DALAM MAHKAMAH TINGGI MALAYA DI SHAH ALAM
DALAM NEGERI SELANGOR DARUL EHSAN
[GUAMAN NO: BA-22NCVC-574-12/2019]

(ALICE LOKE YEE CHING)
Judicial Commissioner
High Court of Malaya at Shah Alam

Case(s) referred to:

National Company For Foreign Trade v. Kayu Raya Sdn Bhd [1984] 2 MLJ 300
Cempaka Finance Bhd v. Ho Lai Ying (trading as KH Trading) & Anor [2006] 2 MLJ 685
Supreme Leasing Sdn Bhd v. Dior Enterprises & Ors [1990] 2 MLJ 36
South East Asia Insurance Bhd v. Kerajaan Malaysia [1998] 1 CLJ 1045
Voo Min En & Ors v. Leong Chung Fatt [1982] 2 MLJ 241
Nam Joo Hong Chan Feedmills Sdn Bhd v. Soon Hup Poultry Farm [1985] 2 MLJ 206
Supreme Court in Koh Siak Poo v. Perkayuan OKS Sdn Bhd [1989] 3 MLJ 164

Legislation referred to:

Strata Management Act 2013, ss. 8, 52, 58 (d), First Schedule
Contracts Act 1950, s. 60
Rules of Court 2012, O. 14

COUNSEL:

For the plaintiff – David Samuel, R Thanasegar & Savreena Kaur; Chambers of Firdaus
For the defendant – Raymond Mah & John Chan; M/s MahWengKwai & Associates

Judgement

Introduction

1. By way of enclosure 11 dated 15.5.2020, the Plaintiff seeks to enter summary judgment pursuant to Order 14 Rules of Court against the Defendant. The Plaintiff’s claim comprises of arrears of maintenance charges, contribution to the sinking fund and late payment charges in respect of parcels owned by the Defendant. The claim in this summary judgment application is for the outstanding amount of RM 3,596,304.06.

2. Apart from the affidavits filed in relation to the summary judgment application, parties have also sought to rely on affidavits filed in respect of other proceedings in this suit. For this purpose, parties filed their respective Notices of Intention to refer to these affidavits.

3. However I only consider the following to be relevant to this application, and which I took into consideration in coming to a decision, as listed below:-

(i) Writ and Statement of Claim dated 20.12.2019;
(ii) Defence and Counterclaim dated 3.2.2020;
(iii) Reply and Defence to Counterclaim dated 24.2.2020;
(iv) Application for summary judgment [enclosure 11] dated 15.5.2020;
(v) Affidavit in support by Plaintiff affirmed on 15.5.2020 [enclosures 12-13];
(vi) Affidavit in Reply by the Defendant affirmed on 18.6.2020 [enclosures 17-22];
(vii) Affidavit in Reply by the Plaintiff affirmed on 14.8.2020 [enclosure 49];
(viii) Additional Affidavit by the Plaintiff affirmed on 21.10.2020 [enclosure 58];
(ix) Additional Affidavit In Reply by the Defendant affirmed on 4.11.2020 [enclosure 63];
(x) Plaintiff’s Affidavit in Reply (4) affirmed on 18.11.2020 [enclosure 65]; and
(xi) Plaintiff’s affidavit in Reply (5) affirmed on 16.12.2020 [enclosure 88]; and
(xii) Defendant’s Affidavit in Support of the Interim Injunction affirmed on 19.6.2020 [enclosure 26].

Background facts

4. The Plaintiff is the management corporation of a stratified development known as 3 Two Square (“3-2 Square”). It is a body established by operation of law pursuant to the Strata Titles Act 1985, and charged with duties and powers pursuant to the Strata Management Act 2013 to manage 3-2 Square.

5. The Defendant is a company registered under the Companies Act 1965 and is the developer of 3-2 Square. The development is a mixed development comprising of six commercial blocks namely Block A to Block F.

6. The Defendant is also the owner of several units within 3-2 Square. It owns 13 units in Block A and all of the 17 units in Block F (“Block F units”). One of the Block F units is the Penthouse. All the car park bays within 3-2 Square located at Basement 1 (“B1”), Basement 2 (“B2”), Lower Ground 1 (“LG1”) and Lower Ground 2 (“LG2”) have been annexed to the Penthouse as its accessory parcels for the purposes of paying maintenance and sinking fund charges. The car parks at B1, B2, LG1 and LG2 will hereinafter be referred to as the car parks.

7. The Plaintiff’s claim is for the outstanding charges in relation to Block F units and car parks spanning the period from 16.6.2012 to 31.10.2019 and substantiated by several invoices titled Group A, Group B, Group C, Group D, Group E and Group F invoices. The compartmentalisation of the claim is because the calculation of maintenance and sinking fund charges and late payment charges owed by the Defendant fluctuates through the passage of time due to changes in the calculation methods to cater for periods of implementation of Goods and Services Tax, zero GST and thereafter the Sales and Services Tax.

8. However, the Plaintiff’s claim based on Group A invoice is not pursued in this application; but will instead be pursued during a trial of this matter. The Plaintiff’s claim in this summary judgment application is now only limited to Group B to Group F invoices.

9. Since the commencement of this action, the Defendant has made some payments. In view of these payments, adjustments have been made to the amount claimed, by way of the Plaintiff’s affidavit in enclosure 88. The updated amount claimed is as follows:-

Triable issues sought to be raised by the Defendant.

10. In response to the Plaintiff’s claim, the Defendant raises five issues which it contends are triable issues to defeat the Plaintiff’s summary judgment application. They are:-

(i) Form 20 (“K-8”) exhibited in the Plaintiff’s affidavit in enclosure 13 by which the Plaintiff gives notice to demand payment from the Defendant, must be stated individually. Here, the Form 20 issued was in respect of 17 parcels owned by the Defendant. The Defendant contends that a single notice affects and prejudices his voting rights;

(ii) the Plaintiff’s calculation and computation of the alleged outstanding maintenance charges, sinking fund contributions and late payment interest is erroneous and cannot be adequately explained or clarified;

(iii) the Plaintiff’s imposition of maintenance charges and sinking fund contributions on the Defendant’s accessory parcels (car parks) at Level B1, B2, LG1 and LG2 which are attached to Parcel No. M1-F/15/267 is unlawful and invalid;

(iv) the Plaintiff’s unilateral set off of the Defendant’s current payments for maintenance charges and sinking fund contributions against previous aged invoices is unlawful and invalid; and

(v) Plaintiff’s imposition of 10% late payment interest on outstanding maintenance charges and sinking fund contributions is unlawful and invalid as it was never resolved by a general meeting at all material times.

Analysis and findings of this court

11. The applicable principles relating to summary judgment applications are trite law. The Plaintiff in an application for summary judgment must satisfy the preliminary requirements under Order 14 Rules of Court 2012. (See: National Company For Foreign Trade v. Kayu Raya Sdn Bhd [1984] 2 MLJ 300).

12. Once the preliminary requirements have been satisfied, the burden then shifts to the Defendant to satisfy the Court that judgment should not be entered against it. (See: Cempaka Finance Bhd v. Ho Lai Ying (trading as KH Trading) & Anor [2006] 2 MLJ 685).

13. In my view, the Plaintiff has satisfied these preliminary requirements in that the Defendant has entered an appearance, the statement of claim has been served on the Defendant and the affidavit in support of the application complies with the requirements of rule 2 of Order 14. The affidavit verifies the facts on which the claim is based and states the deponent’s belief that there is no defence to the claim. (See: Supreme Leasing Sdn Bhd v. Dior Enterprises & Ors [1990] 2 MLJ 36).

14. As the preliminary requirements have been satisfied, I have to now consider whether the Defendant succeeds in raising any triable issue. If the Defendant can establish even one triable issue, the Plaintiff’s application will not be granted. (See: South East Asia Insurance Bhd v. Kerajaan Malaysia [1998] 1 CLJ 1045).

15. However, it has to be a bona fide triable issue. In Voo Min En & Ors v. Leong Chung Fatt [1982] 2 MLJ 241, the Federal Court made it clear that the issue raised must be one which would justify a trial of the action in order to determine it.

16. I shall now deal with the issues sought to be raised by the Defendant.

Form 20 must be issued separately in respect of each parcel owned by the Defendant

17. Form 20 is a statutory notice to demand payment of sum due by the proprietor. The Plaintiff issued this notice pursuant to Regulation 31 of the Strata Management (Maintenance and Management) Regulations 2015 to demand payment of the outstanding dues. Form 20 dated 21.11.2019 stated that a sum of RM 4,751,805.52 was due as at 31.10.2019 in respect of 17 strata parcels. The Defendant contends that the failure to issue separate notices renders the demand invalid, and consequently cannot be the basis for the recovery in this action.

18. This issue of the obligation to issue separate notices was never raised in the affidavit in reply by the Defendant to oppose the summary judgment application. The Defendant’s affidavit in enclosure 17 states six triable issues, two of which were not pursued in this hearing. There was no mention made of this point which is now raised for the first time by way of oral submission in this hearing. The Plaintiff’s counsel urged this court to disregard this point.

19. I agree that I am not obliged to consider the issue raised. Even if I am, I fail to see how this issue sought to be raised can constitute a defence to the claim of the Plaintiff. It does not in any way raise a defence to the indebtedness of the Defendant. The issuance of only one Notice or several notices cannot possibly have a bearing on the validity of the amount claimed.

Erroneous computation of the outstanding maintenance charges, sinking fund contributions and late payment interest

20.  Maintenance charges and sinking fund contribution were imposed by the Plaintiff based on share unit calculation following the formula stipulated in the Strata Management Act 2013 (See: section 8 of the Strata Management Act 2013 and the First Schedule). The rate for 3-2 Square has been determined as RM 0.70 sen for maintenance charges and RM 0.08 sen for sinking fund contribution. In addition to that, late payment interest of 10% per annum calculated on a daily basis is also imposed on outstanding invoices.

21. The issue of erroneous computation was merely raised generally by the Defendant in its affidavit in opposition to the Plaintiff’s application for summary judgment (See: enclosure 17). The alleged erroneous computation lacked specificity, and no particulars were given. The details were only mentioned for the first time in the oral and written submission of the Defendant, by questioning the irreconcilable differences between the Statement of Account as at 31.10.2019 and the Statement of Account as at 31.3.2020. The Defendant relied on its affidavit filed in respect of the application for interlocutory injunction (See: enclosure 26) to question the omission of a significant number of items dated 16.8.2012 which appear in the Statement of Account as at 31.10.2019 but which are missing in the 31.3.2020 Statement of Account.

22. Had the Defendant been specific with details of the alleged errors in its affidavit in reply, the Plaintiff would have had a chance to rebut the allegation by way of affidavit. The allegation raised by the Defendant is a factual allegation for which an opportunity to be respond on the matter ought to have been given.

23. Nonetheless, the Plaintiff in its affidavit in reply (See: enclosure 49) responded by stating that the invoices for maintenance and sinking fund charges are generated automatically through the Plaintiff’s computerised accounting system of Advelsoft (M) Sdn Bhd. Plaintiff’s counsel in its oral submission, also explained that as the invoices are generated from a running account, earlier entries in a preceding invoice would not appear in the later invoice. In this case, the entries appearing before the first item stated as “Electricity Charges-Aug (16/08/12- 31/08/12)” in the Statement of Account as at 31.10.2019 would no longer appear in the Statement of Account as at 31.3.2020. (See: enclosure 26). This explanation is reasonable and I accept it.

24. Apart from 17 units in Block F, the Defendant also owns 13 units in Block A. The same computation was applied to these units for which invoices were also issued. The Defendant made payment towards these invoices, which payment included late payment charges. (See: Plaintiff’s averment in paragraph 46 of enclosure 49 and paragraph 20 of enclosure 58). There were no questions nor complaints raised pertaining to the computation of the charges which was done on the same basis for Block F.

Imposition of maintenance charges and sinking fund contributions on the Defendant’s accessory parcels (car parks) at Level B1, B2, LG1 and LG2 which are attached to Parcel No. M1-F/15/267

25. The car parks are accessory parcels attached to the Penthouse unit. The Defendant contends that the Plaintiff had unlawfully imposed maintenance charges and sinking fund contributions on these car parks.

26. I agree with the submission of the Defendant’s counsel that car parks are accessory parcels, and are not allocated with any share units as it had already been factored into the calculation and allocation of their main parcels’ share units. The Plaintiff is only allowed to impose maintenance charges and sinking fund contributions on the Defendant’s parcels. Any levy on car parks which are accessory parcels is not mandated or sanctioned by the Strata Titles Act, 1985 or the Strata Management Act 2013.

27. The question to consider is whether there was in fact charges imposed on the car parks. The total share units allotted to the Defendant’s Block F units was 120,862 share units, out of which 71,524 share units was allotted to the Penthouse. The share units alloted to the car parks are part of this 71,524 share units.

28. Prior to 2017, the invoices issued had separate billing for the 17 Block F units and the car parks. This can be seen from the Group B and C invoices. The charges for the accessory parcels was administratively separated in the billing. However, after 1.4.2017, Block F units and the car parks were issued a single invoice per month, as reflected in the Group D, E and F invoices. Notwithstanding this change, the total amount billed for the Block F units and the car parks remained the same, and was based on the total of 120,852 share units only.

29. Nothing turns on the contention that the car parks have been alloted share units as the share units were alloted only for billing purposes. The total share units taken into consideration for billing of Defendant’s parcels in Block F at any material time, did not exceed 120,862 share units. The car parks did not attract any charges over and above that imposed based on the total share units allotted to the Block F units. There is no issue raised as to double charging for the car parks, as confirmed by counsel for the Defendant.

30. In its affidavit to oppose the summary judgment application, the Defendant alleges that the Plaintiff has imposed different rates for the car parks as opposed to Block F units. The basis of this allegation is uncertain and unsubstantiated by any evidence. The Plaintiff’s affidavit has specifically refuted this allegation. The Plaintiff states that the same rate is levied at any given period for both the car parks and the Block F units. Therefore the Defendant is factually in error here.

Unilateral set off of the Defendant’s current payments for maintenance charges and sinking fund contributions against previous aged invoices.

31. The Plaintiff does not deny setting off current payments against aged invoices. However, the Plaintiff explained the practice of doing so has always been in place and it would reduce the late payment interest imposed.

32.The Defendant’s position in relation to this issue is inexplicable. It makes no sense to insist on current payments being utilised to reduce later invoices when these payments if utilised towards older invoices would benefit the Defendant. It would result in limiting the late payment interest incurred.

33. Nonetheless, the Defendant contends that the payments must be used according to their express instruction. By letter dated 7.10.2020, the Defendant expressly stated that the payment made was for contributions for October 2020. The Plaintiff, however, applied this payment towards outstanding invoices for May and June 2017.

34.  In support of its contention that such application of payment is unlawful, the Defendant relies on the Federal Court case of Nam Joo Hong Chan Feedmills Sdn Bhd v. Soon Hup Poultry Farm [1985] 2 MLJ 206 and section 60 of the Contracts Act 1950 to contend that the application of payment towards other debts owed by the Defendant must be done in the manner expressed or implied by the debtor.

35. To appreciate the argument advanced, the portion of the authorities relied on is set out below. Section 60 of the Contracts Act 1950 provide, Application of payment where debt to be discharged is indicated

60. Where a debtor, owing several distinct debts to one person, makes a payment to him, either with express intimation, or under circumstances implying that the payment is to be applied to the discharge of some particular debt, the payment, if accepted, must be applied accordingly.

36. The portion of the Federal Court judgment in Nam Joo Hong Feedmills Sdn Bhd (supra) reads,

The rule as to the payment of debt by a debtor who owes several distinct debts is governed by section 60, 61 and 62 of the Contracts Act. (See also 9 HalsburysLaws of England, 4th edition, paras 505 and 506). Under these sections the debtor has the right when he makes a payment appropriate it to any of the debts, and the creditor is bound, if he accepts the payment, to apply it in the manner directed by the debtor.If, however, the debtor does not make any appropriation at the time when he makes the payment, the right of appropriation devolves on the creditor, who is entitled to apply the payment to any lawful debts actually due whether statute-barred or not. The appropriation can be made in express terms but it must be communicated. However, an intention to appropriate it can also be inferred from the nature of the transaction or the circumstances of the case. Where neither the debtor nor the creditor makes any appropriation the payment shall be applied in discharge of the debts in order of time, whether they are or are not statute-barred. If the debts are of equal standing, the payment should be applied in discharge of each debt proportionally.

37. In my view, the Defendant’s reliance on the above authorities is wholly misconceived. The Defendant’s debt is one single debt even if it relates to several parcels. There are no several distinct debts. The debt is represented in one running account maintained by the Plaintiff. It is mischievous to raise this as a triable issue when the application of the payment made towards aged invoices is to the advantage of the Defendant.

Imposition of 10% late payment interest on outstanding charges is invalid

38. In opposing the application for summary judgment, the Defendant questions the imposition of 10% late payment int erest on the ground that it is excessive and amounts to a penalty. (See: paragraph 76-80 of the Defendant’s affidavit, enclosure 17). However, in its written and oral submission, the imposition of 10% late payment interest is now challenged as being contrary to section 58(d) of the Strata Management Act 2013 as it was never resolved by a general meeting at all material times.

39. Again, the basis of this challenge ought to have been expressly stated in the Defendant’s affidavit but was not done. The Plaintiff did not have an opportunity to factually rebut this issue.

40. The statutory obligation of the Defendant to pay maintenance and sinking fund payment to the Plaintiff arises by virtue of Section 52 of the Strata Management Act 2013. The legal basis for the imposition of the late payment interest is also found paragraph (5) of the same section which provides,

Proprietors to pay charges and contribution to the sinking fund

52. (1) Each proprietor shall pay the Charges, and contribution to the sinking fund, to the management corporation for the maintenance and management of the subdivided building or land and the common property in the development area.

…….

(5) If any sum remains unpaid by the proprietor at the expiry of the period of fourteen days specified in subsection (4), the proprietor shall pay interest at the rate of ten percent per annum on a daily basis.

41. On the ground that the imposition of 10% is excessive, the Plaintiff responded to say that the same late payment charges were imposed on 13 of the Plaintiff’s parcels in Block A. No objection has ever been raised in respect of these charges. Instead, payments for these charges were made by the Defendant.

42. Having considered all the triable issues attempted to be raised in opposition to the summary judgment application, I find them to be to be without merit and do not qualify as triable issues. They are mere afterthought to avoid the Defendant’s liability for the outstanding charges.

Conclusion

43. The Supreme Court in Koh Siak Poo v. Perkayuan OKS Sdn Bhd [1989] 3 MLJ 164 held,

There has been a long line of authorities for the proposition that where all issues are clear and the matter of substance can be decided once and for all without going to trial, there is no reason why the court hearing the application for summary judgment should not deal with the whole matter under the procedure in an O. 14 application. See also Citibank NA v. Ooi Boon Leong & Ors [1981] 1 MLJ 282 In Malayan Insurance (M) Sdn Bhd [1987] 2 MLJ 183, I had occasion to refer to the underlying philosophy in the O. 14 provision. It is to prevent a plaintiff clearly entitled to the money from being delayed his judgment where there is no fairly arguable defence to the claim.

44. The documentary evidence presented shows clearly that the Defendant owes the Plaintiff arrears in maintenance charges, sinking fund contribution and late payment interest amounting to RM 3,596,304.06.

45. In the circumstances, the Plaintiff’s entitlement to its c laim ought not to be delayed. Consequently, the application for summary judgment in Enclosure 11 is allowed, and judgment is entered for the sum of RM 3,596,304.06 together with interest at the rate of 4% from the date of judgment till full realisation. I also order that costs of RM 5,000 be paid to the Plaintiff.

Dated: 27 APRIL 2021

REQUEST A FREE CONSULTATION →

Note: This article does not constitute legal advice to any specific case. The facts and circumstances of each and every case will differ and therefore will require specific legal advice. Feel free to contact us for complimentary legal consultation.

Wednesday, 24 July 2024

3:00 pm – 4:00 pm Within and Beyond the Will: Strategies to Prevent Family Feuds

About this talk

Wills and estate planning are intended to provide individuals with a mechanism to direct the distribution of their assets upon death. However, disputes frequently emerge due to inadequate planning, invalid or unenforceable wills, or when administrators or executors fail to fulfil their duties to beneficiaries. We invite you to join us for this online seminar, where we will explore a variety of estate administration conflicts and the legal remedies available to resolve these issues.

The talk will be delivered over video conference using Zoom.us. You can either view the talk from your web browser or download the Zoom app.

Talk Points

  • Estate Planning and Administration
  • Disagreements over Enforcing Wills
  • Conflicts arising from Estate Administration
  • Strategies for Preventing and Resolving Estate Disputes

Speakers

Sign up →

Past Seminars

MahWengKwai & Associates is proud to announce that our Consultant, Dato’ Mah Weng Kwai, has been appointed as a member of the Protem Committee for the AIAC Court of Arbitration.

According to the announcement by the Legal Affairs Division of the Prime Minister’s Department, the formation of this committee is a key initiative towards enhancing the Asian International Arbitration Centre (Malaysia) (AIAC). This follows the signing of the Supplementary Agreement to the Host Country Agreement on 20 February 2024 between the Malaysian Government and the Asian-African Legal Consultative Organization (AALCO).

The committee, chaired by Dato’ Mary Lim Thiam Suan, includes distinguished legal experts worldwide and aims to establish the mechanisms, protocols, and operational framework for the AIAC Court of Arbitration. The chairperson and committee members are appointed by the Hon. Dato’ Sri Azalina Othman Said, Minister in the Prime Minister’s Department (Law and Institutional Reform), Malaysia, and include:

  • Datuk Dr. Prasad Sandosham Abraham (Malaysia)
  • Justice K.S.P. Radhakrishnan (India)
  • Dato’ Seri Mohd Hishamudin bin Md Yunus (Malaysia)
  • Professor Karuiki Muigua (Africa)
  • Professor Steven P. Finizio (United Kingdom)
  • Mr. Juan Fernánde-Armesto (Spain)
  • Mr. Zeyad Khoshaim (Saudi Arabia)
  • Mr. Chan Leng Sun, SC (Singapore)
  • Ms. Kamilah Kasim (Malaysia)
  • Ms. Shanti Abraham (Malaysia)
  • Dr. Christopher To (Hong Kong SAR)
  • Dr. Can Eken (United Kingdom)
  • Mr. Ng Jern-Fei, KC (Singapore)
  • Mr. Kumar a/l Thangaraju (Malaysia)
  • Mr. Jonathan Lim (United Kingdom)

Dato’ Mah Weng Kwai, a former High Court and retired Court of Appeal judge, is an AIAC arbitrator and mediator. His experience as an arbitrator spans commercial and construction disputes and includes disputes in the technology, telecommunications and marine sectors.

We extend our heartfelt congratulations to Dato’ Mah Weng Kwai on this significant appointment and look forward to the establishment of the AIAC Court of Arbitration.

REQUEST A FREE CONSULTATION →

Note: This article does not constitute legal advice to any specific case. The facts and circumstances of each and every case will differ and therefore will require specific legal advice. Feel free to contact us for complimentary legal consultation.

CCH & ANOR v. PENDAFTAR BESAR BAGI KELAHIRAN DAN KEMATIAN, MALAYSIA

FEDERAL COURT, PUTRAJAYA
TENGKU MAIMUN TUAN MAT CJ
NALLINI PATHMANATHAN FCJ
MARY LIM FCJ

HARMINDAR SINGH DHALIWAL FCJ
RHODZARIAH BUJANG FCJ
[CIVIL APPEAL NO: 01(f)-35-11-2020(W)]
19 NOVEMBER 2021
[2021] CLJ JT(16)

Case(s) referred to:

CTEB & Anor v. Ketua Pengarah Pendaftaran Negara, Malaysia & Ors [2021] 6 CLJ 471 FC (refd)

Merdeka University Bhd v. Government Of Malaysia [1981] CLJ 175; [1981] CLJ (Rep) 191 HC (refd)

Rosliza Ibrahim v. Kerajaan Negeri Selangor & Anor [2021] 3 CLJ 301 FC (refd)

Legislation referred to:

Courts of Judicature Act 1964, s. 25, Schedule para. 1

Federal Constitution, art. 5(1), Second Schedule, Part I, Part II ss. 1(a), (e), 2(3), Part III s. 19B

Rules of Court 2012, O. 53 r. 3(2)

For the appellants – Cyrus Das, Raymond Mah, Jasmine Wong & Eric Toh; M/s MahWengKwai & Assocs

For the respondent – Shamsul Bolhassan & Mazlifah Ayob; SFCs

Watching Brief:

For the Bar Council – Low Wei Loke & Larissa Ann Louis

For the DHRRA – Rani Sreedharan

[Editor’s note: For the Court of Appeal judgment, please see CCH & Satu Lagi lwn. Pendaftar Besar Kelahiran Dan Kematian, Malaysia [2021] 10 CLJ 352 (overruled); For the High Court judgment, please see [2019] 1 LNS 1463 (overruled).]

Reported by Najib Tamby

Judgement

Tengku Maimun Tuan Mat CJ:

Introduction

1. This appeal concerns essentially the question of the entitlement of a child, who was abandoned at birth and later adopted, to Malaysian citizenship by operation of law.

2. The two appellants in this case are CCH and ADY. In addition to being joint litigation representatives, the first appellant is the adoptive father and the second appellant the adoptive mother of their adopted child CYM. For ease of reference, we shall refer to both adoptive parents as the “appellants”, and to CYM as the “child”. We have redacted their names in order to maintain anonymity.

3. The respondent is the Registrar-General of Births and Deaths of Malaysia, a department that operates under the purview of the Ministry of Home Affairs, Government of Malaysia.

4. This case began when the appellants filed an application for judicial review against the respondent in the High Court seeking for the following reliefs:

  1. A declaration that [name redacted], a child (“Child”) is a citizen of Malaysia by operation of law by virtue of his birth within the Federation of Malaysia pursuant to Article 14(1)(b), Part II section 1 paragraph (e) and section 2(3) of the Second Schedule of the Federal Constitution;
  2. A declaration that the Child is a citizen of Malaysia by operation of law by virtue of his lawful adoption by the Applicants pursuant to the Order for adoption dated 20.7.2017 made by the Pulau Pinang High Court in Adoption No. PA-34-3-01/2017, read with sections 9 and 25A of the Adoption Act 1952 and Article 14(1)(b) and Part II section (1) paragraph (a) of the Second Schedule of the Federal Constitution;
  3. An order of certiorari to quash the decision of the Respondent of 21.9.2017 to issue the birth certificate (Register No: 00019676, Serial No.: 001692XA) dated 21.9.2017 (‘Birth Certificate’) of the Child and signed by the Respondent which registers the Child as a non-citizen (bukan warganegara) instead of a citizen of Malaysia;
  4. An order of mandamus directing the Respondent to reissue the birth certificate of the Child to register the Child as a citizen of Malaysia;
  5. … [prayer for costs] …
  6. Such further Orders and/or directions as may be given or made as this Honourable Court deems fit and just in the circumstances.

5. For ease of comprehension and unless otherwise stated, all references in this judgment to “articles” and “Second Schedule” are to that of the Federal Constitution (“FC”). Similarly, and unless otherwise stated, any references to Part II or Part III are to that of the Second Schedule of the FC.

Background Facts

Preliminaries

6. The facts of this appeal are as gleaned and modified from the judgments of the courts below, submissions of parties and the affidavits and other cause papers filed in the judicial review application.

7. The fulcrum of the judicial review application in this case is the decision of the respondent dated 21 September 2017 to issue a birth certificate (“third birth certificate”) to the child stating that the child is not a citizen of Malaysia. The reason why we call it the “third birth certificate” is adumbrated below.

General Context

8. From the narrative provided by the appellants in their affidavits filed in the High Court, the salient facts can be summarised thus.

9. Sometime in January 2004, the appellants were informed by a friend of theirs that a baby boy (the child) was born and abandoned at Hospital Universiti Kebangsaan Malaysia, Cheras. The appellants jointly decided that they would adopt the child and named him CYM.

10. According to the appellants, they were under the impression that they had formally adopted CYM. As such, when they completed the forms and provided information to the respondent, they represented themselves as the child’s biological parents. The respondent accordingly issued the appellants with the child’s birth certificate on 20 February 2004 (“first birth certificate”).

11. Sometime in April 2016, the child turned 12 years old and like usually the case with all parents, the appellants applied to the National Registration Department (“NRD”) for a MyKad for the child. The NRD declined to issue a MyKad to the child.

12. The appellants state that in the process of applying for the MyKad, the NRD officer who inspected the child’s first birth certificate, apparently noted some inaccuracies in their names. This was either between the appellants and the child or between the appellants’ children (that is the child and another female child that the appellants had earlier adopted – with the initials TYS).

13. The appellants averred that TYS is another child who they believed to have formally adopted (before CYM) under their name but who was actually placed under the guardianship and care of a couple loosely called Mr and Mrs Tan. Going strictly by what has been averred in the affidavits, we assume that TYS took her surname from Mr Tan even though her actual “parents” as recorded in her birth certificate appear to be the appellants. The appellants have not exhibited TYS’s birth certificate as proof of this fact but we have no reason to disbelieve it as the respondent did not aver anything to the contrary and considering that the respondent has access to the records and documents necessary to rebut these facts.

14. Thus, from our understanding and following the logical flow of the facts as recounted by the appellants, the respondent had reason to believe that the appellants were not the biological parents of the child because when they inspected the child’s first birth certificate, they noticed a difference in surnames between TYS and the child.

15. Our understanding of the above facts is derived from the averments in the appellants’ affidavit in reply dated 12 April 2019 (RR, vol. 2, p. 160):

4.8 We were subsequently investigated by an NRD officer in respect of the accuracy of our names on the Child’s 1st Birth Certificate. We subsequently understood from the NRD officer that the Child has not been formally adopted.
4.9 During the course of the investigations, we informed the NRD officer that TYS has also not been formally adopted.

16. As a matter of fact, we noticed a similar discrepancy as well. In their earlier mentioned affidavit of 12 April 2019, the appellants refer to their said adopted daughter as TYS – T being the surname of Mr Tan. However, in the corrective form that the appellants filed leading up to the issuance of the second birth certificate, the appellants listed their adoptive daughter in the
“family information” segment of the corrective form as CYS, the “C” being the surname of CCH. See: The correction form located in RR, vol. 3, p. 400).

17. The respondent has not really explained the actual reason that made them realise and inquire into the fact that the appellants are not the child’s biological parents. The only thing we have to go by is a very general statement in the only affidavit filed by the respondent dated 22 March 2019, as follows (as translated into English):

5.3. In 2016, the Child’s birth certificate was withdrawn after an investigation by the National Registration Department revealed that the Applicants are not the birth parents of the Child.

18. In any case, in that affidavit of 12 April 2019, the appellants went on to aver that the NRD officer explained to the appellants that they (the appellants) would have to surrender the first birth certificate so that a new birth certificate could be issued for the child stating the correct facts of parenthood.

19. The appellants complied, surrendered the first birth certificate and accordingly on 3 November 2016 were issued with a new birth certificate for the child (“second birth certificate”).

20.  [20] The second birth certificate, most crucially, recorded the child’s parents’ information as “not available” (“maklumat tidak diperoleh”) and the child’s citizenship status as “yet to be determined” (“belum ditentukan”).

The Third Birth Certificate And The Filing Of The Judicial Review Application

21. Dissatisfied with the details (or lack thereof) contained in the second birth certificate, the appellants sought legal advice from their present solicitors and were accordingly advised that they ought to formally adopt the child. The appellants thus filed an originating summons in the High Court in Malaya at Penang in case number PA-34-3-01-2017 (“adoption summons”).

22. On 20 July 2017, the learned Judicial Commissioner who heard the adoption summons was satisfied that the appellants were fit and proper persons to be declared the adoptive parents of the child. His Lordship, after the usual process of hearing from the Welfare Department and completing the standard procedures, pronounced the following final orders (translated into English) which we think are pertinent to reproduce (“adoption order”):

  1. That CCH and ADY be given the power to adopt CYM [Birth Certificate No: redacted] (“the Child”) (referring to the 1st Birth Certificate) pursuant to the Adoption Act 1952 (“the said Act”).
  2. That the Registrar of Births and Deaths of Malaysia is directed to make an entry to record this adoption in the Register of Adoption in the Form contained in First Schedule to the Act, pursuant to section 25(2) of the said Act, as per Annexure A.
  3. That the Registrar of Births and Deaths of Malaysia is directed to issue a Birth Certificate to the Child under the said Act.
  4. That the Registrar of Births and Deaths of Malaysia is directed not to enter the words “adopted child” or any other words with the same connotation in the Birth Certificate of the Child.
  5. That the Plaintiffs (the present appellants) be given leave to retain the name of the Child as CYM, and to register the Child’s name as CYM in the Birth Certificate.
  6. That the Birth Certificate of the Child [Birth Certificate No.: redacted] (referring to the 2nd Birth Certificate) be surrendered to the Registrar of Births and Deaths of Malaysia.

23. In Annexure “A” of the adoption order, under the header “Date and State of Birth of the Child”, it is recorded as a fact that the child was born on 31 January 2004 at Hospital Universiti Kebangsaan Malaysia, Cheras.

24. Armed with the adoption order, the appellants again made their way to the NRD and reapplied for a new birth certificate for the child. On 21 September 2017, the respondent issued the third birth certificate (exh. A-7 of CCH’s affidavit dated 11 December 2017 filed in support of the judicial review application (RR, vol. 3, p. 389).

25. The material differences between the third birth certificate and the second birth certificate are as follows:

  1. The information in the column on “status of citizenship” was changed from “yet to be determined” to “non-citizen” (“bukan warganegara”);
  2. The colour of the birth certificate was changed from greyish-green (the colour coding for citizens) to pinkish-red which is the colour coding for non-citizens;
  3. The status of father and mother were changed from “information not obtained” to CCH (father) and ADY (mother) respectively.

26. The primary issue the appellants have with the changes made in the third birth certificate is that the child was essentially rendered a non-citizen and since he is not a citizen of any other country, effectively stateless.

27. The underlying purpose of their judicial review application and thus this appeal is therefore to seek declaratory relief and related orders to the effect that the child is entitled to citizenship by operation of law.

28. A material fact to take note of is that the appellants have averred, and the respondent cannot appear to suggest otherwise, that the citizenship status and identities of the child’s biological parents in this case are completely unknown. See para. 1.4 of the statement filed by the appellants pursuant to O. 53 r. 3(2) of the Rules of Court 2012. The second and third birth certificates are also reflective of this fact.

The Material Constitutional Provisions

29. After reading and hearing the written and oral submissions respectively of parties, we respectfully concluded that the arguments taken were essentially the same as the ones advanced and decided in the courts below.

30. Before delving into the arguments, we find it necessary to first set out the constitutional provisions material to this appeal as follows:

Article 14 (Citizen by operation of law)
14. (1) Subject to the provisions of this Part, the following persons are citizens by operation of law, that is to say:
(a) …
(b) every person born on or after Merdeka Day, and having any of the qualifications specified in Part II of the Second Schedule …
Article 31 (Application of Second Schedule)
31. Until Parliament otherwise provides, the supplementary provisions contained in Part III of the Second Schedule shall have effect for the purposes of this Part.


SECOND SCHEDULE

PART II
[Article 14(1)(b)]

CITIZENSHIP BY OPERATION OF LAW OF PERSONS BORN ON OR

AFTER MALAYSIA DAY

1. Subject to the provisions of Part III of this Constitution, the following persons born on or after Malaysia Day are citizens by operation of law, that is to say:

(a) every person born within the Federation of whose parents one at least is at the time of birth either a citizen or permanently resident in the Federation; and …

(e) every person born within the Federation who is not born a citizen of any country otherwise than by virtue of this paragraph.

2. (1) …

(2) …
(3) For the purposes of paragraph (e) of section 1 a person is to be treated as having at birth any citizenship which he acquires within one year afterwards by virtue of any provisions corresponding to paragraph (c) of that section or otherwise.

PART III
[Article 31]

SUPPLEMENTARY PROVISIONS RELATING TO CITIZENSHIP

Interpretation


19B. For the purposes of Part I or II of this Schedule any newborn child found exposed in any place shall be presumed, until the contrary is shown, to have been born there of a mother permanently resident there; and if he is treated by virtue of this section as so born, the date of the finding shall be taken to be the date of the birth.

Submissions And Decisions Of The Courts Below

31. The appellants’ contentions in the courts below can be summarised as follows.

32. Firstly, the appellants appeared to argue that the child is entitled to citizenship under s. 1(e) of Part II. It was suggested that the said s. 1(e) which is only qualified by s. 2(3) of Part II, s. 19B of Part III and other related sections were inserted by the constitutional amendments effected through the Malaysia Act 1963 to guard against statelessness. Learned counsel essentially argued that because the child was born an abandoned child, there is no proof that he is a citizen of any other country and is thereby entitled to citizenship under s. 1(e).

33. On this issue, the courts below found, based on previously decided cases that in order to fulfil the requirements of s. 1(e), the applicant must show that his or her birth parents are not citizens of any other country.

34.  In the present case, the respondent, in refusing to accord the child citizenship under that provision deposed exactly that. In his affidavit in reply dated 22 February 2019, the then Director-General of NRD cum Registrar- General of Births and Deaths deposed as follows (as translated into English):

8. … I state that the said Child (referring to CYM) was registered as a non-citizen as there was no credible evidence of the birth of the Child specifically information relating to the citizenship status of his birth parents.

35. The second argument advanced by the appellants was that the child ought to be accorded citizenship pursuant to s. 1(a) of Part II. The appellants contended that the words “parents” in that section ought to be construed liberally to include adoptive parents. They further argued that provisions of the Adoption Act 1952 which confer full legal rights on adoptive parents and which extinguish all legal connection to the biological parents, ought to be read into s. 1(a).

36. The High Court and the Court of Appeal rejected this argument. Both courts were guided by earlier precedents of the High Court and the Court of Appeal which have held that s. 1(a) must be construed having regard to the words “at the time of birth”. As such, the courts below were of the view that the word “parents” means biological parents and is essentially incapable of being stretched to mean “adoptive parents”. Further, reliance cannot be placed on ordinary law to interpret provisions of the FC which reigns supreme.

Proceedings in the Federal Court

37. In light of the above arguments and the decisions rendered thereupon, the appellants sought leave to appeal to this court. The five questions (“leave questions”) which were allowed are these:

Question 1

Whether a child who (i) was born in Malaysia and (ii) did not acquire citizenship of any other country within one year from his date of birth, is a citizen of Malaysia by operation of law pursuant to Article 14(1)(b) and Part II Section 1(e) and Section 2(3) of the Second Schedule of the Federal Constitution?

Question 2

Whether Part II Section 1(e) of the Second Schedule of the Federal Constitution requires a child to prove the identity of his/her biological parents and/or that they are not foreign citizens?

Question 3

Whether the word “parents” in Part II Section 1(a) of the Second Schedule of the Federal Constitution should be given a restrictive interpretation to mean only the child’s biological parents?

Question 4

Whether a certificate of birth issued under Section 25A of the Adoption Act 1952 shall pursuant to subsection (5) “for all purposes be known as the Certificate of Birth of the child” and pursuant to subsection (6) “shall be received without further or other proof as evidence” of the child’s parents for the purposes of Article 14(1)(b) and Part II Section 1(a) of the Second Schedule of the Federal Constitution?

Question 5

Whether a birth certificate which has been “surrendered” to the Registrar- General of Births and Deaths pursuant to Section 25A(1)(b) of the Adoption Act 1952 and “replaced” by a new birth certificate issued pursuant to section 25A(5) of the Adoption Act 1952, can still be referred to by the Registrar General of Births and Deaths or the courts for the purposes of determining the child’s “parents”?.

Our Decision/Analysis

Whether The Child Is Entitled To Citizenship By Operation Of Law

The Scope Of The Arguments

38. We begin our analysis by recording our gratitude to learned counsel for the appellants, Dato’ Dr Cyrus Das, for his efforts in meticulously taking us through the legislative history leading up to the insertion of the provisions of ss. 1(e) and 2(3) of Part II and s. 19B of Part III into the FC. Without expressly setting out those provisions, we accept that the speeches and debates that took place in Parliament in respect of those amendments clearly establish that the purpose of their insertion was to guard against statelessness. We also commend learned counsel for the arguments he advanced on s. 1(a) in relation to the interpretation of the phrase “parents” therein appearing and how it includes “adoptive” parents.

39. That said, one will notice that we have taken great pains to state the facts of this case in as much detail as possible. After considering the facts of this case in light of the submissions made, we are of the considered view that none of the leave questions need be considered or answered. This is because the peculiar facts and circumstances of this case do not call for such deliberation.

40. During the hearing of this case, we queried counsel for the appellants on whether s. 19B of Part III ought to be read together with s. 1(a) of Part II. He conceded that such a reading was possible. We also asked the same question of learned Senior Federal Counsel (“SFC”) Shamsul Bolhassan and he accepted the same though he took issue with the facts ie, that he is unable to concede that the child was in fact abandoned. We shall address that issue later.

41. It is trite that while concessions of fact bind parties, concessions of law do not. This is a court of law and just because parties concede that something is or is not law, that itself does make it the legal position. On issues of law, courts are always required to apply their own judicial minds and reasoning to determine points of law quite without regard to parties’ concessions on them. We shall therefore proceed to deliberate on the application of s. 1(a) of Part II read alongside with s. 19B of Part III.

Interpretation Of Section 1(a) Of Part II And Section 19B Of Part III

42. It is our considered view that the child in this case is entitled to citizenship by operation of law pursuant to s. 1(a) of Part II read together with s. 19B of Part III. Although we have already set out the provisions earlier, for ease of reference, we set out both ss. 1(a) and 19B together again, as follows:

Section 1(a) of Part II:

1. Subject to the provisions of Part III of this Constitution, the following persons born on or after Malaysia Day are citizens by operation of law, that is to say:

(a) every person born within the Federation of whose parents one at least is at the time of birth either a citizen or permanently resident in the Federation; and …

Section 19B of Part III:

19B. For the purposes of Part I or II of this Schedule any newborn child found exposed in any place shall be presumed, until the contrary is shown, to have been born there of a mother permanently resident there; and if he is treated by virtue of this section as so born, the date of the finding shall be taken to be the date of the birth. (emphasis added)

43. Dato’ Dr Cyrus Das referred us to the dissenting judgment of this court in CTEB & Anor v. Ketua Pengarah Pendaftaran Negara, Malaysia & Ors [2021] 6 CLJ 471; [2021] 4 MLJ 236 (“CTEB”) where it was stated that Part III which contains enabling provisions is meant to aid or assist in the interpretation of Parts I and II, and not to qualify or conditionalise the application of Parts 1 and II to Part III. The dissenting judgment had commented on s. 19B of Part III, as follows:

[161] Both ss. 19A and 19B of Part III are constitutional presumptions as to births. Section 19A codifies in part the international principle of flag state jurisdiction and applies in relation to persons who are born on a vessel such that their birth there is attributed to the place of registration of the vessel. Section 19B applies in relation to children who are found abandoned in any given place such that the place of abandonment is treated as their place of birth and where their mother is also permanently resident there.

[162] All the above sections, namely ss. 17, 19, 19A and 19B exist as supplementary or filler sections – so to speak – to supplement or to close any gaps or to resolve technicalities that may arise when the person’s parents’ identity is in issue or even if their own place of birth is in issue so long as that is a relevant question for the purposes of Part I or Part II respectively. (emphasis added)

44. The principles of jus soli and jus sanguinis as well as the principles on how the FC was drafted to enable citizenship as broadly as possible while weeding out statelessness have been discussed in great length by the minority of this court in CTEB (supra). We adopt the reasoning there as part of this judgment being the only other decision of the Federal Court apart from this one, to our knowledge, to have touched on this issue most recently.

45. Before proceeding to examine s. 19B with those principles in mind, we seek to remind ourselves of other important concepts on constitutional interpretation.

46. Citizenship no doubt is governed by Part III of the FC, but it is also a concept so inextricably linked to the right to life and personal liberty contained in art. 5(1). As such, any provisions on it must be construed as widely as possible.

47. Having said that, we are completely mindful of the following warning by Abdoolcader J (as he then was) in Merdeka University Bhd v. Government Of Malaysia [1981] CLJ 175; [1981] CLJ (Rep) 191; [1981] 2 MLJ 356, at p. 200 (CLJ); p. 360 (MLJ):

I said in Public Prosecutor v. Datuk Harun bin Haji Idris & Ors [1976] 2 MLJ 116 … that the Constitution is not to be construed in any narrow or pedantic sense (James v. Commonwealth of Australia) [1936] AC 578 … but this does not mean that a court is at liberty to stretch or pervert the language of the Constitution in the interests of any legal or constitutional theory, or even, I would add, for the purpose of supplying omissions or of correcting supposed errors. (emphasis added)

48. The courts have always had to do battle with these two conflicting principles. On the one hand, it is said that the Judiciary cannot purport to usurp the role of the Legislature. On the other hand, it is said that the Judiciary must be proactive to protect fundamental rights. No matter the argument, we are constantly reminded of these fears and/or duties by both sides taking their respective positions in constitutional cases. Where do we draw the line between these two extremes?

49. We believe that the answer to the question has been discussed an innumerable amount of times with the most recent being CTEB (supra). The starting point is the understanding that fundamental rights and provisions must be construed as broadly as possible. Next, provisions which limit those rights must be construed as narrowly as possible. Finally, judicial precedent must play a lesser part when construing constitutional provisions. One cannot afford to be pedantic or cling helplessly to tabulated legalism.

50. When construing a word or words in the FC protective of or guaranteeing a fundamental right, the court should give their widest possible meaning without changing or warping the “base” meaning. And when construing interrelated provisions, the court should read them as a whole having regard to the purpose and intent of those provisions and harmonise their collective meaning rather than put them at odds with another.

51. With the above principles in mind, we now come to s. 1(a) of Part II and s. 19B of Part III.

52. Section 1(a) of Part II very clearly adopts the concepts of jus soli (citizenship based on birthplace) and jus sanguinis (citizenship based on blood relation). Section 19B in turn contains two presumptions – one of which relate to jus sanguinis.

53. The operative words in s. 19B are “any newborn child found exposed in any place”. The purpose of this section, when read in context, must be to cover newborn children who are left and discovered in a place without any trace of their biological parents. We take judicial notice of the harsh realities of life: this includes newborn children left abandoned near dumpsites, baby hatches, public or school toilets, places of worship and so on. A literal meaning of “exposed” suggests a newborn child who was “discovered” exposed at any of these locations.

54. As such, the broadest possible interpretation of the word “found exposed” is to accord it a meaning to include a child abandoned at the place of birth by the birth mother whose identity is unknown. The operative word “exposed” in s. 19B must therefore encompass the plight of abandoned newborn children, otherwise the overarching intent of preventing statelessness would be defeated or rendered illusory.

55. In the present case, we took pains to emphasise that throughout the course of this case, it has been an accepted fact that the child is an abandoned child who was born in Hospital Universiti Kebangsaan Malaysia, Cheras. This fact was acknowledged in the adoption order and in the third birth certificate. During the hearing, learned SFC disagreed with the application of s. 19B to the facts of this appeal, suggesting that the appellants had actively concealed facts, that the identity of the biological parents is known or discoverable but kept hidden.

56. The simple answer to that assertion is this. The follow-up words in s. 19B are contained in the phrase “until the contrary is shown”. Meaning, any person who claims that the child was not “found exposed” or otherwise abandoned by the mother as the case may be, bears the burden of showing the identity of the mother and more importantly, that the mother is not permanently resident at the place of the finding.

57. Evidence-wise, the answer to this predicament is in the recent judgment of this court in Rosliza Ibrahim v. Kerajaan Negeri Selangor & Anor [2021] 3 CLJ 301; [2021] 2 MLJ 181 (“Rosliza”) which deals with proof of negative facts. It is quite illogical in this appeal to expect the appellants to show that they do not have knowledge of the biological parents or the mother at least. This is what the appellants averred in their affidavit in reply dated 12 April 2019:

4.5 In January 2004, we were informed by a friend that a baby boy (the Child) has been born and abandoned at Hospital University Kebangsaan Malaysia, Cheras. We decided to adopt the Child and named him CYM …

58. There is nothing in the evidence, as far as we have examined it, to suggest that the appellants were lying about the fact of abandonment. According to s. 19B therefore, the burden of showing that the child’s mother was not permanently resident at the place of finding rests on the respondent. Given that the child was born in the said hospital, surely the respondent has the means to verify from the hospital’s admission records, the identity of the child’s biological mother, if not the father. Therefore, as the record stands, the respondent has not been able to discharge that burden. No affidavit has been deposed nor a modicum of evidence adduced to suggest that the narrative provided by the appellants is inherently incredible or even false or untrue.

59. This leads us now to the final portions of s. 19B. Once it is shown or averred that a newborn child is “found exposed” (or abandoned), two things are presumed, that is:

(i) that the child is born to a mother who is permanently resident at the place where the finding was made (the jus sanguinis presumption); and

(ii) the date of the finding is taken as the date of the birth.

60. Once s. 19B is invoked, any party challenging any of these presumptions must either show that (i) the child was not born of a mother permanently resident at the place where the newborn child was found, or (ii) the date of the finding is not the date of the birth. It is really only a contest on the earlier which determines citizenship because of the wording of s. 1(a) which requires that a child born within the Federation to be born of at least either one parent who is either a citizen or, more important to this case, of a parent permanently resident in the Federation.

61. Putting it another way, the place of the finding, if within the Federation would satisfy the jus soli requirement of s. 1(a) of Part II. The presumption, once it applies, automatically serves to complete the jus sanguinis (parenthood) aspect of s. 1(a) unless anyone claiming to the contrary can prove otherwise.

62. Hence, what remains at this stage is a simple application of the law to the facts of the case. Since the child was found abandoned in the location aforementioned, it is presumed that he was born to a mother permanently resident there. It follows that he is taken to fulfil the requirements of s. 1(a) of Part II read with s. 19B of Part III as he, having been born at Hospital Universiti Kebangsaan Malaysia, was born within the Federation and his mother is presumed to be permanently resident in the Federation.

63. In the premises, it is our judgment that the child is quite simply entitled to citizenship by operation of law by virtue of s. 1(a) of Part II read with s. 19B of Part III.

The Effect Of This Judgment

64. Having determined the citizenship issue, the only remaining matter is the effect of this judgment which is several fold.

65. Firstly, a wholesome reading of s. 1(a) of Part II with s. 19B of Part III obviates the need for us to consider whether the child was stateless. A discussion on the effect of ss. 1(e) and 2(3) of Part II is therefore unnecessary. Similarly, the right of the appellants as adoptive parents to confer citizenship on the child vis-à-vis s. 1(a) of Part II is also unnecessary because the application of the presumption in s. 19B operates to confer citizenship on the child even prior to the fact of his adoption whether considered informally in 2004 or formally by the fact of the adoption order in 2017.

66. Secondly, the natural result of our above discussion is that this appeal must be allowed. The judgments of the High Court and Court of Appeal are reversed and set aside in toto and ought not to be relied upon as precedent in the future as all observations made on the application of s. 1(e) and 1(a) (in relation to adoptive parents) are obiter dicta given that the facts of this case do not call for such legal findings.

67. Thirdly, this case is now precedent on how the Ministry of Home Affairs (generally) and the NRD and Registrar-General of Births and Deaths (specifically) ought to deal with all such future cases within the context of abandoned newborn children. When confronted with an application for registration of such newborn children, the burden is on the respondent to undertake proper investigations to determine the status of such child’s biological parents or mother. If, after investigation, it is found that the fact of abandonment is true, the respondent is obligated by the highest law of the land in s. 19B of Part III to recognise that newborn child’s citizenship by operation of law, except where there is evidence to the contrary as we had stated in para. 60 earlier.

68. This therefore brings into sharp focus the conduct of the respondent in this case. We had earlier referred to the following averment by the then Director-General of NRD cum Registrar-General of Births and Deaths who deposed as follows in his affidavit in reply dated 22 February 2019:

8. … I state that the said Child (referring to CYM) was registered as a non- citizen as there was no credible evidence of the birth of the Child specifically information relating to the citizenship status of his birth parents. (emphasis added)

69. Applying the law to the facts, and to repeat what was said earlier, it is abundantly clear that the respondent failed to apply their minds to the provision in s. 19B of Part III. Following Rosliza (supra), how are the appellants to prove a negative fact, that is, the fact that they do not know the biological parents of the child? The learned SFC contended that the appellants concealed facts which in turn connotes that the appellants somehow know the identity of the child’s biological parents. This, with respect, is mere supposition unsupported by evidence.

70. The Ministry of Home Affairs, of which the respondent is an integral part, have all the important machinery of the State at their disposal to conduct appropriate investigations to ascertain the truth. The fact that they could not eventually determine the identity of the biological parents of the child or adduce any evidence of the biological lineage of the child indicates that they have not discharged their legal burden to rebut the presumption of permanent residence of the child’s mother in s. 19B. Further, the respondent did not directly address or respond to any of the positive averments made by the appellants regarding how the child was found abandoned, thus leaving those averments admitted.

71. In the circumstances, rather than denying the child citizenship because they were unable to gather any evidence of the child’s birth/biological parents, the respondent ought to have given effect to s. 1(a) of Part II read together with s. 19B of Part III. They had no right or discretion to do anything else certainly much less render the child stateless.

72. In this regard and with respect, we are minded to observe that citizenship by operation of law is a right – a fundamental and constitutional right. It leaves absolutely no room for the exercise of subjective notions or presuppositions on what citizenship is. The words citizenship “by operation of law” could not be any clearer, and there is no room whatsoever for discretion. The FC reigns supreme at all times and the respondent and all related bodies are bound to comply with its dictates.

Remedies/Conclusion

73. For the reasons stated above, this appeal is unanimously allowed and we hereby set aside the orders and judgments of the courts below. There shall be no order as to costs as is the standard practice in cases of public interest such as this one.

74. In terms of the remedy, in light of our analysis, the prayers sought and reproduced in para. 4 of this judgment are incapable of enforcement because they do not correspond to the facts of the case. As stated, we make no ruling and/or finding on ss. 1(a) or 1(e) of Part II in the manner argued by the appellants.

75. In order to meet the justice of this case, and acting under the inherent power of this court as further supplemented by s. 25 of the Courts of Judicature Act 1964 (“CJA 1964”) (with para. 1 of the Schedule to the CJA 1964) which allows this court to mould the appropriate relief, we hereby grant the following orders: 1. A declaration that CYM (‘Child’) is a citizen of Malaysia by operation of law by virtue of his birth within the Federation of Malaysia pursuant to Article 14(1)(b), section (1) paragraph (a) of Part II of the Second Schedule of the Federal Constitution read together with section 19B of Part III of the Second Schedule of the Federal Constitution; 2. An order of certiorari to quash the decision of the respondent of 21.9.2017 to issue the birth certificate (Register No: 00019676, Serial No: 001692XA) dated 21.9.2017 (“Birth Certificate”) of the Child and signed by the Respondent which registers the Child as a non-citizen (bukan warganegara) instead of a citizen of Malaysia; and 3. An order in the nature of mandamus directing the Respondent to reissue the birth certificate of the Child to register the Child as a citizen of Malaysia.

76. As alluded to earlier, in light of our findings above, the leave questions are academic and as such, they do not require our further deliberation.

REQUEST A FREE CONSULTATION →

Note: This article does not constitute legal advice to any specific case. The facts and circumstances of each and every case will differ and therefore will require specific legal advice. Feel free to contact us for complimentary legal consultation.

Wednesday, 12 June 2024

3:00 pm – 4:00 pm Navigating Medical Negligence Claims: Guidance for Families of Deceased Patients

About this talk

Losing a loved one due to medical negligence is undoubtedly a devastating experience. Families left behind often grapple with grief, confusion, and a multitude of questions surrounding their rights and options for seeking justice, redress, compensation, etc.

Join our online webinar, where we aim to provide clarity and guidance to families who have lost a loved one due to medical negligence. Members of our firm’s dedicated medical department as well as our dedicated wills, trusts and probate department will cover issues concerning the obtaining of medical records, the applicable limitation periods for such claims, as well as issues involving drafting and preparing of wills, obtaining the grant of probate or letters of administration. Our speakers will also answer questions posed by our webinar participants.

The talk will be delivered over video conference using Zoom.us. You can either view the talk from your web browser or download the Zoom app.

Talk Points

  • Obtaining discovery of medical records
  • Types of claims and limitation periods
  • Damages claimable for medical negligence
  • Applying for grants of representation

Speakers

Sign up →

Past Seminars

Malaysia is a prime destination for events in Southeast Asia and offers unique opportunities for event organisers. However, the success of events ranging from international conferences to local cultural festivals depends on a thorough understanding of the country’s legal landscape. This includes obtaining necessary permits and licences, ensuring attendee safety, protecting intellectual property, and managing contractual relationships.

This article is a comprehensive guide to the legal considerations essential for organising an event in Malaysia. It aims to equip organisers with the knowledge required to navigate the complexities of legal and commercial planning, ensuring compliance with local regulations and a successful event outcome. By focusing on these critical aspects, organisers can not only mitigate potential legal risks but also enhance the overall event experience for all stakeholders involved.

Permits and Licences

Securing the appropriate permits and licences from the relevant authorities is a critical step in organising an event in Malaysia. The specific permits or licences required vary based on the event’s unique characteristics, including its nature and scale. Given Malaysia’s diverse event landscape, which encompasses cultural festivals, corporate conferences, sporting events, and entertainment spectacles, organisers must be well-informed about the common permits and licences that might be necessary. This knowledge ensures compliance with local regulations and contributes to the smooth execution of the event.

1. Temporary Entertainment License: For temporary events such as concerts, funfairs, warehouse sales, or any other provision of entertainment for a limited period of time, a temporary entertainment licence will have to be applied for and obtained from the local municipal council. When considering the application for licences, the local municipal council will consider whether certain safety and security standards have been met.

It was reported by the News Straits Times in its article “Police: Puncak Alam funfair operating without licence” that a funfair in Eco Grandeur in Puncak Alam commenced operations even though the local council had rejected its licence application on the grounds of failing to meet safety standards. An accident occurred two days after its illegal opening when two women and a child were thrown off a ride and suffered injuries. According to the report, the funfair operators were investigated under Section 6 of the Selangor State Entertainment & Places of Entertainment Enactment 1995 for operating without a licence. The offence carries a maximum fine of RM25,000 or imprisonment of up to five years if convicted.

2. Direct Selling Licence: A company requires a direct selling licence to sell their products or services directly to consumers without involving intermediaries such as wholesalers or retailers. This licence is issued by the Ministry of Domestic Trade and Cost of Living (KPDN). A direct selling licence is required by direct sales companies wherein a sales representative conducts a demonstration or presentation of products to the attendees during an event.

3. Music Licence: The event organiser must obtain a music licence if copyrighted music is to be played in a public or commercial setting. The organiser must identify the correct licensing body to obtain the licence from based on the music usage, as there are three main music licensing bodies in Malaysia:

a. Music Authors’ Copyright Protection Berhad (MACP) administers the public performance and broadcast rights of songwriters, composers and music publishers.

b. Public Performance Malaysia Berhad (PPM) represents local and international recording companies in issuing licences and collecting royalties from commercial users of sound, music videos and karaoke recordings.

c. Recording Performers Malaysia Berhad represents recording performers in licensing matters and distribution of royalties granted to performers with respect to the public performance and broadcast of their performances embodied in sound recordings.

4. Liquor licence: The sale of alcoholic beverages during an event will require a liquor licence issued by the local municipality. Organisers should check with the premises owner whether they already have a licence for their premises. Organisers will also have to ensure that restrictions related to the sale of alcohol are observed during the event, such as the minimum age of purchasing and prohibition of selling alcohol to Muslims.

5. Concerts and live shows by foreign artists: For concerts or live shows by foreign artists, an application must be made to the special committee called the Central Agency for Application for Filming and Performance by Foreign Artistes (PUSPAL) established by the Ministry of Communications and Multimedia of Malaysia. All applications must comply with the PUSPAL Guidelines, which set out the code of conduct and specified ‘blackout’ dates when concerts and live performances are not permitted to be held. A foreign artist who is approved by PUSPAL and subsequently fails to adhere to the guidelines imposed will be blacklisted and prohibited from performing again in Malaysia.

During a performance in July 2023 at the Good Vibes Festival in Malaysia, Matty Healy of the music band, The 1975, kissed his bandmate and criticized Malaysian laws against homosexuality. This act led to the band being blacklisted and banned from future performances in Malaysia. PUSPAL described the act as disrespectful to local laws and cultural values. The incident caused the cancellation of the festival and elicited strong responses from government officials, who summoned festival organizers for explanations. The backlash extended beyond Malaysia, prompting The 1975 to cancel scheduled shows in Indonesia and Taiwan. The controversy also highlighted the sensitivity around LGBTQ+ issues in the region, impacting the band’s tour plans and stirring debates on cultural and legal norms concerning sexuality​.

Click on the links to read news reports by The Star (The 1975 blacklisted, banned from performing in Malaysia, says Puspal and Fahmi raps The 1975 over kissing incident at Good Vibes Festival, organisers to explain), Al Jazeera (Pop band The 1975’s set stopped in Malaysia after onstage kiss and The 1975 cancels Indonesia, Taiwan gigs after Malaysia LGBTQ row), and CNA (Malaysia halts Good Vibes music festival after same-sex kiss by UK band The 1975)

Legal Compliance

Organising an event in Malaysia requires adherence to various legal regulations beyond just obtaining permits and licences. This includes ensuring attendee safety and security, maintaining insurance, abiding by data protection and food safety laws, and managing environmental impacts. Effective planning and execution across these areas are essential for legal compliance and the overall success of the event. Below, we outline the key legal considerations every organiser must navigate:

1. Safety and Security: A crucial part of the planning process involves ensuring the safety and security of the attendees. An organiser must implement comprehensive yet flexible security measures based on the unique characteristics of the event. This involves conducting risk assessments to identify potential hazards before the event, which will depend on different factors such as the venue, number of attendees and type of event. A clear emergency evacuation plan has to be established with exit routes and assembly points, and the procedure must be communicated to the attendees.

The 2014 Future Music Festival Asia (FMFA) incident, where six attendees tragically died from heatstroke, underscores the legal responsibility event organisers hold regarding the safety and security of their attendees. Investigations later revealed that these fatalities were not due to drug overdoses as initially reported by the police, but rather resulted from severe heat conditions and insufficient hydration provided at the event. The harsh weather was a combination of choking haze, high humidity and a temperature of 35°C. This mischaracterisation not only led to a misinformed public but also impacted the festival’s reputation significantly. This disaster was likely the result of inadequate safety measures and highlights a lapse in the duty of care that event organisers owe to their attendees to keep them safe. It serves as a stark reminder of the importance of providing sufficient medical facilities, hydration points, and appropriate guidance on managing extreme weather conditions at such large-scale events.

See news reports by the Malay Mail (FMFA deaths caused by heatstroke, not drugs, says pathologist) and The Straits Times (Six deaths at Malaysia’s Future Music Festival Asia caused by heatstroke, not drug overdose).

2. Insurance: Public liability insurance is an essential component of the risk management strategy for any event, providing financial protection against potential liabilities and unexpected incidents. In Malaysia, securing public liability insurance is required for organisers of sporting events. This requirement ensures that in the event of an accident or injury, compensation claims made by attendees are covered, regardless of the organiser’s financial condition.

While public liability insurance does not prevent incidents, it is critical as it covers potential legal fees and compensation claims from attendees who may suffer injuries or whose property may be damaged due to event activities. For event organisers, obtaining adequate public liability insurance is crucial to managing potential financial losses from such claims, thus safeguarding the organiser’s financial stability.

3. Ticketing and Privacy Laws: When selling tickets and collecting attendees’ personal information, the organisers must comply with data protection laws. This includes obtaining consent from the attendees and informing them on how their data will be used and stored. The terms and conditions relating to the purchase of the tickets must be disclosed, including refund policies, event risks, disclaimers and other restrictions. Organisers must also ensure that any third-party ticketing platforms used are secure and comply with data protection and privacy laws.

In the data breach incident at Brock University in Canada, the third-party vendor AudienceView Campus, handling online event ticket sales for a hockey playoff game, experienced a security compromise that exposed customers’ credit card information. The breach led Brock University to suspend the ticketing platform and notify affected individuals. This incident underscores the responsibility event organisers have in ensuring the privacy and security of attendee data, particularly when outsourcing to third-party services. Organisers must themselves have or choose vendors with robust security measures and ensure compliance with data protection laws. In the event of a data breach, rapid response strategies to maintain trust and minimise liability are critical.

See the disclosures by The Brock News (Brock alerted to third-party data breach involving event ticket sales) and Brock Badgers (Brock suspends access to event ticketing platform).

4. Food and Beverages: The sale of food and beverages within the event must comply with food safety regulations, such as adherence to proper hygiene practices, food storage and sanitation procedures. Food vendors should provide clear labelling and information regarding the ingredients in the food sold so that customers with allergies or religious restrictions can make informed decisions. Please read our article “Food Safety in Malaysia: Criminal Liability for Selling Poisonous Pufferfish and Other Harmful Foods” for more information on the regulations governing food sales in Malaysia.

5. Environmental Regulations: The event must have proper waste management systems, which include providing adequate waste bins for the attendees and arranging for the proper disposal of food-related waste for food vendors. This is important for maintaining cleanliness and complying with environmental regulations. The organiser should also be mindful of noise pollution and ensure that the event’s activities, such as music or announcements, comply with local noise level restrictions that the municipality council or the venue owners have set.

Contracts and Agreements

Organising an event involves coordination among various stakeholders, each contributing to different facets of the event’s execution. Event organisers should formalise relationships with all parties through definitive agreements, which establish clear expectations and delineate responsibilities. These agreements not only help in managing liabilities and risks but also ensure that every aspect of the event is conducted as planned. Below are some essential contracts that event organisers might consider to secure confidentiality, define service parameters, manage sponsorships, address risks, and ensure data privacy:

1. Non-Disclosure Agreement (NDA): An NDA allows the parties to establish a confidential relationship and outline the information that is classified as confidential. For example, if the event involves intellectual property such as unique event concepts, innovative elements, marketing strategies or technological innovations, an NDA will help prevent unauthorised use and maintain the originality. An NDA can also be crucial during the planning phase to ensure that sensitive information such as financial information, budget details, attendee lists, or other confidential data would only be disclosed to third parties with prior authorisation, if at all. You can learn more about the importance of an NDA from our article “Non-Disclosure Agreements: Why are they important?

2. Contract for Service: Service contracts are crucial when coordinating with various service providers during event planning, such as influencers, caterers, entertainers and security services. This agreement clearly defines the roles and responsibilities of each provider, detailing essential aspects such as the scope and duration of services, payment conditions, liability and indemnity provisions, terms for contract termination, and dispute resolution mechanisms. Ensuring clarity on these key elements helps in managing expectations, facilitating smooth event execution, and minimising potential conflicts or misunderstandings.

3. Sponsorship Agreement: It is common for sponsors to provide financial support for specific events in return for visibility and exposure for their brand or products. This is where a sponsorship agreement will specify, among other things, the amount of the financial contribution, payment terms, promotional opportunities provided to the sponsor and media coverage of the event.

4. Waiver Form: An effective waiver serves as a crucial document in events where there are inherent risks, by securing participants’ acknowledgement of these risks and their consent to not hold the organiser liable for any resultant injuries or accidents. This form is especially relevant for sporting events such as marathons, cycling races, or triathlons, where the likelihood of injury is higher. By signing the waiver, participants explicitly agree to release the event organisers from liability, ensuring both parties are aware of and agree to the risk involved.

5. Privacy Policy: For events that require collecting and storing personal data from the participants, it is vital to have a privacy policy to obtain the consent of the participants and to inform them on how their data is being handled, stored, protected and the sharing of their data to third parties in certain circumstances. This policy must be easily accessible to attendees, especially when purchasing tickets.

The agreements listed above are among the common agreements that are entered into by relevant parties to promote transparency, mitigate risks, protect the interests of the parties involved and ensure the successful execution of the event. It is advisable to involve lawyers in the drafting and reviewing of these contracts to ensure legal compliance and clarity.

Dangers of Not Having a Written Agreement

The failure to enter into a written agreement may affect the preparation or execution of the event. It may further lead to disputes before or after the event. Not setting out agreed terms in an agreement may cause the following issues to arise:

1. Unclear Expectations: Without a formal agreement, the expectations may be vague and lead to uncertainty on the roles and responsibilities of each party involved. Important terms such as scope of work, milestones, or payment terms must be set out to prevent any misunderstandings, miscommunication, or disagreements.

2. Difficulty in Cancellation: A termination clause included in an agreement will cater for the unfortunate event of cancellation. It may provide for the events that may trigger termination and the recourse for the innocent party. In the absence of this clause, terminating the services may be more complicated and may result in financial loss.

In the case of Live Scape Sdn Bhd v World Wonder Fest Sdn Bhd [2023] MLJU 96, the High Court awarded Live Scape with damages for the breach of contract committed by World Wonder Fest relating to a K-pop concert that was supposed to be held in Malaysia. The latter failed to comply with its obligations to pay the required sums within the agreed period as stipulated in the written agreement. In response, Live Scape terminated the contract. The court found that the notice of termination complied with the termination clause contained in the agreement and was valid. The dispute was also reported by the News Straits Times in its article “#Showbiz: Event organiser Livescape wins lawsuit against K-Pop producers”.

3. Inadequate Risk Management: Effective risk management is crucial for event organizers to address uncertainties that may arise during the planning and execution of an event. It is essential to have written agreements with all vendors involved to clearly define the allocation of risks for unforeseen circumstances. Such contracts help ensure that both parties understand their responsibilities and are prepared to handle unexpected challenges efficiently.

4. Lack of Legal Protection: Lack of legal protection can make it difficult for parties to enforce their rights, complicating efforts to seek legal remedies in disputes. For instance, the absence of a non-disclosure agreement (NDA) makes it challenging to legally address issues such as unauthorized use of intellectual property, including original concepts or logos. Contracts can include clauses for liquidated damages, which pre-determine the compensation amount for specific breaches, providing a clear, enforceable remedy. Specifying dispute resolution mechanisms, such as arbitration or mediation, in the agreement helps streamline the process of resolving disputes outside of court, offering a faster, often less adversarial path to settlement. These provisions ensure that all parties have a clear understanding of their responsibilities and the consequences of their actions, thus safeguarding their rights and facilitating more effective legal protection.

Conclusion

Organising an event requires meticulous planning and a thorough understanding of the legal framework governing such activities. From obtaining permits and licences to ensuring the safety and security of the attendees to entering into a formal agreement for legal protection, it is essential that organisers are aware of all legal and commercial considerations involved. Given the various aspects that are required to be taken into account when organising an event in Malaysia, it is advisable for organisers to refer to legal professionals for assistance in managing their risks and liabilities. Our legal team will be more than happy to assist and guide you through the process.

By Mira Mashor

REQUEST A FREE CONSULTATION →

Note: This article does not constitute legal advice to any specific case. The facts and circumstances of each and every case will differ and therefore will require specific legal advice. Feel free to contact us for complimentary legal consultation.

CHONG CHEE PIAO & ORS v. KOH WAH LEONG
COURT OF APPEAL, PUTRAJAYA
HAS ZANAH MEHAT JCA
RAVINTHRAN PARAMAGURU JCA
MOHD SOFIAN ABD RAZAK JCA
[CIVIL APPEAL NO: A-02(NCVC)(W)-2231-12-2019]

5 JANUARY 2023

Case(s) referred to:

Ahmad Hussin v. Hjh Mek Hj Hussain [1972] 1 LNS 3 FC (refd)
Ladd v. Marshall [1954] 3 All ER 745 (refd)
Lian Keow Sdn Bhd (In Liquidation) & Anor v. Overseas Credit Finance (M) Sdn Bhd & Ors [1988] 1 LNS 44 HC (refd)
Low Tin Yong v. Low Yong Thuan [2016] 5 CLJ 217 CA (refd)
Milroy v. Lord (1862) 45 ER 1185 (refd)
Ng Hoo Kui & Anor v. Wendy Tan Lee Peng, Administrator Of The Estates Of Tan Ewe Kwang, Deceased & Ors [2020] 10 CLJ 1 FC (refd)
Perbadanan Kemajuan Pertanian Selangor v. JW Properties Sdn Bhd [2017] 8 CLJ 392 FC (refd)
Sinnaiyah & Sons Sdn Bhd v. Damai Setia Sdn Bhd [2015] 7 CLJ 584 FC (refd)
Stone World Sdn Bhd v. Engareh (M) Sdn Bhd [2020] 9 CLJ 358 FC (refd)
Zainab Ibrahim v. Limah Che Mat [2014] 1 LNS 716 CA (refd)

Legislation referred to:

Limitation Act 1953, s. 9(1)

National Land Code, s. 127

Rules of Court 2012, O. 40

Rules of the Court of Appeal 1994, r. 7(3A)(a)

For the appellants – Raymond Mah Mun Kitt, Denise Phang Hui Xian & Eric Toh Kah Yung; M/s MahWengKwai & Assocs

For the respondent – Shanty Raj, Ramesh Raj & Balbir Singh; M/s A Rajadurai P Kuppusamy & Co

[Editor’s note: For the High Court judgment, please see Chong Chee Piao & Ors v. Koh Wah Leong [2017] 1 LNS 1011 (varied).]

Reported by Suhainah Wahiduddin

Judgement

Ravinthran Paramaguru JCA:

Introduction

1. This is an appeal against the decision of the High Court that dismissed the claim of the appellants who were plaintiffs in a trespass action. The respondent’s counterclaim that the Chinese temple that is on the land in question is a beneficiary of a constructive trust was allowed. Pursuant to this finding, the High Court made a consequential order for the appointment of a surveyor to draw a plan of the land to determine the portion of the land occupied by the temple.

The Parties

2. The land which is the subject matter of the dispute in this case is described on the title as EMR 618, Lot 1421 Mukim Pengkalan Bharu. It is situated in Pantai Remis, Manjung District, Perak. It measures about two acres. The appellants/plaintiffs are the current registered owners of the land. The first to fourth appellants are the children of the previous registered owner, one Chong Swee Sing who died in 1995. The fifth appellant is the widow of the late Chong Swee Sing. The land was purchased by the late Chong Kew Sang (CKS) who is the father Chong Swee Sing in 1944 from one Hj Rahimah binti Hj Ismail. The land was transferred to Chong Swee Sing by CKS on 6 May 1966. The late CKS is the central figure in the claim of the respondent that he donated the land for the purpose of constructing the temple in question.

3. The respondent/defendant is the Chairman of Pertubuhan Penganut Penganut Ting Leong Keng Lee Hu Tong Chu. The society was registered in 1986. Prior to that, the temple was run by an informal committee. It manages and runs a Taoist temple that bears the name Ting Leong Keng Lee Hu Tong Chu Temple. The temple proper is situated on one end of the rectangular shaped land in question. It takes up about a quarter of the land. However, if a hall (which is actually an open shed) and an area used for fire walking ceremonies is taken into account, the total area occupied by the temple would be slightly more than 1.5 acres.

The Appellants’Suit

4. The appellants became registered owners of the land in 1995. They pleaded that they did not consent to the occupation of their land for temple activities. They issued several notices to quit since becoming registered owners. The last notice to the temple management was issued in 2015. Since no action was taken to vacate the land, the appellants filed the instant writ on 17 November 2016 which is founded in trespass. The plaintiff prayed for the following reliefs:

(a) Vacant possession of the land;
(b) An injunction to prevent the respondent from trespassing their land;
(c) A mandatory injunction for the demolition of all structures
including the temple in question within 30 days; and
(d) Damages.

Amended Defence And Counterclaim

5. The respondent has pleaded that the temple is not a trespasser as it was constructed on the land in 1961 and has been used for worship since then. The land was donated by CKS who was the registered owner at the material time. The purpose of the donation was to raise funds to construct the said temple. The respondent’s pleaded case is that the trespass action is without basis for the following reason. An express trust had been created by the late CKS or a constructive had arisen over a portion of the land in question. That portion comprises three areas, ie, the land on which the temple proper sits, the land on which the hall sits and the land at the back of the hall that is used for activities. The respondent prayed in the counterclaim for a declaration a trust had been created or had arisen in favour of the temple and for consequential reliefs.

Summary Of Evidence

6. A total of 11 witnesses gave evidence for the respondent. The crucial witnesses in respect of the claim of the respondent that the late CKS donated part of the land for the construction of the temple was SD1 and SD3. He said that in 1960, CKS attended a meeting in Pantai Remis to discuss the construction of the temple in question. He agreed to donate land for the temple to be built for the benefit of the surrounding Chinese community. SD1 was present at the said meeting. Subsequently, a building committee was formed. SD1 and other members were involved in collecting donations for the construction of the temple. Construction was completed in 1961. The temple committee commissioned two plaques to be affixed to the temple wall. One plaque contained the name of all those who donated above RM50 whereas the other plaque exclusively mentioned the name of the CKS with gratitude for having donated land for the temple. The plaques still remain on the temple wall and a photograph of it with the Chinese translation was admitted into evidence. When the temple management committee was finally registered with the Registrar of Society in 1986, SD1 became its treasurer.

7. The other witnesses were SD2, SD3 and SD4. SD2 did not give direct evidence about CKS donating the land to the temple. SD2 could only say that the plaques in question had been put up a long time ago and still remain on the wall. SD3 was present at the temple opening ceremony. She was 14 years old that time. She identified the name of her uncle on the plaque that contained the list of donors who contributed money for the construction of the temple. However, she did not give evidence about the role of CKS in the construction of the temple. SD4 was 17 years old at the time of the opening ceremony of the temple. He said the late CKS was the guest of honour at the ceremony as he donated the land upon which the temple sits.

8. SP1 was the only witness who testified for all the appellants. He said the title to the land was always with his family and that the respondent never asked for it for the purpose of transferring the land. To his knowledge, no one from the temple committee ever asked for permission to occupy the land. But he said that he did not know whether the late CKS donated the land in question to the temple as he was only three to seven years old at the material time. He knew about the existence of the temple only about ten to 15 years ago and he instructed his lawyer to issue a notice to the respondent. He said the temple was built without approval from the relevant authorities. The temple committee had also never paid any rental despite occupying the land and did not pay any portion of the parking fees collected from the temple devotees to the appellants.

Decision Of The High Court

9. The learned Judicial Commissioner made a finding that in 1961, the late CKS donated part of the land for the construction of the temple in question. His Lordship held that a constructive trust had been created in favour of an informal committee as part of the land was donated for the construction of the temple and for the raising of funds for that purpose. The late CKS then became a trustee for the land occupied by the temple. His Lordship also found that the appellants knew of the existence of the temple from 1999 onwards at the earliest but did not take any action and therefore the doctrine of acquiescence and waiver operated as well. In the premises, His Lordship dismissed the claim of the appellants that was based on trespass and allowed the counterclaim which is based on constructive trust over the land occupied by the temple.

10. However, in respect of the consequential relief sought by the respondent in respect of the portion of the land occupied by the temple, the learned Judicial Commissioner did not make final orders for the following reason. His Lordship’s decision in the counterclaim was that a trust had been created over a portion of the land occupied by the temple. At the trial, the only plan that was before the court was the plan tendered by the surveyor of the respondent (Ridzuan bin Zulkifli SD6). In that plan, land measuring about 1.5 acres of the two-acre land is stated to be occupied by the temple. The surveyor told the court he was asked to include all the land occupied by the temple in the plan. The High Court noted that the plan did not indicate the area occupied by the temple proper, the other structures and the right of way in the following passage of the judgment:

Ridzuan bin Zulkifli (SD6) is a licenced surveyor. Through him a plan of the land was tendered as Exhibits D11 and D12. The plans clearly showed the area on the land occupied by the Temple shaded in red. The plans thus demarcated the Temple area on the land. The purpose was to show the part of the land where the Temple was built on. I note that the plan was not a detailed plan for instance no structures or buildings used in conjunction with the Temple activities were shown on the plans.

11. The learned Judicial Commissioner ordered that “a mutually agreed surveyor demarcate the area the temple occupies” and that he should show the “structures and easements” on the land. His Lordship also stated that parties could come back to court for further consequential orders. As the parties were unable to agree on a licensed surveyor, the court subsequently appointed one. However, the parties did not go back to the High Court for further consequential orders because of the instant appeal.

Application To Adduce Survey Plan Of Appellants (Encl. 54)

12. Before we proceed to address the issues in the appeal proper, we shall give our reasons for admitting the survey plan of the appellants (exh. CCS-8) as fresh evidence for the purpose of this appeal. This plan was made only after the trial was over. The appellants filed a notice of motion (encl. 54) to include the said survey plan (exh. CCS-8) and other documents (exhs. CCS-1 to 5) on 15 September 2021. The essential facts that form the backdrop to this application are as follows.

13. By the time the instant appeal came before us, the court-appointed surveyor (Juruukur Razif) had drawn a plan (exh. CCS 6) of the land as directed by the High Court. Although this plan showed the temple, the hall and the open space used for temple activities, it lacked details. The location of the individual structures and the size of the area occupied by the said structures were not indicated in exh. CCS-6. The entire land was partitioned into Plot A and B in which Plot B is the wider area that includes the temple proper, the temple hall and the said open space area used for activities. It takes up 1.565 acres of the two-acre land. Upon receiving the plan, the appellants commissioned Juruukur Perunding Services (Ipoh) Sdn Bhd to prepare a more detailed plan (exh. CCS-8) to indicate the exact area taken up by the temple proper, the hall and the open area. In this plan, the land on which the temple proper sits is shaded in orange. The hall and open space used by the temple is shaded in blue. The area upon which the temple proper sits is larger than in the plan (exh. CCS-6) drawn up by the court appointed surveyor as it includes the shrines that are located in front of the temple as well. It also includes the land through which the temple can be accessed from the road.

14. On 8 February 2021, the appellants filed an affidavit to include in the record of appeal exh. CCS-6 and exh. CCS-8. The appellants also sought to include five other documents relating to further acts of trespass on the part of the respondent. The application to admit these documents were objected to by the respondent because leave of court was not obtained. On 23 August 2021, we ordered the admission of only exh. CCS-6 (the plan of the court appointed surveyor) into evidence. Nonetheless, we gave time to the appellants to file a motion to admit exh. CCS-8 and the other documents.

15. On 15 September 2021, the appellants filed a notice of motion in encl. 54 for leave to use the survey plan of Juruukur Perunding (CCS-8) and the other documents exhibited earlier in the abovementioned affidavit or alternatively to include them as further evidence for the purpose of the appeal. On 20 October 2021, we unanimously allowed only exh. CCS-8 (the survey plan of Juruukur Perunding) to be admitted as further evidence for the purpose of the appeal. Our reasons are as follows.

16. Counsel for the respondent submitted that the three conditions in r. 7(3A) of the Rules of the Court of Appeal 1994 which is a codification of the test laid down in Ladd v. Marshall [1954] 3 All ER 745 for admission of further evidence were not met. Rule 7(3A) reads as follows:

(3A) At the hearing of the appeal further evidence shall not be admitted unless the Court is satisfied that:
(a) at the hearing before the High Court or the subordinate court, as the case may be, the new evidence was not available to the party seeking to use it, or that reasonable diligence would not have made it so available; and
(b) the new evidence, if true, would have had or would have been likely to have had a determining influence upon the decision of the High Court or the subordinate court, as the case may be.

17. In Ladd v. Marshall (supra), Denning LJ laid down the following three conditions for reception of fresh evidence in the following passage:

In order to justify the reception of fresh evidence or a new trial, three conditions must be fulfilled: first, it must be shown that the evidence could not have been obtained with reasonable diligence for use at the trial: second, the evidence must be such that, if given, it would probably have an important influence on the result of the case, although it need not be decisive: third, the evidence must be such as is presumably to be believed, or in other words, it must be apparently credible, although it need not be incontrovertible.

18. In particular, counsel for the respondent argued that the reasonable diligence limb in r. 7(3A)(a) and the Ladd v. Marshall test was not satisfied. It was argued that the appellants failed to prove that exh. CCS-8 could not have been obtained with reasonable diligence before the trial. Counsel for the respondent also pointed out that the respondent had commissioned a survey plan before the trial but the appellants failed to do likewise.

19. However, having considered all the circumstances of the case, we were persuaded by the argument of counsel for the appellants that the reasonable diligence condition was not breached for the following reasons. It is necessary to recapitulate some of the relevant facts that relate to the claim and counterclaim. In the instant case, the appellants (as the plaintiffs) claimed recovery of the entire parcel of the two-acre land on the ground that they had a valid cause of action in trespass against the temple. It was no part of the appellants’ case that there was a constructive trust on either the land occupied by the temple or the land upon which the temple proper sits. The appellants were claiming for recovery of the entire land. In the premises, based on their pleaded case, it was entirely unnecessary for the appellants to produce a survey plan that indicates the exact measurements of the structures on the land, ie, the temple proper, the open shed that is used as a hall and the open space used for temple activities. On the other hand, it was the respondent who pleaded that the portion of land occupied by the temple constitutes trust land.

20. The learned Judicial Commissioner made an order that the area “occupied” by the temple is subject to a constructive trust. However, His Lordship did not any make any order to demarcate the trust land based on the survey plan tendered by the respondent as it lacked details. He ordered that “a mutually agreed surveyor demarcate the area the temple occupies” and that the “structures and easements” be shown on the plan. As the parties could not agree on a surveyor, the court-appointed one to draw a plan. The objection of the respondent to the tendering of the plan (exh. CCS-6) of the court appointed surveyor was dismissed on 23 August 2021. However, this plan also did not contain the exact measurement of the structures on the land;
particularly the area occupied by the temple proper. It only indicated that about 1.5 acres of land is occupied by the temple proper, the hall and the open space area that is used for activities. Counsel for the appellants submitted that the plan (exh. CCS-8) drawn by their surveyor is in response to the plan of the court appointed surveyor (exh. CCS-6) which does not contain the measurement of the structures on the land. We find merit in this argument as exh. CCS-6 did not exist at the time of the trial. Therefore, even with reasonable diligence, the appellants could not have produced a plan to complement it with exact measurements of the crucial structures on the land, especially the temple proper. Therefore, we are of the considered opinion
that the reasonable diligence condition was not transgressed.

21. We shall now consider the second condition which is that the fresh evidence would have had a determining influence or important influence on the High Court decision although it need have been decisive. In our opinion, exh. CCS-8 would have had an important influence on the decision of the learned Judicial Commissioner. His Lordship, after allowing the counterclaim and having found that part of the land was land under a constructive trust, did not make final orders in respect of the demarcation of the land because the survey plan tendered by the respondent did not depict the structures on the land. This is the very reason why His Lordship ordered that another survey plan be drawn and for parties to be at liberty to come back for further orders. Thus, it can be surmised that had a detailed survey plan been available earlier at the trial, it would have had a determining influence on the decision of the High Court. The respondent has vehemently objected to the application to introduce exh. CCS-8 into evidence. But ironically, without such a plan showing exact measurements of the structures on the land particularly the temple proper, no final order to demarcate trust land can be made if the decision of the High Court is varied to limit the finding of constructive trust to only the land upon which the temple proper sits.

22. The third condition for the reception of fresh evidence is that it must be credible. In the affidavit in support, it is stated that Juruukur Perunding who drew the survey plan is a licensed surveyor. The respondent did not challenge this assertion and did not challenge the accuracy of the measurement of the structures in question either through a rebuttal survey plan. In fact, the main difference between exh. CCS-8 and the other two survey plans is that it contains measurement of structures on the land. Thus, in our opinion, the credibility condition was satisfied as well.

23. Now we turn to the rest of the fresh evidence (exhs. CCS-1 to 5) sought to be admitted in encl. 54. We did not admit the said fresh evidence in the form of a police report, photographs and correspondences between the parties relating to trespass on a different portion of the same land. The alleged trespass occurred after the judgment of the High Court. In our opinion, it is possible that they could constitute the subject matter of a new cause of action. But they cannot have a determining influence on the decision already made by the High Court in respect of land upon which the temple sits or occupies.

24. For the above reasons, we admitted only exh. CCS-8 into evidence by granting order in terms of prayer 1.6 of encl. 54.

Issues In The Appeal

25. Having regard to the claim and counterclaim, the main issue would be whether the High Court was right in finding that a constructive trust had been created over the land occupied by the temple. Assuming that the answer is in the affirmative, the next crucial issue would be whether the High Court was right in deciding that all the land occupied by the temple as opposed to the land on which the temple proper sits is subject to the constructive trust. Thus, we shall first consider the issue relating to the finding of constructive trust and the portion of land covered by it.

Constructive Trust

26. In the counterclaim, the respondent pleaded express trust, implied trust and constructive trust in respect of the land occupied by the temple. We have adverted to the finding of constructive trust by the learned Judicial Commissioner in favour of the informal temple committee in 1960 and the successor committees.

27. Counsel for the appellants challenged the finding that a trust had been created for the following reasons. Firstly, he argued that the appellants are the registered owners and that no portion of the land had been conveyed by legal title to the successive temple committees since 1960. We find no merit in this argument for the following reason. Assuming that the learned Judicial Commissioner was correct in finding that the successive temple committees and its members were beneficiaries of a constructive trust since 1960, their rights would have not been defeated by the mere fact that there was no conveyance of legal title to them and that the descendants of CKS remained the title holders. In Lian Keow Sdn Bhd (In Liquidation) & Anor v. Overseas Credit Finance (M) Sdn Bhd & Ors [1988] 1 LNS 44; [1988] 2 MLJ 449, Syed Agil Barakbah SCJ at the Supreme Court said that the National Land Code 1965 does not prevent or restrict the creation of beneficial interests in land by way of express, implied or resulting trust and that it does not abrogate the principles of equity.

28. Secondly, counsel for the appellants submitted that the three certainties for the creation of a trust were not proven. Therefore, it could not be said that CKS held a portion of his land in trust for the temple. Thirdly, counsel for the appellants argued that the gift is an imperfect gift and only amounted to a gratuitous promise.

29. Counsel for the appellants cited the general principle on voluntary settlements and trusts that was pronounced by Turner LJ in the well-known case of Milroy v. Lord (1862) 45 ER 1185 which is as follows:

I take the law of this Court to be well settled, that, in order to render a voluntary settlement valid and effectual, the settler must have done everything which, according to the nature of the property comprised in the settlement, was necessary to be done in order to transfer the property and render the settlement binding upon him. He may of course do this by actually transferring the property to the persons for whom he intends to provide, and the provision will then be effectual, and it will be equally effectual if he transfers the property to a trustee for the purposes of the settlement, or declares that he himself holds it in trust for those purposes; and if the property be personal, the trust may, as I apprehend, be declared either in writing or by parol; but, in order to render the settlement binding, one or other of these modes must, as I understand the law of this Court, be resorted to, for there is no equity in this Court to perfect an imperfect gift.

30. Based on the above passage, counsel for the appellants argued that the three certainties of trust were lacking, ie, certainty of words in respect of the intention of the testator, certainty of the subject matter of the trust and certainty of the object of the trust. In the premises, it was submitted that no trust was created in favour of the present temple committee. Counsel for the appellants also submitted that the gift of land, in any, was an imperfect gift. But it must be noted that the High Court made a finding in favour of the temple based on constructive trust and the appellants did not raise the issue of imperfect gift in their pleadings. In the premises, the appellants should not be permitted to raise it now.

31. In respect of the argument that the intention of CKS was not proved, counsel for the appellants pointed out that the respondent also relied on implied and constructive trust as the temple was constructed in 1961 and had been used for worship continuously up to present time.

32. We find merit in the submission of counsel for the respondent that in the case of implied and constructive trust as opposed to an express trust, the element of intention to create a trust on the part of the testator is not essential. It is a trust that is imposed by the law to prevent unfairness or injustice. In the recent case of Ng Hoo Kui & Anor v. Wendy Tan Lee Peng, Administrator Of The Estates Of Tan Ewe Kwang, Deceased & Ors [2020] 10 CLJ 1, Zabariah Mohd Yusof FCJ at the Federal Court said as follows about the irrelevance of intention in a finding of constructive trust:

[111] It is trite law that the intention to create a trust is applicable in situation of express trusts and not in constructive trusts. Constructive trust are trusts that may be implied in the absence of any declaration/ intention of a trust, where the trustee has induced another to act to their detriment they would acquire a beneficial interest in the land/property. A characteristic feature of this trust does not owe its existence to the parties’ intention, but by operation of law. In Takako Sakao v. Ng Pek Yuen [2010] 1 CLJ 381; [2009] 6 MLJ 751, it was held that:

A constructive trust is imposed by law irrespective of the intention of the parties. And it is imposed only in certain circumstances, eg, where there is dishonest, unconscionable or fraudulent conduct in the acquisition of property. What equity does in those circumstances is to fasten upon the conscience of the holder of the property a trust in favour of another in respect of the whole or part thereof.

[112] Constructive trust is viewed as a device under which equity will intervene so as to create a trust relationship between the parties in order to make a person accountable for the trust to prevent any unfairness or injustice. Equity will impose obligation on the defendant to hold the property for the benefit of another. (emphasis added)

33. In the earlier case of Perbadanan Kemajuan Pertanian Selangor v. JW Properties Sdn Bhd [2017] 8 CLJ 392, the Federal Court also emphasised the principle that constructive trust is a trust imposed by equity in order to satisfy the demands of justice and good conscience without reference to intention of the parties. Zulkefli Ahmad Makinudin PCA who delivered the decision of the court said as follows:

[59] It has also been held that a constructive trust is a trust which is imposed by equity in order to satisfy the demands of justice and good conscience without reference to any express or presumed intention of the parties. (See the case of Hassan Kadir & Ors v. Mohamed Moidu Mohamed & Anor [2011] 5 CLJ 136 (FC)). A constructive trust is a remedial device that is employed to prevent unjust enrichment. It has the effect of taking the title to the property from one person whose title unjustly enriches him, and transferring it to another who has been unjustly deprived of it. (See the case of Tay Choo Foo v. Tengku Mohd Saad Tengku Mansur & Ors. And Another Appeal [2009] 2 CLJ 363; [2009] 1 MLJ 289 CA).

34. Thus, a written document evidencing the existence of a trust is also unnecessary. The Court of Appeal in the case of Zainab Ibrahim v. Limah Che Mat [2014] 1 LNS 716; [2014] 6 MLJ 419 said as follows:

[111] We bear in mind that a trust does not arise by written documents alone. It may arise orally or inferred from the conduct of the parties, this is particularly so of a constructive trust. We bear in mind also that a party is entitled to rely upon a trust being honoured. It is not disputed, in this case, that the plaintiff had remained on the land at all times.

35. In the instant case, after having considered the evidence and applying the principles of a constructive trust, the learned Judicial Commissioner granted proprietary rights to the respondent over the land occupied by the temple as per the counterclaim. His Lordship concluded as follows in para. 60 of his judgment:

What can be extracted from these authorities cited above is that the concept of constructive trust is tied up with the principles of fairness and good conscience. It is my view that the Temple had been occupying the land since 1960. Much labour and money had gone in the construction of the Temple premised on the donation by CKS. Further, as mentioned earlier, there was uninterrupted occupation of the land by the defendant for most of the time. With reasoning I find that the in all fairness and good conscience a constructive trust is imposed over the land the Temple was built on and constructive trusteeship is placed on the plaintiffs who are responsible for that disputed property. See Sanmaru Overseas Marketing Sdn Bhd & Anor v. PT Indofood Interna Corp & Ors [2009] 3 CLJ 10; [2009] 1 LNS 23; [2009] 2 MLJ 765.

36. As we said earlier, in the instant case, the case of the respondent was anchored on constructive trust. At the material time in 1960, CKS’s name was not on the land register as the landowner. CKS had purchased the land from one Hjh Rahimah binti Hj Ismail in 1944. He then lodged a caveat on the land pending registration of his name on the title. The land was vested in the name of CKS via a court order on 6 June 1966 and on the same day, CKS transferred the land to his son, Chong Swee Sing. The present appellants inherited the land after Chong Swee Sing passed away in 1994. Although, the late CKS transferred the undivided land in 1966 to his son, we would agree with the learned Judicial Commissioner that his promise to the interim temple committee in 1960 to donate part of the land and his subsequent conduct in affirming his decision made him a trustee of the portion of the land upon which the temple proper was constructed.

37. The learned Judicial Commissioner gave careful consideration to the virtually unchallenged evidence of the following witnesses as the appellants had no knowledge about his grandfather’s (CKS) role in the construction of the temple in 1960. We summarised the evidence of SD1 and SD3 earlier. We shall refer to the salient points of their evidence which the learned Judicial Commissioner considered in holding that a constructive trust had arisen in favour of the temple.

38. SD1 was appointed as the treasurer of the Pertubuhan when it was formally registered in 1986. But his association with the temple goes back to the time it was constructed. SD1 was 20 years old at that time. He said that in 1960, the Chinese community in Pantai Remis wanted to build a temple for the deity referred to as Ting Leong Keng Lee Hu Tong Chu. An informal temple committee was formed. It included the late CKS who was a prominent member of the local community. He agreed to donate land for the temple so that funds could be raised to construct it. The other members of the committee and the local community donated money for the construction. The evidence of SD1 about the role of the late CKS in the construction of the temple was as follows:

The group of members that were part of the surrounding community that were there at this meeting agreed and decided to build a Chinese Temple in honour of Ting Leong Keng Lee Hu Tong Chu. That the late Chong Kew Sang, who owned a piece of land around the area had decided and agreed to donate and give that piece of Land for the construction of the temple to be built on it. We agreed that the since the late Chong Kew Sang is donating a piece of land for the construction of the Chinese temple, that the rest of the ground of members of the community would donate monetarily for the costs of the construction of the temple.

39. SD1 also said none of the members of the committee would have donated money for the construction of the temple if the late CKS had not agreed to give the land for the construction of the temple. The temple that was constructed was a permanent structure. The temple committee commissioned two plaques to be affixed to the temple wall; one with the names of those contributed above RM50 and the other plaque carried the sole name of CKS to acknowledge his contribution of the land. The writing on the plaque recording the contribution of the late CKS was translated into Malay by a certified court interpreter. It reads as follows:

Tanah dan Bangunan Diguna pakai oleh Pertubuhan Penganut Penganut Ting Leong Keng Lee Hu Tong Chu adalah diderma oleh Penganut Tempatan yang bernama Cheong Kew Seng. Batu Lisan in diperbuat sebagai kenangan atau bukti jasa budi baik penderma dengan secara rasmi pada tahun 1961.

40. At the temple opening ceremony, the late CKS was the guest of honour as he had donated the land. In subsequent temple functions, the first two rows of the chairs of the audience would be reserved for the late CKS and his family.

41. SD1’s evidence was not credibly challenged during cross-examination with regard to his claim about the role of the late CKS in the construction of the temple. Neither was it rebutted by the evidence tendered on behalf of the appellants. SP1 who was the sole witness for the appellants was only seven years old at the time the temple was constructed. He agreed during cross examination that he would not have known if his grandfather (the late CKS) had donated the land in question for the temple to be built. He only said that as his family members are Buddhist they would not have donated land for the construction of a Taoist temple. However, when it was put to him that Chong Miew Chin (his uncle and a son of the late CKS) is a devotee of the temple, he said that he was not aware about that fact.

42. The other witnesses (SD2, SD3 and SD4), who were present during the temple opening ceremony in 1961 and whose evidence we referred to earlier did not corroborate SD1 about the donation of the land by the late CKS. However, they corroborated SD1 that the late CKS and his family were devotees of the presiding deity of the temple and they were always given a place of honour at its functions.

43. The learned Judicial Commissioner accepted the crucial evidence of SD1 and the above witnesses. To recapitulate, the essential point of SD1 evidence is that the late CKS agreed to donate part of his land for the construction of a temple. He was on the interim committee that raised funds for the construction of the temple that is a permanent concrete structure. If not for CKS’s declaration to the committee and the local community about his intention to donate land for the temple, it would not have been possible to raise funds. He did not donate money unlike other prominent members of the community. After the temple was constructed, he was honoured by having his generous contribution permanently recorded on a plaque that was affixed to the temple wall. There is evidence that CKS and his immediate family were devotees of the temple. For a continuous period of about 55 years during his lifetime and that of his son, the temple operated on the land without any interference. Thus, the late CKS, despite the absence of a written deed to transfer the land to the interim temple committee or a formal trust deed, had clearly intended to create a trust to benefit the local Chinese community who were devotees of the presiding deity of the temple. The transfer of the land by the late CKS to his son in 1966 did not mean that there was no intention to allow the temple to remain on the land. It was an undivided two acre-parcel of land and the temple in 1966 took up only a small portion of the land. Even, if it can be argued that the late CKS did not express intention to create a trust, his promise to donate land and his encouragement at the time of the erection of the elaborate concrete temple and his subsequent acquiescence in allowing the temple to remain on the land and accepting a place of honour in its ceremonies has given rise to a constructive trust as found by the learned Judicial Commissioner.

44. Counsel for the appellants submitted that there was no certainty of subject matter of the trust as there is no indication via a survey in 1960 to indicate the exact boundary of the temple land. We find no merit in this issue as the temple is a permanent physical structure. In the premises the subject matter is generally ascertainable even if the exact boundary of the temple land was not demarcated at the time of the creation of the trust in 1960. Counsel for the appellants also argued that the exact boundary was not determined by the learned Judicial Commissioner at the time of the decision but was left to be determined via a consequential order. As correctly submitted by counsel for the respondent based on the authority of the Federal Court case of Stone World Sdn Bhd v. Engareh (M) Sdn Bhd [2020] 9 CLJ 358; [2020] 12 MLJ 237, superior courts have an inherent power to give effect to their judgment through consequential orders and that such orders do not transgress the principle of functus officio. Therefore, the fact that the learned Judicial Commissioner found it necessary to make a consequential order to give effect to his judgment does not necessarily mean that there was no certainty of the subject matter of the trust or that such an order was made in want of jurisdiction. For this reason, the argument of counsel for the appellant that the learned Judicial Commissioner appointed a “court expert” without complying with O. 40 of the Rules of Court 2012 has no merit. The appointment was made to give effect to the judgment of the court as the plan tendered by the respondent lacked details. For the same reason also, the argument that the judge had delegated the judicial function to a surveyor is without merit.

45. Based on the above facts, we are of the view that the finding of the learned Judicial Commissioner that a charitable constructive trust had been created by the late CKS in 1960 cannot be assailed. The late CKS had clearly conducted himself in such a manner so as to lead the interim committee and the local Chinese community at that time to believe that beneficial interest over a portion of the land would vest in the temple for their common good. There was evidence from the respondents’ witnesses that when CKS transferred the entire land to Chong Swee Sing, the latter did not raise any objection to the presence of temple on the land either. In the premises, it would be completely unconscionable now to permit the successors in title of the late CKS who are also his heirs to evict the temple on the ground that they are the registered title holders.

Portion Of Trust Land

46. As for the exact portion of the land that should constitute the trust land, there is a serious dispute between the parties. Counsel for the appellants argued that, even assuming that there is a constructive trust in favour of the temple, it cannot include the present-day area “occupied” by the temple as found by the learned Judicial Commissioner. We shall consider this crucial issue now.

47. As we said earlier, at the trial only one plan was tendered by the surveyor of the respondent (SD6). The temple proper sits on an area that is about less than a quarter of the two acre-land. However, in the plan drawn up by SD6 (Ridzuan), about 1.5 acres of the land is marked in red as the temple land. SD6 told the court that he was instructed not only to include the land upon which the temple proper sits but also all the land used by it. During cross-examination he said as follows:

PC1: En Rizuan, apakah tujuan plan ini dibuat atau dilukis oleh
En Ridzuan, tujuan, sebab?
SD6: Tujuan pelan ini dilukis adalah kami dilantik oleh client pada masa itu untuk menandakan kawasan yang digunapakai oleh kawasan kuil jadi dalam takrifan ukur kita panggil sebagai demarcation sebab itu kita panggil sebagai pelan ukuran demarkasi.
PC1: Pelan ini dilukis berdasarkan atas tanah keseluruhan sahaja atau dimana kuil itu dibina?
SD6: Kawasan yang digunapakai oleh kuil. (emphasis added)

48. To a question by the court on this point, SD6 said that he included the area around the building as well in his plan to demarcate the temple land. The evidence is as follows:

Mah:Ini pelan ini, kawasan yang digunapakai oleh kuil?
SD6: Ya Yang Arif.
Mah: Maknanya bukan sahaja bangunan lah, sekeliling pun juga.
SD6: Ya

49. Thus, the area marked in red by SD6 included not only the land upon which the temple proper sits but also an area adjacent to it that includes an open shed that is designated as the “temple hall” and the land behind it that is used for temple activities such as fire walking ceremony. But the plan of SD6 did not indicate the various structures such as the temple proper, the hall, the area used for activities and the access road. When making his finding that a constructive trust had arisen in favour of the temple, the learned Judicial Commissioner found that the plan of Ridzuan lacked details and ordered that “a mutually agreed surveyor demarcates the area the temple occupies”.

50. As we said earlier, counsel for the appellants submitted that even if a constructive trust exists, the subject matter of it cannot include the wider portion of land used by the temple devotees at present time to encompass the open shed used as a hall and the land behind it. In other words, it must be limited to the building footprint of the temple proper that was constructed in 1961. In the premises, counsel for the appellants argued that the learned Judicial Commissioner was wrong to grant an ancillary order that refers to “the area the temple occupies”.

51. We note that the learned Judicial Commissioner did not define “the area the temple occupies”. Assuming that it includes the entire area occupied by the temple, hall and open space as argued by counsel for the respondent, as an appeal is a rehearing, we can decide afresh whether the constructive trust had arisen on the wider area or the smaller area. We find considerable merit in the argument of counsel for the appellants that constructive trust exists only on the area upon which the temple sits with allowance for right of way. Our reasons are as follows.

52. The finding of the learned Judicial Commissioner that a constructive trust exists is based on the evidence of SD1. He was the only witness who was present at the meeting of the interim committee that discussed the construction of the temple in 1960. He said the late CKS agreed to donate land for the temple. The temple was constructed by 1961. However, SD1 never said that the late CKS agreed to donate the wider area on which the open shed that is used as a temple hall was constructed. It is more than double the size of the land on which the temple proper sits. Likewise, SD1 did not say that the late CKS agreed to donate another equally large open space area for temple activities. The other witnesses (SD2, SD3 and SD4) had no direct knowledge of the donation of land by the late CKS. But it must be noted that none of the witnesses including SD1 gave any evidence about the date of the construction of the hall. There was simply no evidence tendered about the date of construction of the hall. Similarly, there was no evidence when the area of land behind the hall was appropriated for temple activities. In the premises, the expanded land area which covers about three quarters of the land in question cannot be something that was contemplated by the late CKS in 1960. The plaques which are crucial evidence for the respondent were placed in the temple in 1961. The “donation” mentioned in the plaques must necessarily refer to the land on which the temple proper sits as there is no evidence that the temple hall had been constructed at that time. It follows that no constructive trust can arise on the wider area. It must necessarily be restricted to the portion of land upon which the temple proper sits together with right of way for the public to access it. We note that the learned Judicial Commissioner did not refer to any evidence to support the finding that a constructive trust had also arisen over the wider area which includes the hall and open space used for activities. Therefore, we are of the respectful view that the learned Judicial Commissioner erred in granting all the land occupied by the temple presently which includes the hall and the area used for activities. In the premises, His Lordship’s decision is varied to only that portion of land upon which the temple proper sits with allowance for right of way. We note that in the plan exh. CCS-8, the area upon which the temple proper sits inclusive of right of way is clearly marked in orange and with exact measurements. Accordingly, the respondent is entitled to claim only that land as trust land.

Other Issues

53. In the course of arguments, counsel for the appellants raised other issues including issues that were not raised in the court below. We shall address them below.

Limitation

54. Counsel for the appellants argued that the counterclaim based on trust is barred by the Limitation Act 1953. He said that the learned Judicial Commissioner erred in finding the limitation period only ran from the last letter of demand that was sent on 14 October 2015. He cited s. 9(1) of the Act that reads as follows:

No action shall be brought by any person to recover any land after the expiration of twelve years from the date on which the right of action accrued to him or if it first accrued to some person through whom he claims to that person.

55. Counsel for the appellants also argued that it is trite law that in an action to recover possession of land, the right of action accrues when there was an infringement of such right or at least when there is a clear unequivocal threat to infringe that right by a party against whom the action is instituted.

56. Based on the above argument, counsel for the appellants submitted that the limitation period for the respondent to claim interest over the portion of the land where the temple proper is located started to run from 6 May 1966 which is the date the land was transferred from the late CKS to his son, Chong Swee Sing. However, we are persuaded by the argument of counsel for the respondent that time to commence action only ran from the date of the letter of demand in 2015. We have earlier referred to the finding of the learned Judicial Commissioner that the temple was allowed to operate on the land without any interference continuously since 1961. There is no evidence that Chong Swee Sing objected to the presence of the temple when he became the registered owner. In the premises, as submitted by counsel for the respondent, the letter of demand issued in 2015 constituted the first clear and unequivocal threat to the respondent’s right to possession. The facts of the instant case in respect of the commencement of the limitation period are somewhat similar to the facts in the old case of Ahmad Hussin v. Hjh Mek Hj Hussain [1972] 1 LNS 3; [1973] 1 MLJ 18. In that case, the plaintiff claimed possession of certain lands from the defendant as he was the registered proprietor and as he was the son of one Merah to whom the land belonged originally. The defendant counterclaimed for the lands be registered in her name because she bought them from Merah. The plaintiff’s plea that the claim was barred by limitation was dismissed and judgment was given to the defendant. The decision was upheld by the former Federal Court. Suffian FJ clearly said that the right of action accrued not from the date of the sale but from the time the defendant asserted her right and it was infringed by Merah or the plaintiff. We reproduce the relevant passage of the judgment of the Federal Court below:

I have studied the cases cited by Mr Wilson on limitation, and in particular a Privy Council decision, Bolo v. Koklan 57 IA 352; one decision of this court’s predecessor (namely, the Court of Appeal) in Ponnusamy & Another v. Nathu Ram [1959] MLJ 86; and two decisions of this court, Ng Moh v. Tan Bok Kim & Another [1969] 1 MLJ 46 and Nasri v. Mesah [1971] 1 MLJ 32; and I am satisfied that the defendant’s right of action accrued not from the date of the sales but from the time when the defendant asserted her right and it was infringed by Merah or the plaintiff or from the time when there was a clear and unequivocal threat by Merah or the plaintiff to infringe that right. The next question concerning limitation that arises is one of fact – when did the first clear and unequivocal threat by Merah or the plaintiff of the defendant’s right occur? If it occurred more than twelve years before the date of the counterclaim, then the counterclaim is statute-barred. As to this, it should be borne in mind that the onus is not on the defendant but on the plaintiff to prove that the threat took place more than twelve years before the date of the counterclaim. (emphasis added)

57. In the instant case, from the evidence and the finding of facts by the learned Judicial Commissioner that we mentioned earlier, there was no threat to the continued use of the land by the temple in 1966 when the late CKS transferred the undivided title of the land to his son. It was only in 2015 that a clear and unequivocal threat to the possession of the land by the temple arose when a letter of demand was issued by the appellants. As the limitation period is 12 years under s. 9(1) of the Limitation Act 1953, the counterclaim of the respondent is not time-barred as the action was filed in January of 2016.

Standard Of Proof

58. Counsel for the appellant submitted that the standard of proof that must be applied when determining whether a trust exists is the “beyond reasonable doubt” standard as opposed to the “balance of probabilities” standard applied by the High Court. In support, he cited the Court of Appeal case of Low Tin Yong v. Low Yong Thuan [2016] 5 CLJ 217; [2016] 3 MLJ 332. However, as submitted by counsel for respondent, in the landmark case of Sinnaiyah & Sons Sdn Bhd v. Damai Setia Sdn Bhd [2015] 7 CLJ 584; [2015] 5 MLJ 1, the Federal Court clearly said that in civil cases the standard of proof is on the “balance of probabilities”. The relevant passage is as follows:

[49] With respect, we are inclined to agree with learned counsel for the plaintiff that the correct principle to apply is as explained in In re B (Children). It is this: that at law there are only two standards of proof, namely, beyond reasonable doubt for criminal cases while it is on the balance of probabilities for civil cases.

As such even if fraud is the subject in a civil claim the standard of proof is on the balance of probabilities. There is no third standard. And ‘(N)either the seriousness of the allegation nor the seriousness of the consequences should make any difference to the standard of proof to be applied in determining the facts’. (emphasis added)

59. In the premises, the argument that the learned Judicial Commissioner misdirected himself on the applicable standard of proof is without merit.

Illegality

60. Counsel for the appellants argued that the construction of the temple on the land breached the implied conditions of the Federated Malay States Land Code (Cap 138) and the category of land use in the National Land Code (“NLC”). It was submitted that in 1960, the permitted category of land use was “agriculture” with the express condition of “commercial plantation-rubber”. It is further argued that for this reason, the land is liable to be forfeited by the State Authority under s. 127 of the NLC. This issue was neither pleaded nor raised in the court below. In the same vein, counsel for the appellants also argued that the local authority, ie, Majlis Perbandaran Manjung could not find any record of the existence of a development plan for the construction of the temple. In summary, counsel for the appellants argued that the respondent had not come to court with clean hands in respect of the counterclaim as the temple was constructed illegally.

61. At the High Court, the appellants never raised the issue of illegality in respect of the construction of the temple in 1961. The copy of the title in the bundle of documents does not show express conditions or restrictions. The extract from the register referred to in the submission of counsel for the appellants refers to a search made in 2016. There is no evidence when the express condition of “commercial plantation – rubber” was imposed. Thus, in our opinion, there is simply insufficient evidence to consider the illegality point at this stage.

Trespass

62. The High Court dismissed the trespass action of the plaintiffs upon finding that a constructive trust had come into existence because of the conduct of the late CKS in permitting the construction of the temple on his land. In the premises, the trespass claim on the area upon which the temple proper sits must fail. In respect of the wider area that includes the hall and the open space behind it, we shall also affirm the decision of the High Court to dismiss the trespass action as no objection to the use of it was taken until notice of demand was issued.

Conclusion

63. For all the above reasons, we allowed the appeal of the appellants in part. The order of the High Court was varied by substitution of the following order:

(i) we grant a declaration that a constructive trust had arisen in favour of the respondent only in respect of the land shaded in orange in the plan marked as exh. CCS-8 inclusive of right of way.

(ii) that vacant possession of the balance of the land, ie, the hall and open space used for temple activity marked in blue which is occupied by the respondent be given to the appellants within three months;

(iii) no order as to costs.

REQUEST A FREE CONSULTATION →

Note: This article does not constitute legal advice to any specific case. The facts and circumstances of each and every case will differ and therefore will require specific legal advice. Feel free to contact us for complimentary legal consultation.

Wednesday, 8 May 2024

3:00 pm – 4:00 pm Applying to Commute Death and Life Sentences under Malaysia’s 2023 Criminal Law Reforms

About this talk

Join us for an essential webinar designed to guide families through the process of applying for commutation for loved ones facing the death penalty or natural life imprisonment. With recent sentencing reforms pursuant to the Mandatory Death Penalty Act 2023 and the Revision of Sentence of Death and Imprisonment for Natural Life (Temporary Jurisdiction of The Federal Court) Act 2023, new avenues have opened for challenging the most severe sentences. Our lawyers will provide insight into eligibility, application procedures, and the impact of recent court decisions, equipping you with the knowledge to navigate these critical changes.

The talk will be delivered over video conference using Zoom.us. You can either view the talk from your web browser or download the Zoom app.

Talk Points

  • Overview of Sentencing Reforms
  • Eligibility for Sentence Commutation
  • Commutation Application Process
  • Recent Court Decisions

Speakers

Sign up →

Past Seminars

In today’s fast-paced corporate landscape, shareholders play a pivotal role in the success and governance of private limited companies. They not only provide essential capital and liquidity but also oversee management decisions, forming a diverse community that includes family, friends, and professional acquaintances. While the prospect of business ventures and partnerships holds excitement, the complexity of shareholder relationships necessitates vigilance to prevent potential disputes or deadlocks that could disrupt operations.

At MahWengKwai & Associates, we specialise in guiding our clients through the intricate process of drafting shareholder agreements and company constitutions. Our focus is on creating documents that accurately reflect shareholder rights and establish a robust corporate governance framework. Among the myriad of shareholder provisions, drag-along rights and tag-along rights stand out for their critical, albeit contrasting, roles in safeguarding shareholder interests during significant corporate transactions. This article delves into the nuances of these rights, outlining their functions, benefits, and legal considerations to ensure a harmonious and equitable corporate environment.

Functions of Drag-Along Rights

Drag-along rights empower majority shareholders with the benefit and power to compel minority shareholders to participate in a proposed sale of the company’s shares. These rights, if expressly agreed in a shareholders’ agreement or company constitution, can be exercised by majority shareholders when a purchaser has made an offer to the majority shareholders to acquire the shares of the company, especially if the offer comes with a condition that the proposed sale and purchase transaction include the entire issued share capital of the company. Minority shareholders may be allowed to oppose a proposed sale of shares under certain circumstances. Still, without any clear expression of such circumstances, majority shareholders may be able to exercise the drag-along rights and compel the minority shareholders to participate in the proposed sale of shares. However, the majority shareholders need to ensure all relevant terms and conditions are fair and equal to the minority shareholders.

Drag-along rights strongly benefit majority shareholders in companies. The example below highlights how drag-along rights can facilitate a complete sale of a company, ensuring that majority shareholders can capitalise on lucrative offers by including minority shareholders’ shares in the sale:

  • BBG Sdn Bhd has a total issued share capital of RM100,000 consisting of 100,000 ordinary shares, which are made up of RM1.00 per share.
  • Mr Ong holds 50,000 ordinary shares (50%), while Mr Chen and Mr Ooi hold 25,000 ordinary shares (25%) each.
  • Mr Wong tabled an offer to Mr Ong to acquire BBG Sdn Bhd in whole at a purchase consideration of RM10.00 per share. It is a strict condition that this proposed sale and purchase transaction must include 100% of the shares in BBG Sdn Bhd, failing which the acquisition offer shall not proceed.
  • Under the shareholders’ agreement between Mr Ong, Mr Chen, and Mr Ooi, there is a drag-along right provided to the majority shareholder. Accordingly, Mr Ong can exercise the drag-along right to compel Mr Chen and Mr Ooi to include their respective shares in the proposed sale of BBG Sdn Bhd to Mr Wong.

Functions of Tag-Along Rights

Conversely, tag-along rights safeguard the interests of minority shareholders, who will have the option to participate in a proposed sale of shares with the majority shareholders. If expressly provided under a shareholders’ agreement or company constitution, these rights can help to prevent minority shareholders from being cast aside or excluded from a proposed substantial change in control in the company that could result in an undesired partnership with the new incoming majority shareholder. In this regard, tag-along rights give minority shareholders a sense of fairness and security.

In the example below, the protective mechanism tag-along rights offer to minority shareholders, enabling them to exit the company alongside a majority shareholder under equal conditions, while still allowing others, the choice to retain their stake:

  • BBG Sdn Bhd has a total issued share capital of RM100,000 consisting of 100,000 ordinary shares, which are made up of RM1.00 per share.
  • Mr Ong holds 50,000 ordinary shares (50%), while Mr Chen and Mr Ooi hold 25,000 ordinary shares (25%) each.
  • Mr Wong tabled an offer to Mr Ong to acquire Mr Ong’s shares in BBG Sdn Bhd at a purchase consideration calculated at RM10.00 per share. The offer tabled by Mr Wong to Mr Ong was made known to Mr Chen and Mr Ooi.
  • Upon receiving this information, Mr Chen informed Mr Ooi that he would like to exercise the tag-along right as agreed and provided under their shareholders’ agreement. On the other hand, Mr Ooi does not intend to exercise the tag-along right.
  • Accordingly, Mr Ong informs Mr Wong that the proposed sale and purchase of shares in BBG Sdn Bhd can proceed on the condition that Mr Wong’s offer includes the purchase of Mr Chen’s shares in BBG Sdn Bhd on the same terms and conditions offered to Mr Ong, while Mr Ooi shall remain as a shareholder of BBG Sdn Bhd.

Legal Considerations

Although these drag-along and tag-along rights offer a form of protection to shareholders, it is still common to come across draft shareholders’ agreements and company constitutions that do not contain these rights. Whether shareholders are aware of such rights beforehand, drag-along and tag-along rights contribute to the governance of the transfer of shares in a company and the safeguarding of the interests of majority and minority shareholders.

In determining whether to incorporate either or both of these rights, majority and minority shareholders need to consider the following elements which may be different under both of these rights.

Drag-along Rights

  • Parameters and structure should be clearly defined in a shareholders’ agreement or company constitution.
  • Terms of drag-along rights must not infringe on or violate the rights of the minority shareholders, as the laws of Malaysia provide protection against minority oppression.
  • Minimum percentage of shares required to trigger the drag-along rights to compel the inclusion of minority shareholders.
  • Right for minority shareholders to object to the exercise of drag-along rights under certain circumstances, including where a proposed sale is not in the company’s best interests.

Tag-along Rights

  • Parameters and structure of tag-along rights should be clearly defined in a shareholders’ agreement or company constitution.
  • Minimum percentage of shares required to trigger the tag-along rights to participate with the majority shareholder in a proposed sale of shares.
  • Collective participation of all minority shareholders in the proposed sale of shares in the event of an exercise of tag-along rights by one minority shareholder.

Majority and minority shareholders will undoubtedly look to protect their respective interests; thus, all shareholders should discuss, negotiate, and achieve a proper balance between the rights of majority and minority shareholders. The exercise of certain rights, such as drag-along and tag-along rights, can be structured to be exercised proportionately without violating the rights of the other shareholders.

Conclusion

Drag-along and tag-along rights play an essential role in safeguarding the interests of shareholders and promoting transparency and fairness in corporate governance. These rights are excellent mechanisms that balance the competing interests of majority and minority shareholders and ensure all parties are treated equitably in the sale of shares or transfer of ownership of a company. By understanding the legal framework surrounding drag-along and tag-along rights and incorporating them into a shareholders’ agreement or company constitution, the shareholders can minimise or prevent potential conflicts and uncertainties, and foster a conducive business environment for sustainable growth and investment.

Our Corporate and M&A Team has vast experience advising shareholders and investors on their rights in shareholder agreements and company constitutions. We ensure that all agreements and corporate documents are drafted clearly and meticulously that set out all of our clients’ desired rights. If you would like to establish a balanced and fair corporate governance structure for your company and stakeholders, our lawyers in the Corporate and M&A Team will be happy to assist you with your enquiry.

By Tommy Wong and Aaron Liew

REQUEST A FREE CONSULTATION →

Note: This article does not constitute legal advice to any specific case. The facts and circumstances of each and every case will differ and therefore will require specific legal advice. Feel free to contact us for complimentary legal consultation.

Wednesday, 17 April 2024

3:00 pm – 4:00 pm Termination of Employment: Types, Requirements and Remedies

About this talk

Is your business looking to terminate the employment of certain employees? Are you an employee facing a risk or indication from your employer that you’ll be sacked? Join our upcoming webinar to understand when and how the employer-employee relationship can be terminated. Our speakers will provide insight into how terminations can be lawfully carried out, what amounts to unfair dismissal and the remedies available. Whether you are an employer or an employee looking to protect your rights, our talk will provide you with practical guidance on handling terminations in the workplace.

The talk will be delivered over video conference using Zoom.us. You can either view the talk from your web browser or download the Zoom app.

Talk Points

  • Malaysian Law on Unfair Dismissal of Employees
  • Differences between Direct and Indirect Termination
  • Guidelines for Employers and Employees in the Termination Process
  • Common misconceptions and case laws on termination practices

Speakers

  • Naveen Joshua, Senior Associate, Dispute Resolution Practice Group
  • Carolyn Ng, Associate, Dispute Resolution Practice Group
Sign up →

Past Seminars

The Construction Industry Payment and Adjudication Act 2012, often abbreviated as “CIPAA”, was enacted to address issues related to payment disputes within the construction industry in Malaysia. According to the Asian International Arbitration Center (AIAC), over 5,000 adjudication disputes have been registered at the AIAC since CIPAA came into force. The amounts in dispute in 2023 alone total RM1.3 billion.

Adjudication under CIPAA was introduced to promote prompt payments and provide a mechanism for resolving payment disputes quickly. An adjudication decision is expected within 90 days from the date the notice of adjudication is issued.

Adjudication was intended to provide “rough justice.” Adjudication results in a decision which is “temporary.” Section 13 of CIPAA expressly provides that an adjudication decision is binding unless the dispute is decided by arbitration or the court.

In this article, we summarise the adjudication process before diving into one of the remedies provided by CIPAA to enforce the adjudication decision – with a favourable adjudication decision, an unpaid party can suspend or reduce its rate of progress of performance until the adjudication decision is satisfied.

Overview of the Adjudication Process

The adjudication process typically begins with the unpaid party issuing a payment claim to the non-paying party. If the claim is disputed, a non-paying party may issue a payment response and, the unpaid party may issue a notice of adjudication to commence the adjudication process. Once the adjudicator is appointed, parties will submit their respective documents and evidence through the adjudication claim, adjudication response and adjudication reply. The adjudicator will then decide on the dispute within 45 days from the date of the adjudication reply.

Once an unpaid party obtains a favourable decision, the next step would be to cash in the decision. Ideally, the losing party complies with the decision, promptly paying the adjudicated amount within the specified time. However, such outcomes are few and far between. Often, the unpaid party will have to initiate proceedings in the High Court to enforce the decision under section 28 of CIPAA and be faced with an opposing application to either set aside the decision pursuant to section 15 of CIPAA or stay the decision pursuant to section 16 of CIPAA.

However, post-adjudication remedies are not limited to the usual enforcement proceedings. There are alternatives available to the unpaid party. A special feature of CIPAA is that it provides two additional options to an unpaid party to lawfully pressure the non-paying party to comply with the decision. One of these options is to suspend or reduce the rate of progress of performance of the construction works.

Section 29(1) of CIPAA provides:

Suspension or reduction of rate of progress of performance

A party may suspend performance or reduce the rate of progress of performance of any construction work or construction consultancy services under a construction contract if the adjudicated amount pursuant to an adjudication decision has not been paid wholly or partly after receipt of the adjudicated decision under subsection 12(6).

Procedure for Suspension

The procedure or mechanism to suspend or reduce the rate of progress is set out in Section 29 of CIPAA and is as follows:

a) Give the other side a written notice of intention to suspend performance or reduce the rate of progress of performance if the adjudicated amount is not paid within 14 calendar days from the date of receipt of the notice (section 29(2) of CIPAA).

b) Only after 14 days from the date of the receipt of the notice has lapsed can an unpaid party reduce or suspend the performance (section 29(3) of CIPAA).

c) Resume performance within ten working days after having been paid the adjudicated amount (section 29 (4) of CIPAA).

Suspension or Slow Down without Penalty

The procedure or mechanism to suspend or reduce the rate of progress is set out in Section 29 of CIPAA and is as follows:

a) Give the other side a written notice of intention to suspend performance or reduce the rate of progress of performance if the adjudicated amount is not paid within 14 calendar days from the date of receipt of the notice (section 29(2) of CIPAA).

b) Only after 14 days from the date of the receipt of the notice has lapsed can an unpaid party reduce or suspend the performance (section 29(3) of CIPAA).

c) Resume performance within ten working days after having been paid the adjudicated amount (section 29 (4) of CIPAA).

Suspension or Slow Down without Penalty

If a contract already provides that the contractor can suspend works (for example, clause 16.15 of PAM 2006 Sub-Contract) in the case of non-payment, an unpaid party can choose to suspend works under the mechanism provided under the contract. However, many contracts do not permit the suspension or slowing down of work based on non-payment.

Contractors with contracts that do not expressly allow the slowing down of work have to choose between termination or continuing work without payment. The non-payment of claims does not confer on the contractor a right to suspend work – two wrongs do not make a right.

For example, in the case of Kah Seng Construction Sdn Bhd v Selsin Development Sdn Bhd [1996] MLJU 359 the developer exercised its rights of set-off and withheld payment for two payment certificates. The main contractor proceeded to suspend work in protest. However, there was no provision in the contract to allow for the suspension of work. The court held that in the absence of a specific provision in the contract, a contractor has no automatic right to suspend works simply because one or two of his certificates have not been paid. Even if the contractor could have established that the developer was in breach of contract, the contractor would have no right to suspend works, but instead would have had to elect to either terminate the contract or insist on due performance.

Section 29 of CIPAA provides the unpaid party with the statutory right to suspend or slow down work if an adjudication decision remains unpaid. This right should be seen as a boon to contractors who may not have this option included as a term in their contract. It provides the unpaid party with an effective tool to compel payment from the non-paying party. Given that the notice to suspend works can be issued once the adjudicated amount is unpaid past the specified deadline, this provides a relatively quick recourse for the unpaid party.

The statutory right to suspend or slow down works means that the non-paying party cannot retaliate against the unpaid party by terminating the contract or imposing liquidated damages for delays. Section 29 of CIPAA provides that the unpaid party is entitled to a fair and reasonable extension of time and is also entitled to recover any loss and expenses incurred as a result of the suspension or slowdown. What exactly constitutes actual costs claimable is difficult to state categorically since it depends on a whole range of factors.

In some contracts, there may be an express contractual provision that prohibits the contractor from slowing down work in the event of a payment delay. In our view, such a clause will not oust the application of section 29(1) of CIPAA. Under such a contract, a contractor cannot slow down works on the allegation of non-payment but can do so when a favourable adjudication decision remains unpaid.

Concurrent Remedy

Suspending or reducing the rate of progress pursuant to section 29 of CIPAA may be done concurrently with other remedies. If the unpaid party chooses to ‘enforce’ the decision, whether by way of garnishee proceedings or seeking direct payment, it can still choose to suspend the works concurrently.

In Hmn Nadhir Sdn Bhd v Jabatan Kerja Raya Malaysia & Ors [2018] 1 LNS 1938, the High Court deliberated upon the issue of whether the three remedies provided “for the recovery of payment in the construction industry” under Part IV of CIPAA (i.e. sections 28 to 30 of CIPAA) may be applied either concurrently or in combination with each other or singly. Lee Swee Seng J (now JCA) ruled as follows:

[77] “Concurrently” cannot be read as “Sequentially” or “Consecutively” after exercising its remedy under section 28 of CIPAA. That is not borne out by the words used which can only be interpreted one way which is that the successful Claimant may exercise any or all of the remedies concurrently and each of the remedy under sections 28, 29 and 30 may be exercised singly or in combination in the enforcement of the Adjudication Decision.

[78] Again with section 31(2) the Legislature must be presumed to know that there is already a mode of execution available under the Rules of Court 2012 with respect to a garnishee proceeding and to insist on an enforcement order first under section 28 to enforce the Adjudicate Decision as if it is a judgment of the High Court would be to make the remedy available under section 30 a duplication of what is already available under a garnishment order.

[79] The three (3) remedies under sections 28 – 30 may be applied either concurrently or in combination with each other or singly as part of the arsenal available to the successful Claimant to activate and deploy in its efforts to recover the payments due under an Adjudication Decision.

Relief for the Non-Paying party

CIPAA has been described as social legislation that is intended the address the imbalance in bargaining and financial power between developers and contractors or contractors and sub-contractors. However, there may still be valid reasons for an unsuccessful respondent, be it a developer or contractor, to be gravely concerned about paying an unfavourable adjudication decision.

An unsuccessful respondent in adjudication can attempt to challenge the decision by applying to the High Court to set it aside under section 15 of CIPAA or to take the dispute to court or arbitration. While these proceedings are pending, the respondent can also for a stay of the decision under section 16 of CIPAA. Grounds for the stay may include concerns about the insolvency of the claimant and the dissipation of funds before the dispute reaches a final resolution in court or arbitration. However, until a stay under section 16 of CIPAA is granted, the unpaid party can make use of section 29, making it necessary to file any application for a stay as swiftly as possible.

Conclusion

While enforcing adjudication decisions may come with challenges, CIPAA provides mechanisms and remedies that offer parties involved in construction disputes a means to assert their rights effectively and resolve disputes in a timely manner.

Section 29 is an additional remedy under CIPAA to help unpaid parties without going through the process of enforcing a favourable adjudication decision. The benefits of section 29 extend beyond just the ability to suspend works; it also safeguards against liquidated damages claims by ensuring that the unpaid party is entitled to extensions of time and reimbursement for any losses incurred due to the suspension or reduction in work progress.

By Michael Koh

REQUEST A FREE CONSULTATION →

Note: This article does not constitute legal advice to any specific case. The facts and circumstances of each and every case will differ and therefore will require specific legal advice. Feel free to contact us for complimentary legal consultation.

Thursday, 18 April 2024

3:00 pm – 4:00 pm Applying for Planning Permission: Overcoming Approval Challenges in Project Development

About this talk

Join us to understand the intricate legal framework governing land development and learn about the key processes and challenges involved in obtaining planning approvals or development orders. From zoning regulations to environmental and social impact assessments, our speakers will provide valuable insights for developers and property owners. Whether you are embarking on a new development project or looking to challenge decisions by the authorities, this talk will offer essential guidance and practical tips for navigating applications for planning permission in Malaysia.

The talk will be delivered over video conference using Zoom.us. You can either view the talk from your web browser or download the Zoom app.

Talk Points

  • Overview of the Planning Permission Process
  • Environmental and Social Impact Assessments
  • Challenges and Practical Tips for Successful Applications
  • Case Studies and Recent Court Decisions

Speakers

Sign up →

Past Seminars

Wednesday, 27 March 2024

3:00 pm – 4:00 pm Resolving Disputes at the Strata Management Tribunal

About this talk

Facing strata management challenges and looking for an alternative to court proceedings? Join our upcoming webinar to discover how the Strata Management Tribunal provides a cost-effective dispute resolution forum for strata property owners, joint management bodies, management corporations and developers. Understand the pros and cons of bringing a claim to the Tribunal and how to go about it. Learn also how to resist a claim and challenge an unfavourable decision. Don’t let strata disputes overwhelm you. Sign up now!

The talk will be delivered over video conference using Zoom.us. You can either view the talk from your web browser or download the Zoom app.

Talk Points

  • Pros and Cons of the Strata Management Tribunal
  • How to File and Defend a Tribunal Claim
  • Enforcing a Strata Tribunal Order
  • Challenging a Strata Tribunal Decision

Speakers

  • Carolyn Ng, Associate, Dispute Resolution Practice Group
  • Jasmine Wee, Associate, Dispute Resolution Practice Group
Sign up →

Past Seminars

Page 1 of 381 2 3 38