.
Case Digest #02 – Setting Aside Third Party
Proceeding
By C.H. Gunner
The principles applicable to set aside a third party
notice are the same as applicable to an application
to strike out under Order 18 rule 19 or under the
inherent jurisdiction of the court. It is important
for the applicant to show special circumstances as
to why the proceeding ought not to continue – see
Lee Yuan Yew v Devan Nair & Anor [1993] 1
SLR 723.
An application of these principles could be
discovered in a rather recent case in the year 2016
of MMIP Services Sdn Bhd v Overseas
Assurance Corp (M) Bhd, IUB Greengold Bhd,
third party. This was a case in the High Court and
decided by Wong Kian Kheong JC.
Briefs (maybe leh buat mcm side diagram for
this?)
 A “collective agreement” (CA) was
entered into by motor insuring
companies including the defendant and
IUB (formerly known as Tahan
Insurance Malaysia Bhd). MNRB
(appointed as an administration manager
of MIMP Pool) entered into a
“management agreement” with all the
parties to the CA.
 March 23, 2006, the plaintiff took over as
the administration manager of the MIMP
Pool.
 The defendant and TIMB entered into a
‘transfer agreement’ on 18 August 2010.
 The plaintiff’s financial statements as at
December 31, 2010 revealed that the
plaintiff had suffered losses for the year
in which each party to the CA, including
the defendant and IUB, were equally
liable. A suit was brought up in regards
to this matter.
 On June 18, 2015, the defendant issued
the third party notice to IUB. IUB filed
an application, among the relief
happened to be striking out of the third
party notice by the defendant.
Can IUB rely on O 18 r19(1)(a) to strike
out third party notice?
The court in the case was of view that the
order only extended to originating summons
and not to third party notices. After all there
is already a specific provision in O 16 r 6 for
a third party to apply to court to set aside third
party proceedings.
Still despite such view, the court referred to a
few cases such as Syarikat Bekalan Air
Selangor Sdn Bhd v Kerajaan Negeri
Selangor [2014] 4 MLJ 147; Ambank (M)
Bhd v Kamariyah bt Hamdan & Anor [2013]
5 MLJ 448; Sime Darby Bhd & Ors v Dato’
Seri Ahmad Zubair @ Ahmad Zubir bin Hj
Murshid & Ors (Tun Musa Hitam & Ors,
third parties) [2012] and held that IUB may
apply under O 18 r 19(1)(a) of the RC to
strike out the third party notice.
IUB cannot strike out third party notice.
In regards to this matter, the court in this case
look into these particulars as follow;
i. whether the third party notice has been
lawfully issued under O 16 r 1(1)(a), (b)
or (c) of the RC; and
ii. if the third party notice has been
lawfully issued under O 16 r 1(1)(a), (b)
or (c) of the RC, the third party notice
should not be struck out unless it is plain
and obvious:
iii. whether the third party notice ex facie
is unsustainable or unarguable.
It is to be noted that a third party notice is
obviously unsustainable if there is no issue to
be or there is no question which can and
should be answered by the court. Other than
that, the third party notice cannot be ‘saved’
by any amendment by the defendant. It also
ought not to be struck out merely because a
defendant’s third party claim is weak.
It is the court’s findings that the third party in
this case had been lawfully issued under O 16
r 1(1)c of the ROC 2016. This is a ‘wide’
provision and questions posed in the third
party notice are not obviously unsustainable
or unarguable. Accordingly, this court cannot
strike out the third party notice under O 18 r
19(1)(a) of the RC. The third party notice
does not constitute an abuse of court process.
However, the question on effect of High
Court’s confirmation order cannot come
within the scope of the arbitration agreement
in this case, as what was argued by IUB. IUB
has relied on sections 8 and 10 of the
arbitration agreement in regards to the extent
of court intervention as well as substantive
claim before the court.
Both of these sections did not have any
relation as this case did not concern of the
arbitration agreement. Even if the arbitration
agreement applies to the four questions, IUB
can only apply to stay the third party
proceedings under s 10(1) of the AA and not
to strike out the third party notice. To add
more salt, all the cases cited by TIMB do not
apply in the third party proceedings which
concern the question on effect of High
Court’s confirmation order.
It was held therefore that the IUB could not
sought to strike out the third party notice.
Meanwhile, the defendant in this case is not
estopped from issuing third party notice