Gan Partnership updates

No escape from paying minimum wage
Gan Partnership
  • Litigation
  • Malaysia
  • 13 April 2021

A recent Federal Court decision has confirmed that the hotel industry cannot use a service charge to supplement employees' wages in order to meet the minimum threshold for wage requirements. While the decision may be unpopular among hoteliers and related or similar industries, it was inevitable. The long-term impact that it may have on society outweighs any likely detriment that it may cause to a particular industry.

Challenging a liquidator's decision to admit a proof of debt
Gan Partnership
  • Litigation
  • Malaysia
  • 30 March 2021

The Court of Appeal was recently tasked with deciding whether a liquidator's decision to admit a proof of debt could be challenged. This decision clarifies the extent of judicial scrutiny regarding the exercise of liquidators' powers in admitting proofs of debt and at the same time provides welcome guidance for liquidators in this undertaking.

Contractors' claims in adjudication against subcontractors
Gan Partnership
  • Litigation
  • Malaysia
  • 23 March 2021

When a contractor takes over its subcontractor's works, can the contractor make a claim in adjudication against the subcontractor? Scenarios such as this are not uncommon; however, contractors which find themselves in such circumstances and wish to make a claim against the subcontractor by way of adjudication under the Construction Industry Payment and Adjudication Act 2012 should be wary of a recent high court case.

Injunctions against Shopee?
Gan Partnership
  • Litigation
  • Malaysia
  • 02 March 2021

E-commerce platforms are accessible to both authentic and counterfeit sellers. Anyone may register and begin selling immediately, without the need to undergo scrutiny or due diligence. The high court recently provided some clarification on the extent of liability that online marketplaces have regarding IP infringements by sellers. This decision is a palpable relief for online marketplaces, the continued existence of which arguably benefits the public by encouraging competition and stimulating the economy.

Calling on performance bonds: new test for unconscionability?
Gan Partnership
  • Litigation
  • Malaysia
  • 23 February 2021

With the recent enforcement of the Temporary Measures for Reducing the Impact of Coronavirus Disease (COVID-19) Act 2020, the question has arisen as to whether it provides a new ground for contractors to challenge calls on bank guarantees. A recent high court decision on the application of the Prevention and Control of Infectious Diseases (Measures Within Infected Local Areas) Regulations 2020 provides insight into how the courts may interpret the act.

Housing developers beware – aftermath of PJD
Gan Partnership
  • Litigation
  • Malaysia
  • 16 February 2021

The Federal Court recently delivered a landmark decision concerning the delay of delivery of vacant possession for Schedule G and H-type contracts under the Housing Development (Control and Licensing) Regulations. This article focuses on the decision's impact on housing developers with respect to their completed and ongoing housing projects. While the dust on the calculation of liquidated and ascertained damages for housing projects is now settled, the storm may be brewing for housing developers.

Housing developers beware – Federal Court upholds Faber Union
Gan Partnership
  • Litigation
  • Malaysia
  • 09 February 2021

In a recent landmark decision, the Federal Court unanimously held that Faber Union is good law. The key question that the court considered was where there is a delay in the delivery of vacant possession, does the date for the calculation of liquidated and ascertained damages begin on the date of the payment of the booking fee or on the date of the sale and purchase agreement?

Federal Court rules that termination clauses should be construed strictly
Gan Partnership
  • Litigation
  • Malaysia
  • 02 February 2021

A recent Federal Court decision has breathed new life into the interpretation of termination clauses in contracts. Indeed, it sounded a cautionary note to the business community at large when the court held that termination clauses must be interpreted strictly. This decision is a warning to all contracting parties not to rush the termination of a contract. Instead, care and a meticulous reading of the entire contract are required to ensure strict compliance with the termination clauses.

Who has the right to sue a consultant?
Gan Partnership
  • Litigation
  • Malaysia
  • 26 January 2021

As cashflow is crucial for main contractors in any ongoing construction project, prompt and expeditious payments by the employer are often expected. However, if the main contractor is dissatisfied with the payment certificate, can the main contractor sue the consultant for negligence? The Court of Appeal recently addressed this question and unanimously upheld a high court decision in dismissing a main contractor's claim against a consultant.

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.

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