Liau Tai Wai David

[2020] MLRHU 867 v. Oun Shan Shan pg 1

LIAU TAI WAI DAVID

v.
OUN SHAN SHAN

High Court Malaya, Johor Bahru

Evrol Mariette Peters JC
[Civil Appeal No: JA-11B-NCC-1-03/2019]
31 July 2020

Case(s) referred to:

Hasil Bumi Perumahan & 5 Ors v. United Malayan Banking [1993] 1 MLRA 642;
[1994] 1 MLJ 312; [1994] 1 CLJ 328; [1994] 1 AMR 297 (refd)
Khor Cheng Wah v. Sungai Way Leasing Sdn Bhd [1996] 2 MLRA 91; [1996] 1
MLJ 223; [1997] 1 CLJ 396; [1996] 1 AMR 846 (refd)
Lai Yoke Ngan & Anor v. Chin Teck Kwee & Anor [1997] 1 MLRA 284; [1997] 2
MLJ 565; [1997] 3 CLJ 305; [1997] 3 AMR 2458 (refd)
Malayan Banking Bhd v. Charterefield Corporation Sdn Bhd [2001] 2 MLRH 646;
[2001] 3 MLJ 160; [2001] 6 CLJ 407; [2001] 3 AMR 3686 (refd)
Malayan Banking Bhd v. Mahmood Zuhdi Hg Mohd Nor [2001] 2 MLRH 482;
[2001] 6 MLJ 209; [2001] 6 CLJ 171 (refd)
Mirra Sdn Bhd v. The Ayer Molek Rubber Co Bhd [2007] 3 MLRA 438; [2008] 2
MLJ 348; [2008] 3 CLJ 273 (refd)
Sivanathan Jaganathan v. Teh Yee Fun [2003] 1 MLRH 776; [2003] 4 CLJ 551;
[2003] 3 AMR 584 (refd)
Tan Aik Teck v. Tang Soon Chye [2007] 2 MLRA 58; [2007] 6 MLJ 97; [2007] 5
CLJ 441 (refd)
Thye Ah Chai (t/a Kent Naga Enterprise) v. Teraju Mercu Construction &
Engineering Sdn Bhd [2013] MLRAU 363; [2014] 1 MLJ 422 (refd)
Tuan Haji Ahmed Abdul Rahman v. Arab-Malaysian Finance Bhd [1995] 2
MLRA 155; [1996] 1 MLJ 30; [1996] 1 CLJ 241; [1996] 1 AMR 215 (refd)
Waseem Yaqoob Sheikh Muhammad Yaqoob v. Wan Muhammad Irywan Wan
Mohamad Sahini & Ors [2018] MLRHU 1601 (refd)

Legislation referred to:

Legal Profession (Practice & Etiquette) Rules 1978, r 28
Rules of Court 2012, O 3 r 5, O 12 r 4, O 41 r 5, O 42 r 13

Counsel:
For the appellant/plaintiff: Aidah Mohamed; M/s Zaid Ibrahim & Co
For the respondent/defendant: P Thirumalai; M/s Thiru & Co

[Allowed the appeal with costs.]

JUDGMENT

Evrol Mariette Peters JC:

 Liau Tai Wai David
pg 2 v. Oun Shan Shan [2020] MLRHU 867

This Appeal

[1] This is an appeal by the Appellant/ Plaintiff ("this Appeal") against the
decision of the learned Magistrate dated 14 March 2019 in allowing the
application ("Enclosure 10") of the Respondent/Defendant to set aside the
Judgment in Default of Appearance ("JID") dated 22 June 2018 obtained by
the Appellant/ Plaintiff. For ease of reference, the Appellants and
Respondents will be referred to respectively as the Plaintiff and Defendant.

[2] I allowed this Appeal and the following are my reasons.

The Brief Facts

[3] The Plaintiff instituted an action on 24 May 2018 against the Defendant for
the recovery of MYR59,068.58, pursuant to a friendly loan given to the
Defendant in staggered payments between September 2017 and February 2018
(evidenced by the transaction history exhibited at pp 31-41 of the Record of
Appeal). The Defendant had failed to enter appearance as prescribed by O 12 r
4 of the Rules of Court 2012 ("Rules of Court"), which reads:

Order 12 - Entry of appearance to writ

Rule 4 - Time limited for appearing

References in these Rules to the time limited for appearing are

references-

(a) in the case of a writ served within Peninsular Malaysia, to fourteen

days after service of the writ or, where that time has been extended by
or by virtue of these Rules, to that time as so extended; and

[Emphasis Added]

[4] On 22 June 2018, the Plaintiff obtained JID against the Defendant and
thereafter proceeded with bankruptcy proceedings. It was only after receiving
the Creditors' Petition on 9 December 2018 that the Defendant had engaged
solicitors and filed a stay of execution proceedings.

[5] On 20 December 2018, the Defendant filed encl 10 (in which he had also
filed a Defence dated 19 December 2018) to set aside the JID, which was
allowed by the Magistrate on 14 March 2019.

The Plaintiff's Case

[6] The Plaintiff contended that the learned Magistrate had erred in allowing
encl 10, as the JID was regular, lawfully obtained, and that the Defendant was
out of time in filing encl 10, and had failed to provide reasonable explanation
for such delay.
 Liau Tai Wai David
[2020] MLRHU 867 v. Oun Shan Shan pg 3

The Defendant's Case

[7] The Defendant submitted that the Affidavit-In-Reply filed on behalf of the
Plaintiff in resisting encl 10 was in breach of the law and ethics as it was
affirmed by his solicitor. The Defendant further submitted that there were
merits in his Defence, as the Plaintiff's claim was based on a loan which was
not reduced into writing and, therefore, not proved.

Contentions And Findings

Whether The Learned Magistrate Erred In Rejecting The Affidavit Affirmed

By The Plaintiff's Solicitor

[8] The learned Magistrate, in allowing encl 10 had rejected the Affidavit-In-
Reply filed by the solicitors of the Plaintiff. Hence, at this juncture, the issue
that needed to be addressed was whether there was a breach of the law and
ethics when, in opposing encl 10, the Plaintiff's Affidavit-In-Reply dated 9
January 2019, was affirmed by his solicitor.

[9] To address this issue, the starting point is O 41 r 5 of the Rules of Court:

Order 41 - Affidavits

Rule 5 - Contents of affidavit (O 41 r 5)

(1) Subject to O 14, rr 2(2) and 4(2), to para (2) of this rule and to any
order made under O 38, r 3, an affidavit may contain only such facts
as the deponent is able of his own knowledge to prove.

(2) An affidavit sworn for the purpose of being used in interlocutory

proceedings may contain statements of information of belief with the
sources and grounds hereof.

[Emphasis Added]

[10] The general rule that an Advocate and Solicitor is not allowed to affirm
an affidavit is rooted in r 28 of the Legal Profession (Practice & Etiquette
Rules) 1978 which reads:

Rule 28 - Advocate and solicitor not to appear in a case where he is a

witness

(a) An advocate and solicitor shall not appear in Court or in chambers

in any case in which he has reason to believe that he will be a witness
in respect of a material and disputed question of fact, and if while
appearing in a case it becomes apparent that he will be such a witness,
he shall not continue to appear if he can retire without jeopardising his
client's interests.

(b) An advocate and solicitor shall not appear before an appellate

 Liau Tai Wai David
pg 4 v. Oun Shan Shan [2020] MLRHU 867

tribunal if in the case under appeal he has been a witness on a material

and disputed question of fact in the Court below.

(c) This rule does not prevent an advocate and solicitor from swearing
or affirming an affidavit as to formal or undisputed facts in matters in
which he acts or appears.

[11] There are, however, exceptions to this rule. In the case of Malayan
Banking Bhd v. Charterefield Corporation Sdn Bhd [2001] 2 MLRH 646; [2001]
3 MLJ 160; [2001] 6 CLJ 407; [2001] 3 AMR 3686 (which was subsequently
adopted by RK Nathan J in Sivanathan Jaganathan v. Teh Yee Fun [2003] 1
MLRH 776; [2003] 4 CLJ 551; [2003] 3 AMR 584) Ramly Ali JC (as he then
was) in the following paragraphs, summed up the situation where an Advocate
and Solicitor is allowed to depose an affidavit on behalf of the litigant:

... I am of the view that a solicitor may depose an affidavit on behalf of

the litigant if all the following conditions are fulfilled:

i) the facts to be deposed must not be contentious or disputed

question of facts;

ii) the facts to be deposed must be from his knowledge (if the
affidavit is for the purpose of being used in interlocutory
proceedings, it may contain statements of information or
belief with sources and grounds thereof); and

iii) he is authorised to depose the affidavit by the litigant.

[12] As such, the first issue, was whether the facts were not disputed.
According to the facts of the present case, the Defendant had ignored the Writ
and Statement of Claim upon receipt of the same, and had failed to file a
Defence. In fact, in paras 9 and 10 of his Affidavit-In-Support dated 19
December 2018, the Defendant himself had admitted that he ignored the Writ
and Statement of Claim although he was aware that the Plaintiff had
proceeded to litigate the matter, and it was only the bankruptcy proceedings
that prompted him to respond to the legal documents. On this point, I find
instructive the case of Waseem Yaqoob Sheikh Muhammad Yaqoob v. Wan
Muhammad Irywan Wan Mohamad Sahini & Ors [2018] MLRHU 1601, where
it was held that the Defendant is deemed to have admitted the Plaintiff's claim
if he does not enter appearance and defence.

[13] The facts deposed to by the Plaintiff's solicitor in the Affidavit-In-Reply

dated 9 January 2019 was based on the Plaintiff solicitor's own knowledge,
and statements of information with sources thereof. Furthermore, the Plaintif's
solicitor had also stated that she was authorised to depose the affidavit on
behalf of the Plaintiff, as he had business overseas, and that he would be filing
a further Affidavit-In-Reply, which he had in fact affirmed on 23 January
2019.

[14] It is, therefore, my view that the learned Magistrate had erred when he
 Liau Tai Wai David
[2020] MLRHU 867 v. Oun Shan Shan pg 5

rejected the Plaintiff's Affidavit-In-Reply that was deposed to by the Plaintiff's

solicitor, as the latter had not breached any rule of law or ethics in doing so.

Whether The Learned Magistrate Erred In Deciding That There Was A

Defence On Merits

[15] The learned Magistrate also held that the reason for allowing encl 10 was
that the defence had merits.

[16] It is trite that the Defendant must show that his defence is not a sham, but
one that is, prima facie, raising serious issues as a bona fide reasonable defence.
A defence on the merits means a defence which discloses an arguable and
triable issue

[17] Since the judgment was in fact regular, the starting point is the Federal
Court case of Lai Yoke Ngan & Anor v. Chin Teck Kwee & Anor [1997] 1
MLRA 284; [1997] 2 MLJ 565; [1997] 3 CLJ 305; [1997] 3 AMR 2458, where
the following was expressed:

But where the default judgment has been obtained regularly, in order
to succeed the defendant must file an affidavit of merits, ie the
defendant must disclose by affidavit evidence that prima facie he has a
defence on the merits. Put in another way, the affidavit must disclose
that he has an arguable or triable issue on the merits.

[18] I also find instructive, the Supreme Court decision of Hasil Bumi
Perumahan & 5 Ors v. United Malayan Banking [1993] 1 MLRA 642; [1994] 1
MLJ 312; [1994] 1 CLJ 328; [1994] 1 AMR 297, where it was stated by Amar
Haji Mohd Jemuri Serjan CJ:

...the applicant must show that he has a defence which has some
merits and which the court must try. To use common and plain
language, the applicant must show that his defence is not a sham
defence but one that is prima facie, raising serious issues as a bona fide
reasonable defence.

[19] The Defendant contended that the friendly loan had no basis as the
Plaintiff had not produced any documentary evidence to that effect.

[20] In my view, this argument is untenable, on the basis that verbal contracts
are just as valid. Furthermore, it has been explained by Mokhtar Sidin JCA in
the Court of Appeal case of Tan Aik Teck v. Tang Soon Chye [2007] 2 MLRA
58; [2007] 6 MLJ 97; [2007] 5 CLJ 441:

A friendly loan is a loan given by the lender to the borrower based on

mutal trust whereby the borrower is to repay the loan within the
specified time with no interests charged...

[21] A friendly loan, therefore, does not have to be in writing, and as such
 Liau Tai Wai David
pg 6 v. Oun Shan Shan [2020] MLRHU 867

there is no requirement for the Plaintiff to adduce a written agreement to that

effect. In any event, the Plaintiff had deposited the loan into the Defendant's
account and the fact that the Defendant had made repayments showed that he
had taken the loan from the Plaintiff.

[22] Based on the facts, it is clear that the Defendant did not have any defence
on the merits. He himself had admitted in his Affidavit-In-Support that he had
ignored the Writ and Statement of Claim, and that the delay was due to wrong
advice by his family and ignorance of the court process. The same omission
was referred to in the case of Mirra Sdn Bhd v. The Ayer Molek Rubber, where
it was stated by James Foong JCA:

...when the defendant is already fully appraised of such claim in the

statement of claim and had failed, refused or neglected to enter
appearance or defence as the case may be, I do not see any injustice
done to the defendant in awarding such interest without assessment
since the defendant had been accorded full opportunity to contest this
by entering an appearance or a defence. Obviously, by not doing so,
the respondent must be deemed to have opted not to challenge any
part of the claim which includes the part on pre-judgment interest.

...Like in this case, I do not see how the respondent could, at the
material time, be prejudiced when the respondent had, despite full
knowledge of the appellant's claim for this item, took no action to
defend it.

[Emphasis Added]

[23] It is pertinent to also note that it was only the bankruptcy proceedings that
prompted him to respond to the documents

[24] Since it is my view that the JID was regular, and that the Defence had no
merits, the issue of the delay on the part of the Defendant in filing encl 10
becomes imperative.

Whether The Learned Magistrate Erred In Failing To Consider The Delay

[25] It was undisputed that the JID obtained against the Defendant was
regularly entered in accordance with the rules following proper service of the
Writ on the Defendant. The issue, therefore, was whether the delay by the
Defendant in applying to set aside the JID was satisfactorily explained.

[26] The Defendant had filed encl 10 only on 20 December 2018, which was
more than 180 days (approximately six months) after the JID was obtained,
and thus, not in accordance with the 30-day period as prescribed by O 42, r 13
of the Rules of Court, which reads:

Order 42 - Judgment and orders

Rule 13 - Setting aside or varying judgment and orders

 Liau Tai Wai David
[2020] MLRHU 867 v. Oun Shan Shan pg 7

Save as otherwise provided in these Rules, where provisions are made

in these Rules for the setting aside or varying of any order or
judgment, a party intending to set aside or to vary such order or
judgment shall make an application to the Court and serve it on the
party who has obtained the order or judgment within thirty days after
the receipt of the order or judgment by him.

[Emphasis Added]

[27] The importance of complying with this time-period was highlighted in

several cases including Mirra Sdn Bhd v. The Ayer Molek Rubber Co Bhd
[2007] 3 MLRA 438; [2008] 2 MLJ 348; [2008] 3 CLJ 273, Khor Cheng Wah v.
Sungai Way Leasing Sdn Bhd [1996] 2 MLRA 91; [1996] 1 MLJ 223; [1997] 1
CLJ 396; [1996] 1 AMR 846, Thye Ah Chai (t/a Kent Naga Enterprise) v.
Teraju Mercu Construction & Engineering Sdn Bhd [2013] MLRAU 363; [2014]
1 MLJ 422, and Malayan Banking Bhd v. Mahmood Zuhdi Hg Mohd Nor
[2001] 2 MLRH 482; [2001] 6 MLJ 209; [2001] 6 CLJ 171.

[28] In Mirra Sdn Bhd v. The Ayer Molek Rubber Co Bhd [2007] 3 MLRA 438;
[2008] 2 MLJ 348; [2008] 3 CLJ 273, the application to set aside was filed four
months after the judgment was served on the defendant. The Court of Appeal
acknowledged that delay is a vital factor to be considered in exercising any
discretion to set aside a judgment in default, and as such, refused to set aside
the judgment, on the basis of delay and lack of a defence.

[29] In Khor Cheng Wah v. Sungai Way Leasing Sdn Bhd [1996] 2 MLRA 91;
[1996] 1 MLJ 223; [1997] 1 CLJ 396; [1996] 1 AMR 846, in dismissing an
application to set aside a regular judgment, it was stated:

It is a cardinal principle of law, that when a litigant seeks the

intervention of the court in a matter that affects his rights, he must do
so timeously. The maxim vigilantibus , non dormientibus , jura
subveniunt, though having its origins in the Court of Chancery, is of
universal application. Even in cases where a right is exercisable ex
debito justitiae, a court may refuse relief to an indolent litigant.

In all cases in which delay in approaching the court is in issue, the

burden is upon the litigant who has delayed to render a satisfactory
explanation for it.

[Emphasis Added]

[30] It is pertinent to note therefore, that an application to set aside a JID must
be made timeously, even where the right is exercisable ex debito justitiae, and
that the Court may refuse relief, especially where the delay is not satisfactorily
explained.

[31] The same reminder was administered by Edgar Joseph Jr FCJ in Tuan
Haji Ahmed Abdul Rahman v. Arab-Malaysian Finance Bhd [1995] 2 MLRA
 Liau Tai Wai David
pg 8 v. Oun Shan Shan [2020] MLRHU 867

155; [1996] 1 MLJ 30; [1996] 1 CLJ 241; [1996] 1 AMR 215:

Having said that it should be added that the application to set aside
such a judgment should be made: (a) with reasonable promptitude, in
other words within a reasonable time; and (b) before the defendant has
taken any fresh step after becoming aware of the irregularity.

[32] In Thye Ah Chai (t/a Kent Naga Enterprise) v. Teraju Mercu Construction &
Engineering Sdn Bhd [2013] MLRAU 363; [2014] 1 MLJ 422, it was stated by
the Court of Appeal that O 42 r 13 is mandatory, and an applicant filing an
application beyond the prescribed time limit, is obliged to provide cogent
reasons for any delay. In that case, since the reasons were not satisfactorily
explained, the Court of Appeal allowed the appeal and reinstated the JID
without even considering the merits of the application.

[33] In this case, the delay was more than 180 days and the reasons provided
by the Defendant for the delay in filing encl 10 were unacceptable, as he said it
was due to wrong advice by his family and ignorance of the court process. In
my view, the learned Magistrate had not considered the issue of delay on the
part of the Defendant and the absence of a satisfactory explanation for the
same.

[34] Furthermore, in the absence of an application for extension of time by the

Defendant despite a lapse of 180 days (approximately six months), this
application was filed well out of time, and was bad in law. This was
emphasised in Malayan Banking Bhd v. Mahmood Zuhdi Hg Mohd Nor [2001] 2
MLRH 482; [2001] 6 MLJ 209; [2001] 6 CLJ 171, where the Court
acknowledged that the 30-day time frame is a strict one, and that a party
would be required to file an application to extend time under O 3 r 5 of the
Rules of Court, which reads:

Order 3 - Time

Rule 5 - Extension of time

(1) The Court may, on such terms as it thinks just, by order extend or
abridge the period within which a person is required or authorized by
these Rules or by any judgment, order or direction, to do any act in
any proceedings.

(2) The Court may extend any such period as referred to in para (1)
although the application for extension is not made until after the
expiration of that period.

(3) The period within which a person is required by these Rules, or by

any order or direction, to serve, file or amend any pleading or other
document may be extended by consent in writing without an order of
the Court being made for that purpose.

Conclusion
 Liau Tai Wai David
[2020] MLRHU 867 v. Oun Shan Shan pg 9

[35] In the upshot, based on the aforesaid reasons, and after careful scrutiny of
all the evidence before this Court, both oral and documentary, and
submissions of Counsel for both parties, this Appeal is allowed with costs in
the sum of MYR1,000 (subject to allocatur fees).