Right to prevent processing for purposes of direct marketing

Pursuant to s. 43(1) of the Personal Data Protection Act 2010 (PDPA), a data subject may, at any time by notice in writing to a data user, require the data user at the end of such period as is reasonable in the circumstances to cease or not to begin processing his personal data for purposes of direct marketing.

In this regard, the Personal Data Protection Commissioner has recently issued two (2) template letters for data subjects to use when the latter-

(1) makes a request to a data user to cease the processing of his personal data for marketing purpose; or
(2) files an application to the Commissioner to require the data user to comply with the notice.

Pursuant to s. 43(4) of the PDPA, a data user who fails to comply with the requirement of the Commissioner commits an offence and shall, on conviction, be liable to a fine not exceeding RM200,000 or to imprisonment for a term not exceeding 2 years or to both.

Download:-
(1) Template notice to data user to prevent processing for purposes of direct marketing
(2) Template notice to Commissioner to cease or not to begin processing personal data for purposes of direct marketing.

Notes
1. “direct marketing” means the communication by whatever means of any advertising or marketing material which is directed to particular individuals
2. These templates merely serve only as a guide.

Hijacking hardware in stealth mode

I was featured by The Star in their article “Hijacking hardware in stealth mode“. I was asked to comment about malicious cryptomining Malaysia.

Under our law, malicious cryptominers can be punished with the Computer Crimes Act 1997, says Bar Council information technology and cyberlaw committee deputy chairman Foong Cheng Leong.

“It can be considered unauthorised access to computer material or unauthorised modification to computer material,” he adds.

If found guilty for unauthorised access, the cybercriminal can face up to a RM50,000 fine, a five-year jail term or both.

At present, digital currencies such as bitcoin are not recognised as legal tender in Malaysia.

But cryptocurrency exchangers are required to report their activities to Bank Negara.

This reporting obligation, the central bank was reported as saying, is the first step in making activities in the cryptocurrency business more transparent.

Foong says while it is not recognised as legal tender, it doesn’t mean cryptocurrency is illegal.

“You can still use digital currencies to purchase things. It is up to the buyer and seller,” he adds.

However, he points out that cryptocurrency may also be misused, particularly in the black market for illegal purposes like money laundering, purchase of drugs and other undesirable items, to avoid detection.

“I foresee more crimes and disputes may arise from there,” Foong says.

Getting ‘played’ over games

I was featured by The Star in their article “Getting ‘played’ over games“. I was asked to comment about online impersonation in Malaysia.

Bar Council information technology and cyberlaw committee deputy chairman Foong Cheng Leong said somebody who impersonates another person online could be breaking the law if the actions fall within criminal activity.

“For example, impersonation to gain monetary benefit could amounting to cheating.

“Impersonation, as a prank, is not a criminal act,” he explains.

Hence, it is considered a crime in cases where the online impersonator asks for money from unsuspecting victims – or as in the case of this latest twist, tricking them into buying game credits for them.

Such an offence comes under Section 420 of the Penal Code for cheating and dishonestly inducing delivery of property.

It is a crime punishable with a jail term of between one and 10 years, with whipping and a fine.

However, even the act of hacking into a person’s social media account alone, whether it is a prank or not, crosses into the criminal realm.

Under the Computer Crimes Act, a person who gains unauthorized access to computer material is guilty of an offence.

Those convicted could be liable to a maximum fine of RM50,000, five years in jail or both.

Hacking with intent to commit further offences, including fraud, also amounts to a crime.

If found guilty, the court can sentence a person to a maximum fine of RM150,000, a 10 year jail term or both.

Farewell for Justice Wong Kian Kheong

Farewell dinner with the members of Intellectual Property Bar for Justice Wong Kian Kheong who presided the Intellectual Property Court from 1st January 2016 to 31 August 2018.

We compiled all his intellectual property judgments into a book which consisted of 2 volumes as his farewell gift. He had contributed to the development of our intellectual property laws tremendously in the past 2 years.

Many have asked if the book is for sale. Unfortunately, it is not for sale as we have only printed a copy. However, you may download all cases from the book below-

Aktif Perunding Sdn Bhd v. ZNVA & Associates Sdn Bhd

Billion Prima Sdn Bhd & Anor v Nutech Company Limited & Anor

Chanel v Melwani2 International Sdn Bhd & 2 Ors & Another Case

Chow Chuan Fat v Yeo Chai Seng & Ors (No. 1)

>Chow Chuan Fat v Yeo Chai Seng & Ors (No. 2)

Chuah Aik King (Sole Proprietor of Syarikat B Three Technology) v Keydonesoft Sdn Bhd

Dart Industries Inc & Anor v CMN International Sdn Bhd & Other Cases

Darul Fikir v Dewan Bahasa dan Pustaka – legal entity DBP

Diesal SpA v Bontton Sdn Bhd

Doretti Resources Sdn Bhd v Fitter Marketing Sdn Bhd & 4 Ors (No. 2)

Doretti Resources Sdn Bhd v Fitter Marketing Sdn Bhd & 4 Ors (No. 3)

DR HK Fong Braindbuilder Pte Ltd v SG-Maths Sdn Bhd & 5 Ors

Goodway Retread Sdn Bhd v Goodway Rubber Industries Sdn Bhd

GS Yuasa Corporation v GBI Marketing Sdn Bhd

Huan Schen Sdn Bhd v SRAM LLC

Hyundai Motor v Sun Yuen Rubber Manufacturing Co Sdn Bhd

Iradar Sdn Bhd v Nutech Company Limited & Anor

Juris Technologies Sdn Bhd v Foo Tiang Sin & Ors

Jyothy Laboratories Limited v Perusahaan Bumi Tulin Sdn Bhd

Kraft Foods Schweiz Holdings GmbH v Pendaftar Cap Dagangan

La Kaffa International Co Ltd v LOOB Holdings Sdn Bhe & Another Case

Lim Teck Lee v Longcane Industries Sdn Bhd

Louis Vuitton Malletier v Renown Incorporated

Merck Sharp & Dohme Corp & Anor v Hovid Bhd

Motordata Research Consortium Sdn Bhd v Ahmad Shahril bin Abdullah & 3 Ors

Ooi Siew Bee (trading under the name and stye of Syarikat Perniagaan Eng Leong) & 2 Ors v Zhu Ge Kong Ming Sdn Bhd & Anor

Pentamaster Instrumentation Sdn Bhd v QAV Technologies Sdn Bhd & 3 Ors

Philip Morris Brands Sari v Goodness For Import and Export & Ors

Portcullis Trustnet (Singapore) Pte Ltd v George Pathmanathan_ al Michael Gandhi Nathan & 11 Ors

Prism Berhad v Measat Broadcast Network Sdn Bhd

R Ramani AL M Ramalingam (suing on behalf of the Recording Industry Association of Malaysia, a registered society) & 2 Ors v Deluxe Exclusive Lounge Sdn Bhd

Schwan-Stabilo Marketing Sdn Bhd & Anor v S & Y Stationery & 2 Ors

Sigma Glove Industries Sdn Bhd & 2 Ors v Ong Chin Kok & Anor

Singham Sulaiman Sdn Bhd v Appraisal Property Management Sdn Bhd and Another Case

Sri Paandi Restaurant Sdn Bhd & Anor v Saraswathy ap Kesavan & 3 Ors

Syarikat Faiza Sdn Bhd & Anor v Faiz Sdn Bhd & Anor

Syarikat Duasama Sdn Bhd v Abdul Aziz Ibrahim (Trading as Radiant Star Enterprise); 1st Third Party Tiong Sing Trading Co Sdn Bhd and another Party

Tokai Corporation v DKSH Malaysia Sdn Bhd

World Grand Dynamic Marketing Sdn Bhd v FJVAA SPA Sdn Bhd & Ors

X1R Global Holdings & Anor v Y – Teq Auto Parts (M) Sdn Bhd

Walmar Wil Heavy Duty Pumps Sdn Bhd v Pump Matrix Engineering Sdn Bhd

Public Consultation Paper 1/2018: The Implementation of Data Breach Notification

The Public Consultation Paper (PCP) No. 1/2018 entitled The Implementation of Data Breach Notification is intended to solicit feedback from data users and/or relevant parties pertaining to personal data breach management. Personal data breach has become a global threat. Therefore, in light of this, the Personal Data Protection Commissioner (Commissioner) is going to implement Data Breach Notification (DBN), which is currently having practised worldwide.

Objectives: The implementation of DBN is aimed to assist data users in personal data breach management. Basically, it is a mechanism where data users will give notification, informing the authority and the affected/relevant parties where a breach has occurred in an organization. The DBN serves as proactive steps taken by data users to contain the damage caused by a breach incident. Data users should be able to demonstrate their commitment and accountability when addressing the breach. In addition, the DBN enables the enforcement authorities/regulators to conduct investigation thoroughly, transparently and fairly. The DBN is expected to be implemented by end of 2018 by way of imposing conditions to the certificate of registration issued by the Commissioner to the data users. In this regard, the Commissioner welcomes the feedback to this paper and suggestions of other criteria (if any) to be set for the implementation of DBN as stated in the consultation paper.

The deadline for submitting your feedback is on the 21st August 2018 (Tuesday). Feedback can be submitted to pcpdp@pdp.gov.my.

Download: Public Consultation Paper 1/2018: The Implementation of Data Breach Notification

IMLC 2018: Future of Lawyering: Fight or Flight?

I will be speaking at one of the Breakout Sessions of International Malaysia Law Conference held on 14 to 17 August 2018. My session will be on 14 August, 3pm.


Are wood-paneled offices and the colourful display of boundless volumes of law reports a thing of the past. Has the time come to embrace all that is technology by going completely online and living in `the cloud’. Are
we ready for virtual law offices, and building and maintaining lawyer-client relationships completely online? How can we compete with non-lawyers offering legal services, and AI replacing human interaction with legal templates and algorithms that make lawyering seem easy. What is the road ahead for the legal profession?

Speakers
1. Min Chen, Vice President & Chief Technology Officer of Asia Pacific, LexisNexis
2. Gaythri Raman, Managing Director, LexisNexis Southeast Asia
3. Foong Cheng Leong, Messrs Foong Cheng Leong & Co.
4. Wan Zafran Pawancheek, Messrs Wan Marican, Hamzah & Shaik

Moderator
Syahredzan Johan, Messrs RamRais & Partners

Session Sponsor
Lexis Nexis

History of Kuala Lumpur Bar

History of Kuala Lumpur Bar: The Story You Should Know

The Beginnings

The Kuala Lumpur Bar traces its roots to the Selangor Bar Association which was established in 1903.

Prior to 1896, any legal cases regardless whether with large importance or complexity had to be commenced and carried out without legal assistance of any kind. It was left to the management of the litigants themselves.

This was due to a Circular by the Acting Resident of Selangor (Circular 17.5.1892) in which he declared that “the settled policy of the Government of the Protected Native States (i.e. the Federated Malay States) not to admit lawyers to practise in the States”. Thus, litigants had to conduct their own cases in the courts.

Notwithstanding the restriction by the Acting Resident of Selangor, records show that locals had appeared as counsels for litigants. In Raja Bot v Ah Chan (1889)[1], one Raja Bot acted as an attorney for Abdul Kadir of Lukut to recover the sum of $1000 owed to Haji Yahya, the deceased father of Abdul Kadir. The Magistrate held that the Defendant, a mining towkay, had admitted the debt and the debt was not barred by laws of limitation.

However, the restriction had caused considerable problem to investors in the Federated Malay States. The Magistrate Court Judges took very brief notes and their grounds of judgement were also brief and without much discussions of law and facts.

To protect their rights and capital invested in the state of Selangor, the Selangor Planters’ Association made an appeal to the Government to admit a limited number of lawyers of position and standing to practise in the Courts of Selangor. The Association complained of the utter stagnation in the Selangor Court and the enormous accumulation of arrears[2]. In a letter dated 2 December 1896 to the Government Secretary, the Selangor Planters’ Association stated that they had resolved that “Government be urged to throw open the Magistrates courts of the Federated States to legal practitioners of status and position, the large vested interests of capitalists deserving in the opinion of this Association, more adequate protection than that afforded at present”[3].

The establishment of the Judicial Commissioner’s Court in 1896[4] paved the way for lawyers, who were already practising in other states such as Singapore and Penang, to practise in the Federated Malay States (“FMS”). Their right, however, was not extended to the lower Courts thus in 1897, John Parsick Joaquim, C W Hewgill and Vernon Francis Page (also known as V F Page — a lawyer who practised in Bangkok) mounted a challenge to have the right to appear in the criminal Lower Courts[5]. The then-Judicial Commissioner, Lawrence Colville Jackson (L C Jackson)[6] granted John Parsick Joaquim’s application to have the right to appear at the criminal Lower Courts. Soon, the lawyers were also granted the right to appear at the civil Lower Courts.

In 1903, lawyers practising in the state of Selangor formed the “Selangor Bar Association” with C W Hewgill and G Harold Day as their first President and Honorary Secretary[7], respectively.

C W Hewgill was called to the Straits Settlement Bar in Singapore in 1893 before moving to Kuala Lumpur to set up his practice in 1896. He had the honour of being the first advocate in private practice to appear at the Judicial Commissioner’s Court[8]. The Judicial Commissioner’s Court was the final Court of Appeal for the Federated Malay States during that time and was later replaced by the Supreme Court in 1905.

C W Hewgill later established the firm of Hewgill and Day with G Harold Day until it was amalgamated with the firm of Messrs Bannon and Bailey in March 1917[9], [10]. Hewgill died some time in the early 1930s.

The early members of Selangor Bar Association were active in the social and legal arena. Records indicate that the members were actively engaging the then-Government on matters concerning legal practice such as opposing to new rules allowing civil servants to be admitted to the local Bar, suggesting that posts of Senior Magistrates should be confined to “barristers, advocates and solicitors who had carried on their profession for at least five years at the time of appointment” and extending time to file appeal from seven days to 21 days.

On 21 February 1925, a meeting was held by a group of advocates and solicitors practising in Selangor and from the meeting, it was resolved that an association, also called the “Selangor Bar Association” be formed. The Office Bearers were T H T Rogers, B J P Joaquim, A S Bailey, Vivien Mackie and William George Warren Hastings[11]. It is unknown from the records why these advocates and solicitors had formed the “Selangor Bar Association” as it had already been in existence since 1903.

According to the Rules of the Association of the Selangor Bar Association[12], the objects of the Association are to “provide its members in the practice of their profession with such amenities as may from time to time be found desirable, and generally to advance the interest of Advocates and Solicitors practising in the State of Selangor”.


(Credits: Arkib Negara)

The premises of the Association were “room or rooms in the Supreme Court of Kuala Lumpur”. The “entrance fee” for ordinary members was $15 and subscription was fixed $2 per mensem (per month), payable half-yearly in advance. An ordinary general meeting of the Association was held every year in the month of January and only three ordinary members were sufficient to form a quorum.

This new Selangor Bar Association was also exempted by the Selangor British Resident from registration under the Societies Enactment 1913[13].

It is unfortunate that the records of the early years of the early Selangor Bar Association and Selangor Bar Committee are lost. The earliest record held by the Kuala Lumpur Bar is 1956 where the late R R Ramani was the Chairman together with four other committee members namely M N Cumarasami, S M Yong (who later became a Judge) and N A Marjoribanks. The Advocates and Solicitors Ordinance 1947 (“1947 Ordinance”) only allows four committee members in the local State Bar.

The complete rolls of Chairman and Committee members before 1947 were also no longer available. However, based on the newspaper reports and records of the National Archives, the Office Bearers of the Selangor Bar Association of 1925 were T H T Rogers, B J P Joaquim, A S Bailey, Vivien Mackie and W G W Hasting. In 1934, W G W Hastings, K K Benjamin and A K Sen were elected as members whereas S M Yong was appointed as Honorary Secretary. B J P Joaquim, T Rajendra and J T Toswill were elected members of the Committee and P C Au-Young as Honorary Secretary in 1937.

The numbers grew slowly. In 1906, there were only six members (three English Barristers and four English Solicitors) in the Selangor Bar Association[14]. The six members were C Wagner, G Harold Day, H N Ferrers, C W Hewgill, J H T , C H Downes and M R — all with offices at Klyne Street (now Jalan Hang Lekiu), Kuala Lumpur.

In 1969, there were 238 members practising in Selangor (Selangor Bar Annual Report, 25 January 1969).

The rolls of the FMS Court show that Hoosein Hasannly Abdul Cader[15] (also known as H H Abdoolcader) was the first Asian (and also Indian) name appearing on the rolls (admitted in 1915). However, H H Abdul Cader (later Sir) practised mainly in Penang.

(Credits: Arkib Negara)

Raja Musa b Raja Haji Bot was the first Malay to be called to the FMS Bar in 1929 and also the English Bar[16]. He later became the first Malay to sit on the Bench of the Supreme Court of the FMS and had subsequently been appointed Professor of Law at Raffles College. During the Japanese Occupation, he was appointed a Judge of the Supreme Court, Singapore. He passed away in 1943.

The first Chinese lawyer called to the FMS Bar was Yong Shook Lin (admitted 1918), who later found Messrs Shook Lin & Bok together with Tan Teow Bok.

The 1947 Selangor Bar

Upon the advent of the 1947 Ordinance, the Selangor Bar Committee was established.

The 1947 Ordinance requires every annual meeting of the local bars be presided by the most senior member present. The practice has now been abolished by the Legal Profession Act 1976. In 1956, M N Cumarasami (admitted to FMS Bar in 1929) presided the annual meeting of the Selangor Bar as he was the most senior member present[17].

In 1956, the subscription fee for Selangor Bar was $2.50 per month. In 1970, it was $30 per annum. Such subscription fee was not mandatory and members were able to practise without payment of such fee in those days. The Bar Committee was tasked to collect outstanding payments from time to time.

Under the 1947 Ordinance, local State Bars were empowered with disciplinary functions. Committee members will deliberate on complaints against fellow members and if there is a cause for complaint, the local Bar will refer the matter to the Chief Justice who will then establish a Disciplinary Committee. In 1970, there were 23 complaints against members, of which five were referred to the Chief Justice under the appropriate provisions of the 1947 Ordinance. The Committee considered 16 complaints did not merit any reference to the Chief Justice.

The usual complaints relate to the misappropriation of funds by members but some are out of the ordinary such as:

  1. complaint over the use of a logo on letterhead;
  2. complaint by a law firm against a Judge for allegedly interrupting a proceeding where he had rephrased questions and answers as well, calling clients name, eg “clever” and “cunning”;
  3. publication of law firm names and address on telephone directory which was a contravention of the Bar Council’s ruling on re Yellow Pages of the Telephone Directory 1969/1970; and
  4. complaint by a Judge against a member over his conduct in Court.

In 1947, the Selangor Bar Committee changed its name to Selangor and Negri Sembilan Bar Committee and then to Selangor, Negri Sembilan and Kelantan Bar Committee in 1949.

In 1964, the Negri Sembilan Bar Committee was established with Dato’ Balwant Singh as its first chairman. P S Maniam was elected as the honorary secretary and V C George, H W Tan, Atma Singh Gill and Edgar Joseph Jnr were elected as committee members[19].


Petition file of the late Dingle Mackintosh Foot

With the establishment of the Negri Sembilan Bar Committee, the name was changed to Selangor and Kelantan Bar Committee. In 1965, the name was reverted back to its original name after Kelantan Bar Committee was established.

Severance of the Selangor and Federal Territory Bar

Kuala Lumpur was made a Federal Territory on 1 February 1974. When the Legal Profession Act 1976 came into force in 1976, it was provided for under section 68(3) that all lawyers practising within the Federal Territory were deemed to be members of the Selangor State Bar.

Upon the establishment of the Federal Territory of Kuala Lumpur, the Selangor Bar Committee was renamed the Selangor and Federal Territory Bar Committee in 1979.

In the 1986 Annual General Meeting of the Federal Territory and Selangor Bar, it was mooted whether a separate Bar be established for all practising members within the state of Selangor. Members practising in the state of Selangor felt that they will be better served with a committee that comprises more Selangor Bar members and furthermore, most Bar events were held in Kuala Lumpur.

However, this discussion was abandoned and the floor decided that the incoming Committee appoint two protem Committee to study the severance of the Federal Territory and Selangor Bar. The Selangor Bar Protem Committee and Federal Territory Bar Protem Committee were then established and chaired by Jeffrey Fernandez and Dulip Singh, respectively.

Written opinions were provided by Mohd Ismail Shariff and Anthony Rocky Fernandez on whether the then-Legal Profession Act 1976 allows the severance of the Selangor and Federal Territory Bar.

Section 68(3) of the Legal Profession Act 1976 stipulates that all members practising in the Federal Territory shall be deemed to be members of the Selangor State Bar. Thus it was decided that section 68(4) be introduced to allow the establishment of a separate Bar. The original section 68(4) is reproduced below in its original form:

  1. 68(4) Members practising in the Federal Territory shall be at a general meeting called for the purpose by a majority vote of the members present be entitled to establish a separate Bar for the Federal Territory and until such time they shall be deemed to be members of the Selangor State Bar.

The said amendment was then forwarded to the Attorney General and in 1992, section 68(4) was introduced to allow the establishment of the Kuala Lumpur Bar. The words “Kuala Lumpur” were added. Section 68(4) is the only provision in the Legal Profession Act 1976 that specifically mentions a State Bar.

A meeting of members practising in the Federal Territory of Kuala Lumpur was called in 1992. About 2,300 members were practising in Kuala Lumpur at that time.

The Selangor Bar also called a meeting to fill the vacancies left by committee members who ceased to be members of the Selangor Bar.

On 1 July 1992, the Kuala Lumpur Bar Committee was established. R R Sethu was the first Chairman of the Kuala Lumpur Bar Committee and he held this position for the next three terms. Saseedharan Menon was the first Honorary Secretary of the Kuala Lumpur Bar Committee.

Other committee members were Hendon Mohamed, Roy Rajasingham, M Puravalen, Manjeet Singh and Zainudin b Haji Ismail. Lee Swee Seng and Mah Weng Kwai (both later became judges) were the first co-opt committee members of the Kuala Lumpur Bar.

According to the Bar Council’s Legal Directory (as at 20 July 1992), Low Chi Cheng, Tan Sheh Lynn, Seet Hooi Ping and Loke Dore Lee were the first newly admitted members of the Kuala Lumpur Bar. They were admitted to the Malaysian Bar on 10 July 1992 — nine days after the establishment of the Kuala Lumpur Bar.

Chairpersons of the Kuala Lumpur Bar Committee since 1992

1992–1996 R R Sethu

1996–1998 Cecil Abraham

1998–1999 Dennis Appaduray

1999–2001 M Puravalen

2001–2002 Zainudin b Ismail

2002–2004 Ragunath Kesavan

2004–2005 Jerald Gomez

2005–2007 Lim Chee Wee

2007–2009 R Ravindra Kumar

2009–2010 Anand Ponnudurai

2010–2013 Brendan Navin Siva

2013–2015 H R Dipendra

2015–2017 Ravinder Singh Dhalliwal

2017–present Goh Siu Lin

Footnotes

[1] Arkib Negara — ID No: 1957/0016576

[2] Selangor Planters’ Association Annual Report 1895, Selangor Journal Vol III, page 195

[3] Arkib Negara — ID No: 1957/0066577W — http://ofa.arkib.gov.my/ofa/digital/asset/787570

[4] Arkib Negara — ID No: 1957/0063163W — http://ofa.arkib.gov.my/ofa/digital/asset/786395

[5] In the Matter of John Parsick Joaquim, Esq, Advocate (3088/97 (Arkib Negara — ID No: 1957/0070913W)

[6] L C Jackson QC was the first Judicial Commissioner albeit a short one. He died in 1905 after illness struck him. He was described to be organically sound, and was in good health. He had two defects namely he had little range of hearing and had varicose veins on his legs (http://ofa.arkib.gov.my/ofa/digital/asset/154198)

[7] The Straits Times, 2 March 1903, Page 4 — http://eresources.nlb.gov.sg/newspapers/Digitised/Article/straitstimes19030302-1.2.24.aspx

[8] The Straits Times, 7 November 1896, Page 2 — http://eresources.nlb.gov.sg/newspapers/Digitised/Article/straitstimes18961107-1.2.20.aspx

[9] The Straits Times, 12 March 1917, Page 6 —  http://eresources.nlb.gov.sg/newspapers/Digitised/Article/straitstimes19170312-1.2.9.2.aspx

[10] Messrs Bannon and Bailey was founded by Raymond B Bannon and Arnold Savage Bailey in 1913. Savage Bailey later became a Judge in the Johor Supreme Court but tragically died after he fell off from a ship in 1935. The firm was dissolved in April 1963 and this led to the establishment of Messrs Skrine and Co by its former partners, John S H Skrine, S D K Peddie and Peter Mooney in the same year. It is noted that John S H Skrine’s father, Walter Vivian Douglas Skrine (W V D Skrine) was a partner of Messrs Bannon and Bailey.The former Chief Justice of Singapore, Chan Sek Keong chambered in Messrs Bannon and Bailey in 1962.

[11] Also known as W G W Hastings. He established Lovelace & Hastings in 1913. Hastings was a temporary Judge of the Federated Malay States Supreme Court and Federal Councillor. He died in 1952.

[12] Arkib Negara — ID No: 1957/0235137W

[13] Application made via a letter dated 9 March 1925, from Vivian Mackie, a Partner of the now defunct Messrs Freeman & Madge and also the then-Honorary Secretary of the Selangor Bar Association

[14] Arkib Negara —ID No: 1957/058925

[15] Father of the late Federal Court Judge, Tan Sri Eusoffe Abdoolcader

[16] The Straits Times, 19 February 1929, Page 10 http://eresources.nlb.gov.sg/newspapers/Digitised/Article.aspx?articleid=straitstimes19290219-1.2.91

[17] M N Cumarasami was called to the Federated Malay States Bar in 1929 and passed away in 1962. The then-Prime Minister, the late Tunku Abdul Rahman moved a tribute to him in Parliament as he was an old member of the House. (Hansard 20 January 1962, Vol III, No 33).

[18] Selangor Bar Annual Report 1970

[19] The Straits Times, 3 February 1965, Page 5 — http://eresources.nlb.gov.sg/newspapers/Digitised/Article/straitstimes19650203-1.2.37.aspx

Bread & Kaya: Layperson’s guide to the Chatime v Tealive dispute

-By Foong Cheng Leong | Jul 17, 2018
– Trouble started brewing when La Kaffa alleged that Loob had breached RERA
– Case began in the High Court, went to the Court of Appeal, pending a hearing at the Federal Court

MUCH has been said about the dispute between the owners of the Chatime and Tealive bubble tea businesses. The dispute, however, is not as straightforward as the media has reported it to be. This article seeks to guide readers, especially laymen through this technical legal dispute.

Background

La Kaffa International Co Ltd (La Kaffa) is the registered franchise owner of the Chatime bubble tea franchise (Chatime Franchise). Prior to the opening of Tealive, Loob Holding Sdn Bhd (Loob) was appointed as the master franchisee for the Chatime Franchise and had entered into an agreement called Regional Exclusive Representation Agreement (RERA).

Due to the popularity of the Chatime Franchise, it had expanded to 165 outlets in Malaysia in a short period of time.

However, trouble started brewing when La Kaffa alleged that Loob had breached RERA by, among others:

– Loob’s failure to purchase all raw materials from La Kaffa as required by Article 7 RERA;
– Loob failed to allow La Kaffa to inspect and/or audit, among others, Loob’s accounts, books and records; and
– Loob’s failure to pay for raw materials purchased from La Kaffa.

The parties then had the dispute arbitrated by the Singapore International Arbitration Centre (Singapore Arbitral Proceedings). The RERA was also terminated by La Kaffa. Loob argued that the termination was unlawful but accepted the termination in any event.

The matter was arbitrated in Singapore because Article 18 of the RERA stated that the RERA is governed by Singapore laws and any disputes regarding the RERA shall be arbitrated at the Singapore International Arbitration Centre.

After the termination, Loob started its Tealive bubble tea business. Out of 165 Chatime franchisees, 161 Chatime franchisees in Malaysia “converted” into Tealive.

Pending the disposal of Singapore Arbitral Proceedings, La Kaffa and Loob filed applications for interim injunctions under s 11(1) of the Arbitration Act 2005 and/or inherent jurisdiction of the Court in the High Court of Kuala Lumpur.

La Kaffa sought orders for, among others, an interim injunction to restrain Loob, its directors (including their spouses and immediate family members) and employees from, among others, carrying on business which is identical or similar to the Chatime Franchise business.

What is an Interim Injunction?

The important point here to note is the interim injunction.

I will focus on La Kaffa’s interim injunction only as Loob’s interim injunction in its counterclaim was only to restrain La Kaffa from interfering with its business.

The purpose of the interim injunction is to restrain Loob and its related parties from carrying on business which is identical or similar to the Chatime Franchise. This would include running the Tealive bubble tea business.

If the Court grants the interim injunction, it would last until the disposal of the Singapore Arbitral Proceeding. La Kaffa did not ask for a perpetual injunction to restrain Loob from operating the Tealive bubble tea business.

The High Court held that it does not decide on the merits of the dispute which should only be decided by the arbitral tribunal as agreed by the parties. The High Court held that it would only need to decide if the interim injunction would support, assist, aid or facilitate the Singapore Arbitral Proceedings.

And to decide whether the interim injunction would support, assist, aid or facilitate the Singapore Arbitral Proceedings, the Court would need to determine if there is any bona fide and serious question to be tried in respect of the plaintiff’s cause of action against the defendant; and if so:

– whether damages constitute an adequate remedy for the plaintiff; and
– if damages do not constitute an adequate remedy for the plaintiff, whether the “balance of convenience” lies in favour of the granting or refusal of an interim restraining injunction.

In other words, the Court would need to balance the rights of the parties to determine if Tealive should close down pending the completion of the Singapore Arbitral Proceedings.

Should Tealive close down?

La Kaffa says that it should because of our franchise laws and Article 15 of the RERA.

Pursuant to s. 27 of the Franchise Act 1998 (FA 1998), a franchisee shall give a written guarantee to the franchisor that the franchisee including its directors, the spouses and immediate family of the directors, and his employees shall not carry on any other business similar to the franchised business during the franchise term and for two years after the expiration or earlier termination of the franchise agreement.

In brief, La Kaffa argued that s. 27 of the FA 1998 requires Loob and its directors (including their spouses and immediate family members) and employees from, among others, carrying on business which is identical or similar to Chatime Franchise business e.g Tealive.

S. 27 FA provides the following:

Prohibition against similar business

27(1) A franchisee shall give a written guarantee to a franchisor that the franchisee, including its directors, the spouses and immediate family of the directors, and his employees shall not carry on any other business similar to the franchised business operated by the franchisee during the franchise term and for two years after the expiration or earlier termination of the franchise agreement.

(2) The franchisee, including its directors, the spouses and immediate family of the directors, and his employees shall comply with the terms of the written guarantee given under subsection (1).

(3) A person who fails to comply with subsection (1) or (2) commits an offence.

Article 15 of the RERA provides the following:

Article 15. Forbidden to Engage in Competition

I. Forbidden during the term of Agreement. Unless otherwise consented by the Parties in advance and in writing during the term of this Agreement, either Party, including their managers, employees, shareholders, subsidiaries or parent companies shall not in the Territory, directly or indirectly by itself through agents, engage in any commercial activities that are identical or similar to those done in the Franchised Stores.

II. The Parties agree that the commercial or business activities being done in the affiliate stores of the MASTER FRANCHISEE, including their managers, employees, shareholders, subsidiaries, or parent companies at the time of the execution of this Agreement would not be deemed to be identical or similar to those done in the Franchised Stores if the said activities do not form part of the core business or are complimentary to the core business of the affiliated stores.

III. Application scope. The Parties hereby consent that the aforesaid sub-articles (I) and (II) shall be applied to prevent the FRANCHISOR and the MASTER FRANCHISEE from engaging in unfair competition in breach of this Agreement.

IV. Default compensation. In the event any Party (Defaulting Party) violates this Article, the Defaulting Party shall pay the other Party (Non-Defaulting Party) a sum of US$10,000.00 as punitive penalty for each violation. All gains derive from the violation by the Defaulting Party shall also be paid to the Non-Defaulting Party as compensation and the Defaulting Party shall stop the competing activities immediately.

V. Validity of the provisions of this Agreement. This Article 15 shall survive the invalidity, expiration or termination of this Agreement.

In brief, Article 15(1) of the RERA prohibits La Kaffa and Loob from engaging in competing business during the term of the RERA.

What happened in the High Court?

As some of you may know, the case was first fought in the High Court. La Kaffa could not stop Tealive from operating.

The High Court held that it could not close Tealive down because the provision of s. 27 of the FA 1998 was not incorporated into the RERA and Loob and its related parties did not give a written undertaking to cease business for two years. Therefore, the High Court was of the view that there is no bona fide and serious issue to be tried as to whether Loob had breached s. 27 of the FA 1998.

Some may ask why the Court did not order the closure since it is clear that s. 27 of the FA 1998 requires Loob and its related parties to operate an identical or similar business as Chatime for two years.

The High Court was of the view that Tealive do not need to close down because Loob did not promise to close down after the termination of the RERA. The High Court Judicial Commissioner Wong Kian Kheong (as then he was) was of the view that the issue before the Court was whether La Kaffa is entitled to an interim injunction so that it can be used to support, assist, aid or facilitate the Singapore Arbitral Proceedings.

Based on my understanding of the grounds of judgment, the learned Judicial Commissioner was of the view that the action before him was not the forum for him to decide whether there was a breach of s. 27 of the FA.

Further, a breach of s. 27 of the FA amounts to a criminal offence. If it is a criminal offence, criminal action would need to be taken by the Government and it would need to go through a criminal trial to find liability. In a criminal trial, the burden of proof is beyond reasonable doubt as opposed to a balance of balance of probabilities in a civil case.

In addition, the learned Judicial Commissioner held that La Kaffa had been guilty of inequitable conduct. One of the inequitable conducts committed by La Kaffa was that it had sent a notice to “shopping mall owners” which stated, among others, all the agreements between Loob and the shopping mall owners regarding Chatime franchise business “shall be null and void”.

What happened in the Court of Appeal?

The Court of Appeal had a different view and overturned the High Court’s decision.

In granting overturning the High Court’s decision, the Court of Appeal held that:

– A simple construction of Article 15 of the RERA as well as s. 27 of FA 1998 will demonstrate that there is an obligation for Loob not to compete with La Kaffa’s business even after the termination of the RERA;
– In light of Article 15 of the RERA and s. 27 of FA 1998, the High Court ought not to have refused the prohibitory injunction. When parties have agreed not to do certain acts and a statute also provides for such protection, the court is obliged to give effect to ensure the salient terms of the agreement as well as the statute is not breached.

The Court of Appeal found it unjustifiable for the High Court to rely that the Tealive bubble tea business consisting of 161 outlets and the livelihood of 800 employees will be affected. The conduct of Loob on the face of record is not only in breach of legal obligation related to restraint of trade but also breach of franchise law which does not encourage criminal or tortious conduct of business, goodwill.

Therefore, the Court of Appeal held that the failure to grant the prohibitory injunction was flawed which requires appellate intervention.

What happened after that?

Loob thereafter filed an application to the Court of Appeal to stay (suspend) the Court of Appeal’s order for an injunction, among others, pending the disposal of the application for leave to appeal to the Federal Court. However, the Court of Appeal, on a majority decision of 2-1, dismissed the application for stay.

It is unknown why Tealive stores did not close its doors after the stay of execution application was dismissed by the Court of Appeal. My guess is that La Kaffa was not enforcing the interim injunction. If Tealive closes down but Loob succeeds in the Federal Court, La Kaffa would be liable to pay damages for the profit Loob could have made during the closure and other forms of damages. This is because La Kaffa had given an undertaking as to damages for all loss suffered by the Loob as a result of the interim injunction. Such damages could amount to millions of Ringgit.

What now?

Fortunately for Loob, the application for stay of execution was granted by the Federal Court on 16 July 2018. Loob has filed an application for leave to appeal (permission to appeal) to the Federal Court. The Federal Court will only hear limited type of cases and in civil cases, the Federal Court will hear cases involving a question of general principle decided for the first time or a question of importance upon which further argument and a decision of the Federal Court would be to public advantage, among others.

If the Federal Court refuses leave for Loob to appeal to the Federal Court or dismisses the appeal, Tealive will need to close down until the disposal of the Singapore Arbitral Proceedings.



First published on Digital News Asia on 17 July 2018

Download:-
1. High Court Judgement
2. Court of Appeal
2.1 Appeal Proper
2.2 Stay of Execution
2.2.1. Majority Judgement
2.2.2 Minority Judgment

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