Ambank (M) Berhad v 1. ) Wrp Asia Pacific Sdn Bhd (WA-22NCC-219-04/2024)

WRP SPECIALTY PRODUCTS SDN BHD (RECEIVER AND MANAGER APPOINTED) DEFENDANTS GROUNDS OF JUDGMENT (ENCLOSURE 69) A.

The 3rd Defendant, WRSP, seeks to set aside the Amended Judgment in Default entered against it on 28-10-2024. There was an earlier Judgment in Default entered against the 3rd Defendant on 17-5-

But as seen in the court docket this Judgment in Default was amended by the Plaintiff. Both Judgment in Default were served on the 3rd Defendant on 7-6-2024 and 9-12-2024 respectively.

The 3rd Defendant does not deny that the said Judgment in Default was regularly entered. This was admitted by Counsel for the Defendant during the hearing of this application. The 3rd Defendant’s Counsel accepts that the pleadings were served on his client and that his client should have entered its appearance within the stipulated time. Therefore, the 3rd Defendant has no complaints as to the regularity of the said Judgment in Default entered against the said Defendant

This Court after considering the facts and issues raised by the litigants, find that this is not suitable case for the Judgment in Default of appearance to be set aside. B. Reasoning of this Court

Delay in the Application – Not Within 30 days and no abridgment of time 4. It is trite law that if a Defendant seeks to set aside a regularly entered Judgment in Default, it must file such an application within the stipulated time frame provided under 42 rule 13 of the Rules of Court 2012. The application must be brought within 30 days and if it does not do so, it must first obtain leave to abridge time and explain why the said application was not made within the said 30 days from service of the said Judgment in Default.

This time frame is mandatory, and any delay must be accompanied with an application to abridge time and with a reasonable explanation for the said delay.

I refer to the decision of the Court of Appeal in Ng Han Seng & OR’s v. Scotch Leasing Sdn Bhd [2003] 4 MLJ 647 where Nik Hashim JCA explained that this is mandatory and failure to take such steps may be fatal to an application to set aside the judgment in default: - “From the record, the JID was not irregular in any way. However, the appellants' applications did not comply with O. 42 r. 13 of the Rules of the High Court 1980 which requires that a party intending to set aside a judgment must make his application to the court and serve it on the party who has obtained the judgment within 30 days after the receipt of the judgment by him. In the present case, the 1st and 3rd appellants were two months outside the time allowed whereas the 2nd appellant was seven months. Further, there was no explanation whatsoever from the appellants for their delay in approaching the court and that they had not prayed for extension of time to make their applications. In these circumstances, there was clearly no need for the merits of the appellants' applications to be considered and in fact they should be dismissed in limine. (see Koperasi Belia Nasional Bhd v. Storage Enterprise (Port Kelang) Sdn Bhd [1998] 3 CLJ 335; Khor Cheng Wah v. Sungai Way Leasing Sdn Bhd [1997] 1 CLJ 396; Abdul Latif bin Mohamed Ibrahim v. International Factors Leasing Pte Ltd [2001] 2 CLJ 140).”

This was also explained by Mohd Nazlan J in Juliafitriani bt Baharuddin & Anor v. Rosdoni bt Rashid [2021] 12 MLJ 259 where he held: - “[20] Although not submitted by parties, I should also state that case law authorities have held that where there is delay on the part of a defendant, to act with reasonable promptitude to apply to set aside a default judgment within the stipulated 30 day period, it is incumbent upon the defendant to discharge the burden of proffering a satisfactory explanation for the delay. Thus, if there is no explanation for the delay and there is no application for an extension of time to apply, the Court of Appeal in Ng Han Seng & Ors v. Scotch Leasing Sdn Bhd [2003] 4 CLJ 533; [2003] 4 MLJ 647 held that the setting aside application should be dismissed in limine, without considering the merits of the application. [21] Whether any purported explanation in a given case is satisfactory or otherwise would plainly be dependent on the facts and circumstances of each application and it is for the Court to exercise its discretion to make the determination (see the Court of Appeal decision in Khor Cheng Wah v. Sungai Way Leasing Sdn Bhd [1997] 1 CLJ 396; [1996] 1 AMR 846).”

In this case, the said original Judgment in Default was served on the 3rd Defendant on 7-6-2024. The amended Judgment in Default was served on 9-12-2024.

This was not refuted by Counsel for the 3rd Defendant during the hearing of this application. He concedes that the said Judgment in Default was regularly entered against his client.

Therefore, the 3rd Defendant should have filed his application to set aside the said Amended Judgment in Default within 30 days from the date of receipt of the said Judgment. Instead, the 3rd Defendant had only filed this application on 24-3-2025, about 3 months later than the time frame provided by the Rules of Courts 2012.

Under those circumstances, the 3rd Defendant should have filed an application to abridge time and explain why there was a delay in the application to have the Judgment in Default set aside. No such application was filed by the 3rd Defendant. This should have been undertaken by the 3rd Defendant and at the very least be specifically mentioned in the application to set aside the Judgment in Default.

I also find that the Writ and the Statement of Claim was validly served on the 3rd Defendant.

The facts as shown in the affidavits indicate that the Writ and the Statement of Claim was served on the 3rd Defendant at its registered address at No. 7-1, Jalan 109F, Plaza Danau 2, Taman Danau Desa, 58100 Kuala Lumpur.

I do note that the Miss Teo Soon Mei, the former company secretary of the 3rd Defendant, did resign on 25-8-2023. However, as seen even in the latest company search on the 3rd Defendant dated 13-2-2025 the above address remains the registered address of the 3rd Defendant. Therefore, the said Writ and the Statement of Claim was validly served on the said Defendant. Even Teo Soon Mei remains registered as the company secretary based on the current search from the Companies Commission of Malaysia. If there have been any changes to the company’s registered address, it is incumbent upon the Defendant to ensure that such changes are reflected in the company search.

Furthermore, the said cause papers were also served on the Receivers and Managers appointed over the 3rd Defendant. Therefore, it cannot be said that the said cause papers were not validly served on the 3rd Defendant.

When I peruse Enclosure 69 and the affidavit in support filed by the 3rd Defendant, it has clearly failed to seek the extension of time to file this application and failed to seek the abridgment of time. It has also failed to explain why there was a delay of almost 3 months before filing this application.

I have also considered the dispute between the 3rd Defendant and the Receiver and Manager, as well as the manner in which his resignation was recorded with the Companies Commission of Malaysia. Nonetheless, this internal dispute should not affect the Plaintiff. As long as the Plaintiff has acted in accordance with the public records and information available to it, it should not be faulted. The service of the cause papers is therefore valid. These are issues between the 3rd Defendant and the Receivers and Managers.

As such, I find that this application should be dismissed in limine.

(ii) No Defence to the Claim Shown in the Affidavits filed 19. I also find that the Defendant and has not shown any defence to the claim filed by the Plaintiff.

I note that the 3rd Defendant is a surety to the debt claimed against the 1st Defendant and that the Plaintiff’s application for summary judgment against the 1st Defendant was dismissed by this Court. However, this does not mean that the 3rd Defendant has shown that it has any defence to the claim.

The burden of proof in an application to set aside a regularly entered Judgment in Default lies with the 3rd Defendant, who must show the existence of a valid defence.

Firstly, the 3rd Defendant did not show that it has a prepared a draft defence to the claim to show that it has a bona fide defence to the claim. I refer to the decision of Suriyadi Halim Omar J in Pengkalen Concrete Sdn Bhd v. Chow Mooi & Anor [2003] 6 CLJ 326: - “In the current case, it was indisputable that the defendants had failed to produce that all important draft statements of defense. Without them, I was thus without any option but to find again for the plaintiff, even on this second ingredient. Not only was there no prima facie defence, raising serious issues as bona fide reasonable defence that ought to be tried, but there was not even a sham one (Hasil Bumi Perumahan & Ors v. United Malayan Banking Bhd [1994] 1 CLJ 328). Not wishing to encourage a sham defense, and rhetoric aside what else could have I done? Common sense would convince anyone that to allow the appeal, and set aside a default judgment when no prima facie defence worthy of consideration was before the court, would portray the court as lame ducks prolonging the agony of all parties. Without them before me, I could only conclude that the defendants were definitely not serious in their attempts to challenge the plaintiff-delaying and defeating the latter from taking up more anticipatory drastic actions during these bad times, and waiting for better ones, being one of the conclusions that I could arrive at." Also see Lee Cheng Yin t/a Perniagaan Jia Zing Ten v. MBF Finance Bhd [2005] 6 CLJ 479 and Arsinah Daning & Anor v. Nurdin Aripin [2011] CLJU 628.

The failure to file the said draft defence suggests to me that the Defendant does not have a defence to the Plaintiff’s claim. A draft defence would have assisted this Court in assessing whether a genuine defence exists. While I acknowledge that filing a draft defence is not mandatory since the rules do not expressly require it but it remains a relevant factor for the Court to consider in determining whether there is a real defence to the Plaintiff’s claim. The failure to even file a draft defence may tilt heavily against the Defendant but this will depend on the facts of each case.

Secondly, the averments as contained in paragraphs 23 to 25 of the 3rd Defendant’s affidavit in support has not disclosed any defence to the Plaintiff’s claim. I summarize what was said by the 3rd Defendant in the said paragraph: -

The 3rd Defendant’s board of directors had lost control of its management as a Receiver and Manager was appointed on 2-1- 2020 to February 2025. It was allegedly impossible for the Board of Directors to have control of the suit and defend the claim.

(ii) The 3rd Defendant is only a surety and should not be made liable until such time the 1st Defendant is liable for the same debt. The application for summary judgment was dismissed against the 1st Defendant.

(iii) If Judgment is not entered against the 1st Defendant and this Judgment in Default continues, it will be unfair to the 3rd Defendant.

On the above issues, I find that the 3rd Defendant has failed to prove that it has a defence to the Plaintiff’s claim that must be tried. I must firstly refer to what was said by the Supreme Court in Hasil Bumi Perumahan Sdn Bhd & Ors v. United Malayan Banking Bhd [1994[ 1 CLJ 328 where Jemuri bin Serjan (CJ Borneo) held: - “…In other words, it was decided in that case that a judgment in default may be set aside if the facts show a defence has merits. Fira's case was followed by Zakaria Yatim J. in P.L. Construction Sdn. Bhd. v. Abdullah bin Said [1989] 1 MLJ 60. Again, V.C. George J. in East Asiatic Company (M) Bhd v. Kamanis Sdn. Bhd. [1985] 2 MLJ 227 used such expression as "bona fide reasonable defence" to describe the standard of the defence that must be met for the applicant to succeed to set aside a default judgment, although he cited no authority for his proposition, and it seemed to us the proposition was redolent of Lord Atkin's dictum. Consistent with the decision of our own courts in the past in dealing with issues such as those under O. 13 r. 8 and O. 19 r. 9 the guidelines in Evans v. Bartlam (supra) should be accepted. In our view, in order to succeed in his application under these Orders the applicant must show that he has a defence which have some merits and which the Court should try. To use common and plain language, the applicant must show that his defence is not a sham defence but one that is prima facie, raising serious issues as bona fide reasonable defence that ought to be tried because obviously if the defence is a sham defence there is no defence and the application must fail. It can hardly be emphasised that in order for the Court to arrive at a decision that the defence has merits it must perforce make a reasoned assessment of the justice of the case by forming a professional view of the probable outcome of the case, but this is stating the obvious. It involves a mental process that goes through the mind of a Judge when making a decision in any case, weighing the evidence of a litigant against that of another on the facts alleged by a party against those of the other before finally coming to a decision. At any rate whether we follow Saudi Eagle or Evans v. Bartlam, both cases only lay down, not rules of law, that must be stringently complied with but merely guidelines to assist a Judge in the exercise of his discretion. So long as the Judge exercises his discretion according to principles of law the appellate court would hesitate to interfere with the Judge's exercise of discretion. It is for the appellants to convince us that this is a proper case for our interference with the learned Judge's exercise of his discretion under O. 19 r. 9.”

I find that the Plaintiff has shown that the 3rd Defendant has not produced any credible evidence to support its claim that it has a defence that should be determined at trial. The above factors when considered as a whole tilt heavily in favour of the Plaintiff. I find that the (i) failure to even prepare a draft defence and (ii) the failure to show any real and substantive defence to the claim as principal debtor, indicate that this Court should not set aside the said Judgment in Default of Appearance.

As shown by the Plaintiff, the liability of the 3rd Defendant remains that not only as surety but also as principal debtor for the alleged debts. The 3rd Defendant has not shown any evidence or any draft defence to show that its liability under the terms of the Guarantee is no longer binding on it and that the Plaintiff is not entitled to call on the guarantee imposing liability on the said Defendant.

I refer to Affin Bank Bhd v. Gok Hock Hai [2012] MLJU 1528 where it was held: - “[33] That was not the situation here in the instant case. The Plaintiffs action was not brought against the 'chargor' of the land but against the Defendant, a guarantor on the terms of an independent contract of guarantee given by the Defendant. The liability of the Defendant as guarantor under the terms of the Letter of Guarantee arose immediately upon a 'demand' being made for payment for the whole sum owed by the Principal Borrower and not merely for any 'shortfall' not recovered from the Principal Borrower or realized from other security given in respect of the facilities.” Also refer to CIMB Bank Berhad v. Norlia binti Mohd Yusof [2013]

I find that the purported issues raised by the 3rd Defendant do not merit the setting aside the Judgment in Default. More so when it has not even filed the draft defence. If it had filed a draft defence, at the very least this Court could have ascertained the details and particulars of its alleged defences and determine whether or not the issues warrant a trial.

As to the issue of the lost of control of the board of directors due to the appointment of the Receivers and Managers, I find that this does not constitute a defence to the Plaintiff’s claim. This is at best points to another internal squabble the 3rd Defendant board may have with the previous Receiver and Manager, which is a separate cause of action the 3rd Defendant may wish to pursue against that party. This is particularly so since the appointment was made not by the Plaintiff, but by a third party. C. Conclusion 31. For the above reasons, I find that the Judgment in Default should not be set aside with costs of RM5,000.00 to be paid by the 3rd Defendant to the Plaintiff. Dated 22nd May 2025 Dato’ Indera Mohd Arief Emran bin Arifin Judge High Court of Malaya at Kuala Lumpur NCC5 Counsel: Koo Yin Soon together with Koo Jia You For the Plaintiff Shearn Delamore & Co. Advocates & Solicitors R Sundaradevan, Suvitra Morais together with Hanna Mathew For the 3rd Defendant