The Opposed Ex Parte Hearing: Contradiction in Terms?

This will be the first in a series of articles I will touch on issues relating to general ex parte hearings, ad interim orders, inter partes hearings and the tactical considerations relating to these matters.

Introduction

The Latin term ex parte means “for one party” and in legal proceedings, an ex parte application is heard by the Judge only in the presence of one party. Due to the extraordinary situation of a Judge only hearing from one party, an ex parte application is normally only allowed in circumstances of urgency, and where if notice is given to the other side, it may alert that party to dissipate assets or to frustrate any possible injunctive relief that may be granted. So it is common to see ex parte applications for a Mareva or freezing injunction, or for other types of urgent injunctions.

To safeguard against any possible abuse of the ex parte process, both the common law and the procedural rules require a full and frank disclosure of material facts, as well as for the applicant to not only make submissions in support of the application but to also highlight potential arguments against the grant of the application.

The Pickwick opposed ex parte procedure

A modern practice that has evolved is for the applicant to file an ex parte application but to give notice to the other side prior to the ex parte hearing. The opposing respondent may then choose to appear at the ex parte hearing and where the hearing may then proceed on an opposed ex parte basis, in that the Court will hear submissions from both parties. This in itself may already sound like a contradiction in terms for both parties to be present at the ex parte hearing. Nonetheless, the utility of this has been highlighted in the leading English High Court case of Pickwick International Inc (GB) Ltd v Multiple Sound Distributors Ltd and another [1972]3 All ER 384.

Megarry J in that cases highlighted that the Court would be greatly assisted in deciding whether or not to grant the ex parte injunction by knowing what contentions may be advanced against the grant of the application. The Court would also be aware of the general line of evidence in opposition to the application when it moves into the formal inter partes stage. It makes it possible for the real points of contention to emerge more quickly and thus saves Court’s time. Megarry J points to one advantage to the applicant is that the Court, having heard what there is to be said in opposition to the grant of the injunction, may sometimes be encouraged to grant an injunction that otherwise would be refused. I am not entirely convinced as to how true this so-called advantage is. I would imagine that the Court may then get a fuller picture as to how weak the injunction application may be, having heard the submissions from the opposing party.

Megarry J also pointed to potential disadvantages to each side when parties engage in an opposed ex parte hearing. The opposing party may go to the trouble of preparing submissions at short notice in which a truly ex parte application would have failed in any event. For the applicant, this more modern Pickwick procedure carries the risk that if his application fails he may be ordered to pay the costs of the party who has successfully opposed the application. The Court has jurisdiction to make an order for costs against the applicant in such cases, whether in the cause or in any event. It was held that it cannot be right that the applicant should issue an express or tacit invitation to be present to the party whom he is seeking to enjoin, and then deny him any claim to the costs of what has proved to be a successful opposition.

In Malaysia

The opposed ex parte procedure has been referred to approvingly here in Malaysia. The Singapore High Court decision in Castle Fitness Consultancy Pte Ltd v Manz [1990] 1 MLJ 141 was one of the first cases referring to the Pickwick procedure approvingly and it was the Court’s view that such a procedure should be adopted. An example of an opposed ex parte hearing is also seen in the High Court case of Azman & Tay Associates Sdn Bhd v Sentul Raya Sdn Bhd [2002] 4 MLJ 390.

The one advantage in the Malaysian context of an applicant giving notice of the ex parte hearing and then anticipating the opposed ex parte hearing is in the situation where the applicant expects the Court, or a particular Judge, to be reluctant to proceed with the ex parte application without notice having been provided to the other side. An example of this is the strict approach taken by Mohd Hishamudin JCA in his dissenting judgment in the Court of Appeal case of Westform Far East Sdn Bhd v Connaught Heights Sdn Bhd and other appeals [2010] 3 MLJ 459. This appeal involved the grant of an ex parte injunction to prevent the presentation of a winding up Petition and there was no notice provided to the opposing party. His Lordship felt that there was no urgency justifying proceeding on an ex parte basis and that notice should have been given. His Lordship referred approvingly to his earlier High Court decision in University of Malaya Medical Centre v Choo Chee Kon & Anor [2008] 3 MLJ 278.

Coming Soon

This discussion on the opposed ex parte procedure is predicated on the applicant having the choice to proceed ex parte, or to give notice and then head to an opposed ex parte hearing or to file an inter partes application. In my next article,I will touch on two applications where the applicant must follow the procedural rules and must file the application on an ex parte basis. The Rules of Court 2012 provide that both the leave applications for judicial review and committal must be filed ex parte. So is there discretion on the Court to allow for the application to be heard inter partes or an opposed ex parte basis?

Edit: I have now written about the ex parte leave for committal application.

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Contractual Clause that Damages are Not an Adequate Remedy

The Federal Court in the AV Asia v MEASAT decision (Grounds of Judgment dated 20 January 2014) dealt with the issue on the existence of a contractual clause providing that “monetary damages will not be sufficient … and that injunctive relief would be appropriate to prevent any actual or threatened use of disclosure of such Confidential Information …”

Would such a clause bind the Court in holding that damages are not an adequate remedy for the purpose of granting an injunction?

The Federal Court agreed with both the High Court and the Court of Appeal in finding that the Court would not be bound by this contractual term. The Federal Court referred to two Canadian and American authorities. Those authorities held that where a clause stipulates that damages may not be adequate and that injunctive relief may or shall be the appropriate remedy, that does not mean that such relief will be granted as of right. The party seeking to secure equitable relief must still satisfy the Court that the pre-requisites for granting injunctive relief are prevalent.

 

Judgment in Default: Hearing the Case on the Merits

Typically, when entering judgment in default of appearance, judgment is allowed by the Court as a mere formality. However, there may be situations where the plaintiff will still wish for the case be heard on its merit even though the defendant is not present in court.

In the Singapore High Court decision of Singapore Telecommunications Ltd v APM Infotech Pte Ltd [2011] SGHC 147, the facts involved the Defendant from India which had been served but did not enter appearance within the Singapore jurisdiction.

The Plaintiff, instead of obtaining Judgment in Default, had argued that the Court had jurisdiction to hear the case on the merits (nowithstanding the absence of the foreign Defendant) in order to obtain Judgment. The reason for this is that Indian law required a foreign Judgment to be heard on its merits in order to be enforced in India.

The Court agreed that it had the inherent jurisdiction to do so and was referred to English authorities such as Berliner Bank AG v Karageorgis and another [1996] 1 Lloyd’s Rep 426 as applied in Habib Bank Ltd v Central Bank of Sudan (formerly known as Bank of Sudan) [2007] 1 WLR 470 and Trafigura Pte Ltd, Trafigura Beheer BV v Emirate General Petroleum Corporation [2010] EWHC 87 (Comm).

Although I am not aware of this point arising in Malaysia, this is something we can consider as well when advising on entering Judgment against a foreign Defendant and for purposes of the subsequent enforcement in that foreign country.

Costs on an Indemnity Basis

When costs are awarded, it is usually on a standard basis and where the party claiming costs has to demonstrate that the costs are reasonable before being allowed to claim for it. In practice, what this means is that the amount of costs awarded can be significantly lower than any out-of-pocket legal fees you may have paid your lawyers. So typically, at the Court of Appeal, where costs is awarded whether the appeal is allowed or dismissed, the figure for costs can be as low as RM5,000 or RM10,000 although a party may have paid its lawyer a lot more than that.

In certain exceptional circumstances, costs can be awarded on an indemnity basis. In practice, this means that a party ought to be allowed a full reimbursement of that party’s out-of-pocket legal expenses unless the paying party can show that certain items were so unreasonable.

The guiding principles on costs on an indemnity basis was summarised in the English High Court decision of Fiona Trust & Holding Corporate and ors v Yuri Privalov and ors [2011] EWHC 664 (Comm), where Justice Andrew Smith at [61] identified the following guiding principles:

“(1) The court should have regard to all the circumstances of the case and the discretion to award indemnity costs is extremely wide.

(2) The critical requirement before an indemnity order can be made in the successful defendant’s favour is that there must be some conduct or some circumstance which takes the case out of the norm.

(3) Insofar as the conduct of the unsuccessful claimant is relied on as a ground for ordering indemnity costs, the test is not conduct attracting moral condemnation, which is an a fortiori ground, but rather unreasonableness.

(4) The court can and should have regard to the conduct of an unsuccessful claimant during the proceedings, both before and during the trial, as well as whether it was reasonable for the claimant to raise and pursue particular allegations and the manner in which the claimant pursued its case and its allegations.

(5) Where a claim is speculative, weak, opportunistic or thin, a claimant who chooses to pursue it is taking a high risk and can expect to pay indemnity costs if it fails.

(6) A fortiori, where the claim includes allegation of dishonesty, let alone allegations of conduct meriting an award to the claimant of exemplary damages, and those allegations are pursued aggressively inter alia by hostile cross-examination.

(7) Where the unsuccessful allegations are the subject of extensive publicity, especially where it has been courted by the unsuccessful claimant, that is a further ground.

(8) The following circumstances take a case out of the norm and justify an order for indemnity costs, particularly when taken in combination with the fact that a defendant has discontinued only at a very late stage in proceedings:

(a) Where the claimant advances and aggressively pursues serious and wide ranging allegations of dishonesty or impropriety over an extended period of time;

(b) Where the claimant advances and aggressively pursues such allegations, despite the lack of any foundation in the documentary evidence for those allegations, and maintains the allegations, without apology, to the bitter end;

(c) Where the claimant actively seeks to court publicity for its serious allegations both before and during the trial in the international, and national and local media;

(d) Where the claimant, by its conduct, turns a case into an unprecedented factual enquiry by the pursuit of an unjustified case;

(e) Where the claimant pursues a claim which is, to put it most charitably, thin and, in some respects, far-fetched;

(f) Where the claimant pursues a claim which is irreconcilable with the contemporaneous documents;

(g) Where a claimant commences and pursues large-scale and expensive litigation in circumstances calculated to exert commercial pressure on a defendant, and during the course of the trial of the action, the claimant resorts to advancing a constantly changing case in order to justify the allegations which it has made, only then to suffer a resounding defeat.”

Locally, the Federal Court in Takako Sakao (f) v Ng Pek Yuen (f) & Anor (No 2) [2010] 2 MLJ 181 has held that the discretion to award costs on an indemnity basis is unfettered. Gopal Sri Ram FCJ quoted with approval some of the guidelines for an award of indemnity costs as discussed by Millett J (later Lord Millett) in Macmillan Inc v Bishopsgate Investment Trust plc and others (No 3) [1995] 3 All ER 747 :

 The power to order taxation on an indemnity basis is not confined to cases which have been brought with an ulterior motive or for an improper purpose. Litigants who conduct their cases in bad faith, or as a personal vendetta, or in an improper or oppressive manner, or who cause costs to be incurred irrationally or out of all proportion as to what is at stake, may also expect to be ordered to pay costs on an indemnity basis if they lose, and have part of their costs disallowed if they win. Nor are these necessarily the only situations where the jurisdiction may be exercised; the discretion is not to be fettered or circumscribed beyond the requirement that taxation on an indemnity basis must be ‘appropriate’.

Practical Tips when Seeking Committal

Some practical tips to keep in mind if an applicant is ever seeking committal proceedings to enforce compliance of an Order.

1. Set time frame to do the act

During litigation, if you are seeking to compel someone to do something (e.g. hand over documents, to hand over vacant possession, etc), do include an explicit time frame for them to do it. Committal can then be easily enforced for if there is a breach to do that act within that time frame (O. 45 r. 5 of the Rules of the High Court 1980 (“RHC”)), then you can apply for leave to commit. There is case law that states without such a time frame, you may not be able to go for committal. Without such a time frame, you may also not be able to get the penal indorsement (see below).

2. Set long enough time frame to get sealed Order and to serve

 However, do list out a long enough time frame (e.g. 28 days) for that person to do the act as you can only go for committal if the sealed Order is served personally on that person before the expiration of the time frame (O. 45 r. 7(2)(b) RHC). You can however go for an extension of the time frame, but that will add further complication and another round of litigation.

3. Penal indorsement

In order for you to go for committal for failure to do something within a certain time, the sealed Order must be indorsed with the necessary penal notice. When trying to extract the sealed Order, please double check that both the Order is sealed AND the penal notice which is at the bottom of the Order is sealed as well. Failure to seal the penal notice will make it defective. Sometimes, the Registrar and the court staff will forget to get the penal indorsement sealed.

4. Leave for committal

When going for leave for committal, which is carried out on an ex parte basis, you may also want to consider whether you want to have an additional prayer to exclude the need for personal service of the committal papers. Possibly state that the proper service can be effected by service on the contemnors’ solicitors (applicable if there is already ongoing litigation).

This is useful where you have individuals who may evade the service of the contempt papers, because the RHC requires that the contempt papers, after you get leave, be served personally on the alleged contemnors.

There should be some explanation  in your affidavit in support of leave as to why you are asking for dispensation of personal service. You may have tried to serve an order before on these individuals for instance. If there is no disclosure of such grounds, the contemnors could try to set aside the ex parte leave Order.

5. Ex parte hearing for leave

If you are on the other side and your opponent is seeking leave for committal and you get wind of it, there is a High Court authority allowing a Judge discretion to hear you notwithstanding that the RHC states that leave must be ex parte.

I however lost before a Judge when the Court read the RHC very strictly and said since the RHC states that leave for committal “shall” be heard ex parte, the Court had no discretion and the Court did not allow me to be heard at the ex parte leave hearing. I still prepared submissions and left the submissions and authorities with the Court, as I stated that since this was an ex parte hearing, the Court would still have to consider all the arguments for and against the grant of leave. I still lost the leave application anyway (but eventually succeeded in opposing the committal proper).

Penal Notice on Court of Appeal Order

If pending your appeal at the Court of Appeal, you apply for an interim Order under section 44 of the Court of Judicature Act 1964, it is advisable to include a prayer along the lines of:

 “that the penal notice under Form 87(c) of the Rules of the High Court 1980 be endorsed unto this order”

The Rules of the Court of Appeal does not have a provision for the penal notice, so you will not be able to automatically include the penal endorsement. The prayer for the penal notice was granted by the Court of Appeal in the Metramac case for instance (see the Federal Court decision in Metramac Corp Sdn Bhd (formerly known as Syarikat Teratai KG Sdn Bhd) v Fawziah Holdings Sdn Bhd [2006] 4 MLJ 113).

Foreign Deponents of Affidavits in Malaysia

What is the correct procedure to allow for foreign deponents to affirm affidavits for use in Malaysian Court proceedings? See my summary of the procedure.

(i) Affirmation

Under Order 41 Rule 12 of the Rules of the High Court 1980, deponents from a Commonwealth country can affirm the affidavit before a notary public or person having authority to administer oaths (where there are commonly Commissioner for Oaths in Commonwealth countries).

But where the deponent is NOT from a Commonwealth country, then he must affirm the affidavit before a consular officer of a Commonwealth country i.e. head to the nearest Commonwealth embassy in that country.

(ii) Translation

Have the deponent affirm everything in English (which would include the exhibit cover page and all the headings in English).

The English copy of the affidavit will be filed and a Malay version of the affidavit will have to be affirmed by a certified translator and this Malay affidavit will exhibit the entire English affidavit along with a Malay translation of the contents. You can see this method stated by Vincent Ng J in Gilbert Engineering Co Inc v Zainuddin Ahmad & ors (No. 2) [2003] 3 CLJ 39.