Timeliness and valid service are critical for setting aside a judgment in default; failure to comply leads to dismissal regardless of merits.

JUDGMENT

Atan Mustaffa Yussof Ahmad JC:

[1] This judgment concerns the 3rd Defendant's application (encl 7) pursuant to O 13 r 8 of the Rules of 2012 ("ROC 2012") to set aside a judgment in default of appearance dated 31 October 2018 ("the Judgment in Default") recorded against the 3rd Defendant. The Judgment in Default arises from a writ action filed by the Plaintiff against the Defendants in this suit for recovery under a Commodity Murabahah Facility granted by the Plaintiff to the 1st Defendant.

[2] At the hearing of this application, I dismissed the application. This judgment contains the full grounds for my decision.

Background Facts

[3] The Plaintiff, a licensed bank, extended to the 1st Defendant a Commodity Murabahah Term Financing-i facility to the 1st Defendant for the sum of RM2,185,400.00 ("the Facility"). This was documented by the Plaintiff's Letter of Offer dated 12 February 2014 and a Master Commodity Murabahah Financing Agreement (CMTF-i) ("the Facility Agreement") dated between the Plaintiff and the 1st Defendant dated 25 September 2014.

[4] As part of the security arrangement under the Facility, a Deed of Assignment dated 25 September 2014 ("the Deed of Assignment") and Power of Attorney dated 25 September 2014 ("the Power of Attorney") were executed by the 1st Defendant in favour of the Plaintiff assigning all rights in the 1st Defendant's property to the Plaintiff. The 2nd and 3rd Defendants also jointly and severally executed a Joint and Several Guarantee dated 25 September 2014 ("the Guarantee"). The guarantors, in consideration of the Plaintiff inter alia granting or continuing to make available the Facility to the 1st Defendant, jointly and severally guaranteed not only as guarantors but as principal debtors to pay the Plaintiff on demand all moneys due and owing by the 1st Defendant to the Plaintiff including legal costs on a solicitor client basis.

[5] 1st Defendant failed to make the repayments under the Facility on the due date and the Plaintiff The Plaintiff through its solicitor's letter dated 12 September 2018 to the 1st Defendant terminated the Facility and demanded payment of the entire indebtedness of the 1st Defendant, the sum of RM4,838,073.47 as at 31 August 2018 together with the applicable ta'widh/compensation. The 1st Defendant did not pay the amount demanded.

[6] The Plaintiff then issued a letter dated 12 September 2018 through its solicitors by registered post to the 2nd Defendant and 3rd Defendant who stood as guarantors under the Guarantee demanding payment of all amounts outstanding due and owing under the Facility.

[7] No payment was forthcoming from all the defendants in this action and the Plaintiff filed this action on 4 October 2018, claiming, together with compensation for late payment (ta'widh), the total outstanding amount of RM4,838,073.47 due and owing as at 31 August 2018 on the Facility together with the applicable ta'widh/compensation.

[8] The Writ of Summons and Statement of Claim were served on the defendants by way of registered post on 9 October 2018. The Defendants failed to enter an appearance within 14 days and the Plaintiff filed a Certificate of Non-Appearance and obtained the Judgment in Default on 31 October 2018. The Judgment in Default was served on the 3rd Defendant on 7 November 2018.

[9] On 18 November 2020, the 3rd Defendant filed an application to set aside the Judgment in Default (encl 7).

The Law On Setting Aside Judgment In Default

[10] An application to set aside a judgment in default is governed by O 42 r 13 of the ROC 2012. It requires such an application to be filed in Court and served on the party who has obtained the judgment within 30 days after the receipt of the said judgment. Pursuant to O 13 r 8 of the ROC 2012 the Court has the discretionary power to set aside or vary any judgment on such terms as it thinks just.

[11] An irregular default judgment would be set aside as of right irrespective of the merit's ex debito justitiae as held by the Federal