Dato' Haji Mohd Sabri Bin Mohd Nadzir v Perbadanan Nasional Berhad (WA-22NCC-439-06/2023)

The plaintiff filed this claim to set aside a consent judgment that had been entered into by the parties. The defendant applied to strike out the plaintiff’s claim (“Striking Out Application”).

After considering the evidence before the court and counsel’s submissions, the court found the plaintiff’s claim to be obviously unsustainable, as there is no justification to set aside the validly obtained and perfected consent judgment. The Striking Out Application was therefore allowed. S/N Bpa9Sytq1U2qytB2cLqodg **Note : Serial number will be used to verify the originality of this document via eFILING portal 2

The dispute between the parties arose from a subscription agreement dated 24 July 2015 (“Subscription Agreement”) executed between the defendant, Tropical Aquaculture Resources Sdn Bhd (“Company”), Erat Semarak Sdn Bhd, the plaintiff and Wong Yew Kai (“WYK”).

Under the Subscription Agreement: a. The defendant invested in the Company by subscribing for redeemable preference shares in the Company; b. The defendant was granted a put option, under which it had the right to require the plaintiff to purchase the shares; and c. The Company was required to pay dividends to the defendant. In the event dividends are not paid, an event of default would be triggered, resulting in the shares becoming redeemable by the Company and the put option becoming exercisable at the defendant’s option.

The plaintiff and WYK are guarantors under the Subscription Agreement.

The Company failed to redeem the shares and pay dividends on the shares. Therefore, the defendant commenced an action against the Company, seeking the outstanding amount of RM4,041,680 due from the S/N Bpa9Sytq1U2qytB2cLqodg **Note : Serial number will be used to verify the originality of this document via eFILING portal 3 Company. The defendant obtained a judgment and subsequently, a winding-up order against the Company.

The defendant also commenced legal action against the plaintiff, by way of Kuala Lumpur High Court Suit No. WA-22NCC-338-08/2017 (“Suit 388”), to seek the outstanding amount of RM4,041,680 from the plaintiff. On 12 June 2018, a consent judgment was recorded between the plaintiff and the defendant (“Consent Judgment”).

The plaintiff filed this action to set aside the Consent Judgment, which he claimed was induced by fraud and misrepresentation on the part of the defendant.

The defendant filed the Striking Out Application to strike out the plaintiff’s claim. C. Considerations and Findings ` [10] The plaintiff sought the following reliefs in this action: a. A declaration that the Consent Judgment is set aside; and b. An order for Suit 338 to proceed to trial.

It must first be noted that pursuant to the Consent Judgment, the plaintiff is required to pay RM2,222,480 as full and final settlement for the amounts claimed in Suit 338. The payments were due to be made by way of monthly instalments. S/N Bpa9Sytq1U2qytB2cLqodg **Note : Serial number will be used to verify the originality of this document via eFILING portal 4

It is trite that a perfected judgment, including a consent judgment, can only be set aside under specific circumstances. In Badiaddin bin Mohd Mahidin v Arab Malaysian Finance Bhd [1998] 1 MLJ 393, the Federal Court held, at page 409A, that one High Court cannot set aside a final order regularly obtained from another High Court of concurrent jurisdiction. The court however laid out an exception to this rule that would entitle a person affected by an order to have the order set aside ex debito justitiae in the exercise of the inherent jurisdiction of the court. This exception applies where an order can be proven to be null and void on the ground of illegality or lack of jurisdiction.

The Federal Court went on to hold that: “The Privy Council through Lord Diplock also emphasized that the courts in England have not closed the door as to the type of defects in the final judgment of the court that can be brought into the category that attracts ex debito justitiae the right to have it set aside without going into the appeal procedure, ‘save that specifically it includes orders that have been obtained in breach of rules of natural justice’. Similarly in this country, the statement of Abdoolcader J (as he then was) in Eu Finance Bhd v Lim Yoke Foo [1982] 2 MLJ 37 at p 39 provides the correct guideline on the subject: The general rule is that where an order is a nullity, an appeal is somewhat useless as despite any decision on appeal, such an order can be successfully attacked in collateral proceedings; it can be disregarded and impeached in any proceedings, before any court or S/N Bpa9Sytq1U2qytB2cLqodg **Note : Serial number will be used to verify the originality of this document via eFILING portal 5 tribunal and whenever it is relied upon — in other words, it is subject to collateral attack. In collateral proceedings, the court may declare an act that purports to bind to be non-existent. In Harkness v Bells’ Asbestos and Engineering Ltd [1967] 2 QB 729, Lord Diplock LJ (now a Law Lord) said (at p 736) that ‘it has been long laid down that where an order is a nullity, the person whom the order purports to affect has the option either of ignoring it or of going to the court and asking for it to be set aside’. For my part, I must hasten to add that apart from breach of rules of natural justice, in any attempt to widen the door of the inherent and discretionary jurisdiction of the superior courts to set aside an order of court ex debito justitiae to a category of cases involving orders which contravened ‘any written law’, the contravention should be one which defies a substantive statutory prohibition so as to render the defective order null and void on ground of illegality or lack of jurisdiction. It should not for instance be applied to a defect in a final order which has contravened a procedural requirement of any written law. The discretion to invoke the inherent jurisdiction should also be exercised judicially in exceptional cases where the defect is of such a serious nature that there is a real need to set aside the defective order to enable the court to do justice. In all cases, the normal appeal procedure should be adopted to set aside a defective order, unless the aggrieved party could bring himself within the special exception.” S/N Bpa9Sytq1U2qytB2cLqodg **Note : Serial number will be used to verify the originality of this document via eFILING portal 6 (emphasis added)

Further, in Ganapathy Chettiar v Lum Kum Chum; Meenachi v Lum Kum Chum [1981] 2 MLJ 145, the Federal Court dealt with an attempt to vary a consent order that had been drawn up by the parties. It was held that: “… an order by consent is evidence of the contract between the parties and is binding on all the parties to the order. It may be pleaded as an estoppel: Kinch v Walcott [1929] AC

All the more so, in our view, since there is not the slightest question of any mistake as to facts or law.” (emphasis added) [15] From the above cases, it is clear that a perfected judgment of a court, which includes a consent judgment, cannot be set aside unless it was obtained in breach of natural justice. [16] The plaintiff claimed the circumstances leading to the execution of the Consent Judgment gave rise to a breach of natural justice. The plaintiff’s case in this regard is that the former chairman of the defendant had fraudulently represented to the plaintiff that the plaintiff would be allowed to make payments on a best endeavour basis, notwithstanding the payment terms in the Consent Judgment. The former chairman was also said to have represented that the defendant would not commence bankruptcy proceedings against the plaintiff. S/N Bpa9Sytq1U2qytB2cLqodg [17] From the evidence available before the court, I find the plaintiff's claims to be highly improbable for two reasons. [18] First, the plaintiff was represented by solicitors throughout Suit 338, and in the course of the execution of subsequent settlement agreements between the plaintiff and the defendant. It is therefore likely that the plaintiff would have had access to legal advice at all material times, which makes the claim of fraudulent misrepresentation by the defendant implausible. [19] Second, the conduct of the plaintiff suggests that the contention raised by the plaintiff that he was fraudulently misled into executing the Consent Judgment is, on the balance of probabilities, an afterthought. [20] This is clear from the events occurring after the execution of the Consent Judgment and prior to the filing of this action. The Consent Judgment was recorded in June 2018, while this action was filed five years later in June 2023. The allegation of fraud by the defendant was not raised by the plaintiff in those five years. Instead, the plaintiff had continued to engage with the defendant on repayment of outstanding amounts he owed to the defendant. [21] After the Consent Judgment was recorded, the plaintiff and the defendant entered into a settlement agreement dated 21 August 2018 (“Settlement Agreement”). Under the Settlement Agreement, the plaintiff agreed to pay a revised sum of RM1,800,000 to the defendant in instalments. However, the plaintiff failed to pay the defendant according to the instalment plans set out in the Settlement Agreement. S/N Bpa9Sytq1U2qytB2cLqodg [22] The defendant commenced bankruptcy proceedings against the plaintiff, leading the parties to enter into another agreement, dated 14 October 2020, this time to vary the Settlement Agreement (“Variation Agreement”). In the Variation Agreement, the plaintiff agreed to settle the outstanding amount of RM1,690,000 to the defendant by way of instalments. Upon execution of the Variation Agreement, the defendant withdrew the bankruptcy proceedings against the defendant. [23] However, the plaintiff failed to pay the amounts due to the defendant in accordance with the terms of the Variation Agreement, and the defendant once again commenced bankruptcy proceedings against the plaintiff. The plaintiff’s application to set aside the defendant’s bankruptcy notice was dismissed by the court. [24] From the conduct of the defendant, I find the allegation raised by the defendant that there were fraudulent misrepresentations made which induced him to enter into the Consent Judgment, to be an afterthought. The allegation was clearly raised in response to bankruptcy proceedings commenced against the plaintiff, after the plaintiff had on multiple occasions failed to pay outstanding amounts due to the defendant. [25] It is settled law that recourse to the summary procedure of striking out under order 18 rule 19(1) of the Rules of Court 2012 should only be allowed in plain and obvious cases (see Bandar Builder Sdn Bhd & Ors v United Banking Corporation Bhd [1993] 3 MLJ 36). [26] I find that this action filed by the plaintiff, seeking to set aside a final and perfected consent judgment, and to reopen Suit 338 is wholly S/N Bpa9Sytq1U2qytB2cLqodg without basis. This is therefore a plain and obvious case warranting the exercise of the court’s powers to strike out the plaintiff’s claim.

[27] With the above findings, the court allowed the Striking Out Application, with costs. Dated 25 April 2025 ADLIN ABDUL MAJID Judge High Court of Malaya Kuala Lumpur Counsel: Plaintiff : Mohd Rizal Bahari Md. Noor of Messrs. Bahari & Bahari Defendant : Farah Mohd Afzal Messrs. Tan Norizan & Associates S/N Bpa9Sytq1U2qytB2cLqodg