Resolution of the Dire Conflict?

I had earlier blogged about the dire conflict facing Liquidators arising from the Court of Appeal decision of Dato’ See Teow Chuan. The reported Court of Appeal decision can be read at [2010] 6 MLJ 459 and I had pointed out the grave implications arising from the Court of Appeal decision relating to Liquidators, Receivers (and Managers) and auditors.This Court of Appeal decision had proceeded to the Federal Court and based on this Bursa announcement, the Federal Court had allowed the Liquidators’ appeal.

It will be very interesting to read the Federal Court’s written grounds of judgment. I expect that the reasoning set out in the High Court decision (See Teow Guan & Ors v Kian Joo Holdings Sdn Bhd & Ors [2010] 1 MLJ 547) would be reinstated.

Putik Lada: A passion that keeps them in practice

Last week, I contributed an article to the Star’s Putik Lada column. It is a bi-weekly column of the Bar’s National Young Lawyers Committee featuring articles and viewpoints of young lawyers from across the country.

I wanted to share how important it is to have passion for what you do. Hopefully the message still comes across whether you are in legal practice or just working in general.

A passion that keeps them in practice

Legal practice is never boring. The law is ever-evolving. It forces you to keep learning the latest legal developments as well as to update yourself on the current affairs in the relevant industries.

A FEW months ago, I was moderating a session at the Young Lawyers Con­vention 2011 on the working conditions of young lawyers.

With me were three Speakers with different levels of seniority at the Bar.

In that session, questions were posed by various lawyers highlighting their perspective on the practice and concerns on issues such as long working hours and low pay.

Midway through that lively discussion, a question was posed to the four of us on what motivated us to still stay on in practice. The first Speaker spoke of the thrill of litigation and being up on his feet in court. He described that feeling as almost intoxicating and that continued to spur him on in practice.

Another Speaker shared his perspective on how he enjoyed being able to manage a matter from start to finish and he enjoyed the sense of satisfaction in being able to assist his client on legal matters.

The third Speaker talked of enjoying the intellectual challenge of practising law and the joy of still read­­- ing and learning the law.

I then spoke on how I could relate to each and every aspect highlighted by the Speakers.

I expanded on my personal experience which I will share in this article.

Firstly, I touched on how I had ended up doing law.

Unlike a number of lawyers I know, I never had a deep yearning to study law when I was in secondary school or college. Without quite knowing what I should study in university, I settled for doing a law degree since I thought it would give me a good foundation to go into other fields if I wished to.

While doing my law degree, I enjoyed studying the subjects but my desire to become a lawyer only crystalised when I sat for the English Bar. With the Bar’s practical training, I then knew I wanted to be a litigator as I wanted to put forward arguments in court.

When I returned to Kuala Lumpur, I sought out a pupillage position to do litigation. I ended up starting my legal career at a law firm which was a very good fit for me. By chance, I ended up practising litigation in an area of law – that of company law – which I had no knowledge of at the beginning.

But it has since become a subject I am very interested in and passionate about.

Legal practice is not easy. Similar to the experiences shared by the other lawyers at that working conditions session, I have gone through periods of late nights and working on weekends which are almost de regiueur in the legal profession.

I have been frustrated with the delay in court proceedings and I have also many times felt aggrieved about low salaries. However, a lot of that frustration melts away once I set foot in the courtroom.

All the long hours somehow pay off when I am able to put forward my legal arguments in court or when I am on my feet cross-examining a key witness at a trial.

There is an adrenaline rush of submitting in court and that sense of satisfaction of having argued a good case.

Legal practice is never boring. The law is ever-evolving. It forces you to keep learning the latest legal developments as well as to update yourself on the current affairs in the relevant industries.

What I shared with the audience that day was that if they were unable to relate to any of the narratives shared by the speakers and I on why we were still in practice, then it may be a sign that some form of change is needed.

Maybe a change in the law firm they are working in, perhaps a move into setting up their own law practice or even a switch in the area of law they were practising.

Without passion for what you are doing, it is difficult to soldier on in practice since the profession demands so much out of you.

Long hours are a necessity in order to hone our skills and irregular working hours are the norm since we are answerable to the demands of our client.

With a tinge of pessimism or realism (depending on how you look at it), legal practice in Malaysia is also not going to make you incredibly rich and I do not expect to draw an astronomically high pay.

So to last in the profession, I would think we need to enjoy what we are doing.

There is a saying that once you find a job you love, you will never work a day in your life.

This brings back into focus the question posed from the floor that day – Why am I still in practice?

It is because I am still passionate about the work I do.

Unwinding a Winding-Up?

This article was originally published in Skrine’s Legal Insights and I drew inspiration from Fahri Azzat’s article on LoyarBurok which featured the Federal Court decision below.

A commentary on Megah Teknik Sdn Bhd v Miracle Resources Sdn Bhd

The law allows the Court to exercise its discretion to set aside a Court Order under specific circumstances, for instance, where an Order has been granted in the absence of one party, or where there has been a contravention of a substantial provision of law.In the case of a winding up Order, the authorities strongly suggest that a Court has no jurisdiction to set aside a winding up Order. Instead, an applicant must apply for a stay of such an Order under the Companies Act 1965 (“the Act”). However, it can be argued that the Court still has some limited jurisdiction to set aside a winding up Order where the Order can be shown to be null and void due to illegality or lack of jurisdiction.All these principles will be analysed in light of the Court of Appeal decision in Megah Teknik Sdn Bhd v Miracle Resources Sdn Bhd [2010] 4 MLJ 651 (“Megah Teknik”). This decision was affirmed by the Federal Court (unreported judgment dated 13 October 2010 in Federal Court Civil Application No. 02(i)-29-2009).

BRIEF FACTS AT THE HIGH COURT

The Court of Appeal decision arose from a decision of the Kuala Lumpur High Court dismissing an application to set aside a winding up Order.

The petitioning company (“the Petitioner”) had presented a winding up Petition against the respondent company (“the Company”). The Company failed to enter an appearance and failed to file an affidavit to oppose the Petition. The Court then made a winding up Order against the Company.

Almost a year later, the Company filed an application to set aside the winding up Order on the ground that the winding up Order was made in default as the Company had no knowledge of the winding up proceedings. The Company claimed that it only became aware of the winding up Order when one of its directors had been blacklisted.

In the unreported grounds of judgment (Miracle Resources Sdn Bhd v Megah Teknik (M) Sdn Bhd [2008] 1 LNS 362), the High Court held that it was bound by the Court of Appeal decision in Vijayalakshmi Devi d/o Nadchatiram v Jegadevan s/o Nadchatiram & Ors [1995] 1 MLJ 830 (“Vijayalakshmi”). This decision held that a winding up Order cannot be discharged or rescinded after it had been made and the only remedy was to apply for a stay of the winding up under section 243 of the Act.

The High Court declined to follow other High Court authorities which allowed for the setting aside of a winding up Order.

THE COURT OF APPEAL

The Court of Appeal adopted the approach of the High Court in upholding the decision of Vijayalakshmi. It was pointed out in Vijayalakshmi, and noted in Megah Teknik, that there are no express provisions in the Act or the Companies (Winding up) Rules 1972 (“the Rules”) which allow for a setting aside or variation of a winding up Order. This is unlike the English Insolvency Rules 1986 which contain such a provision.

In Megah Teknik, the Court of Appeal held that a Court cannot invoke the general provision under the Rules of the High Court 1980 allowing for the setting aside of an Order made in default. This was because the Act set out specific provisions pertaining to winding up, including a stay of a winding up, but the Act was silent on allowing for a setting aside. Hence, the proper remedy in Megah Teknik was to apply for a stay under section 243 of the Act or to appeal against the winding up Order.

However, the Court of Appeal did leave the door open for a possible exercise of inherent jurisdiction to set aside a winding up Order under certain circumstances. The Court of Appeal did not explicitly list out these circumstances but adopted the Federal Court decision of Badiaddin bin Mohd Mahidin & Anor v Arab Malaysian Finance Bhd [1998] 1 MLJ 393 (“Badiaddin”). It was held by the Federal Court that there was inherent jurisdiction to set aside an Order where there was a contravention that defied a “substantive statutory prohibition so as to render the defective order null and void on ground of illegality or lack of jurisdiction.”

THE FEDERAL COURT

Leave to appeal to the Federal Court against the Court of Appeal decision was allowed. The question of law was whether a winding up Order could be set aside when obtained in the absence of the Respondent company. However, the Federal Court felt it was not proper to address the question as the Petitioner was not present and was not represented by solicitors. While declining to answer the question of law, the Federal Court nonetheless also held that there was no merit in the appeal and dismissed the appeal. Therefore, the Court of Appeal decision in Megah Teknik was upheld.

COMMENTARY

The upshot of Megah Teknik is that in general, one can only apply to stay a winding up Order. In circumstances like Megah Teknik, where the winding up Order was obtained in default, this decision suggests that there is no recourse to apply for a setting aside.

However, the Court of Appeal recognised that there would still be circumstances where the Court can exercise its inherent jurisdiction to set aside a winding up Order. Such circumstances could be where there was illegality or lack of jurisdiction. For instance, there may have been breaches in complying with the requirements under the Act and the Rules. Those breaches may have resulted in a respondent company not even having notice of the winding up Petition. Such an argument did not arise in Megah Teknik as the procedural requirements were complied with.

There are crucial differences between a stay and a setting aside of a winding up. While a stay of a winding up Order amounts to a total discontinuance of the winding up proceedings, there are several hurdles in applying for such a stay. The interests and views of the creditors, contributories and the liquidators must be taken into account in assessing whether a stay should be granted. On the other hand, for a setting aside, such a test would not be relevant as the focus would be on whether the winding up Order was granted illegally or with lack of jurisdiction. Further, for a stay, the records with the Companies Commission of Malaysia would still reflect the winding up but that it was now stayed. For a setting aside, there would not have been a valid winding up Order in the first place and the records should not reflect any winding up.

For the reasons discussed above, it is submitted that the Court ought to have jurisdiction to set aside a winding up Order. Echoing the words of Mohd. Azmi FCJ in Badiaddin, circumstances may exist where there is a “real need to set aside the defective order to enable to Court to do justice.”

It is a pity that the Federal Court in Megah Teknik missed out on the opportunity to clarify whether a Court can set aside a winding up Order and the specific circumstances in which it would do so.

See also my post on The Limits of a Stay of Winding Up.

KL Bar Talk on Shareholder Remedies

I will be giving a talk to the KL Bar on Tuesday 3pm 19 April 2011 ‘Shareholder Remedies: How to Slay a Dragon‘. The talk is very much inspired by my earlier article with the same title.

Some of the topics I’ll be covering over the span of about 2 hours:

  • The rule in Foss v Harbottle – the two-headed dragon.
  • The WMDs: Winding-up, Minority Oppression, Derivative Action.
  • Interim Remedies and the Statutory Injunction.
  • The Side Arms: Convening Meetings and Director’s Access to Records.
  • Case studies: The 50-50 Split, the Matriach Company and the Tale of the Lazarus company.
  • Arbitrating Shareholder Disputes?

Do come and attend if you are interested in learning a bit more.

Drafting of Court Applications

The drafting of court applications is an essential skill of all litigation lawyers. Whether it is the drafting of an originating process like a Writ of Summons or Originating Summons, or an interlocutory application via a Summons in Chambers, you will be eventually asking for the Orders you have crafted out in your court papers. So you need to be sure that the Orders have a sound basis in law and you need to protect your application from any sort of procedural objections.

A suggested workflow for such drafting can be along the lines of the following steps:

1.A possible starting point is to check with a colleague to get a sample precedent. This is often useful but it is merely the first step.

2.The more definitive source would be to look at the English Atkin’s Court Forms for the specific type of application you are drafting. The English civil procedure rules changed significantly post-1999 so if the application is very much based on civil procedure rules rather than a specific area of the law, it is best to have an older version of Atkin’s at hand.

3.The Malaysian Court Forms is the local version of Atkin’s and though not as extensive, it is also useful to compare with this guide.

4.Where the application is based on a specific statute, it is good to also check the annotated statutes to have a read of the description of that area of the law and the cases that have been decided under that section. CLJ Law provides a useful Noter Up function when you click on specific provisions of any Act.

5.Where your application is grounded on a specific provision of the Rules of the High Court 1980, then you need to have a read of the Malaysian High Court Practice book (dubbed the ‘Red Book’) which sets out a full description of the law under the various provisions. If you want to be thorough, then have a read of the English Supreme Court Rules (the old ‘White Book’) just to have a feel of what the old English authorities have to say, although these cases will not be directly binding.

6.Have a quick read of some recent appellate or High Court authorities on the specific provision, and in particular, to see what sort of objections may have been raised before. These cases also help to sometimes set out the Orders being prayed for and you can check the wording of your application with what was decided in that case and what was argued in that case.

For example, where you are drafting for various Orders allowing a director to inspect the records of a company under section 167 of the Companies Act 1965. A check through the case law will reveal that there is the decision of Paul Nicholson lwn Faber Medi-Serve Sdn Bhd & Satu Lagi [2002] 5 CLJ 383 which allowed certain Orders for not only the director to carry out an inspection of records, but also for the director to bring on to the company premises 2 photocopying machines to make copies and for 3 staff to operate the machines. So if you wanted such a wide Order, you would mirror the language of the Orders in the Paul Nicholson case and you would be able to rely on that authority at the hearing before the Court.

7.Armed with the above precedents and with the cases in mind, then you can craft your application or affidavit in support.

8.After drafting, take a step back and think of the Order that you are seeking and whether it will be easy to enforce, or whether procedural objections could be taken by the other side. More so, if you are applying for Orders ex parte (e.g. leave to enter Judgment in Default, or registration of a foreign judgment, or garnishee proceedings) and where you first serve the Order and a defendant has a right to set aside the Order. That is where the avalanche of procedural objections may be raised.

Rise and fall and rise of the heritage law firms

From Singapore Law Watch (link may expire), the Chief Justice of Singapore Justice Chan Sek Keong wrote the following foreword to commemorate the 150th year anniversary of Rodyk & Davidson. Malaysian law firms can also take away some of his advice: “Embrace change; discard the culture of seniority ranking of partners; seek fresh talent wherever they may come from; and share profits equitably.”


LAW firms with a long historical lineage during the period of colonial rule in Singapore are a rarity. Singapore became a British territory in 1824, and English law was introduced into the colony in 1826 through the Second Charter of Justice. From 1826 to 1963, Singapore was the legal capital of the Straits Settlements in terms of the volume and quality of legal work and disputes. Many law firms were born and died.Many ceased to exist because of the Japanese Occupation in 1942 and were never revived after the British returned. Many others did not survive their founding partners, who did not care to let their names continue as brand names for the sake of their partners.

Those that have survived to this day are our heritage law firms bearing British names. Their names reflect the colonial history of our legal profession. The oldest of such law firms bearing its original name is Rodyk & Davidson, a firm that is deservedly proud of its lineage.

Legal services at the inception of the Straits Settlements were provided by law agents, rather than by lawyers. The two Lists of Law Agents published in Vo1 1 of Kyshe’s Reports 1808-1884 and Vol IV 1885-1899 respectively contained the names of all law agents and lawyers of the time.

There was no Asian lawyer among them. The prominent ones were William Napier (1833), Bernard Rodyk (1860), Thomas Braddell (1861), Robert Carr Woods Jr (1863), Edwin Koek (1864), Duncan Clerk Presgrave (1867), Charles William Rodyk (1868), Alexander Leathes Donaldson (1873), Robert Garling Van Someren (1873), John Burkinshaw (1874), Thomas de ML Braddell (1880), Robert Braddell (1883) and Walter John Napier (1889). Neither Allen nor Gledhill appeared in the two lists.

The first Asian to be admitted to the Singapore Bar was Sir Ong Siang Song, in 1893. Other notable Asian lawyers were SJ Chan, Wee Swee Teow, and Reynold Lionel Eber. SJ Chan formed Chan & Swee Teow, which later became Wee Swee Teow & Co in 1912, while SJ Chan teamed up with RL Eber as Chan & Eber, and subsequently the latter formed Eber & Tan.

Our most famous criminal lawyer David Marshall practised under various firms and finally formed David Marshall & Partners. Unfortunately, most of these names are now history.

In 1968, the Directory of Law Firms in Singapore published in Vol 1 No 1 of the Singapore Law Review listed the following firms which could be said to be heritage law firms, namely Allen & Gledhill, Battenberg & Talma, Braddell Brothers, Donaldson & Burkinshaw, Drew & Napier, Wee Swee Teow & Partners, Eber & Tan, Murphy & Dunbar, and Rodyk & Davidson.When I started practice in Singapore in 1963, only three of the firms named above were headed by Asian lawyers; the rest were still headed by British expatriates. The last expatriate lawyer to leave was apparently LAJ Smith.

Currently, only three of these heritage law firms are among the largest law firms in Singapore, having made the transition successfully after full localisation, with leadership and vision. Many law firms continued to survive on brand name and past goodwill for a short time. Even the best of law firms will suffer the same fate without successive generations of new blood and talent in the new legal environment.

Globalisation of legal services has allowed foreign law firms to claim a natural right to supply to all, without hindrance. Singapore law firms now face international competition domestically, and even greater challenges abroad.Rodyk’s recent history provides a valuable lesson on how to keep our heritage law firms alive and prosperous. It was once the pre-eminent law firm in Singapore, but its star began to fade in the 1980s through lack of leadership and fresh legal talent, amid the dynamic economic changes taking place in Singapore and in the region.

It lost its lustre and became a pale shadow of its former self. Its illustrious past was what it was, past. Fortunately, through a merger with HelenYeo & Partners and acquisitions of new talent, a new generation of able lawyers with foresight and vision emerged with the aim of regaining the firm’s former eminence and prestige.Singapore needs more and larger law firms with the talent, ability and desire to compete both in Singapore and in Asia. In this quest, some of our other heritage law firms can take a leaf out of Rodyk’s experience. Embrace change; discard the culture of seniority ranking of partners; seek fresh talent wherever they may come from; and share profits equitably. Rodyk is now doing all of these things – it has found the elixir of professional life and is deservedly celebrating the 150th anniversary of its founding. Rodyk has my congratulations and best wishes.

The writer is the Chief Justice of Singapore. He contributed this piece to ‘Rodyk 150 Years’, a book commemorating Rodyk & Davidson’s 150th anniversary

Getting Called to the Singapore Bar (Part 2): Sitting for the Bar Exams

My article originally posted up on LoyarBurok.

Part 1 of this article set out the process in which a Malaysian lawyer can get admitted to the Singapore Bar. Part 2 recounts the personal experience of a LoyarBurokker who recently sat for the Singapore Bar examinations.


Having applied in April of this year to do the Singapore Part A Bar exam, I was informed at the end of June that I had successfully secured a place. Like many other Malaysians, I had opted to only sit for the exam rather than enrol in the 3-month preparatory course in order to minimise time off work.

In August, we were given a reading list of recommended textbooks and cases to study. At that time, I did not realise the stressful study route ahead of me. The exams starting in November still seemed very far away and any thoughts of studying were placed on the back burner.

THE (ATTEMPT AT) STUDYING BEGINS

With 5 subjects to cover, being Criminal, Evidence, Singapore Legal System & Constitutional, Land and Company, it was quite surprising how little knowledge I had retained on some of these subjects from my university days in the UK. On top of that, these subjects, naturally, featured almost solely Singapore law cases. It seemed like I be pretty much starting from scratch for most of my subjects.

At the start of October (with the exams now just a month away), it was time to knuckle down and I attempted to start with my studying. This however had to still be balanced with normal working hours. So this meant that I had to work until about 6-7pm after which, I had to put aside work aside for the day, in order to bring out my Part A Bar books to study for the rest of the night. Quite stressful and really not the most productive way to study. I could barely sneak in any free time to study and before I knew it, it was already past mid-October.

With stress levels now having jumped up quite a few notches and with a growing sense of panic that this was the most under-prepared I have ever been for any exam, I headed off for study leave and took a break from work. This was just about 1 1/2 weeks before my first paper.

THE (REAL) STUDYING BEGINS

So I headed down to Singapore sometime close to the last week of October. When I first looked at the sheer amount of reading material I had to cover, there was this initial sense of dread about having to study academic law subjects all over again. I thought it would be something so far removed from practice and something I had already left behind. But as I buried myself deeper into my books, it became more and more enjoyable to study the law again. More so, when the Singapore legal system shared so many common features with Malaysia’s and I saw the law from a fresh perspective, having seen the practical application of the law already and now applying those examples when picking my books.

Both Singapore and Malaysia share the same English common law origins, especially with a joint heritage through the legal system set up in the Straits Settlement of Penang, Malacca and Singapore. We both adopted the Indian codification of the Evidence Act and the Penal Code. Many of the key provisions of the Constitution of Malaysia and Singapore, especially relating to fundamental liberties, were also very similar or even identical in wording. Both countries adopted the Australian Torrens system for land and the Companies Act were similarly influenced from English and Australian provisions.

Having never studied the history or theoretical framework of Malaysian law subjects (having picked up Malaysian law only through chambering and practice), it was very interesting to learn about the similar Singapore principles of law, since I could instantly relate the subjects back to Malaysian law.

By way of examples, the Singapore criminal case law we studied would be drawn heavily from both Singapore and Malaysian authorities, applying almost identical provisions in the Penal Code. For constitutional law, and with me having had only a rudimentary knowledge of Malaysian constitutional law prior to this, it was fascinating to see how both Malaysia and Singapore grappled with similar constitutional issues and questions, for instance, those relating to preventive detention laws. Another example would be in the sphere of company law, with Singapore applying very similar laws for shareholder remedies which originated from the same English authorities applied in Malaysia.

THE END OF DAYLIGHT

Every single day, whether a weekday or a weekend, was spent studying from the hours of about 10am until 9pm. I was lucky to have a small study group and we would just camp out in the library, taking a break for lunch nearby, and then immediately heading back to continue our studying. Dinner may be some bread we bought for ourselves and I’d gobble it down with a drink from the drink dispenser machine. It would then be back into the library to continue with the studying.

Books and notes would be heavily tabbed with different coloured Post-Its. Past year exam questions would be leafed through for us to try to get a feel of what the exam questions might be like. Brief discussions would be made in whispered voices as we tried to figure out some of the harder issues raised in those past year questions.

One unintended side effect of hitting the books and taking down all the notes was a dramatic improvement in my handwriting. Having not written lengthy notes for years now, my hand regained its mobility from all the atrophy of keyboard typing. I was going to need my strengthened hand for the exam papers ahead of me.

THE START OF THE EXAMS

With me still scrambling to finish covering the syllabus, the exams were upon us. 5 exam papers, each lasting for 2 hours with an average of 2 questions to answer, and an exam period which was spread out over the course of 2 weeks. It would be an open-book exam so we would be allowed to bring in any material we wanted, save that it could not violate any copyright laws (i.e. no photocopying whole textbooks and bringing them into the exam hall). Almost all the exam questions had a heavy emphasis on hypothetical problem questions. These questions would involve a detailed fact scenario and you then had to write out an opinion of sorts for your hypothetical client to advise on the issues arising and the reliefs available. While the open-book format definitely made things easier since you did not have to commit large chunks of statutory provisions to memory, you still had to know where all your material was and you had to be able to identify the issues raised in the questions.

With all the exam papers starting at 6pm, this meant a lot of cramming could still be done during the day of the exam itself which would also leave me exhausted at the end of each paper. There would be a one-day gap in between papers, which made for some welcome breathing space and allowed us to cram in even more material for the next paper. I was quite nervous before my first paper (being Land law) but once that was out of the way, it was a lot less nerve-wracking.

There was a relatively large contingent of around 20 former and present Malaysian lawyers all sitting for the Singapore Bar exam this year. Before each paper, there would be a group of us having a brief chat before heading into the exam hall so it was like a mini-reunion of sorts. After each paper, we would also share a quick complaint or lament, depending on how difficult each paper, was before we scurried home to rest or study further that evening. There was such relief once all of us finished our final paper. Results would be out around 2 weeks later but we were just so glad to have finished with the exams.

CONCLUSION

The end of the exams left me with mixed feelings. It was stressful studying in the short period of time, and having to face exams again. On the other hand, it was enjoyable leading a student life again, even if it was for only 3 or so weeks. Best of luck to anyone in future who wishes to take the Singapore Bar exams.

Getting Called to the Singapore Bar (Part 1): The Requirements

This was my article originally posted up on LoyarBurok. 
 
Recent changes to the Singapore Bar admission requirements have made it easier for foreign lawyers to get admitted to practice law in Singapore. Here are the requirements Malaysian lawyers need to meet.

This first-part will set out in some detail the process in which a Malaysian lawyer can get admitted to the Singapore Bar. Due to the various rule changes over the years, with different admission standards applying for different years, it will focus mainly on younger lawyers who obtained their law degrees after 1997.

Part 2 will then shift to a different perspective where we get to learn about the personal experience of a LoyarBurokker who recently sat for the Singapore Bar examinations.

INTRODUCTION

Increasingly, Singapore seems to be the port of choice for many Malaysian lawyers to practice in. There are many factors attracting Malaysians over, including higher pay and the opportunity to gain better exposure to higher level work.

In the past, the most common route to work in Singapore was to find a position as a foreign lawyer. This allowed a lawyer to work at Singapore law firms but without the need to be admitted to the Singapore Bar. Strictly speaking, as a foreign lawyer, you could advise only on foreign law but in practice, you largely carried out the same duties as a Singapore qualified lawyer but without the ability to attend Court or to sign off on documents or opinions. Some of the drawbacks of being a foreign lawyer were that in most cases, you would draw a lower pay than a Singapore qualified lawyer and your promotion prospects may also be affected.

While many Malaysians do still go over to Singapore to work as foreign lawyers, there have now been some recent changes to the admission requirements which make it easier to get admitted to the Singapore Bar.

PREREQUISITES

Even before you consider taking the Singapore Bar examinations, you will need to see if you satisfy certain prerequisites, and if you don’t meet these requirements, then you need to plan and see if you can apply for exemptions.

Broadly, to get called to the Singapore Bar, you need to satisfy 3 requirements:

  1. Satisfy the requirements of being a “qualified person” – more on this below.
  2. Complete the Part B Singapore Bar exams. The Part B is similar in some respects to the Bar Vocational Course or Certificate of Legal Practice, in that it focuses on more procedural law.
  3. Complete a 6-month training contract at a Singapore law firm. This is similar to pupillage.

I will explain more on these 3 requirements below and how the most important threshold to cross is that of being a “qualified person.”


QUALIFIED PERSON(i) Scheduled UniversitiesYou need to have graduated from a certain list of scheduled universities, as a full-time internal candidate with a certain degree class. You can go through this useful checklist to see if you are a “qualified person” by first checking which university you graduated from.

So for instance, for a UK graduate, you would need to have been a full-time internal candidate with at least a Second Lower degree from a list of only 19 recognised universities. For an Australian graduate, you would need to be in the top 70% of your graduating batch from a list of only 10 recognised universities.

Some examples where you would not satisfy the requirements for being a “qualified person”:

1. You graduated from a twinning programme or a London external law degree; or
2. You had graduated from any of the local Malaysian universities.

However, you would be able to apply for exemptions from any of the requirements which I will elaborate on further below.

(ii) Permanent Resident

Another requirement is that you will need to be a Permanent Resident or a citizen of Singapore. So a factor you must take into account for being admitted to the Singapore Bar would be whether you are planning on moving down to Singapore to then apply for Permanent Resident status.

(iii) 6 Months of Legal Practice

You need 6 months of either “relevant legal training” or “relevant legal practice” to satisfy this final requirement to be a “qualified person.” So, if you were in active practice in any jurisdiction other than Singapore, this would fall under the definition of “relevant legal practice”. Chambering/pupillage may also qualify under the definition of “relevant legal training.”

(iv) Part A Bar Examinations

The final requirement to be met is that you would need to pass the Part A Bar examinations. The examinations cover 5 academic Singapore law subjects: Criminal, Evidence, Land, Singapore Legal System & Constitutional, and Company. You can either opt to sit for only the examinations, held once a year in November, or to attend a 3-month course (starting in August) and then sit for the examinations. This year the exam format was open book (i.e. you could bring in all your study material with you into the examination hall) while last year, it was closed book.

The deadline for applying for the Part A Bar Examinations (both for the course + exam or just the exam) is by the end of April of every year.

More information on the Part A Bar Examinations and its syllabus/fees are on the National University of Singapore website.

QUALIFIED PERSON – EXEMPTIONS

If you do not satisfy any of the above requirements, you can apply for exemptions. A common exemption is from the requirement of being a full-time internal candidate from a scheduled university. So for instance, an exemption to allow for a twinning programme to be recognised, or an exemption as your university does not fall under one of the scheduled universities.

The present exemption process, from what I have heard from friends, seems to be more flexible in allowing twinning programme candidates as well as non-recognised foreign universities graduates. I know that graduates from local Malaysian universities have a very hard time in getting an exemption and I have not heard of any London external degree law graduates having obtained an exemption as well. All these policies are of course subject to change and are discretionary.

In terms of applying for an exemption from the Permanent Resident requirement, it appears that this exemption is not granted any more or is at least very difficult to obtain. You therefore will likely need to obtain Permanent Resident status in Singapore if you are considering getting admitted to the Singapore Bar. I know of senior practitioners having successfully applied for exemption from the Part A requirement as well. For instance, I had a Malaysian lawyer friend with around 10 years of experience and she was exempted from Part A. But they still needed to become a Permanent Resident of Singapore.

Applicants who are intending to sit for the Part A Bar examinations will put in their exemption applications around the same time in April when applying for the Part A. More information on exemptions can be found on the Singapore Ministry of Law website.

PART B BAR EXAMINATIONS & TRAINING CONTRACT

Having now satisfied the prerequisites of being a “qualified person”, you will need to complete the Part B Bar examinations as well as the 6-month training contract.

The Part B Bar examinations are made up of a compulsory 5-month practical law course and exam, which in some respects, is very similar to the English Bar Vocational Course (now renamed to the Bar Professional Training Course) in that it teaches you practical aspects of Singapore law. The subjects covered include subjects such as Civil and Criminal Procedure, Conveyancing Practice, Professional Responsibility, and Family Law. More information on the Part B can be found at the Singapore Board of Legal Education website.

After successfully completing these examinations, you will then need to serve a 6-month training contract, which is akin to pupillage.

EXEMPTION FROM PART B AND TRAINING CONTRACT

You are allowed to apply for complete exemption from the Part B Bar examination as well as the 6-month training contract. To obtain such an exemption, you will need to already be a “qualified person”, and also been practicing in a common law jurisdiction for at least 2 years (and this period could possibly include your 9 months of chambering as well). If you do not fulfil any of the requirements of being a “qualified person”, or you have not achieved the necessary length of practice, you can also try to apply for exemption from such a requirement.

CONCLUSION

In conclusion, if you are a practitioner in Malaysia, of 2 years experience or more, you can likely be exempted from having to take the Part B Bar examinations as well as be exempted from the 6-month training contract. You will however need to still pass the Part A Bar examinations and in order to qualify to sit for the Part A, you will need to fulfil the other requirements of being a “qualified person.”

Shareholder Remedies: How to Slay a Dragon

My debut article on LoyarBurok.

The Fire-Breathing Dragon
Source: recycledwax.deviantart.com

Within the corporate sphere, there is an ever-present tension between majority rule where the majority shareholders are allowed to dominate the decision-making process and that of protection of minority shareholders. Where majority rule is abused and wielded in the majority’s self-interest rather than in the interest of the company, then the minority shareholder may be able to seek court intervention for relief.

However, the minority must be prepared to face a foe of ancient origin. It is known as the rule in Foss v Harbottle (a 19th century decision of the English courts), which has been dubbed a “fire-breathing and possibly multiple-headed dragon.”

This dragon has two distinct heads. The first is that of the “proper plaintiff rule” being that the proper claimant to bring an action in respect of a wrong done to the company must prima facie be the company. Since the company is a separate entity from its shareholders, a shareholder may not sue to enforce a company’s rights. The second is the general principle of majority rule being the right of the majority shareholders to decide how the company’s affairs are to be conducted.

This article will touch on the three main weapons in the minority’s arsenal in attempting to slay this dragon.

Statutory Derivative Action

With the enactment of the recent statutory derivative action provisions of the Companies Act (sections 181A – 181E), a minority shareholder is allowed to take on the name of the company in order to bring an action against a wrong done to the company. This derivative action seeks to overcome the situation where the directors (often times under the control of the majority) or the majority shareholders take no action for a wrong done to the company. This may range from directors acting in breach of their duties to the company or where company assets are being wrongly depleted. Both the heads in Foss v Harbottle would have largely prevented (although certain limited exceptions do apply) an aggrieved minority shareholder from pursuing any action in relation to these wrongs.

Any shareholder (or a former shareholder in certain circumstances) or director can apply to the Court for permission in order to control the company in initiating or continuing court proceedings.

The first element that must be satisfied is that the applicant must provide a 30-day notice to the directors of the applicant’s intention to apply to the Court. This rule allows the directors to assess whether it is a proper case for the company to take action. Secondly, the applicant must demonstrate that he is acting in good faith and finally, it must appear prima facie to be in the best interest of the company that the application be allowed.

This statutory derivative action is altruistic in nature, in that this is ultimately an action by the company, under the direction of the applicant, to seek relief for a wrong done to the company and any damages would flow back to the company itself. The applicant would not benefit directly from bringing such an action.

Oppression Remedy

The oppression remedy is embodied in section 181 of the Companies Act, which allows shareholders to seek relief for personal wrongs suffered in their personal capacity as shareholders. While often relied on by the minority, even the majority shareholder can raise the issue of oppression where the majority is unable to exercise its majority will. This is often due to the written agreement among the shareholders (whether in the Articles of Association or a shareholders’ agreement).

The language of the provision covers situations where the company’s affairs are being conducted in an oppressive manner, there is disregard to a shareholder’s interests, or unfair discrimination. Ultimately, at the very heart of the oppression remedy is the question of whether there has been commercial unfairness. The starting point therefore in determining such unfairness is an examination of the agreement between the shareholders, which would be the written contract and any implied understandings and legitimate expectations among the shareholders. If a breach of such an agreement has then led to prejudice, the shareholder may be entitled to seek the appropriate remedies.

The Court will be empowered to grant any remedy to bring the oppression to an end, which oftentimes is an Order that the majority shareholder purchase the minority’s shares at a fair price. This is normally the most reasonable remedy because it allows the minority to realise the value of their interest in the company and puts an end to the unfairness – but does not destroy the company. Nonetheless, the Court has a wide jurisdiction to craft any appropriate remedy it deems fit.

Just and Equitable Winding Up

A shareholder may also apply to the Court to wind up a company where it is “just and equitable” to do so. This area of the law overlaps largely with that of the oppression remedy as the Court will also be guided by the concept of fairness. Notwithstanding the corporate structure, the Court can impose equitable considerations on the relationship among the shareholders. A just and equitable winding up situation often features elements of legitimate expectation or mutual trust and confidence among the shareholders, a breach of which may then justify the winding up of the company.

The jurisdiction under a just and equitable winding up is wider than that of oppression, as it can apply in a fault-neutral situation. For instance, where there was a mutual breakdown in the relationship between the shareholders, neither party is really to blame.

Common grounds relied on in a just and equitable winding up are where there is a loss of the substratum or the sole purpose of the company, where there is an irretrievable breakdown in the trust and confidence among the shareholders, or in a situation of a shareholders’ deadlock.

The only relief that can be granted by the Court is that of a winding up of a company. The shareholder would then only be entitled to any excess proceeds from the liquidation of the company’s assets.

Conclusion

These are merely three of the more important weaponry available to an aggrieved minority shareholder in attempting to seek relief against any abuse by the majority. All three lead to very different results, where a statutory derivative action seeks relief and damages for the company, an oppression remedy is for a wide range of personal relief for the shareholder, and the just and equitable remedy results in the winding up of a company. While not slaying the dragon of Foss v Harbottle,these remedies, in appropriate circumstances, allow a minority to outflank the beast and thereby pierce the majority’s armour.

Liquidators Now Facing a Dire Conflict

A commentary on the Court of Appeal’s views on conflicts of interest involving liquidators|
[edit 7 January 2012: The Federal Court has overturned the Court of Appeal decision.]

The Court of Appeal judgment of Dato’ See Teow Chuan and others v Ooi Woon Chee and others [2010] 1 LNS 594 involved the situation where a Liquidator and his accounting firm may be held to be acting in conflict of interest.

BRIEF FACTS

The Winding Up of Kian Joo Holdings

In 1994, a winding up petition was filed against Kian Joo Holdings Sdn Bhd (“the Company”) by several of its shareholders. The Company’s shareholders are all members of the See family. Subsequently, in 1996, the Company was wound up by the High Court by consent of the parties.

Two liquidators were appointed jointly and severally by the Court, with the current liquidators being Ooi Woon Chee (who, in 2007, replaced Abdul Jabbar bin Abdul Majid) and Ng Kim Tuck (“the Liquidators”). All were partners of KPMG Peat Marwick (“KPMG”). KPMG Corporate Services Sdn Bhd (“KCSSB”) was an entity used by the Liquidators to carry out some of their duties.

The Company’s contributories are broadly divided into 2 groups. The first group, led by Dato’ See Teow Chuan (“Dato’ See”), were the majority contributories representing 52% in value of the shares in the Company (“Majority Contributories”). The second group, led by Dato’ Anthony See Teow Guan, were the minority contributories representing 48% in value of the shares in the Company (“Minority Contributories”).

The Company owns shares representing approximately 34% of the issued and paid up capital in Kian Joo Can Factory Berhad (“KJCFB Shares”), a company whose shares are listed on Bursa Malaysia.

Upon the winding-up of the Company, the Liquidators had called for meetings of the contributories to ascertain their views on the method of distributing the assets of the Company. The two groups of contributories put forward two differing views. The Majority Contributories favoured the sale of the KJCFB Shares, while the Minority Contributories preferred a distribution in specie (a pro-rated distribution among the existing contributories) of the KJCFB Shares. At three separate meetings of contributories, the Majority Contributories voted in favour of the sale of the KJCFB Shares while the Minority Contributories voted against the sale.

The Sale of the KJCFB Shares

The Liquidators eventually decided to sell the KJCFB Shares. The Liquidators held an open public tender and received expressions of interest from several parties including Gold Pomelo Sdn Bhd (“Gold Pomelo”), a private vehicle of Dato’ See, and a third party, Can-One International Sdn Bhd (“Can-One International”). After some increase in the offers, the Liquidators accepted the higher offer by Can-One International and the parties entered into a conditional share sale agreement.

By this time, all the contributories were now against the completion of the sale of the KJCFB Shares to Can-One International. The Minority Contributories objected as they had always taken the position that the KJCFB Shares ought to be distributed in specie. The Majority Contributories on the other hand alleged that the acceptance of the Can-One International offer by the Liquidators was tainted with fraud and corrupt practice, and they filed a civil suit (“the Suit”) against the Liquidators.

The Court Applications

Various Court applications were then filed in the High Court, including two that were of particular significance. The first was the application by the Majority Contributories for leave to proceed with the Suit or alternatively, leave to commence legal action against the Liquidators, KCSSB, KPMG and Can-One International for damages for alleged breach of fiduciary duties and/or alleged fraud (“the Majority Contributories’ Leave Application”).

The second was an application by the Liquidators for directions from the Court, pursuant to section 237(3) of the Companies Act 1965 (“the Act”), as to whether the Liquidators should proceed with the completion of the sale of the KJCFB Shares to Can-One International.

The High Court dismissed the Majority Contributories’ Leave Application and gave directions to the Liquidators to proceed with the sale of shares. These Orders were then appealed to the Court of Appeal.

WHETHER DIRECTIONS FROM THE HIGH COURT WERE APPEALABLE

At the Court of Appeal, the Liquidators raised a preliminary objection as to whether the directions given by the High Court were appealable. The question to be determined was whether such a direction would fall within the meaning of “judgment or order of any High Court” under section 67(1) of the Courts of Judicature Act 1964. The Court of Appeal held in the affirmative and ruled that it was appealable. The Court held that a liquidator’s discretion must take a back seat once the Court gives its direction. A liquidator is therefore bound to act in the way in which the court has so directed because that direction is a judgment or an order emanating from the Court. Therefore, such a direction by the Court would be appealable.

ALLEGATIONS OF CONFLICT OF INTEREST AND BRIBERY

The Court of Appeal then dealt with the issues relating to the Majority Contributories’ Leave Application. In seeking leave to commence an action against a liquidator, it was accepted by both the High Court and Court of Appeal that there must be sufficient prima facie evidence to support such allegations.

To make out such a prima facie case, the Majority Contributories raised two grounds. Firstly, that the Liquidators, KCSSB and KPMG had acted in conflict of interest and therefore were in breach of their duties, and secondly, they alleged that secret meetings had been held in which a solicitation of illegal gratification had taken place. Both these allegations were not accepted by the High Court.

Conflict of Interest

In determining the first ground on conflict of interest, the Court of Appeal found that it could not categorically say that the Liquidators had not acted in breach of their fiduciary duties or that the entire public tender exercise was tainted with conflict of interest or fraud.

In the High Court, the Majority Contributories had raised the allegation of conflict of interest as KPMG were the auditors of both Can-One International and its parent company, Can-One Berhad (collectively the “Can-One Companies”), and it was alleged that the Liquidators, who were partners in KPMG, had failed to disclose this fact. The High Court dismissed such a challenge and held that the Liquidators were personally appointed as liquidators and were at all times acting for the Company. Can-One International on the other hand was an audit client of KPMG and not the Liquidators. Hence, there was no conflict of interest.

However, the Court of Appeal disagreed with this finding. Abdul Malik Ishak JCA (in delivering the Judgment of the Court) held that not only were the Liquidators in possible breach of their fiduciary duties, but that both KCSSB and KPMG were also in possible breach as these two companies were the vehicles and/or entities used by the Liquidators. The Court of Appeal held that KCSSB and KPMG, along with the Liquidators, were trustees and agents of the Company and/or the Majority Contributories in relation to the KJCFB Shares where the Majority Contributories are the beneficial owners of the KJCFB Shares in the liquidation exercise.

The Court of Appeal listed out the particulars of the fiduciary duties breached by the Liquidators, KCSSB and KPMG, some of which are highlighted below:

(i) KPMG received and had continued to receive financial remuneration from the Can-One Companies in respect of auditing and/or accounting services. Based on this fact, the Court held that the Liquidators, as partners of KPMG, received pecuniary benefit from the Can-One Companies. The Court therefore commented that the Liquidators, KCSSB and KPMG had only themselves to blame for being in a position of possible conflict of interest.

(ii) It remained to be answered whether the Liquidators, KCSSB and KPMG had suppressed and concealed their conflict of interest, and whether the entire public tender process and award of the bid to Can-One International was “tainted and infected with the conflict of interest element”.

(iii) It could not be ruled out that the Liquidators, KCSSB and KPMG had acted in conflict of interest for their own benefit and for the benefit of their existing clients, the Can-One Companies.

In considering the financial remuneration received by KPMG from the Can-One Companies, the Court of Appeal held that once there is any pecuniary relationship between the Liquidators and KPMG together with the Can-One Companies, there is an automatic disqualification in law and the Liquidators are disqualified from considering and awarding the bid to Can-One International.

It also found that the Liquidators, KCSSB and KPMG were inextricably linked, intertwined, and involved in the entire liquidation process of the Company. In making such a finding, the following facts were relied on:

(i) The Liquidators’ correspondence, business cards and advertisements of the tender were all under the name of KPMG.

(ii) In the course of their work, the Liquidators delegated various duties to the employees of KPMG and/or KCSSB.

(iii) All payments and advances for the Liquidators’ services were paid to KPMG or KCSSB.

(iv) The Liquidators’ statutory reports were filed by KCSSB.

The Court of Appeal therefore found that the Liquidators were KPMG and/or KCSSB’s “men” and once KPMG and/or KCSSB had put their men in as liquidators of the Company, KPMG and/or KCSSB owed a duty to the contributories as beneficiaries of the assets of the Company.

Although the Court of Appeal had earlier on in its judgment said that there were possible breaches of duties and possible conflicts of interest, it proceeded to nonetheless make findings of facts that the Liquidators had actually acted in conflict of interest in awarding the bid to, what the Court held as, the Liquidators’ client and paymaster, Can-One International.

Secret Meetings and Alleged Bribery

The second allegation raised by the Majority Contributories was that one of the Liquidators had held two secret meetings with a representative of Gold Pomelo. It was alleged that at both the meetings, the Liquidator concerned had asked for a substantial cash consideration and in return he would ensure that the bid would be awarded to Gold Pomelo. The High Court found that such allegations amounted to bare assertions, that they appeared to have been made with the intent of derailing the sale of the KJCFB Shares and therefore disregarded these allegations.

The Court of Appeal reversed such a finding. It held that it was not disputed that two meetings had taken place and the Court found that the two private and secret meetings outside the office in connection with the bid was akin to a judge meeting lawyers or clients outside the context of a court. Therefore, serious questions had been raised which must be investigated and answered.

The Court of Appeal therefore ordered, amongst others, that the directions given to the Liquidators to proceed with the completion of the sale of the KJCFB Shares be set aside, and that leave be granted to the Majority Contributories to proceed with their legal action against the Liquidators.

COMMENTARY

The appeal arose in relation to the Majority Contributories’ Leave Application. The appropriate test should have been whether the Majority Contributories had succeeded in establishing a prima facie case on the allegations of breaches of duties. Nevertheless, the Court of Appeal went a step further by making findings of actual conflicts of interest on the part of the Liquidators, KPMG and KCSSB when these matters should have been determined at the hearing of the legal action to be filed by the Majority Contributories.

This decision also arguably goes against the grain of accepted views and practice in other jurisdictions. The effect of this decision is that a liquidator and even a Receiver and/or Manager (“R&M”) will automatically be held to be in conflict of interest whenever the liquidator/R&M has any dealings with another company in which the liquidator’s/R&M’s accounting firm has provided any auditing or other services to. For instance, a public tender exercise carried out by a liquidator or R&M will now have to exclude all companies in which such an accounting firm (and likely the firms in the same global network) has provided any services to. As the foregoing will be impracticable, and clearly not in the interest of the company which is the subject of liquidation or receivership, the liquidator or R&M would have to cease acting in the transaction once bids are received from any party to whom their accounting firm provides services to unless consent is obtained from all relevant parties.

Further, notwithstanding the general view that a liquidator is appointed in his personal capacity and that it is the liquidator who then owes a duty to the company, the decision of the Court of Appeal suggests that the accounting firm in which the liquidator is a partner would also be treated as a trustee and agent of the company and both could be sued for any breaches of duties.

The Liquidators have applied for leave to appeal to the Federal Court against this decision. It is hoped that leave will be given so that the Federal Court can clarify these important points of law.

Originally published in Skrine’s Legal Insights.