A Federal Court case summary of Ketua Pengarah Jabatan Penyiaran Malaysia & Anor v Vertex Blue Consulting Sdn Bhd
Introduction
This case highlights the effect of an unless order for discovery and whether a court is bound to enter a default judgment containing declaratory relief purely due to non-compliance with such an order. The Federal Court was required to determine whether declaratory relief may be granted without consideration of the merits or supporting evidence, and whether an unless order can operate in the same manner as a summary judgment or judgment in default, particularly in proceedings involving the government. The appellants were the Ketua Pengarah Jabatan Penyiaran Malaysia and another, representing Radio Televisyen Malaysia (‘RTM’), a government entity responsible for public broadcasting and the respondent was Vertex Blue Consulting Sdn Bhd, a company engaged in advertising and media services, and the successful bidder in a tender exercise conducted by RTM for the sale of advertising airtime.
Brief Facts of the Case
Vertex Blue Consulting Sdn Bhd was appointed as an independent sales agent for advertising airtime on TV2, TVOkey and 33 radio stations pursuant to a five-year concession agreement dated 4 July 2017.The appellants then terminated the concession agreement in December 2018. Vertex alleged that the termination was wrongful and amounted to a breach of contract. Consequently, Vertex commenced proceedings in the High Court seeking, inter alia, a declaration that the termination was unlawful and damages for losses suffered.
The appellants denied liability and contended that Vertex had breached the concession agreement by failing to pay the contractually guaranteed minimum sum. The appellants further counterclaimed RM43,482,881.27 as damages. During the pre-trial proceedings, Vertex filed several discovery applications. A further discovery application was allowed, and the High Court issued an unless order stating that failure to comply would result in the appellants’ defence and counterclaim being struck out automatically and judgment entered in favour of Vertex.
Vertex later alleged that the appellants had failed to fully comply with the discovery order. On the first day of trial, Vertex sought default judgment based on the unless order.
High Court Finding
The High Court held that the appellant had failed to comply with the unless order. As the order was self-executing, the appellants’ defence and counterclaim were automatically struck out.
The High Court entered judgment in favour of Vertex and granted a declaration that the termination of the concession agreement was unlawful, with damages to be assessed.
Court of Appeal Finding
The Court of Appeal dismissed the appeal and affirmed the High Court’s decision. It held that the unless order was clear and binding, and that non-compliance resulted in automatic consequences. The Court of Appeal emphasised that court orders must be obeyed unless set aside, and the trial judge was correct to enter judgment pursuant to the unless order.
Federal Court
The issue before the Federal court was: Whether a trial judge is bound by an unless order to enter a default judgment containing declaratory relief solely on the basis of non-compliance, without considering the merits of the case or supporting evidence, and whether such an order has the effect of a summary judgment or judgment in default against the government
In a significant clarification on the limits of procedural default, the Federal Court drew a clear distinction between ordinary default judgments involving monetary claims and those seeking declaratory relief. While the former may be entered as of right upon proof of default in appropriate circumstances, the latter stands on a fundamentally different footing.
The Court emphasised that declaratory relief is discretionary in nature. Unlike fixed or liquidated monetary claims, where judgment may be entered upon procedural default, declarations require the court to examine the substantive merits of the case. A declaration is not granted merely because a defendant has failed to appear or comply with procedural directions. Instead, the court must be satisfied, based on evidence and a proper evaluation of the factual matrix, that the relief sought is justified and appropriate.
On the facts, the Federal Court found that the High Court had granted declaratory relief without any evidential foundation and without undertaking a meaningful assessment of the underlying merits. The absence of such scrutiny rendered the judgment irregular. It was not, in substance, a judgment on the merits but one entered solely on procedural default.
Importantly, the Federal Court also addressed the effect of an ‘unless order’. It held that the trial judge was not automatically bound to enter judgment merely because of non-compliance with the terms of the order. Procedural non-compliance, without more, does not entitle a claimant to declaratory relief. The discretionary nature of such relief demands judicial evaluation beyond mechanical enforcement.
In light of these principles, the Federal Court allowed the appeal and set aside the decisions of both the High Court and the Court of Appeal. The decision underscores a critical point in civil procedure that while procedural rules are important, they cannot substitute for substantive judicial scrutiny particularly where discretionary remedies such as declarations are concerned.
Conclusion
This case affirms that a default judgment granting declaratory relief cannot be entered without consideration of the merits and supporting evidence, even where an unless order has been breached. Declaratory relief remains subject to judicial discretion, and courts are not bound to grant such relief solely due to procedural non-compliance.
