Jri Resources Sdn Bhd v Kuwait Finance House (Malaysia) Berhad (06(i)-06-07/2017(B))

This matter came before us by way of reference emanating from the decision of the Court of Appeal on 15.5.2017 which allowed an application filed by the Applicant in the High Court pursuant to Article 128(2) of the Federal Constitution and Section 84 of the Courts of Judicature Act 1964 to refer questions to the Federal Court in respect of the constitutionality of Sections 56 and 57 of the Central Bank of Malaysia Act 2009 (CBMA 2009).

The two constitutional questions are as follows: - Question 1 Whether sections 56 and 57 of the Central Bank of Malaysia Act 2009 (CBMA 2009) are unconstitutional and void for: a. Contravening Article 74 of the Federal Constitution read together with the Ninth Schedule of the Federal Constitution for the Shariah Advisory Council (SAC) having been vested with the power to ascertain Islamic Law; b. Contravening Part IX of the Federal Constitution for the said sections having the effect of vesting judicial power in the SAC; c. Contravening Article 8 of the Federal Constitution for the said sections having the effect of denying a litigant substantive due process. Question 2 If the above is answered in the negative: a. Whether a court nonetheless is entitled to admit and consider expert evidence on any question concerning a Shariah matter relating to Islamic financial business. Background facts:

The material facts upon which the constitutional questions are posed are these. The Applicant in the High Court is the $ 1^{\mathrm{st}} $ Defendant-JRI Resources Sdn Bhd, whereas the Respondent is the Plaintiff-Kuwait Finance House (Malaysia) Berhad.

Sometime in 2008, the Applicant was given by the Respondent various Islamic credit Facilities (the Facilities), namely 5 ljarah Muntahiah Bitamlik facilities (the ljarah Facilities) and a Murabahah Tawarruq Contract Financing facility (MTQ Facility). The Guarantors for the aforesaid facilities were Ismail Bin Kamin, Zulhizzan Bin Ishak and Norazam Bin Ramli who are the $ 2 ^{n d}, $ $ 3 ^{r d} $ and $ 4 ^{th} $ Defendants respectively.

The purpose of the Facilities was to facilitate the leasing of Shipping Vessels by the Applicant from the Respondent which had with its own fund purchased the same at the request of the Applicant. As owner of the Shipping Vessels, they are then leased to the Applicant.

The Applicant defaulted in making monthly lease payments under the Facilities, resulting in the Respondent's calling on the Guarantors to remedy the Applicant's defaults. The Guarantors also failed to remedy the obligations of the Applicant under the Facilities.

To recover the amounts owing under the Facilities, the Respondent took legal action against the Applicant and Guarantors on the 2.9.2013.

A Summary Judgment application was taken by the Respondent against the Applicant and the Guarantors and on 3.10.2014, the High Court granted Summary Judgment against the Applicant and the Guarantors in the sum of RM118,261,126.26 as at 8.11.2013 together with compensation fees.

In the Summary Judgment application proceedings, the Applicant had argued that in view of the Respondent's failure to carry out the major maintenance works on the Shipping Vessels, there was a failure to derive income from the charter proceeds (from leasing the Shipping Vessels). The aforesaid argument was premised on the contention that the carrying out of the major maintenance works on the Shipping Vessels was the responsibility of the Respondent, as owner of the Shipping Vessels. Such contention is contrary to the express wordings in clause 2.8 of the ljarah Agreements which reads as follows: "Notwithstanding the above clause 2.7, the Parties hereby agree that the Customer (meaning the Applicant here) shall undertake all of the Major Maintenance as mentioned herein and the Customer will bear all the costs, charges and expenses in carrying out the same". (emphasis added)

Appeals by the Applicant and the Guarantors were lodged to the Court of Appeal against the Summary Judgment and on 15.9.2015, counsel for the Applicant at the proceeding before the Court of Appeal had submitted that Clause 2.8 of the Ijarah Agreements was not Shariah compliant as the same made it the obligation of the customer (the Applicant herein) to bear all the costs of maintaining the Shipping Vessels (including undertaking major maintenance). The Applicant further submitted that the High Court ought to have referred this issue to the Shariah Advisory Council of Bank Negara Malaysia (the SAC) pursuant to Section 56 of the CBMA 2009.

The Court of Appeal after hearing respective submissions from the parties on 15.9.2015 allowed the appeals and set aside the Summary Judgment. The Court of Appeal further remitted the case to the High Court for trial with a consequent order to the High Court that a reference be made to the SAC on the following question: "Whether clause 2.8 of the Ijarah Agreements (which makes it the obligation of the Customer, to bear all the costs of maintaining the leased vessels including major maintenance), is Shariah compliant" (the Issue)

The Shah Alam High Court in early 2016 referred the aforesaid question to the SAC.

Through a letter dated 30.6.2016 (the SAC Letter), the SAC made the following reply (English Translation as per $ 2^{\mathrm{nd}} $ Intervener's submission): "COURT'S REFERENCE TO BANK NEGARA MALAYSIA'S SHARIAH ADVISORY COUNCIL (CIVIL SUIT NO. 22NCVC- 584-09/2013) KUWAIT FINANCE HOUSE (MALAYSIA) BERHAD VS JRI RESOURCES SDN BHD, ISMAIL BIN KAMIN, ZULHIZZAN BIN ISHAK @ MUHAMAD & NORAZAM BIN RAMLI Introduction: In answering to the question posed by the Court, the SAC took note that the SAC's duty is merely to analyse the Syriah's issues that are contained in each question posed and to state the Hukum Syarak ruling relating to the question. The SAC does not have jurisdiction to make a finding of facts or to apply the ruling to the facts of the case and to decide whether relating to an issue or for the case because this jurisdiction is vested with the court. Referred Question: Whether clause 2.8 in all Ijarah Agreement (4 in total) between the Plaintiff and its customer (the 1 $ ^{st} $ Defendant) is Shariah compliant, in the light of the Shariah Advisory Council resolution made during its 29 $ ^{th} $ meeting on 25.9.2002, the 36 $ ^{th} $ meeting dated 26.6.2003 and the 104 $ ^{th} $ meeting dated 26.8.2010. Answer: After referring to the decision of the SAC's earlier meeting, concerning the issue of the cost of maintenance of ijarah's asset, the SAC has decided that in principle, the maintenance cost relating to the ownership of ijarah's asset is the responsibility of the owner, meanwhile the cost relating to the usufruct of the rental is the responsibility of the lessee. Nevertheless, there are few arrangements that were allowed by the SAC which are: i. The owner of the asset can delegate to the lessee to bear the maintenance cost of the asset and amount of that cost will be fully deducted in the transaction's sale and purchase if the asset at the end of the lease period; or ii. The owner and the lessee may negotiate and agree to decide which party that will bear the maintenance cost of the asset. Accordingly, The SAC has decided that the negotiation to determine the party that will beat the maintenance cost if the asset is allowed, as long as it has been agreed by tr contracting parties."

With that SAC letter, the High Court then fixed the matter for trial on 22.8.2016, 29.8.2016 and 30.8.2016. However, the Applicant filed an application for a reference to the Federal Courts pursuant to Article 128(2) of the Federal Constitution and Section 84 of the Court of Judicature Act 1964 before the High Court but was rejected by the learned Judge. However, on appeal to the Court of Appeal, the reference was allowed on

5.2017, resulting in the High Court on 20.10.2017 making this reference before us.

On 15.3.2018, this Court allowed the $ 1^{\mathrm{st}} $ and $ 2^{\mathrm{nd}} $ Interveners to intervene in this reference.

At the start of the hearing of this reference, learned counsel for the Applicant informed the Court that he would abandon reference question 1 (a) as he concedes that Federal Parliament has the legislative competence to enact Sections 56 and 57 of the CBMA 2009 (Sections 56 and 57). That being the case, I now move to reference question 1(b) and (c). Questions 1(b) and (c):

It is my view that the aforesaid questions are substantially anchored on the determination whether Sections 56 and 57 have the legal effect of encroaching on the judicial power of the Courts, hence unconstitutional having contravened Part IX of the Federal Constitution - Article 121.

The relevant provisions in CBMA 2009 in this reference are Sections 52, 56 and 57 which read as follows: 52 (1) The Shariah Advisory Council shall have the following functions:

to ascertain the Islamic law on any financial matter and issue a ruling upon reference made to it in accordance with this Part;

to advise the Bank on any Shariah issue relating to Islamic financial business, the activities or transactions of the Bank;

to provide advice to any Islamic financial institution or any other person as may be provided under any written law; and

Such other functions as may be determined by the Bank.

For the purposed of this Part, "ruling" means any ruling made by the Shariah Advisory Council for the ascertainment of Islamic law for the purposes of Islamic financial business." 56 (1) Where in any proceedings relating to Islamic financial business before any court or arbitrator any question arises concerning a Shariah matter, the court or the arbitrator, as the case may be, shall-

take into consideration any published rulings of the Shariah Advisory Council; or

refer such question to the Shariah Advisory Council for its ruling.

Any request for advice or a ruling of the Shariah Advisory Council under this Act or any other law shall be submitted to the secretariat.

Any ruling made by the Shariah Advisory Council pursuant to a reference made under this Part shall be binding on the Islamic financial institutions under section 55 and the court or arbitrator making a reference under section 56. Applicant's position:

The Applicant's position is quite clear and simply this. Sections 56 and 57 in effect take away the judicial power of the High Court from determining any question concerning a Shariah matter and give it to a non-legal body (SAC) not provided for under the Federal Constitution. Section 56 requires the High Court to refer any question in relation to Shariah matters to the SAC for a ruling, which ruling under Section 57 is binding on the High Court. It is, so to speak, a complete prohibition on the High Court from performing its constitutional function of deliberating and deciding on a dispute before it. To put it simply, the Civil Courts possess no judicial power to decide on disputes relating to Shariah matters.

Learned counsel for the Applicant in supporting his contention relied substantially on this Court's decision in Semenyih Jaya Sdn Bhd v Pentadbir Tanah Daerah Hulu Langat and another case [2017] 3 MLJ 561 (Semenyih). In that case, there was a similar challenge to the constitutionality of a provision in the Land Acquisition Act 1960 (LAA) premised on the judicial power contention as in this case. The impugned provision there was Section 40D of the LAA (Section 40D) which reads:

In a case before the Court as to the amount of compensation or as to the amount of any of its items the amount of compensation to be awarded shall be the amount decided upon by the two assessors.

Where the assessors have each arrived at a decision which differs from each other then the Judge, having regard to the opinion of each assessor, shall elect to concur with the decision of one of the assessors and the amount of compensation to be awarded shall be the amount decided upon by that assessor.

Any decision made under this section is final and there shall be no further appeal to a higher Court on the matter.

The contention there was that Section 40D made it obligatory on the part of the Judge to accept the opinion of the two assessors or elect to concur with the decision of either one of them if there are differing opinions between the two assessors in respect of the amount of reasonable compensation arising out of a compulsory acquisition of landed properties. The legislative intent was crystal clear in that the Judge cannot be in a position of deciding for himself as to what should be the reasonable compensation amount as he merely anoints the assessors' decision. It was argued then section 40D was unconstitutional as it effectively took away the Judge's constitutional function of judging and gave it to two non-judicial personnel to decide.

The above argument was sustained by this Court and this was how Zainun binti Ali FCJ (as she then was) rationalized her conclusion: [51] Wherefore now stands the judge? It would appear that he sits by the sideline and dutifully anoints the assessors' decision. [52]Section 40D of the Act therefore effectively usurps the power of the court in allowing persons other than the judge to decide on the reference before it. This power to decide a matter which is brought before the court is known as judicial power and herein lies the rub. What is judicial power? [95] However in our view, s. 40D of the Act has a wider reach. The implications of the language of s. 40D(1) and (2) of the Act is that the assessors in effect take over the judicial power of the court enshrined under art. 121(1) of the Federal Constitution in deciding on a reasonable amount of compensation in land reference matters. The judicial power to award compensation has been whittled away from the High Court Judge to the assessors in breach of art. 121 of the Federal Constitution.

Premised on the above reasoning, learned counsel for the Applicant submitted that the judicial power on questions regarding Shariah matter of the High Court had been taken away and had been given to a non-judicial body in the form of SAC. That simply would be unconstitutional as it is a breach of Article 121 of the Federal Constitution.

Learned counsel for the Respondent from the outset submitted that SAC was established with only the power to ascertain and rule on Shariah issues and present such ruling to the Courts. SAC, it was submitted, makes no determination of the case at hand, that determination is left to the Court to apply the SAC ruling to the facts of the case as pleaded by the parties. Reliance was also made to the Manual for References to Shariah Advisory Council by the Civil Court and Arbitrator, issued by the 2 $ ^{nd} $ Intervener, in which Part B, Paragraph 7 states as follows: In answering the questions referred by the Court or arbitrator, the Shariah Advisory Council is aware that its role is merely to ascertain the "hukum Syarak" (Islamic law) in relation to the issues where reference is made. The Shariah Advisory Council does not have any jurisdiction to make any finding of facts or to apply a particular "hukum" (principle) to the facts of the case or to make a decision whether in relation to an issue or for the case since such jurisdiction is vested with the court and arbitrator."

Reference is also made to the case of Mohd Alias bin Ibrahim v RHB Bank Bhd & Anor [2011] 4 CLJ 685 where the learned Judge there held as follows: [102] The SAC cannot be said to perform a judicial or quasi-judicial function. The process of ascertainment by the SAC has no attributes of a judicial decision. The necessary attribute of the judicial decision is that it can give a final judgment between two parties which carries legal sanction by its own force. It appears to the court that before a person or persons or a body or bodies can be said to exercise judicial powers, he or it must be held that they derive their powers from the State and are exercising the judicial power of the State. An attempt was made to define the words "judicial" and "quasi-judicial" in the case of Cooper v. Wilson & Ors [1937] 2 KB 309. The relevant quotation reads: A true judicial decision presupposes an existing dispute between two or more parties, and then involves four requisites: (1) The presentation (not necessarily orally) of their case by the parties to the dispute; (2) If the dispute between them is a question of fact, the ascertainment of the fact by means of evidence adduced by the parties to the dispute and often with the assistance of argument by or on behalf of the parties on the evidence; (3) If the dispute between them is a question of law, the submission of legal argument by the parties, and (4) a decision which disposes of the whole matter by a finding upon the facts in dispute and application of the law of the land to the facts so found, including where required a ruling upon any disputed question of law. A quasi-judicial decision equally presupposes an existing dispute between two or more parties and involves (1) and (2), but does not necessarily involve (3) and never involves (4). The place of (4) is in fact taken by administrative action, the character of which is determined by the Minister's free choice. [103] The court has no hesitation in holding that the process employed by the SAC is not a judicial process at all. The function of the SAC is confined to the ascertainment of the Islamic law on financial matters. [104] There is nothing in the Impugned Provisions from which it could be inferred that the SAC really exercising judicial functions. There are no contending parties before the SAC. The issue relating to Islamic financial business is referred to it by the court or arbitrator. The SAC does not require evidence to be taken and witnesses to be examined, cross-examined and re-examined.

The case of Tan Sri Abdul Khalid Ibrahim v Bank Islam Malaysia Bhd (2012) 3 CLJ 249 was also relied on. There the Court of Appeal expressed the same sentiments: [23] Looking at the purpose of s. 56 of Act 707, it is clear that SAC is required to ascertain the applicable Islamic law to the above Shariah Issues. Upon ascertainment of the Islamic Law, the court would then apply it to the facts of the present case. This approach is in consonance with the decision in Bank Islam Malaysia Bhd v. Lim Kok Hoe & Anor And Other Appeals [2009] 6 CLJ 22, where Raus Sharif JCA (as he then was) stated: In this respect, it is our view that judges in civil courts should not take upon themselves to declare whether a matter is in accordance to the Religion of Islam or otherwise...

Premised on the above, it was submitted that Sections 56 and 57 do not vest any judicial power in the SAC.

Learned counsel for the Respondent also submitted that the reliance by the Applicant on the Semenyih case was misconceived and the reasons are these. In the Semenyih case, the two assessors were part of the tribunal in determining the valuation of compensation amount. Further, that tribunal disposed the whole matter in dispute and the disputing parties were before that Tribunal consisting of a Judge and two assessors. Of course, here, there are no disputing parties before the SAC as they are before the Court. In Semenyih case, the Judge in the tribunal did not possess any judicial discretion in that he was precluded from forming an opinion on the appropriate amount of compensation as he had to adopt the valuation of the assessors. As such, learned counsel submitted, Semenyih was correct to find that Section 40D was unconstitutional and in view of different factual matrix with the case at hand, it is not applicable here.

Learned counsel for the $ 2^{\mathrm{nd}} $ Intervener in his Rebuttal Note referred to a journal article by Enid Campbell titled 'The Choice between Judicial and Administrative Tribunals and the Separation of Powers (1981) FLR 12(1)24 and submits that there must be in existence three essential attributes before one can say a tribunal possesses judicial power and they are:

Exercising an adjudicative function;

Finality in resolving the whole dispute, and

Enforceability of its decision.

SAC, it was submitted, undoubtedly possesses no such attributes, as such it cannot be said that SAC in making the ruling was exercising any judicial power.

As for the $ 1^{\mathrm{st}} $ Intervener, learned counsel in paragraph 21 of his submission submitted as follows:

..that the judicial power should have certain characteristic and features, namely:-

Exercised in accordance with the judicial process of the judicature - (Semenyih Jaya Sdn Bhd v Pentabdir Tanah Hulu Langat & anor)

Is vested only in persons appointed to hold judicial office - (Semenyih Jaya Sdn Bhd v Pentabdir Tanah Hulu Langat & anor (supra))

Power to examine questions submitted for determination with a view to the pronouncement of an authoritative decision as to the right and liabilities of one or more parties- (PP v Dato' Yap Peng)

Power to determine and arbitrate disputes of a legal nature in which parties are concerned with the protection of their legal interest as opposes to any other interest - (PP v Dato' Yap Peng)

Power of a Court to decide and pronounce a Judgment and carry it into effect between persons and parties who bring a case before it before decision- (PP v Dato' Yap Peng)

Involve inquiry concerning the law as it is and the facts as they are, followed by an application of the law as determined to the facts as determined and to observance of the rights and obligations that the application of law to facts has shown to exist - (Trade Practices Tribunal: Ex Parte Tasmanian Breweries Pty Ltd)

Let me start of by looking at the ramification of the judgment in Semenyih. As alluded above, this Court, through the judgment of Zainun binti Ali FCJ (as she then was) struck down Section 40D premised on the ground that it is unconstitutional in that the judicial power of the Civil Courts have been vested on 2 non-judicial personnel, hence contravening Article 121(1) of the Federal Constitution.

Much have been said as to whether the Semenyih Judgment in striking down Section 40D had relied on the Basic Structure Doctrine which is an Indian judicial principle that the Constitution has certain basic features that cannot be altered or destroyed through amendments by parliament. (see Kesavananda Bharati & Ors v The State of Kerala & Ors 1973 AIR 1461) Key among these "basic features" are the fundamental rights granted to individuals by the constitution, the supremacy of the constitution, rule of law and more relevant to the case at hand is the principle of separation of powers and the independence of the judiciary.

In the Semenyih case, section 40D was struck down despite what Article 121 of the Constitution says and that is this:

There shall be two High Courts of co-ordinate jurisdiction and status, namely-

one in the States of Malaya, which shall be known as the High Court in Malaya and shall have its principal registry at such place in the States of Malaya as the Yang di-Pertuan Agong may determine; and

one in the States of Sabah and Sarawak, which shall be known as the High Court in Sabah and Sarawak and shall have its principal registry at such place in the States of Sabah and Sarawak as the Yang di-Pertuan Agong may determine;

(c)(Repealed), and such inferior courts as may be provided by federal law and the High Courts and inferior courts shall have such jurisdiction and powers as may be conferred by or under federal law.

It is quite clear that Section 40D is a piece of federal law which does not confer jurisdiction or judicial power on the Civil Courts to assess the appropriate compensation amount for compulsory land acquisition and yet this Court in Semenyih saw fit to strike it down, premised on the ground that Parliament does not have the power by legislation to undermine the basic principles of separation of power and the independence of the judiciary.

Further this Court in Semenyih had adopted the minority Judgment of Richard Malanjum, Chief Judge of Sabah and Sarawak as he then was but the present Chief Justice of the Federal Court, in PP v Kok Wah Kuan [2007] 6 CLJ 341 (Kok Wah Kuan) where the issue there was whether a provision in the Child Act contravenes the Constitution. The Chief Justice in no uncertain terms said this of Article 121 of the Constitution: [37] At any rate I am unable to accede to the proposition that with the amendment of art. 121(1) of the Federal Constitution (the amendment) the Courts in Malaysia can only function in accordance with what have been assigned to them by federal laws. Accepting such proposition is contrary to the democratic system of government wherein the courts form the third branch of the government and they function to ensure that there is 'check and balance' in the system including the crucial duty to dispense justice according to law for those who come before them. [38] The amendment which states that "the High Courts and inferior courts shall have such jurisdiction and powers as may be conferred by or under federal law" should by no means be read to mean that the doctrines of separation of powers and independence of the Judiciary are now no more the basic features of our Federal Constitution. I do not think that as a result of the amendment our courts have now become servile agents of a federal Act of Parliament and that the courts are now only to perform mechanically any command or bidding of a federal law. [39] It must be remembered that the courts, especially the Superior Courts of this country, are a separate and independent pillar of the Federal Constitution and not mere agents of the federal legislature. In the performance of their function they perform a myriad of roles and interpret and enforce a myriad of laws. Article 121(1) is not, and cannot be, the whole and sole repository of the judicial role in this country...

There is no doubt in my mind that the then Chief Judge of Sabah and Sarawak in his minority Judgment in Kok Wah Kuan case had applied the Basic Structure Doctrine and by the very adoption of his opinion, this Court in Semenyih in my view had also applied the basic structure doctrine in striking down Section 40D. One can say Semenyih in fact said what others thought it did not say, which is that the Basic Structure Doctrine is very much part of this country's judicial landscape.

Of course, now we have the case of Indira Gandhi a/p Mutho v Pengarah Jabatan Agama Islam Perak & Ors and other appeals [2018] 1 MLJ 545 of this Court reaffirming the Basic Structure Doctrine, which includes the separation of powers and the independence of the judiciary.

Zainun binti Ali FCJ (as she then was) found in no uncertain terms that the Civil Courts have exclusive jurisdiction and inherent jurisdiction to review the actions of a public authority premised on the ground that the powers to review a public authority's actions is a basic part of the Federal Constitution that cannot be altered or removed. This cannot be said of the Shariah courts as they do not have the same power and cannot be given such power as the constitutional safeguards for judicial independence do not apply to them. It was also held by her Ladyship that the Federal Constitution's basic structure includes judicial powers such as judicial review, the principles of separation of powers, rule of law, and the protection of minorities. Those basic features cannot be removed by amending the Constitution or through federal legislation. Article 121(1) of the Federal Constitution endows judicial power exclusively in the Civil Courts and such power cannot be given to any other body as they do not have the similar protection as the Civil Courts to safeguard their independence.

Based on the above, it is thus incumbent on me to apply the Basic Structure Doctrine to determine whether Sections 56 and 57 of CBMA 2009 ought to be struck down.

To recapitulate, the respective learned counsel for the Respondent and Interveners had submitted that SAC had not exercised any judicial power in giving its ruling as the disputing parties were not before them. With respect, I cannot accept such contention as it does not take into consideration of the implication of that ruling in the whole scheme of things.

What we have here is an ongoing dispute in the Court between the Applicant and the Respondent as to the liability of the Applicant under the Ijarah Agreements and that liability is anchored on clause 28 of the same. As to whether clause 28 is Shariah compliant is the pivotal issue to that liability. The legal implication of the answer to Shariah-compliant issue is simply this. Islamic Banking in this country is regulated under Islamic Financial Services Act 2013 (IFSA) since 30.06.2013. Under this legislation, it is required that persons conducting such business must be licensed and in issuing the license, the Minister must ensure that the licensee's "aims and operations" would "in no way contravene the religion of Islam". Hence any licensed institution under IFSA must operate its business in a way which would not involve any element which is not approved by the Religion of Islam. In short, all financial transactions of the Respondent must be Shariah-compliant.

Following that requirement, learned counsel for the Applicant contended that if the transaction at hand is founded not to be Shariah-compliant, that transaction is tainted with illegality in that it is a transaction forbidden by law. That will then bring into play section 24 of the Contracts Act which provides that any transaction which is forbidden by law is void.

I come now to the question of what defines judicial power. Let me from outset say that I am in full accord with what is stated by Gageler J in Palmer v Ayers [2017] 341 ALR 18 and it is this: "The difficulty and danger of attempting to formulate some all-encompassing abstract of the judicial power of the Commonwealth was acknowledged from its inception, was repeatedly recognised in judicial pronouncements throughout the twentieth century and has been reiterated in this country"

The 2nd Intervener posits three essential features of judicial power: adjudication of a dispute, finality in determining the whole dispute, and enforceability of the decision. Given the abstract nature of judicial power, it is doubtful whether the test for the exercise of judicial power can be simplified into a checklist of factors.

Nevertheless, the role of the SAC in the present case can be usefully examined with reference to these factors. The specific question of whether clause 2.8 of the ljarah Facilities is Shariah-compliant, which arose in the course of the proceedings before the High Court, was referred to the SAC. The effect of the SAC ruling that the said clause is Shariah-compliant is that the parties are bound by the clause, and accordingly the cost for the maintenance works are to be borne by the Applicant. The rights and liabilities of the parties in dispute have been adjudicated and finally determined by the SAC. There is no opportunity for the parties to adduce evidence contrary to the SAC ruling, or to appeal against it. Since the SAC ruling is binding upon the Court, it is artificial to contend that the ruling is not itself enforceable by the SAC; the Court has no option but to incorporate and apply the substance and effect of the ruling in making the order and delivering the decision.

Thus, upon an analysis of the substance and true effect of the SAC's role in this case, it is clear that the all three elements of adjudication, finality, and enforceability are present. Without purporting to pronounce an exhaustive definition of judicial power, even if one were to apply the test proposed by the 2nd Intervener, the role of the SAC under Sections 56 and 57 would satisfy all the suggested essential characteristics of judicial power.

According the greatest latitude to the Appellant and the Interveners, even if the function of the SAC does not exhibit the core characteristics of judicial power, it may arguably be regarded as a "borderline" case. Borderline functions would form part of the judicial power if they are ancillary or incidental to its exercise. In respect of borderline functions, a contextual approach as used by the High Court of Australia in R v Davison [1954] ALR 877 is to be adopted: "...there are many functions or duties that are not necessarily of a judicial character but nay be performed judicially, whether because they are proper subjects of its exercise. How a particular act or thing of this kind is treated by legislation may determine its character. If the legislature prescribes a judicial process, it may mean that an exercise of the judicial power is indispensable. It is at that point the character of the proceeding or of the thing to be done becomes all important. Where the difficulty is to distinguish between a legislative and a judicial proceeding, the end accomplished may be decisive"

The Davison approach reflects the stand taken in the United States where Holmes J in Prentis v Atlantic Coast Line Co (1908) 211 US 210 held as follow: "... the effect of the inquiry, and of the decision upon it is determined by the nature of the act to which the inquiry and decision lead up...The nature of the final act determines the nature of the previous inquiry. As the Judge is bound to declare the law he must know or discover the facts that establish the law. So when the final act is legislative the decision which induces it cannot be judicial in the practical sense, although the questions considered might be the same that would arise in the trial of a case."

Applying the above approach, I am now duty bound to refer to the context in which Sections 56 and 67 are framed and the purpose that the legislature intended to achieve.

I look at the context in this manner. If there were no Sections 56 and 57, the learned trial Judge would have, in the normal course of event, in a trial accepted and taken into consideration of respective and conflicting expert opinions in considering whether clause 28 is Shariah-compliant. His approach in resolving the conflict would be as set out by Edgar Joseph Jr in Tan Sri Khoo Teck Puat & Anor v Plenitude Holdings Sdn Bhd [1995] 1 CLJ 15 at p.30: "When, as here, there was a conflict of expert testimony, the correct approach for the judge to have adopted was not to cut the Gordion knot, as it were, by averaging out the two quantifications aforesaid, but by analysing the reasoning of the rival experts, and then concluding by accepting the version of one over the other."

With the enactment of Sections 56 and 57, it is crystal clear that with the SAC's binding ruling, the trial Judge's function of analysing the conflicting opinions as is done in every deliberation of a Judge in a trial has completely been usurped. There is a complete prohibition on the part of the Judge to determine a substantial issue of dispute between the Applicant and the Respondent as to the legality of clause 28. The SAC's ruling is no more an advice as prior to the enactment of Sections 56 and 57, it is now much more. The SAC's ruling for all intents and purposes becomes the ruling of the trial Judge. Hence it must be said that the legislative purpose here is to take away from the Civil Courts the judicial power and place it with SAC on issues relating to Shariah matters.

Hence, with respect, I disagree with the contention that Semenyih is distinguishable to the case at hand. In Semenyih, the learned Judge had no option but to accept the assessment value of the assessors. His judicial power was taken away in no uncertain terms as to what the compensation amount should be. In this case, similarly the Judge's judicial power to determine whether clause 28 is Shariah compliant is also taken away by the binding effect of the ruling of SAC. In both instances, the Judges have been prohibited from exercising their constitutional duty of judging so to speak. I am fully aware of the fact that in Semenyih, the assessors are part of the tribunal of three, of which the Judge is a member, deciding the compensation amount. Here though SAC is not part of the Court structure, one cannot ignore the two important features and they are firstly that the Court is obliged to refer such dispute on Shariah compliance to the SAC for a ruling and secondly that ruling shall bind the Court which includes the appellate Courts. These two features in effect make the SAC very much part of the judicial framework, though not ostensibly but in my view substantially. SAC, though should be considered as an expert in Islamic law, had by its role of providing a binding ruling on the Courts had in no uncertain term stepped into the sphere of judicial function which under the Federal Constitution is solely reserved to the Civil Courts.

Further I find that there is merit in the contention of the Applicant's learned counsel that Sections 56 and 57 had scuttled the rights of a litigant to a fair trial and to due process. These rights involve the right of a litigant to lead expert evidence on matters requiring the same, the right to cross examine the experts on their expertise and the right to make submissions to assist the Court to form a binding opinion on the litigants. Here the liability of the Applicant is substantially anchored on clause 28 of the ljarah Agreements and with the SAC's binding ruling the Applicant had been deprived of its right to lead evidence and argue that clause 28 is forbidden by law and hence his liability under the agreement is rendered void. It is not insignificant to note that in Semenyih, respective counsel there were given the right to tender expert evidence, cross examine the experts and make submissions to the Court. Despite the aforesaid rights this Court held that Section 40D to be unconstitutional.

If I may add here, the prohibition of litigants from tendering evidence, be it expert evidence or otherwise, in a civil trial goes against the grain of the very notion of fair play, hence breaching one feature of the concept of "rule of law". That feature is no less than the basic right of a litigant to prosecute or defend its case by being able to call witnesses of his or her choice, to cross examine opposing witnesses and then making the relevant submissions before the Courts premised on those evidence. That basic right is available to other litigants in cases unrelated to Sections 56 and 57 regime. To put it in another way, a litigant would be deprived of a fair trial under the regime of Sections 56 and 57 and would in effect be discriminated against in that the notion of "all are equal before the law" as encapsulated in Article 8 of the Federal Constitution, has been compromised. The concept of the rule of law underpins the existence of the basic human rights provided for in our Federal Constitution and any legislation which impinges on the aforesaid concept can and should be struck down.

I am also aware of the contention that Civil Courts may not be well equipped in deciding complex issues of Islamic jurisprudence. This much is made clear by Raus Sharif JCA (as he then was) in Bank Islam Malaysia Berhad v Lim Kok Hoe [2009] 6 CLJ 22 where his Lordship said as follows: [32] In this respect, it is our view that judges in civil court should not take upon themselves to declare whether a matter is in accordance to the Religion of Islam or otherwise. As rightly pointed out by Suriyadi J (as he then was) in Arab-Malaysian Merchant Bank Bhd v. Silver Concept Sdn Bhd [2006] 8 CLJ 9 that in the civil court 'not every presiding judge is a Muslim, and even if so, may not be sufficiently equipped to deal with matters, which ulamak take years to comprehend'. Thus, whether the bank business is in accordance with the Religion of Islam, it needs consideration by eminent jurists who are properly qualified in the field of Islamic jurisprudence.

Similar sentiments are expressed in Sulaiman bin Takrib v Kerajaan Negeri Terengganu (Kerajaan Malaysia, intervener) and other applications [2009] 2 CLJ 54, where Zaki Tun Azmi PCA (as he then was) said, at para. 105: "This court is not an expert in Islamic law. It therefore has to rely on opinions given by experts in this field."

With respect, that contention ignores the sole reason for the very existence of the Civil Courts, and it is this. They exist only to adjudicate disputes between parties and make an informed decision only after hearing all relevant evidence including expert opinions and respective submissions. And with it, there is an appeal framework in place to ensure a correct decision is arrived at by the apex Court of the Land.

Similarly, here respective parties can advance their cases by leading expert evidence, subject the same to cross examination and make their respective submissions before the Court makes its decision. It is in my view that this case is no different to many complex medical negligence or construction or intellectual property or trade mark cases handled by various Courts daily in the country where experts' evidence from respective sides would be led to allow Judges to analyse and then make an informed decision. Judges are trained to analyse evidence led into Courts and in complex issues where expert opinions are required, respective counsel will provide such evidence with their respective analysis to assist the Court to make an informed decision.

Since the preceding sections relating to the establishment and role of the SAC are not impugned, with the striking down of Sections 56 and 57 of the CBMA 2009, proposed new provisions need to be put in place to redefine the role of the SAC in respect of Shariah questions in proceedings relating to Islamic financial business. It is significant that in Semenyih, having struck down section 40D as unconstitutional, this Court issued guidance on the new procedure to be adopted in proceedings to determine the amount of compensation and the redefined role of the assessors. I would adopt the same approach in this instance.

Where a question concerning a Shariah matter arises in any proceedings relating to Islamic financial business, it is suggested that the Court retains the option of referring such question to the SAC for its opinion. In addition to the SAC opinion, parties are free to lead expert evidence in support or contravention of that opinion. The Court is to consider the SAC opinion and all the expert evidence adduced in making a determination. In doing so, persuasive weight ought to be given to the opinion of the SAC, taking into account its special role as a "statutory expert" (as rightly described by Low Hop Bing JCA in Tan Sri Abdul Khalid Ibrahim v Bank Islam (M) Bhd [2013] 3 MLJ 269). Having evaluated all the evidence, the court is at liberty to disagree with the SAC opinion, giving reasons for so doing. This procedure "would in no small way, emphasise the punctilious nature of [the SAC opinion] and the value their role represents" (Semenyih at [124]).

For reasons above, I am constrained to find that Sections 56 and 57 had violated the doctrine of separation of power in that the aforesaid sections had clothed SAC, a non-judicial body under the Federal Constitution, with judicial power. For the avoidance of doubt, this decision is to have prospective effect, and is applicable to this case and future cases.

I have given my draft Judgment to my learned brothers Chief Justice Richard Malanjum and Justice Idrus to peruse and they have indicated to me that they are agreeable to it and the reasons thereof. I have also read to draft judgment of the Chief Justice and I fully agree with the same.

However, in view of my opinion and reasons thereof and with respect, I am unable to agree with the learned draft judgments of my learned brothers Justice Mohd Zawawi Salleh and Justice Azahar Mohamed.

For reasons as stated above, I answer question 1(b) and (c) in the affirmative. As for question 2(a), there is no necessity to answer in view of my answers to question 1(b) and (c). I make no order as to costs. I also order this matter to be remitted back to the High Court for further action. Dated: 10 April 2019. (DAVID WONG DAK WAH) Chief Judge of Sabah and Sarawak Appellant : Dato' Malik Imtiaz Sarwar bersama Pradeep Nandrajog, Chan Wei June, Dinesh Nandrajog, Clinton Tan Kian Seng & Aliff Benjamin Respondent : Yoong Sin Min bersama Samuel Tan Lih Yau & Sanjiv Naddan $ 1^{\mathrm{st}} $ Intervener : Mohd Johan Lee & Muhamad Nakhaie bin Ishak (pencelah 1-Presiden Persatuan Institusi Perbankan Islam Malaysia) $ 2^{\mathrm{nd}} $ Intervener : Dato' Cyrus Das bersama Abdul Rashid Ismail & Siti Nurani Zahidi (pencelah 2-Bank Negara Malaysia) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision.