1. ) 1MALAYSIA DEVELOPMENT BERHAD 2. ) IMBD ENERGY HOLDINGS LIMITED 3. ) 1MDB ENERGY LIMITED 4. ) 1MDB ENERGY (LANGAT) LIMITED 5. ) GLOBAL DIVERSIFIED INVESTMENT COMPANY LIMITED v 1. ) LOW TAEK JHO 2. ) TAN KIM LOONG 3. ) LOW HOCK PENG 4. ) LOW MAY LIN 5. ) LOW TAEK SZEN 6. ) GOH GAIK EWE BUKAN PIHAK-PIHAK BSI BANK LIMITED, SINGAPURA

Case Significance

Instructive on the finality of a regular judgment in default of defence, holding that unexplained delay and a desire to obtain a merits judgment for foreign enforcement are not sufficient grounds to set it aside absent fraud on the court.

This High Court decision at Kuala Lumpur concerns an application to set aside a judgment in default of defence, and the principles governing the finality of such a judgment. The plaintiffs, a group of related companies comprising 1Malaysia Development Berhad and associated entities, had sued a number of defendants, and the first and third defendants, natural persons, having failed to file their defence within the prescribed period, the plaintiffs obtained a judgment in default of defence against them in November 2022. The affidavit of service confirmed that the writ had been served at the first and third defendants' last known addresses obtained through a registration-department search. Nearly three years later the plaintiffs themselves applied to set aside that default judgment, relying on the grounds that at the time it was entered they did not have knowledge of evidence that later surfaced in foreign proceedings, that the fraud alleged against those defendants was sophisticated and spanned multiple jurisdictions, and that certain foreign courts require a judgment on the merits from the Malaysian courts before enforcement can be undertaken abroad. The court, per Mahazan binti Mat Taib J, dismissed the application. It held that the court must first determine whether the default judgment was regular or irregular, and that the delay of nearly three years in bringing the application was wholly unexplained. It found no sufficient basis in law or fact to set aside the judgment: the desire to replace the default judgment with a judgment on the merits to facilitate foreign enforcement was not a valid legal ground to reopen a final judgment, since the court cannot set aside a valid judgment merely because it no longer suits a party's strategic preferences; and there was no allegation or proof of fraud practised upon the court in the procurement of the default judgment, the fraud alleged relating to the underlying cause of action rather than the integrity of the default-judgment proceedings. The court dismissed the application with no costs and directed that the trial against the remaining defendants proceed. The judgment is instructive on the finality of a regular default judgment and the insufficiency of enforcement strategy or unexplained delay as grounds to set it aside.