Counterclaims must demonstrate sufficient connection to primary claims; otherwise, they may be struck out to avoid complicating proceedings.

Amarjeet Singh Serjit Singh JC:

Introduction

[1] In the original action the plaintiff, Karunamoorthy a/l Ramasamy, a sole proprietor trading as Era Hemas Trading brought an action against three defendants, Hariharan a/l Subramaniam ( Hariharan), Asokan a/l Palaniandy (Asokan) and Ezy Group Berhad formally known as EZYFX Berhad (EGB). Hariharan and Asokan were the only directors of EGB.

[2] Hariharan and EGB in response to the statement of claim filed a defence and counterclaim which they subsequently amended. They cited themselves as the plaintiffs in the counterclaim and in the title to the action cited the following five persons: Karunamoorthy in his personal capacity, Aravanthan a/l Subramaniam (Aravanthan), Muhammad Denial Dass (Muhammad Denial), Mathialagan a/l Maniam (Mathialagan) and Reeta a/p Jaya (Reeta) as the 1st to 5th defendants in the counterclaim.

[3] Karunamoorthy and Aravanthan then moved this Court by way of a notice of application (enclosure 23) under O 15 r 5 and/or O 18 r 19(1) and/or O 94 r 4 of the Rules of 2012 for an order that the amended counterclaim be struck out against them. For ease of reference all rules hereinafter stated refer to the Rules of Court 2012.

[4] On 27 August 2020, I granted the said order striking out the counterclaim solely pursuant to O 15 r 5(2). My reasons for so deciding are as follows.

The Original Action

[5] The original action concerns monies invested by the plaintiff in a fund operated by EGB. The plaintiff alleged that Hariharan induced him to invest in the fund which would see a guaranteed monthly return of 10% of the investment and the right of the plaintiff at any time to demand the return of the amount invested. On 1 April 2016 the plaintiff began with an investment of RM500,000.00 and at March 2018 alleged that the amount invested stood at RM4.8 million.

[6] In April 2018 the plaintiff did not receive part of the monthly return that was guaranteed and in May 2018 the monthly return was not paid at all. It was alleged that Hariharan failed and/or refused to provide any reasons for the said non-payment and on 16 August 2018 the plaintiff, in the presence of Aravanthan, was informed by Hariharan that the plaintiff's monies were "lost".

[7] On 22 January 2020 the plaintiff filed the action herein seeking to recover the invested monies amounting to RM14.81 million or alternatively the principal invested sum amounting to RM4.8 million and damages from Hariharan, Asokan and EGB. The plaintiff pleaded cause of action was fraud and/or misrepresentation and/or breach of warranty and/or conspiracy and/or illegality in respect of the investment agreement entered with EGB.

The Counterclaim

[8] The counterclaim in essence consist of two claims:

(i) the first claim is by Hariharan against Karunamoorthy for the return of three cars belonging to Hariharan which were borrowed in 2017 and 2018 respectively and not returned or the value of said three cars amounting to RM483,000.00; and

(ii) the second claim is by Hariharan and EGB against Karunamoorthy, Aravanthan, Muhammad Denial, Mathialagan and Reeta for the amount of RM150,000.00 extorted from Hariharan through threats but which amount was shared equally only by Mathialagan and Reeta.

Decision Of The Court

[9] At the outset, I must make it clear that in view of the conclusion I had arrived at based on the attack against the counterclaim pursuant to O 15 r 5(2), I found it unnecessary to decide the striking out issue under O 18 r 19(1).

The Law On Counterclaims

[10] In the context of the present case the starting premise in relation to counterclaims is O 15 r 2(1) of the Rules of 2012 which provide as follows:

Subject to rule 5(2), a defendant in any action who alleges that he has any claim or is entitled to any relief or remedy against a plaintiff in the action in respect of any matter (whenever and however arising) may, instead of bringing a separate action, make a counterclaim in respect of that matter; and where he does so he shall add