Ambank (M) Berhad v Shah Rul Izat Bin Ab Salam & 1 Lg (22NCC-608-10/2013)

SHAH RUL IZAT BIN AB SALAM (No. K/P: 710605-06-5103)

JALILAH BINTI HASSAN (No. K/P: 710125-04-5242) … DEFENDAN-DEFENDAN

There are 2 appeals before me. The Respondent (“Plaintiff”) had obtained judgment in default of appearance against the Appellants (“Defendants”). The Defendants had applied to set aside the judgment in default (“JID”). After exchange of affidavits but before the Deputy Registrar gave her decision, the Plaintiff filed an application for leave to 2 file an affidavit exhibiting the duly acknowledged AR Registration Cards to show that the writ and statement of claim have been served on the Defendants. The Learned Deputy Registrar allowed the Plaintiff’s application and dismissed the Defendants’ application to set aside the JID. I have dismissed both appeals. These are the full reasons for my decision.

The Defendants obtained a housing loan facility from the Plaintiff and thereafter defaulted in the repayments.

On or around 16.10.2013, the Plaintiff commenced legal action against the Defendants and obtained the JID on 15.11.2013.

Thereafter the Plaintiff commenced bankruptcy proceedings against the Defendants and the 1st Defendant has already been adjudicated bankrupt.

It was then that the Defendants claim they knew about the proceedings commenced against them by the Plaintiff and they filed the application to set aside the JID. 3

After the exchange of affidavits but before decision has been given, the Plaintiff filed an application for leave to file an affidavit to exhibit the duly acknowledged AR Cards which would prove that the writ and statement of claim had been duly served on the Defendants.

The said application was allowed by the Learned Deputy Registrar on 14.12.2017 and the Defendants’ application to set aside the JID was dismissed subsequently on 10.4.2018. Hence the appeals before me.

It is settled law that if the JID is an irregular judgment, it should be set aside ex debito justitiae. However, if it is a regular judgment, the Defendants have to show that they have a defence on the merits.

In this case, the Defendants say that the JID is an irregular judgment because the affidavit of service filed by the Plaintiff’s solicitors’ process server did not exhibit the duly acknowledged AR Cards so there is nothing to show that the writ and statement of claim have been served on the Defendants. 4

The Defendants also say that they have not been served with the JID so they are not out of time in making the application to set aside the

In any event, the Defendants say that they have a defence on the merits. In particular, they allege that they do not admit signing the Charge over the property. It is not in dispute that the loan taken by them from the Plaintiff was to purchase a property and the Plaintiff contends that the Defendants had executed a charge over the property pursuant to the provisions of the National Land Code 1965 and, upon default, the Plaintiff had taken foreclosure proceedings against the property and realised the sale proceeds of the property in reduction of the outstanding amount due and owing from the Defendants.

After affidavits have been exchanged in respect of the Defendants’ application to set aside the JID and written submissions have been filed but before the matter was decided by the Learned Deputy Registrar, the Plaintiff filed an application for leave to file an additional affidavit to exhibit the duly acknowledged A R Cards to show that service of the writ and statement of claim has been duly effected on the Defendants. 5

In opposing this application, the Defendants raised 2 preliminary issues. The first is that the Plaintiff has not cited any particular Order of the Rules of Court 2012 under which the application is made and the second is that the Plaintiff has not sought an order for an extension of time. The cases relied upon by the Defendants are all High Court cases which are not binding upon me. In this case, the affidavit of the Plaintiff exhibiting the AR Cards was dated 7.11.2017. As a matter of fact, the Plaintiff had affirmed an affidavit in relation to the setting aside application on 29.11.2017 and could have easily exhibited the AR Cards in the said affidavit without seeking leave to file an additional affidavit. Since the Plaintiff is only seeking to exhibit the AR Cards, I am of the view that the fact that the Plaintiff did not cite a specific Order in the Rules of Court 2012 is not fatal. This would be a case where Order 2 rule 3 should be applicable as the non-compliance has not occasioned a substantial miscarriage of justice or occasioned prejudice that cannot be cured either by amendment or an appropriate order for costs or both. The Defendants could easily file an affidavit in reply in relation to the AR Cards if they had wished to do so but they did not seek to do so. As for the objection that the Plaintiff did not ask for an extension of time, the fact that they are seeking leave to file an additional affidavit implies that they are asking for an extension of time, otherwise there will be no need 6 for them to seek leave of the court to file the said affidavit in question. In the premises, I would dismiss the Defendants’ preliminary objection.

In opposing this application, the Defendants also submitted that the principles in Ladd v Marshall are applicable and the Plaintiff cannot fulfil the requisite requirements.

Ladd v Marshall was referred to in Lau Foo Sun v Government of Malaysia [1970] 2 MLJ 70 where it was held as follows: “To justify the reception of further evidence three conditions must be fulfilled: first, it must be shown that the evidence could not have been obtained with reasonable diligence for use at the trial; second, the evidence must be such that, if given, it would probably have an important influence on the result of the case, although it need not be decisive; third, the evidence must be such as is presumably to be believed, or in other words, it must be apparently creditable, although it need not be incontrovertible.”

If the principles in Ladd v Marshall have to be complied with, the Plaintiff will obviously fail in its application as it could have, with reasonable diligence, obtained the duly acknowledged AR Cards prior to the date of its application in 2017. Although the AR Cards were not 7 returned yet at the date of filing of the Affidavit of Service, they had been returned thereafter, long before 2017.

However, I am of the view that the principles in Ladd v Marshall need not be complied with, as the Learned Deputy Registrar had not yet decided on the Defendants’ application to set aside the JID at that time (the Learned Deputy Registrar allowed the Plaintiff’s application on 14.12.2017 and only dismissed the Defendants’ application to set aside the JID on 10.4.2018). In fact, as I have earlier stated, the Plaintiff could have exhibited the AR Cards in its affidavit in reply to the Defendants’ application without leave of the Court. As it is, the only issue is whether the Plaintiff is entitled to rely on the duly acknowledged AR Cards when there was a delay on the part of the Plaintiff in filing the said affidavit exhibiting the AR Registration Cards.

Since the duly acknowledged AR Registration Cards will show that the Defendants are lying to the Court in alleging that they were never served the writ and statement of claim, they are very relevant and in fact decisive in determining the issue whether the JID is regular or irregular. Since the principles in Ladd v Marshall are not applicable, I am of the view that the Learned Deputy Registrar did not err in exercising her 8 discretion in favour of allowing the Plaintiff to exhibit the duly acknowledged AR Cards.

I would therefore dismiss the appeal of the Defendants in this regard with no order as to costs.

Coming to the Defendants’ application to set aside the JID, since the writ and statement of claim have been served on the Defendants, (the AR Cards having been returned by the post office duly signed by the Defendants) the JID is regular and the Defendants have to show a defence on the merits in order to be entitled to set aside the JID.

In any event, the Court of Appeal had, in the case of Yap Ke Huat & Ors v Pembangunan Warisan Murni Sejahtera Sdn Bhd & Anor [2008] 4 CLJ 175 held 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.

The Court said this: “In this instance, the plaintiffs had elected to serve the writ and statement of claim on this defendant by way of sending it by prepaid A.R. registered post. 9 This defendant did not challenge that such process was never undertaken. Once this process was carried out, it is our view that there is no provision in law to say that the plaintiffs must also prove that the person so named in the post had received it. This opinion is shared by Suriyadi Halim J (as he then was) when he said in Pengkalan Concrete Sdn Bhd v Chow Mooi & Anor [2003] 6 CLJ 326: In fact, under sub-r 1(1) of O. 10, nothing is indicated that the plaintiff must evidentially prove that the named person in the writ must be the very person who had received it ie if it was sent by prepaid AR registered post. I therefore was satisfied that as in this case, if all the pre requisites were fulfilled, as the plaintiff had done so, the recipient being “Yanti”(not the name of the defendants) did not vitiate that service.” “In respect of [the 6th defendant], the prepaid A.R. registered post acknowledgment card was not retuned. But, following from what we have expounded earlier, this does not mean that the service of the writ and statement of claim is deemed defective. What is demanded in O. 10 r 1 RHC is that the writ (and in this case including the statement of claim) be sent by prepared A.R. registered post to the defendant’s last known address. When there is sufficient evidence of posting, as it is in this case, then under the rules, the writ (and statement of claim) is deemed to be served on the defendant. There is no necessity to prove that the acknowledgment of the A.R. registered posting has been returned. Of course, if it is returned by the 10 Post Office then it is further proof that it was not only sent but also received. But for the purpose of service, proof of sending by prepaid AR registered post is sufficient.”

However, I note that in the recent Court of Appeal decision of Chung Wai Meng v Perbadanan Nasional Berhad [2017] 1 LNS 892, the court held that there was no proof by the respondent that the writ and statement of claim which were sent by AR Registered post to the appellant’s address had been duly served on the appellant as the AR Registered acknowledgement card duly signed by the appellant has not been produced.

In the present case, the Plaintiff had produced and duly acknowledged AR Card and so it has proved that the writ and statement of claim have been duly served on the Defendants.

I will next consider the delay on the part of the Defendants in making the application to set aside the JID. The JID is dated 15.11.2013 and the application to set aside the JID is on 25.9.2017. That is a delay of almost 4 years. Pursuant to Order 42 rule 13 of the Rules of Court 2012, an application to set aside a judgment should be made within 30 days from the date of service of the judgment. The Defendants’ 11 explanation for the delay is that they were never served with the judgment and did not know about it until the bankruptcy proceedings against them.

However, the Plaintiff has shown that a copy of the JID was served on the Defendants by way of certificate of posting to their last known address. At the hearing, Learned Counsel for the Defendants acknowledged that the judgment had been duly posted to the last known address of the Defendants by certificate of posting.

Accordingly, there was no acceptable explanation by the Defendants for the delay in applying to set aside the JID. Hence the application to set aside the JID should be dismissed on this ground.

In the event I am wrong in finding that the application should be dismissed on the ground of delay, the Defendants have to show that they have a defence on the merits, in order to set aside the JID.

On this issue, the main submission of the Defendants is that they had no knowledge of the Charge over the property (Gadaian Perserahan No. 24/2012 dated 16.1.2012) because at all material times the Defendants were overseas. The Plaintiff has contended that it had 12 commenced foreclosure proceedings against the charged property and the sale proceeds had been used to reduce the indebtedness of the Defendants. I asked Learned Counsel for the Defendants whether the Defendants are saying that foreclosure proceedings have been taken against the charged property and the Defendants are saying that they did not even know the property was charged to the Plaintiff. He confirmed that that was what the Defendants are saying. I find this assertion to be incredulous and inconceivable, especially as Learned Counsel for the Defendants admitted that the Defendants have not taken any action against the Plaintiff for foreclosing on the property. In any event, the existence or otherwise of the Charge would not affect the Defendants’ liability to the Plaintiff in respect of the loan facility granted by the Plaintiff to them. This is not a credible defence.

The other allegation made by the Defendants is that there was a change in the time period for the first defendant to service the loan instalment to the Plaintiff because at the material time when the Defendants received the letter of offer, the agreed term for repayment was for 300 months but in the statement of claim it is pleaded as 240 months instead. I do not think that is a credible defence either. The Defendants do not dispute that they had defaulted in the repayment of 13 the loan facility and they do not dispute the amount of the judgment entered against them.

In the circumstances, I would also dismiss the appeal against the decision of the Learned Deputy Registrar in dismissing the Defendants’ application to set aside the JID. Costs of RM2,500.00 will be ordered against the Defendants subject to allocator. Wong Chee Lin Judicial Commissioner Kuala Lumpur High Court Dated: 6th August, 2018 14 Solicitors for the Petitioner Chandrasegaran A/L Panjacharam Messrs B H Gan Nor & Kim Advocates & Solicitors 1702, 17th Floor, Wisma Lim Foo Yong 86, Jalan Raja Chulan 50200 Kuala Lumpur Tel : 03-2142 9393 Fax: 03-2142 7373 Solicitors for the Defendants Sathyananthan A/L Sinnappan Messrs Sathya, Lee & Co Advocates & Solicitors E-3-5, Plaza Damas, No. 60 Jalan Sri Hartamas 1, Sri Hartamas 50480 Kuala Lumpur