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The Court of Appeal in Pembangunan Tanah dan Perumahan Sdn Bhd v Raja Qahaarruddin Raja Abdul Aziz [2020] 2 CLJ 519 recently considered whether a judgment in default can be impeached by fresh proceedings on the ground that the judgment in default was obtained by fraud and conspiracy, instead of the usual setting aside procedure.

Brief Facts

The Plaintiff commenced action against the Defendant in the Sessions Court for a declaration that the Plaintiff is the lawful owner of a piece of land in Johor or alternatively, for damages of RM844,000, being the purchase price of the land.

Judgment in default (“Judgment”) for a liquidated sum was obtained by the Plaintiff when no appearance was entered by the Defendant.

The Defendant only entered appearance approximately 2 months after the Judgment was obtained and even then, did not take any further steps for almost a year, until they filed an application to set aside the Judgment. At this point, the Defendant would also have to apply for an extension of time to file the setting aside application.

However, midway through, the Defendant’s solicitors discharged themselves. The setting aside application was not argued and was later dismissed, and no appeal was ever filed.

Two years later, after the Plaintiff enforced the Judgment, the Defendant, via new solicitors, filed a fresh suit in the High Court to impeach the Judgment on the basis that the judgment in default was obtained by fraud and conspiracy.

The new suit was struck out by the High Court on the application of the Plaintiff.

The Defendant appealed against the striking out of this new suit.

Court of Appeal’s decision

In upholding the decision to strike out, the Court of Appeal held that:

  • The Defendant’s allegation was that they were never served with their former lawyers’ application to discharge themselves, and the Defendant therefore had no knowledge of what happened to the setting aside application. However, this was insufficient for the Defendant to explain the delay in filing the new suit. If anything, the Defendant ought to bring a suit in negligence against its former lawyers.
  • Even if the Defendant had inadvertently missed the hearing of the setting aside application, the Defendant should have applied for an extension of time to appeal when it found out that the setting aside application had been dismissed.
  • The Defendant must be stopped from filing a fresh proceedings, on the ground of impeaching the judgment of the Sessions Court, when there was no reference to any fresh evidence discovered after the judgment had been entered which would, in some ways, point towards the fact that the Sessions Court could have been misled and that deceit had been practised upon the court. The law does not allow a litigant repeated bites of the cherry in litigating the same issue long lost.
Key Takeaways

The Court of Appeal had strong words to say about the Defendant’s conduct:

“Such a contumelious conduct … cannot be condoned and indeed, has to be censured in the strongest terms. After having failed to set aside the default judgment with no appeal therefrom and having failed to set aside the consent order in the committal proceeding, the [Defendant] is trying its luck on the supposedly higher ground of impeaching the default judgment….

 

Whilst tenacity and perseverance is a virtue, it becomes toxic and an abuse of the court’s process in the face of repeated resurrecting of the same matter that had been finally concluded with no appeal from [the Defendant]. There must be an end to all litigation involving the same issue either because the affected party had not exercised its right of appeal or that it has exhausted all avenues of setting aside the impugned judgment…”

 This decision and the principles therein although not altogether novel, serves as a reminder that:

  1. The proper procedure to challenge a judgment in default is by way of a setting aside application and the relevant appeal route which lies thereafter. It is not appropriate to institute a fresh suit to impeach the judgment. Once that ship has sailed and the judgment in default becomes a final judgment, the Court will not resurrect the case, unless there is new evidence to show that the judgment was obtained by way of fraud or misrepresentation.
  1. A defendant must at all times be vigilant as to any claim made against it or the status of proceedings in Court as the delay in taking any action will have to be explained and negligence on the part of solicitors are not good grounds to challenge the judgment in default. In other words, it is unwise to ignore letters of demand or any Court papers served and one should always check on the status of any Court proceedings with their lawyers.

 

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Th’ng Yan Nie is an associate in the dispute resolution practice group at Donovan & Ho.  She has a wide range of experience in litigation matters including contractual and commercial disputes, compulsory land acquisition, debt recovery and strata and property management issues.

Donovan & Ho is a law firm in Kuala Lumpur, Malaysia.  Our practice areas include employment law, dispute resolution (litigation and arbitration), corporate and tax advisory, and real estate/conveyancing.  Have a query? Contact us.

 

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