YaPEIM GOLD SDN BHD v 1. ) DEMI IDAMAN SDN BHD 2. ) AIMAN BIN AZLI 3. ) MOHD ELYAS BIN ZAKARIA

Case Significance

Illustrates that a regular default judgment supported by proper service of process will not be set aside where the applicant, including a guarantor-director, offers only bare denial rather than a meritorious defence.

This High Court decision, delivered in Bahasa Malaysia, concerns two applications to set aside default judgments entered in a commercial suit. The plaintiff, YaPEIM Gold Sdn Bhd, had entered judgment in default against the defendants, and the second and third defendants — individuals who were at the material time directors of the first defendant company — each applied to set aside the default judgment entered against him. The first defendant company, which carried on the business of manufacturing, processing and trading in gold, had itself since been wound up on a creditor's petition. The core issue in both applications was whether the applicants were entitled to have the default judgments set aside, which in turn raised questions about the service of the originating process and the merits of each proposed defence. The court examined whether the cause papers had been properly served and concluded that service had been duly effected, so that the default judgment was a regular judgment. Turning to the merits, it found that the third defendant had failed to put forward any meritorious defence: what was advanced by way of proposed defence amounted only to bare assumption and denial, and the third defendant had failed to show that the underlying Collaboration Agreement was invalid or unenforceable against him in his capacity as a guarantor of that agreement. Because service was proper and no meritorious defence had been disclosed, the court dismissed the application and ordered the third defendant to pay costs of RM10,000.00 to the plaintiff. The judgment illustrates that a regular default judgment supported by proper service will not be set aside where the applicant, including a director who guaranteed the company's obligations, offers only bare denial rather than a genuine defence on the merits. The court also observed that a director who signs a personal guarantee assumes an independent obligation, so that a bare denial of liability does not excuse the guarantor from a default judgment properly entered after due service of process.