Perintis Amanah Berhad v Abd Wahab Bin Arifin (BA-12ANCvC-73-12/2024)

This appeal arises from a scenario all too familiar in civil litigation: a judgment in default is swiftly entered by one party against another. The party against whom the default judgment is entered will then seek the court’s intervention to have it set aside and for the matter to be adjudicated on the merits.

When faced with such applications, the courts must walk a careful line: on one hand, upholding procedural discipline; on the other, ensuring that justice is not sacrificed at the altar of technicality. While the Rules of Court 2012 empower the courts to set aside default judgments, this discretion is not unfettered. It must be exercised judiciously, in accordance with well-settled legal principles and the unique facts of each case.

This appeal is a testament to that delicate judicial balancing act.

At the heart of this appeal lies a singular, overarching question: should this Court intervene and overturn the decision of the Sessions Court in refusing to set aside a judgment in default entered against the Appellant/Defendant?

Arising from this predominant issue are questions such as: • Whether the default judgment was one that was irregular or regular; • Whether there was a delay in the application to set aside the default judgment; and • Whether there are defence on the merits.

On the question of whether the default judgment was obtained regularly or irregularly, the Sessions Court concluded that it was regularly obtained. After referring to the affidavit of service relating to the Writ and Statement of Claim, the learned Sessions Court Judge found that service had been effected in accordance with the relevant provisions of the Rules of Court 2012. In light of the Appellant/Defendant’s failure to enter an appearance or to file a defence, the Sessions Court held that the Respondent/Plaintiff was entitled to enter judgment pursuant to Order 13 rule 1 of the Rules of Court 2012.

As for the issue of delay, the Sessions Court referred to Order 42 rule 13 of the Rules of Court 2012 and found that there had been non-compliance with the prescribed time requirement. The learned Sessions Court Judge reasoned as follows:

Selain itu, Mahkamah mendapati bahawa Afidavit-Afidavit Defendan tidak mendedahkan sebab-sebab dan alasan kelewatan dalam memfailkan permohonan.

Sekali lagi Mahkamah merujuk kepada ATURAN 42 KAEDAH 13 KKM (SUPRA) dan mendapati bahawa peruntukan ini jelas menyatakan bahawa pihak yang ingin mengenepikan penghakiman ingkar hendaklah berbuat sedemikian dalam masa 30 hari dari tarikh penerimaan penghakiman tersebut. ….

Oleh itu, merujuk kepada keputusan Mahkamah Tinggi di atas. Memandangkan Penghakiman Ingkar adalah bertarikh 22.3.2023 dan Penghakiman telah diserahkan di alamat berdaftar (registered address). Defendan pada 18.4.2023, maka permohonan Defendan telah melebihi had masa selama lebih satu tahun tiga bulan dari tarikh penerimaan tanpa alasan munasabah. ….

Defendan tidak ada sebarang alasan atau pengakuan yang wajar diberikan Defendan untuk menjelaskan kelewatan satu tahun tiga bulan Defendan (no explanation whatsoever from the appellants for their delay in approaching the court and that they had not prayed for extension of time. to make their applications.)

Mahkamah mendapati bahawa hanya setelah Plaintif membangkitkan isu kelewatan tersebut di dalam Afidavit Jawapan, Defendan telah membalas isu itu secara ringkas di Afidavit Balasan bahawa Defendan baru sahaja menyedari tuntutan Plaintif, oleh itu tiada sebarang kelewatan. Tidak ada iarikh atau apa-apa bukti untuk menyokong kenyataan Defendan.

Malahan, Mahkamah mendapati bahawa tiada penjelasan terhadap sebab mengapa sekarang baru Defendan menyedari perkara ini.

Pernyataan Defendan bahawa terdapat pertukaran pemegang saham yang menyebabkan kelewatan adalah satu pemikiran terkemudian (afterthought) yang tidak pernah dibangkitkan di dalam Afidavit Sokongan. Sekali lagi, Mahkamah mendapati bahawa Defendan gagal melampirkan eksibit untuk membuktikan pernyataan tersebut.

Oleh yang demikian, sebenarnya permohonan Defendan adalah dihalang dengan had masa 30 hari yang ditetapkan melalui ATURAN 42 KAEDAH 13 Kaedah-Kaedah Mahkamah 2012, Defendan juga gagal menjelaskan kelewatan Defendan dengan wajar.

The Sessions Court relied on several authorities to support its findings, including Ching Yik Development Sdn Bhd & Anor v Wordware Distributors (M) Sdn Bhd & Anor [2012] 6 CLJ 394; [2012] 10 MLJ 611; [2012] 5 MLRH 1, Ng Han Seng & Ors v Scoth Leasing Sdn Bhd (Appointed Receivers and Managers) [2003] 4 CLJ 533; [2003] 4 MLJ 647; [2003] 2 MLRA 103, and Tractors Malaysia (1982) Bhd v Chiew Chong Huat @ Singhuat & Anor [1999] 2 CLJ 51; [1999] MLJU 103; [1999] 1 MLRH 287.

The Sessions Court was further of the view that, due to the delay in filing the application to set aside the default judgment, the Respondent/Plaintiff had suffered prejudice which could not be adequately compensated by an award of costs (paragraphs [68] to [75] of the Grounds of Judgment).

Lastly, having analysed the “defences” advanced by the Appellant/Defendant, the Sessions Court concluded that they were devoid of merit (paragraphs [77] to [102] of the Grounds of Judgment).

In closing, the learned Sessions Court Judge remarked as follows:

Sekiranya permohonan di Lampiran 4 dibenarkan untuk difailkan sewenang-wenangnya pada bila-bila masa tanpa mematuhi Kaedah-Kaedah Mahkamah 2012, ia akan menjadi ‘precedence’ dan ikutan kepada kes-kes lain. Kesemua Defendan di negara ini akan menganggap pemfailan mengetepikan Penghakiman Ingkar Kehadiran boleh dibuat pada bila-bila masa tanpa mematuhi Aturan yang disediakan dalam Kaedah-Kaedah Mahkamah 2012. Ia adalah satu pembaziran masa yang berharga buat Mahkamah dan Plaintif-Plaintif jua atas sikap Defendan yang tidak mengambil tindakan proaktif dalam tempoh yang ditetapkan oleh Mahkamah. Tuntasnya, undang-undang adalah jelas dan hendaklah dipatuhi.

The Appellant/Defendant conceded that it was served with the Writ. In other words, service was duly effected, rendering the default judgment a regular one in form.

Nevertheless, the Appellant/Defendant argued that the default judgment was substantively irregular due to non-compliance with Order 13 rule 7 of the Rules of Court 2012.

It further contended that although the judgment in default of appearance was entered on 22 March, 2023, the judgment was never served upon it.

According to the Appellant, it only became aware of the judgment after a change in its management, shareholders, and board of directors. Upon discovering the existence of the judgment, it promptly engaged solicitors to initiate proceedings to have the judgment set aside. The application to set aside was filed on 17 July 2024.

The Appellant therefore asserted that the 30-day time frame prescribed in Order 42 rule 13 of the Rules of Court 2012 does not operate as a bar in the circumstances. It maintained that no undue delay arose in seeking to set aside the default judgment.

The Appellant also submitted that it has a valid defence on the merits, and that it should be afforded the opportunity to ventilate this defence at trial.

The Respondent/Plaintiff disputed each of the grounds advanced by the Appellant. He maintained that the judgment in default was both procedurally and substantively regular, and that there is no justifiable reason to disturb it. The Respondent/Plaintiff further argued that the Appellant/Defendant has not demonstrated any triable issue or credible defence on the merits, and that the Sessions Court was correct in dismissing the setting-aside application. Accordingly, the Respondent/Plaintiff urged this Court to affirm the decision below and dismiss the present appeal.

It is well established that, in an application to set aside a regularly obtained default judgment, an applicant must demonstrate the existence of a defence on the merits. This requirement is rooted in common sense and judicial prudence. It would serve no purpose to set aside a judgment merely to prolong proceedings if, ultimately, a defendant has no viable defence to the claim. In such circumstances, judgment would inevitably be entered against the defendant following trial, resulting in unnecessary expenditure of judicial resources.

Conversely, where a defendant is able to show a defence with arguable merit, the courts have consistently taken the view that justice requires that the claim be adjudicated on its merits. As observed by Lord Wright in Evans v Bartlam [1937] AC 473 at p. 489, the “court will not, prima facie, desire to let a judgment pass on which there has been no proper adjudication.” See also Lord Atkin at p. 480 (referring to a “prima facie defence”) and Lord Russell of Killowen at p. 482 (mentioning a “serious defence”).

These principles have found endorsement in our local jurisprudence. The courts have interchangeably referred to “defence on the merits,” “serious defence,” and “merits to which the court should pay heed” in assessing whether a defendant has met the threshold to justify setting aside a default judgment. Notably, what is required is not a fully proven defence, but rather an indication of triable issues worthy of proper adjudication.

It bears emphasis that bare or general denials are insufficient. This principle is affirmed in cases such as Hongkong & Shanghai Banking Corporation v Ismail bin Daud & Anor [1977] 1 LNS 146; [1978] 2 MLJ 160; [1977] 1 MLRH 152, Taisho Marine Insurance v Wong Poo Peng [1975] 1 LNS 175; [1976] 1 MLJ 78; [1975] 1 MLRH 319, and Dialdas & Co (Pte) Ltd v Sin Sin & Co [1983] 2 CLJ 273; [1984] 2 MLJ 223; [1983] 1 MLRH 70. However, the court is not at this stage concerned with whether the defences will ultimately succeed. The threshold is a low one. What matters is whether there is a plausible defence requiring ventilation at trial.

Applicants and sometimes even the courts have occasionally conflated issues that are properly the subject of trial with those relevant at the interlocutory stage. That is a misapprehension. The court’s role here is not to resolve disputed facts but to determine whether the defendant has crossed the minimal threshold required to reopen the case.

An additional, yet significant, consideration is whether setting aside the judgment would cause prejudice to the plaintiff that cannot be adequately compensated by an award of costs or other suitable directions. This principle was articulated in Rosing v Ben Shemesh [1960] VR 173 at p. 177. In the present case, the learned Sessions Court Judge correctly took this factor into account in determining the potential prejudice to the Respondent/Plaintiff.

To reiterate, the three central issues arising in this appeal are:

whether the default judgment was regular or irregular;

(ii) whether there was undue delay in filing the setting aside application; and

(iii) whether the Appellant/Defendant has a defence on the merits. [26] Having carefully reviewed the record of appeal, the affidavits filed, the submissions of both parties, and the Grounds of Judgment of the learned Sessions Court Judge, this Court finds no compelling basis to interfere with the lower court’s determination that the default judgment was regularly entered. [27] The affidavit of service filed by the Respondent/Plaintiff, which was referred to and relied upon by the Sessions Court, complies with the requirements under the Rules of Court 2012. The finding that the Writ and Statement of Claim were duly served is supported by the evidence and, absent any credible challenge by the Appellant/Defendant, must stand. Accordingly, the conclusion that the Respondent/Plaintiff was entitled to enter judgment pursuant to Order 13 rule 1 of the Rules of Court 2012 is legally sound. [28] This Court also agrees with the Sessions Court’s application of Order 42 rule 13. The Appellant/Defendant’s contention that it was unaware of the judgment until its new management took over, while not implausible, does not satisfactorily explain the delay in filing the setting-aside application. Procedural timelines serve a vital function in the administration of justice, and absent cogent justification, non-compliance may justifiably result in the refusal of discretionary relief. [29] With regard to the alleged prejudice to the Respondent/Plaintiff, this Court has noted that the Sessions Court correctly considered not only the delay but also the resulting impact on the progress of the suit. The finding that the prejudice could not be remedied by costs is a discretionary one and, in this Court’s view, was neither unreasonable nor unsupported by the facts. [30] Finally, this Court concurs with the Sessions Court’s conclusion on the absence of a meritorious defence. It is trite that in applications to set aside regular default judgments, the existence of a plausible or triable defence is a material factor. The Appellant/Defendant’s assertions, as disclosed in its affidavit, were rightly assessed by the Sessions Court as unmeritorious and insufficient to justify the exercise of the court’s discretion in its favour. [31] In the circumstances, this Court finds no appealable error on the part of the Sessions Court. [32] Accordingly, this appeal is dismissed with costs. [33] The Appellant/Defendant to pay costs of RM5,000.00 to the Respondent/Plaintiff. Dated: 20 May, 2025 sgd [CHOONG YEOW CHOY] Judicial Commissioner High Court of Malaya Shah Alam Counsel: Jacyn Tan Ze Xin for the Appellant (Messrs. Gan, Lee & Tan) Nur Iffah Hizwani Omar for the Respondent (Messrs. Tengku Amalin & Faizi)