JCW

[Contempt proceedings – breach of Anton Piller Order] Justin and Christina Chin acted as counsel for the Plaintiff in this case. This case involves the principles of law in respect of the enforcement of an Anton Piller Order (“APO”) which the Plaintiff states was not complied with by the 1st Defendant (the 1st Alleged Contemnor) and the persons in control of the premises i.e the 2nd and 3rd Alleged Contemnors   The Court inter alia held that :   (i)              The case against the 1st Defendant is very clear where she has been served with the APO and the terms of the APO has been explained to her. She was asked to surrender her laptop were she responded she did not have her laptop but she was pictured later that day carrying a laptop bag. The Court found that it was improbable that she would not have her laptop with her seeing that she was at the premises to carry out a demonstration to a potential client. In any event she was subsequently asked again by letter dated 26/10/2017 to deliver up her lap top but she has not complied with the APO to date.     (ii)            The 1st Defendant refused to comply with the APO on basis the premises is not her office, but the premises is the place where the Plaintiff has reason to believe that the Defendants’ products or some of them are, since she was there to conduct a demonstration of her products   (iii)          However, since the person in control of the premises are the 2nd and 3rd Alleged Contemnors, and there is possibility that the Plaintiff would not be able to execute the APO even if the 1st Defendant did not object to it, the Court is not satisfied beyond reasonable doubt that she had obstructed the execution of the APP. But the 1st Defendant is guilty of contempt of Court in not surrendering her laptop at all, in breach of the terms of the APO     (iv)          As for the case against the 2nd and 3rd Alleged Contemnors, the Supervising Solicitors (“SS”) did hand the APO to the 2nd Alleged Contemnor for her to hand to her lawyers. The  SS did not explain the terms of the APO to the 2nd and 2rd Alleged Contemnors but to their lawyers who advised them what they should do. Despite that , the 2nd Alleged Contemnor pointedly said the Plaintiff cannot search the premises , they are not bound by the APO, there are not parties to the action, the premises do not belong to the Defendants and the APO might be obtained due to non disclosure of material facts.   (v)            The  2nd and 3rd Alleged Contemnors’ lawyers wrote a letter dated 19/10/2017 stating they are not bound by the APO and the APO might be obtained due to non disclosure of material facts but it did end the letter by saying that should the Plaintiff insist on entry and search it will reserve its rights to claim damages. The Court is of the view that the 2nd and 3rd Defendant have not categorically refused to comply with the APO as the option was given to the Plaintiff to insist on the entry and search. There is a reasonable doubt whether the 2nd and 3rd Alleged Contemnor had obstructed the Plaintiff from enforcing the APO   (vi)          The failure to comply with Order 52 rule 2B of the Rules of Court 2012 on service of a show cause notice is not fatal nor prejudicial to the 2nd and 3rd Alleged Contemnors   (vii)         The case of Dato Seri Yusof Bin Dato Biji Sutra @ Mohamad v BTM Timber Industries Sdn Bhd [2010] 1 MLJ 644 where the Court of Appeal held the words “persons appearing to have control of the premises” are too vague but on the careful reading of that case, the Court of Appeal is saying that it has not been shown the alleged contemnors in that case were the persons appearing to be in control of  the premises. In this case, the APO uses the words “owner of the Premises” or “persons on control of the Premises” and it is not in dispute that the 3rd alleged Contemnor is the owner of the premises and the 2nd Alleged Contemnor was the person who had control of the premises.     [Note : The Plaintiff appealed to the Court of Appeal vide Civil Appeal No. W-02(IM)(NVCV0-73-01/2021 and the Court of Appeal on 7/7/2022 allowed the Appeal and reversed the decision of the High Court vis-à-vis the 2nd and 3rd Alleged Contemnors and ordered that they were in contempt of court]

[setting aside of Consent Judgment]   Justin was the counsel for the defendant. The Plaintiff applied to Court to declare that the Consent Judgment entered between parties is amongst others declared as “stands terminated”. The Court dismissed the application and held inter-alia as follows : (i)The Federal Court in Berjaya Times Squares Sdn Bhd (formerly known as Berjaya Ditan Sdn Bhd) v M Concept Sdn Bhd [2010] 1 MLJ 597 decided that a party could seek termination only in a case where time was of the essence and the party in breach had not performed its obligations in its entirety within the time-frame stipulated by the contract or where there had been a total failure of consideration. Applying that principle here, this was not a case of total failure of consideration; nor was time expressed to be of the essence of the consent order. Neither had the defendant refused to perform its contractual obligations or failed to perform its entire promise. It therefore followed that the plaintiff was not entitled to terminate the consent order as the defendant had not refused to perform its contractual obligations. The said decision of the Federal Court was binding upon this court (ii)The consequential relief that the plaintiff sought if termination of the consent order was allowed was for an order that the defendant account for or refund all benefits that it had received under the consent order and for damages to be assessed. It appeared that the plaintiff was seeking restitution and for the consent order to be set aside ab initio. This was contrary to the decisions in Berjaya Times Square Sdn Bhd and Turf Club Auto Emporium Pte Ltd and Others v Yeo Boong Hua and Others and Another Appeal and Other Matters [2017] 2 SLR 12; [2017] SGCA 21 that a contract or consent order could not be discharged or terminated ab initio on the basis of a breach. On the basis of those two cases, the courts were unanimous in deciding that a consent order could only be terminated prospectively and its effect was to release parties from their future performance. (iii) The plaintiff ought to have applied under the ‘liberty to apply’ clause to enforce her rights under the consent order in Suit 627 for an appropriate consequential order if she was of the view that the consent order had been breached. Since the defendant’s application for enforcement of the consent order in Suit 627 was filed first in time and was pending determination, it was more expeditious for the plaintiff to make the necessary application in the suit itself.

[setting aside of restraining order and sanction for scheme of arrangement] Justin and Alvin acted for Proposed Interveners to apply to intervene and set aside ex-parte order granted by the Court to sanction a proposed scheme of arrangement and the restraining order. The Court allowed the Proposed Interveners’ application and inter-alia held that : (i) Grant of leave to intervene was warranted as the implementation of the scheme would directly and seriously affect the rights of the proposed interveners (ii) Court convened Creditors meeting held outside the 90 days period in the ex-parte order without any leave to extend time was a breach of the order. Also, some of the proposed interveners received their notice on filing of proof of debt late and were deprived of their statutory rights to vote (iii)No specific condition in the ex parte order or proposed rules of meeting or Section 366 of the companies act 2016 that the filing of proof of debt is required before the proposed interveners are recognized as class of creditors (iv) Application to sanction the scheme is an abuse of process bearing in mind that the settlement agreement upon which the proposed scheme is conditional, had been terminated and hopelessly insolvent and it would be against public policy. (v)On evidence, the white knight is not in a financial postion to implement the scheme. (vi)There was non disclosure of material facts including the inability of the white knight to rehabilitate the project All four requirements of Section 368(2)(a) to (d) of the Companies Act 2016 must be met even before the initial restraining order and there was non-compliance with these provisions.

[disqualification] Justin was the counsel for the defendant. The plaintiff entered into a sale and purchase agreement with the defendant and claimed that there was a breach by the defendant and claimed liquidated damages from the defendant. The defendant in his defence and counterclaim, contended that the agreement was a sham. The defendant applied to disqualify the legal firm from acting for the plaintiffs on the ground that the 4th plaintiff is a partner in the said firm and has a pecuniary interest in the action and that the other partner of the firm had purportedly witnessed the execution of the agreement. It is not disputed that both partners in the law firm are potential material witnesses in the action if it proceeds to trial. The High Court allowed the defendant’s application to disqualify the law firm from acting for the plaintiffs. The High Court also rejected the submission that the legal firm can still act for the relevant partners who will not be conducting the trial when inter alia the proximity of relationship of the partners and the legal assistants are too close for comfort to ensure a conflict of interest will not arise.

[Claim for specific performance – refusal by defendants to renew lease] Justin was the counsel for the plaintiff. This case deals with the important issue of the Specific Performance of a Lease Arrangement for 30 years structured with an initial 5 years plus subject to a Renewal every 5 years for 5 renewable terms. The High Court granted the said Specific Performance after a Full Trial based on inter alia the following: (a)The Court held that there was an agreement between parties of a 30 years lease broken down to 6 terms of 5 years each and the option to renew the said Lease lies solely and absolutely on the Plaintiff. (b)The Court held that the doctrine of equitable estoppel apply to the present case to prevent the Defendants from the non- renewal of the Lease and/or alleging that he Plaintiff is a “monthly tenant” given the huge sums of monies expended by the Plaintiff to build the Horse Ranch ( Riders Lodge) on the said Land and rely on remaining tenure of the 30 years lease promised from the outset. (c)The earlier notice by the Plaintiff’s solicitors’ letter dated 6/1/2009 asked for renewal for another 5 years and “thereafter for each renewal due” and this phrase clearly shows the Plaintiff intended to renew the lease not only for the period of 5 years from 21/5/2009 to 20/5/2014 but also for the 4 renewable terms of 21/5/2014 to 20/5/2019 (third term), 21/5/2019 to 20/5/2024 (fourth term) , 21/5/2024 to 20/5/2029 ( 5th term ) and 21/5/2029 to 20/5/2034 ( 6th term). (d)The Defendants who received gross revenue sharing (which only exists under the lease agreement) and/or who accepted rent with knowledge of the cause of forfeiture had thereby waived the forfeiture. (e)On the separate loan issue, when a loan is unsecured, non-interest and has no fixed repayment terms, the said loan is repayable within a reasonable time of a request for repayment depending on the circumstances of the case and it is not repayable immediately. It is untenable for a demand for the repayment of the said Loan to be made all at once when the Plaintiff is generally making losses overall in recent years and an immediate repayment of the said Loan sum is very damaging and harmful to the Plaintiff’s business, operation and finances. The Court granted a specific performance of the renewal of the lease until 2034 and also the Plaintiff is entitled to lodge a caveat on the said Lease Land to protect the Plaintiff’s interests.

[Setting aside of an Anton Pillar Order] Justin was the counsel for the Plaintiff in this case. The 1st Defendant applied to set aside the Anton Pillar Order granted but was unsuccessful. In refusing to set aside the Anton Pillar Order, the Court found that it was quite clear that while in the employment of the Plaintiff, the 1st Defendant is strictly forbidden to divulge any information or trade secret to its customers and from the facts of the case, there exist a strong arguable case which inter alia justified the Anton Pillar Order granted.

[Locus standi – “persons acting in concert” under Section 360 CMSA 2007] This case involves the issue of the strict compliance of the Capital Market and Services Act 2007 where the Plaintiffs alleges that the Defendants are “persons acting in concert” and a Suit was filed to seek Injunctive remedies against the Defendants. Justin acted for the 12th and 13th Defendants. All the Defendants applied to strike out the Suit which was allowed by the Court.   The important points of laws canvassed by Yang Arif Ong Chee Kwan includes the following :   1.Sections 218(1) to (3) of the CMSA and s. 60(7), 64(1), 64(1)(h)(iv) and (v) and s.72(2)(a)(i) of the CMSA and / or Rule 4.02(8) and 4.02(9) of the Licensing Handbook SC-GL/2007 (R6-2018)T. 218 are clearly not a "relevant requirement" for the purposes of Section 360 of the CMSA.   2.The Plaintiffs do not have locus standi and neither can they be a "person aggrieved" when :   (i)      The Plaintiffs, as the target companies, are the very subject matter of this case; and   (ii)      It is the minority shareholders in this case, if at all, who are affected by the acts of 'persons acting in concert' who can sue and not the Plaintiffs.   (3)   This case involves the rights of the minority shareholders against the purported "PAC" or "persons acting in concert" as regards the latter's obligations to them under the provisions of the Code on Take-Overs and Mergers and the relevant provisions of the CMSA. As such, even if there are persons acting in concert, it is the minority shareholders who ought to sue and not the Plaintiffs.   (4)   Accordingly, the basis upon which the Plaintiffs claim to be "aggrieved persons" falls, bringing along with it any locus standi the Plaintiffs allege they may have to commence this OS 246.   (5)   Further, whilst prayer 6.1 of the OS 246 seeks to compel the Securities Commission to act, however, the Securities Commission is not made a party in these proceedings.   This is an important case where it appears to be the first case in Malaysia where the Court held that the “target” or “subject matter” company has no locus standi in respect of an allegation of  'persons acting in concert' and/or suit under Section 360 CMSA or breach of Takeover Code/Rules.

[Fortuna Injunction – pending Section 37 and/or Section 42 Arbitration Act 2005 application] Justin acted for the plaintiff to apply for an ad interim Fortuna Injunction to restrain the defendant from proceeding or acting upon the statutory notice and proceeding with a winding-up petition against the plaintiff. This decision further clarifies the position of the law on Fortuna Injunctions and is helpful for litigants as a winding up threatened to be filed based on an award challenged and/or not registered as a Court Judgment yet arise often in Courts. (i)The Court held that the case of Mobikom Sdn Bhd v Inmiss Communications Sdn Bhd [2007] 3 MLJ 318 which is a pre-Arbitration Act 2005 case is still applicable to injunct a winding up proceedings when there is a pending Sections 37 and/or 42 Arbitration Act 2005 application to challenge the Arbitration Award plus the recognition and enforcement application by the Defendant. (ii)Despite the Final Award, the Plaintiff had been disputing the alleged debt both on liability and quantum right from the stage the dispute was referred to arbitration. It would be premature and improper for the Winding Up Petition to be presented at this stage before the pending actions are disposed of. The argument by the Defendant that unlike Section 17 of the old Arbitration Act 1952 (relied by Mobikom’s case), the wordings of the new Section 36 of the Arbitration Act 2005 grants sufficient power to the party to rely on the Award to initiate Court proceeding is plainly misconceived as there is effect hardly any significant difference in the wording of the finality clause in both sections, except for different usage of words which for all intents and purposes convey the same meaning.