SUMMARY JUDGMENT

LWH1HLAW547: Advanced Civil Procedure 1

Firm 3 | Adil Safwan & Partners

INTRODUCTION What is Summary Judgment

• It is a procedure of disposal of dispute without a trial involving witnesses, available for prompt and speedy disposition of an action by the plaintiff or a counterclaim by the defendant, without trial when there is no dispute as to fact or law.

INTRODUCTIONWhat is Summary Judgment

• In Malayan Insurance (M) Sdn Bhd v Asia Hotel Sdn Bhd [1987] 2 MLJ 183 the court explained the underlying philosophy in the Order 14 application as follows:

• “...is to prevent a plaintiff clearly entitled to the money

from being delayed his judgment where there is no fairly arguable defence to the claim.”

Purposes of Summary Judgment• To allow a plaintiff who is clearly entitled to his cause of action from

being delayed in obtaining his judgment. The court will only allow the plaintiff such a relief in clear cut cases due to its summary nature and as a safeguard on its own.

• To prevent the defendant from putting in a sham defence and hence delay the proceedings.

• In the case of Hasil Bumi Perumahan Bhd & Ors. V United Malayan Banking Corp. Bhd [1994] 1 MLJ 312, the Supreme Court (as it was then) stated that in ‘in order to succeed in a summary application the applicant must show that he has a defence which has some merits and which the court should try. To use common and plain language, the applicant must show that his defence is not a sham defence but one that is prima facie, raising serious issues as a bonafide reasonable defence.’

Procedure to apply Summary Judgment

• Before a plaintiff can apply a summary judgment against the defendant under Order 14 of the Rules of Court 2012, the plaintiff must satisfy the following:

1. The statement of claim must have been served on the defendant;

2. The defendant must have entered appearance; and

3. The plaintiff must support his application by the requisite affidavit.

Procedure to apply Summary Judgment (Cont.)

• An application for summary judgment must be made by way of notice of application supported by an affidavit in the prescribed Form 13 (Order 14 rule 2) setting out:

1.Verifying the facts on which the claim arises and

2.The deponent’s belief that there is no defence to the claim or except to quantum of damages claimed.

Procedure to apply Summary Judgment (Cont.)

• The affidavit may contain statements of information or belief with the sources and grounds thereof. In Chirgwin v Russell (1910) 27 TLR 21 CA, it was stated that the affidavit may be made by the plaintiff or any person duly authorised by him.

• The affidavit must strictly fulfil the requirement specified under the rules. However, if the affidavit is defective, the defect can be cured by filing further affidavit. In the English Court of Appeal case of Les Fils Dreyfus et Cie Societe Anonyme v Clarke [1958] All ER 459, it was held that the court had jurisdiction to allow a defective affidavit filed in support of a summons under Order 14 rule 1 to be supplemented by further affidavits and that a defect could thus be cured.

1. Procedural Irregularities

• In Sandilands Buttery & Co Ltd v Marcus Knorpel [1959] 3 MLJ 244, in an application for summary judgement, an affidavit was filed which contained various defects and irregularities. However the Court stated that the failure to comply with any of these technical requirements has in no way prejudiced or embarrassed the defendant in the application and therefore did not render the proceedings void

• In UMW (Sarawak) Sdn Bhd v Kim Leong Timber sdn bhd & Ors [1989] 3 MLJ 177, the second defendant raised a number of technical issues namely:

• i) there was failure to comply strictly with form 62;• ii) The plaintifs must depose that they verily believe that there is no

defence to the action;• iii) the application should be taken out promptly;• iv) the affidavits filed did not disclose the place of residence or

occupation of deponent nor the grounds or source of information;• v) notice of demand was defective;• vi) there was misrepresentation by the plaintiffs;• vii) no notice of assignment was given.

• The court among other things held that failure to comply with the Form was not fatal so long as the Form was substantially complied with and the defendant is not prejudiced by it in any way.

• Even if there was a failure, the defect was only minor and purely technical and was only an irregularity. Further, the court stated that the supplemental affidavit deposing that the notice of assignment had been served on all the defendants cannot make good any defect or omission in the statement of claim.

• In MBF Finance Bhd v Hasmat Properties sdn bhd [1990] 1 MLJ 180, the court allowed an application for summary judgement even though Order 14 Rule 2(1) of RHC, 1980 was not strictly complied with.

• In contrast, the High Court in Pembinaan KSY Sdn Bhd v Lian Seng Properties Sdn Bhd and another appeal[1993] 1 MLJ 316, held that the requirement under 14 rule 2(1) is a condition precedent to the court to make an order under Order 14.

• Procedural irregularities in an Order 14 application may appear to be fatal to the applicant. However, procedural irregularities may be avoided taking positive steps to cure the irregularity.

• In UMBC v Palm Vegetable Oils sdn bhd [1983] 1 MLJ 206, the Federal Court stated that the ‘defects or omissions in a statement of claim cannot be remedied or corrected by an affidavit in support of the application. The statement of claim must be amended in the normal way. In any event the defendant should be given leave to defend where the defendant can by affidavit evidence or otherwise establish that:

• a) there is a triable issue; or• b) there ought to be some other reason for a trial of the

claim or part thereof.

2. Triable issues• What are capable of being triable issues were set out

by Mohamed Dzaiddin J in Syarikat Kerjasama Serbaguna Tunas Muda Sungai Ara v Ghazali bin Ibrahim [1985] 2 MLJ 225.

• The Court observed:• The issue here is whether or not there is a triable

defence. This simply means that it is for the defendant to show merits, he has a good defence to the claim, or that a difficult point of law is involved, or the dispute is as to the fact which is to be tried or any other circumstances showing reasonable ground of a bona fide defence.

• In Voo Min Enn & Ors v Leong Chung Fatt [1982] 2 MLJ 241, the respondent claimed there was an oral agreement other than the lease agreement in which the appellant had agreed for a new lease.

• The High Court held that that there were triable issues. However, the appellant appealed to the Federal Court and it was held that the issue as to the existence of the oral agreement to renew the lease of the demised premises in the case was not an arguable issue.

• As it was neither effective nor admissible and therefore did not constitute a triable issue.

• In USRA Tampi Sdn Bhd v MBf Property Trust Management Berhad [2003] 4 AMR 496,

• it was contended that the plaintif’s failure to obtain Foreign Investment Committee’s approval to transfer the said land was a triable issue. The Court of Appeal made the following observations:

• a) the defendant had failed to fulfill the condition precedent under clause 2(1)(i) of the agreement.

• b) Even if approval was obtained, it could not be effected since prior consent from state authority was absent

• c) the plaintiff’s failure to obtain FIC approval was therefore inconsequential.

• d) there is no triable issue that would merit a full trial.

Unliquidated Claim

• Generally, Order 14 application is suitable only for liquidated claim.

• Credit Corporation (M) Berhad v Bulan Sabit Sdn Bhd : Where a claim is for unliquidated damages, Order 14 is wholly inappropriate.

• However, Order 14 has been successfully been applied in cases of unliquidated claims but such cases are extremely rare.

Avel Consultants Sdn Bhd & Anor v Mohamed Zain Yusof & Ors

• Once it is clearly established that there was a breach of fiduciary duty and there is no defence to the issue, the Court under an Order 14 application should give the declaratory judgment asked for and leave the question of assessment of damages to be dealt with by the Registrar.

Delay in filing the application

• An application for summary judgment should be made promptly after Defendant has entered appearance and a statement of claim has been served on Defendant: Or 14 r1

• If Plaintiff delays his application, he must give good reason and explain the delay.

• CGIR v Weng Lok Mining Ltd [1969] 2 MLJ 98: concerning non-payment of tax, it was held that the reason for delay of 3 months in the application for summary judgment due to holidays and the fasting month was good reason and did not warrant a dismissal of the application.

• Krishnamurthy v Malayan Finance Corp [1986] 2 MLJ 134,it was held that an application for summary judgment must be made after the Defendant has entered an appearance and it could be made either before or after the delivery of defence. If the explanation is not accepted by the court, then no O.14 judgment could be given.

• British American etc Bhd v Pembinaan Fal Bhd [1994] 3 MLJ 267: the court did not accept Plaintiff’s explanation for the delay in that its former solicitors had moved to Kota Bharu and it had to engage other solicitors.

• MBSB v Ghazi bin Hasbollah [1994] 2 MLJ 1: Defendant raised the issue of 4 ½ months delay in Plaintiff’s application for summary judgment, the High Court held that there is no hard and fast rule that the delay is fatal. The court has discretion and looks at the circumstances of each case.

• Perkapalan Shamelin Jaya Sdn Bhd & Anor v Alpine Bulk Transport New York [1998] 1 AMR 258, it was held that if Defendant has no triable issue or defence to Plaintiff’s action, then delay per se cannot be raised by defendant as the ground to object to Plaintiff’s application for Order 14 judgment.

DEFENCE, COUNTERCLAIM & SET-OFF

Defendant can raise substantive technical objections in plaintiff’s application for non-compliance with the rules in the Notice of Application such as defective service, defective affidavit, etc. If defendant’s objection succeeds, the Judge will dismiss plaintiff’s application under O. 14 r. 7 and award costs to defendant.

Df’s shows that there is a triable issue

• For defence, defendant must show in his counter affidavit (or affidavit in reply) that, “there is an issue or question in dispute which ought to be tried”, there is a substantial question of fact which ought to be tried or a difficult question of law involved. If defendant succeeds, plaintiff’s application will be dismissed and defendant will be given unconditional leave to defend.

• Leave to defend ought to be given unless there is clearly no defence in law and no possibility of a real defence on a question of fact.

• In Appadurayv Ananda [1982] 1 MLJ 292, this case involved an action for trespass. The dispute between the plaintiff and the defendant was in respect of the common boundary. The plaintiff in reliance of his surveyor’s report claimed that the defendant has encroached 513 sq. ft. of his boundary. Then, the plaintiff proceeded to obtain judgment under Order 14. The court held that the dispute in the boundaries of property raised by defendant required evidence of a survey report since the defendant questioned the accuracy of the surveyor’s report. This was a triable issue and hence plaintiff’s application for Order 14 judgment was dismissed.

• Furthermore, in Ng Yik Seng v Perwira Habib Bank [1980] 2 MLJ 83, the appelants were guarantors for overdraft facilities. The overdraft was further secured by a charge on a property. The respondent obtained summary judgment before senior assistant registrar. Appelant claimed that the signature on the guarantee form was not his. Court also found that there were great variations in the signatures of the appellant not only in the documents but also in the specimens supplied by them. The court held that it was a triable issue as expert evidence was required.

Voo Ming En v Leong Chung Fatt [1982] 2 MLJ 241

• There was a written agreement of a lease which provided for the possibility of renewal by written request. On expiry of the lease, the lessee refused to deliver part of the premises and alleged that there was an oral agreement for a new lease. The lessor applied for final judgment but this was refused as the learned judge held that there was a triable issue. However, on appeal, the Federal Court held that the alleged oral agreement to renew the lease was not a triable issue, as it was neither effective nor admissible and therefore did not constitute a triable issue.

• in Bank Negara Malaysia v Mohd Ismail &Ors [1992] 1 MLJ 400, the court held that in order to resist an Order 14 application, defendant must show in his affidavit in reply that there is a defence and a triable issue. Here, defendant had admitted liability. Thus, plaintiff’s application for summary judgment was granted.

• Furthermore, if defendant raises fraud in his affidavit in reply and some evidence to support his allegation, then no summary judgment will be granted. However, if plaintiff raises fraud, plaintiff cannot apply for summary judgment as it becomes a triable issue which must go to trial as stated in Order 14 rule 1(2).

Df’s raises set-off or counterclaim

• Defendant also can raises set off or counterclaim. In the case of Permodalan Plantations Sdn Bhd v Rachuta Sdn Bhd [1985] 1 MLJ 157 it states that; a set off is a cross claim for a sum of money by defendant against plaintiff’s claim. It normally arises in the same transaction and acts as a defence for defendant. A counterclaim is also a cross claim which defendant can bring against plaintiff in a separate action where defendant becomes plaintiff and plaintiff becomes defendant. In practice, plaintiff’s claim and defendant’s counterclaim are joined to avoid multiplicity of suits.

• Example 1:• Plaintiff sells a washing machine to defendant

at the price of RM1000.00. Defendant does not pay. Then the machine explodes and defendant claims for damage (injury) amounting to RM2, 500.00. Plaintiff sues defendant for the price of the machine. The set off is the damage (injury) arisen from the machine.

• Example 2:• Plaintiff claims for rent not paid by the

defendant. However, the defendant makes a counterclaim that plaintiff has not returned a sum of money borrowed from defendant.

What order may be made if Df raises a set-off or counterclaim?

• In Shanghai Hall v Town House Hotel Ltd [1967] 1 MLJ 223, the Federal Court held that where Df raises a set-off, it acts as a defence for Df. The court will determine Df’s claim abd Pf’s claim and order a set-off which is the difference between their claims.

• Where Df raises a counterclaim which is not a defence to Pf’s claim, Df will not obtain unconditional leave to defend

• . However, the court may order a stay of execution of Pf’s judgment until after the trial of the counterclaim.

• In Ronald Quay Sdn Bhd v Maheswary Sdn Bhd [1987] 1 MLJ 322, Df made a counterclaim which was more than Pf’s claim. The court held that Df’s counterclaim was not frivolous and ordered a stay of execution of the judgment for Pf until the determination of Df counterclaim.

Defence by affidavit• In Defence by Affidavit, if defendant has filed his defence

he may raise defences over and above those alleged in his defence by way of an affidavit in an Order 14 application. In Lin Securities v Noone & Co Sdn Bhd [1989] 1 MLJ 321, the plaintiff applied to obtain summary judgment before the senior assistant registrar. The court is interested in whether the defendant has a defence. However, at the hearing, defendant cannot raise issues not covered in defendant’s affidavit in reply because there should be openness in civil procedure. The court held that the defendant was entitled to show at the hearing of the Order 14 application that he had other defences over and above what had been pleaded in the statement of defence.

COSTS

• The court may dismiss the application with costs and may require the costs to be paid by the plaintiff forthwith without prejudice if the plaintiff makes an application for summary judgment by knowing that the defendant relies on the contention which will entitle him to unconditional to leave.

• This is stated under Order 14 r 7 of Rules of Court 2012.

• Under Order 14 r 7, it only permits the court to order costs to be paid forthwith provided that it appears before the judge and the plaintiff knew the defendant is relying on a contention which entitle to unconditional to leave.

• However, the court may order costs to be taxed and paid forthwith in situation irrespective whether the conditional or unconditional leave is granted.

• Goddard LCJ opined that:“I wish it to be known as a practice rule that the proper

course for a master to take if he considers that in a summons under Order 14 it is clear that the plaintiff knows that there was an arguable defence to the claim, is to dismiss the summons with costs. Masters should use their powers under Order 14 much more freely.” Peacock v. ADAC [1952] 1 TLR 29

• Therefore, the court should not hesitate to grant such costs to be paid forthwith after he has discovered what evidence the defendant has.

• In any event, the court should impose time limit by which a plaintiff must set the matter for trial failing which the defendant be given the liberty to make an application to strike out the plaintiff’s claim.

• Hence, Order 14 will enable the court to expeditiously deal with the case and clear the backlog.

• Further, the court must also to consider whether the parties will consent to the whole or part of the claim to be tried before the Registrar under Order 14 rule 6 (2).

• It is now trite law that an appellate court will not interfere with the exercise of discretion of the judge unless the court clearly acted on wrong application and principle or failure to consider some matters.

• In Koh Siak Poo v. Perkayuan Oks Sdn Bhd [1989] 3 MLJ 164, Hashim Yeop A. Sani CJ stated that the power of an appellate court in Order 14 appeal should not regard it as reviewing the exercise of the judge’s approach but it should be an approach as a rehearing.

• These situations can be seen in several cases.

Condition Precedent• It is trite that the plaintiff must adduce sufficient evidence

to the court if the plaintiff’s claim is subject to the fulfillment of a condition precedent.

• The plaintiff must satisfy the court that condition precedent before he will be allowed to enter summary judgment.

• For instance, the case of a demand guarantee, it is a condition precedent that the plaintiff must have a formal demand before he initiates his suit.

• He must plead and adduce evidence to show that the letter of demand was duly sent before he can obtain summary judgment.

• In Mok Hin Wah & Ors v. UMBC [1987] 2 MLJ 610, the respondent bank brought a claim against the defendant borrowers and the guarantors.

• No letter of demand was actually sent to the guarantors but carbon copies of the demand made to the principal debtor was sent to all guarantors. The issue before the Supreme Court was whether the notice was sent by the respondent (plaintiff) was a proper demand under guarantees.

• The court stated that since the bank guarantees invariably specify that the liability of the guarantor is to pay on demand, the words are not devoid of meaning or effect but make the demand a condition precedent to suing the guarantors.

• Furthermore, the Supreme Court stated the respondent as creditor must prove a real demand by sending actual notice of demand to the respective guarantors. Sending a carbon copy of it is not enough.

Guarantor• Summary judgment procedure will not be suitable

against guarantors who bona fide allege that he does not know the debt is due and that he requires it to be proved.

• Brammell LJ“The power to sign assignment was, in my opinion,

intended to apply to those cases which almost on the admission of the defendant are undefended, and not to cases in which the defendant might reasonably say, ‘I don’t know if your case is well founded or not, but I require you to prove it.” Lloyd’s Banking v. Ogle (1876) 1 Ex. D 263

• He further stated:“In my opinion, it ought to be a general rule that where there is

no acknowledgment of the debt by the defendant, or anything else to show that the defence is for mere purposes of delay, in the case of a guarantor or surety, like the defendant, he should not be prevented from going to the jail.”

• Where the defendant guarantor bona fide alleges fraud, misrepresentation, set off and etc, it will raise triable issues and the plaintiff will not be able to enter summary judgment.

• It must be emphasized that mere allegation such irregularities raised in the statement of defence or affidavit in reply to the application for summary judgment are not sufficient.

• There is tendency for the judge to treat such manner as sham defence.

• Hence, to defeat the plaintiff’s application to summary judgment, the defendant must not only allege but also adduce some evidence by way exhibits or otherwise to support the allegation.

• Goh Swee Hon & Anor v. Ewings (Australia) Pte Ltd [1987] 2 MLJ 653.

• The plaintiff proceeded to obtain summary judgment against the guarantors. The defendant rise two defences that the guarantees were not executed and if there were such guarantees executed by the defendant, they were given for past consideration.

• On the facts the Singapore Court of Appeal held that the defence was shadowy and that there was no merit in the defence of past consideration.

Setting Aside Summary Judgment• A judgment under Order 14 application given in

the absent of the defendant may be set aside or varied by the court under Order 14 r 11.

• Such principles under Order 13 and 19 may be used as the alternative to default judgment.

• Hence, the defendant must satisfy the court as to the reason why he fails to appear in the hearing on the trial.

• V. C George J in Bank Bumiputra Sdn Bhd v. Kredin Sdn Bhd & Anor [1989] 1 MLJ 323 “Although Or 14 allows the court to set aside a judgment

given against a party who does not appear at the hearing, rule 11 could not be invoked …..as the defendants had directed their minds to the application and had deliberately decided to allow summary judgment to be taken against them. Having in effect conceded to the right of the plaintiff to enter summary judgment against them, it is as if a consent judgment had been entered. Unless a defendant can bring the matter more or less within the terms in which a consent judgment can be set aside, he will not succeed in his application.”

• However, Zakaria Yatim J in Development & Commercial Bank Bhd v. Cheah Theam Swee [1989] 2 MLJ 496 opined that:

– “…hence to dismiss the defendant’s application to set aside the judgment on this ground was too dramatic. If the defendant failed to explain his absence at the hearing, the court should order him to pay costs if he succeeded in setting aside the judgment..”

• It must be noted in this case is in line with the long established principle that if the judgment in default is irregular, it will be set aside as a matter of right, subject only as to costs.

• In Eu Hoon Chwee v. Chua Way Tiong, Raja Azlan Shah J referred to Scott J in Spira v. Spira (1939) that, – “insofar as they did apply at the later date for an extension of time, that was a

matter of pure discretion and the judge acted within his power..I think the answer to that was that there had been no such default in the proceedings under Or 14 as is contemplated by Or 27 r 15 and the matter is not one in which the discretion of the court should be exercised in favour of the defendants.”

Hence, Raja Azlan Shah J opined that:

– “….I would add that a judgment under Or 14 is an adjudication on merits and the learned senior assistant registrar has judiciously and in my view properly done so in this case”.

• Thus, it was stated that a judgment obtained under Order 14 is not a judgment in default and Order 27 r 15 of Rules of Supreme Court 1957 has no application to the present cases.

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