1. ) TADMANSORI HOLDINGS SDN. BHD. 2. ) DATUK SERI UTAMA TENGKU ADNAN BIN TENGKU MANSOR 3. ) DATO' DR. TENGKU RETHWAN BIN TENGKU MANSOR v 1. ) DANCOM TELECOMMUNICATIONS (M) SDN. BHD. 2. ) THREE WELLS HOLDINGS SDN. BHD. 3. ) DATUK LIU THIM SOON 4. ) DATIN TAN KUI MOI 5. ) LIU YOONG CHWEN

Case Significance

Applies the in pari delicto and clean-hands principles, as moderated by the trio of considerations in Patel v Mirza, to strike out a writ suit under Order 18 rule 19, treating the underlying arrangement as a sham and holding the action could not possibly succeed.

This High Court (Kuala Lumpur) decision concerns an application to strike out a writ suit on the principles of "let the loss lie where it falls" and in pari delicto, where the parties are said to be equally at fault in an illegal or immoral transaction. The court began from the maxim "Ex turpi causa non oritur actio", that no action arises from a dishonourable cause, and noted that the in pari delicto principle (in equal fault) may be displaced or moderated by the three considerations, or "trio of considerations", propounded by the United Kingdom Supreme Court in Patel v Mirza and accepted by the Malaysian courts. The application to strike out the plaintiffs' writ was brought under Order 18 rule 19(1)(a), (b), (c) and (d) of the Rules of Court 2012.

The court set out the approach to determining whether a case is plain or obvious for striking out: the length of time it takes to argue the case is not decisive; rather, where the affidavit evidence discloses a factual dispute, those facts must be analysed and, if found to be inconsistent with undisputed contemporaneous documents or inherently improbable, the court is entitled to reject them and proceed on the undisputed documentary evidence, a trial adding nothing further. If critical examination of the evidence leads to the conclusion that the action could not possibly succeed, it should be struck out.

The court also addressed the nature of sham agreements, describing a written agreement as a sham where it incorporates clauses by which neither party intends to be bound and which is a smokescreen to cover the real intentions of both contracting parties. It reiterated the principle that the court will not assist a party who takes advantage of its own wrongdoing and comes to court without clean hands. The judgment illustrates the striking-out of a claim as an abuse of process on illegality and clean-hands grounds, applying the in pari delicto principle as moderated by the trio of considerations in Patel v Mirza.