Suruhanjaya Sekuriti Malaysia v WONG SHEE KAI (WA-22NCC-171-05/2020)

WONG SHEE KAI

TEH SEW WAN

WONG SK HOLDINGS SDN. BHD. (COMPANY NO.: 729123-K) ... DEFENDANTS JUDGMENT [1] Before the court is an application for leave to commence committal proceedings against the Securities Commission Malaysia ("SC"), arising from allegations that the SC interfered with and prevented compliance with a court order permitting the disposal of shares to satisfy tax liabilities. The application centres on whether the SC's actions in advising a financial institution about compliance with an existing seizure order amounts to contempt of court, particularly in circumstances where the SC maintains it was acting within its regulatory role and directing the applicants to seek appropriate variation from the relevant authority. At the heart of this matter lies the interplay between a court order S/N A3zZ6xC8y0iyk8d2Yg6afA varying an earlier Mareva injunction and an administrative seizure order issued under anti-money laundering legislation, raising important questions about the scope of contempt jurisdiction where competing legal obligations exist. Background facts [2] The Plaintiff, the SC, filed the suit herein against the 1st Defendant, Wong Shee Kai (“D1”), the 2nd Defendant, Teh Sew Wan (“D2”) and the 3rd Defendant, Wong SK Holdings Sdn Bhd (“D3”). The case concerns three corporate exercises conducted by Bright Packaging Industry Berhad (“BPI”) between 2013 and 2015: a Rights Issue Exercise completed on 23.1.2014 that raised RM47,613,390.00; a Private Placement Exercise completed on 30.7.2014 that raised RM7,791,000.00; and an Employee Share Option Scheme completed in two rounds on 24.2.2015 and 24.4.2015, raising RM9,300,000.00 and RM3,983,500.00 respectively. [3] BPI is a public company listed on the Main Market of Bursa Malaysia Securities Berhad, engaged in manufacturing aluminium foil packaging materials and investment holding. D3 emerged as BPI's substantial shareholder on 10.10.2013 and currently holds a 32.94% stake, making it BPI's largest shareholder. D1 and his mother, D2, are the only directors and shareholders of D3. S/N A3zZ6xC8y0iyk8d2Yg6afA [4] The present matter before the court (Enclosure 692) concerns an application for leave to commence committal proceedings against the SC. This arises from events relating to a Variation Order dated 31.1.2023 (Enclosure 607) (“Variation Order”) which varied an earlier Mareva injunction dated 28.4.2022 (Enclosure 462). The Variation Order permitted D1 and D3 to withdraw RM5,037,159.41 or such other settlement sum for making payment to the Inland Revenue Board (“IRB”) pursuant to a tax settlement. [5] On 2.3.2023, a Consent Order was entered between D1 and the IRB in judicial review proceedings WA-25-305- 08/2021, requiring payment of the settlement sum by 25.12.2023. A first payment of RM1,995,400.00 was eventually made to the IRB following the disposal of 20,000,000 BPI shares around May 2024. [6] For the balance payment, on 12.9.2024, D1 instructed RHB Investment Bank (“RHB Investment Bank”) to dispose of and transfer 36,500,000 BPI shares to raise approximately RM3,041,759.42. However, RHB Investment Bank informed on 13.9.2024 that they could not process the transfer as they required clearance from the SC. [7] The shares in question are held in D3's RHB Investment Bank Account No. 240353, which is subject to a Seizure Order dated 5.8.2019 (“AMLA Seizure Order”) under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (“AMLA 2001”). S/N A3zZ6xC8y0iyk8d2Yg6afA On 8.5.2020, the Public Prosecutor initiated forfeiture proceedings (WA-44-98-05/2020) specifically targeting 5,792,000 BPI shares in this account. [8] The Government of Malaysia has separately filed a civil recovery suit against D1 (BA-21NCvC-26-06/2024) for non-payment of the outstanding tax sum, which includes a 10% late payment penalty. This resulted in a total claim amount of RM5,503,695.91, subject to interest and costs. [9] The present application for committal proceedings centres on whether the SC's actions regarding the clearance for the share disposal constitute a breach of the Variation Order dated 31.1.2023. Enclosure 692 [10] The Notice of Application (Enclosure 692) is an ex-parte application filed by D1 and D3 (“the Applicants”) seeking leave to commence committal proceedings against the SC pursuant to Order 52 Rule 3(2) of the Rules of Court 2012. The Applicants seek five prayers: (1) leave to apply for an order of committal against the SC for intentionally disobeying/circumventing the High Court's Variation Order dated 31.1.2023; (2) that the SC be held in contempt for intentionally disobeying/circumventing the Variation Order and be penalised with a fine and/or an appropriate order of committal; (3) costs of the application and costs of issuing and executing any order be borne by the SC; (4) liberty to S/N A3zZ6xC8y0iyk8d2Yg6afA apply for directions on service of the Notice of Application, Statement and supporting Affidavit; and (5) such further or other orders as the court deems fit. [11] The grounds of the application are that on 28.4.2022, the court granted a Mareva injunction restraining the Defendants from disposing of assets up to specified values. This was subsequently varied by the Variation Order dated 31.1.2023 to allow the Applicants to withdraw RM5,037,159.41 or such other settlement sum for payment to the IRB. On 12.9.2024, D1 instructed RHB Investment Bank to dispose of and transfer 36,500,000 BPI shares for payment of the outstanding tax sum of RM3,041,759.42. However, the SC allegedly used its regulatory powers to prevent RHB Investment Bank from executing this transaction, which the Applicants contend constitutes a direct contempt of the Variation Order. The Applicants argue that the SC is directly responsible for this contempt and should be punished accordingly. Procedural history [12] On 30.9.2024, the Applicants filed Enclosure 692 against the SC, supported by their affidavit in support in Enclosure 694. [13] A case management for Enc 692 was held on 4.10.2024. Although the application was filed ex-parte, the SC’s solicitors, Messrs Lim Chee Wee Partnership (“LCWP”) had S/N A3zZ6xC8y0iyk8d2Yg6afA requested to be present. Tan Sri Shafee Abdullah, appearing for the Applicants, agreed to allow the SC to participate, and the court permitted their participation on an opposed ex-parte basis. Given the urgency related to tax payment deadlines, the hearing was fixed for 8.10.2024 at 4pm, with directions for the Applicants to serve the papers on the SC’s solicitors. [14] The hearing of the opposed ex-parte application took place on 8.10.2024. After hearing full submissions from both parties, the court reserved its decision to 9.10.2024. [15] On 9.10.2024, the court delivered its decision dismissing the application for leave to commence committal proceedings, finding that no prima facie case of contempt had been established. Respective parties’ submissions [16] The Applicants argued that the SC has interfered with and obstructed the implementation of the Variation Order by preventing RHB Investment Bank from executing the transfer of shares. They contend that the AMLA Seizure Order has lapsed after one year under Section 52A AMLA 2001, and even if the forfeiture proceedings keep it alive, it only affects 5.8 million shares while they have over 65 million shares available. They argue that the SC is wrongfully using the AMLA Seizure Order to block the share disposal when the Attorney General’s Chambers (“AGC”), S/N A3zZ6xC8y0iyk8d2Yg6afA who has actual jurisdiction over AMLA 2001 matters, has not objected or intervened. [17] The the SC submitted that there can be no contempt as the Variation Order does not impose any positive obligations on the SC and contains no penal notice. They argue they have consistently advised that the AMLA Seizure Order requires variation from the AGC first, and that they have only acted within their regulatory role by advising RHB Investment Bank about compliance with the existing seizure order. They contend they cannot speak for the AGC on AMLA 2001 matters and have repeatedly directed the Applicants to seek the AGC's consent to vary the AMLA Seizure Order. [18] The key issues to be determined are therefore: a) Whether the lack of a penal notice in the Variation Order precludes a finding of contempt; b) Whether there is a prima facie case of contempt against the SC; and c) Whether the SC's actions amount to interference with the Variation Order. [19] Section 52A AMLA 2001 reads: “A seizure order made under this Act shall cease to have effect after the expiration of twelve months from the date of the seizure order, or where there is S/N A3zZ6xC8y0iyk8d2Yg6afA a prior freezing order, twelve months from the date of the freezing order, if the person against whom the order was made has not been charged with an offence under this Act.” Analysis and findings of the court Issue 1: Lack of Penal Notice [20] The SC contends that the absence of a penal notice in the Variation Order is fatal to any finding of contempt. Relying on Loh Eng Leong & Anor v Lo Mun Sen & Sons Sdn Bhd & Anor [2003] 4 MLJ 284 (Court of Appeal) and Sushi Kitchen Group Sdn Bhd & Anor v Goh Hooi Cheen [2024] 3 CLJ 476 (High Court), the SC argues that a penal notice is a mandatory prerequisite for contempt proceedings, and its absence renders the application fatally defective. [21] The Applicants argue that a penal notice is not required in this instance as the Variation Order does not impose any positive obligation on the SC. They contend that the order is permissive in nature, allowing the Applicants to withdraw funds and dispose of shares for tax payment purposes, rather than requiring the SC to perform or abstain from any specific act. [22] I find merit in the Applicants' position. The Court of Appeal in Loh Eng Leong held that a penal notice is mandatory where the order requires a person to do an act within a specified time. This principle was recently affirmed by Azlan S/N A3zZ6xC8y0iyk8d2Yg6afA Sulaiman JC (as he then was) in Sushi Kitchen Group. However, both these authorities dealt with contempt arising from non-compliance with mandatory orders imposing positive obligations on the alleged contemnors. [23] The present case is materially different. The Variation Order is permissive in nature, allowing D1 and D3 to withdraw RM5,037,159.41 or such other settlement sum for payment to the IRB, and to dispose of shares in BPI for raising this sum. Paragraph 2 and 3 of the Variation Order reads: “2) The Order of this Court dated 28.04.2022 in Enclosure 462 is varied to allow the 1st and 3rd Defendants to withdraw a sum of RM5,037,159.41 or such other settlement sum for the purposes of making and/or effecting payment to the Inland Revenue Board of Malaysia ("IRBM") pursuant to and in relation to the settlement of the 1st Defendant's tax liabilities ("Settlement Sum"); 3) Further to prayer (2) above, the 1st and 3rd Defendants shall be allowed to withdraw any sum and/or dispose of any such number of shares in Bright Packaging Industry Berhad ("BPIB") as registered in the 3rd Defendant's name for the purposes of raising the Settlement Sum;” [24] It does not impose any positive obligation on the SC to perform any act or to abstain from doing anything specific. [25] The contempt alleged here stems from the SC's purported interference with the implementation of a permissive court order, rather than non-compliance with a mandatory direction. The correspondence between RHB Investment Bank and the parties, particularly the communications dated

13.9.2024 and 23.9.2024, evidences that the SC's actions allegedly prevented the bank from processing the Applicants' share disposal instructions, despite the explicit permission granted by the Variation Order. [26] To hold that the absence of a penal notice precludes contempt proceedings in such circumstances would create an undesirable lacuna in the law. It would effectively allow third parties to interfere with court orders with impunity, provided the order did not contain a penal notice specifically directed at them. This cannot be the intention behind the requirement for penal notices, which primarily serves to warn parties subject to mandatory orders of the consequences of their non-compliance. [27] The nature of the alleged contempt here - interference with the administration of justice through obstruction of a court order - is fundamentally different from the non-compliance cases where the penal notice requirement has been strictly enforced. This distinction is significant and warrants a different approach to the penal notice requirement. [28] Accordingly, while I acknowledge the general importance of penal notices in contempt proceedings as emphasised in Loh Eng Leong and Sushi Kitchen Group, I find that their absence is not fatal to the present application, given the permissive nature of the Variation Order and the type of contempt alleged. However, this finding alone does not dispose of the application, as the Applicants must still S/N A3zZ6xC8y0iyk8d2Yg6afA demonstrate that the other requirements for contempt have been satisfied, particularly the existence of a prima facie case against the SC. Issue 2: Prima Facie Case of Contempt [29] The Applicants submit that the SC has deliberately obstructed compliance with the Variation Order by preventing RHB Investment Bank from disposing of 36,500,000 BPIB shares to pay the outstanding tax sum of RM3,041,759.42 to the IRB. They argue this amounts to wilful interference with the Variation Order. [30] The SC contends there is no prima facie case as the Variation Order imposed no positive obligation on the SC, and that the SC has consistently advised the Applicants to deal with the AGC regarding variation of the AMLA Seizure Order affecting the shares. [31] After careful consideration of the submissions, I find that the Applicants have failed to establish a prima facie case of contempt against the SC. This finding aligns with the principles established in Dato' Oon Ah Baa & Ors v Eagle & Pagoda Brand Teck Aun Medical Factory Sdn Bhd & Ors [2003] 7 CLJ 81. In that case, VT Singham J held that “the plaintiffs must demonstrate a prima facie case of contempt and that the express terms of the order have been breached.” The learned judge further emphasised that “to extend or widen the terms of the court order for the S/N A3zZ6xC8y0iyk8d2Yg6afA convenience of the plaintiffs so as to obtain leave to commence committal proceedings seems to be an 'unwarrantable stretch of judicial authority'.” [32] Applying these principles to the present case, it is clear that the Applicants have not shown any breach of the express terms of the Variation Order by the SC. The Variation Order is permissive in nature, allowing the Applicants to withdraw funds or dispose of shares to pay tax liabilities. It does not impose any specific obligations on the SC. As in the Dato' Oon case, the Applicants here are essentially asking the court to widen the scope of the Variation Order to include terms that were not originally present. [33] The evidence demonstrates that the SC has acted consistently within its regulatory role. Letters dated 26.7.2024 and 23.9.2024 from LCWP clearly show that the SC has repeatedly advised the Applicants to seek variation of the AMLA Seizure Order from AGC. This advice is entirely appropriate given that breach of the AMLA Seizure Order would constitute a statutory offence under Section 50(3) of AMLA 2001 which reads: “(3) Any person who fails to comply with an order of the Public Prosecutor under subsection (1) commits an offence and shall on conviction be liable to a fine not exceeding five times the amount which was parted with, dealt in or otherwise disposed of in contravention of the Public Prosecutor's order or five million ringgit, whichever is the higher, or to imprisonment for a term not exceeding seven years or to both, and, in the case of a continuing offence, shall in addition be liable to S/N A3zZ6xC8y0iyk8d2Yg6afA a fine not exceeding five thousand ringgit for each day or part thereof during which the offence continues to be committed.” [34] Furthermore, LCWP's letter dated 26.7.2024 explicitly states that the Applicants “are to obtain the AGC's consent to vary the Seizure Order for any future disposal of the BPI shares.” This demonstrates the SC's consistent position on the matter. [35] The Applicants have raised concerns that the SC's correspondence advising them to obtain AGC's consent was not copied to AGC. However, this does not undermine the SC's position for several reasons. Firstly, there is no legal requirement for the SC to copy such correspondence to AGC. The SC's role is to advise parties on regulatory matters, not to act as an intermediary between litigants and the AGC. Secondly, the absence of AGC in copy does not negate the substance of the SC's advice, which consistently and appropriately directed the Applicants to the correct authority for addressing matters related to the AMLA 2001. Thirdly, it is not uncommon or improper for regulatory bodies to communicate their understanding of other agencies' positions without directly involving those agencies in every correspondence. [36] Moreover, the Applicants, as the parties seeking to vary the AMLA Seizure Order, bear the primary responsibility for engaging with AGC. LCWP’s advice to seek AGC's consent does not create an obligation for the SC to facilitate that S/N A3zZ6xC8y0iyk8d2Yg6afA communication. The Applicants' argument on this point appears to be an attempt to shift their own responsibility onto the SC, which is neither legally required nor practically justified. This is evidenced by the letter dated 23.9.2024, which states, “Your clients are seeking explanation on matters that have already been made abundantly clear in all our previous correspondences. Despite that, your clients still instructed RHB Investment Bank to carry out the latest disposal without varying the Seizure Order.” [37] It is also worth noting that the Applicants have not presented any evidence that they actually attempted to contact AGC as advised by the SC. Had they done so and encountered difficulties, or had AGC contradicted the SC's understanding of the situation, that might lend weight to their concerns. In the absence of such evidence, the fact that the SC did not copy AGC on its correspondence does not support an inference of improper conduct or contempt of court. In fact, LCWP’s letter dated 23.9.2024 points out that “In the time taken to instruct you and for the Letter to be issued to threaten legal action against our client, your clients could and ought to have written to the AGC for the variation of the Seizure Order before said disposal.” [38] While the Applicants argue that the AMLA Seizure Order has lapsed under Section 52A of AMLA 2001, this is not a matter for determination in these proceedings. LCWP’s letter dated 23.9.2024 indicates that the AGC has taken the position that the AMLA Seizure Order remains in force until S/N A3zZ6xC8y0iyk8d2Yg6afA disposal of the forfeiture proceedings. The SC, as a regulatory body, is correct to defer to the AGC's interpretation of the AMLA 2001 provisions. This approach is consistent with the principle in Dato' Oon that the court should not extend or distort the interpretation of a clear court order. [39] Furthermore, the fact that the SC allowed a previous disposal of 20,000,000 shares does not establish a prima facie case of contempt. Rather, it demonstrates the SC's willingness to facilitate transactions when there is no apparent conflict with other court orders. This aligns with the principle in Dato' Oon that contempt should not be inferred where the alleged conduct does not clearly violate the express terms of the order. LCWP’s letter dated 23.9.2024 clarifies this point, stating that “The previous payments of legal fees were squarely within the Variation Orders to the Injunction Order by way of consent dated 31 May 2021 (Enclosure 262) and dated 26 October 2022 (Enclosure 539). These payments were not subject to and did not involve the Seizure Order, unlike WSKH's RHB Investment Bank Account.” Issue 3: Interference with the Variation Order [40] The Applicants argue that the SC's refusal to allow RHB Investment Bank to dispose of the shares amounts to wilful interference with the Variation Order. They contend the SC has no valid basis to prevent the disposal, as the AMLA S/N A3zZ6xC8y0iyk8d2Yg6afA Seizure Order has lapsed or only affects a small portion of the shares. [41] The SC maintains it is merely advising compliance with the AMLA Seizure Order, and that the Applicants should deal with AGC to vary that order if necessary. The SC denies any intentional obstruction of the Variation Order. [42] I find that the SC's actions do not amount to interference with the Variation Order. As held by the Supreme Court in Wee Choo Keong v MBf Holdings & Anor And Another Appeal [1993] 3 CLJ 210, orders of court must be treated with respect and require strict obedience. While that principle underscores the importance of complying with court orders like the Variation Order, the SC's conduct in advising RHB Investment Bank about its statutory obligations under Section 50(3) of AMLA 2001 regarding the administrative AMLA Seizure Order issued by AGC does not breach or interfere with the Variation Order. The AMLA Seizure Order operates under a separate statutory regime and the SC's advice about compliance with it, while directing the Applicants to seek appropriate variation from AGC, demonstrates appropriate recognition of distinct legal obligations rather than obstruction of the court's order. [43] This is evident from the SC's repeated advice in its correspondence, such as in LCWP’s letter dated 23.9.2024, which states, “We reiterate that your clients are required to obtain the AGC's consent to vary the Seizure Order for the S/N A3zZ6xC8y0iyk8d2Yg6afA disposal of the 36,500,000 BPI Shares. Kindly reach out to the AGC's Money Laundering Crimes and Forfeiture of Proceeds of Crime Unit to resolve the issue on variation of the Seizure Order.” [44] In Dato' Oon, the court emphasised that “the terms of the order of court …are expressly clear and not ambiguous and there can be no extended or distorted interpretation given as parties are only bound by the terms of the said order.” Applying this principle to the present case, it is clear that the SC's actions in advising compliance with the AMLA Seizure Order and directing the Applicants to seek variation from AGC do not amount to interference with the express terms of the Variation Order. To find otherwise would require the court to extend the interpretation of the Variation Order beyond its clear and unambiguous terms. [45] The SC's position is further strengthened by its clear acknowledgment of the AGC's jurisdiction over AMLA 2001 matters. This demonstrates that the SC is not overreaching its authority but is appropriately deferring to the relevant body on matters outside its direct purview. This is evidenced by LCWP’s letter dated 26.7.2024, which states, “You may direct any future correspondences on this matter to the AGC's Money Laundering Crimes and Forfeiture of Proceeds of Crime Unit.” The fact that the SC allowed a previous disposal of 20,000,000 shares does not undermine its current position; rather, it shows that the SC is willing to S/N A3zZ6xC8y0iyk8d2Yg6afA facilitate transactions when there is no apparent conflict with other court orders. [46] The Applicants' concern about delay in tax payment, while understandable, does not justify a finding of contempt against the SC. The SC has demonstrated its willingness to facilitate the payment process, as evidenced by the letter dated 23.9.2024, which states “Further, our client expressed their willingness to facilitate the variation of the Seizure Order.” This shows that the SC is not obstructing the court's intention but is seeking to ensure compliance with all relevant legal obligations. Furthermore, the letter dated 23.9.2024 emphasises that “Any delay in the disposal of the 36,500,000 BPI shares and/or the payment of the Settlement Sum to the IRB and any resulting penalties are solely, if at all, caused by your clients' contumelious conduct and refusal and/or inaction to obtain a variation of the Seizure Order.” Conclusion [47] For the reasons set out above, I am not satisfied that the Applicants have established a prima facie case of contempt against the SC. While the absence of a penal notice in the Variation Order does not preclude contempt proceedings in this instance, the evidence demonstrates that the SC has acted consistently within its regulatory role, advising compliance with existing court orders and directing the Applicants to the appropriate authority to address their S/N A3zZ6xC8y0iyk8d2Yg6afA concerns about the AMLA Seizure Order. The SC's actions do not amount to interference with the Variation Order but rather reflect a cautious and appropriate approach to navigating potentially conflicting legal obligations. [48] This decision is consistent with the approach in Dato' Oon, which emphasises the need for a clear prima facie case of contempt based on the express terms of the court order, without extending or distorting its interpretation. [49] The correspondence between the parties clearly demonstrates that the SC has consistently advised the Applicants on the proper course of action and has not willfully obstructed the implementation of the Variation Order. [50] Accordingly, the application for leave to commence committal proceedings against the SC is dismissed with costs. I order costs of RM20,000 to be payable by the Applicants the SC, to be paid within one month. 12 January 2025 ATAN MUSTAFFA YUSSOF AHMAD Judge Kuala Lumpur High Court (Commercial Division) S/N A3zZ6xC8y0iyk8d2Yg6afA Counsel: For the Plaintiff: Dato' Lim Chee Wee, Kwan Will Sen, Joyce Lim Hwee Yin, Annabel Tan Sher May, Esther Hong Hui Jun, Cheryl Yee Jia Le (Pupil in Chambers), Nurul Rafeeza Hamdan and Keith Loo Kit Ming (Messrs Lim Chee Wee Partnership) For the 1st and 3rd Defendants: Muhammad Farhan Shafee, Abhilaash Subramaniam, M Naresh PDK and Lim Zun Kang PDK (Messrs. Shafee & Co)