Nite Beauty Industries Sdn Bhd

- vs -

Bayer (Malaysia) Sdn Bhd

Judgment

Jeffrey Tan, J

1. This is an application (Encl 10) by Bayer (Malaysia) Sdn Bhd, (Bayer) to be added as a party to this proceeding, and also to declare a nullity the order dated May 14, 1999 or to declare that

   the ambit of the order dated May 14, 1999 does not include the debt due and owing by the first petitioner to (Bayer) for goods sold and delivered by (Bayer) to the first petitioner.

2. Apparently, Bayer is an unsecured creditor of the first petitioner but is bound by the scheme of arrangement and compromise approved by order of the court on May 14, 1999. According to the petition filed herein,

   1. in Muar High Court Originating Summons No 24(L)-84-1998, the petitioners (the second petitioner is a subsidiary of the first petitioner) applied and the court summoned separate meetings of the secured and unsecured creditors of the petitioners, to be held on or before May 25, 1999, for the purpose of considering and approving the scheme of arrangement and compromise and proposed between the petitioners and creditors (secured and unsecured),

   2. two separate meetings were convened, on April 26, 1999, in accordance with the directions of the court,

   3. the required majority at both meetings approved the scheme of arrangement and compromise, without any material changes or amendments; under Scheme B, unsecured creditors are

      to take a 50% discount and [the discounted debts are to] be paid over five years from January 1, 2000 ...

3. Then, on May 14, 1999, Md Raus Sharif J approved the scheme of arrangement and compromise. Pursuant to s 176(3) of the Companies Act 1965, Scheme B - agreed by the required majority and approved by order of the court - shall be binding on all unsecured creditors including Bayer. And it would appear, that this court, with regard to the order dated May 14, 1999, is functus officio.

4. Mr. SV Param contended however, for Bayer, that the order dated May 14, 1999 is a nullity. He said, amongst his grounds, here and there, for saying that the order dated May 14, 1999 is a nullity, that this petition should have been filed in Muar High Court Originating Summons No 24(L)-684-1998, that Bayer was not heard and that therefore justice was not done. But Mr. Param dwelled only fleetingly on those grounds, as both counsel eventually agreed, to confine their arguments to Order 15 r 6(2) of the Rules of the High Court 1980 and Bayer's application to be added as a party, and to argue the alleged nullity only if Bayer had first been added as a party to this proceeding.

5. On Bayer's application to be added as a party, Mr. Param contended that Bayer remains a creditor of the first petitioner but is affected, "both legally and financially", by the scheme of arrangement and compromise.

   And he submitted, that Order 32 r 6 permits the court, "if Order 15 r 6 is not applicable", to set aside the ex parte order dated May 14, 1999. But amazingly, Mr. Param did not say nor show why Bayer is a "person" under Order 15 r 6(2)(b).

6. Undoubtedly, under Order 15 r 6, "a person who is not a party may be added as a defendant against the wishes of the plaintiff either on the application of the defendant or on his own intervention, or in the rare cases by the court of its own motion. The jurisdiction of the court under this rule is entirely discretionary". (The Supreme Court Practice 1997, paragraph 15/6/7). Nevertheless, the court may only order, not just any person, but only any of the following persons to be added as a party, namely -

   (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 and 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 o for 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 him and that party as well as between the parties to the cause or matter.
   [Order 15 r 6(2)(b)(i) and (ii)]

7. In Gula Perak Bhd v Varghese Mathai [1988] 3 MLJ358, where Mr. Mathai sought to be added as a party to the originating petition, pursuant to Order 15 r 6(2)(b)(ii), VC George J (as he then was) held that to add Mr. Mathai as a party, "it has to be established that there is a question or issue to be tried as between Mr. Mathai and one of the existing parties in the petition, and that question or issue arises out of or relates to or is connected with any relief or remedy claimed in the petition". Likewise, to add a person as a party, pursuant to Order 15 r 6(2)(b)(i), it has to be established that the person 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 and adjudicated upon.

8. The objects of Order 15 r 6(2)(b) are namely,

   1. to prevent multiplicity of actions and to enable the court to determine disputes between all parties to them in one action (Malite Sdn Bhd v Abdul Karim Gendut [1981] 2 MLJ 29),

   2. to prevent the same or substantially the same questions or issues being tried twice with possibly different results (Tajul Ariffin Mustafa v Heng Cheng Hong [1993] 1 AMR 1119), and

   3. to enable a court to prevent 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 of being heard (Pegang Mining Co Ltd v Choong Sam [1969] 2 MLJ 52 per Lord Diplock).

      Those objects "are achieved by enabling a person not a party to be added as a party" (The Supreme Court Practice 1997, paragraph 15/6/7).

   "The would-be intervener should have some interest which is directly related or connected with the subject matter of the action". (The Supreme Court Practice 1997, paragraph 15/6/7A).

   "Interest here means a legal interest not a commercial interest" (Tai Choi Yu v Tingan Lumber Sdn Bhd [1998] 4 AMR 3 807).

   "A mere commercial interest in its outcome, divorced from the subject matter of the action, is not enough". (Sanders Lead Co Inc v Entores Metal Brokers Ltd [1984] 1 WLR 452).

   "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" (Pegang Mining).

9. A person who is directly affected, either legally or financially, by any order which may be made in the action, may be added (see e.g. Gurtner v Circuit [1968] 2 QB 587; see also Arab Malaysian Merchant Bank Bhd v Jamaludin Dato Mohd Jarjis [1991] 2 MLJ 27, where Gunn Chit Tuan SCJ (as he then was) said, at p 28, that

   the effect of Gurtner v Circuit is to include any case in which the intervenor is directly affected not only in his legal rights but in his pocket.

10. Although Order 15 r 6(2) states that such an application could be made 'at any stage of the proceedings', this does not mean that such an application can be made after final judgment had been entered (Tai Choi Yu). "Order 15 r 6 only applies to proceedings where the substitution of any of the parties to the cause or matter was made before final judgment" (Shell Malaysia Trading Sdn Bhd v Leong Yuet Yeng [1990] 3 MLJ 254 per Gunn Chit Tuan J, as he then was). "Intervention will not be allowed if the proceedings have ended (Tan Kheng Guan v Pendaftar Hakmilik Johor [1999] MLJU 69). The would-be intervener who is directly affected, either legally or financially, by any order which may be made in the action, must intervene before that order is perfected and whilst the court is still not functus officio (Mui Bank Bhd v Cheam Kim Yu [1992] 1 AMR 244; United Asian Bank Bhd v Personal representative of Roshammah [1994] 3 MLJ 327). The following authorities say the same.

11. Two years after the judicial sale, in Hong Leong Finance Bhd v Staghorn Sdn Bhd [1995] 3 AMR 2170, Staghorn filed an application for leave to intervene and for an order to set aside the sale and order for sale and for other consequential orders. The High Court granted Staghorn leave to intervene, proceeded to hear the rest of the application and granted the substantive reliefs claimed. On appeal, the Court of Appeal per NH Chan JCA said:

    From the opening words of r 6(2), it will be seen that the order to add, join or intervene in the proceedings can be made ' at any stage of the proceedings in the cause or matter'. The question for determination, therefore, is whether there were any proceedings in existence... when the order for intervention was made ...or when the summons seeking intervention was issued … when the certificate of sale was issued by the Registrar of the High Court, nothing further remained to be done in the proceedings. There were no proceedings in existence after that date. The court would have had no jurisdiction thereafter to make any order under Order 15 r 6(2). The proceedings came to an end upon the issuance of the certificate for sale on February 18, 1992, and therefore the order for intervention which was made on January 30, 1995, or the summons for leave to intervene which was filed on December 4, 1993, had not been made or issued 'at any stage of the proceedings' as required by Order 15 r 6(2).

12. In Takang Timber Sdn Bhd v Government of Sarawak [1998] 4 MLJ 42, the applicant applied for leave to intervene and / or to be added as a plaintiff, pursuant to Order 15 r 6. Judgment had been given and the final order had been perfected and extracted. Dismissing the application, Elizabeth Chapman JC said:

    An order under this rule can only be made before judgment whereas in this case we have a situation where the plaintiffs action against both defendants in this suit has been adjudicated upon, the action has been dismissed with costs. There does not exist any question or issue arising out of or relating to or connected with any relief or remedy claimed in the suit which remains to be determined between the applicant and the defendants.

13. Altogether it translates, that after May 14, 1999, when the court approved the scheme of arrangement and compromise, nothing further remained to be done in the proceedings. All proceedings came to an end upon the approval of the scheme of arrangement and compromise on May 14, 1999. All matters had been effectually and completely adjudicated upon, on May 14, 1999. The only thing left to be done, which in the event was done, was for the petitioners to perfect and extract the order dated May 14, 1999. No proceedings were in existence after that date. No proceedings are in existence today. There is no matter in dispute, presently.

14. Naturally, without a proceeding and without a matter in dispute, there cannot be a

    person 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 and adjudicated upon,

    or a

    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 him and that party as well as between the parties to the cause or matter.

15. There is nobody possibly within the terms of Order 15 r 6(2) to be added. Moreover, Encl 10 which was filed without any proceedings in existence is not an application made "at any stage of the proceedings" as required by Order 15 r 6(2). The court has no jurisdiction anymore to make any order under Order 15 r 6(2). As Mr. Cheow Wee for the petitioners remarked, rather dryly, "this petition has ended". Also, the court cannot set aside the order dated May 14, 1999, pursuant to Order 32 r 6, as the order dated May 14, 1999 is not an order made pursuant to an application in chambers. For the reasons above, Bayer's application to be added as a party is refused.

16. Both counsel had agreed, that Encl 10 should be dismissed, if Bayer is not granted leave to intervene in this proceeding. Accordingly, Encl 10 is dismissed with costs.

Cases

Gula Perak Bhd v Varghese Mathai [1988] 3 MLJ 358; Hong Leong Finance Bhd v Staghorn Sdn Bhd [1995] 3 AMR 2170; Takang Timber Sdn Bhd v Government of Sarawak [1998] 4 MLJ 42; Tan Kheng Guan v Pendaftar Hakmilik Johor [1999] MLJ 69; Arab Malaysian Merchant Bank Bhd v Jamaludin Dato Mohd Jarjis [1991] 2 MLJ 27; Gurtner v Circuit [1968] 2 QB 587;  Malite Sdn Bhd v Abdul Karim Gendut [1981] 2 MLJ 29; Mui Bank Bhd v Cheam Kim Yu (Beh Sai Ming, Intervener) [1992] 1 AMR 244; Pegang Mining Co Ltd v Choong Sam [1969] 2 MLJ 52; Sanders Lead Co Inc v Entores Metal Brokers Ltd [1984] 1 WLR 452; Shell Malaysia Trading Sdn Bhd v Leong Yuet Yeng [1990] 3 MLJ 254; Tai Choi Yu v Tingan Lumber Sdn Bhd [1998] 4 AMR 3807; Tajul Ariffin Mustafa v Heng Cheng Hong [1993] 1 AMR 1119; United Asian Bank Bhd v Personal Representative of Roshammah (deed) [1994] 3 MLJ 327.

Legislations

Companies Act 1965: s.176(3)

Rules of the High Court 1980: Ord.15 r 6(2)(b)(i), (ii), Ord.32 r 6

Authors and other references

The Supreme Court Practice 1997

Representation

Cheow Wee & KS Yap (Cheow Wee & Ong) for Petitioner

SVS Param (SVS Param & Co) for Intended Intervener

Notes:-

This decision is also reported at [2000] 3 AMR 2960