Judgment in default against a third party is regular if the third party fails to enter appearance within the stipulated time, deeming it to admit the claim.

JUDGMENT

Mohd Nazlan Mohd Ghazali J:

Introduction

[1] This is an application to set aside a judgment in default entered by the defendant against a third party primarily on the ground that no judgment was given against the defendant in the plaintiff's main action. It was refused. This judgment contains the full reasons for the dismissal.

Key Background Facts

[2] The plaintiff had extended a loan to the third party company pursuant to an agreement dated 1 October 2017 ("the Agreement"). The defendant, being a shareholder and director of the third party had under the Agreement also guaranteed payment 60% of any outstanding amounts owed by the third party to the plaintiff.

[3] In light of allegation of breach, the plaintiff filed a writ action against the defendant, claiming inter alia, 60% of the outstanding amounts under the Agreement. The defendant responded by filing a notice for leave to issue third party notice against the third party. This was allowed by the Court.

[4] This suit was then fixed for case management on 14 January 2021, with the trial dates fixed in May 2022. The defendant also filed a counterclaim against the plaintiff claiming that the plaintiff and another person had, in breach of pre-contractual agreements and the Agreement, interfered in the daily operations of the third party company.

[5] But the third party had failed to enter appearance within 14 days after the service of the third party notice. The defendant then obtained a judgment in default of appearance against the third party.

[6] The third party now sought to set aside the judgment in default against the third party. Hence the instant proceedings.

Essence Of The Grounds For The Setting Aside Application

[7] The third party essentially argued that the defendant could not have entered the judgment in default (JID) against the third party because there was no judgment entered against the defendant, and that there was no leave obtained by the defendant prior to filing the JID. Further, as the defendant was, as the third party asserted, following O 13 r 7 (concerning proof of service of writ) of the Rules of 2012 ("the RC 2012") to obtain such judgment against the third party, the JID obtained by the defendant was therefore not in compliance with O 16 r 5(1) (b) of the RC 2012.

[8] As the JID is void and irregular, the third party is entitled to have it set aside ex debito justitiae. Even if the JID was regular the third party is still entitled to set aside the JID as it has a meritorious defence against the defendant, and that it is in the interest of justice to have the JID set aside.

Analysis & Findings Of This Court

Governing Principles

[9] Based on the third party notice, the defendant relied on the first limb of O 16 r 1 to seek an indemnity or contribution from the third party. Order 16 r 1 states as follows:

1. Third party notice (O 16 r 1)

(1) Where in any action a defendant who has entered an appearance:

(a) claims against a person not already a party to the action any contribution or indemnity;

(b) claims against such a person any relief or remedy relating to or connected with the original subject matter of the action and substantially the same as some relief or remedy claimed by the plaintiff; or

(c) requires that any question or issue relating to or connected with the original subject matter of the action should be determined not only as between the plaintiff and the defendant but also as between either or both of them and a person not already a party to the action,

then, subject to paragraph (2), the defendant may issue a notice in Form 18 or 19, whichever is appropriate (which is referred to as a "third party notice" in this Order), containing a statement of the nature of the claim made against him and, as the case may be, either of the nature and grounds of the claim made by him or of the question or issue required to be determined.

(2) A defendant to an action may not issue a third party notice without the leave of the Court unless he issues the notice bef