Yee Liu Wei v Yap Kim Heng (CA-A72NCvC-225-06/2024)

The defendant, vide enclosure 21, filed an application to strike out the judgment in default entered against him pursuant to O. 42 r. 13 of the Rules of Court 2012 (herein referred to as "the ROC 2012"). The plaintiff objected the application. After perusing the application, affidavits and written submissions by both parties, this court dismissed the defendant’s application with no order for cost. The reasons for the decision of this court are set out as below. 10/03/2025 14:38:58 CA-A72NCvC-225-06/2024 Kand. 51

The plaintiff is an individual having his registered address at No. 11, Jalan Mawar Impian 8, Taman Mawar Impian, 28300 Triang, Pahang Darul Makmur.

The defendant is an individual having his registered address at No. 16, Lorong Galing 19, Jalan Haji Ahmad, 25300 Kuantan, Pahang Darul Makmur.

Around 2019, the defendant requested the plaintiff to invest in the establishment of a halal restaurant in China. To implement this plan, both the defendant and the plaintiff travelled to Guangxi, China, to search for a suitable and strategic location.

After identifying an appropriate location and based on trust in the defendant's capabilities, the plaintiff transferred a sum of RM57,910.00 to the defendant's personal bank account with the intention of opening the halal restaurant in China, in accordance with the plan provided by the defendant.

However, despite receiving the funds from the plaintiff, the defendant failed to take any action toward executing the restaurant opening plan. The defendant gave various excuses and avoided responding to the plaintiff’s inquiries regarding the progress of the halal restaurant's establishment.

Due to the defendant’s failure, reluctance, and negligence in opening the halal restaurant as agreed upon by both parties, the Plaintiff demanded the return of the investment sum of RM57,910.00.

The service of the Writ of Summons and Statement of Claim through registered AR Card and personal delivery to the Defendant was unsuccessful. As a result, an application for substituted service was filed, and an order for substituted service was granted on 17th August 2024 (please refer to Enclosure 8).

Consequently, the Writ of Summons and Statement of Claim were served to the defendant via substituted service, where the plaintiff served the Order for Substituted Service, Writ of Summons, and Statement of Claim on the notice board of the Kuantan Magistrate's Court on 22nd August 2024, advertised the Notice of Writ of Summons in the local 4 newspaper "The Star" on 26th August 2024, and sent it via registered AR Card to the defendant on 28th August 2024.

However, the defendant failed to enter an appearance in the case within 14 days from the date of final service. As a result, the service of the Writ of Summons and Statement of Claim on the defendant was deemed to be properly and duly effected on 11th September 2024.

On 20th September 2024, the plaintiff filed a Certificate of Non-Appearance against the defendant (please refer to Enclosure 12), and a Default Judgment was subsequently recorded on 25th September 2024 (please refer to Enclosure 14).

Due to the defendant's failure to comply with the judgment in default, the plaintiff obtained an Order for Garnishment to show cause on 25th October 2024.

The defendant applied an application to strike out the judgment in default pursuant to Order 13 Rule 8 the ROC 2012. The provision of Order 13 Rule 8 the ROC 2012 is reproduced hereunder: “8. 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.

The defendant's application was supported by an affidavit (vide Enclosure 22) deposed by Yap Kim Heng, who after verifying the facts of the defendant's application stated that he verily believed that the defendant had defence with merits ('mempunyai pembelaan yang bermerit', Enclosure 22, para. 10).

Briefly, the reasons raised by the defendant to support the application to set aside the Judgment in Default are as follows: a) The Judgment in Default was obtained irregularly; and b) The Defendant has a defence in merits against the Plaintiff's claim.

The court will refer the following documents as follows: No. Type of documents Enclosure 1 Writ of Summons and Statement of Claim dated 14th June 2024 1 & 2 2 Order for Substituted Service dated 17th August 2024 8 3 Affidavit of Service sworn by Aw Shi Qin on 19th September 2024 10 4 Judgment in Default dated 25th September 2024 14 5 Garnishment Order to show cause dated 25th October 2024 19 6 Notice of Application to set aside the Judgment in Default and Stay of Procceding dated 14th November 2024 21 7 Affidavit in Support sworn by Yap Kim Heng on 14th November 2024 22 8 Affidavit in Reply sworn by Yee Liu Wei on 29th November 2024 26 9 Affidavit in Reply sworn by Yap Kim Heng on 13th December 2024 27

The defendant’s conduct of filing an application to set aside the judgement in default and to apply for stay of proceeding within a single Notice of Application is inappropriate and incorrect. This is due to the fact that the fundamental nature of both applications is distinctly different, with each application requiring the fulfilment of different criteria and conditions.

It is, therefore, unreasonable for the defendant to combine both applications into a single Notice of Application, as this could potentially cause confusion for this Honourable Court, as the applications are independent in nature and need to be evaluated separately.

As a result, the defendant’s application, as presented in Enclosure 21, constitutes a clear abuse of court process, as it misrepresents the procedural requirements and complicates the legal proceedings unnecessarily. 8 ii) THE DEFAULT JUDGMENT WAS ENTERED LAWFULLY AND REGULARLY

The plaintiff argues that the service of the Writ of Summons and Statement of Claim on the Defendant was carried out lawfully and regularly in accordance with Rule 62, Rule 5 of the Rules of Court 2012.

The plaintiff further argues that the Writ of Summons and Statement of Claim were duly and properly served, particularly through the substituted service order issued by this Honourable Court, where the Writ of Summons, Statement of Claim, and the Substituted Service Order were affixed on the notice board at the Kuantan Magistrate’s Court on 22nd August 2024, and the Writ of Summons notice was published in the local newspaper "The Star" on 26th August 2024.

Therefore, the service of the Writ of Summons and Statement of Claim on the defendant is considered lawful and proper from the 7th day after the final date of the posting on the notice board at the Magistrate’s Court, as per the order of this Honourable Court under the Substituted Service Order (Enclosure 8).

Since the plaintiff followed the Substituted Service Order, it is clear and evident that the service of the Writ of Summons and Statement of Claim on the defendant was carried out lawfully, regularly, and in compliance with the applicable legal provisions.

To support the plaintiff's argument, the plaintiff relies on the case MOHD ZAKI AHMAD V RAVI SANKAR GOPAL [2019] 1 LNS 2382, where the High Court Judge dismissed the application to set aside the Default Judgment, stating as follows: “[8] In his grounds of judgment, the learned SCJ held that the said IJ and FJ were regularly entered against the defendant. In short, they were regular judgments since the appellant was properly served with the writ and SOC. Although the service was by way of substituted service, it was made pursuant to an order of the court. The substituted service was also properly effected by way of a newspaper advertisement dated 8.6.2017. ... [28] However, for the sake of completeness, I will touch briefly on the other issues raised by the appellant. I respectfully agree with the finding of the learned SCJ that the judgments entered against 10 the appellant were regular since they were properly served on the appellant.”

Therefore, due to the defendant’s failure to enter an appearance in accordance with Rule 12, Rule 4 of ROC 2012, which stipulates that this must be done within 14 days after the Substituted Service has been completed, the plaintiff is entitled to enter a judgment in default against the defendant pursuant to Rule 13, Rule 1 of ROC 2012

As stated under Order 13 Rule 8 of the ROC 2012, the Court may, on such terms as it thinks just, set aside or vary any judgment entered in pursuance of this Order. I refer to Order 42 Rule 13 of the ROC 2012 that is stated as follows: “13. 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.”

In this case, the plaintiff filed the Certificate of Non-Appearance on 20.09.2024 and the judgment in default on 25.09.2024 after the non-appearance of the defendant to file the defence. As I perused the documents, the said writ was filed on 14.06.2024 and it was delivered to the defendant by way of substituted service on 11.09.2024

It is well-established legal principle that a judgement in default can only be set aside under specific circumstances. The defendant must demonstrate to this Honourable Court that the judgement in default was obtained irregularly, or that the defendant possesses a meritorious defence against the plaintiff’s claim, as clearly outlined in the Federal Court case LAI YOKE NGAN & ANOR V CHIN TECK KWEE & ANOR [1997] 3 CLJ 305.

Furthermore, reference is made to the Court of Appeal case YAP KE HUAT & ORS V PEMBANGUNAN WARISAN MURNI SEJAHTERA SDN BHD & ANOR [2008] 4 CLJ 175, which states: “(1) 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 debitio justitiae. 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 an 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 incorrect as the facts showed that the application was made well within the 30-day period as stipulated under O. 42 r. RHC.”

Therefore, to succeed in an application to set aside a judgement in default, the defendant must prove that the judgement in default was 13 obtained in an irregular manner and should be set aside due to such irregularity. On the other hand, if the judgement in default was obtained regularly, the Defendant must provide evidence that there is merit in their defence, which justifies the setting aside of the judgment.

In this case, as the writ could not be affected by way of personal service, the plaintiff had proceeded with an application for substituted service pursuant to Order 62 Rule 5 Rules of Court 2012 and had obtained an order on 17.08.2024 and proceeded with the service of the cause papers accordingly.

Once the said writ was delivered to him by way of substituted service, I am of the opinion that he should have known about the claim that was about to be taken against him but there was no defence entered. Hence, I believe that the service was perfected and the judgment in default entered was regular.

Furthermore, I agree with the contention of the plaintiff that under Rule 42, Rule 13 of ROC 2012, it stipulates that any application to set aside or alter a judgment or order must be made within thirty (30) days after the order or judgment has been received by the applicant. In the case of MOHD AZLAN HJ ZAINAL & ORS V PEGAWAI PENERIMA SYARIKAT COSMOPRO PLANNERS SDN BHD & ORS [2015] 5 CLJ 836, the High Court stated as follows: “[13] Let us examine O. 42 r. 13. A perusal of O. 42 r. discloses that the drafters have used the terminology 'shall', i.e., 'shall make an application within thirty (30) days after the receipt of the order or judgment'. The word 'shall' denotes that the provision is mandatory and must be adhered to strictly….. In Perbadanan Nasional Insurans Sdn Bhd v. Pua Lai Ong [1996] 3 CLJ 321, the Court of Appeal held that the word 'must' is equated in meaning to the word 'shall' and implies a peremptory mandate as opposed to a mere direction or discretion, as the word 'may' implies. Siti Norma Yaakob, JCA, (as she then was), in delivering the judgment of the court held that the word 'must' in the rule does not create the existence of any discretion or empowers the court to exercise such a discretion.”

However, the defendant's application in this matter was only filed on 14th November 2024, which is more than 30 days from the date it was 15 received, and the defendant has provided no reasonable explanation for the delay in filing their application. ii) Whether the Defendant had successfully stating facts showing that he had defence on merits.;

In determining whether the defendant had successfully stating facts that he had defence on merits, this court is of the view to go thoroughly on the facts brought forward by the defendant. The defendant argued that although the court found that the service was perfectly served, the judgment still can be set aside when merits are disclosed and when the court is satisfied that there were merits in the defence.

As in the case of the FEDERAL COURT IN HASIL BUMI PERUMAHAN SDN BHD & 5 ORS V UNITED MALAYAN BANKING BERHAD [1994] 1 MLJ 312, where the Court decided that: “…the applicant must show that his defence is not a sham defence but one that is prima facie, raising serious issues as a bona fide reasonable defence that ought to be tried because obviously if the defence is a sham defence that is no defence and the application must fail.”

Furthermore, His Lordship Lee Hun Hoe, former Chief Justice (Borneo) in the Supreme Court case FIRA DEVELOPMENT SDN BHD V GOLDWIN SDN BHD [1989] 1 MLJ 40, provided an explanation on the meaning of a "defence with merits": "Where judgment is entered on the failure of a defendant to take any of the procedural steps laid down under the Rules of the High Court 1980, the court has an absolute discretion to set aside the judgment, if necessary, on terms and allow the case to be heard on the merits. Lord Atkins stated clearly the principles in which the court acts in EVANS V BARTLAM [1937] AC 473 in these words: ...The principle obviously is that unless and until the court has pronounced a judgment upon the merits or by consent, it is to have the power to revoke the expression of its coercive power where that has only been obtained by a failure to follow any of the rules of procedure.”

In the defendant's written submissions, the defendant emphasized that they have a defence with merits, which raises disputed issues that should be heard in a trial, as outlined in paragraph 18, including whether the amount of RM57,910.00 was intended for the purchase of shares in Kejaya Resources Sdn Bhd, rather than for a personal business investment in China.

However, I have a different view on that. I strongly agree with the submission of the plaintiff that the issues raised by the defendant are completely baseless, particularly as the defendant has admitted to receiving the sum of RM57,910.00 (hereinafter referred to as "the amount") from the Plaintiff (see paragraph 11(b) of the Supporting Affidavit).

Furthermore, the conversation between the plaintiff and the defendant in Exhibit YLW-2, on pages 15–20 of the Affidavit in Reply, clearly shows that the amount is related to the opening of a halal restaurant in China, which has no connection whatsoever to Kejaya Resources Sdn Bhd.

Additionally, the Defendant has failed to provide any evidence to show that the amount was intended for the purchase of shares in Kejaya Resources, whereas the plaintiff has provided evidence demonstrating that the amount was intended for the opening of a restaurant in China.

Thus, I conclude that the defence that the defendant was raising here was just a manoeuvre to delay & to deny the plaintiff’s fruit of judgment.

For the reasons adumbrated above, this court dismissed enclosure

No order for cost. DATED: 10th MARCH 2025 (NOR IZZATI BINTI ZAKARIA) Magistrate Magistrates' Court Kuantan, Pahang Counsel: For the plaintiff - Aw Shi Qin from Messrs Foo Hiap Siong & Co. For the defendant – Chai Ko Thing from Messrs. Lee Ong & Partners Legislation(s) referred: ORDER 42 RULE 13 OF THE RULES OF COURT 2012; and ORDER 13 RULE 8 OF THE RULES OF COURT 2012 Case(s) referred: 1) MOHD ZAKI AHMAD V RAVI SANKAR GOPAL [2019] 1 LNS 2382; 2) LAI YOKE NGAN & ANOR V CHIN TECK KWEE & ANOR [1997] 3 CLJ 305; 3) YAP KE HUAT & ORS V PEMBANGUNAN WARISAN MURNI SEJAHTERA SDN BHD & ANOR [2008] 4 CLJ 175; 4) MOHD AZLAN HJ ZAINAL & ORS V PEGAWAI PENERIMA SYARIKAT COSMOPRO PLANNERS SDN BHD & ORS [2015] 5 CLJ 836; 5) FEDERAL COURT IN HASIL BUMI PERUMAHAN SDN BHD & 5 ORS V UNITED MALAYAN BANKING BERHAD [1994] 1 MLJ 31;; 6) FIRA DEVELOPMENT SDN BHD V GOLDWIN SDN BHD [1989] 1 MLJ 4; dan 7) EVANS V BARTLAM [1937] AC 473.