Chandrasegaran A/L Veeryah v Thurgas Industries Sdn Bhd (PA-12ANCC-14-08/2022)

Section 68 provides that no Appeal can be brought to the Court Of Appeal when the High Court allows an Application to set aside a judgment in default.

The Sessions Court entered a judgment in default of appearance (JID) against the Defendant. The Defendant applied to set it aside. The Sessions Court dismissed the Defendant’s Application i.e. the Sessions Court refused to set aside the JID. The Defendant appealed to the High Court. I allowed the Appeal, that is, I reversed the decision of the Sessions Court. Effectively, I allowed the Defendant’s Application to set aside the JID.

The issue is—does the Plaintiff have the right to appeal to the Court Of Appeal against my decision, when my decision was to effectively allow the Application to set aside the JID? SECTION 68 OF THE CJA [5] The amended section 68 of the CJA came into force on 1.10.2022— the Federal Government Gazette dated 19.9.2022, P.U. (B) 451/2022.

The current sub-section 68(1) reads as follows— Section 68 Non-appealable matters S/N 7ks8s4XUr0K6Oaj/HUv5ow **Note : Serial number will be used to verify the originality of this document via eFILING portal Page 3 of 18

No appeal shall be brought to the Court of Appeal in any of the following cases:

when the amount or value of the subject-matter of the claim (exclusive of interest) is less than two hundred and fifty thousand Ringgit, except with the leave of the Court of Appeal;

where the judgment or order is made by consent of parties;

where the judgment or order relates to costs only, which by law are left to the discretion of the Court, except with the leave of the Court of Appeal;

where, by any written law for the time being in force, the judgment or order of the High Court is expressly declared to be final;

where a High Court dismissed any application for a summary judgment;

where a High Court dismissed any application to strike out any writ or pleading; and

where a High Court allowed any application to set aside a judgment in default. [emphasis mine] [7] If the High Court allows an Application to set aside a JID, there is no longer a right to appeal to the Court Of Appeal against the High Court’s decision. S/N 7ks8s4XUr0K6Oaj/HUv5ow Page 4 of 18 [8] It is true that my decision to set aside the JID did not emanate from a High Court suit. It started from the Sessions Court suit. As alluded to earlier, the JID was entered in the Session Court. The Defendant applied to set aside the JID. The Sessions Court refused to set it aside. The Defendant appealed. I heard and allowed the Appeal. And it is against my decision that the Plaintiff is now appealing to the Court Of Appeal. [9] But the Appeal that I heard was an interlocutory appeal. All appeals, particularly interlocutory appeals, are determined by the process of re-hearing. In other words, when I heard this setting aside Appeal, it was as if I re-heard the Defendant’s Application to set aside the JID that was filed in the Sessions Court. [10] Order 55 Rule 2 of the Rules Of Court 2012 (ROC) provides for this principle. Order 55 Rule 2 reads as follows—

Order 55 Appeals to High Court from Subordinate Courts Appeal to be by re-hearing on notice (O. 55 r. 2) All appeals to the High Court shall be by way of re-hearing and shall be brought by giving a notice of appeal within fourteen days from the date of the decision appealed from. [emphasis mine] [11] In United Malayan Banking Corporation Bhd v Pembinaan KSY Sdn Bhd & Ors [1993] 3 MLJ 45 (SC), the Supreme Court, in the context of an Order 14 (summary judgment) appeal, propounded this principle like so (at page 49)— S/N 7ks8s4XUr0K6Oaj/HUv5ow Page 5 of 18 The approach to be taken by an appellate court in an O 14 appeal has been settled. The appellate court should not regard the appeal as reviewing the exercise of the judge's discretion but should approach the appeal as a rehearing. [emphasis mine] [12] When I allowed the Defendant’s Appeal, I effectively allowed the Defendant’s Application to set aside the JID. It is clear then that sub-section 68(1) applies to prohibit a further appeal to the Court Of Appeal, since I allowed the Defendant’s Application to set aside the JID. THE RATIONALE FOR THE AMENDMENTS TO SECTION 68 (AND SECTION 28) OF THE CJA [13] Focusing specifically on paragraphs 68(1)(e) to (g) of the CJA, the amendments seek to achieve the purpose of taking away the right to appeal to the Court Of Appeal—

when an application for summary judgment is dismissed (paragraph (e));

when an application to strike out is dismissed (paragraph (f)); and

when an application to set aside a judgment in default is allowed (paragraph (g)). [14] When any of these three decisions or outcomes occur, the effect is that the suit goes to trial. When an application for summary judgment is dismissed, the suit proceeds to be determined at trial. When an S/N 7ks8s4XUr0K6Oaj/HUv5ow Page 6 of 18 application to strike out is dismissed, the suit proceeds to trial to be determined. When an application to set aside a judgment in default is allowed, the suit similarly proceeds to trial for determination. [15] The latest amendments to sub-section 68(1) of the CJA curtail appeals or further appeals to the Court Of Appeal. The latest equivalent amendments to sub-section 28(1) of the CJA have the same corresponding purpose of curbing appeals from the Subordinate Courts to the High Court. The rationale or purpose is so that the Appellate Courts are not further inundated with interlocutory appeals, such as summary judgment, striking out and the setting aside of a default judgment. [16] The parties get one opportunity or attempt at persuading the first instance Court to grant summary judgment, to strike out a suit or pleading, or to sustain a default judgment. If the first instance Court does not grant summary judgment, does not strike out the suit or a pleading, or does not sustain a default judgment—then the parties have to go trial to determine their dispute. [17] For the ease of reference, sub-section 28(1) of the CJA is also set out here— Section 28 Civil appeals from subordinate courts

No appeal shall lie to the High Court in any of the following cases:

subject to any other written law, from a decision of a subordinate court in any civil cause or matter where the amount in dispute or the value of the subject matter is ten thousand ringgit or less except on a question of law; S/N 7ks8s4XUr0K6Oaj/HUv5ow

where a subordinate court dismissed any application for a summary judgment;

where a subordinate court dismissed any application to strike out any writ or pleading; and

where a subordinate court allowed any application to set aside a judgment in default. [emphasis mine] [18] These interlocutories—summary judgment, striking out and setting aside a default judgment—are the exceptions, rather than the rule. The rule is to go to trial. The trial process is the essence and the bedrock of our legal process. THE APPLICABILITY OF SUB-SECTION 68(1) OF THE CJA [19] In this matter, the Sessions Court dismissed the Defendant’s Application to set aside the JID. The Defendant’s right to appeal to the High Court was unaffected, because the Sessions Court dismissed the Defendant’s setting aside Application. The Sessions Court sustained the JID. [20] I heard and allowed the Defendant’s Application to set aside the JID. The Plaintiff now appeals to the Court Of Appeal. This Appeal falls squarely into sub-section 68(1), paragraph (g). [21] I am therefore of the view that the current sub-section 68(1), specifically through paragraph (g), is applicable to this subsequent Appeal to the Court Of Appeal, rendering the Plaintiff’s Appeal of no effect. S/N 7ks8s4XUr0K6Oaj/HUv5ow Page 8 of 18 BRIEF REASONS FOR ALLOWING THE APPLICATION TO SET ASIDE [22] Nevertheless, if for some reason this Appeal to the Court Of Appeal is permitted to be heard i.e. the Appeal is not deemed null and void, I set out below my brief reasons for allowing the Defendant’s Appeal from the Sessions Court, effectively allowing the Defendant’s Application to set aside the JID. The law on setting aside JIDs [23] The principles governing setting aside a JID is rather established— if the JID was obtained irregularly, then the JID should be set aside ex debito justitiae (as a matter of right). An example of an irregularity that justifies setting aside a JID as a matter of right, is when the Writ was not properly served on the Defendant. But if the JID was obtained regularly, then the Defendant has to demonstrate that he has a prima facie defence on the merits: see Lai Yoke Ngan & Anor v Chin Teck Kwee & Anor [1997] 2 MLJ 565 (FC); [1997] 3 AMR 2458; [1997] 3 CLJ 305. [24] In Lai Yoke Ngan (supra), the Federal Court enunciated (at MLJ page 573-574)— The principle of setting aside a default judgment under O 13 r 8 has been well established and needs no detailed repetition. What is important to observe is that a default judgment is not a judgment on the merits. Accordingly, when such judgment is obtained irregularly, such irregularity would be a sufficient ground by itself for setting it aside. But where the default judgment has been obtained regularly, in order to succeed, the defendant must file an affidavit of merits, ie the defendant must disclose by affidavit evidence that prima facie he has a defence on the merits. Put in another S/N 7ks8s4XUr0K6Oaj/HUv5ow Page 9 of 18 way, the affidavit must disclose that he has an arguable or triable issue on the merits (see Evans v Bartlam [1937] AC 473)… . In the instant case, the learned judge did not consider the judgment to be irregular. The Mallal's Supreme Court Practice (2nd Ed) (Vol 1) at p 84 explains the position where the judgment is regular thus: 'The discretion will only be exercised if the affidavit supporting the application to set aside discloses facts showing a defence on the merits; or for some very sufficient reason: Bank Bumiputra Malaysia Bhd v Majlis Amanah Ra'ayat [1979] 1 MLJ 23; Farden v Richter (1889) 23 QBD 124.' [emphasis added] Was the JID regularly obtained? [25] At the hearing of the Appeal, the Defendant conceded that the Writ and Statement Of Claim (SOC) was properly served, and as such conceded that the JID was regularly entered against the Defendant. [26] In this regard, I commend the Defendant’s counsel for his forthrightness in conceding the issue about the service of the Writ and SOC. The Defendant’s counsel understood that good and effective advocacy is oftentimes demonstrated by the wisdom of refraining from raising and arguing every conceivable issue that is relevant to the matter at hand. Good and effective advocacy is having the maturity to submit the Defendant’s strongest points in the most coherent and persuasive manner. A party’s strongest points are the usually no more than one or two pivotal points that will swing the proceeding in that party’s favour. S/N 7ks8s4XUr0K6Oaj/HUv5ow Page 10 of 18 [27] If counsel argues a strong point and a weak point with equal or indistinguishable importance, then the usual effect is that the strong point gets diluted in its vigour. The strong point will lose its punch. Permitting this effect to occur is not good advocacy. [28] Here, in this Appeal, the issue about the service of the Writ and SOC on the Defendant was a weak point. It was an unwinnable point. More likely than not, the Defendant received the Writ and SOC, making the JID a regularly obtained judgment. By conceding that the Defendant received the Writ and SOC, the Defendant’s counsel in effect conveyed to me that Defendant did not need to challenge the service of the Writ and SOC, because he has a prima facie defence on the merits. [29] Further, by conceding this point, the Defendant’s counsel was fulfilling his duty to conduct the Appeal to achieve a just, expeditious and economical disposal of the Appeal. And Courts appreciate that. The Defendant’s counsel demonstrated to me that the Defendant would not waste the Court’s time canvassing a weak point—which caused me to give an emphasised attention to the other point about having a prima facie defence on the merits, as that is the only point the Defendant has left to canvass. Does the Defendant have a prima facie defence on the merits? [30] To ascertain whether the Defendant has a prima facie defence on the merits, I first looked into the Plaintiff’s claim. [31] In the SOC, the Plaintiff pleaded material facts that included these facts— S/N 7ks8s4XUr0K6Oaj/HUv5ow

In 1992, by an oral contract made between them, the Plaintiff appointed the Defendant as its agent to market the Plaintiff’s goods. By this oral contract, the Plaintiff sold its goods to the Defendant at certain prices. Presumably (as the SOC does not say), the Defendant sold the goods at higher prices for a profit or a commission. (Note—the Plaintiff provided no particulars about the terms of this oral contract.)

The payments for these transactions between the Plaintiff and the Defendant were made by cash and cheque, through what the Plaintiff called a “continuing account”. To document the transactions, the Plaintiff utilized (menggunakan) documents such as invoices, credit notes, bills and account statements. And the Defendant never disputed these documents.

The oral contract led to a written contract dated 31.12.2012 for the period of two years from 1.1.2012 and 31.12.2013, with the addition of several terms to the oral contract. (Note—the Plaintiff again provided no particulars about these additional terms, nor the particulars of the written contract.)

On 24.2.2015, by consent, the Plaintiff terminated the oral contract. (Note—this fact did not tally with the fact that the oral contract was already substituted with the written contract on 31.12.2012, three years before.)

On 27.7.2015 (five months after the pleaded termination of the oral contract), the amount that was owed by the Defendant to the Plaintiff was RM321,125.29 (the RM321K). S/N 7ks8s4XUr0K6Oaj/HUv5ow Page 12 of 18

By a notice of demand dated 5.11.2015, the Plaintiff demanded for the payment of the RM321K, but the Defendant refused to pay. [32] In the Defendant’s Proposed Defence, which was exhibited to his Affidavit In Support of his setting aside Application, the Defendant pleaded these material facts—

The oral contract pleaded by the Plaintiff was made in 1992. The Plaintiff’s “cause of action” was filed outside of the limitation period.

The facts pleaded by the Plaintiff were unclear and vague, and can only be determined by considering the Plaintiff’s witnesses’ testimonies, as well as the Defendant’s testimony.

The Defendant put the Plaintiff to proof that the Plaintiff in fact served on the Defendant the documents that the Plaintiff relies on to prove the RM321K claim.

The Defendant knew of no written contract dated 31.12.2012.

There were no particulars of the alleged RM321K debt and the Plaintiff was put to proof.

The Defendant did not know what the Plaintiff’s cause of action was. The Plaintiff claimed a huge amount of RM321K without providing any calculation and explanation (pengiraan dan penjelasan). S/N 7ks8s4XUr0K6Oaj/HUv5ow Page 13 of 18 [33] In addition to his pleas in his Proposed Defence, the Defendant also averred to facts that included these facts—

Santhira Segaran a/l Chelliah (Santhira) is the Plaintiff’s director. Santhira is the deponent of the Plaintiff’s Affidavit In Reply to the setting aside Application. Santhira is the Defendant’s brother-in-law.

Santhira told the Defendant that the purpose that the Plaintiff filed the Sessions Court suit (where the JID was entered) was to disclose the Plaintiff company’s bad debts in its accounts (untuk menunjukkan hutang lapuk dalam akaun Syarikat Plaintif). The civil suit was just for the record (untuk tujuan rekod sahaja).

It was because of this representation from Santhira that the Defendant did not appear in Court to defend against the suit. It was because he believed Santhira that he did not file an Appearance, which resulted in the JID. [34] I find that the Defendant has demonstrated a prima facie defence on the merits. And I find so for the following reasons. [35] First, the defence of limitation is fact-centric. In other words, whether the Defendant succeeds on a time-bar defence (against the alleged debt of RM321K) is dependent on the facts. And if it is dependent on the facts, it is dependent on the evidence, which can only be led at trial. S/N 7ks8s4XUr0K6Oaj/HUv5ow Page 14 of 18 [36] This is so because the Plaintiff has pleaded rather limited particulars about the terms of the oral contract, as well as the terms of the written contract dated 31.12.2012. The terms of the oral contract can only be proven by the oral testimony of the parties, and perhaps other witnesses. The terms of the written contract dated 31.12.2012 will only be known after the process of Discovery when the contract itself will be produced, and also from the testimony of witnesses. [37] Second, in the same vein, the Plaintiff has not pleaded the particulars of the alleged RM321K debt. [38] In this context, the learned Sessions Court Judge, in her Grounds Of Judgment, found that the Defendant’s Proposed Defence consisted of bare denials. But I find, however, that perhaps the Defendant could only deny the RM321K debt (without providing particulars) because there were no particulars of the RM321K debt (such as how the RM321K amount was computed), for the Defendant to refute the debt with more specificity. Put differently, due to the allegedly insufficient particulars in the Plaintiff’s SOC, the Defendant could only plead bare denials against the Plaintiff’s bare averments. [39] Third, there is the Defendant’s averment that Santhira (the Plaintiff’s director) represented to the Defendant that the Sessions Court suit was just to record the alleged RM321K debt as a bad debt in the Plaintiff’s accounts. Whatever may be the legal effect and consequence of that representation, I am of the view that the Defendant should be given the opportunity to prove, through the process of a trial, that such a representation was in fact made to him. S/N 7ks8s4XUr0K6Oaj/HUv5ow Page 15 of 18 Did the Defendant file this Appeal out-of-time? [40] Additionally, the Plaintiff argued that the Defendant did not file this Appeal within the prescribed time-limit under the ROC. The Sessions Court’s decision not to set aside the JID was given on 29.7.2022. The 14- day deadline for the Defendant to file an Appeal was 12.8.2022. [41] The Plaintiff referred to the Notice Of Appeal and pointed out that at the top right hand corner of the Notice, it is written “Notis Rayuan Difailkan 15 AUG 2022” and “This is a NON-PAYABLE document H0272101 15/08/2022 15:08:12”, which would make the Appeal filed out-of-time by 3 days. I will refer to this evidence as the “Notation on the Notice Of Appeal”. [42] Contrary to this Notation on the Notice Of Appeal, the Defendant produced (although it was produced as an annexure to his written Submissions In Reply) a “Bil Rasmi” issued by the Court Registry, stating information that verified that the Defendant’s solicitors paid RM400.00 to file this Notice Of Appeal on 12.8.2022 (the last day to lodge this Appeal, but within time). [43] Although the “Bil Rasmi” was not exhibited to an affidavit filed on the Defendant’s behalf, I am of the view that since it was a Court-issued document, I could take judicial notice of this “Bil Rasmi” and its contents. I will refer to this “Bil Rasmi” as the “Official Receipt for the Appeal”. [44] As such, we have what appears to be contradicting evidence—the Notation on the Notice Of Appeal that it was filed on 15.8.2022 (out-of-time), and the Official Receipt for the Appeal that the Appeal was filed on 12.8.2022 (within time). S/N 7ks8s4XUr0K6Oaj/HUv5ow Page 16 of 18 [45] I checked the 2022 calendar. The date 12.8.2022 was a Friday. The date 15.8.2022 was the following Monday. From this information, I deduced that the Defendant in fact paid the filing fee and filed the Notice Of Appeal on 12.8.2022. which was within the time prescribed for filing the Notice Of Appeal. But the Notice Of Appeal was processed by the Court Registry on the following Monday: 15.8.2022. Thus the Notation on the Notice Of Appeal containing the 15.8.2022 date. [46] In my view, where there is conflicting evidence such as this, in order to give regard to the overriding interest of justice, I should give the Defendant the benefit of the doubt because justice and fairness dictate that the Defendant’s Appeal should be heard on its merits. Particularly when the Plaintiff has not demonstrated that there was a clear and obvious breach of the ROC by the Defendant, or that the Plaintiff is prejudiced to such an extent that it cannot be compensated by costs. [47] Also, I considered the competing justices of the matter. On the one hand, the consideration was to summarily strike out the Defendant’s Appeal, without hearing the Appeal on its merits; without considering whether the Defendant has a prima facie defence on the merits. On the other hand, the consideration was for me to hear the Defendant’s Appeal and consider whether he has a prima facie defence on the merits. [48] In the end, I found that on the balance of probabilities, the Defendant filed the Notice Of Appeal within time, and proceeded to hear the Defendant’s Appeal on its merits. S/N 7ks8s4XUr0K6Oaj/HUv5ow Page 17 of 18 CONCLUSION [49] For the reasons stated above, I allowed the Defendant’s Appeal against the Sessions Court’s decision, with costs here and below of RM10,000.00 to be paid by the Plaintiff to the Defendant by 5.5.2023. [50] I reversed the Sessions Court’s Order dated 29.7.2022 i.e. the JID is set aside. I also directed the Sessions Court suit to be fixed for case management before the Sessions Court to progress it for trial. I also directed the Defendant to file his Defence in the manner of his Proposed Defence. Dated: 2 May 2023 signed KENNETH ST JAMES Judicial Commissioner Penang High Court Counsel/Solicitors For the Appellant/Defendant: Murali Chandran [Messrs. AL Murali & Co., Perak] For the Respondent/Plaintiff: Siti Zhamaliah binti Mohamad Ismail [Messrs. Zhamaliah, Mahen & Teh, Pulau Pinang] S/N 7ks8s4XUr0K6Oaj/HUv5ow Page 18 of 18 Legislation referred to:

Section 68 and section 28 of the Courts Of Judicature Act 1964.

Federal Government Gazette dated 19.9.2022, P.U. (B) 451/2022.

Order 55 Rule 2 and Order 14 of the Rules Of Court 2012. Cases referred to:

United Malayan Banking Corporation Bhd v Pembinaan KSY Sdn Bhd & Ors [1993] 3 MLJ 45 (SC).

Lai Yoke Ngan & Anor v Chin Teck Kwee & Anor [1997] 2 MLJ 565 (FC); [1997] 3 AMR 2458; [1997] 3 CLJ 305. S/N 7ks8s4XUr0K6Oaj/HUv5ow