With Absolute Assignment, No Need for Remedies under NLC

The Federal Court in its decision dated 7 April 2015 in Damai Freight (M) Sdn Bhd v Affin Bank Berhad clarified an important issue of law, especially for banks and secured lenders.

The question of law posed to the Federal Court was:

“Whether a lender having an absolute assignment of rights to land may realise his security under the terms of the assignment, where the document of title to the land was issued subsequently, without the need to resort to the remedies under the National Land Code (NLC).”

The answer to this is yes.

In summary, the Federal Court’s findings were:

  1. There was an absolute assignment and not one by way of charge only. The Bank should have all the rights, title and interest of the assignor.
  2. When the title was issued to the Land, the Bank did not lose its security or its power of sale under the Loan Agreement Cum Assignment (LACA). The absolute assignment under the LACA survives.
  3. The Bank is thus empowered to realise its security for the loans by way of private sale of the Land.
  4. There is no necessity for the Bank to first create a charge or to resort to foreclosure under the NLC to realise its security. The Bank’s recovery action stands independently.
  5. Section 206(3) of the NLC allows such a transaction relating to any alienated land to give effect to the contractual obligations and rights of the parties as they had determined in the LACA.

Astro v Lippo: Singapore Court of Appeal Grounds of Judgment

I have attached the Singapore Court of Appeal Grounds of Judgment for the Astro v Lippo dispute. I had earlier written a commentary analysing the High Court’s decision and the Court of Appeal has now allowed the Lippo Group’s appeal. This meant that the Court of Appeal allowed the setting aside of a majority of the enforcement orders for the arbitral awards.

The grounds are reported as PT First Media TBK v Astro Nusantara International BV & 7 others [2013] SGCA 57.

Kian Joo Holdings and Contempt of Court

The ongoing conflict between See Teow Chuan and the Liquidators of Kian Joo Holdings Sdn Bhd (KJHSB) continue to rumble on. I had covered the Court of Appeal decision which had far-reaching effects on establishing conflict of interest on the part of liquidators. This decision was subsequently overturned by the Federal Court. The Federal Court grounds of judgment are out and I will follow up with a case commentary shortly.

See Teow Chuan and the other majority contributories of KJHSB then filed an application for a review of the Federal Court decision. It was reported that the main ground for the review is on the issue of plagiarism; that the Federal Court had substantially adopted the written submissions of the Liquidators’ solicitors in writing its grounds of judgment.

Far-fetched perhaps but what was unexpected was the step then taken by the Liquidators in applying to cite the majority contributories and their Counsel, Datuk VK Lingam, for contempt of court. An application for leave to issue committal proceedings has been filed. An interesting step and one which the Federal Court appears to be taking quite seriously and the Attorney-General will be intervening as well to put forward his views.

The news report from the New Straits Times is set out below.

…………………………………………………………

Application filed to cite lawyer for contempt

‘DISRESPECT TO COURT’: Lingam and clients had asked for case to be reviewed alleging Federal Court judges had plagiarised liquidators’ submission in written judgment.

Prominent lawyer Datuk V.K. Lingam and his clients in a civil suit are facing possible contempt charges after accusing a Federal Court bench of alleged plagiarism in their written judgment.

Lingam and his clients, Kian Joo Can Factory Bhd (KJCF) group managing director Datuk See Teow Chuan and 13 others, had accused the bench, led by Chief Judge of Malaya Tan Sri Zulkefli Ahmad Makinudin, of producing the submissions of the respondents, “lock, stock and barrel”, in the written judgment against the appellants.

The High Court had earlier allowed the liquidators, Ooi Woon Chee and Ng Kim Tuck, to sell the shares of (KJCF) to a company, Can-One Sdn Bhd.

See and 13 others appealed against the High Court’s decision, which the Court of Appeal allowed.

The liquidators, however, took the case to the Federal Court which reinstated the High Court ruling.

Following the Federal Court ruling, See and 13 others had on Feb 21, filed a review of the ruling, citing the grounds that the previous bench, led by Zulkefli, had committed plagiarism in their written grounds.

They alleged that the written judgment glaringly showed plagiarism as they “consisted very largely and substantially the reproduction, without any attribution, of the liquidators, Ooi and Ng’s written submission.

Yesterday at the Federal Court, Tan Sri Cecil Abraham, appearing for the liquidators, told a five-man bench chaired by Chief Justice Tan Sri Arifin Zakaria, that an application to obtain leave had been filed to cite Lingam, See and 13 others, for contempt.

“Their grounds for a review, showed disrespect to the court,” said Abraham, adding that he had invited Attorney-General Tan Sri Gani Patail to be a party in the proceedings.

“He has indicated his desire to be an intervener.”

Arifin agreed that the A-G should be present, and even the court could invite him, as it was a case of public interest. “This case is a serious allegation which affects the integrity of the judiciary.”

Cecil informed the court that the leave application was an ex-parte matter and Lingam wanted to be a party.

“We want to be heard during the leave stage as this is a serious issue, coming for the first time in this court,” Lingam said, adding that he may consider filing a counter-contempt proceeding against the liquidators.

Arifin said the court would decide later whether to also allow Lingam to be an intervener before he adjourned proceeding to April 3.

Lawyer Ranjit Singh is holding a watching brief for the Malaysian Bar.

See and 13 others, are in a legal dispute over KJCF shares, and are asking for an order of a re-hearing of two appeals by a new panel of Federal Court judges.

They said this was an appropriate case for the court to invoke its inherent jurisdiction to review the judgment and set it aside.

See and the others are the majority contributors of family investment holding company Kian Joo Holdings Sdn Bhd, which was ordered by a High Court to be wound up in 1996.

Responses to Bar’s resolution for resignation

After the 15 May 2009 Bar resolution, calling for the resignation of the Home Minister, the IGP and the OCPD, the Government responses have been, well, expected.We have our Inspector-General of Police asking the Bar to do some soul-searching first and questioned whether the lawyers think that they are above the law.

We then have our de facto Minister of Law accusing the Bar, by passing the resolution, of trying to intimidate the enforcement authorities from discharging their duties.

It is clear that the Government has taken the position that nothing wrong was done. There has been no denouncement of the treatment of the lawyers, no acknowledgment that there is something wrong with the system, and that now, the Bar is in the wrong for passing such a resolution. Ridiculous.

Bar Calls for Resignation of Home Minister and IGP

More than 1,400 lawyers attended the EGM today at the PJ Civic Centre. To be honest, I could not be certain to discount the possibility of there being a police presence at the hall. But all was clear, and the EGM easily hit quorum very early on and I could see that the hall was completely packed to the rafters. Lawyers were virtually hanging over the first level balcony.As set out in my earlier post, 5 legal aid lawyers were arrested when they were present outside the police station trying to get access to their clients. During the EGM, we heard first hand from the arrested lawyers and the other lawyers who tried to assist them, what occurred on 7 May 2009.

1. When the 5 legal aid lawyers were trying to get access to their clients, they were blatantly lied to by the police that their clients had signed the forms dispensing with the need to have legal representation. This is a lie as it is clear from the malaysiakini video on youtube, that the arrested individuals could be seen calling out for their lawyers.

2. When the 5 legal aid lawyers tried to ask the police officer, what were the reasonable grounds for detaining their clients, the police officer refused to answer. Clearly, the police just had no answer to this question.

3. The 5 lawyers were then arrested and then put into a cell. They had to remove all their belongings and items of clothing, and then change into the lock-up clothing. When brought for questioning and brought from place to place, the 4 female lawyers were handcuffed. It is as if these lawyers were a great danger to society, amongst the many snatch thievs, mat rempits, rapists, burglars out there which the police never seem to be able to catch, these lawyers were truly big dangers to society that they had to be handcuffed and locked up.

4. Ravin, who is the Chairperson for the KL Legal Aid Centre, was transferred from the original Brickfields police station to another police station. He was not informed of what station he was being transferred to. The many lawyers outside the Brickfields station could not get any information as to where Ravin was being shifted to. Not a single officer could, or wanted to, answer these queries.

5. When Ravin was being questioned by the police, the police insulted him, got angry at him when he refused to answer questions, made fun of his clothing, made fun of his clothing. No respect was accorded to the fact that in the end, these lawyers were merely officers of the Court and carrying out their legal duties to try to get access to their clients.

6. The lawyers were in the end released on police bail the next day, at around 3pm. Even when the President of the Malaysian Bar walked into the police station to try to speak with the OCPD, one of the OCPD’s first few words were, shouting at the top of his voice in front of all his subordinates “Get out of my balai!”. There was no need for the shouting and there was no need for the rude words.

At the EGM, the members of the Bar clearly were furious at the abuse of police powers. While the original motion merely read for the calling upon of the IGP and other forms of complaints, the members unanimously approved for the amendment of the Motion to call for the resignation of the IGP and the Home Minister. Further, the overwhelming sentiment on the floor is that the lawyers must walk again. There must be a public demonstration of why the arrest of the lawyers was wrong.

Also, any member of the public, not just the lawyer, could go through the same system. You may be arrested, the grounds of your arrest is not informed to you, you are denied the right of legal representation and your own family members may not know where you are. There has to be a change in the system. The laws are clear, both in the Federal Constitution and the Criminal Procedure Code, but the police are blatantly breaking these laws.

This is a video of Ragunath Kesavan, President of the Malaysian bar, at the press conference after the EGM.

 

Bar EGM: Condemn the Arrest of the 5 Legal Aid Lawyers

I will be there at the Bar EGM this Friday to vote for the motion to condemn and denounce the arrest of the lawyers on 7 May 2009. Have a watch of the video to see how a peaceful candlelight vigil led to the arrest of several individuals. The Legal Aid lawyers were then present at the police station in order to represent these arrested individuals. Not only were they denied access to these individuals, they were then arrested on what appears to be the charge of ‘illegal assembly.’

The wording of the Motion sets out the whole sequence of events.

The Motion

 
Whereas on the night of 7 May 2009, five members of the Kuala Lumpur Legal Aid Centre, Fadiah Nadwa binti Fikri (Secretary), Murnie Hidayah binti Anuar, Puspawati binti Rosman, Ravinder Singh Dhalliwal (Chairperson) and Syuhaini binti Safwan (collectively known as the “LAC Lawyers”), in their capacity as Advocates & Solicitors, had requested the police at the Brickfields Police Station for access to the detained persons who were arrested that same night whilst holding a candlelight vigil at the same Police Station over the recent arrest of political scientist Wong Chin Huat.

Whereas Article 5(3) of the Federal Constitution entrenches the fundamental right of a person to consult and be defended by the legal practitioner of his/her choice. Further, sub-sections 28A(2) to (7) of the Criminal Procedure Code (“CPC”) set out in detail the rights of arrested persons including their right to communicate and consult with a legal practitioner of their choice.

Whereas the Police denied the LAC Lawyers access to the detained persons, the Police, without any reasonable grounds, proceeded to arrest the LAC Lawyers and only released them on police bail the following day at around 3 p.m., notwithstanding the repeated requests by other lawyers for their immediate release.

NOW IT IS HEREBY RESOLVED THAT THE MALAYSIAN BAR:

1. Strongly condemns and denounces the wrongful arrest, detention and interrogation of the LAC Lawyers.

2. Strongly condemns and denounces the blatant transgression of the rule of law and the constitutional right of every person to counsel and access to justice.

3. Strongly condemns the unnecessary arrest and detention of those exercising their constitutional right to assemble peaceably.

4. Strongly condemns the arbitrary, improper and frequent resort by the police to section 28A(8) of the Criminal Procedure Code, thus denying an arrested person access to counsel and making the right provided under section 28A(3) meaningless.

5. Strongly condemns and denounces the appalling treatment of the LAC lawyers and all those held in custody, including compelling them to wear lock up uniforms and unnecessarily handcuffing them.

6. Strongly condemns and denounces the Police for deliberately refusing to disclose to their family or their lawyers any information in relation to the LAC lawyers after their arrest, including their location and their next course of action.

7. Calls upon the Inspector-General of Police to take immediate disciplinary action against the police officers responsible for the unlawful arrest of the LAC Lawyers and in particular, the OCPD of the Brickfields police station for this shameful incident.

8. Calls upon the Inspector-General of Police to take full responsibility for, and to explain, this gross abuse of police power.

9. Calls upon the Government to be committed to and to uphold the Rule of Law as enshrined in the Federal Constitution.

10. Reiterates its previous calls on the Government to establish the Independent Police Complaints and Misconduct Commission (IPCMC) in its original form to serve as an independent external oversight mechanism.

11. Calls on the Government of Malaysia to uphold and defend the fundamental rights of advocates and solicitors to discharge their responsibilities to their clients in an environment free from threats and intimidation and unhindered by law enforcement agencies.

No to Stand Alone Foreign Firms?

The Bar Council has today come out stronglyagainst the Government allowing foreign firms to set up stand-alone branches here in Malaysia.The Bar Council is understandably taking the position that there should always be quid pro quo in that the foreign firms get to enter a new legal market, while the local legal industry gets to benefit from some form of knowledge transfer. Hence, the Council’s insistence that a joint law venture framework be implemented. On the other hand, the Government and the Bank Negara wants to keep Malaysia at the cutting edge of Islamic finance, and having major foreign firms (mainly from London) set up practice here will help the industry and also help to bring in their clients.

I’ve never quite believed the concept of the clients moving to regions where their service provider heads to. The reason why such foreign firms are keen on establishing themselves here must be to tap the pool of clients here in Malaysia and the surrounding region.

Perhaps the other aspect of this ongoing ‘tussle’ (there really hasn’t been much development on this issue since 2006) is that foreign firms will be unlikely to want to have a joint venture with a local firm. It will be more attractive for these firms to maintain their profit sharing arrangements and have complete autonomy on how they want to run the firm.

I am not quite sure on which side of the fence I stand on this. From the perspective of the legal industry, I am not sure whether our legal market is developed enough to compete with the foreign law firms. Of course this issue is confined mainly to the practice of Islamic finance, which will only affect several firms which practice in this area. This partial liberalisation will not affect most of the other litigators and even corporate lawyers.

However, without the benefit of some knowledge-transfer arrangement, or easing in period (akin to the long period of time where Singapore implemented their joint law venture), the local established Islamic finance law practitioners are unlikely to benefit. There may be no guarantee that young lawyers practicing in Islamic finance will also be able to be employed at such foreign firms.