Pook South Choong v 1. ) Tai Yew on (BA-12ANCvC-140-12/2020)

TAI YEW ON 10

TAI KIM FUNG 12

CHEE KING SENG 14

CHEE KING CHONG 16

LEE MEI CHUE 18

LEE SIEW CHAI 20 (NO. K/P.: 630715-08-5017) ... RESPONDEN-RESPONDEN 21 22 23 DALAM MAHKAMAH SESYEN DI SHAH ALAM 24 DALAM NEGERI SELANGOR DARUL EHSAN 25 (GUAMAN SIVIL NO: BA-B52NCVC-262-07/2019) 26 27 ANTARA 28 29 22/11/2022 09:02:10

TAI YEW ON 1

TAI KIM FUNG 3

CHEE KING SENG 5

CHEE KING CHONG 7

LEE MEI CHUE 9

LEE SIEW CHAI 11 (NO. K/P.: 630715-08-5017) ... PLAINTIF-PLAINTIF 12 13 DAN 14 15 POOK SOUTH CHOONG 16 (NO. K/P.: 650513-05-5723) ... DEFENDAN 17 18 19 GROUNDS OF JUDGMENT 20 21 22

This was an appeal by the Appellant against the decision of the 24 learned Sessions Court Judge (SCJ) on 9.12.2020, who dismissed the 25 Appellant’s application to set aside the judgment in default (JID) entered 26 against him on 10.9.2019. 27 28

For ease of reference the Appellant and the Respondent will be 1 referred to respectively as the Defendant and the Plaintiff. 2 3

I am hearing this appeal by way of re-hearing under Order 55 rule 2 4 ROC 2012. 5 6 Background Facts 7

The salient facts which sets the context of the application were 8 adopted from the chronology of events referred to in respective counsel’s 9 written submissions. 10 11

Between the period of May 2016 to end of the year 2017, the 12 Defendant had represented to all the Plaintiffs that he is an authorized 13 agent/broker of a company known as LWK Automotive Green 14 Technologies Sdn Bhd (the Company). 15 16

The Plaintiffs have pleaded that the Defendant had made the 17 following representations and/or statements to the Plaintiffs: - 18

the Defendant is an authorized agent/broker of the Company;

(ii) the Company will be listed on the main board of the Hong 20 Kong Stock Exchange in the future. On that premise the 21 Defendant invited all the Plaintiffs to invest in and to purchase 22 the pre-IPO shares of the Company; and 23

(iii) that if the Plaintiffs invest and purchase shares of the 24 Company through the Defendant, the Plaintiffs will be entitled 25 and given extra share units of the Company and the 26 Defendant will provide the share certificates of the Company 27 and relevant documents to the Plaintiffs. 28 29

Relying on those representations the Plaintiff invested and made 1 progressive payments in the total sum of RM867,000.00 to three (3) bank 2 accounts belonging to the Defendant. The Plaintiffs have provided the 3 particulars of payment made by each of the Plaintiffs to the Defendant in 4 the following amount : 5 No. Respondents Amount 1 Tai Yew On (1st Respondent) RM 219,000.00 2 Tai Kim Fung (2nd Respondent) RM 417,000.00 3 Chee King Seng (3rd Respondent) RM 150,700.00 4 Chee King Chong (4th Respondent) RM 22,000.00 5 Lee Mei Chue (5th Respondent) RM 21,000.00 6 Lee Siew Chai (6th Respondent) RM 40,000.00 Total RM 869,700.00 6

The Plaintiffs paid and deposited their share of the amounts as 7 stated in the table above all amounting to a total of RM869,700.00 to the 8 Plaintiff by cash partially and by banking in into the Defendant’s two (2) 9 bank accounts in CIMB Bank and one (1) in Hong Leong Bank. The 10 Plaintiffs have provided the documentary evidence of bank slip 11 transactions and record of payment which have been marked as exhibit 12 TYO-6 at pg 190 – 212 of the Record of Appeal. 13 14

The Defendant had promised the Plaintiffs that he will prepare and 15 ensure that the Shares Certificates of the Company will be issued as soon 16 as possible. 17 18

The Defendant failed to provide any Share Certificates of the 19 Company as promised despite repeated requests and demands made by 20 the Plaintiffs. The only reason given by the Defendant was that the Share 21 Certificates were still pending and in process. In order to persuade and 1 convince the Plaintiffs to continue making payments to him, the Defendant 2 sent a fake Share Certificate of the Company to the Plaintiffs via WeChat. 3 4

The Plaintiffs lodged a complaint with the Company and to their 5 dismay were informed by the Company that the Defendant is not their 6 authorised agent/broker nor did he have the authority to represent the 7 Company to offer any shares for sale. 8 9

The Plaintiffs through their solicitor sent a Notice of Demand dated 10 10.6.2019 to the Defendant claiming for the sum of RM869,700. Until 11 todate the Defendant has failed to reply or respond. 12 13

On 23.7.2019 the Plaintiffs filed a Writ and Statement of Claim 14 (SOC) and served by way of personal service and AR Registered Post to 15 the Defendant’s addresses at Kota Damansara and Taman Paramount 16 respectively. 17 18

The Writ and SOC were served to the Defendant on 9.8.2019 by 19 personal service at the Taman Paramount address. 20 21

The Defendant did not enter appearance within the time limit and 22 hence Judgement in Default (JID) of appearance was entered against him 23 on 10.9.2019. The JID was served on the Defendant on 23.9.2019 by 24 Registered Post and Certificate of Posting. 25 26

Subsequently the Plaintiffs filed a Bankruptcy Notice against the 27 Defendant. 28

The Bankruptcy Notice and JID were effected by personal service 1 on the Defendant by the Plaintiff’s solicitor, Mr Yong Kean Chee (KC 2 Yong) on 21.1.2020. Mr KC Yong has in his Affidavit of Service dated 3 11.2.2020 (Exh TYO-3 p.157-186 Encl 3) deposed to the fact that he 4 personally served the Bankruptcy Notice and JID on the Defendant who 5 accepted it but refused to acknowledge receipt on the cover letter dated 6 30.12.2019. 7 8

It was stated on record that on 5.6.2020 the Defendant’s solicitor, 9 Mr Mathan Raj from Messrs Ong & Partners contacted Mr KC Yong to 10 enquire about the status of the Bankruptcy Notice as well as to discuss 11 the possibility of settling the matter amicably. On the same day the 12 Plaintiffs’ solicitor sent a without prejudice offer for settlement via email to 13 the Defendant’s solicitor. 14 15

On 22.7.2020 the Plaintiffs’ solicitor emailed to the Defendant’s 16 solicitor to enquire whether they had instructions to accept service of 17 cause papers on behalf of the Defendant. No response was forthcoming. 18 19

On 18.9.2020 the Defendant filed an application to set aside the JID, 20 which was dismissed. Hence this appeal, which was also dismissed for 21 the following reasons. 22 23 Decision of this Court 24

The principles of setting aside JID are well established. In the case 25 of Yap Ke Huat & Ors v Pembangunan Warisan Murni Sejahtera Sdn 26 Bhd [2008] 5 MLJ 112 the Court of Appeal held as follows – 27 28 “[15] It is trite that when considering an application to set aside a 1 judgement in default, the first task is to ascertain whether it is regular or 2 irregular judgment. If it is an irregular judgement, then the default 3 judgment ought to be set aside ex debito justitiae. If it is regularly 4 obtained, then the principle expounded in Evans v Bartlam [1937] AC 5 473 applies – see the judgement of the Federal Court in Hasil Bumi 6 Perumahan Sdn Bhd & Ors v United Malayan Banking Corp Bhd [1994] 7 1 MLJ 312. This requires the defendant to show that he has a defence 8 on merits. Delay in making such an application is a factor to be 9 considered by the court in deciding whether to grant or refuse the 10 application – see Tuan Haji Ahmed Abdul Rahman v Arab-Malaysian 11 Finance Bhd [1996] 1 MLJ 30.” 12 13

Relying on the authority above the approach for the Court to take 14 when considering an application to set aside a judgement in default can 15 be sum up to this :

First ascertain if the JID was a regular or irregular one;

(ii) If the JID is irregular, it should be set aside ex debitio justitae;

(iii) But if the JID was regularly obtained, the Court has to 19 determine whether there is a defence on the merits; and 20

(iv) Any delay in making the application to set aside is a material 21 factor for the Court to consider in deciding whether to allow or 22 refuse the application. 23 24 Whether the JID was regularly obtained 25

The Defendant contended that the JID was irregularly obtained 26 because the Writ and the SOC was served and delivered to the Taman 27 Paramount address which is the address of his father’s house and not his. 28 As for the service by AR Registered Post on 23.7.2019 to both the Taman 29 Paramount address and Kota Damansara address, it was contended that 30 this too was defective as there was no evidence of acknowledgement of 1 receipt by him on the AR Card. 2 3

The affidavits reveal that the service of the Writ and SOC was made 4 by A.R. Registered Post on both addresses. The Plaintiffs produced the 5 A.R. Card which shows the cause papers were posted to both addresses. 6 However, it would appear that the A.R. Registered Card was returned 7 without any acknowledgement of receipt. Counsel for the Defendant relied 8 on the case of Goh Teng Whoo & Anor v Ample Objectives Sdn Bhd 9 where the Federal Court held that where service of a writ is alleged to 10 have been effected by way of sending the same to a defendant by A.R. 11 Registered post pursuant to Order 10 rule 1(1) ROC 2012, the court 12 cannot enter a judgment in default of appearance where the affidavit of 13 service does not exhibit the A.R. Registered card containing an 14 endorsement as to receipt by the Defendant himself or someone 15 authorised to accept service of the same on his behalf. In that case the 16 AR Registered card signed and acknowledged by the defendant’s brother 17 was held to be improper service. 18 19

Coming back now to the facts of the present case, I am aware and 20 mindful of the binding decision in Goh Teng Whoo (supra) where the 21 mode of service of the cause papers relied on was by way of AR 22 Registered Post. However, the facts and circumstances of service are not 23 on all fours here in this instant case. 24 25

In this case, it is to be noted that the Plaintiff did not merely rely on 26 service by way of AR Registered Post but had also in an abundance of 27 caution caused service to be effected personally on the Defendant in 28 accordance with Order 10 rule 1 ROC 2012. 29

Having considered and perused the contents of the Affidavits of 1 Service filed by the process servers, it is my opinion that the JID entered 2 against the Defendant on 10.9.2019 is a regular judgment for a number of 3 reasons. I find that the Writ and SOC were properly served on the 4 Defendant at the said Taman Paramount and Kota Damansara addresses 5 in accordance with Order 10 rule 1 ROC 2012. The Kota Damansara 6 address is the Defendant’s address is the same address used by the 7 Defendant in all his Affidavits. One pertinent point to note is the fact that 8 he has admitted that this is his own address. The Defendant has also 9 admitted in paragraph 5 of his Affidavit that the Taman Paramount 10 address is his father’s house address. It is on record that the cause papers 11 were served and delivered to the Taman Paramount address and was 12 received by the Defendant’s father. Furthermore, the Defendant received 13 the Plaintiffs’ solicitor’s letter of demand dated 10.6.2019 sent to the 14 Taman Paramount address. 15 16

Order 10 rule 1 provides as follows : 17 18

(1) Subject to the provisions of any written law and these Rules, a writ 19 shall be served personally on each defendant or sent to each defendant 20 by prepaid A.R. registered post addressed to his last known address and 21 in so far as is practicable, the first attempt at service must be made not 22 later than one month from the date of issue of the writ.” 23 24

On this issue, I have already emphasized on the fact that the 25 Defendant made admissions that the Kota Damansara address is his 26 address and the Taman Paramount address is his father’s house address. 27 In the circumstances I am in agreement with the Plaintiffs’ contention that 28 personal service had been properly effected on the Defendant. The 29 underlying purpose of effecting personal service of the cause papers is to 1 bring notice and attention to the Defendant that there is an action taken 2 against him in order for him to have an opportunity to answer and defend 3 himself. Therefore, the service at both addresses is sufficient to achieve 4 that very purpose. Would it be necessary for the Writ and SOC to be 5 handed personally to the Defendant? It would not be necessary to do so 6 as the rules do not prescribe for it. So long as the writ has been effectively 7 brought to his attention personally, it would be sufficient to constitute 8 personal service as provided for in Order 10 rule 1 ROC 2012 (see Dato 9 Tan Chin Who v Dato Hj Zulkamain b Dato Sheikh Ahmad, Yang 10 DiPertua Council of Justices of the Peace State of Negeri Sembilan 11 [2004] MLJU 6, Hong Leong Finance Bhd v Pasir Permata Sdn Bhd & 12 Ors [1989] 1 CLJ 939). In this particular instance the Defendant ought not 13 to be allowed to play a cat and mouse game to evade service. 14 15

Accordingly, bearing in mind the Defendant had never denied those 16 two addresses, I find service to have been effected properly and regularly 17 and therefore the JID obtained against the Defendant is a regular 18 judgment. 19 20 Whether the delay in filing the setting aside application was 21 satisfactorily explained 22

A defendant against whom the JID was regularly entered is required 23 to file the application to set it aside within 30 days from the date of receipt 24 of the Judgment. If he cannot do so within the time stipulated, he must 25 explain the delay. 26 27

Order 42 rule 13 of ROC 2012 provides : 28 29 “Setting aside or varying judgment and orders (O. 42 r. 13)

Save as otherwise provided in these Rules, where provisions are 2 made in these Rules for the setting aside or varying of any order or 3 judgment, a party intending to set aside or to vary such order or 4 judgment shall make an application to the Court and serve it on the party 5 who has obtained the order or judgment within thirty days after the 6 receipt of the order or judgment by him.” 7 8

The JID was entered against the Defendant on 10.9.2019. The 9 Bankruptcy Notice was filed in the Shah Alam High Court on 19.12.2019. 10 There is evidence to show that the JID was personally served on the 11 Defendant by the Plaintiffs’ solicitor on 21.1.2020. The application to the 12 court was filed only on 18.9.2020. Apart from that there is evidence via 13 the admission of the Defendant himself in his affidavit that he was aware 14 of the Bankruptcy Notice on 29.1.2020 when informed by his daughter. 15 The Defendant in an about turn then alleged that he was only aware of 16 the said Bankruptcy Notice on 29.5.2020. The Defendant instructed his 17 solicitor to contact the Plaintiffs’ solicitor to discuss a possibility of 18 settlement. Only on 18.9.2020 did the Defendant file the application to set 19 aside the JID. 20 21

A perusal of the time frame of events show that the earliest moment 22 the Defendant would have been aware of the JID would have been on 23 21.1.2020 when he was personally served by the Plaintiffs’ solicitor. 24 25

The importance of complying with the time frame allocated for filing 26 the application to set aside the JID has been underscored in a chain of 27 cases the Court of Appeal case of Khor Cheng Wah v Sungai Way 28 Leasing Sdn Bhd [1997] 1 CLJ 396. The Court of Appeal cautioned : 29 “…it is a cardinal principal of law, that when a litigant seeks the 1 intervention of the Court in a matter that affects his rights, he must do 2 so timeously… 3 …in all cases in which delay in approaching the Court is in issue, the 4 burden is upon the litigant who has delayed to render a satisfactory 5 explanation for it.” [emphasis added] 6 7

In this case there was a delay of about 8 months from 29.1.2020 to 8 18.9.2020. To compound the matter there is an admission by the 9 Defendant that he had instructed his solicitor to contact the Plaintiffs’ 10 solicitor on 5.6.2020. However, the Notice of Application was filed only on 11 18.9.2020. 12 13

The explanation given for the delay in filing the Notice of Application 14 was that he was a layman and not well versed with legal requirements. 15 The Defendant also claimed that he had financial constraints and could 16 not afford to engage a counsel to act for him. He claimed to have difficulty 17 in appointing solicitors due to the movement restrictions (MCO, CMCO) 18 imposed during the Covid-19 pandemic. 19 20

I find the explanations given are flimsy and unacceptable. No 21 satisfactory reasons were given for not making the application within the 22 time stipulated in the ROC. The Defendant was aware of the JID and 23 Bankruptcy Notice as early as 21.1.2020 before the onset of the 24 pandemic. It cannot be gainsaid that under subsequent MCOs, law firms 25 were placed under essential services and were allowed to operate despite 26 the restriction to other activities. It will be noted that the Defendant already 27 appointed a solicitor by June 2020 but yet the application was filed three 28 months later. In my view the reason of having financial constraints are 29 bare averments with not an iota of evidence. To my mind there was no 1 excuse for the failure of the Defendant to act timely. 2 3

I am mindful that justice should not be sacrificed at the alter of 4 procedural rules. However, the Court shall not tolerate indolence on the 5 part of the litigant even if the JID was irregularly obtained. In this respect 6 the Court has to take heed of the advise of the Court of Appeal Khor 7 Cheng Wah (supra) where it was held : 8 9 “it is a cardinal principle of law, that when a litigant seeks the intervention 10 of the court in a matter that affects his rights, he must do so timeously. 11 The maxim vigilantibus, non dormientibus, jura subveniunt, though 12 having its origins in the Court of Chancery, is of universal application. 13 Even in cases where a right is exercisable ex debito justitiae, a 14 court may refuse relief to an indolent litigant.” 15 16

On this ground alone, I find the Defendant’s application must fail. 17 18 Whether there was a defence on merits 19

Even if I am in error on my views above said, the next issue to 20 consider is whether the Defendant has shown a defence on merits in his 21 affidavit filed in support of the application. 22 23

In Hasil Bumi Perumahan Sdn Bhd & Ors v United Malayan 24 Banking Bhd [1994] 1 CLJ 328 the meaning of defence on merits was 25 explained in the following manner : 26 27 “To use common and plain language, the applicant must show that his 28 defence is not a sham defence but one that is prima facie, raising 29 serious issues as bona fide reasonable defence that ought to be 30 tried because obviously if the defence is a sham defence there is 1 no defence and the application must fail. It can hardly be emphasised 2 that in order for the court to arrive at a decision that the defence 3 has merits, it must perforce make a reasoned assessment of the 4 justice of the case by forming a professional view of the probable 5 outcome of the case, but this is stating the obvious. It involves a mental 6 process that goes through the mind of a Judge when making a decision 7 in any case, weighing the evidence of a litigant against that of another 8 on the facts alleged by a party against those of the other before finally 9 coming to a decision.” [emphasis mine] 10 11

It will be seen that the Defendant’s defence pivoted on only his 12 denial of receipt of the sum of RM869,700.00 from the Plaintiffs. I am of 13 the considered view that the Defendant’s averments are an afterthought 14 and unsubstantiated. It is pertinent to note here that the Defendant did not 15 explain and furnish any reason as to why the Plaintiffs had made those 16 large sums of payments to him. More importantly the Defendant did not 17 exhibit a single shred of evidence in his affidavits to show that he did not 18 receive the said sum of money or that those three bank accounts into 19 which the money was banked in were not his. 20 21

It has not escaped the attention of this Court that the Plaintiff’s 22 pleaded case was that based on the representations given by the 23 Defendant, they had invested and progressively paid the sum of 24 RM869,700.00 to the Defendant by means of cash partially and by way of 25 bank transfer into the Defendant’s bank account. As I have emphasized 26 earlier nowhere in his Affidavit has the Defendant ever denied that the 27 said bank accounts did not belong to him. In this respect I find that the 28 Defendant has failed to show any defence on the merits. 29

I am in agreement with the contention of counsel for the Plaintiffs 1 who argued that it is very telling that the Defendant is unable and has not 2 explained why all these 6 Plaintiffs had banked in and transferred so much 3 money over a period of time to the Defendant’s bank accounts. 4 5

Suffice to say that the Plaintiffs are correct to contend that they had 6 successfully discharged their burden that the monies given were 7 investment sums for shares of the Company unless proven otherwise by 8 the Defendant. The failure to explain the purpose of the monies he 9 received has proved to be the Defendant’s undoing. The burden is on the 10 Defendant to prove and explain the purpose of the monies that was 11 banked into his own bank account. 12 13

In the absence of a reasonable explanation from the Defendant, the 14 Plaintiff’s case against the Defendant is watertight and he is not entitled 15 and has no legal basis to keep and retain the monies paid by the Plaintiff. 16 It follows that the Defendant is bound to restore and refund those monies 17 that were paid into his accounts. The Plaintiff has contended that the 18 Defendant has been unjustly enriched at the expense of the Plaintiffs and 19 cited the Court of Appeal case of Transnasional Express Sdn Bhd & 20 Ors v Tan Chong Industrial equipment Sdn Bhd [2020] 5 MLJ 746 21 where it was decided as follows : 22 23 “[22] And what constitute unjust enrichment? It is a concept under which 24 a claimant is entitled to restitution if he can show that a defendant was 25 enriched at his expense and that there was no legal ground for the 26 defendant’s enrichment. Under the concept of unjust enrichment, a 27 defendant can escape liability by showing that there was a legal ground 28 for his enrichment, for example because the claimant was required to 29 benefit the defendant by statute or by contract. The reason why there is 30 no liability in these circumstances its that the defendant’s enrichment is 1 not justified.” 2 3

Further justification for this can be found in section 71 of the 4 Contracts Act 1950 which deals with unjust enrichment. It states that a 5 person who enjoys the benefit of a non-gratuitous act is obliged or bound 6 to make compensation or to restore the thin so done or delivered. 7 8

In the premises this Court agrees with the LSJ that based on the 9 representations given by the Defendant, the sum of RM869,700.00 was 10 paid and given to the Defendant as an investment and purchase of the 11 shares in the Company and the Defendant has the burden to explain his 12 reasons why the Plaintiffs paid those sums of money to him if as he 13 alleged were not for investment purposes. It is incumbent on the 14 Defendant to offer a reasonable explanation as to why a considerable sum 15 of monies had been deposited into three bank accounts belonging to him 16 over a period of time. In my view on a careful scrutiny of the proposed 17 defence offered by the Defendant I find that I am inclined to agree with the 18 contention that the Defence is not one of merits. It is a sham defence. It 19 does not on a prima facie basis raise any serious issue which qualifies it 20 to be a bona fide reasonable defence that ought to be tried. In other words, 21 it has failed to fulfil the criteria laid down as explained in Hasil Bumi 22 (supra). 23 24 Conclusion 25

Taking into consideration the JID which was regular, the 26 inexplicable delay and the proposed defence which was devoid of merit, I 27 found no reason to interfere with the decision of the LSJ. 28

Premised on the above including the written and oral submissions 1 of both parties, and the grounds of judgment of the LSJ, the appeal was 2 dismissed with costs. 3 4 Dated 30 October 2022. 5 6 7 8 9 (JULIE LACK) 10 Judge 11 High Court of Malaya 12 Shah Alam, Selangor Darul Ehsan 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Counsel 1 For the Applicant : 2 Mathan Raj Subramaniam 3 (MESSRS. ONG & PARTNERS) 4 5 For the Respondent : 6 Yong Kean Chee 7 (MESSRS. CHRISTOPHER YEO & KP CHANG) 8 9