Bursa Malaysia Securities Berhad v Gan Boon Aun (W-02(IM)-443-03/2017)

Court of Appeal of Malaysia5 Apr 2018W-02(IM)-443-03/2017

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Refers toAdjudication ActExternal
“o give legal effect to the AC Decision by way of a court order. By way of amplification, we would venture to add that s. 360 of the CMSA is analogous to s. 28 of the Construction Industry Payment and Adjudication Act 2012 which allows for adjudication decisions to be enforced as if it is a judgment or order of the High”
Refers toCompanies ActExternal
“and the Registrar of the Companies Commissions of Malaysia which are established by statute, Bursa is not a public body. Bursa Malaysia Securities Berhad was incorporated on 4 December 2003 under the Companies Act 1965 10 as a wholly owned subsidiary of Bursa Malaysia Berhad (Company No. 30632-P). Bursa Malaysia Berhad”
Refers toLimitation ActExternal
“arned Judge’s decision can be discerned from the grounds of decision. In summary, the learned High Court Judge allowed GBA's striking out application on the following reasons - i) that s. 6 of the Limitation Act 1953 (“LA 1953”) applies to an action brought pursuant to s. 360 of the CMSA because there is no express pro”
Refers toServices ActExternal
“Court and dismissed GBA’s appeal. At the High Court [4] Bursa then filed the present Originating Summons in the High Court at Kuala Lumpur (“the OS 359”) pursuant to s. 360 of the Capital Markets and Services Act 2007 (“CMSA”) to compel the respondent, Gan Boon Aun, to comply with the decision of the Bursa Appeals Comm”
Cites[2005] FCA 585External
“ation for the corporation to be granted listing status on the stock exchange (se also OSK & Partners Sdn v Tengku Noone Aziz & Anor [1983] 1 MLJ 179; McLellan and Anor v Australian Stock Exchange Ltd [2005] FCA 585 and Yeoh Eng Kong v Dato’ Nik Ismail Nik Yusoff & Ors [2017] 7 CLJ 369). So in essence, and as noted earl”

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1 IN THE COURT OF APPEAL, MALAYSIA AT PUTRAJAYA (APPELLATE JURISDICTION) CIVIL APPEAL NO. W-02(IM) - 442 - 03/2017 (HEARD TOGETHER WITH) CI...

1 IN THE COURT OF APPEAL, MALAYSIA AT PUTRAJAYA (APPELLATE JURISDICTION) CIVIL APPEAL NO. W-02(IM) - 442 - 03/2017 (HEARD TOGETHER WITH) CIVIL APPEAL NO. W-02(IM) - 443 - 03/2017 BETWEEN BURSA MALAYSIA SECURITIES BERHAD … APPELLANT AND GAN BOON AUN … RESPONDENT (In the matter of High Court of Malaya at Kuala Lumpur Originating Summons No: WA-22NCC-359-08/2016 Between BURSA MALAYSIA SECURITIES BERHAD … PLAINTIFF And

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1. GAN BOON AUN

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2. KHIUDIN BIN MOHD

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3. SHUKRI BIN SHEIKH ABDUL TAWAB

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4. CHIN KEEM FEUNG … DEFENDANTS) 2 CORAM: ROHANA YUSUF, JCA VERNON ONG LAM KIAT, JCA HARMINDAR SINGH DHALIWAL, JCA JUDGMENT OF THE COURT [1...

4. CHIN KEEM FEUNG … DEFENDANTS) 2 CORAM: ROHANA YUSUF, JCA VERNON ONG LAM KIAT, JCA HARMINDAR SINGH DHALIWAL, JCA JUDGMENT OF THE COURT [1] The two appeals before us arose from decisions of the Kuala Lumpur High Court delivered on 08 February 2017. We heard arguments on 20 March 2018 and indicated that due to the urgency of the appeal, we would deliver a decision in two weeks. On 5 April 2018, we delivered our unanimous decision. We allowed the appeals and set aside the orders of the High Court. Brief reasons were given for our decision and we indicated to the parties that full reasons will be provided in due course. This is now our full written judgment. Background [2] The respondent, Gan Boon Aun (“GBA”), was a director of Transmile Group Berhad (“Transmile”). Between the years 2005 to 2007, Transmile had breached certain provisions of the Main Market Listing Requirements (“MMLR”) in relation to delay and inaccuracies in filing its 3 financial reports to Bursa Malaysia Securities Berhad (“Bursa”), the appellant here. [3] Subsequent to Transmile’s breaches, Bursa initiated enforcement action against GBA. It resulted in a public remand and fine being imposed on GBA vide a letter from the Bursa Appeals Committee (“AC Decision”) dated 6 September 2010. GBA was fined RM781,500.00 which sum has yet to be paid. GBA’s attempt to quash the AC Decision by way of judicial review was rejected by the High Court. On 24 November 2016, this Court upheld the decision of the High Court and dismissed GBA’s appeal. At the High Court [4] Bursa then filed the present Originating Summons in the High Court at Kuala Lumpur (“the OS 359”) pursuant to s. 360 of the Capital Markets and Services Act 2007 (“CMSA”) to compel the respondent, Gan Boon Aun, to comply with the decision of the Bursa Appeals Committee. To recall, GBA had yet to pay the outstanding fine of RM781,500.00. [5] GBA, however, filed an application to strike out OS 359 on the ground that it was filed out of time. Both the OS 359 and the striking out application were heard together. After hearing submissions, the High 4 Court allowed the striking out application and dismissed the OS. Hence the two appeals before us. [6] The reasons for the learned Judge’s decision can be discerned from the grounds of decision. In summary, the learned High Court Judge allowed GBA's striking out application on the following reasons - i) that s. 6 of the Limitation Act 1953 (“LA 1953”) applies to an action brought pursuant to s. 360 of the CMSA because there is no express provision in CMSA to exclude the application of LA 1953;

subparagraph

(ii) that the outstanding fine which Bursa sought to recover is a penalty by virtue of s. 6(4) of the LA 1953 because the source of power t...

(ii) that the outstanding fine which Bursa sought to recover is a penalty by virtue of s. 6(4) of the LA 1953 because the source of power to impose penalty comes from s. 11 of the CMSA;

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(iii) that time started to run for Bursa to recover the fine imposed on GBA from the expiry of the 14 days from the AC Decision, that is, o...

(iii) that time started to run for Bursa to recover the fine imposed on GBA from the expiry of the 14 days from the AC Decision, that is, on 20 September 2010;

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(iv) that s. 6(4) of the LA 1953 clearly stipulated that "an action to recover penalty ...recoverable by virtue of any written law shall no...

(iv) that s. 6(4) of the LA 1953 clearly stipulated that "an action to recover penalty ...recoverable by virtue of any written law shall not be brought after the expiration of one 5 year from the date on which the cause of action accrued". The OS 359 was filed on 29 August 2016 and the cause of action accrued on 20 September 2010. Therefore, the OS was filed out of time.

(v) that the fine imposed on GBA is not a debt. If CMSA intended any fine imposed under provisions of CMSA to be a civil debt, there should be a provision in CMSA to this effect. [7] In short, the learned Judge accepted the argument that the application brought by Bursa through OS 359 was an action to recover a penalty and was therefore filed out of time pursuant to s. 6(1)(d) and 6(4) of the LA 1953. Our Decision [8] Before us, the same arguments were raised as to whether the limitation period that applies falls under s. 6(1)(d) and s. 6(4) of LA 1953. Section 6(1)(d) provides that actions to recover any sum recoverable by virtue of any written law other than a penalty or forfeiture or of a sum by way of penalty or forfeiture shall not be brought after the expiration of six years. 6 [9] As for actions to recover any penalty or forfeiture, s. 6(4) of LA 1953 provides: “(4) An action to recover any penalty or forfeiture or sum by way of penalty or forfeiture recoverable by any written law shall not be brought after the expiration of one year from the date on which the cause of action accrued: Provided that for the purpose of this subsection the expression “penalty” shall not include a fine to which a person is liable on conviction for a criminal offence” [10] Now, the application by Bursa in OS 359 was filed pursuant to s. 360(1)(c)(i)(J) and (K) of the CMSA which provisions allow for a court order compelling an individual to do something which he has failed or refused to do under the MMLR. It may include payment of unpaid fines and also the production of company accounts and refund of monies illegally transferred out of the company. For convenience, the relevant parts of the provisions are set out as follows: “360. Power of court to make certain orders

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(1) Where -

(c) on an application by an exchange holding company, a stock exchange, a derivatives exchange or an approved clearing house, as the case may be, it appears to the court that - 7

(i) any person has contravened a relevant requirement; or … the court may, without prejudice to any order it would be entitled to make otherwise than pursuant to this section, make one or more of the following orders:

(J) where a person has refused or failed, is refusing or failing, or is proposing to refuse or fail, to do any act or thing that he is required to do under a relevant requirement, an order requiring such person to do such act or thing;

(K) in a case of a contravention by a person of the rules of a stock exchange, a derivatives exchange or an approved clearing house, an order giving directions concerning compliance with or enforcement of those rules to -

(i) the person; and

subparagraph

(ii) if the person is a body corporate, the directors of the body corporate;” [11] After a careful consideration of all the arguments raise...

(ii) if the person is a body corporate, the directors of the body corporate;” [11] After a careful consideration of all the arguments raised, we were persuaded by the contention by Bursa that s. 6(1)(d) and s. 6(4) of LA 1953 do not apply to the present case for the reasons that follow. [12] Firstly, we agreed that the fines imposed by Bursa should be distinguished from a penalty. Bursa imposed a fine on GBA for breaches of MMLR. The MMLR is a set of requirements created by Bursa under s. 9 of the CMSA to ensure an orderly and fair stock market. MMLR is a set 8 of contractual terms between Bursa and the listed corporations and directors. All listed corporations and their directors give Bursa undertakings to comply with the listing requirements in consideration for the corporation to be granted listing status on the stock exchange (se also OSK & Partners Sdn v Tengku Noone Aziz & Anor [1983] 1 MLJ 179; McLellan and Anor v Australian Stock Exchange Ltd [2005] FCA 585 and Yeoh Eng Kong v Dato’ Nik Ismail Nik Yusoff & Ors [2017] 7 CLJ 369). So in essence, and as noted earlier, the MMLR is essentially a contract between Bursa and the listed issuers and directors. And in this context, we note that paragraph 16.19(1)(b)(iv) of the MMLR gives power to Bursa to impose fines not exceeding RM1 million. [13] Secondly, the MMLR does not come within the meaning of "written law" in either s. 6(1)(d) or 6(4) of the LA 1953. "Written law" is specifically defined in s. 3 of the Interpretation Acts 1948 and 1967 (“Interpretation Acts”) to mean essentially the Federal and State Constitutions and the subsidiary legislations made thereunder, Acts of Parliament and subsidiary legislation made thereunder, Ordinances and Enactments and subsidiary legislation made thereunder and other legislative enactments or instruments (and subsidiary legislation made thereunder) from the United Kingdom which are in force in Malaysia or part thereof. Subsidiary legislation is also defined in s. 3 of the Interpretation Acts which by 9 virtue of s. 86 of the Interpretation Acts requires publication in the Gazette. [14] While it is obvious that the MMLR is not a written law because it is not an Act of Parliament and so on, the MMLR is also not a subsidiary legislation because MMLR is not gazetted as required by s. 86 of the Interpretation Acts. There is also no express provision in s. 9 of the CMSA which excludes the requirement of publication in the Gazette. [15] It can therefore be surmised that the MMLR is not a "written law" and the fines imposed by Bursa is neither a sum or penalty recoverable by virtue of any written law under s. 6(1)(d) or 6(4) of the LA 1953. Hence, it must follow that an application under s. 360(1)(c)(i)(J) and

(K) of the CMSA does not fall within the ambit of s. 6(1)(d) or 6(4) of the LA 1953. With respect, the argument accepted by the learned Judge that the aforementioned limitation rules apply since there is no express exclusion in the CMSA is misconceived in law. [16] Thirdly, it must be observed that unlike public bodies like the Securities Commission, Bank Negara Malaysia and the Registrar of the Companies Commissions of Malaysia which are established by statute, Bursa is not a public body. Bursa Malaysia Securities Berhad was incorporated on 4 December 2003 under the Companies Act 1965 10 as a wholly owned subsidiary of Bursa Malaysia Berhad (Company No. 30632-P). Bursa Malaysia Berhad (formerly known as Kuala Lumpur Stock Exchange) was incorporated on 14 December 1976 as a company limited by guarantee. Bursa is in effect a hybrid corporation - a company incorporated under the Companies Act but recognised and regulated by the CMSA. (see the Federal Court Case of OSK & Partners Sdn v Tengku Noone Aziz & Anor [1983] 1 MLJ 179). [17] Now, it is worth noting that public bodies such as the ones mentioned earlier also have power to impose penalties. However, the source of power for the public bodies to impose the respective penalties are derived from Acts of Parliament. So unlike these bodies, and as we had determined earlier, the source of power for Bursa to impose fines on listed companies and directors is found in a set of listing requirements created by Bursa. They are a set of contractual terms between Bursa and the listed companies and their directors. [18] In our respectful view, the learned Judge fell into grave error when concluding that the outstanding fine which Bursa sought to recover is a penalty by virtue of s. 6(4) of LA 1953 because the source of power to impose the penalty came from s. 11 of the CMSA. With respect, s. 11 of the CMSA speaks generally of the 11 duties of the exchange to ensure an orderly and fair stock market and to take action to monitor and to secure compliance with its rules. There is nothing in s. 11 which gives Bursa the power to impose fines. [19] It is perhaps unfortunate that in reaching the aforesaid conclusion, the learned Judge failed to consider that the nature of an application made under sections 360(1)(c)(i)(J) and (K) of the CMSA is not intended to be punitive, but it is really a statutory or procedural mechanism to give legal effect to the AC Decision by way of a court order. By way of amplification, we would venture to add that s. 360 of the CMSA is analogous to s. 28 of the Construction Industry Payment and Adjudication Act 2012 which allows for adjudication decisions to be enforced as if it is a judgment or order of the High Court. [20] It is also noteworthy that s. 360 of the CMSA does not purely deal with recovery of fines. In some cases, Bursa had resorted to s. 360 to compel directors to produce audited accounts of the company or to refund monies unlawfully taken out of the listed company (see, for example, Tengku Dato’ Kamal & Ors v Bursa Malaysia Securities & Anor Appeal [2012] 8 CLJ 678). 12 Conclusion [21] In the upshot, we would summarise our conclusions as follows. We accept that the fine imposed by Bursa is a monetary claim arising out of a contractual relationship between Bursa and its members. Bursa’s power to impose the fine arises not from any “written law” but from the MMLR which is a set of contractual terms between Bursa with the listed corporations and their directors. [22] We note with agreement that the MMLR is neither an Act of Parliament nor subsidiary legislation and cannot therefore be characterized as “written law” within the meaning of s. 6(1)(d) or s. 6(4) of LA 1953. In our judgment, the proceedings filed under OS 359 fall outside the scope of these provisions of the LA 1953. [23] In this context as well, we agree that s. 360 of the CMSA is not the written law which prescribes the recoverability of the penalty or fine. Section 360 of the CMSA, amongst others, provides for the enforcement through a court order a penalty or fine imposed under the MMLR. This proposition is buttressed by the legal fact that Bursa could also recover the fine outstanding by filing a civil claim in which case the limitation period that would apply would be the limitation period for an action founded on 13 contract as provided under s. 6(1)(a) of LA 1953 which would be six years from the date the cause of action accrued. [24] In the circumstances, and for the reasons we have provided, the orders of the High Court cannot be sustained. We allowed the appeals and set aside the orders of the High Court with agreed costs of RM10,000.00. The matter was remitted to the High Court for OS 359 to be heard on the merits by a different Judge. Deposits to be refunded. Dated: 25 September 2018 Signed (HARMINDAR SINGH DHALIWAL) Judge Court of Appeal Malaysia Counsel / Solicitors: For the Appellant: Lim Chee Wee (with him Kwan Will Sen and Gilfred Ho Ming Han) (M/s Skrine) For the Respondent: Adam Abdullah (with him Yap Chin Ling) (M/s Song & Partners)

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