Counter-Claims in Malaysian Civil Litigation: Withdrawal, Costs, and Professional Conduct

Introduction

In Malaysian civil lawsuits, defendants often file counter-claims against plaintiffs. Sometimes, counter-claims even extend to additional parties who were not part of the original action. But what happens if the counter-claim is weak, unsustainable, or based on questionable material? Can it simply be withdrawn? What are the consequences for costs? And what accountability exists if fabricated evidence is suspected?

This article explains the key rules under the Rules of Court 2012 and the Legal Profession Act 1976. It is for educational purposes only and not a substitute for professional legal advice.

 

1. Can a Counter-Claim Be Withdrawn?

Yes. A counter-claim is treated as a separate action. The counter-claimant may withdraw it:

 

Without court permission (Order 21 rule 2): Within 14 days after the Defence to Counterclaim is served, by filing a Notice of Discontinuance.

 

With court permission (Order 21 rule 3): After the 14-day period, withdrawal requires a formal application supported by affidavit, and leave of the Court.

 

Can the other party reply? 

Yes. When leave of court is sought, the opposing party — including any additional defendants joined by counterclaim — may file an affidavit in reply. This allows them to contest withdrawal terms, demand costs, and raise issues of misconduct.

 

2. Costs When a Counter-Claim Is Withdrawn

Withdrawal almost always comes with a costs order against the withdrawing party.

 

Standard basis costs: Partial recovery, covering only reasonable expenses.

 

Indemnity basis costs: Stronger recovery (often 70–90% of solicitor-client costs), awarded in cases of frivolous, vexatious, or abusive litigation.

 

Courts generally impose costs to ensure fairness, but the level of recovery may not fully reflect the burden on parties forced to defend against weak or dishonest claims.

 

3. Fabricated Evidence and False Particulars

If a counter-claim contains fabricated material — for example, false particulars of a transaction — withdrawal does not erase the misconduct. Options include:

 

Applying to strike out under Order 18 rule 19.

 

Seeking indemnity costs at the withdrawal hearing.

 

Referral by the Court for criminal investigation under the Penal Code.

 

Withdrawal should not be used as an escape route when dishonesty is involved.

 

4. Complaints About Professional Conduct

Withdrawal does not shield lawyers from accountability. Under section 94 of the Legal Profession Act 1976, misconduct includes dishonesty, fraud, or grave impropriety. Filing or maintaining pleadings known (or reasonably expected) to contain false material may amount to misconduct.

 

Complaints can be made to:

 

Advocates & Solicitors Disciplinary Board (ASDB): Handles professional misconduct inquiries.

 

The police: If fabricated evidence amounts to a criminal offence.

 

The Law Minister or Attorney General’s Chambers: While not disciplinary bodies, complaints here can highlight systemic flaws and pressure institutions to act.

 

In practice, however, ordinary citizens often face barriers. Disciplinary complaints may be slow and costly. Police reports risk being dismissed as “civil matters.” Ministerial complaints may be ignored unless public pressure builds.

 

Key Takeaways

Counter-claims can be withdrawn, but costs follow — and additional defendants have the right to contest terms.

 

Indemnity costs are crucial when litigation conduct crosses into abuse.

 

Fabricated evidence should trigger strike-outs, indemnity costs, and possible criminal referral.

 

Complaints are not limited to the Disciplinary Board — police and ministerial channels exist, though their effectiveness depends on enforcement and political will.

 

Call to Action

Counter-claims should not be used as tools of harassment, dragging in parties only to be withdrawn later. Ordinary citizens deserve protection from dishonest pleadings. Reform is needed: disciplinary bodies must act independently, police must treat fabricated evidence as a crime, and ministers must ensure accountability. Without these safeguards, withdrawal becomes not justice, but escape.

 

Disclaimer

This article provides general information based on Malaysian civil procedure and professional conduct rules as of 2026. Laws and interpretations may change, and every case depends on its specific facts. For advice on your situation, consult a qualified advocate and solicitor.