JALUR TEGAS SDN.BHD. v 1. ) PESTECH TECHNOLOGY SDN. BHD. 2. ) Mohd Rizal Bin Abdul Ghani

Case Significance

Illustrates the striking-out jurisdiction under Order 18 rule 19 and the care taken to separate a company's litigation from personal claims wrongly directed against its director.

This High Court decision at Shah Alam concerns an application to strike out a counterclaim, in a dispute arising from a contract for the supply of labour. The plaintiff company carried on the business of supplying manpower for various services, including construction, and had supplied workers to the defendant company for two of its projects pursuant to purchase orders. According to the plaintiff, the workers were supplied and invoices issued, the defendant had acknowledged receiving the manpower, had made some payments and had even proposed a reduction in the rate charged, yet a balance of RM1,037,369.76 remained outstanding, which formed the basis of the plaintiff's principal claim. In its defence the defendant alleged that the plaintiff had failed to supply manpower as required despite payment, and that the quoted rates were excessive compared with the market. The defendant then filed a counterclaim not only against the plaintiff company but also against the company's director in his personal capacity, and the plaintiff company and the director applied under Order 18 rule 19(1)(b) and (d) of the Rules of Court 2012 to strike out that counterclaim as frivolous, vexatious and an abuse of process. The court's task was to decide whether the counterclaim disclosed a sustainable case against each of the two defendants to it. The court held that the substance of the counterclaim, that the plaintiff had failed to supply satisfactory and timely manpower causing the loss of a subcontract, was tied to the defendant's defence in the main claim and needed to be tried against the plaintiff company. As against the company's director, however, the court found the counterclaim misdirected, because the principal claim had been brought by the plaintiff company as a corporate entity alone and the director, whether in his personal capacity or as director, had filed no claim against the defendant. Accordingly, the court allowed the striking-out application only in part, striking out the counterclaim against the director but declining to strike it out against the plaintiff company, and ordered costs in the cause. The judgment is a useful illustration of the striking-out jurisdiction under Order 18 rule 19 and of the care taken to separate a company's litigation from personal claims against its director.