Counterclaims must be substantiated with timely evidence; unreasonable delay can bar claims under laches.

Headnote:(A) Rules of the High Court 2012 – Order 18 r 19(1) – Plaintiff's application to strike out Defendant's counterclaim – Claim for defective cement dismissed as not sustainable – Court affirmed summary judgment granted to Plaintiff – Dismissal based on failure to substantiate claims and delay in filing the counterclaim. (Paras 2-6, 9-10, 14-15)

(B) Laches – Counterclaim barred due to unreasonable delay and lack of action on defective quality claims – Acquiescence established by Defendant making full payment for cement without complaint. (Paras 22-32)

Facts of the case: Plaintiff, a cement supplier, seeks recovery of unpaid sum from Defendant who counters with quality claims after full payment made for cement during disputed period.

Findings of Court: Court found Defendant's counterclaim lacks substance and is an abuse of process, allowing the Plaintiff's application.

Issues: Whether the counterclaim is sustainable and whether laches applies due to delay in filing.

Ratio Decidendi: Court emphasized that striking out claims requires a clear lack of sustainability, and the principle of laches prevents claims where there has been unreasonable delay.

Result: Application allowed with costs.

Judgement Key Points

Key Points: - Plaintiff's application to strike out First Defendant's counterclaim for defective cement under O 18 r 19(1) Rules of the High Court 2012 was allowed due to lack of sustainability, delay, and abuse of process (!) (!) (!) . - First Defendant received cement (2015-2018), made full payment without complaint, then filed counterclaim in Oct 2020 alleging losses from substandard quality after Plaintiff's summary judgment application (!) (!) (!) . - Court rejected internal concrete cube tests as proof of cement defect due to no receipt by Plaintiff, tests assessing concrete (not pure cement), and multiple influencing factors (!) (!) (!) (!) . - Principles for striking out under O 18 r 19(1): only for plain/obvious cases where claim is "obviously unsustainable," not for detailed fact examination; includes scandalous, frivolous, vexatious, or abuse of process (!) (!) (!) (!) . - Counterclaim filing delayed (4.5 months after appearance, 16 days before summary judgment hearing), seen as tactical to seek stay under O 14 r 3(2), lacking bona fides (!) (!) (!) . - Doctrine of laches applied per s 32 Limitation Act 1953: unreasonable 5-year delay, acquiescence via full payments without complaint, prejudicing Plaintiff (e.g., lost employees, time-barred supplier claims) (!) (!) (!) (!) (!) . - Acquiescence inferred from continued purchases/payments post-alleged issues, unconvincing "business relationship" excuse; counterclaim deemed afterthought and stale demand (!) (!) (!) . - Court granted summary judgment to Plaintiff earlier, rejecting quality defense; counterclaim losses (MYR4.5M, ~5% purchase price) vague/unsubstantiated (!) (!) (!) (!) . - Application allowed with costs after scrutinizing evidence; emphasizes equity maxim against stale claims (vigilantibus non dormientibus jura subveniunt) (!) (!) .

What is required to strike out a counterclaim under Order 18 r 19(1) of the Rules of the High Court 2012?

What constitutes laches barring a counterclaim?

JUDGMENT

Evrol Mariette Peters JC:

Introduction

[1] This is the Plaintiff's application ("this Application") in enclosure 58 to strike out the First Defendant's counterclaim.

The Background Facts

[2] The Plaintiff is a company based in Kuala Lumpur and is in the business of selling and supplying, inter alia, cement and other cement-based products. The First Defendant, based in Johor Bahru, is a manufacturer of ready-mixed concrete, whilst the Second and Third Defendants are the guarantors of the First Defendant.

[3] At the request of the First Defendant, the Plaintiff had sold and delivered cement to the First Defendant, which then used the cement to produce ready-mixed concrete for sale to its customers.

[4] It is undisputed that the First Defendant had acknowledged receipt of the cement delivered by the Plaintiff by signing and affixing its rubber stamp on the Delivery Notes. However, the First Defendant had, to date, failed to settle the outstanding sum of MYR5,863,903.91, during the period between January 2019 to January 2020 ("Judgment Period"). The Second and Third Defendants, were guarantors to the First Defendant.

[5] The Plaintiff commenced this action against the Defendants on 23 May 2020 to recover the Outstanding Sum, and on 15 June 2020, filed an application for summary judgment, which was heard on 5 November 2020, and allowed on 6 December 2020.

[6] On 19 October 2020, the First Defendant filed its Defence and Counterclaim ("the Counterclaim") against the Plaintiff for a sum of MYR4,505,599.07, alleging that it has suffered losses because the quality of the cement sold and delivered by the Plaintiff during the period between 2015 to 2018 ("the purported defective time period") was not according to specifications. It is pertinent to note that the First Defendant had made full payment to the Plaintiff for the cement received by the First Defendant during the purported defective time period. Hence, this Application was filed, which was allowed for the following reasons.

The Applicable Law

[7] In striking out the Counterclaim, the starting point of reference was O 18 r 19(1) of the Rules of 2012 ("Rules of "), which reads as follows:

Order 18 - Pleadings
Rule 19. Striking out pleadings and endorsements
(1) The Court may at any stage of the proceedings order to be struck out or amended any pleading or the endorsement, of any writ in the action, or anything in any pleading or in the endorsement, on the ground that:-
(a) it discloses no reasonable cause of action or defence, as the case may be;
(b) it is scandalous, frivolous or vexatious:
(c) it may prejudice, embarrass or delay the fair trial of the action; or
(d) it is otherwise an abuse of the process of the Court, and may order the action to be stayed or dismissed or judgment to be entered accordingly, as the case may be.

[8] The law on striking out is trite and has been encapsulated by the Supreme Court in Bandar Builder Sdn Bhd & Ors v. United Malayan Banking Corporation Bhd, 1993 MarsdenLR 99 , where it was distilled by Mohamed Dzaiddin SCJ (as he then was) in the following words:

The principles upon which the Court acts in exercising its power under any of the four limbs of O 18 r 19(1) Rules of the High are well settled. It is only in plain and obvious cases that recourse should be had to the summary process under this rule (per Lindley MR in Hubbuck v. Wilkinson [1899] 1 QB 86, p 91), and this summary procedure can only be adopted when it can be clearly seen that a claim or answer is on the face of it "obviously unsustainable" (Attorney- General of Duchy of Lancaster v. L & NW Ry Co [1892] 3 Ch 274, CA). It cannot be exercised by a minute examination of the documents and facts of the case, in order to see whether the party has a cause of action or a defence (Wenlock v. Moloney [1965] 1 WLR 1238; [1965] 2 All ER 871, CA.). The authorities further show that if there is a point of law which requires serious discussion, an objection should be taken on the pleadings and the point s

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2021 MarsdenLR 142

HIGH COURT MALAYA JOHOR BAHRUYINSON CORPORATION SDN BHD – AppellantVersusPERFECT MIX PORTFOLIO SDN BHD & ORS (ENCL 58) – Respondent[Civil Suit No: JA-22NCC-53-09/2020]

Counterclaims must be substantiated with timely evidence; unreasonable delay can bar claims under laches.

What is required to strike out a counterclaim under Order 18 r 19(1) of the Rules of the High Court 2012?

What constitutes laches barring a counterclaim?

Cases Referred (2)

HIGH COURT MALAYA JOHOR BAHRU
YINSON CORPORATION SDN BHD – Appellant
Versus
PERFECT MIX PORTFOLIO SDN BHD & ORS (ENCL 58) – Respondent
[Civil Suit No: JA-22NCC-53-09/2020]