AWANGSA BINA SDN BHD v MAYLAND AVENUE SDN BHD

Non-Applicability of Section 10 of the Arbitration Act 2005 to a Winding Up Petition

The Learned Judge, Wong Chee Lin J in dismissing the Respondent’s Stay Application, held that Section 10 of the Arbitration Act 2005 has no applicability to a winding-up petition. In arriving at her decision, the Learned Judge concurred with the High Court decision in NFC Labuan Shipleasing Ltd v Semua Chemical Shipping Sdn Bhd [2017] MLJU 900, which reasoned, amongst others, that:-

i) A winding-up proceeding is sui generis and not in the nature of a substantive claim contemplated within the remit of Section 10 Arbitration Act 2005.

ii) A winding-up proceeding is not an execution proceeding based on a judgment or proceedings to resolve disputes between parties.

iii) Following therefrom, a winding-up petition is not a ‘proceeding’ that is susceptible to a stay pending arbitration and to grant a stay of winding-up petition under Section 10 of the Arbitration Act 2005 would be patently inappropriate and conceptually incongruent within the winding-up context.

Discretionary Powers under S465 Companies Act 2016 may be invoked when there is a prima facie dispute of debt

Having decided the above, the Learned Judge proceeded to examine the substantive merits of winding-up petition and the position in foreign jurisdiction in the English Court of Appeal decision in Salford Estates (No 2) Ltd v Altomart Ltd (No 2)[2015] Ch 589, Singapore High Court decision in Bdg v Bdh [2016] 5 SLR 977, and lastly Hong Kong Court of First Instance decision in Lasmos Limited v Southwest Pacific Bauxite (HK) Limited [2018] HKCFI 426.

After conducting a comprehensive examination on the foreign authorities, the Learned Judge was satisfied that there was prima facie a dispute as to the debt and exercised her discretion under Section 465 of Companies Act 2016 to dismiss the winding-up petition. In doing so, the following principles in the above authorities become relevant:-

a) The Companies Act confers the court the discretionary power to wind up a company and the Court shall only exercise this discretion in such a way which is not incongruent with the legislative policy embodied in the Act;

b) When the Parties have agreed to refer the dispute relating to the debt to arbitration, the merits of the dispute are to be decided by the arbitrator and not the court.

c) In such circumstance, it would be anomalous for the Court to conduct a summary judgment type analysis of liability for an unadmitted debt on which a winding-up petition is grounded.

d) The exercise of the discretion to wind up a company would inevitably mean that the Court would have to conduct a summary judgment type of analysis and enquiry onto the merits of the dispute of the debt, and thus, depriving the other Parties from its contractual bargain – i.e. to resolve any dispute by way of arbitration.

e) Further, the exercise of the discretion to wind up a company would also encourage parties to an arbitration agreement to by-pass the arbitration agreement by presenting a winding-up petition.

f) In the upshot, if there was prima facie a dispute of debt, the petition may be dismissed to enable parties to resolve the dispute over the debt by their chosen method of dispute resolution – arbitration, rather than require the court to investigate whether or not the debt is bona fide disputed on substantial grounds.

Case Extract 

[25]  Applying the decisions in Salford Estates, Bdg v Bdh and the Lasmos case, I should ascertain whether there is a prima facie dispute of the debt claimed by the Petitioner. Since the Respondent was relying primarily on section 10 of the Arbitration Act 2005, it did not elaborate on the basis on which it was disputing the debt claimed by the Petitioner but essentially this is what the Respondent is alleging:

• a)that it is entitled to a set off against rectification costs that are needed to be incurred;
• b)that the Respondent is also entitled to counterclaim for back charges that had been incurred; and
• c)that the claim incorporated amounts that are owing from the nominated sub-contractors and the nominated Suppliers.

[26]  The Respondent had exhibited letters from some nominated sub- contractors to the effect that they have been paid directly by the Respondent and are not claiming against the Respondent.

[27]  It was submitted for the Petitioner that the Respondent lacks bona fides as the claims were made only very recently and not when the Accounts were being finalised. Also I note that the Respondent could have but did not quantify its counterclaim or set off. If the Respondent has to show that the debt was disputed bona fide on substantial grounds, I would hold that the Respondent has not discharged that burden.

[28]  However, applying the lower threshold of merely showing a prima facie dispute, since the debt here is the subject matter of an arbitration clause, I am of the view that the Respondent has discharged the burden of showing a prima facie dispute, bearing in mind that a denial of the indebtedness constitutes a dispute. The merits or otherwise of the dispute are matters to be decided by the arbitrator and not by this Court and the Respondent had given notice of arbitration to the Petitioner. Accordingly, I would not stay the winding up petition pending arbitration under section 10 of the Arbitration Act 2005 but, in the exercise of my discretion under section 465 of the Companies Act 2016, I would dismiss the winding up petition on the ground that the Respondent has shown the existence of a prima facie dispute which ought to be referred to arbitration.

Holding Letter

1. We refer to your letter dated 14 March 2023.

2. We have been instructed by our client that your client may proceed with any adjudication and/or arbitration proceedings deemed necessary by your client.

3. However, any adjudication and/or arbitration proceedings will be vigorously defended by our client. Kindly also be informed that we have our client’s instructions to accept service of all legal process on our client’s behalf.

4. For the avoidance of doubt, all our client’s rights are expressly reserved.

Letter to Deny Liability

We refer to your letter dated +++

Kindly be informed that the alleged +++ are not within the scope of +++

Indeed, we have taken all necessary steps to +++

We further deny the +++’s claims for the sum of +++ in its entirety as the alleged amount is wholly unsubstantiated and, in any event, excessive.

 Therefore, you shall not release the sum of ++++, being +++.

Can you cancel a Schedule H SPA after signing it?

 Anand Raj Giri A/L Haripasar Giri v Country Garden Danga Bay Sdn Bhd

The brief facts are as follows:-

11–10–2017 Purchaser signed the Sales Form and Schedule H SPA (“SPA”) for the purchase of a property worth RM670,380. Paid Deposit of RM10,000.

9–11–2017 Purchaser made part payment to the Developer.

16–4–2018 Purchaser made another 2 part payments. Total paid to Developer at this stage is RM80,445.20.

7–8–2018 Developer dated the SPA.

On or around August 2018, Purchaser did not want to continue with the Purchase, citing financial issues.

18–1–2019 Purchaser signed the Deed of Revocation sent to him by the Developer. In the Deed of Revocation, there is a clause that allows the Developer to forfeit 10% of the Purchase Price (same substantial remedy as in Clause 11 (2) of the SPA).

20–8–2019 Purchaser commenced an action against the Developer.

26–9–2019 Developer refunded RM8,916.68 to the Purchaser, after deducting RM67,038.00 and RM4,491 as legal fees incurred by the Developer which arose from the purchase of the property.

The learned Magistrate held for the Purchaser/Plaintiff.

On appeal to the High Court, the learned Judicial Commissioner allowed the appeal and held for the Developer.

Dissatisfied, the Purchaser/Plaintiff appealed to the Court of Appeal.

The issues which were raised before the Court of Appeal were essentially:-

(a) Whether a Purchaser under a Schedule H SPA can cancel the SPA 2 years after signing the same, in reliance of a Sales Form that was signed by the Purchaser?

(b) Is the Purchaser entitled to claim for a full refund of Deposit paid to the Developer in reliance of the Sales Form?

(c) Whether the Deed of Revocation is valid and enforceable?

The solicitors for the Plaintiff/Purchaser submitted that:-

(a) The learned Judicial Commissioner in holding that the Purchaser in refusing to perform the SPA, has repudiated the SPA, and therefore the Developer elected to terminate the SPA, is plainly wrong because:-

(i) This was not pleaded by the Defendant in its pleadings;

(ii) The learned Judicial Commissioner made a finding that is contrary to the testimony of witnesses;

(iii) In making a finding that the Purchaser has repudiated the SPA and the Developer has elected to terminate the SPA, the learned Judicial Commissioner referred to Clause 11 (1) (c) SPA.

(iv) The 30-day notice requirement in Clause 11 (2) SPA has to be fulfilled before the Developer can terminate the SPA.

(v) Clause 11 is immaterial. The Developer never terminated the SPA. The precondition was never fulfilled.

(b) The Deed of Revocation should not be accepted because:-

(i) it was not in compliance with Clause 11 (2) SPA, and is consequently not valid.

(ii) it was never signed by the Defendant.

(iii) There was no evidence to show that the Deed of Revocation was agreed by the Developer. RM8,916.68 was only refunded to the Purchaser after this Suit was commenced.

(c) On the Sales Form, 2 issues were raised:-

(i) Whether Clause (f) is applicable?

There is no conflict between the Sales Form and the SPA, because it deals with a different situation — Sales Form caters to a cancellation by the Purchaser, while Clause 11 SPA deals with situation where termination by the Developer.

(ii) Does the SPA supersede the terms of the Sales Form?

The Sales Form was intended to exist together with the SPA, therefore, there was no conflict between the SPA and the Sales Form.

On behalf of the Developer, we submitted the following in relation to the SPA:-

(a) The SPA took effect on 11.10.2017. Refer to PJD Regency (Federal Court Decision).

(b) The SPA, being a Statutory Agreement, prevails over the Sales Form.

(c) The Sales Form is no longer applicable once the SPA is signed.

(d) If we were to refer to Clause (i) of the Sales Form, it “…will be construed with the provisions of the SPA…” and “in the event of any conflict, the provisions of the SPA shall prevail.”

(e) Clause (f) of the Sales Form states that “…in event of cancellation… charge 5% deposit as administrative fee and balance of deposit will be refunded.” However, Clause (f) catered for a scenario where the SPA has not been signed, because Clause (b) states that the Purchaser needs to sign the SPA in 7 days.

(f) Further, the reference to the word “deposit” in Clause (f) should be read together with Clause (a) of the Sales Form, which states that the deposit refers to the sum of RM10,000 and not any other sum (that is in the SPA).

Further, on the Deed of Revocation, we submitted that if only a situation under Section 8A of the Housing Development (Control and Licensing) Act 1966 occurs, i.e., if the Developer abandons the project, then the Purchaser may terminate the SPA, subject to certain terms and conditions:-

(1) Notwithstanding anything contained in any agreement, a purchaser shall at any time be entitled to terminate the sale and purchase agreement entered into in respect of a housing development which the licensed housing developer is engaged in, carries on, undertakes or causes to be undertaken if-

(a) the licensed housing developer refuses to carry out or delays or suspends or ceases work for a continuous period of six months or more after the execution of the sale and purchase agreement;

(b) the purchaser has obtained the written consent from the end financier; and

(c) the Controller has certified that the licensed housing developer has refused to carry out or delayed or suspended or ceased work for a continuous period of six months or more after the execution of the sale and purchase agreement.

(Case law has impliedly shown that a Deed of Revocation signed between parties may be used as a mode of such termination, notwithstanding that the Controller’s certification is not obtained. See Cemerlang Land Sdn Bhd v Ali bin Saat & Anor and other appeals [2018] 1 MLJ 331 Court of Appeal.)

In the present case, it was the Purchaser who wanted to cancel the deal, in response to which the Developer had prepared the Deed of Revocation. Although the Deed of Revocation was not signed by the Developer, it was acted upon by the Developer when it refunded RM8,916.68 to the Purchaser.

Further, the Deed of Revocation is in compliance with Clause 11 SPA, as the substantive remedy is same, i.e., both Clause 11 SPA and Deed of Revocation provide that the Developer can forfeit 10% of the Purchase Price.

It was conceded that the Developer never issued any 30-day notice as required under Clause 11 (2) SPA, but the point here is, it would be futile for the Developer to issue any such notice, since it was the Purchaser who had decided to cancel the deal (although technically speaking he cannot do so) and he also went on to cancel the bank loan. Therefore, the 30-day notice is no longer necessary. The Developer has no other choice except to prepare the Deed of Revocation, which was duly signed by the Purchaser.

The Developer had a legitimate expectation that the SPA will be performed. It was only after 2 years of signing the SPA that the Purchaser decided not to continue with the purchase. Therefore, based on parties’ agreement, the Developer forfeited 10% of the Purchase Price RM67,038 and the legal fees borne by the Developer on behalf of the Purchaser, amounting to RM4,491.

The Learned Judicial Commissioner therefore correctly decided that the Appeal at the High Court should be allowed.

Last but not least, if this Appeal is allowed, it would potentially create a floodgate in the housing industry, where the Purchaser can simply renege on a Schedule H SPA anytime, without having to deal with any repercussions.

After listening to parties, the Court of Appeal unanimously decided that the applicable agreement has to be the SPA as prescribed, and not the Sales Form. When the Purchaser indicated his intention to cancel, the Developer had followed up with a Deed of Revocation. Therefore, the High Court was correct to point out that there was repudiation by the Purchaser, that the Developer decided to accept. A non-compliance of Clause 11 (2) SPA cannot invalidate the Deed of Revocation when the Purchaser has agreed to it. There is no appealable error, and the appeal is thereby dismissed with costs of RM5,000.00, subject to allocatur.

Bar Council Life Insurance for Members

Nomination Form

Application for Termination of Winding Up

 
Mode: Summons in Chambers (Understanding: Notice of motion is only for those matters listed in the winding up rules), supported by Affidavit in Support

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Lee Shih stated on 4.12.2017 that "The Companies Act 2016 only provides for the prescribed form under section 493 for lodging the court order for termination. This is found on the SSM website. The procedure for such termination would have to be governed generally under case law as well as the Winding Up Rules 1972. The winding up rules do not explicit set out the procedure for termination (and neither does it set out the stay procedure), but I am of the view that the application can be made by way of Summons in Chambers under Rule 6 read together with Rule 7 (2) of the Winding Up Rules.

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So the story was, we applied by SIC, and proposed to make all payments to Insolvency Department. 

Insolvency had no objections to a stay, pending their preparation of a report. 

In the end, client had to pay fees of approximately RM115K to the Insolvency Department for the termination to be granted (fees charged by the Insolvency Department).

---

Moral of the story: Don't ignore demands from creditors, if you're wound up and wish to revive the company, it would be a more challenging task. 

But we managed to get the Winding Up Order terminated within 1 month of its grant, which was not bad at all. 

Settlement Proposal

1. We refer to the above matter, wherein we act for +++, the +++.

2. We also refer to your letter dated +++ and the telephone conversation between +++.

Strictly on a without prejudice basis, we are instructed by our client to propose the following terms and conditions, as full and final settlement of the above matter:-

(a) Our client is agreeable to pay the sum of +++ to your client, as full and final settlement of the above matter (“Settlement Sum”).

(b) The Settlement Sum shall be released to you as the solicitors for your client, as stakeholder on or before +++ subject to the following terms and conditions:-

(i) Your client shall forthwith withdraw +++ upon receipt of the Settlement Sum by you as stakeholder;

(ii) Upon the +++, you may proceed to release the Settlement Sum to your client; and

(iii) Both parties shall bear their own costs in relation to the above matters.

(c) This Settlement constitutes a full final settlement of all claims and/or liabilities between +++ and +++, and all Parties shall have no further claims and/or liabilities whatsoever against each other.

4. Pending negotiation between Parties, we would be grateful if your client can hold +++ in abeyance.

5. We trust you will impress upon your client that our client is prepared to resolve the above matter amicably and we would be grateful if you could revert with your client’s agreement on the above terms within seven (7) days from the date hereof.

6. For the avoidance of doubt, our client expressly reserves all its rights.

Joint and Several Liability by Farina Hanim

In a relationship between a creditor and debtor, the issue of liability is always a cause of concern. This is made even more apparent when there is more than one debtor involved as the terms of liability is not necessarily clear. Among the popular issues of contention is whether the debtors’ liability is joint or joint and several. In this commentary, we will explore this artificial distinction through the recent Federal Court case of Lembaga Kumpulan Wang Simpanan Pekerja v. Edwin Cassian Nagappan @ Marie [2021] 1 LNS 928.

1. Background facts

A suit was commenced by the Employee’s Provident Fund Board against a company and its directors, Edwin Cassian and one other, for the failure of their company to make employer contributions on behalf of its employees. A consent judgment was recorded where each of the three defendants agreed to pay arrears amounting to RM133,697.00 together with dividends and interests.

However, the judgment did not expressly specify the type of liability to be borne by them i.e. whether the defendants would be “jointly and severally” liable for the judgment sum.

When the defendants failed to comply with the terms of the judgment, the EPF Board commenced a bankruptcy action solely against Edwin Cassian who then applied to set aside the action which was allowed by the Senior Assistant Registrar of the High Court. An appeal to the judge in chambers was dismissed by the judge of the High Court.

On appeal to the Court of Appeal, the main point of contention by the EPF Board is for the court to read in the words “jointly and severally” as stipulated in Section 46 (1) of the Employees Provident Fund Act 1991 (“EPF Act”) into the judgment which reads as follows:

Joint and several liability of directors, etc

“Where any contributions remaining unpaid by a company, a firm or an association of persons, then, notwithstanding anything to the contrary in this Act or any other written law, the directors of such company including any persons who were directors of such company during such period in which contributions were liable to be paid, or the partners of such firm, including any persons who were partners of such firm during such period in which contributions were liable to be paid, or the office-bearers of such association of persons, including any persons who were office-bearers of such association during such period in which contributions were liable to be paid, as the case may be, shall together with the company, firm or association of persons liable to pay the said contributions, be jointly and severally liable for the contributions due and payable to the Fund.”

Despite the express statutory provision, this was unsuccessful in the Court of Appeal on the basis that the bankruptcy action commenced against Edwin Cassian was for the whole judgment sum, instead of only the portion owed by him.

2. Federal Court decision and the diverging authorities before it

The sole question posed before the Federal Court is on the point of law:

“Whether this Court should give effect to the liability on a “joint and several” basis as provided under Section 46 of the Employees Provident Fund Act 1991 in a situation where “joint and several” were not specially stated in the court judgment.”

The court unanimously answered in the affirmative and to analyse the court’s reasoning behind this, we must dive into the diverging authorities before it:-

• Sumathy A/P Subramaniam v Subramaniam A/L Gunasegaran & Anor Appeal [2017] 6 MLJ 753

In Sumathy, the court took the view that where bankruptcy proceedings were simultaneously initiated against two judgment debtors, they could not both be held liable for the whole judgment sum if the judgment did not specify that liability was joint and several.

In other words, the court cannot insert the feature of “joint and several” liability if such phrase were never inserted into the judgment in the first place.

• Kejuruteraan Bintai Kindenko Sdn Bhd v Fong Soon Leong [2021] 2 MLJ 234

In Kejuruteraan Bintai, Fong and four other petitioners were ordered to pay cost of RM50,000 to the company. When this was not paid, Kejuruteraan Bintai commenced bankruptcy proceedings against Fong for the sum of RM50,000. This was challenged by Fong on the basis that since the order for cost never specified that liability was joint and several, he was only liable for an equal portion of the sum with the rest of the petitioners.

Despite acknowledging the preponderance of judicial laws where unless stated otherwise, judgement debtors are regarded as jointly and severally liable under a judgment or order, the Court of Appeal abided by the doctrine of stare decisis and held that it is bound by the previous decision of Sumathy. The bankruptcy action was subsequently set aside.

3. Analysis in Edwin Cassian

The Federal Court in its reasoning drew a distinction between the intertwined terms:

Joint liability: Where two or more persons jointly promise to do the same thing. It refers to one obligation or promise and consequently, performance by one discharges all.

Joint and Several liability: Where two or more persons jointly promise to do the same thing and also severally make separate promises to do the same thing.

The important point to note is the difference in the number of promises made.

Critically, the Federal Court emphasised that the term “joint liability” in a judgment does not render liability of each of the debtors to be halved or divided into equal portion according to his interest or obligation, unless clearly and expressly stated to that effect.

The court went further and noted that although a judgment for joint and several liability does not prevent a creditor from bringing several actions against several debtors separately, if any of the debtors satisfies the whole judgment sum, the right of a creditor to bring an action against another is extinguished. This prevents double recovery by the creditor and addresses the issue of a creditor being “overpaid” in Sumathy.

In the instant appeal, Section 46 of the EPF Act has expressly made clear of the joint and several liability of the directors of a company for unpaid contributions and therefore must be fully implemented over the terms of the judgment.

Fortunately, the law is even made clearer on account of Section 44 of the Contracts Act 1950 which provides as follows:

Any one of joint promisors may be compelled to perform

(1) When two or more persons make a joint promise, the promisee may, in the absence of express agreement to the contrary, compel any one or more of the joint promisors to perform the whole of the promise

In short – all joint contracts essentially imposed complete accountability for the obligation on each of the promisors unless the contract expressly states otherwise. Therefore, when debts are incurred jointly, each promisor is responsible for the entire amount. There was no indication that a joint liability situation renders the obligation to be somehow halved or according to portion. This was the misconception that prevailed in Sumathy.

4. Conclusion

It is pertinent to note that the point of law in Edwin Cassian was decided in the context of Section 46 of the EPF Act which manifestly imposes joint and several liability. Nevertheless, adopting the court’s analysis above and by virtue of the statutory law provided in Section 44 of the Contracts Act 1950, it is reasonable to conclude that joint and several liability prevails in any contracts or agreement unless a judgment or order stipulates otherwise.

By: Tay & Partners - Farina Hanim

Purchase Bar Council Sticker

Letter of Authorisation Template :)

Counter Settlement Proposal

Remember to mark it as WITHOUT PREJUDICE.

1. We refer to the above matter and to your letter dated 27 April 2020 (“Proposal”).

2. Our client maintains that the amount due and owing by your client to our client is RM222,861.89 (“Outstanding Sum”) as claimed by our client in the Writ and Statement of Claim dated 9 January 2020. Our client is therefore not agreeable to the Proposal.

3. Notwithstanding the above, our client is willing to settle the above matter amicably and instructed us to propose the following terms and conditions:-

(a) Your client should pay the sum of RM250,759.39 to our client as full and final settlement of the above matter. The particulars of the Settlement Sum are as set out in Annexure A and are briefly as follows:-

(i) Outstanding Sum of RM222,861.89; and

(ii) Interest at the rate of 5% per annum from the due date of the invoices until full and final settlement, amounting to RM27,897.50 (“Interest”),

(b) The sum of RM250,759.39 should be paid by your client to our client by 6 instalments as follows:-

(i) 1st instalment on 15 May 2020 RM41,385.91

(ii) 2nd instalment on 15 June 2020 RM42,157.28

(iii) 3rd instalment on 15 July 2020 RM42,388.87

(iv) 4th instalment on 15 August 2020 RM40,697.50

(v) 5th instalment on 15 September 2020 RM42,349.00

(vi) 6th instalment on 15 October 2020 RM41,780.83

(c) The payment stated in paragraph 3 (b) above shall be made by 6 post-dated cheques all of which shall be payable to our client and forwarded to us, as solicitors for our client, on or before 14 May 2020 (“Post-Dated Cheques”).

(d) In the event of default or non-payment of any one of the instalments as stated in paragraph 3 (a) to (c) above, the sum of RM222,861.89 (less actual amount paid) shall become immediately due and payable by your client to our client, and in this respect, our client shall be at liberty to commence legal proceedings against your client for the recovery of the sum of RM222,861.89 (less actual amount paid) together with interests, without further reference to your client, in which event, your client shall be fully and solely responsible for all further costs and interest incurred in the same.

(e) Parties should enter a Consent Judgment within 7 days of your client’s acceptance of paragraphs 3 (a) to 3 (d) above.

4. Kindly take note that the terms set out in paragraph 3 above are final and revert with your client’s agreement on the above terms on or before 11 May 2020, failing which this settlement proposal will automatically lapse. We look forward to your client’s favourable response.

5. For the avoidance of doubt, our client expressly reserves its rights.

6. Kindly acknowledge receipt of this letter and its enclosures.

How To Draft a Settlement Proposal

TIPS

1. Remember to mark the proposal as WITHOUT PREJUDICE. Without prejudice means it cannot be produced as an exhibit in Court (unless the maker voluntarily discloses it first).
2. Identify what your client wants, how he/she wants it.
3. Identify what your client can offer to your opponent's client, how your client wants to do it, and when.
4. Include dateline to accept offer!
5. No further claims.
6. Expressly reserve your client's rights.

SAMPLE CONTENT

We refer to the above matter, to our letter dated [when] / telephone conversation between [who] and [who] on [when].

Strictly on a without prejudice basis, we are instructed by our client to propose the following terms and conditions, as full and final settlement of the above matter:-     

(a) Your client should pay a sum of [amount] to our client, particulars of which are as follows:-

(i) A sum of [amount], being our client's initial share capital contribution.

(ii) A sum of [amount], being commission owed to our client for the period of [date]

(iii) A sum of [amount], being our client’s salary for the period of [date] to [date] or until date of the settlement.

(b) The payments stated in paragraph 2 (a) above shall be made by your client to us as solicitors of our client, on or before [date].

(c) In consideration of payment under paragraph 2 (a)(i) above, our client will transfer all its shares to a person nominated by your client. In this respect:-

(i) Kindly forward the relevant shares transfer form duly executed by your client to us for our client’s execution on or before [date]; and

(ii) Upon receipt of payment stated in paragraph 2 (a) above and within 5 days from the date of receipt of payment, we should forward the duly executed shares transfer form to you for your onward transmission to your client.

(d) In relation to paragraph 2 (a)(ii) above, your client is required to provide our client with the actual total number of sales which has been audited by your client’s auditor on or before [date].

(e) Our client should withdraw the above matter against your client with no liberty to file afresh and with no order as to costs.

(f) The above terms shall constitute full and final settlement of all claims, rights, actions and/or recourse that our client may have against your client, and your client may have against our client.

3. Kindly revert with your client’s agreement on the above terms on or before [date], failing which this settlement proposal will automatically lapse. We look forward to your client’s favourable response.

4. For the avoidance of doubt, our client expressly reserves all its rights.

How Garnishee Proceedings Work

1. There must be a debt due or accruing due from the garnishee to the judgment debtor. What it does is essentially to make the Defendant's bank pay to you the debt that Defendant owes you (under banking law banks are your debtor/owe you money). See Order 49 of the Rules of Court.

2. The steps are generally a writ and SOC, and if no appearance is entered by the Defendant, proceed to get a judgment in default of appearance.Or, if the Defendant enters appearance, proceed to Summary Judgment (if straightforward case, no triable issues) / Trial, obtain Judgment against Defendant.

3. Once you get the Judgment, apply for Garnishee by Notice of Application and Affidavit.

4. Court will grant an Order with a date for the Garnishee to Show Cause.

5. Serve this on the Garnishee (ASAP) and the Defendant (7 days before Hearing of Order to Show Cause).

6. Garnishee (bank) will produce a statement saying how much is in the Defendant's account that can be garnished. Sometimes where the amount in the account is not enough to cover your Judgment sum, then you can only garnish the sum that is available and recover the rest due and owing through other modes of execution.

5. On the date to show cause, in the absence of Garnishee or Garnishee/Defendant has no objection, then court will grant a Garnishee Order Absolute.

6. If the Defendant opposes, then you can forward few reasons to Court why the Garnishee Order should be made absolute, for example:-

(a) Plaintiff obtained Judgment against Defendant, Plaintiff should not be barred from enjoying the fruits of litigation.

(b) Defendant did not appeal to the Judgment.

(d) There is debt due or accruing due from the Garnishee to the Defendant, and Garnishee has no objections whatsoever to release the amount sought to be garnished to the Plaintiff.

7. If Court grants Garnishee Order Absolute, serve the sealed Garnishee Order Absolute on the Garnishee bank and the Garnishee bank will pay the Plaintiff (or its solicitors) directly.

Civil Law (Amendment) Act 2019

The Civil Law (Amendment) Act 2019 was published in the Gazette on 31 May 2019. There are a few major changes to note:

1. Persons with disabilities - refer to meaning in Persons with Disabilities Act 2008. [1]

2. Previously, if a person has died caused by wrongful act (neglect or default), under s7(2) only parents, spouse and child can claim. Now, it includes "any person with disabilities under the care" of the deceased.

3. Previously, no loss of earnings (after death of person or after personal injury) shall be considered if his age exceeds 55. With the amendment, the age is increased to 60.

4. The upper limit of multiplier for loss of future earnings in a claim for damages (for both loss of dependency and personal injury) is increased to 60.

5. In relation to personal injury, good health before injury is NO LONGER a criteria of assessing loss of earnings, as long as he was working before death.

6. Bereavement is increased to RM30,000 - and now 'spouse', 'parents' and 'child' can claim (previously only spouse can claim if deceased was married, or parents can claim if deceased was under 18 and single).

_______________

[1] “persons with disabilities” include those who have long term physical, mental, intellectual or sensory impairments which in interaction with various barriers may hinder their full and effective participation in society;

First Time in KLHC

So what happened today was that Shermal got a call from pihak atasan, then came back with a list of printing materials with 280+ stuff on it. He threw the whole list to Yew Xian. Yew Xian was supposed to go to Shah Alam High Court with Grace as they were going to arrange some items there. But since Shermal is throwing his whole workload unto Yew Xian, he can't go. So I said perhaps I can help out.  

Then 11.30am came, Grace and I went down to 6th floor, and we saw my master Mr Toi. And he was like, "where are you going Yin Chien?" and I was like shit I forgot to ask my master's permission before I go. So I told him I'm going to SAHC to help Grace arrange some files for the trial tomorrow. And he was like, "Oh, I was thinking of asking you to go court with me this afternoon at 2pm." And so I tried to find a replacement for myself but failed. So in the end Grace went alone, and I went to KLHC with Mr Toi. I feel super bad for Grace for having to do this alone. 

The matter today was a hearing of an interlocutory injunction of GDSP. Basically the dispute between Datuk Lim Chee Wah suing on behalf of his late mother and the 2nd grandchild of the eldest son of Lim Goh Tong, Benjamin Lim, who was given 75% shares for free from his late grandpa. 

So what happened was BL kicked his grandma off the BOD, and is now trying to sell of 29/40 plots of land around Genting that belonged to the family company. What we were trying to argue is that there is a family arrangement that gives rise to quasi partnership, and the lands have special value to the family and damages is not an adequate remedy as the location and circumstances surrounding those lands are unique. 

The other side, represented by Izral & Partnership, were basically saying that LCW has no locus to sue as his late mother's POA did not give him such authority. And in any case, LCW cannot make an affidavit based on what is personal to his mother as it wouldn't have been in his knowledge. 

It's definitely an eye-opening experience. And I'm really grateful that my master was willing to let me tag along to KLHC.

When we got back to the office, the bag that I borrowed from Iris got accidentally locked. And she didn't know her own password. We were dismayed but obviously the problem has to be solved cos Iris is having a court case tomorrow. So me and Michael tried the number combinations one by one (1000 combinations) but it still wouldn't open. Then everyone gave up and were resolved to get one of the Abangs to cut it open the next day. I really felt super bad at this point of time. 

Then I went back down, tried all the numbers again from 1-1-0. And when I reached 1-1-8, it suddenly clicked open! Imagine my excitement! Everybody was saying I should go buy toto hahaha. So problem solved, and the bag was reset to 0-0-0.

I owe Iris a meal for giving her a heart attack! XD

It was an eventful day, but thank God it ended on a positive note.

Land Acquisition Cases

Article 13(1): Accordance with Law

Ng Chin Siu & Sons Rubber Estate Sdn Bhd v Pentadbir Tanah Hilir Perak & Anor 

[2013] MLJU 1590 COURT OF APPEAL (PUTRAJAYA) 

Issue: Form D and E (mandatory procedure under LAA) issued to wrong entity. 

Held: It was of no consequence that the respondents had in fact substantially complied with the essential provisions of the Land Acquisition Act 1960, that the appellant was not prejudiced because it was fully aware of the whole acquisition exercise or that it was open to the appellant to seek the remedy of a higher compensation for the said land. All these do not detract from the fact that the acquisition was not made in accordance with law and thus ipso facto null and void by virtue of Article 13(1) of the Federal Constitution.

Ee Chong Pang & Ors v The Land Administrator Of The District Of Alor Gajah & Anor [2012] MLJU 1366 COURT OF APPEAL (PUTRAJAYA)

Issue: Appellants contended that as a result of the failure of the State Authority to publish in the Gazette Form A, the land acquisition exercise was not carried out in accordance with the law. Thus the land acquisition by the State Authority was contrary to Article 13(1) and should be declared null and void.

Judge's Opinion: In this regard, we are in agreement with the view expressed by Gopal Sri Ram JCA (as he then was) in his dissenting judgment in Ng Kim Moi (P) & Ors v Pentadbir Tanah Daerah, Seremban, Negeri Sembilan Darul Khusus (Negeri Sembilan Township Sdn Bhd & Anor, proposed intervenors) [2004] 3 MLJ 301 where his lordship said (at p. 328):

[74] The draft judgment of my learned brother accepts in entirety the appellants' contention that Form A was never issued and that Form E was never served. However, my learned brother has gone on to hold that issuance of Form A is not mandatory despite the imperative language of s 4(1). With respect, this approach disregards well settled principles of statutory construction. We are here dealing with a statute which is aimed at the prevention of arbitrary escheatment of proprietary rights, the protection of which the supreme law of the Federation guarantees as a fundamental right. To read mandatory provisions in such a statute in a generous and favourable manner towards those whose duty is to ensure their due observance is to condone and promote maladministration in a manner so important as the deprivation of property. It is a message from the judicial arm of the Government to bureaucrats that due compliance with mandatory provisions of the Act will produce no consequences for them. I am therefore unable in the face of compelling authority as I have found and cited in this judgment to accept an ipse dixit based on no authority that compliance with s. 4(1) is not mandatory.

Held: Based on the above judicial authority, the issuance of Form A under section 4(1) of the Act is mandatory and the failure of the State Authority to comply with this mandatory provision can only mean that the land acquisition exercise is not in accordance with the law.

S KULASINGAM & ANOR v COMMISSIONER OF LANDS, FEDERAL TERRITORY & ORS [1982] 1 MLJ 204 

Issue: Tamil Association land to be acquired for building hockey stadium. It was argued that Article 13(1) FC would render any law providing for deprivation of property without a pre-acquisition hearing invalid.

Held: Acquisition could not be impugned on any ground of natural justice since the legislation imposed no obligation for any inquiry and hearing in respect of the acquisition. The legislature can by clear words exclude the principles of natural justice in the absence of specific constitutional guarantees and Article 13(1) in no way vitiates the provisions of the Land Acquisition Act. 

In a Nutshell: Federal Court negatived right to pre-acquisition hearing under the LAA as a matter of natural justice, saying that there is nothing in the legislation imposing any such obligation in contrast to the specific provisions for an inquiry and hearing in respect of the quantum of compensation payable. 

However, MP Jain said that, "Any argument that if one provision of a statute specifically stipulates natural justice and another provision therein is silent, then natural justice is impliedly excluded in the latter case, is now NOT accepted in other common law jurisdictions." See SL Kapoor v Jagmohan AIR 1981 SC 136; Swadeshi Cotton Mills v Union of India AIR 1981 SC 818.

In India, Swadeshi Cotton Mills v Union of India AIR 1981 SC 818, the court observed:

"The audi alteram partem rule ... is a very flexible, malleable and adaptable concept of natural justice. To adjust and harmonize the need for speed and obligation to act fairly, it can be modified and the measure of its application cut short in reasonable proportion to the exigencies of the situation. Thus, in the ultimate analysis, the question (as to what extent and in what measure) this rule of fair hearing will apply at the pre-decisional stage will depend upon the degree of urgency, if any, evident from the facts and circumstances of the particular case."

In Canada, in Nicholson v Haldimand Norfolk Regional Board of Commissioners of Police, a probationary constable in a municipality was dismissed without a hearing. There was a statutory provision requiring hearing only for those who crossed the probationary period, but not for one who was yet on probation. Still, the Supreme Court of Canada ruled that the probationer must be treated ‘fairly’. The consequences of dismissal to the concerned person were serious. The dismissal was thus quashed by the court. The moral of the case is that when a statute provides for hearing in one situation, but not in another, the court can still read the right of hearing in the latter situation on the ground of fairness. 

Also, it is submitted that once the word ‘law’ in art 13(1) is read broadly so as to include natural justice therein, then natural justice becomes a constitutionally-guaranteed procedural safeguard and will have to be implied in every statute falling within the scope of art 13. The Constitution being the supreme law of the land, it will be beyond Parliament to dilute the effect of art 13 and exclude natural justice when a person is being deprived of his property.