MUSLIM BEST MARKETING (M) SDN BHD v Majlis Amanah Rakyat (MARA) (BA-22NCvC-319-08/2022)

The provision in Order 18 rule 19(1) of the Rules of Court 2012 empowers the courts to order an action to be stayed or dismissed or judgment to be entered accordingly, as the case may be. This noteworthy provision can be relied on by either party in a civil action to have an action or defence struck out based on a number of established grounds. In the United States, when a defendant successfully invokes this similar procedure of striking out, it is said that a defendant has succeeded in obtaining summary judgment against the plaintiff.

In view of the fact that the striking out of any writ or pleading may have the drastic effect of bringing an action to an early end, with the action 28/12/2023 15:40:32 BA-22NCvC-319-08/2022 Kand. 26 2 dismissed or judgment entered accordingly, as the case may be, it has been repeatedly said that the discretion should only be exercised in plain and obvious cases.

The present case requires this Court to exercise such discretion, in considering an application by the Defendant in Enclosure 7 to have the Plaintiff’s writ and statement of claim struck out pursuant to Order 18 rule 19(1)(a), (c) and/or (d) of the Rules of Court 2012.

To appreciate the genesis of the present Suit, the erstwhile relationship between the parties must be clarified.

The Plaintiff in this action was appointed by the Defendant as an “Anchor” under an “Anchor-Vendor Program for a Halal Food Project” through an Appointment Letter dated 21 November, 2012. Following the said appointment, the parties signed a Lease Agreement and a Letter of Guarantee and Indemnity, both dated 10 September, 2015. The latter was also signed by the Plaintiff's Guarantors.

Under the Lease Agreement, the Defendant agreed to offer a lease to the Plaintiff for the premises at the Taman Pengeluaran Produk Usahawan in Pedas, for the production of halal food products. This Lease Agreement was terminated by the Defendant on the ground that the Plaintiff had failed to pay the lease rental as agreed upon pursuant to the said Lease Agreement.

The Defendant had also demanded payment of the outstanding lease rental amount from the Plaintiff and subsequently, actions were filed against the Plaintiff as well as against its Guarantors to enforce its rights.

In this Suit, the Plaintiff is seeking, inter alia, general and special damages (RM17,500,000.00) against the Defendant primarily on the basis that: • a factory that was built by the Defendant (pursuant to a Lease Agreement alluded to in paragraph [6] above) was not fit for the purposes of production of the food products (as spelt out under the Appointment Letter referred in paragraph [5] above); • there was insufficient ventilation at the said factory; and • the Plaintiff had been induced by the Defendant to sign the Lease Agreement and the Letter of Guarantee.

The main thrust of the argument in support of the Defendant’s application in this Enclosure 7 is the concept of Res Judicata. It was contended on behalf of the Defendant that the issues for determination by this Court in the present action relate to those that have been settled and determined by the Sessions Court in two preceding Suits, namely, Civil Suit No. NA-B52NCvC-17-07/2019 (“Suit 17”) and Civil Suit No. NA-B52NCvC-31-11/2019 (“Suit 31”).

The prevailing issue for determination by this Court in this application by the Defendant in Enclosure 7 is whether the Plaintiff’s writ and statement of claim ought to be struck out under Order 18 rule 19(1)(a),

and/or (d) of the Rules of Court 2012. [11] Arising from the above principal issue are the following questions, namely – • whether the issues raised in the present Suit have been addressed by the Sessions Court in Suit 17 and Suit 31; and • whether the wider doctrine of res judicata applies in the present case. The Plaintiff’s Contention [12] The case for the Plaintiff is that Enclosure 7 is without merit and ought to be dismissed with costs. The grounds raised by the Defendant are that:

res judicata does not apply as the issues in the Plaintiff’s present suit have not been previously determined; and

the right to bring the Plaintiff’s present suit as a counterclaim or as a separate suit lies with the Plaintiff as the issues and facts underlying the same are totally distinct from those raised in the Defendant’s earlier suits. [13] Predictably, the Plaintiff has relied on the following authorities to oppose the Defendant’s application to strike out its writ and statement of claim, namely, Tan Wei Hong (A Minor Suing through Guardian Ad Litem and Next Friend Chuang Yin Ee & Ors v Malaysia Airlines Bhd and Other Appeals [2018] AMR 529; [2018] 9 CLJ 425; [2019] 1 MLJ 59; [2018] 6 MLRA 433 where the Federal Court had referred to Bandar Builders Sdn Bhd v United Malayan Banking Corporation Bhd [1993] 2 AMR 1969; [1993] 4 CLJ 7; [1993] 3 MLJ 36; [1993] 1 MLRA 611, Joseph Paulus Lantip & Ors v Unilever Plc [2013] 1 AMR 481; [2012] 7 CLJ 693; [2018] Supp MLJ 151; [2012] 6 MLRA 614, Seruan Gemilang Makmur Sdn Bhd v Kerajaan Negeri Pahang Darul Makmur & Anor [2016] 2 AMR 795; [2016] 3 CLJ 1; [2016] 3 MLJ 1; [2016] 2 MLRA 263, Norazma Abdul Rahim & Satu Lagi v Azlan Ahmi [2018] AMEJ 1510; [2018] MLJU 2168]; [2018] MLRHU 1518 and Shiva Kumar Day v Allianz Life Insurance Malaysia Bhd & Anor [2021] 4 AMR 809; [2021] 1 LNS 684; [2021] MLJU 823; [2021] MLRHU 568. [14] On the Defendant’s reliance on paragraph (a) of Order 18 rule 19(1) of the Rules of Court 2012, that is, that the Plaintiff’s writ and statement of claim discloses no reasonable cause of action, the Plaintiff’s arguments are that

the Plaintiff's cause of action against the Defendant is due to the act of Defendant’s breach and/or negligence in providing a tenantable premise to the Plaintiff that caused an immense amount of losses suffered by the Plaintiff; and

the Plaintiff's present suit herein had disclosed a reasonable cause of action against the Defendant because:

in this present suit, the Plaintiff’s cause of action against the Defendant is founded upon the breach of contract and/or negligence of the Defendant in providing a tenantable premises to the Plaintiff for the Projek Makanan

this Court is the proper forum to adjudicate and determine the disputes between the Plaintiff and the Defendant in respect of the breach of contract and/or negligence of the Defendant. [15] As for the Defendant’s reliance on paragraph (b) of Order 18 rule 19(1) of the Rules of Court 2012, that is, the claim is scandalous, frivolous or vexatious, the Plaintiff’s response is that the Plaintiff's Suit against the Defendant has a fair amount of prospect to succeed. Therefore, it would be prejudicial on the Plaintiff should this Court strike out and/or dismiss this Suit at this point of time. The Plaintiff cited the case of Tan Kean Huat & Anor v Chan Ban Hin [2021] AMEJ 1685; [2021] 1 LNS 1649; [2021] MLJU 2111; [2021] MLRHU 1666, which elucidated the meaning of scandalous, frivolous or vexatious or may prejudice, embarrass or delay the fair trial of the action or what constitutes an abuse of the process of the court. [16] On the concept of res judicata and estoppel, the Plaintiff has adopted the position that the issues in the present suit have not been previously determined, in that they remain unresolved notwithstanding the previous suits. [17] The Plaintiff rightly referred this Court to Asia Commercial Finance

(M) Bhd v Kawal Teliti Sdn Bhd [1995] 3 AMR 2559; [1995] 3 CLJ 783; [1995] 3 MLJ 189; [1995] 1 MLRA 611 (“Asia Commercial Finance”) where the concept of res judicata and its extended doctrine were extensively discussed. In that case, the Supreme Court elucidated the principles in the following terms:

Res judicata precludes a party from re-litigating a matter already adjudged by a court of competent jurisdiction "because the judgment becomes the truth between the parties, or in other words, the parties should accept it as the truth";

(ii) the extended doctrine of res judicata encompasses “all causes of action which one of the two parties has against the other, based on, or substantially on the same facts or issues, and not just all issues of law or of fact that are in dispute between the parties”; and

(iii) res judicata and its extended form may be disapplied in special cases. [18] The Plaintiff further submitted that while what amounts to “special cases” is not exhaustive, it pointed out that the Privy Council in Kok Hoong v Leong Cheong Kweng Mines Ltd [1963] 1 MLRA 343 and the Federal Court in Tong Lee Hwa & Anor v Lee Yoke San [1978] 1 MLRA 340 had cautioned that res judicata only bars a matter and/or issue that was determined necessarily and with complete precision by an earlier judgement. As to when an issue or issues would be regarded as having been “determined necessarily and with complete precision by an earlier judgement”, the Plaintiff referred to Prestasia Sdn Bhd v Mow Wai Lan [1997] 2 MLJ 236 and Eddie Lee Ki Tak & Ors v Jurutera Konsultant (SEA) Sdn Bhd & Ors [1998] MLJU 528 as illustrations of issues that had not been determined necessarily and with complete precision by an earlier judgement. [19] Finally, in response to the Defendant’s contention that the present suit ought to have been brought as a counterclaim or pleaded in the previous suits and that the failure on the part of the Plaintiff to do so renders the present suit as being barred by the extended doctrine of res judicata, the Plaintiff argued that any decision to bring the present suit either as a counterclaim or as a separate action is entirely within the prerogative of the Plaintiff. In addition, it was also contended by the Plaintiff that the factual matrix and issues in dispute in the present suit are entirely distinct and separate from those raised in the previous suits. [20] The Plaintiff had relied on Au Yong Kun Min v Tractors Malaysia Bhd [1996] MLJU 613 for the authority and proposition that a defendant has the prerogative to litigate a dispute by way of a counterclaim or a separate claim at a future juncture and may only be barred if an earlier decision determines a matter critical to maintaining the subsequent action. [21] The Defendant’s application is anchored on the ground that the Plaintiff’s claims as pleaded in the statement of claim are derived from the same cause of action and/or on the same facts and/or based on the Lease Agreement and/or Letter of Guarantee and Indemnity both dated 10 September, 2015, all of which have been decided by the Seremban Sessions Court in Suit 17 and Suit 31. [22] Furthermore, the Defendant pointed out that the Plaintiff and/or its Guarantors are the same parties in both legal actions. [23] According to the Defendant, since the issues raised in this present action have the same cause of action and/or on the same facts and/or based on the Lease Agreement and/or Letter of Guarantee and Indemnity which have been decided in the Suit 17 and Suit 31, the Plaintiff is estopped from filing this present action against the it. [24] The Defendant is relying primarily on the wider doctrine of res judicata to support its application in Enclosure 7. [25] Like the Plaintiff, the Defendant is also relying on Asia Commercial Finance. The Plaintiff referred to the case of Syarikat Duasama Sdn Bhd v. Abdul Aziz Ibrahim & Ors [2018] MLJU 5; [2018] MLRHU 73 which had summarized the principle of res judicata as follows: [18] In the Supreme Court case of Asia Commercial Finance (M) Bhd v Kawai Teliti Sdn Bhd [1995] 3 MLJ 189, at 197-198, 198 and 199-200, Peh Swee Chin FCJ has explained that the doctrine of res judicata consists of 2 limbs, namely cause of action estoppel and issue estoppel.” ...that issue estoppel principle has a wide application which may bar any –

party; and

party's "privy" from raising any issue in a second and subsequent proceedings which –

has been raised; or

(ii) (can be raised with "reasonable diligence" in the first proceedings between the parties and/or their privies.” [26] The Defendant strenuously refuted the allegation by the Plaintiff that the issues in this present action are new and that the it has a valid cause of action. Instead, the Defendant put forward the case that issues raised in the present suit have been ventilated earlier in Suit 17 and Suit 31 and they relate to both the Lease Agreement and the Letter of Guarantee and Indemnity. [27] The Defendant cited Ho Hup Construction Company Bhd v Zen Courts Sdn Bhd & Ors [2018] AMEJ 0305; [2018] LNS 340; [2018] MLJU 3257; [2018] MLRHU 256 where the High Court had allowed the Defendant’s application under Order 18 rule 19(1) of the Rules of Court 2012 on the ground of res judicata. Mohd Nazlan J (as his Lordship then was) held as follows: [48] In my evaluation, given the history of previous litigation, the issues pleaded by the plaintiff in its statement of claim which underpin the present dispute are for all intents and purposes everything but new. These are familiar issues. They have been ventilated before. Even if they were not, the issues ought to have been raised by the plaintiff in the slew of Court proceedings involving the various disputes between the plaintiff and particularly the second defendant as summarised earlier. … [55] The concept of res judicata is not confined only to issues that have actually been judicially determined previously. The law would also not permit issues which could have been raised in and properly belonged to an earlier proceeding to be surfaced for litigation in a subsequent suit. This is the wider doctrine of res judicata. The defendants, at the start of the hearing made available the decision in Malpac Holdings Berhad v Malpac Capital Sdn Bhd & Ors [2017] 1 LNS 1251. In this connection, it would not be remiss of me to refer to certain passages in that case where I had briefly stated the law on the point, as follows: “The Wide Doctrine of Res Judicata [134] The issues raised by the plaintiff cannot succeed because they are plainly barred by res judicata. For it is fairly well settled in local jurisprudence that the principle of res judicata is even of wider remit, and extends to matters which are part of the subject matter of a litigation which ought to have been raised even if not actually raised to be determined, due either to inadvertence or by conscious design. In this case, it had in fact been raised and adjudicated upon. [56] In other words, the present complaints pleaded by the plaintiff had either been raised, or ought to have been raised earlier, being matters which properly belonged to the subject of the earlier litigation. The plea of res judicata, in the nature of both cause of action and issue estoppel, including the wider sense of res judicata as referred to by the leading Federal Court decision in Asia Commercial Finance (M) Bhd v Kawal Teliti Sdn Bhd [1995] 3 MLJ 189 thus applies to the instant case to prevent yet another re-opening and re-litigation of the issues. It is quite plain that the plaintiff has had many opportunities to raise the matters presently alleged in its statement of claim before this Court, but chose not to do so in respect of some of them. Whether the non-raising of these issues earlier was by design, or due to negligence or inadvertence is of no consequence.” [28] Based on the above authorities and submissions, it is the Defendant’s contention that the Plaintiff is estopped from filing this present action against it. The Decision of this Court [29] The cases cited by the parties are indeed valid authorities that have outlined the applicable legal principles to this area of practice and procedure. Be that as it may, whether the power to strike out a writ of any pleadings ought to be exercised or not rests on the factual matrix of the case before the court. [30] As the Defendant is relying principally on the doctrine of res judicata to have the Plaintiff’s writ and statement of claim struck out, it is a requisite for us to closely scrutinize and recap the nature of the actions in Suit 17 and Suit 31 before this. [31] Suit 17 was a claim brought by the Defendant in the present suit (Plaintiff in Suit 17) against the Plaintiff in the present suit (Defendant in Suit 17) for outstanding lease rental for RM306,650.40. The Defendant had obtained a judgment in default. The Defendant had then proceeded for execution by way of a Writ of Possession. The Plaintiff subsequently filed an application for a stay of execution. [32] Notably, in support of its stay application, the Plaintiff had raised several issues including the issue of ventilation and air flow in the factory and the need for sufficient electricity. The Plaintiff was nevertheless successful before the Sessions Court and stay was granted. However, this decision Sessions Court was set aside by the High Court. Of significance is the fact that the default judgment in Suit 17 remained final, valid and enforceable as it was not set aside. [33] As for Suit 31, the Defendant in the present case (Plaintiff in Suit 31) had sued the Plaintiff in the present case (Defendant in Suit 31) and its guarantors. The Defendant was successful in obtaining summary judgment against the Plaintiff and its guarantors at the Sessions Court. On appeal, the decision of the Sessions Court was affirmed by High Court. [34] Once again, what is noteworthy is the fact that in Suit 31, the Plaintiff's guarantors have, among other things, raised the issue of the Defendant not providing "tenantable premises". This defence was considered and rejected by the learned Sessions Court Judge. [35] Based on the totality of evidence before this Court, the factual matrix of this case and having examined the submissions by the parties and the authorities cited, this Court is of the considered view that first, the Plaintiff and/or its Guarantors are the same parties in both legal actions. Second, the Plaintiff’s claims as pleaded in the Statement of Claim are derived from the same cause of action and/or on the same facts and/or based on the Lease Agreement and/or Letter of Guarantee and Indemnity have been decided by the Seremban Session Court Suit 17 and Suit 31. Hence, the features that are present in this instant application fall squarely within the ambit of the doctrine of res judicata, both the narrow and wider sense, and warrant this Court in exercising its discretion to invoke its powers under Order 18 rule 19(1)(d) of the Rules of Court 2012. [36] On the argument advanced by the Plaintiff in this case that it is within its prerogative to bring a counterclaim as a new suit or as a separate suit, this Court is in agreement with the opinion articulated by the Court of Appeal in Frankey Leong Pit Fui (as the administrator of the estate of Louis Leong Kui Yung, deceased) v Foong Da Realty Sdn Bhd [2020] AMEJ 1866; [2020] 1 LNS 2212; [2021] 4 MLJ 418; [2020] MLRAU 365. It is germane that the relevant parts of the judgment of the Court of Appeal are set out in full. [53] The starting point in our analysis is that the agreements are the subject of Suit 123 and were at the very epicentre of Suit 92. Frankey was a party to Suit 92 (in his own personal capacity and as administrator of the estate of the deceased) and he could have, but did not file a counterclaim. [54] He now says that he is not precluded from filing Suit 123 because he did not file a counterclaim in Suit 92. In our view, Frankey’s decision not to file a counterclaim in Suit 92 was plainly, his prerogative. It could only have been an informed and conscious decision on his part not to file a counterclaim. But by not filing a counterclaim in Suit 92, Frankey does not get a second chance to resurrect (via Suit 123) the issues that were raised and adjudicated upon in Suit 92. Further, the doctrine of res judicata in the wider sense would also preclude issues that could have been, but which somehow, were not raised. [55] In our view, the matters that have been raised in Suit 123 were either raised in Suit 92, or are in any event, matters which could have been but were not raised. … [57] In this regard, we think that Suit 123 is barred by res judicata. Here, it is apt to quote Wigram VC in Henderson v Henderson (1843) 67 ER 313 where he said ‘… The plea of res judicata applies, except in special cases, not only to points upon which the court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time …’. … [69] Thus, any which way that one examines it, the outcome is crystal clear — that Suit 123 is barred by res judicata in the ‘narrow sense’ and the ‘wider sense’. At any rate, for completeness, we felt compelled to consider whether by applying res judicata any injustice would be occasioned to Frankey. … [71] We gave the matter our fullest consideration. However, we could not find any injustice to Frankey so as to preclude the application of res judicata. On the other hand, we are in fact convinced that there would be a gross injustice to FDR if the court declines to apply res judicata… . [37] This Court is mindful of the reminder by the Federal Court in CC Ng & Brothers Sdn Bhd v Government of State of Pahang [1985] 1 CLJ 235; [1985] 1 MLJ 350, where it was said that "the inherent power to dismiss an action summarily without permitting the plaintiff to proceed to trial is a drastic power” and that such power “should be exercised with utmost caution". In other words, it is a power which ought to be very sparingly exercised and only in very exceptional cases. However, it is equally imperative that courts should be bold enough to exercise this drastic power in a proper case, lest injustice befall on the party seeking to strike out an action. [38] This is one such proper case for this Court to exercise this drastic power. The application in Enclosure 7 is allowed with costs. The Plaintiff to pay the Defendant costs of RM10,000 subject to allocator. Dated: 28 December, 2023 sgd [CHOONG YEOW CHOY] Judicial Commissioner High Court of Malaya Shah Alam Counsel: Kokila Vaani Vadiveloo with Nur Syazwina binti Md Azaham for the Plaintiff (Messrs. Kumar Chambers) Mohd Munzeer bin Zainul Abidin with Muhammad Ali Redha bin Ahmad Rashidi for the Defendants (Messrs. Yusfarizal, Aziz & Zaidi)