Gan Partnership updates

Oppression versus derivative actions: courts' wide discretion maintained
Gan Partnership
  • Litigation
  • Malaysia
  • 19 January 2021

The Federal Court recently refused leave to appeal a Court of Appeal decision which had found that the courts' powers in an oppression action are broad and unfettered. This includes the power to order restitution to a company, a remedy traditionally seen as belonging to companies. The broad language used in the oppression provision is crucial in providing the courts with the necessary discretion to formulate remedies which are appropriate and just in the circumstances of a particular case.

Section 368 of Companies Act: apex court rules ex parte application for restraining proceedings is valid
Gan Partnership
  • Litigation
  • Malaysia
  • 12 January 2021

A recent Federal Court decision regarding applications made by a company or its creditors under Section 368 of the Companies Act 2016 to restrain proceedings against the company under a proposed scheme of arrangement appears to be a welcomed decision. Clarity is now proffered on the procedure to be adopted when making such applications. Nevertheless, there may yet still be room for further judicial interpretation on applications concerning a scheme of arrangement.

De facto doctrine applies to defective judicial appointments and preserves judicial decisions
Gan Partnership
  • Litigation
  • Malaysia
  • 22 December 2020

Pursuant to Rule 137 of the Rules of the Federal Court 1995, seven motions were filed in the apex court, requesting it to invoke its inherent power to review its decisions delivered in seven separate lawsuits. Interestingly, a common question arose from these motions premised on coram failure and further questions that were peculiar to the circumstances of each case. While the apex court dismissed all of the motions, its unanimous decision on coram failure is significant for ongoing and future cases.

Court rules former director of AIAC's directorship is non-justiciable
Gan Partnership
  • Litigation
  • Malaysia
  • 15 December 2020

The Kuala Lumpur High Court recently struck out two originating summonses against the former director of the Asian International Arbitration Centre (AIAC). The court's ruling included that the appointment of the director of the AIAC was not justiciable. It is hoped that this decision will provide valuable case law and put similar challenges to rest, as such challenges are not only vexatious but also a waste of judicial time and resources.

Consequential order: functus officio rule stretched for interest of justice
Gan Partnership
  • Litigation
  • Malaysia
  • 01 December 2020

The Federal Court recently confirmed that the court is entitled to issue a further order subsequent to its final and perfected judgments or orders only in limited circumstances. However, a change or substitution of one form of remedy with another form of remedy ordered in a subsequent application does not amount to variation subject to the facts of each case. This decision reinforces the inherent jurisdiction of the court to grant consequential orders to ensure that justice is achieved.

Derivative proceedings: leave of court is substantive legal requirement
Gan Partnership
  • Litigation
  • Malaysia
  • 24 November 2020

The Court of Appeal recently ruled that Sections 347(1) and (2) of the Companies Act 2016, which require leave of court to be obtained before any action may be initiated on behalf of a company and any such action to be brought in the name of the company, are substantive law and not merely procedural. Following this decision, it is clear that violations of Sections 347(1) and (2) are not mere irregularities, but illegalities.

Competing claims in curial and arbitral proceedings: recent anti-arbitration injunction developments
Gan Partnership
  • Litigation
  • Malaysia
  • 17 November 2020

Are the Malaysian courts adopting a minimalist judicial intervention approach when considering anti-arbitration injunctions? This article discusses a recent Federal Court decision which dealt with the issue of competing claims in curial and arbitral proceedings where not all parties were before both forums, and two recent high court decisions that made reference to the Federal Court decision.

Can management corporations stop parcel owners from operating Airbnbs?
Gan Partnership
  • Litigation
  • Malaysia
  • 10 November 2020

A recent Federal Court judgment determined whether the management corporation of a stratified development can introduce a new bylaw forbidding parcel owners from using their units to carry out short-term rentals, even if the express condition of the title stipulates that the building is a commercial building. More robust regulations may be implemented in Malaysia to regulate short-term rentals such as Airbnb due to this apex court's decision.

Post-ASM: is an adjudication decision a disputed debt?
Gan Partnership
  • Litigation
  • Malaysia
  • 13 October 2020

In ASM Development (KL) Sdn Bhd v Econpile (M) Sdn Bhd, Darryl Goon J (now JCA) held that an adjudication decision, even one which has been enforced as if it were a court judgment or order pursuant to Section 28 of the Construction Industry Payment and Adjudication Act 2012, is still a disputable decision. While the high court departed from ASM in one recent case, in another, it agreed with Darryl Goon J's decision. As such, there now appears to be two different schools of thought on this matter.

From bare trustee to chargee: does registration of a charge assure an indefeasible interest?
Gan Partnership
  • Litigation
  • Malaysia
  • 06 October 2020

The concept of indefeasibility is the cornerstone of Peninsular Malaysia's land administration system, which is embodied in Section 340 of the National Land Code 1965. Once an interest is registered in the title of a property, it is immune against any adverse claims. While disputes on indefeasibility are not uncommon in Malaysia, the apex court recently faced another dispute involving the registered interest of a licensed financial institution and an unregistered interest of an owner.

CIPAA: court has no discretion to set aside adjudicator's costs order
Gan Partnership
  • Litigation
  • Malaysia
  • 15 September 2020

The Construction Industry Payment Adjudication Act 2012 (CIPAA) was enacted to alleviate payment problems in the construction industry by allowing any payment dispute to be resolved speedily through adjudication. However, the losing party may opt to set aside or stay an adjudication decision pursuant to Sections 15 and 16 of the CIPAA. In a recent case, a dilemma arose as to whether the costs determined by the adjudicator in withdrawing adjudication proceedings could be challenged in court.

Section 30 of CIPAA: apex court maintains mandatory direct payment obligation against employer under receivership
Gan Partnership
  • Litigation
  • Malaysia
  • 08 September 2020

Section 30 of the Construction Industry Payment and Adjudication Act 2012 creates a statutory obligation for a principal to make the payment awarded by an adjudication decision to a subcontractor in the event of the main contractor's failure to do so. In a recent case, an issue arose on whether direct payment could be ordered against a principal when winding-up proceedings against the main contractor were already afoot.

Apex court decides on validity and effects of retrospective sanction by liquidators
Gan Partnership
  • Litigation
  • Malaysia
  • 25 August 2020

When a company is wound up by a court order, a liquidator steps in and manages the company. It is enunciated in the Malaysian company law regime that the legal standing of such company to bring or proceed with an action or proceedings is vested in the liquidator. If an action or proceeding is taken by a wound-up company, the liquidator's prior sanction must be obtained. The apex court recently handed down a landmark judgment on the validity of retrospective sanction granted by liquidators.

Embassy dismisses employee: exercise of jure imperii or act of jure gestionis?
Gan Partnership
  • Litigation
  • Malaysia
  • 18 August 2020

In a recent case, a high court faced a judicial review application filed by the United States in Malaysia. The facts leading to the application were uncommon and the court considered a novel aspect of industrial law jurisprudence in Malaysia. The high court judge's assessment of the facts in light of the sovereign immunity principle gives a fresh perspective in industrial law jurisprudence.

Apex court rules that maintenance charges owed by parcel proprietors constitute unsecured debts
Gan Partnership
  • Litigation
  • Malaysia
  • 11 August 2020

As Section 77 of the Strata Management Act provides that the amount due to a management corporation (MC) is a 'guaranteed sum', issues arise as to whether an MC is a secured creditor in the event that a parcel proprietor is insolvent and wound up. In a recent decision, the Federal Court decided that the outstanding amount due to an MC is an unsecured debt.

Utility innovation infringement and invalidation disputes
Gan Partnership
  • Litigation
  • Malaysia
  • 04 August 2020

In general, when an individual asks "how can I protect my invention?", only one answer comes to mind: patents. While this is not wrong, most individuals are unaware of the patent's lesser-known sibling – the utility innovation. Utility innovations are commonly known as 'minor' or 'petty' patents. Much like patents, owners of a granted utility innovation have exclusive rights to exploit said utility innovation for 20 years. This article examines a recent case concerning a utility innovation.

Section 314 of Companies Act: court orders one-member extraordinary general meeting
Gan Partnership
  • Litigation
  • Malaysia
  • 21 July 2020

A high court recently allowed a shareholder to convene a one-member extraordinary general meeting of a family-run company. In applying for a court-ordered meeting, applicants must prove that it is otherwise impracticable to hold the meeting. This case is significant to the issue of whether the application of this test is different for family-run companies.

Apex court rules that foreign employee on successive fixed-term contract is permanent employee
Gan Partnership
  • Litigation
  • Malaysia
  • 14 July 2020

Employers can offer fixed-term contracts to their employees (often for economic or management reasons). However, such prerogative is subject to scrutiny by the Malaysian courts so that it does not fetter employees' rights in terms of employment security. The Federal Court recently delivered a groundbreaking decision on this matter concerning a foreign employee.

Apex court rules that high court orders and decisions that do not finally dispose of litigants' rights are non-appealable
Gan Partnership
  • Litigation
  • Malaysia
  • 23 June 2020

Section 67 of the Courts of Judicature Act 1964 sets out the right to appeal in civil suits. However, confusion commonly arises when deciding whether an order or judgment made by a high court in a civil matter is appealable. The Federal Court recently clarified this issue by affirming that a decision made during a trial that does not finally dispose of the parties' rights is non-appealable.

Courts' discretion to hold virtual hearings
Gan Partnership
  • Litigation
  • Malaysia
  • 16 June 2020

In a recent case, the plaintiff obtained a judgment in default of defence against multiple defendants during the enforcement of the Movement Control Order in Malaysia. Subsequently, the judge held that various applications of the plaintiff and the defendants be heard by way of a Skype videoconference due to the ongoing COVID-19 pandemic. Dissatisfied with the videoconference, the plaintiff challenged its validity.

Current search