30 July 2010

Amendments to the Subordinate Courts Act 1948

Press Release: Proposed changes to Subordinate Courts Act are too drastic and require proper studyPDFPrintE-mail
ImageThe Malaysian Bar is concerned that the far-reaching amendments to the Subordinate Courts Act 1948 are being tabled for adoption in Parliament without a detailed and thorough impact assessment exercise, and exhaustive consideration of the ramifications.

The proposed amendments contemplate increasing the limits in monetary jurisdiction of, among others, the Sessions Court (from RM250,000 to RM1,000,000), and the Magistrates Court (from RM25,000 to RM100,000).  Such a sudden and substantial expansion, representing a four-fold increase, is too large, and immediately calls into question the ability of the current capacity of the Subordinate Courts to handle the corresponding increase in workload.  Allocation of resources is also a significant issue, as the upsurge in workload will similarly require an increase in the number of judges and court infrastructure.  No details have been provided as to how these concerns will be addressed. 

Although there are inflationary-based arguments that justify a reasonable enlargement in the monetary jurisdiction of the Subordinate Courts after 16 years, an extensive study is crucial to ensure the amendments do not subject litigants in Malaysia to hardship and place undue stress and pressure on the present structure and resources of the Subordinate Courts.  A gradual and incremental increase would be a more appropriate and realistic move, which would also be less likely to adversely impact on the capacity of the Subordinate Courts to handle and dispose of such claims in an effective and efficient manner.

The Malaysian Bar is also concerned about the competence and judicial experience of judicial officers of the Subordinate Courts to effectively deal with claims of such financial magnitude.  An essential consideration is whether they possess the necessary experience and qualifications to preside over such matters, and the adequacy of the training they must necessarily be given.

The proposed amendments also contemplate conferring additional jurisdiction on the Sessions Court, allowing it to grant equitable remedies such as injunctions and declaratory relief, provided the claim is within its (enlarged) monetary jurisdiction.  The Malaysian Bar has reservations that the relatively short time spent as judicial officers in the Subordinate Courts and the resultant lack of experience do not adequately equip the judicial officers to deliberate upon and grant equitable remedies, which involve complex legal principles and can have harsh and serious consequences on a litigant.  Conferring such power, especially the power to grant an injunction directing a party to do, or refrain from doing, a particular act, will potentially result in adverse consequences arising from imprudent or erroneous decisions.

The Malaysian Bar believes that a more appropriate and realistic boundary between the Subordinate Courts and the High Court should be based on the relative complexity of the subject matter of the claim rather than the claim amount alone, to ensure that more complex matters are heard by High Court Judges who possess greater experience and knowledge of legal principles. 

We call on the Government to defer the Amendment Bill until a comprehensive study is undertaken to address the myriad issues posed by the proposed amendments, and the Bar Council is consulted and given a full opportunity to provide its views.  The Bar Council is presently working closely with the Judiciary on the formulation of the Combined Rules of Court and considerations of enlarging the jurisdiction of the Subordinate Courts ought to be discussed and dealt with comprehensively in tandem with this. 

Lim Chee Wee
Malaysian Bar

2 July 2010 

21 July 2010

Section 218 Companies Act 1965

The Companies Act 1965 (CA 1965) includes a provision which allows a party to file a Petition in High Court to wind up a Company. Today we look at one of the few provisions related to this issue, Section 218 of the CA 1965. 

We re-produce Section 218 below

218.  Circumstances in which company may be wound up by Court.

(1) The Court may order the winding up if -
(a) the company has by special resolution resolved that it be wound up by the Court;

(b) default is made by the company in lodging the statutory report or in holding the statutory meeting;

(c) the company does not commence business within a year from its incorporation or suspends its business for a whole year;

(d) the number of members is reduced in the case of a company (other than a company the whole of the issued shares in which are held by a holding company) below two;

(e) the company is unable to pay its debts;

(f) the directors have acted in the affairs of the company in their own interests rather than in the interests of the members as a whole, or in any other manner whatsoever which appears to be unfair or unjust to other members;

(g) an inspector appointed under Part IX has reported that he is of opinion -
(i) that the company cannot pay its debts and should be wound up; or

(ii) that it is in the interests of the public or of the shareholders or of the creditors that the company should be wound up;
(h) when the period, if any, fixed for the duration of the company by the memorandum or articles expires or the event, if any, occurs on the occurrence of which the memorandum or articles provide that the company is to be dissolved;

(i) the Court is of opinion that it is just and equitable that the company be wound up;

(j) the company has held a licence under the Banking and Financial Institutions Act 1989 (Act 372) or the Islamic Banking Act 1983 (Act 276) and that licence has been revoked or surrendered;

(k) the company has carried on Islamic banking business, licensed business, or scheduled business, or it has accepted, received or taken deposits in Malaysia, in contravention of the Banking and Financial Institutions Act 1989 or the Islamic Banking Act 1983, as the case may be;

(l) the company has held a licence under the Insurance Act 1996 and-
(i) that licence has been revoked;
(ii) Bank Negara Malaysia has been petitioned for its winding up under

subsection 58(4) of the Insurance Act 1996; or

(iii) an order under paragraph 59(4)(b) of the Insurance Act 1996 has been made in respect of it;
(m) the company is being used for unlawful purposes or any purpose prejudicial to or incompatible with peace, welfare, security, public order, good order or morality in Malaysia; or

(n) the company is being used for any purpose prejudicial to national security or public interest.
[Am. Act A1022]
DEFINITION of inability to pay debts.
(2) A company shall be deemed to be unable to pay its debts if -
(a) a creditor by assignment or otherwise to whom the company is indebted in a sum exceeding five hundred ringgit then due has served on the company by leaving at the registered office a demand under his hand or under the hand of his agent thereunto lawfully authorized requiring the company to pay the sum so due, and the company has for three weeks thereafter neglected to pay the sum or to secure or compound for it to the reasonable satisfaction of the creditor;

(b) execution or other process issued on a judgment, decree or order of any court in favour of a creditor of the company is returned unsatisfied in whole or in part; or

(c) it is proved to the satisfaction of the Court that the company is unable to pay its debts; and in determining whether a company is unable to pay its debts the Court shall take into account the contingent and prospective liabilities of the company.

As you may see, Section 218 gives you a list of instances where one may file such a Petition. This is a popular method used by debtor to Petition the winding up of a Company which owes the debtor. 

In some instances, the very service of a Notice under that Section 218, would trigger the essential response to report to the Stock Exchange, if the Company targeted is a Public listed Company. 

There have also been a mixed responses from Judges whether the provision can be used if the Debtor has yet to attain Judgment against the owing Company. There have been cases where Debtors file this Petition to pressure the Company to settle the outstanding amount, even though that Debtor has not crystalized that debt into a Judgment. The case laws are split in the sense that some Judges opine that one must attain a Judgment first before proceeding to the Petition; whilst another line of authority felt that it is all right to file such a Petition, with or without a Judgment.

14 July 2010

LOYARBUROK : ISA Musical Chairs: High Court judgment in Azzahari & 7 others


We often hear that the draconian and anachronistic ISA is used by the government of the day as an oppressive tool to stifle peaceful and political dissent. More often than not, political activists/politicians and to some extent, journalists in the past decade have been detained under the ISA without trial.

However, the ISA was again used recently on 21 January 2010 – but this time rather than targeting political opponents, more than 50 people of various nationalities including students from local universities were arrested in a crackdown at Sungai Cincin, Gombak for allegedly participating in “unsanctioned” Islamic sermons/religious classes; and for allegedly having links with international terrorist organisations.

Despite letters sent by us (as solicitors representing the detainees) to the Inspector-General of Police and the Home Minister on 29 January 2010 to seek further information on the arrests and to request for access, the addressees failed to respond positively.

A writ of habeas corpus was subsequently filed on 4 February 2010, on behalf of the detainees, to secure the release of those still being detained and to prevent the deportation of those who were not Malaysians. On 5 February, we were informed that one of the foreigners had been deported back to his country of origin, while the remaining 6 had been released to the custody of the Immigration Department.

The application was heard by the High Court on 10 March 2010, before His Lordship Dato Hj Ghazali Bin Hj. Cha. On the very same day of the hearing, in an obvious attempt to frustrate legal process, we were informed that a Restriction Order has been issued against Azzahari, the Malaysian detainee.

In light of this, a preliminary objection to the writ was raised on the ground that the application is now academic as the detainees are no longer in the custody of the Police or Home Ministry.

In dismissing the application for writ of habeas corpus (and thus allowing the preliminary objection), the High Court held inter alia:-
1. On the issue of the application now being academic
Adalah undang-undang yang mantap bahawa sesuatu Permohonan untuk mendapatkan writ of habeas corpus hanya terpakai bila mana seseorang individu itu berada di dalam tahanan secara fizikal dengan tidak mengikut undang-undang; atau dengan lain perkataan “He must be in actual custody,” “restrictee” juga tidak berhak untuk memohon writ of habeas corpus. Rujuk kes ‘Kerajaan Malaysia & Ors v. Nasharuddin Nasir’ (2004) 1 CLJ 90 (F/Ct):
“In the result, Choor Singh J took the position that a writ of habeas corpus had to be addressed to the person or authority having actual physical custody of the person alleged to be detained illegally. That, in my view, represents a correct statement of law. In a situation where the court finds it impossible to issue the writ because the person or authority no longer had the custody of the detainee, it should not hear the application. Indeed, it has no jurisdiction to do so. This is precisely the position of the instant case. Here, the facts show that when the application came up for full argument before the court, the police no longer has custody of the respondent. …”

2. On the issue of public policy and public interest grounds
One of the issues submitted by us was whether the scope and purview of ISA was wide enough to cover alleged security threats outside Malaysia i.e. international security threats. It was submitted that the purpose of the ISA, via the speech of Tun Abdul Razak recorded in Hansard, limited the use of the ISA to internal threats:-
The Honorable Prime Minister and other Members of Government, including myself, have made it quite clear on a number of occasions that, because Emergency is to be declared at an end, the Government does not intend to relax its vigilance against the evil enemy who still remains as a threat on our border and who is now attempting by subversions to succeed where he has failed by force of arms. It has two main aims: firstly to counter subversion throughout the country and secondly, to enable the necessary measures to be taken on the border area to counter terrorism.
The High Court however held as follows:-
Mengenai isu kepentingan awam, saya percaya kepentingan awam akan lebih dipelihara dari segi keselamatan mereka sekiranya tindakan pencegahan yang cepat bagi menangani isu keganasan diambil, maka isu sama ada ISA terpakai hanya untuk keselamatan negara hendaklah ditafsirkan secara meluas, iaitu bagi menghalang kegiatan keganasan yang akan atau mungkin menular ke negara ini, apa yang berlaku di negara luar perlu dihalang penularannya ke negara ini, di dalam kes ini Pemohon-pemohon telah ditahan di dalam negara ini, dalam keadaan ISA adalah terpakai kepada Pemohon-Pemohon.
3. On the issue of the conduct of the Respondents in frustrating the legal process
Mengenai isu kedua sama ada Y.B. Menteri dan Responden bertindak secara melampau dengan niat bagi menggagalkan Permohonan Pemohon-Pemohon, saya percaya ini bukanlah menjadi isu berdasarkan kepada jumlah pemfailan affidavit-affidavit oleh Responden-Responden, dan tindakan Y.B. Menteri yang menandatangani perintah sekatan terhadap Pemohon Pertama baru semalam (10/3/2010), pada pendapat saya, tidak sekali-kali terjumlah kepada tindakan menghina Mahkamah. Saya faham dengan kesibukan Y.B. Menteri setiap hari dan tandatangan di saat akhir perintah sekatan itu pada pendapat saya dilakukan tanpa unsur-unsur mala fide.
An appeal was filed on 5 April 2010 against the decision and is now scheduled to be heard on 19 July 2010 by the Federal Court. Another habeas corpus appeal is scheduled to be heard together, that of actor Khaeryll Benjamin Ibrahim (popularly known as Benjy).

LB: The writer is the solicitor at Messrs Richard Wee & Yip handling the matter, and part of the team of counsel acting for the detainees.

*Original posting at www.loyarburok.com