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2021 MarsdenLR 3239
HIGH COURT MALAYA MUAR
YEE FATT MOTORS ENTERPRISE (SEGAMAT) SDN BHD – Appellant
Versus
DIRECTOR JOHOR ROAD TRANSPORT DEPARTMENT & ORS (ENC.... – Respondent
[Civil Appeal No: JB-12A-1-02/2021]
The court affirmed that only parties to a contract can sue for breaches, establishing limits on third-party claims and emphasizing the application of the privity doctrine.
Headnote:(A) Rules of Court 2012 – Order 18, Rule 19 – The court addresses the viability of third-party applications to strike out proceedings for lack of privity of contract and reasonable cause of action – Appeals related to a motorcycle sale, where issues of contract and legal standing were pivotal. (Para 2, 3, 4, 5, 8, 18).
(B) Privity of Contract – Doctrine established that only parties to a contract can sue for breaches, with discussions on exceptions and nuances such as horizontal and vertical privity – Cases cited include Dunlop Pneumatic Tyre Co Ltd v. Selfridge & Co Ltd and others. (Para 24, 26, 30).
Facts of the case: The plaintiff pursued action against the defendant along with third parties related to the sale of a motorcycle, contested on grounds of privity and strike-out applications.
Findings of Court: Appeals dismissed confirming the Sessions Court’s decision to strike out third-party claims.
Issues: Determination of privity of contract and sustainability of writ action against third parties.
Ratio Decidendi: The court found no privity of contract or reasonable cause of action linking the defendant to third parties, concluding claims were unsustainable.
Result: Appeals dismissed with costs.
Certainly. Based on the provided legal document, the key points are as follows:
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The court emphasized that only parties to a contract have the right to sue for breaches, reinforcing the doctrine of privity of contract. This limits third-party claims unless specific exceptions apply (!) (!) (!) .
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The application of Order 18, Rule 19 of the Rules of Court 2012 allows courts to strike out pleadings or proceedings that disclose no reasonable cause of action, are frivolous, vexatious, or otherwise an abuse of process. The courts adopt a strict approach, limiting summary dismissals to clear and obvious cases (!) (!) (!) (!) (!) (!) .
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The tests for striking out involve assessing whether the claim is obviously unsustainable on its face, without requiring detailed examination of evidence or facts, and whether there are serious points of law or fact that warrant full trial proceedings (!) (!) (!) (!) (!) .
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The court clarified that summary procedures are only appropriate when the claim or defence is plainly unsustainable, and not when issues of law or fact require lengthy or detailed consideration. The court must be satisfied that there is no reasonable cause of action or that the claims are frivolous or vexatious (!) (!) (!) .
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The doctrine of privity restricts enforceability and liabilities to parties directly involved in a contract. Third parties, even if intended to benefit from a contract, generally cannot enforce or rely on its provisions unless there is a direct contractual or legal connection, such as an indemnity or a clear nexus established early in proceedings (!) (!) (!) (!) (!) (!) .
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The court highlighted that the mere existence of a benefit conferred to a third party does not automatically establish privity or a right to enforce the contract unless a proper legal or contractual link is demonstrated (!) (!) .
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The court also discussed that government or official acts are presumed to be performed regularly and properly unless rebutted with evidence, relying on legal presumptions that such acts are conducted in accordance with their duties (!) (!) .
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In relation to third-party proceedings, the court stressed that the linkage or nexus must be sufficiently direct and relevant. Remote or purely incidental connections, such as issues of "cloning" of a motorcycle in this case, are deemed too remote to establish any legal relationship or liability (!) (!) .
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The court underscored that the burden of proof regarding the existence of a nexus or indemnity lies with the defendant. Failure to properly plead or establish this connection can be fatal to the third-party claim (!) (!) .
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Finally, the appellate court affirmed that the lower court's decision to strike out the third-party claims was correct, emphasizing that the findings of fact and law by the trial court should not be disturbed unless clearly erroneous. The appeals were dismissed with costs (!) (!) (!) (!) .
These points collectively reaffirm the principles that third-party claims require a clear legal or contractual nexus, and that summary dismissals are only appropriate when claims are evidently unsustainable on their face.
JUDGMENT
Introduction
[1] These are 2 appeals that originated from the same case (JB-A52-4-06/2019)before the Sessions Court sitting in Muar. To prevent any confusion, I shall usethe designation of parties as they were in the Court below.
[2] The Plaintiff (Mohamad Saifoll bin Basir) took a writ action against thefollowing:
i. Yee Fatt Motors Enterprise (Segamat) Sdn Bhd (Company Number 688142-D).
[3] The Defendant then took third party proceedings against the following:
i. Hisyamuddin bin Haji Mohamed.
ii. Public Bank Berhad.
iii. Ambank (M) Berhad.
iv. Puspakom Sdn Bhd.
v. Director, Johore Road Transport Department (Pengarah, Jabatan Pengangkutan Jalan, Johor).
vi. Director-General, Road Transport Department Malaysia (Ketua Pengarah Jabatan Pengangkutan Jalan Malaysia).
vii. Registrar and Examiner of Motor Vehicles (Pendaftar dan Pemeriksa Kereta-kereta Motor).
viii. Government of Malaysia (Kerajaan Malaysia).
[4] Before the Sessions Court sitting in Muar, the following named third party:
i. Director, Johore Road Transport Department (Pengarah, Jabatan Pengangkutan Jalan, Johor).
ii. Director-General, Road Transport Department Malaysia (Ketua Pengarah Jabatan Pengangkutan Jalan Malaysia).
iii. Registrar and Examiner of Motor Vehicles (Pendaftar dan Pemeriksa Kereta-kereta Motor).
iv. Government of Malaysia (Kerajaan Malaysia).
applied to strike out the Third Party proceedings against them pursuant to encl 108. The application to strike out the Third Party Proceedings was made pursuant to Order 18, r 19 Rules of 2012. The application wasallowed with cost of RM3,000- 00 each to both applications.
[5] Public Bank Berhad also applied to strike out the 3rd Party proceedingsagainst them vide encl 75 and succeeded in the application with the other Third Party named above.
[6] The Cause Papers are as follows:
a. Notice of Appeal. (Enclosure 1)
b. Appeal Record. (Enclosure 3)
c. Appeal Record. (Enclosure 4)
d. Appeal Record. (Enclosure 5)
e. Memorandum of Appeal. (Enclosure 6)
f. Supplementary Appeal Record 1. (Enclosure 7)
[7] The Learned Counsel for the Appellant, Mr Mohd Radzi Yatiman appliedto have both appeals (JB-A52-4-06/2019 & JB- 12A-1-02/2021) heard together andthe Learned Federal Counsel as well as Learned Counsel acting for Public BankBerhad have both agreed to the application and hence this consolidated hearing.
Background Facts
[8] The Plaintiff bought a motorcycle Honda Jazz with the registration number JKY 2651 ("the said motorcycle") from the Defendant and the sale was financed by Hire Purchase Agreement from Ambank (M) Berhad (a Third Party). The Defendant bought the said motorcycle vide a public auction that was conducted by Public Bank Berhad (another Third Party and a Respondent in this appeal) through its agent.
[9] This auction was as a result of the repossession of the said motorcycle because of outstanding amount due and payable to Public Bank Berhad by Hisyamuddin Haji Mohamed ("Hisyamuddin").
[10] According to Public Bank Berhad ("Public Bank") the said motorcycle was repossessed because of the failure of Hisyamuddin to pay the outstanding sums due and payable after a judgment-in-default was entered against Hisyamuddin by Public Bank.
[11] Puspakom Sdn Bhd is another Third Party who examined the said motorcycle after it was repossessed by Public Bank for the purpose of the auction.
[12] The Director, Johore Road Transport Department, Director- General, Road Transport Department Malaysia, Registrar and Examiner of Motor Vehicles,Government of Malaysia are the authorities that processed, registered and kept of the records of the said motorcycle.
The Law In Respect Of Striking Out Pursuant To Order 18 Rule 19 Rules Of 2012
[13] The Rules of Court provides for Striking Out in O 18 r 19 and were produced the same for ease of reference.
19. Striking out pleadings and endorsements (O 18 r 19)
(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
