Case Update: Federal Court Decides on Issue of Leave to Sue Liquidator Personally

I set out a case update on the Federal Court decision of Tee Siew Kai v Machang Indah Development Sdn Bhd (see the Grounds of Judgment dated 17 February 2020). The decision is on the law applicable to the grant of leave to sue a liquidator in his personal capacity. This decision reverses the Court of Appeal decision in Tee Siew Kai (as liquidator for Merger Acceptance Sdn Bhd) (in liquidation) v Machang Indah Development Sdn Bhd (in liquidation) (previously known as Rakyat Corp Sdn Bhd [2019] 2 MLJ 514.

This decision reiterates the importance of leave of the Court in order to avoid wasteful litigation against liquidators and to preclude unwarranted interference with the winding up process. There must be a prima facie case made out, the Court must evaluate the evidence to see if this has been met, and pecuniary loss suffered by the company must be shown. Continue reading

Artificial Intelligence has Arrived for Criminal Sentencing

We will be seeing the use of artificial intelligence (AI) in the Malaysia courts for the first time this week. AI will be used to give guidance to a Magistrate Court Judge on the sentencing of certain criminal offences. The public prosecutor and the defence counsel will still get a chance to submit and comment on the sentencing guideline generated by the AI system. The Magistrate Judge will have the final discretion on the sentence to impose.

This article will set out how this AI system will be implemented. This is based on the various news reports (see here, here and here) and the presentation made by the Chief Judge of Sabah and Sarawak Tan Sri Datuk Seri Panglima David Wong Dak Wah at the Selangor Bar Civil Law Conference on 14 February 2020. I anticipate that there will be more clarity once the system is up and running. Continue reading

Six Points on Leave to Appeal to the Federal Court

At the recent Civil Law Conference on 14 February 2020, there was a list of good pointers, statistics and tips set out in the session on leave to appeal to the Federal Court. This post sets out the chances of success and examples of questions where leave was allowed.

As a brief background, in Malaysia, the apex court is the Federal Court. For matters that originated at the High Court, the final level of appeal is before the Federal Court. But an appeal to the Federal Court is not as of right. There must first be an application for leave, or permission, to appeal to the Federal Court. The test for leave is that there must be a question to be decided for the first time or a question of importance where a Federal Court decision would be to public advantage. Where leave is allowed, the Federal Court would then allow the appeal proper to be heard.

#1: Leave applications take up the majority of the cases at the Federal Court.

Approximate breakdown of the percentages of cases at the Federal Court:

  • 55% – leave to appeal to the Federal Court.
  • 14.8% – civil appeals.
  • 15.7% – criminal appeals.
  • 9.5% habeas corpus (where appeal is of right).
  • 4.7% – others.

With the number of leave applications, the Judiciary is also considering a proposal of reducing the number of Federal Court Judges from three to one when hearing leave applications.

#2: Statistically – 20%

Based on statistics, around only 20% of leave applications are allowed.

#3: Are the Court of Appeal Grounds of Judgment required for the hearing of the leave application?

  • If the Court of Appeal affirmed the High Court decision, then normally no.
  • If the Court of Appeal reversed the High Court decision, then normally yes.
  • An interlocutory application, no.
  • But where there is doubt, then yes.

#4: Checklist Prior to Filing Leave

  1. Does it involve an interlocutory matter? An interlocutory matter would very unlikely be allowed leave.
  2. Was there a consistent judicial opinion which may be uniformly wrong?
  3. Is there a dissenting judgment in the Court of Appeal? If dissenting on facts, still no.
  4. Does it involve interpretation of a statute? And if yes, whether such interpretation is of public importance?
  5. Is there a prospect of success?

In particular on this aspect, it may involve heavy findings of fact. But the applicant will have to try to convince the Federal Court hearing the leave application that the decision is so wrong, that if there is no leave granted, the Court will not be doing justice. It would be a question that the Judges pose to themselves as well; whether they can do justice in this case. If it can be shown that the Court of Appeal so completely ignored certain facts or that no reasonable tribunal could have come to that justice, the Federal Court may be convinced that the prospects of success is good. So, even a pure finding of fact may be allowed leave.

#5: Examples of Questions where Leave was Granted

Examples of questions where leave was granted are set out below.

“Whether the filing of a single notice of appeal in respect of eight separate and distinct interlocutory applications is in compliance with the procedural rules as set out in the Rules of Court of Appeal 1994.” – Deepak Jaikishan v A Santamil Selvi a/p Alau Malay @ Anna Malay and 3 Ors [2017] 4 MJ 11.

“Whether a respondent can be precluded from raising an issue by notice of cross-appeal on the ground that it was open to him to independently appeal on the issue” – Kabushiki Kaisha Ngu v Leisure Farm Corp Sdn Bhd & Ors [2016] 5 MLJ 557.

“On a submission of no case to answer by a defendant at the close of the plaintiff’s case, can the defendant dispute the admissibility of evidence adduced and admitted during the plaintiff’s case?” – Sampo Materials (M) Sdn Bhd v Tenaga Nasional Berhad [2015] 9 CLJ 902.

“Whether in Malaysia, an exemption clause can be relied upon by a party who commits a breach of trust to escape liability for that breach” – K & N Kenanga Bhd v Dato Liew Yuen Keong [2015] 1 LNS 1467.

“Is there a valid cause of action for a civil claim on the grounds of sexual harassment under the existing laws of Malaysia?” – Mohd Ridzwan Abdul Razak v Asmah Hj Mohd Nor [2016] 6 CLJ 346.

“Whether pursuant to Clause 19 of Schedule H of the Housing Development (Control & Licensing) Regulations 1989, it is mandatory for a Developer to collect monthly service charges from a purchase of a subdivided building for the maintenance and management of common property prior to the establishment of a Joint Management Body or Management Corporation?” – Kiaramas Development Sdn Bhd v Perbadanan Pengurusan Kiaramas Cendana [2016] 1 LNS 1539.

#6: Costs: RM30,000.00

The current practice is that where the leave application is dismissed, costs of RM30,000 will be ordered against the unsuccessful applicant.

 

IRB Tax Dawn Raid – How to Deal With It

The news recently featured the new Tax Investigation Framework 2020 of the Inland Revenue Board of Malaysia (IRB).

The Inland Revenue Board of Malaysia (IRB) actively conducts tax investigations or “raids” on taxpayers. The main purpose of these raids is to deter tax evasion and/or aggressive tax planning with the ultimate aim of enhancing tax compliance. It is not uncommon for the IRB to have obtained a reasonable amount of information – either through its own global intelligence or through informers – prior to conducting a dawn raid on a taxpayer.

The guest authors, Siong Sie and Desmond, set out some tips on what to do if there is such a surprise visit or a dawn raid carried out by IRB. Continue reading

Talk on Resolving Boardroom and Shareholders Disputes

On Tuesday 7 April 2020, I will be speaking at the Companies Commission of Malaysia seminar on ‘Resolving Boardroom and Shareholders Disputes‘. It is a half day talk from 9am to 1pm and with a registration fee of RM250 or RM300. It is open to members of the public.

I am looking forward to sharing practical insight from the various cases I have worked on. I frequently receive queries from company secretaries, directors and shareholders on certain disputes. I then designed this seminar around these often raised issues. Continue reading

The Airbus Bribery Case Study: Six Corporate Liability Lessons for Malaysian Companies

I set out six cautionary lessons for Malaysian companies arising from the Airbus US$4 billion global resolution for bribery involving authorities from the UK, France and the United States.

In the UK, Airbus faced five counts of failure of a commercial organisation to prevent bribery. This was under section 7 of the UK Bribery Act. This section 7 is a similar provision to Malaysia’s section 17A of the Malaysian Anti-Corruption Commission Act, known as the corporate liability provision. I have written about the elements of Malaysia’s corporate liability here.

You can read the UK High Court grounds of judgment in relation to the Airbus settlement through the deferred prosecution agreement. You can also read the detailed agreed Statement of Facts for all the background facts.

From the Airbus case study, I set out below six cautionary lessons for Malaysian companies, especially where we are on the brink of seeing the introduction of corporate liability on 1 June 2020. Continue reading