Amarnath A/L Subramaniam v Bsn Commercial Bank Berhad (W-02(IM)-46-01/2017)

Shamkor Rubber Products Sdn. Bhd.

Pegawai Penerima Malaysia (on behalf of Shamkor Rubber Products Sdn. Bhd. under Liquidation No. D2-28-27-1995)

Che Mah Bt Abdul Hadi 4. Amarnath A/L Subramaniam 5. In Sung Hwang …Defendants] 2 CORAM: IDRUS HARUN, JCA SURAYA OTHMAN, JCA RHODZARIAH BUJANG, JCA JUDGMENT OF THE COURT INTRODUCTION [1] This is an appeal against the entire decision of the learned High Court Judge which dismissed the 4th Defendant’s application in enclosure 2A to seek an extension of time to file this application out of time, to set aside the judgment in default (“JID”) order against the 4th Defendant dated 21.11.2002, to be allowed leave to enter an appearance and a defence within 30 days from the date of the order and to stay all bankruptcy proceedings pending the disposal of this application. We heard the appeal, and after considering the records of appeal and the submissions of learned counsel of both parties, we dismissed the appeal. We now give reasons for our decision. For convenience, the parties will be referred to as they were in the High Court; the appellant as the 4th Defendant and the respondent as the Plaintiff. BACKGROUND FACTS [2] The background facts are gleaned from the records of appeal and the respective submissions of parties and are summarized as follows: 3

(a) The plaintiff’s claim against Shamkor Rubber Products Sdn Bhd (as 1st Defendant), Pegawai Penerima Malaysia (as 2nd Defendant for Shamkor Rubber Products Sdn Bhd In Liquidation), Che Mah Bt Abdul Hadi (as 3rd Defendant), Amarnath A/L Subramaniam (as 4th Defendant) and In Sung Hwang (as 5th Defendant) are for multiple sums due under various banking facilities granted to the 1st Defendant.

(b) The 4th Defendant was a guarantor to the banking facilities granted by the Plaintiff to the 1st Defendant. The 4th Defendant was also a director and a shareholder in the 1st Defendant before it was acquired by Autoquest Sdn Bhd (“third party”) on 2.11.1995.

(c) The 1st Defendant defaulted in the repayments of the banking facilities and the Plaintiff commenced a civil suit in the Kuala Lumpur High Court via civil suit no. D4-21-4-1997 (“1997 suit”) against all the Defendants. On 10.11.2001, a JID of defence was entered against the 3rd Defendant. On 6.12.2001, judgment was entered against the 1st Defendant. Then on 21.11.2002, JID of appearances were entered against the 4th and 5th Defendants as guarantors of the banking facilities granted by the Plaintiff to the 1st Defendant for the following amounts:

(i) A sum of RM895,635.77 for a Term Loan at the interest rate of 11.60% per annum from 1.8.1997 until full settlement and costs; 4

(d) At the material time when the JID of appearance was obtained against the 4th Defendant on 21.11.2002, he claimed that he was an undischarged bankrupt vide Negeri Sembilan High Court Bankruptcy No. 29-361-1997. This is so since the Adjudication Order was dated 11.2.1999 and he was only discharged as a bankrupt by the Negeri Sembilan High Court on 1.4.2009 (see the letter from Jabatan Insolvensi Malaysia (“JIM”) dated 6.4.2009 exhibit A1 at page 73 Appeal Record Part C).

(e) On 5.11.2014, another Bankruptcy Notice (“BN”) was issued against the 4th Defendant for the sum of RM 4,103,832.94 vide Shah Alam High Court Bankruptcy Suit No. 29NCC-10850- 11/2014 based on the JID of appearance obtained against him dated 21.11.2002. The 4th Defendant admitted that he had knowledge of the BN only in the month of December 2014. 5

(f) On 26.5.2015, a Creditor’s Petition (“CP”) was filed by the Plaintiff against the 4th Defendant. The CP was duly served on the 4th Defendant on 4.11.2015 and 5.11.2015. On 26.11.2015, the CP was granted by the Shah Alam High Court and the Receiving and Adjudication Orders were made against the 4th Defendant in the presence of both the Plaintiff’s and the 4th Defendant’s solicitors.

(g) On 25.11.2015, the 4th Defendant filed an application, enclosure 2A, to seek an extension of time to file this application out of time; to set aside the JID dated 21.11.2002, to be allowed leave to enter an appearance and file a defence within 30 days from the date of the order and to stay all bankruptcy proceedings pending the disposal of this application. The grounds of the application are as follows:

(i) The 4th Defendant had no knowledge that a JID had been entered against him since he had never received the writ of summons and the statement of claim in this action. He was only made aware of the JID upon being served with the Bankruptcy Notice dated 20.11.2008;

(v) The Bankruptcy proceedings against the 4th Defendant is now fixed for hearing on 26.11.2015.

(h) The application in enclosure 2A was heard by the learned High Court Judge (“learned Judge”) on 25.11.2016 and was dismissed with no order as to costs. The 4th Defendant, dissatisfied with the decision and order of the learned Judge, appealed to this court on 23.12.2016. FINDINGS OF THE HIGH COURT [3] The learned Judge found that all 3 judgments (JID of defence against the 3rd Defendant dated 10.11.2000; judgment dated 6.12.2001 against the 1st Defendant and JID of appearances dated 21.11.2002 against the 4th and 5th Defendants) are on the same terms. The learned Judge noted that in the judgment dated 6.12.2001, counsel Mr P.C. Low was acting for the 1st, 4th and 5th Defendants and in the JID dated 21.11.2002, judgments were entered in the absence of counsel for both the 4th and 5th Defendants. Though counsel was absent, on record the 4th Defendant was represented in this action when the JID was entered. Therefore, the 4th Defendant was served with the cause papers before the JID was entered. [4] The learned Judge found that since the 4th Defendant was still a bankrupt on 21.11.2002, the cause papers must be served on the Director 7 General of Insolvency (“DGI”) or JIM and as JIM has no records of the same, the JID was an irregular judgment. [5] Further, the learned Judge held that bearing in mind that there was on record legal representation acting on behalf of the 4th Defendant in this action, Her Ladyship was of the considered opinion that there has been a delay of more than 12 years in filing this application. This delay, according to the learned Judge, had caused severe prejudice to the Plaintiff as both parties cannot reconstruct the file. This predicament was averred to in the Plaintiff’s affidavit which stated that it no longer has any documents on this case. [6] The learned Judge applied this court’s decisions in Ng Han Seng & Ors v Scotch Leasing Sdn Bhd [2003] 4 CLJ 533 and Adnan Ishak & Ors v APT Associates Sdn Bhd [2015] 2 MLRA 635 and found that premised on these authorities and the facts of the case, bearing in mind that the 4th Defendant was legally represented on record and there was no explanation by the 4th Defendant for the delay in making this application, the application to set aside the JID must be dismissed in limine. [7] The learned Judge applied the principle in the Supreme Court’s case of Hasil Bumi Perumahan Sdn Bhd & Ors v United Malayan Banking Bhd [1994] 1 CLJ 328 to conclude that the 4th Defendant had failed to show a good defence on merits. This was so, since the 4th Defendant had merely alleged in his affidavit in support that his interests as a shareholder and director had been divested pursuant to the sale of the 1st Defendant to a third 8 party, without explaining how such a sale of the 1st Defendant to a third party had discharged his liability as a guarantor of the banking facilities granted to the 1st Defendant by the Plaintiff. GROUNDS OF APPEAL [8] There are 8 grounds of appeal forwarded by the 4th Defendant and they can be summarized as follows:

(a) The learned Judge erred in law and in fact when Her Ladyship failed to consider that the JID dated 21.11.2001 had been entered by the Plaintiff against the 4th Defendant who was a bankrupt and as such leave of court was required pursuant to section 8 of the Bankruptcy Act 1967. In such circumstances, all letters and cause papers up until the grant of the JID should be served on the DGI or JIM;

(b) The learned Judge erred in law and in fact when Her Ladyship failed to consider that the 4th Defendant had a defence on merits to set aside the JID;

(c) The learned Judge erred in law and in fact in concluding that the 4th Defendant was legally represented at the time that the JID was entered against the 4th Defendant when the 4th Defendant is a bankrupt and cannot be represented by a solicitor without the sanction of the DGI; and 9

(d) The learned Judge erred in law and in fact in concluding that the 4th Defendant’s application to set aside the JID does not explain why the application was made after 12 years when the 4th Defendant is entitled to set aside an irregular JID as of right without explaining the delay. ISSUES BEFORE THE COURT [9] From the grounds of appeal, three main issues arose for this court to consider as follows:

(i) Whether an irregular JID may be set aside ex debito justitiae.

(i) Whether an irregular JID may be set aside ex debito justitiae;

(i) no one has suffered prejudice by reason of the delay;

(a) no one has suffered prejudice by reason of the defendant’s delay;

(b) alternatively, where such prejudice has been sustained, it can be met by an appropriate order as to costs; or

(c) to let the judgment stand would constitute oppression. (See Attwood v Chichester [1878] 3 QBD 772; Harley v Samson [1914] 30 TLR 450.” [23] If one applies the principle as laid down in Tuan Haji Ahmed Abdul Rahman (supra), the 4th Defendant’s simple arguement that an irregular JID should be set aside ex debito justitiae, as of right, and that delay, no matter how long or inordinate, even with no reasonable explanation given, is immaterial, except with regard to the question or issue on costs - is flawed and easily demolished. As can be seen, His Lordship, Edgar Joseph Junior in Tuan Haji Ahmed Abdul Rahman (supra) has laid down certain conditions/requirements before a court will intervene, first and foremost being that such an application to set aside should be made with reasonable promptitude or in other words, within a reasonable time. Then, in cases where there is a delay in making such an application, His Lordship opined that the court still retains its discretion to set aside the JID provided that it is satisfied that no one has suffered prejudice by reason of the delay or if such prejudice has been sustained, it can be met or compensated by an appropriate order as to costs or to let the judgment stand would constitute oppression to the applicant. 16 [24] In this court’s case of Khor Cheng Wah (supra), His Lordship Gopal Sri Ram, (as he then was), made reference to Tuan Haji Ahmed Abdul Rahman (supra) and elaborated the principle further, by stating that in matters that affects the rights of litigants, a court, even in cases where a right is exercisable ex debito justitiae, may not intervene, if the application is not made timeously as a court may refuse relief to an indolent litigant. “The Delay Point It is a cardinal principle of law, that when a litigant seeks the intervention of the Court in a matter that affects his rights, he must do so timeously. The maxim vigilantibus, non dormientibus, jura subveniunt, though having its origins in the Court of Chancery, is of universal application. Even in cases where a right is exercisable ex debito justitiae, a Court may refuse relief to an indolent litigant. In all cases in which delay in approaching the Court is in issue, the burden is upon the litigant who has delayed to render a satisfactory explanation for it. Whether the explanation in a given case is satisfactory or reasonable depends upon the facts and circumstances of each case. And in a matter which involves the exercise of discretion, it is for the Judge in whom the law primarily vests the discretion. The point that is presently under consideration has been authoritatively stated in Tuan Haji Ahmed Abdul Rahman v. Arab-Malaysian Finance Berhad [1996] 1 CLJ 241 at p. 247; [1996] 1 AMR 215. It is a decision of the Federal Court and therefore quite plainly binds this Court.” [25] The case of Khor Cheng Wah (supra) was followed by this court’s decision in Adnan Ishak & Ors (supra) where Mohamad Ariff Mohd Yusof, JCA, at Held (2) states that delay and tardiness in litigation have to be viewed 17 seriously and that the court have to balance the interest of the defendant as against the interest of the plaintiff before making its decision and that inordinate delay without reasonable justification could still in law be a factor for the court not to exercise its discretion in favour of the applicant. “(2) Delay and tardiness in litigation have to be viewed seriously. The High Court was correct to balance the interests of the defendants as against the interest of the plaintiff. This was a case where at the material times the defendants were represented by solicitors. Even though the defendants were served with the default judgments, they did not act in a timely fashion. Even accepting that the default judgments against the 14th and 19th defendants were irregular, inordinate delay without reasonable justification could still in law be a factor for the Court not to exercise its discretion in favour of the applicant.” [26] In our instant appeal, there is no dispute that the JID of appearance obtained against the 4th defendant was irregular. The plaintiff admitted that it was irregular. What the plaintiff complained of is that there was a delay of 12 years and 1 month from the date of the JID to the date of the 4th Defendant’s realization of the existence of the JID; and there was a further delay of 1 year from the date of the discovery of the existence of the JID to the date of the 4th Defendant’s application to set aside the JID. No explanation was forwarded by the 4th Defendant for the delay. The learned Judge at paragraph 7 in her grounds of judgment (“GOJ”) found that since the 4th Defendant was still a bankrupt on 21.11.2002, the cause papers must be served on the DGI or JIM and as JIM has no records of the same, the JID was an irregular judgment. 18 “[7] Be that as it may, since the 4th Defendant was still a bankrupt, the cause papers must be served with JIM. As JIM has no records of the same, it can be said that the JID is an irregular judgment.” [27] And at paragraphs 6 of her GOJ, the learned Judge found that the 4th Defendant was legally represented on record by counsel on 21.11.2002, though absent on that day, and that cause papers were served on the 4th Defendant before the JID was entered. “[6] In the JID dated 21.11.2002, judgment was entered in the absence of counsel for both the 4th and the 5th Defendants. As such, there was on record legal representation acting on behalf of the 4th Defendant in this action, but was absent when the JID was entered. Therefore, the 4th Defendant was served with the cause papers before the JID was entered.” [28] The learned Judge reiterated this fact at paragraphs 8 and 11 and stated that though represented by counsel, there was a delay of more than 12 years in filing the application which delay had caused severe prejudice to the Plaintiff as both parties cannot reconstruct the file since the Plaintiff no longer have any documents on the case. Further, there was no explanation for the delay in making the application which prompted Her Ladyship, based on case authorities cited to her, to dismiss the application in limine. “[8] However, bearing in mind that there was on record legal representation acting on behalf of the 4th Defendant in this action, I am of the considered opinion that there has been a delay of more than 12 years in filing this application. This delay has cause severe prejudice to the 19 Plaintiff as both parties cannot to reconstruct the file. The Plaintiff has filed an affidavit to state that they no longer have any documents on this case. [11] On the facts of this application and premised on the authorities cited above, bearing in mind that that the 4th Defendant was legally represented on record and there is no explanation by the 4th Defendant for the delay in making this application, I am therefore of the considered opinion that the application to set aside must be dismissed in limine.” [29] From the learned Judge’s GOJ, it was very clear that Her Ladyship agreed that the JID was an irregular judgment and that she dismissed the 4th Defendant’s application in limine based on the fact that the 4th Defendant, though legally represented, took more than 12 years to make the application without providing any satisfactory explanation for the delay. Her Ladyship took into consideration that the delay had severely prejudiced the Plaintiff as both parties cannot reconstruct the files since the Plaintiff no longer have any documents on this case. [30] We find no fault in the learned Judge’s reasoning to disturb her findings. Her Ladyship was correct in finding that the 4th Defendant was legally represented and that based on case laws, an applicant is not entitled to have an irregular judgement be set aside ex debitio justitae, as of right. The court still has to consider whether there had been any delay on the part of the party making an application to set aside an irregular judgment and if there had been delay, the court still retains the discretion to refuse to intervene to assist an applicant if the delay was inordinate, without 20 reasonable justification proffered and especially so when that delay had caused prejudice to the Plaintiff. The prejudice in this case is that both parties cannot reconstruct the file since the Plaintiff no longer had any documents on the case. Further, to let the JID stand will not constitute an oppression to the 4th Defendant as the 4th Defendant had willingly signed as a guarantor to the banking facilities granted by the Plaintiff to the 1st Defendant and his liability as a guarantor, in such circurcumstances, was not discharged. The case of Tuan Haji Ahmed Abdul Rahman (supra) refers. Whether the 4th Defendant has merits in his defence [31] The 4th Defendant submitted that he has merits in his defence. The 4th Defendant explained that any relationship he had with the 1st Defendant as a shareholder and director of the 1st Defendant had ceased pursuant to the sale of the 1st Defendant to a third party i.e. to Autoquest Sdn Bhd on 2.11.1995. As such, his liability as a guarantor too had ceased. The learned Judge at paragraphs 12 and 13 found that the sale of the 1st Defendant to a third party did not explain how the 4th Defendant’s liability as a guarantor had been discharged and that this explanation had failed to show a good defence on merits. “[12] In any event, with regards to the merits of the application, in his affidavit in support, the 4th Defendant merely alleged that his interests as a share holder and director had been divested pursuant to the sale of the 1st Defendant to a third party. [13] However, I agree with the Plaintiff that this does not explain whether his liability under the transaction documents as a guarantor of the banking 21 facilities granted to the 1st Defendant had been discharged. The 4th Defendant has failed to explain the issue of his liability as he was sued as a guarantor to the banking facilities. As such, I am of the considered opinion that the 4th Defendant has failed to show a good defence on the merits”. [32] We agree with the learned Judge’s finding and see no reason to intervene. The learned Judge had correctly applied the Supreme Court’s case of Hasil Bumi Perumahan Sdn Bhd & Ors (supra) to conclude that the 4th Defendant had failed to show a good defence on merits. This is so since the 4th Defendant had merely alleged in his affidavit in support that his interests as a shareholder and director had been divested pursuant to the sale of the 1st Defendant to a third party without explaining how such a sale of the 1st Defendant to a third party had discharged his liability as a guarantor of the banking facilities granted to the 1st Defendant by the Plaintiff. CONCLUSION [33] For the reasons stated above, we are of the view that this is not a fit and proper case for appellate intervention. We therefore unanimously dismissed the appeal with no order as to costs. Deposit is to be refunded. - Signed - Dated: 28th December 2018 (SURAYA OTHMAN) Judge Court of Appeal Malaysia 22 CASE(S) REFERRED TO: 1) Ng Han Seng & Ors v Scotch Leasing Sdn Bhd [2003] 4 CLJ 533; 2) Adnan Ishak & Ors v APT Associates Sdn Bhd [2015] 2 MLRA 635; 3) Hasil Bumi Perumahan Sdn Bhd & Ors v United Malayan Banking Bhd [1994] 1 CLJ 328; 4) Taman Pangkor Sdn. Bhd. v Doric Development Sdn. Bhd. & Ors [1987] CLJ (Rep) 1008; 5) Anlaby & Ors v Praetorius [1988] 20 QBD 764; 6) Ang Chee Seng v Tan Khee Swee [1935] MLJ 245; 7) OCBC Bank (M) Bhd & Anor v Livision Sdn. Bhd. & Ors [2000] AMEJ 0314; [2001] 5 MLJ 129; [2001] 5 CLJ 433; 8) Khor Cheng Wah v Sungai Way Leasing Sdn Bhd [1997] 1 CLJ 396; 9) Tuan Haji Ahmed Abdul Rahman v Arab-Malaysian Finance Berhad [1996] 1 CLJ 241; 10) Attwood v Chichester [1878] 3 QBD 772; and 11) Harley v Samson [1914] 30 TLR 450. LEGISLATION REFERRED TO: 1) Section 8 of the Bankruptcy Act 1967 (Act 360); and 2) Order 42 rule 13 of the Rules of Court 2012 [P.U. (A) 205/2012]. COUNSEL: For the Appellant - D. Kalai Messrs Kalai & Partners No. 14A-3, 2nd Floor Jalan 14/20, Seksyen 14 46100 Petaling Jaya, Selangor For the Respondent - Gary Yap Messrs Adnan Sundra & Low Level 11, Menara Olympia 8, Jalan Raja Chulan 50200 Kuala Lumpur 23