Dato Dr Ng Meng Kee v Rightlink Capital Sdn Bhd (W-02(IM)(NCvC)-1013-06/2022)

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1 IN THE COURT OF APPEAL MALAYSIA IN PUTRAJAYA (APPELLATE JURISDICTION) IN THE FEDERAL TERRITORY OF PUTRAJAYA CIVIL APPEAL NO: W-02(IM)(NCVC)-1012-06/2022

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Schedule 2 of the Act (“Question1”)?; (ii) if Question 1 is answered in the affirmative, whether the Plaintiff requires a CMSL pursuant to s. 58 of the Act (“Question 2”)?; and (iii) if Question 2 is answered in the affirmative, whether the Agreements are illegal, void and/or unenforceable against the Defendants (“Question 3”)?. Question 1, Question 2 and Question 3 are hereinafter collectively referred as Questions. [16] The Defendants contended that it is readily apparent the Questions that centred on illegality are fundamentally determinative in nature. It is evident that the determination of Question 3 only necessitated the consideration of the terms and conditions of the Agreements in light of the material provisions of the Act. These terms and conditions are clear and unambiguous. [17] According to the Defendants, the services provided under the Agreements contravened provisions of the Act and are summarized as follows: They are therefore straightforward questions of interpretation of statute. [18] The Defendants placed great reliance on the English case of Curragh Investments Ltd v. Cook [1974] 1 WLR 1559 that has been approved in Tan Keen Keong v. Tan Eng Hong Paper & Stationery Sdn Bhd & Ors and Other Appeals [2021] 2 CLJ 318 FC. It was held by Mary Lim FCJ as follows: “[55] We find support for this view in Curragh Investments Ltd v. Cook [1974] 3 All ER 658, a case where the purchaser of land was resisting a completion of sale on the ground that the seller company was not registered in Great Britain as required under s. 407 of the Companies Act 1948 where Megarry J opined: ... I accept of course, that where a contract is made in contravention of some statutory provision then, in addition to any criminal sanctions, the courts may in some cases find the contract itself is stricken with illegality. But for this to occur there must be sufficient nexus between the statutory requirement and the contract. If the statute prohibits the making of contracts of the type in question, or provides that one of the parties must satisfy certain requirements (e.g. by obtaining a licence to registering some particulars) before making any contract of the type in question, then the statutory prohibition or requirement may well be sufficiently linked to the contract for questions to arise of the illegality of any contract made in breach of the statutory requirement. But it seems to me a far cry from that to the breach of statutory requirements which are not linked sufficiently or at all to the contract in question…” [19] The Defendants also relied on the other English cases of Bedford Insurance Co v. Instituto de Resseguros do Brazil [1985] QB 966 and Re Mahmoud and Ispahani [1921] 2 KB 716. [20] In opposition, the Plaintiff contended that the Questions involve mixed questions of fact and law and are thus unsuitable to be answered pursuant to Order 14A of the Rules of Court 2012. Reliance has been made on the cases of Thein Hong Teck v. Mohd Afrizan bin Husain and Anor Appeal [2012] 2 MLJ 299 FC and Kerajaan Negeri Kelantan v. Petroliam Nasional Bhd and other appeals [2014] 6 MLJ 31 FC. This is the same according to the Plaintiff even if the application has been made pursuant to the less stringent Order 33 rule 2 of the Rules of Court 2012 as seen in Arab Malaysian Finance Bhd v. Meridien International Credit Corporation Ltd London [1993] 3 MLJ 193 SC and Newacres Sdn Bhd v. Sri Alam Sdn Bhd [1991] 3 MLJ 474 SC. [21] The Plaintiff in response to the summary produced by the Defendants alluded to in paragraph [17] above counter produced the Plaintiff’s summary of disputes of fact and law involved as an appendix to the Plaintiff’s written submission. The Plaintiff’s summary is however too copious to be reproduced here. [21] The Plaintiff therefore contended that Suit 885 and Suit 886 must proceed to trial. [22] The learned High Court judge dismissed the Applications and held as follows in his grounds of judgment: “[27] It is trite that Order 14A application should not be granted when there are disputed facts. In this 2 Suits, there are too many disputed facts which means that this matter cannot be resolved summarily here at this juncture. The facts that both parties cannot resolve out with “an Agreed fact”, speaks volume. The Plaintiff alone itself has filed 93 volumes of documents (PBOD) and the Defendants have filed in 48 volumes of their documents (DBOD). … [34] This Court hereby ruled that the questions of law here really require mature considerations and lengthy arguments. Hence witnesses have to be called to explain and parties to ventilate and argue at length the legal terminologies for example the meaning of “regulated activity”. Thereafter evidence has to be led by the Plaintiff (and rebutted by the Defendants) that the Plaintiff’s business is not a regulated activity. This will determine as to whether a license is required under. S 58 of the CMSA. Documents have to be examined by witnesses from the 93 PBOD that support the Plaintiff’s case that it is not a regulated activity. Towards that end, again this case cannot be resolved summarily as the questions of law warrants viva voce evidence to be adduced. [35] Secondly, since there are many disputed facts alluded to earlier which are capable of resolution only after taking viva voce evidence during trial, the case should not be determined or dispose off summarily based on affidavit evidence only.See also Seruan Gemilang Makmur v. Kerajaan Negeri Pahang [2016] 3 CLJ 1 (Federal Court). Hence, the Defendants’ Order 14A application should be dis missed with costs. [36] Further, as there are also issues of facts that are interwoven with issues of law, before the Proposed Questions could be determined, these facts must first be ascertained and established and this can only be determined at the trial proper where witnesses will be called to testify orally and also with reference to the contemporaneous evidence in the PBOD. … [41] On that note, in this case the applications should not be allowed as parties have reached the final stage of the CM. Amongst others, the Plaintiff had sent 93 volumes of PBOD to the Defendant’s Solicitors for their classification and filed 46 volumes of CBC (Part C). The Defendants had sent 48 volumes of DBOD to the Plaintiff’s solicitors which documents have all been classified as Part B by the Plaintiff. Hence, these 2 applications under Order 14A should not be granted. See Ranjan Paramalingam & Anor v. Bangsar Park Residents Association [2019] MLJU 409. … [46] Finally, in an Order 14A application, this Court has to be cautious and mindful to ensure that the discretion to allow such application is exercised sparingly. This is because, like any other interlocutory applications which have finality in its effect (eg. Order 14, order 18, Order 81 etc.), once granted to the applicant (the Defendant here), the opposite party, i.e. the Plaintiff will lose everything and will never have his day in Court akin to shutting the door to justice to them (See See Thong v. Saw Beng Chong [2013] 3 MLJ 235). The Plaintiff will certainly be unfairly prejudiced. Hence, this application should only be allowed sparingly. See Sivakumar a/l Varatharaju Naidu v. Ganesan a/l Retnanam [2011] 6 MLJ 70 (Court of Appeal) pages 82-83.” [23] The Defendants are dissatisfied; thus, they lodged their appeal here. FINDINGS OF THIS COURT [24] It is apt we reproduce Order 14A of the Rules of Court 2012 that formed the basis of the Defendants’ Applications: 14A. Disposal of case on point of law 1. Determination of questions of law or construction (O. 14A r. 1) (1) The Court may, upon the application of a party or of its own motion, determine any question of law or construction of any document arising in any cause or matter at any stage of the proceedings where it appears to the Court that- (a) such question is suitable for determination without the full trial of the action; and (b) such determination will finally determine the entire cause or matter or any claim or issue therein. (2) On such determination the Court may dismiss the cause or matter or make such order or judgment as it thinks just. (3) The Court shall not determine any question under this Order unless the parties have had an opportunity of being heard on the question. (4) The jurisdiction of the Court under this Order may be exercised by a Registrar. (5) Nothing in this Order shall limit the powers of the Court under Order 18, rule 19 or any other provisions of these Rules. 2. Manner in which applications under rule 1 may be made (O. 14A r. 2) An application under rule 1 may be made by a notice of application or, notwithstanding Order 32, rule 1, may be made orally in the course of any interlocutory application to the Court. [25] In Thein Hong Teck v. Mohd Afrizan bin Husain & Anor Appeal (supra), Hasan Lah FCJ held as follows: “[47] It is trite law that 0.14A of the Rules of the High Court 1980 may only be resorted to if there is no dispute by the parties as to the relevant facts, or that the Court, upon scrutinizing the pleadings concludes that the material facts are not in dispute (see Dream Property Sdn Bhd v Atlas Housing Sdn Bhd [2008] 2 MLJ 812). Where the issues of fact are interwoven with legal issues raised, it will be undesirable for the Court to split the legal and factual determination for to do so would in effect be to give rulings in vacuo or on a hypothetical ruling, which the Court will not do (see State of Bank of India v Mariani Marketing, 1 March 1991, CA Transcript No. 91/0304).” (emphasis added) [26] Furthermore, in Kerajaan Negeri Kelantan v. Petroliam Nasional Bhd and other appeals (supra), Abdull Hamid Embong FCJ held as follows: “[24] In light of the above cases, learned counsel for the plaintiff then referred to us the following passages of the judgment of the Court of Appeal in the Terengganu’s case, which he argued, severely restricts and curtails the right of a party with a substantive claim to lead and extract relevant evidence in the manner long established and recognised as a litigants basic right, by way of a trial through the examination and cross-examination of witnesses: Legally, in O 14A and O 33 r 2 of the RHC applications no party has any liberty to disagree just for the sake of disagreeing to any fact pleaded which is obviously undisputed because for the court to give indulgence to such disagreement will not only erode the efficacy but also will stultify the objective and purpose of those Orders. On that basis, we scrutinised the pleadings and the Proposed Statement of Agreed Facts (re Appendix 11), then we called upon the parties to submit on the Proposed Statement of Agreed Facts wherein certain facts, which were not agreed to previously, had been agreed to by the defendants, and finally, having considered the respective submission on the matter we decided to impose upon the parties to accept the facts which, in our considered view, having regard to the other related facts which are obviously undisputed or facts which had been agreed to by the defendants, should have been agreed to by the parties, with or without variation or reservation. However, that liberty is to be subject to the constraints and limitations as dictated in this judgment relating to the matters that may be proved by affidavit evidence except that in the case of pleaded facts which are not sufficient for the purpose of determining the additional question of law (per Appendix D) affidavit evidence may be used by the parties. However, the decision whether to allow such application, if any, and to what extent it should be allowed and the nature and extend of the affidavit evidence to be used for the limited purposes as aforesaid, is left entirely to the learned judges discretion. [25] It was further argued by learned counsel for the plaintiff that the correct proposition of law on O 14A now, as envisaged in the recent decisions of the Federal Court in the cases referred above, is that where facts are interwoven with legal issues, the splitting of legal and factual determination is considered inappropriate and hence negating such application in the determination of a matter. [26] Learned counsel for Petronas submitted that the decisions of the Federal Court on O 14A in cases referred to by learned counsel for the plaintiff do not depart from the Terengganu s case and further, do not set up any new proposition of law. It was argued by learned counsel for Petronas that in Dream Property and Thein Hong Teck respectively, the Federal Court had decided that recourse to O 14A is unsuitable in the circumstances of those cases since there were serious dispute of facts involved, which can be distinguished from the present case. It was further argued that the Federal Court in Bato Bagi also made no critical remark on the decision in the Terengganu’s case. In this regard, the same stand was also taken by learned senior federal counsel for the second defendant. [27] We are in agreement with the submission of learned counsel and senior federal counsel for Petronas and second defendant respectively that the decisions of the Federal Court on the application of O 14A in the three cases cited above do not in any way depart or steer away from the decision in the Terengganu’s case. In our view, the Court of Appeal in the Terengganu’s case did not attempt to lay down a hard and fast rule on the application of O 14A. The decision in the Terengganu s case merely stated some of the relevant factors which should be considered in dealing with an application under O 14A and they are not meant to be exhaustive. This view had already been expressed by Richard Malanjum CJSS in Bato Bagi which says: With respect, I do not think the Court of Appeal in Petroleum Nasional Bhd laid down a hard and fast rule for courts to comply with when confronted with applications under O 14A. All the Court of Appeal did was to state the relevant factors which should be considered and which in my view the relevant factors to consider are not exhaustive... [28] We share the same view as expressed in Bato Bagi above and we are unable to understand how the decision in that case can be said to have steered away from the decision of the Court of Appeal in the Terengganu’s case, as argued by counsel for the plaintiff. [29] Meanwhile, Dream Property concerns the issue of the determination of delivery of vacant possession and the confirmation thereof pursuant to the special condition of a sale and purchase agreement entered into between the parties. In Thein Hong Teck, among the critical disputes were the issues of dissolution of a partnership before the filing of a petition for winding up and the preservation of rights of the partnership in respect of legal actions commenced before the dissolution of the partnership (as a result of the Federal Court order in one of the many suits filed in connection with the partnership). The issues in these two cases, as viewed by the Federal Court, were questions of facts which were seriously disputed between the parties and required to be determined in a full trial, to which the application of O 14A was held unsuitable in the circumstances of those cases. In addition, it is also to be noted that in Dream Property, there was no question of law framed or a specific question on the construction of the agreement forwarded by the plaintiff to the court for consideration. By the above decisions, it is clear that the position of the law in an O 14A application is that where there are serious disputes of facts involved, it is inappropriate and unsuitable to have recourse to an O 14A procedure. In contrast, the Court of Appeal in the Terengganu’s case, after having carefully scrutinised the pleadings, concluded that the issues raised were purely legal issues based on the construction of documents which are suitable to be determined by the O 14A procedure. In our considered view, the facts and circumstances in the three cases above and in the Terengganu’s case must be distinguished. The decisions of the Federal Court in those three cases did not change or set up any new proposition of law on the application of O 14A laid down in Terengganu’s case and therefore, we answer the first question posed in the affirmative.” (emphasis added) [27] The grant or otherwise of an application under Order 14A of the Rules of Court 2012 thus plainly involves the exercise of discretion. [28] In Vasudevan v. T Damodaran & Anor [1981] 2 MLJ 150, Abdoolcader J (later FCJ) held as follows: “There is a catenation of cases on this point and it will suffice to cull and refer to a few which restate the well-settled principles. An appellate court can review questions of discretion if it is clearly satisfied that the judge was wrong but there is a presumption that the judge has rightly exercised his discretion and the appellate court must not reverse the judge's decision on a mere "measuring cast" or on a bare balance as the mere idea of discretion involves room for choice and for differences of opinion (Charles Osenton & Co v Johnston [1942] AC 130 (at page 148), 148 perLord Wright). The Privy Council held in Ratnam v Cumarasamy & Anor [1965] 1 MLJ 228 that an appellate court will not interfere with the discretion exercised by a lower court unless it is clearly satisfied that the discretion had been exercised on a wrong principle and should have been exercised in a contrary way or that there has been a miscarriage of justice, referring to Evans v Bartlam [1937] AC 473. The House of Lords, approving the decision of the English Court of Appeal in Ward v James [1966] 1 QB 273, held to the same effect in Birkett [1978] AC 297 (at pages 317, 326), 317, 326. For good measure, we would refer to the felicitous expression of Goulding J., in Re Reed (a debtor) [1979] 2 All ER 22, 25 on this point (at page 25): "… the duties of an appellate court in such a matter as this are, in my judgment, confined to those normally exercisable where the lower court has a discretion, that is to say, we are not justified in setting aside or varying an order simply because we may think we might have come to a different conclusion ourselves on similar material. We can only interfere if either we can see that the court below has applied a wrong principle, or has taken into account matters that are in law irrelevant, or has excluded matters that it ought to have taken into account, or otherwise that no court, properly instructing itself in the law, could have come to the conclusion which in fact was arrived at."” (emphasis added) See also Iskandar Coast Sdn Bhd v. Ketua Pengarah Hasil Dalam Negeri [2019] 7 CLJ 143. [29] We have consequently in the exercise of our appellate function reviewed the learned High Court judge’s judgment in light of the parties’ contentions before us which are basically reiterations of their contentions in the High Court. [30] In this respect and upon scrutiny of the pleadings, we find there are many contested issues of facts and mixed facts and law. This is not a case where the issue of illegality can be neatly excised from the other issues raised and be decided independently by itself. We are of the opinion that the assessment and evaluation of the Questions posed must be undertaken on the pleadings as well as evidence of fact of the services actually provided. In other words, they cannot be answered based on the pleadings alone unless the facts are agreed. [31] Furthermore in a case of “regulated activities” where the law enforcer has seen it fit to issue Guidance Notes and Technical Notes, we are of the further and considered opinion that to rely on a mere description of the scope of services rendered would be an oversimplification to determine if the services are caught within the meaning of “regulated activities” requiring a license under s. 58 of the Act for those providing such services or carrying out such activities. The scope, nature, benefits and ramifications of these activities are best ascertained and evaluated after evidence of it has been adduced at trial and tested against the backdrop of what experts may say on the practice of it vis-à-vis the Securities Commission. The Court is of course not bound by the opinion of experts or even the Securities Commission but a better assessment and evaluation of these activities would surely be made as to whether they are attracted or included within “regulated activities” within the meaning of Part 1 Schedule 2 of the Act. [32] The issue of illegality here with its many ramifications should hence best be tried in a full trial when the underlying facts are seriously disputed as can be seen from the voluminous bundles of documents filed under Part B and Part C as well as the various defences pleaded in the alternatives like implied terms and even counterclaim with respect of the restitution for the amount already paid by the Defendants to the Plaintiff. In this connection, we are also satisfied that the answering of the Questions posed in the Applications would not fully dispose Suit 885 and Suit 886 because the counterclaim will still have to be tried. [33] We also noted that both consolidated Suit 885 and Suit 886 are ready and awaiting trial. At the end of the day, the High Court judge has a discretion with respect to assessing whether the Applications would substantially save time and costs in a matter that is ready for trial. We are therefore disinclined to interfere with the Judge’s exercise of discretion unless it is very clear that the questions of law raised would substantially dispose of the issues before the Court. [34] In summary, we find there is no good reason to disagree with the High Court Judge in his arriving at the decision that the Questions cannot be conveniently dealt and decided by way of disposal on preliminary point of law. This is primarily because the Questions posed cannot be disassociated from the substratum facts which are still very much disputed. The Questions cannot be answered in a vacuum. [35] In the premises, we find there is no mis-direction on the part of the learned High Court judge that warrants appellate intervention. CONCLUSION [36] These appeals mirror the dilemma that arose in the House of Lords case of Tilling v. Whiteman [1979] UKHL 10 wherein Lord Scarman finally stated: “Preliminary points of law are too often treacherous short cuts.” [37] It is for the foregoing reasons that we dismissed the appeals as so ordered. Before concluding, we noted that the learned High Court judge in his grounds of judgment in dismissing the Defendants’ appeals also answered the Questions in the negative but we believe he actually meant they need not be answered in the circumstances at that stage. Dated this 7th July 2023 -Sgd-LIM CHONG FONG JUDGE COURT OF APPEAL MALAYSIA LIST OF COUNSELS: 1. Counsels for Appellant Dato’ Malik Imtiaz Sarwar; 2. Balan Nair Thamodaran; 3. Lim Yvonne; and 4. Danielle Devinna Dickman. Solicitors for Appellant Messrs. Lavania & Balan Chambers S-21-01, Wisma YNH, Kiara 163 No. 8, Jalan Kiara Mont Kiara 50480 Kuala Lumpur 1. Counsels for Respondent Tan Sri Cecil Abraham; 2. Noor Muzalifah Binti Shabudin; 3. Polwin Sua Shiang-Nian; and 4. Cheah Kha Mun. Solicitors for Respondent Messrs. Wong Kian Kheong Advocates & Solicitors. D1-U5-01, Solaris Dutamas Np. 1, Jalan Dutamas 50480 Kuala Lumpur LEGISLATION REFERRED TO: s. 61 of the Capital Markets and Services Act 2007; Part 1 of Schedule 2 to the Capital Markets and Services Act 2007 Order 14A of the Rules of Court 2012; and Order 33 rule 2 of the Rules of Court 2012 CASES REFERRED TO: Curragh Investments Ltd v. Cook [1974] 1 WLR 1559; Tan Keen Keong v. Tan Eng Hong Paper & Stationery Sdn Bhd & Ors and Other Appeals [2021] 2 CLJ 318; Bedford Insurance Co v. Instituto de Resseguros do Brazil [1985] QB 966; Re Mahmoud and Ispahani [1921] 2 KB 716. Thein Hong Teck v. Mohd Afrizan bin Husain and Anor Appeal [2012] 2 MLJ 299; Kerajaan Negeri Kelantan v. Petroliam Nasional Bhd and other appeals [2014] 6 MLJ 31; Arab Malaysian Finance Bhd v. Meridien International Credit Corporation Ltd London [1993] 3 MLJ 193; Newacres Sdn Bhd v. Sri Alam Sdn Bhd [1991] 3 MLJ 474 SC; Vasudevan v. T Damodaran & Anor [1981] 2 MLJ 150; Iskandar Coast Sdn Bhd v. Ketua Pengarah Hasil Dalam Negeri [2019] 7 CLJ 143; and Tilling v. Whiteman [1979] UKHL 10