Pengurusan Air Selangor Sdn Bhd v Mines Resort Sdn Bhd (Dalam Likuidasi) (BA-24NCvC-1865-09/2023)

This is the Defendant’s application in Enclosure 22 to set aside a Consent Judgment dated 29 May 2024, which was entered before this Court with the consent of both parties in the presence of their respective solicitors.

The Defendant, a company in liquidation, contended that the Consent Judgment ought to be set aside on grounds including the alleged lack of consent by the liquidator, breach of statutory duties under the Companies Act 2016, breach of natural justice, and the applicability of Order 42 rule 13 of the Rules of Court 2012.

The Plaintiff opposed the application, submitting that the Consent Judgment was binding, contractual in nature, and could not be set aside in the manner attempted by the Defendant. The Plaintiff further contended that the Defendant’s application was procedurally defective, devoid of merit, and an afterthought brought after the Defendant failed to comply with its obligations.

After considering the affidavits and the detailed written submissions filed by both parties, this Court dismissed the Defendant’s application. These are my reasons.

The Plaintiff commenced this action against the Defendant in relation to the Defendant’s obligations regarding the water supply system within Mines Resort City.

On 29 May 2024, the parties entered into a Consent Judgment before this Court. The Consent Judgment stated as follows: “(1) Satu deklarasi bahawa Defendan bertanggungjawab untuk menyerahkan sistem bekalan air dalam keadaan berfungsi kepada Plaintif menurut seksyen 47 Akta Industri Perkhidmatan Air 2006 dan Kaedah-Kaedah Industri Perkhidmatan Air (Retikulasi Air dan Pemasangan Paip) 2014.

Satu perintah bahawa Defendan menyerahkan kepada Plaintif –

Sistem bekalan air dalam masa enam (6) bulan dalam keadaan berfungsi dari tarikh penyerahan laporan audit seperti yang dinyatakan dalam perenggan 2(c) di bawah, dimana pihak-pihak bersetuju untuk lanjutan masa maksimum tiga (3) bulan atas syarat bahawa Defendan boleh membuktikan usaha untuk menyerahkannya.

Semua dokumen-dokumen yang sedia ada dengan Defendan yang termasuk dan tidak terhad kepada sistem bekalan air, termasuk tetapi tidak terhad kepada pelan skematik (‘schematic plans’), pelan induk (‘blueprints’), lukisan seperti dibina (‘as built drawings’), dan butiran tanah-tanah atau dokumen hakmilik berkenaan tangki sedutan tanah (‘ground suction tank’), menara tangki air (‘elevated water tank’) dan rumah pam (‘pump house’) (sekiranya ada) dalam masa tiga (3) bulan dari tarikh penghakiman ini bagi menyempurnakan penyerahan sistem bekalan air.

Dalam masa tiga puluh (30) hari dari tarikh penghakiman ini satu laporan audit yang mendedahkan dan mengenalpasti dengan perincian penuh –

Kerja-kerja yang perlu dilaksanakan untuk penyerahan semua infrastruktur air yang terletak di dalam Mines Resort City kepada Plaintif.

(ii) Nilai penuh kos yang diperlukan untuk membaiki dan menyerahkan sistem bekalan air Defendan kepada Plaintif.

Satu deklarasi bahawa Defendan bertanggungjawab untuk membaiki apa-apa kebocoran sistem bekalan air dan/atau membayar pampasan kepada Plaintif bagi kebocoran sistem bekalan air dalam masa enam (6) bulan dari tarikh penyerahan laporan audit seperti yang dinyatakan dalam perenggan 2(c) di atas, dimana pihak-pihak bersetuju untuk lanjutan masa maksimum tiga (3) bulan atas syarat bahawa Defendan boleh membuktikan usaha untuk membaikinya.

Satu perintah bahawa Defendan membaiki apa-apa kebocoran sistem bekalan air sebelum sistem bekalan air diserahkan dalam keadaan berfungsi kepada Plaintif menurut perenggan (2)(a) di atas.

Satu perintah bahawa Defendan membayar bil bekalan air tertunggak sebanyak –

RM3,867,739.15 (setakat 25.4.2024) kepada Plaintif dalam masa empat belas

hari dari tarikh penghakiman.

Semua jumlah tertunggak selepas 25.4.2024 sehingga tarikh penghakiman ini kepada Plaintif dalam masa empat belas (14) hari dari tarikh penghakiman.

Semua bil bekalan air bagi Meter Pukal Sementara yang dikeluarkan oleh Plaintif selepas tarikh penghakiman ini dibayar oleh Defendan dalam masa tiga puluh

hari sehingga dan melainkan Meter Pukal Sementara didaftar semula kepada entiti baru atau salah satu syarikat daripada kumpulan syarikat Country Heights Holdings Bhd yang tidak digulung.

Satu perintah bahawa Defendan membaiki apa-apa kebocoran atau kerosakan sistem bekalan air (sekiranya ada) dalam tempoh 24 bulan selepas sistem bekalan air diserahkan kepada Plaintif menurut perenggan (2)(a) di atas.

Satu perintah bahawa Defendan hendaklah memberikan atau menyebabkan supaya pemilik tanah untuk memberikan Plaintif akses kepada sistem bekalan air bagi maksud pengendalian dan penyenggaraan sistem bekalan air tersebut.”

The Consent Judgment was subsequently sealed and served on the Defendant’s previous solicitors, Messrs Au & Partners, on 25 June 2024.

It was not disputed that the Consent Judgment was recorded in open court, with both parties represented by solicitors.

The Defendant failed to comply with the substantive terms of the Consent Judgment. Instead, on 13 August 2024, the Defendant filed the present application to set aside the Consent Judgment.

The following issues arose for determination:

whether a perfected consent judgment may be set aside by an interlocutory application or whether a fresh action is required.

whether Order 42 rule 13 of the Rules of Court 2012 applies to the setting aside of the Consent Judgment.

whether there was a lack of consent, a breach of natural justice, or illegality sufficient to vitiate the Consent Judgment.

whether the application was brought without undue delay;

whether the Defendant was estopped from resiling from the Consent Judgment. FINDINGS OF THE COURT

This Court agrees with the Plaintiff’s submission that a consent judgment, in substance, is an agreement between the parties that is subsequently recorded as an order of the Court. A consent judgment derives its force from the parties’ agreement and must be given full contractual effect (see: Lee Lim Huat v Yusuf Khan bin Ghows Khan & Anor [1997] 2 MLJ 472 (CA) and Tan Geok Lan v La Kuan @ Lian Kuan [2004] 3 MLJ 465

Therefore, once a consent judgment is recorded and perfected, it binds the parties in the same manner as a contract, subject only to recognised grounds that vitiate free consent.

The Plaintiff contended that a perfected consent judgment cannot ordinarily be set aside by an application within the same proceedings.

The Plaintiff referred to the cases of Tong Lee Hwa & Anor v Chin Ah Kwi ; Tong Chong Fah v Chin Ah Kwi [1971] 2 MLJ 75, and Khaw Poh Chhuan v Ng Gaik Peng & Ors [1996] 1 MLJ 761, in which the Federal Court held that a perfected consent judgment can be set aside only by a fresh action filed for that purpose.

The Plaintiff further relied on Badiaddin bin Mohd Mahidin & Anor v Arab Malaysian Finance Bhd [1998] 1 MLJ 393 to submit that allegations of vitiating factors, such as lack of consent, illegality, or breach of duty, ordinarily require proper pleadings and must be tested through viva voce evidence in a fresh action.

This Court accepted these arguments. The Defendant’s application raised substantive challenges to the validity of the Consent Judgment, including the alleged lack of consent, breaches of statutory duties, and contraventions of the law. These were not matters that could be determined summarily on affidavit evidence.

The Defendant relied on Lagenda Kencana Sdn Bhd v Peter’s Holdings Sdn Bhd & Anor [212] 4 MLJ 855 to argue that no fresh action was required. This Court agrees with the Plaintiff that Lagenda Kencana was decided on exceptional facts, namely a clear absence of authority and an immediately apparent grave injustice. By contrast, the present case did not disclose such exceptional circumstances. The Defendant’s reliance on Lagenda Kencana did not displace the general rule articulated by the Federal Court authorities relied upon by the Plaintiff.

The Defendant further contended that the liquidator had never consented to the penal endorsement and only became aware of it upon service of the sealed Consent Judgment, and that the liquidator lacked the authority to record the consent judgment on behalf of the Defendant.

The Plaintiff contended that the Consent Judgment was recorded in open court with the Defendant represented by solicitors, and that there was no evidence to suggest that the solicitors lacked authority to record the consent on the Defendant’s behalf. Significantly, during submissions, learned counsel for the Defendant candidly conceded that there was no proof before this Court that the Defendant’s previous solicitors had entered into the Consent Judgment without the Defendant’s authority. In the absence of any such evidence, the Defendant’s assertion of lack of consent could not be sustained.

The Plaintiff further contended that a penal endorsement, by itself, does not impose personal liability on a liquidator, nor does it invalidate a consent judgment.

This Court further agrees with the Plaintiff’s argument that any order of the Court, including one containing a penal endorsement, remains binding until set aside. The existence of a penal endorsement did not, without more, vitiate the Consent Judgment.

The Defendant argued that compliance with the Consent Judgment would require the liquidator to breach her duties under the Companies Act 2016 and the winding-up regime.

The Plaintiff argued that this argument was misconceived. The Plaintiff demonstrated, by reference to the Water Services Industry Act 2006 and the Water Services Industry (Water Reticulation and Plumbing) Rules 2014, that the obligations in the Consent Judgment substantially mirrored the Defendant’s existing statutory duties.

The Plaintiff further contended that the Consent Judgment did not elevate the Plaintiff above other creditors, nor did it offend the pari passu principle. At most, it crystallised obligations into judgment debts in the ordinary course of litigation.

This Court finds that the Defendant failed to show how compliance with the Consent Judgment, of itself, would amount to a breach of the liquidator’s statutory duties.

The Plaintiff stated that Order 42, rule 13 of the Rules of Court 2012 was not intended to allow a party to reopen or undo a consent judgment merely because it later disputes the bargain struck.

The Plaintiff relied on Halim bin Saad v Chan Yok Peng [2021] 3 MLJ 717 to demonstrate that Order 42 rule 13 does not apply to judgments that are final and binding and is not a substitute for an appeal or a fresh action. The Court of Appeal held that Order 42 rule 13 of the Rules of Court 2012 applies only where the rules themselves expressly provide for the setting aside or variation of specific categories of judgments or orders, such as judgments in default of appearance, summary judgments where a defendant fails to appear, or other expressly enumerated procedural defaults. It does not extend to inter partes orders made after the parties have consented or after matters have been disposed of on the merits. Accordingly, Order 42 rule 13 is not an avenue for an unsuccessful party to seek a review or reopening of a perfected consent judgment.

In Hock Hua Bank Bhd v Sahari Bin Murid [1981] 1 MLJ 143, the Federal Court held that once a judgment has been regularly obtained and entered, or an order drawn up, the Court has no power, upon an application in the same action, to alter, vary or set it aside, save under the slip rule to correct errors in expressing the Court’s intention, or where the judgment was entered by default or made in the absence of a party at trial or hearing.

Therefore, Order 42 rule 13 did not assist the Defendant in the circumstances of this case. Order 42 rule 13 of the Rules of Court 2012 does not confer jurisdiction to set aside consent orders on substantive grounds. That rule is limited to correcting clerical mistakes or accidental omissions and is not an avenue for reversing a judgment recorded by consent.

This Court noted that the Defendant’s delay and conduct were material. The Defendant failed to comply with the Consent Judgment and sought to set it aside only later, after failing to honour its agreed obligations.

On the facts and circumstances before this Court, I find that the Defendant’s application to set aside the Consent Judgment is an afterthought. There was a clear delay. The Defendant did not take immediate steps to challenge the Consent Judgment after being served. The explanation offered is not satisfactory. The Defendant is estopped from resiling from a judgment entered with its solicitors present and no timely objection raised.

Accordingly, for the reasons stated above, I hereby order that the application in Enclosure 22 be dismissed with costs of RM10,000.00 to the Plaintiff. Dated 15 January 2026 -sgd-JAMHIRAH ALI JUDGE HIGH COURT OF MALAYA SHAH ALAM SELANGOR DARUL EHSAN To the parties’ solicitors: For the Plaintiff : Chng Keng Lung & Nur Afiqah (Messrs Adrian & Co) For the Defendant : Nur Amalina (Messrs Lee Hishamuddin Allen &