[K22-146-2007-I]
Jurisdiction: MALAYSIA IN THE HIGH COURT IN SABAH & SARAWAK AT KOTA KINABALU
Parties: 1st Plaintiff: Mascom (M) Sdn Bhd 2nd Plaintiff: Lawrence Sinsua
1st Defendant: Kamawang Enterprise Sdn Bhd 2nd Defendant: Hj Mohd Kamaruddin Yap
File Number: K22-146-2007-I
Issues: Whether the Plaintiff suit is barred by the principle of res judicata?
Whether the Plaintiff’s action for defamation is sustainable in law?
Hearing Date: 14 April 2009
Date of Decision: 17 July 2009
Judge: HONOURABLE JUSTICE DAVID WONG DAK WAH
Representation: For Plaintiffs: Mr. Yunof Maringking Messrs. Maringking & Co. Kota Kinabalu, Sabah
For Defendants: Datuk Kong Hong Ming Messrs. Lee & Kong Kota Kinabalu, Sabah
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GROUNDS OF DECISION
Proceedings:
This is an application by the defendants to strike out the plaintiffs’ statement of claim pursuant to Order 18 r19 (1)(a)(b),(d) and/or Order 92 r 4 of the
High Court Rules.
The law in such application is settled and it is this. The court will only exercise its power sparingly and will only do so when it is crystal clear that the claim on the face of it is obviously unsustainable. In another words the pleadings are such that they are hopeless, no basis in law or equity and amount to an abuse of process of court. Further in determining whether proceedings are vexatious or an abuse of process of court, the Court must look at the whole history of the matter, not solely at the question whether the pleadings had disclosed a cause of action. (see Re Vernazza [1959] 2 All ER
200, Chung Khiaw Bank v Tio Chee Hing (1987) 1 CLJ 531, Tractors
Malaysia Berhad v Tio Chee Hing [1994] 1 LNS
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Issues:
Having heard submissions from counsels and read the various affidavits,
there are basically two issues for me to determine and they are these:
5 1. Whether the Plaintiff suit is barred by the principle of res
judicata and/or an abuse of the process of the court?
2. Whether the Plaintiff’s action for defamation is sustainable in
law?
10 Issue 1:
Res Judicata/abuse of the process of the court:
It is the submission of counsel for the defendants that the issues which are
15 being litigated in this case had all been litigated in the case of suit K22-121-
2000 and applying the principle of res judicata this action should be struck
out. It is also the submission of counsel for the defendants that the plaintiffs’
action is an abuse of the process of the court. The principle of law on what
amounts to res judicata is comprehensively set out in the case of Sim Kie
20 Chon v. Superintendent of Pudu Prison & Ors [1986] 1 CLJ 548; [1986]
CLJ (Rep) 256 . Abdoolcader SCJ who delivered the judgment of the court
said:
“There is moreover the inherent jurisdiction of the court in cases where res judicata is not strictly established, and where estoppel per rem judicatam has
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not been sufficiently pleaded, or made out, but nevertheless the circumstances are such as to render any re-agitation of the questions formally adjudicated upon a scandal and an abuse, the court will not hesitate to dismiss the action, or stay proceedings therein, or strike out the defence thereto, as the case may 5 require. It would suffice in this regard to refer to the judgment of the Privy Council delivered by Lord Wilberforce in Brisbane City Council and Myer Shopping Centres Pty Ltd v. Attorney-General for Queensland [1979] AC 411, 425. The second defence is one of “res judicata”. There has, of course, been 10 no actual decision in litigation between these parties as to the issue involved in the present case, but the appellants invoke this defence in its wider sense, according to which a party may be shut out from raising in a subsequent action an issue which he could, and should, have raised in earlier proceedings. The classic statement of this doctrine 15 is contained in the judgment of Wilgram V-C in Henderson v. Henderson [1843] 3 Hare 100 and its existence has been reaffirmed by this Board in Hoystead v. Commissioner of Taxation [1926] AC 155. A recent application of it is to be found in the decision of the Board in Yat Tung Investment Co Ltd v. Dao Heng Bank Ltd [1975] AC 581. 20 It was, in the judgment of the Board, there described in these words: … there is a wider sense in which the doctrine may be appealed to, so that it becomes an abuse of process to raise in subsequent proceedings matters which could and therefore should have been litigated in earlier proceedings. (p. 590). 25 The attempt by way of the instant proceedings to re-litigate and reopen the earlier action clearly reflects the appositeness of the caption suggested for this matter in the prelude to this judgment and would appear to us to be as clear an instance of an abuse of the process of the court as one can find within the connotation thereof enunciated in the speech of Lord Diplock in Hunter 30 v. Chief Constable of the West Midlands Police & Ors [1982] AC 529, 542.”
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What amounts to an abuse of the process of the court is set out by Lord
Bingham of Cornhill in Johnson v. Gore Wood & Co (a firm) [2002] 2 AC as
follows:
“The rule of law depends upon the existence and availability of courts and 5 tribunals to which citizens may resort for the determination of differences between them which they cannot otherwise resolve. Litigants are not without scrupulous examination of all the circumstances to be denied the right to bring a genuine subject of litigation before the court (Yat Tung Investment Co Ltd v. Dao Heng Bank Ltd [1975] AC 581 at 590, [1975] 2 WLR 690 at 696 per Lord 10 Kilbrandon, giving the advice of the Judicial Committee; Brisbane City Council v. A-G for Queensland [1978] 3 All ER 30 at 36, [1979] AC 411 at 425 per Lord Wilberforce, giving the advice of the Judicial Committee). This does not, however, mean that the court must hear in full and rule on the merits of any claim or defence which a party to litigation may 15 choose to put forward . For there is, as Lord Diplock said at the outset of his speech in Hunter v. Chief Constable of West Midlands [1981] 3 All ER 727 at 729, [1982] AC 529 at 536, an inherent power which any court of justice must possess to prevent misuse of its procedure in a way which, although not inconsistent with 20 the literal application of its procedural rules, would nevertheless be manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute among right-thinking people. The circumstances in which abuse of process can arise are very varied; those which give rise to the instant appeal must surely be unique. It 25 would, in my view, be most unwise if this House were to use this occasion to say anything that might be taken as limiting to fixed categories the kinds of circumstances in which the court has a duty (I disavow the word discretion) to exercise this salutary power. One manifestation of this power was to be found in RSC Ord 18, r 19, which 30 empowered the court, at any stage of the proceedings, to strike out any pleading which disclosed no reasonable cause of action or defence, or which was scandalous, frivolous or vexatious, or which was otherwise an abuse of
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the process of the court.”
I shall now apply the above principles to the factual matrix of the present
case. I start off by setting out the reliefs sought by the plaintiffs:
5 1. A declaration that the Judgment and/or Order under suit K22-121- 2000 on 14.3.2003 was obtained by the Defendant in breach of clause 14 of the Joint Venture Agreement and/or that it was procured by fraud or deception and thus irregular and devoid of any legal effect; 10 2. A declaration that 1 st Defendant is accountable to pay the 1 st Plaintiff the sum of RM4,022,756.38 or part thereof its share of the Firms’ profits and/or repayment of its advance to do the said project as provided under by virtue of Section 26(c), (d) and (e) of 15 the Partnership Act;
3. A declaration that since the Firm owes the 1 st Plaintiff the sum of RM4,821,340.00 and the 1 st Defendant is indebted to the Firm the sum of RM797,431.00, the 1 st Plaintiff is entitled to take all the 20 money in the Firm Account No 765-106796-8 at OCBC Kota Kinabalu branch and LIPO Deposit thereat as repayment of its advance and interest thereon by virtue of Sections 26(b), (c) and/or otherwise under Section 46 of the Partnership Act;
25 4. A declaration that clause 7.4(b) of the JVA is illegal and/or null and void for being ultra vires Section 132(C)(1) of the Company Act 1965 because in law all the profits in the 1 st Plaintiff’s Account are returns of the 1 st Plaintiff’s investment in the said project or the
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Joint Venture and shall be distributed as dividends to its shareholders only;
5. A declaration that the Firm stands dissolved as between the 5 partners by virtue of the winding-up of Seri Pagi Sdn. Bhd and thus accordingly the Accounts of the Firm must be settled under the rules as provided under Section 46 of the partnership Acts;
6. Special damages in the sum of RM7,764,949.38; 10 7. General damages to be assessed for breach of contract and fraud and/or misrepresentation;
8. General damages and exemplary damages to be assessed for the 1 st 15 Plaintiff for malicious falsehood and injury to its business reputation;
9. General damages and aggravated damages for the 2 nd Plaintiff to be assessed not less than RM50,000,000.00 for libel and slander; 20 10. Interest at the rate of 8% on all sum awarded to the Plaintiffs from the date of judgment until full realization;
11. Costs; 25 12. An injunction to restrain the Defendants from enforcing the Court Judgment or Order dated 14.3.2003 pending disposal of the Plaintiffs suit herein and to restrain the Defendants from repeating publication of the said words and/or such similar statements which 30 has defamatory effect or insinuation on the 1 st Plaintiff and/or the 2nd Plaintiff howsoever and by whatsoever means, and
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13. Any other order or relief as the Court may deem fit.
It is the contention of counsel for the defendants that the above reliefs sought
5 for are premised on the same partnership agreement and the Joint Venture
agreement in suit K22-121-2000 (suit 121); hence applying the principle of
res judicata this suit should be struck out.
I will now look at K22-121-2000 (suit 121). The facts there were these. The
10 1st plaintiff (which was the 1 st defendant in suit 121), and the defendants
(who were the 1 st plaintiff and 2 nd plaintiff in suit 121) formed a partnership
called SMK Engineering (‘SMKE’) for the sole purpose of undertaking a
construction project for the Federal Government. The 1 st plaintiff was
appointed the managing partner for the project. The 2 nd plaintiff (who was
15 the 2 nd defendant in suit 121), was the managing director of the 1st plaintiff
which had entered into a joint-venture agreement (‘JVA’) with SMKE to
provide management expertise and project financing for the project. By
virtue of cl. 7.1 of the JVA, 28.7% of the contract sum was apportioned to
SMKE whilst 71.3% was apportioned to 1 st plaintiff. It was arranged
20 between the parties that any contract sum paid to SMKE by the government
would first go into the SMKE Account from which the 71.3% would then be
transferred into the 1st plaintiff’ Account (Mascom Account). The balance
28.7% would remain in the SMKE Account. According to cl. 7.4
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of the JVA, the 1 st plaintiff was entitled to deduct RM4,300,000 in 24
installments for its absolute use and the balance was to be used for paying
the expenses and costs borne by the 1 st plaintiff for the project. It was also
agreed that upon completion of the project, any balance should be divided
5 equally among the partners and any shortfall should also be borne equally by
them. The 1 st defendant and Seri Pagi Sdn Bhd as plaintiffs in suit 121 filed
a writ action against the plaintiffs for the following reliefs:-
(A) As for the said Partnership Deed dated 3 rd March 1997
10 1. A declaration that the partnership in the name of SMK
Engineering between the plaintiffs and the 1 st defendant
company by the said Partnership Deed dated 3 March 1997
be dissolved;
2. An Order that the affairs of the partnership of SMK
15 Engineeering be wound up;
3. For the purposes aforesaid that all necessary Accounts and
Inquiries to be taken and made;
(B) As for the said JV Agreement dated 21 November 1997
20 4. An account and Inquiry of the Mascom Account;
5. An account of what is due from the Mascom Account to the
plaintiffs; or alternatively, to SMK Engineering;
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6. An order that 1 st defendant company do pay to the plaintiffs
the share and/or sum to which the plaintiffs are entitled
against or from the Mascom Account.
5 The plaintiffs as defendants defended the action and also made a
counterclaim. The 1 st defendant and Seri Pagi then applied, under O. 43
Rules of the High Court 1980 (‘RHC’), for an order for the taking of account
of the SMKE Account and the Mascom Account. They also applied for an
injunction to preserve the monies in the accounts and for the appointment of
10 a receiver for the SMKE partnership. The Senior Assistant Registrar
(‘SAR’) granted all their prayers. On appeal, Charles Ho J on 2.5.2001
affirmed the SAR’s order for the taking of account of the SMKE Account
and the Mascom Account but omitted the others. After the documents and
accounts ordered to be filed had been filed by the plaintiffs, the 1 st defendant
15 and Seri Pagi applied for various orders including for the payment of a sum
of RM2,230,000 each from the SMKE Account. Ian Chin J on 14.3.2003
allowed the application but ordered a trial of whether certain items in the
Mascom Account should be falsified. Both orders resulted in an appeal to
the Court of Appeal. Through the judgment of Abdul Aziz Mohamad JCA
20 (as he then was, now FCJ), the Court of Appeal dismissed the appeal of the
plaintiffs. In respect of Charles Ho J’s order which is premised on the
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existence of a partnership between Mascom, Kamawang and Seri Pagi, this
is what the Court of Appeal said:
“It appeared, therefore, that Charles Ho J, and probably the senior assistant 5 registrar too, did not treat the allegations of fraud as a live issue since the respondents grounded their claim for an account only on the duty of partners to render true accounts. But in the appeal the appellants’ counsel still clung to the allegations of fraud as a preliminary question to be tried that prevented the taking of account until it was tried. 10 We agreed with the respondents’ counsel that so long as there was a partnership, which in the appeal the appellants’ counsel conceded the existence of, the respondents were entitled to an account by virtue of s. 30 of the Partnership Act 1961 and that the allegations of fraud were not a preliminary question to be tried before the taking of account could be ordered because the claim to an account 15 was not founded on those allegations but on the duty of partners in any event to render true accounts. That was the only issue in the first appeal. As the appellants failed on that issue, the first appeal was dismissed.”
In respect of the appeal against Ian Chin J who made an order of payment of
20 RM2,476,019.00 this is what the Court of Appeal said:
“The Sum Of RM2,476,019 This issue related to the second appeal, which was the appeal against the orders of payment made by Ian Chin J. To explain how the question of the sum of 25 RM2,476,109 arose, it is necessary to set out Ian Chin J’s findings that formed the basis for his orders of payment.……… The appellants’ reply to the respondents’ said paras 9.2, 9.3, 9.4 and 10 was in para 7.9 of the appellants’ affidavit dated 21 September 2001 and was as follows: As regard to paragraphs 9.2, 9.3, 9.4 and 10 of the Plaintiffs’ 30 Affidavit, I have been advised by my solicitors and verily believe that despite the facts that the total income over the period was RM70,879,071.00 and that of this income, the net profit was at
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RM19,308.,943.00, the Plaintiffs could not be entitled to RM6,436,314.30 respectively as against their paid disbursements of RM4,038,185.00 and RM4,023,756.00. It was based on the plaintiffs’ said paras 9.2, 9.3 and 9.4 that Ian Chin J made a 5 finding that there was a balance of RM2,398,123.30 for Kamawang and RM2,412,558.30 for Seri Pagi and that Mascom had overdrawn RM3,899,187.70. He said: “Those facts are not only undisputed and indisputable but being reiterated by the defendants themselves” in their said para. 7.9. 10 In the appeal, the appellants’ counsel submitted that the learned judge erred in saying that the appellants’ para. 7.9 supported his findings and contended that the paragraph instead raised a dispute. In our view, while in para. 7.9 the appellants did make an attempt to raise a dispute the form of which was, however, vague, it was an attempt based on an acceptance of the figures on the basis of which the 15 respondents worked out correctly the balance due to them.”
Leave to appeal to the Federal Court was dismissed. From the proceedings
in suit 121 it can be said the following matters had been litigated:
20 1. As far as the partnership account – SMKE – is concerned the Court of
Appeal have upheld the decisions of Ian Chin J and Charles Ho J
which in effect states that there is to be a payment of RM2,230,000.00
each from the SMKE account to Seri Pagi and Kamawang and the 1 st
plaintiff had overdrawn RM3,899,187.70. The implication of this
25 finding is that there was a partnership between the litigants and that
partnership is now dissolved with accounts having been taken and
finalized .
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2. The Mascom account is to be determined through a trial which I am
informed that Nurchaya bt Hj. Arshad J has reserved judgment of that
trial.
3. The counterclaim in suit 121 has yet to be adjudicated.
5 Counsel for the plaintiffs, however submits that the cause of action in the
present case is different to suit 121 in that the plaintiffs in the present action
are attempting to set aside the suit 121 order on the ground that it was
procured by fraud or deception, hence the principle of res judicata does not
10 apply. On first glance, I must admit that the argument appears to have some
merits. However applying a ‘fine tooth comb’approach to the evidence as
was done in the Privy Council in Tractors Malaysia Bhd v Tio Chee Hing
(1975) 2 MLJ 1 , I am of the opinion the plaintiffs are in fact raising the
matters which had been or should have been raised in suit 121. From the
15 pleadings in the present case it can be seen that apart from the allegation that
they had been defamed by the defendants, the whole foundation of
allegations rest on both the partnership agreement and the joint venture
agreement. This foundation was the very foundation of suit 121. Not only
that, there is still a counterclaim in suit 121 which the plaintiffs had not
20 bothered to prosecute. There is also two other suits filed by them and they
are suit 22-67-2002 and 22-24-2003, both of which concern the partnership
agreement and the joint venture agreement. The actions of the plaintiffs to
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say the least and with respect are haphazard in that they are conducting their
litigation in installments which the whole principle of res judicata prohibits.
A litigant must present all the issues in one installment, that is in one suit,
otherwise he will be shut out in a subsequent action an issue which he could,
5 and should have raised in earlier proceedings. The historical background of
the litigants show that the plaintiffs had, prior to this suit, three occasions to
set out all the issues and to allow the plaintiffs to continue with this suit is
allowing them four bites of the cherry. In the circumstance I have no
hesitation in concluding that the principle of res judicata applies in so far as
10 this suit relies on the partnership agreement and joint venture agreement. I
also have no hesitation to conclude that this suit is an abuse of the process of
the court.
Issue 2:
15 Do the alleged defamatory words disclose a cause of action?
The last matter which I need to address is the plaintiffs’ claim for damages
for libel and slander. On this issue I agree with counsel for the defendants
that the alleged defamatory words are protected by absolute privilege as they
20 were made in the course of litigation. The defamatory words are from
affidavit of the 2 nd defendant filed and used in suit 121. As for the Judge’s
remark that ‘the unclean hands of the plaintiffs are not even fit to touch the
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door knobs of the door of the court and let alone to enlist its assistance’, it is
also protected by absolute privilege in that Judges are protected for whatever
is said or written in the discharge of their duty. In any event the defendants
were not responsible for that remark. Accordingly the plaintiffs have no
5 cause of action against the 2 nd defendant.
For all the reasons stated above, suit 22-146 -2007 is struck out with costs to
be taxed unless agreed to the defendants.
10
(Y.A. TUAN DAVID WONG DAK WAH) Judge
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25 Notice: This copy of the Court's Reasons for Judgment is subject to formal revision.
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