A valid defence must be shown to set aside a regular default judgment, and reasonable explanations for delay can justify granting such relief.

Mary Lim Thiam Suan JCA (Majority):

[1] Before the High Court, the appellant was unsuccessful in his appeal against the dismissal of his application to set aside a judgment in default obtained by the respondent on 18 January 2016 and that the appellant be given leave to extend time to file a Memorandum of Appearance and Defence. Upon due consideration of the submissions, reasons for the learned Judicial Commissioner's decision and the record of appeal, by majority, the appeal was allowed these are our reasons in full.

Background

[2] The respondent is a law firm comprising at the material time six advocates and solicitors with areas of practice in banking, property, corporate and insurance. In 2012, the respondent decided to expand its area of practice to include motor insurance. Towards this end, on 3 October 2012, the respondent appointed the appellant as a legal assistant; it seemed after the appellant had given the respondent's senior partner the impression that he was experienced in the field of motor insurance.

[3] The respondent claimed that it had provided the appellant a total of RM1,620,730.00 for the expansion. The respondent claimed that the appellant ceased turning up for work from 30 September 2014. After three letters had been issued requiring the appellant to report for work, the appellant's appointment was terminated. Following an internal investigation, the respondent found that the appellant had failed to diligently carry out his duties as a result of which it suffered loss. The respondent initiated proceedings against the appellant seeking a refund of RM1,620,730.00 given as a loan, general damages and interest.

[4] On 18 January 2016, a judgment in default of Appearance was entered against the appellant for the sum of RM1,620,730.00 together with interest. On the strength of this judgment, the respondent commenced bankruptcy proceedings against the appellant.

[5] On 23 February 2018, the appellant filed an application to set aside the judgment in default, citing that the judgment was irregular, for time to enter Appearance and filing of Defence and for the receiving and adjudication orders dated 6 April 2017 to be annulled.

[6] The application was dismissed on the basis that the judgment in default was regular; that there was unaccountable delay in the application; and that there were no merits in the Defence.

Our Decision

[7] Pursuant to O 13 r 8 of the Rules of 2012, the Court may, on such terms as it thinks just, set aside or vary any judgment entered pursuant to this Order. Where the default judgment was entered regularly, case law has been clear that the default judgment may only be set aside upon satisfying the Court that there is a good meritorious defence. See for instance the decisions of the Federal Court in Bank Bumiputra Malaysia Bhd v. Majlis Amanah Ra'ayat , 1978 MarsdenLR 242 ; Supreme Court in Hasil Bumi Perumahan Sdn Bhd & Ors v. United Malayan Banking Bhd; [1994] 1 MLJ 312; [1994] 1 CLJ 328; [1994] 1 AMR 297; Lai Yoke Ngan & Anor v. Chin Teck Kwee & Anor; [1997] 2 MLJ 565; [1997] 3 CLJ 305; [1997] 3 AMR 2458; Adzmi Ali & Anor v. Mohd Isa Kasad; [1987] 2 MLJ 199; [1987] CLJ 37; and Kwong Yik Bank Berhad v. Sa'adiah Binti Mastan , 1992 MarsdenLR 1250 .

[8] The issue of the regularity of the judgment in default was not pursued in this appeal although there were written submissions to this effect. For the record, we find the judgment in default to be regular, in which case, the issue of the merits of the Defence becomes relevant and, because of the time lapse between the default judgment and the application to set aside, the reasons for such delay. We focused thus on the two remaining issues - whether the delay had been reasonably accounted for and whether there was a defence on the merits raised. The law is trite and we have no intention to rehash the sound principles underlying the exercise of discretion in O 13 r 8; that a regular judgment will not be set aside unless a defence of merit is