Court distinctions between stringent and lenient tests for setting aside default judgments hinge on intentional delay versus genuine procedural confusion affecting defendants' responses.

Introduction

[1] This judgment concerns encl 50, which is the application brought by the first and third defendants (referred to respectively as "D1" and "D3") seeking to set aside the default judgments that were entered against them on 23 August 2024. For D1, the company accused of orchestrating delays, the Court applied the stringent Saudi Eagle test which demanded proof of a defense with real prospect of success. Whereas, for D3, the bankrupt director caught in procedural limbo, the Court applied the more lenient Evans v. Bartlam test requiring only an arguable defense.

Background Facts

[2] The plaintiffs, Uwe Lange and Christiane Lange, are German nationals who claimed to have been deceived into parting with their funds under the guise of a friendly loan agreement.

[3] The second defendant, Sascha Sainer ("D2"), is the cousin of the first plaintiff and played a central role in inducing the plaintiffs to provide a short term friendly loan to his company, SYS Holding Sdn Bhd ("D1"). The fourth defendant, Noor Adilah Binti Ahmad ("D4"), is D2's wife. D1 is a company registered in Malaysia and allegedly controlled by D2 and D4. The third defendant, Yap Woon Chieh ("D3"), is named as a director of D1 and thereby presumed to have knowledge and control over its affairs.

[4] In or around January 2020, the plaintiffs claimed that D2 and D4 persuaded them to extend financial assistance to D1, representing that the company was in urgent need of short-term funding.

[5] Between March and December 2020, the plaintiffs transferred a total of EUR 115,000 in ten (10) international wire transfers to a Malaysian bank account under the name of D4's brother-in-law, Mohamed Reza Bin Mohd Arif, purportedly for DVs benefit. These transfers were made based on a document later referred to as the "SYS Loan Agreement," which governed the repayment terms The plaintiffs were assured repeatedly that the funds would be repaid in full by 31 December 2020.

[6] However, once the funds were received, D1 failed to make any repayment. Multiple requests and reminders sent by the plaintiffs throughout 2021 and 2022 were ignored. In May 2023, the plaintiffs issued letters of demand, but the D1 continued to evade contact.

[7] Based on the plaintiffs affidavit evidence, which includes a private investigator's report, it is alleged that D2 and D4, along with their children, departed Malaysia on 27 October 2023 and have since relocated to Virginia, USA. The plaintiffs contend that this relocation was a calculated and strategic move aimed at evading legal responsibility and hindering efforts to recover the outstanding debt. In support of this contention, the plaintiffs rely on screenshots from D4's social media accounts, which portray a lifestyle of comfort and affluence abroad.

[8] The plaintiffs commenced legal proceedings on 31 October 2023 by filing a Writ of Summons and Statement of Claim. The ensuing procedural developments are summarised below:

(a) On 16 November 2023, Messrs Samir Sumathi Fernando & Co ("SSF & Co") entered appearance on behalf of all defendants;

(b) During case management on the same date (16 November 2023), SSF & Co informed the Court that D3 and D4 were bankrupt and that SSF & Co were in the process of seeking the requisite sanction from the Director General of Insolvency ("DGI") pursuant to s 38(1)(a) of the Insolvency Act 196