Irdkl Land Sdn. Bhd v Aventador Construction (WA-12ANCvC-295-10/2021)

This was an appeal (“this Appeal”) against the decision of the learned Sessions Court Judge (“SCJ”) in allowing the application by the Respondent to set aside the judgment in default obtained by the Appellant on 5 July 2021. For ease of reference, the Appellant and Respondent will be referred to respectively as the Defendant and Plaintiff.

The Plaintiff filed an action against the Defendant on 28 August 2020 at the Magistrate’s Court with its previous solicitors. The Defendant filed its Defence and Counterclaim on 4 November 2020 and served it on the Plaintiff on 11 November 2020. However, since the Counterclaim filed by the Defendant was beyond the monetary jurisdiction of the Magistrate’s Court, the Defendant applied to transfer the matter to the Sessions Court, which was allowed in May 2021.

The Plaintiff’s previous solicitors applied to discharge themselves on 4 November 2020, which was allowed by the Magistrate on 9 November 2020.

The Plaintiff’s Reply and Defence to the Counterclaim, which was filed by its new solicitors in January 2021, was rejected by the Magistrate on 13 January 2021, as it was filed out of time. 20 June 2022 ……………………………………………………………………………………………… ________________________________________________________________________ 3 [5] Due to the ruling by the Magistrate with regard to the Plaintiff’s Reply and Defence to the Counterclaim, the Defendant obtained judgment in default (“JID”) of the Defence to its Counterclaim on 5 July 2021 before the Sessions Court. On 16 July 2021, the Plaintiff filed an application in the Sessions Court not only to set aside the JID, but for extension of time to file its Reply and Defence to the Counterclaim. The application was allowed by the learned SCJ.

As a result of the decision of the learned SCJ, the Defendant appealed, which appeal was allowed for the following reasons. Contentions, evaluation, and findings

The approach of the Court when considering an application set aside a JID is, that the Court must first ascertain if the JID is a regular or irregular judgment. If the JID is an irregular one, it is set aside ex debitio justitae.

However, if the JID was regularly obtained, the Court then has to determine whether there is a defence on merits. In doing so, the delay in making the application to set aside is a factor to be considered by the Court in deciding whether to grant or refuse the application.

The Plaintiff claimed that it had not received the Defendant’s Defence and Counterclaim, as it had not been personally served, as prescribed by the Federal Court case of Goh Teng Whoo v Ample 20 June 2022 ……………………………………………………………………………………………… ________________________________________________________________________ 4 Objectives [2021] MLJU 300. The Plaintiff claimed that an unknown third party had received the documents on behalf of the Plaintiff.

I would like to state, at this juncture, that I am mindful of the case of Goh Teng Whoo v Ample Objectives, where it was held by the Federal Court that proof of posting only creates a presumption of service by virtue of section 12 of the Interpretation Acts 1948 and 1967, which reads: Section 12 – Service by post Where a written law authorises or requires a document to be served by post, then, until the contrary is proved, service-

shall be presumed to be effected by properly addressing, prepaying and posting by registered post a letter containing the document; and

shall be presumed to have been effected at the time when the letter would have been delivered in the ordinary course of the post. [11] However, in this case, the first issue that had to be addressed was whether the Plaintiff was a company or sole proprietor. Although the Plaintiff now claimed that it is a sole proprietor, in the statement of claim, the Plaintiff pleaded that it is a company incorporated under the Companies Act 1965. In my view, since it was pleaded that the Plaintiff was indeed a corporation, as such, Order 62 rule 4 of the Rules of Court 2012 (“Rules of Court”), applied, which meant that the service of the documents on the Plaintiff was deemed to be effected by leaving a copy of the Defence and Counterclaim at the registered address of the Plaintiff. The provision reads: 20 June 2022 ……………………………………………………………………………………………… ________________________________________________________________________ 5 Order 62 – Service of documents Rule 4 – Service on corporation

Where an action is against a corporation, the writ may be served-

by leaving a copy of it at the registered office (if any) of the corporation; … [Emphasis added.] [12] According to the relevant documents, it was undeniable that the Plaintiff’s registered address is at No 4 Lorong Arfah 3, Segambut

In fact, the Plaintiff had never denied its registered address, as it was consistent with what had been pleaded. In my view, therefore, the learned SCJ had failed to take into consideration the application of Order 62 rule 4 of the Rules of Court, and as such, her reliance on Goh Teng Whoo v Ample Objectives was misplaced. Whether delay in filing application for extension of time was satisfactorily explained [13] The Plaintiff contended that it had a defence on merits, that should be considered by this Court. However, in addressing that issue, one of the factors that had to be considered was the Plaintiff’s delay in filing its Reply and Defence to the Counterclaim. [14] In the events that transpired between November 2020 and July 2021, there were several flaws committed by the Plaintiff. The first was filing of the Reply and Defence to the Counterclaim out of time, which the Plaintiff’s solicitors had known better not to do. 20 June 2022 ……………………………………………………………………………………………… ________________________________________________________________________ 6 [15] The second flaw was the failure to file an extension of time before filing the Reply and Defence to the Counterclaim. In fact, the application for extension of time was filed only on 16 July 2021 in its application to set aside the JID. However, this application for extension of time to file the Reply and Defence to the Counterclaim was filed only after the Defendant had already obtained the JID against the Plaintiff. [16] The third flaw committed by the Plaintiff was disregarding the ruling of the Magistrate who had very clearly rejected the Reply and Defence to the Counterclaim filed in January 2021. This flaw was exacerbated by the failure of the Plaintiff to appeal against the ruling of the Magistrate. [17] What was extremely glaring was the fact that despite the Magistrate’s ruling on 13 January 2021 that the Reply and Defence to the Counterclaim were to be rejected as they were filed out of time, the Plaintiff had not even attempted to file an application for an extension of time to file the Reply and Defence to the Counterclaim. [18] At this stage, it was crucial to emphasise the importance of complying with timelines, which was underscored in several Court of Appeal cases such as Mirra Sdn Bhd v The Ayer Molek Rubber Co Bhd, Khor Cheng Wah v Sungai Way Leasing Sdn Bhd [1996] 1 MLJ 223, and Thye Ah Chai (t/a Kent Naga Enterprise) v Teraju Mercu Construction & Engineering Sdn Bhd [2014] 1 MLJ 422; and the High Court case of Malayan Banking Bhd v Mahmood Zuhdi Hg Mohd Nor [2001] 6 MLJ

20 June 2022 ……………………………………………………………………………………………… ________________________________________________________________________ 7 [19] In Mirra Sdn Bhd v The Ayer Molek Rubber Co Bhd [2008] 2 MLJ 348, the Court of Appeal acknowledged that delay was an important consideration in exercising any discretion to set aside a judgment in default, and had accordingly refused the application. [20] I am mindful that the procedural rules should not lead to injustice by depriving a party the opportunity to argue his case. However, in my view, the Plaintiff had blatantly disregarded the law to its own advantage, and that was unacceptable. [21] In the present case, there was indolence on the part of the Plaintiff between 13 January 2021 and 16 July 2021, in that, there was no application to extend time to file the Reply and Defence to the Counterclaim, despite the Magistrate’s ruling. The only justification provided by the Plaintiff was that there was miscommunication between itself and its previous solicitors, resulting in missed timelines. [22] In my view, this purported miscommunication that the Plaintiff had with its solicitors was an internal issue which was of no concern to, and beyond the control of the Defendant. As such, the learned SCJ should not have taken this into consideration at the hearing of the Plaintiff’s application to set aside the JID. However, a perusal of the grounds of her judgment indicated that her decision to allow the application to set aside the JID was based purely on the premise that the JID was irregular. As such, the decision of the learned SCJ warranted intervention. 20 June 2022 ……………………………………………………………………………………………… ________________________________________________________________________ 8 Whether there was a defence on merits [23] Since the learned SCJ had arrived at her conclusion on the premise that the JID obtained was irregular, she had not proceeded to consider if the Plaintiff had a defence on merits. In the present case, however, it was my view that the JID obtained was in fact regular. Hence in the interest of completeness, the issue of whether there was a defence on merits was considered. [24] A perusal of the Plaintiff’s affidavits indicated that there was no evidence of any defence of merits to be considered. On that note, the Court’s attention was brought to the cases of Media Base Advertising Sdn Bhd v HSL Electrical & Electronics Sdn Bhd [2011] 1 LNS 730, Pontian United Theatre Sdn Bhd v. Southern Finance Bhd [2006] 1 CLJ 1067, and Fira Development Sdn Bhd v. Goldwin Sdn Bhd [1989] 1 CLJ 32 (Rep), where it was held that it was insufficient for an applicant to merely exhibit a proposed pleading, without more, and to leave it to the Court to decide. [25] In the present case, the nub of the Plaintiff’s contention was the purported irregular judgment obtained, and its justification for the delay in filing the application for an extension of time to file the Reply and Defence to the Counterclaim. In fact, the learned SCJ had not dealt with the issue of whether the Plaintiff had a defence on merits, and after considering the evidence adduced, it was my view that the Plaintiff had none. [26] As such, this was a case where intervention was warranted. 20 June 2022 ……………………………………………………………………………………………… ________________________________________________________________________ 9 Conclusion [27] In conclusion, and after judicious consideration of all the evidence before this Court, both oral and documentary, and submissions of parties, including the grounds of the judgment of the learned SCJ, this Appeal was allowed with costs. Dated: 20 June 2022 SIGNED …………………………………………. (EVROL MARIETTE PETERS) Judge High Court, Kuala Lumpur Counsel: For the Appellant/ Defendant – Cyrill Clade bin Agus; Messrs Asyraf, Vivek & Wee For the Respondent/ Plaintiff: Shakir Hussain Khurshed Ibrahim, Messrs Leong & Partners 20 June 2022 ……………………………………………………………………………………………… ________________________________________________________________________ 10 Cases referred to: ➢ Goh Teng Whoo v Ample Objectives [2021] MLJU 300 ➢ Khor Cheng Wah v Sungai Way Leasing Sdn Bhd [1996] 1 MLJ 223 ➢ Malayan Banking Bhd v Mahmood Zuhdi Hg Mohd Nor [2001] 6 MLJ 209 ➢ Media Base Advertising Sdn Bhd v HSL Electrical & Electronics Sdn Bhd [2011] 1 LNS 730 ➢ Mirra Sdn Bhd v The Ayer Molek Rubber Co Bhd [2008] 2 MLJ 348 ➢ Pontian United Theatre Sdn Bhd v. Southern Finance Bhd [2006] 1 CLJ 1067 ➢ Thye Ah Chai (t/a Kent Naga Enterprise) v Teraju Mercu Construction & Engineering Sdn Bhd [2014] 1 MLJ 422 Legislation referred to: ➢ Interpretation Acts 1948 and 1967 – section 12 ➢ Rules of Court 2012 – Order 18 rules 7 and 12, Order 62 rule 4