THIRD PARTY PROCEEDINGS

(ORDER 16)

What is a third party proceeding?

 Where a Df brings in an outsider as a party into proceedings—the outsider is known as a
third party (TP).
 Rationale: To prevent multiplicity of proceedings.

When Available
 Requirements: Before a person could be added/joined as a TP, Df has to satisfy either one of
the requirements under O.16, r.1(1)(a), (b) OR (c).

(a) Claims to contribution: O.16, r.1(1)(a)

(b) Indemnity: O.16, r.1(1)(a)
(c) “Claims against such a person any relief or remedy relating to or connected with the original
subject-matter of the action and substantially the same as some relief or remedy claimed by
the plaintiff”: O.16, r.1(1)(b)
(d) “Requires that any question or issue relating to or connected with the original subject-matter
of the action should be determined not only as between the plaintiff and the defendant but
also as between either or both of them and a person not already a party to the action”:
O.16, r.1(1)(c)

(a) Claims to contribution: O.16, r.1(1)(a)

 Definition: Where Df is alleging that if Df has to pay damages to Pf, TP is liable to pay part of
the damages.
 Happens when:
o one of several trustees sued in breach of trust
o there are joint tortfeasors
o insurer who has issued a policy covering the same assured and the same peril as
another insurer
 Zulkifle bin Sabarudin v Fauziah Bte Arshad [2005] 5 MLJ 229
o In the context of O.16 of the RHC, the Df had to satisfy the court that there was a
question proper to be tried as to the claim for contribution from the TP as required
under the provisions of the RHC.
o There was a failure on the part of the Df to prove a prima facie case against the TP.
o Df too had failed to prove the existence of any connection between the Pf + the TP
as well as the existence of any knowledge on the part of the TP regarding the suit
filed by the Pf/the transaction entered into between the Df and the Pf.
(b) Indemnity: O.16, r.1(1)(a)
 Definition: Where Df alleges if he has to pay damages to the Pf, the TP is liable for the whole
amount.
 Happens when there is:
o surety + principal debtor
o insured + insurer
 Sze Hai Tong Bank Ltd. v Rambler Cycle Co. Ltd. [1959] 1 MLJ 200
o The Rp was entitled to the judgment against the Ap who is the carrier of the goods.
o The Ap then was entitled to be indemnified by the TPs—which are the consignee +
the bank.
o The Ap is not protected by the terms in the bill of lading as the delivery of the goods
to the consignee was against the written indemnity in the bill of lading.

(c) “Claims against such a person any relief or remedy relating to or connected with the
original subject-matter of the action and substantially the same as some relief or remedy
claimed by the plaintif”: O.16, r.1(1)(b)
 E.g. Pf ordered goods from Df (supplier)—Df then ordered goods from TP (manufacturer of
goods). Goods turned out to be defective.
o Pf wants to sue Df (for defective goods).
o Df wants to sue TP (for defective goods).

(d) “Requires that any question or issue relating to or connected with the original subject-
matter of the action should be determined not only as between the plaintif and the
defendant but also as between either or both of them and a person not already a party to
the action.” O.16, r.1(1)(c)
 E.g. A’s car was stolen by B. B sold the car to C. C sold the same car to D.
o The car is in D’s possession.
o A is now suing D for its return.
 Wide provision.

Procedure
(a) Enter into appearance
(b) Leave?
(c) Commencement
(d) Service

(a) Enter into appearance

 Df must first enter appearance (O.16, r.1(1))

(b) Leave?
 The Df must then ask himself if leave if required to issue TP notice.
 Leave is required if:
o action begun otherwise than by writ (O.16, r.1(2)).
o Df has served his defence (O.16, r.1(2)).
o TP notice is sought to serve on the government (O.73, r.8).
 If leave is required, the Df must apply by filling an ex parte notice of application supported by
an affidavit.
o The ex parte notice of application must comply with Form 20.
o The affidavit must comply with O.16, r.2(2), where it must state:
 The nature of the claim made by the Pf in the action;
 The stage which proceedings in the action have reached;
  The nature of the claim by the Applicant + facts on which proposed TP notice
is based; and
 The name + address of the person against whom the TP notice is to be
issued.
 Granting of leave is Court’s discretion.
 If leave is granted, then Df is ready for TP proceedings.

(c) Commencement
 Df has to issue a TP notice + serve it on TP (must comply with a particular form)
o If Df is seeking contribution/indemnity/same form of relief, TP notice must be in
Form 18.
o If Df is claiming common issue, TP notice must be in Form 19.
 Together with TP notice, a copy of the writ + any other pleadings must be attached—O.16,
3(2).

(d) Service
 Once Df has issued TP notice, Df has to serve TP notice on intended TP.
 O.16, r.3(3): Service to be done in accordance with O.10, r.1 (personal service).
 Once TP notice is served, TP has to enter into appearance in accordance with Form 20.
o Time limit same as O.12, r.4.
 WM: 14 days
 EM: 14 days or 20 days
 If TP fails to enter an appearance—O.16, r.5—TP is in default + he is deemed to admit to Df’s
claim against him.

Summons for Third Party Directions: (r 4)

(a) Df must apply for directions
(b) Setting aside TP notice
(c) Hearing of TP directions
(d) Possible directions given
(e) Effect of directions

(a) D must apply for directions

 O.16, r.4(1): Within 7 days of the TP entering an appearance, Df is under a duty to issue +
serve on all parties (TP, Pf, Co-Dfs), a notice of application for TP directions in accordance
with Form 22.
 Purpose of TP directions: Bring all parties to Court so Court could make orders/directions
necessary for smooth running of the trial.
 If Df fails to apply for TP directions:
o O.16, r.4(2)—2 options:
 TP himself may apply for directions (very rare).
 TP can apply to have TP notice issued against him to be struck out.

(b) Setting aside TP notice

 If Df delays issuing the notice of application for TP directions, TP may apply to strike out
notice of application for TP directions.
 2 grounds that can be raised:
o Df’s claim against him does not fall under O.16, r.1(1); OR
o Where TP can show special circumstances e.g. immunity, privilege, etc.
 If TP succeeds in striking out TP proceedings, the entire proceedings will be terminated.
(c) Hearing of TP directions
 Court orders for Df to serve on TP an SOC within a certain number of days.
o To inform the TP the nature of the Df’s claim against him.
o Not mentioned in ROC but can be seen in Forms 22 + 23.
 Court may order for TP to serve a defence to Df’s SOC within a certain number of days.
o O.16, r.5: If ordered but fails to do so, he is deemed to have admitted to the Df’s
claim + he will be bound by any judgment made by Court
 Court may make an order for discovery between the Df + TP.

(d) Possible directions given

 The Court has wide power in deciding what directions to give.
 They include the power to:
o O.16, r.4(3)(a): Order judgment to the Df against the TP if the liability of the TP to
the Df who issued the TP notice is established at the hearing;
o O.16, r.4(3)(b): Order any claim question/issue to be tried as the Court may direct;
o O.16, r.4(4): Give the TP leave to defend alone/jointly with any Df + appear at the
trial;
 TP may want to defend Pf’s claim together with Df/alone because TP may
feel like Df has a strong case—if Df wins, TP also wins + walks away free.
 Kayla Beverly Hills (M) Sdn Bhd & Anor v Quantum Far East Ltd & Ors (Uma
Devi d/o Balakrishnan, third party) [2003] 6 MLJ 703.
 Issue: Whether there is a conflict of interest where a solicitor acts for
both Pf + TP.
 Yes. Allowing this to happen would raise serious questions relating
to a breach of confidence, conflict of interest + ultimately the due
administration of justice.
o Determine the extent to which the TP is to be bound by any judgment; OR
o O.16, r.4(3)(c): Dismiss the application for directions.
 Where Court finds that TP proceedings does not fulfill the requirements/TP
raises special circumstances.
 Dismissal of the application for directions has the result of terminating the
TP proceedings.

(e) Efect of directions

 Pacific etc Sdn Bhd v Senanti Motors Sdn Bhd [1992] 2 MLJ 364
o O.16, r.4(2) of the RHC permits a TP who has been served with a TP notice to make
an application to set it aside if 7 days after he had entered an appearance, the Df
has failed to take out a TP summons for directions.
o The TP's application in the instant case was premature as it had been filed before
the 7-day period had expired.
o Principle: By consenting to the order on the summons for direction, the TP's
solicitors acquiesced in the validity of the TP notice.

Plaintif and Third Party

(a) If Pf wishes to obtain judgment against TP
(b) If TP wishes to counterclaim against Pf

(a) If Pf wishes to obtain judgment against TP

 When a TP is added to proceedings, Pf may then realise that TP is liable—Pf may now want
to claim against TP.
  General rule: Pf can only claim against Df (TP is not a Df)
 If the Pf wishes to obtain judgment against the TP, he must apply under O.15, r.6 (joinder of
parties) to alter status of TP to become a co-Df.
 Court has discretion to allow the joinder of parties or not.
 Fullji Realty Sdn Bhd v Lim Yong Meng [2007] 3 MLJ 39
o Pf claims against the Df for loss suffered due to the Df’s breach of warranty.
o Pf bought a piece of land from an impostor who claimed to be the registered
proprietor, where Df acted as a solicitor.
o Df took out a TP claim for indemnity + contribution against the TP (purchaser’s
solicitor).
o Held: To constitute a breach of warranty of authority the Df must have warranted to
the Pf that he was authorised to act for the registered proprietor to sell the land +
the Pf signs the agreement in consequence thereof. The evidence clearly indicates
that this was not the case. The Pf had already made up its mind to purchase the land
from the imposter before the parties went to see the Df at his office.
(b) If TP wishes to counterclaim against Pf
 Generally, only a Df can bring a counterclaim against the Pf.
 If the TP wishes to counterclaim against the Pf he must himself apply to the Court to alter his
status from TP to Co-Df (O.15, r.6).
 A TP who has been given leave to defend the action pursuant to O.16, r.4(4) may, at the trial,
cross-examine the Pfs + seek discovery against + interrogate the Pfs.
o Kayla Beverly Hills (M) Sdn Bhd & Anor v Quantum Far East Ltd & Ors (Uma Devi
d/o Balakrishnan, third party) [2003] 6 MLJ 703.

Limitation against Third Party

 Scenario:
o Accident happened on 1 January 2000 (cause of action accrued)
o Pf sued Df on 31 December 2005 (a day before limitation period expires)
o Df issues TP notice on TP on 16 January 2006
o Can TP say that since limitation period expired, he cannot be added in?
 No. The 6-year limitation period that started on the day the cause of action
accrued is only between the Pf + Df—not between the TP + Df.
 When a TP claim is for an indemnity/contribution, time does not run for the purposes of
limitation until Df is found liable.
o Mat Abu bin Man v Medical Superintendent, General Hospital, Taiping, Perak &
Ors [1989] 1 MLJ 226
 Time does not run for purposes of limitation between the Df + TP until Df is
made liable to Pf.
 This only applies when Df is claiming indemnity/contribution from TP.
 Where the claim by the Df against the TP is not one for an indemnity/contribution but for a
breach of contract, then time runs for the purposes of limitation from the date the cause of
action accrued.
o Tan Chong & Sons Co Sdn Bhd v Arumugam s/o Packrisamy & Anor [1992] 3 CLJ
1477
 This is the 3rd case—Ap is a TP.
 In the 1st case, the 1st Rp obtained judgment against 2nd Df.
 In the 2nd case, the TP was found to be liable for indemnity + contribution
towards the 1st Rp.
 The issue was limitation as the oral contract was breached 9 years ago.
 Held: Since the subject was breach of contract, Rp was time barred.