, r. 3 of the Rules of Court 2012 (‘RC 2012’) for the sum of RM458,980.40 with interest and cost of 04/12/2024 10:56:30 WA-24NCvC-2920-08/2024 Kand. 23 RM3,000.00. The Defendants’ erstwhile counsel was present when the Sessions Court made the Order via e-review. [3] As this is a decision other than a decision made after trial, any appeal against the decision must be brought within 14 days from 8.2.2024 (see O. 55, r. 5 RC 2012) i.e. on or before 22.2.2024. [4] However, no Notice of Appeal to the High Court was filed by the Defendants within the stipulated time. [5] By this Originating Summons (encl. 1), the Defendants are seeking, among others, for an abridgement of time to file a Notice of Appeal to the High Court against the decision of the Sessions Court. The application is made pursuant to sub-s 25(2) of the Courts of Judicature Act 1964 read with paragraph 8 of the Schedule; O. 3, r. 5 and O. 92, r. 4 of the RC 2012; and/ or the inherent jurisdiction of the court. [6] Apart from encl. 1, the cause papers are as follows:

the Defendants’ Affidavit In Support (‘AIS’) affirmed by the 2nd Defendant (‘D2’), Kugiindran a/l Munindy on 6.8.2024 (encl. 2);

the Plaintiff’s Affidavit In Reply (‘AIR’) affirmed by its Director, Karthik a/l Chandran on 23.8.2024 (encl. 5); and

the Defendants’ AIR affirmed by the same deponent on 9.9.2024 (encl. 6). [7] The Court has considered the cause papers and submissions of the parties and the findings are elaborated in the following part of this judgment. [8] The power to extend the time to file a notice of appeal is discretionary and has to be exercised judicially by taking into consideration the following factors [see Bala Subramaniam Sengodan v. Ahamed

The length of, and the reasons for, the delay Encl. 1 was filed on 7.8.2024. The delay is thus approximately 5½ months. The reasons averred by the Defendants for the delay is that –

they have no knowledge about the decision of the Sessions Court and were not advised by their previous solicitors regarding the time frame within which a notice of appeal must be filed. The Defendants claimed that they knew of the judgment against them only in July 2024 when the Plaintiff took execution proceedings. In my considered view, this is not a good reason for me to exercise my discretion in the Defendants’ favor because any omission by the Defendants’ erstwhile solicitors to convey the decision of the Sessions Court to the Defendants and to advise about the mandatory time period in the RC 2012 are not good excuse. As a party to the suit, the Defendants should be alert and interested in the status of the case and be constantly checking the same with their solicitors (see C.E.L Construction Sdn Bhd v Toh Wai Ming [2023] CLJU 2555). In the AIS, the Defendants made no averments as to any efforts taken by them to check the status of the suit. The Defendants were contented to allow months to past until the Plaintiff began to enforce the judgment; and

(ii) they were facing financial difficulties due to the slowdown in business and debts owed to them by their clients. As a result, they could not afford to obtain legal services until the new solicitors were appointed for purposes of filing encl. 1. I am not convinced by the Defendants’ affirmations in paragraphs 13.4 - 14 of the AIS for the simple reason that no documentary evidence was produced to support the same. All that the Defendants exhibited was a Statement of their Current Account dated 30.11.2023 issued by Alliance Bank showing a balance of RM586.98.

The chances of the appeal succeeding if time for appealing is extended I have scrutinised the pleadings filed in the court below and the cause papers and written submissions in relation to the application for summary judgment against all Defendants and it is my finding that –

there is no chance of success if the 1st Defendant (‘D1’) is allowed to file its Notice of Appeal because in the AIR to the application for summary judgment, the only issue which was raised by D1 was that in paragraph 17 of the Statement of Claim (‘SoC’), the Defendants are said to be indebted to the Plaintiff for the sum of RM458,980.40 as at 1.5.2023. However, in the Statement of Account in exhibit “A-5”, the amount outstanding as at 1.5.2023 is stated as RM468,126.47. In paragraph 10 of the Plaintiff’s AIR, it was explained that the sum of RM458,980.40 is the sum that is due and owing to the Plaintiff as at the date of filing of the SoC i.e.

23.5.2023. It is observed that there is a contradiction in the second sentence of paragraph 17 of the SoC as it reads “Pada setakat Writ saman ini difailkan Defendan-Defendan berhutang kepada Plaintif sebanyak RM458,980.40 setakat 1.5.2023.”. In any event, in subparagraph 18(a) of the SoC, the relief prayed for is RM458,980.40 as at 1.5.2023, which is lesser than RM468,126.47, and summary judgment was entered for the lesser sum. Moreover, sufficient documentary evidence was exhibited by the Plaintiff to prove that the sum of RM458,980.40 was owing by D1. D1 did not dispute the Statement of Account as at 10.5.2023 when it was attached in an e-mail dated 11.5.2023 and in fact, in the earlier correspondence, D1 had admitted the debt; and

(ii) there is a chance of success if D2 and the 3rd Defendant (‘D3’) are allowed to file their Notice of Appeal because the pleaded cause of action against D2 and D3 is that D2 and D3 have carried out D1’s business with an intention to defraud the Plaintiff under s 540 of the Companies Act 2016 (‘CA 2016’). Based on the affidavit evidence alone, it is not possible for the Sessions Court to come to the conclusion that it did in allowing summary judgment to be entered against D2 and D3 i.e. that the elements of s 540 CA 2016 have been fulfilled by the Plaintiff. These elements are that –

(A) the business of the company has been carried on with intent to defraud creditors, or for any fraudulent purpose; and

(B) D2 and D3 were knowingly a party to the carrying on of the business in that manner. To show an “intent to defraud” or “fraudulent purpose”, the element of dishonesty is an essential ingredient. This is a question of fact to be inferred from the surrounding circumstances [see Dato’ Prem Krishna Sahgal v Muniandy a/l Nadasan & Ors [2018] 2 MLJ 693 (FC) and Tetuan Sulaiman & Taye v Wong Poh Kun & Anor and another appeal [2023] 3 MLJ 360 (CA)]. To establish dishonesty, the court must find that, according to the ordinary standard of reasonable and honest people, what was done was dishonest; and D2 and D3 must have realised that the act was by those standards dishonest [see Tradewinds Properties Sdn Bhd v Zulhkiple bin A Bakar & Ors [2019] 1 MLJ 421 (CA)]. I agree with the submission by the learned counsel for the Defendants that this is not an appropriate case for summary judgment to be entered against D2 and D3 as there are issues which need to go for trial and there is a good chance of D2 and D3 succeeding in the appeal if abridgement of time to file the Notice of Appeal is allowed.

The degree of prejudice to the Plaintiff if the application is granted There is no prejudice to the Plaintiff if D2’s and D3’s application is allowed because the Plaintiff can still enjoy the fruits of its litigation as against D1. [9] In the premises, the Court only allows D2’s and D3’s application for abridgement of time to file the Notice of Appeal to the High Court. The Notice of Appeal is to be filed by 28.10.2024 and when filed, shall be regarded as valid and regular. [10] D1’s application is dismissed. [11] No order is made as to costs. Dated: 25 October 2024 (ALIZA SULAIMAN) Judge High Court in Malaya (NCvC2) Kuala Lumpur Counsels/ Solicitors: For the Applicants: Putri Ainaa Amiera Messrs. Ganeson Gomathy Fadzlin M. Nava & Co. Advocates & Solicitors No. 1, Jalan Merbok 1 Taman Merbok 75450, Melaka For the Respondent: Amalina Suhainy Messrs. Vaasan Chan & Chandran Advocates & Solicitors Unit 23-2, Level 23 Binjai 8, No. 2, Lorong Binjai 50450 Kuala Lumpur