Public Bank Berhad (6463-H) v 1. Tan Teck Seng Jason (JA-12ANCvC-142-12/2019)

TAN KEAT SENG KITSON …RESPONDENTS [MAHKAMAH SESYEN DI JOHOR BAHRU DALAM NEGERI JOHOR DARUL TAKZIM, MALAYSIA GUAMAN SIVIL NO. JA – A52NCC - 255 - 06 / 2018

TAN KEAT SENG KITSON …Defendants] GROUNDS OF JUDGMENT 1 February 2021 ……………………………………………………………………………………………………………………… --------------------------------------------------------------------------------------------------------------------------------- 2 Introduction [1] This is an appeal (“this Appeal”) by the Appellant against the decision of the learned Sessions Court Judge (“SCJ”) dated 2 December 2019, in allowing the Respondents’ application dated 28 May 2019 to set aside the judgment in default of appearance (“JID”) obtained against them on 23 July 2018. For ease of reference, the Appellant and Respondents will be referred to respectively as the Plaintiff and Defendants. The background facts [2] The Plaintiff is a banking institution which, on 29 July 2005, had granted a housing loan (“the Loan”) in the sum of MYR370,000 to the Defendants, as co-borrowers, who maintained a joint account with the Plaintiff. The Defendants’ address, at the time the loan agreement (“the Loan Agreement”) was signed, was No. 8, Jalan Gangsa Satu, Taman Kolam Air, 80200 Johor Bahru, Johor (“the First Address”). [3] In February 2016, the Defendants had defaulted on the monthly instalments despite having received a notice of demand by the Plaintiff. As a result thereof, the Plaintiff issued a Notice of Withdrawal/ Termination of the Facility dated 7 June 2016, and Notice of termination of Licence to Occupy dated 26 October 2016. There were three attempts by the Plaintiff to conduct a public auction of Unit No. B-09-03 (Developer Unit No. B-09-05), Pelita Indah Condominium, Jalan Pelita, 80300 Johor Bahru, Johor (“the Property”), which was charged by the Defendants pursuant to the Loan Agreement. The Plaintiff was successful in its third attempt and 1 February 2021 ……………………………………………………………………………………………………………………… --------------------------------------------------------------------------------------------------------------------------------- 3 on 22 January 2018, the Property was auctioned off. The Defendants were notified of such public auctions by letters dated 16 November 2017, 12 December 2017 and 16 January 2018, which were sent to the First Address (exhibited at pages 80, 83 and 86 of the Record of Appeal (Vol 2)). [4] After sending a notice of demand on 12 June 2018 to the First Address of the Defendants, claiming the balance amount owing after making the necessary deductions from the proceeds of the auction (exhibited at pages 93-97 of the Record of Appeal (Vol 2)), on 21 June 2018, the Plaintiff filed a writ of summons and statement of claim for an amount of MYR107,020.32. A copy of the writ of summons and statement of claim (collectively “the cause papers”) were sent by the Plaintiff via registered post, to the Defendants at the First Address, on 2 July 2018. [5] In the meantime, on 8 June 2018, the First Defendant sent an email to the Plaintiff informing the latter of his new address, that was, No. 193, Jalan Sutera, Taman Sentosa, Johor Bahru, 80150 Johor (“the Second Address”), to which the Plaintiff responded on 19 June 2018, informing the First Defendant that the application to change the address verbally or via email could not be accepted, and that the First Defendant should attend personally to do a bio-metric verification before effecting any change to the address. [6] On 22 June 2018, the First Defendant attended the Plaintiff’s office to do a bio-metric verification and submitted a Change of Personal Details Form (“the Form”) to change his address to 10U-1, Jalan Alimat, Off Jalan Pelita, 80300 Johor Bahru, Johor (“the Current 1 February 2021 ……………………………………………………………………………………………………………………… --------------------------------------------------------------------------------------------------------------------------------- 4 Address”). It should be noted that the Current Address was not the same as the Second Address, referred to in his email. [7] It was clearly stated in the Form that the request to change the personal details would be processed not later than 21 days from the date of the request. [8] However, since it was a joint account, the Plaintiff had informed the First Defendant that the Second Defendant would also be required to submit to the Plaintiff a letter confirming the change of address. Such letter was received by the Plaintiff only on 6 July 2018. [9] On 23 July 2018, the Plaintiff obtained judgment in default (“JID”) against the Defendants as they had failed to enter appearance. The JID was sent on 13 August 2018 to the Current Address (exhibited at pages 118-122 of the Record of Appeal (Vol 2)). [10] On 28 May 2019, the Defendants filed an application to set aside the JID, which was allowed by the learned SCJ. Hence, this Appeal was filed by the Plaintiff, which was allowed for the following reasons. The applicable law [11] It is trite law that if a judgment in default is a regular judgment, then the party intending to set it aside must establish a defence on merits; but where the judgment in default is an irregular one, it could be set aside ex debito justitiae. This was explained by Edgar Joseph Jr. FCJ in the Federal Court case of Tuan Haji Ahmed Abdul Rahman 1 February 2021 ……………………………………………………………………………………………………………………… --------------------------------------------------------------------------------------------------------------------------------- 5 v Arab-Malaysian Finance Berhad [1996] 1 CLJ 241, in the following passage: The general rule is that when it is clearly demonstrated to the satisfaction of the Court that a judgment has not been regularly obtained, the defendant is entitled to have it set aside ex debito justitiae, that is to say, irrespective of the merits and without terms. [12] The law on setting aside a judgment in default had been further distilled by the court in Bank Bumiputra (M) Bhd v Mohd Ibrahim bin Salleh [2000] 5 MLJ 778 as follows: “It is now trite law that in setting aside the judgment in default, the first step for the court to ascertain would be whether the judgment in default is regular or irregular... In Evans v. Bartlam [1937] AC 473, Lord Atkin at p. 480 of his judgment said: “... 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 ...” In Bank Bumiputra Malaysia Bhd v. Majlis Amanah Ra’ayat [1979] 1 MLJ 23, Raja Azlan Shah, Acting CJ (Malaya) (as His Majesty then was) at p. 24 aptly said: “… It is axiomatic that if the judgment is regular, then it is an inflexible rule that there must be an affidavit of merits, that is, an affidavit stating facts showing a defence on the merits ...” To me, the phrase “defence on the merits” means a defence which discloses an arguable and triable issue (B Dialdas & Co (Pte) Ltd v. Sin Sin & Co & Ors [1983] 2 CLJ 273; [1984] 2 MLJ 223).” [Emphasis added.] Contentions, evaluation, and findings Whether the JID was regular [13] The learned SCJ had allowed the Defendants’ application to set aside the JID on the basis that it was not regular, as the Plaintiff had sent the cause papers to the First Address, despite having received an email from the First Defendant regarding the change to the Second Address. 1 February 2021 ……………………………………………………………………………………………………………………… --------------------------------------------------------------------------------------------------------------------------------- 6 [14] The Plaintiff argued that the learned SCJ had erred in her decision as she had not at all considered the terms of the Loan Agreement and the provisions of the Personal Data Protection Act 2010 (“the Personal Data Protection Act”), which the Plaintiff was bound by. I agreed with the Plaintiff for the following reasons. [15] First and foremost, it was stated in clause 53.3 of the Loan Agreement that there could be no change of address unless the Plaintiff is given actual notice of the same (exhibited at page 50 of the Record of Appeal (Vol 2)). Clause 53.3 of the Loan Agreement reads:

53.3 No change in the address for service howsoever brought about shall be effective or binding on the Bank unless actual notice of such change has been given to the Bank. [Emphasis added.] [16] In accordance with clause 53.3 of the Loan Agreement, the request for change of address by the First Defendant via email dated 8 June 2018, had been refused by the Plaintiff via email dated 19 June 2018, as the identity of the requestor could not be verified unless bio-metric validation was conducted. Such refusal was made within 21-day period as prescribed by sections 36(1)(a)(i) and 37(1)(a) of the Personal Data Protection Act, which read: Section 36 – Circumstances where data user may refuse to comply with data correction request 1 February 2021 ……………………………………………………………………………………………………………………… --------------------------------------------------------------------------------------------------------------------------------- 7

A data user may refuse to comply with a data correction request under section 34 if-

the data user is not supplied with such information as he may reasonably require-

in order to satisfy himself as to the identity of the requestor; or …. Section 37 – Notification of refusal to comply with data correction request

Where a data user who pursuant to section 36 refuses to comply with a data correction request under section 34, he shall, not later than twenty-one days from the date of receipt of the data correction request, by notice in writing, inform the requestor-

of the refusal and the reasons for the refusal; and [Emphasis added.] [17] As such, the Plaintiff was not bound by the Current Address since the change of address, if at all, could only have been deemed validly effected, at earliest on 13 July 2018 (which would have been 21 days from 22 June 2018), and latest on 27 July 2018 (which would have been 21 days from 6 July 2018) – the said 21-day period prescribed by section 35 of the Personal Data Protection Act, which reads: Section 35 - Compliance with data correction request

Subject to subsections (2), (3) and (5) and section 36, where a data user is satisfied that the personal data to which a data correction request relates is inaccurate, incomplete, misleading or not up-to-date, he shall, not later than twenty-one days from the date of receipt of the data correction request-

make the necessary correction to the personal data; 1 February 2021 ……………………………………………………………………………………………………………………… --------------------------------------------------------------------------------------------------------------------------------- 8

supply the requestor with a copy of the personal data as corrected; and … [18] The cause papers, however, had already been served to the Defendants at their First Address on 2 July 2018, before the Current Address had taken effect. [19] In my view, the learned SCJ had erred as she had failed to consider that, in line with clause 53.3 of the Loan Agreement, the obligation was on the Defendants to give actual notice to the Plaintiff for the change of address, either by personally attending at the bank or by sending a signed written notification (both of which had not been effected before the cause papers were served); and that the Plaintiff, being a bank, was a data user within section 4 of the Personal Data Protection Act, and was bound by its provisions. [20] In fact, the notification via email sent by the First Defendant was not secure as the Plaintiff would have had no knowledge of who specifically had sent the email, which was neither signed nor encrypted. In such circumstances, the Plaintiff would have run the risk of compromising the security of the personal data of the Defendants, a principle of which is part of the Personal Data Protection Act as prescribed by section 5, which reads:

The processing of personal data by a data user shall be in compliance with the following Personal Data Protection Principles, namely-

the General Principle; 1 February 2021 ……………………………………………………………………………………………………………………… --------------------------------------------------------------------------------------------------------------------------------- 9

the Notice and Choice Principle;

the Disclosure Principle;

the Security Principle;

the Retention Principle;

the Data Integrity Principle; and

the Access Principle, as set out in sections 6, 7, 8, 9, 10, 11 and 12.

Subject to sections 45 and 46, a data user who contravenes subsection (1) commits an offence and shall, on conviction, be liable to a fine not exceeding three hundred thousand ringgit or to imprisonment for a term not exceeding two years or to both. [Emphasis added.] [21] The Plaintiff’s obligation to adhere to the security principle is provided for in section 9 of the Personal Data Protection Act, which reads: Section 9 – Security principle

A data user shall, when processing personal data, take practical steps to protect the personal data from any loss, misuse, modification, unauthorized or accidental access or disclosure, alteration or destruction by having regard-

to the nature of the personal data and the harm that would result from such loss, misuse, modification, unauthorized or accidental access or disclosure, alteration or destruction;

to the place or location where the personal data is stored;

to any security measures incorporated into any equipment in which the personal data is stored;

to the measures taken for ensuring the reliability, integrity and competence of personnel having access to the personal data; and 1 February 2021 ……………………………………………………………………………………………………………………… --------------------------------------------------------------------------------------------------------------------------------- 10

to the measures taken for ensuring the secure transfer of the personal data.

Where processing of personal data is carried out by a data processor on behalf of the data user, the data user shall, for the purpose of protecting the personal data from any loss, misuse, modification, unauthorized or accidental access or disclosure, alteration or destruction, ensure that the data processor-

provides sufficient guarantees in respect of the technical and organizational security measures governing the processing to be carried out; and

takes reasonable steps to ensure compliance with those measures. [Emphasis added.] [22] In the event of non-compliance with the security principle enumerated above, the Plaintiff ran the risk of being prosecuted, pursuant to section 5(2) of the Personal Data Protection Act (referred to above). [23] The learned SCJ, therefore, had taken a simplistic approach in concluding that the Plaintiff should have taken note of the change of address via email, and in doing so, had failed to consider the provisions of the Personal Data Protection Act that the Plaintiff was bound by. [24] It is also pertinent to note that the address referred to in the email for the change to be made was the Second Address and not the Current Address. [25] The Defendants, therefore, had failed to effect the change of address according to the prescribed procedure, which meant that 1 February 2021 ……………………………………………………………………………………………………………………… --------------------------------------------------------------------------------------------------------------------------------- 11 the Plaintiff had in fact effected service of all cause papers on the valid address, that is, the First Address, rendering the JID regularly entered against the Defendants. Whether the delay was satisfactorily explained [26] Since it was my view that the JID obtained against the Defendants was in fact regular, the issue, therefore, was whether the delay by the Defendants, in filing the application to set aside the JID, was satisfactorily explained. [27] The JID was obtained by the Plaintiff on 23 July 2018 and was served on the Defendants on 13 August 2018 at their Current Address. The Defendants were, therefore, required to file the application to set aside the JID within 30 days from the date of receipt, that is, by 13 September 2018, as prescribed by Order 42 of the Rules of Court 2012 (“Rules of Court”), which reads: Order 42 – Judgment and orders Rule 13 – Setting aside or varying judgment and orders Save as otherwise provided in these Rules, where provisions are made in these Rules for the setting aside or varying of any order or judgment, a party intending to set aside or to vary such order or judgment shall make an application to the Court and serve it on the party who has obtained the order or judgment within thirty days after the receipt of the order or judgment by him. [Emphasis added.] [28] However, the application to set aside the JID was filed only on 28 May 2019, which amounted to a delay of eight and a half months. 1 February 2021 ……………………………………………………………………………………………………………………… --------------------------------------------------------------------------------------------------------------------------------- 12 [29] The importance of complying with this time-period was underscored in several cases including the Court of Appeal cases of Mirra Sdn Bhd v The Ayer Molek Rubber Co Bhd [2008] 2 MLJ 348, Khor Cheng Wah v Sungai Way Leasing Sdn Bhd [1996] 1 MLJ 223, Hong Kwi Seong v. Ganad Media Sdn Bhd [2013] 9 CLJ 277, Thye Ah Chai (t/a Kent Naga Enterprise) v Teraju Mercu Construction & Engineering Sdn Bhd [2014] 1 MLJ 422; and the High Court case of Malayan Banking Bhd v Mahmood Zuhdi Hg Mohd Nor [2001] 6 MLJ

[30] In Mirra Sdn Bhd v The Ayer Molek Rubber Co Bhd [2008] 2 MLJ 348, the application to set aside the judgment in default was filed four months after it was served on the defendant. The Court of Appeal acknowledged that delay was an important consideration in exercising any discretion to set aside a judgment in default, and had accordingly refused the application. [31] In Thye Ah Chai (t/a Kent Naga Enterprise) v Teraju Mercu Construction & Engineering Sdn Bhd [2014] 1 MLJ 422, it was stated by the Court of Appeal that Order 42 rule 13 of the Rules of Court is mandatory, and an applicant filing an application beyond the prescribed time limit, is obliged to provide cogent reasons for any delay. In that case, since the reasons were not satisfactorily explained, the Court of Appeal allowed the appeal and reinstated the judgment in default without even considering the merits of the application. [32] In this case, the delay was for more than 8 months. The Defendants contended that the delay was immaterial, as the JID should be set aside ex debitio justitae. However, it should be noted that in the 1 February 2021 ……………………………………………………………………………………………………………………… --------------------------------------------------------------------------------------------------------------------------------- 13 present case, it was my view that the JID was regular and, therefore, the issue of delay becomes imperative. The explanation provided by the Defendants for the delay in filing their application to set aside the JID was unsatisfactory, as they said they had only known about the JID when the Plaintiff claimed for the shortfall from the public auction. This was unacceptable, bearing in mind that the JID was sent to the Defendants at their Current Address. In my view, therefore, no reasonable explanation was provided for the delay in filing the application to set aside the JID. [33] Furthermore, in the absence of an application for extension of time by the Defendants, the application to set aside the JID was filed well out of time, and was bad in law. This was emphasised in Malayan Banking Bhd v Mahmood Zuhdi Hg Mohd Nor [2001] 6 MLJ 209, where the court acknowledged that the 30-day time frame is a strict one, and that a party would be required to file an application to extend time under Order 3 rule 5 of the Rules of Court, which reads: Order 3 – Time Rule 5 – Extension of time

The Court may, on such terms as it thinks just, by order extend or abridge the period within which a person is required or authorised by these Rules or by any judgment, order or direction, to do any act in any proceedings.

The Court may extend any such period as referred to in paragraph

although the application for extension is not made until after the expiration of that period.

The period within which a person is required by these Rules, or by any order or direction, to serve, file or amend any pleading or other document may be extended by consent in writing without an order of the Court being made for that purpose. 1 February 2021 ……………………………………………………………………………………………………………………… --------------------------------------------------------------------------------------------------------------------------------- 14 [34] In any event, even if the JID was irregularly obtained, the Court should not tolerate indolence on the part of the litigant. This was emphasised in several cases including Khor Cheng Wah v Sungai Way Leasing Sdn Bhd [1996] 1 MLJ 223, and Tuan Haji Ahmed Abdul Rahman v Arab-Malaysian Finance Bhd [1996] 1 MLJ 30. [35] In Khor Cheng Wah v Sungai Way Leasing Sdn Bhd [1996] 1 MLJ 223, the following comments of Gopal Sri Ram JCA are pertinent: It is a cardinal principle of law, that when a litigant seeks the intervention of the court in a matter that affects his rights, he must do so timeously. The maxim vigilantibus, non dormientibus, jura subveniunt, though having its origins in the Court of Chancery, is of universal application. Even in cases where a right is exercisable ex debito justitiae, a court may refuse relief to an indolent litigant. In all cases in which delay in approaching the court is in issue, the burden is upon the litigant who has delayed to render a satisfactory explanation for it. [Emphasis added.] [36] The same reminder was administered by Edgar Joseph Jr FCJ in Tuan Haji Ahmed Abdul Rahman v Arab-Malaysian Finance Bhd [1996] 1 MLJ 30: Having said that it should be added that the application to set aside such a judgment should be made: (a) with reasonable promptitude, in other words within a reasonable time; and (b) before the defendant has taken any fresh step after becoming aware of the irregularity. [37] It is pertinent to note therefore, that an application to set aside a judgment in default must be made timeously, even where the right is exercisable ex debito justitiae, and that the Court may refuse relief, especially where the delay is not satisfactorily explained. 1 February 2021 ……………………………………………………………………………………………………………………… --------------------------------------------------------------------------------------------------------------------------------- 15 [38] However, in this case, since the JID was in my view, regularly obtained, and served on the Current Address of the Defendants, the reasons for the delay had to be considered, which had not been done by the learned SCJ, rendering it an appealable error. Whether there was a defence on merits [39] The Defendants’ defence was that the calculation of the shortfall was inaccurate. I found this argument untenable since this objection was raised more than a year after the Defendants were last notified of the public auctions via notice dated 16 January 2018; and had subsequently received the notice of demand on 12 June 2018. In fact, it was inequitable for the Defendants to now plead ignorance especially after they had remained silent all this while, even after being notified of the public auctions of the Property. Conclusion [40] In the upshot, based on the aforesaid reasons, and after careful scrutiny of all the evidence before this Court, both oral and documentary, including submissions of both parties and the grounds of judgment of the learned SCJ, I allowed this Appeal with costs in the sum of MYR2,500 (subject to allocatur fees). Dated: 1 February 2021 ………….…SIGNED…………… (EVROL MARIETTE PETERS) Judicial Commissioner High Court, Johor Bahru 1 February 2021 ……………………………………………………………………………………………………………………… --------------------------------------------------------------------------------------------------------------------------------- 16 Counsel: For the Appellant/ Plaintiff – YX Gwee; Messrs Arthur Lee & Company For the Respondents/ Defendants – G Ravi and C Sivasankar; Messrs G Ravi Cases referred to:  Bank Bumiputra (M) Bhd v Mohd Ibrahim bin Salleh [2000] 5 MLJ 778  Hong Kwi Seong v. Ganad Media Sdn Bhd [2013] 9 CLJ 277  Khor Cheng Wah v Sungai Way Leasing Sdn Bhd [1996] 1 MLJ 223  Malayan Banking Bhd v Mahmood Zuhdi Hg Mohd Nor [2001] 6 MLJ 209  Mirra Sdn Bhd v The Ayer Molek Rubber Co Bhd [2008] 2 MLJ 348  Thye Ah Chai (t/a Kent Naga Enterprise) v Teraju Mercu Construction & Engineering Sdn Bhd [2014] 1 MLJ 422  Tuan Haji Ahmed Abdul Rahman v Arab-Malaysian Finance Bhd [1996] 1 MLJ 30 Legislation referred to:  Rules of Court 2012, Order 3, Order 42  Personal Data Protection Act 2010, sections 4, 5, 9, 35, 36, 37