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Malayan Law Journal Unreported/2017/Volume/Chung Wai Meng v Perbadanan Nasional Bhd - [2017] MLJU
814 - 6 June 2017

[2017] MLJU 814

Chung Wai Meng v Perbadanan Nasional Bhd

COURT OF APPEAL (PUTRAJAYA)
LIM YEE LAN, BADARIAH SAHAMID AND YEOH WEE SIAM JJCA
CIVIL APPEAL NOS W-02(IM)-1216-07/2016 AND W-02(IM)-1217-07/2016
6 June 2017

Logan Sabapathy (Alithea Wong and Lim Soon Seng with him) (Izral Partnership) for the appellant.

Alan Wong Teck Wei (Muhammad Asyraf bin Abd Aziz with him) (Zain Megat & Murad) Solicitors for the
respondent.

Yeoh Wee Siam JCA:

JUDGMENT

BRIEF FACTS

[1] On 10.5.2001, the Plaintiff (i.e. the Respondent) entered into a Share Subscription Agreement
("SSA[#65533]?) with HK Movie Entertainment S/B ("HK Movie[#65533]?), Focal House Holding S/B ("Focal
House[#65533]?), Amernordin (as a Proponent), and the 2nd Defendant (i.e. the Appellant).

[2] To supplement the SSA, a debenture was created on 10.5.2001 between the Plaintiff and HK Movie. At
the same time, a Guarantee and Indemnity Agreement ("Guarantee[#65533]?) was also entered between the
Plaintiff, Yip Yee Foo (1st Defendant) and the 2nd Defendant. It was agreed that both the 1st and 2nd
Defendants are to stand as surety and guarantor, and also as the principal debtor and to pay every single
money payable by HK Movie and/or the Proponent to the Plaintiff.

[3] The Plaintiff alleged that it had performed its part of the obligation under the SSA by fully paying to HK
Movie RM2 million for the ordinary shares and RM1.8 million for the preferential share. However, HK Movie
and the Proponent failed to perform their part under the Agreement.

[4] The Plaintiff further alleged that the 1st and 2nd Defendants also had failed to pay as guarantor cum
principal debtor under the Guarantee.

[5] On 21.2.2003, the Plaintiff exercised its right under the Debenture and appointed a Receiver and
Manager to manage the assets of HK Movie.

[6] On 8.8.2008, the Plaintiff filed this suit against the 1st and 2nd Defendants. The Plaintiff alleged that the
Writ of Summons ("Writ[#65533]?) and Statement of Claim ("SOC[#65533]?) were served on the 1st and 2nd
Defendants on 8.9.2008 by AR registered post.

[7] The 2nd Defendant failed to enter appearance and a Judgment in Default ("JID[#65533]?) was entered
against him on 14.11.2008. The JID Order was then served on the 2nd Defendant on 9.12.2008.

[8] The 1st Defendant contested the suit. The Plaintiff's Application for summary judgment against the 1st
Defendant was dismissed by the High Court.

[9] On appeal by the Plaintiff, the Court of Appeal allowed the appeal and summary judgment was entered
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against the 1st Defendant. The 1st Defendant's Application for leave to appeal was dismissed by the Federal
Court.

[10] On 27.8.2015, almost 7 years after the JID, the 2nd Defendant filed the Application in enclosure 29
to set aside the JID. Following that, on 16.2.2016 the 2nd Defendant filed another Application in enclosure 43
for discovery of the following documents:

(1) All documents and correspondence relating to the debenture dated 10.5.2001, including the
right to take control over the assets and properties of HK Movie and the disposal of the same;
(2) Any documents relating to the appointment of the Receiver and Manager i.e one Mr. Wan Idris
Bin Wan Ibrahim;
(3) Any directions given to the Receiver and Manager and his power;
(4) Any documents showing the utilization of the funds/proceeds received by the Receiver and
Manager from the disposal of the assets of HK Movie; and
(5) All documents showing the financial position of HK Movie as at 31.12.2010 and the estimate
value of all the assets of HK Movie based on Form 63 dated 20.8.2009 and 20.12.2010.

[11] Upon hearing the parties, the High Court dismissed enclosure 29 and struck out enclosure 43.
Dissatisfied with the decision, the 2nd Defendant appeals to this Court.

THE 2 APPEALS

[12] On 10.4.2017, we heard the following 2 Appeals respectively which were filed by the 2nd Defendant
("Appellant[#65533]?):

(1) Civil appeal No. W-02(IM)-1216-07/2016 i.e. Appeal by the Appellant in respect of enclosure
29. The High Court had dismissed the Appellant's Application to set aside the JID dated
14.11.2008 with costs of RM5,000.00; and
(2) Civil appeal No. W-02(IM)-1217-07/2016 i.e. Appeal by the Appellant in respect of enclosure 43
for discovery of documents. In view of the decision in (1) above, the High Court struck out the
Appellant's Application in enclosure 43 with no Order as to costs.

DECISION OF THE COURT OF APPEAL

[13] After having heard the parties in both Appeals and their submissions, this Court finds merits in the
Appeals. Accordingly, both Appeals were respectively allowed.

GROUNDS FOR DECISION

Appeal No. W-02(IM)-1216-07/2016

[14] The main issues to be considered in this Appeal are:

(1) Whether the JID is a regular Judgment; and

(2) Whether there are merits in the Defence.

(1) Whether the JID is a regular Judgment

[15] The Appellant submits that the JID was irregularly obtained since the Writ and SOC were not served on
the Appellant. Therefore, the JID ought to be set aside.
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[16] The Respondent raised the preliminary objection that the Appellant's Application is out of time, bad in
law and ought to be dismissed in limine. The Respondent relied on O.42 r. 13 of the Rules of Court 2012
("ROC[#65533]?) which provides that any application to set aside an Order or Judgment mandatorily shall be
made within 30 days after the receipt of the Judgment. In this case, the Respondent contended that the said
Judgment has been duly served to the Appellant on 9.12.2008 and the proof of service of the same was duly
endorsed by Pos Malaysia [RR Vol. 2(2) pg 364 to 370].

[17] In our view, there are 2 steps to be taken by the Respondent, namely:

(a) to serve the Writ and SOC on the Appellant; and

(b) to serve the JID Order on the Appellant.

[18] Regarding the first step, the governing provisions are found in O.10 r.1(1) and 0.10 r.3(1)(b) of the
ROC:

"Order 10

SERVICE OF ORIGINATING PROCESS:

GENERAL PROVISIONS

General provisions (O.10, r.1)

1. (1) Subject to the provisions of any written law and these Rules, a writ shall be served personally on each defendant
or sent to each defendant by prepaid A.R. registered post addressed to his last known address and in so far as
is practicable, the first attempt at service must be made not later than one month from the date of issue of the writ.

..................

Service of writ in pursuance of contract (O.10, r. 3)

3. (1) Where

(a) a contract contains a term to the effect that the Court shall have jurisdiction to hear and determine any
action in respect of a contract or, apart from any such term, the Court has jurisdiction to hear and
determine any such action; and
(b) the contract provides that, in the event of any action in respect of the contract being begun,
the process by which it is begun may be served on the defendant, or on such other person on his
behalf as may be specified in the contract, in such manner or at such place (whether within or out
of the jurisdiction) as may be so specified,

then, if an action in respect of the contract is begun in the Court and the writ by which it is begun is served in
accordance with the contract, the writ shall, subject to paragraph (2), be deemed to have been duly served on the
defendant.[#65533]? (emphasis added).

[19] 0.10 r.1(1) of the ROC, inter alia, requires that the Writ be served on the Defendant by prepaid AR
registered post addressed to his last known address. Pursuant to 0.10 r.3(1)(b), the Writ may be served on
the Defendant as may be specified in the contract.

[20] The Respondent submitted that the Plaintiff has filed an Affidavit of Service ("AOS[#65533]?) affirmed
by Abdullah bin Osman on 3.11.2008 and duly endorsed by the postal authority as proof of service of the
Writ and SOC at the last known address of the Appellant as stated in the Guarantee.

[21] The question is whether service of the Writ and SOC on the Appellant is in compliance with O.10 r.1(1)
and O.10 r.3(1)(b) of the ROC for the service to be deemed regular or good service on the Appellant.

[22] The learned High Court Judge ("Judge[#65533]?) relied on the decision in Sivamurthy s/o Muninady v.
Lembaga Kumpulan Wang Simpanan Pekerja [2012] 9 CLJ 598 where it is stated that there is no necessity
for the Plaintiff to rely on an endorsed AR registered card. The Judge then held that "It is sufficient to show
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that the Writ and SOC is sent to the Second Defendant at his last known address. Therefore, the JID is a
regular judgment.[#65533]?.

[23] For completeness, we now set out that particular part of the decision in Sivamurthy (supra) which
states as follows:

"[8] The challenge by the Appellants on the Judgment-in-Default being an irregular judgment as advanced by learned
Counsel is without merits...

The service through A.R. registered post by the Respondent is in accordance with the provision of order 10 Rule 1(1) of
the Rules of the High Court 1980.

[9] There is no necessity for the Respondent to prove receipt of the writ by the person named in the A.R. registered
post.[#65533]?.

[24] The Respondent further relied on the decision in Yap Ke Huat & Ors v. Pembangunan Warisan
Murni Sejahtera Sdn Bhd & Anor [2008] 4 CLJ 175 where James Foong JCA (as he then was) stated as
follows:

"[30] In respect of this defendant, the prepaid A.R. registered post acknowledgement card was not returned. But,
following what we have expounded earlier, this does not mean that the service of the writ and statement of claim is
deemed defective. What is demanded in O.10 r.1 RHC is that the writ (and in this case including the statement of claim)
be sent by prepaid A.R. registered post to the defendant's last known address. When there is sufficient evidence of
posting, as it is in this case, then under the rules, the writ (and statement of claim) is deemed to be served on the
defendant. There is no necessity to prove that the acknowledgement of the A.R. registered posting has been
returned.[#65533]?.

[25] We take note of the fact that in Yap Ke Huat (supra) James Foong JCA stated that there is no provision
of law that the plaintiff must also prove that the person so named in the post had received the Writ and SOC.
It is also clear that Sivamurthy (supra), which is a later case, had followed the earlier decision in Yap Ke
Huat (supra).

[26] Coming back to the present case, in the Guarantee, the Appellant's address as stated in Preamble
(A) at pg 2 [RR2(2) pg 332] is No. 45-8-11, The Forum Jalan Inai 55100 Kuala Lumpur ("Jalan Inai
Address[#65533]?). Clause 17 of the Guarantee [RR2(2) pg 336] provides as follows:

"17. Any notice demand or request required or permitted to be given or made under this Guarantee shall be deemed to
have been sufficiently given if sent by registered post letter to the addresses of the Guarantors last known to PNS or
stated herein and shall be deemed to have been given or made at the time when in the ordinary course of post it
should have been delivered.[#65533]?.

[27] We are of the view that Clause 17 of the Guarantee only provides for service of any notice, demand or
request required etc under the Guarantee. It does not provide for service of the Writ and SOC. Therefore, the
provisions of O.10 r.1(1) of the ROC must still apply to the service of the Writ and the SOC on the Appellant
in this case.

[28] There is no proof by the Respondent that the Writ and SOC which were sent by AR registered post to
the Appellant's Jalan Inai address had been duly served on the Appellant. The AR registered
acknowledgement card duly signed by the Appellant has not been produced.

[29] The Appellant averred that he had been occupying a subsequent address at No. 76, Persiaran Duta
Nusantara, Jalan Sri Hartamas 1, 50480 Kuala Lumpur ("subsequent address[#65533]?) until January 2013,
instead of the Jalan Inai address. The subsequent address has been recognised by the Respondent in the
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substituted service for bankruptcy proceedings against the Appellant. The Appellant on oath had stated that
he was completely unaware of the JID until 22.4.2015 when he was in Sabah and his credit card was
blocked because of a substituted service for bankruptcy proceedings, and thus, the present recent
Application to set aside the JID [RR 2(1) pg 123].

[30] From the Appellant's evidence, it is clear that he was not served with the Writ and SOC.

[31] With respect, despite the decisions in Sivamurthy (supra), and Yap Kee Huat (supra), we take note of
the majority of the High Court decisions and authorities in Malaysia, and Commonwealth cases, to which we
agree, on the requirement that the AOS must be "proving due service of the writ on the defendant[#65533]?
as provided in O.13 r.7(1)(b) of the ROC.

[32] In the local textbook on civil procedure, Malaysian Civil Procedure, it is categorically stated that the
AR card duly acknowledged (in the case of service by AR registered post) must be produced to prove
effective service (1AB A/Tab 32).

[33] In Public Bank Bhd v. Rasatulin Holdings Sdn Bhd & Ors [1989] 1 MLJ 47, Siti Norma Yaakob J (as
she then was) held as follows:

"In this instant case, rather than sending the notices by ordinary post, the solicitors for the plaintiff chose to send them
by way of AR registered post and by doing so, the plaintiff has varied cl 8 of both guarantees. By so choosing, the
plaintiff has also burdened themselves with the added responsibility of seeing that the AR cards shall be
returned to them duly acknowledged by the fourth and fifth defendants, for there to be proper service of such
notices on them. In this case both the AR cards were returned with the endorsements 'kembali tidak boleh
dituntut'. As there is no proper and effective service of such notices on the fourth and fifth defendants, this in
itself a defence to both of them.[#65533]? (emphasis added).

[34] Following the above decision, if a party entitled to utilise the registered post method chooses instead to
use AR registered post, it is then incumbent on the party to produce the AR card to evidence
acknowledgedment of receipt.

[35] In MBF Finance Bhd. v. Tiong Kien Seng [2001] 4 CLJ 38 at pg 46, Clement Skinner J (as he then
was) stated as follows:

"I, however, agree with the submission of counsel for the respondent that the written receipt given under the Post Office
Rules constitutes prima facie and not conclusive proof of service - it would not preclude or prevent a defendant from
trying to show that there had been some irregularity in service because the presumption of service that arises under the
Interpretation Act is a rebuttable one and, as often happens, where a summons is served by post and is not returned
unserved, the court acts on the plaintiff's proof of posting and any documents relied on in support thereof at their face
value when they are exhibited to an affidavit of service and will not be aware of any alleged irregularities or defects in
service until challenged.[#65533]?.

[36] Applying MBF Finance Bhd (supra) to the present case, the presumption under s.12 of the
Interpretation Act 1948, being a rebuttable presumption, is rebutted by the Appellant's evidence that he had
never been served with the Writ and SOC. It is for that reason that the Respondent was unable to exhibit the
card for proving the Appellant's acknowledgement of service in the AOS.

[37] In Ho Miaw Ling v. Singapore Island Country Club [1997] 1 SLR(R) 276 at pg 282, the Singapore
High Court stated that the acknowledged receipt posting process requires production of the AR card as proof
of receipt:

"I shall start with the third reminder. On that reminder, the plaintiff's assertion that she did not receive it is reinforced by
the fact that the Club could not produce the AR card. It will be recalled that reminder was sent by AR Registered post.
The evidence shows that whether the notice was delivered or otherwise, the AR card would be returned to the sender.
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If it was delivered the card would bear the signature of the recipient or someone at the address; if not the card would
indicate why it was not delivered.[#65533]?.

[38] In Teskey v. Paz [1999] OJ No. 4977, the Ontario Superior Court of Justice ("Ontario
SCJ[#65533]?) considered Rule 16.03(4) of the Ontario Rules of Civil Procedure ("Ontario Rules[#65533]?)
which provides as follows:

"16.03(4) Service of document may be made by sending a copy of the document together with an
acknowledgement of receipt card (Form 16A) by mail to the last known address of the person to be served, but service
by mail under this subrule is effective,

(a) only if the acknowledgement of receipt card or a post office receipt bearing a signature that purports to
be the signature of the person to be served is received by the sender; and
(b) on the date on which the sender first receives either receipt, signed as provided by clause...[#65533]?.

[39] The Ontario SCJ then went on to state that:

"This rule is essentially a rule which allows a person to accept service by sending back the acknowledgement of receipt
card or by acknowledging on a registered mail receipt that they have received it.[#65533]?.

[40] It is observed that nowhere in our O.10 r.1(1) of the ROC is there a specific requirement similar to Rule
16.03(4)(a) of the Ontario Rules to require an acknowledgement of receipt card to prove service on the
person to be served. With the greatest respect, we are of the considered opinion that since O.10 r.1(1) of the
ROC is silent on such a requirement, then in line with the thinking in a whole host of High Court decisions
here and similar decisions in other Commonwealth jurisdictions, in order to prove due service of the Writ and
SOC on the Defendant it is not for the Court as in the case of Sivamurthy (supra), and Yap Ke Huat (supra)
to dispense with the requirement to prove receipt of the Writ and SOC by the person named in the AR
registered post, or proof that the acknowledgement of the AR registered posting has been returned and duly
acknowledged by the intended recipient.

[41] We are of the considered view that the lacuna in O.10 r.1(1) of the ROC must be interpreted in favour of
the intended recipient, and in this case, the Appellant. As submitted by the Appellant, if service by AR
registered post on the Appellant fails, then it is incumbent upon the Respondent to apply for substituted
service of the Writ and SOC on the Appellant.

[42] In this case, it is clear that, as a first step the Respondent had failed to show proof of due service of the
Writ and SOC under O.10 r.1(1) of the ROC on the Appellant. Therefore, we are of the unanimous decision
that the JID has been irregularly obtained. That being the case, it must be set aside ex debito justitiae.

[43] Therefore, the question of considering the second step, and whether the application to set aside the JID
is in accordance with O.42 r.13 of the ROC does not arise. In the circumstances, we do not even have to
consider whether there are merits to the Defence of the Appellant.

[44] Accordingly, the Appeal is allowed with costs of RM10,000.00 subject to payment of the Allocator fee.
The JID dated 14.11.2008 is set aside.

Appeal No. W-02(IM)-1217-07/2016

[45] In view of our above Decision for Appeal No. W-02(IM)-1216-07/2016, consequently the Appeal
regarding the Application for discovery (enclosure 43) is allowed, with costs in the cause. We order that the
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Application in enclosure 43 be remitted to the High Court for hearing on the merits.