CIMB BANK BHD MAYBANK TRUSTEES BHD & OTHER APPEALS

Transcription

1 [2014] 3 LJ M ank hd v. Maybank Trustees hd & Other ppeals 1 M NK v. MYNK TRUSTS & OTR PPLS RL OURT, PUTRJY RN ZKR J RUS SR P ULL M MON J SURY LM OMR J M MROP J [VL PPLS NO: 02(f) (W), 02(f) (W), 02(f) (W), 02(f) (W) & 02(f) (W)] 10 RURY 2014 [2014] LJ JT(3) OMPNY LW: Lifting of corporate veil - Whether corporate veil should be lifted - ssuance of public slamic bonds for financing of government contracts - ond-issuer fraudulently making off with redemption monies due to bondholders - Whether corporate veil to be lifted to make directors of bond issuer liable ONTRT: xemption clause - ffectiveness - ond-issuer fraudulently made off with redemption monies due to bondholders causing latter to hold bonds facility agent and trustee company liable for loss - Whether facility agent and trustee negligent in causing loss to bondholders - Whether lead arranger entitled to exclude liability arising from nformation Memorandum SURTS: onds - Public slamic bonds - ssuance of public slamic bonds for financing of government contracts - ond-issuer fraudulently made off with redemption monies due to bondholders causing latter to hold bonds facility agent and trustee company liable for loss - Whether facility agent and trustee negligent in causing loss to bondholders - uty of lead arranger - uty of trustee - Responsibility for verifying information in nformation Memorandum - Whether trustee may claim indemnity against bond issuer Pesaka stana (M) Sdn hd ( Pesaka ) (owned by Mohamad Rafie and his wife Murnina, both of whom also controlled the mdac roup of ompanies) had obtained three government contracts. Pesaka proposed a financing scheme through the

2 2 urrent Law Journal [2014] 3 LJ issuance of public slamic bonds worth RM140 million ( the bonds ). Pesaka appointed K nvestment ank hd ( K ) as the lead arranger, facility agent and issue agent for the issuance of the bonds. This was contained in the subscription and facility agreement ( the S ) entered into between K, Pesaka and the primary subscriber ( Kenanga ). Pesaka then set up a ue iligence Working roup ( the W ). The W gathered all information required for the bonds scheme to formulate the information memorandum ( M ). The M was put together based on the information presented by Pesaka to the W. Under the bonds scheme, Pesaka s contracts with the government will be charged as security. The bondholders will provide funds to Pesaka to finance the contracts. n return, the bondholders will be repaid on the maturity date. To ensure the financial interest of the bondholders were secured, the bonds scheme was structured with Maybank Trustees erhad ( MT ) as the trustee, where all the proceeds from the government contracts due to Pesaka will be deposited in Syariah designated accounts. No one could use the monies in these accounts except the trustee of the accounts and in the manner and for the purpose as specified in the trust deed ie, the designated account would be completely ring fenced. s it turned out, instead of opening up new Syariah designated accounts, upon Pesaka s request, the W agreed to use the existing conventional accounts belonging to Pesaka as the designated accounts and to convert them by making MT the sole signatory. owever, these designated accounts were not fully converted as MT was not made the sole signatory to these accounts. Pesaka was still the signatory and had complete control over these accounts. The bonds funds paid by the bondholders were deposited into the designated accounts. aving control over the accounts, Pesaka utilised the monies in the designated accounts for its own purposes and failed to redeem the bonds and repay the bondholders on the maturity date. The bondholders commenced action for recovery of the monies against 12 separate defendants including K. The bondholders entered a consent judgment against Pesaka (first defendant), Rafie (fourth defendant) and the mdac roup (sixth to 12th defendants) for the full sum of claim ( the consent judgment ) and subsequently withdrew their action against Murnina (fifth defendant). The bondholders however chose not to execute the consent judgment against Pesaka or to assess the damages as against Rafie and the mdac roup.

3 [2014] 3 LJ M ank hd v. Maybank Trustees hd & Other ppeals 3 nstead, the bondholders proceeded to trial against K and MT. The igh ourt allowed the bondholders claim against MT and K for breach of contract and negligence. The learned igh ourt Judge ( the judge ) denied K any indemnity against Pesaka and apportioned liability between K and MT on 60:40 basis. On appeal, the ourt of ppeal affirmed the findings of the igh ourt but re-apportioned liability between K and MT on 50:50 basis. The ourt of ppeal further granted K an indemnity of 2/3 of the sum of RM149,300,000 as against Pesaka. ive separate appeals were filed to the ederal ourt and were heard together. eld (allowing M s appeal against MT and dismissing MT s counter claim; dismissing Murnina s appeal against MT and setting aside order on indemnity by ourt of ppeal; allowing K s appeal and setting aside orders of igh ourt and ourt of ppeal; allowing MT s appeal and ordering full indemnity against Pesaka; dismissing appeal by Pesaka, Rafie and mdac roup) Per rifin Zakaria J, Raus Sharif P, bdull amid mbong, Suriyadi alim Omar & hmad Maarop JJ: (1) The judge erred in imposing a duty on K to verify the information contained in the M against the original documents. The finding by the igh ourt went against the duties and obligations of K as spelt out in the S. (paras 29 & 30) (2) The word agreement in s. 65 of the Securities ommission ct 1993 ( S ), must be given its ordinary meaning, which would mean some kind of contract between two or more parties. The M on the face of it is not a contractual document. t had been issued by K on behalf of Pesaka to provide information to potential investors. The M was not part of the issue documents which required the approval of the Securities ommission. ence, the M was not an agreement falling within s. 65 of the S. Therefore, K was free to include the important notice in the M to exclude any liability arising from any claim that may arise from the M. (para 34)

4 4 urrent Law Journal [2014] 3 LJ (3) The bondholders were sophisticated investors with vast experience in the capital market. They were not ordinary investors. The important notice shifted the burden of verifying the content of the M on the potential investors rather than K. (paras 50 & 51) (4) K as lead arranger was entitled to exclude liability arising from the M through the important notice. K could not be held liable for any information found in the M. ccordingly, the findings made by the igh ourt and the ourt of ppeal that K was liable for damages suffered by the bondholders consequent upon their reliance on the M was set aside. (para 52) (5) K was only required to obtain the confirmation and the mandates from Pesaka that the designated accounts had been opened. The letters from Pesaka dated 15 March 2004 relating to the designated accounts clearly stated that Pesaka had opened the designated accounts to be managed and operated by MT. ence, it was justified for K to be satisfied that the designated accounts had been opened and the MT had been made the sole signatory to the designated accounts. K had no knowledge that the designated accounts had not been opened what more ring fenced. There was no contractual duty in the issue documents for K to independently verify that MT had been made the sole signatory to the designated accounts. Under the S, K s duty as the lead arranger was merely to ensure that Pesaka had opened the designated accounts and that the mandates in form and content were acceptable to K. (paras 74, 75 & 77) (6) The most proximate cause of the loss was the failure on the part of MT to ring fence the designated accounts or alternatively to stop Pesaka from operating the designated accounts. MT could have done that by using its powers and rights as vested upon it by the trust deed and the power of attorney. MT was wholly to blame for the loss and not K. MT was 100% liable to the bondholders. (para 87)

5 [2014] 3 LJ M ank hd v. Maybank Trustees hd & Other ppeals 5 (7) There was no serious dispute as to the total sum of monies that was received and dissipated by Pesaka from the R which did not exceed RM107 million. ence, judgment could not be entered for the sum of RM149,315,000 against MT in favour of the bondholders, which sum represented the redemption value of the bonds. (para 95) (8) The ourt of ppeal had erred in allowing pre-judgment interest, which the igh ourt had correctly refused, on the premise that the parties had agreed that no interest will be payable. n deciding the question of interest, the court must consider the express agreement of the bondholders in the trust deed. n this case, the trust deed as specified under cl. 39 clearly provided that no interest shall be payable. (para 101) (9) lause 14.1 of the trust deed clearly provides that MT would be indemnified save and except for its gross negligence, wilful default, wilful breach or fraudulent actions. The igh ourt did not make a finding that MT was guilty of gross negligence, wilful default, wilful breach or fraudulent actions. s such the igh ourt had erred in denying MT s claim for indemnity against Pesaka. (para 111) (10) t was not just and equitable to allow Pesaka to keep the ill-gotten gains or any part of it. This was especially so when the bondholders had not taken any step to enforce the consent judgment entered between Pesaka and the bondholders and instead focus their attention to MT on the basis that MT was in the position to satisfy the bondholders claim. Thus, by allowing indemnity in full, Pesaka would be called to meet its obligation in full. (para 115) (11) Murnina allowed herself to be used by Rafie in carrying out the design to move monies out of the trust account as well as to be the recipient of monies on the assets which were in her name. The ourt of ppeal and the igh ourt were therefore not wrong in lifting the corporate veil and in finding her liable. The various entities, Pesaka included, were a mere facade to perpetrate the acts. The corporate veil could not be a defence for Murnina from the claim for indemnity by MT. Murnina was guilty of having been in knowingly receipt of the revenue. (paras 127 & 128)

6 6 urrent Law Journal [2014] 3 LJ (12) M could not be construed as being dishonest in the ordinary standards of reasonable and honest people, with itself knowing, based on the subjective dishonest test, that what it did was dishonest when transferring the monies to other accounts. (para 148) (13) MT was liable for failing to ring fence the designated accounts. MT had been unprofessional and indifferent when it failed to take action despite being aware of the inaction of Pesaka. M was not liable for the monies disposed on the instruction of Pesaka from the designated account and instead MT was totally liable. (paras ) (14) Notwithstanding MT s breach of duty or negligence, there was no excuse for Pesaka by its fraudulent misappropriation, to deprive the bondholders of the monies. Pesaka must indemnify MT. ence, MT was given full indemnity against Pesaka. (para 166) ahasa Malaysia Translation Of eadnotes Pesaka stana (M) Sdn hd (dimiliki oleh Mohamad Rafie dan isterinya, Murnina, yang kedua-duanya juga mengawal Kumpulan Syarikat mdac) telah memperolehi tiga kontrak kerajaan. Pesaka mencadangkan skim pembiayaan melalui pengeluaran bon awam slam bernilai RM140 juta ( bon-bon tersebut ). Pesaka melantik K nvestment ank hd ( K ) sebagai penanggung utama, ejen kemudahan dan ejen pengeluaran bagi pengeluaran bon-bon tersebut. ni terkandung dalam perjanjian langganan dan kemudahan ( PLK ) yang dimasuki antara K, Pesaka dan pembeli utama ( Kenanga ). Pesaka kemudian membentuk Kumpulan Kerja Usaha Wajar ( KKUW ). KKUW mengumpul kesemua maklumat yang diperlukan bagi skim bon-bon tersebut untuk membentuk memorandum maklumat ( MM ). MM dibentuk berdasarkan maklumat yang diberikan oleh Pesaka kepada KKUW. i bawah skim bon-bon tersebut, kontrak Pesaka dengan kerajaan akan dicagarkan sebagai jaminan. Pemegang-pemegang bon akan memberikan dana kepada Pesaka untuk membiayai kontrak-kontrak tersebut. Sebagai balasan, pemegang-pemegang bon akan dibayar semula pada tarikh matang. Untuk memastikan kepentingan kewangan pemegang-pemegang bon terjamin, skim bon-bon tersebut distrukturkan dengan Maybank Trustees erhad ( MT )

7 [2014] 3 LJ M ank hd v. Maybank Trustees hd & Other ppeals 7 sebagai pemegang amanah, di mana kesemua hasil daripada kontrak kerajaan yang perlu dibayar kepada Pesaka akan didepositkan dalam akaun Syariah yang ditetapkan. Tiada siapa yang boleh menggunakan wang dalam akaun-akaun ini kecuali pemegang amanah akaun tersebut dan dalam cara dan untuk tujuan seperti yang dinyatakan dalam surat ikatan amanah iaitu akaun yang ditetapkan tersebut akan dipagar sama sekali. Tetapi, di sebalik membuka akaun Syariah yang ditetapkan yang baru, atas permintaan Pesaka, KKUW bersetuju untuk menggunakan akaun konvensional sedia ada milik Pesaka sebagai akaun yang ditetapkan dan menukarnya dengan menjadikan MT sebagai satu-satunya penandatangan. Walau bagaimanapun, akaun yang ditetapkan ini tidak ditukar secara menyeluruh kerana MT tidak dijadikan satusatunya penandatangan akaun-akaun ini. Pesaka masih menjadi penandatangan dan mempunyai kawalan penuh terhadap akaunakaun ini. ana bon-bon tersebut yang dibayar oleh pemegangpemegang bon didepositkan ke dalam akaun yang ditetapkan tersebut. engan memiliki kawalan terhadap akaun-akaun ini, Pesaka menggunakan wang dalam akaun yang ditetapkan untuk tujuannya sendiri dan gagal menebus bon-bon tersebut dan membayar pemegang-pemegang bon pada tarikh matang. Pemegang-pemegang bon memulakan tindakan terhadap 12 orang defendan yang berlainan termasuk K untuk mendapatkan semula wang tersebut. Pemegang-pemegang bon tersebut memasuki penghakiman persetujuan terhadap Pesaka (defendan pertama), Rafie (defendan keempat) dan Kumpulan mdac (defendan keenam hingga ke-12) untuk jumlah tuntutan penuh ( penghakiman persetujuan ) dan kemudian menarik balik tindakan mereka terhadap Murnina (defendan kelima). Pemegang-pemegang bon, walau bagaimanapun, memilih untuk tidak melaksanakan penghakiman persetujuan terhadap Pesaka atau untuk mentaksir ganti rugi terhadap Rafie dan Kumpulan mdac. Sebaliknya, pemegang-pemegang bon meneruskan perbicaraan terhadap K dan MT. Mahkamah Tinggi membenarkan tuntutan pemegangpemegang bon terhadap MT dan K bagi kemungkiran kontrak dan kecuaian. akim Mahkamah Tinggi ( hakim ) menafikan K apa-apa indemniti terhadap Pesaka dan membahagikan liabiliti antara K dan MT atas dasar 60:40. tas rayuan, Mahkamah Rayuan mengesahkan dapatan Mahkamah Tinggi tetapi membahagikan semula liabiliti antara K dan MT atas dasar 50:50. Mahkamah Rayuan selanjutnya memberikan K indemniti

8 8 urrent Law Journal [2014] 3 LJ 2/3 daripada jumlah RM149,300,000 terhadap Pesaka. Lima rayuan berasingan difailkan ke Mahkamah Persekutuan dan didengar bersama. iputuskan membenarkan rayuan M terhadap MT dan menolak tuntutan balas MT; menolak rayuan Murnina terhadap MT dan mengenepikan perintah untuk indemniti oleh Mahkamah Rayuan; membenarkan rayuan K dan mengenepikan perintah-perintah Mahkamah Tinggi dan Mahkamah Rayuan; membenarkan rayuan MT dan memerintahkan indemniti penuh terhadap Pesaka; menolak rayuan oleh Pesaka, Rafie dan mdac roup) Oleh rifin Zakaria, Raus Sharif P, bdull amid mbong, Suriyadi alim Omar & hmad Maarop MP: (1) akim telah terkhilaf dalam mengenakan kewajipan ke atas K untuk mengesahkan maklumat yang terkandung dalam MM terhadap dokumen-dokumen asal. apatan Mahkamah Tinggi adalah bertentangan dengan tanggungjawab dan kewajipan K seperti yang terkandung dalam PLK. (2) Perkataan perjanjian dalam s. 65 kta Suruhanjaya Sekuriti 1993 ( SS ), perlu diberikan tafsiran biasa yang membawa maksud sesuatu kontrak antara dua atau lebih pihak. MM, pada asasnya, bukan dokumen kontrak. a telah dikeluarkan oleh K bagi pihak Pesaka untuk memberikan maklumat kepada pelabur-pelabur berpotensi. MM bukan sebahagian dokumen-dokumen isu yang memerlukan kelulusan Suruhanjaya Sekuriti. engan itu, MM bukan perjanjian yang terangkum dalam s. 65 SS. Maka, K adalah bebas untuk memasukkan notis penting dalam MM untuk mengecualian apa-apa liabiliti yang berbangkit daripada apaapa tuntutan yang mungkin berbangkit daripada MM. (3) Pemegang-pemegang bon adalah pelabur-pelabur yang canggih dengan pengalaman luas dalam pasaran kewangan. Mereka bukan pelabur-pelabur biasa. Notis penting mengalihkan beban untuk mengesahkan kandungan MM ke atas pelabur-pelabur berpotensi dan bukan K. (4) K sebagai penanggung utama berhak untuk mengecualikan liabiliti yang berbangkit daripada MM melalui notis penting. K tidak boleh diputuskan sebagai bertanggungjawab bagi apa-apa maklumat yang didapati dalam MM. engan itu,

9 [2014] 3 LJ M ank hd v. Maybank Trustees hd & Other ppeals 9 dapatan yang dibuat oleh Mahkamah Tinggi dan Mahkamah Rayuan bahawa K bertanggungjawab bagi kerugian yang dialami oleh pemegang-pemegang bon disebabkan oleh sandaran mereka terhadap MM diketepikan. (5) K hanya diperlukan untuk memperoleh pengesahan dan mandat daripada Pesaka bahawa akaun yang ditetapkan telah dibuka. Surat-surat daripada Pesaka bertarikh 15 Mac 2004 berkaitan dengan akaun yang ditetapkan jelas menyatakan bahawa Pesaka telah membuka akaun yang ditetapkan untuk diuruskan dan dikendalikan oleh MT. Maka, adalah wajar bagi K untuk berpuas hati bahawa akaun yang ditetapkan telah dibuka dan MT telah dijadikan satu-satunya penandatangan kepada akaun yang ditetapkan. K tidak mempunyai pengetahuan bahawa akaun yang ditetapkan tidak dibuka apatah lagi telah dipagar. Tidak ada kewajipan kontrak dalam pengeluaran kontrak untuk K mengesahkan secara persendirian bahawa MT telah dijadikan satu-satunya penandatangan dalam akaun yang ditetapkan tersebut. i bawah PLK, kewajipan K sebagai penanggung utama adalah semata-mata untuk memastikan bahawa Pesaka telah membuka akaun yang ditetapkan tersebut dan mandatmandat dalam bentuk dan kandungan yang diterima oleh K. (6) Sebab paling hampir bagi kerugian tersebut adalah kegagalan pihak MT memagar akaun yang ditetapkan atau secara alternatifnya menghentikan Pesaka daripada mengendalikan akaun yang ditetapkan. MT boleh berbuat demikian dengan menggunakan kuasa dan haknya yang telah diletakhakkan kepadanya melalui surat ikatan amanah dan surat kuasa wakil. MT bersalah sepenuhnya bagi kerugian tersebut dan bukan K. MT bertanggungan 100% kepada pemegangpemegang bon. (7) Tidak ada pertikaian serius mengenai jumlah keseluruhan wang yang diterima dan dilupuskan oleh Pesaka daripada R yang tidak melebihi RM107 juta. Maka, penghakiman tidak boleh dimasukkan bagi jumlah RM149,315,000 terhadap MT memihak kepada pemegang-pemegang bon, yang jumlahnya mewakili nilai penebusan bon-bon tersebut.

10 10 urrent Law Journal [2014] 3 LJ (8) Mahkamah Rayuan telah terkhilaf dalam membenarkan faedah sebelum penghakiman, yang mana Mahkamah Tinggi telah dengan betulnya menolak, atas dasar bahawa pihakpihak telah bersetuju tidak ada faedah yang boleh dibayar. alam memutuskan persoalan berkaitan faedah, mahkamah harus mempertimbangkan perjanjian langsung pemegangpemegang bon dalam surat ikatan amanah. alam kes ini, surat ikatan amanah seperti yang dinyatakan di bawah kl. 39 jelas memperuntukkan bahawa tidak ada faedah yang boleh dibayar. (9) Klausa 14.1 surat ikatan amanah jelas memperuntukkan bahawa MT akan dibayar ganti rugi save and except for its gross negligence, willful default, willful breach or fraudulent actions. Mahkamah Tinggi tidak membuat dapatan bahawa MT bersalah atas gross negligence, wilful default, wilful breach or fraudulent actions. Oleh itu, Mahkamah Tinggi telah terkhilaf dalam menafikan tuntutan MT bagi bayaran ganti rugi terhadap Pesaka. (10) dalah tidak adil dan berekuiti untuk membenarkan Pesaka menyimpan wang yang diperoleh secara haram atau sebahagian daripadanya. ni adalah lebih khusus lagi apabila pemegang-pemegang bon tidak mengambil apa-apa langkah untuk melaksanakan penghakiman persetujuan yang dimasuki antara Pesaka dan pemegang-pemegang bon dan sebaliknya menumpukan perhatian mereka kepada MT atas dasar bahawa MT berada dalam kedudukan untuk memenuhi tuntutan pemegang-pemegang bon. Oleh itu, dengan membenarkan indemniti dengan penuh, Pesaka akan bertanggungan sepenuhnya. (11) Murnina membenarkan dirinya dipergunakan oleh Rafie dalam melakukan tindakan untuk mengeluarkan wang daripada akaun amanah tersebut dan juga menjadi penerima wang tersebut atas aset-aset yang dalam namanya. Mahkamah Rayuan dan Mahkamah Tinggi oleh itu adalah tidak salah dalam menyingkap tabir penubuhan dan mendapatinya bertanggungan. ntiti-entiti yang berasingan, termasuk Pesaka, adalah semata-mata facade untuk melakukan tindakan-tindakan tersebut. Tabir penubuhan tidak boleh menjadi pembelaan kepada Murnina daripada tuntutan indemniti oleh MT. Murnina bersalah kerana telah menerima hasil tersebut dengan pengetahuan.

11 [2014] 3 LJ M ank hd v. Maybank Trustees hd & Other ppeals 11 (12) M tidak boleh ditafsirkan sebagai tidak jujur dalam standard biasa seseorang yang munasabah dan jujur, dengan ia sendiri mengetahui, berdasarkan kepada ujian subjektif ketidakjujuran, bahawa apa yang dilakukannya adalah tidak jujur apabila memindahkan wang ke dalam akaun lain. (13) MT bertanggungan bagi kegagalan memagar akaun yang ditetapkan. MT telah bertindak secara tidak profesional dan tidak peduli apabila ia gagal mengambil tindakan walaupun menyedari ketidakgiatan Pesaka. M tidak bertanggungan bagi wang yang telah dilupuskan atas arahan Pesaka daripada akaun yang ditetapkan dan sebaliknya MT adalah bertanggungan sepenuhnya. (14) Walaupun dengan kemungkiran kewajipan dan kecuaian MT, tidak ada alasan untuk Pesaka bagi pelesapan secara fraud, untuk menafikan pemegang-pemegang bon wang tersebut. Pesaka mesti membayar MT semula. engan itu MT diberikan indemniti penuh terhadap Pesaka. ase(s) referred to: ndrew rown and Others v. nnovatorone Plc and Others [2012] W 1321 (omm) (refd) ntaios ompania Naviera S v. Salen Rederierna [1985] 191 (dist) ank slam Malaysia hd v. Lim Kok oe & nor nd Other ppeals [2009] 6 LJ 22 (refd) arnes v. ddy [1874] LR 9 h pp 244 (refd) artlett v. arclays ank Trust o Ltd (No 2) [1980] 2 ll R 92 (refd) elmont inance orporation Ltd v. Williams urniture Ltd [1979] 1 ll R 118 (refd) aparo ndustries plc v. ickman [1990] (refd) arl-zeiss-stiftung v. erbert Smith & o (a firm) (No 2) [1969] 2 ll R 367 (refd) atuk M Kayveas v. See ong hen & Sons Sdn hd & Ors [2013] 5 LJ 949 (refd) ubai luminum ompany v. Salam & Ors [2003] 1 ll R 97 (foll) ernrite Sdn hd v. Perbadanan Nasional hd [2011] 9 LJ 1 (refd) o ante Yap v. ank ustria reditanstalt [2010] S 220 (refd) assan Kadir & Ors v. Mohamed Moidu Mohamed & nor [2011] 5 LJ 136 (refd) asualty and eneral nsurance Ltd & Ors v. hase Manhattan ank & Ors [2003] 2 Lloyd s Rep 61 (refd) und S v. oldman Sachs nternational [2007] W iv 811 (refd)

12 12 urrent Law Journal [2014] 3 LJ JP Morgan hase ank & Others v. Springwell Navigation orporation [2008] W 1186 (omm) (refd) Karak Rubber o Ltd v. urden [1972] 1 ll R 1210 (refd) Karsales (arrow) Ltd v. Wallis [1956] 1 WLR 936 (refd) Lipkin orman v. Karpnale Ltd [1992] 4 ll R 331 (refd) Paragon inance v. Thimbleby [1999] 1 ll R 400 (refd) Raiffeisen Zentralbank Osterreich v. Royal ank of Scotland plc [2010] W 1392 (omm) (foll) Re Montagu s Settlement Trusts uke of Manchester v. National Westminster ank Ltd [1992] 4 ll R 308 (refd) Rowlandson v. National Westminster ank Ltd [1978] 3 ll R 370 (refd) Royal runei irlines v. Tan [1995] 3 ll R 97 (refd) Selangor United states Ltd v. raddock (No 3) [1968] 2 ll R 1073 (refd) Springwell Navigation orporation (a body corporate) v. JP Morgan hase ank (a body corporate)(formerly known as the hase Manhattan ank) & Others [2010] W iv 1221 (refd) Standard hartered ank v. eylon Petroleum orporation [2011] W 1785 (omm) (refd) Suisse tlantique Societe d rmement Maritime S v. NV Rotterdamsche Kolen entrale [1967] (refd) Takako Sakao v. Ng Pek Yuen & nor [2010] 1 LJ 381 (refd) Target oldings Ltd v. Redfrens [1995] 3 ll R 785; [1996] 421 (refd) Titan Steel Wheels Limited v. The Royal ank of Scotland [2010] W 211 (omm) (foll) Twinsectra Ltd v. Yardley [2002] 2 ll R 377 (foll) Legislation referred to: Securities ommission ct 1993, ss. 38(4), 65 (ivil ppeal No: 02(f) (W)) or the appellant - Tommy Thomas (lan drian omez & Nur shikin bdul Rahim with him); M/s Tommy Thomas or the respondent - Robert Lazar (Mark Lau, Tan h eng Leong & opal Sreenevasan with him); M/s Sreenevasan Young (ivil ppeal No: 02(f) (W)) or the appellant - Wong Kian Kheong (Karen Lee oong Voon & eraldine Oh Kah Yan with him); M/s Wong Kian Kheong or the respondent - Robert Lazar (Mark Lau, Tan h eng Leong & opal Sreenevasan with him); M/s Sreenevasan Young (ivil ppeal No: 02(f) (W)) or the appellant - ecil braham (Rishwant Singh, Mohamed Zaini Mazlan, Mawar hmad adzil & mrit ill with him); M/s Zaini Mazlan or the 1st - 10th respondents - Tommy Thomas (lan drian omez & Nur shikin bdul Rahim with him); M/s Tommy Thomas

13 [2014] 3 LJ M ank hd v. Maybank Trustees hd & Other ppeals 13 or the 11th respondent - Malik mtiaz Sarwar (Jenine ill, Sia Siew Mun & Lee Zhen Yeap with him); M/s Sia Siew Mun & o or the 12th respondent - Robert Lazar (Mark Lau, Tan h eng Leong & opal Sreenevasan with him); M/s Sreenevasan Young (ivil ppeal No: 02(f) (W)) or the appellant - Robert Lazar (Mark Lau, Tan h eng Leong & opal Sreenevasan with him); M/s Sreenevasan Young or the 1st - 10th respondents - Tommy Thomas (lan drian omez & Nur shikin bdul Rahim with him); M/s Tommy Thomas or the 11th respondent - ecil braham (Rishwant Singh, Mohamed Zaini Mazlan, Mawar hmad adzil & mrit ill with him); M/s Zaini Mazlan or the 12th - 20th respondents - Malik mtiaz Sarwar (Jenine ill, Sia Siew Mun & Lee Zhen Yeap with him); M/s Sia Siew Mun & o or the 21th respondent - Wong Kian Kheong (Karen Lee oong Voon & eraldine Oh Kah Yan with him); M/s Wong Kian Kheong (ivil ppeal No: (W)) or the appellant - Malik mtiaz Sarwar (Jenine ill, Sia Siew Mun & Lee Zhen Yeap with him); M/s Sia Siew Mun & o or the 1st respondent - Robert Lazar (Mark Lau, Tan h eng Leong & opal Sreenevasan with him); M/s Sreenevasan Young or the 2nd respondent - ecil braham (Rishwant Singh, Mohamed Zaini Mazlan, Mawar hmad adzil & mrit ill); M/s Zaini Mazlan Reported by mutha Suppayah JUMNT rifin Zakaria J, Raus Sharif P, bdull amid mbong, Suriyadi alim Omar, hmad Maarop JJ: ntroduction [1] There are five appeals before this court and they are: (i) ivil ppeal No: 02(f) (W) with M ank erhad as the appellant and Maybank Trustees erhad as the respondent; (ii) ivil ppeal No: 02(f) (W) with atin Murnina bt ato aji Sujak as the appellant and Maybank Trustees erhad as the respondent;

14 14 urrent Law Journal [2014] 3 LJ (iii) ivil ppeal No: 02(f) (W) with K nvestment ank erhad as the appellant and M manah nvestment ank erhad & 11 others as the respondents; (iv) ivil ppeal No: 02(f) (W) with Maybank Trustees erhad as the appellant and M manah nvestment ank erhad & 20 others as the respondents; and (v) ivil ppeal No: 02(f) (W) with Pesaka stana (M) Sdn hd & eight others as the appellants and Maybank Trustees erhad & nother as the respondents. or convenience, we will first deal with the third appeal. ivil ppeal No: 02(f) (W) ppeal No. (iii) (K s ppeal) [2] This court had on 5 pril 2012 granted leave to appeal to K nvestment ank erhad ( K ) on the following questions of law: (i) What liability in law is assumed by an ssuer, Lead rranger, acility gent and ssue gent with respect to matters contained in an nformation Memorandum? (ii) To whom do the Lead rranger, acility gent and ssue gent owe duties in contract, tort and/or statute, and in light of the express contractual obligations, duties and liabilities either by way of contract or under an nformation Memorandum? (iii) Whether and to what extend are sophisticated investors, with the benefit of independent and professional advice, allowed to expressly apportion their obligations, duties and liabilities either by way of or under an nformation memorandum? (iv) Whether and to what extend is the Lead rranger allowed to: (a) Place experienced and sophisticated investors on notice as to the extend to which such investors are entitled to rely on information contained in an nformation memorandum? and (b) Limit any liability arising from any party reading and relying on the nformation Memorandum? (v) s an nformation Memorandum an agreement within the meaning of s. 65 of the Securities ommission ct 1993, and if so, who are parties to the nformation Memorandum and how does the doctrine of privity of contract apply?

15 [2014] 3 LJ M ank hd v. Maybank Trustees hd & Other ppeals 15 (vi) Where a party has benefitted in pecuniary form from its fraudulent actions, in what circumstances will a court of law countenance or permit that party to retain the benefit of that fraud? (vii) Where parties to a contract provide that a party will indemnify the other in full for any and all expense, loss, damage or liability arising out of the second party carrying out its duties under the contract in question: (a) Whether a court of law can interfere with the agreed contractual indemnity and order that only a partial indemnity be given?; and (b) What circumstances will justify a court making such an order in law? (viii) Whether and to what extend can a court of law, to the exclusion of the Syariah dvisory ouncil, determine or ascertain slamic Law for the purpose of slamic financial business within the meaning of ss. 56 and 57 of the entral ank of Malaysia ct 2009? (ix) Where a trial court makes a finding that there is no misrepresentation on a particular state of facts, in the absence of an appeal from that decision by an affected party, can a ourt of ppeal intervene and set aside that part of the igh ourt decision? f the answer to this question is yes, then to what extend, if any, does the doctrine of res judicata apply? (x) On the issue of liability for the default of the issuer in repaying the bonds: (a) n light of the fact that the Lead rranger, ssue gent and acility gent owe no duties in contract, tort or under statute to the trustee, can the Lead rranger, ssue gent and acility gent, in law, be held to be contributorily liable with the trustee for the default in the repayment of the bonds; (b) What is the test for the apportionment of liability where more than one party is found liable and what part does a party s knowledge in respect of the default play in the apportionment of liability? and (c) s the question to be asked whether (1) what is the proximate cause of the loss, or (2) what was the real effective cause of the causa causans of the loss?

16 16 urrent Law Journal [2014] 3 LJ (xi) n a contractual context, can a statement of intent as to an event that is to take place in the future constitute a misrepresentation under the law (including s. 18 of the ontracts ct 1950)? (xii) Whether the ourt of ppeal was correct as a matter of fact and law in holding that the Securities ommission must approve an nformation Memorandum bearing in mind s. 38(4) of the Securities ommission ct 1993 and if so, whether any party who wishes to issue an nformation Memorandum is obliged to obtain prior approval of the Securities ommission? [3] We do not propose to answer the questions of law posed individually, but we will answer them in so far as they are relevant to the appeal before us. rief acts [4] Pesaka stana (M) Sdn hd ( Pesaka ) had obtained three government contracts. Pesaka proposed a financing scheme through the issuance of public slamic bonds worth RM140 million (the bonds). Pesaka appointed K as the lead arranger, facility agent and issue agent for the issuance of the bonds. This is contained in the subscription and facility agreement ( the S ) entered into between K, Pesaka and the primary subscriber ( Kenanga ). [5] Pesaka then set up a due diligence working group ( the W ). The W gathered all information required for the bonds scheme to formulate the information memorandum ( the M ). The M was put together based on the information presented by Pesaka to the W. [6] Under the bonds scheme, Pesaka s contracts with the government will be charged as security. The bondholders will provide funds to Pesaka to finance the contracts. n return, the bondholders will be repaid on the maturity date. The security for the bonds exercise was the contracts which Pesaka had signed with OM and the Ministry of efence ( MN ). The proceeds of these contracts were to be paid into Pesaka s accounts which were to have Maybank Trustees erhad ( MT ) as trustee and sole signatory.

17 [2014] 3 LJ M ank hd v. Maybank Trustees hd & Other ppeals 17 [7] To ensure the financial interest of the bondholders are secured, the bonds scheme was structured with MT as the trustee, where all the proceeds from the government contracts due to Pesaka will be deposited in Syariah designated accounts. [8] The designated accounts will be under the sole control of the trustee. No one can use the monies in these accounts except the trustee of the accounts and in the manner and for the purpose as specified in the trust deed. n other words, the designated accounts will be completely ring fenced. [9] Pesaka appointed MT as the sole trustee to manage and control the designated accounts. This was done under the trust deed entered into between MT and Pesaka. [10] s it turned out, instead of opening up new Syariah designated accounts, upon Pesaka s request, the W agreed to use the existing conventional accounts belonging to Pesaka as the designated accounts and to convert them by making MT as the sole signatory. Thus, Pesaka s existing accounts were used as the designated accounts. owever, these designated accounts were not fully converted as MT was not made the sole signatory to these accounts. Pesaka was still the signatory and had complete control over these accounts. [11] Under the scheme, the bonds were first issued to Kenanga as the primary subscriber. Kenanga then on sold the same to the plaintiffs (the bondholders). The bonds funds paid by the bondholders were deposited into the designated accounts, under the control of Pesaka. [12] aving control over the accounts, Pesaka utilised the monies in the designated accounts for its own purposes and failed to redeem the bonds and repay the bondholders on the maturity date. [13] On 25 October 2005, MT arranged an informal meeting for Pesaka to table a debt repayment proposal. The following details were, inter alia, revealed during the 25 October 2005 meeting: (i) ato Mohamad Rafie bin Sain ( Rafie ) reported that he would like to come clean with the bondholders and disclosed that Pesaka had actually received the monies, amounting to RM109 million, sometime between June and ugust 2004.

18 18 urrent Law Journal [2014] 3 LJ (ii) n response to queries from the bondholders as to where the monies were, Rafie mentioned that the funds had been fully utilised to support Pesaka s overseas operation and overheads. (iii) The bondholders asked the trustee as to how that could have happened and the trustee reported that K had disbursed the bonds proceeds before the signatory was changed. (iv) The bondholders then turn to K with the question as to how K could have disbursed the funds when the documents stated that the trustee should have been the sole signatory prior to the disbursement (v) arid Mohd Yusof reported that K had acted on the advice of Messrs bu Talib Shahrom & Zahari ( the transactional solicitor ). (vi) Miss Kim Lim of transactional solicitor explained that the condition precedent only required Pesaka to confirm that it had opened the designated accounts and that the board had passed a resolution to change the signatories. t does not mention the need for K to get confirmation that the changes had been effected. (vii) Pesaka then requested for indulgence until mid ecember to come up with a repayment proposal. igh ourt [14] ggrieved, the bondholders then commenced action in the igh ourt against 12 separate defendants which includes K. The bondholders were the parties who purchased the bonds in the secondary market from Kenanga. The bondholders claims against K in the igh ourt were fivefold, namely: (a) that the three trustee accounts which formed part of the designated accounts were not Syariah compliant; (b) that the bonds proceeds were not deposited into the disbursement account under MT s control; (c) that the government contracts proceeds were never deposited into the revenue accounts under MT s control; (d) that the foreign exchange claim was not RM31,529,338; and

19 [2014] 3 LJ M ank hd v. Maybank Trustees hd & Other ppeals 19 (e) that OM had not agreed to compensate Pesaka on its foreign exchange losses and therefore, there were misrepresentations in the M. [15] The bondholders then entered a consent judgment against Pesaka (first defendant), Rafie (fourth defendant) and the roup (sixth to 12th defendants) for the full sum of claim ( the consent judgment ). The bondholders then withdrew their action against atin Murnina bt ato aji Sujak (fifth defendant) (Murnina). [16] aving entered consent judgment for the full sum of the claim against Pesaka, the bondholders however chose not to execute the consent judgment against Pesaka or had the damages assessed as against Rafie and the mdac roup. nstead, the bondholders proceeded to trial against K and MT. [17] The learned judge dismissed the claim in paras. 14 (d) and (e) and no appeal was brought by the bondholders against the dismissal. [18] The igh ourt allowed the bondholders claim in paras. (a), (b) and (c). The igh ourt found for the bondholders against MT and K for breach of contract and negligence [19] The learned judge denied K any indemnity against Pesaka and apportioned liability between K and MT on 60:40 basis. ourt Of ppeal [20] On appeal, the ourt of ppeal affirmed the findings of the igh ourt but re-apportioned liability between K and MT on 50:50 basis. The ourt of ppeal further granted K an indemnity of 2/3 of the sum of RM149,300,000 as against Pesaka. K s Liability Under The M [21] K is defined in the M as the lead arranger. s lead arranger in a securitisation transaction, K is to advise the issuer on how to go about obtaining a loan in a bond market. t is also tasked with the duty to make submission of the proposal to the Securities ommission ( S ), as the regulatory body, and to prepare all the required documentation in order to obtain the necessary approval from the S.

20 20 urrent Law Journal [2014] 3 LJ [22] K is also responsible for: (a) organising and identifying the apportionment of relevant advisers/parties (if applicable) in relation to the private debt securities/slamic securities for and on behalf of the issuer; (b) organising the formation of W. t should be noted however that the W was set up by Pesaka; and (c) participating as a member of W, assisting in the preparation of M, liaising with local rating agency, marketing the securities to potential investors, monitoring the compliance of the conditions precedent prior to issuance and supervising the documentation of the slamic securities to the financial close. igh ourt [23] The igh ourt held that K as lead arranger owed a duty of care to the bondholders. This duty of care, according to the igh ourt, arose out of the proximity of the relationship between K and the bondholders which made it foreseeable that the bondholders would rely on the M which K had played a substantial role in putting together. The learned judge, therefore, held that K owed a duty of care to the bondholders to ensure that the contents of the M or otherwise known as the prospectus under the Securities ommission ct 1993 ( the S ) was neither false nor misleading. [24] The learned judge also found that it was K s duty as lead arranger, not only to put together the information contained in the M and to make submission to the S for approval, it was also K s duty to verify the information that was given by Pesaka against the original documents. [25] The learned judge held that K was liable in negligence in failing to verify the content of the M, as a result of which, the bondholders suffered damages. [26] Learned counsel for K in his submission contended that the igh ourt Judge in coming to her decision failed to take into consideration the fact that the M is not K s document, but that of Pesaka. n fact, the letter from Pesaka dated 15 March 2004, in the M, clearly acknowledged that the M was prepared by K based on information provided by Pesaka. Therefore, K should not be held liable for the information contained in the M.

21 [2014] 3 LJ M ank hd v. Maybank Trustees hd & Other ppeals 21 [27] e further contended that in coming to her decision, the learned judge failed to consider the effect of the important notice in the M. [28] With respect, we agree with learned counsel for K that the learned judge erred in saying that the M had to be submitted to S for its approval under s. 38(4) of the S, whereas the said section merely requires a person issuing the M, to deposit a copy of the M within seven days after it is first issued. Therefore, it is clear that the M is not a document which requires approval of the S. [29] The learned judge further imposed a duty on K to verify the information contained in the M against original documents. We do not know how and on what basis this duty to verify arose. The learned judge made no reference to any agreement or any statutory provision requiring K to verify the information contained in the M. [30] The finding by the igh ourt in fact appears to go against the duties and obligations of K as spelt out in the S. or instance, cl. 14.2(a) of the S clearly stipulates that K shall not assume or be deemed to have assumed any obligation to or fiduciary relationship with the primary subscriber other than those for which specific provision is made by this agreement or any obligation to or fiduciary relationship with the issuer. lause 14.2(b) of the S further provides that the facility agent shall not be liable for any failure of any other party to this agreement, or the trustee to duly and punctually perform any of their respective obligations under the issue documents. ourt Of ppeal [31] n affirming the decision of the igh ourt, the ourt of ppeal went on to hold that the important notice had no legal effect for two reasons, namely: (i) there was no approval from the S for the important notice; and (ii) K could not contract out its statutory duties or liabilities as it contravenes s. 65 of the S.

22 22 urrent Law Journal [2014] 3 LJ [32] Like the igh ourt, the ourt of ppeal fell into error in saying that the M needs the approval of the S. s we stated earlier, that is not the case. s for the second ground, the ourt of ppeal construed the word agreement in s. 65 of the S to include the M and accordingly the disclaimer is void as it contravenes the said provision. This ourt [33] The ourt of ppeal relied on the case of ntaios ompania Naviera S v. Salen Rederierna [1985] 191 in extending the meaning of the word agreement to include the M but as rightly pointed out by learned counsel for K, in that case the ouse of Lords was concerned with charter party which had an arbitration clause and in particular with the construction of cl. 5 of the charter party. Therefore, strictly, the principle of construction as expounded by Lord iplock in that case is relevant to the construction of commercial contract and is not applicable to the interpretation of statute. [34] Section 65 of the S provides as follows: 65. greements to exclude or restrict liability void. n agreement is void in so far as it purports to exclude or restrict the liability of a person for contravention of section 55, 57 or 58 or for loss or damage under section 153. We agree with learned counsel for K that the word agreement in s. 65 of the S must be given its ordinary meaning, which would mean some kind of contract between two or more parties. The M on the face of it is not a contractual document. t had been issued by K on behalf of Pesaka to provide information to potential investors. The M was not part of the issue documents which requires the approval of the S. or those reasons, we hold that the M is not an agreement falling within s. 65 of the S, therefore, K is free to include the important notice in the M to exclude any liability arising from any claim that may arise from the M. [35] The important notice in the present case reads: This nformation Memorandum s Not ntended y K To Provide The Sole asis Of ny redit Or Other valuation, nd Should Not e onsidered s Recommendation y K To Participate n The inancing acilities, ach Participant s Urged

23 [2014] 3 LJ M ank hd v. Maybank Trustees hd & Other ppeals 23 To Make ts Own ssessment Of The Relevance nd dequacy Of The nformation ontained n This nformation Memorandum nd To Make Such ndependent nvestigation s t eems Necessary or The Purpose Of Such etermination. Neither K Nor ny Of ts irectors, Officers, mployees, Representatives Or Professional dvisers (ollectively, The Parties ) Shall e Liable or ny onsequences s Result Of The Reliance On ny nformation Or ata n This nformation Memorandum. ll nformation nd Projections ontained n This nformation Memorandum ave een Supplied y PS s Mere uide Only nd o Not Purport To ontain ll The nformation That n nterested Party May Require. K as Neither ndependently Verified The ontents Nor Verified That ll nformation Material or n valuation Of The inancing acilities Or bout PS as een ncluded. No Representation Or Warranty, xpress Or mplied, s Made y K With Respect To The uthenticity, Origin, Validity, ccuracy Or ompleteness Of Such nformation nd ata s ontained n This nformation Memorandum. y Receiving This nformation Memorandum The Recipient cknowledges That t Will e Solely Responsible or Making ts Own nvestigations, ncluding The osts nd xpenses ncurred, nd orming ts Own Views s To The ondition nd Prospects Of PS nd The ccuracy nd ompleteness Of The Statements ontained n This nformation Memorandum. urther, K nd PS, nd Their Officers Or mployees o Not Represent Or Warrant That ny nformation ontained erein Will Remain Unchanged rom The ate Of This nformation Memorandum. This nformation Memorandum ncludes ertain Statements, stimates nd Projections Provided y PS With Respect To ts nticipated uture Performance. Such Statements, oncerning nticipated Results nd Subject To Significant usiness, conomic nd ompetitive Uncertainties nd ontingencies, Many Of Which re Or May e eyond The ontrol Of PS. ccordingly, There an e No ssurance That Such Statements, stimates nd Projections Will e Realised. The orecast nd ctual Results May Vary, nd Those Variations May e Material. No Representations re Or Will e Made y K Or PS s To The ccuracy Or ompleteness Of Such Statements, stimates nd Projections Or That ny orecast Will e chieved.

24 24 urrent Law Journal [2014] 3 LJ The ontents Of This nformation Memorandum re Strictly Private nd onfidential nd Must Not e Reproduced Or irculated n Whole Or n Part Or Used or ny Purpose Other Than That or Which t s ntended. [36] The M is widely used in other jurisdictions and it is generally accepted that the M is merely to provide the potential investors with the necessary overview of the product before deciding whether to participate in bonds issue or otherwise. t is also common practice for a lead arranger to insert the notice of disclaimer. [37] n the case of und S v. oldman Sachs nternational [2007] W iv 811, it was held that a notice of disclaimer by an arranger absolves the arranger from the obligation to verify the accuracy of the facts contained in the information memorandum. t was held that the disclaimer was sufficient to negate the duty of care. The material facts in that case may be summarised as follows: (i) oldman Sachs nternational ( S ) was the underwriter of credit facilities made available to utodis. (ii) dditionally, S was also the arranger for the syndication of an intermediate tier of credit provided to utodis for its purchase of shares in inelist, a UK listed company. (iii) S created a syndication information memorandum ( SM ), subject to certain standard wording, which was distributed on or about 30 March 2000 to possible participants, including. (iv) decided to invest in the security and subsequently brought an action against S, alleging misrepresentation on the basis that S had failed to reveal further information regarding inelist, which S had obtained from rthur nderson prior to 30 May (v) efore the trial, amended its pleading and included an additional claim for breach of duty of care. [38] n its defence, S also relied on the terms of the important notice, under cover of which the SM was provided to and all possible participants. That notice contains standard terms under which arrangers and underwriters in the world of syndicated finance provide SMs.

25 [2014] 3 LJ M ank hd v. Maybank Trustees hd & Other ppeals 25 [39] The claim by was dismissed by the igh ourt. The ourt of ppeal affirmed the decision of the igh ourt. Waller LJ in dismissing the appeal by made the following observation: 28. The foundation for liability for negligent misstatements demonstrates that where the terms on which someone is prepared to give advice or make a statement negatives any assumption of responsibility, no duty of care will be owed. lthough there might be cases where the law would impose a duty by virtue of a particular state of facts despite an attempt not to assume responsibility, the relationship between S either as arranger or as vendor would not be one of them. entirely agree with the judge on this aspect. Second, since and S were parties to the contract under which S sold bonds to, if there was a misrepresentation it would be one to which the Misrepresentation ct 1967 would apply. f that ct does not, for any reason, provide a remedy, there could as see it be no room for being able to succeed on some other case of negligent misstatement. [40] t would appear that important notice is a common practice not only in this country but also in more established capital markets. Therefore, important notice cannot just be brushed aside. t has to be given effect. fter all, it cannot be denied that the bondholders in the present case are sophisticated investors and experienced financial institutions. They have vast experience in bonds and are expected to act on independent and professional advice from their own sources in respect of the contractual obligations in the light of the disclaimer as contained in the important notice. [41] und S has been followed in a number of other cases. (See JP Morgan hase ank & Others v. Springwell Navigation orporation [2008] W 1186 (omm); Springwell Navigation orporation (a body corporate) v. JP Morgan hase ank (a body corporate)(formerly known as the hase Manhattan ank) & Others [2010] W iv 1221; Titan Steel Wheels Limited v. The Royal ank of Scotland PL [2010] W 211 (omm); Raiffeisen Zentralbank Osterreich v. Royal ank of Scotland plc [2010] W 1392 (omm); Standard hartered ank v. eylon Petroleum orporation [2011] W 1785 (omm); ndrew rown and Others v. nnovatorone Plc and Others [2012] W 1321 (omm); and o ante Yap v. ank ustria reditanstalt [2010] S 220.