January 2015
Legal Updates
Cases
Banking
Tan Poh Khiang v Malayan Banking Bhd [2015] 1 MLJ 817; [2014] 1 LNS*
1146 (CA)
Guarantor’s discharge from liability upon acceptance of settlement proposal
Principal borrower had explicitly stated offer to settle outstanding overdraft
and amount to a maximum limit of RM1.3 million in one payment, an offer
accepted by Maybank. “Discharge of the property” meant all 13 pieces of
charged land were to be discharged, signifying that principal borrower had
been released from its debt claimed by Maybank.
Guarantor released from guarantee by virtue of ss 87 and 88 Contracts Act
1950. JC erred when he failed to take into account the concluded settlement
of principal borrower’s debt to Maybank and that, by virtue of s 87, guarantor
was released from the guarantee.
Court rejected Maybank’s argument that letter of acceptance dated 16 May
2003 not meant to be a full and final settlement of the debt; bank had not
reserved its rights to pursue balance of the debt due in the same letter, and
had, in addition to accepting the offer of settlement of RM1.3 million, agreed
to discharge the 13 charged lands. Subsequent letter dated 12 July 2003
could not be interpreted to mean that Maybank had reserved its right to sue
principal borrower and guarantors for balance of debt due.
By releasing the charged lands without guarantor’s consent, Maybank had
acted in a way inconsistent with the right of the individual concerned as a
guarantor. Therefore, he was also discharged as a guarantor under s 92
Contracts Act 1950.
The grounds of judgment may also be viewed here
Bankruptcy
Hong Leong Bank Bhd (formerly Credit Corporation (M) Bhd) v Sheikh
Ahmad Marzuki Sheikh Yusof [2015] 1 AMR 151; [2014] 9 CLJ 939;
[2014] MLJU^ 960 (CA)
Bankrupt has no locus to apply to set aside or vary decision of DGI
Erroneous of counsel for guarantor to invoke s 86 Bankruptcy Act 1967, as
applicable section was s 42, read with Schedule C
Judge erred by not holding guarantor did not have locus to move court to
expunge admission of proof of debt by Director General of Insolvency (“DGI”)
Guarantor should be estopped from re-litigating issues of annulment and
rescission of AO/RO and expunction of proof of debt admitted by DGI under
conventional loan
Judge erred when he failed to hold application in Encl 22A was res judicata
Tan Seok Leng (as the administratrix of the estate of Tan Kim Cheng,
deceased) v Mogasu Sundram a/l T Mogasu & Anor distinguished
Judge erred in holding s 6 Limitation Act 1953 applied, and not s 26(2)
The judgment may also be viewed here
Poh Gaik Lye v Amfraser Securities Pte Ltd [2015] 1 MLJ 453; [2014] 10
CLJ 79 (CA)
Validity of substituted service of bankruptcy notice and bankruptcy notice itself
When order for extension of bankruptcy notice containing the name “Citibank
Berhad” was made, it could not be a valid extension for the simple reason
that “Citibank Berhad” had no locus to make that application
Bankruptcy notice defective, could not be used to premise Amfraser’s
bankruptcy action against appellant
Sealed order incomplete and unsatisfactory as it was not clear on what basis
interest was charged. Court of Appeal had no alternative but to hold
bankruptcy notice did not conform to terms of sealed order of judgment.
The grounds of judgment may also be viewed here
Civil Procedure
Owners of The Ship or Vessel ‘Sasacom I’ v Bank Pembangunan Malaysia
Bhd [2015] 1 CLJ 392 (CA)
Whether vessel’s owners had filed valid memorandum of appeal within meaning of
r 18 Rules of the Court of Appeal 1994
As document purporting to be memorandum of appeal was undated, bank
entitled to doubt whether safe to rely upon it. A signed but undated
memorandum of appeal would not be compliant with r 18. This was a breach
of a fundamental rule and could not be excused.
Objection that undated memorandum of appeal led to record of appeal being
defective remained valid
The grounds of judgment may also be viewed here
For the High Court grounds of decision, see [2013] 4 MLJ 735; [2012] 1 LNS
858
Contract
Good Quantum Sdn Bhd & Ors v Alliance Investment Bank Bhd
(previously known as Alliance Merchant Bank Bhd) Civil Appeal No W-02969-05-2012 (CA)
Existence of collateral contract to novation, repayment agreements and guarantee
Inconceivable appellants would have agreed to enter into arrangement if not
for restructuring exercise, bearing in mind Good Quantum was never original
borrower of said loan; Alliance IB had caused itself to be appointed as an
advisor for proposed restructuring exercise and was to earn a fee of RM600k
Credible and sufficient evidence of inducement, persuasion and assurance
given by Alliance IB which constituted collateral contract prior to execution of
repayment agreement, novation agreement and guarantee
Trial judge should have asked herself: If arrangement under restructuring
exercise not in place, would Good Quantum have signed novation agreement,
repayment agreement and guarantees?
Also failed to take into account that evidence pointed to Alliance IB being fully
aware of this collateral arrangement and participating in them as advisor of
restructuring exercise was to earn hefty fee
The judgment may be viewed here
Kumpulan Perubatan (Johor) Sdn Bhd v Dr Mohd Adnan Sulaiman & Anor
[2015] 1 CLJ 471; [2015] AMEJ 43 (CA)
No iron-clad prohibition restricting KPJ from setting up new hospital in absence of
‘non-competition’ clause
HC placed too high an emphasis on fiduciary duties being a sine qua non of a
joint venture (JV) and had not properly considered JV being essentially a
commercial one
Failed to sufficiently consider fundamental principle that shareholders only
entitled to dividends declared out of profits within terms of governing articles
of association, even in the context of a JV agreement
Failed to sufficiently consider that even JV agreement incorporating
shareholders’ agreement did not expressly provide for percentage share in
division of profits in the context of this fundamental principle of company law
JV arrangement in the nature of a commercial JV, so incumbent on HC to
have determined exact contractual terms binding the parties and the fact that
there was no “non-competition clause” restricting KPJ from setting up the new
hospital, in a situation where the parties could have easily included such
provision if that was the intention
HC had failed to sufficiently critically analyse expert’s report, which was
essentially based on assumptions, estimates and projections that had not
been independently verified. Given the extravagant sums calculated as
projected losses for years based on a flawed legal premise, HC should have
rejected expert opinion as inherently questionable or incredible.
The grounds of judgment may also be viewed here
For the High Court judgment, see [2013] 10 MLJ 781; [2013] 7 CLJ 1032
See also
www.thestar.com.my/News/Nation/2013/07/26/KPJ-pay-RM7034mildamages/
Hong Leong Bank Bhd v Tan Siew Nam & Anor [2014] 7 CLJ 293; [2014] 5
MLJ 34; [2014] 4 AMR 189 (CA)
SPA between developer and purchasers not frustrated
Sale and purchase agreement
assignment not frustrated
(SPA),
loan
agreement-cum-deed
of
Performance of obligations under loan agreement-cum-deed of assignment
had not become impossible even if SPA between developer and respondents
frustrated
Strategi Cerah Sdn Bhd wrongly decided; HC patently wrong when it held that
main purpose of loan agreement was “obviously to finance the purchase of
the units by the defendants” and that “the consideration for the agreement is
therefore the assigned units”
No basis for HC to order HLB to refund RM151,900 to developer; first order
must be set aside
Judge ignored provisions of s 15 Civil Law Act 1956
Land Law
Damai Jaya Realty Sdn Bhd v Pendaftar Hakmilik Tanah, Selangor Civil
Appeal No B-01-384-11/2013 (CA)
Failure to register order for sale of property notwithstanding that certificate of
sale issued and presented
Fit and proper case to direct registration of property as per order of court
order with a direction that respondent and/or State Authority and/or agencies
facilitate the registration according to law
The grounds of judgment may be viewed here
Damai Motor Kredit Sdn Bhd v Kementerian Kerja Raya Malaysia [2015]
1 AMR 205; [2015] 1 CLJ 44 (CA)
Registered proprietor, developer could intervene in action filed to challenge
award of compensation for land acquisition
Absence of time frame in court order for Ministry of Works to file objection
may be a ground to nullify order
The grounds of judgment may also be viewed here
Boustead Plantations Bhd & Anor v Kadam Anak Embuyang & Ors and
other appeals [2015] 1 MLJ 546; [2014] 1 LNS 967; [2014] AMEJ 1046
(CA)
JV scheme between company and Orang Asal not in contravention of s 8 Sarawak
Land Code (Cap 81)
Omission in deed to spell out more particularly that JV company was already
in existence did not mislead parties so as to provide a valid ground to vitiate
contract entered into
Plaintiffs estopped on the facts and by own acquiescence and consequent
events, thereby not entitled to relief sought; Boustead Trading (1985) Sdn
Bhd v Arab-Malaysian Merchant Bank distinguished
Pawa Ajah v Chung Kok Chiang & Anor and Masa Anak Nangkai & Ors v
Lembaga Pembangunan Dan Lidungan Tanah & Ors distinguished
No basis for trial judge to arrive at conclusions that privileges and rights of
NCR landowners had been reduced to ‘zero’ or ‘relegated to nought’ by the
arrangements entered into with Pelita Holdings and the State to develop NCR
lands into an oil palm plantation on a collective basis.
The judgment may also be viewed here
See also
www.freemalaysiatoday.com/category/nation/2014/08/07/court-of-appealdeclares-jv-native/
and
www.theborneopost.com/2014/08/07/appeal-court-affirms-legality-of-ncrland-devt-scheme/
For the High Court decision, see (2013) 5 BLR 1194
Tenaga Nasional Bhd v Keyaki Corporation Sdn Bhd [2015] 1 CLJ 528
(CA)
Whether TNB had failed to show what rights they had in the first place to enter
two lots of land sold
Existence of old transmission lines, along with lack of evidence of revocation
of the right, was ipso facto proof of right of way for re-entry
Tenaga Nasional had previously entered upon the land; impugned entry was
not an entry but a re-entry. No evidence of abandonment of right of way, nor
was there evidence right of way had been revoked: Tenaga Nasional Bhd v
Dolomite Industrial Park Sdn Bhd distinguished
The grounds of judgment may also be viewed here
For the High Court grounds of judgment (BM), see [2011] 1 LNS 64
Legal Profession
Gurbachan Singh s/o Bagawan Singh & Ors v Vellasamy s/o Pennusamy
& Ors and other appeals [2015] 1 CLJ 719; [2015] 1 MLJ 773; [2014]
AMEJ 1537 (FC)
Lawyer, legal firm betrayed clients’ trust in acquisition of estate land
Threshold issue in action against solicitor by erstwhile client is whether
solicitor-client relationship exists between plaintiff-client and defendantsolicitor. In the absence of such relationship, defendant-solicitor in his
professional capacity owes no duty to plaintiff-client. On the evidence
adduced and submissions of counsel, there was definitely a solicitor-client
relationship between the solicitor and purchasers including the respondents.
And the relationship was not limited for those purposes.
Purchasers entrusted solicitor to secure their portions of the estate land for
them. Instead, he took advantage of his position as a fiduciary and, having
obtained the whole estate land, transferred it to his company. Solicitor was in
breach of his fiduciary duty and had unjustly enriched himself. Hence, he
must account for the profit and other advantages acquired while acting in
breach of his fiduciary obligations towards purchasers.
Court will lift corporate veil of a corporation if it was set up for fraudulent
purposes, or where it was established to avoid an existing obligation or even
to prevent abuse of a corporate legal personality
The judgment may also be viewed here
See also
www.themalaysianinsider.com/malaysia/article/prominent-lawyer-betrayedclients-trust-in-land-deal-says-federal-court
The majority judgment of the Court of Appeal may be viewed here
Or see [2010] 5 MLJ 437
Batu Malay a/l Thandy v Saulinardi & Anor [2015] 1 AMR 143; [2015] 1
CLJ 33 (CA)
Complainant/borrower failed to prove complaint beyond a reasonable doubt
Borrower’s failure to attend disciplinary hearing before Disciplinary Committee
(“DC”) was a proper ground for his complaint to be dismissed. Disciplinary
Board (“DB”) ought to have agreed with the findings made by DC.
DB not bound to follow findings and recommendations made by DC, no
general duty to give reasons for its decision
The grounds of judgment may be viewed here
The High Court decision (in BM) may be viewed here
Tetuan Kang & Kang v Kirana Studio Sdn Bhd [2015] 1 CLJ 431; [2014] 5
AMR 821 (HC)
Whether client may challenge solicitor’s bill notwithstanding expiry of period
limited for taxation
No evidence that Kirana Studio requested detailed bill when invoice was
delivered; HMJ Shahrom not authority for proposition that client sued by
solicitor for legal fees is entitled to challenge reasonableness of sum claimed,
notwithstanding that period during which he may apply for taxation has
expired. Sessions judge wrong to rely on that case to allow Kirana Studio to
challenge invoice.
Solicitors Remuneration Order 2005 does not override provisions in Legal
Profession Act 1976, which expressly and clearly provides that client who
does not seek taxation of bill cannot thereafter challenge it
The grounds of judgment may also be viewed here
Partnership
Network Pet Products (M) Sdn Bhd v Royal Canin SAS & Anor Civil Appeal
No W-02(NCC)-1454-06-2013 (CA)
Whether there was an oral partnership agreement, as seen against requirements
under partnership law; appeal allowed in part
Attempt to prop up oral partnership agreement flew in face of clear provision
in distributorship contract which constituted an “entire agreement” clause:
Macronet Sdn Bhd v RHB Bank Sdn Bhd followed
Facts of appeal fell within category where it was important to prove
“predominant purpose” was to injure Network Pet Products and injury was
thereby caused. On the facts, it could not be said there was such a purpose.
Non-renewal of distributorship was within the discretion of Royal Canin SAS
and reasonable notice of nine months was given.
Appellate court not convinced essential ingredients of tort of passing off had
been established by Royal Canin SAS and Royal Canin Malaysia
The grounds of judgment may be viewed here
For the High Court judgment, see [2013] 8 MLJ 713; [2013] 5 CLJ 914
Tort
Dato’ Ibrahim Ali v Datuk Seri Anwar Ibrahim [2015] 1 AMR 605; [2015]
1 CLJ 176 (CA)
Conviction, one-day jail term and RM20k fine for contempt of court set aside
Judge erred in holding that president of Perkasa had committed contempt of
court as alleged by former deputy PM
The judgment may also be viewed here
See also
www.themalaysianinsider.com/malaysia/article/court-overturns-ibrahim-aliscontempt-conviction-bernama
www.thestar.com.my/News/Nation/2014/12/03/Court-Set-aside-ibrahim-ali/
~
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°
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