Talam Transform Berhad v 1. Kerajaan Negeri Selangor (22NCVC-558-10/2015)

YANG AMAT BERHORMAT MOHAMED AZMIN BIN ALI DATO MENTERI BESAR SELANGOR DEFENDAN-DEFENDAN GROUNDS OF DECISION

Vide a Notice of Application (enclosure 22), the defendants, Kerajaan Negeri Selangor (“the 1st defendant”) and Yang Amat Berhormat Mohamed Azmin bin Ali, Dato Menteri Besar Selangor (“the 2nd defendant”) had sought to amend their Statement of Defence. The Court had on 26.10.2016 dismissed the defendants’ application with costs of RM 3000-00. Being dissatisfied, the defendants had appealed against the said decision.

The defendants’ application is supported by the affidavit of Dato’ Haji Mohd Amin bin Ahmad Ahya affirmed on18.10.2016 (Enclosure 23). Among the proposed 2 amendments was the inclusion of a new paragraph 16A which, whilst acknowledging the existence of a Settlement Agreement dated 12.3.2010, states categorically that the defendants are not a party to the Settlement Agreement. There is also a proposed amendment to paragraph 21 of the Defence to plead that the actions of the plaintiff against the defendants is prevented under the Public Authorities Protection Act 1948.

The plaintiff, Talam Transform Berhad, has filed an affidavit in reply (Enclosure 24) affirmed by its manager, Ng Chik Koon, on 19.10.2016. In his affidavit, the deponent avers that the application is not made bona fide as the defendants are now trying to raise issues of limitation and locus when these issues could have been pleaded in the Statement of Defence. It was argued that the plaintiff would be prejudiced by the proposed amendment because the defendants were now seeking to raise issues previously omitted from their Defence and further that the new proposed issues of limitation and locus were inconsistent with the present defence.

Before me, learned counsel for the defendants had submitted that the delay in filing the application was because they had just been appointed. The Defence was only filed on 28.8.2016 and they were trying to proceed as quickly as possible. She conceded that it was the fault of the Assistant Legal Advisor/Senior Federal Counsel who had missed this point.

The defendants relied on the following grounds in support of their application:-

that the proposed amendment sought is necessary to ensure that all important issues are covered during the trial; 3

that the application is made bona fide and not to delay proceedings; and

(iii) that the proposed amendment will not change the basic nature of the defendants’ defence.

In response to this submission, learned counsel for the plaintiff had set out the following sequence of events. From February 2016, the defendants were given time to file their defence but did not do so. On 29.3.2016, they filed an Order 18 application to strike out the plaintiff’s case. The application was stuck out on 12.8.2016. The defence was only filed on 26.8.2016.

The plaintiff submits that limitation does not apply in this case. In any event, the proposed amendments re the limitation period as in paragraph 21 of the proposed amendments to the Statement of Defence is merely the conclusion without the element formulating the basis as to why limitation would apply. There is no statement as to when the limitation would arise and what is the act or omission which triggered the limitation period to run. Without these facts in the proposed defence, the plaintiff is caught by surprise. And lastly, the defendants had failed to plead the relevant provision applicable under the Limitation Act 1948.

In its submissions, the plaintiff had referred the Court to the case of Tan Ah Tong v Parveen Kaur [2011] 5 MLJ 428 where the Court of Appeal had held that the defendant cannot rely on defences which were not specifically pleaded in his Statement of Defence. As held by Ramly Ali JCA at page 435: “The existence of coercion, undue influence, fraud, misrepresentation or mistake (or any of them) if proven, may negate the element of consent by the defendant (as he alleged), in entering into the SPAs. In 4 order to prove any of the elements above, it must first be specifically pleaded by the defendant in his statement of defence as required under O 18 r 8 and r 12 of the Rules of the High Court 1980. Failure to specifically plead any of those elements is fatal to the defendant’s case. (Emphasis added)

The plaintiff further submitted that even if the Court was minded to exercise its discretion to allow the proposed amendment, there is no proper pleading in the proposed amendment. As such, it would be prejudicial to the plaintiff for the Court to allow this application.

The Facts in Summary Vide a Confirmation of Debt Agreement dated 3.11.2009, the plaintiff had acknowledged that a sum of RM 391 billion is due and owing to the defendant’s companies. The plaintiff referred to the defendant’s letter dated 3.11.2009 which states that “In consideration of the acknowledgment of debt, the State Government shall use its best endeavour to resolve the outstanding issues as stipulated in Appendix 1 attached herewith and YAB Tan Sri had agreed”.

The plaintiff had pursued the outstanding issues on numerous occasions over the years including through meetings and written communications with both defendants.

The plaintiff had then sent a notice dated 18.12.2014 requesting that the 1st defendant fulfills its obligations as stated in the Confirmation of Debt Agreement and followed up by issuing a notice of demand dated 12.10.2015 stipulating a period of 7 days to resolve/settle the issues. However the defendants failed to comply with the demand. 5

Hence the present action. It was after the 10th case management that the defendant filed enclosure 22 to amend its defence.

In the case of Ally Consolidated Sdn Bhd and others v Dato’ Dr. Haji Adam Bin Harun Civil Appeal 03-(1)-1-2008, the Federal Court had held as follows: “The court, may at any stage of the proceedings allow either party to “alter or amend his pleadings in such manner and on such terms as may be just and all such amendments shall be made as may be necessary for the purpose of determining the real question in controversy between the parties. The rule permits amendment at any stage and it does not matter whether the original omission arose from negligence or carelessness but such amendments are only allowed when they occasion no injury and cause no injustice to the opposite party or where they can be sufficiently compensated by costs or other terms imposed by the court.” 15 These principles are reflected in Order 20 rule 5 of the Rules of Court 2012 (ROC 2012) which provides as follows:

“Order 20. Amendments Amendment of writ or pleading with leave. (O 20. r. 5)

Subject to Order 15, rules 6, 6A, 7 and 8 and the following provisions of this rule, the Court may at any stage of the proceedings allow the plaintiff to amend his writ, or any party to amend his pleading, on such terms as to costs or otherwise as may be just and in such a manner, if any, as it may direct. 6

Where an application to the Court for leave to make the amendment mentioned in paragraph (3), (4) or (5) is made after any relevant period of limitation current at the date of the issue of the writ has expired, the Court may nevertheless grant such leave in the circumstances mentioned in that paragraph if it thinks it just to do so.

An amendment to correct the name of a party may be allowed under paragraph (2) notwithstanding that it is alleged that the effect of the amendment will be to substitute a new party if the Court is satisfied that the mistake sought to be corrected was a genuine mistake and was not misleading or such as to cause any reasonable doubt as to the identity of the person intending to sue or, as the case may be, intended to be sued.

An amendment to alter the capacity in which a party sues (whether as plaintiff or as defendant by counterclaim) may be allowed under paragraph (2) if the capacity in which, if the amendment is made, the party will sue is one in which at the date of issue of the writ or the making of the counterclaim, as the case may be, he might have sued.

An amendment may be allowed under paragraph (2) notwithstanding that the effect of the amendment will be to add or substitute a new cause of action if 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 action by the party applying for leave to make the amendment.”

The case most often cited in relation to amendment of pleadings is Yamaha Motor v Yamaha Malaysia [1983] 1 MLJ 213 where the Federal Court held that if the application is bona fide, where the prejudice can be compensated with costs, and the amendments do not change the character of the suit, then an application for amendment should be allowed at any stage of the proceedings particularly before trial, even in the effect of the amendment 7 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. As such, as a general rule, any amendment prior to the delivery of the decision would be allowed provided it satisfies the requirements as laid down by Yamaha Motor.

However, in the recent case of Hong Leong Finance v Low Thiam Hoe [2016] 1 MLJ 301, the Federal Court had taken a different approach concerning the issue of amendment of pleadings.

In the afore-stated case, the defendant / borrower had defaulted in repayments hence the plaintiff’s action against him. The case was fixed for hearing but a few days before the trial, the defendant filed an application to amend its defence. The proposed amended defence sought to introduce two new defences.

The High Court judge dismissed the application citing gross delay. The defendant appealed against the decision of the High Court but participated in the trial. Subsequently, the Plaintiff’s claim against the Defendant was allowed. The Defendant appealed.

The Court of Appeal allowed the appeal in respect of the amendment issue and ordered the matter to be fixed for retrial. In arriving at its decision, the Court of Appeal relied solely on the case of Yamaha Motor (supra).

The Federal Court, after allowing leave to appeal, decided as follows: 8 “[16] The principles in Yamaha Motor’s case were laid down in respect of an application to amend that was made at an early stage of the proceedings in particular before the trial commences. The Court of Appeal fell into an error of law when it applied the principles in Yamaha Motor without appreciating that those principles were insufficient to deal with an application to amend, which introduced two new defences on the eve of a trial. [18] Yamaha Motor was decided under the old Rules of the High Court 1980. The civil procedure has since then changed with the introduction of pre-trial case management. Under the new case management regime the court recognises that a different approach needs to be taken to prevent delay in the progress of a case to trial. The management of cases by the courts prior to the trial is intended to ensure ‘just, expeditious and economical disposal’ of an action. When an application to amend a pleading is made at a very late stage, the principles in Yamaha Motor ought not to be the sole consideration. This was 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. There had been five case managements since 2011 and there was no indication at all that an amendment application was contemplated by the defendant. [29] The Court of Appeal failed to appreciate that Low bears the burden of producing material and cogent reasons to explain why 9 the change was sought so late and was not sought earlier. In the defendant’s affidavit-in-support, all that was stated was that he had only realised that important issues, namely the first and second proposed amendments were not pleaded when he was preparing for trial. Such an explanation could not be accepted. [30] The defendant’s affidavit-in-support failed to adduce an explanation for the delay in filing the said application. The Court of Appeal erred in holding that the plaintiff should have filed an affidavit to oppose the application to amend since the defendant’s affidavit in support contained nothing more than a bare assertion. A bare assertion carries no evidential value and hence, there was nothing to reply. Low’s affidavit also did not discharge the heavy onus imposed on the amending party as Low did not disclose any material and cogent reasons to explain the inordinate delay.” Decision 22. The Court is bound to follow the binding precedent as set out in Yamaha Motors when dealing with issues pertaining to amendment of pleadings.

However, the Federal Court in the recent case of Hong Leong Finance v Low Thiam Hoe [2016] 1 MLJ 301 has laid down new considerations in dealing with amendment of pleadings as follows: “[33] Having considered the facts and the circumstances of the present case, our views are as follows: 10

when dealing with an application to amend the pleadings, which introduce a new case in the claim or defence, on the eve of the trial, the principles in Yamaha Motors are not the sole considerations;

the principles in Yamaha Motors applies to cases where the application to amend the pleadings is made at an early stage of the proceedings;

that there has to be a cogent and reasonable explanation in the applicant’s affidavit as to why the application was filed late;

that the application to amend the pleadings is not a tactical manoeuvre;

that the proposed amendment must disclose full particulars for the court to ascertain if there is a real prospect of success in proving the same; and

that lateness in the application to amend the pleadings cannot necessarily be compensated by payment of costs.”

From the above, it is clear that Yamaha Motors is no longer the sole precedent with regards to amendment of pleadings. Consideration must be given to the recent decision in Hong Leong Finance v Low Thiam Hoe [2016] 1 MLJ 301 which directs that the Court should also consider other factors such as the delay 11 in making the application. The factors to be considered as laid down in Hong Leong Finance are real and relevant considerations in view of the intention of the legislature for faster court process and speedier trials in the public interest.

Applying the afore-stated principles to the instant case, the Court notes that the defendant had applied to amend its defence at the eleventh hour when the court was ready to fix trial dates. The case was registered in 2015, and there had been 10 case managements. Pleadings had closed. The application to amend was only made in October 2016. The Court further notes that with the proposed amendment, the defendants were attempting to introduce two new defences of limitation and locus. No good reason was given for the failure to plead these defences from the beginning or even to apply for the amendment in a timely manner.

The Court is of the considered view that there had been gross delay on the part of the defendants in applying for the amendment. No good and valid reasons were given for the delay. Further, there was an attempt to introduce new issues which were not pleaded in its defence and this would have caused prejudice to the plaintiff which cannot be compensated with costs. It was for those reasons that the Court had dismissed the defendants’ application in enclosure 22 with costs of RM 3000-00. (Amelia Tee Hong Geok bte Abdullah) Hakim NCVC 1

28.11.2017 12 K. Chandra Sekar (Messrs Chandrasekar & Associates) for the Plaintifft/respondent. Masturina binti Mohamad Rodzi (Messrs Edwin Lim & Suren) for the defendants/applicants.