Customer Loyalty Solutions Sdn Bhd v Tan Chin Yen (WA-22NCC-17-01/2017)

ADVANCE INFORMATION MARKETING BERHAD (Previously known as Advance Information Marketing Sdn Bhd (Company No: 644769-D)

MAK SIEW WEI (NRIC No.: 750130-08-6707)

TAN CHIN YEW (NRIC NO: 680704-04-5402) ...DEFENDANTS BEFORE YANG ARIF TUAN MOHD NAZLAN MOHD GHAZALI JUDGE JUDGMENT Introduction [1] This is an application filed by the third defendant in enclosure 86 to strike out the suit instituted by the plaintiff given the failure by the latter to comply with the order for payment of security of cost. Page 2 of 19 [2] At the conclusion of the hearing, I allowed the application, and stated my reasons for the decision. This judgment contains the full reasons for my decision. The Application [3] In order to better appreciate the nature of the request before me, it is apposite that I set out the entirety of the notice of application, the grounds in support included, as filed by the third defendant to strike out the writ action of the plaintiff. It reads as follows:- “(a) Satu Perintah bahawa tindakan di dalam ini dibuang di bawah kuasa sedia ada Mahkamah atas alasan bahawa Plaintif enggan dan/atau gagal mematuhi Perintah Mahkamah Yang Mulia ini bertarikh 14 Jun 2017 yang memerintahkan Plaintif dalam masa 21 hari dari tarikh Perintah tersebut memberi jaminan mengenai kos Defendan Ketiga sebanyak RM50,000.00;

relif lain atau selanjutnya yang Mahkamah fikir patut; dan/atau

kos. Alasan-alasan membuat permohonan adalah bahawa:

1.

Plaintif enggan dan/atau gagal mematuhi Perintah tersebut tanpa alasan atau alasan yang mencukupi; dan

Kelakuan Plaintif merupakan ketidakpatuhan Perintah Mahkamah dan merupakan suatu penghinaan Mahkamah dan dikemukakan dalam affidavit Tan Chin Yen yang difailkan pada 12 Julai 2017”. Summary of Contention of Parties [4] The application by the third defendant is resisted by the plaintiff principally on the ground that the order for security for cost granted to the former merely have the effect of staying the proceedings until payment by the plaintiff during the stipulated period. The failure to comply does not, according to the plaintiff, additionally entitle the third defendant to seek the striking out of the proceedings. The third defendant was attempting to present its case in instalments, which should be rejected. [5] The third defendant, on the other hand, argued that the basis of the application before this Court is the non-compliance with the order of the Court on the part of the plaintiff. Evaluation and Findings of this Court [6] It is common ground that pursuant to enclosure 38, the third defendant had prayed for security for costs of RM60,000.00, and pending the giving of such security, all proceedings in the underlying suit be stayed. Thus the relevant prayer in that application for security for Page 4 of 19 cost merely stated that the suit be stayed in the event of non-payment of security for costs. [7] This application succeeded before me where on 14 June 2017, I allowed the prayer by granting the third defendant security for costs of RM50,000.00 and ordered that pending the giving of such security, which must be made within 21 days, all proceedings in the suit be stayed. [8] The plaintiff then found it objectionable that on 17 July 2017, after the expiry of the period stipulated in the Order for payment, the third defendant applied to strike out this suit on the non-payment of security for costs. The plaintiff asserted that it was never the third defendant’s intention that this suit shall be struck out for non-payment of security for costs since from the filing of the enclosure 38 on 4 May 2017 up until the hearing of enclosure 38 on 14 June 2017, there was no such indication whatsoever from the third defendant. [9] The plaintiff submitted that the third defendant could have prayed for the striking out in its application in enclosure 38 and should not now be allowed to apply to strike out this suit on the same or substantially the same grounds as enclosure 38. The third defendant could also have made an oral application to amend her application at any point in time up until the hearing of enclosure 38, or even at the hearing itself, especially given that the prayers of the first and the second defendants which were heard at the same hearing had both applied for the striking out as a consequential prayer. Page 5 of 19 [10] The plaintiff thus maintained that the making of the present application in enclosure 86 is an abuse of process and not authorised by the order of the Court granting security for cost on enclosure 38, for it did not provide for the striking out of this suit in the event that security for costs is not paid. [11] The plaintiff argued that the instant application is an attempt by the third defendant to present its case in instalments which this Court should not countenanced. The plaintiff referred to the Court of Appeal decision in, among others Maril-Rionebel (M) Sdn Bhd v Perdana Merchant Bankers Bhd [2001] 4 MLJ 187 and Tenaga Nasional Bhd v Prorak Sdn Bhd [2000] 1 MLJ 479 where in the latter, Gopal Sri Ram JCA (as he then was) held: “Applying the foregoing principles to the facts of the present case, it was certainly open to the appellant to ground its first application on the basis that the default judgment was irregular for the reasons we have set out earlier in this judgment. It was therefore an issue which properly belonged to the first application. But it chose not to rely upon that ground. Once the first application was dismissed, it was not open to the appellant to make a second application to set aside the judgment on a different ground. It would, as Haidar JCA observed during the course of En Zainur's argument, amount to presenting one's case in instalments. That is something the law does not permit. [12] However, in that case the setting aside application was made twice, each with different basis. It was thus ruled to have been fashioned in instalments as well as being flawed by reason of res judicata since the applicant could have raised the basis relied on in the subsequent second application in the first, but did not. Page 6 of 19 [13] In contradistinction, the instant application by the third defendant herein is to dismiss the writ action whilst the earlier application for security for costs only sought the prayer of staying the action pending payment. The nature of the two applications is plainly different. As such the fact that the prayer for dismissal was not included in the earlier application for security for costs cannot be construed as attracting the application of res judicata to deny the same. [14] I agree that like the first and second defendants, the third defendant could have included the prayer for dismissal of the action in the earlier application should the plaintiff fail to pay. But there is no procedural defects in the course of action pursued by the third defendant and no objection, either on the grounds of application made by instalments or res judicata, could justifiably be taken against it. Another reason for this position is that the applications concerns consequences for non-compliance with the Order of the Court, and not any other requests by parties in litigation not specifically concerning issues of refusal to obey Court Orders. [15] At the same time, it must also be noted that pursuing a separate application like undertaken by the third defendant has occasioned no prejudice to the plaintiff. Neither did the plaintiff aver that it had in any manner been prejudiced by the third defendant’s dismissal application now before me. [16] In my view, the argument of the plaintiff that having succeeded in staying the proceedings, the third defendant cannot now, again for the same reason, seek to strike out the proceedings is legally Page 7 of 19 and conceptually flawed. The reason is this. It must be readily apparent from a plain reading of the Order on enclosure 38 that the proceedings be stayed pending payment of the security for cost. That payment must be made within the stipulated period of 21 days. A late payment would have been a breach of the Order (see Standard Chartered Bank (Thailand) v Dato’ Matshah Safuan [2005] 3 CLJ 158). [17] Strictly therefore, the stay operates only pending payment and within the remit of the 21-day period. Non-payment within the stipulated time like in the instant case is a non-compliance. Upon the expiry thereof, and in the absence of payment, there will be a breach of the Order. Notwithstanding the breach, technically, the stay is no longer effective as the life of the Order, being the 21 days, has expired. Unlike the Orders granted to the first and second defendants which contained the prayers for striking out in the event of non-compliance, the Order for the security for cost vis-à-vis the third defendant is already spent. [18] For completeness, it is to be observed that the Order in respect of the security for cost in favour of the second defendant contained the relief that “andai kata Plaintif gagal memberi jaminan kos seperti yang diperintahkan dalam tempoh 21 hari daripada tarikh perintah ini, tindakan ini ditolak.” A similar prayer was granted in respect of the Order for the first defendant. [19] This means that what the third defendant now seeks to achieve is something that she had not sought earlier. The two applications are clearly different, in character and effect. The first was to stay proceedings pending payment by the plaintiff of the security for cost Page 8 of 19 within the 21 days, the second is to strike out the entire action for the failure by the plaintiff to make the said payment. [20] There is thus, in my view, nothing irregular, let alone abusive about how the third defendant seeks to pursue its litigation strategy to enforce the security for cost against the plaintiff. [21] I do not disagree that the third defendant could have followed the approach taken by the first and second defendants in seeking for the prayer of what in effect is the automatic striking out of the suit by the plaintiff in the event the plaintiff failed to pay security for cost within the 21 days. As it transpired, the plaintiff did not comply and failed to make payment within 21 days. That, being for all intents and purposes in the nature of an ‘unless order’, has automatically, without any further confirmatory orders or other proceedings, resulted in the striking out of the writ action instituted by the plaintiff. [22] But the fact that the third defendant chose not to take that more direct approach is neither fatal nor in any manner objectionable. In fact, if nothing else, the plaintiff should not object to the same since instead of pursuing the route utilising the ‘unless order’ mechanism, this two-stage approach as favoured by the third defendant conferred on the plaintiff the right to contest the application in a hearing which is precisely before me now. [23] As such, is a striking out of the writ action instituted by the plaintiff justified? The answer is resoundingly in the affirmative. The fact of the matter is the plaintiff had refused and failed to adhere to the Order Page 9 of 19 of the Court dated 14 June 2017. The non-adherence is continuing until presently as I hear the application. And this is despite the third defendant’s solicitors having served the said Order together with their letter dated 18 July 2017 highlighting that the third defendant would file the application in enclosure 86 following the non-adherence. [24] Not only that. Even though the prayers on the period for compliance sought by the defendants was 14 days, in granting the Orders, I had specifically directed that the period be extended to be 21 days. Yet, no payment was forthcoming. [25] Worse, neither is there any explanation in the affidavit of the plaintiff opposing this application as to why this was so, nor any semblance of an expression of hope or endeavour that the plaintiff would be in a position to make the requisite payment at any point in time. In the present case, the plaintiff has not even given a proper explanation as to why it has not complied with the Order dated 14 June 2017. [26] However, instead of obeying the Order by depositing the security for the third defendant’s costs of RM50,000.00 to uplift the stay, the plaintiff filed enclosure 65 to purportedly stay the execution of the Order of 14 June 2017. This application for stay was pursued following the issuance of the notice of appeal against the Order on enclosure 36 to the Court of Appeal. [27] But that application is entirely unmeritorious for plainly there is no execution or further proceedings for the Court to stay (as applied by the plaintiff subsequent to the expiry of the 21 days) precisely Page 10 of 19 because by then, the refusal of the plaintiff to comply with the Order dated 14 June 2017 has, as I have stated earlier, resulted in the same being spent. There is nothing further to be done pursuant to the Order. There is therefore absolutely nothing to stay. To the extent that the Order had already stayed further proceedings within the 21 days, the application by the plaintiff to stay what had been stayed is wholly incongruous and devoid of merits. [28] It must be stated nevertheless that, having infringed a Court Order, the party in default, like the plaintiff herein, cannot be allowed by the Court to seek the Court’s assistance or indulgence. That would be akin to breaching the principle that a party cannot benefit from its own wrong. [29] For this principle is one that is founded on fairness and justice; and is wholly in consonance with the rule that the law should not allow one to take advantage against another for one’s own wrongs or transgressions. In the case of Bank Simpanan Nasional v Rudysham Abdul Raof [2017] 4 CLJ 234, I had stated thus:- “No Benefit from Own Default [88] It is also my finding that the appellant is additionally subject to the trite principle of law that a party cannot benefit from his own wrong or default, which in this case, being the negligent mistake by the appellant. It is an established presumption in law that parties to a contract do not intend that either party should be able rely on its own breach of obligations to avoid a contract or obtain any benefit under it, unless the contrary is clearly provided for by the contract (see the Page 11 of 19 House of Lords decision in New Zealand Shipping Co v. Société des Ateliers et Chantiers de France [1919] AC 1)”. [30] What the plaintiff had in fact undertaken to do was that despite the clear non-adherence, it nevertheless proceeded to file the stay application in enclosure 65. This plainly suggested as if it were entitled and competent to have done what it did. It was as if the plaintiff had taken the attitude that it could willy-nilly ignore the Court Order or that it did not exist. For the record, I dismissed the stay application in enclosure 65 before hearing the instant enclosure 86 for the dismissal of the plaintiff’s writ action. [31] Therefore, I cannot but agree with the submission by the third defendant that there is no clearer example of disobedience to an Order of the Court that the instant case such that the writ action should rightly be dismissed. [32] In the case of Standard Chartered Bank (Thailand) v Dato’ Matshah Safuan [2005] 3 CLJ 158 which was referred to by the parties before me, the plaintiff did make payment for the security for cost but was out of time by a mere two days. The High Court still proceeded to dismiss the action. Hishamudin Yunus J (as he then was) said:- “ ... In my judgment, in the case before me, once it is shown that the deposit was made outside the prescribed time, the conduct of the plaintiff is deemed prima facie intentional and contumelious and thus the action ought to be struck out. There is nothing else for the defendant to prove or to satisfy the court. However, on the authority of Re Jokai Tea Holdings Ltd, notwithstanding the non-compliance, the plaintiff can still persuade the court not to strike out the action; but the Page 12 of 19 legal burden is on the plaintiff to demonstrate that there was no intention to ignore or flout the order and that the failure to obey was due to extraneous circumstances. “... In the present case has the plaintiff discharged that legal burden? In my judgment, the answer is in the negative.” [33] I am similarly more than inclined to reach the same conclusion in the instant case. On its conduct, instead of explaining its non-compliance, the plaintiff filed a stay application. There was absolutely nothing offered by the plaintiff by way of affidavit evidence to show that its conduct in this regard was unintentional, let alone stating that the non-compliance with the Order was attributed to any exceptional or special circumstances. [34] In am not unmindful that in the case of Standard Chartered Bank (Thailand) v Dato’ Matshah Safuan, the Order directing security for cost did contain a prayer that the action would be dismissed if payment was not made by the stipulated timeline. In other words, the Order was akin to an ‘unless order’ and the dismissal would be automatic in the event of failure to comply. [35] But the essence of the matter is that having regard to the cases where plaintiffs refused to comply with security for costs Orders, the Courts have always maintained the need to comply with the said Order, failing which the plaintiff’s action is invariably dismissed. [36] Of fundamental importance is the point that whether the dismissal is ordered pursuant to the prayer in the Order directing Page 13 of 19 payment of security for cost or that it is upon another application to dismiss following the failure to make payment, is in my view a question that is of secondary importance. In both situations there has been a failure to adhere to the Court Order. The dismissal or striking out should almost be a natural consequence of non-compliance such that either of the two modes of pursuing the dismissal in the event of non-compliance is valid and not objectionable. [37] The seriousness of non-compliance cannot be emphasised enough. This is because refusal to comply could also tantamount to a contempt of the said Order. And it is trite that a party in contempt of an Order of Court cannot be heard in the same proceedings until he has purged his contempt. Thus, the Court of Appeal, in State Government of Johor Darul Ta’zim v Johor Coastal Development Sdn Bhd [2015] 1 CLJ 210 in finding that the defendant’s refusal to provide security for costs was contumacious, stated, in the judgment of Azahar Mohamed JCA (as he then was):- “[16] It is established law that a person against whom an order of court has been issued is duty bound to obey that order until it is set aside. It has to be said that order of court cannot be disregarded with impunity. It is not open for the person to decide for himself whether the order was wrongly issued and therefore does not require obedience. His duty is one of obedience until such time as the order may be set aside or varied. Any person who fails to obey an order or court runs the risk of being held in contempt with all its attendance consequences...” [38] It is worthy of emphasis that the crux of the matter is the plaintiff has failed to comply with an Order of the Court on the payment for security for cost. Such a failure is the premise upon which the Court Page 14 of 19 is empowered to move to dismiss the action of the party in default. In as much as the power to order security for cost is premised on the inherent jurisdiction of the Court and not merely conferred by legislative prescriptions (see for example the judgment of Lord Esher MR in In Re Semenza [1894] 1 QB 15), the power to dismiss an action by reason of the default by the party ordered to make payment similarly derives from the inherent jurisdiction of the Court and applies as much to an Order made pursuant to Order 23 r 1 of the Rules of Court 2012. [39] Thus, again I reiterate that it is immaterial whether the dismissal is invoked pursuant to a condition stated in the Order for payment for the security for cost like in the case of the first and second defendants or that it is sought in another fresh application, like being pursued by the third defendant herein, following the same failure on the part of the plaintiff to comply with the Order directing payment. [40] A non-inclusion of the prayer for the dismissal cannot justifiably preclude the third defendant from applying for the dismissal of the action subsequent to the refusal of the plaintiff to abide by the Order for security for cost. That is not the determinant of whether the case for the dismissal sought for is meritorious. What matters is whether the conduct of the party in default can be construed as being contumelious of the Order of the Court, pure and simple. [41] The following passages from the leading text of Malaysian Civil Procedure 2015 (paragraphs 23/2/3 and 23/2/10) as highlighted by the third defendant are instructive:- Page 15 of 19 “... Where an order for security for costs is to be given, the court will fix the amount to and direct the mode in which and the time within which such security should be given, and the order will usually provide that the proceedings shall be stayed until such security is given. The order may also provide that the action will be dismissed, if the security is not provided within a particular time ...” “... The power to dismiss an action for default by a plaintiff in complying with an order for security derives from the inherent jurisdiction of the court, and applies as much to an order for security made under the Companies Act 1965, s 351 (1) as to one made under Order 23 r 1; the court has power to dismiss the action where it is satisfied that: (i) the action is not being pursued with due diligence; (ii) there is no reasonable prospect that he security will be paid, and (iii) the time limit prescribed by the court for the giving of the security has been disregarded ...” [42] In the instant case, the mere fact that the stay and reinstatement was applied for by the plaintiff after the expiry of the 21 days, when the default is ‘complete’ speaks volume of the unsatisfactory manner of the plaintiff’s pursuit of its case. There is also no reasonable prospect of the security being paid because it has not been paid and the plaintiff too did not, as stated earlier, even bother providing any explanation as to why that was so, or even whether it could make payment in the future (not that it would have changed the fact of the breach). And of course, on time limit, the stipulated deadline of 21 days has long past and gone. [43] There is one other argument raised by the plaintiff. It is that failure to obey an Order for payment of money cannot be construed as a form of contempt. That is not quite right. The case on point is the Court Page 16 of 19 of Appeal decision in Johor Coastal Development referred to earlier where refusal to provide security for cost was held to be contumelious. [44] I assume that the basis of the argument of the plaintiff is the Court of Appeal decision in Hong Leong Bank Berhad v Phung Tze Thiam @ John Phuang [2008] 4 CLJ 742 which held that an order for payment of a monetary judgment cannot be enforced by means of a committal proceedings. [45] The Court of Appeal in Hong Kwi Seong v Ganad Media Sdn Bhd [2013] 2 MLJ 251 on the other hand, preferred the contrary position. Low Hop Bing JCA held:- “[13] We respectfully note that the two English authorities referred to in Hong Leong Bank, concern the construction of the crucial terms of the order. These terms ordered the plaintiff to recover the money, as in In Re Oddy; or the plaintiff to have a return of the shares, as in Iberian Trust Ltd. These orders did not require the defendant to do or refrain from doing an act, and hence, obviously, those orders could not be enforced against the defendant by way of committal for contempt. [14] On the other hand, in Hong Leong Bank, the terms of the order did direct Phung to refund the sum paid to him, less the sum of RM130,000 paid to EPF, and so are vastly different from the terms of the orders prevailing in the aforesaid two English authorities. With the utmost respect, we are unable to agree with the decision of the Court of Appeal in Hong Leong Bank, that a money judgment directing Phung to repay the money could not be enforced by committal proceedings. While it is true that a money judgment could be enforced pursuant to the Debtors’ Act 1957, the Act does not, either expressly or by necessary implication, exclude committal proceedings in the event of a Page 17 of 19 defendant’s refusal or neglect to do the act within the time specified in the money judgment. Hence, we respectfully hold that the decision of the Court of Appeal in Hong Leong Bank, does not assist the appellant in the instant appeal”. [emphasis added] [46] It can be said that there is a difference of opinion whether the law permits enforcement of payment of money or money judgment by committal proceedings. But the underlying governing premise to this question is Order 45 r 5 of the RC which clearly provides that only an order that requires a party to do or refrain from doing an act that may be enforced by committal for contempt. As highlighted above, in Hong Leong Bank there was in fact a Court direction for the party to do a relevant act, which was to make payment. Similarly, in the instant case, the plaintiff was directed by the Order to provide security for cost. [47] It is of interest to observe that the Singapore Court of Appeal in Mok Kah Hong v Zheng Zhuan Yao [2016] SGCA 8 discussed the divergence of the views expressed in these two cases, preferred the view pronounced in Hong Kwi Seong, and suggested that “a distinction ought to be drawn between a judgment or order for the payment of money within a specified time, to which an order of committal is available as a mode of enforcement, and a judgment or order for the payment of money simpliciter without a specified timeframe, to which an order of committal will not be available”. [48] As such, I do not think the argument that the plaintiff cannot be held to have wilfully and contumaciously disobeyed and acted in contempt of the Court Order because the Order concerns the payment of Page 18 of 19 money, to be tenable. In any event, this issue is of less importance since the instant proceeding is not a committal action. Conclusion [49] For the myriad of reasons I have discussed above, I find that the third defendant has successfully established its case for the dismissal of the plaintiff’s writ action due principally to its non-adherence to the Order directing the payment of security for cost. [50] As such, I allow enclosure 86, with costs. Dated: 9 November 2017 (MOHD NAZLAN BIN MOHD GHAZALI) Judge High Court NCC1 Kuala Lumpur Counsel Counsel for Plaintiff Foo Joon Liang with Lee Xin Div Messrs Gan Partnership Kuala Lumpur Page 19 of 19 Counsel for the Third Defendant