BetweenRavichanthiran A/L Ganesan(Nric No.: 621221-05-5649) … PlaintiffAnd1. Dato’ Mat Shah Bin Safuan(Nric No.: 470406-10-5707)2. Pembinaan Kota Laksamana (Melaka)Sdn Bhd(Company No.: 40873-T)(Under Receivership) … Defendants

  

Download PDF Here

IN THE HIGH COURT OF MALAYA IN KUALA LUMPUR IN THE FEDERAL TERRITORY, MALAYSIA (COMMERCIAL DIVISION)

 

SUIT NO: 22NCC-115-04/2015

 

BETWEEN

 

RAVICHANTHIRAN A/L GANESAN

 

(NRIC No.: 621221-05-5649) … PLAINTIFF

 

AND

 

1. DATO’ MAT SHAH BIN SAFUAN (NRIC No.: 470406-10-5707)

 

2. PEMBINAAN KOTA LAKSAMANA (MELAKA)

 

SDN BHD

 

(Company No.: 40873-T)

 

(under receivership) … DEFENDANTS

 

JUDGMENT

 

(Court enclosure nos. 5, 6 & 9)

 

A. Introduction

 

1. This is a suit (This Suit) concerning a business venture in the Republic of Cameroon. This Suit has been filed by an individual plaintiff (Plaintiff) against the first defendant, an individual (1st Defendant) and the second defendant company (which is under receivership) (2nd Defendant). The

 

i

 

1st and 2nd Defendants will be collectively referred to in this judgment as the “Defendants”.

 

2. The following issues arise in this case:

 

(a) whether the Plaintiffs can file an ex parte application to enter judgment in default of defence (Defence) against the Defendants;

 

(b) in the Defendants’ application to strike out This Suit, whether the Defendants can pray for an extension of time to file Defence in the event the striking out application is dismissed by the court;

 

(c) whether the Defendants can be granted an extension of time to file Defence; and

 

(d) whether the Defendants can strike out This Suit based on, among others, an earlier settlement agreement and consent judgment.

 

B. Facts

 

3. In December 2012, the Defendants have filed Kuala Lumpur High Court Civil Suit No. 22 NCVC-1501 -12/2012 (2012 Suit) against the following defendants:

 

(a) Dato’ R. Arunasalam a/l V. Ramasamy (Dato’ Aru);

 

2

 

(b) the Plaintiff; and

 

(c) Solaris Estate Sdn. Bhd. (SESB).

 

4. A settlement agreement dated 28.3.2013 had been entered into by the 1st Defendant, Plaintiff and SESB (Settlement Agreement). According to the Settlement Agreement, among others –

 

(a) Dato’ Aru, Plaintiff and 1st Defendant had entered into a

 

shareholders’ agreement dated 25.6.2010 (Shareholders

 

Agreement) regarding Solaris Estates Pvt. Ltd. (SEPL) – paragraph A of the recital to the Settlement Agreement;

 

(b) the Plaintiff had offered 33% of the Plaintiff’s shares in SEPL to the 1st Defendant at a price of US$4.3 million – paragraph B of the recital to the Settlement Agreement;

 

(c) the Plaintiff had told the 1st Defendant to pay to SESB, a subsidiary of SEPL which was incorporated in Malaysia – paragraph C of the recital to the Settlement Agreement;

 

(d) the 1st Defendant had instructed the 2nd Defendant to pay a total sum of RM2,950,000 (Sum) – paragraph D of the recital to the Settlement Agreement;

 

3

 

(e) the Defendants had filed the 2012 Suit against the Plaintiff, Dato’ Aru and SESB – paragraph E of the recital to the Settlement Agreement;

 

(f) the 1st Defendant, through his solicitors, Messrs Richard Wee & Yip (Messrs RWY), wrote to the Plaintiff and Dato’ Aru to terminate the Shareholders Agreement by way of a letter dated 20.4.2012 from Messrs RWY (Messrs RWY’s Letter dated 20.4.2012) – paragraph F of the recital to the Settlement Agreement

 

(g) on 19.1.2013, Messrs Sylester Groves & Co, through Mr. Subra Paidathally, Dato’ Aru and Plaintiff met with the 1st Defendant and it was agreed upon between Plaintiff, 1st Defendant and SESB that the 1st Defendant is a creditor and a Settlement Agreement be set out -paragraph G of the recital to the Settlement Agreement;

 

(h) the Plaintiff, 1st Defendant and SESB are desirous of entering into a full and final settlement upon the terms and conditions contained in the Settlement Agreement and to record a consent judgment in the 2012 Suit – paragraph H of the recital to the Settlement Agreement;

 

(i) in consideration of the premises contained in the Settlement Agreement, the Plaintiff, 1st Defendant and SESB agreed to fully and finally settle the 2012 Suit – clause 1.1;

 

4

 

(j) the Plaintiff, 1st Defendant and SESB agreed that the Sum shall be paid by SESB to the 1st Defendant by way of cheque or telegraphic transfer on or before 31.12.2013 – clause 3.1(a) and (b);

 

(k) if SESB fails or defaults in the payment of any sum of money as stipulated in clause 3, then the 1st Defendant shall be entitled to demand by written notice to SESB and/or Plaintiff full payment of the entire outstanding balance – clause 4.1(a);

 

(l) if SESB and/or Plaintiff fails or defaults to comply with the written notice, the outstanding balance shall be due and payable by SESB and/or Plaintiff to the 1st Defendant with continuing interest at the rate of 5% per annum on the outstanding balance until full realization – clause 4.1(b);

 

(m) upon the execution of the Settlement Agreement, the Plaintiff, 1st Defendant and SESB agreed to record a consent judgment in the 2012 Suit – clause 5.3;

 

(n) the Plaintiff, 1st Defendant and SESB agreed that the Settlement Agreement shall be the full and final settlement of the 2012 Suit and further undertake that they shall not file any further legal proceedings in court or by way of arbitration against the other parties save and except for any breach of the terms and conditions of the Settlement Agreement – clause 5.4;

 

5

 

(o) any amendment to the Settlement Agreement shall only be binding if executed and agreed by the Plaintiff, 1st Defendant and SESB in writing – clause 6.5; and

 

(p) the Settlement Agreement constitutes the whole agreement between the Plaintiff, 1st Defendant and SESB and it is expressly declared that no variation thereof shall be effective unless made in writing and signed by the Plaintiff, 1st Defendant and SESB – clause 6.10.

 

5. In 2012 Suit, on 22.4.2013, the Defendants, Plaintiff, Dato’ Aru and SESB entered into a consent judgment (Consent Judgment). The Consent Judgment provided, among others, as follows:

 

(a) the Settlement Agreement had been annexed to the Consent Judgment; and

 

(b) as provided in the Settlement Agreement, among others –

 

(i) SESB shall pay the Sum to the 1st Defendant by cheque or telegraphic transfer on or before 31.12.2013; and

 

(ii) if SESB refused or failed to pay the Sum or if the Plaintiff failed to comply with any term or condition of the Consent Judgment, the entire sum claimed in the statement of claim in the 2012 Suit or any part which was still outstanding and payable, shall be immediately due to be paid by Dato’ Aru, Plaintiff and SESB

 

6

 

to the Defendants with interest at 5% per annum together with costs.

 

C. This Suit

 

6. On 22.4.2015, the Plaintiff filed This Suit. The statement of claim (SOC)

 

alleged as follows, among others:

 

(a) Dato’ Aru and the Plaintiff owned equal shares in SEPL which had entered into a joint venture with “Societe Des Transports Complementaires De Chemins De Fef (STCCF) to clear land in the Republic of Cameroon, extract timber and plant oil palm thereon (Cameroon Project);

 

(b) Dato’ Aru and Plaintiff offered 33% of their shares in SEPL to the 1st Defendant on the ground that the 1st Defendant had represented that the 1st Defendant had a close relationship with the chairman of Felda Global Ventures Sdn. Bhd. (FGVSB);

 

(c) on 25.6.2010, Dato’ Aru, Plaintiff and 1st Defendant entered into the Shareholders Agreement wherein 33% of shares owned by Dato’ Aru and Plaintiff in SEPL were sold to the 1st Defendant for US$4.3 million. It was agreed that the US$4.3 million was to be used to meet SEPL’s operating expenses for the Cameroon Project;

 

(d) before entering into the Shareholders Agreement, the 1st Defendant had conducted a due diligence by –

 

7

 

(i) visiting the Republic of Cameroon where the 1st Defendant had met STCCF’s board of directors and the Ministers for Agriculture and Forestry of the Republic of Cameroon; and

 

(ii) getting confirmation from consultants in forestry and oil palm regarding the Cameroon Project;

 

(e) in compliance with the Shareholders Agreement, the 1st Defendant had instructed the 2nd Defendant to pay the US$4.3 million to SESB. However, the Defendants had only paid the Sum to SESB. As such, the Defendants had breached the Shareholders Agreement;

 

(f) the 1st Defendant did not disclose to the Plaintiff that the 2nd Defendant was under receivership;

 

(g) the 1st Defendant alleged that the Cameroon Project was not genuine and had sent a letter dated 10.5.2011 through the 1st Defendant’s company, Safuan Group Bhd. (SGB) to SESB and demanded the return of the Sum;

 

(h) despite alleging that the Cameroon Project was not genuine, the 1st Defendant had employed 2 employees of SESB without SESB’s consent, with the intention of getting the Cameroon Project for the 1st Defendant’s sole benefit. The 1st Defendant had invited the Republic of Cameroon’s Forestry Minister to visit Malaysia and to

 

8

 

deal directly with the 1st Defendant without the knowledge of the Plaintiff and SESB;

 

(i) the 1st Defendant had defrauded the Plaintiff so as to take over the Cameroon Project for the benefit of the 1st Defendant;

 

(j) the 1st Defendant had represented to the Plaintiff that the 1st Defendant’s company, SGB, would collaborate with Tabung Haji Plantations Bhd., FGVSB and/or Felda Holdings Bhd in managing the Cameroon Project. The 1st Defendant had represented that only the 1st Defendant had the confidence and support of the Malaysian government for the Cameroon Project;

 

(k) the 1st Defendant had represented that the Cameroon Project would be financed by the 2nd Defendant, a company controlled by the 1st Defendant;

 

(l) the Plaintiff and SESB were “forced” to enter into the Consent Judgment by their financial disability;

 

(m) the Settlement Agreement had lapsed on 30.12.2014;

 

(n) on 6.2.2014, one Dato’ Dr. Jacky Pang Chow Huat (Dato’ Pang) agreed to pay the Sum to the 1st Defendant (Dato’ Pang’s Agreement). Dato’ Pang’s Agreement had superseded the Settlement Agreement;

 

9

 

(o) the Consent Judgement is not valid because –

 

(i) the Consent Judgement has been superseded or substituted by Dato’ Pang’s Agreement;

 

(ii) the Consent Judgement has been obtained by fraud by the Defendants. This is because the 1st Defendant has not disclosed to the Plaintiff that the 2nd Defendant is under receivership; and

 

(iii) the Consent Judgement cannot be enforced in law because there is no resolution from the 2nd Defendant to authorize the 2nd Defendant to enter into the Consent Judgment. Furthermore, Messrs RWY has not adduced “ Warrant To Act’ from the 2nd Defendant; and

 

(p) the Plaintiff prays for the following relief, among others –

 

(i) the Consent Judgment be set aside on the ground of fraud to the extent the Consent Judgment binds the Plaintiff;

 

(ii) additionally and/or alternatively, a declaration that the 1st Defendant has breached the Shareholders Agreement and is liable to pay damages to the Plaintiff for such a breach;

 

10

 

(iii) additionally and/or alternatively, a declaration that the Shareholders Agreement has not been terminated by Messrs RWY’s Letter dated 20.4.2012;

 

(iv) additionally and/or alternatively, the 1st Defendant to pay general damages, exemplary damages and punitive damages to be assessed by court; and

 

(v) all proceedings to execute the Consent Judgment be stayed until the disposal of This Suit.

 

D. Three applications

 

7. The Defendants entered appearance on 11.5.2015 but did not file and serve their Defence within the time period stipulated in Order 18 rule 2(1) of the Rules of Court 2012 (RC) (which required the Defence to be served on the Plaintiff before the expiry of 14 days after the time limited for appearance or after the SOC has been served on the Defendants, whichever is later).

 

8. On 27.5.2015, the Defendants filed an application (Court Enc. No. 5), among others –

 

(a) to strike out This Suit on the ground that This Suit is scandalous, frivolous, vexatious and/or an abuse of court process; and

 

11

 

(b) if Court Enc. No. 5 is dismissed, the Defendants be given 14 days from the date of the dismissal of Court Enc. No. 5, to file the Defence.

 

9. After the filing of Court Enc. No. 5, Messrs RWY wrote a letter dated 29.5.2015 to the Plaintiff’s solicitors, Messrs Zailan & Co. (Messrs ZC), and inquired from Messrs ZC on whether the Defendants could file the Defence after the disposal of Court Enc. No. 5 (Defendants’ Request).

 

10. On 1.6.2015, the Plaintiff filed an ex parte application to enter judgment in default of Defence against the Defendants (Court Enc. No. 6). It is to be noted that Court Enc. No. 6 has been filed without a reply by Messrs ZC to the Defendants’ Request.

 

11. When Court Enc. No. 6 was referred to me, I directed Court Enc. No. 6 to be heard inter partes by me for reasons to be explained later in this judgment.

 

12. By way of a letter dated 3.6.2015, Messrs ZC replied that the Plaintiff had instructed Messrs ZC to object to the Defendants’ Request. It would have only have been proper for the Plaintiff to have filed Court Enc. No. 6 after declining the Defendants’ Request. I shudder to think if Court Enc. No. 6 has not been referred to me and if my learned Senior Assistant Registrar has heard Court Enc. No. 6 on an ex parte basis!

 

12

 

13. The Defendants filed an application on 9.6.2015 (Court Enc. No. 9) for an extension of time to file Defence in the event Court Enc. No. 5 is dismissed by the court.

 

14. On 19.6.2015, the Defence was filed before the hearing of Court Enc. No. 5, 6 and 9.

 

15. The Plaintiff wished to proceed first with Court Enc. No. 6 while the Defendants applied for Court Enc. No. 5 to be heard before Court Enc. Nos. 6 and 9. I then ordered Court Enc. Nos. 5, 6 and 9 to be heard together.

 

E. Can Court Enc. No. 6 be heard on ex parte basis?

 

16. The SOC had prayed for, among others, the relief of setting aside the Consent Judgment, declarations and unliquidated damages. As such, Order 19 rule 7 RC is relevant in this case –

 

“Default of defence: Other claims

 

Order 19 rule 7(1) Where the plaintiff makes against a defendant or

 

defendants a claim of a description not mentioned in rules 2 to 5, then, if the defendant or all the defendants (where there is more than one) fails or fail to serve a defence on the plaintiff, the plaintiff may, after the expiration of the period fixed under these Rules for service of the defence, apply to the Court for judgment, and

 

13

 

on the hearing of the application the Court shall give such judgment as the plaintiff appears entitled to on his statement of claim.

 

(2) Where the plaintiff makes a claim as is mentioned in

 

paragraph (1) against more than one defendant, then, if one of the defendants makes default as mentioned in that paragraph, the plaintiff may –

 

(a) if his claim against the defendant in default is severable from his claim against the other defendants, apply under that paragraph for judgment against that defendant, and proceed with the action against the other defendants; or

 

(b) set down the action by notice of application for judgment against the defendant in default at the time when the action is set down for trial, or is set down by notice of application for judgment, against the other defendants.

 

(3) An application under paragraph (1) shall be by notice

 

of application.”

 

(emphasis added).

 

17. I have directed Court Enc. No. 6 to be heard on an inter partes basis. My reasons are as follows:

 

14

 

(a) Order 19 rule 7(1), (2) and (3) RC does not provide for Court Enc. No. 6 to be heard on an ex parte basis. As such, the Plaintiff cannot proceed with Court Enc. No. 6 on an ex parte basis. In Chin Wai Hong & Anor v Lim Guan Hoe & Anor [2014] 5 AMR 427, at paragraphs 38, 39 and 40(1), I have decided that an application can only be made ex parte if the law has expressly provided for it; and

 

(b) the learned authors of “Malaysian Civil Procedure”, Volume 1 (2015), paragraph 19/7/8, p. 259, have expressed the following view

 

“Application for judgment by notice of application – The application for judgment in default of defence under [Order 19 rule 7 RC] should be made by notice of application to a registrar. The notice of application must be served on the defendant not less than two clear days before the day specified in the notice of application for the hearing thereof (Order 32 rule 3).”

 

(emphasis added).

 

Order 32 rule 3 RC states as follows –

 

“Service of notice of application

 

Order 32 rule 3 A notice of application asking only for the

 

extension or abridgement of any period of time may be served on the day before the day specified in the notice of application for the

 

15

 

hearing thereof but, except as aforesaid and unless the Court otherwise orders or any of these rules otherwise provides, a notice of application shall be served on every other party not less than two clear days before the day so specified .”

 

(emphasis added).

 

The use of the mandatory term “shall” in Order 32 rule 3 RC clearly shows the intention of the Rules Committee that except as provided in the RC or ordered by the court, a notice of application “shall’ be served on the opposing party.

 

F. Whether Defendants can pray in a striking out application for time to file Defence if striking out application is dismissed

 

18. Order 3 rule 5 and Order 18 rule 2 RC provide as follows:

 

“ Extension of time

 

Order 3 rule 5(1) The Court may, on such terms as it thinks just,

 

by order extend or abridge the period within which a person is required or authorized by these

 

Rules or by any judgment, order or direction, to do any act in any proceedings.

 

(2) The Court may extend any such period as

 

referred to in paragraph (1) although the

 

16

 

(3)

 

Service of defence

 

Order 18 rule 2(1)

 

(2)

 

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.

 

Subject to paragraph (2), a defendant who enters an appearance in, and intends to defend, an action shall, unless the Court gives leave to the contrary, serve a defence on the plaintiff before the expiration of fourteen days after the time limited for appearing or after the statement of claim is served on him, whichever is the later.

 

If a notice of application under Order 14, rule 1 is served on a defendant before he serves his defence, paragraph (1) shall not have effect in relation to him unless by the order made on the notice of application, he is given leave to defend the action and, in that case, shall have effect as if it required him to serve his defence within fourteen days after the making of the order or within such other period as may be specified therein”

 

17

 

(emphasis added).

 

19. My understanding of Order 3 rule 5(1), (2) and (3) RC read with Order 18

 

rule 2(1) and (2) RC is as follows:

 

(a) if a plaintiff has applied for a summary judgment under Order 14 rule 1(1) RC (Summary Judgment Application) before a defendant serves his or her defence, the defence need not be served in accordance with the time period stipulated in Order 18 rule 2(1) RC. This is clear from Order 18 rule 2(2) RC. If the Summary Judgment Application is allowed, the suit comes to an end. If the Summary Judgment Application is however dismissed, Order 18 rule 2(2) RC provides that the defendant has 14 days or any other time period as specified by the court (in dismissing the Summary Judgment Application) to serve his or her defence on the plaintiff;

 

(b) the filing of an application to strike out a suit under Order 18 rule 19(1) RC does not stop the running of the time period to serve a defence under Order 18 rule 2(1) RC. A defendant who has applied to strike out an action, is still required to file his or her defence within the time stipulated in Order 18 rule 2(1) RC except when the plaintiff has consented in writing under Order 3 rule 5(3) RC to an extension of time to file defence (Plaintiff’s Written Consent); and

 

(c) if a defendant has not obtained the Plaintiff’s Written Consent and –

 

18

 

(i) has not served his or her defence within the time period stated in Order 18 rule 2(1) RC; or

 

(ii) has served his or her defence beyond the time period stipulated in Order 18 rule 2(1) RC

 

– the defendant has to apply to court for an extension of time to serve his or her defence under Order 3 rule 5(1) and (2) RC.

 

20. In this case, prayer (b) of Court Enc. No. 5 (which had applied for the Defence to be filed in the event Court Enc. No. 5 is dismissed) had been made by the Defendants even before the Defendants’ Request was conveyed to Messrs ZC. As explained above, a striking out application (unlike a Summary Judgment Application) does not defer the time period in Order 18 rule 2(1) RC. It is hoped that such a prayer should be avoided in the future as such a prayer will lead to a non-compliance with Order 18 rule 2(1) RC which entitles a plaintiff to apply for a default judgment (as in this case). Furthermore, such a prayer which delays the service of a defence, is not in consonance with policy considerations to ensure an expeditious and economical disposal of cases.

 

G. Whether Defendants should be given extension of time to serve Defence

 

21. The Plaintiff has contended, among others, that there was a delay in the filing of the Defence and the Defence is a bare denial. The following

 

19

 

cases have been cited to support Court Enc. No. 6 and to oppose Court Enc. No. 9:

 

(a) the High Court decision of Asia Commercial Finance (M) Bhd v Pasadena Properties Development Sdn Bhd & Ors [1991] 1 MLJ 111;

 

(b) the High Court case of Nadarajan s/o Verayan v Hong Tuan Teck

 

(Part 2) [2007] 7 MLJ 640;

 

(c) the High Court judgment in Abdul Rahim Ponniah bin Abdullah v Kulim Intensive Driving Centre Sdn Bhd [2000] 6 MLJ 584; and

 

(d) the High Court’s decision in Kilang Papan Pulai Sebang Sdn Bhd v Lim Trading & Co [2005] 1 MLJ 753.

 

22. The Defendants forwarded, among others, the following submission to resist Court Enc. No. 6 and to support Court Enc. No. 9:

 

(a) the Defence had already been filed and served on the Plaintiff’s solicitors. No prejudice had been caused to the Plaintiff;

 

(b) reliance was placed on the High Court case of Aleykutty James v Syed Putra bin Syed Omar Shahabudin & Anor [1979] 1 MLJ 238;

 

20

 

(c) if this court dismisses Court Enc. No. 5, the Defendants have filed Court Enc. No. 9 for an extension of time to serve the Defence. On this ground, the Defendants submitted that the High Court case of Ferco Seating Systems (M) Sdn Bhd v The Product People Pty Ltd [2008] 6 MLJ 874 should be distinguished; and

 

(d) fraud is easy to allege but difficult to prove. The Plaintiff has the burden to prove fraud beyond reasonable doubt so as to set aside the Consent Judgment. The High Court’s judgment in Muthammah a/p Govindan v Masri bin Mohamed & Anor [2000] 5 MLJ 518.

 

23. In Aleykutty James, at p. 239, 240-241, Gunn Chit Tuan J (as he then

 

was) decided as follows:

 

“The plaintiff had also on January 5, 1978 taken out a notice of motion for an order that final judgment be entered against the defendants (a) for a declaration that the plaintiff is the lawful tenant of the defendants in respect of the land and school building and (b) for an injunction restraining the defendants from taking possession of or in any way evicting the plaintiff from the said land and school building. The notice of motion was fixed for hearing on January 28, 1978. After the notice of motion was served on the defendants, they filed an appearance through their solicitors on January 23, 1978 and a statement of defence dated February 25 was also filed. …

 

The defendants had also filed a summons-in-chambers dated March 2, 1978 applying for leave to enter appearance and to file a statement of defence notwithstanding lapse of time and this application was also fixed for hearing on March 10, 1978. When both counsel

 

21

 

appeared before me in Penang, they requested that both the notice of motion and summons-in-chambers be heard together in Open Court. …

 

He referred to Order 12 rule 22 of the Rules of the Supreme Court, 1957, which states that:—

 

“a defendant may appear at any time before judgment. If he appear at any time after the time limited by the writ for appearance, he shall not, unless the court or a judge shall otherwise order, be entitled to any further time for delivering his defence”,

 

and pointed out that the defendants had to file their statement of defence within 22 days of the service of the writ and statement of claim i.e. by January 13, 1978. The defence filed in this case was out of time. Counsel contended that in a case where the party served with the writ does not appear within the time limited for appearance, then upon the filing by the plaintiff of a proper affidavit of service, the action may proceed as if such party had appeared. Counsel also referred to page 108 of the Annual Practice 1958 and contended that by Order 27 rule 11 the plaintiff may set down the action on motion for judgment and such judgment shall be given as upon the statement of claim the court or judge shall consider the plaintiff to be entitled. He also referred to page 612 of the said Annual Practice 1958 and correctly pointed out that a defence delivered after the proper time cannot be disregarded even though it is not delivered until after the plaintiff has served notice of motion for judgment. In such a case, the court will have regard to the contents of the defence delivered out of time and deal with the case in such a manner that justice can be done.

 

Counsel for the defendants conceded that the defendants had filed their appearance and statement of defence out of time but also referred to Order 12 rule 22 of the Rules of the Supreme Court, 1957. He also referred to page 108 of Mallal’s Supreme Court Practice under the commentary of “Time for appearance” and pointed out that an appearance may be made at any time before the judgment is actually signed. Thus a defendant, who, not having entered an appearance comes before the court on the day when an order for judgment is being sought against him, must be allowed to enter an appearance if he desires to do so and to

 

22

 

defend the action. Reference was made to the case of Redditch Benefit Building Society v Roberts [1940] Ch 415; [1940] 1 All ER 342 CA in which it was held by Clauson L.J. that the court should not allow a plaintiff to enter judgment against a defendant for default of appearance when the defendant, whether he has technically appeared or not, is personally or by his legal representative before the court and anxious to put himself in a position to defend the action.

 

Counsel for the defendants, Mr. Ajmeer Singh, also referred to the following passages in the Annual Practice 1957 at pages 151 and 446 respectively:-

 

and

 

“A defence delivered after the proper time cannot be disregarded, even though it is not delivered until after the plaintiff has served notice of motion for judgment under this Rule. (Gill v Woodfin (1884) 25 Ch D 707 CA). In such a case the court will have regard to the contents of the defence delivered out of time, and deal with the case in such a manner that justice can be done. (Gibbings v Strong (1884) 26 Ch D 66 CA); Montagu v Land

 

Corporation 56 LT 730, etc.”

 

In this connection the following dictum of Earl of Selborne L.C. in the case of Gibbings v Strong (1884) 26 Ch D 66 CA is apt:-

 

“and if a defence has been put in, though irregularly, I think the court would do right in attending to what it contains. If it were found to contain nothing, which, if proved, would be material by way of defence, the court would disregard it. If, on the other hand, it discloses a substantial ground of defence, the court will not take the circuitous course of giving a judgment without regard to it, and obliging the defendant to apply (under rule 14) to have that judgment set aside on terms, but will take steps to have the case properly tried on the merits.”

 

23

 

Having considered the arguments of both counsel, I considered that the proper procedure in this case would be that laid down in Order 12 rule 22 of the Rules of the Supreme Court, 1957. It is obvious that the defendants could appear at any time before judgment. In this case they have in fact entered appearance on January 21, 1978 before there was any judgment. As they have entered appearance after the time limited by the writ for appearance it was necessary of course to consider whether they should be entitled to further time for delivering their defence. In accordance with the above-quoted authorities, I therefore proceeded to consider the statement of defence which was filed by the defendants on February 25, 1978. Even counsel for the applicant/plaintiff did not dispute the correctness of that step as he too in his written submission also referred to the statement of defence filed in which the defendants have pleaded ‘inter alia’ that the said land was registered in the name of Tengku Aminah binti Almarhom Sultan Abdul Hamid with effect from February 13, 1952. …

 

… Here I would respectfully agree with the following dictum of Wylie C.J. (Borneo) in the case of Thomas v Booty, Edwards & Partners [1964] MLJ 359 360 when His Lordship said-

 

“Moreover it is a waste of time to shut out a defence, because immediately judgment was given in default the defendant would apply to set it aside. An order would be granted if there is a defence and the defendant had (not), in effect, been refused an opportunity for the court to hear his side of the case. We are concerned only with the application of rules of procedure. These applications should not amount to a denial of the principles of justice. It is for these reasons that extensions of time are usually granted as a matter of course unless there are very strong circumstances to show that these are delaying tactics of some major feature…”

 

Having considered all the circumstances of this case I therefore decided, in exercise of the powers under Order 12 rule 22 of the Rules of the Supreme Court, 1957, to make an order to allow the defendants one week from the date of the said order to file their statement of defence on payment of costs thrown away. The said

 

24

 

order was made on the defendants’ application by way of summons-in-chambers dated March 2, 1978. I made no order on the applicant/plaintiff’s notice of motion, except at the request of her counsel, I ordered that costs connected with the said notice of motion be paid by the defendants to the plaintiff in any event ”

 

(emphasis added).

 

24. Aleykutty James is decided based on the previous Order 12 rule 22 of the Rules of the Supreme Court 1957 (RSC). I am of the view that the reasoning in Aleykutty James applies to Order 19 rule 7(1) RC. In deciding Court Enc. No. 6 on whether the court should “give such judgment as the [Plaintiff] appears entitled” on the SOC pursuant to Order 19 rule 7(1) RC, the court should consider the Defence, even though the Defence had been filed late [contrary to Order 18 rule 2(1) RC]. This is because if the court enters a judgment in default of Defence for the Plaintiff and if the Defence has merits, the Defendants can easily apply to set aside such a default judgment under Order 19 rule 9 RC. This interpretation of Order 19 rule 7(1) RC based on Aleykutty James is supported by the 2 following provisions in the RC:

 

(a) Order 1A RC provides that in administering the RC, including Order 19 rule 7(1), the court “shall have regard to the overriding interest of justice and not only to the technical non-compliance” with RC; and

 

(b) Order 2 rule 1(2) RC states that the RC are “subject to the overriding objective of enabling the Court to deal with cases justly’ and all

 

25

 

parties are required to assist the court to achieve this overriding objective.

 

25. A perusal of the Defence clearly reveals that the Defendants have a meritorious answer to This Suit based on the Settlement Agreement and Consent Judgment. On this ground alone, Court Enc. No. 6 should be dismissed and Court Enc. No. 9 be allowed. In view of the Defendants’ delay in filing and service of the Defence as well as the Defendants’ erroneous prayer in Court Enc. No. 5 for an extension of time to file the Defence (please see the above Part F), no costs is ordered for –

 

(a) the dismissal of Court Enc. No. 6; and

 

(b) allowing Court Enc. No. 9.

 

26. Additionally or alternatively, I exercise my discretion under Order 3 rule 5(1) RC to allow Court Enc. No. 9 and grant an extension of time for the Defence to be filed and served. Such a decision, in itself, will defeat Court Enc. No. 6.

 

27. My understanding of Malaysian cases which have granted or refused extensions of time under Order 3 rule 5(1) RC is as follows:

 

(a) in the Federal Court case of National Union of Bank Employees v Director General of Trade Unions & Anor [2013] 5 AMR 729, at paragraph 27, Arifin Zakaria CJ decided as follows –

 

26

 

—[27] The grant of extension of time by the court is one of discretion by virtue of Order 3 r 5 of the RHC. The principle to be applied by the court is settled. In Saeed U Khan v Lee Kok Hooi [2000] AMEJ 26; [2001] 5 MLJ 416, it was held that, the court should consider certain factors, when exercising its discretion to extend time, namely: (1) the delay in making an application; (2) whether or not there are cogent reasons for the litigant not to have made the application within the prescribed time; and (3) the likelihood and degree of prejudice, as well as injustice to the opposite party should the court exercise its discretion. In the present appeal, the application for extension of time was made before the hearing of the judicial review application and the respondents were not prejudiced by this application as they had been duly served with all the cause papers prior to the application itself. In exercising its discretion, the court must have regard to justice. This is in line with the provision in Order 1A of the RHC. (See Maxwell v Keun [1928] 1 KB 645; Walker v Walker [1967] 1 WLR 327)

 

(emphasis added); and

 

(b) the exercise of the court’s discretion to grant or refuse an extension of time, is dependent on the particular facts of the case in question. Accordingly, cases on the grant or refusal of extension of time, are based purely on the facts of those cases and are not binding legal precedents from the view point of the stare decisis doctrine.

 

27

 

Consequently, all the cases cited by the Plaintiff and Defendants, may be explained on their own facts.

 

28. I find the following reasons in favour of the exercise of my discretion under Order 3 rule 5(1) RC to allow an extension of time to file and serve Defence:

 

(a) there is no injustice or prejudice to the Plaintiff due to the late filing and service of the Defence. This is because the Defendants have earlier filed Court Enc. No. 5 and the Plaintiff has opposed Court Enc. No. 5 by way of affidavits and written submission;

 

(b) as the Defence had been filed on 19.6.2015, there was no inordinate delay; and

 

(c) the reason for the delay in filing and serving the Defence was because of an error of law on the Defendants’ part in praying in Court Enc. No. 5 for an extension of time to file the Defence (please see the above Part F). In other words, there was no mala fide or improper purpose regarding the delay in the filing and service of the Defence.

 

29. Lastly, any breach of Order 18 rule 2(1) RC is curable under Order 2 rule 1(1) and (3) RC. Order 2 rule 1(1) and (3) RC state as follows:

 

—Order 2 Non-compliance with Rules

 

28

 

rule 1(1) Where, in beginning or purporting to begin any

 

proceedings or at any stage in the course of or in connection with any proceedings, there has, by reason of any thing done or left undone, been noncompliance with the requirement of these Rules, the non-compliance shall be treated as an irregularity and shall not nullify the proceedings, any step taken in the proceedings, or any document, judgment or order therein.

 

1(3) The Court or Judge may, on the ground that there has

 

been such non-compliance as referred to in paragraph (1), and on such terms as to costs or otherwise as it or he thinks just, bearing in mind the overriding objective of these Rules, exercise its or his discretion under these Rules to allow such amendments, if any, to be made and to make such order, if any, dealing with the proceedings generally as it or he thinks fit in order to cure the irregularity. ”

 

(emphasis added).

 

At this juncture, it is apt for me to refer to the following judgment of Suffian LP in the Federal Court case of Tan Chwee Geok & Anor v Khaw Yen-Yen & Anor [1975] 2 MLJ 188, at p. 189 –

 

—The [RSC] are intended to facilitate, not impede, the administration of civil justice.

 

In the bad old days in England from where we took our Rules, if you put a comma wrong you were thrown out of court, so strict were they about technicalities.

 

29

 

But over the years this strictness gave way to common sense, and every time the Rules were amended it was with the object of removing fussy technicalities, and making it easier for parties to get justice.

 

This changed attitude was reflected in the remarks of Lord Collins M.R. about 70 years ago in Re Coles and Ravenshear [1907] 1 KB 1, 4:

 

“Although a court cannot conduct its business without a code of procedure, the relation of the rules of practice to the work of justice is intended to be that of handmaid rather than mistress; and the court ought not to be so far bound and tied by rules, which are after all only intended as general rules of procedure, as to be compelled to do what will cause injustice in the particular case.”

 

Today 0.70 r. 1 of our Rules [RSC] [now replaced by Order 2 rule 1(1) and (3) RC] explicitly states that non-compliance with our Rules-

 

“shall not render any proceedings void unless the court or a judge shall so direct…” ”

 

(emphasis added).

 

I am of the view that Tan Chwee Geok (which interprets RSC) can apply a fortiori in the context of Order 2 rule 1(1) and (3) RC to cure the breach of Order 18 rule 2(1) RC in this case.

 

H. Court Enc. No. 5

 

30

 

30. In determining Court Enc. No. 5, I am guided by the following trite

 

principles of law:

 

(a) a pleading can only be struck out in a plain and obvious case, namely where that pleading is obviously unsustainable – please see the Supreme Court’s judgment delivered by Mohd. Dzaiddin SCJ (as he then was) in Bandar Builder Sdn Bhd & Ors v United Malayan Banking Corporation Bhd [1993] 3 MLJ 36, at 43;

 

(b) the mere fact that a pleaded case is weak and is not likely to succeed, is not a ground to strike out that pleading – Bandar Builder Sdn Bhd, at p. 44;

 

(c) every Malaysian citizen has a constitutional right of access to justice under article 5(1) of our Federal Constitution – please see Gopal Sri Ram FCJ’s judgment in the Federal Court case of Sivarasa Rasiah v Badan Peguam Malaysia [2010] 3 CLJ 507, at 514-515; and

 

(d) under Order 18 rule 19(1) RC, in the interest of justice the court has a discretion to direct a pleading to be amended -the Court of Appeal’s judgment given by Mahadev Shankar JCA in Muniandy s/o Subrayan & Ors v Chairman & Board Members of Koperasi Menara Maju Bhd [1997] 1 MLJ 557, at 560 and 561.

 

31

 

31. If a striking out application has been made under Order 18 rule 19(1)(a) RC, the court cannot consider affidavit evidence according to Order 18 rule 19(2) RC – please see the Court of Appeal’s judgment delivered by Ramly Ali JCA (as he then was) in See Thong v Saw Beng Chong [2013] 3 MLJ 235, at 241. As Court Enc. No. 5 has been filed pursuant to Order 18 rule 19(1)(b) and/or (d) RC, namely This Suit is scandalous, frivolous, vexatious and/or an abuse of court process, I can consider affidavits filed by the parties in this case.

 

H(1). Plaintiff’s submission

 

32. In opposing Court Enc. No. 5, the Plaintiff advanced the following contentions:

 

(a) Messrs RWY had no resolution from the 2nd Defendant’s directors to act in the 2012 Suit, the recording of the Consent Judgment and This Suit;

 

(b) Messrs RWY had dealt with an “unauthorized person”, one Mr. Dinesh Kanawagi, in respect of the Consent Judgment; and

 

(c) the Consent Judgment has been obtained by fraud.

 

33. The Plaintiff cited the following cases:

 

(a) the High Court case of Thangavelu v Saudagar Singh (1965) 31 MLJ 38; and

 

32

 

(b) the High Court’s judgment in Lee Lim Luang v Lee Shiah Yee [1988] 1 MLJ 193.

 

H(2). Plaintiff is estopped by cause of action estoppel from filing This Suit

 

34. In Asia Commercial Finance (M) Bhd v Kawal Teliti Sdn Bhd [1995] 3 MLJ 189, Peh Swee Chin FCJ explained in the Supreme Court that the doctrine of res judicata consists of 2 limbs, namely cause of action estoppel and issue estoppel. As regards the cause of action estoppel principle, the Supreme Court has decided as follows in Asia Commercial Finance (M) Bhd, at p. 197-198 and 198-199:

 

What is res judicata? It simply means a matter adjudged, and its significance lies in its effect of creating an estoppel per rem judicatum. When a matter between two parties has been adjudicated by a court of competent jurisdiction, the parties and their privies are not permitted to litigate once more the res judicata, because the judgment becomes the truth between such parties, or in other words, the parties should accept it as the truth; res judicata pro veritate accipitur. The public policy of the law is that, it is in the public interest that there should be finality in litigation – interest rei publicae ut sit finis litium. It is only just that no one ought to be vexed twice for the same cause of action – nemo debet bis vexari proeadem causa. Both maxims are the rationales for the doctrine of res judicata, but the earlier maxim has the further elevated status of a question of public policy.

 

Thus, there are in fact two kinds of estoppel per rem judicatum. The first type relates to cause of action estoppel and the second, to issue estoppel, which is a development from the first type.

 

33

 

The cause of action estoppel arises when rights or liabilities involving a particular right to take a particular action in court for a particular remedy are determined in a final judgment and such right of action, ie the cause of action, merges into the said final judgment; in layman’s language, the cause of action has turned into the said final judgment. The said cause of action may not be relitigated between the same parties because it is res judicata.

 

In order to prevent multiplicity of action and also in order to protect the underlying rationales of estoppel per rem judicatum and not to act against them, such estoppel of cause of action has been extended to all other causes of action (based on the same facts or issues) which should have been litigated or asserted in the original earlier action resulting in the final judgment, and which were not, either deliberately or due to inadvertence. …”

 

(emphasis added).

 

35. The Settlement Agreement has been annexed to the Consent Judgment and is part of the Consent Judgment. The terms of the Settlement Agreement and Consent Judgment clearly concern –

 

(a) the Shareholders Agreement regarding SEPL and the Cameroon Project; and

 

(b) the 2012 Suit wherein the Plaintiff and Defendants were parties.

 

36. This Suit is based on the Shareholders Agreement regarding the Defendants, SEPL and the Cameroon Project. Accordingly, it is plain and obvious that the Plaintiff is barred by cause of action estoppel principle as enunciated in Asia Commercial Finance (M) Bhd, from filing This Suit against the Defendants because the Plaintiff has agreed to both the

 

34

 

Settlement Agreement and the Consent Judgment. In view of the Consent Judgment, the case concerning the Shareholders Agreement, Defendants, SEPL and the Cameroon Project has become final, res judicata and cannot be re-litigated by way of This Suit due to policy considerations underlying the cause of action estoppel principle. This Suit therefore constitutes an abuse of court process by the Plaintiff which should be struck out under Order 18 rule 19(1)(d) and Order 92 rule 4 RC as well as pursuant to the court’s inherent jurisdiction. This Suit is bound to fail by reason of cause of action estoppel principle and cannot be saved by any amendment to the SOC.

 

H(2). Plaintiff cannot set aside Consent Judgment based on fraud

 

37. The Plaintiff had applied in This Suit to set aside the Consent Judgment on the ground of fraud. Section 44 of the Evidence Act 1950 (EA) provides as follows:

 

“Any party to a suit or other proceeding may show that any judgment, order or decree which is relevant under section 40, 41 or 42, and which has been proved by the adverse party, was delivered by a court not competent to deliver it or was obtained by fraud or collusion”

 

(emphasis added).

 

38. When I delivered an oral decision for Court Enc. No. 5 on 4.8.2015 (Oral Decision), a party was then required by case law to prove fraud in a civil case beyond all reasonable doubt. My Oral Decision was that it was plain

 

35

 

and obvious that the Plaintiff could not prove beyond all reasonable doubt that the Consent Judgment had been obtained by fraud. My reasons were as follows:

 

(a) under s 114(e) EA, there is a rebuttable presumption that judicial acts are regularly performed. It is presumed under s 114(e) EA that the Consent Judgment has been obtained regularly;

 

(b) in Chee Pok Choy & Ors v Scotch Leasing Sdn Bhd [2001] 2 CLJ 321, at 334-336, Gopal Sri Ram JCA (as he then was) decided as follows in the Court of Appeal –

 

“I think I may begin this part of the case by referring to s. 44 [EA]. …

 

The principle then to be culled from the authorities is that a judgment may be impeached for deliberate fraud practised upon the court, and it is insufficient to show that a litigant merely convinced the court through misleading or erroneous evidence. Whether the test has been met in any given case must, I think, depend on the facts and circumstances of the particular case.”

 

(emphasis added).

 

Based on Chee Pok Choy, the Plaintiff must adduce evidence beyond all reasonable doubt that fraud had been practised on the court which had recorded the Consent Judgment. In this case, all the parties in the 2012 Suit had agreed to the Consent Judgment and no evidence had been adduced in the court which had recorded the

 

36

 

Consent Judgment. As such, the court which had recorded the Consent Judgment, was not even misled;

 

(c) the Plaintiff is a practising Advocate and Solicitor. Such a fact was informed to the court on 4.8.2015 by the Defendants’ learned counsel and this was confirmed by the Plaintiff himself who personally attended the hearing of Court Enc. Nos. 5, 6 and 9 on 4.8.2015 with the Plaintiff’s learned counsel. It is plain and obvious that the Plaintiff as a practising lawyer, has not been defrauded to sign the Settlement Agreement and to agree to the Consent Judgment;

 

(d) in the 2012 Suit, the Plaintiff had been legally represented by a law firm, Messrs Melissa Ram (Messrs MR);

 

(e) the Plaintiff had signed the Settlement Agreement in the presence of a witness, Mr. Ramacchandaran Periasamy (RP);

 

(f) no contemporaneous documentary evidence has been adduced by the Plaintiff to support fraud as a ground to set aside the Settlement Agreement and the Consent Judgment, such as complaints by the Plaintiff against Messrs MR and/or RP. No police report had ever been lodged by the Plaintiff that fraud had been perpetrated on the Plaintiff in respect of the recording of the Consent Judgment; and

 

(g) the Consent Judgment was recorded on 22.4.2013. This Suit was only filed on 22.4.2015. There has been a delay of exactly 2 years

 

37

 

for the Plaintiff to set aside the Consent Judgment. More importantly, there is no credible and reasonable explanation for this inordinate delay of 2 years in the filing of This Suit.

 

39. Six days after the Oral Decision, on 10.8.2015, the Federal Court in a judgment delivered by Richard Malanjum CJ (Sabah & Sarawak) in Sinnaiyah & Sons Sdn Bhd v Damai Setia Sdn Bhd [2015] 5 AMR 497, at paragraphs 48-53, has held that an allegation of fraud, even if such an allegation concerns “criminal fraud”, need only be proven on a balance of probabilities and not beyond all reasonable doubt.

 

40. The question that now arises is whether Sinnaiyah & Sons Sdn Bhd has any effect on the Oral Decision. The Federal Court has addressed this issue in Sinnaiyah & Sons Sdn Bhd, at paragraph 54, as follows:

 

“[54] However, we should make it clear that this judgment only

 

applies to this appeal and to future cases and should not be utilised to set aside or review past decisions involving fraud in civil claims

 

(emphasis added).

 

41. The above passage in Sinnaiyah & Sons Sdn Bhd does not state whether Sinnaiyah & Sons Sdn Bhd applies to decisions which have been made before the Federal Court’s judgment in Sinnaiyah & Sons Sdn Bhd and are pending appeals (such as this case).

 

38

 

42. In view of Sinnaiyah & Sons Sdn Bhd and in the interest of justice, I have decided to review the Oral Decision and decide afresh whether the Plaintiff has proven on a balance of probabilities that the Consent Judgment has been obtained by fraud.

 

43. Based on the reasons elaborated in the above paragraph 38, I am not satisfied that the Plaintiff has succeeded to prove on a balance of probabilities that the Consent Judgment has been obtained by fraud.

 

44. The 2 High Court judgments cited by the Plaintiff’s learned counsel,

 

namely Thangavelu and Lee Lim Luang, with respect, do not assist the Plaintiff as both cases do not concern a settlement contract which has been annexed into a consent judgment.

 

H(3). Consent Judgment is not affected by Dato’ Pang’s Agreement

 

45. I have not overlooked the Plaintiff’s reliance on Dato’ Pang’s Agreement. It is trite law that a consent judgment can only be varied by consent in a subsequent court order. The Consent Judgment cannot be varied, let alone be superceded, by Dato’ Pang’s Agreement.

 

H(4). This Suit is plainly not sustainable against Defendants

 

46. In Yeng Hing Enterprise Sdn Bhd v Liow Su Fah [1979] 2 MLJ 240, at 244, Abdoolcader J (as he then was) held in the Federal Court that when a plaintiff has no cause of action against a defendant, the plaintiff’s suit is

 

39

 

therefore vexatious, frivolous and an abuse of court process. As explained above, the Plaintiff has no valid cause of action against the Defendants for the following reasons:

 

(a) the Plaintiff has entered into the Settlement Agreement and has recorded the Consent Judgment which has annexed the Settlement Agreement. There is no proof of fraud on a balance of probabilities to impugn the Consent Judgment; and

 

(b) the Plaintiff is estopped by the cause of action estoppel principle from filing This Suit against the Defendants.

 

47. In view of the above reasons, this court allows Court Enc. No. 5 with costs on the following grounds:

 

(a) This Suit is frivolous and/or vexatious within the meaning of Order 18 rule 19(1)(b) RC; and/or

 

(b) This Suit constitutes an abuse of court process which should be struck out under Order 18 rule 19(1)(d) and Order 92 rule 4 RC as well as pursuant to the court’s inherent jurisdiction.

 

48. For the sake of completeness, Court Enc. No. 5 is not allowed on the ground This Suit is scandalous as understood in Order 18 rule 19(1)(b) RC.

 

40

 

I. Court’s decision

 

49. Based on the above reasons:

 

(a) Court Enc. No. 5 is allowed with costs;

 

(b) Court Enc. No. 6 is dismissed with no order as to costs; and

 

(c) Court Enc. No. 9 is allowed with no order as to costs and the Defence is deemed to have been validly filed and served on the Plaintiff.

 

WONG KIAN KHEONG

 

Judicial Commissioner High Court (Commercial Division) Kuala Lumpur

 

DATE: 4 JANUARY 2016

 

Counsel for Plaintiff: Encik Mohd. Hafiz, Puan Aida Hassan & Ms. Pramananti a/p Muniandy

 

(Messrs Zailan & Co.)

 

Counsel for Defendants: Mr. Richard Wee & Ms. Lesley Lim Ai Lee (Messrs Richard Wee & Yip)

 

41

PDF Source: http://kl.kehakiman.gov.my