Judgment

Vincent KK Ng, J

BACKGROUND FACTS

1. On September 10, 1997, the plaintiff took out a writ of summons (Encl. 1) against the defendants claiming a sum of RM676,$57.16 being the balance payable to it under a performance bond and insurance guarantee respectively. The First, third and fourth defendants failed to enter appearance and default judgment was entered against them. The suit against the second defendant had been set down for trial, but was adjourned due to the fourth defendant's application to set aside the default judgment. The fourth defendant succeeded to set aside the judgment and filed his defence. At the outset, it is pertinent to note that the law office of Messes Ravi Muthiah & Co is the common counsel on record for both the second and fourth defendants. The second and fourth defendants defences are similar. In short, they raise the defence of non est factum. Also, in the case of the second defendant, he counter claimed for declaration that the letters of indemnity allegedly executed by him on November 24, 1994 and December 2, 1994 are null and void.

   THE PLAINTIFF'S CASE

2. On or at about October 18, 1994, the government awarded the First defendant a tender to construct four bridges across Sungai Batu under a project known as Rancangan Tebatan Banjir Wilayah Persekutuan [i.e. a flood mitigation project] (the contract). As consideration. Bank Bumiputra Malaysia executed a bank guarantee with the government, to guarantee the due performance of the contract by the first defendant. The plaintiff also executed a performance bond wherein it undertook to indemnify Bank Bumiputra Malaysia from and against all claims, demands, losses, damages, costs, charges and expenses that may be sustained or incurred by reason of the said guarantee. On November 24, 1994, the second to fourth defendant executed a letter of indemnity whereby they agreed to indemnify the plaintiff for any money claimed under the performance bond upon a demand being made together with interest at the rate of 3% above prime rate calculated from the date of such demand. Further, on December 2, 1994, as consideration for the government's agreement to give advances to the first defendant, the plaintiff executed an insurance guarantee. On the same day, the second to fourth defendant executed another letter of indemnity with the plaintiff whereby they agreed to indemnify the plaintiff for any claim under the insurance guarantee. Subsequently, Bank Bumiputra Malaysia and the government made a demand for a sum of RM393,704.67 and RM930,200.11 under the performance bond and insurance guarantees respectively. The plaintiff complied with the demand. After deduction of cash collateral of RM647,384.02, the plaintiff alleges that a balance of RM676,557.16 is still due to be paid to it under the letters of indemnity. The said amount is the subject matter in this suit.

   THE CASE MANAGEMENT

3. On December 2, 2002, the plaintiffs counsel informed the court that parties intended to file an application to dispose of the suit through analysis of certain signatures in five documents by a handwriting expert jointly appointed by both parties. A formal application (Encl. 37) to that effect was filed, and on March 26, 2003 the order was allowed by consent in which all parties agreed that they were to be bound by the result of the expert report. The agreement was that, if the report is in the second and fourth defendants' favour, the plaintiffs claim would be dismissed and the second defendant's counter clairn would be allowed. However, if the same is in the plaintiffs favour, then the plaintiffs claim ought be allowed and the said counterclaim would be dismissed. It was also the agreed by the parties that the documents were to be examined by a handwriting expert from the Chemist Department, Malaysia. Months passed, but the parties were unable to get any result from the government handwriting expert. When the case was called before the court on July 13, 2004, the parties disclosed to the court that they have agreed to appoint a private handwriting expert. Again, they made known to the court that they agreed to be bound by the result of the examination conducted by the private handwriting expert and resolve the suit with finality. Thus, on that date an order by consent of all the parties was entered (the consent order). The documents were then returned to the parties for further action.

4. On the case management date of November 23, 2004, the court was informed that the appointed handwriting expert, one Mr. Siow Kwen Sia had prepared his report and a copy was produced and marked as Encl. 85. Also, a copy of the handwriting expert's credentials on his expertise (Encl. 86) was tendered to court. In brief, the expert certified that the handwriting on the documents were the genuine and true signature of the fourth defendant. Based on the parties prior agreement on the mode of case disposal referred to earlier, I entered judgment for the plaintiff as prayer in prayer (a) to (c) Encl.1 and dismissed the second defendant's counter clairn. Now, the second defendant has filed an appeal with the Court of Appeal against the November 25, 2004 judgment. On December 23, 2004 the second defendant filed a summons in chambers (Encl. 91), inter alia, to set aside the judgment of November 23, 2004 and for an order of stay of execution of that judgment.

   ENCLOSURE 91

5. The application was supported by affidavits affirmed by the second defendant's counsel (Encl. 90) and the second defendant (Encl. 89). In Encl. 90 the second defendant's counsel gave his reasons for his absence on November 25, 2004 and craved the court's indulgence. He averred nothing more. The second defendant in his affidavit deposed that in his statement of defence he had challenged the fact alleged by the plaintiff. Hence, the issue whether or not the fourth defendant is the actual author of the documents sent for expert inspection does not concern him in any manner. Thus, he contends that he should be given an opportunity to have his day in court.

   MY REASONS FOR ALLOWING ENCLOSURE 1 AND DISMISSING ENCLOSURE 91

6. It is clear from the records and his own conduct (before the private handwriting expert had made his finding) that the second defendant was very much a party to the consent order. It was pursuant to the consent order that this court had recorded the judgment on November 25, 2004 whereby judgment was given to the plaintiff against both the second and fourth defendants with costs and also the second defendant's counterclaim was dismissed with costs. We have to be mindful that both the second and fourth defendants were represented by the same counsel who had on July 13, 2004 requested the court to record the consent order in the following terms [translation][a]:

   By consent, the original documents for the case will be forwarded to a private handwriting expert who is mutually acceptable to the parties and the parties will be bound by the opinion of that handwriting expert for the purpose of the final determination of whether: (a) to withdraw the action and to enter judgment in respect of the counter claim with costs; or (b) to enter judgment for the action and dismiss the counter claim with costs.

7. Also earlier on January 29, 2004 Mr. Ravi appearing as counsel for both the second and fourth defendants informed the court as follows [translation][b]:

   The case will be decided based on the chemist report, which the parties agreed that if original then both D2 and 4 would be liable ....

8. This shows that the second defendant had a clear and consistent intention to be bound by the finding of the private handwriting expert even before the date when the said consent order was recorded, that is, on July 13, 2004. It is pertinent to note that the parties must have agreed to resolve this case with finality as it is (a 1997 matter) a very old pre 2000 case. The intention to finally resolve this old matter could be gleaned from the following very pertinent then prevailing circumstances, at the time and after the said consent order was recorded:

   (a)	it would be pointless for this court and the parties to adopt the approach pertaining to the handwriting expert's opinion in the resolution of the case if only the case against the fourth defendant is resolved whilst the case against the second defendant remain unresolved and a trial would still be necessary.
   (b)	there was no preparation for trial of the case against the second defendant by him or his counsel during the substantial period of time from March 26, 2003 to July 13, 2004 whilst waiting for the government chemist's report) and even thereafter, when that failed, the private handwriting expert's report.

9. Thus, after considering my recorded notes and all the facts and circumstances which led to the said consent order, it is very clear that the second defendant was minded to raise the issue that he was not to be bound by the consent order only after the parties had secured the finding of the private handwriting expert which was not in his favour. This conduct on the part of the second defendant is wholly unbecoming and reprehensible as, had the private handwriting expert's finding been adverse to the plaintiffs case, I am sure the second defendant would have been happy to be bound by the finding and insist that the plaintiffs claim be dismissed with costs and judgment be entered on his counterclaim.

10. Though it is common ground that the said consent order has not to date been perfected, yet nevertheless, it is trite law that no party should be allowed to set aside such unperfected consent order as of right bereft of any cogent grounds, and even in the teeth of his adverse conduct.

11. The second defendant also raised the issue that his line of defence in the pleadings did not hinge on the authenticity of the fourth defendant's signature. I would hold that this line of attack on the said consent order is a non-starter and it is inapplicable to cases of setting aside of a consent order. The simple reason is that, when parties consent to abide by a certain course of disposal of an action, it surely entails consent of one to be bound by such course of disposal even when, as in the instant case, it involves the authenticity of a signature of another defendant. It is pertinent to note that this court's approach herein is consistent with the words "whether raised by the pleadings or otherwise" found in Order 33 rr 2 and 5 of the Rules of the High Court 1980; notwithstanding that the issue on the fourth defendant's signature was not raised or pleaded by the second defendant in his defence. See the Federal Court case of Tan Geok Lan v La Kuan [2004] 3 AMR 177; [2004] 2 CLJ 301, which held as follows:

    Now, under the procedure the court controls the progress of cases by the exercise of its powers given to it to enable it, and not the parties, co dictate the progress of cases at the pre-trial stage, ensuring that the practices and procedures applicable during that stage are complied with promptly and not abused. The other example is the procedure under Order 33 r 2 of the RHC which states that the court may order any question or issue arising in any cause or matter, whether of fact or law or partly of fact or partly of law, and whether raised by the pleadings or otherwise, to be tried before, at or after the trial of the cause or matter, and may give directions as to the manner in which the question or issue shall be stated. As a complement to the procedure the parties are encouraged to co-operate with each other in the conduct of the proceedings because their co-operation is necessary to facilitate the speedy disposal of cases. [emphasis added]

12. In my view the ratio in Tan Geok Lan, supra, must be read in conjunction with Visia Finance Bhd v Expert Credit & Leasing Sdn Bhd [1998] 2 AMR 1959; [1998] 2 MLJ 705 where it was held that:

    Here, both counsel had consented to proceed in a particular way. An order made by consent in the absence of fraud can only be varied by consent. It would be a denial of justice to permit a party to resile from what his counsel decided for him merely because he lost.

    (See also my decision in Lee Teng Siong v Lee Geok Thye Holdings Sdn Bhd [2004] 5 MLJ 13.)

13. It was for all the aforesaid compelling reasons that I had to allow Encl. 1 with costs and dismiss the second defendant's counterclaim with costs. In the event, Encl. 91 has to be and is dismissed with costs.

Cases

Lee Teng Siong v Lee Geok Thye Holdings Sdn Bhd [2004] 5 MLJ 13, HC; Tan Geok Lan v La Kuan [2004] 3 AMR 177; [2004] 2 CLJ 301, FC; Visia Finance Bhd v Expert Credit & Leasing Sdn Bhd [1998] 2 AMR 1959; [1998] 2 MLJ 705, CA

Legislation

Rules of the High Court 1980: Ord.33

Representations

SY Chiam (Azim, Tunku Farik & Wong) for plaintiff

Ravinathan Mutiah (Ravi Muthiah & Co) for defendants

Notes:-

[a] The translation is not a part of the original judgment. The texts quoted in the judgment are in Malay language.

[b] The translation is not a part of the original judgment. The texts quoted in the judgment are in Malay language.

This decision is also being reported at [2006] 3 AMR 717