D2D BIZHUB SDN. BHD. v 1. ) ALPHA FINTECH SDN. BHD. 2. ) KOH CHEE SIONG BUKAN PIHAK-PIHAK TEOH WENG BOON

Case Significance

Strikes out a counterclaim as an abuse of process for seeking to relitigate allegations of fraud and illegal moneylending already rejected in an earlier Order 14 summary judgment, holding that a failed defence cannot be converted into a viable counterclaim by rephrasing and adding peripheral parties.

This High Court (Kuala Lumpur, Commercial Division) decision concerns an application to strike out a counterclaim, the plaintiff in the original action (and first defendant in the counterclaim) applying to strike out the counterclaim of the original defendants. The dispute had already been the subject of an Order 14 summary judgment proceeding, and the application to strike out the counterclaim raised whether the defendants were, in substance, seeking to re-litigate issues already decided against them.

The catchwords frame a series of related questions: on civil procedure, the requirements for summary judgment and whether the defendants had raised genuine triable issues rather than bare assertions; on contract, the validity and enforceability of settlement agreements, estoppel by settlement, and whether a settlement was signed under duress; on estoppel, whether it could override illegality and its requirements of inducement and detriment; and on moneylending and illegality, whether the loan arrangement contravened the Moneylenders Act 1951, the burden of proving illegality, and whether excessive interest rendered the transaction illegal, illegality having to be established by credible evidence rather than mere assertion.

In striking out the counterclaim, the court reasoned that issues already scrutinised and found meritless cannot be made triable by recasting them as a counterclaim. It observed that in the earlier Order 14 summary judgment proceedings the court had examined a transaction of RM323,000 and the surrounding allegations, and that the respondents had failed to produce credible evidence disputing the genuineness of the loan; the allegations of fraud, conspiracy and illegal moneylending had been found to be without merit and to appear to be afterthoughts made only after the respondents were ordered to pay. The court held that the respondents could not recover, by counterclaim, sums allegedly paid under a transaction that they themselves alleged was illegal and void ab initio, nor could they convert a failed defence into a viable counterclaim by rephrasing the same allegations and adding peripheral parties. The judgment illustrates the abuse-of-process bar on relitigating, through a counterclaim, allegations already rejected on summary judgment.