Suhaini Bin Mohammad v 1. ) Pandan Hotel Sdn. Bhd. (JA-12A-11-07/2020)

PANDAN HOTEL SDN. BHD. (No. Syarikat: 799943-H) …FIRST RESPONDENT

BILLION MEWAH SDN BHD (No. Syarikat: 905597-T) …SECOND RESPONDENT (Dalam perkara mengenai Mahkamah Sesyen di Johor Bahru Guaman Sivil No: JA-A52-17-04/2018) BETWEEN PANDAN HOTEL SDN. BHD. (NO. SYARIKAT: 799943-H) … PLAINTIFF

BILLION MEWAH SDN. BHD.

SUHAINI BIN MOHAMMAD … DEFENDANTS GROUNDS OF JUDGMENT 17 April 2021 ………………………………………………………………………………………………………………………………………………. ---------------------------------------------------------------------------------------------------------------------------------------------------- 2 Introduction [1] This was an appeal by the Appellant against the decision of the learned Sessions Court Judge (“SCJ”) on 1 July 2020, who dismissed the Appellant’s application to set aside the judgment in default (“the JID”) entered against him on 15 July

For ease of reference, the Appellant and First Respondent will be referred to respectively as the Second Defendant and Plaintiff. The background facts [2] The Plaintiff filed an action (“this Action”) against the Defendants pursuant to a tenancy agreement (“the Tenancy Agreement”) wherein the Plaintiff claimed for surrender of vacant possession against the First Defendant, and arrears in rental payment amounting to approximately MYR200,000 against both the First and Second Defendants. [3] This Action was filed on 11 April 2018, with its amended Writ of Summons and Statement of Claim dated 19 November

The Second Defendant filed his amended Defence on 24 December 2018. [4]

The Court, having given directions under rule 2(2) or rule 3 may either on its own motion or upon the application of any party, if any party defaults in complying with any such directions, dismiss such action or proceedings or strike out the defence or counterclaim or enter judgment or make such order as it thinks fit. [Emphasis added.] [6] The Second Defendant then, through his current solicitors, filed an application on 5 January 2020 to set aside the JID, on the grounds, inter alia, that he had not received it and that he had a defence on merits. The learned SCJ dismissed the application. Hence the Second Defendant filed this Appeal, which was dismissed for the following reasons. 17 April 2021 ………………………………………………………………………………………………………………………………………………. ---------------------------------------------------------------------------------------------------------------------------------------------------- 4 The applicable law [7] The approach of the Court when considering an application set aside a JID is, that the Court must first ascertain if the JID is a regular or irregular judgment. If the JID is an irregular one, it is set aside ex debitio justitae. [8] However, if the JID was regularly obtained, the Court then has to determine whether there is a defence on merits. In doing so, the delay in making the application to set aside is a factor to be considered by the Court in deciding whether to grant or refuse the application. Whether the JID was regularly obtained [9] The Second Defendant claimed that he had not received the JID, and averred that he had no idea that his previous solicitors had discharged themselves and, as such, he had not been apprised of the development of his case. [10] At the outset, I would like to state that I am mindful of the case of Goh Teng Whoo v Ample Objectives [2021] MLJU 300, where it was held by the Federal Court that proof of posting only creates a presumption of service by virtue of section 12 of the Interpretation Acts 1948 and 1967, which reads: Section 12 – Service by post Where a written law authorises or requires a document to be served by post, then, until the contrary is proved, service- 17 April 2021 ………………………………………………………………………………………………………………………………………………. ---------------------------------------------------------------------------------------------------------------------------------------------------- 5

shall be presumed to be effected by properly addressing, prepaying and posting by registered post a letter containing the document; and

shall be presumed to have been effected at the time when the letter would have been delivered in the ordinary course of the post. [11] The Federal Court further explained that such presumption could be rebutted, and as such, it was incumbent on the party to produce the AR cards containing endorsement by the recipients or their authorised representatives as evidence of service, and that concrete evidence of service by way of AR registered post would be the production of AR card signed by the purported recipient or his authorised representative which was required to be exhibited in the affidavit of service. [12] However, it is pertinent to note that in this case, the learned SCJ was without the benefit of the landmark decision by the Federal Court as her decision was delivered on 1 July 2020. In fact, in this Appeal, parties had not submitted on Goh Teng Whoo v Ample Objectives as the judgment in that case was delivered only on 5 March 2021, whilst the hearing of this Appeal was on 16 December 2020. [13] In any event, in my view, the case of Goh Teng Whoo v Ample Objectives did not apply as first and foremost, in the present case, service was contractual, which attracted Order 10 rule 3(1) of the Rules of Court, which reads: Order 10 – Service of originating process: General provisions Rule 3 – Service of writ in pursuance of contract 17 April 2021 ………………………………………………………………………………………………………………………………………………. ---------------------------------------------------------------------------------------------------------------------------------------------------- 6

Where-

a contract contains a term to the effect that the Court shall have jurisdiction to hear and determine any action in respect of a contract or, apart from any such term, the Court has jurisdiction to hear and determine any such action; and

the contract provides that, in the event of any action in respect of the contract being begun, the process by which it is begun may be served on the defendant, or on such other person on his behalf as may be specified in the contract, in such manner or at such place (whether within or out of the jurisdiction) as may be so specified, then, if an action in respect of the contract is begun in the Court and the writ by which it is begun is served in accordance with the contract, the writ shall, subject to paragraph (2), be deemed to have been duly served on the defendant.

A notice of a writ which is served out of the jurisdiction in accordance with a contract shall not be deemed to have been duly served on the defendant in accordance with paragraph (1) unless leave to serve such notice out of the jurisdiction has been granted under Order 11, rule 1 or 2. [14] Reference was made to clause 13A of the Tenancy Agreement, which reads: Service of Documents, Stamp, And Registration Fee, Schedule, Waiver, Interpretation & Persons To Be Bound By Agreement 13A Any notice, request or demand required to be served by either party htereto to the other under this Agreement shall be in writing and shall be deemed to be sufficiently served:

13A.1 If it is sent by the party or his solicitors by registered post addressed to the other party’s address hereinbefore mentioned and in such case it shall be deemed to have been received at the time when such registered letter would in the ordinary course be delivered; or

13A.2 If it given by the party or his solicitors by hand to the other party or his solicitors 17 April 2021 ………………………………………………………………………………………………………………………………………………. ---------------------------------------------------------------------------------------------------------------------------------------------------- 7 [15] The documentary evidence indicated that the Plaintiff had complied with clause 13A of the Tenancy Agreement with regard to service of the documents. [16] Secondly, the rationale of the case of Goh Teng Whoo v Ample Objectives was to protect an unsuspecting recipient and to ensure that he was not caught by surprise. In that context, it was stated by Abdul Rahman Sebli FCJ in the following passage: It is anathema to the concept of justice and fair play that a defendant who has no knowledge of the action is attached with liability without being given the opportunity to explain why the default judgment should not be entered against him. [17] In this case, the Second Defendant was far from unsuspecting. He was elusive and had no intention of accepting the documents. This is also indicated by his refusal to acknowledge and respond to the WhatsApp message sent to him by the Plaintiff, requesting for an appointment to serve the JID obtained against him. The blue tick at the message indicated that the Second Defendant had read, but chose to ignore the text. This cat and mouse game that the Second Defendant embarked on pointed to an irresistible inference of not only his refusal to cooperate, but also his intention to evade service. Since he chose to ignore service of the documents, it does not lie in his mouth now to claim that service was not proper. As such, it would be inequitable for the Second Defendant to seek protection of the principle in Goh Teng Whoo v Ample Objectives, as he had not rebutted 17 April 2021 ………………………………………………………………………………………………………………………………………………. ---------------------------------------------------------------------------------------------------------------------------------------------------- 8 the presumption of service in section 12 of the Interpretation Acts. Whether the delay in setting aside the JID was satisfactorily explained [18] In any event, the nub of the Second Defendant’s contention was that he had a defence on merits, However, in addressing that issue, one of the factors that had to be considered was the Second Defendant’s delay in filing the application to set aside, which timeline is prescribed by Order 42 rule 13 of the 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.] [19] Since I had agreed with the learned SCJ that the JID obtained against the Second Defendant was regularly entered, the Second Defendant was, therefore, required to file the application to set aside the JID within 30 days from the date of receipt. However, such application was filed only on 5 January 2020, which was a delay of approximately six months. 17 April 2021 ………………………………………………………………………………………………………………………………………………. ---------------------------------------------------------------------------------------------------------------------------------------------------- 9 [20] 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, and 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

[21] 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. [22] 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 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. 17 April 2021 ………………………………………………………………………………………………………………………………………………. ---------------------------------------------------------------------------------------------------------------------------------------------------- 10 [23] In this case, the Second Defendant was silent for more than 10 months since March 2019 when his previous solicitors had discharged themselves, and had delayed filing the application to set aside for six months since receiving the JID. The delay was clearly substantial and all the Second Defendant did was to blame his previous solicitors for failing to apprise him. I found this contention wholly unconvincing and as such, I found the Second Defendant’s delay deliberate and contumelious. [24] I am mindful that the procedural rules should not lead to injustice by depriving a party the opportunity to argue his case. However, in my view, the Second Defendant, due to his indolence, could not be granted the same of justice as the Plaintiff, who in my view was diligent. [25] It is crucial to note that the Court should not tolerate indolence on the part of the litigant, even if the JID was irregularly obtained. 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. In Khor Cheng Wah v Sungai Way Leasing Sdn Bhd [1996] 1 MLJ 223, the following comments of Gopal Sri Ram JCA (as he then was) 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. 17 April 2021 ………………………………………………………………………………………………………………………………………………. ---------------------------------------------------------------------------------------------------------------------------------------------------- 11 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.] [26] 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. [27] As such, an application to set aside a JID must be made timeously, even where the right is exercisable ex debitio justitiae. In this case, since the JID was in fact regular, the inexplicable delay rendered it imperative for this Court to refuse relief. Whether there was a defence on merits [28] The Second Defendant’s Defence was that the Tenancy Agreement was between the Plaintiff and the First Defendant, and that the Second Defendant had signed the Tenancy Agreement as a director. As such, based on the concept of separate legal entity, he could not be made liable. The Second Defendant claimed that this was fortified by the fact that he had already transferred his shares and resigned as a director before this Action was filed. 17 April 2021 ………………………………………………………………………………………………………………………………………………. ---------------------------------------------------------------------------------------------------------------------------------------------------- 12 [29] At this juncture, it is crucial to note that a perusal of the Second Defendant’s Defence indicated that he had not at all pleaded the concept of separate legal entity. [30] At this juncture, it is pertinent to note that parties are bound by their pleadings. Reference is made to the Federal Court case of Samuel Naik Siang Ting v. Public Bank Bhd [2015] 6 MLJ 10, where it was stated by Ramly Ali FCJ: It is a cardinal rule in civil litigation that parties are bound by their pleadings and are not allowed to adduce facts and issues which they have not pleaded…. The Supreme Court in Lee Ah Chor v. Southern Bank Bhd [1991] 1 CLJ 667; [1991] 1 CLJ (Rep) 239; [1991] 1 MLJ 428, had also emphasised the importance of pleadings and ruled that where a vital issue was not raised in the pleadings it could not be allowed to be argued and to succeed on appeal (see also Ambank (M) Bhd v. Luqman Kamil Mohammed Don [2012] 3 CLJ 551; [2012] MLJU 56 FC). [Emphasis added.] [31] The objective of pleadings is, therefore, to prevent parties from being caught by surprise. I am guided by the Federal Court in KEP Mohamed Ali v. KEP Mohamed Ismail [1980] 1 LNS 169, in the following passage by Raja Azlan CJ (Malaya) (as he then was), which was adopted subsequently by a plethora of cases including Ang Koon Kau & Anor v Lau Piang Ngong [1984] 2 MLJ 277, [1985] CLJ Rep 24: As one of the objects of modern pleadings is to prevent surprise, we cannot for one moment think that the defendant was taken by surprise. To condemn a party on a ground of which no material facts have been pleaded may be as great a denial of justice as to 17 April 2021 ………………………………………………………………………………………………………………………………………………. ---------------------------------------------------------------------------------------------------------------------------------------------------- 13 condemn him on a ground on which his evidence has been improperly excluded. [Emphasis added.] [32] Secondly, clause 13E.1 of the Tenancy Agreement makes it crystal clear that the liability of the Second Defendant is ‘joint and several. The clause reads: Service of Documents, Stamp, And Registration Fee, Schedule, Waiver, Interpretation & Persons To Be Bound By Agreement 13E In this Agreement, where the context so admits:

13E.1 ‘Tenant’ includes his heirs, personal representative, successors in title and permitted assigns and where there are two or more persons included in the expression ‘the Tenant’ their liabilities under this Agreement shall be joint and several; [Emphasis added.] [33] The Plaintiff had also highlighted to the Court that the Second Defendant was bound by the terms of the Tenancy Agreement, which included clause 5A, which reads: Tenant’s Covenants 5A The tenant hereby further agrees and covenants with the Landlord as follows:

5A.16 Except with the prior written consent of the Landlord, the Tenant shall not effect any form of reconstruction, or amalgamation and shall not permit any change of ownership or 17 April 2021 ………………………………………………………………………………………………………………………………………………. ---------------------------------------------------------------------------------------------------------------------------------------------------- 14 transfer of any part of its issued share capital or change of directors. [34] The Plaintiff claimed that the Second Defendant had also breached clause 5A, since he had not informed the Plaintiff of his resignation and sale of shares. [35] I agreed with the Plaintiff since the Second Defendant had signed the Tenancy Agreement on his own accord, and it was inequitable for him to now claim that clause 5A of the Tenancy Agreement was contradictory to principles of company law, and to insist that he was not bound by the terms of the Tenancy Agreement. In my view, the Second Defendant was responsible for signing the Tenancy Agreement and cannot now allege that the contents of the Tenancy Agreement did not bind him. [36] This rule is so strict that even if a party to a contract has not read the contents of a contract, he is held to be bound by its terms: Polygram Records Sdn Bhd v. Hillary Ang & Ors & Anor [1994] 2 MLRH 137. [37] It is also pertinent to note that although the Second Defendant claimed to have resigned and transferred his shares, he had still continued to conduct negotiations on behalf of the First Defendant. This, therefore, negates his contention that his resignation from the First Defendant had absolved him of all liability. 17 April 2021 ………………………………………………………………………………………………………………………………………………. ---------------------------------------------------------------------------------------------------------------------------------------------------- 15 [38] In the final analysis, taking into account the JID (which was regular), the inexplicable delay, and the defence wich was devoid of merit, I found no basis to interfere with the decision of the learned SCJ. Conclusion [39] In the upshot, therefore, based on the aforesaid reasons, and after careful scrutiny and consideration of all the evidence before this Court, including the written and oral submissions of both parties, and the grounds of judgment of the learned SCJ, the Second Defendant’s appeal was dismissed with costs (subject to allocatur fees). Dated: 17 April 2021 ……..…SIGNED…………. (EVROL MARIETTE PETERS) Judicial Commissioner High Court, Johor Bahru Counsel: For the Appellant/ Second Defendant – Mohd Rasheed Hassan; Messrs Chor Pee Anwarul & Company For the First Respondent/ Plaintiff – Shaline Rajan; Messrs Law Chamber of Vin Sa & Ian 17 April 2021 ………………………………………………………………………………………………………………………………………………. ---------------------------------------------------------------------------------------------------------------------------------------------------- 16 Cases referred to: ¾ Ang Koon Kau & Anor v Lau Piang Ngong [1984] 2 MLJ 277, [1985] CLJ Rep 24 ¾ Goh Teng Whoo v Ample Objectives [2021] MLJU 300 ¾ KEP Mohamed Ali v. KEP Mohamed Ismail [1980] 1 LNS 169 ¾ Khor Cheng Wah v Sungai Way Leasing Sdn Bhd [1996] 1 MLJ 223 ¾ Malayan Banking Bhd v Mahmood Zuhdi Hg Mohd Nor [2001] 6 MLJ 209 ¾ Mirra Sdn Bhd v The Ayer Molek Rubber Co Bhd [2008] 2 MLJ 348 ¾ Nova Scotia Berhad v Beltronix Intertrade Sdn Bhd [2015] MLRHU 450 ¾ Polygram Records Sdn Bhd v. Hillary Ang & Ors & Anor [1994] 2 MLRH 137 ¾ Samuel Naik Siang Ting v. Public Bank Bhd [2015] 6 MLJ 10 ¾ Thye Ah Chai (t/a Kent Naga Enterprise) v Teraju Mercu Construction & Engineering Sdn Bhd [2014] 1 MLJ 422 ¾ Tuan Haji Ahmed Abdul Rahman v Arab-Malaysian Finance Bhd [1996] 1 MLJ 30 Legislation referred to: ¾ Interpretation Acts 1948 and 1967, section 12 ¾ Rules of Court 2012, Order 10 rule 3(1), Order 34 rule 2(3)