Motor Insurers’ Bereau of West Malaysia v Thinesh A/L Mailan (JA-12A-1-01/2024)

THINESH A/L MAILAN [NRIC NO. : 880828-05-5537]

DEVAKI A/P GANASON [NRIC NO. : 830207-01-5932] …RESPONDENTS IN THE SESSIONS COURT AT JOHOR BAHARU IN THE STATE OF JOHOR DARUL TA’ZIM MALAYSIA CIVIL SUIT NO. : JA-A53KJ-28-01/2022

THINESH A/L MAILAN [NRIC NO. : 880828-05-5537]

DEVAKI A/P GANASON [NRIC NO. : 830207-01-5932] …PLAINTIFFS

1.

MOTOR INSURERS’ BUREAU OF WEST MALAYSIA [BUSINESS REGISTRATION NO. :7377-V] …2ND DEFENDANT GROUNDS OF JUDGMENT Introduction

This is an appeal by the Appellant (“the 2nd Defendant”) against the decision of the learned Sessions Court Judge (“SCJ”) dated

4.1.2024, whereby the 2nd Defendant’s application in Enclosure 43 to set aside the judgment in default of appearance and the subsequent judgment after assessment was dismissed with costs.

For convenience and ease of reference, the parties are referred to as they were in the Sessions Court.

The parties filed written submissions and bundles of authorities and the decision was fixed for today. This Court now delivers its decision. Background Facts

The Plaintiffs’ claim arises from a road traffic accident on 14.1.2019 at about 7.35 p.m. at Jalan Sungai Danga / Jalan Bestari 10/1, Iskandar Puteri, Johor Bahru. The 1st Plaintiff was riding motorcycle JTD 4839, while the 1st Defendant was driving motorcar JLY 7964, registered in his name.

The Plaintiffs commenced proceedings in the Sessions Court against the 1st Defendant as driver/owner of the car and against the 2nd Defendant, relying on the statutory and contractual scheme under which the 2nd Defendant compensates victims of traffic accidents in circumstances where insurance cover is absent or ineffective.

On 31.3.2022, judgment in default of appearance (“JID”) was entered against the 2nd Defendant, with damages to be assessed. Following an assessment of damages, judgment after assessment was entered on 5.7.2023.

As for the 2nd Defendant’s case, sealed copies of the judgments were only received by it on 13.10.2023, following correspondence from the Plaintiffs’ solicitors. Enclosure 43 was then filed on 26.10.2023.

The learned SCJ accepted that Enclosure 43 was filed within the 30 days from the date the 2nd Defendant received sealed copies of the judgments, as contemplated under Order 42 rule 13 Rules of Court 2012 (“ROC 2012”).

However, the learned SCJ dismissed the application on the basis that—

(a) service of the Writ and Statement of Claim on the 2nd Defendant was defective as the copies served were unsealed and without a case number, and therefore the JID was irregular;

(b) the circumstances engaged natural justice; and

(c) in any event, once judgment after assessment had been entered, the proper recourse was by appeal rather than a setting-aside application in the Sessions Court (and that the Sessions Court had become functus officio). Court Analysis

The appeal is brought pursuant to Order 55 rule 5 of the ROC 2012 and section 29 of the Courts of Judicature Act 1964 [Act 91]. It is not in dispute that the appeal is by way of rehearing on the record.

In this appeal, the 2nd Defendant essentially advances the following complaints:

(a) that the JID was irregular, as only unsealed copies of the Writ and Statement of Claim were sent to it;

(b) that there was a breach of natural justice, as it was not given proper notice of the proceedings and the assessment of damages; and

(c) that in any event it has a meritorious defence on liability which warrants the JID being set aside and the matter sent for trial.

The plaintiffs contend that –

(a) the judgment was regular, having been preceded by proper service of sealed process;

(b) once damages have been assessed, the JID has matured into a final judgment such that the threshold to set it aside is a high one, focusing on recognised grounds like breach of natural justice or serious procedural defect; and

(c) the 2nd Defendant’s purported defence, premised mainly on a lack of “privity of contract” and an alleged discretion under the MIB agreement—is misconceived in law in light of the authorities governing the MIB scheme, and does not amount to a defence with a real prospect of success. Issue (a) Nature of the judgment in default: regular or irregular

On a rehearing, this Court is entitled to re-examine the evidence on service.

In her written grounds, the learned SCJ correctly directed herself to the distinction between an irregular and a regular judgment in default, and to the different consequences flowing from that distinction, referring in particular to Fira Development Sdn Bhd v Goldwin Sdn Bhd [1989] 1 MLJ 40; [1989] 1 CLJ Rep 32. She also referred to MacQuire (Malaysia) Sdn Bhd v HSBC Bank Malaysia Bhd & Anor and another appeal [2007] 7 MLJ 139 and the earlier authority of Hock Hua Bank Bhd v Sahari bin Murid [1981] 1 MLJ 143 on the well-established categories in which a regular judgment may be set aside, such as breach of natural justice, lack of jurisdiction, illegality, serious procedural defect or fraud.

The SCJ then accepted the 2nd Defendant’s complaint that the Writ and Statement of Claim allegedly served on it were unsealed and without a case number, relying principally on the Plaintiffs’ solicitors’ cover letter enclosing “the unsealed copy of the Writ and Statement of Claim” and on that basis treated the JID as irregular.

Having reviewed the appeal record, this Court is not persuaded that the JID should be characterised as irregular. The affidavit of service, together with its exhibits and the court record, indicate that the originating process bore the court seal and the assigned suit number, and was sent to the 2nd Defendant’s address by registered post with postal acknowledgement exhibited.

In this Court’s view, the more reliable indicators of whether process was duly issued and served are the affidavit of service, the exhibited documents themselves and the court file. The reference to “unsealed” in the solicitors’ cover letter is reasonably explicable as an inadvertent clerical description and is insufficient, without more, to displace the documentary record.

Accordingly, this Court finds that the originating process was duly issued and served in accordance with the ROC 2012 and that the JID was regularly obtained. The 2nd Defendant’s attempt to characterise the JID as irregular cannot therefore be sustained on the appeal record.

That said, it is important to note that although this Court differs from the Sessions Court on the characterisation of the JID, the Sessions Court nonetheless dismissed Enclosure 43 principally because judgment after assessment had already been entered and the proper recourse was by appeal.

The present appeal is precisely that recourse. The real question is therefore whether, on the appeal record, there is any basis to disturb a regular judgment which has already been followed by a full assessment of damages.

As regards the complaint of “no proper notice” of the assessment of damages, even assuming (without deciding) that there was any imperfection in the notice of assessment as required under the ROC 2012, this does not, on the facts, amount to a fundamental denial of justice warranting the reopening of a final judgment. The Appellant has not shown any real prejudice or substantial injustice, particularly where it had knowledge of the suit and failed to enter appearance or take timely steps prior to assessment.

Since the JID was regular, the 2nd Defendant cannot invoke the “set aside as of right” approach applicable to irregular judgments. The application therefore falls to be considered under the principles governing the setting aside of a regular judgment—particularly where judgment after assessment has already been entered. Issue (b) Power to set aside a regular judgment after assessment

The Plaintiffs’ proposition was that once assessment has been completed, a JID becomes a final judgment and that the appropriate recourse is by appeal rather than an application in the same court. (See Adzmi Ali & Anor v. Mohd Isa Kasad [1987] CLJ (Rep) 37).

On the question of the court’s power to set aside the JID after assessment, the SCJ referred to authorities including Abdul Rahim Ishak & Anor v. Muniandy Mahalingan [2019] 1 LNS 203 and held that, once assessment had been completed and judgment after assessment entered, the Sessions Court had in substance become functus officio, and that the proper recourse for an aggrieved party was by appeal to the High Court.

In view of the Court of Appeal decision which reversed Abdul Rahim Ishak & Anor, the Plaintiffs no longer rely on that authority. Instead, the Plaintiffs rely on Adzmi Ali and Gunalan Pechimutu v. Pacific & Orient Insurance Co Berhad & Anor [2024] 3 MLRA 419, which emphasise that the proper recourse against a judgment in default that has matured into a final judgment after assessment is by way of appeal. In the present case, this appeal is properly before this Court.

It is therefore unnecessary for this Court to pronounce definitively on the limits of the Sessions Court’s jurisdiction after assessment. The question for this Court is whether, on the appeal record, the criteria for setting aside a regular judgment that has already been followed by assessment have been satisfied.

That said, this Court would observe, without deciding, that the trial court's jurisdiction is not entirely spent upon entry of judgment after assessment. A residual jurisdiction remains to set aside a judgment in exceptional cases, such as where the judgment is vitiated by fraud, was entered without jurisdiction or where there has been a fundamental denial of natural justice amounting to a nullity. This residual power is to be exercised sparingly and only where the defect is so serious that the judgment cannot be allowed to stand. In the ordinary case, however, the proper recourse remains by way of appeal, as has been done here. Even if such a residual jurisdiction exists, the present facts do not meet that exceptional threshold.

The applicable principles are not in dispute. A regular judgment may be set aside where the applicant can show, for example, a denial of natural justice, a serious procedural defect, lack of jurisdiction or some other compelling reason and where there is also a defence with a real prospect of success. The discretion is a judicial one, to be exercised in a manner consistent with the overriding objective.

This Court now considers whether the 2nd Defendant has established—

(a) a breach of natural justice or serious procedural defect; and

(b) a defence of sufficient merit. Alleged breach of natural justice

The complaint of breach of natural justice is premised on the assertion that the 2nd Defendant was unaware of the proceedings and of the assessment of damages. However, having found that the originating process was properly served at its address, this Court is unable to accept that the 2nd Defendant was denied notice in a manner warranting the reopening of a regular judgment.

The record further shows that there had been pre-suit correspondence over several years between the plaintiffs’ solicitors and the 2nd Defendant regarding the underlying accident and claim.

Against that backdrop, this Court is of the view that the 2nd Defendant cannot be said to be an innocent stranger to the dispute.

While the 2nd Defendant complains that it was not expressly notified of subsequent case management or assessment dates, this must be viewed in the context that it had not entered appearance despite proper service. A defendant in default cannot insist on the procedural entitlements of a participating litigant, save where the ROC 2012 expressly require notice notwithstanding default.

Based on the appeal record and parties’ submissions, this Court is unable to find any denial of natural justice of the kind that would justify reopening a regular judgment. The 2nd Defendant, in this Court’s view, had the opportunity to engage with the court process but failed to do so. Existence of a meritorious defence

In any event, even if discretion were to be considered, the 2nd Defendant’s proposed defence, as set out in its draft pleadings and affidavit, rests essentially on three limbs:

(a) that there was no insurance policy in force at the material time, based on a JPJ search;

(b) that there is no “privity of contract” between the plaintiffs and 2nd Defendant, and that the plaintiffs have no direct right to sue 2nd Defendant; and

(c) that under the agreement between 2nd Defendant and the Government, 2nd Defendant retains a discretion whether to compensate victims, which it has exercised against the plaintiffs.

The plaintiffs, on the other hand, rely on authorities such as Ramlah Abdullah v. Talasco Insurance Sdn Bhd & Anor [2009] 3 CLJ 620 and Ramli Shahdan & Anor v. Motor Insurer’s Bureau of West Malaysia & Anor [2006] 1 CLJ 224, as well as English cases like Stott v. West Yorkshire Road Car Co. Ltd and Home Bakeries Ltd and Another [1971] 2 QB 651 to emphasise that MIB is part of the compulsory insurance safety-net and that its role is to ensure that innocent road users are compensated in circumstances where insurers do not provide indemnity.

This Court accepts the Plaintiffs’ submission that, as a matter of legal policy and authority, the 2nd Defendant scheme is not to be viewed as a purely private arrangement which can be deployed to deny compensation to victims on technical grounds of privity. The authorities show that the courts have taken a robust view in ensuring that the underlying objective of the scheme, ie, to protect injured road users, is not undermined.

More importantly for present purposes, the 2nd Defendant has not demonstrated how, on the specific facts of this case, its reliance on the absence of a policy, privity and “discretion” under the agreement translates into a defence with a realistic prospect of defeating the plaintiffs’ claim. The absence of an insurance policy at the time of the accident, in the mind of this Court, is precisely the situation in which the 2nd Defendant scheme is meant to operate. It does not of itself exonerate the 2nd Defendant.

In the circumstances, and bearing in mind that the JID has already been followed by a full assessment of damages, this Court is not satisfied that the proposed defence crosses the threshold of being a bona fide defence with a real prospect of success. It remains speculative and largely contrary to the thrust of the authorities governing the 2nd Defendant’s obligations.

The 2nd Defendant also suggests that the plaintiffs’ claim against it is barred or rendered unjust by reason of the consent judgment recorded against the 1st Defendant. However, as the Plaintiffs correctly point out, that consent judgment was entered without admission of liability and expressly preserved the Plaintiffs’ liberty to proceed against the 2nd Defendant. This does not, in this Court’s view, amount to a defence with any realistic prospect of success. Issue (c) Delay and conduct

This Court noted that the application in Enclosure 43 was filed within 30 days from the date the 2nd Defendant received sealed copies of the judgments, and that, in that limited sense, there was no undue delay once the judgments were formally brought to its attention.

Nonetheless, the broader chronology shows that the 2nd Defendant had long been aware of the claim and the accident, yet chose not to participate in the proceedings until after judgment and assessment had been concluded. That conduct is relevant to the exercise of the court’s discretion and to the weight to be given to its present complaints.

When balanced against the Plaintiffs’ position, who have already gone through the process of obtaining judgment and assessment, it would not be just to disturb the finality of the judgment in the absence of a clear procedural wrong or a defence of substance. Any prejudice to the 2nd Defendant stems primarily from its own inaction. Court’s Decision

Based on the above, in summary, this Court finds as follows:

(a) the JID entered against the 2nd Defendant was a regular judgment, preceded by proper service of sealed originating process in accordance with the Rules of Court 2012;

(b) there has been no denial of natural justice or serious procedural defect which would justify setting aside a regular judgment that has already been followed by assessment of damages;

(c) the 2nd Defendant has not demonstrated a defence with a real prospect of success; its proposed defence is inconsistent with the purpose and legal framework of the MIB scheme and does not warrant reopening the judgment; and

(d) although this Court differs from the learned SCJ on the regularity point, the learned SCJ’s ultimate decision to dismiss Enclosure 43 is correct and discloses no error warranting appellate interference.

Hence, this is not a proper case for this Court to interfere with the learned SCJ’s ultimate decision.

The appeal is therefore dismissed with costs of RM7,000.00, subject to allocatur. In view of the dismissal of the appeal, the prayers for leave/extension of time (if necessary) and stay of execution pending disposal (prayers 1, 2 and 5) are consequentially dismissed / do not arise.

The order of the Sessions Court dated 4.1.2024 is affirmed. Dated : 28 November 2025 -sgd-Dr Noradura binti Hamzah Judicial Commissioner High Court Civil 2 Johor Bahru Solicitor for Appellant : Paannimalar A/P Paramasivan Messrs. Kanaga, Suresh & Co. Solicitor for Respondents : Teo Han Ley Messrs. Teo & Associates