Pacific & Orient Insurance Co. Berhad v Gunalan A/L Pechimutu (JA-12A-6-02/2023)

JEYA PRAKASH A/L ARASAN … RESPONDEN/ DEFENDAN PERTAMA [DALAM MAHKAMAH SESYEN DI JOHOR BAHRU DALAM NEGERI JOHOR DARUL TAKZIM, MALAYSIA GUAMAN SIVIL NO: A53KJ-894-10/2015 ANTARA GUNALAN A/L PECHIMUTU ... PLANTIF JEYA PRAKASH A/L ARASAN … DEFENDAN PACIFIC & ORIENT INSURANCE CO BERHAD ... DEFENDAN KEDUA] GROUNDS OF JUDGMENT Introduction [1] This is an appeal emanating from the Sessions Court. [2] As the proceedings in relation to the present appeal commenced in 2015, a brief background would be useful for a better understanding of the factual matrix of the case. [3] For ease of reference, parties would be referred to as they were at the Sessions Court. [4] On 17.11.2014, the Plaintiff (“P”) claimed that he was involved in an accident with the First Defendant (“D1”) along KM 2, Jalan Johor Bahru-Kota Tinggi. Both parties lodged their respective police reports whereby both of them were riding their respective motorcycles at the time of the alleged accident. [5] P had then commenced a civil suit (Johor Bahru Sessions Court Civil Suit No A53KJ-894-10/2015) (“2015 suit”) against D1 claiming for damages for injuries and losses allegedly suffered by P. [6] In the 2015 suit, D1 was defended by D2 who had appointed Messrs VM Kumaran to represent D1. [7] However, investigations conducted by D2 via their insurance adjusters revealed the following. [8] Firstly, D1 was not involved in any accident with P on 17.11.2014. Secondly, D1 had admitted that he made a false police report about the same in order to obtain financial reward from a third party. This admission was made on a statutory declaration affirmed by D1. [9] D1 had then also lodged a second report admitting to previously lodging a false police report. [10] In light of the above, D2 decided to withdraw from further defending D1 as the insured party in respect of the 2015 suit. [11] D2 via order dated 19.07.2016 obtained from the Kuala Lumpur High Court (Originating Summons WA-24NCC-259-06/2016) (“2016 KL HC OS”) an order that that the insurance policy issued by D2 to D1 as being void and unenforceable. [12] With D2 deciding not to defend D1 anymore, it had instructed Messrs VM Kumaran to stop acting for D1 and the latter dutifully discharged from representing D1 in respect of the 2015 suit. [13] P then applied for judgment to be entered against D1 in the 2015 suit. This would form the substratum of the present appeal for reasons which would become apparent below. [14] At the same time, P had also applied to set aside the 2016 KL HC OS in Johor Bahru High Court Originating Summons JA- 24NCVC-526-09/2020) (“JB HC OS 2020”). [15] In respect of his first course of action, P obtained judgment against D1 in respect of the 2015 suit on 29.03.2017 (“said judgment”). [16] It is obvious that when the said judgment was obtained, D2 was oblivious to this fact since they were no more part of the proceedings having already decided to stop defending and representing D1 via their solicitors having discovered via their investigations about the truth behind the alleged accident on 17.11.2014. [17] D2 first became aware of the said judgment when it was exhibited by D1 in JB HC OS 2020 and received by D1 on 29.09.2020. The Court notes that a period of more than 3 ½ years have lapsed since the said judgment was obtained before it was brought to the attention of D2. [18] D2 objected to JB HC OS 2020 which was dismissed by the High Court. D1 has since appealed against that decision. [19] At the same time, D2 filed an application to intervene with a view to set aside the said judgment at the Sessions Court. This intervener application was dismissed by the Sessions Court but allowed on appeal by the High Court. This explains how D2 had managed to intervene and become a party to the 2015 suit. It is to be noted that D1 is also appealing this decision of the High Court allowing D2 to intervene to the Court of Appeal. [20] D2 then filed an application to set aside the said judgment which was dismissed by the Sessions Court and which is now the subject matter of this appeal. Duty of Court exercising appellate jurisdiction [21] It is trite that this Court in the exercise of its appellate jurisdiction would intervene when the findings of the Sessions Court is either plainly wrong or where there is no or insufficient judicial appreciation by the Sessions Court. [22] Accordingly, the decision of the Sessions Court would be plainly wrong when it does not appreciate evidence adduce before it or where a situation arises concerning insufficient judicial appreciation of evidence. Refer to UEM Group Bhd v Genisys Integrated Engineers Pte Ltd & Anor [2019] 9 CLJ 785 (Federal Court) page 800: - “Thus, the prime issue in respect of Questions 1 to 3 is whether the Court of Appeal had erred in interfering with the findings of facts of the trial judge. It is well settled law that an appellate court will not generally speaking, intervene with the decision of a trial court unless the trial court is shown to be plainly wrong in arriving at its decision. A plainly wrong decision happens when the trial court is guilty of no or insufficient judicial appreciation of evidence." [23] It is also worth noting that the failure of the Sessions Court in construing crucial evidence or failure to properly analyze the entirety of the evidence would also cause appellate intervention on appeal. Refer to Azman Bin Mahmood & Anor v SJ Securities Sdn Bhd [2012] 6 CLJ 573 (Federal Court):- "[25] The law on appellate intervention on findings of fact by a trial Judge is trite. In this context it may be useful to refer to the case of Multar v. Lim Kim Chet and Anor [1982] CLJ Rep 237; [1982] 1 MLJ 184 (FC), wherein it was held that an appellate court will interfere and disturb the finding of fact by the trial judge if crucial evidence had been misconstrued resulting in the uncertainty on one party's evidence" - and the consistency of the other party's evidence being disregarded. In the Privy Council case of Choo Kok Beng v. Choo Kok Hoe and Ors [1984] 1 LNS 40; [1984] 2 MLJ 165 it was held that when a trial judge had so manifestly failed to derive proper benefit from the undoubted advantage of seeing and hearing witnesses at the trial, and in reaching his conclusion, has not properly analysed the entirety of the evidence which was given before him, it is the plain duty of the appellate court to intervene and correct the error lest otherwise the error results in serious injustice." [24] Reference may also be made to Lee Ing Chin & Ors v Gan Yook Chin & Anor [2003] 2 MLJ 97 (Court of Appeal) page 116: - “Suffice to say that we re-affirm the proposition that an appellate court will not, generally speaking, intervene unless the trial court is shown to be plainly wrong in arriving at its decision. But appellate interference will take place in cases where there has been no or insufficient judicial appreciation of the evidence. It is, we think appropriate that we say what judicial appreciation of evidence involves.” [25] The Court of Appeal in Lee Ing Chin at page 116 further held: - “A judge who is required to adjudicate upon a dispute must arrive at his decision on an issue of fact by assessing, weighing and, for good reasons, either accepting or rejecting the whole or any part of the evidence placed before him. He must, when deciding whether to accept or to reject the evidence of a witness test it against relevant criteria. Thus, he must take into account the presence or absence of any motive that a witness may have in giving his evidence. If there are contemporary documents, then he must test the oral evidence of a witness against these. He must also test the evidence of a particular witness against the probabilities of the case. A trier of fact who makes findings based purely upon the demeanour of a witness without undertaking a critical analysis of that witness' evidence runs the risk of having his findings corrected on appeal. It does not matter whether the issue for decision is one that arises in a civil or criminal case: the approach to judicial appreciation of evidence is the same. There are a number of important and leading cases in which the point has been considered.” Whether said judgment concerns D2 [26] Although the High Court had allowed D2’s appeal to be made an intervener in the 2015 suit, the Sessions Court (at paragraph 15 of its grounds) made a finding that D2 is not a party to the 2015 suit and that the said judgment does not concern it. According to the Sessions Court: - “Daripada status terkini kes juga, memandangkan perintah deklarasi yang diperolehi oleh Defendan Ke-2 masih kekal “status quo” dan Plaintif sedang dalam proses merayu ke Mahkamah Rayuan setelah kalah dalam permohonan mengenepikan perintah Deklarasi tersebut, pihak Defendan Ke-2 bukanlah pihak yang disaman/ dimasukkan Penghakiman Ingkar Interlokutori pada 29/3/2017 tersebut.” [27] Having made the above finding, the Sessions Court at para 16 stated that D’2 rights are limited to the execution stage. The Sessions Court as could be seen at paragraph 13 justified this finding by relying on the High Court’s decision in dismissing JB HC OS 2020 where the High Court granted D2 the liberty of commencing recovery proceedings to reclaim the damages awarded pursuant to the 2015 suit. According to the Sessions Court: - “Jika sekiranya ada sekalipun kepentingan Defendan Ke-2 iaitu Syarikat Pacific & Orient Insurance Co. Berhad, ia adalah pada peringkat pelaksanaan penghakiman (recovery action) apabila Plaintif berjaya mengenepikan Perintah Deklarasi berkenaan. Sehingga itu, walaupun Mahkamah Tinggi telah membenarkan Defendan Ke-2 dijadikan Pencelah dan pihak dalam tindakan ini, Mahkamah ini membuat dapatan bahawa Defendan Ke-2 tidak ada hak untuk mengenepikan Penghakiman Ingkar Interlokutori bertarikh 29/3/2017 pada peringkat ini.” [28] The Sessions Court at paragraph 18 of its grounds then said the right to set aside the said judgment is granted only to P and not D2. D2 according to the session court are only acting for the insurers and not D1. The Sessions Court said: - “Oleh demikian, jika sekiranya perlu pada peringkat ini, pihak yang harus dan sepatutnya mengenepikan Penghakiman Ingkar Interlokutori bertarikh 29/3/2017 adalah pihak Defendan/ Defendan Pertama melalui peguamcara mereka. Walaupun begitu, tiada apa-apa Notis Permohonan difailkan oleh Defendan Pertama.” [29] The Sessions Court also faulted D2 for not having defended the 2015 suit from the beginning and having elected to stop defending the 2015 suit could not now be allowed to set aside the said judgment when it was not in D1’s favour. [30] This Court disagrees with the Sessions Court for the following reasons: - [31] Firstly, the High Court had already allowed D2’s appeal with the result that D2 as an intervener could now participate in the 2015 suit as a party to the suit. The Sessions Court in this regard is bound by the High Court’s decision in this regard. [32] As such, the Sessions questioning whether D2 is a proper party or not as alluded in paragraphs 15, 16 and 18 of its written grounds as reproduced above is akin to questioning the High Court’s decision to allow D2 to intervene in the first place. [33] This could not be allowed since by the doctrine of binding precedent, the Sessions Court as a subordinate court is bound by the High Court’s decision. Refer to Kerajaan Malaysia & Ors v Tay Chai Huat [2012] 3 CLJ 577 (Federal Court) page 603: - “Precedents not only have persuasive authority but also must be followed when similar circumstances arise. Any principle announced by a higher court must be followed in later cases. In short, the courts are bound within prescribed limits by prior decisions of superior courts. Judges are also obliged to obey the set-up precedents established by prior decisions. This legal principle is called stare decisis.” [34] Secondly, the Sessions Court’s finding in limiting the rights of D2 is to D2’s prejudice as there is nothing in law to prevent them from filling the setting aside application. [35] In fact, the fact that D2 would be the final paymaster if found liable by the Sessions Court in the 2015 suit would render it crucial and just for D2 to apply to set aside the said judgment. [36] Instead, it is trite that D2 has a right to intervene and apply to have the said judgment set aside. See Mohammad Hafiz Bahari & Anor v Pacific & Orient Insurance Co Bhd & Anor & Another Appeal [2024] CLJU 1183 (Court of Appeal): - “Firstly, as explained in the above sub-paragraph 32(1), the Intervener had a right to intervene in the Negligence Suit as follows:

in view of the Insurer's Statutory Liability under s 96(1) RTA, it was "necessary" for the Intervener to intervene in the Negligence Suit under O 15 r 6(2)(b)(i) RC so as to ensure that "all matters in dispute in the [Negligence Suit] may be effectually and completely determined and adjudicated upon";

by virtue of O 15 r 6(2)(b)(ii) RC, with regard to the relief claimed by the Plaintiffs against the Defendant in the Negligence Suit, there existed a question between -

the Intervener on the one hand; and

the Plaintiffs and Defendant on the other hand - on whether a fraudulent Negligence Suit had been instituted by the Plaintiffs for which it would be just and convenient to determine the Question (Intervener/Plaintiffs/Defendant); and

in accordance with O1A and O 2 r 1(2) RC, it is only just for the Intervener to intervene in the Negligence Suit so as to ensure that the Sessions Court can decide whether the Negligence Suit had been fraudulently filed by the Plaintiffs.” [37] Thirdly, D2 as an insurer has a statutory liability to adhere to under Section 96 (1) Road Transport Act 1967. This provision reads: - “(1) If, after a certificate of insurance has been delivered under subsection 91(4) to the person by whom a policy has been effected, judgement in respect of any such liability as is required to be covered by a policy under paragraph 91(1)(b) (being a liability covered by the terms of the policy) is given against any person insured by the policy, then notwithstanding that the insurer may be entitled to avoid or cancel, or may have avoided or cancelled the policy, the insurer shall, subject to this section, pay to the persons entitled to the benefit of the judgement any sum payable thereunder in respect of the liability, including any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any written law relating to interest on judgements.” [38] The above duty necessarily means D2 can intervene in the 2015 suit with a statutory interest in hand. Refer to Mohammad Hafiz Bahari & Anor v Pacific & Orient Insurance Co Bhd & Anor & Another Appeal [2024] CLJU 1183 (Court of Appeal): - “(1) as an Insurer has a statutory liability under s 96(1) RTA to pay to a Claimant who has obtained a judgment sum against an Insured in a Claimant's Suit (Insured's Liability), the Insurer has a statutory "interest" pursuant to s 96(1) RTA to intervene in the Claimant's Suit (Insured's Liability) {Insurer's Statutory Liability [Section 96(1) RTA ]} within the meaning of O 15 r 6(2)(b)(i) and/or (ii) read with O 1A and O 2 r 1(2) RC. O 1A, O 2 r 1(2), O 15 r 6(2)(b)(i) and (ii) RC …..” [39] The same would apply to the present case where the High Court had already decided to allow D2 to intervene in the 2015 suit. [40] D2 as an insurance company had also proven that they have sufficient interest in the proceedings. As such, they have all the necessary rights to apply to set aside the said judgment. [41] This Court further finds guidance in the Court of Appeal’s decision in Mohammad Hafiz Bahari where it was held: - “The Insurer's right to intervene in a Claimant's Suit (Insured's Liability) arises as follows -

it is "necessary" for an Insurer to intervene in a Claimant's Suit (Insured's Liability) under O 15 r 6(2)(b)(i) RC so as to ensure that "all matters in dispute in the cause or matter may be effectually and completely determined and adjudicated upon"; and/or

as provided in O 15 r 6(2)(b)(ii) RC, with regard to any relief claimed by the Claimant against an Insured in a Claimant's Suit (Insured's Liability), there exists a question or questions between -

the Insurer on the one part; and

(ii) the Claimant and/or Insured on the other part - for which it would be just and convenient to determine the Question(s) [Insurer/Claimant/Insured]. It is to be noted that the scope of O 15 r 6(2)(b)(ii) RC is wider than that provided by O 15 r 6(2)(b)(i) RC. Reliance is placed on the following judgment in CELCOM (M) Bhd & Anor v. Tan Sri Dato' Tajudin bin Ramli & Ors [2016] MLJU 1167, at [61(4)] – "[61(4)] the scope of [O 15 r 6(2)(b)(ii) RC ] is wider than [O 15 r 6(2)(b)(i) RC ]. In Arab Malaysian Merchant Bank, at p. 28, Gunn Chit Tuan SCJ decided as follows in the Supreme Court - "It was held by the Privy Council in the Pegang Mining Co Ltd case [1968] CLJU 96; [1969] 2 MLJ 52 that one of the principal objects of O 16 r 11 of the former Rules of the Supreme Court 1957, is to enable the court to prevent injustice being done to a person whose rights will be affected by its judgment by proceeding to adjudicate upon the matter in dispute in the action without his being given an opportunity of being heard. It must be noted that the Privy Council in that case added that to achieve that object calls for a flexibility of approach which made it undesirable in that case, in which the facts are unique, to attempt to lay down any proposition which could be applicable to all cases. Our present O 15 r 6 of the Rules of the High Court 1980, which replaced the former O 16 r 11 of the Rules of the Supreme Court 1957, is in pari materia with O 15 r 6 of the UK Rules of the Supreme Court. The scope of the present rule, so far as concerns the joinder of persons not parties, has been significantly extended by the addition of para 2(b)(ii)..." (emphasis added);

O 15 r 6(2)(b)(i) and (ii) RC should be "widely or liberally interpreted" because such an interpretation ensures that all parties who have any interest in a Claimant's Suit (Insured's Liability), are brought before the Sessions Court trying the Claimant's Suit (Insured's Liability) so as to secure a just, expeditious and economical disposal of the Claimant's Suit (Insured's Liability) - please refer to CELCOM, at [61(3)]; and

by reason of O1A and O 2 r 1(2) RC, the court shall have regard to the "overriding interest of justice" in the application of O 15 r 6(2)(b)(i) and (ii) RC. It is clearly in the interest of justice for an Insurer to intervene in a Claimant's Suit (Insured's Liability), especially when the Insurer alleges that a fraudulent negligence suit has been filed by a Claimant against an Insured; Whether the setting aside application is defective [42] The Sessions Court also found D2’s setting aside application as in Enclosure 91 to be defective for failing to state the provision of law under which the said application was made. [43] This Court disagrees with the Sessions Court for the following reasons: - [44] Firstly, the Notice of Application in Enclosure 91 clearly states that D2’s application it primarily to set aside the said judgment which was obtained on 29.03.2017. [45] Secondly, there is no prejudice caused to any party as a result of the failure to cite the provision of law under which Enclosure 91 is premised on based on the ability of both D1 and P not only to prepare their respective replies but also to submit and ventilate their arguments before the Sessions Court. [46] Thirdly, there is an absence of any uncertainty on the record when it is clear that a setting aside of an order could be made under Order 42 Rules 13 ROC 2012 or under Order 13 Rule 8 ROC 2012 in respect of a default judgment. [47] In any event, the overriding interest here is to ensure the justice of the case is served namely that no fraud is perpetrated in which led to the issuance of the said judgment. At the same time, natural justice requires for everyone interested in the case among others D2 to be heard before a final determination could be made on the merits of the 2015 suit. [48] Order 1A ROC 2012 would thus be applicable in this circumstances which reads as follows: - “In administering these Rules, the Court or a Judge shall have regard to the overriding interest of justice and not only to the technical non-compliance with these Rules.” [49] The Sessions Court had also relied on the High Court decision on Mahadevi Nadchatiram (No 2) as a basis in finding D2’s setting aside application as being defective. This Court finds Mahadevi Nadchathiram (No 2) while being of a persuasive nature being a decision of a court of co-ordinate jurisdiction does not bind this court. [50] At the same time, Mahadevi Nadchathiram (No 2) was also decided before the coming into force of Order 1A ROC 2012 and its predecessor Order 1A Rules of High Court 1980. As such its persuasive nature has also being seriously undermined by the necessary statutory provision cited above. [51] This Court finds that the alleged failure to cite the provision of the law relied upon by D2 is a mere technical non-compliance which should not affect their application. Refer to Order 2 Rule 1 (1) ROC 2012 which reads: - “(1) Where, in beginning or purporting to begin any proceedings or at any stage in the course of or in connection with any proceedings, there has, by reason of any thing done or left undone, been non-compliance with the requirement of these Rules, the non-compliance shall be treated as an irregularity and shall not nullify the proceedings, any step taken in the proceedings, or any document, judgment or order therein.” Whether there is merits in D2’s application [52] A perusal of D2’s application in particular their affidavit evidence clearly shows that there is substance to the allegations of fraud and conspiracy raised by them. [53] The allegation of fraud being perpetrated by both P and D1 are not bare assertions but supported by cogent evidence. The same applies the conspiracy claims. [54] In this regard, there is the statutory declaration made by D1 that he lodged a false police report and that the alleged accident on 17.11.2014 was untrue. [55] There is thus now an admission on the fact that the 2015 suit is underlined by fraudulent conduct on the part of both P and D1 to defraud D2 to its detriment. [56] While the discretion is with the Sessions Court whether or not to allow the application to set aside the said judgment, this court finds that the Sessions Court erred in dismissing D2’s application as it had failed to properly appreciate the probable miscarriage of justice if the said judgment is allowed to remain in place since there is a total failure on its part to consider adequately the plethora of evidence being adduced which shows fraudulent conduct on the part of both P and D1 must be addressed via a trial. Refer to Evans v Bartlam [1937] AC 473 (House of Lords):- “The Courts, however, have laid down for themselves rules to guide them in the normal exercise of their discretion. One is that where the judgment was obtained regularly there must be an affidavit of merits, meaning that the applicant must produce to the Court evidence that he has a prima facie defence. It was suggested in argument that there is another rule that the applicant must satisfy the Court that there is a reasonable explanation why judgment was allowed to go by default, such as mistake, accident, fraud or the like. I do not think that any such rule exists, though obviously the reason, if any, for allowing judgment and thereafter applying to set it aside is one of the matters to which the Court will have regard in exercising its discretion. If there were a rigid rule that no one could have a default judgment set aside who knew at the time and intended that there should be a judgment signed, the two rules would be deprived of most of their efficacy. The principle obviously is that unless and until the Court has pronounced a judgment upon the merits or by consent, it is to have the power to revoke the expression of its coercive power where that has only been obtained by a failure to follow any of the rules of procedure” [57] This Court also find it instructive to refer to Seruan Gemilang Makmur Sdn Bhd v Kerajaan Negeri Pahang Darul Makmur & Anor [2016] 3 MLJ 1 (Federal Court): - “[43] In the Major Law Lexicon (4th edn, 2010), "intrinsic fraud" refers to that fraud which occurs within the framework of actual conduct of trial and pertains to and affects determination of issues presented therein, and it may be accomplished by perjury, or by use of false or forged instruments or by concealment or misrepresentation of evidence; while "extrinsic fraud" refers to fraud which is collateral to the issues tried in the case wherein the judgment was rendered ie, a fraud the effect of which prevents a party from having a trial or from presenting all of his case to the court or has so affected the manner in which the judgment was taken that there has not been a fair submission of the controversy to the court. [44] In Cheah Wong Nyan & Cheah Sin Kee (supra); Whitley J adopted Sir William de Grey and Lord Walsingham opinion in The Duchess of Kingston (supra) on the principle that "fraud is an intrinsic collateral act which vitiates the most solemn proceedings of Court of Justice". This principle was accepted and adopted by the Court of Appeal in Chee Pok Choy (supra). We are of the view that the issue as to whether the fraud is in the form of intrinsic or extrinsic is factual-based and can only be determined at trial. The question as to whether the fraud referred to in s. 44 of the Act speaks about "intrinsic or extrinsic" fraud is an issue of law that requires lengthy argument and mature consideration at trial. It is no part of the court's function at this stage of the litigation to decide difficult question of law which call for detailed argument and mature considerations (see: American Cyanamid Co (supra)).” [58] Further support on this could also be found on the adjusters report prepared by the insurance adjusters on D2’s instructions. [59] This Court thus finds that in so far as all the evidence adduced D2 had successfully demonstrated that they have a prima facie defense of fraud and also conspiracy against both P and D1 in the 2015 suit. Refer to Hong Kong Shanghai Banking Corp v Ismail Bin Daud [1978] 2 MLJ 160 (High Court): - “In an application of this nature the defendant must produce to the court evidence, that he has a prima facie defence. In Evans v Bartlam [1937] AC 480 Lord Atkin said thus:— "The courts, however, have laid down for themselves rules to guide them in the normal exercise of their discretion.One is that where the judgment was obtained regularly there must be an affidavit of merits, meaning that the applicant must produce to the court evidence that he has a prima facie defence." It is now for me to decide whether the amended proposed defence contains a prima facie defence and that the 1st defendant has filed an affidavit of merits producing such defence. In my opinion, except for the allegations in the amended proposed defence there is nothing in the affidavit of the 1st defendant that satisfies me that he has a prima facie defence. There is no evidence of the alleged written agreed schedule of repayment being produced with the affidavit and neither that part of the evidence that the Principal was not indebted to the plaintiff or that the plaintiff has discharged the 1st defendant of the liability under the guarantee. It is rather difficult for me to understand why he had not obtained these evidence, such as copies of agreement, receipts of payment or any letter to relieve him of his obligation in the Suit particularly as both the defendants, as admitted, are also the sole directors and shareholders of the Principal company.” [60] Fraud as alleged and as proven so far by D2 is a valid triable defense. The same applies to the conspiracy defense being forwarded by D2 where D2’s claim manager alleged a conspiracy exists between P’s mother (who lodged 2 police reports of the alleged accident) and D1 to cause D2 to being held liable for the claims being made by P which is translated into the 2015 suit. [61] In support of the above finding, refer to ALW Car Workshop Sdn Bhd v AXA Affin General Insurance Bhd [2019] 7 CLJ 667 where the Federal Court held that since an insurance claim is premised on contract, the provisions of the Contract Act 1950 is applicable. Since this is the case, fraud would qualify as a defence since fraud vitiates a contract. At page 685, the Federal Court held: - “Insurance claim is an action based on contract. It relates to a contract or an agreement in the form of the policy entered into between the insured and the insurer. Therefore, in dealing with such a contract, the Contracts Act 1950 (the Act) applies.” [62] This being the case, there is a triable issue or defense on the merits advocated by D2 in their setting aside application which should have resulted in them being successful in the said application. Refer to Lembaga Kemajuan Tanah Persekutuan (FELDA) & Anor v Awang Soh Mamat & Ors [2009] 5 CLJ 1 (Federal Court): - “And in Barnes v. Kondel [1971] 1 Lloyds Rep @ 444, Lord Denning MR expanded to say that a "defence on the merits" means a defence which discloses an arguable and triable issue. In short, the court, as a general rule, will not set aside such default judgment unless the defendant can establish a defence on merit. This seems to be the predominant feature against the explanation for the default or for any delay in applying to set it aside.” [63] The events surrounding the recording of the said judgment is also very uncertain. [64] P had maintained in his affidavit in-reply affirmed on 16.11.2022 at paragraph 24 at page 146 of Volume 1, Record of Appeal that the said judgment was entered after him having given evidence and submissions made by his solicitor. [65] However, a perusal of the notes of evidence as exhibited in the Records of Appeal does not support P’s contention. Instead, it just shows that on 07.02.2017, P’s solicitor moved the court for a judgment in-default to be entered. [66] What is more peculiar is that there is nothing on record to show that P gave evidence at all to support his contention that assessment of damages have taken place. The court records merely show that on 22.02.2017 the assessment of damages have taken place. [67] This now raises the question whether the said judgment is a final one or a judgment in-default. D2 maintains that the said judgment is a judgment in-default (JID) while P maintains that it is a final judgment. [68] It would be pertinent to refer to the notes of proceedings which is at page 327, Part C, Volume 2, Record of Appeal which shows P’s solicitor applying for a JID and no evidence being led subsequently. [69] What is more crucial is the Sessions Court itself on 29.03.2017 was unsure whether to mark a police report as an exhibit in light of the JID being sought by P’s solicitor. Refer in this regard to page 329, Part C, Volume 2, Record of Appeal. The Sessions Court did not however sufficiently appraise itself of these crucial evidence in dismissing D2’s application. [70] With all this uncertainty arising on a perusal of the Record of Appeal coupled with the fact that D2’s by reason of common justice should be heard and be allowed to put forward their case bearing in mind the serious nature of the allegations raised supported further by cogent evidence as disclosed in their respective affidavits, the said judgment should be set aside. Refer to Grimshaw v Dunbar [1953] 1 ALL ER 350 (Court of Appeal): - “No doubt, the learned judge is entitled to satisfy himself that the party applying has a bona fide intention of defending the action and that there is some possibility of his doing so with success … I think that a new trial should seldom, if ever, be refused merely on the ground that the applicant's case appears a weak one, and it is, moreover, difficult to see how the tenant's case here could on the face of it be classed as obviously weak in view of the payment into court. Be that as it may, a party to an action is prima facie entitled to have it heard in his presence. He is entitled to dispute his opponent's case and cross-examine his opponent's witnesses, and he is entitled to call his own witnesses and give his own evidence before the court. If by some mischance or accident a party is shut out from that right and an order is made in his absence, then common justice demands, as far as it can be given effect to without injustice to other parties, that that litigant who is accidentally absent should be allowed to come to the court and present his case, no doubt on suitable terms as to costs …” [71] Based on the record of appeal before this court, it is this court’s finding that no evidence has been adduced concerning the liability (if any) of D1. [72] The Sessions Court had erred in this regard in finding that SP1 and SP2 have given evidence when it is clear that P’s solicitor applied for a JID. The case not being heard on its merits, it would be open for the said judgment to be applied to be set aside. [73] As such, in view of D2’s statutory liability under Section 96 (1) Road Transport Act 1987 (as reproduced above), D2 has a right to be heard before the 2015 suit is decided by the Sessions Court. This was not being adhered to in the present case, thus necessitates for the said judgment to be set aside. See R v Chancellor of Cambridge University [1723] 1 Stra 557: - “The objection for want of notice can never be got over. The laws of God and man both give the party an opportunity to make his defence, if he has any. I remember to have heard it observed by a very learned man, upon such an occasion, that even God himself did not pass sentence upon Adam before he was called on to make his defence. "Adam" (says God), 'where art thou? Hast thou not eaten of the tree whereof I commanded thee that thou shouldest not eat? And the same question was put to Eve also.” [74] Then there is the question of fraud and the question of conspiracy which has been forcefully highlighted by D2 throughout this appeal with the necessary supporting evidence. This fraud issue unravels everything and could not be allowed to stand since a court could not allow a judgment to be obtained by fraud. Refer to Ong Leong Chiou & Anor v Keller (M) Sdn Bhd & Ors [2021] 4 CLJ 821 (Federal Court): - “Lord Sumption, while embracing the juridical basis for, and the concept of a separate legal personality, accepted that the strict confines of the corporate personality "will not necessarily apply" if the dealings of persons natural or artificial are not honest or if the corporate personality is abused (see para. 18) He reiterated and affirmed Denning LJ's famous statement in Lazarus Estates v. Beasley [1956] 1 All ER 341 ('Lazarus v. Beasley ') at 345: ... No court in this land will allow a person to keep an advantage which he has obtained by fraud. No judgment of a court, no order of a Minister can be allowed to stand if it has been obtained by fraud. Fraud unravels everything. The court is careful not to find fraud unless it is distinctly pleaded and proved; but once it is proved, it vitiates judgments, contracts and all transactions whatsoever... (emphasis added)” [75] All in all, it is pertinent for the 2015 suit to be heard on its merits in order for the following to be ascertained. [76] Firstly, whether the accident as alleged by both P and D1 did occur on 17.11.2014. This is a very important issue which the Sessions Court had failed to consider at all in its decision. Refer to Tang Loon Pau & Ors v Mohd Salihin Kotni & Anor [2023] 8 CLJ 105 (Court of Appeal): - “But in the context of an insurer's liability under s. 96(l) of the RTA, the critical question is whether an insurer remains liable when it is proven that the insured motorcar was not involved in the impugned motor-vehicle accident? That is essentially the question that needs to be answered. In this regard, we are acutely conscious of the fact that we are wading into unchartered territory as there seems to be no case law precedent covering the point which has been raised in this appeal.” [77] Next is whether there is fraud perpetrated or whether there is a conspiracy between P and D1 and/ or others to the detriment of D2 or whether there exists a false claim is certainly an issue that needs to be tried with the presence of all parties. [78] Thirdly, it also needs to be determined the extent of the liability (if any) of D2 in light of the fraudulent conduct and the conspiracy between P and D1 (if proven at the trial of the 2015 suit). [79] The above issues which have been properly set out by D2 in their setting aside application must be subjected to a proper trial where evidence is taken and documentary evidence could be adduced for it to be weighed and assessed by the Sessions Court before a proper finding on liability could be made at the close of trial. Oral evidence would be also be needed to address the various fraudulent conduct being alleged by D2 not to mention the need to uncover the truth of the matter as justice dictates what more D1 is willing to come to court to tell the truth as what was stated in his statutory declaration. [80] While it is noted that no proposed defence was filed by D2 in their setting aside application, this is not fatal since this court could ascertain the merits of their application and the defence which they intend to rely on to defeat P’s claim in the 2015 suit. The Sessions Court had unnecessarily placed a heavy emphasis on this requirement when not even P or D1 had raised this non production of a proposed defense in their respective replied. While it is desirable for such a proposed defense to be exhibited, its absence does not automatically defeat D2’s setting aside application. Other issues arising [81] The Sessions Court also found that D1 did not apply to set aside the said judgment and he did not attend court despite being notified of the same. [82] The Sessions Court also found that since D2 has decided to not defend D1 in the 2015 suit, there is no need for the said judgment and any cause papers to be served on D2. [83] In light of the above, the Sessions Court is impliedly in this court’s opinion questioning the wisdom behind the setting aside application. [84] This Court could not agree with the session’s court finding since in light of the admission made by D1 about the existence of fraud and conspiracy, it would not be far fetched to infer that no possible setting aside application would have been filed by D1 since he had admitted he stands to benefit from the entire alleged accident. [85] Secondly, with D2 being the ultimate paymaster in light of their statutory liability under Section 96(1) Road Transport Act 1987 and the fact that the said judgment was only brought to D2’s attention when P was challenging the 2016 OS HC KL gives credence to why there was a delay on D2’s part in filing the setting aside application. [86] Finally, P also gave no satisfactory justification in their delay in bringing D2’s attention to the said judgment in the first place. Conclusion [87] Based on the above, this court allows D2’s appeal with costs of RM 10,000.00 to be paid by P to D2 subject to allocator fees. [88] Consequent to the above, the said judgment is set aside and the 2015 suit is now remitted back to be heard on its merits at the Sessions Court. Dated: 26th December 2024 …………………………………………. (NOOR HISHAM BIN ISMAIL) Judge High Court, Johor Bahru Counsels: Dato ‘Kamalanathan A/L Ratnam (together with him Vinod A/L R. Kamalanathan and Anis Amirah Binti Zakaria) Solicitors for the Appellant (D2) Messrs Vinod Kamalanathan & Associates Kuala Lumpur Mr Christie Marie A/L Mariassosai Nathan (together with Mr/MsLee Yen Yee) Solicitors for the First Respondent (P) Messrs Teo & Associates Johor Bahru Mr/Ms Lee Sooi Kee Solicitors for the Second Respondent (D1) Messrs SK Lee Johor Bahru Cases referred to:

UEM Group Bhd v Genisys Integrated Engineers Pte Ltd & Anor [2019] 9

Azman Bin Mahmood & Anor v SJ Securities Sdn Bhd [2012] 6 CLJ 573 (Federal Court);

Lee Ing Chin & Ors v Gan Yook Chin & Anor [2003] 2 MLJ 97 (Court of

Kerajaan Malaysia & Ors v Tay Chai Huat [2012] 3 CLJ 577 (Federal

Mohammad Hafiz Bahari & Anor v Pacific & Orient Insurance Co Bhd &

Evans v Bartlam [1937] AC 473 (House of Lords);

Seruan Gemilang Makmur Sdn Bhd v Kerajaan Negeri Pahang Darul

Hong Kong Shanghai Banking Corp v Ismail Bin Daud [1978] 2 MLJ 160 (High Court);

ALW Car Workshop Sdn Bhd v AXA Affin General Insurance Bhd [2019] 7 CLJ 667 (Federal Court);

Lembaga Kemajuan Tanah Persekutuan (FELDA) & Anor v Awang Soh

Grimshaw v Dunbar [1953] 1 ALL ER 350 (Court of Appeal);

R v Chancellor of Cambridge University [1723] 1 Stra 557; 13 Ong Leong Chiou & Anor v Keller (M) Sdn Bhd & Ors [2021] 4 CLJ 821 (Federal Court);

Tang Loon Pau & Ors v Mohd Salihin Kotni & Anor [2023] 8 CLJ 105 (Court of Appeal). Legislation referred to:

Rules of High Court 1980;

Rules of Court 2012;

Road Transport Act 1987.