1. Are cross claims
In Permodalan Plantations Sdn Bhd v Rachuta Sdn Bhd [1985] 1 MLJ 157 (“Permodalan Plantations”), Salleh Abbas LP opined the following:
“A counterclaim on the other hand is also a cross-claim which a defendant has against a plaintiff but in respect of which the defendant can bring a separate action against the plaintiff if he wishes to do so.”[1]
2. Are a separate and independent action
Salleh Abbas LP also held in Permodalan Plantations that:
“… to all intents and purposes a counterclaim is a separate and independent action by the defendant, which the law allows to be joined to the plaintiff’s action in order to avoid multiplicity or circuity of suits.”[2] (Emphasis mine)
Consequently, a counterclaim still stands even if a principle action is discontinued by the Plaintiff(s) or the principle action is dismissed by the Court.
This position was expressly taken by the Court of Appeal in Tai Choi Yu & Co, Advocates v Ting Sie Chung @ Ting Sieh Chung [2017] MLJU 846:
“The law must therefore be taken to be well settled that by Order 15 rule 2 of the Rules of Court 2012 and based on the above authorities, a counterclaim is treated as a separate and independent action which does not come to an end in consequence of the plaintiff’s decision in discontinuing the action or the dismissal of the plaintiff’s action by the court as with the present case.”[3] (Emphasis mine)
3. Must be sufficiently connected with or allied to the subject matter of the principle claim
Order 15 Rule 2(1) of the Rules of Court 2012 is broadly worded and would appear to allow for counterclaims not sufficiently connected with or allied to the subject matter of the principal claim:
“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 the counterclaim to his defence.” (Emphasis mine)
Notwithstanding that, the courts have taken the view that a counterclaim must be sufficiently connected with or allied to the subject matter of a principle claim.
In Alloy Consolidated Sdn Bhd & Anor v Anjari Properties Sdn Bhd & Anor [2009] 4 MLJ 833, Ahmad Maarop JCA (later PCA) held the following:
“… it is settled law that a counterclaim cannot be maintained unless it is shown that the relief claimed is sufficiently connected with or allied to the subject matter of the principle claim as to make it necessary in the interest of justice that it should be dealt with along with the claim. Thus a counterclaim for slander cannot be maintained in a claim for money lent (see Esso Standard Malaya Bhd v Southern Cross Airways (M) Bhd [1972] 1 MLJ 168 at p 170, per Raja Azlan Shah J as His Royal Highness then was)).”[4] (Emphasis mine)
A similar position was taken by the Court of Appeal in M/S L.M. Ong & Co and Others v Chia Kah Gek (Dissenting avail MLJU (09) 1092 & 1094) [2009] MLJU 1093:
“As a rule, counterclaim must be sufficiently connected with the claim. Material affinity with the subject matter of the claim must be present in the counterclaim for defamation cannot be maintained in an action for a claim for a declaration that the clause in the sale and purchase agreement providing for the retention of the sale proceeds by a stakeholder was of no effect.
In this respect, it is pertinent to quote with our full agreement on what Raja Azlan Shah, J (as His Majesty then was) said in Esso Standard Malaysia v Southern Cross Airways (Malaysia) Bhd [1972] 1 MLJ 168 at p 170 …”[5] (Emphasis mine)
4. Defendant cannot be forced to bring a counterclaim
After considering the use of the word ‘may’ in Order 15 Rule 2(1) of the Rules of Court 2012, the Federal Court in Jaya Sudhir a/l Jayaram v Nautical Supreme Sdn Bhd [2019] 2 MLJ 816 held the following:
“Thus, a defendant cannot be forced to bring a counterclaim when sued for the law gives him an election.”[6]
5. Cannot be included when the principal action has been disposed of
In Ambank (M) Berhad v New Century Concepts Sdn. Bhd & Anor [2011] MLJU 741, Datuk Dr Haji Hamid Sultan bin Abu Backer J (later JCA) opined that:
“[4] … (i) The rules of the court do not strictly permit an amendment to include a counterclaim when the main suit has been disposed off. Order 15 rule 2(1) which the defendants purportedly relies on limits a counterclaim to bring in the plaintiffs action. If the plaintiffs action has been disposed off I do not think Order 15 rule 2 (1) will be of assistance to the defendants.”[7]
Additionally, His Lordship referred to the Salybia [1910] P 25 where Sir John Bingham (as he then was) was of the view that:
“I am of the opinion that no counterclaim was ever set up. A counterclaim can only be born of a living action. The letter of November 4 was written after the action had been wholly discontinued and when ‘the case’ had gone. If Bildt v Foy (1) be good law, I think it is distinguishable on the ground that there the counterclaim was mentioned while the action was still alive, whereas here it was not mentioned until after the action was dead. I doubt, moreover, whether a mere casual reference to an intention to prefer a counter claim can be described as setting up a counter claim at all. I think the registrar was right in refusing the application” (Emphasis mine)
[1] Permodalan Plantations Sdn Bhd v Rachuta Sdn Bhd [1985] 1 MLJ 157 (FC), at p. 161
[2] Ibid.
[3] Tai Choi Yu & Co, Advocates v Ting Sie Chung @ Ting Sieh Chung [2017] MLJU 846 (CA), at para 9
[4] Alloy Consolidated Sdn Bhd & Anor v Anjari Properties Sdn Bhd & Anor [2009] 4 MLJ 833 (CA), at p. 848
[5] M/S L.M. Ong & Co and Others v Chia Kah Gek (Dissenting avail MLJU (09) 1092 & 1094) [2009] MLJU 1093 (CA)
[6] Jaya Sudhir a/l Jayaram v Nautical Supreme Sdn Bhd [2019] 2 MLJ 816 (FC), at para 10
[7] Ambank (M) Berhad v New Century Concepts Sdn. Bhd & Anor [2011] MLJU 741 (HC), at para 4
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