IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR

(COMMERCIAL DIVISION)
SUIT NO: D-22-163-2009

EON BANK BERHAD

V
OSMAN @ MD DAUD BIN AROFF & 2 ORS
GROUNDS OF JUDGMENT

Enclosure 32 is the Proposed Intervener application to intervene under

Order 15 r 6(2)(b)(i) and (ii) and Order 92 r 4 Rules of the High Court
1980 for the following Orders:1. Bahawa LAU JENN WEE (No. K/P: 700603-04-5177)
dibenarkan

untuk mencelah di dalam tindakan ini

sebagai Defendan dan bahawa Writ Saman dan

Pernyataan

Tuntutan

dipinda

sedemikian

dengan

menambah nama beliau;

2. Bahawa LAU JENN WEE tersebut diberikan kebebasan
untuk memasukkan kehadiran dan pembelaan dan/atau
tuntutan

balas

dalam

masa

14

hari

dari

penyampaian Pliding terpinda;

3. Kos permohonan ini dijadikan kos dalam kausa;

tarikh

4. apa-apa relif atau perintah dan/atau arahan lain yang

selanjutnya yang mana Mahkmah Yang Mulia ini fikirkan
berpatutan dan suai manfaat.
The Application is supported by an Affidavit in Support affirmed on
30.11.2009.
Brief Facts
The Plaintiffs Claim in this action is premised on the Letters of offers
dated 29.6.2007 and 14.11.2007 in relation to the Housing Loan Facility
of RM6.5 million granted to the Defendants. A Guarantee dated
6.12.2007 was executed whereby the Guarantor is the 3 rd Defendant.
The amount claimed is RM6,730,544.63 with interest and costs due and
owing under the said Facility.
The Interveners Application
1)

The Proposed Intervener has commenced its suit against the 1 st

and 2nd Defendants [Civil Suit No. 22-276-2009].

2)

The Proposed Intervener have entered into an Investment

Agreement with the 1st and 2nd Defendants to purchase the
property described as H.S. (M) 3999, Lot 25, Mukim Kuala
Lumpur, Wilayah Persekutuan Kuala Lumpur.

3)

The Proposed Interveners interest and rights in HS (M) 3999 Lot

25, Mukim Kuala Lumpur [the said Land] will be prejudiced
should the Plaintiff, without the Proposed Intervener knowledge,
obtain an order for sale over the said Land. The Proposed

22-163-2009

Intervener has entered a private caveat over the said Land and
has an injunction against the Defendants.
4)

The Proposed Intervener averred that the 1 st and 2nd Defendants

hold the said Land on trust for him pursuant to an Investment
Agreement and therefore the Defendants do not have the
capacity to enter into the Facility Agreement without the consent
of the Proposed Intervener.

The Proposed Interveners Argument

The Proposed Intervener had invested in a project to develop the said
Land. The 1st and 2nd Defendant was holding the property as a trustee of
the Proposed Intervener. Therefore the Proposed Intervener is entitled to
the RM2.7million.
The Proposed interveners Counsel further submits that the issue to be
considered by the Court is not whether there is a nexus between the
Parties. The issue before the Court is whether if any Order is made the
legal interest of the proposed Intervener will be affected. The case of
Kuala Lumpur Finance Bhd. v. Azmi & Co. Sdn. Bhd. [1996] 4 MLJ
650 was referred to by Counsel where the Court held that even though
there was no nexus between the Parties considering there was a specific
allegation against them it was just and convenient to add the Defendants
so that the dispute could be resolved effectively.
The Plaintiffs Argument
The Plaintiff submits that the matters averred by the Proposed Intervener
are not matters which are questions or issues arising out or relating to or

22-163-2009

connected with any relief or remedy claimed in this action. The case of
Pegang Mining Co Ltd v. Choong Sam & Ors [1969] 2 MLJ was cited.
The Proposed Intervener is neither privy nor conferred any rights or
benefit as the Plaintiffs claim is pursuant to the Loan Facility Agreement
between the Plaintiff and the Defendants. The RM2.7million said to be
paid by the Proposed Intervener to 1st and 2nd Defendants as down
payment of the said Land is not relevant.
Any rights and liabilities the Proposed Intervener may seek to assert with
regards to the said Land are not directly affected by any order which
may be made in the action. The Plaintiff cited the case of Bujang bin
Haji Ulis v. Nancy bte Abdullah (Imas anak Blanda & Anor as
Proposed Interveners) [2007] 4 MLJ 363 where it was held that,
To succeed in an interveners application, the applicants
have to show that they have a right in the subject matter of
the suit and want to be made a party to protect their interest.
They must comply with the procedural requirement to
intervene as set out on O15 r 6 (2) (b) (ii) of the RHC. The
test in determining whether an applicant ought to be given
leave to intervene is whether the applicants rights or
liabilities to any party to the action, in respect of the subject
matter of the action, will be directly affected by any order
which may be made in the action.
The Plaintiff further submitted that the Proposed Interveners interest, if
any, is merely a commercial interest in the outcome of the action.
Therefore whatever the alleged business relations between the

22-163-2009

Proposed Intervener and the 1st and 2nd Defendants is not an interest
entitling him to intervene.
It is also the Plaintiffs submission that the rights and the obligations
under the Investment Agreement can at best amount to a collateral
rights and obligations.
On the issue of the 1st and 2nd Defendants as trustee for the Proposed
Intervener vis-vis the said Land, the Proposed Intervener failed to show
any legal interest in the actual proceedings.
The Proposed Intervener had submitted that the Plaintiff has
constructive knowledge of the Proposed Interveners rights as
installment payments to the Plaintiff were made with cheques bearing
the name of Meriah Unggul Sdn. Bhd.,
pihak

Plaintif

mempunyai

pengetahuan

konstruktif

berkenaan dengan hak kepentingan Pencelah kerana segala

bayaran ansuran telah dibuat melalui cek atas nama sebuah
syarikat dikenalai sebagai Meriah Unggul Sdn. Bhd;..
[para 5(d) Affidavit

of the Proposed Intervener

affirmed on 22.12.2009].
The Plaintiff submits that the fact the payments are made by a 3 rd party
is insufficient to suggest that the agreements between the Defendants
and the 3rd parties were within the Plaintiff knowledge. Further a
company search done on Meriah Unggul Sdn. Bhd. shows that the
Proposed Intervener does not have an interest in that company.

22-163-2009

The Proposed Intervener had in fact filed a civil suit against the 1 st and
2nd Defendants vide KL High Court 22-276-2009.
The Law
O. 15 r. 6(2) (b) of the Rules of the High Court 1980 gives the court the
powers to grant leave to intervene where:
(i)

any person who ought to have been joined as a party or

whose presence before the court is necessary to ensure that
all matters in dispute in the cause or matter may be
effectually and completely determined or adjudicated upon;
or

(ii)

any person between whom and any party to the cause or

matter there may exist a question or issue arising out of or
relating to or connected with any relief or remedy claimed in
the cause or matter which in the opinion of the court it would
be just and convenient to determine as between the parties
to the cause or matter.

Order 15 r. 6(3 )RHC further sets out the test for granting or refusing
leave to intervene. The applicant must show his or their interest in the
cause or matter in dispute or, as the case may be, the question or issue
to be determined as between him and any party to the cause or matter.
His Lordship Gopal Sri Ram JCA(as he then was) in DATO DR HJ
MOHAMED HANIFFA HJ ABDULLAH & ORS v. KOPERASI DOKTOR
MALAYSIA BHD AND ORS & ANOTHER APPEAL [2008] 3 CLJ 323
said that ,

22-163-2009

..In such a case what the rule does is to enable the court to
prevent In the first place, it is important to note that the rule
permits intervention on two separate grounds. In sub-para (i) it
enables intervention where the presence of a party before the
court is necessary. In sub para. (ii) intervention is enabled where a
party to an action claims relief or a remedy which will materially
affect the non-party-interveners rights. In such circumstances, the
court is empowered to permit intervention if it forms the view that
to do so will be just and convenient. Take the obvious case of an
action for specific enforcement of a contract for the sale of
immovable property brought by a purchaser against the vendor. If
the vendor has resold the property to a third party, such third party
may be entitled to intervene and be added as a party to the
purchasers action because his rights under the second sale will
be materially affected by the relief claimed by the plaintiffpurchaser injustice being done to a person whose rights will be
affected by its judgment by proceeding to adjudicate upon the
matter in dispute in the action without his being given an
opportunity to be heard. (Pegang Mining Co Ltd v. Choong Sam &
Ors [1969] 2 MLJ 52, per Lord Diplock.) The second observation I
would make is this. The court should not read the requirements of
the rule as though they are words in a penal statute calling for
strict compliance with them before intervention may be permitted.
Put differently, the rule should be widely or liberally interpreted.
(See, Pegang Mining Co Ltd v. Choong Sam). But the court should
also bear in mind that it must be an interpretation of the language
used by the rule because the rule does not give power to add a
party whenever it is just or convenient to do so
22-163-2009

(Vandervell Trustees Limited v. White [1971] AC 912, per Viscount

Dilhorne). In other words, no process of giving a wide or liberal
interpretation to the rule can be employed to alter it or to give it an
enlarged meaning which, on a fair and reasonable interpretation, it
does not bear. (Vandervell Trustees Limited v. White per Lord
Morris).
In the instant case the Plaintiff had granted to the 1 st and 2nd Defendants
a Housing Loan Facility of RM6.5 million. The Housing Loan Facility was
offered and accepted by the 1st and 2nd Defendants on 9.7.2007. A
Guarantee was provided by the 3 rd Defendant. A Third Party First Legal
Charge over the said property was executed under the Housing Loan.
The Defendants defaulted in payments. Therefore the Plaintiff initiated
this action against them.
According to the Proposed Intervener the 1 st and 2nd Defendants is in
actual fact holding the Land in trust for him pursuant to an Investment
Agreement dated 18.7.2007 to develop the Land into low density
residential development. Among the Terms of the Agreement is that the
1st and 2nd Defendants intend to obtain a loan from a financial institution
to part finance the purchase of the Property.
In Pegang Mining Co Ltd v. Choong Sam & Ors [1969] 2 MLJ 52,
Lord Diplock said (at page 55):
The cases illustrate the great variety of circumstances in which it
may be sought to join an additional party to an existing action. In
their Lordships view one of the principal objects of the rule is to
enable the court to prevent injustice being done to a person whose
rights will be affected by its judgment by proceeding to adjudicate
22-163-2009

upon the matter in dispute in the action without his being given an
opportunity of being heard. To achieve this object calls for a
flexibility of approach which makes it undesirable in the present
case, in which the facts are unique, to attempt to lay down any
general proposition which could be applicable to all cases.
The Privy Council went on further to say that,
It has been sometimes said as in Moser v. Marsden and in In re
I.G. Farbenindustrie A.G. that a party may be added if his legal
interests will be affected by the judgment in the action but not if his
commercial interests only would be affected. While their Lordships
agree that the mere fact that a person is likely to be better off
financially if a case is decided one way rather than another is not a
sufficient ground to entitle him to be added as a party, they do not
find the dichotomy between legal and commercial interests
helpful. A better way of expressing the test is: will his rights against
or liabilities to any party to the action in respect of the subject
matter of the action be directly affected by any order which may be
made in the action?
In the instant case this Court will have to determine whether the
Proposed Interveners rights in respect of the subject of the action by the
Plaintiff will be directly affected by any order which may be made in this
proceeding. In Arab Malaysian Merchant Bank Bhd v. Jamaludin bin
Dato Mohd Jarjis [1991] 1 MLJ 27 at page 28 Gunn Chit Tuan SCJ
(as he then was) said,
One of the class of cases covered by the said rule, which allows
intervention by persons not parties, is where the proprietary or
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pecuniary rights of the intervener are directly affected by the

proceedings or where the intervener may be rendered liable to
satisfy any judgment directly or indirectly. The ambit of this class
has been materially widened by the decision of the UK Court of
Appeal in Gurtner v. Circuit, the effect of which is to include any
case in which the intervener is directly affected not only in his legal
rights but in his pocket. In this connection, we would refer to and
respectfully adopt the following dictum of Lord Denning MR, in that
case, in which His Lordship said as follows:
It seems to me that, when two parties are in dispute in an action
at law and the determination of that dispute will directly affect a
third person in his legal rights or in his pocket, in that he will be
bound to foot the bill, then the court in its discretion may allow
him to be added as a party on such terms as it thinks fit. By so
doing, the court achieves the object of the rule. It enables all
matters in dispute to be effectually and completely determined
and adjudicated upon between all those directly concerned in the
outcome.

The test in determining whether an applicant ought to be given leave to

intervene is whether the proprietary or pecuniary rights of the Proposed
Intervener are directly affected by the proceedings or where the
Proposed Intervener may be rendered liable to satisfy any judgment
directly or indirectly. The Proposed Intervener pursuant to the
Investment Agreement invested in the project by giving the 1 st and 2nd
Defendant RM2.7 million as initial investment deposit towards the
purchase of the property for development. The 1 st and 2nd Defendants
were actually holding the property as a trustee of the Proposed
Intervener as agreed under the Investment Agreement.
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11

In the instant case the Parties by the Investment Agreement had agreed
that the 1st and 2nd Defendant hold the Property in Trust. However the
claim against the 1st and the 2nd Defendant by the Proposed Intervener is
not proprietary but merely for monetary and commercial reasons. This
can be seen from the prayers in the pending suit S-22-276-2009 which
the Proposed Intervener filed against the 1 st and 2nd Defendants. Among
the Prayers in that suit are,
1. Satu

pengisytiharan

bahawa

Perjanjian

Pelaburan

bertarikh 18.9.2007 masih lagi sah dan berkuatkuasa;

2. Satu

perintah

pelaksanaan

spesifik

Perjanjian

Pelaburan bertarikh 18.9.2007;

3. Satu perintah injunksi.;
4. Secara lanjutan dan/atau alternative gantirugi am
menggantikan pelaksanaan spesifik (damages in lieu of
specific performance) untuk ditaksirkan dan dibayar oleh
defendan-Defendan kepada Plaintif
The issue of the trust can be determined in the Proposed Interveners
suit against the 1st and 2nd Defendants i.e. KL High Court S-22-276-2009.
The purpose of the purchase of the property was to develop it and that
the Proposed Intervener had agreed that 1 st and 2nd Defendants will
obtain a Loan from a financial Institution for the balance sum. It is

22-163-2009

12

settled law, on the authorities, that a party may be added if his "legal
interests" will be affected by the judgment in the action but not if his
commercial interests alone would be affected: per Lord Diplock in
Pegang Mining Co. Ltd. v. Choong Sam & Ors. [1973] 1 LNS 107.
The claim by the Plaintiff is for the Housing Loan Facility which was
granted to the 1st and 2nd Defendants. If judgment is entered against the
1st and 2nd Defendants then it would be the Defendants that they will
have to pay to the Plaintiff the amount due.

As for the property the

Proposed Intervener has entered a private caveat over the land. The
object of Order 15 r 6(2)(b)(i) and (ii) is to prevent multiplicity of
proceedings. In this case the Proposed Intervener has a pending suit
against the 1st and the 2nd Defendants. The Proposed Intervener has
failed to show that his legal interest will be affected by the judgment in
this action.
For the reasons set out above Enclosure 32 is dismissed with cost.

sgd.
( HASNAH BINTI DATO MOHAMMED HASHIM )
Judicial Commissioner
High Court of Malaya
Kuala Lumpur.
15 July 2010.
Counsels:
For the Plaintiff: [Messrs. Shearn Delamore & Co.
Messrs. Pail Ong & Assiociates].
For the Defendant: [Messrs. Periasamy & Co.].

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22-163-2009