Amendments to pleadings can include fresh counterclaims as long as they arise from the same facts, and such counterclaims are not barred by limitation if filed within applicable statutory periods.

Arifin Zakaria CJ (Malaya):

Introduction

(1) This is an appeal against the decision of the Court of Appeal dated 30 October 2008 dismissing the appellants appeal. Leave to appeal was granted by this court on 1 December 2008 on the following questions:

Question 1

Where counterclaims are concerned, whether leave to amend under Order 20 Rule (1), Rules of the High Court 1980 ("RHC") is limited to amendments of existing counterclaims and does not extend to the introduction of a fresh counterclaim by way of amendments.

Question 2

Where counterclaims are concerned, whether the power of a High Court to grant leave to amend pursuant to Order 20 Rule 5(2) is limited to the granting of leave to amend existing counterclaims and does not extend to permitting the introduction of fresh counterclaims by way of amendments.

Question 3

Whether Section 31 , Limitation Act 1953 is relevant to the exercise of discretion under Order 20 Rule 5(5), RHC where leave is sought to amend a defence to introduce a fresh counterclaim.

Question 4

Where leave to amend pleadings "in toto", whether such an application is one which prejudices the other party in a manner that cannot be compensated and should as a matter of course, save where exceptional basis is put before the court by the applicant, be dismissed.

Question 5

In connection with question 4 above, whether a court is entitled to conclude that an application for amendment of the nature described is an application lacking in bona fide where justification is not provided by the applicant.

In this judgment, the appellants will be referred to as plaintiffs and the respondent as the 2nd defendant as in the trial court.

The Facts

(2) The facts relevant to this appeal as distilled from the pleadings and the affidavits filed herein are briefly as follows:

The plaintiffs at all material times were involved in building and construction industry. They were contractors who had taken over four incomplete projects which were previously undertaken by the 1st defendant.

(3) The 1st defendant is a company known as Anjaria Properties Sdn Bhd. The principal business of the 1st defendant at all material times was building industry. The 2nd defendant was at all material times the executive chairman of the 1st defendant. He is being sued in his personal capacity.

(4) Between 18 April 1995 to 7 May 1996, the 1st defendant was commissioned by Jabatan Kerja Raya ("JKR") for the building and construction of four government projects ("the said projects"). Due to cash flow problems faced by the 1st defendant, the 2nd defendant sought the help of one Dato Dr Nik Hussain Abdul Rahman ("Dato Nik Hussain") to assist the 1st defendant in completing the said projects. Dato Nik Hussain was the corporate representative of the 1st and the 2nd plaintiffs.

(5) After a series of meetings between the 2nd defendant and Dato Nik Hussain, an understanding was reached wherein that the 2nd plaintiff would effectively take over the 1st defendants role in the said projects. The takeover would be fronted by the 1st plaintiff as it was a bumiputra company. It was also agreed that to all intents and purposes, the 1st defendant would publicly remain as the contractor appointed for the said projects. It was also agreed that a sum of RM10,260,399.48 was to be paid to the 2nd plaintiff for the works it was to undertake.

(6) The 2nd plaintiff commenced works. At the outset, the 2nd defendant was compelled by circumstances to deal with 3rd party contractors who were originally engaged by the 1st defendant which had certain sums due and owing to them. The 2nd plaintiff requested for funds from the 1st de