Hayati Bin Jantan v Plc Credit & Factoring Sdn Bhd (29NCC-2623-03/2015)

This is an appeal by the Appellant who is the Judgment Debtor (JD) against the decision of the Senior Assistant Registrar of 24.1.2017 (pages 1 - 2 of the Appeal Record) in allowing the Receiving Order and Adjudication Order (ROAO) (pages 5-7 of Appeal Record) and dismissed the Notice and Affidavit Opposing the Creditor’s Petition (pages 3 - 4 of Appeal Record) that was filed by the Respondent, the Judgment Creditor (JC).

I dismissed the appeal with cost and my reasons follows.

On 20.12.2012, the JC filed a Writ of Summons (pages 42 – 47 of Appeal Record) and Statement of Claim (pages 48 – 60 of Appeal Record) against the JD, 1st defendant and 2nd defendant. The 1st defendant is a company, MM Vitaoils Sdn. Bhd., incorporated in Malaysia under the Companies Act 1965, having its address at Lot 3, Persiaran Perusahaan, Seksyen 23, 40300 Shah Alam, Selangor Darul Ehsan. The 2nd defendant is an individual having its address at No. 17, Jalan PJS 9/4A, Bandar Sunway, 46150 Petaling Jaya, Selangor Darul Ehsan. The JD was the 3rd defendant, the guarantor for the 1st defendant, having its address No. 17, Jalan PJS 9/4A, Bandar Sunway, 46150 Petaling Jaya, Selangor Darul Ehsan. 3 [4]

The 1st defendant applied for a hire-purchase facility for RM7, 105, 00 to which the JC agreed to offer that was issued on 10.7.2008 and accepted by the 1st defendant (page 49 of Appeal Record). The Specific Offer Letters were signed by the 2nd defendant and the JD, both representing the 1st defendant (page 50 of Appeal Record). The 2nd defendant and JD signed the Hire Purchase agreements representing the 1st defendant (paragraph 10, page 50 of Appeal Record). [5] The JC claimed that as a security to the hire-purchase, the JD and the 2nd defendant signed the Guarantee and Indemnity Agreements dated 15.8.2008, 15.9.2008, 29.9.2008, 21.11.2008, 23.12.2008,

17.2.2009, 30.3.2010, 30.3.2010, 30.3.2010, 22.6.2010, 25.8.2010,

24.2.2011 and 25.5.2011 where they agreed to repay all the money upon demand and indemnify JC for all the losses suffered caused by the 1st defendant’s default (page 51 of Appeal Record). [6] The JC claimed that the machines and equipment hire-purchased for the 1st defendant were received and used by the 1st defendant based on the Specific Offer Letter and Hire Purchase Agreements (page 53 of Appeal Record). The JC claimed that the 1st defendant failed to make monthly payments based on the Hire Purchase Agreements to which the JC demanded for repayment by a Notice of Demand of 28.10.2011. It was alleged that the all defendants failed or refused to pay. The JC through its solicitor issued the notice revoked the hire-purchase facility of 4.12.2012 and demanded the payment up till 30.11.2012 amounting to RM2, 190,044.39 (pages 58 - 59 of Appeal Record). [7] A Judgment in Default (JID) was entered against the JD (pages 177 -178 of Appeal Record). The JC’s Creditors Petition dated 27.5.2015 4 was opposed by the JD through an affidavit submitted by JD dated 21.4.2016 (pages 25 – 27 of Appeal Record) where JD declared that it has no knowledge of the Judgment Order as it did not receive any cause papers and that the interest charges of 18% per annum as stated in the Creditor’s Petition was incorrect. [8] The JC claimed that the repayment based on the Bankruptcy Notice of 17.3.2015 and Creditor’s Petition of 27.5.2015 is RM3, 095,922.71 up till 17.3.2015 (pages 22-23 Additional Affidavit of JC of Supplementary Appeal Record). The JC claimed that it has in July 2016 successfully repossessed the equipment under the Hire Purchase Agreements and in October 2016 advertised the equipment in the newspapers (pages 22, 26-29 of Supplementary Appeal Record) where it obtained three highest bidder for a price of RM57,000.00 that was below the forced sale value at RM100,000.00 although the market value then was at RM194,000.00 (Valuation Report at pages 62-67 of Supplementary Appeal Record). The JC claimed that based on the Valuation Report, if the equipment sold at the market value of RM194,000.00, there is a balance of RM2,901, 922.71 owing by JD to JC. Cause Papers [9] Based on the JC’s and JD’s written submissions, the cause papers are as follows:

“Notis Kebankrapan bertarikh 17.3.2015” (Bankruptcy Notice, pages 13 – 14 of Appeal Record); 5

“Petisyen Pemiutang bertarikh 27.5.2015” (Creditor’s Petition, pages 16 – 20 of Appeal Record));

“Afidavit Penyataan Kebenaran Dalam Petisyen yang diikrarkan oleh Mustafa Kamal Abd Mutalib pada 27.5.2015” (Affidavit verifying the Creditor’s Petition by JC, pages 21 – 22 of Appeal Record);

“Notis Niat Menentang Petisyen Pemiutang bertarikh 21.4.2016” (notice to oppose by JD, pages 23 – 24 of Appeal

“Afidavit Menentang Petisyen Pemiutang yang diikrarkan oleh Penghutang Penghakiman pada 21.4.2016” (Affidavit in

“Afidavit Jawapan Pemiutang Penghakiman yang diikrarkan oleh Farida Abdul Talib Jalany pada 3.5.2016” (Affidavit in

“Afidavit Tambahan Pemiutang Penghakiman yang diikrarkan oleh Farida Abdul Talib Jalany pada 19.1.2017 (terhadap Petisyen Pemiutang bertarikh 27.5.2015)” (Additional Affidavit of JC of 19.1.2017). JD’s submission [10] The learned counsel for the JD submitted that the JC at all material times did not serve the Writ and Statement of Claim and JD was not 6 aware of the Judgment in Default (JID) entered as the JD has no knowledge of the bankruptcy proceeding, arguing that the cause papers of the proceeding was not served regularly on JD. [11] The JD’s counsel averred that the interest charges of 18% per annum as reflected in the Creditor’s Petition was incorrect and it should have been 5% interest per annum instead. JC’s submission [12] The learned counsel for the JC averred that the JID of 16.1.2013 (pages 177 – 178 of Appeal Record) was validly obtained as it was never set aside nor application for stay was made by JD. The JC’s counsel averred that the Writ and Statement of Claim were served on the JD on 28.12.2012 by way of registered post to JD’s address as stipulated in the Guarantee and Indemnity Agreements following clause 6.2 and in accordance to the address given by JD in her Affidavit Opposing Creditor’s Petition. The JC’s counsel argued that the Writ and Statement of Claim was regular, in accordance with Order 10 rule 3 of the Rules of Court 2012 (ROC 2012) with the proof of posting enclosed with the Affidavit (Exhibit NA-2) and therefore JD’s claim as having no knowledge is untrue. [13] In relation to the 18% interest charges, the JC’s counsel averred that this was agreed following clause 14 of the Hire Purchase Agreements between JC and the 1st defendant where the JD was a guarantor to the 1st defendant based on the Guarantee and Indemnity Agreements. 7 [14] It was submitted by JC that it is trite law where a judgment obtained, be it a JID, the court is barred from going behind the judgment, relying on the authority, the Supreme Court case of Sovereign General Insurance Sdn Bhd v Koh Tian Bee [1988] 1 MLJ 304. [15] The JC’s lawyer averred that the ROAO dated 24.1.2017 had been recorded against the JD. It is submitted pointing to the Additional Affidavit dated 19.1.2017, that if the equipment based on the Valuation Report were sold at a market value price of RM194,000.00, there would still be a balance of RM2,901, 922.71 as debt owing to JC which is higher than the RM30,000.00 cap allowing the JC to proceed with bankruptcy action against JD. It was brought to this Court’s attention that subsequently to ROAO, the JC managed to sell off the equipment at RM72, 557.00. APPEAL [16] This is an appeal by JD to set aside the Senior Assistant Registrar’s Orders of 24.1.2017 which allowed the ROAO against the JD and dismissed the JD’s Notice to Oppose the Creditor’s Petition. The JD was adjudged bankrupt on 24.1.2017 (pages 8 - 9 of Supplementary Appeal Record). Upon careful perusal of the Appeal Record, the Supplementary Appeal Record, both counsels’ written submissions and having heard both counsels’ oral submissions, this Court finds that firstly, there was no setting aside of JID filed by the JD within the 30 days after the receipt of the judgment: Order 42 rule 13 of ROC 2012. 8 [17] Based on the Court of Appeal case of Yap Ke Huat & Ors v Pembangunan Warisan Murni Sdn Bhd & Anor [2008] 5 MLJ 112, at page 120, stated that, “[15] It is trite that when considering to set aside a judgment in default, the first task is to ascertain whether it is regular or irregular judgment. If it is an irregular judgment, then the default judgment ought to be set aside ex debitio justitiae. If it is regularly obtained, then the principle expounded in Evans v Bartlem [1937] AC 473 applies – see the judgment of the Federal Court in Hasil Bumi Perumahan Sdn Bhd & Ors v United Malayan Banking Corp Bhd [1994] 1 MLJ 312. Thius requires the defendant to show that he has a defence on merits. Delay in making such an application is a factor to be considered by the court in deciding whether to grant or refuse the application – see Tuan Haji Abdul Rahman v Arab-Malaysian Finance Bhd [1996] 1 MLJ 30.” [18] The burden to proof that the Writ and Statement of Claim was served regular rest with JC. Based on the Guarantee and Indemnity Agreements, following clause 6.2, any notice or demand including any Writ of Summons shall be deemed to have been validly served if delivered personally or sent by prepaid ordinary post accompanied by Certificate of Posting. The addresses given are clearly stipulated in the Guarantee and Indemnity Agreements, spanning from years 2008 until 2011 bearing the same address of JD. Upon careful scrutiny of the documentary evidence submitted by JC, this Court finds that the JC’s solicitor had notified the JD with the solicitor’s letter of 27.12.2012 enclosing the Writ and Statement of Claim to JD’s two addresses based on the Guarantee and Indemnity Agreements and JD’s Affidavit 9 Opposing Creditor’s Petition of 21.4.2016 (pages 25 - 27 of Appeal Record), which is No. 57, Jalan Anggerik Vanda 31/168, Kota Kemuning, 40460 Shah Alam, Selangor Darul Ehsan). [19] The JC’s solicitor had initiated proof by providing the record of posting by Pos Malaysia dated 28.12.2012 (page 64 of Appeal Record) which bears the JD’s name and both addresses. This postal service is supported by the affidavit of service of one Nor Azam Bin Isa of JC’s solicitor dated 7.1.2013 that the Writ and Statement of Claim had been served through registered post (pages 35 -37 of Appeal Record). [20] On that score, the service was regular and the JID was validly obtained. This Court finds no setting aside nor stay application was filed by the JD. The Bankruptcy Notice of 17.3.2015 was personally served on JD on 14.4.2015 to the address borne in JD’s Affidavit Opposing Creditor’s Petition (page 25 of Appeal Record). [21] The fact also remains that the JD possess the knowledge of the acceptance of the Hire Purchase Agreements and the Guarantee and Indemnity Agreements. Default in due payment of any hire rental or any other sum payable under the Hire Purchase Agreements following clause 12.3 is a default by the ‘Hirer’ which is defined as the 1st defendant (see one of the said agreements at pages 180 – 192). Based on clause I on Consideration of one of the Guarantee and Indemnity Agreements (pages 193 - 199 of Appeal Record), the JD and 2nd defendant agreed to guarantee and indemnify the JC, “I/WE HEREBY UNCONDITIONALLY AND IRREVOCABLY GUARANTEE upon written demand being made to me/us by the 10 payment by the Hirer of all sums which may become payable by the Hirer under the terms of the said Hire Purchase agreement and the due performance and observance of the Hirer of the stipulations and conditions therein contained and I/WE HEREBY AGREE TO INDEMNIFY you against any loss or damage which you may sustain or incur including all legal costs and expenses on a full indemnity basis in respect of the Hire Purchase Agreement or the failure by the Hirer to perform any obligations thereunder…” [22] In addition, following clause 3 of the Guarantee and Indemnity Agreements, the JD agreed to be guarantor as principal debtor: “3. GUARANTOR AS PRINCIPAL DEBTOR I/We further agree that as between me/us and you I/We shall be deemed to be a principal debtor and I/We waive all suretyship and other rights inconsistent with this clause.” [23] In relation to the 18% interest charges, it is clearly provided in the Hire Purchase Agreements, clause 14 under the heading ‘LATE CHARGES’ where it is stipulated, “… the ‘Hirer’ shall pay to the Owner interest at the rate of eighteen (18) per centum per annum calculated on a daily basis on any monies payable under this Agreement which may from time to time be overdue……”. [24] Upon evaluation of the law and evidence before me, I am satisfied that the defence submitted by JD that it did not have the knowledge of the bankruptcy proceeding and the interest rate charges of 18% are 11 without merits. The JID was validly obtained without set aside or stay applications by JD to which the JC proceeded with the Bankruptcy Notice and hence ROAO was registered. Following the case of Sovereign General Insurance Sdn Bhd v Koh Tian Bee [1988] attributed by the JC’s counsel, this Court is disallowed from questioning the Orders that have not been set aside by the opposing party. Based on the foregoing, I dismissed the appeal. Dated: 3 January 2018 (ZALITA BINTI DATO’ ZAIDAN) Judicial Commissioner Shah Alam High Court 12 COUNSEL FOR THE JUDGMENT DEBTOR MOHAMMAD IZWAN BIN AZMI Tetuan Khairul Mukhtar & Izwan Azmi Peguambela & Peguamcara No. 1-12, Tingkat 1, Alam Idaman Business Centre Jalan Budiman 22/3, Seksyen 22 40300 Shah Alam Selangor Darul Ehsan [Ref: KMCO/CIV/HAYATIPLCC/2016] Tel: 03-5614 3803, 012-4270 057 Fax: 03-5641 3908 COUNSEL FOR THE JUDGMENT CREDITOR KIRANJIT KAUR D/O TARLOK SINGH Tetuan Manjit Singh Sachdev, Mohamad Radzi & Partners Peguambela & Peguamcara No. 1, Tingkat 11 Wisma Havela Thakardas Jalan Tiong Nam Off Jalan Raja Laut 50350 Kuala Lumpur [Ref: MS/STEVE/KS/49815-14/PLC/zie]