CIVIL PROCEDURE II

GROUP 2

THIRD PARTY PROCEEDINGS (ORDER16)

& SUMMARY JUDGEMENT(ORDER 14 & 81)

GROUP MEMBERS:

1)GROUP MEMBERS:

1) PUTERI SYAHIRAH EZZATY BINTI ROSLI 2258042) WAN NUR FATIHAH BINTI MUKHTAR 2267133) DENI SAPUTRA BIN MUZAKIR 2291074) SYAMIL HAIDHAR BIN ABDUL JALIL ALWI 2273475) FATIN IZYAN BINTI MAZLAN 2254166) GAYATHRI A/P SAMBATH 2261787) SUREKKA A/P SREEDHARAN 2283768) SARASMALA A/P ESPRAIN 2282509) NUR AKMAL BINTI ADNAN 22554310)ASMAH BINTI CHE WAN 22638811)MUHAMMAD FAIZI BIN TAJUDDIN 229112

THIRD PARTY PROCEEDING(O16 ROC 2012)

INTRODUCTION

SITUATION

When a lawsuit is begun in Subordinate Court, the Claimant files a Statement of Claim (SOC) at the Court Registry.

The SOC contains a statement which describes the Claimant's claim against the Defendant.

The Defendant is then served with the SOC. After that, Defendant must file a Reply to be able

to defend the lawsuit. There are few examples of when third party may

be added to a lawsuit. (will be discussed).

HIGH COURT: O.16 RC

ONLY a defendant can take TP proceedings.

Plaintiff may take TP proceedings if there is a counterclaim by the defendant.

A TP proceedings is a separate action from the main action between P and D. In TP proceedings, D becomes P and the TP becomes D.

TP proceedings and the main action between P and D may be heard together to avoid multiplicity of suits.

When TP proceedings may be used by D??

O.16 r.1(1)

D claims contribution

D claims indemnity

D claims any relief or remedy

D requires any question or issue

related to the original subject

matter to be determined

(1) D claims contribution

D may claim contribution from TP where:

(i) One of several trustees is sued in breach of trust: the trustee sued (D) may claim contribution from the other trustees (TP); or

(ii) There are joint tortfeasors: where one tortfeasor (D) is sued, he may claim contribution from the other tortfeasors (TP); or

(iii) Two insurers have issued policies covering the same assured and the same peril: where one insurer (D) is sued, he may claim contribution from the other insurer (TP).

The case of Stott v West Yorkshire Road Car Co Home

Bakeries Ltd and Another [1971] 2 QB 651 is an

example where a TP proceeding had been initiated to

seek for contribution.

The case involved a road traffic collision between a

motorcycle (the plaintiff), an oncoming bus (the

defendants) and a parked van (the third party). The

plaintiff who was injured in the accident brought an

action against the defendants. The defendants in turn

brought third party proceedings against the parked

van, seeking contribution.

(2) D claims indemnity

D may claim indemnity from TP in cases of:a) Surety and principal debtor: e.g. where the banker goes after the guarantor (TP) for a loan.b) Insured and insurer: where the insured (D) goes after the insurer (TP).

In Sze Hai Tong Bank Ltd v Rambler Cycle Co Ltd [1959] MLJ PC 200, the Privy Council held that P, who had shipped the goods, was entitled to judgment against D who was the carrier of the goods. In turn, D was entitled to be indemnified by the TPs who were the consignee and the bank.

(3) D claims any relief or remedy

• D may claim any relief or remedy from TP which is substantially the same as the relief or remedy claimed by P against D.

e.g. “P is injured by a falling roof tile

in D’s house. The roof was repaired

the previous day by T, a contractor

(i.e. third party). P is suing D”. D can

claim the damages against T by TP

proceedings.

(4) D requires any question or issue related to the original subject matter to be determined

• For example, “A’s car was stolen by B. B sold the car to C. C sold the same car to D. The car is in D’s possession. A is now suing D for its return.”

• D may take TP proceedings to require C to determine the ownership of the car. C in turn can require B to determine ownership.

AMANAH SCOTTS PROPERTIES (KL) SDN BHD & ORS v. OOIT MENG KHIN & ORS (NO 2) [2011] 1 LNS 500

• plaintiffs are seeking reliefs relating to breach of duty and negligence against the defendant.

• The defendant alleged that his signature has been forged on certain document, allowing monies from the Plaintiff’s account to be released.

• He therefore wishes to apply for the bank to be named as a third party to the proceeding for negligent in releasing such unauthorised payments from the plaintiff’s accounts.

• CT held that the application shall fail because D did not show how the reliefs claimed against the banks were related to with the subject matter of the plaintiffs ’ claim

So, what if there is default by the third party??

We can refer to Order 16 rule 5(1)(a):

If a third party does not enter an appearance or, having been ordered to serve a defence, fails to do so, he shall be deemed to admit any claim stated in the third party notice and shall be bound by any judgement or decision in the action so far as it is relevant to any claim, question or issue stated in that notice.

• The rules on limitation period apply to defendant as well as to third party. For example, for contract or tort, the limitation is 6 years to bring an action against defendant or third party.

• In the case of Mat Abu b Man v Govt of Malaysia (1989), the court held that time does not begin to run until defendant is made liable to plaintiff . Also, a third party claim is between defendant and third party and is a separate action from the main action between plaintiff and defendant.

Limitation against Third Party

Procedure of Third Party Proceeding

• Governed by O 16 of Rules of Court (ROC)

• Defendant may or may not required leave from court to issue third party proceeding:

– Leave not required:

When action begun by writ of summon but defendant not yet serve his defence.

Defendant issues third party notice before defendant serves his defence according to Rule 1(2)

– Leave required:

When action begun by originating summons.

Defendant issues the notice after serving his defence according to Rule 1(2).

Third party is government (O73 R8).

• Third Party notice must be served to every third party personally together with a copy of the writ and any of the pleadings served (if any) as Rule 3(2) is concerned.

D must apply for directions by way of a notice in Form 22 within 7 days after third party has entered appearance and serve the application to all parties of proceeding. (R 4(1))

If D has not served within 7 days, third party may apply to the Court for an order to set aside the third party notice according to O 16 R 4(2).

The Notice may be dismissed if:-The action does not fall under O.16 r.1 (1)(a) – (c); or-Plaintiff or third party can show special circumstances why the directions should not be given. E.g: In Pacific Asia etc v Senanti Motors SdnBhd [1992] 2 MLJ 364, the court held that delay in taking out third party proceedings by D may constitute special circumstances to dismiss it.

no leave required

D entered appearance

D have to apply for direction

Third party enter appearance

Issued and served third party notice

Apply leave to issue third party notice

Defence served or third party is goverment

Proceed with third party proceeding if follow all the

procedure

SUMMARY JUDGEMENTORDER 14

• Summary judgment is to enable P to obtain early judgment in cases where the defendant has no hope of success and any defence he raises would merely have the effect of delaying judgment (Jones v Stone). It can be filed when the defendant has entered appearance.

Reasons for summary judgment:

1. Such defence is just a mock defence

2. The defence is only a mere denial

3. There is no triable issues

• Trials in civil suit incurs time and costs. Instead of going to trial, P can apply for summary judgment if certain conditions are met.

• It is a procedure to obtain judgment without trial. Its applicable only in a clear-cut cases where there is no dispute as to facts or law and D’s defence is only to delay.

• Summary judgment is a quick way to dispose of a civil action. However, the court must exercise caution in granting an O.14 application.

When Summary Judgment Under O. 14 Is Not Available??• When proceedings begun with originating summons and not writ

O.14 R.1(2)• action involves claim for defamation, malicious prosecution, false

imprisonment, seduction or breach of promise of marriage and where the claim is based on an allegation of fraud O.14 R.1(2)

• Where there are triable issues in the D’s defence.• Where P’s claim falls under O.81 i.e. specific performance.• Where D is the government O.73 R.5(1)

PROCEDURE FOR OBTAINING SUMMARY JUDGMENT

1) Preliminary Requirement:

A. National Company for Foreign Trade v Kayu Raya Sdn Bhd

Held:

(i) The preliminary requirements to be satisfied, before a party can obtain summary judgment, are:

(a) D must have entered an appearance;

(b) the statement of claim must have been served on D; and

(c) the affidavit must comply with the requirements of O.14 R.2.

Once these considerations have been satisfied, P will have established a prima facie case and he becomes entitled to judgment. The burden then shifts to D to satisfy the court why judgment should not be given against him: see rr.3 and 4(1) of O.14.

(ii) A case is not within O.14:

(a) where no statement of claim had been served on D;

(b) where the indorsement on the writ includes a claim or claims outside the scope of O.14 as coming within R.1(2);

(c) where the affidavit in support of the application is defective, i.e. in omitting to state the deponent’s belief that there is no defence to the claim or part of it to which the application relates; and

(d) where the application is made in an action against the government: O.73 R.5(1).

If P fails to satisfy any of these considerations, the Notice of Application may be dismissed.

B. Whether injunctive relief is available under O.14 RC

Binariang Communications Sdn Bhd v I & P Inderawasih Jaya Sdn Bhd [2000] 3 MLJ 321,

COA (Siti Norma Yaakob JCA) Held:

• that as long as the 3 conditions have been fulfilled, there is no restriction in law to prevent P from proceeding to obtain injunctive relief in an O.14 proceeding before a judge.

2) Time of application

• An application for summary judgment should be made promptly after D has entered appearance and a statement of claim has been served on D: O.14 R.1

• If P delays his application for summary judgment, he must give good reasons and explain the delay.

Cases on delay of P’s application:

In CGIR v Weng Lok Mining Ltd [1969] 2 MLJ 98, concerning non-payment of taxRaja Azlan Shah J Held:That the reason for delay of 3 months in the application for summary judgment due to holidays and the fasting month was good reason and did not warrant a dismissal of the application.

(b) In Krishnamurthy v Malayan Finance Corp [1986] 2 MLJ 134

Salleh Abas LP stated that an application for summary judgment must be made after D has entered an appearance and it could be made either before or after the delivery of defence. If it is made after the service of the defence, P must explain the delay. If the Court does not accept the explanation by P, the Court will not grant an O.14 judgment.

(c) In British American etc Bhd v Pembinaan Fal Bhd [1994] 3 MLJ 267

The court did not accept P’s explanation for the delay in that its former solicitors had moved to Kota Bharu and it had to engage other solicitors.

3) Application and service of Application:

• P must apply by Notice of Application (Form 57) supported by affidavit in Form 13: O.14 R.2

• The Notice of Application and the affidavit must be served on D within 14 days from the date of receipt of sealed notice: O.14 R.2 (3)

(See also: O.32 R.2 and O.63A R.10)

• Service may be effected personally, by prepaid registered post, by leaving it at D’s proper address, or by facsimile: O.62 R.6.

4) Affidavit:

(i) An affidavit is a sworn statement made by the deponent who affirms or swears the affidavit.

(ii) The affidavit may be made in Form 13 by: (a) P himself: P need not state the source and grounds; or (b) P’s solicitor: the solicitor must state the source (authorisation) and grounds.

(iii) The affidavit must satisfy the following requirements: (a) It must be made by P or any person duly authorised to make it; (b) It must verify the facts on which the claim or part of the claim to which the application relates is based; and (c) It must state the deponent’s belief that there is no defence to the claim or part of the claim or no defence except as to the amount of damages claimed: O.14 R.2 (1). Example: “I verily believe that there is no defence to the action.”

(iv) If the 3 requirements are satisfied, then the court has jurisdiction to hear the application for summary judgment.

(v) Non-compliance of R.2 (1):

• If the affidavit is defective i.e. does not satisfy the requirements of R.2 (1), P’s application for summary judgment will be dismissed but not the action. The action will still go to trial.

In Chai Cheon Kam v Hua Joo Development Co Sdn Bhd [1989] 2 MLJ 422

P’s affidavit did not verify the claim as well as it did not state that in his belief, D had no defence.

Held:

The affidavit did not comply with O.14 R.2(1) and was bad. P’s application was dismissed and the action had to go for trial.

5) Defective statement of claim:

• If the statement of claim is defective, it cannot be cured by the affidavit supporting the O.14 application

Gold Ores Reduction Co v Parr [1892] 2 QB 14l

To cure it, P must apply to the court to amend it.

ISSUES(1) How hearing proper is made?The hearing of P’s O.14 application is in chambers, usually before the Registrar who may refer it to the Judge in Chambers: O.32 R.9 and R.10.

(2) Can D raise technical objections? D can raise substantive technical objections against P’s O.14 application for non-compliance with the rules such as defective service, defective affidavit, etc. If D’s objection succeeds, the Judge will dismiss P’s application under O.14 r.7 and award costs to D. If the defect can be cured, the Judge may give leave to P to amend and P has to pay costs.

(3) How D shows that there is a triable issue?(i) D must show in his counter affidavit (or affidavit in reply) that, “there is an issue or question in dispute which ought to be tried”. • If D succeeds, P’s application will be dismissed and D will be given unconditional leave

to defend.• Cases on whether there is a triable issue to merit D’s defence: In Appaduray v Ananda [1982] 1 MLJ 292, where the case involved an action for trespass

Court Held:The dispute in the boundaries of property raised by D required evidence of a survey report. This was a triable issue and hence P’s application for O.14 judgment was dismissed.

(ii) If D or P raises fraud in the case and gives evidence, then no summary judgment will be granted as it becomes a triable issue which must go to trial: O.14 R.1 (2).

(iv) If D has filed his defence he may raise defences over and above those alleged in his defence: Lin Securities v Noone & Co Sdn Bhd[1989] 1 MLJ 321, it was held, The court is interested in whether D has a defence. However at the hearing, D cannot raise issues not covered in D’s

affidavit in reply because there should be openness in civil procedure.

(v) Summary judgment is also possible even if damages have to be quantified as they can be assessed later: Avel Consultants Sdn Bhd v Mohd Zain [1985] 2 MLJ 209.

(4) Order 14 Rule 3 : Defendant shows “some other reason that there ought to be a trial of that claim”

• Although Defendant may not be able to raise a triable issue, the circumstances of the case might be such that summary judgment should not be given.

In Concentrate Engineering (Pte) Ltd v UMBC Bhd [1990] 3 MLJ 1, P sued D (bank) for honouring its cheques which were stolen and the signatures were forged. P applied for summary judgment. D resisted P’s application on the ground that police investigations were going on. This reason is under the 2nd limb of Order 14 rule 3 (other reason) as D could not raise a triable issue under the 1st limb. The court dismissed P’s application for summary judgment as the on-going police investigations constituted “other reason that there ought to be a trial”.

Other reasons D may raise are:• D is trying to contact a material witness; • D claims he was mentally unsound when he made the contract;

or• Where the facts of the case are only within P’s knowledge and

hence it is unfair to enter summary judgment without discovery

(5) Can the court determine questions of law?In the English Court of Appeal case of European Asian Bank v Punjab & Sind Bank [1983] 2 All ER 508 (CA), Goff LJ said that in appropriate cases the court can decide on the question of lawunder Order 14 even if the question of law seems to be complex.

In Malaysia, the Federal Court, in Chong Ngam Sen v Yeoh Bah Chee[1981] 1 MLJ 161, held that where there was a question of law raised and not determined, leave to defend should be given. Thus, no summary judgment would be granted.

But the Supreme Court, in Malayan Insurance (M) Sdn Bhd v Asia Hotel Sdn Bhd[1987] 2 MLJ 183, applied Goff LJ’s statement in European Asian Bank and held that where the issue raised is solely a question of law and the facts are undisputed, then an Order 14 application should be allowed even if the question of law is a difficult one.

(6) WHEN DEFENDANT NEEDS TO PAY IN TO COURT?

• In Yorke Motors v Edwards [1982], the House of Lords held that:

1. If conditional leave to defend is granted then Defendant has to pay into court the whole or part of the claim;

2. It would be wrong for the court to impose payment for conditional leave to defend if Defendant finds it impossible to fulfil;

3. The conditions for Defendant to pay are:

(i) Defendant must make a full and frank disclosure;

(ii) Defendant cannot rely on the ground that he is on legal aid;

(iii) Defendant cannot just complain that the financial condition is difficult to fulfil. He must provide evidence that it is impossible for him to fulfil.

(7) CAN THE COURT DISMISS P’S ACTION?

In Diamond Peak Sdn Bhd v Tweedie [1980] 2 MLJ 31,

Held:

The trial judge has no power in an application for summary judgment to dismiss P’s action. He can only dismiss the application for summary judgment and grant Defendant unconditional leave to defend.

SETTING ASIDE ORDER 14 JUDGMENT AGAINST A PARTY WHO DOES NOT APPEAR AT THE HEARING

Order 14 rule 11 The court may, if it thinks just, set aside an Order14 judgment against Defendant who does not appear at the hearing where the court views that there is a triableissue or other reasons that it ought to go to trial.

SUMMARY JUDGEMENT UNDER ORDER 81

SUMMARRY JUDGMENT UNDER O.81

- Obtaining summary judgment for certain applications for example specific performance or rescission of an agreement.

- Plaintiff must first commence an action by writ before the Plaintiff can apply for specific performance or rescission of an agreement.

APPLICATION FOR O.81 JUDGMENT

O.81 r.1(1) provides that P may apply to the court for:(a)Specific performance of sale or purchase or of exchange of property or in respect of lease; or(b)Rescission of an agreement; or(c)Forfeiture or return of deposit under such an agreement.

(2) The above applications are for equitable relief which may be granted at the discretion of the court.(3) P must begin his action by writ indorsed with a claim and on grounds that D has no defence to the action.

WHEN IS O.81 APPLICABLE?

O.81 is only applicable where P’s application for summary judgment is for the claim specified in O.81 r.1(1)(a) – (c): Ng Ah Bah @ Ng Looi Seng & 2 Ors v Ramanda Sdn Bhd [1996] 1 CLJ 238, 1 MLJ 62, where the court dismissed the appallentsappeal as well as the respondents appeal.

PROCEDURE AND DIFFERENCES BETWEEN O.81 AND O.14:

(1) P may make the application as soon as the writ is served whether or not D has entered appearance: O.81 r.1(2).In an O.14 application, P can only apply after D has entered appearance and after P has

served his statement of claim.(2) P must proceed by Notice of Application supported by affidavit which is made by some person who can:(i) Swear positively to the facts verifying the cause of action; and(ii) State that in his belief there is no defence to the action: O.81 r.2(1).In an O.14 application, the affidavit may be made by P himself or his solicitor.

(3) The Notice of Application must attach the minutes of the judgment sought by P i.e. a draft copy of the summary judgment sought: O.81 r.2(2)

(4) In an O.14 application, there is no requirement of the minutes of judgment sought to be attached to the Notice.

(5) In Sova Sdn Bhd v Kasih Sayang Realty Sdn Bhd [1988] 2 MLJ 268, the court held that failure to file the minutes of judgment is not fatal to P’s action.

(6) (4) The Notice of Application, a copy of the affidavit in support and of any exhibit referred to therein must be served on D within 14 days from date of issue of the notice: O.81 r.2(3).

(7) This is the same as for O.14 application.

JUDGMENT FOR PLAINTIFF: O.81 R.3

O.81 r.3 provides that at the hearing of the application under r.1, the Court may give judgment for the plaintiff in the action unless:(a) The Court dismisses the application; or(b) D satisfies the Court that there is an issue or question in dispute which ought to be tried; or (c) There ought for some other reason to be a trial of the action.

LEAVE TO DEFEND

(1) D may show cause against an application under r.1 by affidavit or otherwise to the satisfaction of the Court: r.4 (1).(2) The Court may give D leave to defend the action either

unconditionally or on such terms as to give security or time or mode of trial or otherwise as it thinks fit: r.4(2).

(3) Where the Court orders that D has leave to defend the action, the Court shall give directions as to the further conduct of the action: r.5

CAN COURT DISMISS P’S ACTION UNDER O.81 APPLICATION?

(1) The court can dismiss P’s whole action under O.81 application as it is for an equitable relief made by a judge.(2) Note that in O.14 application, the court cannot dismiss P’s action as an O.14 application is an interlocutory application.

SETTING ASIDE JUDGMENT: O.81 R.7

O.81 r.7 provides that any judgment given against D who does not appear at the hearing of an application under r.1 may be set aside or varied by the Court on such terms as it thinks fit.

Distinction between O.81and O.14 RC 2012

-Case law-

Cotra Enterprises Sdn Bhd v Pakatan Mawar (M) Sdn Bhd[2001] 3 AMR 334; Ahmad Maarof JC had before him a case in which the plaintiff had sought summary judgment under Order 14 for a declaration the substance of which was that five written agreements he had entered into were void and had been rescinded. The learned judicial commissioner held – and in our judgment correctly held – that the declaration sought was in essence an order for rescission within Order 81 and therefore fell outside the scope of Order 14. In the present case the facts are inverted. Here the respondent obtained a declaration under Order 81 when that form of relief is not one of the remedies available summarily under the Order. It is our very respectful view that the High Court was plainly wrong in making the order which it did as it simply did not have the power to do so.

CE Health Plc v Ceram Holding Co [1988] 1 WLR 1219, Neill LJ made the following observation:“The scope of Order 14 proceedings has been a matter which has been determined

by the rules. There would therefore appear to be little, if any, room for an argument that the court has some wider powers in these fields than that conferred by the rules, or that it has some residual or inherent jurisdiction to grant relief where it is just to do so, or that the wide language of the statute confers some additional powers to act outside and beyond the rules.”That passage in our respectful judgment applies to the summary procedure created

by RHC Order 81.What we are therefore concerned with are not two different procedures to achieve

the same result but two entirely different types of jurisdiction.

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