Top Capital Ventures Sdn Bhd v Kok Mee Yen (AA-A72NCvC-486-10/2024)

Introduction This is the Court’s Grounds of Judgment in respect of the Defendant’s Notice of Application dated 17.10.2025 (Enclosure 40) seeking leave to issue a Third-Party Notice against HLL Management Sdn. Bhd. pursuant to Order 16 Rule 2 of the Rules of Court 2012.

The Plaintiff’s claim against the Defendant arises from an alleged breach of a Memorandum of Agreement dated 26.12.2022 relating to an investment in the Hello Bar Business.

The Defendant seeks to bring HLL Management Sdn. Bhd. (“the Proposed Third Party”) into these proceedings on the basis that she was at all material times an employee of the Proposed Third Party and that the acts complained of were undertaken pursuant to instructions and/or within the scope of her employment.

The Defendant contends that should liability be established against her, she is entitled to indemnity and/or contribution from the Proposed Third Party. 20/02/2026 23:20:02

As pleadings had closed, leave of Court was required. After considering the affidavits and written submissions filed by both parties, this Court allowed the application. The Plaintiff has appealed against that decision.

Issue for Determination The issue before this Court at the leave stage was narrow and confined.

The Court was required to determine whether the Defendant had disclosed a prima facie case against the Proposed Third Party sufficient to justify the issuance of a Third-Party Notice.

This Court was not required to determine the ultimate merits of the indemnity claim nor to conduct a detailed evaluation of the evidence as would be done at trial.

Legal Principles Governing Third Party Proceedings Order 16 of the Rules of Court 2012 provides the procedural mechanism by which a defendant may claim contribution or indemnity from a third party or seek determination of issues connected with the subject matter of the action.

The underlying rationale of third-party proceedings is to prevent multiplicity of proceedings and to ensure that all connected issues arising from the same factual matrix may, where appropriate, be determined in a single action.

The principles governing the grant of leave are well settled. In DATO' ABUL HASAN BIN MOHAMED RASHID V MULTI-CODE ELECTRONICS INDUSTRIES & ANOR [2012] 5 MLJ 176, the Court of Appeal held that at the leave stage, the applicant must show that there is a question proper to be tried as to liability for indemnity or contribution. The threshold is that of a prima facie case.

The Court is not required to determine whether the claim will ultimately succeed.

Similarly, in ASAS HARMONI PROPERTY SDN BHD V KOPERASI PEGAWAI-PEGAWAI KERAJAAN BERHAD (NO 6) [2020] MLRHU 1552, it was emphasised that there must be a causal nexus between the defendant and the proposed third party. At this stage, that nexus need only be arguable.

Whether a Prima Facie Case Has Been Disclosed In considering the Defendant’s affidavits, this Court noted that the Defendant had set out the factual basis of her proposed indemnity claim.

The Defendant deposed that she was an employee of the Proposed Third Party and that the acts forming the basis of the Plaintiff’s claim were undertaken pursuant to instructions from the management and within the course of her employment.

It is recognised in law that certain legal relationships, including that of employer and employee, may give rise to rights of indemnity depending on the circumstances of the case. In SIME DARBY BERHAD & ORS V DATO’ SERI AHMAD ZUBAIR & ORS [2012] 9 MLJ 464, the High Court acknowledged that indemnity may arise out of recognised legal relationships.

Whether such right ultimately exists in the present case is a matter to be determined upon full evaluation of evidence at trial.

Upon consideration of the material before it, this Court was satisfied that the Defendant has disclosed an arguable basis for indemnity grounded on her pleaded employment relationship and alleged instructions.

The threshold requirement of a prima facie case was therefore met.

(A) Separate Legal Personality

The Plaintiff relied on principles of separate corporate personality, including SALOMON V SALOMON & CO LTD [1897] AC 22.

Those principles are well established.

However, the present application does not require this Court to determine whether the corporate veil ought to be lifted or whether the Defendant will ultimately succeed against the Proposed Third Party.

Those issues go to the substantive merits of the indemnity claim and are properly matters for trial.

(B) Alleged Absence of Live Issue

The Plaintiff contended that there is no live issue between the Defendant and the Proposed Third Party.

This submission cannot be accepted. The Plaintiff’s claim against the Defendant remains pending and liability has not yet been determined.

The proposed indemnity claim is contingent upon a finding of liability.

Third party proceedings commonly operate on conditional liability. The contingent nature of the claim does not render it speculative.

(C) Delay

The Plaintiff raised the issue of delay, noting that the application was filed approximately one year after commencement of the action.

Delay per se does not amount to abuse of process.

The Court must consider whether the delay is so inordinate as to cause serious and irremediable prejudice.

In the present case, the matter has not proceeded to trial and no findings of fact have been made. The Plaintiff did not demonstrate specific prejudice beyond general inconvenience.

In the absence of demonstrable prejudice affecting the fairness of the trial, this Court was not satisfied that the delay justified refusal of leave.

Exercise of Judicial Discretion The grant of leave under Order 16 is discretionary.

In exercising that discretion, this Court applied the correct legal test and confined itself to the prima facie threshold.

This Court was mindful that third party procedure forms part of a broader judicial policy aimed at preventing multiplicity of proceedings.

Refusing leave where an arguable nexus exists may result in separate proceedings, duplication of evidence and potentially inconsistent findings.

The prima facie threshold is intentionally modest. To require conclusive proof at this stage would convert an interlocutory application into a trial within a trial, which is not contemplated by Order 16.

The Court must guard against conflating arguability with probability of success. The leave stage functions as a filter against plainly unsustainable claims, not as a mechanism to determine substantive liability.

This Court weighed procedural efficiency against the alleged prejudice to the Plaintiff and found no serious prejudice established.

It is also settled that appellate intervention in matters of discretion is limited. An appellate court will not substitute its own view merely because it might have reached a different conclusion. Interference is warranted only where wrong principles were applied or the decision is plainly wrong.

In the present case, this Court acted upon settled legal principles and considered all relevant factors.

Conclusion Having considered the totality of the material before it, this Court was satisfied that: a) The Defendant disclosed prima facie claim for indemnity; b) There exists a sufficient and arguable nexus between the Defendant and the Proposed Third Party; and c) No serious prejudice or abuse of process was established.

The Plaintiff’s objections primarily concern the ultimate merits of the indemnity claim, which are matters properly to be determined at trial.

The decision to grant leave was made upon proper legal principles and in the exercise of judicial discretion.

There was no misdirection in law, no failure to consider relevant matters, and no consideration of irrelevant matters.

Accordingly, the Defendant’s application for leave to issue the Third-Party Notice was allowed. EVANGELIN A/P SIMON SILVARAJ MAGISTRATE