The case of Yap Seong Yee v Eureka Property Management Sdn Bhd and another appeal [2018] 6 MLJ 799 concerned a dispute over a property transaction.

Madam Yap Seong Yee (“Mdm Yap”) had initially entered into a sale and purchase agreement with Eureka Property Management Sdn Bhd (“Eureka”), but that transaction entered into dispute. Eureka sued Mdm Yap for alleged breach of the agreement.

Whilst the suit was pending, Mdm Yap sold the property to a third party by a 2nd Sale and Purchase Agreement (“2nd SPA”). When this was disclosed in Mdm Yap’s defence, Eureka pleaded in its reply that the 2nd SPA was a sham and fraudulent in nature.

The learned High Court Judge found that the 2nd SPA was indeed a sham and fraudulent. Dissatisfied, Mdm Yap appealed.

One pertinent question raised in the Court of Appeal was whether Eureka was permitted to raise the issue that the 2nd SPA was a sham and fraudulent in its reply, as opposed to raising it in its initial Statement of Claim. Eureka maintained that it had sufficiently pleaded its case because the Reply also constitutes part of the formal pleadings.

Unfortunately for Eureka, the Court of Appeal disagreed. The Court relied on O 18 r 15 Rules of Court 2012 (“ROC 2012”) and held that the plaintiff (i.e. Eureka) must have specifically set out its cause of action in its Statement of Claim. Furthermore, O 18 r 10(1) ROC 2012 prohibits the plaintiff from raising any new ground or claim inconsistent with his previous pleadings.

Since the issue of the 2nd SPA being a sham and fraudulent was not raised in its initial Statement of Claim, the Court held that Eureka was not entitled to raise it in its Reply. Such being the case, the High Court ought not to have considered the argument that the 2nd SPA was a sham and fraudulent in the course of the trial.

This case illustrates the need for parties to put forward their best case from the get-go. Any inadequacy or deficiency in pleadings cannot be rectified at the stage of Reply. A party who wishes to add to its cause would need to amend its Claim and not insert the new cause in its Reply.

Written by: Pung Kian Bang ([email protected]), pupil reading in the chambers of Lynn Yang Lee Yuen ([email protected]). 

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