A default judgment may be set aside if the judgment was not properly served, allowing the aggrieved party to present a defence.

Introduction

[1] This is an appeal brought by the appellant (the taxpayer) against the decision of the Georgetown Sessions Court dated 29 December 2015 that disallowed the setting aside of the judgment in default dated 23 October 2013 obtained by the respondent (the Inland Revenue Department).

[2] The cause papers for purposes of this appeal under O 55 r 5 of the Rules of 2012 comprised, inter alia, the following:

(i) The appellant's notice of application to set aside the default judgment dated 7 September 2015;

(ii) The appellant's affidavit in support of Koay Hean Seng affirmed on 3 September 2015

(iii) The respondent's affidavit in reply of Hamisah binti Zakaria affirmed on 23 September 2015;

(iv) The appellant's affidavit in reply of Koay Hean Seng affirmed on 1 October 2015;

(v) The respondent's affidavit in reply (2) of Hamisah binti Zakaria affirmed on 19 October 2015; and

(vi) The appellant's affidavit in reply (2) of Koay Hean Seng affirmed on 21 October 2015.

[3] After having read the written submissions filed by the parties, I heard the counsel on 4 July 2016 and thereafter deferred my decision to deliberate on the arguments presented by them.

[4] I now give my decision together with my supporting grounds thereto.

Salient Background Fact

[5] The respondent commenced Georgetown Sessions Court Suit No: B5 3 June 2013 on 26 June 2013 against the appellant for failure to pay income tax for the year of assessment 2008 amounting to RM245,847.36.

[6] The writ of summons and statement of claim were served on the appellant vide substituted service pursuant to the order of Court dated 19 September 2013.

[7] As the result of the appellant's failure to enter his appearance,the respondent entered judgment in default of appearance on 23 October 2013.

[8] The respondent thereafter on 12 January 2015 commenced bankruptcyproceedings against the appellant based on the aforesaid judgment in default.The appellant was subsequently adjudged a bankrupt on 26 February 2016 after the appellant's application to stay the hearing of the creditor's petition pending the disposal of his application to set aside the default judgment as well as thesetting aside of the creditor's petition were refused.

[9] The appellant in the meantime on 7 September 2015 applied to set aside the aforesaid judgment in default but the Sessions Court on 29 December 2015 dismissed the appellant's application, hence this appeal.

Contentions And Findings

[10] At the outset of this appeal, the respondent raised two preliminary objections, to wit:

(i) the appellant is not competent to file and maintain this appeal without the sanction of the Director General of Insolvency; and

(ii) the appellant's application to set aside the judgment in default was bad in limine because it was not filed within the time prescribed by O 42 r 13 of the Rules of 2012.

[11] It is not disputed that this appeal has been brought without theprior sanction of the Director General of Insolvency. As to the requirement ofthe sanction, the respondent referred to s 38(1) Bankruptcy Act 1967 which reads:

"Where a bankrupt has not obtained his discharge:

(a) the bankrupt shall be incompetent to maintain any action (other thanan action for damages in respect of an injury to his person) without theprevious sanction of the Director General of Insolvency."

[12] In this regard, the respondent referred to the High Court cases of Sabah Bank Bhd v. Syarikat Bintang Tengah Sdn Bhd & Ors, 1992 MarsdenLR 1261 , Supreme Finance (M) Bhd v. Mohamad Noor Bin Yusof & Ors; [1993] 2 MLJ 29, Chin