1. Ridzuan Ahmad Bin Idrus v Mohd Yusof Bin Omar (BA-12A-25-04/2016)

RIDZUAN AHMAD BIN IDRUS (No. K/P: 600116-08-5501)

WASMAZIAH BINTI NOORDIN (No. K/P: 640102-08-8898) … PERAYU-PERAYU DAN MOHD YUSOF BIN OMAR (No. K/P: 610313-06-5293) ... RESPONDEN (Dalam Mahkamah Sesyen di Shah Alam Dalam Selangor Darul Ehsan GUAMAN NO: B52-68-04/2015) ANTARA MOHD YUSOF BIN OMAR (No. K/P: 610313-06-5293) … PLAINTIF 2

RIDZUAN AHMAD BIN IDRUS (No. K/P: 600116-08-5501)

WASMAZIAH BINTI NOORDIN (No. K/P: 640102-08-8898) … DEFENDAN-DEFENDAN GROUNDS OF JUDGMENT Introduction [1] This is an appeal against the decision of the Sessions Court which had, after a full trial, dismissed the application by the Appellants (the First Defendant and the Second Defendant) to set aside Judgment in Default of Appearance (JID) of 5.4.2016. The Appellants are husband and wife and the Respondent was the Plaintiff. [2] At the conclusion of the hearing of the appeal, I dismissed the appeal against the decision of the Sessions Court. This judgment contains the full grounds for my decision. Background Facts [3] The dispute before me is regarding friends (the Appellants and the Respondent) who entered a friendly loan agreement where the Respondent agreed to loan the Appellants the sum of RM320,000.00 and the said amount to be repaid on 31 July 2013. It was alleged that on 11 October 3 2012, the Appellants borrowed from the Respondent another RM80,000.00 which is to be repaid on 31 July 2013. [4] There was a sworn statement (SD) made by the Appellants of 27 June 2011 declaring that a friendly loan agreement of RM320,000.00 was made with the Respondent. The SD also provides the following terms, briefly:

the Appellants had received all the loans by cash and cheque in stages;

(ii) the Appellants are to repay all the loans on or before 31 July 2013;

(iii) if the Appellants breached the friendly loan agreement, legal action can be taken against the Appellants and all legal cost including interest ordered by court will be borne by the Appellants;

(iv) all demand notices delivered will be deemed to have been accepted by the Appellants either delivered via normal post or delivered personally to the Appellants’ address as stated;

the Appellants made the declaration believing that all statements are true according to the Statutory Declaration Act 1960. [5] The Appellants failed to repay the Respondent on the promised date and the Respondent claimed that he had on several occasions demanded for the repayment of RM320,000.00 but the Appellants failed or refused to repay. The Respondent also claimed that the Appellants failed to repay the loan of RM80,000.00 on the promised date and had demanded the same from the Appellants and the Appellants had failed to repay. [6] The Respondent had on 12 November 2014 through his Advocate & Solicitors, Messrs Mazwan & Nasar served the letter of demand to the 4 Appellants but the Appellants failed to repay or refuse to repay the Respondent. [7] The Writ and Statement of Claim of the Respondent was sealed on 1 April 2015 and the Respondent through Messrs Mazwan & Nasar filed the Writ and Statement of Claim on 9 April 2015. The Respondent claimed to have served the Writ and Statement of Claim together with Counsel’s letter of 9 April 2015 via AR registered post to the Appellants’ house address. The service was endorsed by the server-notice, one Azlizan Bin Abdul Aziz of Messrs Mazwan & Nasar on 9 April 2015. The Case Management was fixed on 8 May 2015 at the Shah Alam Sessions Court. [8] In default of appearance, a Judgment In Default (JID) was entered against the Appellants on 12 May 2015 for the sum of RM400,000.00, interest at the rate of five per centum (5%) per annum for the judgment sum calculated from 31.07.2013 to the date of full settlement and the cost for the legal action of RM906.00 to be paid by the Appellants to the Respondent. [9] The application to set aside JID was filed by the Appellants on 28 January 2016. The Respondent alleged that the application to set aside the JID was filed and served by the Appellants almost 9 months after the JID was obtained against them at which material time the Respondent proceeded with bankruptcy action against the Appellants. A Bankruptcy Notice of 8 December 2015 was personally served on the Appellants on 30 December 2015. The application for setting aside was dismissed by the Session Judge and hence the appeal herein. 5 The Appellants’ Submission [10] The Appellants’ brief grounds of appeal based on their written submissions are as follows: “(a) the service of Writ and Statement of Claim was improper. Therefore, the JID obtained was irregular and must be set aside;

there are merits / triable issues present in the defence that warrant an investigation at trial; and

the learned judge fell into error when she failed to examine the evidence. Had she done so, the JID would have been set aside at first instance.” [11] The learned counsel for the Appellants submitted in writing the two grounds of appeal with issues, that is the service of writ is bad and JID is irregular. On the first ground, the Appellants claimed that the Respondent did not serve the papers by using A.R. Register Post following Order 10 Rule 1(1) Rules of Court 2012 (ROC 2012) but instead using mere Registered Post. The Appellants’ Counsel submitted that there is no evidence that the Appellants received the cause papers and that “Given that service is bad, the JID must be set aside as of right. The question of there being a delay does not arise.” [12] The Appellants submitted that such evidence must be present and relied on the authority of the Kuala Lumpur High Court, Wilken Sdn Bhd v Chua Beng Hock & Ors [2004] 2 CLJ 164 that where a plaintiff decides to effect service by way of prepaid AR registered post, “it will be then 6 incumbent upon him to produce the duly acknowledged AR card as proof of effective service…” [13] The Counsel for Appellants also submitted that the Session Judge was erred in law for accepting that the cause papers were served properly by Registered Post based on paragraph 5 of the SD which states that all notices and cause papers will be deemed accepted by the Defendants so long as they were sent via normal post (as in paragraph (b) at page 10 of her Ground of Judgment). The Counsel submitted that the learned Judge fell into error because all Court procedures is governed by ROC 2012 and cannot be superseded by a private treaty. [14] The Counsel further submitted that the Session Judge relied on the case of Amanah Merchant Bank Bhd v Lim Tow Choon [1994] 2 CLJ 1 that there was no need to demonstrate that the papers had been been received if they were sent by AR Registered Post. The Counsel for the Appellants submitted that the issue in that Federal Court case was to construe the word ‘post’ contained in Clause 17 of one Letter of Guarantee and therefore there was a deeming provision that a letter is deemed received once posted out. In that case it concerns a Notice of Demand unlike in this case, a Writ. [15] The Appellants submitted that there are merits to their defence and that the dispute ought to be investigated at trial. The Appellants’ Counsel submitted in his written submission three issues: 7

“1st Issue:- whether the SD for RM320K and the Letter for RM80K can form the basis for the Plaintiff’s claim for RM400,000.00 against the Defendants.”

“2nd Issue:- if at all, how much is the Plaintiff entitled to be repaid? In this regard:-

there is a big question over the veracity of both the SD for RM320,000 and the letter for RM80K. Their contents are inaccurate;

(ii) the Plaintiff insists that he is owed RM400,000.00. However, the money trail suggests that only RM280,000.00 is due (if at all);

(iii) is the Plaintiff inflating his claim? This must be investigated at trial;

(iv) ….

…

(vi) …. “

“3rd Issue:- is D2 even liable? In this regard:-

All the monies were received exclusively by D1, and never by D2;

(ii) In the absence of any formal loan agreement, only D1 can be made liable because he received the monies;

(iii) D2 cannot be made liable since she never received any monies; and

(iv) If at all, this is an issue to be tried in Court….” 8 The Respondent’s Submission [16] The learned counsel for the Respondent submitted they objected to the Appellants’ application in setting aside JID on the reason for failure to adhere to Order 42 Rule 13 of the ROC 2012. The counsel pointed out that there was a delay of almost 9 months where based on the First Defendant’s affidavit, the JID was only received in late May 2015 and the application to set aside the JID was only filed on 18 January 2016. The counsel relied on the case Lembaga Kumpulan Wang Simpanan Pekerja v Agni Energie Sdn Bhd & Ors [2013] 6 MLRH 477 for filing the application to set aside JID out of time. [17] The learned counsel for the Respondent submitted that the service was done via post A.R. Registered to the Appellants’ address which is the same address as in First Defendant’s Affidavit and Affidavit In Reply, as in Exhibit ‘MYO 2’ at pages 75, 76 dan 77 of the Appeal Record. Exhibit ‘MYO 2’ is the Appellants’ address affirmed by the National Registration Department based on its reply of 7 April 2015. The learned counsel for the Respondent submitted that the Writ and Statement of Claim had thus properly been served on the Appellants and as to whether the AR Registered card should be returned or otherwise is no longer an issue based on the case of Amanah Merchant Bank Bhd v Lim Tow Choon [1994] 2 CLJ 1 where the Federal Court held that the AR Registered card need not be the proof of acceptance but suffice to show the notice was to the correct address with prepaid AR registered post with the postal receipt as proof of posting. The counsel submitted that the service was done in accordance with Order 10 Rule 1 of the ROC 2012 and is therefore regular. 9 [18] On the issue of defence of merits, the learned counsel further submitted that the delay of 9 months on the part of the Appellants with no reasons for the delay even though a lawyer was appointed on 2 June 2015 following the letter from the lawyer to Respondent’s counsel of 2 June

The authority relied was the case of Lembaga Kumpulan Wang Simpanan Pekerja v Agni Energie Sdn Bhd & Ors [2013] 6 MLRH 477 that the Appellants did not show that he has a defence on the merits. The learned counsel further submitted that if the application to set aside is allowed it will be prejudicial to the Respondent as the Respondent had given ample time for the Appellants to react and repay the loan and that the Respondent had incurred cost in starting a bankruptcy action. Decision of the Sessions Court [19] The Session Judge allowed the Respondent’s application to set aside the Appellants’ application. She wrote in her ground, “ALASAN DAPATAN Setelah Mahkamah meneliti segala kertas kausa dan membaca hujahan kedua-dua pihak, Mahkamah mendapati segala kertas kausa adalah teratur dan Penghakiman Ingkar yang dimasukkan adalah teratur serta mendapati bahawa: 1) SERAHAN WRIT DAN PENYATAAN TUNTUTAN ADALAH SEMPURNA a) Serahan sesalinan bermeterai Writ dan Penyataan Tuntutan bertarikh 1 April 2015 kepada Defendan-defendan diserah secara AR berdaftar di alamt Defendan-defendan di No. 38 Jalan 5/69 Gasing Indah 46000 Petaling Jaya, Selangor pada 9 April 2015 10 sepertimana mengikut perenggan 5 Surat Akuan Defendan-Defendan (Eksibit R-2 Defendan). b) Merujuk kepada Perenggan 5 Surat Akuan tersebut di atas, Defendan-Defendan secara jelas telah menyatakan bahawa segala notis dianggap terima oleh Defendan-Defendan samada dihantar melalui mel biasa atau diserha ke rumah Defendan-Defendan di alamt seperti diatas. Rujuk surat Akuan Bersumpah Defendan, Ekshibit R-2 Afidavit Sokongan dan cabutan alamat Defendan-Defendan dari JPN, Ekshibit MYO 2 Afidavit Jawapan. Serahan kepada Defendan-Defendan dibuat melalui AR Berdaftar di alamat yang sama tertera pada ekshibit-ekshibit di atas) c) Sehubungan dengan itu juga, berkaitan isu penyempurnaan penyerahan kertas kausa, Mahkamah ini telah merujuk kepada Penghakiman kes Amanah Merchant Bank Bhd v Lim Tow Choon [1994] 2 CLJ 1, yang mana Mahkamah Persekutuan memutuskan bahawa AR Berdaftar tidak perlu dibukti penerimaannya dengan sempurna tetapi cukup dengan menunjukkan bahawa notis di alamatkan dengan betul berbayar dan dihantar serah ke Pejabat pos diakui untuk penyampaian oleh pihak pos. Justeru itu, Mahkamah tidak perlu mengambil kira merit permohonan Defendan (sekiranya ada) memandangkan serahan writ dan pernyataan tuntutan adalah teratur. Walaupun sedemikian, setelah meneliti kertas kausa dan Affidavit sokongan Defendan, Mahkamah mendapati tiada pembelaan yang bermerit yang menunjukkan terdapat kebarangkalian peluan untuk 11 Defendan-Defendan berjaya dalam kes ini mahupun sebarang isu yang seharusnya dibicarakan…..” COURT’S FINDINGS [20] After perusing the Appeal Record and hearing the submissions, I dismissed the appeal. The principle issue in this appeal is whether the setting aside application for the judgment of default should be allowed when it was made out of time. [21] Based on Order 42 rule 14 of the ROC 2012, a party intending to set aside or vary the order must make his application to the court and serve it on the party who has obtained the order or judgment within 30 days after the receipt of the order or judgment by him. [22] The setting aside judgment in default of appearance is a judgment given to the Plaintiff without the court hearing the merits of the Plaintiff’s case. Therefore where a party intending to make application to the court to set aside a JID, it must be served on the party who has obtained the judgment within 30 days after the receipt of the judgment. [23] On an application to set aside a JID, I refer to the Court of Appeal case of Yap Ke Huat & Ors v Pembangunan Warisan Murni Sdn Bhd & Anor [2008] 5 MLJ 112 where the Court of Appeal held at page 120: “[15] It is trite that when considering to set aside a judgment in default, the first task is to ascertain whether it is regular or irregular judgment. If it is an irregular judgment, then the default judgment 12 ought to be set aside ex debitio justitiae. If it is regularly obtained, then the principle expounded in Evans v Bartlem [1937] AC 473 applies - see the judgment of the Federal Court in Hasil Bumi Perumahan Sdn Bhd & Ors v United Malayan Banking Corp Bhd [1994] 1 MLJ 312. This requires the defendant to show that he has a defence on merits. Delay in making such an application is a factor to be considered by the court in deciding whether to grant or refuse the application – see Tuan Haji Abdul Rahman v Arab-Malaysian Finance Bhd [1996] 1 MLJ 30.” [24] It is pertinent to verify the service effected on the Appellants had been properly made, that is the means of bringing to their notice the action being taken against them so that they can either defend or otherwise. In this regard, we must carefully scrutinize firstly whether the service was regular and secondly, if the service was regular, whether there was a defence with merit to justify the delay. Service of cause papers [25] On the issue of irregularity raised by the Appellants, I looked at the Respondent’s submission namely in its Affidavit In Reply that the Writ and Statement of Claim were posted using A.R. Registered to the address of the Appellants, the same address as in the First Defendant’s Affidavit’s address and as affirmed by the National Registration Department of 7 April 2015 (exhibit ‘MYO 2’ of the Appeal Record). 13 [26] I now return to the First Defendant’s defence on the service of the Writ and Statement of Claim. I reproduce here an extraction of the First Defendant’s Affidavit for easy reference as to whether the irregularity was specified in the application: “6. Saya telah dinasihati oleh peguamcara kami dan sesungguhnya percaya dan menyatakan bahawa JID tersebut adalah ‘irregular’ kerana:- a) kami tidak pernah menerima sesalinan Writ dan Pernyataan Tuntutan Plaintif pada bila-bila masa. Dokumen tersebut tidak pernah disampaikan ke atas diri kami; b) saya cuma mendapat tahu berkenaan dengan tuntutan disini apabila disampaikan dengan salinan JID tersebut pada lewat bulan Mei 2015; c) selepas menerima sesalinan JID tersebut, saya telah melantik peguamcara dan mengarahkannya untuk membuat carian Mahkamah untuk mendapat tahu lebih lanjut berkenaan tuntutan disini; d) setelah meneliti affidavit penyampaian bertarikh 7.5.2015 yang difailkan oleh pihak peguamcara Plaintiff, hanya adanya bukti pengeposan dan tidak adanya kad A.R. Berdaftar’ yang dikembalikan; Sesalinan Afidavit Penyampaian bertarikh 7.5.2015 ditunjukkan kepada saya dan ditanda sebaga Eksibit “R-1” 14 e) ianya jelas bahawa tiadanya bukti penerimaan oleh pihak kami. Oleh itu, JID tersebut patut diketepikan terus-menerus kerana prosedur penyampaian dokumen tidak dipenuhi.” [27] The Plaintiff’s Statement of Claim, the First Defendant’s Affidavit and Plaintiff’s Affidavit In Reply can be found at pages 12 -14, pages 20 - 24 and at pages 57- 63 of the Appeal Record. [28] The Appellants stated that they have never received the Writ and the Statement of Claim but they were served with the JID in late May 2015. Upon careful scrutiny of the Appeal Record I find the affidavit by one Azlizan Bin Abdul Azizi, a notice-sender with the Respondent’s counsel (exhibit “AA-1” at pages 27-30 of the Appeal Record) stating that he had served the copies of Writ and Statement of Claim of 1 April 2015 on 9 April 2015 through A.R. Registered post to the Defendants’ last known address. The postal receipts were tendered as exhibit “AA-2” at page 34 of the Appeal Record. This is corroborated with the First Defendant’s Affidavit admitting that there was proof of posting but there was no A.R. Registered card. [29] The learned counsel for Respondent referred to the Federal Court case of Amanah Merchant Bank Bhd v Lim Tow Choon [1994] 2 CLJ 1 which held that there is no need for proof of posting and suffice to show that the notice was properly addressed with a prepaid stamped and a receipt of posting by the post office. [30] The learned counsel for the Defendants argued in its written submission that the case of Amanah Merchant Berhad v Lim Tow Choon 15 [1994] 2 CLJ be distinguished from the instant case as the issue before that Federal Court was to construe the word ‘post’ contained in one clause 17 of one Letter of Guarantee as it was concerning the postage of a Notice of Demand and unlike a Writ in this case which should be governed by Order 10 Rule 1(1) ROV 2012. [31] Based on Order 10 Rule 1(1) ROC 2012: “(1) Subject to the provisions of any written law and these Rules, a writ shall be served personally on each defendant or sent to each defendant by prepaid A.R. registered post addressed to his last known address and in so far as is practicable, the first attempt at service must be made not later than one month from the date of issue of the writ. …” [32] I had a close look at the notice-server’s affidavit which stated that the cause papers were sent via A.R. Registered post. The Respondent’s counsel’s clerk can effect service based on the case of Commerzbank (South East Asia Ltd v Tow Kong Liang [2011] 3 CLJ 127, Court of Appeal where Heliliah JCA (as she then was) held that the Rules of High Court 1980 (then) permits the mode of service to be effected by an agent. [33] This Court looked at previous cases decided on the service issue that is the case of MBF Finance Bhd v Tiong Kieng Seng [2001] 4 CLJ 38, the case of Pengkalan Concrete Sdn Bhd v Chow Mooi [2003] 3 MLJ 67 and the case of CIMB Bank Bhd v Comsa Layer Farms Sdn Bhd [2011] 2 MLJ 118. In the case of MBF Finance Bhd [2001] (supra), it was held 16 that once the writ and statement of claim are sent by AR registered post, it is prima facie proof of service unless the defendant is able to rebut this. [34] Following the case of Pengkalan Concrete Sdn Bhd v Chow Mooi [2003] 3 MLJ 67, Suryadi J (as he then was) held that there is nothing under Order 10 rule 1(1) ROC 2012 that the plaintiff must evidentially prove that the named person in the writ must be the very person who had received the summon if it was sent via prepaid AR Registered post. It was also held at page 73 that whether the writ had physically arrived or had been received at the last known address was not legislated in the court’s rules and stated that, “On that score, if the plaintiff had direct and cogent evidence of that writ having been received by the intended person, that was a plus factor for the former, otherwise s 12 of the Interpretation Acts 1948 and 1967 would immediately come into play when invoked….” [35] In the case of CIMB Bank Bhd v Comsa Layer Farms Sdn Bhd [2011] 2 MLJ 118, the High Court held that the plaintiff was not contractually bound under the facility agreement to produce the AR Registered cards as contended by the defendants even if service of the writ was effected by AR Registered post. [36] A close scrutiny of the Order 10 Rule 1 ROC 2012 finds that whether the writ must be physically arrived or received at the last known address is not legislated in the provision. In fact, there is nothing in Order 10 Rule 1 to state in express terms that there is a need to produce the AR Registered cards as proof of service. 17 [37] In the current case, the friendly loan agreement was supported by the SD specified that all demand notices delivered will be deemed to have accepted by the Appellants either delivered by normal post or delivered personally. The cause papers comprising the Writ and Statement of Claim together with the Respondent’s Counsel’s letter however had been claimed by the Respondent to be sent via A.R. Registered post. [38] The cause papers had been served via A.R. Registered post as required by Order 10 rule 1 of the ROC 2012. In addition, the Appellants were not sued under the SD. I stand to be guided by the Federal Court’s decision of Amanah Merchant Bank Bhd v Lim Tow Choon [1994] 2 CLJ 1 attributed by the counsel for the Respondent. In that Federal Court decision at page 5, clause 17 referred in the letter of guarantee did not provide that the notice should either be sent by registered post or AR registered post. For the reasons stated above, as the cause papers were posted by A.R. registered, it is suffice to show that the cause papers had been properly addressed with the postal receipt as proof of service which the Respondent here had clearly complied under Order 10 rule 1 of the ROC 2012. [39] The burden is on the Respondent, who was the plaintiff, on the balance of probabilities, to prove that the service was regular as in accordance with Order 10 Rule 1 of the ROC 2012. Upon evaluation of the law and the evidence before this Court that is the proof of receipt as exhibit ‘AA-2, at page 34 of the Appeal Record and the affidavit of the server-notice, the Respondent has proven that the Writ and Statement of Claim were sent via A.R. Registered post to the known address of the Appellants. 18 No merits to the Defence [40] In order to apply to set aside a regular judgment, the Appellants must show that they have defence with merits. On this context I refer to the Federal Court case of Bank Bumiputra Malaysia Bhd v Majlis Amanah Ra’ayat [1979] 1 MLJ 24 where the Federal Court stated, “It is axiomatic that if the judgment is regular, then it is an inflexible rule that there must be an affidavit of merits, that is, an affidavit stating facts showing a defence on the merits.” [41] It is trite law that the defence must come with merits. In Barnes v Kondel [1971] 1 Lloyds Rep at page 544, Lord Denning MR stated that a ‘defence on the merits’ means a defence which discloses an arguable and triable issue. This was also decided in the case of Lembaga Kumpulan Wang Simpanan Pekerja v Agni Energie Sdn Bhd & Ors [2013] 6 MLRH 477 at page 480 as submitted by the Respondent’s Counsel that in order to show a defence with merits, a draft defence must also be filed. Whether Judgment Sum is Incorrect [42] A friendly loan is a loan given by the lender to the borrower based on mutual trust whereby the borrower is to repay the loan within the specified time with no interests charged: Tan Aik Teck v Tang Soon Chye [2007] 5 CLJ 441 at page 442. In that case, it was an appeal against the decision of the High Court which allowed the plaintiff’s claim for the repayment of a friendly loan given by the plaintiff to the defendant. In that case, the defendant admitted that he received the money but denied that it was a friendly loan. No loan agreement was made between the plaintiff and the 19 defendant but there were cheques issued to the defendant which the Court of Appeal held that it is irrelevant as to how the plaintiff got the amount and the defendant’s argument that the cheque cashed did not belong to plaintiff was plainly not true. The Court of Appeal decided that the defendant made up the evidence to avoid paying the friendly loan given by plaintiff. [43] The friendly loan agreement made orally is binding as in the case of Tan Aik Teck (supra) although there was no promissory note made for instance stating the amount of debt and date of repayment as decided in one Singapore case of Lena Leowardi v Yeap Cheen Soo [2014] SGCA 57 at paragraph 25. A promissory note is a written promise to pay money between lender and borrower where normally it would state the amount of debt and the date of repayment or a repayment schedule. [44] If the Appellants denied that there were such amount loaned and if there were such loan, the amount was incorrect. In this case, the evidence adduced as in exhibit MYO-3 at pages 79, 80 and 81 of the Appeal Record and exhibit MYO-4 particularly at pages 83 and 84 of the Appeal Record clearly showed that there were loan made and the second loan taken clearly stated that it was a friendly loan. [45] Based on the documents tendered as in exhibit MYO-3 and MYO-4, I cannot disregard that those documents claimed as scribbled notes by the Appellants do not amount to a friendly loan agreement. The fact that there was a SD made by the Appellants stating the amount borrowed from the Respondent, the repayment date and the notice of demand if the repayment is defaulted is clear evidence that the friendly loan existed. I would think the second loan was made by a promissory note as it expressly 20 stated the amount taken from the Respondent and the terms of repayment that is by way of a cheque dated 31 July 2013. In addition, the existence of the friendly loan is corroborated by the SD taken under oath by the Appellants. [46] Although no execution of a formal agreement, it can infer that the SD is also a form of security for the Respondent to get the return of his money from the Appellants. The amount loaned RM400,000.00 is not a small amount. I would say that it is a reasonable inference from the SD that there was a friendly loan made and a promise to return the money. A reasonable inference as Lord Wright had stated in Caswell v Powell Duffryn Association Collieries Ltd [194] AC 152 at page 169, “Inferences must be carefully distinguished from conjecture or speculation …” [47] The SD was made by the Appellants and sworn before the Commissioner for Oath, it is definitely not a conjecture or a speculation. It is also a reasonable inference to connote that the SD is a form of guarantee for the Respondent as the Appellants had benefitted from the friendly loan. [48] The Respondent bears the burden to prove that there were loans given to the Appellants firstly and that the total amount was RM400,000.00. The Appellants claimed as in their proposed defence that the Respondent will contribute to the Appellants that is the First Defendant’s business, RM200,000.00 if the First Defendant will repay the RM200,000.00 with interest amounting to RM120,000.00 (Appellants’ Defence & Affidavit In Reply, pages 53-54 of Appeal Record). 21 [49] The Respondent on the other hand claimed that out of the RM320,000.00, the Appellants had received RM120,000.00 by cash as per signed receipt of the Appellants of 11 July 2011 (as in exhibit MYO-3). The allegation of RM120,000.00 as interest was denied by the Respondent. [50] The Court had the opportunity to study the evidence as exhibited on the sum RM 320,000.00 which includes the RM120,000.00 cash and the second loan of RM80,000.00 alleged to be borrowed from the Respondent by the Appellants as in the SD of 27 June 2011 (the Appellants’ document exhibit ‘R-2)’ at page 44 of the Appeal Record. [51] There was a bank transaction of RM100,000.00 made to the Appellants as at page 48 of the Appeal Record. There was a cheque of 11 July 2011 for the amount of RM100,000.00 made to the First Defendant cheque bearing the number 40-01032 with notes stating having been received by the Appellants. There is also a note signed by the Appellants of 11 July 2011 that the Appellants received RM120,000.00 with their identification card numbers (at page 79 of the Appeal Record) and with copies of their identification cards (at pages 80-81 of Appeal Record). [52] The second loan was a signed note of 11 October 2011 with the heading “Friendly loan” where the Appellants took a second loan of RM80,000.00 signed by the First Defendant accompanied with a cheque of RM80,000.00 in the name of the Respondent at pages 83-84 of the Appeal Record. In relation to the second loan, the Respondent stated in his Affidavit In Reply that the there was an email following the second loan after the Appellants failed to repay on the promised date where the Appellants deferred the payment of RM80,000.00 and suggested an 22 instalment payment instead (at pages 86-88 of the Appeal Record). There was no security pledged for the friendly loan except for the SD to guarantee the repayment of the two loans to the Respondent, an affirmation under oath and signed by the Appellants. Moneylending Transaction [53] The illegal moneylending raised by the Appellants was not in the written submission of the learned counsel for the Appellants but was submitted orally at the hearing of this appeal of 18 April 2017, in the Appellants’ Affidavit In Support (at page 20 of the Appeal Record) and in the Proposed Defence and Counterclaim (at page 53 of the Appeal Record). An extraction of paragraph 7 (c) and (j) of the Affidavit In Support is reproduced here: “c) namun, saya ingin menyatakan bahawa yang sama tidak tepat. Pinjaman yang kononnya diberikan tersebut sebenarnya adalah suatu transaksi pinjam-wang (moneylending transaction) di mana Plaintiff sedang cuba menuntut faedah ke atas wang yang diberipinjamkan walaupun Plaintiff tidak mempunyai lesen peminjam wang dan bukanlah ‘licensed moneylender’; …. j) ini jelas menunjukkan bahawa suatu ‘underlying moneylending transaction dibelakan kesemua ini. Kesemua ini telahpun dimasukkan ke dalam bentuk suatu Pembelaan & Tuntutanbalas Defendan-Defendan yang Dicadangkan yang kami akan memfailkan sekiranya Permohonan tersebut dibenarkan.” 23 [54] The Proposed Defence and Counterclaim of the Appellants stated that the Respondent had informed the Appellants that the Respondent is desirous to support First Defendant’s work in one Company and will remit the money as loan if the Appellants were to repay the RM200,000.00 with interest at RM120,000.00. The Appellants also stated that in the alternative, there was a moneylending transaction without license (at paragraph 2.9) and such transaction is illegal. [55] Based on the First Defendant’s affidavit, it was claimed that the amount claimed is incorrect and that the loan was a moneylending transaction where the Plaintiff, not a licensed moneylender, is trying to make a profit on the moneylending transaction. The Respondent in its Affidavit In Reply stated that the money RM400,000.00 was at all material time a friendly loan agreement made between the Respondent and the Appellants and was upon Appellants’ request. The Respondent claimed that it was never as a claim under service agreement nor as moneylending transaction. [56] The Appellants submitted that the amount is incorrect based on the banking transactions made as exhibited before the Sessions Court that the only “money trail” available showed that there was only RM200,000.00. The Appellants however offered no explanation to the note of receipt for the amount of RM120,000.00 in cash, the First Defendant’s cheque of RM80,000.00 made to the Respondent and the email by the First Defendant to the Respondent on his proposed schedule of repayment of RM80,000.00. Despite the allegation of illegal moneylending activity by Respondent, there was a second loan taken as per “promissory” note by the Appellants. 24 [57] The Respondent’s claims for the friendly loan had been denied by the Appellants. It was a friendly loan and no other parties nor witnesses to the loans. There was no mention of the Company receiving the loan but only the Appellants as stated in the notes receiving the loan, the cheque made under the Respondent’s name and the SD. There was no other documentary evidence from the Appellants to rebut the Respondent’s claims. Having found that the Plaintiff has proven that there such loans and are still owing to the Plaintiff, the onus then shifts to the Defendants to show that they have a good defence for the incorrect judgment sum in justifying the delay in setting aside the JID. [58] This is a friendly loan agreement. There was no denial from the Appellants that they had borrowed a sum of money from the Respondent. Under the Moneylenders Act 1951, the law does not prohibit one from giving a friendly loan and one need not have a license to give a friendly loan. It is however for the court to decide if the primary principal object of the lender’s business was of moneylending: Ngui Mui Khin & Anor v Gillespie Bros & Co. ltd [1980] 2 MLJ 9. [59] Based on the evidence adduced, the friendly loan is a separate matter altogether from the service agreement that is purportedly entered between the Respondent and the Appellants. As claimed by the Appellants in their Proposed Defence and Counterclaim, the loan by the Respondent need not be returned until the Company has made its profits. In addition to that, the Appellants claimed that the Respondent’s claim for the loan has yet to “crystallize”. The Respondent had denied these. 25 [60] This Court is dissatisfied with the statements made by the Appellants. The SD that the Appellants had made in this regard is governed by the Statutory Declarations Act 1960 and needless to say that making a false statutory declaration is, by virtue of section 3 thereof, an offence punishable under the Penal Code. The Appellants submitted that they were economically pressured to return the loan however no documentary proof to proof as such for instance by making a police report against the Respondent. The Appellants failed to offer some credible explanations as to why they had copies of their identification cards and address in the receipt notes of RM120,000.00 which as alleged by the Respondent a loan given to the Appellants in cash. I take the view that the weight of documentary evidence outweighs everything else: Low Keang Guan v Sin Heap Lee-Marubeni Sdn Bhd [2005] 1 LNS 289. [61] This Court also considered the fact that if the application to set aside is allowed, it will be prejudicial to the Respondent. The amount RM400,000.00 was a friendly loan to the Appellants and setting aside the application would mean that the Respondent is denied the money owed to him and will face unjust delay in getting his money back. In addition, the Respondent had given ample time for the Appellants to react and to repay the Respondent coupled with the fact that the Respondent had incurred cost in starting a bankruptcy action to get his money back. Is Second Defendant liable? [62] Based on the receipt notes where both the First Defendant and Second Defendant received the loan, the defence that only the First Defendant had received all the monies and the Second Defendant did not, 26 could not hold water as the documentary evidence adduced stated clearly that the Appellants supported by the SD had received all the friendly loans totaling RM400,000.00. CONCLUSION [63] I am hard pressed to accept that by allowing the appeal it will defeat the purpose of having the mandatory provisions of Order 42 Rule 13 ROC

Where the law provides a particular method or form of procedure for effecting service, then there must be strict compliance with those provisions: PT Pelajaran Nasional Indonesia v Joo Seang & Co Ltd [1958] 24 MLJ 113 at pages 115-116. I am of the view that if the Appellants believed that they have a triable issue, they would have filed the application to set aside the judgment entered immediately upon receiving the Writ and Statement of Claim and not to wait for almost 9 months. The claim that this is an illegal moneylending transaction is an afterthought. [64] Based on the foregoing, I am satisfied that there is no merit to the Appellants’ proposed defence. There are no bona fide triable or arguable issues raised by the First Defendant either. On that note, I have no compunction in dismissing this appeal with costs. Dated: 29 May 2017 (DATIN ZALITA BINTI DATO’ ZAIDAN) Judicial Commissioner Alam High Court, Selangor 27 Counsel for Appellants/Defendants Messrs. Dinesh Praveen Nair C3-3-15, Solaris Dutamas Jalan Dutamas 1, 50480 Kuala Lumpur Counsel for Respondent/Plaintiff Messrs Mazwan Dee Nasar & Shima 12-2-1, Jalan Medan Pusat Bandar 4A, Bandar Baru Bangi 43650 Bangi