Spade Capital Sdn. Bhd. v Paragrene Land Berhad (WA-22NCC-90-02/2024)

PARAGRENE LAND BERHAD (Company No: 199601027709 (400061-H))

GREGORY AMOS YOON PENG SUM (Identity Card No.: 750227-14-5603)

YONG PENG YUEN (Identity Card No.: 670223-10-6615)

WAN NASIR BIN WAN MUSTAFHA (Identity Card No.:750425-03-5931)

MOHD HALIM WHY BIN ABDULLAH (Identity Card No.: 621208-08-5755) … DEFENDANTS GROUNDS OF JUDGMENT (Enclosure 8) Introduction [1] This is an application by the Defendants to disallow the Plaintiff's Amended Statement of Claim dated 13.03.2024 pursuant to Order 20 Rule 4 of the Rules of Court 2012. The Defendant’s application was allowed. The Plaintiff has since filed an appeal. Background Facts [2] The Plaintiff commenced this action on 07.02.2024 claiming RM5,200,000.00 under a Loan Agreement subject to the Moneylenders Act 1951. [3] The Defendants filed their Statement of Defence on 29.02.2024, highlighting several procedural defects in the Plaintiff's Statement of Claim: a) Breach of Section 16 of the Moneylenders Act 1951 - loan disbursement before delivery of stamped agreement; b) Non-compliance with Sections 21(1) and 19 - failure to annex statements of account; c) Breach of Rule 79 Rule 1(e), (f), (k) ROC 2012 - omission of required details regarding the loan agreement [4] On 13.03.2024, the Plaintiff filed an Amended Statement of Claim incorporating the previously omitted details. The Law [5] Order 20 Rule 4 ROC 2012 provides:

Within fourteen days after service of an amended pleading, a party may apply to disallow the amendment

The Court shall disallow the amendment if leave would have been refused had the amendment been sought under Rule 5 [6] The principles governing amendments are established in Yamaha Motor Co Ltd v. Yamaha (M) Sdn Bhd & Ors [1983] CLJ Rep 428. Essentially, an amendment can be allowed upon considering the following considerations:

Whether the application is bona fide;

Whether prejudice can be compensated by costs;

Whether amendments would change the suit's character. Analysis [7] I find merit in the Defendants' application for these reasons: [8] First, the amendments fundamentally alter the suit's character. The original claim lacked essential requirements under the Moneylenders Act 1951. [9] In the Defendants’ Statement of Defence, the Defendants pleaded that the Plaintiff’s procedure in filing their Statement of Claim against the Defendants is incorrect on the following grounds:-

The Plaintiff breached the provision under Section 16 of the Money Lenders Act 1951 because the advance loan was remitted to the Defendant before the stamped copy of the Loan Agreement and/or the Loan Agreement was handed over to the Defendant;

The Plaintiff breached the provisions under Section 21 (1) of the Money Lenders Act 1951 read together with Section 19 of the Money Lenders Act 1951 wherein the Plaintiff had failed to annex any statements of account in the Plaintiff's Statement of Claim;

The Plaintiff breached the provision under Rule 79 Rule 1(e),

(f), (k) of the Rules of Court 2012 wherein the Plaintiff had failed to include the following details in the Statement of Claim:- i. the fact that a note or memorandum of the Loan Agreement was made and was signed by the First Defendant; ii. the date when a copy of the note or memorandum was delivered or sent to the First Defendant; and iii. the form in which the money was lent. [10] The Defendants in their Statement of Defence have pleaded that since the Plaintiff had breached the provisions under the Moneylenders Act 1951 and the Rules of Court 2012, the Loan Agreement cannot be enforced under the law. [11] To my mind, the defects raised by the Defendants goes to the root of the Plaintiff’s claim. It is not merely pointing a trivial issue that was lacking in the Plaintiff’s claim. [12] The amendments proposed by the Plaintiff seek to cure these jurisdictional defects after they were exposed by the Defence. The proposed amendments will result in the Defence raised by the Defendants to be ineffective. This is because of the reformulation of the claim by the Plaintiff. This clearly is a step this is fundamentally unsupportable in law. [13] This principle is illustrated in K Rajashekar Kanapathy & Ors v Palm Court Condominium - JMB & Ors [2014] 10 CLJ 391, where amendments seeking to reformulate the entire case were disallowed as they would have changed the suit's character. [14] Similarly, in Smijaya Sdn Bhd & Ors v Perwira Affin Bank Bhd [2011] 2 CLJ 609, the court held that amendments proposing substantially different matters from the original pleading should not be allowed, particularly when they seek to expand the scope of the original claim. [15] Second, the amendments demonstrate lack of good faith. They were clearly prompted by the Defendants' Defence highlighting the defects. This constitutes an improper attempt to improve the Plaintiff's case after seeing the Defence. In Taisho Company Sdn Bhd v. Pan Global Equities Bhd & Anor [1999] 1 CLJ 703, the Court of Appeal emphasized that amendments must not only arise from substantially the same facts but must also be just to be allowed. This principle was affirmed in Raphael Pura v. Insas Bhd & Anor [2000] 4 CLJ 830, where amendments made in bad faith were rejected. [16] Third, allowing such amendments would cause prejudice beyond mere costs. It would effectively permit a party to cure fatal defects in their claim after these are identified by the opposing party, undermining proper pleading practice. The proposed amendments significantly alter the original pleading by attempting to comply with statutory requirements that were initially ignored, similar to the situation in K Rajashekar Kanapathy where the court found that such fundamental changes would prejudice the opposing party. [17] While courts generally favour allowing amendments to determine the real controversy, this principle cannot extend to permitting a party to retrospectively cure fundamental jurisdictional defects. The requirements under the Moneylenders Act 1951 are mandatory and go to the very foundation of the claim. [18] The Plaintiff's argument that these are mere technical amendments is unpersuasive. Such a simplistic argument cannot be accepted. The Plaintiff cannot take advantage of the Defendants’ diligence in pointing out the defects of the Plaintiff’s claim as required under the law. [19] The Plaintiff was clearly ignorant of the law when the claim was formulated and cannot be given a second chance to salvage its case. It would simply not be just to allow the amendments to be made. The Defendants on the other hand, is fully entitled to make this current application and succeed on this very technical but legally permissible route of objecting to the proposed amendments made by the Plaintiff. Conclusion [20] For these reasons, I allow the Defendants' application with costs. The Plaintiff's Amended Statement of Claim dated 13.03.2024 is disallowed. -Sgd- (AHMAD FAIRUZ BIN ZAINOL ABIDIN) Judge High Court of Malaya Kuala Lumpur Dated: 3rd February 2025 Counsel