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2021 MarsdenLR 978
HIGH COURT MALAYA JOHOR BHARU
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 obtained without proper service is irregular and must be set aside; defendants must show a genuine defence on merits.
Headnote:(A) Rules of Court 2012 – Application to set aside a Judgment in Default (JID) – The court found that non-service of the Writ and Statement of Claim renders the JID irregular and liable to be set aside – The burden rests on the defendant to demonstrate a defence on merits – The delay in making the application was deemed acceptable due to intervening circumstances – The JID was set aside due to failures of procedural compliance. (Paras 12, 15, 23)
Facts of the case: The First Defendant applied to set aside a JID obtained by the Plaintiff due to alleged non-service of Writ and claims of irregularity.
Findings of Court: The court held that the JID is irregular due to lack of service and allowed the application to set aside.
Issues: Main issues included the validity of the service of Writ and whether the First Defendant established a defence on merits.
Ratio Decidendi: The court emphasized that a judgment obtained under such irregularity must be set aside and determined that the First Defendant's arguments warranted a full hearing.
Result: Application 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 leave by 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 sinc
