Emrail Sdn Bhd v Kuwait Finance House (Malaysia) Berhad (WA-22M-1073-12/2019)

Enclosure 213 is the Defendant’s application for leave to file a counter-claim arising from Islamic Financing Facilities (“the Facilities”) granted to the First Plaintiff and guaranteed by the other three (3) Plaintiffs.

The Defendant contends that the Facilities have expired by effluxion of time. Thus, the Facilities have matured and consequently, the First Plaintiff’s obligation to make payment has set in.

As at 31.12.2023, the amount outstanding under the Facilities is RM37,653,124.04. Among the prayers sought in the counter-claim are:

A declaration that the Facilities had matured by 31.10.2021;

(ii) A declaration that an amount of RM37,653,124.04 is owed by the First Plaintiff to the Defendant; and

(iii) An order for the amount as above to be paid by all the Plaintiffs jointly and severally to the Defendant. ISSUES TO BE DECIDED [4]

In opposing this application by the Defendant, the main issue raised by the Plaintiffs is that the proposed counter-claim is designed to have the effect of nullifying or rendering the Injunction Order dated 19.12.2021 obtained by the Plaintiffs against the Defendant to be ineffective.

(ii) The second issue raised by the Plaintiffs is the inordinate delay in filing Enclosure 213.

(iii) The third issue raised is that any amendment of pleadings would take effect from the date of filing of the original pleading when the alleged cause of action in the counter-claim had yet to accrue. Thus, the counter-claim is bound to fail. [5] The relevant part of the Injunction Order provides as follows: “(i) …

(ii) … bahawa Responden sendiri, pengarah-pengarah, pengkhidmat-pengkhidmat dan/atau ejen-ejennya atau bagaimanapun dihalang melalui suatu injunksi daripada memanggil suatu ‘Event of Default’ dan/atau menuntut pembayaran Kemudahan Pembiayaan Islam (‘Islamic Financing Facility’) sementara menunggu perbicaraan penuh dan perlupusan tuntutan Perayu-Perayu.” [6] The Defendant takes the position inter-alia, that the proposed counter-claim would not nullify or go against the terms of the Injunction Order. THE LAW [7] The Defendant's Amendment Application herein was filed pursuant to Order 20 rule 5 of the Rules of Court 2012 (“ROC 2012”), which clothes this Court with the discretion and power to allow an amendment of writ or pleadings, provided that the proposed amendments arise from the same facts or substantially the same facts. [8] The law on amendment of pleadings is trite. The general principle is that the Court will allow such amendments as will cause no injustice to other parties. The test laid down by the Federal Court in the case of Yamaha Motor Co Ltd v Yamaha Sdn Bhd & Ors (1981) MLJ 213 (“Yamaha Motor”), is as follows:-

8.1 whether the application was made bona fide;

8.2 whether the prejudice caused to the other side can be compensated by costs; and

8.3 whether the amendments would not in effect turn the suit from one character into a suit of another and inconsistent character. [9] In the case of Hong Leong Finance Berhad v Low Thiam Hoe (2016) 1 MLJ 301 (FC), the Federal Court further held that:-

9.1 when there is delay in the making of an application to amend the pleadings, the principles in Yamaha Motor (supra) are not the sole considerations;

9.2 the onus is on the applicant to furnish a reasonable explanation for such delay and that failure to do so would result in the application being disallowed; and

9.3 the proposed amendments must disclose full particulars for the court to ascertain if there is a real prospect of success in proving the same. PLAINTIFFS’ SUBMISSIONS [10] The Plaintiffs submits that Enclosure 213 ought to be dismissed by this Court, given that it is in clear breach of the Injunction Order. The Defendant asserts that there is ambiguity in the terms of the Injunction Order. With respect, this assertion is entirely misconceived given that the Injunction Order specifically provides that the Defendant be restrained from calling an Event of Default and/ or demanding/ claiming (“menuntut”') payment of the Facilities pending the full trial and disposal of the Plaintiffs' claim. [11] With respect to the allegation of inordinate delay in making this application, the Plaintiffs submits as follows:

11.1 even taking the Defendant's case at its highest, the Defendant's purported cause of action (which is denied) would have arisen on 31.10.2021;

11.2 despite the lapse of more than two (2) years, the Defendant did not take any steps to file a counter-claim against the Plaintiffs premised on the purported lapse and/or expiry of the tenure of the Facilities;

11.3 in filing Enclosure 213, the Defendant has not provided any reasonable and/or cogent explanation to explain the delay in filing the same and/or mounting a counter-claim against the Plaintiffs; DEFENDANT’S SUBMISSIONS [12] With respect to the first issue, the Defendant submits as follows:

12.1 In essence, the Plaintiffs are attempting to oppose Enclosure 213 by relying on the word “menuntut” in the Injunction Order. The Plaintiffs are misdirecting this Court by relying on the incorrect version of the English translation, since the Court of Appeal has worded the Injunction Order, as only “demanding”, instead of “claiming”, as provided below: “(ii) the Respondent, by itself, its directors, servants, agents or otherwise be restrained by injunction from calling an Even of Default and/or demanding the payment of the Islamic Financing Facility pending the full trial and disposal of the Appellants’ claim.”

12.2 By that wording alone, the Plaintiffs lack appreciation of the implication of “demanding” in the Injunction Order, which does not entirely preclude the proposed counter-claim, intending to include the Defendant’s counter-claim. [13] The Injunction Order only concerns the Defendant’s defence that an Event of Default had occurred, and to recall the Facilities on the same basis, as pleaded in the previous written submission to set aside the Injunction Order. In contrast, Enclosure 213 is inserted for expiry of the Facilities, when the amount becomes due and owing. This is an entirely different pursuable cause of action under different clauses of the Facilities agreements. [14] On the issue of alleged inordinate delay in filing this application, the Defendant submits that the Plaintiff’s themselves took at least three (3) years after the pleadings were closed to file their application for amendment. The Plaintiffs cannot allege delay on the part of the Defendant when they had acted similarly. [15] The Plaintiffs argued that the proposed amendments (to include a counter-claim) would be ineffective and/or useless given that the proposed amendments, if allowed, would relate back to the date of the original issue date of the defence i.e., 31.01.2020. On this, the Plaintiffs further argued that the Defendant’s cause of action in the proposed counter-claim premised upon the lapse and/or expiry of the tenure of the Facilities on 31.10.2021 was non-existent and/or had not accrued. [16] The Defendant submits that the position taken by the Plaintiffs is misconceived given the fact that the proposed amendments do not relate to Defence filed by the Defendant. The proposed amendments relate to a counter-claim against the Plaintiffs, which would be a separate action and independent of the defence against the Plaintiffs’ claim. [17] On this, the Federal Court in Permodalan Plantations Sdn Bhd v Rachuta Sdn Bhd [1985] 1 MLJ 157 stated that, “a counter-claim on the other hand is also a cross-claim which a defendant has against a plaintiff but in respect of which the defendant can bring a separate action against the plaintiff if he wishes to do so. Thus, to all intents and purposes, a counter-claim is a separate and independent action by the defendant, which the law allows to be joined to the plaintiff’s action in order to avoid multiplicity or circuity of suits.” [18] In considering allowing the amendment to include the proposed counter-claim, what would be required from the Defendant is to demonstrate that the relief claimed is arising from similar facts. This was the position taken in the Court of Appeal case of Alloy Consolidated Sdn Bhd & Anor v Anjari Properties Sdn Bhd & Anor [2009] 4 MLJ 833. FINDINGS BY THE COURT [19] (i) I am in agreement with the Defendants submissions that the proposed counter-claim in the amendment application neither involves reporting the First Plaintiff under CCRIS nor calling an Event of Default. My reading of the words in the Injunction Order “dihalang melalui satu injunksi daripada memangggil suatu Event of Default dan/atau menuntut pembayaran.” is that “memanggil suatu Event of Default” and “menuntut pembayaran” are to be read together.

(ii) The proper reading of the Injunction Order is that the Defendant is prohibited from calling an Event of Default and demanding payment arising from such event of default. Thus, I find that the proposed counter-claim does not contravene the Injunction Order. I find that the context of the Injunction Order is aimed to prevent the Defendant from calling an Event of Default only during the tenure of the Facilities. [20] I also find there was no inordinate delay by the Defendant in making this application since I had earlier allowed the Plaintiffs’ application for amendment, which was also filed at about the same time. What is sauce for the goose is sauce for the gander. [21] I agree with the Defendant’s submission that the counter-claim is a separate cause of action against the Plaintiff and is independent of the defence against the Plaintiffs’ claim. Thus, the Plaintiffs’ submission that the cause of action would relate back to the original date of defence is misconceived. [22] For the reasons aforesaid, I allow the Defendant’s application in Enclosure 213 with costs. Dated 13 March 2025 …………t.t………………. Ahmad Murad Bin Abdul Aziz Judge High Court of Malaya Kuala Lumpur COUNSEL FOR THE PLAINTIFFS: SHAARVIN RAAJ & CRAIG HO SOLICITORS FOR THE PLAINTIFFS: TETUAN KUMAR PARTNERSHIP COUNSEL FOR THE RESPONDENT: WAFIY AZMAN & WARDAH YUNUS SOLICITORS FOR THE RESPONDENT: TETUAN AZMI & ASSOCIATES Cases Referred to: ➢ Yamaha Motor Co Ltd v Yamaha Sdn Bhd & Ors (1981) MLJ ➢ Hong Leong Finance Berhad v Low Thiam Hoe (2016) 1 MLJ 301 ➢ Permodalan Plantations Sdn Bhd v Rachuta Sdn Bhd [1985] 1 MLJ 157 ➢ Alloy Consolidated Sdn Bhd & Anor v Anjari Properties Sdn Bhd & Anor [2009] 4 MLJ 833 Legislation Referred to: ➢ Rules of Court 2012 ➢ Companies Act 2016 Decision date: 9 September 2024