Third Party Proceedings ( Final) PDF

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Third Party ProceedingsNature of 3 rd Party Proceeding Definition: Third party proceedings is a procedure where the Defendant applies to bring another person into the court proceedings as a third party.  Scenario: P & D is already involving in a proceeding. Then, a 3rd party proceeding is ...

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Third Party Proceedings Nature of 3rd Party Proceeding  

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Definition: Third party proceedings is a procedure where the Defendant applies to bring another person into the court proceedings as a third party. Scenario: P & D is already involving in a proceeding. Then, a 3rd party proceeding is filed by D to shift the burden/liability to 3rd party. The condition is that the 3rd party must be related to the cause of action brought by P. A third party proceedings is a separate action from the main action between P and D. In third party proceedings, D becomes P and the third party becomes D. Third party proceedings and the main action between plaintiff and defendant may be heard together to avoid multiplicity of suits. The 3rd party proceeding will be heard first. The 3rd party is required to enter his memorandum of appearance (MOA) and statement of defence. As usual, the 3rd party is to enter MOA within 14 days (O 12 R 4), failing which, D may apply for JID. On the other hand, if the 3rd party has no good defence & only bare denial, D may file SJ

When can a 3rd party proceeding be filed? 

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Order 16 Rule 1(1): where in an action, D who has entered appearance: o Claim contribution/indemnity against a person who is not a party to the action o Claim against such person any relief/remedy relating to subject matter which substantially the same as what claimed by P; or o Requires any question/issue relating to subject matter to be determined not only between P and D but also between a 3rd party. Then, D may issue a 3 rd party notice, containing a statement of claim & grounds of claim/questions required to be determined.

Defendant claims contribution: O.16 R.1(1)(a) 

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Defendant may claim contribution from TP where: o (i) One of several trustees is sued in breach of trust: the trustee sued (D) may claim contribution from the other trustees (TP); or o (ii) There are joint tortfeasors: where one tortfeasor (D) is sued, he may claim contribution from the other tortfeasors (TP); or o (iii) Two insurers have issued policies covering the same assured and the same peril: where one insurer (D) is sued, he may claim contribution from the other insurer (TP). Stott v West Yorkshire Road Car Co Home Bakeries Ltd and Another o TP proceeding had been initiated to seek for contribution. o This case involved a road traffic collision between a motorcycle (P), an oncoming bus (D) and a parked van (TP). The P who was injured in the

accident brought an action against the D. The D in turn brought third party proceedings against the parked van, seeking contribution. Defendant claims indemnity: O.16 R.1(1)(a) 

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Defendant may claim indemnity from TP in cases of: o (a) Surety and principal debtor: e.g. where the banker goes after the guarantor (TP) for a loan o (b) Insured and insurer: where the insured (D) goes after the insurer (TP) A right to indemnify may arise from express or implied contract; it may be implied from some principle of law other than contract; or it may arise from some statute. Sze Hai Tong Bank Ltd v Rambler Cycle Co Ltd o The Privy Council held that P, who had shipped the goods, was entitled to judgement against D who was the carrier of the goods. In turn, D was entitled to be indemnified by the TPs who were the consignee and the bank. Eastern Shipping Co Ltd v Quah Beng Kee o It exists where there is an obligation either at law or in equity upon one party to indemnify the other.

Defendant claims any relief or remedy: O.16 R.1(1)(b)  

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Defendant may claim any relief or remedy from TP which is substantially the same as the relief or remedy claimed by P against D. E.g. “P is injured by a falling roof tile in D’s house. The roof was repaired the previous day by T, a contractor (i.e. third party). P is suing D.” D can claim damages against T by TP proceedings. Tan Chong & Sons Co Sdn Bhd v Arumugam s/o Packirisamy o where the original subject matter of the action is a claim in tort for damages in respect of personal injuries involving a motor accident and the claim against the third party is a claim for breach of an oral agreement to purchase a third party insurance policy for the car that was involved in the accident and is founded on contract, the relief or remedy claimed against the third party cannot be regarded as 'substantially the same as some relief or remedy claimed by the plaintiff'.

Defendant requires any question or issue related to the original subject matter to be determined   

For example, “A’s car was stolen by B. B sold the car to C. C sold the same car to D. The car is in D’s possession. A is now suing D for its return.” D make take TP proceedings to require C to determine the ownership of the car. C in turn can require B to determine ownership. Amanah Scotts Properties (KL) Sdn Bhd v Ooit Meng Khin & Ors (No 2) o P are seeking reliefs relating to breach of duty and negligence against the D.

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o The D alleged that his signature has been forged on certain document, allowing monies from the P’s account to be released. o He therefore wishes to apply for the bank to be named as a third party to the proceeding for negligent in releasing such unauthorized payments from the P’s accounts. o Court held that the application shall fail because D did not show how the reliefs claimed against the banks were related to with the subject matter of the P’s claim. Public Bank Bhd v Ng Chee Ping o it was stated that the defendant's claim against the third party must be premised on a cause of action, and a party must not be joined as a third party merely to elicit evidence, which can be obtained by issuing a subpoena.

Procedure to bring in third party

Issuance of third party notice   

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O 16 R 1(2): D may not issue a 3rd party notice in Form 18 or Form 19 without the leave of court unless he issues the notice before serving his defence to P Means: if 3rd party notice is issued before a statement of defence is served to P, no need to obtain leave of court O 16 R 2(1): application for leave to issue 3rd party notice may be made ex parte via notice of application in Form 20. The court may direct the application to be served O 16 R 2(2): application must be supported by affidavit stating contain a statement by the defendant of the nature of the claim made against him and either of the nature and grounds of the claim made by him against the third party or of the question or issue required to be determined. O 16 R 3(2): Third party procedure applies in an action begun by originating summons as well as in an action begun by writ O 16 R 11: It also applies to any counterclaim by a defendant as if the subject matter of the counterclaim were the original subject matter of the action, and as if the person making the counterclaim were the plaintiff and the person against whom it is made were a defendant Thus the plaintiff on whom a counterclaim is served may issue a third party notice against a person who is not a party to the action.

Third party directions / appearance and set aside

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O 16 r 4(1): If the third party enters an appearance in Form 21, the defendant who issued the third party notice shall, by a notice of application to be served on all the other parties to the action, apply to the Court for directions. O 16 r 4(2): If no application is served on the third party under paragraph (1), the third party may, not earlier than seven days after entering an appearance, by a notice of application in Form 22 to be served on all the other parties to the action, apply to the Court for directions or for an order to set aside the third party notice.

Directions to be given (by Court)   

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O 16 r 4 (3)(a): Order judgment to the Defendant against 3rd Party O 16 r 4 (3)(b): Order that any claim or issue to be tried O 16 r 4 (3)(c): Dismiss application o The application may be dismissed if the action does not fall within O16 R1(1)(a) – (c) or if the P or the third party can show special circumstances why the directions should not be given. o Effect: dismissal of the application for directions has the result of terminating the third party proceedings. O16 R 4 (4): 3rd Party’s leave to defend o Kayla Beverly Hills (M) Sdn Bhd & Anor v Quantum Far East Ltd & Ors (Uma Devi d/o Balakrishnan, third party)  Order 16 Rule 4(4) of the RHC allows the court to give such directions to the 3 rd party to defend the suit whether alone or jointly with any D.  The necessary consequence of Order 16 Rule 4(4) of the RHC is that the 3rd party can, at the trial, cross-examine the P and seek discovery against and interrogate the P. What if there is default by the third party? o Order 16 Rule 5 (1)(a) o If a third party does not enter an appearance or, having been ordered to serve a defence, fails to do so, he shall be deemed to admit any claim stated in the third party notice and shall be bound by any judgement or decision in the action so far as it is relevant to any claim, question or issue stated in that notice.

Limitation against third party 

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The rules on limitation period apply to defendant as well as to third party. For example, for contract or tort, the limitation is 6 years to bring an action against defendant or third party Mat Abu b Man v Government of Malaysia o The court held that time does not begin to run until defendant is made liable to plaintiff. Also, a third party claim is between defendant and third party and is a separate action from the main action between plaintiff and defendant.

Procedure of Third Party Proceeding  

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Governed by Order 16 of Rules of Court Defendant may or may not require leave from court to issue third party proceeding: o Leave not required:  When action begun by writ of summon but defendant not yet serve his defence  Defendant issues third party notice before defendant serves his defence according to Rule 1(2) o Leave required:  When action begun by originating summons  Defendant issues the notice after serving his defence according to Rule 1(2)  Third party is government (Order 73 Rule 8) Third party notice must be served to every third party personally together with a copy of the writ and any of the pleadings served (if any) as Rule 3(2) is concerned.

Procedure to apply leave  

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By ex-parte application based on Form 20 support with affidavit Affidavit must consist of: o Nature of the claim made by P o The stage of the proceedings which has been reached o Nature of the claim by D against third party o The name and address of third party Court had power to grant or not the application Third party must enter appearance in Form 21 within 14 days after being served with the third party notice R 4(1) If third party fails to enter appearance or defence, then judgement may be entered against him in default of appearance or defence. D must apply for directions by way of notice in Form 22 within 7 days after third party has entered appearance and serve the application to all parties of proceeding (R 4(1)) If D has not served within 7 days, third party may apply to the court for an order to set aside the third party notice according to Order 16 Rule 4(2). The notice may be dismissed if: o The action does not fall under Order 16 Rule 1(1)(a) – (c); or o Plaintiff or third party can show special circumstances why the directions should not be given. o Pacific Asia etc v Senanti Motors Sdn Bhd  The court held that delay in taking out third party proceedings by D may constitute special circumstances to dismiss it.

The extent to which the 3rd party is to be bound by any judgement: Plaintiff and Third Party: 

P obtain judgement against the 3 rd party: o The P must apply under Order 15 Rule 6 to add the latter as a codefendant (alter TP’s status). P cannot claim against a TP. o Fullji Realty Sdn Bhd v Lim Yong Meng  P claimed against D because of an imposter who purported to be the registered proprietor, and for whom the D had acted as solicitor. The D took out a TP claim for indemnity and contribution against the 3rd party, the P’s solicitor.  Held: a TP proceeding is essentially an independent proceeding between the D and the 3 rd party. If the P intends to obtain judgement against the 3 rd party, it would have to apply to add the 3 rd party as a D under Rules of High Court 1980 O 15 R 6.

Third party counterclaim against the P:  

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The third party must himself apply to court to alter his status to co-defendant A third party who has been given leave to defend the action pursuant to Order 16 R4(4) may, at the trial, cross-examine the P and seek discovery against and interrogate the P. Kayla Beverly Hills (M) Sdn Bhd & Anor v Quantum Far East Ltd & Ors (Uma Devi d/o Balakrishnan, third party) o Order 16 r 4(4) of the RHC allows the court to give such directions to the third party to defend the suit whether alone or jointly with any defendant. o The necessary consequence of O 16 r 4(4) of the RHC is that the third party can, at the trial, cross-examine the plaintiffs and seek discovery against and interrogate the plaintiffs.

Interpleader Proceedings Nature of interpleader: 

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Proceedings commenced by any person who is in possession of any goods, money, or chattel, to which he has no interest or claim but that property is being claimed by 2 or more other persons, and the first person, who is in possession of the property, is unsure as to who is the proper claimant. The person in possession of the property may apply to court and ask the court to decide who the proper claimant of that property is. The person who applies = interpleader, the proceedings = interpleader proceeding Watson v Park Royal Caterers Ltd o It is essential that before the applicant is granted relief, he is, or genuinely expects to be, sued by 2 or more persons, and there must be some real foundation for the said expectation. A mere anticipation, without any intimation having been received is not sufficient. Order 17 Rule 1: Generally relief for interpleader summons is available in two classes of cases known traditionally as stakeholder's and sheriff's interpleader.

Types of interpleader: o Order 17 Rule 1(1)(a) (stakeholder’s interpleader)  For stakeholder's interpleader, it’s where relief is available in a situation where the applicant is under a liability in respect of a debt, or in respect of any money, goods or chattels, and he is, or expects to be, sued for in respect of that debt or money, or those goods or chattels by two or more persons making adverse claims thereto. o Order 17 Rule 1(1)(b) (sheriff’s interpleader)  In a sheriff's interpleader relief is available to a sheriff (The Registrar of the High Court is a Sheriff. Other officers of like nature appointed include bailiffs, process servers and subordinate officers) where a claim is made by any person, other than the person against whom the process is issued, to any money, goods or chattels taken, or intended to be taken, by a sheriff in execution under any process or to the proceeds or value of any such goods or chattels. Procedure (stakeholder’s interpleader): 

Where D is sued by P claiming property held by D in which D has no interest but which is also claimed by a third party, D may take out and serve a summons on

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both claimants for an order that the issue as to ownership be decided between them. Conditions: o Used when the applicant has no claim to the property o Applicant do not side with either party o Applicant let the court made decision o Applicant want cost to be borne by the parties Order 17 Rule 3(1): the application shall be made by OS. If it is a pending action, the application shall be made by notice of application in Form 27 or Form 28. (ROC 2012 does not mention on appearance) Three conditions must be fulfilled- O 17 r 3(2): the OS (unless the applicant is a Sheriff) shall be supported by an affidavit containing that the applicant o a. claims no interest in the subject matter in dispute other than for charges or costs; o b. does not collude with any of the claimants to that subject matter; and o c. is willing to pay or transfer that subject matter into Court or to dispose of it as the Court may direct. Order 17 Rule 4(1): the OS / notice of application that is in one of the forms in Form 29 shall be served at least 7 days before return day. Order 17 Rule 4(2): OS must be served personally. Order 17 Rule 4(3): the notice of application need not be served personally unless ordered by court. Hong Leong Bank Bhd v Manducekap Hi-Tec Sdn Bhd & Ors o Applicant maintained a current account for 1st claimed (C1). C1 dispute with C2 (current BOD), C3 (former BOD) and C4 (shareholders) over control and management of the account. C2 given control. Applicant faced several threats of litigation and competing claims concerning the control and management of the account. The applicant thus applied for interpleader relief, requesting the High Court to determine and/or clarify the control and/or management of the account. o Held: In seeking interpleader relief under O 17 r 1 RHC, an applicant must genuinely face a potential suit by one or more persons. There must exist a real conflict between the claimants. Mere anticipation of a legal suit is not sufficient. o Further, C1 was an incorporated company having its own legal entity. The moneys in the account belonged to C1. No shareholder or board had any claim to such moneys. Therefore, there could not be any competing claim to the account between the first claimant's shareholders or the board of directors. The application did not meet the first requirement under O 17 r 1 of the RHC since the applicant was not faced with two or more competing claims. The applicant did not also face any real threat of litigation since the threats by the C2 and C3 in the instant case could not be construed as threats of legal suit. Tan Kim Khuan v Tan Kee Kiat (M) Sdn Bhd

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o On the issue of whether at the hearing of an interpleader summons, the respondent judgment creditor has to lead evidence to show that the goods seized are the properties of the judgment debtor. o The court held that the burden of proof was on the claimant unless the judgment creditor has been made the plaintiff. Lee Heng Moy (f) v John Hancock Life Insurance (M) Bhd & Anor o Deceased took life insurance policy with R1, and named R2 (whom he described as his wife in the policy) as beneficiary. Appellant claimed the sum insured on grounds that she was the lawful wife of the deceased. R1 filed instant interpleader summons order. Trial judge held R2 = lawful beneficiary, since Insurance Act does not limit beneficiary to a wife. Deceased nominated R2 = lawful beneficiary. Hence this appeal by the appellant. o Held: The first respondent could have decided on their own and release the insured sum to the second respondent. But they did not want to take the risk. So they decided to take a safer course by filing an interpleader summons under O 17 RHC requesting both claimants to come to court and state the circumstances and particulars of their respective claims to the insured sum and that they be bound by whatever order that the court may make.

Procedure (Sheriff’s interpleader): 

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Order 17 Rule 2(1): applicant shall give notice of his claim in Form 24 to the Sheriff charged and shall include in his notice a statement of his address, and that address must be his address for service. Order 17 Rule 2(2): On receipt of a claim made under this rule, the Sheriff shall forthwith give notice thereof in Form 25 to the execution creditor and the execution creditor shall, within four days after receiving the notice, give notice in Form 26 to the Sh...