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2022 MarsdenLR 2552
HIGH COURT MALAYA SUNGAI PETANI
TIONG HUAT RUBBER FACTORY SDN BHD – Appellant
Versus
NR RUBBER TECH INDUSTRIES SDN BHD – Respondent
[Civil Suit No: KB-22NCVC-21-07/2021]
A defendant seeking to set aside a default judgment must prove procedural irregularity or demonstrate a viable defence; mere contradictory claims do not suffice.
Headnote:(A) Civil Procedure – Default Judgment – The defendant applied to set aside a default judgment entered against it due to alleged procedural non-compliance in service of cause papers. The court found that service was proper under O 62 r 4 of the Rules of 2012, thus confirming the regularity of the default judgment (Paras 2, 12, 22).
(B)
Breach of Contract – The plaintiff’s claim was based on a breach of contract for non-delivery of rubber, with the plaintiff seeking to recover losses from having to purchase rubber at a higher price (Paras 5, 28, 39).
(C)
Defence of Merits – The court held that the defendant failed to demonstrate a viable defence, as contradictions in its claims rendered them incoherent and unmeritorious (Paras 26, 30).
Facts of the case:
The plaintiff contracted the defendant for the supply of 1820 metric tons of rubber, of which only 460 metric tons were delivered, leading to a claim of USD289,510.00 for loss incurred (Paras 4, 7, 8).
Findings of Court:
The court concluded the default judgment was regular, and the defendant’s claims were insufficient to show a defence of merits (Paras 16, 40).
Issues
: Whether service of cause papers was irregular; whether the defendant had a defence of merits (Paras 10, 24).
Ratio Decidendi:
The judgment is regular as the plaintiff complied with the service rules, and the defendant's proposed defence was found to be a sham with inconsistencies (Paras 12, 39).
Result:
The application to set aside the default judgment is dismissed with costs.
JUDGMENT
[1] Enclosure (14) is the defendant's application to set aside a default judgment entered against it. The plaintiff had secured this judgment on 22 September 2021 due to the defendant's failure to enter appearance.
[2] The law relating to an application of this nature is trite. The defendant is entitled to have the judgment set aside as of right if the default judgment is an irregular judgment: ex debito justitiae. On the other hand, if the judgment is a regular judgment, the applicant must show that it has a defence which has some merits. ( Evans v. Bartlam [1937] AC 473 Hasil Bumi Perumahan Sdn Bhd & 5 Others v. United Malayan Banking Berhad, [1994] 1 MLJ 312 , Bank Bumiputra (M) Bhd v. Majlis Amanah Rakyat; followed.)
[3] In support of this application, the learned counsel for the defendant submits that the default judgment is an irregular judgment which should be set aside ex debito justitiae as there was procedural non-compliance in the service of the writ of summons and statement of claim ('cause papers'). In addition to that the defendant has a defence of merits.
[4] The plaintiff's cause of action against the defendant is premised on a breach of contract to deliver goods. The judgment sum prayed is a loss quantified by the plaintiff as the loss it suffered after having taken due steps to mitigate its loss occasioned by the breach.
Background Facts
[5] The plaintiff is a company which purchases rubber and latex ('raw materials') for the purpose of processing and converting these raw materials into goods. These processed goods are then sold to its own customers ('third parties').
[6] The defendant is a company which trades in rubber and other related products.
[7] The plaintiff claims that the defendant is its supplier for the raw materials of its processed goods. It alleges that by a series of contracts entered between the parties the defendant undertook to supply the plaintiff 1820 metric tons of Cup Lump Rubber ('the rubber'). These contracts were executed between the period June 2020 to Oct 2020 and the details of these contracts appear in the following table:
[8] Apparently out of the 1820 metric tons, the defendant delivered only 460 metric tons leaving the plaintiff short of 1360 metric tons. Without this supply, the plaintiff was unable to produce the processed goods which it had contracted to deliver to the 3rd parties (plaintiff's own customers for the processed goods). Faced with the situation, there were only 2 options open to the plaintiff. The first option was for the plaintiff to accept the non-delivery as it is which would translate to stopping the production of its processed goods totally. However, the consequences of this option would mean that the plaintiff would be sued by the 3rd parties for breach of its contractual obligations as it would have no processed goods to deliver.
[9] The second available option was for the plaintiff to continue production of the processed goods with rubber sourced from the open market. This would enable the plaintiff to honour its contractual obligations to the 3rd parties as the plaintiff would be able to supply the processed goods to the 3rd parties within their agreed timelines. However, the downside of this option was that the plaintiff would have to purchase rubber at a price higher than the defendant's selling the price.
[10] After considering the costs incurred in executing the second option against stopping production, the plaintiff concluded that the loss ensuing from production with a higher priced rubber would be less than stopping production totally. Thus, in order to mitigate the loss caused by the defendant's non-delivery of the rubber, the plaintiff resorted to purchasing the rubber from the open market. The sum of USD289,510.00 claimed in this action is the differential sum in price which the defendant contracted to supply to the plaintiff and the higher price which the plaintiff was forced to pay for the purchase from the open market for t
