Rainbow Marble & Tiling Sdn. Bhd. v S. P. Granite Sdn. Bhd. (JA-22NCC-83-10/2021)

RM250,000.00 to be paid before/on 1.3.2020;

RM250,000.00 to be paid before/on 1.9.2020;

RM250,000.00 to be paid before/on 1.3.2021; and

RM374,136.47 to be paid before/on 1.9.2021. [4] SMCB was wound up on 27.2.2020 vide the Kuala Lumpur High Court Winding Up Petition No. WA-28NCC-1233-011/2020. [5] As the Defendant failed to pay the Debt despite numerous demands issued by the Plaintiff’s solicitors, on 12.10.2021 the Plaintiff filed the Writ and Statement of Claim against the Defendant for recovering the Debt. [6] A personal service of the Writ and Statement of Claim was done to the Defendant on 20.10.2021 and an affidavit of service was filed by the Plaintiff on 5.11.2021. S/N woluKsTnUkm9FJ6ucmLHbg [7] The Certificate of Non-appearance was filed on 5.11.2021 and a JID was entered against the Defendant on 5.12.2021. [8] The Defendant was wound up on 22.2.2022 vide the Seremban High Court Winding Up Petition No. NA-28NCC-39-11/2021. [9] Almost a year after the JID was entered, on 13.11.2022 the Defendant filed a notice of application as to extend the time of filing the application and to set aside the JID on the following grounds:

the service of the Writ and Statement of Claim was irregular as it was done at the registered address of the Defendant which was the address of the then Defendant’s company secretary by the name of Low Eng Tack;

the JID was obtained by way of conspiracy to defraud the Defendant perpetrated by Foo Chooi Wai, Ong Kow Ee @ Ong Chiow Chuen, Tay Ah Tai and Low Eng Tack who allowed the JID be entered against the Defendant; and

the Defendant denied the Debt as there was no reason for it to purchase the alleged tiles from the Plaintiff. The Plaintiff was an associate company of the Defendant and both are subsidiaries of and fully owned by SMCB. [10] The Plaintiff in opposing the Defendant’s application stated the following grounds:

there was inordinate delay in the Defendant’s application and no reasonable explanation given by the Defendant on the delay; S/N woluKsTnUkm9FJ6ucmLHbg

there was no irregularity in the service of the Writ and

the Defendant has no defence of merit. Whether there was inordinate delay by the Defendant [11] O. 42 r. 13 of the Rules of Court 2012 (“ROC”) requires that any application to set aside an order or judgment must be made within 30 days from the receipt of the order or judgment by the affected party. The provision says – Setting aside or varying judgment and orders (O. 42, r. 13)

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. [12] As alluded to earlier, the JID was entered on 5.12.2021 and as such the application to set aside the JID must be made by the Defendant before or on 4.1.2022. Nevertheless, the Defendant only filed this application on 13.11.2022 i.e. 10 months after the due date. [13] About the delay in filing this application, the Defendant explained as follows:

Although SMCB was wound up on 27.2.2020, Mr Sundarasan a/l Arumugam was only appointed to act and carry out duties and responsibilities as the private liquidator of SMCB on 15.2.2022. As the private liquidator of SMCB, Mr Sundarasan S/N woluKsTnUkm9FJ6ucmLHbg stated that he conducted investigations on SMCB and its subsidiary companies including the Defendant. Upon carrying out an extensive investigation on the Defendant, Mr Sundarasan discovered that the JID entered against the Defendant was by way of conspiracy to defraud the Defendant perpetrated by Foo Chooi Wai, Ong Kow Ee @ Ong Chiow Chuen, Tay Ah Tai and Low Eng Tack who were the Defendant’s former directors before it was wound up.

Mr Sundarasan also believed that there was no reason for the Defendant as a producer of marbles and granites, to purchase the alleged tiles from the Plaintiff. Further, the Plaintiff was an associate company and the sister company of the Defendant as well as both are subsidiaries of and fully owned by SMCB.

As a result of the investigation, Mr Sundarasan immediately applied for sanction from the winding up court and obtained the relevant order on 21.10.2022 to file this application. On 10.11.2022, Mr Sundarasan filed this application on behalf of the Defendant as to set aside the JID. [14] It is trite law that the burden and onus is on the applicant to prove that there was no inordinate delay in the application and this must be explained and shown in the affidavits. Upon perusal the explanation given by the Defendant via the private liquidator of SMCB, I find that there was no explanation whatsoever offered by the Defendant as to why this application was not made within the one month period as required by the ROC. The JID was duly sent to the Defendant via a registered post on 21.12.2021 to the Defendant’s registered address. Undoubtedly the S/N woluKsTnUkm9FJ6ucmLHbg Defendant had full knowledge about the existence of the JID and ample time to set aside it but it failed to do so within time. Bear in mind that the Defendant is a company run by directors and staff alas nobody was concerned to take any immediate action to set aside the JID. It begs a question as to why the Defendant was willing to wait until Mr. Sundarasan to take such action and put the task on Mr Sundarasan to explain the delay. I agree with the Plaintiff that the Defendant’s explanation is an afterthought and more importantly not relevant at all. Therefore, I find that the Defendant’s action in filing this application 10 months after the mandatory period set under the ROC without any reasonable explanation was clearly inordinate delay. Whether the service of the Writ and Statement of Claim was irregular [15] O. 13 r. 8 of the ROC gives the court an absolute discretion to set aside any judgment entered during a proceedings. The Order reads – Setting aside judgment (O. 13, r. 8)

The Court may, on such terms as it thinks just, set aside or vary any judgment entered in pursuance of this Order. [16] When considering an application to set aside a JID, the first task of the court is to ascertain whether it is a regular judgment or otherwise. Where it is an irregular judgment, then the JID ought to be set aside as of right. Nevertheless, if it is regular, the Court has to determine whether a defence on the merits has been shown (see Lai Yoke Ngan v. Chin Teck Kwee & Anor [1997] 3 CLJ 305). In Yap Ke Huat & Ors v. Pembangunan Warisan Murni Sejahtera Sdn Bhd & Anor [2008] 4 CLJ 175, James Foong JCA (as the Lordship then was) held – S/N woluKsTnUkm9FJ6ucmLHbg

When considering an application to set aside a judgment in default, the first task is to ascertain whether it is a regular or irregular judgment. If it is an irregular judgment, then the default judgment ought to be set aside ex debitiojustitae. If it is regularly obtained, then the principle expounded in Evans v Bartlam applies (see the Federal Court judgment in Hasil Perumahan Sdn Bhd & Ors v. United Malayan Banking Berhad. This requires the defendant to show that he has a defence on merits. Delay in making such application is a factor to be considered by the court in deciding whether to grant or refuse the application. The learned judge applied these principles of law correctly when evaluating the application. However, his ruling that the application was made out of time was wrong as the facts showed that the application was made well within the 30-day period as stipulated under O. 42 r. 13 RHC. (paras 15 & 16) [17] In the present action, as the Defendant is a company, O. 62 r.4 of the ROC applies pertaining to the service of a writ. The provision reads – Service on corporation (O. 62, r. 4)

4.

Where an action is against a corporation, the writ may be served—

by leaving a copy of it at the registered office (if any) of the corporation;

by sending a copy of it by registered post addressed to the corporation at the office, or, if there are more offices than one at the principal office of the corporation, whether such office is situated within Malaysia or elsewhere;

by handing a copy of it to the secretary or to any director or other officer of the corporation; or

in the case of a foreign company registered under Part XI of the Companies Act 1965 [Act 125] by handing a copy of it to, or sending the same by registered post to, a S/N woluKsTnUkm9FJ6ucmLHbg person authorized to accept service of process on behalf of the foreign company. [18] The Writ and Statement of Claim were served via a personal service on the Defendant at its address which was registered with the Suruhanjya Syarikat Malaysia (“SSM”) and were received by its secretary. In light of this, I agree with learned counsel for the Plaintiff that the service of the Writ and Statement of Claim was regular. Whether the Defendant has defence on merit [19] The Defendant raised the following grounds as its defence:

there was a conspiracy to defraud the Defendant perpetrated by Foo Chooi Wai and Ong Kow Ee @ Ong Chiow Chuen who were directors of both the Plaintiff and the Defendant in connivance with Tay Ah Tai and Low Eng Tack, the then Defendant’s company secretary. In view of this conspiracy, on 7.7.2022 SMCB had filed a suit at the Seremban High Cout via Writ No. NA-22NCC-5-07/2022 against Foo Chooi Wai, Ong Kow Ee @ Ong Chiow Chuen, Tay Ah Tai and Low Eng Tack for fraudulently transferring the SMCB’s shares in the Plaintiff to Tay Ah Tai;

the Defendant did not owe anything to the Plaintiff as there was no reason for the former to purchase the alleged tiles from the latter. The Plaintiff was an associate company of the Defendant and both are subsidiaries of and fully owned by SMCB; S/N woluKsTnUkm9FJ6ucmLHbg

the alleged settlement letter dated 3.9.2019 was a document fraudulently created by Foo Chooi Wai and Ong Kow Ee @ Ong Chiow Chuen in connivance with Tay Ah Tai and Low Eng Tack;

the Writ and Statement of Claim were served upon Low Eng Tack, the then company secretary and neither he or the then directors of the Defendant namely Foo Chooi Wai and Ong Kow Ee @ Ong Chiow Chuen took any step to defend the suit herein. Foo Chooi Wai, Ong Kow Ee @ Ong Chiow Chuen, Tay Ah Tai and Low Eng Tack (“Conspirators”) were contented to allow the JID be entered against the Defendant. [22] Upon scrutinizing the Statement of Claim, I find that the claim made by the Plaintiff is based on the settlement letter dated 3.9.2019 issued by Ong Kow Ee @ Ong Chiow Chuen as the Defendant’s director wherein the Defendant agreed to settle the Debt of RM1,124,136.47. [23] The Defendant denied the existence of the settlement letter and alleged that the letter was fraudulently created by the Conspirators. Further, there was no invoices or purchase orders produced by the Plaintiff to corroborate the claim that the letter was issued in relation to the sale of tiles by the Plaintiff to the Defendant. [24] I find that the settlement letter was duly issued by the Defendant and nothing is wrong with the letter. There was no documentary evidence or at least a police report produced by the Defendant to support its allegation that the settlement letter was fraudulently issued. In this context, I find instructive the statement of principles by the Federal Court in Hong Yik Trading v. Liziz Plantation Sdn Bhd [2017] 8 CLJ 491; [2017] 5 MLJ 398 where it was held that: S/N woluKsTnUkm9FJ6ucmLHbg [12] It is settled law that the burden of proof rests throughout the trial on the party who asserts that the facts exist (section 101 of the Evidence Act 1950). Where a party on whom the burden of proof lies has discharged that burden then the evidential burden shifts to the other party. However, if the party on whom the burden of proof lies fails to discharge it, the other party need not call any evidence. [25] Thus, in the absence of any evidence brought by the Defendant, I find that the allegation about the settlement letter was fraudulently issued is merely a bare statement without basis. [26] I have to add here that it is trite that a settlement agreement would preclude parties from relying on the original cause of action. In Sambu (M) Sdn. Bhd. v. Stone World Sdn Bhd. (formerly known as Kostone Sdn Bhd) & Anor [1996] 2 CLJ 523 where Abdul Malik Ishak J (as he then was) held that – That was said in the context of an O. 25, r. 1 (4) of the RHC where the defendants there sought to dismiss the plaintiffs' claim for want of prosecution. To that I must add that there must also be some measure of intearity and righteousness. Sargant J. in Re Hearn, de Bertodano v. Hearn [1913] 108 LT 452 at 454 did say that where the parties settle or compromise pending proceedings, whether before, at or during the trial, the settlement or compromise constitutes a new and independent agreement between them made for good consideration. Its effects have been said to be:

to put an end to the proceedings, for they are thereby spent and exhausted: per Sargant J. in Re Hearn, de Bertodano v. Hearn (supra);

to preclude the parties from taking any further steps in the action (Green v. Rozen [1955] 2 ALL ER 797; [1955] 1 WLR 741), S/N woluKsTnUkm9FJ6ucmLHbg except where they have provided for liberty to apply to enforce the agreed terms (Dashwood v. Dashwood [1927] WN 276);

to supersede the original cause of action altogether (Smythe v. Smythe [1887] 18 QBD 544 DC). [27] The same principle was held by the Court of Appeal in Pacific Sanctuary Holdings Sdn Bhd v. Masaland Construction Sdn Bhd [2020] 4 CLJ 490 where Kamardin Hashim JCA when delivering the judgment of the court held that – [21] Another point is that we agree with learned counsel for the defendant's submission that the learned JC had erred in law and in fact in granting leave to the plaintiff for failure by the learned JC to take into consideration that there is no longer any pending judgment and/or order of the court to be enforced as the said judgments and/or order have been superseded or extinguished by the settlement agreement entered between the parties on 28 May 2012. The settlement agreement constitutes a new and independent agreement for good consideration. Its effect in law is to supersede the original cause of action altogether and put an end to the proceedings, which are thereby spent and exhausted. The parties are therefore precluded from taking any further steps in the action. [28] Based on the above principle, the Defendant’s argument that the Plaintiff’s failure to produce invoices and purchase orders as to prove the transaction between parties, is misconceived. Instead, by virtue of the settlement letter issued by the Defendant, the Plaintiff has no obligation to bring other evidence to substantiate its claim. The settlement letter itself is more than sufficient to trigger the Plaintiff’s claim against the Defendant. S/N woluKsTnUkm9FJ6ucmLHbg [29] On the issue of conspiracy to defraud the Defendant, in Renault SA v. Inokom Corp Sdn Bhd & Anor [2010] 5 CLJ 32; [2010] 5 MLJ 394, the Court of Appeal laid down the key principles for an allegation of conspiracy to succeed. KN Segara JCA when delivering the judgment of the court said – [32] In regard to the tort of conspiracy, the following need to be satisfied at this interlocutory stage:

an agreement between two or more persons (that is an agreement between Tan Chong and others);

an agreement for the purpose of injuring Inokom and Quasar;

that acts done in execution of that agreement resulted in damage to Inokom and Quasar;

damage is an essential element and where damage is not pleaded the Statement of Claim may be struck out. [see Yap JH v. Tan Sri Loh Boon Siew & Ors [1991] 3 CLJ 2960; [1991] 4 CLJ (Rep) 243 HC] [30] I find that the Defendant failed to prove any evidence that there was any agreement among the Conspirators for the purpose of injuring the Defendant as required by Renault SA (supra). [31] Likewise, the mere fact that SMCB had filed an action against the Conspirators at the Seremban High Court does not turn the allegation of conspiracy into one that is bona fide true. The action is still pending for hearing and decision. Thus, the allegation of conspiracy in that action has S/N woluKsTnUkm9FJ6ucmLHbg no bearing in discharging the Defendant’s duty to prove that the conspiracy as claimed is really in existence herein. [32] In the final analysis, after perusing the Defendant’s affidavits, I am satisfied that the elements of the alleged act of conspiracy among the Conspirators had not been cogently and reasonably established by the Defendant. Conclusion [33] Having considered the facts and the circumstances of the present case, it is my considered view that the Defendant failed to establish any merit in this application. I find that the JID of apprearance was regularly entered and the Defendant failed to show that it has merit in its defence let alone there was inordinate delay in filing this application. As such, I dismiss the Defendant’s application in Enclosure 8 to set aside the JID dated 5.12.2021 with costs. Dated: 24.4.2023 -SIGNED - (SHAMSULBAHRI BIN HAJI IBRAHIM) Judicial Commissioner, High Court, Johor Bahru Counsels: For the Plaintiff – Goh Tiong Sin; Messrs S.K Song For the Defendant – R. Thayalan (Pannirselvam a/l Mannar with him); Messrs Nurliny, Pannir Mannar & Co. S/N woluKsTnUkm9FJ6ucmLHbg Cases referred to:  Hong Yik Trading v. Liziz Plantation Sdn Bhd [2017] 8 CLJ 491; [2017] 5 MLJ 398  Lai Yoke Ngan v. Chin Teck Kwee & Anor [1997] 3 CLJ 305  Pacific Sanctuary Holdings Sdn Bhd v. Masaland Construction Sdn Bhd [2020] 4 CLJ 490  Renault SA v. Inokom Corp Sdn Bhd & Anor [2010] 5 CLJ 32; [2010] 5 MLJ 394  Sambu (M) Sdn. Bhd. v. Stone World Sdn Bhd. (formerly known as Kostone Sdn Bhd) & Anor [1996] 2 CLJ 523  Yap Ke Huat & Ors v. Pembangunan Warisan Murni Sejahtera Sdn Bhd & Anor [2008] 4 CLJ 175 Legislations referred to:  Rules of Court 2012 - O. 13 r. 8, O. 42 r. 13 & O. 62 r.4 S/N woluKsTnUkm9FJ6ucmLHbg