Gust Collection (M) Sdn. Bhd. v Gain Collection Sdn. Bhd (WA-22NCC-843-11/2023)

This is a judgement of the court in respect of an application by all four Defendants to request leave for an extension of time, in order to file an application to set aside the Judgement in Default (JID) entered by the Plaintiffs on the 3rd of April 2024.

The Defendants also sought additional orders for a certiorari, mandamus, as well as an order requesting the Plaintiff’s solicitors to relinquish all cause papers to the Defendant’s solicitor.

The primary issue before the court was to determine whether leave for an extension of time should be granted to the Defendants having considered the reasons for delay and whether the JID obtained was a regular judgement.

The Plaintiff’s claim was for the payment of arrears amounting to RM 1,474,484.00 for the supply of clothing and fashion accessories. The Plaintiff had further invested RM500,000.00, for a business agreement to supply clothing stocks to the 1st Defendants.

The Plaintiff sought a declaration that the ‘Personal Guarantee and Indemnity’ agreement with the Defendants, dated 13 October 2023 to be in force and binding upon the Second Defendant, Third Defendant, and Fourth Defendant.

Furthermore, together with a declaration of ownership, the Plaintiff demanded to remain as the legal and/or beneficial and/or equitable owner of all the unpaid stocks supplied to the Defendants.

The Plaintiff also demanded that the Defendants return all the stocks supplied by the Plaintiff to the Defendants and that Defendants are restrained from disposing of and/or selling or doing any act inconsistent with the Plaintiff's right to the stocks;

Thus, the Plaintiff commenced legal proceedings through an Amended Writ of Summons dated 25.11.2023 and the Statement of Claim dated 17.11.2023. Since the Plaintiff failed to effect personal service upon the Defendants, the Plaintiff accordingly applied for an order for substituted service and subsequently the JID was entered on the 03.04.2024.

The Defendants on the other hand claimed that the JID was only known to them by way of credit‑reporting/CTOS searches carried out in or about February 2024. Hence the Defendants filed an application in Enclosure 24 seeking leave from this court for an extension of time to file an application to set aside the JID.

This court narrowed down the relevant and central issues raised by the both the Plaintiff and Defendants, namely:- Whether the Defendant provided a reasonable excuse for the delay in filing an application for leave? Whether the JID was regularly obtained by the Plaintiff? Did the Plaintiff comply with the rules on service of the Writ? IV. Is there a meritorious defence by the Defendants?

Whether it is appropriate for this court to grant the following orders? a mandamus order; and a certiorari order

The Defendants in their supporting affidavit (AIS) pleaded in paragraphs 13 to 15, that the Third Defendant wanted to acquire a bank loan at some point in February 2024 but was rejected on the grounds that there was a legal action recorded against him. Therefore, the Defendants on the 24.02.2024, promptly made a search by way of credit‑reporting / CTOS and particulars of the search was enclosed in “Exhibit C” of the AIS.

Defendants further went on to state that, it was the first time they ever had knowledge of the legal proceedings taken against them by the Plaintiff. Hence, pursuant to the search conducted, the Defendants attempted to appoint a solicitor to represent them and ultimately appointed Messrs. Susan Lee & Co. for this action.

However, the Defendants did not apply to set aside the JID with immediate effect but instead, they filed a leave application in Enclosure 24 on the 21.03.2025, some thirteen months after they affirmed their first knowledge of the civil suit action in February 2024.

The Plaintiff argues that at the material time, namely in February 2024, the JID had not yet been recorded as of 3 April 2024. If the Defendants had acted promptly and appropriately, and had not delayed the process of obtaining legal services, then leave application would not have been necessary.

Furthermore the Plaintiff goes on to argue that the Defendants, as experienced business individuals, it was illogical and unreasonable to take 1 year and 3 months to find a solicitor, especially when they allegedly asserted that they had a meritorious defence which was an afterthought.

The governing provision on extension of time is principally contained in Order 3 r. 5 of the Rules of Court 2012 reads as follows: -

Extension of time (O. 3 r. 5)

The Court may, on such terms as it thinks just, by order extend or abridge the period within which a person is required or authorized by these Rules or by any judgment, order or direction, to do any act in any proceedings.

The Court may extend any such period as referred to in paragraph (1) although the application for extension is not made until after the expiration of that period.

The period within which a person is required by these Rules, or by any order or direction, to serve, file or amend any pleading or other document may be extended by consent in writing without an order of the Court being made for that purpose. [18] The defendant mainly relied on two cases with regards to the leave application, namely Zaini bin Che Awang & Ors v Pegawai Penerima Syarikat Cosmopro Planner Sdn Bhd [2015] 11 MLJ 410 and Thirichelvasegaran A/L Manikavasegar v Mahadevi A/P Nadchatiram [1998] 4 MLJ 297. [19] In my view, the case of Zaini bin Che Awang & Ors v Pegawai Penerima Syarikat Cosmopro Planner Sdn Bhd, submitted by the Defendants concerns primarily on the procedural correctness of an application to amend a court document, specifically the importance of citing the correct legal provisions. [20] In that case, the court held that failure to specify an appropriate order or rule renders such amendment applications to be defective and the court lacked the power to allow the amendment because it was not properly based on the correct procedural rule and quoted as follows:- [14] As stated earlier, the third defendant can seek redress from the court under O3r5 for extension of time to file the setting aside application which is out of time. The third defendant should have filed a formal application for extension of time. This, they had failed to do. Instead, they had by-passed or ignored that requirement and went straight to make the said application. What are the consequences of this failure on their part? In this court’s view, the case of Thirichelvasegaran A/L Manikavasegar v Mahadevi A/P Nadchatiram, upholds the proposition that the foremost consideration in the exercise of discretion to extend time is whether the applicant can positively demonstrate that there was no intention to ignore or flout the order and that the failure to obey was due to extraneous circumstances. [21] In a nutshell, this court takes the approach on a more general proposition of universal application that has been set out by the Federal Court in National Union of Bank Employees v. Director General of Trade Unions & Anor [2013] 6 MLJ 167 which affirmed the key principles on Order 3 r. 5 and observed as follows:- “[27] The grant of extension of time by the court is one of discretion by virtue of O. 3 r. 5 of the RHC. The principle to be applied by the court is settled. In Saeed U Khan v. Lee Kok Hooi [2001] 5 MLJ 416, it was held that, the court should consider certain factors, when exercising its discretion to extend time, namely:

the delay in making an application;

whether or not there are cogent reasons for the litigant not to have made the application within the prescribed time; and,

the likelihood and degree of prejudice, as well as injustice to the opposite party should the court exercise its discretion. In the present appeal, the application for extension of time was made before the hearing of the judicial review application and the respondents were not prejudice by this application as they had been duly served with all the cause papers prior to the application itself. In exercising its discretion, the court must have regard to justice. This is in line with the provision in O. 1A of the RHC (see Maxwell v. Keun [1928] 1 KB 645; Walker v. Walker [1967] 1 WLR 327)”. [22] To summarise, the approach in the case of Saeed U Khan v. Lee Kok Hooi mentioned above namely referring to paragraph (1) to

to be directly applied to the facts of this case. [23] Defendants admitted that since gaining knowledge of the Plaintiff's action, in February 2024, they tried to appoint a solicitor to represent them until March 2025, which is more than one year since their knowledge. In my view, this suit is not of a complex nature that requires solicitors practicing in a more specialised arear of law whom are difficult to engage. The Defendants have failed to demonstrate a good and cogent reason for the delay. [24] The evidence and explanation put forward in the Defendant’s AIS, do not give any explanation or extraneous circumstances as to why they required 13 months to instruct solicitors. Furthermore, there has been no satisfactory account explaining in detail, why such a process would take in excess of one year. [25] The court concludes that the Defendants were lacking in enthusiasm to defend the civil suit filed by the Plaintiff immediately. For any business owners in a commerce industry, whom has a network of activities from trading to logistics and finances, particularly for commercial litigants who becomes aware of any civil litigation that threatens their assets and reputation, would be expected to act with reasonable promptitude. THE DEFAULT JUDGEMENT REGULARLY OBTAINED [26] Since the Defendants have filed the leave application for an extension of time, the next step for this court was to determine whether the Plaintiff’s had obtained a regular judgement. [27] A JID is to be considered regularly obtained when it’s issued in accordance to proper procedural rules without any process irregularities. It must be supported by a valid service and the Defendants must have the ability to challenge and produce an arguable case in which the court can retain its statutory and inherent jurisdiction to prevent any injustice. THE RELEVANT LAW [28] The Plaintiffs argues that the governing provision on extension of time is principally contained in Order 42 r. 13 of the Rules of Court 2012 reads as follows: Order 42 r 13 Setting aside or varying judgment and orders 13. “Save as otherwise provided in these Rules, where provisions are made in these Rules for the setting aside or varying of any order or judgment, a party intending to set aside or to vary such order or judgment shall make an application to the Court and serve it on the party who has obtained the order or judgment within thirty days after the receipt of the order or judgment by him” [29] The Plaintiff claimed that the legal position is for the Defendants to file and submit an application to set aside the judgment within 30 days after learning / being informed thereof. [30] They further stated that the Defendants, as experienced business people, it is unfounded and unreasonable to take more than a year to find a suitable solicitor, especially when they allegedly assert that they have a meritorious defence. [31] The Plaintiff cited the case of Thye Ah Chai (t/a Kent Naga Enterprise) v Teraju Mercu Construction & Engineering Sdn B in which the court cited the following: - [6] There is a plethora of authorities to the effect that O42r13 is mandatory and that an applicant filing an application beyond the prescribed time limit is obliged to provide cogent reasons for any delay. We need cite only one authority in support of this proposition. This court in the case of Khor Cheng Wah v Sungai Way Leasing Sdn Bhd [1996] 1 MLJ 223 opined through the judgment of Gopal Sri Ram JCA (as he then was) in a case also involving an application to set aside a default judgment that: “It is a cardinal principle of law, that when a litigant seeks the intervention of the court in a matter that affects his rights, he must do so timeously. The maxim vigilantibus, non dormientibus, jura subveniunt, though having its origins in the Court of Chancery, is of universal application. Even in cases where a right is exercisable ex debito justitiae, a court may refuse relief to an indolent litigant. In all cases in which delay in approaching the court is in issue, the burden is upon the litigant who has delayed to render a satisfactory explanation for it. Whether the explanation in a given case is satisfactory or reasonable depends upon the facts and circumstances of each case. And in a matter which involves the exercise of discretion, it is for the judge in whom the law primarily vests the discretion” (Page 229) [8] …the reasons provided by the respondent for the delay are so frivolous, that they ought to have been rejected by the court” [32] Plaintiffs further went on to quote the case of Ponyrace Moujing v Protasius Jomoly Mukiau [2022] MLJU 1773, which reads as follows [25] In this case, the Defendant were indolent for more than 5 years since the JID dated 06.08.2015 was entered against him, the delay in applying to set aside the JID was totally inconsiderable. [26] The Defendant submitted that his reasons and justification for such delay was due to: 

(a)The Defendant had only known about the Bankruptcy Notice published in the Daily Express newspaper on 04.01.2021 after it was shown to him by his friend; 

(b)The Defendant was waiting the reply from Messrs. Ambo & Co. as to the cause paper filed by the Plaintiff’s previous advocates; 

(c)The Defendant had a hard time to meet his advocates due to widespread of the pandemic virus; 

(d)That the exact date that the Notice of Application should have been filed was on or before 21.02.2021 in accordance with 30- day statutory limit set out in the Rules of Court 2021; and 

(e)The Defendant faced certain difficulties to come forward to the office of his advocates to attest the affidavit of the said Notice of Application [27] In my view, these reasons were unacceptable as submitted by the Plaintiff that they were nothing but convenient concoction, afterthought and plainly perverse. [28] O. 42.r.13 Rules of Court 2012 has clearly provided that an application to setting aside the said JID shall be made within the 30-day period. However, the prevailing fact remains that the Defendant did not file his setting aside application within the 30-day period upon being served with the said JID on 25.09.2015. This strongly indicates and/or suggests that the Defendant is and was an indolent litigant and had indeed slept over his right to set aside the default judgement for more than five (5) years. SUBSTITUTED SERVICE BY THE PLAINTIFF [33] The court finds that the substituted service effected by the Plaintiff was in order and sufficient to put the Defendants on notice of the proceedings. Referring to paragraphs 11 of the Plaintiff’s Affidavit in Reply [AIR] which reads as follows: -

Saya seterusnya dinasihatkan dan menafikan Perenggan Afidavit Sokongan, di mana Plaintif sebenarnya telah bertindak mengikut procedur penyampaian ganti secara teratur sepertimana dalam Afidavit Penyampaian (Lampiran 7 dan 10) yang mana tidak dijelaskan oleh Defendan-defendan; • Afidavit-Afidavit Penyampaian tersebut kini dilampirkan sebagai Ekshibit-A; [34] The Plaintiff’s records in Enclosure 27 of the AIR sets out the following proof of service: - attempts made at the business and registered addresses of the Defendants the affixation of copies at the Court notice board on 8 January 2024, an advertisement in The Star on 14 January 2024, [35] This is specifically pleaded in the Plaintiff’s affidavit for substituted service dated 30.01.2024 in “Exhibit A”, Enclosure 10, sworn by the process server. [36] In addition to that, the court finds the AIS by the 3rd Defendant Chan Zhi Min dated 8.04.2025, admits and confirms all the last known addresses of the Defendants from paragraphs 6 to 9. Therefore, this court agrees with the Plaintiff that service was in accordance to rules and the judgement was regular. Proposed meritorious defence [37] The court moving into common grounds, feels that a composition of a meritable defence is one that:- Is genuine and bona fide; Raises a triable issue of fact or law; and Is supported by credible evidence or legal reasoning. [38] In the case of Hasil Bumi Perumahan Sdn Bhd & Ors v United Malayan Banking Corp Bhd [1994]1MLJ 312 at p 321, the Supreme Court held as follows: 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. [39] If the Defendants were able to established a meritorious defence that would succeed, the court would be in a better position to set aside a regular default judgement regardless of an order for substituted service that was procedurally correct when obtained by the Plaintiff like in in this instance. [40] However the factual circumstances declared in the AIS by the Defendants did not establish any meritable defence but a bare denial. Even after examining the proposed defence, the court finds that it was just a general assertion of an arguable defence. The defendants assert and admit that the RM500,000.00 was given to the Second Defendant as a business capital arrangement with the Plaintiff to take over the 1st Defendants company and it lacked further details of the Defendants version of events. [41] The Defendants’ affidavits and submissions failed to provide any persuasive arguments that would convince this court that the JID obtained was so irregular that it supersedes the delay in filing an application for leave. CERTIORARI AND MANDAMUS ORDER FROM THE COURT. [42] The Defendants in their prayers sought the following orders: -

1.2 Suatu Perintah certiorari untuk segala prosiding untuk pelaksanaan bagi Penghakiman Ingkar Kehadiran di 1.1 di atas digantung dan ditahan sepenuhnya sehingga pelupusan penuh dan muktamad Permohonan ini.

1.3 Suatu

Mandumus untuk mengarahkan Peguamcara Responden atau mana-mana Peguamcara yang mewakili Responden atau Responden menyerahkan kertas-kertas kausa berkhaitan Writ Saman No: WA-22NCC-843-11/2023 (Writ Saman tersebut) kepada Peguamcara Pemohon-pemohon untuk tunjuan di 1.2 di atas dalam masa 14 hari atau sekian masa yang difikirkan wajar dan sesuaioleh Mahkamah yang Mulia ini dari Tarikh PerintahMahkamah yang Mulia ini dikeluarkan. [43] The court is in the view that this prayer sought by the Defendants are flawed and not appropriate in nature when applying the basic legal principles to the current factual circumstances. There was no explanation or any justification as to why such reliefs were required or necessary for the Defendant’s case be it. [44] In a summary, the court is in the view, that the Plaintiff has exhibited all the relevant material for a proper substituted service, that was conducted in accordance with the rules and that the Defendants had notice thereafter. The Defendants have not shown prejudice of the type that would render the delay excusable, nor have they produced credible evidence of a meritorious defence that would tip the balance in their favour for leave to be granted. [45] Accordingly, application in enclosure 24 is dismissed with cost of RM3,000.00. 03 December 2025 SHOBA RAJAH A/P DORAI RAJAH Judicial Commissioner Kuala Lumpur High Court (Commercial Division) Counsel: For the Respondent/Plaintiff: KM Chong (Messrs Goh, Cheah & Chong) For the Applicant/Defendant: Mohamad Ilyasa’ Iqbal, Fatin Naqiyah (Messrs Chris Koh & Chew)