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2021 MarsdenLR 2426
HIGH COURT MALAYA JOHOR BAHRU
CITYVILLA CONSTRUCTION SDN BHD – Appellant
Versus
DINDING DEVELOPMENT SDN BHD & ORS; BALA SUBRAMANIAM RASU (APPLICAN.... – Respondent
[Civil Suit No: JA-22NCVC-8-01/2018]
A judgment in default can be set aside if it is found to be irregular due to non-service of the requisite court documents, warranting a full trial to address substantive defenses raised.
Headnote:(A) Civil Procedure Act – Judgment in Default – Application to set aside of Judgment in Default by First Defendant founded on irregularity in service of Writ – The court found that the necessary documentation proving service of Writ was lacking, thus ruling the Judgment in Default to be irregular and warranting setting aside. (Paras 15, 18, 22)
(B) Evidence – Fraudulent Misrepresentation – The court considered allegations of fraud regarding a Power of Attorney and determined that a full trial was necessary to appropriately address raised issues and defenses presented. (Paras 22, 23)
Facts of the case: The Plaintiff obtained loans from MBSB, defaulted, and entered into a Joint Venture Agreement with the First Defendant. The Plaintiff alleged that the First Defendant fraudulently used a Power of Attorney. After the Plaintiff obtained a Judgment in Default against the First Defendant, the First Defendant sought to set it aside, claiming irregular service of the Writ. (Paras 2-4, 6-8)
Findings of Court: The JID was irregular due to improper service of the Writ on the First Defendant, justifying the setting aside of the judgment ex debitio justitae. (Paras 15, 18)
Issues: The main questions included the regularity of JID and whether the First Defendant showed a defense on merits. (Paras 13, 22)
Ratio Decidendi: The court ruled that the absence of evidence of proper service meant that the JID was irregular, and the First Defendant raised valid defenses necessitating a full trial on the merits. (Paras 18, 22)
Result: Application to set aside the Judgment in Default is allowed.
JUDGMENT
Introduction
[1] This is the First Defendant's application to set aside a judgment in default of appearance obtained by the Plaintiff against the First Defendant on 31 July 2010.
Background Facts
[2] The Plaintiff applied for and was granted a bridging loan of RM20,000,000.00 from Malaysia Building Society Bhd ("MBSB"). Subsequently, MBSB granted a second loan of RM13,000,000.00 to the Plaintiff. The Plaintiff and MBSB then executed a facility agreement dated 13 December 2006 in respect of the loan of RM20,000,000.00 and a second facility agreement dated 14 December 2006 in respect of the RM13,000,000.00 loan. The Plaintiff subsequently defaulted on the loans and as at 21 September 2012, the Plaintiff owed MBSB a sum of RM26,034,490.00.
[3] On 3 August 2012, the Plaintiff and the First Defendant entered into a Joint Venture Agreement ("JVA") to develop and build a building to be called Block A Sun City Plaza ("the Project") on land held under Hak Milik PN 9501, Lot 63471, Mukim Plentong, Johor ("the Land") belonging to the Plaintiff.
[4] The First Defendant had agreed to take over all the debts owing by the Plaintiff to MBSB amounting to RM26,000,000.00. The Plaintiff, the First Defendant and MBSB then executed a Novation Agreement dated 21 September 2019 to record the agreement among them. The Plaintiff subsequently created a Third Party Charge over the Land to secure the loans taken over by the First Defendant.
[5] In addition to the JVA, the Plaintiff had executed a Power of Attorney ("PA") dated 29 April 2013 to appoint the First Defendant as attorney for the Plaintiff, to do all acts and sign all necessary documents with respect to the Project.
After obtaining the required permits and licences from Jabatan Perumahan Negara, the First Defendant commenced the construction of the Project and thereafter began to sell units in the Project. The purchasers and end-financiers had paid a sum of RM11,587,408.00 to MBSB to obtain a discharge of 79 units which were purchased. MBSB issued a disclaimer letter in respect of the 79 units redeemed.
[6] The Plaintiff alleged that the First Defendant had used a "fraudulently obtained" Power of Attorney to execute the sales and purchase agreements and financing agreements with the purchasers and end-financier.
[7] The Plaintiff filed suit No JA-22NCVC-77-04/2016 ("the First Suit") at the Johor Bahru High Court on 10 April 2016 against the First Defendant. In the First Suit, the Plaintiff had inter alia sought a declaration that the PA is void ("dibatalkan"). MBSB was granted leaveby the Court on 23 May 2018 to intervene in the First Suit. However, on 18 September 2018, the Plaintiff withdrew the First Suit during case management. On 11 January 2018, the Plaintiff filed a second suit ("the Present Suit") no JA-22NCVC-8-01/2018, against five (5) parties, including the First Defendant.
[8] Meanwhile, on 30 January 2018, the First Defendant was wound up by the Court on the petition of a creditor and the Official Receiver was appointed Liquidator. The Plaintiff obtained Judgment in Default ("JID") against the First Defendant and three others on 31 July 2018. On 12 February 2019, Mr Bala Subramaniam a/l Rasu was appointed as a Private Liquidator ("P Liquidator") of the First Defendant, replacing the Official Receiver.
[9] The P Liquidator became aware of the JID some time in May 2019 when he received a copy of the JID from the Plaintiff's solicitors via fax.
[10] After being served with a copy of the JID, the P Liquidator wrote a few emails to the Plaintiff's solicitors requesting for copies of the cause papers. The documents requested were sent to the First Defendant's solicitors on 11 March 2020.
[11] The First Defendant filed this application about one (1) year after being supplied with the cause papers by the Plaintiff. The Plaintiff submits that this application by the First Defendant should be dismissed for the following reasons:
a) The JID is a regular judgment since ser
