Johan Shah Bin Amin Shah v 1. ) Stemey (Malaysia) Sdn. Bhd. (Sebelum Ini Dikenali Sebagai Aphrozone (Malaysia) Sdn. Bhd.) (WA-22NCvC-445-08/2022)

STEMEY (MALAYSIA) SDN. BHD. (SEBELUM INI DIKENALI SEBAGAI APHROZONE (MALAYSIA) SDN. BHD.)

EDMUND CHUAH CHOONG ENG HUAT (NO. K/P: 620214-10-6271) …DEFENDAN-DEFENDAN GROUNDS OF JUDGEMENT (Enclosure 68) INTRODUCTION [1] This is an application by the Defendant to amend its defence dated 14.02.2022 under O20 R5 of the Rules of Court 2012 (ROC) (Enclosure 68). This Court dismissed Enclosure 68 with cost. 25/09/2024 09:44:32 WA-22NCvC-445-08/2022 Kand. 112 [2] Prior to this application, the 2nd Defendant (D2) had filed to strike out the Plaintiff’s claims under Order 18 rule 19(1)(a), (b), (c) or (d) of the ROC (Enclosure 11). Subsequently, the 1st Defendant filed a counterclaim against the Plaintiff and the Plaintiff named D2 as a 3rd party in the counterclaim. Thus, D2 (as a 3rd party in the counterclaim) filed an application to strike out the 3rd party’s claim against him under Order 18 rule 19(1)(a), (b), (c) or (d) of the ROC (Enclosure 18). Consequently, this Court allowed both Enclosures 11 and 18 with cost and the Plaintiff appealed. On 10.05.2024, the Court of Appeal dismissed the appeals. [3] Since the claim by the Plaintiff against D2 was struck out, there only remain the 1st Defendant in this Suit as the sole Defendant. BRIEF FACTS [1] The Defendant runs a multi-level network marketing business and deals with skincare products, cosmetics and toiletries. [2] The Plaintiff applied to join the Defendant as its member and executed a Membership Application Form (Membership Form) which the Plaintiff agreed to, inter alia, promote and sell the Defendant's products, either by himself or through his "downliners". [3] On 20.06.2022, the Defendant issued a show-cause letter to the Plaintiff and suspended his membership. [4] On 10.08.2022, the Plaintiff commenced an action against the Defendant for damages following the suspension of the Plaintiff’s membership. The Defendant then counter-claimed for RM 1,099,880.00, being the outstanding amount for the pre-registration of sales. [5] During the pre-trial case management (PTCM) on 11.08.2023, this Court had directed all pre-trial documents to be filed by 9.10.2023. Upon request by the parties, this Court granted an extension of time for the pre-trial documents to be filed by 30.10.2023 (EOT). [6] Further extension was granted until 6.12.2023 as a final extension of time (Final EOT), upon the request of the Defendant. Final date of pre-trial case management was fixed on 7.12.2023 for compliance of all pre-trial documents. [7] There was no indication by the Defendant at any time during the case management sessions of any need to amend the defence. This Court then fixed the trial on 23.10.2024, 24.10.2024 and 7.11.2024 on the pleading as it stood. [8] Still, a week before the final extension, the Defendant filed Enclosure 68 on the 30.11.2023 to amend its defence dated 14.09.2022. The proposed amendments of the Defendant’s defence are to remove particulars on the plaintiff’s downline, particularly on one “Lim Mei Yen”, and to include the contention that the Defendant had paid the Plaintiff for the Plaintiff’s additional work through the Plaintiff’s sister. Parties Contention [9] The Plaintiff contended that the Defendant’s application to amend its defence dated 14.09.2022 is tainted with bad faith and an afterthought as the Defendant only filed Enclosure 68 on 30.11 2023. [10] The Plaintiff also contended that the Defendant could have filed for amendment at a much earlier stage but neglected to do so, thus the Defendant’s application was not filed in good faith. [11] The Plaintiff further contended that if the proposed amendments have been necessary to clarify material and relevant issues between the parties as alleged by the Defendant, it ought to have been included in the defence dated 14.09.2022. [12] The Plaintiff also contended that Enclosure 68 was filed with a prolonged delay and no valid grounds or justifications for the delay was given. [13] On the Contrary, the Defendant stated that there was no delay in filing Enclosure 68 in its Affidavit in Support (AIS) affirmed on 8.12.2023 at para 6(c) which was filed in Court on the 11.12.2023. [14] It was observed that even though Enclosure 68 was filed on the 30.11.2023, the AIS was only filed later, on the 11.12.2023. [15] Accordingly, the amendments proposed by the Defendant are- [16] The Plaintiff contended that the proposed amendments are bona fide, and would not prejudice the Plaintiff in a way that cannot be compensated with costs. The Defendant further contended that the amendments do not turn this suit from one character into a suit of another and inconsistent character. ANALYSIS AND FINDINGS [17] The law on the amendment of pleadings is settled. In the Federal Court case of Yamaha Motor Co. Ltd. v. Yamaha (M) Sdn. Bhd. & Ors. [1983] CLJ Rep 428; [1983] 1 MLJ 213, the principles for amendment of pleadings are as follows- “(i) whether the application is bona fide;

(ii) whether prejudice caused to the other side can be compensated by costs; and

(iii) whether the amendments would not in effect turn the suit from one character into a suit of another and inconsistent character.” [18] Relatively, in the case of Hong Leong Finance Bhd v. Low Thiam Hoe & Another Appeal [2015] 8 CLJ 1; [2016] 1 MLJ 301, the Federal Court held- “[17] In Yamaha Motor, the Federal Court amongst others considered the effect of O 20 r 5 of the Rules of the High Court 1980 (RHC 1980) (now known as Rules of Court 2012 (ROC 2012)). The facts in Yamaha Motor showed that the application to amend the statement of claim was made about seven months after the original statement of claim was amended and the trial has not commenced. [18] It is pertinent to note that Yamaha Motor was decided under the old RHC 1980. The civil procedure has since then changed with the introduction of the pre-trial case management in the year 2000 under O 34 of the RHC 1980 (22 September 2000) and now under O 34 of the ROC 2012 (1 August 2016). Nowadays the court recognises especially under the new case management regime that a different approach needs to be taken to prevent delay in the progress of a case to trial and for its completion. The progress of the case is no longer left in the hands of the litigants but with the court in the driver’s seat (see the case of Syed Omar Syed Mohamed v. Perbadanan Nasional Berhad [2013] 1 MLRA 181; [2012] 9 CLJ 557; [2013] 1 AMR 1). In particular when an application to amend the pleading is made at a very late stage as was done in the present case, the principles in Yamaha Motor ought not to be the sole consideration. This is because an order for compensation by payment of costs in such a case may not be an adequate remedy and it would also disrupt the administration of justice which affects the courts, the parties and the other users of the judicial process (see the case of Conlay Construction Sdn Bhd v. Perembun (M) Sdn Bhd [2013] 6 MLRA 531; [2014] 1 MLJ 80; [2013] 9 CLJ 828; [2013] 6 AMR 526).”. [19] In its AIS, the Defendant contended that there was no delay in filing Enclosure 68, thus, there was no explanation for the delay other than stating that it had only discovered the new defences when preparing for trial that these purportedly important defences were not pleaded. [20] It is clear facts that the Defendant filed Enclosure 68 on 30.11.2023 to amend its defence dated 14.09.2022. There was more than a year after the defence filed and also a week before the final extension of all documents required under the PTCM to be filed. Furthermore, the AIS was filed much later on the 11.12.2023 and this is also questionable as to why AIS was not filed together with Enclosure 68. Most importantly, no justification was given by the Defendant. [21] In Hong Leong Finance Bhd (supra), the Federal Court held that “We are of the view that there is therefore a heavy onus placed on the defendant in the present case to justify this application for amendment to the pleadings.”. Thus, the onus is on the Defendant to justify the delay and the failure to do so would result in the application being dismissed. [22] This Court finds that there was indeed a delay. The delay was not explained and in the absence of any credible explanation for the delay, in the case of Hong Leong Finance Bhd (supra), the Federal Court held that- “[32] It is noted in the present case the defendant’s affidavit in support failed to adduce an explanation for the delay in filing the said application.”. [23] Similarly, in this instant case, the Defendant had failed to explain the reason for the delay. In fact, it contended that there was no delay at all despite the fact that pleadings were already closed and trial dates have been fixed. [24] Furthermore, Order 34 of the ROC explicitly provides what is required for the purpose of just, expeditious, and economical disposal of proceedings, which parties must strictly complied with. [25] In Hong Leong Finance Bhd (supra), it was held- “[28] It is to be stated here, the requirement that a cogent explanation for such a delay must be furnished when making a late application to amend would be clearly in line with pre-trial case management procedures (introduced in year 2000). The management of cases by the courts prior to the trial is intended to ensure just, expeditious and economical disposal of an action (see O 34 r 4(1) of the RHC 1980, now O 34 r 1(1) of the ROC 2012) and the Practice Direction No 2 of 2014 issued by the Chief Judge of High Court in Malaya). Timely disposal of cases and the limitation of cost are now the primary considerations under the present regime. [29] In our instant case, there had been five case managements since 2011 and there was no indication at all that an amendment application was contemplated by the defendant. The only explanation given by the defendant in his affidavit for the delay was that he had only discovered that these new issues were not pleaded when preparing for trial. Such an explanation in our view surely cannot be acceptable.”. [26] Likewise, in this instant case, it was contented by the Defendant that “the Defendant’s solicitors informed the Plaintiff’s solicitors that, during the compilation of the Defendant’s documents, it was discovered there was a necessity to amend the Defence.”. [27] Furthermore, surely the facts giving rise to the amendment were known at the time of the original pleading (see Ismail bin Ibrahim & Ors v. Sum Poh Development Sdn Bhd & Anor [1988] 1 MLRH 186; [1988] 3 MLJ 348). [28] Obviously, when the Defendant sought to amend its defence, it should have not waited and would have immediately done so, but did not. That conduct raised the inference that the application was a tactical maneuver and was done in bad faith to delay the rights of the Plaintiff on his claim (see Lim Nyang Tak Michael v. ACE Technologies Sdn Bhd [1995] CLJU 118; [1995] 4 MLJ 616, [1995] 4 MLRH 442). CONCLUSION Based on the above deliberations, Enclosure 68 is dismissed with cost. -SGD- (SUZANA BINTI MUHAMAD SAID) Pesuruhjaya Kehakiman Mahkamah Tinggi Sivil NCVC1 Kuala Lumpur DATED: 24 SEPTEMBER 2024 COUNSELS For the Plaintiff Messrs Goh Wong Pereira Advocates & Solicitors 8 Chancery No. 8, Jalan Tualang Taman Bukit Bandaraya Bangsar, 59100 Kuala Lumpur For the Defendant Messrs Vin Cheng & Co Advocates & Solicitors 20-1 dan 20-2, Oval Damansara Taman Tun Dr Ismail, 60000 Kuala Lumpur