MAYBANK ISLAMIC BERHAD v 1. ) TRANSKON SDN. BHD. 2. ) YEE KIM MUN

Case Significance

An appeal to set aside a regularly obtained default judgment on Islamic financing facilities, dismissed on the stricter real-prospect test given deemed service by registered post and a delayed, tactical application.

This High Court decision concerns an appeal against the refusal to set aside a judgment in default of appearance (JIDA) obtained by a bank against a corporate borrower and its guarantor in respect of Islamic financing facilities. The bank had granted the first defendant three facilities — a commodity murabahah term financing of RM1,000,000 in April 2020, and two further facilities in July 2022 of RM1,566,129.36 and RM1,961,876.99 that restructured earlier financing — and, following default, entered judgment in default when no appearance was filed. The defendants applied to set the judgment aside, and, that application having failed below, appealed.

The appeal engaged the principles governing the setting aside of a default judgment, sharpened by the manner in which the default had arisen. Because the judgment had been regularly obtained, the applicants faced the stricter test that requires a real prospect of success in a proposed defence, and the Court weighed against them a series of difficulties: the application had been made out of time and long after the defendants had knowledge of the judgment, without any prayer for an extension of time, and was met by considerations of laches and prejudice. Service had been effected by registered post to the contractual address, and under the contractual mode of service and the rules on deemed service the failure to update that address, and whether the documents were actually received, were immaterial — deemed service was complete. The Court treated the belated application as tactical and, applying Order 42 rule 13 of the Rules of Court 2012, was not persuaded that the judgment in default had been irregularly obtained or that a defence with a real prospect of success had been shown.

The Court dismissed the appeal and upheld the judgment in default. The judgment illustrates the strict approach to setting aside a regularly obtained default judgment, the operation of deemed service by registered post to a contractual address, and the treatment of delayed, tactical set-aside applications.