PT Karya Sumiden Indonesia

138 v. Oceanmasters Marine Services Sdn Bhd & Anor [2014] 4 MLRH

PT KARYA SUMIDEN INDONESIA

v.
OCEANMASTERS MARINE SERVICES
SDN BHD & ANOR

High Court Malaya, Kuala Lumpur

Nallini Pathmanathan J
[Civil Suit No: 27-35-08-2013]
20 February 2014

Civil Procedure: Joinder of parties — Discretion of court to add party as defendant,

how exercised — Factors to be considered — Whether any issue arising out of or
connected with relief or remedy claimed by plaintiff required presence of third parties
— Primary cause of action by plaintiff against defendants was for wrongful release
of cargo — Whether third parties essential to said cause of action — Whether joinder
of third parties as co-defendants absolutely necessary to determine case effectively —
Whether joinder of parties would encumbrance plaintiff with delay and costs — Rules
of Court 2012, O 15 r 6

Civil Procedure: Third party proceedings — Indemnity — Defendants sought joinder

of third parties as co-defendants in action brought by plaintiff — Whether onus on
defendants to join third parties to be entitled to an indemnity or contribution from
those parties — Whether it was incumbent upon defendants to undertake third party
proceedings rather than join third parties as co-defendants in said action

Civil Procedure: Costs — Security for costs — Application for — Defendants applied
for security for costs in defending cause of action brought by plaintiff — Whether it was
a fit or appropriate case for court to exercise discretion to order security for costs in favour
of defendants — Whether based on factual matrix of case, defendants had complete
and meritorious defence to plaintiff ’s claim — Whether application for security for costs
should be allowed

The plaintiff had entered into a contract for the carriage of goods with the
2nd defendant (“D2”) from the Port of Tanjong Priok, Jakarta to the Port of
Dammam, Saudi Arabia (“the contracts of carriage”). The cargo was to be so
shipped pursuant to several contracts of sale entered into between the plaintiff
and Jawad and Malik Metal Trading LLC (“JMM”). Subsequently a contract
of sale was entered between the parties. JMM then appointed the 1st defendant
(“D1”) to arrange for the carriage of the cargo. As part of D1’s appointment,
JMM indicated that its local agent (“Super Express”) was to be used as the local
agent for all shipments including those with the plaintiff. D1 then appointed its
local agent (“Pratama”) in Indonesia to arrange for the loading of the cargo.
The cargo was delivered into the custody of Pratama who as agent for D2 and/
or sub-agent for D1 as carrier issued to the plaintiff its house Bills of Lading
(‘the bill of lading’). Thus, the contracts of carriage were evidenced, inter alia,
by the bills of lading. Delivery was to be given to JMM against the production
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[2014] 4 MLRH v. Oceanmasters Marine Services Sdn Bhd & Anor 139

of the bill of lading. Subsequently, it was discovered by the plaintiff in a

meeting with JMM that the cargo had been released to another entity without
the due production or presentation of the bill of lading. The plaintiff submitted
further that it was subsequently advised that D2 was at all times acting as agent
to D1, and that all shipping instructions and arrangements in relation to the
carriage of the cargo under the bill of lading were given by D1. For this reason
the plaintiff contends that D1 was the principal carrier of the cargo under the
bill of lading. Accordingly, the plaintiff ’s main cause of action against D1
was for the release of the cargo without due production of the bill of lading,
which in turn amounted to a conversion of the cargo or the aiding of such
conversion of the cargo, to the loss and detriment of the plaintiff. Further, the
plaintiff also claimed for conspiracy against the defendants, maintaining that
D1 and/or D2 jointly with JMM and others conspired to injure the plaintiff by
agreeing to and causing or facilitating the release and/or delivery of the cargo
without the production of the bill of lading. As a consequence, the plaintiff
lost its entitlement to the cargo without receiving consideration for the same.
In the present matter, three interlocutory applications arose. The first was an
application for the joinder JMM and Super Express as co-defendants to this
action by D1, which was opposed by the plaintiff. The two other applications
were made by both defendants claiming security for costs against the plaintiff.

Held (dismissing the defendants’ application):

(1) In the present case, there was no question or issue arising out of or
connected with the relief or remedy claimed in the matter which required
the presence of JMM or Super Express as co-defendants. On a perusal of the
pleadings, it was evident that the primary cause of action the plaintiff leveled
against the defendants was under the contracts of carriage for the wrongful
release of the cargo, which was an issue to which JMM or Super Express was
not an essential party. Similarly, with the plea of conspiracy, the plaintiff took
the position that D1 was the primary party responsible, as it had arranged the
contract of carriage. Here the plaintiff chose to pursue its case against D1 and
D2. It was entitled to do so. Thus, the presence of JMM and Super Express was
not absolutely necessary as co-defendants in this suit for it to be determined
effectually. (para 39)

(2) Although it was open to the defendants to join JMM and Super Express as
third parties, such an application for joinder ought not to be allowed in place
of third party proceedings in an attempt to circumvent or avoid costs. The
onus was on the defendants to join such other parties, who were considered
responsible for acts and/or omissions which they deny being party or privy
to. In the instant case, it was pertinent that both parties sought to be joined
as co-defendants were outside of the jurisdiction of the court. The serving of
a writ out of jurisdiction on JMM and Super Express would entail both time
and cost. In this instance, there was no sufficient basis to force the plaintiff to
bear both the delay and the costs. (Wilson, Sons & Co Limited v. Balcarres Brook
Steamship Company Limited (refd)). (paras 40-41)
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(3) As the plaintiff ’s claim did not require the presence of JMM and Super
Express as parties, much less co-defendants, the plaintiff could not be forced
to make them parties simply because the defendants may have been entitled
to an indemnity or contribution from those parties. It was incumbent upon
the defendants to undertake third party proceedings rather than to force the
plaintiff to join them as co-defendants. Consequently, the court did not exercise
its discretion under O 15 r 6 Rules of Court 2012. (para 42)

(4) Having considered the unique factual matrix of the instant case, it was not
a fit or appropriate case for the court to exercise its discretion to order security
for costs in favour of the defendants against the plaintiff. While the defendants
may indeed have a good and bona fide defence to the plaintiff ’s claim, it would
appear, at this juncture at least, to entail contribution from other parties, rather
than providing a complete and meritorious defence to the plaintiff ’s claim.
Hence, the applications for security for costs by the defendants were refused.
(paras 49-50)

Case(s) referred to:

Dollfus Mieg et Campagnie SA v. Bank of England [1950] 1 Ch 33 (refd)
Eastacres Development Sdn Bhd v. Fatimah Mutallip & Anor [2000] 2 MLRH 11 (refd)
Goldquest International Ltd v. Teh Leong Kiat [2003] 1 MLRH 189 (refd)
Kasturi Palm Products v. Palmex Industries Sdn Bhd [1985] 2 MLRH 213 (refd)
North Plaza Sdn Bhd v. United Securities Sdn Bhd [2009] 3 MLRA 104 (refd)
Raju Rajaram Pillai v. MMC Power Sdn Bhd & Anor [2000] 1 MLRH 489 (refd)
Tajjul Ariffin Mustafa v. Heng Cheng Hong [1993] 1 MLRA 237 (refd)
Wilson, Sons & Co Limited v. Balcarres Brook Steamship Company Limited [1893]
1 QB 422 (refd)

Legislation referred to:

Contracts Act 1950, s 186
Rules of Court 2012, O 15 r 6, O 23 r 1
Rules of High Court 1980, O 15 r 6(2)(b), O 16

Counsel:
For the plaintiff: Sitpah Selvaratnam (Rahayu with her); M/s S Tommy Thomas
For the 1st defendant : Arun (Chew Pei Yee with him); M/s Sativale Mathew & Arun
For the 2nd defendant : Jeremy Joseph; M/s Joseph & Partners

JUDGMENT

Nallini Pathmanathan J:

[1] Three interlocutory applications arise for adjudication in this matter. The
first is an application for the joinder of two parties as co-defendants to this
action, by the 1st defendant, Oceanmasters Marine Services Sdn Bhd (‘D1’).
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[2014] 4 MLRH v. Oceanmasters Marine Services Sdn Bhd & Anor 141

This application is opposed by the plaintiff, PT Karya Sumiden Indonesia

(‘plaintiff ’).

[2] The two other applications are made by the defendants individually,
namely D1 and the 2nd defendant, Sapphire Line Private Limited (‘D2’),
seeking security for their costs in this action against the plaintiff in the sum of
RM150,000.00 each. It is further prayed that the action be stayed pending the
provision of these monies, and that in the event the plaintiff fails to comply
with any order granted, the action be dismissed.

Salient Facts

[3] The salient background facts have been comprehensively set out in the
submissions of learned counsel for the plaintiff and D1 and the following
outline is adopted from these submissions.

[4] Between May and June 2012, the plaintiff entered into contracts for the
carriage of goods with D2 as carrier by sea of various consignments of copper
wire rod (‘the cargo’) from the Port of Tanjong Priok, Jakarta to the Port of
Dammam in Saudi Arabia (‘the Contracts of Carriage’).

[5] The cargo was to be so shipped pursuant to several contracts of sale entered
into between the plaintiff as seller and a party known as Jawad and Malik Metal
Trading LLC (‘JMM’) as buyer. The sale of the cargo is evidenced by a Sales
Agreement for eight mm copper wiring rod 2012 and a Master Agreement
dated 30 December 2011 as well as various purchase orders issued in relation
thereto (‘the Contracts of Sale’). The terms of these sale contracts provide for
the shipment of the cargo to be FOB Jakarta and for payment of the price of
the cargo to be against documents.

[6] The primary cause of action here revolves around the contracts of carriage,
rather than the contracts of sale. The contracts of sale, as provided by the
Master Agreement of 30 December 2011, governed by an arbitration clause
that provides for disputes or differences to be settled by arbitration in Tokyo.

[7] JMM, the buyer of the cargo, appointed D1 to arrange for the carriage of
the cargo.

[8] D1 then appointed its local agent, one PT Pratama Indo International
Indonesia (‘Pratama’) in Indonesia to arrange for the loading of the cargo. The
cargo was delivered into the custody of Pratama who issued to the plaintiff its
house Bills of Lading under the name of Sapphire Line (‘the Sapphire House
Bills of Lading’). In other words the Sapphire House Bills of Lading were
so issued by Pratama as agent for D2 and/or sub-agent for D1 as carrier. In
other words, the contracts of carriage are evidenced, inter alia, by D2’s Bills of
Lading or the Sapphire House Bills of Lading. They disclose the shipper to be
the plaintiff and the consignee to be JMM. Delivery was to be given to JMM
against the production of these original Sapphire House Bills of Lading. It
should be noted that D1 maintains in its defence that it is not the carrier under
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the said Sapphire House Bills of Lading. It maintains that D2 is the carrier and
that it has an agency agreement with D2.

[9] The plaintiff maintains that the original Sapphire House Bills of Lading
were submitted to the Bank of Tokyo-Mitsubishi (‘the plaintiff ’s bank’) between
May and June 2012 for collection and/or exchange against payment by JMM of
the price of each consignment of cargo in the total sum of USD5,921,979.80.
However JMM failed to pay this price. The Sapphire House Bills of Lading
and other relevant shipping documents were therefore returned to the plaintiff
in August 2012.

[10] The plaintiff maintains that it was advised on 2 August 2012 at a meeting
with JMM that the cargo had been released at the Port of Dammam to an
entity by the name of Fanar Electrical Systems (‘Al-Fanar’) without the due
production or presentation of the original Sapphire House Bills of Lading.

[11] The plaintiff further avers that it was subsequently advised that D2
was at all times acting as agent to D1, and that all shipping instructions and
arrangements in relation to the carriage of the cargo under the Sapphire House
Bills of Lading were given by D1. For this reason the plaintiff contends that
D1 is the principal carrier of the cargo under those Sapphire House Bills of
Lading.

[12] The plaintiff ’s primary cause of action against D1 turns on the release
of the cargo without due production of the Sapphire House Bills of Lading.
This cause of action is premised in contract and/ or in tort and/or in law as
carrier and/or bailee of the cargo. It is maintained against D1 that such release
amounts to a conversion of the cargo or the aiding of such conversion of the
cargo, to the loss and detriment of the plaintiff.

[13] Further or alternatively the plaintiff also brings a claim of conspiracy

against the defendants. In essence the plaintiff maintains that D1 and/or D2
jointly with JMM and others conspired to injure the plaintiff by agreeing to and
causing or facilitating the release and/or delivery of the cargo at the Port of
Dammam without the production of the original Sapphire Bills of Lading. As
a consequence the plaintiff lost its entitlement to the cargo without receiving
consideration for the same.

How Were The Goods Released?

[14] This is the central issue for adjudication at trial. No findings are made
at this juncture in this respect. However the documentary trail of documents
is relevant to enable the court to determine whether D1’s application for the
joinder of parties ought to be allowed. It is evident however that these matters
are not within the direct knowledge of the plaintiff.

[15] It would appear from the pleadings and documents filed here that Pratama
was to coordinate with the plaintiff on the loading of the cargo etc Pratama
was then to receive the sealed and stuffed containers at the port for loading
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onto the vessel booked by D1, as agent for the JMM and Super Express for the
contract of carriage.

[16] D1 arranged for China Shipping Container Lines (Hong Kong) Co Ltd
(‘China Shipping’) to carry or transport the cargo. The cargo was duly loaded
onto designated vessels.

[17] China Shipping then issued Sea Waybills naming Pratama as shipper and
Al-Fanar as consignee of the cargo. The Sea Waybills carried the following
statement:
“Delivery will be made to the consignee or his authorised representative upon
presentation of delivery receipt or other evidence of identity and authorisation
satisfactory to the carrier in its sole and absolute discretion without the need
for producing or surrendering a copy of this Sea Waybill.”

[18] D1 avers that these Sea Waybills issued by China Shipping merely operated
as an acknowledgement of receipt of the containers stated in those bills of
lading and not as documents of title. The plaintiff contends to the contrary.

[19] While the intervening facts remain very much in dispute, it appears that
the cargo was released against “switched” bills of lading issued by one North
American Cargo Inc. These switched bills of lading bear the name of JMM
as shipper and Al-Fanar as consignee. The cargo was released despite the
existence of the unextinguished Sapphire House Bills of Lading which had
been issued in respect of the exact same cargo and voyage. D1 maintains that
it was unaware of the issuance and existence of these ‘switched’ bills of lading
issued by North American Cargo Inc. Until after the cargo had been discovered
to be released. As such it denies any breach of duty and the allegation of
conversion. It follows that D1 denies conspiracy or collusion in relation to the
release of the cargo.

[20] It is relevant that after the release of the goods against the switched bills
of lading, JMM issued a letter of indemnity dated 26 September 2012 agreeing
to indemnify D2 and D1 in respect of the release of the cargo without the
surrender or presentation or production of the original Sapphire House Bills
of Lading.

The Application For Joinder Under Order 15 Rule 6 Rules Of Court 2012
(“ROC”) By D1

[21] The first application that falls for adjudication before this court is the
application by D1 for the joinder of two other parties as co-defendants in this
action. The two parties sought to be joined are JMM and one Super Express
Cargo LLC (‘Super Express’).

[22] At all times, as stated earlier, D1 was appointed as JMM’s agent to arrange
for the shipments of cargoes from China, Indonesia and Malaysia. It was a
condition of this appointment that Super Express, whom JMM indicated was
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its local agent, be used as the local agent for all shipments including those with
the plaintiff.

[23] To this end, D1 maintains that at the commencement of business with

JMM, it had entered into an agency agreement with Super Express whereby
D1 would act as agent of Super Express in all transactions involving JMM.
This agency agreement has been exhibited in support of this application for
joinder.

[24] D1 further maintains that in making arrangements for the carriage of

the cargo, any instructions issued by it to Pratama and/or other entities, were
instructions emanating from JMM and Super Express. As such, D1 maintains
that it acted at all times as agent to JMM and Super Express. D1 further avers
that as it is not a party to any contract with the plaintiff, both JMM and Super
Express ought to be joined as co-defendants in this action.

[25] D1 further submits that since the delivery of the cargo was effected by
JMM to Al Fanar, the end-consignee through the use of switched bills of
lading issued by Super Express, the presence of both entities is necessary to
ensure that all matters in dispute can be effectually and completely adjudicated
upon. Without JMM and Super Express as parties, it is maintained that this
court will not be able to elicit the true facts of how the cargo was released to
the end-consignee against the switched bills of lading without surrender of the
original Sapphire House Bills of Lading. In other words it is submitted for D1
that JMM and Super Express are essential parties for the effective adjudication
of this case.

[26] With regards to the plea of conspiracy, D1 points to the statement of

claim where the plaintiff avers that D1 and/or D2 jointly with JMM and/
or other parties conspired to injure the plaintiff by allowing through their
combined efforts the release of the cargo against the switched bills of lading.
Given this plea of conspiracy D1 maintains that the just and convenient means
of adjudicating on the same will necessarily involve the presence of JMM and
Super Express. As the central issue is the identity of the party that caused the
release of the cargo against the switched bills of lading it is just and convenient
for this court to join JMM and Super Express as co-defendants in this action so
that all parties alleged to be responsible to the plaintiff may be examined and
all facts made known to the court.

[27] The plaintiff in response objects vehemently to any such joinder, albeit
of JMM or Super Express. The plaintiff maintains that the central issue
in this case is the wrongful release of the cargo. It does not relate to non-
payment for the price of the cargo against JMM which is the subject matter
of arbitration. A distinction is drawn between the contract of sale and the
contract of carriage and the point made that this suit relates to the latter. The
only issue here is why sufficient care was not take by the carriers in relation
to the cargo and why release was allowed without the original Sapphire Bills
of Lading. The plaintiff maintains that ultimately in so far as the plaintiff ’s
 PT Karya Sumiden Indonesia
[2014] 4 MLRH v. Oceanmasters Marine Services Sdn Bhd & Anor 145

case is concerned, it is the defendants who are primarily responsible to ensure

the proper release of the cargo under the contract of carriage. JMM is not a
necessary party in this respect. In so far as the conspiracy is concerned the
plaintiff submits that its case is that D1 is the party primarily responsible
under the contract of carriage and accordingly the presence of JMM and
Super Express is not necessary.

[28] The plaintiff further maintains that it enjoys the right to choose which
joint tortfeasor it wishes to proceed against and that it cannot be compelled to
plead a case against both JMM and Super Express.

[29] As for the plea of conspiracy against the defendants, the plaintiff maintains
that it can establish its case from the existing documents without the need for
JMM and Super Express to be joined as parties. In this respect the plaintiff
pointed out to several emails and evidence to support its contention that it
was D1 that gave all instructions on contract of carriage and received freight
from JMM for such arrangement. As such it is contended that D1 was the
‘mastermind’ or ‘controller’ in respect of the contract of carriage and therefore
ultimately responsible. The truth or otherwise of this contention will be tested
at trial. However the upshot of the plaintiff ’s submission is that it is prepared
to prosecute its claim in conspiracy on the basis of documentary evidence
available, without the need for JMM or Super Express as parties.

[30] If indeed the presence of JMM and Super Express is found to be necessary,
then it is submitted for the plaintiff that it is incumbent upon the defendants to
join them as third parties to this action. The joinder of these parties ought not
to be allowed merely for the benefit and convenience of D1 and D2.

The Position In Law In Relation To Order 15 Rule 6 ROC

[31] D1 relies on the express provisions of O 15 r 6 ROC which allows, inter

alia, 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.
As such it is contended that JMM and Super Express (for the reasons set out
above) are essential parties to this action to allow all matters in dispute before
the court to be fully ventilated and considered in determining the responsibility
of the party that allowed the release of the cargo wrongfully.

[32] In Hee Awa’s case (above) there was a road accident involving a motor
cycle and a government motor van in which the pillion rider of the motorcyele
was killed and a passenger in the motor van was injured. The injured
passenger instituted an action in negligence against the motorcyclist. The
van driver and the Government of Malaysia were made third parties. The
parents and administrator of the estate of the pillion rider sought damages
against the van driver and the Government of Malaysia. The van driver and
the Government of Malaysia applied under O 15 r 6(2)(b) of the Rules of
the High Court 1980 (“RHC”) for an order that the motorcyclist be joined
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as a party. The High Court allowed the motorcyclist to be joined as a co-

defendant despite objections by the parents of the deceased pillion rider. The
Supreme Court held that the application to add the motorcyclist as a co-
defendant fell squarely within O 15 r 6(2)(b) RHC. It was held that the van
driver and the Government of Malaysia had a choice to proceed under either
O 15 or O 16 RHC. As such there was nothing to prevent them from opting
for O 15 r 6 RHC.

[33] The Supreme Court further rejected the argument of the parents and
administrator of the estate of the pillion rider who contended that the
consequence of allowing the application for joinder would be unfavourable to
them as compared to the adoption of third party procedure under O 16 RHC
in the event that the motorcyclist turned out to be a man of straw although
he was found to be substantially blamed for the accident. It held that this
concern about financial advantage would be applicable to the van driver and
the government equally if the third party procedure were to be adopted and
there was no hope at all of them being indemnified or getting contribution
from an impecunious motorcyclist.

[34] Similarly in Abidin bin Umar v. Doraisamy a/l Supramaniam (above) it was
held that the joinder ought to be allowed as the proposed co-defendant Salleh
bin Ani could shed light on the salient facts and that for this reason it would be
prudent to allow the joinder.

[35] However as submitted by learned counsel for the plaintiff, the Supreme
Court decision of Tajjul Ariffin Mustafa v. Heng Cheng Hong [1993] 1 MLRA 237
specifically stipulated that the case of Hee Awa (above) did not prescribe any
principle other than that found in the rules of court to govern the exercise of
judicial discretion reposed in the court of first instance. It was further pointed
out that Hee Awa’s case ought to be read in the light of the facts of that case,
and should not be seen as imposing any fetter on the exercise of the discretion
accorded to a judge when considering an application by the defendant to join
another defendant against the wishes of the plaintiff, which is precisely the
case here.

[36] The Supreme Court highlighted that the power of the court to add a
defendant on the application of another defendant against the wishes of the
plaintiff is entirely discretionary and the only fetter the rule places upon the
exercise of that discretion is that it should be exercised whether 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 person sought to
be joined and that party as well as between the parties to the cause or matter.
Edgar Joseph SCJ set out the principles to be distilled from the Rules of Court
(see pp 242-243 of the decision). Of relevance to the instant suit include the
following:
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“(1) ...

(2) ...

(3) ...

(4) Generally, in common law and chancery matters, a plaintiff who

considers that he has a cause of action against a defendant is entitled to
pursue his remedy against that defendant alone and he cannot be forced
to pursue his remedy against other persons who he has no wish to sue.
(see per Wynn-Perry J in Dollfus Mieg et Compagnie SA v. Bank of England).

(5) Nevertheless, a person who is not a party may be added as a defendant

over the objections of the plaintiff on his own intervention or upon the
application of the defendant or in some cases by the court of its own
motion (see 1 Supreme Court Practice (1991) at p 193 para 15/6/71).

(6) But, a defendant against whom no relief is sought by the plaintiff will
generally not be added against the wishes of the latter (see Hood-Bars v.
Frampton & Co) A third party notice is in such a case usually the proper
procedure to adopt though such a defendant can be added in a proper
case. (see Doofus Mieg et Compagnie SA v. Bank of England).”

[37] And the case of Dollfus Mieg et Campagnie SA v. Bank of England [1950] 1 Ch
33 sets out both the general rule and the exceptions to the rule. In considering
the english equivalent of O 15, Buckley LJ held that in order to have a person
joined as a party, the court must be satisfied either that the party ‘ought to
have been joined’, or that his ‘presence before the court may be necessary in
order to enable the court effectually and completely to adjudicate upon and
settle all the questions involved in the cause or matter’. He also pointed out
that if the party were joined as a defendant and the plaintiff did not make any
allegation against it, the prospective defendant might ask to be dismissed from
the action. This then was stated to be the general rule. The exceptions were also
considered which Buckley LJ said could be divided into three classes:
(i) A representative action where the person seeking to intervene is one of a
class whom the plaintiff claims to represent and the intervener is unwell to be
so represented. In such a case he can insist upon being added as a defendant.

(ii) The second class is whether the proprietary rights of the intervener are
directly affected by the proceedings; and

(iii) The third class comprises actions for specific performance of contracts
where third parties have an interest in the question of the manner in which the
contract should be performed.

[38] It is evident that the application for joinder in the instant case does not
fall within any of the exceptions to the general rule. It is equally clear that
this court should exercise its discretion to so join another defendant as a co-
defendant against the wishes of the plaintiff only if there exists 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
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just and convenient to determine as between the person sought to be joined and
that party as well as between the parties to the cause or matter.
[39] Applying that test to the present case it would appear that the application
for joinder should not succeed because there does not appear to be a question
or issue arising out of or connected with the relief or remedy claimed in the
matter which requires the presence of JMM or Super Express as co-defendants
or which requires determination as between the plaintiff and JMM or the
plaintiff and Super Express. This is because:

(a) On a perusal of the pleadings, it is evident that the primary cause

of action the plaintiff levels against the defendants is under the
contract of carriage for the wrongful release of the cargo in that it
was not against the Sapphire House Bills of Lading but against the
“switched” bills of lading. This is an issue which is governed by the
contract of carriage, to which JMM is not an essential party for the
purposes of the issue in dispute here;

(b) No relief is sought against either JMM or Super Express. The

relief claimed against the defendants in this suit is in relation to the
wrongful release of the goods, not for the price of the goods. As for
Super Express it is not mentioned in the statement of claim and no
allegation is made against it. Given the absence of any relief sought
against JMM and Super Express, and given that the plaintiff cannot
be forced to undertake an amendment of its claim to plead a case
against these defendants, it is more than likely that any such joinder
would result in applications being made by these parties to be struck
out for want of a reasonable cause of action;

(c) The claim by the plaintiff against JMM relating to the price of the
goods etc. is the subject matter of arbitration. Given the subsistence
of an arbitration clause in relation to any dispute arising between
the plaintiff and JMM, it would be untenable to join JMM as a
co-defendant in the present action. It is most likely that the action
might have to be stayed against JMM in view of that clause, given
the provisions of the Arbitration Act 2005;

(d) Finally even if JMM and Super Express are co-defendants or may be
liable, it remains the prerogative of the plaintiff, given the contract
of carriage, to sue the party it wishes to. Similarly, with the plea
of conspiracy, the plaintiff takes the position that D1 is primarily
responsible, as it was party primarily responsible for arranging the
contract of carriage. Here the plaintiff has chosen to pursue its case
against D1 and D2. It is entitled to do so. If it is subsequently found
that there is insufficient basis for its claim, then the claim will simply
fail. In other words, the presence of JMM and Super Express does
not appear to be absolutely necessary as co-defendants in this suit
for it to be determined effectually, and I so find.
 PT Karya Sumiden Indonesia
[2014] 4 MLRH v. Oceanmasters Marine Services Sdn Bhd & Anor 149

[40] In so finding I am greatly persuaded by the consideration that it is open to

D1 (and D2) to join JMM and Super Express as third parties if they so desire
or require. An application for joinder ought not to be allowed in place of third
party proceedings in an attempt to circumvent or avoid costs. It appears to
this court that the plaintiff ought not to be further encumbered with costs and
delay on a claim which is premised primarily on a failure to ensure delivery or
discharge of goods against original bills of lading. It ought to be the defendants
who taken on the onus of joining such other parties as they consider responsible
for acts and/or omissions which they deny they have been party or privy to.
This is particularly so when the plaintiff ’s primary contract of carriage is with
D1 and/or D2 or both.

[41] In the instant case it is pertinent that both parties sought to be joined as
co-defendants are outside of the jurisdiction, in Dubai. If the court were to
order that they be joined as parties, the writ would have to be served on them.
That must be done by complying with the requisite provisions for service
out of jurisdiction. This will entail, as I have said earlier, both time and
costs. There does not appear to this court to be sufficient basis to force the
plaintiff to bear both the delay and the costs. I am supported in exercising my
discretion in this manner by ,inter alia, the case of Wilson, Sons & Co Limited v.
Balcarres Brook Steamship Company Limited [1893] 1 QB 422 (Court of Appeal)
per Lord Esher:
“... There is discretion therefore; and therefore, if one or two joint contractors
were resident out of the jurisdiction, but the circumstances were such that
the joinder of such joint contractor could not possibly delay the plaintiff or
cause any real hardship or difficulty to him, the court, I apprehend, would
have a discretion to make an order that he should be joined; but I think that
such a discretion ought to be exercised with the greatest caution. To say that,
although a joint contractor resident abroad, there is an absolute right to have
him joined, gives rise to many difficulties, which I have pointed out during the
argument. Suppose the court ordered that such a joint contractor should be
joined. He must then be served; but a writ cannot be issued for service out of
the jurisdiction without the leave of the court. The court has a discretion with
regard to granting that leave ...

I think therefore, that it was a matter of discretion whether the order should
be made. It does not appear that by leaving the defendants to their remedy
over against Benier, if they have any, we shall be doing any injustice to the
defendants. If Benier is a joint contractor with them it would seem that there
might be a right of contribution, and therefore the defendants could bring
him in as a third party. If there is no right of contribution, then I cannot
help thinking that the defendants are endeavouring to put on the plaintiffs the
burden of suing a foreigner out of the jurisdiction for no real legal benefit to
themselves, but for some indirect purpose ...”

[42] The foregoing appears to sum up the case aptly. As the plaintiff ’s claim, by
its own plea and submission, does not require the presence of JMM and Super
Express as parties, much less co-defendants, then the plaintiff ought not to be
forced to make them parties simply because the defendants may be entitled to
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150 v. Oceanmasters Marine Services Sdn Bhd & Anor [2014] 4 MLRH

an indemnity or contribution from these parties. It must be incumbent upon

the defendants to undertake third party proceedings rather than to force the
plaintiff to join them as co-defendants. I am satisfied that this is not a fit case for
the exercise of my discretion under O 15 r 6 ROC. Therefore D1’s application
for the joinder of JMM and Super Express is dismissed. They remain at liberty
to bring third party proceedings if they so deem fit.

Applications For Security For Costs By The Defendants Against The

Plaintiff

[43] The plaintiff is a foreign company with no assets within the jurisdiction.
The defendants therefore seek security for the costs of action in the sum of
RM150,000.00 each. They premise their applications under O 23 r 1 of the
ROC.

[44] Order 23 r 1 ROC confers upon the court a discretion as to whether and to
what extent a plaintiff is to be ordered to provide security for costs.

[45] The defendants maintain that it is just and appropriate for the plaintiff to
be ordered to give security because:

(a) The plaintiff is resident out of the jurisdiction;

(b) The plaintiff has no assets within the jurisdiction;

(c) Any order for costs granted by this court in favour of D1 as

against the plaintiff would be difficult to enforce as there is no
reciprocal enforcement of judgments as between Malaysia and
Indonesia.

(see Raju Rajaram Pillai v. MMC Power Sdn Bhd & Anor [2000] 1
MLRH 489; Goldquest International Ltd v. Teh Leong Kiat [2003] 1
MLRH 189)

(d) The defence of the defendants discloses a formidable and

meritorious defence to the plaintiff ’s claim, as it denies owing any
duty of care to the plaintiff as it is not party to any contract with
the plaintiff. By reason of the pleaded defence and factual matrix,
the defendants maintain that they enjoy a strong likelihood of
success. Accordingly it is submitted that security for costs ought to
be ordered.

[46] The plaintiff on the other hand points out that it is trite that:

(a) A court will not order security for costs solely on the basis that the
plaintiff is a foreign party;

(b) It is a matter of discretion and the court will only do so if it is just in

the circumstances of the case to do so;
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[2014] 4 MLRH v. Oceanmasters Marine Services Sdn Bhd & Anor 151

(c) In exercising its discretion the court will take into consideration the
bona fides of the plaintiff ’s claim, the likelihood of success of the
plaintiff ’s claim and the merits of the defence.

(see Kasturi Palm Products v. Palmex Industries Sdn Bhd [1985] 2

MLRH 213 at 213-214 per Mohamed Dzaiddin J (as he then was).

[47] The plaintiff further submits in response that it is a subsidiary of Sumitomo

Electric Industries Ltd of Japan with a history dating back to 1897. Its audited
accounts for the financial year ended 31 March 2013 recorded total assets of
USD 197.8 million. The plaintiff maintains that its primary cause of action is
strong in that D1 and D2 have no real defence to the claim for the wrongful
release of the cargo to unauthorised persons without production of the original
bills of lading. In other words, the plaintiff maintains that it has very good
prospects of succeeding in its claim against the two defendants. In this context
the plaintiff relies, inter alia, on s 186 of the Contracts Act 1950, which allows
for the claim to be made against both principal and agent who may be held
jointly liable.

[48] It is evident that in each case the court will balance the factors stipulated
above in the context of each particular factual matrix and determine whether
it would be just in the particular facts of that case to order security for costs.
It is not an entitlement as of right. (See also North Plaza Sdn. Bhd v. United
Securities Sdn Bhd [2009] 3 MLRA 104 and Eastacres Development Sdn Bhd v.
Fatimah Mutallip & Anor [2000] 2 MLRH 11).

[49] I have considered the unique factual matrix of the instant case. I have
determined that this is not a fit or appropriate case for this court to exercise
its discretion to order security for costs in favour of D1 and D2 against the
plaintiff for the following reasons:

(a) The fact that the plaintiff is resident outside of the jurisdiction
without assets in this country does not entitle the defendants as of
right to security;

(b) I am satisfied that the plaintiff is an entity of some means and has
the financial capacity and solvency to meet any order of costs that
might be made against it;

(c) There appear to be no factors which warrant any inference that the
plaintiff that has submitted to this jurisdiction, will not meet any
order of costs granted by this court at the end of trial;

(d) Given the factual matrix of this case, which I have detailed at some
length at the beginning of this judgment, it does not appear to
this court to be just for security to be ordered to be provided by
the plaintiff in respect of any possible order of costs that might be
made against it in favour of the defendants. In so determining I am
persuaded by the relative merits of the plaintiffs’ case, as it appears
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152 v. Oceanmasters Marine Services Sdn Bhd & Anor [2014] 4 MLRH

at this juncture. While the defendants may indeed have a good and
bona fide defence to the plaintiffs’ claim, it would appear, at this
juncture at least, to entail contribution from other parties, rather
than providing a complete and meritorious defence to the plaintiff ’s
claim in so far as the failure to deliver against original bills of lading
is concerned.

[50] I therefore exercise my discretion to refuse the applications for security for
costs filed by both the defendants. Enclosures 21 and 27 are therefore dismissed.