Zhong Bang Mining Sdn Bhd v Tentrade Sdn Bhd (dalam Likuidasi) (TA-23NCvC-6-11/2024)

TENTRADE SDN BHD (in liquidation) (Company No.: 198501015212 (147667-K))

SYED HASBIL HILMY BIN SAYED OMAR (NRIC No.: 710612-11-5471) ... DEFENDANTS GROUNDS OF JUDGMENT

This is the decision of the Court in respect of the Notice of Application filed by the Second Defendant dated 27 February 2026 (Enclosure 41). The Second Defendant seeks, in summary, three principal orders: first, leave and an extension of time to file an application to set aside the Judgment in Default of Defence dated 26 March 2025 (Enclosure 36); second, that the said Default Judgment be set aside; and third, a stay of execution proceedings, specifically the Judgment Debtor Summons dated 6 May 2025, pending the final disposal of this application.

The application arises from a commercial dispute involving a silica sand mining operation in Dungun, Terengganu. The Plaintiff had paid a deposit of RM4,500,000.00 to the First Defendant pursuant to two Mining Agreements. The Plaintiff alleged breach of contract and subsequently obtained a Default Judgment against both Defendants. The Second Defendant, who is a director and the Chief Executive Officer of the First Defendant, now seeks to challenge that Default Judgment.

Having carefully considered the Notice of Application, the Affidavit in Support (Enclosure 42), the Affidavit in Reply (Enclosure 45), the Plaintiff's Written Submissions (Enclosure 48), the Second Defendant's Written Submissions (Enclosure 51), the Plaintiff's Submissions in Reply (Enclosure 53), the Second Defendant's Rebuttal Submissions (Enclosure 55), and all the cause papers and authorities cited, this Court now delivers its grounds of judgment.

The Plaintiff commenced this action by way of a Writ and Statement of Claim filed on 26 November 2024. The Writ and Statement of Claim were duly served on the Second Defendant on 10 December 2024. The Second Defendant filed a Memorandum of Appearance on 23 December 2024 and was represented by Messrs Hisyam Yunus & Co.

At the first case management on 30 December 2024, the Court directed the Second Defendant to file and serve his Defence by 6 January 2025. Despite this clear direction, and the Plaintiff's consistent follow-ups, no Defence was served on the Plaintiff. At a subsequent case management on 6 January 2025, the Court reiterated its direction, stating that if the Defence was not filed by the close of business that day, the Plaintiff would be at liberty to enter judgment in default.

The Second Defendant failed to comply. Consequently, the Plaintiff filed an Application for Judgment in Default of Defence (JIDD) on 27 January 2025. All relevant documents were served on the Second Defendant's solicitors. The Second Defendant's solicitors informed the Court that an Affidavit in Reply would be filed to oppose the JIDD application. However, no such affidavit was ever filed. The entire JIDD application was left uncontested.

On 26 March 2025, this Court per Hassan Bin Abdul Ghani J allowed the Plaintiff's JIDD application in the presence of the Second Defendant's solicitors. The sealed Default Judgment and Allocatur were served on the Second Defendant's solicitors on 22 April 2025. No appeal was filed against the Default Judgment.

The Plaintiff thereafter commenced enforcement proceedings by way of a Judgment Debtor Summons (JDS) on 6 May 2025. The Second Defendant failed to attend the hearing on 10 June 2025, leading to the issuance of a Warrant of Arrest on 10 August 2025. The Warrant was executed on 5 January 2026, and the Second Defendant was brought before the Court for examination.

Only after the execution of the Warrant of Arrest did the Second Defendant "resurface" and file an earlier Stay Application on 17 January 2026 (Enclosure 37). That application was dismissed by the Court on 11 February 2026 as being procedurally premature, with liberty granted to file a fresh application after a proper setting aside application had been filed. During that case management, the Second Defendant's solicitors represented to the Court that a setting aside application would be filed by 12 February 2026. That representation was not honoured.

The present application (Enclosure 41) was eventually filed on 27 February 2026 and served on the Plaintiff on 28 February 2026. The application was filed approximately 278 days out of time (from the date the Default Judgment was served on the Second Defendant's solicitors) and almost 11 months after the Default Judgment was pronounced.

The following issues arise for determination by this Court:

Whether the Second Defendant should be granted an extension of time to file the application to set aside the Default Judgment;

If so, whether the Default Judgment dated 26 March 2025 ought to be set aside;

Whether the application for a stay of execution (including the JDS proceedings) should be granted.

It is well settled that the application for extension of time is a threshold issue. This Court must first determine whether the Second Defendant has provided a satisfactory explanation for his inordinate delay in filing the setting aside application. Only if the extension is granted can the Court proceed to consider the merits of setting aside the Default Judgment.

Learned counsel for the Second Defendant, Muhammad Hisyam Bin Md Yunus submits that the delay was not intentional or contumelious but was caused by serious financial constraints arising from the winding-up of the First Defendant, which affected the Second Defendant's ability to instruct his solicitors effectively and to obtain and organise material documents. Counsel argues that the Second Defendant acted promptly once the Warrant of Arrest was executed on 5 January 2026, which the Second Defendant claims was the "turning point" that made him fully aware of the serious implications of the Default Judgment.

On the merits, counsel contends that the Second Defendant has a bona fide defence that raises triable issues. Counsel relies on the doctrine of separate legal personality under Section 20 of the Companies Act 2016, arguing that the Second Defendant is not personally liable for the corporate obligations of the First Defendant. Counsel also relies on the force majeure clause in the Mining Agreements, arguing that the delay in obtaining government approvals was beyond the Second Defendant's control. Learned counsel for the Second Defendant further argues that the Plaintiff is estopped from claiming breach of contract because the Plaintiff, with full knowledge of the delays, continued to perform the agreements, paid the deposit, and even entered into a Supplementary Mining Agreement.

On the stay of execution, learned counsel for the Second Defendant submits that there are "special circumstances" justifying a stay, including: the large sum of RM14.6 million which is oppressive, the risk that his appeal would be rendered nugatory, the irreversible prejudice from disclosure of the Second Defendant's personal financial information in the JDS proceedings, and the fact that the issue of the Second Defendant's personal liability (piercing the corporate veil) has not yet been substantively determined.

Learned counsel for the Second Defendant relies on several authorities, including Abdul Rahim Ponniah bin Abdullah v Kulim Intensive Driving Centre Sdn Bhd [2000] 6 MLJ 584 (HC) (on extension of time factors being a guide, not rigid requirements), Lau Pick Huong v Soh Huang Siah [2014] MLJU 647 (HC) (on the importance of substantive justice over technicalities), Yayasan Melaka v Photran Corp Sdn Bhd & Anor [2012] 7 MLJ 1 (HC) (on the inherent power to set aside a default judgment out of time to prevent injustice), and Malayan United Bank Bhd v Mohammed Salleh bin Mohammed Yusoff & Ors [1988] 3 MLJ 165 (HC) (on the primary importance of a defence on the merits, with delay being secondary).

Learned counsel for the Plaintiff, Julian Ch'ng Wei Shen submits that the Second Defendant's application should be dismissed in limine. Counsel argues that the delay is grossly inordinate (approximately 278 days) and has not been satisfactorily explained. Counsel argues that the Second Defendant was legally represented at all material times, was present through his solicitors when the Default Judgment was pronounced, and was served with all relevant documents. Despite this, he chose not to contest the JIDD application and only acted after enforcement measures (the Warrant of Arrest) affected him personally.

Learned counsel for the Plaintiff further submits that the Second Defendant's alleged "financial constraints" are belied by his own bank statements (Exhibit ZBM-15), which show continuous substantial transactions during the relevant period. Moreover, the Second Defendant cannot blame his solicitors' alleged inability to act due to non-payment of fees, as it was his own conduct that caused that difficulty. The Plaintiff relies on APT Associates Sdn Bhd v Adnan Bin Ishak & Ors [2012] MLJU 1318 (HC) (where financial incapacity was not accepted as a reasonable ground for delay) and Khor Cheng Wah v Sungai Way Leasing Sdn Bhd [1996] 1 MLJ 223 (CA) (where a defendant was not allowed to shift blame to his solicitor for his own indifference).

On the merits, counsel argues that the Default Judgment was regularly obtained, and the Second Defendant had the opportunity to raise his defences during the JIDD application but chose not to. Counsel contends that the doctrine of res judicata and issue estoppel applies, relying on Bakun Hydro Power Generation Sdn Bhd (formerly known as Sarawak Hidro Sdn Bhd) v Ammar Teknik Sdn Bhd [2021] MLJU 3090 (HC). Learned counsel for the Plaintiff further argues that the Second Defendant's alleged defences are without merit: the separate legal personality principle does not assist him because his own admissions show intermingling of personal and company funds (Yahya Mohd Khalid v MISC Berhad [2020] 3 MLRA 343 (CA)); the force majeure clause was never invoked by notice as required; and the waiver/estoppel defence fails because Clause 17 of the Mining Agreement requires any waiver to be in writing.

On the stay of execution, counsel submits that the application is procedurally defective because this Court is not the court seised of the JDS proceedings. In any event, the counsel argues that no special circumstances have been shown. The size of the judgment sum and the financial hardship caused by execution are ordinary consequences of a money judgment and do not constitute special circumstances, relying on Kosma Palm Oil Mill Sdn Bhd & Ors v Koperasi Serbausaha Makmur Bhd [2004] 1 MLJ 257 (FC), Ming Ann Holdings Sdn Bhd v Danaharta Urus Sdn Bhd [2002] 3 MLJ 49 (CA), and the recent Court of Appeal decision in Golden Plus Holdings Berhad & Ors v Shui Fai Fong & Other Appeals [2026] 4 MLRA 896 (CA).

This Court begins by emphasising that the Rules of Court 2012 exist to provide a clear timetable for the conduct of litigation. Order 3 rule 5 confers a discretion on the Court to extend time, but that discretion must be exercised judicially and not arbitrarily. Order 42 rule 13 prescribes a period of 30 days from the receipt of a judgment to file an application to set it aside. Non-compliance with this timeframe requires the applicant to seek an extension of time and to provide a satisfactory explanation for the delay.

The principles applicable to an application for extension of time were summarised in Abdul Rahim Ponniah bin Abdullah v Kulim Intensive Driving Centre Sdn Bhd (supra), where the Court considered four factors: the length of the delay, the reasons for the delay, the chances of success of the underlying application (if time is extended), and the degree of prejudice to the respondent. However, as the Court itself noted, these factors are merely a framework or guide, not rigid mandatory requirements.

Applying those factors to the present case, this Court finds as follows.

Length of the delay: The delay here is substantial and inordinate. The Default Judgment was pronounced on 26 March 2025 and served on the Second Defendant's solicitors on 22 April 2025. The present application was only filed on 27 February 2026, some 278 days beyond the 30-day period and approximately 11 months after the judgment was entered. This is not a case of a short or technical delay. It is a prolonged period of inactivity by a party who was legally represented throughout.

Reasons for the delay: The Second Defendant has advanced several explanations: (a) financial constraints arising from the winding-up of the First Defendant; (b) the need for time to obtain and organise documents; and (c) that he only fully appreciated the seriousness of the Default Judgment when the Warrant of Arrest was executed on 5 January 2026.

This Court finds these explanations wholly unsatisfactory. First, the Second Defendant's claim of financial incapacity crumbles in the face of his own bank statements (Exhibit ZBM-15), which demonstrate recurring deposits aggregating RM2,119,026.00 into his savings account for the entirety of 2025 - an average of RM176,585.50 per month - thereby laying bare any suggestion of genuine financial constraint. Moreover, the Second Defendant was represented by solicitors at all material times. The fact that he may have had difficulty paying legal fees does not excuse his complete inaction, especially when no application was made to the Court for any relief during the intervening months.

Second, the need to obtain documents does not explain a delay of 278 days. The documents in question pre-date the commencement of the action and would have been within the Second Defendant's custody or control (or that of the First Defendant, of which he was a director and CEO) from the outset. No particulars were provided as to what specific documents were required, why they could not be obtained earlier, or what efforts were made to obtain them.

Third, the assertion that the Second Defendant only "realised the real effects" of the Default Judgment when the Warrant of Arrest was executed on 5 January 2026 is, in this Court's view, an admission that he deliberately chose to disengage from the proceedings until enforcement measures affected him personally. This is not a mark of a diligent litigant acting bona fide. It is a calculated, tactical delay.

This Court agrees with the Plaintiff that the Second Defendant falls squarely within the principle articulated in MBSB Bank Berhad v Hiew Yee Sin & Anor [2025] CLJU 2226 (HC), where the High Court held that where an application to set aside is only mounted after execution proceedings have commenced, such conduct amounts to a deliberate and tactical non-participation. The Court in that case applied the stricter test in Alpine Bulk Transport v. Saudi Eagle Shipping (the Saudi Eagle) [1986] 2 Lloyd's Rep 221 (CA), requiring the defendant to demonstrate a real, and not merely arguable, prospect of success. That stricter threshold is appropriate here.

Chances of success on the underlying application: This Court will address the merits of the setting aside application in the next section. However, even if the Second Defendant had arguable defences, the inordinate and unexplained delay alone is sufficient to disentitle him from the relief sought. As held by the Court of Appeal in Khor Cheng Wah v Sungai Way Leasing Sdn Bhd (supra), justice is not only for a defaulting defendant but also for the plaintiff. The plaintiff should not be made to suffer the consequences of the defendant's indolence.

Prejudice to the Plaintiff: The Plaintiff has already obtained a regular Default Judgment and has commenced enforcement proceedings. To grant an extension of time now, after such a long delay, would cause substantial prejudice to the Plaintiff, who would be forced to defend a claim that was effectively determined almost a year ago. The Plaintiff has a legitimate expectation to enjoy the fruits of its judgment.

Even applying the more flexible approach in Pick Huong v Soh Huang Siah (supra), that case is distinguishable on its facts. In Lau Pick Huong, the delay was only six days, and the plaintiff had failed to serve the default judgment on the defendant's solicitors despite knowing they were acting for the defendant. Here, the delay is extreme, and all documents were properly served on the solicitors. There is no procedural unfairness.

For completeness, this Court also rejects the Second Defendant's reliance on the inherent power under Order 92 rule 4. While the Court has inherent power to prevent injustice, that power cannot be invoked to rescue a litigant who has, by his own deliberate and sustained inaction, brought the situation upon himself. As the Court of Appeal held in Tan Ewe Chong & Ors v Pribudi Sdn Bhd & Ors [1998] 5 MLJ 108 (CA), even where a default judgment is irregular, delay and indolent conduct can operate to defeat the right to have it set aside ex debito justitiae. A fortiori where, as here, the judgment is regular.

Conclusion on Extension of Time: This Court finds that the Second Defendant has failed to provide any satisfactory or cogent explanation for the inordinate delay of 278 days. The application for an extension of time is accordingly dismissed. Because the threshold issue is decided against the Second Defendant, the Court does not need to proceed to consider whether the Default Judgment should be set aside on its merits. However, in the interest of completeness, the Court will briefly address the merits. ISSUE 2: Whether the Default Judgment Ought to be Set Aside (if time were extended)

Even assuming, arguendo, that an extension of time had been granted, this Court would not have set aside the Default Judgment for the following reasons.

First, the Default Judgment was regularly obtained. The Second Defendant had entered appearance, was represented by solicitors, was given ample opportunity to file his Defence and to oppose the JIDD application, but chose not to do so. The chronology set out in the Plaintiff's Affidavit in Reply (paragraphs 5 to 25) is undisputed. In APT Associates Sdn Bhd v Adnan Bin Ishak & Ors (supra), the High Court held that a default judgment is regular where the defendant had entered appearance, was represented by solicitors, and failed to take any steps to respond or protect his position. That principle applies directly here.

Second, the Second Defendant's alleged defences, even if considered, are not bona fide or meritorious. On the issue of separate legal personality, the Second Defendant's own written submissions (at paragraphs 47 to 50 and 103) admit that his personal financial position was tied to the First Defendant and that funds received were used to pay project-related expenses. Those admissions, when read together, indicate an impermissible intermingling of personal and corporate funds, which is a factor that may justify piercing the corporate veil. The Plaintiff has made serious allegations of fraud and misrepresentation, which require a full trial. However, the question before this Court on a setting aside application is not whether the defence will ultimately succeed, but whether it discloses a triable issue.

The more fundamental problem for the Second Defendant is that he had the opportunity to raise these very defences when the Plaintiff's JIDD application was pending. He failed to do so. The doctrine of res judicata and issue estoppel, as applied in Bakun Hydro Power Generation Sdn Bhd (formerly known as Sarawak Hidro Sdn Bhd) v Ammar Teknik Sdn Bhd (supra), precludes him from raising them now. In that case, the High Court held that any alleged defence ought to have been raised when the plaintiff applied for default judgment. Having failed to do so, the defendant was not permitted to raise such defences subsequently. This Court agrees with that approach.

Third, even on their face, the defences are weak. The force majeure clause (Clause 11.3) requires immediate written notification. No such notice was ever given. The doctrine of waiver is contractually restricted by Clause 17, which requires any waiver to be in writing. The estoppel argument is contradicted by the Plaintiff's consistent follow-ups on the status of approvals.

For these reasons, had the Court proceeded to consider the setting aside application on the merits, it would have been dismissed.

The Second Defendant's application for a stay of execution of the JDS proceedings is, with respect, procedurally defective. The JDS was initiated under Execution No. TA-37J-1-05/2025. This Court (the original court that entered the judgment) has supervisory jurisdiction over its own execution proceedings. However, to seek a stay of a specific execution proceeding, the proper forum is the court seised of that proceeding. The Plaintiff's preliminary objection on this ground is upheld.

Even on the merits, the stay application fails. It is trite law that a stay of execution is not granted as a matter of course. The applicant must demonstrate "special circumstances" (Kosma Palm Oil Mill Sdn Bhd & Ors v Koperasi Serbausaha Makmur Bhd (supra)). The fact that an appeal (or an application to set aside) would be rendered nugatory if the stay is refused is a classic example of special circumstances. However, the mere fact that the judgment sum is large, or that execution would cause financial hardship, or that assets may have to be sold, does not constitute special circumstances.

The Court of Appeal's recent decision in Golden Plus Holdings Berhad & Ors v Shui Fai Fong & Other Appeals (supra) is directly on point. In that case, the Court of Appeal overturned a High Court decision granting a stay, holding that impecuniosity, the prospect of liquidation of assets, and the size of the judgment sum are ordinary consequences of a money judgment and do not, by themselves, amount to special circumstances.

The Second Defendant's argument that his appeal would be rendered nugatory because he would be forced to disclose confidential financial information is also unpersuasive. Disclosure of assets is the very purpose of a JDS. There is no inherent prejudice in being required to disclose that which the law mandates. Moreover, the Second Defendant has already disclosed his financial position in the JDS proceedings.

Accordingly, the application for a stay of execution is dismissed both on procedural grounds and on the merits.

For all the foregoing reasons, this Court finds that the Second Defendant has failed to provide any satisfactory explanation for the inordinate and excessive delay of approximately 278 days in filing the application to set aside the Default Judgment. The application for an extension of time is dismissed. Consequently, the application to set aside the Default Judgment dated 26 March 2025 and the application for a stay of execution are also dismissed.

The Default Judgment entered against the Second Defendant on 26 March 2025 remains valid and enforceable.

The Second Defendant shall pay costs to the Plaintiff in the sum of RM6,000.00. Dated: 24 June 2026 Yusrin Faidz Bin Yusoff Judge High Court of Malaya Kuala Terengganu For the Plaintiff: Julian Ch'ng Wei Shen (together with Siti Shyazana Binti Mokhsein) Messrs. Moideen & Max, Suite B-05-12, Gateway Kiaramas, No.1, Jalan Desa Kiara, Mont' Kiara, 50480 Kuala Lumpur. For the Second Muhammad Hisyam Bin Md Yunus Defendant: Messrs Hisyam Yunus & Co Unit 18-3A & Unit 18-3A-01, Binjai 8 Premium Soho, No.2, Lorong Binjai, 50450 Kuala Lumpur.

Abdul Rahim Ponniah bin Abdullah v Kulim Intensive Driving Centre Sdn Bhd [2000] 6 MLJ 584 (HC).

Lau Pick Huong v Soh Huang Siah [2014] MLJU 647 (HC).

Yayasan Melaka v Photran Corp Sdn Bhd & Anor [2012] 7 MLJ 1 (HC).

Malayan United Bank Bhd v Mohammed Salleh bin Mohammed Yusoff & Ors [1988] 3 MLJ 165 (HC).

APT Associates Sdn Bhd v Adnan Bin Ishak & Ors [2012] MLJU 1318 (HC).

Khor Cheng Wah v Sungai Way Leasing Sdn Bhd [1996] 1 MLJ 223 (CA).

Bakun Hydro Power Generation Sdn Bhd (formerly known as Sarawak Hidro Sdn Bhd) v Ammar Teknik Sdn Bhd [2021] MLJU 3090 (HC).

Yahya Mohd Khalid v MISC Berhad [2020] 3 MLRA 343 (CA).

Golden Plus Holdings Berhad & Ors v Shui Fai Fong & Other Appeals [2026] 4 MLRA 896 (CA).

MBSB Bank Berhad v Hiew Yee Sin & Anor [2025] CLJU 2226 (HC).

Alpine Bulk Transport v. Saudi Eagle Shipping (the Saudi Eagle) [1986] 2 Lloyd's Rep 221 (CA).

Tan Ewe Chong & Ors v Pribudi Sdn Bhd & Ors [1998] 5 MLJ 108 (CA).

Order 3 rule 5, Order 42 rule 13, & Order 92 rule 4 of the Rules of Court 2012.

Section 20 of the Companies Act 2016.