Bintai Gemilang Petroleum Engineering Sdn. Bhd v Magnalogic Sdn. Bhd (WA-22NCC-460-07/2023)

The defendant filed an application to amend its defence (“Amendment Application”). The court dismissed the Amendment Application for the reasons set out below.

The plaintiff and the defendant had entered into service agreements on 18 November 2020 and 1 November 2021 (“Service Agreements”), pursuant to which the plaintiff appointed the defendant as 2 a facilitator between the plaintiff and Petronas Refinery and Petrochemical Corporation Sdn Bhd, to secure a project at the Pengerang Integrated Complex in Johor (“Project”).

For the purpose of the Service Agreements, the plaintiff advanced a deposit amounting to RM19,690,000 to the defendant (“Deposit”).

The Project was not awarded to the plaintiff, and the plaintiff filed this action, seeking a return of the Deposit.

The defendant’s initial defence, filed by its former solicitors, was that this claim was filed prematurely, as the Service Agreements had not expired and/or lapsed. The defendant claimed that it was still in the midst of performing its obligations under the Service Agreements.

Through its existing solicitors, the defendant filed the Amendment Application, seeking to amend its defence. In its new defence, the defendant claimed that the Service Agreements are void, unlawful and/or illegal. C. Considerations and Findings

The Amendment Application is filed under order 20 rule 5 of the Rules of Court 2012, which empowers the court to allow parties to amend pleadings at any stage of the proceedings.

The parties relied on Yamaha Motor Co Ltd v Yamaha Malaysia Sdn Bhd & Ors [1983] 1 MLJ 213, which provides the test that must be 3 considered in an application to amend pleadings. The Federal Court held that: “The general principle is that the court will allow such amendments as will cause no injustice to the other parties. Three basic questions should be considered to determine whether injustice would or would not result, (1) whether the application is bona fide; (2) whether the prejudice caused to the other side can be compensated by costs and (3) whether the amendments would not in effect turn the suit from one character into a suit of another and inconsistent character. (See Mallal's Supreme Court Practice page 342). If the answers are in the affirmative, an application for amendment should be allowed at any stage of the proceedings particularly before trial, even if the effect of the amendment would be to add or substitute a new cause of action, provided the new cause of action arises out of the same facts or substantially the same facts as a cause of action in respect of which relief has already been claimed in the original statement of claim... ” (emphasis added)

In applying the above test, I first considered the proposed amendments in the Amendment Application. Even a cursory glance of the proposed amendments would show that the application does not entail a mere amendment of the defence. Instead, it involves a total deletion of the original defence, to be replaced by a completely new defence.

In the original defence, the defendant confirmed it had entered into the Service Agreements. The defendant claimed it was still in the process of obtaining the letter of award for the Project and as such, the Service Agreements had not expired or been terminated, and the Deposit was not due to be returned. Thus, the defendant contended that the plaintiff’s action is pre-mature.

By the Amendment Application, the defendant proposed to delete the entire defence, to be replaced by a new defence. In the amended defence, the defendant alleged that the Service Agreements are “dummy agreements” and the parties had not intended to comply with their terms. The defendant alleged that the Deposit was not a deposit, but was paid for other purposes, including for fees and financial assistance. The defendant further claimed that the Service Agreements are void and/or illegal.

Thus, it cannot be disputed that from the proposed amendments, the amended defence would turn the defence from one character into a defence of another and inconsistent character. In the original defence, the defendant took the position that this action is premature, as the defendant was in the midst of complying with the Service Agreements. No issue was raised on the validity of the agreements. However, the defendant is now alleging that the Service Agreements are sham agreements.

The defendant claimed the original defence was drafted unilaterally by its former solicitors, who had acted negligently in filing the defence. I am unable to accept this claim, as it is unlikely that the former solicitors would have been able to draft the defence without any information and supporting documents from the defendant. There is also 5 no evidence provided by the defendant of any actions it had taken against its former solicitors on the alleged negligent conduct, whether they be notices or complaints issued to them, or police reports filed against them.

Thus, I find the allegations raised by the defendant and its overall conduct in filing the Amendment Application lack good faith, and cast serious doubt on the bona fide nature of the amended defence.

Further, the significant departure of the defendant’s proposed defence from its original defence will prejudice the plaintiff in a way that cannot be compensated by costs. This would result in the plaintiff having to re-consider its entire existing legal position. In Bacom Enterprises Sdn Bhd v Jong Chuk & Ors [1998] 2 MLJ 301, the Court of Appeal held at page 306B of its judgment that: “Generally speaking, the exercise of the power to grant or refuse amendment of pleadings at any stage of the proceedings is in the discretion of the judge, but the power must always be exercised judicially having regard to the prevailing practice and whether the amendment sought by one party, if allowed would cause injustice or prejudice to the other party which cannot be compensated by costs, bearing in mind that it is not always easy to measure justice in terms of money.” (emphasis added)

In my view, the extent of the amendments sought in the Amendment Application is such that the prejudice caused to the plaintiff if 6 the Amendment Application is allowed would not be able to be compensated by costs. [17] Based on the findings as set out, the court finds that the tests to amend pleadings as set out in Yamaha Motors (supra) have not been met. D. Decision [18] It is on the basis of the findings above that the court dismissed the Amendment Application, with costs. Dated 7 March 2025 ADLIN ABDUL MAJID Judge High Court of Malaya Kuala Lumpur Counsel: Plaintiff : Ankit Sanghvi (together with Chew Jin Heng) of Messrs. Halim Hong & Quek Defendant : Nur Afiqah Mohd Ashriee (together with Muhamad Izham Pandak Mohamad) of Messrs. Saiful, Roger & Co