CASE OF THE WEEK

CIVIL PROCEDURE: Striking out – Action for damages – Grounds for - Effect of amendments to Rules of the High Court 1980 – Whether triable issues existed – Rules of the High Court 1980, O. 1A, O. 2 r. 3

DALAM MAHKAMAH TINGGI MALAYA DI SHAH ALAM

DALAM NEGERI SELANGOR DARUL EHSAN

GUAMAN SIVIL NO. MT1-22-812-2001

ANTARA

NORWEST HOLDINGS SDN. BHD. ...PLAINTIFF

DAN

MUHIBBAH ENGINEERING (M) BHD ...DEFENDANT

The plaintiff had entered into a pre-bid agreement (hereinafter referred to as the pre-bid agreement), with the defendant and another company called Ken Holdings Berhad, to form a consortium. It was solely set up for the purpose of securing a turnkey project and executing the works for the construction and completion of LNG 3, Jetty Project on Negotiated Basis at Bintulu, Sarawak (hereinafter referred to as the project) from Bintulu Port Sdn Bhd. In a gist, they wanted to cast a broad based net, wherein they would co-operate in a joint effort manner to secure the above project from Bintulu Port Sdn Bhd. That consortium later would do business in the name of 'KHB-MEB-NHSB'. Naturally the fruits of their success would be shared among them.

The plaintiff had alleged that Muhibbah Engineering (M) Sdn Bhd, the current defendant, had reneged on their agreement when it acted to the detriment of and in direct competition with the consortium. The defendant was accused to have tendered separately on an individual basis for the same project, through an open tender, and had come out successful when on August 23 1999 had solely accepted the award.

The plaintiff had subsequently commenced an action against the defendant, and had claimed damages, as a result of the defendant's breach of the pre-bid agreement and/or breach of its fiduciary duty as co-partner of the consortium. Theplaintiff had also demanded that an account of all profits received by the defendant for the execution of the project be divulged.

In response to the writ, the defendant had filed an application pursuant to Order 18 rule 19 and Order 92 rule 4 of the Rules of the High Court 1980, to have the matter struck out. It was a brave effort on the part of the defendant to pursue this line, as it is only in plain and obvious cases that recourse should be had to this summary process. This procedure may be pursed if the claim on the face of it is "obviously unsustainable" (Bandar Builder Sdn Bhd & Ors v United Malayan Banking Corporation Bhd (1993) 3 MLJ 36). Despite the appearance of a battle royal case the defendant had succeeded in its attempt to strike out the writ before the Senior Assistant Registrar. Being dissatisfied with the decision the plaintiff had filed the notice of appeal before the judge in chambers. I had heard the appeal on the premise of a rehearing and had accordingly on August 5, 2004 dismissed the appeal with costs. I now supply my reasons for the dismissal.

My decision would appear strange in the light of:

1. the pleadings having been closed;
2. the defendant having failed to file a conditional appearance; and
3. despite parties having voluntarily agreed to form the consortium to obtain a contract from Bintulu Port Sdn Bhd, and with the defendant having reneged in its
   promise, when it had individually tendered for the project for its own benefit.

The facts revealed that the pleadings were deemed closed on March 18, 2002. In fact the plaintiff had even filed its notice to attend pretrial case management before the High Court on April 5, 2002 and with that notice having been served eight days later. Despite Form 63 having been filed, the defendant had still filed its summons in chambers to strike out the writ and statement of claim on June 18, 2002. The plaintiff before me had diligently supplied me with authorities, which were meant to support their stance that as the striking out application had been filed too late in the day, the application was a non-starter. I was also not unaware of the case of Thiruchelvasegaram Manickavasegar v Mahadevi Nadchatiram (2001) 3 CLJ 742, where the learned judge had held, amongst others, that a striking out application must normally be made before the close of pleadings. In that case the issue and effect of O.34 r.2 RHC 1980 was also discussed. From the opening page of the case it was quite obvious that the decision was pronounced by the learned judge on July 19, 2001.

The position of the defendant appeared more untenable as it was compounded by the fact that it had filed an unconditional appearance on December 20, 2001. The plaintiff in support of its stance had ventilated that the defendant should be precluded from filing an application under Order 18 rule 19, and in support of it, had adverted to cases in the like of Anchorage Mall Sdn Bhd v Irama Team (M) Sdn Bhd & Anor (2001) 7 CLJ 3133 and Alor Janggus Soon Seng Trading Sdn Bhd & Ors v Sey Hoe Sdn Bhd & Ors (1995) 1 CLJ 461.

Despite those persuasive authorities, it is my view that the law as regards the timing of when a striking out action may be undertaken, has changed. There is no necessity for me to comprehensively set out a dissertation on the shift, and how it came about, but suffice for me to allude to P.U (A) 197 which has its effective date from May 16, 2002. This date is factually past the dates of the above cases supplied by the plaintiff.

In exercise of the powers conferred by section 17 of the Courts of Judicature Act 1964 (Act 91), and with the consent of the Chief Judges of the High Court in Malaya and of the High Court in Sabah and Sarawak, the Rules Committee had made certain amendments. The eventual effect was the promulgation of Order 1A in the abovementioned PU (A) 197, by which promulgation, in the administration of any of the rules herein, the court or a judge shall have regard to the justice of the particular case, and not only to the technical non-compliance of the rules supplied in the Rules of the High Court 1980 (PU (A) 50/80). Order 2 of the principal Rules of the High Court was also amended by inserting after it the following rule:

The above amendment, as I see it, is merely streamlining the statutory law that is already in existence, especially in the like of Order 2 rule 1, which reads:

In brief the above provision provides that failure to comply with the requirements of the rules would be construed as mere irregularity and not as a nullity. In effect, the amendments (O. 1A and O. 2 r. 3) have merely placed all technical objections at its rightful place, i.e. irrelevant if it defeats the purpose of justice (Government of State of Pahang v Tengku Abdul Aziz & Anor (1978) 2 MLJ 34); Concrete Engineering Products Bhd v Merces Builders Sdn Bhd (MT1 22-876-2001). With the amendment being statutory in nature, and being the latest law, how could I not but be bound by it?

A brief sight of O.18 r.19 RHC 1980, certainly does not indicate anywhere the mandatory requirement that a striking out action application must be undertaken within a specific time frame (Doree Industries (M) Sdn Bhd & Ors v Sri Ram & Co (sued as a firm) & Ors (2001) 6 MLJ 532; N. Carrupiya v MBF Property Services Sdn Bhd & Anor (2000) 4 MLJ 389; Tucker v Collinson 34 W.R 354; Mallal's Supreme Court Practice 2nd Edition page 226). The provision in no uncertain term states that the court may at any stage of the proceedings, order to be struck out, on the ground that the writ or any pleading discloses no reasonable cause of action or defence, as the case may be, or it is scandalous, frivolous or vexatious, or it may prejudice, embarrass or delay the fair trial of the action, or it is otherwise an abuse of the process of the court (by analogy see T.R Hamzah & Yeang Sdn Bhd v Lazar Sdn Bhd (1985) 2 MLJ 45; Tan Lay Soon v Kam Mah Theatre Sdn Bhd (Malayan United Finance Bhd, intervener (1992) 2 MLJ 434). Nothing is stated in it by whatever form that once pleadings are closed all striking out actions thereafter will be barred.

The above argument applies equally to situation where an applicant had already filed an unconditional appearance. Nothing is provided for under O. 18 r 19, stating that to strike out the writ a conditional appearance must be filed first, or that once an unconditional appearance has been filed, an interested person is precluded from making an application of striking out on the given grounds (N. Carrupaiya v MBF Property Services Sdn Bhd & Anor; Leong Peng Kheong & Anor v Dawntree Properties Sdn Bhd (2002) 2 MLJ 186; Bank Bumiputra (M) Bhd & Anor v Lorraine Esme Osman (1987) 2 MLJ 633; Jamir Hassan & Kang Min (1992) 2 MLJ 46).

To have an inhibitive interpretation of the above provision would necessitate the importation of inhibitive factors which would militate against the grain of that provision. To restrict the definition of the phrase "at any stage of the proceedings" to mean, inter alia, that no application would be entertained if there were no promptitude in the striking out application, or if once pleadings have been closed, or conditional appearance have not been filed, without subjecting the restrictions merely on the preconditions of sub-rule 1 (a), (b), (c) or (d), would result in outright denial of the court's right to exercise its discretionary functions, not only supplied in other provisions but statutorily built into that very provision of O. 18 r. 19. Without permitting the court to take into account the justice of the matter, but imposing and subjecting the court with debilitating self-made procedural corralling, will do injustice to the very function of the provision, let alone justice itself. If Parliament has the foresight to trust the wisdom of the court to act wisely with the wide discretion, why should interpretations be made, which deliberately snubs that trust?

Needless to say, it is fundamental in our justice system that the entire proper adherence or non-adherence of the rules and procedures laid down in the Rules of the High Court 1980, eventually must subject itself to the higher calling of justice. To arrive at that pinnacle platform there must be powers provided for, in the like of inherent powers, to be adverted to only when needed. And thankfully that power is sufficiently provided for in the catch all provision of Order 92. r. 4. This statutory provision promulgated by Parliament, which empowers the courts with the necessary veto power to act as the vanguard of justice is not mere legislative wallpaper. That power, which must, by necessity not to be invoked arbitrarily, is not curtailed by any time factor or happenings and statutorily may be invoked at any stage of the proceedings.

On reflection, if under O.34 r.3 RHC 1980 a court may in its absolute discretion make any order as meets the end of justice, amongst others, striking out the action or defence, using a general power concretized by O.92 r.4 and put into effect by O.34 r.3, surely sends out a strong message that a court may strike out a case at any stage if the need arises. Under O.34 the draconian act of striking out can be ignited and considered, merely on the premise that the relevant party had failed to appear in court, on the return date as indicated in the relevant Form 63 (let alone on substantive grounds pursuant to an O. 18 r. 19 application).

Now, with the new amendments to the RHC 1980 by PU (A) 197, any last lingering doubt is put to rest. The administration of justice of the particular case now takes top spot, and slavish non-compliance of procedures and rules, takes a back seat. Returning to the main stream, the O.18 r.19 application certainly fell within the ambit of the spirit of the new O 2 r 3 and the new Order 1A of the Rules of the High Court 1980. Any allusion therefore to the unamended Rules of the High Court 1980 and pre-May 16, 2002 cases by the plaintiff in support of its case, when proposing the preliminary objections, was doomed to meet failure.

I now proceed and identify the substantive point that justified my striking out of the writ. For purposes of this case I need only identify one ground, and the answer came in a singular package of factual and legal poser. It was indisputable from the agreed facts, that the Bintulu Port Sdn Bhd and the Bintulu Port Authority were different and separate entities, to be succinctly affirmed again during the plaintiffs own submission.

The additional agreed facts were that the plaintiff was appointed as the lead operator to submit the anticipated tender for the abovementioned project by Bintulu Port Sdn Bhd. Incontrovertibly not only did the plaintiff fail to do that, but even the open tender made by Bintulu Port Authority. The invitation made by the latter was an open tender, made through the New Straits Times dated January 3, 1998 inviting and calling upon all contractors to bid for it. That invitation was never done surreptitiously, and now for its proactive diligence, the defendant was required to share its profits with the unproductive plaintiff. Interestingly enough the other copartner in the consortium never even made a whimper.

With the facts and law being crystal clear, the next step to be undertaken was to decide whether the agreement of the consortium, also covered any contracts issued by the Bintulu Port Authority. If the answer were to be in the negative, was the defendant right in tendering for that successful project whilst the plaintiff merely folded its arms?

It was an effortless exercise on my part, as after being aided by the agreed facts that the Bintulu Port Sdn Bhd and the Bintulu Port Authority were different and separate entities, it meant that they had their respective legal persona. A perusal of the consortium agreement clearly showed that the agreement was set up only to net the abovementioned turnkey project to be tendered out by Bintulu Port Sdn Bhd. Nothing connected the agreement to the Bintulu Port Authority, which was legally an absolutely different person or entity. If the agreement were to cover the latter too, then surely it would also cover any of the defendant's contracts with, say an individual, Malaysian Airline System, Bintulu Gas Authorities, Bintulu Waterworks and the like. There would thus be no end to it or the width of that agreement.

After that effortless exercise, I had no hesitation in deciding that the defendant was entitled not to be bound by the agreement. Without any triable issue left for consideration before me I had accordingly dismissed the appeal with costs.

DATUK SURIYADI BIN HALIM OMAR
HAKIM MAHKAMAH TINGGI
SHAH ALAM.

TARIKH : 18TH OCTOBER 2004

Counsel

Lim Chong Fong
Sonia Abraham mendengar bersama bagi pihak plaintiff
Tetuan Azman Davidson & Co,
Suite 13,03, 13th Floor,
Menara Tan & Tan,
207 Jalan Tun Razak,
50400 Kuala Lumpur.

Pradeep Kumar mendengar bagi pihak defendant
Syarikat K.L Rekhraj,
7th Floor, Wisma Gurcharan,
No.71-75, Jalan Tuanku Abdul Rahman,
50100 Kuala Lumpur.