LEGAL DEVELOPMENTS 2015 Foreword In 2015, the Banking, Insolvency and Commercial Dispute Team kept an eye on the key developments and stand out cases which altered the shape of the legal landscape and which may present a new set of legal challenges in 2016. The Team have selectively highlighted regulatory developments which may be relevant to your area of business as well as decisions of the appellate courts which changed the law, had significant implications to operational practices and which foreshadow judicial trends which may inform commercial considerations moving forward. We hope that you will find the included highlights informative and that they provide useful guidance in terms of compliance and best practices. 18th Floor, Wisma Sime Darby, Jalan Raja Laut, 50350 Kuala Lumpur Tel : +603 2694 9999 Fax : +603 2698 4759 Email : rdl@rdl.com.my Website : www.rajadarrylloh.com (a) Bill - Companies Bill 2015 (b) Legislation Financial Services Related Legislation - Financial Services (Financial Ombudsman Scheme) Regulations 2015 and Islamic Financial Services (Financial Ombudsman Scheme) Regulations 2015 - Money Services Business (Remittance Business) (Amendment) Regulations 2015 - Development Financial Institutions (Amendment) Act 2015 Non-financial Services Related Legislation - Strata Titles (Amendment) Act 2013 and Strata Management Act 2013 - Limited Liability Partnership (Amendment) Act 2015 (c) Cases Banking and Insolvency General Litigation Corporate Commercial
Companies Bill 2015 BILL The Bill, tabled for its 1 st reading on 19.10.2015, is expected to revamp the Companies Act 1965 and seeks to introduce changes relating to the formation of a company and also adds new corporate rehabilitation mechanisms. The notable intended amendments include:- a) 1 single person (who has no company ) may form a company and with a single director, b) The memorandum and articles of association of the company will be replaced with a Constitution which in itself is not mandatory save for a company limited by guarantee. A company without a Constitution will be governed by the new Bill which will state the rights, powers and duties of the directors and members, c) Under proposed new clauses 115 122, there will be an alternative method of effecting a capital reduction without the need for court confirmation, i.e. when the company meets the solvency test. The responsibility lies on the directors to ensure that the company meets the solvency test in both these respects: (1) cash-flow (no grounds that the company could be found to be unable to pay its debts within 12 months); and (2) balance-sheet (where the assets of the company are greater than its liabilities). This new procedure would substantially reduce the costs of undertaken in a capital reduction, d) The new clauses 372 393 expand the present Act on the appointment, qualification and disqualification of a receiver and receiver and manager ( R&M ). Whilst confirming an R&M as agent of the company, the Bill also imposes personal liability on the R&M for debts incurred in the course of receivership unless the appointing instrument provides otherwise, e) There will be clauses on Corporate Voluntary Arrangement ( CVA ) (Clauses 395-402) which key features proposed include those to enable a director to submit to an approved liquidator a proposed CVA and a statement of affairs to settle the creditors of the company. When approved by the liquidator, the director may then make an application to Court for a meeting to enable creditors to vote on the proposed CVA, f) Clauses 403 430 introduce judicial management which is a new component. Companies suffering from financial difficulties have an opportunity to return to solvency through the appointment of a judicial manager. A judicial manager would be able to exercise and perform the powers and duties of a director of the company and his duties include formulating proposals to meet debt repayment obligations, and g) The winding up provisions in Clauses 464 506 interestingly, now leaves it to the discretion of the Minister to state the threshold for the statutory debt. The commencement of winding up is proposed to be changed to the date of the winding up order. The Court will be given power not only to stay a winding up order but to terminate such order.
LEGISLATION Financial Services Related Legislation (A) Financial Services (Financial Ombudsman Scheme) Regulations 2015 and Islamic Financial Services (Financial Ombudsman Scheme) Regulations 2015 The Financial Ombudsman Service ( FOS ) is expected to commence in the first quarter of 2016. The purpose of the FOS is to transform the Financial Mediation Bureau to allow financial consumers access to an inexpensive, effective and expedient independent redress mechanism with minimum formality to resolve their disputes, claims and complaints arising from services or products provided by Financial Services Providers. The FOS will be regulated by the 2015 Regulations. 1. The resolution process will incorporate the following stages: Stage 1: Case Management A case manager will handle eligible disputes through negotiation, mediation or a conciliation process in a timely manner. If it fails, the case manager will make a recommendation on the manner to resolve the disputes in a specified timeframe. Stage 2: Adjudication Disputing parties who do not accept the recommendation of the case manager will be referred to an ombudsman who will review the dispute and conduct a hearing or conclude a decision based on available documents and finally make a decision. The ombudsman must give reasons for his final decision and state a time limit within which the Complainant must indicate acceptance or rejection of the decision and if the Complainant accepts the final decision, it will be final and binding on all parties. If the eligible Complainant does not accept the final decision, it will not bind either party and the Complainant is free to pursue the matter through the courts. 2. The other operationalization of the FOS and the Regulations include: a) The periodic review of monetary limits apply to eligible disputes to ensure that it is reflective of changes in the value of financial services or products. [Third Schedule, Regulation 18 of the Regulations] and b) The imposition of a clear duty on the directors of the FOS to act at all times in the best interest of the FOS and independently of any particular group or body, which the individual directors might belong to. [Regulations 10, 11 and 12 of the Regulations]. (B) Money Services Business (Remittance Business) (Amendment) Regulations 2015 The new regulation amends Regulation 3 of the Money Services (Remittance Business) Regulations 2012 and provides that the daily outward transactions for a customer shall not exceed the amount as approved in writing by the Central Bank of Malaysia ( Bank Negara ), which is RM 50 million. The transactions must also be based on Bank Negara s assessment of the operational readiness, level of control and risk management of a licensee as well as any other relevant factors which Bank Negara may determine.
(C) Development Financial Institutions (Amendment) Act 2015 ( DFIAA 2015 ) The DFIAA 2015 which is yet to be enforced seeks to amend the Development Financial Institutions Act 2002. 1. Section 5 of the DFIAA 2015 amends the responsibility of the board of directors of the prescribed institutions by specifying the generality of the management of the board to ensure that strategies implemented are consistent with its constituent documents and Bank Negara s specifications. Having regards to the long term viability of the prescribed institutions and reasonable standards of fair dealing, this serves to set and oversee the implementation of business as well as risk objectives and strategies, to ensure a reliable and transparent financial reporting process within the prescribed institutions and to promote timely and effective communications on safety and soundness matters of the prescribed institutions. 2. The duties of a director of a prescribed institution are added into Section 5A of the DFIAA 2015. The directors are required to act in good faith in the best interests of the prescribed institutions, to exercise reasonable care, skill and diligence with the knowledge, skill and experience which may reasonably be expected of a director, to only exercise powers conferred on them, to exercise sound and independent judgment, and to comply with any standards specified by Bank Negara which are applicable to a director. 3. The DFIAA 2015 deletes Part VIII: Examination and Investigation of the 2002 Act, which grants the power to Bank Negara to examine books or other documents, accounts and transactions of a prescribed institution and any of its offices in or outside Malaysia with or without any prior notice. 4. The DFIAA 2015 adds Part IIIA: Islamic Financial Business, which governs the business or activity of the prescribed institution in accordance with Shariah. Any prescribed institution can carry on its entire business or activity or in addition to its existing conventional business in accordance with Shariah, upon prior written approval of Bank Negara. Non-Financial Services Related Legislation (A) The Strata Titles (Amendment) Act 2013 ( STA 2013 ) and Strata Management Act 2013 ( SMA 2013 ) These 2 sets of legislation came into force on 01.06.2015, to regulate buildings intended for subdivision and subdivided buildings which were previously governed by the Building and Common Property (Maintenance and Management) Act 2007 and the Strata Management Act 1985. 1. The STA 2013 has effectively carved out the provisions regarding management of subdivided buildings and placed them under the governance of SMA 2013. The implementation of the SMA 2013 is complemented by the Strata Management (Maintenance & Management) Regulations 2015 which duly came into force on 02.06.2015. 2. The net effects of the amendments are as follows: a) To ensure that strata titles are handed to purchasers upon delivery of vacant possession; b) To promote certainty on the allocation of share units from the early stages of development; and c) To provide greater check and balance on developers at various stages of construction.
3. The basic structure of the SMA 2013 includes provisions relating to restricted dealings in buildings intended for subdivision, the schedule of parcels before any sale, the allocation of share units in a building intended for subdivision, the management before and after the formation of the management corporation, the managing agent to be appointed by the Commissioner of Buildings ( COB ), the deposits to rectify defects, insurance, and the disputes which are to be referred and to be dealt with by the Strata Management Tribunal and its enforcement. 4. The KEY elements introduced include the following: a) Developers are to file the schedule of parcels with the COB before any sale. They must first obtain a Certificate of Share Unit Formula (or SiFUS) to be issued by the Land Office to ensure that the strata title would be handed over upon delivery of vacant possession. A copy of the schedule of parcels must be exhibited at a conspicuous position in the developer s office and the place where the sale of parcels is conducted. This serves to promote transparency in the development industry, b) Under the new regime, share units determine the charges payable by the parcel owner and the number of votes in a poll for the said owner. Where an owner has 2 or more parcels, the share units determine the number of committee members that the owner may nominate for election, c) The COB may appoint one or more persons under a management agreement to act as managing agent to maintain and to manage the building and common property. The managing agent must lodge a bond with the COB and is answerable to the COB, d) Upon delivery of vacant possession, the developer is required to deposit no less than 0.5% of the estimated costs of construction of the development area (which includes commercial and residential components) but excluding land costs or RM50,000 (whichever is higher) into a common property defects account, to be opened and maintained by the COB. This will enable claims to be made against defects in the common property of the building and e) Management bodies are able to function more effectively as the by-laws contain enforcement provisions, which allow them to impose fines against defaulters, recover outstanding sums from owners and also grant them the right to apply for warrants of attachment on movable properties. 5. The SMA 2013 also establishes the Strata Management Tribunal to hear and determine claims specified in Part 1 of the Fourth Schedule, which includes:- a) disputes on costs of repairs of defects; b) claims for recovery of charges and contributions to sinking funds; c) claims for orders to convene general meetings; d) claims to invalidate proceedings of meeting; and e) claims to nullify resolutions, to compel supply of information and documents and to affirm, vary or revoke decisions of the COB.
(B) The Limited Liability Partnership (Amendment) Act 2015 ( LLPAA 2015 ) The LLPAA 2015 which is not yet in force will amend the Limited Liability Partnerships Act 2012. 1. Section 2 substitutes the interpretation of Registrar to mean the Registrar designated under subsection 20A (1) of the Companies Commission of Malaysia Act 2001. 2. When in force, the entire Section 48 of the 2012 Act concerning foreign limited liability partnerships will be amended. a) The compliance officer of the foreign partnership immediately before the commencement of liquidation proceedings must cause to be lodged with the Registrar a notice of such liquidation or dissolution and where a foreign liquidator is appointed, a notice of such appointment. b) The liquidator of a foreign partnership must advertise in a newspaper widely circulated in each country where the partnership had been carrying on business prior to the liquidation and invite creditors to make their claims, within a reasonable time prior to distribution of the assets. c) The liquidator must obtain a Court order in the event that any payment made to any creditor is to the exclusion of another. d) The liquidator shall only recover and realize the assets in Malaysia. i) Where the partnership has been wound up and there is no liquidator for the place of its incorporation or origin, so far as its assets in Malaysia are concerned, the liquidator may apply to Court for directions as to its disposal of the net amount recovered. ii) The Registrar shall remove the name of the partnership from its register upon receipt of a notice from the compliance officer that the partnership has been dissolved. iii) The Registrar may strike off the partnership if he has reasonable cause to believe that the partnership has ceased to carry on business in Malaysia. The Act will also remove provisions relating to the appointment of the Registrar, several enforcement provisions and several other general provisions relating to the powers of the Registrar.
Banking and Insolvency CASES CIMB Bank Bhd v Panaron Control Sdn Bhd [2015] 1 CLJ 1056, CA - Grounds of Judgment dated 25.11.2014 A bank which has honoured forged cheques has an available defence under section 73A of the Bills of Exchange Act 1949 if the bank is able to show that the customer has knowingly or negligently contributed to the forgery and that the bank has acted in good faith. CIMB Bank Bhd v Sebang Gemilang Sdn Bhd & Anor [2015] 7 CLJ 870, CA - Grounds of Judgment dated 19.06.2015 The bank which had been given a copy of a deed of assignment by its customer and/or the 3 rd party assignee, had constructive knowledge of the customer s assignment of the monies held in its account to the 3 rd party assignee. By having such knowledge of the assignment, the bank has a duty not to participate in a breach of trust. Damai Freight (M) Sdn Bhd v Affin Bank Bhd [2015] 4 CLJ 1, FC - Grounds of Judgment dated 07.04.2015 A bank does not lose its rights to sell a legal chose in action (in this case, a right over the lease) under a deed of assignment created by way of a loan agreement cum assignment notwithstanding the issuance of the title to the land. There is no necessity for the bank to first create a charge and to resort to the statutory remedy of a foreclosure action under section 256 of the National Land Code 1965 to realise its security, where section 206(3) allows such a transaction relating to any alienated land to give effect to the contractual obligations and rights of the parties. Dr Shamsul Bahar bin Abdul Kadir v RHB Bank Bhd and another appeal [2015] 4 MLJ 1, FC - Grounds of Judgment dated 06.04.2015 Leave of court is now required to commence bankruptcy proceedings on a judgment after 6 years has lapsed from the date of the judgment. FLH LCT Services Sdn Bhd and Pawanteh Bin Mohamed Zain v Malaysian Debt Ventures Bhd Unreported, CA - Grounds of Judgment dated 13.11.2015 As the existence of assets in transactions is the underlying feature of a Bai Al-Inah contract or financing, no remedy can be sought by a financier who cannot show such asset under the financing system. Ho Ken Seng v Progressive Insurance Sdn Bhd [2015] 4 MLJ 674, CA - Grounds of Judgment dated 14.10.2014 A Judgment Creditor acted under a court direction to file a creditor s petition afresh in 2004 when the previous creditor s petition filed in 1996 could not be extracted. The Court set aside the adjudication and receiving orders against the debtor as notwithstanding the directions of court, the petition was not presented within 6 months of the act of bankruptcy. Item Industrial Engineering Sdn Bhd & Ors v Bank Utama (Malaysia) Bhd [2015] 1 CLJ 933, CA - Grounds of Judgment dated 27.11.2014 For a guarantee repayable on demand, a proper demand must be sent to the guarantors before an action can be initiated against the guarantors.
K Siladass v CIMB Bank Bhd [2015] 6 CLJ 726, CA - Grounds of Judgment dated 17.06.2015 A party may still be liable under a third party proceedings even though the primary dispute between the plaintiff and the defendant had been resolved amicably by way of a settlement with no finding of liability, as long as the party seeking contribution from the third party has effectively accepted responsibility (ie: by agreeing to pay a sum of money to the other party despite not making any admission as to liability). Ketua Pengarah Insolvensi v Goh Ah Kai & Anor [2015] 7 CLJ 1, CA - Grounds of Judgment dated 23.01.2015 All matters relating to the estate of a bankrupt should be dealt with through the Official Assignee (the OA ). A third party cannot privately settle the debts of the estate of a bankrupt without the knowledge of or reference to the OA even if there was only one creditor. An application for an annulment of adjudication made without the OA as a party to the proceedings is liable to be set aside as it is for the OA to satisfy the court that the conditions for annulment are satisfied. The court is not bound to exercise its discretion in annulling adjudication simply because the creditors consent. Koh Huat Kwan v Pegawai Penerima selaku pelikuidasi bagi Poh Mah Housing Development Sdn Bhd & Ors [2015] 5 MLJ 323, CA - Grounds of Judgment dated 16.06.2015 The disposal of the assets of a wound up company by a liquidator under section 236(2) of the Companies Act 1965 is not a recovery process by the creditor and the issue of limitation does not apply. The commencement of liquidation stops time running in favour of the creditors of a company. Malayan Banking Bhd v Boau Yoon Fut @ Wong Yoon Fut (bankrupt represented by the Director General of Insolvency) [2015] 2 MLJ 353, CA - Grounds of Judgment dated 28.10.2014 The bank as a secured creditor who filed a proof of debt for the full sum of indebtedness without indicating that it would surrender its security nor attaching a value of the security to prove for the shortfall, cannot, save for an unequivocal election, be assumed to have surrendered its security. Malayan Banking Bhd v Worthy Builders Sdn Bhd & Ors [2015] 3 MLJ 791, CA - Grounds of Judgment dated 13.02.2015 A bank has no obligation to enforce the securities given immediately upon default of the borrower unless provided for in the contract. There is no duty and/or obligation on the part of a bank, as assignee, under a deed of assignment and/or power of attorney to sue to recover the assigned proceeds as the assignor could do so with the consent of the bank, or by including the bank as one of the defendants. Ranjit Singh Jarnail Singh v Malayan Banking Bhd [2015] 1 CLJ 908, FC - Grounds of Judgment dated 10.12.2014 When an order for sale has been set aside by the chargor, the successful bidder is only entitled to a refund of the full purchase price, as the setting aside has rendered the whole transaction void ab initio unless the bidder is able to prove breach of contract, misrepresentation, negligence or breach of fiduciary duty on the part of the chargee bank. Resolution Alliance Sdn Bhd v Binabaik Sdn Bhd & Anor [2015] 5 CLJ 813, CA - Grounds of Judgment dated 28.11.2014 A bank is under no legal obligation under an assignment of a sale and purchase agreement to pay any outstanding maintenance charges as only the title, rights, interest and benefit of the
property was assigned. A developer in withholding the strata title for non-payment of maintenance charges is in breach of its undertaking to the purchaser and also in breach of section 40A of the Strata Titles Act 1985. RHB Bank Bhd v Malaysian International Trading Corp Sdn Bhd [2015] 3 MLJ 864, CA - Grounds of Judgment dated 03.10.2014 There is no obligation on a bank to ascertain the source of monies deposited with them. The bank s rights over security in the monies are not affected by the depositors illegal conduct, which the bank was unaware of. RHB Bank Bhd v Travelsight (M) Sdn Bhd & Ors And Another Appeal [2015] 1 CLJ 309, FC - Grounds of Judgment dated 20.11.2014 The rescission of a sale and purchase agreement may cause the buyer s financier s security (in the form of an assignment) to cease but it will not affect the standing of the financier to lay first claim to the money paid, before the property is restored to the vendor, to discharge the outstanding loan due. Samuel Naik Siang Ting v Public Bank Bhd [2015] 6 MLJ 1, FC - Grounds of Judgment dated 30.09.2015 The title of a registered proprietor who is a bona fide immediate purchaser without notice as defined under the National Land Code 1965 can be defeated by a non-registered valid equitable interest of an absolute assignee under an earlier sale and purchase agreement. Tan Poh Khiang v Malayan Banking Bhd [2015] 1 MLJ 817, CA - Grounds of Judgment dated 24.09.2014 Where a bank does not reserve its rights to pursue the balance of the debt or to secure the relevant consent from the other guarantors for the release of the charged properties, the bank s acceptance of the borrower s settlement proposal which discharged some secured properties and released some of the guarantors effectively released the other guarantors from their debts. Teo Cheng Hua v Ker Min Choo & Ors [2015] 7 CLJ 328, CA - Grounds of Judgment dated 02.06.2015 Liquidators have a duty to ensure that they file Form 75 (Liquidator s Account of Receipts and Payments) accurately and correctly, as it can only be amended with good and credible reasons. The Pacific Bank Bhd v Kerajaan Negeri Sarawak [2015] 3 CLJ 717, FC - Grounds of Judgment dated 23.04.2014 A letter of guarantee prescribing a validity period for a cause of action to arise does not offend section 29 of the Contracts Act 1950, which provides that agreements to restrain legal proceedings are void. UR Leisure Resorts Sdn Bhd v Malayan Banking Bhd [2015] 2 CLJ 1101, CA - Grounds of Judgment dated 04.02.2015 There must have been 2 prior unsuccessful sales by the Land Administrator before he can lawfully refer the matter to the High Court under section 265(3A) of the National Land Code 1965. Wong Kok Leong & Anor v RHB Bank Bhd [2015] 2 MLJ 385, CA - Grounds of Judgment dated 04.09.2014 A lien holder must comply with section 281 of the National Land Code 1965 by filing a suit and obtain a judgment, to foreclose the property before the limitation period sets in. A lien holders caveat does not give rise to a cause of action to proceed with foreclosure proceedings.
General Litigation Ahmad Nadzrin bin Abd Halim & Anor v Allianz General Insurance Co (M) Bhd [2015] 6 MLJ 223, CA - Grounds of Judgment dated 27.08.2015 Under section 96(3) of the Road Transport Act 1987, an insurer could commence an action to repudiate a policy issued in respect of an insured vehicle before any judgment was obtained in the proceedings commenced by a third party for damages for bodily injuries or death sustained in a road accident caused by or arising from the use of the insured vehicle. Deb Brata Das Gupta v Christopher Martin Boyd [2014] 4 MLJ 590, CA - Grounds of Judgment dated 07.10.2013 An arbitration award is an agreement and is contractual in nature. The registration of an arbitral award into a judgment is a mere procedure to enforce the award. The limitation period for the purposes of enforcement of an arbitral award is 6 years as per section 6 of the Limitation Act 1953. Deutsche Bank (Malaysia) Bhd v MBF Holdings Bhd & Anor [2015] 8 CLJ 1068, FC - Grounds of Judgment dated 06.10.2015 Formality of an executed agreement is an exception rather than the rule. Generally, when there is no executed agreement, the court will take a factual approach to find whether negotiations and exchanges between parties had resulted in a concluded (although informal) contract. If formality of an executed contract is by choice, it should be made clear that parties are not bound until execution of the formal contract. Dream Property Sdn Bhd v Atlas Housing Sdn Bhd [2015] 2 MLJ 441, FC - Grounds of Judgment dated 12.02.2015 The enforceability of an automatic termination clause cannot be questioned if it is expressly or clearly provided in the contract. When such contract has been terminated, the defaulting party cannot then seek to perform its obligations and claim that the innocent party has waived its rights to terminate the contract. The defaulting party may be ordered to account for profits, but should not be so required where there is no breach of fiduciary duty and where there are other normal measures of relief available. Everise Sprint (M) Sdn Bhd v Minister of Finance, Malaysia & Anor [2015] 5 MLJ 379, CA - Grounds of Judgment dated 31.03.2015 The issuance of the notices of demand by the customs on 2 persons for the same short-paid taxes was an ambiguity and had created a serious doubt as to the party liable. The Court refused to adopt a construction of a taxing statute which would impose liability when doubt exists. Leisure Farm Corporation Sdn Bhd v Kabushiki Kaisha Ngu & Ors [2015] 3 CLJ 489, CA - Grounds of Judgment dated 01.12.2014 Any cross-appeal must relate directly to the appeal brought by the appellant; otherwise there ought to be a separate notice of appeal filed. Loo Chooi Ting v United Overseas Bank Ltd [2015] 8 CLJ 287, CA - Grounds of Judgment dated 22.06.2015 Enforcement of a foreign judgment which is registrable under the Reciprocal Enforcement of Judgments Act 1958 must be made by way of a registration of the judgment and not as a fresh action.
Lok Kok Beng & 49 Ors v Loh Chiak Eong & Anor [2015] MLJU 261, FC - Grounds of Judgment dated 02.07.2015 There is no duty of care imposed on architects for a responsibility which they had not assumed or one which is not within their professional scope of duty; the developer would be liable for any failure to deliver vacant possession. The architects could not have foreseen any liability for consequential financial loss to the purchasers when there was delay in the completion of the building and the issuance of the certificate of fitness. Medallion Development Sdn Bhd v Bukit Kiara Development Sdn Bhd [2015] 4 MLJ 350, CA - Grounds of Judgment dated 16.01.2015 A contractual provision which states that time is of the essence does not, in law, entitle the innocent party to rescind the contract and claim that the non-compliance with the agreed time is a total failure of consideration. Noraini binti Abu Bakar v Amislamic Bank Bhd (Oh Siew Kuen as Third Party) Unreported, CA - Grounds of Judgment dated 07.12.2015 A chargee can serve the Form 16D based on the address contractually agreed upon and which term can include a new address duly notified to the chargee. Service on the address provided under the contract would be deemed as good service in the absence of any notification of change of the address for service. Ong Siew Hwa v UMW Toyota Motor Sdn Bhd [2015] 8 CLJ 1003, CA - Grounds of Judgment dated 09.09.2014 A hirer/buyer who entered into a hire-purchase agreement with a finance company for the vehicle, ceases to have any contractual relationship with the car dealer and the buyer has no claim against the car dealer whether for breach of implied guarantee under the Consumer Protection Act 1999 and Sale of Goods Act 1957 or otherwise. Pendaftar Hakmilik, Pejabat Pendaftaran Wilayah Persekutuan Kuala Lumpur & Anor v Poh Yang Hong [2015] 5 MLJ 830, CA - Grounds of Judgment dated 10.06.2015 The National Land Code 1965 requires the Registrar of Titles and the Government of Malaysia to keep and maintain a register of title of lands, a duty of care can therefore exist. Where there are 2 sets of titles for the same land in the land registry, the conclusion must necessarily be that something is amiss with the records. The protection from liability in civil actions afforded under section 22 of the National Land Code 1965 is only available where the act or omission was in good faith and in the exercise of any statutory power or duty. Sejati Education Sdn Bhd v S3M Development (Sabah) Sdn Bhd Unreported, CA - Grounds of Judgment dated 26.11.2015 In the exercise of an option in an agreement, parties who have exercised the option within the period stipulated in the agreement may rely on their subsequent conduct (outside the option period) to conclude the option. Sinnaiyah & Sons Sdn Bhd v Damai Setia Sdn Bhd [2015] 7 CLJ 584, FC - Grounds of Judgment dated 10.08.2015 The standard of proof for fraud in civil claims is based on the balance of probabilities, and not the criminal test of beyond a reasonable doubt. S & M Jewellery Trading Sdn Bhd & Ors v Fui Lian Kwong Hing Sdn Bhd [2015] 5 MLJ 717, FC - Grounds of Judgment dated 25.08.2015 A lease or sublease (exceeding 3 years) is not rendered void by reason of non-registration. A tenant
who is let into the possession under an unregistered lease or sublease, becomes a tenant at will and may become a periodic tenant if he pays or expressly agrees to pay rent periodically which can be brought to an end upon notice by the lessor. SPM Membrane Switch Sdn Bhd v Kerajaan Negeri Selangor Unreported, FC - Grounds of Judgment dated 13.11.2015 When terminating a contract, there is no duty to give reasons but such duty may be imposed by a proper construction of the contract. Factors that lean towards establishing such a duty are where grounds for valid termination of the agreement are particularised in the contract and where the contract purports to give the party in breach an opportunity to remedy its unsatisfactory performance. Tan Goat Eng & Anor v Rozdenil Toni (as administrator of estates of Toni Ismail & Normy Mohamed Khatif; deceased) [2015] 6 CLJ 486, CA - Grounds of Judgment dated 15.06.2015 Section 340(3) of the National Land Code 1965 which renders a transfer of title premised on a void instrument, defeasible and liable to be set aside, is not limited to situations where the title remains in the hands of the party who acquired immediate title but also if it has been subsequently transferred or registered in the names of purchasers who acquired title subsequent to the immediate purchaser. Widad Az Zahra Sdn Bhd v Kolej Risda Sdn Bhd Unreported, CA - Grounds of Judgment dated 11.11.2015 An agreement between the landlord and tenant may be binding if the parties had intended and acted as if the contract was in force notwithstanding the landlord not being the registered owner of the property at the time of the agreement. Corporate and Commercial Durable Portfolio Sdn Bhd & Anor v Pang Kee Hwi Realty Sdn Bhd & Ors And Another Appeal [2015] 1 CLJ 335, CA - Grounds of Judgment dated 24.11.2014 The shares of a registered company are freely transferable, and there is no power to refuse the registration of a transfer unless the constitution of the company restricts such registration. Fujasa Property Sdn Bhd & Anor v Idaman Unggul Bhd & Anor [2015] 5 MLJ 810, CA - Grounds of Judgment dated 24.06.2015 Notwithstanding section 67(1) of the Companies Act 1965 prohibiting a company from providing financial assistance for the purpose of, or in connection with, a purchase or subscription of its own shares, an agreement in breach of the section will not be rendered null and void if it falls within section 67(6) which provides for the recovery of the loan pursuant to the financial assistance or security given. Petra Perdana Bhd v Tengku Dato Ibrahim Petra Tengku Indra Petra & Ors [2015] 8 CLJ 856, CA - Grounds of Judgment dated 27.08.2015 This decision blurs the demarcation of powers between the Board of Directors and the shareholders of a company. Given the new provision in the Companies Bill on the members right to management review (Clause 195), shareholder resolutions may now very well impinge on the directors powers to make business and management decisions.
Contributors Lim Siew Ming Partner 603-2694 9999 (Ext 193) siewming@rdl.com.my Ng Sai Yeang Partner 603-2694 9999 (Ext 183) nsy@rdl.com.my Mark La Brooy Partner 603-2694 9999 (Ext 168) marklabrooy@rdl.com.my Hew Sheau Ying Senior hewsheauying@rdl.com.my Chong Juen Quan juenchong@rdl.com.my Tai Wei Jeat weijeat@rdl.com.my Darnisa Binti Abdul Jalil darnisa@rdl.com.my Th ng Yan Nie yannie@rdl.com.my Teoh Chye Yi chyeyi@rdl.com.my Joseph Cheah Jun Siang josephcheah@rdl.com.my Loh Kah Hey juneloh@rdl.com.my Adibah Rinol Azhar adibahra@rdl.com.my Tan Sek Meng Pupil-in-Chambers Pee Kui Yee Pupil-in-Chambers Azarith Sofia Binti Aziz Pupil-in-Chambers Disclaimer: The contents herein are provided for information purposes only. No claim is made as to the accuracy or authenticity of the contents.