Case Update: Statutory Immunity, the National Sports Institute of Malaysia, and the Issue of Good Faith

In the High Court Grounds of Judgment dated 6 July 2018, this sports law decision touched on the statutory immunity of the National Sports Institute of Malaysia under the National Sports Institute Act 2011. This decision also sets out some useful general principles when statutory bodies rely on statutory immunity under an Act and how civil suits may risk being struck out. The National Sports Institute was represented by sports lawyers, Richard Wee and Lesley Lim.

As in this case, statutory immunity often includes the requirement of good faith. Would a plaintiff bringing an action have to assert the absence of good faith, or would the defendant have to actively put forward a good faith argument?

Brief Facts

The National Sports Institute of Malaysia, or known as Institut Sukan Negara (ISN), is a body corporate under the Ministry of Youth and Sports, and one of its functions is to advance sports excellence, sports science and sports medicine. ISN is a body corporate established under the National Sports Institute Act 2011 (Act).

Three athletes were chosen by ISN to join an elite training programme. The atheletes signed an agreement with ISN where the athletes would receive a monthly allowance of RM4,500.

A dispute arose when ISN issued notices to the three athletes that they were dropped from this programme as they had breached the agreement. ISN claimed that the three athletes had attendance issues at the training sessions. The athletes denied that there were such issues. The athletes then sued ISN for breach of contract.

ISN applied to strike out the legal suit. This was based on the statutory immunity provision under section 44 of the Act. It is worth reproducing the entire section 44:

44. Protection against suit and legal proceedings

No action, suit, prosecution or other proceedings shall lie or be brought, instituted or maintained against-

(a) the institute;

(b) any member of the institute or a committee, or any officer, employee or agent of the institute; or

(c) any person lawfully acting on behalf of the institute,

in respect of any act, neglect, default or omission done or omitted by him or it in good faith in such capacity.

 

This suit was initially before the Sessions Court. The Sessions Court Judge agreed with the striking out based on the statutory immunity under section 44 of the Act. The athletes then appealed to the High Court against the striking out.

Decision on Statutory Immunity

The High Court Judge identified the issue as whether section 44 provides immunity to insulate ISN from the suit. Next, whether the burden of proof on good faith was on the plaintiff or on the defendant in such a suit.

The Judge noted that in the pleadings, ISN had clearly raised section 44 as a defence. In the reply to the defence, the athletes’ position was that section 44 did not apply. They further stated that the agreement between the parties did not refer to section 44. Finally, in the athletes’ affidavit in reply, they did not touch provide any basis to suggest that there was absence of good faith on the part of ISN.

The Judge upheld the striking out decision. First, the Judge held that the statutory immunity did cover the suit filed by the athletes. The immunity was intended to cover all aspects of actions taken or decisions made or things done or put in place by ISN, or its servants or agents, provided it was done in good faith.

Second, the Judge did not think there is a presumption of bad faith orĀ mala fideĀ to start with such that ISN, as the defendant, would have to defensively put forward a good faith argument. It was sufficient for ISN to raise section 44 in its defence. Then, the burden shifts to those who contend otherwise and maintain that good faith was lacking. Here, the athletes had failed to allude to any fact or document or circumstances to show some form of bad faith on the part of ISN or its servants or agents.

Third, if the athletes had put forward some sort of fact or document or circumstances to challenge the good faith contention, then the Judge would have concluded that the issue of good faith had to be determined at a full trial. Therefore, a striking out of the suit would not have been appropriate. But since this had not been done, the Judge upheld the Session Court’s decision for striking out.

Commentary

This decision is useful in establishing the burden of putting forward an argument of good faith or bad faith for statutory immunity. A defendant relying on statutory immunity could raise a bare statement of good faith. The burden then rests on a plaintiff filing the civil suit to put forward some case of bad faith on the part of the defendant.

The striking out of a suit is only in a plain and obvious case. So a plaintiff drafting the suit should positively plead the absence of good faith. The plaintiff should put forward some sort of fact, document or circumstance to establish at least a case for the absence of good faith. This then becomes an issue that should be determined at the full trial instead of allowing the suit to be struck out based on statutory immunity.

Statutory immunity and the presence of good faith also applies to many other statutory bodies. For instance, statutory immunity applies to the following bodies under these statutes:

  1. The Stock Exchange under section 376 of the Capital Markets and Services Act 2007.
  2. The Companies Commission of Malaysia under section 25 of the Companies Commission of Malaysia Act 2001.
  3. Arbitrators and arbitral institutions under sections 47 and 48 of the Arbitration Act 2005 (but note, that the language used is slightly different where there is a positive requirement to show that the acts were done in bad faith).
  4. The Government of Malaysia, the MACC, the Advisory Board or the Special Committee under section 72 of the Malaysian Anti-Corruption Commission Act 2007.

 

 

 

 

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