By Foong Cheng Leong and Mira Marie Wong and Nur Faiqah Nadhra
– Court decisions on thorny issues of hyperlinked agreements’ enforceability – Heavy price to pay for not reading online terms of any commercial agreement – 8 practical tips to ensure that your electronic contracts are enforceable – Tracking mechanism to track if counterparty accessed terms and condition
These days, many businesses no longer print or provide their entire contract to their customers or suppliers. It is relatively commonplace for businesses to point their contracting partners to the terms contained on a website, i.e. through a hyperlink.
We can see these in application forms, emails, and even in physical or electronic contracts. With the advent of the Covid-19 pandemic, it would be beneficial for businesses to adopt electronic contracts, particularly using hyperlinked contracts or terms, rather than physical contracts.
It creates convenience, not only are they great for easy drafting but it makes editing documents a breeze, it is an attempt to achieve a much more friendly and acceptable clientele experience within business.
However, there are certain issues to be looked at when adopting the use of hyperlinked contracts or terms. One of such situations would be where the contracting parties each have their own terms of engagement with reference to their own hyperlinked contracts or terms. Without a signed contract, this poses a dilemma which contract or terms would apply.
This article addresses the measures businesses may use to incorporate a hyperlink successfully and the current state of law in disputes involving contracts or terms incorporated by reference by way of a hyperlink. Therefore, we will look into the cases below to see how the courts deal with such a dilemma.
English Law Position
In tackling the enforceability of whether the electronics terms and conditions form part of the agreement, the English courts critically analyzed whether a party had taken reasonable steps to ensure that its terms and conditions had been brought to the attention of the other side. The two following courts had based their focus on the conspicuousness of the terms.
In Impala Warehousing v Wanxiang Resources  EWHC 25, Impala issued a warehousing certificate in respect of Wanxiang’s goods pledged to a bank as security. The warehouse certificate was then endorsed to Wanxiang after the sum advance by the bank had been paid off. A dispute arose thereof and parties disagreed where the matter ought to be adjudicated. The back of the warehousing certificate contains a term stating that its latest version of its terms and conditions is posted on its official website. The website contains an agreement stating that, among others, the governing law of the matter is English law and the English court shall have exclusive jurisdiction to adjudicate the matter.
In deciding whether the English court has exclusive jurisdiction, the English High Court held that as a matter of English law where terms are incorporated it must be shown that the party seeking to rely on the conditions has done what is reasonably sufficient to give the other party notice of the conditions. The learned Judge found that the first page of the warehouse certificate contains a clause stating that all disputes shall be subject to Impala’s terms and conditions. At the base of the page the reader is invited to refer to the reverse of the page for additional conditions. On the reverse, the reader is referred to Impala’s website for its terms and conditions.
Thus, the holder of the warehouse certificate knows that the certificate is subject to Impala’s terms and conditions. The High Court held that these steps taken by Impala were reasonably sufficient to give the holder notice of condition. In this day and age when standard terms are frequently to be found on websites, the High Court considered that reference to the website is a sufficient incorporation of the warehousing terms to be found on the website.
Cockett Marine Oil DMCC v Ing Bank NV & Anor  EWHC 1533, on the other hand, involves a challenge of two arbitration awards on the ground that the arbitral tribunal had no jurisdiction. The tribunal held that it had jurisdiction because the terms of the contract between the parties included a London arbitration clause. The claimants had agreed to purchase bunkers from the defendants in two separate transactions. The defendants, being the sellers, had earlier sent a mass email to their customers enclosing their terms and conditions which contained the London arbitration clause which provides for the jurisdiction of the arbitral tribunal in London in the event of a dispute. The parties had a dispute and the defendants brought the matter to arbitration.
In one of the two transactions, it was done through an exchange of email. The defendant sent a copy of its sales order confirmation which contained the particulars of the sale and purchase. The email also stated that “…The fixed terms and conditions are well known to you and remain in your possession. If this is not the case, the terms can be found under the web address [to the defendant’s terms and conditions]”.
The English High Court held that the defendants’ terms and conditions apply to the contract for the supply of bunkers and therefore the arbitral tribunal has jurisdiction. The High Court found that the claimants were aware of the defendants’ terms and conditions since the defendants had taken steps to inform their customers, including the claimants, regarding the defendants’ terms and conditions by way of the said mass email. In respect of the transaction involving the email exchange and sales confirmation order, the High Court further held that the claimant could access the defendants’ terms and conditions by clicking on the hyperlink in the sales order confirmation.
Malaysian Court’s position
Our Court’s approach in assessing whether the hyperlinked contract or terms is similar to the English court’s position. Essentially, there must be a clear and concise notice informing the reader that their hyperlinked contract or terms apply. Therefore, parties who wish their hyperlinked contract or terms to be incorporated must ensure that they provide an avenue for the user to read the terms of the agreement. Simply inserting a hyperlink to the terms and conditions may not be effective in making them form part of the overall contract. The following recent court decisions highlighted the thorny issues of hyperlinked agreements’ enforceability in businesses in whether or not it could be incorporated by reference.
In Able Food Sdn Bhd v Open Country Dairy Ltd  7 CLJ 716, the plaintiff, a Malaysian company, sued the defendant, a New Zealand company, for alleged breach of contract(s) in, among others, supplying instant whole milk powder of unmerchantable quality. The plaintiff demanded, among others, special damages and general damages for loss of profit and loss of market.
The defendant challenged the jurisdiction of the High Court in Malaysia to hear the dispute on the ground that the parties had submitted to the exclusive jurisdiction of the courts in New Zealand. In this regard, the parties had entered into seven (7) sales contracts. Each of the sales contracts (except for one) contains an endorsement with a hyperlink to its terms of trade (“Terms of Trade”) and it reads as follows: “http://opencountry.co.nz/termsoftrade
The Terms of Trade form part of this contract for sale and the parties agree to comply with the Terms of Trade in performing their obligation under this contract. Please be advised that OCD has modified its Terms of Trade please consult the attached terms.”`
The defendant argued that their “Terms of Trade” were incorporated by reference in each of the sales contracts wherein the parties had agreed that New Zealand law would apply and the parties are subject to the exclusive jurisdiction of the courts in New Zealand (hereinafter referred as the “choice of law and jurisdiction clauses”).
The High Court ( 4 CLJ 614) held that the choice of law and jurisdiction clauses were not incorporated in the contracts because the Terms of Trade were not attached to the sales contracts, among others.
However, on appeal the Court of Appeal overturned the High Court’s decision and held that the choice of law and jurisdiction clause was, in fact, incorporated into the sales contracts.
In regard to whether the Terms of Trade were incorporated by reference, the Court reiterated the following basic principles of the law of contract:-
To incorporate a binding term, reasonable notice must be given either before or at the time the contract was made (Olley v Marlborough Court Hotel  1 KB 532 CA).
The terms incorporated should be located in a document where terms are expected to be printed (Chapelton v Barry Urban District Council  1 KB 532 CA).
Whether or not the parties had read the terms, contractual documents signed by the parties would automatically be considered as binding (L’Estrange v F Graucob Ltd  2 KB 394).
Reasonable steps must be taken by the party who inserted the term to bring it to the attention of the other party (Parker v South Eastern Railway Company  2 CPD 416).
The Court of Appeal found that the parties had a course of dealings. In all the sales contracts (issued by the defendant and duly accepted/signed by the plaintiff without any comment, modification, or qualification), it was clearly stated that the Terms of Trade formed part of the contract and that parties agreed to comply with the Terms of Trade in performing their obligations under the contracts. The endorsement in each of the sales contracts referred to a hyperlink, to wit, http://opencountry.co.nz/termsoftrade. The Terms of Trade could be found in the hyperlink. The plaintiff, for whatever reason, did not click on or look up the hyperlink. But that does not mean that the Terms of Trade, which are contained in the hyperlink, do not apply.
The Court of Appeal held that the burden was on the plaintiff to look up the Terms of Trade via the hyperlink. The failure on the plaintiff’s part to do so is akin to a contracting party not bothering to avail themselves of the terms, and to read and understand the same, with the benefit of legal advice or otherwise.
The plaintiff argued that the defendant was under a duty or obligation to furnish them with a copy of the Terms of Trade. The Court of Appeal was of the view that there was no such duty or obligation as the Terms of Trade were, as the defendant put it, just a “click away”.
The Court of Appeal found that notice of the Terms of Trade was given at the time when the contract was formed, and it was referred to in a document (Sales Contract) that one would reasonably expect to contain contractual terms. The express notice was given to the plaintiff that the Sales Contracts were subject to the Terms of Trade, which was accessible via a hyperlink provided. There was no ambiguity whatsoever as to where the Terms of Trade were located. Thus, the Court of Appeal was satisfied that the defendant had fulfilled the requirement of having taken reasonable steps to bring the Terms of Trade to the plaintiff’s attention and incorporating it in the Sales Contracts.
Additionally, during product purchase by the plaintiff, it is apparent that there is an exclusive jurisdiction clause. Therefore, the Malaysian Court is obliged to give effect to the exclusive jurisdiction clause unless the plaintiff, as the party sought to avoid the application of the clause, is able to establish that there are exceptional circumstances to justify the contrary. Since there was no convincing evidence to show that the plaintiff has an exceptional circumstance to exclude the express choice of jurisdiction, the most appropriate jurisdiction to hear the dispute would be in New Zealand.
The Court of Appeal further stated that although it would seem unfair in the plaintiff’s perspective to file the action in New Zealand, however, it is what they had agreed upon when they had signed the contract, and so if any inconvenience were to be faced by the plaintiff, it would merely amount to the consequences of their agreement.
In MISC Berhad v Cockett Marine Oil (Asia) Pte Ltd  MLJU 563, the plaintiff had invited tenders for the supply of bunkers via email and in the email, the plaintiff had attached their proposal form and terms and conditions (“the Plaintiff’s Terms”).
In the body of the said email under the heading “Important Note”, the plaintiff set out terms and conditions of the purchase attached to the email. The Plaintiff’s Terms stated that the provisions of the agreement shall be subject to, construed, and interpreted in accordance with the laws of Malaysia, and the parties hereto submit to the exclusive jurisdiction of Malaysian courts.
In addition, the Plaintiff’s Terms stated that the Plaintiff’s Terms constitute the entire agreement between the parties and no modification would be effective unless in writing and signed by both parties.
After a series of emails were exchanged between the parties, the tender was awarded to the defendant. The plaintiff contended that the contract was concluded on the Plaintiff’s Terms when the parties agreed on the price. The defendant, on the other hand, contended that the contract was made on its terms as the defendant’s emails carries a hyperlink to the defendant’s website containing the Fuel Supply Terms & Conditions (“the Defendant’s Terms”) at its footer.
The parties made the necessary arrangements to perform the contract to supply bunkers to the plaintiff by the defendant (“Supply Contract”). The supply went into trouble when the bunkers were detained by the Malaysian Maritime Enforcement Agency for potential offences. The plaintiff then terminated the Supply Contract on the grounds that the defendant was in breach of its obligation to deliver the bunkers free of claims and encumbrances.
After the bunkers were released by the Malaysian Maritime Enforcement Agency, the parties’ solicitors had commenced negotiation with reference to the Plaintiff’s Terms. The negotiation failed and the plaintiff initiated proceedings against the defendant in the High Court of Malaysia for damages arising from the defendant’s alleged breach of contract. The defendant, however, commenced arbitration proceedings in London and consequently sought a stay order pursuant to section 10 of the Arbitration Act 2005 and challenged the jurisdiction of Malaysia’s High Court. In response, the plaintiff applied for an anti-arbitration injunction on the grounds that the English courts have no jurisdiction over the proceedings based on the terms agreed between both parties in the Supply Contract.
On the issue of whose terms apply, the High Court held that the parties are contracted on the Plaintiff’s Terms and therefore, the Malaysian court has jurisdiction to adjudicate the matter. Judicial Commissioner Atan Mustaffa held that the plaintiff had attached their terms during their invitation to tender whereby it clearly states the recipients were invited to tender using the form provided and on the basis that it was the Plaintiff’s Terms that were to apply as found under the heading of “IMPORTANT NOTE”. Although the defendant’s hyperlink to the Defendant’s Terms was stated in the footer of its emails to the plaintiff during negotiation, there was no indication that the defendant’s offer made pursuant to the plaintiff’s invitation was a counter-offer on the Plaintiff’s terms.
In addition, the learned Judicial Commissioner held that the invitation to tender issued by the plaintiff via email was an offer and capable of immediate acceptance and should not be regarded as a mere invitation to treat apart from the specific price made on the forms. The forms included specified time and place of supply, fuel specifications, and terms and conditions therewith, which were already present in the invitation to tender and was not left open for any further discussion.
The learned Judicial Commissioner held that the hyperlink to the Defendant’s Terms was not sufficient to be incorporated into the Supply Contract. There was no step taken by the defendant to draw the attention of the plaintiff to the application of the hyperlink which only appeared in the foot of the defendant’s emails.
The defendant did not make it plain that the Defendant’s Terms were to govern the Supply Contract by giving reasonable notice of the conditions in a visually prominent way. A reference to an inconspicuous hyperlink at the bottom of someone’s signature at the footer of the email does not constitute sufficient notice of intention to contract on different terms.
Tips when incorporating hyperlinked terms
Here are some tips that businesses may use when incorporating these hyperlinked terms during the course of negotiations-
1. Clarity is the key. You should expressly inform your counterparty that your terms apply and are available on a website. For example, the link is accompanied with a notice stating, “Please click here for our terms and conditions of trade”. Do consider placing your hyperlink at the body of the email. Avoid placing the hyperlink anywhere inconspicuous, such as the footer of the email using very small font size. Also, do ensure that the hyperlink is valid and not broken. 2. Insert a date on all your contracts. This is so that you know which version of the terms and conditions you were dealing with in the future. 3. Keep your terms and conditions up to date. 4. Keep a record of your previous contracts. As disputes may arise any time in the future, you may not know which contract is applicable if you have various versions of the contract. Such previous contracts may be recorded by way of a print screen. 5. Employ a tracking mechanism in the system. This could keep track of whether the counterparty had accessed the terms and conditions. 6. Verify whether the terms reflect what have been agreed by the parties. In other words, ensure the terms are parallel to what have been discussed or negotiated with the counterparty. 7. Check the terms thoroughly. Be extremely attentive to the accuracy and the detail of the terms. Staff should be trained to identify any ambiguous terms that may knock back any rights that you may wish to protect, especially when it involves any onerous provision. The court may hold against you for not examining the provisions stated in the terms and conditions. 8. Consider Response Procedure. This is even if you do not have any enquiries regarding the hyperlinked terms provided by the other party. Such response procedure can be in the following manner- a. Open discussion regarding the contract or terms; b. Investigate any problems which may affect your rights; c. Review the terms and decide whether the contracted terms should apply.
First published on Digital News Asia on 20 and 21 September 2021.
Since the Covid-19 pandemic, various aspects of our lives have been drastically changed to establish the new normal. The lockdown caused by the pandemic effectively closed our Courts for many months. Physical attendances were not allowed. Nevertheless, the Judiciary remained committed to ensuring the public’s access to justice.
During the early days of the lockdown, the Judiciary tried to encourage more lawyers to opt for online hearings. However, this can only happen if all the parties in the case consent to online hearing. Unfortunately, many lawyers were not receptive to the same and asked their matters to be adjourned to a date where physical attendance is allowed again.
Due to this, many cases have been pushed back and many cases filed in 2020 can only be heard in the 4th quarter of 2021. This goes against the Judiciary’s self-imposed KPI, which requires cases to be completed within 9 months. With this in mind, the Judiciary introduced section 15A to the Courts of Judicature Act 1964 to allow the use of remote communication technology. Currently, cases are done via email, video conferencing and e-Review (Court’s own platform used for case management).
With the introduction of this new provision, no consent is required from any of the parties to have the matter heard online. The Court will only have to decide if it is in the “interest of justice” for the matter to be heard online.
Other new laws were also introduced to deal with effects of the pandemic such as the Temporary Measures for Reducing the Impact of Coronavirus Disease 2019 (Covid-19) Act 2020 on 23 October 2020. This new law was introduced to provide temporary relief to reduce the impact of the Covid-19 pandemic and the effects of the Movement Control Order. However, unlike other countries, this new law did not cover online remote access to services such as affirmation and notarisation. Physical appearance is still required for affirmation before a Commissioner for Oaths or Notary Public.
On another note, I am happy to announce that my book “Foong’s Malaysia Cyber, Electronic Evidence and Information Technology Law” is now available on Thomson Reuters’ website and selected bookstores. This is the only book on cyberlaw and electronic evidence in Malaysia. Carrying more than 200 local cases and some selected foreign cases with commentaries, this publication looks at areas that have evolved in the digital sense such as civil issues like defamation, privacy and copyright.
Virtual Hearings Become The Norm
During the Movement Control Order, issued under the Prevention and Control of Infectious Diseases Act 1988 and the Police Act 1967, to combat the Covid-19 pandemic, our courts allowed hearings to be conducted online through e-Review or online conferencing, provided that the parties agreed to the same and such request for online hearing was based upon the discretion of the court.
The first online hearing at the Court of Appeal was broadcast live on the Internet on April 24, 2020 with the Court of Appeal Panel sitting at their respective premises. [Zhao Fangliang v. Syarikat Pengangkutan Satu Hati Sdn Bhd and Other Appeals (Unreported; Court of Appeal Civil Appeal No J-04(NCvC)(W)-552-10/2019, J-04(NCvC)(W)-554-10/2019 and J-04(NCvC)(W)-555-10/2019); available on YouTube.
The law in relation to remote hearing developed very quickly within a year. Justice Wong Kian Kheong published the first case regarding remote hearing in the year 2020. In SS Precast Sdn Bhd v. Serba Dinamik Group Bhd & Ors  MLJU 400, his Lordship held that remote hearing can be done even without one party’s consent.
The court may order that a hearing of a notice of application or appeal before a Judge in Chambers be heard by way of video conferencing in view of a party’s fundamental right to have access to justice as guaranteed under Article 5(1) of the Federal Constitution. The court may exercise its discretion to proceed with video conferencing in the interests of justice under Order 32 rules 10 and 11(1) read with Order 1A and Order 2 rule 1(2) of the Rules of Court 2012.
In KNM Process Systems Sdn Bhd v. Cypark Sdn Bhd  AMEJ 0540, his Lordship also applied the principles of SS Precast (above) to allow the hearing of an originating summons and notice of application by way of video conferencing. By late 2020, many cases have moved to online hearing save for criminal cases.
Prior to the lockdown, the physical location of a defendant and his witnesses are important when deciding where to conduct the legal proceeding. In Dr Zakir Abdul Karim Naik v. Raveentharan A/L Subramaniam  1 LNS 1149, the plaintiff sued the defendant, an advocate and solicitor practising in Penang, for publishing certain defamatory statements on the latter’s Facebook page. The High Court in Kuala Lumpur allowed the transfer of the proceedings to the Penang High Court. The High Court took into account the place of residence and practice of the defendant and his witnesses and where the subject matter of the defamation arose, i.e. Penang, and that the defendant’s Facebook account was created, edited and used in Penang.
Remote communication technology is now a factor to be considered when deciding whether to transfer proceedings to another court of another location. In Liziz Plantation v. Liew Ah Yong  10 CLJ 94, Justice Su Tiang Joo held that with the experience gained in using remote communication technology in dealing with the movement control order, conditional movement control order and the recovery movement control order that is extant and which were necessitated by the Covid-19 pandemic, the physical location of any one litigant or witness and the issue of having to physically travel to any court has become very much less important [Para 43].
The need for counsel, litigants, and witnesses to physically travel to the court for the hearing of their matters is getting less and less. Hearings and meetings can now be done and are, by reason of the Covid-19 pandemic, encouraged to be done electronically via a variety of Internet platforms such as “Zoom” or “Skype”, not to mention that there are other platforms as well such as “Google Duo”, “Google Hangouts”, “MS Teams” and “Adobe Connect” [Para 44]. Accordingly, the High Court held that it would not be in the interest of justice to allow the transfer application.
In an intellectual property dispute case Muhammad Hafidz Bin Mohd Dusuki v. Hassan Bin Zulkifli  1 LNS 1843, Justice Radzi Harun dismissed an application to transfer the proceeding to the Kota Bahru High Court notwithstanding that, among others, one of the witnesses is of old age and would be difficult to travel due to the Covid-19 pandemic. His Lordship held that the Court is cloaked with sufficient powers and can allow flexibility towards the said person by dispensing his attendance and resort to technology for his evidence taking.
After considering the above factors, the Court will direct the proceedings to be conducted through long-distance communications technology, physically, or a combination of both modes (“hybrid method”). The Court will determine the digital platform and designated location for remote proceedings, along with other relevant instructions. Specific instructions have been laid out for witnesses to give evidence remotely.
We also saw the hearings for the petition for admission to the Bar moving online for the first time in December 2020. Since the commencement of petition for admission to the Bar (going as far back as the 1800s), such proceedings have always been done physically in the Court. Only in recent years it has become some form of celebration where friends and family will attend the event with flowers and gifts, and for photography sessions. On one occasion, one pupil’s friends and family came with a large banner with a large congratulatory note with his face on it. However, such proceedings were put to a halt by the Movement Control Order. This resulted in many pupils, who had finished their pupillage, not being able to qualify as an advocate and solicitor for many months. Fortunately, the Judiciary decided to have the proceeding done online and aired in platforms such as YouTube. This special occasion was not only witnessed by friends and family of the pupils, but also by the nation and the world.
It is also worth mentioning that the inquest to the death of Nora Anne Quoirin was conducted via Zoom and broadcasted on YouTube. Ms Nora Anne Quoirin, a 15-year-old with an abnormality of brain development, went missing in the middle of the night while staying with her family at a resort located at Negeri Sembilan in August 2019. She was found dead about 10 days later in a stream not too far from the resort. The learned Coroner found in Inquiry into the death of Nora Anne Quoirin  1 LNS 6 that the reason for her death is due to “misadventure”, i.e. she had gone out of the resort on her own and subsequently got lost in the abandoned palm oil plantation.
Defamation on Facebook
The case of Masyitah Binti Md Hassan v. Sakinah Binti Sulong  1 LNS 2108is a defamation case involving many features of a social media posting. This judgment took into account hashtags, the type of reader who will view the posting and how public apologies can be published on social media.
In this case, the Plaintiff, a doula or a birth companion sued the Defendant, a doctor for publishing defamatory postings about the Plaintiff on the latter’s Facebook account. The Defendant had alleged that the Plaintiff was responsible for the death of a baby who died at birth via a home water birth.
The mother of the baby appeared as a witness for the Plaintiff and revealed that the Plaintiff did not attend to the home water birth as a doula but merely as a friend. The baby was already partially delivered when the Plaintiff reached the Defendant’s home during the delivery.
Justice Evrol Mariette Peters found that the Defendant’s Facebook postings were defamatory of the Plaintiff, and the Defendant’s defence of justification fails since the Defendant had failed to prove the truth of the contents of her Facebook postings. The Defendant’s defence of fair comment failed as the comments which were based on falsity, were enveloped in bad faith, and not made in the interest of the public.
The High Court also held that, in deciding the natural and ordinary meaning of the impugned statement, the Court should look into the perspective of a reasonable netizen who is of ordinary and average intelligence, fair-minded, not avid for scandal, not unduly suspicious, and one who understands colloquial Bahasa Malaysia with a spattering of English.
The Defendant argued that the contents of the same had conveyed merely that the Plaintiff had been present at the birth of the baby, and that she had lied about that, and nothing more. The Court did not agree to this argument as it was very clear that the Facebook postings were littered with remarks that were not only disparaging, but accusatory as well. For instance, the hashtags #doulakeji was used, with ‘keji’ referring to vile. The word ‘vile’ is a parlance used interchangeably with ‘evil’, ‘abominable’, and ‘vicious’, which were sufficiently clear to an ordinary man.
In deciding on the damages, the High Court took into account the fact that the defamatory comments were made online on a Facebook account and bearing in mind the rapid forwarding and sharing that online comments are susceptible to, and the length of time that the postings were displayed, which in this case was six months. The Defendant argued that the postings were deleted after six months and, therefore, the news could not have spread at the extent as contended by the Plaintiff.
The Court held that publication over the Internet has wide circulation and the Court may presume such a fact under section 114 of the Evidence Act 1950. The Court also took judicial notice the breakneck speed that online news is susceptible to spreading, as this was a sufficiently notorious fact that the Court could not ignore; compounded by the fact that such news was false.
In addition, the High Court applied section 114A(1) of the Evidence Act 1950 and held that the Defendant is presumed to have published the comments posted by the public on her Facebook posting as she had provided a platform for such purpose.
The High Court ordered, among others, general damages of RM100,000.00. Exemplary or punitive damages of RM100,000 was also ordered in view of the indecorous conduct of the Defendant. Her Ladyship held that the Court cannot turn a blind eye to the activities of quidnuncs, since the moment false news is released into the wilderness of the World Wide Web, that bell cannot be un-rung.
In addition, the High Court ordered the defendant to post an apology on the Facebook timelines of both the Plaintiff and Defendant, within seven days of the decision of this Court, and for such apology to remain at such timelines for six months.
The High Court also dealt with a case where a defamatory Facebook posting had not named or described the Plaintiff but nevertheless, the Plaintiff took legal action against the Defendant. In Ahmad Suhaimi Abdullah lwn. Amir Shariffuddin Abd Raub  1 LNS 687, the Plaintiff sued the Defendant for publishing certain statements on his Facebook account allegedly to be defamatory of the Plaintiff. The Plaintiff and his wife were business partners of the Defendant for a company selling imported cars. The Plaintiff and his wife pulled out from that company. The Defendant published a statement alleging a person had misappropriated the company’s money without naming anyone. The Defendant also alleged that the statement did not specify the Plaintiff’s designation or in relation to his conduct in the performance of his duties, or that the words refer to or are understood to refer to or may refer to the Plaintiff, among others.
In dismissing the Plaintiff’s claim, the High Court held that other than the Plaintiff, his wife and his driver, the Plaintiff did not call any independent witness, namely any witness that is acquainted with the Plaintiff, to testify that the words in the impugned posting referred to the Plaintiff. The Court was also of the view that the Plaintiff’s witnesses are interested witnesses because the Plaintiff himself had admitted that he taught or coached them in giving evidence in Court.
Employee who was dismissed for leaving a WhatsApp group
Last year, I reported that an employee was terminated by her employer after she left the WhatsApp group of the company (Thilagavathy a/p Arunasalam v. Maxis Mobile Sdn Bhd  2 LNS 1050). The Industrial Court held that that the Claimant was in breach of her terms of employment with the company when she failed to follow the reasonable oral and written instructions of the company, i.e. to obtain approval prior to exiting the WhatsApp group.
On appeal to the High Court (Thilagavathy a/p Arunasalam v. Maxis Mobile Sdn Bhd  1 LNS 1062), the High Court overturned the Industrial Court’s decision and ordered the matter to be decided by another Industrial Court Chairperson. The High Court held that the Industrial Court failed to make an objective assessment on the facts and evidence before them in determining whether the employee was guilty based on the charges stated in the show cause notice. Amongst the reasons for the decision is that the Industrial Court ought to take into account that there was no clear notice or warning to the Claimant that she cannot leave the company’s WhatsApp group without the permission of the company.
When the Claimant asked to be re-added to the group, the company refused to do so. The company’s witness also could not confirm that every employee has been informed that they need permission to exit the group. Therefore, it is reasonable to assume that the Claimant has no knowledge that permission is required to exit the group. The Industrial Court had earlier held that the Claimant ought to have cross examined the company’s witness regarding the issue of exiting the WhatsApp group. However, the High Court held that the Industrial Court failed to consider that the Claimant was not legally represented, hence she does not know how to cross examine a witness, and it is not fair to judge the Claimant with technical matters not within her capability as a layperson with no legal background.
On the topic of WhatsApp groups, we also saw defamation lawsuits being filed for publications on WhatsApp groups. In Mohamed Fahamy Mohamed Suyud v. Iscada Net Sdn Bhd  1 LNS 867, the Defendant filed a counterclaim against the Plaintiff for publishing certain alleged defamatory statements on a WhatsApp group. However, the High Court found that the Defendant has failed to prove that those statements referred to the Defendant. The High Court was of the view that pure speculation is not sufficient, and the ordinary reader must have rational grounds for his belief that the words refer to the Defendant.
First Decision on a Persons Unknown Injunction in Cyberspace
In most litigation cases, the defendant is usually named. However, the use of the Internet has made it harder for a plaintiff to trace the identity of a wrongdoer. This is coupled with internet users’ assertions of their right to remain anonymous for, among other things, their own safety, right to privacy and speech and expression.
Where a defendant’s name is unknown, it is still possible to file an action against such person in Malaysia. We have seen this in land possession matters and accident matters. It is now possible to file an action against “persons unknown” in Malaysia in respect of matters arising from the cyberspace sphere.
In Zschimmer & Schwarz GmbH & Co KG Chemische Fabriken v. Persons Unknown & Anor  7 MLJ 178, the High Court granted an ex parte proprietary injunction and Mareva injunction against “persons unknown” as the 1st Defendant. In this case, the Plaintiff was a victim of cross-border cyber fraud known as a “push payment fraud” where the victim is tricked over emails to make a payment for a legitimate transaction into a different bank account under the control of the fraudster.
The Plaintiff, a German company, was in communication with its South Korean counterparty. The fraudster, being Persons Unknown, deceived the Plaintiff into paying into the 2nd Defendant’s bank account the sum of EUR 123,014.65 (approximately RM600,000.00) by infiltrating the email communications between the Plaintiff and the South Korean counterparty. The Plaintiff thought it was making a genuine payment to its South Korean counterparty for a commission payment. Instead, the fraudster had siphoned the Plaintiff’s monies away.
Justice Ong Chee Kwan delivered the first known decision on a Persons Unknown injunction. After going through a series of English cases against Persons Unknown, his Lordship held-
 It is not usually the case that a defendant is described as ‘Persons Unknown’. Nevertheless, the Court can grant interlocutory orders against the 1st Defendant — being Persons Unknown. In cases like the present which involve cyber fraud and fake email addresses, the fraudster or fraudsters are unknown. English case law have allowed for similar injunctive orders against ‘Persons Unknown’. There is nothing in our Rules of Court 2012 that would prevent the Writ of Summons and applications from being filed against Persons Unknown.
 As stated above, there is nothing in our Rules of Court 2012 prohibiting the making of an order against Persons Unknown. In fact, Order 89 of the Rules of Court 2012 for summary proceedings for possession of land allows for a defendant reference to Persons Unknown.[See Fauziah Ismail & Ors v Lazim Kanan & Orang-Orang Yang Tidak Diketahui  7 CLJ 37 (CA); the commentary in Foong’s Malaysia Cyber, Electronic Evidence and Information Technology Law, para [8.098] to [8.100]].
This case clears the doubt on whether action can be taken against Persons Unknown in respect of matters arising from the cyberspace sphere. With the increase of online scams and fraud, we can expect similar cases to be filed in Court so that victims of these cybercrimes are able to seek redress and preserve their assets.
Short Term Lodging – AirBnB Effect
The Federal Court finally resolved the issue of whether a management corporation has the power to ban short term lodging. In Innab Salil & 8 Ors v. Verve Suites Mont’ Kiara Management Corporation  1 LNS 2318, the Defendants operated and/or caused to be operated a short-term rental in the Verve Suites. The Plaintiff, being the management corporation, passed a special resolution, which was then incorporated into its House Rule No. 3, to stop the operation of short-term rentals in the Verve Suites. The Plaintiff then filed an action against the Defendants to stop them from breaching House Rule No. 3. The Defendants argued that the management corporation does not have the power to pass House Rule No. 3 as it is beyond their powers provided under section 70 of the Strata Management Act 2013.
On appeal, the Court of Appeal ( MLJU 1496) held, among other things, that the Strata Management Act 2013 was to advance the interest in communal living within a strata scheme. Therefore, it would defeat the spirit and purpose of the Act for the proprietors, such as the Defendants, to use their residential units in the form of a business enterprise such as short-term rentals. The majority of the residents had voted against the same. The wish of the majority had to be taken heed of, hence there could never be any violation of section 70(5) when House Rules No. 3 was adopted.
The Federal Court ( 10 CLJ 285) held that by-laws passed pursuant to section 70 of the Strata Management Act 2013 stipulated in subsection (2) are justifiable if they exist for the good of the strata community. In other words, even if the State Authority permits the use of the land for commercial purposes, such use is still subject to other laws in force, in particular to section 70 of the Strata Management Act 2013. Hence, the passing of House Rule No. 3 is not unlawful. The Federal Court also held that the arrangements by the Defendants are nothing more than mere licences, and therefore do not amount in law to “dealings” within the ambit of section 70(5) of the Strata Management Act 2013.
Accordingly, House Rule No. 3 is not ultra vires section 70(5). As concurrently found by the High Court and the Court of Appeal, the said House Rule was enacted for the many legitimate purposes under section 70(2) or for that matter, for the purposes under which the Plaintiff has established under section 59 of the Strata Management Act 2013. As such, the Federal Court held that the said short-term rentals in this case amount to licences and not tenancies.
TT Dotcom Sdn Bhd v Low Wey Heng & Ors  1 LNS 2136 is a case that concerns Anton Piller orders against operators of short term rental business. An Anton Piller order is a court order that allows a plaintiff to, among others, search the premise(s) of the defendant to obtain evidence without prior notice or warning.
In this case, the 1st and 2nd defendants, having subscribed to the plaintiff’s single home-user internet service plan by the name of “1 Gbps Home Package” for the use of 3rd and 4th defendants’ short term rental businesses i.e. an AirBnB business, were found to have allegedly tampered with the service line to enable multiple access which enable internet connectivity outside and beyond the named location to other units unspecified in the forms for subscription.
This had allegedly contravened the General Terms and Conditions signed, where it was stipulated that the plaintiff’s services should only be intended for personal use and any providing or sub-providing to 3rd parties is prohibited.
The plaintiff contended that the defendants breached the contract with the plaintiff as they had (i) unlawfully provided and extended the Wi-Fi connectivity or internet service for unlawful use of 3rd parties, and (ii) conspired to injure the plaintiff by unlawful means which had deprived the plaintiff of the monetary benefit it could have gained. The unlawful connection and usage is also a deliberate interference with the plaintiff’s trade and business.
The plaintiff contended that in order to carry out the unlawful activities, they have in possession certain and custody of certain electronic equipment. The plaintiff then obtained the Anton Piller orders for, among others, its search team to carry out enforcement activities by searching and seizing those equipment and by conducting a LIVE TEST Recording.
Understandably, given the draconian nature of an Anton Piller order, a stringent threshold must be met in order for the Courts to grant an Anton Piller order. The High Court held that the plaintiff has complied with all legal requirements to grant the order. The Court dismissed the contention that the plaintiff’s sales agent is aware of the 1st and 2nd defendants’ AirBnB business. The Court held that as the name of the package suggest, it is a package for home subscription and clearly was not meant for commercial and business subscription / subscribers (where the latter obviously requires higher volume of internet connectivity). A dwelling or residence that is monetized or commercialized as an Airbnb is not at all a Home. Taking into account of the 1st to 4th defendants’ deliberate effort to abuse the Internet service provided by the plaintiff, the plaintiff established a strong prima facie case. In this regard, the learned Judge was of the view that the Anton Piller orders were necessary because-
(a) It was necessary to negate any notion that the earlier tests had been tampered with or manipulated by the plaintiff (because the previous investigation/tests were carried out without the presence of the 1st to 4th defendants). (b) The Anton Piller order has specified a limited number of units i.e to run LIVE TESTS in 2 unoccupied units with Wi-Fi facility. This refutes the allegation by the defendants that the applications for an Anton Piller orders were a fishing expedition. (c) The disclosure required was only in respect of certain listed items which were discovered and identified even before the investigation under the first Anton Piller order. (d) The enforcement of the Anton Piller order was done under the supervision of the Supervising Solicitors who had ensured that it was carried out without any disruption to the operations of the 1st to 4th defendants’ premises. Furthermore, there has been no evidence led by the 1st to 4th defendants to prove of such disruption. (e) If the Defendants had any objections against the Anton Piller orders, they could have applied for a variation or a stay of the execution of the first Anton Piller order but this was exactly what the 1st to 4th defendants have either failed, refused, or neglected to do.
There was a real possibility that the defendants may destroy the evidence within their possession. The Court recognised that the defendants’ alleged abuse would not have discovered had the plaintiff not conduct a random inspect on the usage of their Wi-Fi connectivity. It can be seen that many technical manoeuvres can be discreetly carried out without the knowledge of the service provider. Stemming from this fact, the Court held that it can be inferred that concealment and possible destruction of evidence (crucial to prove the unauthorized connections link setup by the defendants) is definitely a real possibility. In addition, the devices for connectivity are within the control and possession of the defendants. The 1st to 4th defendants’ alleged breach could only be further demystified or unravelled through proper investigation and inspection on the devices for wi-fi connectivity installed at defendants’ premises.
Furthermore, the application contained specific undertakings and safeguards, with two supervising solicitors to supervise the execution.
Thus, there were no meritable grounds for the Court to set aside the Anton Piller orders.
Discovery of the Identity of Social Media User
Last year, I reported that it is possible to file an action to obtain information about certain Facebook users in Malaysia. In Universiti Utara Malaysia v. Facebook Inc (Alor Setar High Court Originating Summons No. KA-24-1-01/2019), Facebook agreed to disclose basic subscriber information of certain Facebook users who allegedly have published defamatory statements against the Plaintiff (also known as a pre-action discovery order). However, in usual cases against foreign defendants, one would need to make a formal application to Court to have the court documents served overseas through, among others, the assistance of our Government and the foreign government or judicial authorities of that country. This is a long and complicated process.
The Court has also now allowed the service of court documents on Facebook Malaysia Sdn Bhd (“Facebook Malaysia”) as the Court found that Facebook Malaysia is the agent of Facebook, Inc under Order 10 Rule 2 of the Rules of Court 2012 (Abu Jamal Bin Sulaiman & Anor v Facebook, Inc (Kuala Lumpur High Court Original Summons No. WA-24NCVC-57)). In this case, the Applicants, who are husband and wife, filed a pre-action discovery order against Facebook, Inc to obtain information about certain Instagram users who had allegedly defamed them.
Instead of applying to have the court documents served on Facebook, Inc in the United States, the Applicants obtained an ex parte order to have the court documents served on Facebook Malaysia. Facebook, Inc then applied to set aside the ex parte order on the ground that Facebook Malaysia is not an agent of Facebook, Inc and has never authorised them to accept documents on behalf of Facebook Inc. Furthermore, Facebook, Inc and Facebook Malaysia are separate legal entities.
The High Court dismissed Facebook Inc’s application to set aside the service of the ex-parte order with cost of RM5,000. The High Court was of the view that:-
(1) any reasonable man would conclude that Facebook Malaysia is indeed an agent of the Defendant by virtue of implied contract in existence between them as there were numerous online publications such as publication on the Prime Minister’s Office on the attendance of the then Prime Minister and Communication Minister at the official opening of Facebook Malaysia, and New Straits Times report with the caption “It’s official: Facebook opens office in Malaysia”; (2) Facebook Malaysia is involved in the marketing and sales support services based on a search from the Companies Commission of Malaysia; (3) nothing was adduced to show that Facebook Malaysia had officially declared that it is not part of or an agent of the Defendant and vice versa; and (4) the Applicants’ solicitors had earlier sent a letter to Facebook Malaysia regarding this matter and Facebook, Inc had replied to the Applicants’ solicitors directly stating that “We are responding in our capacity as Facebook, Inc which operates Facebook for Malaysia users”. Accordingly, if Facebook Malaysia is not Facebook, Inc’s agent or has locus standi to act for Facebook, Inc, it should have returned those letters/documents straight back to the Applicants’ solicitors. Facebook Malaysia had failed to mention specifically that it is not an agent of the Defendant.
The High Court also held that when Facebook Malaysia was officially opened or launched in Malaysia, Facebook, Inc. was indeed conducting business in Malaysia. It follows that it can receive any mode of originating process on behalf of its principal here in Malaysia.
There were numerous malicious and defamatory remarks made by eight Instagram accounts which have reduced the Applicants into as though they are criminals and an irresponsible couple who does not deserve any respect from society. The defamatory words used, among others, are that the couple are kidnappers, paedophiles rapists, Satan practising black magic etc. The couple is experiencing great difficulties to identify the right party to sue, and the many court procedures to be adhered to, creating a great stumbling block for them to seek justice.
The Court was of the opinion that it will be highly prejudicial and cause grave injustice to the Applicants as though their rights to bring the actual culprits to court will be completely shut. There is no prejudice caused to the Defendants but on the other hand, the Applicants and family are still receiving continuous accusations and slanders. Even if there are some shortcomings or non-compliance on the part of the Applicants regarding the service of the court documents, such irregularity can be cured by Order 2 Rule 1 of the Rules of Court 2012.
Electronic service of court documents
Prior to the enforcement of Rules of Court (Amendment) 2020, Order 10 rule 1 of the Rules of Court 2012 provides that a writ and originating summons shall be served personally on each defendant or sent to each defendant by prepaid AR registered post, addressed to his last known address. The Rules of Court 2012 was silent as to whether such court documents can be served via electronic means other than by way of facsimile.
The Rules of Court (Amendment) 2020, which came to force on 15 December 2020, introduced service of Court documents by means of electronic communication in accordance with any practice direction issued for that purpose. As of the date of writing, no such practice direction has been issued yet. Perhaps the Court may soon expressly allow the service of court documents by email and other instant messages applications such as WhatsApp, Facebook or WeChat. Our Courts have in the past allowed service of court documents in certain selected cases (for example, see 30 Maple Sdn Bhd v. Noor Farah Kamilah binti Che Ibrahim (Unreported; Kuala Lumpur High Court Suit No. WA-22IP-50-12/2017); Zschimmer & Schwarz GmbH & Co KG Chemische Fabriken v. Persons Unknown & Anor  7 MLJ).
In PP v. Mohamad Faezi bin Abd Latif 5 LNS 42, the learned Sessions Court Judge produced a helpful table consisting of sentences for those who had pleaded guilty at first instance under a section 233(1)(a) of the Communications and Multimedia Act 1998 charge. The table is reproduced below (together with the sentence in that case):
PP v. Ranendar Bijoy Bhattacharyya(Kuala Lumpur Sessions Court Suit No. WA-63-1024-10/2019)
The offender posted fake content using application service Facebook
A fine of RM5,000 in default of 3 months’ imprisonment
PP v. See Foo Hoong (Petaling Jaya Sessions Court Suit No. BB-MS4-63-29-9/2019
The offender sent obscene video to the complainant using application service Facebook Messenger
A fine of RM10,000 in default of 4 months’ imprisonment
PP v. Ruziman bin Kamaruzaman (Petaling Jaya Sessions Court Suit No. BB-MS3-63-28-9/2019)
The offender sold obscene content using application service Telegram
A fine of RM8,000 in default of 12 months’ imprisonment
PP v. Azhar bin Mamat (Kuala Lumpur Cyber Court Suit No. WA-63-130-01/2018
4 charges under s 233(1)(a)The offender sent offensive communications using application service Facebook
A fine of RM5,000 in default of 1 month imprisonment for each charge
PP v. Mohd Shariman Shahir bin Omar (Kuala Lumpur Cyber Court Suit No. WA-63-785-12/2017)
The offender sent offensive communications using application service Facebook
A fine of RM10,000 in default of 6 months’ imprisonment
PP v. Mohd Nazri bin Sulaiman (Klang Sessions Court Suit No. BI-63-14-7/2017)
The offender sent false communication using application service Facebook
A fine of RM7,000 in default of 3 months’ imprisonment
PP v. Ng Thai Quen (Kuala Lumpur Cyber Court Suit No. WA-63-199-08/2017)
The offender sent offensive communication using application service Facebook
A fine of RM7,000.00 in default of 3 months’ imprisonment
PP v. Mazlan bin Yusoff (Kuala Lumpur Cyber Court WA-63-202-08/2017
The offender sent offensive communication using application service Facebook
A fine of RM7,000 in default of 3 months’ imprisonment
PP v. Kamarzaman bin Mustafa(Kuala Lumpur Cyber Court Suit No. WA-63-209-08/2017)
The offender sent false communication using application service Facebook
A fine of RM5,000 in default of 3 months’ imprisonment
10 charges under s 233(1)(a)The offender sent obscene communications on his Twitter account, comprising still images and videos depicting the male genitalia with lewd and lascivious captions. The offender also posted obscene communications on his Twitter account to promote his reproductive health product. The Sessions Court Judge commented that this case appears to be the first in this country involving commercial exploitation of obscene communication on Twitter.
A fine of RM5,000 in default of 3 months’ imprisonment on each charge, totalling RM50,000 in default of 30 months’ imprisonment
Notwithstanding the sentencing trends above, the learned Sessions Court Judge stated that the sentencing trends merely serve as a guide on the prevailing trends and the range thereof. It does not in any way take precedence over the Court’s judicial discretion on sentencing. The learned Sessions Court Judge stated that “sentences are not binding precedents, but are merely historical statements of what has happened in the past”.
Contempt proceedings against Malaysiakini
In Peguam Negara Malaysia v.Mkini Dotcom Sdn Bhd & Anor 7 CLJ 173, the Attorney General obtained an ex parte order for leave to initiate contempt proceedings against the operator of the online news portal Malaysiakini (1st Respondent) and its Chief Editor (2nd Respondent) in the Federal Court for certain contemptuous comments made by the readers of Malaysiakini. The Respondents filed an application to set aside the ex parte order. In dismissing the said application to set aside the ex parte order, the Federal Court held that the Respondents were the publisher of the comments based on the following facts:
(1) the 1st Respondent facilitated publication; (2) the editorial policy allowed editing, removing and modifying of comments; (3) only upon being made aware by the police, the 1st Respondent indeed removed the comments; and (4) evidence revealing that the editors of the 1st Respondent reviewed postings on a daily basis.
The Federal Court also held that, by virtue of section 114A of the Evidence Act 1950, the Respondents are presumed to have published the impugned comments. The Federal Court found that a prima facie case of contempt in the form of scandalising the Court had been made out.
The matter was then heard by a seven-judge panel on the issue of whether the Respondents are liable for contempt of court over the readers’ comments (Peguam Negara Malaysia v. Mkini Dotcom Sdn Bhd & Anor  1 LNS 89). The Federal Court recognised that there were difficulties faced by the Court in pinning down the role of publication on the internet content provider when the comments were made and posted by third parties. The Federal Court held that the Malaysian Parliament must had resolved this difficulty by enacting section 114A of the Evidence Act 1950.
In rebutting the presumption, the Respondents relied mainly on three measures to safeguards itself from pre- and post-publication comments by third party subscribers. The first by its terms and conditions warning subscribers that abusive posting offending any law or which create unpleasantness would be banned. Second, it installs a filter program which disallows the use of certain foul words. Failing that filter any article or comment would not get posted. This filter program is also used to review third party comments. Third is the peer reporting system. This process entails other users or readers of the online news portal to report on offensive comments. Only upon the receipt of such report will an editor immediately examine and decide on the removal of the same. It is for this reason, the 1st Respondent reserves the right to remove or modify comments posted at its discretion. In this way, the 1st Respondent’s take down policy would be effectively implemented.
The Respondents also argued that it is not practical or possible for the 1st respondent to moderate all the comments posted by third parties as they have a high volume of about 2,000 comments received per day with 25,000 online subscribers. The process of peer reporting is thus resorted to.
Nevertheless, the Federal Court found that the Respondents had failed to rebut the presumption of publication under section 114A of the Evidence Act 1950. The Federal Court held that the 1st Respondent is the owner of its website, publishes articles of public importance, allows subscribers to post comments to generate discussions. It designs its online platform for such purpose and decides to filter foul words and rely on all the three measures it has taken.
In other words, the 1st Respondent designs and controls its online platform in the way it chooses. It has full control of what is publishable and what is not. It must carry with it, the risks that follow from allowing the way its platform operates. The 1st Respondent cannot be heard to say that its filter system failed to filter offensive comment when it deliberately chooses only to filter foul language but not offensive substance. The 1st Respondent cannot be allowed to turn their news portal into a runaway train, destroying anything and everything in its path, only because their riders are the ones creating such havoc albeit made possible by their train.
As for the 2nd Respondent, the Federal Court held that section 114A is not applicable to the Chief Editor as there was no evidence to show that he was owner or the host or the editor on the online news portal and that he is the person who reserves the sole discretion to edit or completely remove any comments by a third party. Therefore, the 2nd Respondent is found not guilty of contempt of court.
The Federal Court meted out a sentence of RM500,000 against the 1st Respondent to serve public interest, where the sentence must not be too lenient in order to provide a deterrence effect. The Respondents’ unreserved apology, and their cooperation with the police and the courts were also taken into account. The contempt committed was much more severe than previous cases on contempt, stating that there were baseless allegations of corruption, and that the comments made were “beyond any bound of decency”. The 1st Respondent subsequently managed to raise more than RM500,000 through public donations within hours of the Federal Court’s sentencing.
The use of Court’s “Artificial Intelligence” (AI) system in Criminal Proceedings
Last year, I reported about the use of artificial intelligence system to aid judges in passing sentence for criminal cases in respect of drug possession under s. 12 of the Dangerous Drugs Act 1952 and s. 376 of the Penal Code. There is now more information about this system as it is published by the learned Magistrate Jessica Ombou Kakayun in her judgment of Public Prosecutor v Denis P. Modili  5 LNS 21.
According to her judgment, to analyse and provide the recommendations to pass the sentence, the artificial intelligence system requires important information called parameters. For instance, under s. 12(2) of the Dangerous Drugs Act 1952, information regarding the weight of the drugs, the age and employment record of the accused are required. Once this crucial information is entered into the system, the artificial intelligence system will generate its own recommendations (either the sentence of fine or imprisonment) and this will reflect in a percentage form. Whichever percentage is higher, the recommendations provided are mere guidelines to assist the presiding judge to decide in applying the correct sentencing principles according to past precedents. This, in turn, will avoid disparity of sentences among the judicial officers. By meting the sentences accordingly, this will likely reduce any possible upcoming appeal to the higher courts since a uniform standard of sentencing principles is applied. The issue of sentencing principle being manifestly inadequate or excessive by the presiding officer will lessen and/or even be avoided in the future.
In Public Prosecutor v Denis P. Modili(supra), the counsel of the accused objected to the use of the artificial intelligence system in determining the sentence of the accused on the grounds that the use of the artificial intelligence system is a breach of Article 5(1) of the Federal Constitution which provides that that no person shall be deprived of his life or personal liberty, and Article 8 of the Federal Constitution which provides that all persons are equal before the law and entitled to the equal protection of the law. Further, the use of artificial intelligence system by the Court will influence the outcome and thus is prejudicial to the accused.
However, the learned Magistrate held that the issue of breach of constitutional rights is not within her competent jurisdiction. The matter should be decided by the higher court. Nevertheless, the learned Magistrate held that the artificial intelligence system is a mere guideline to assist the Court so as not to depart from the true spirit of a reasonable sentencing principle. The presiding officer may agree or depart from the sentence recommended by the artificial intelligence system. Ultimately, the sole discretion rests on the presiding judge in determining the sentence of the accused. Accordingly, the accused was sentenced to 12 months imprisonment notwithstanding that the artificial intelligence system recommended that the accused to be sentenced to 10 months.
However, on appeal to the High Court, the learned High Court judge allowed the appeal and reduced the sentence to 6 months. However, no reason was given for the reduction of the sentence and the issue of constitutionality was not addressed by the Court.
Guidelines on Digital Assets
Towards the end of 2020, Securities Commission Malaysia issued the revised Guidelines on Digital Assets to regulate Initial Exchange Offerings (IEO) and Digital Asset Custodians (DAC). The aim is to promote responsible innovation in the digital asset space, while managing emerging risks and safeguarding the interests of issuers and investors.
The guideline is applicable to the following parties: a body corporate that seeks to raise funds through a digital token offering, a person who seeks to operate an IEO platform, and a person intending to provide the services of safekeeping, storing, holding or maintaining custody of digital assets for another person.
The guideline provides, among others, that IEO platform operators will be required to conduct due diligence on the issuer, review the issuer’s proposal and disclosures in the “whitepaper”, and assess the issuer’s ability to comply with the requirements of the guidelines and the SC’s Guidelines on Prevention of Money Laundering and Terrorism Financing.
In 2021, we can expect more interesting developments in the cyberlaw and IT sphere.
– In the e-hailing sector, Loh Guet Ching v. Myteksi Sdn. Bhd. (Berniaga atas nama Grab) & 2 Ors (Kuala Lumpur High Court Suit No. WA-25-296-10/2020) is an interesting case on the position of e-hailing drivers vis-a-vis e-hailing companies. Ms Loh brought a case against Grab at the Labour Department after she was terminated as an e-hailing driver. She had alleged that she is an employee, thus entitled to bring an action against Grab for unlawful dismissal. However, the Minister of Transport refused to refer the matter to the Industrial Court. A judicial review application was thereafter brought against the Director General of the Department of Industrial Relations, among others. While the matter is still pending before the High Court, perhaps the recent UK Supreme Court decision, Uber BV and others v. Aslam and others  UKSC 5, would have some bearing on this case, where the UK Supreme Court upheld the UK’s Employment Tribunal’s decision that Uber drivers are considered workers rather than self-employed.
– Another e-hailing case is Gabungan Pertubuhan Teksi, Kereta Sewa, Limosin Dan Teksi Lapangan Terbang SeMalaysia-GTSM v. Grabcar Sdn Bhd (Kuala Lumpur High Court Suit No. WA-22NCvC-801-12/2020), where a RM100 million class-action lawsuit was mounted by Malaysian Association of Taxi, Rental Car, Limousine and Airport Taxi against Grabcar. The association claimed that Grabcar was running an illegal e-hailing service which contravened the Transport Act 2012, the Competition Act 2010 and the Federal Constitution. Grabcar’s service was alleged to be in violation of the right to livelihood, rights and interests of taxi drivers. As at the time of writing, the matter is still pending in Court.
– The Court of Appeal recently affirmed the High Court’s previous decision in Robert Ong Thien Cheng v. Luno Pte Ltd & Anor  3 AMR 143 and held that intangible cryptocurrency such as bitcoin falls within the ambit of “things” under section 73 of the Contracts Act 1950. The decision gives certainty to the modern business world whilst adapting to the digital revolution. The Malaysian courts are seemingly moving in the right direction to keep up with this digital age.
– The Government has also recently gazetted the Emergency (Essential Powers) (No. 2) Ordinance 2021 under the current state of emergency. This Ordinance reproduced a large section of the Anti-Fake News Act 2018, which was repealed by the Pakatan Harapan government.
However, unlike its predecessor, this Ordinance is limited to “fake news” relating to Covid-19 or the proclamation of emergency. There are also no illustrations of what could amount to an offence unlike its predecessor. Nevertheless, spreading fake news about the effect of Covid-19 vaccines or that certain persons had contracted Covid-19 would clearly be an offence under the Ordinance.
In respect of “proclamation of emergency”, it was reported by Malaysiakini that the de facto Minister of Law, Takiyuddin Hassan said that it is fake news to claim that the Government sought an emergency declaration because it lost its majority in the Dewan Rakyat. Those spreading “fake news”, whether in Malaysia or outside Malaysia, will face a fine not exceeding RM100,000, or an imprisonment for a term not exceeding 3 years, or both. Those providing financial assistance in spreading fake news or failing to remove any publication containing fake news will also commit an offence amounting to a fine not exceeding RM500,000, or an imprisonment for a term not exceeding 6 years, or both.
First published on Digital News Asia on 27 and 29 April 2021 and 2 May 2021. Article updated with the case of TT Dotcom Sdn Bhd v Low Wey Heng & Ors.
By Foong Cheng Leong December 17, 2019 – Digital currencies can be used to raise funds, make purchases or traded online – Anyone operating a digital assets exchange platform must obtain approval from the SC
DIGITAL currencies are a form of digital asset. They can be used to raise funds, purchase goods or services and even traded online instantaneously without any border restrictions.
Digital currencies are now traded on the Internet through, among others, digital assets exchange platforms. Due to their popularity, the prices of certain digital currencies such as Bitcoin are volatile.
Bank Negara Malaysia has declared that digital currencies are not legal tender in Malaysia. However, this does not mean that trading of digital currencies is illegal. Trading of digital currencies is legal in Malaysia but any person operating a digital assets exchange platform must obtain approval from the Securities Commission.
Currently, there are three Recognised Market Operators (RMOs) registered by the Securities Commission to operate digital asset exchanges in Malaysia.
In the meantime, the Securities Commission has also issued Public Consultation Paper No. 1/2019 Proposed Regulatory Framework for the Issuance of Digital Assets Through Initial Coin Offerings (ICOs).
The issuance or offering of certain digital assets to the public will require prior approval or authorisation from the Securities Commission and compliance with the relevant laws and regulations.
Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019
Reg 2 of the Order 2019 has defined digital assets as:
Digital Currency: a digital representation of value which is recorded on a distributed digital ledger whether cryptographically-secured or otherwise, that functions as a medium of exchange and is interchangeable with any money, including through the crediting or debiting of an account; or
Digital Token: a digital representation which is recorded on a distributed digital ledger whether cryptographically-secured or otherwise.
Not all digital currency or digital tokens are securities under the Capital Markets and Services Act 2007. Reg. 3 of the Order provides the relevant criteria. In respect of a digital currency, a digital currency which: —
is traded in a place or on a facility where offers to sell, purchase, or exchange of, the digital currency are regularly made or accepted;
a person expects a return in any form from the trading, conversion or redemption of the digital currency or the appreciation in the value of the digital currency; and
is not issued or guaranteed by any government body or central banks as may be specified by the Securities Commission,
is prescribed as securities for the purposes of the securities laws.
As for digital token, a digital token which represents a right or interest of a person in any arrangement made for the purpose of, or having the effect of, providing facilities for the person, where: —
the person receives the digital token in exchange for a consideration; the consideration or contribution from the person, and the income or returns, are pooled;
the income or returns of the arrangement are generated from the acquisition, holding, management or disposal of any property or assets or business activities;
the person expects a return in any form from the trading, conversion or redemption of the digital token or the appreciation in the value of the digital token;
the person does not have day-to-day control over the management of the property, assets or business of the arrangement; and
the digital token is not issued or guaranteed by any government body or central banks as may be specified by the Securities Commission, is prescribed as securities for the purposes of the securities laws
While laws and regulations are being drafted by Governments to deal with digital assets, digital asset disputes are slowly creeping into Courts and the Courts have been applying existing traditional laws into modern technology.
In the English case of Vorotyntseva v Money-4 Ltd (t/a Nebeus.com) EWHC 2596 (Ch), the High Court dealt with a freezing order against a cryptocurrency platform operator and its directors to restrain them from dissipating their assess. The claimant in this case had deposited a substantial quantity of Bitcoin and Ethereum cryptocurrencies with the operator and became concerned when the operator in this case become uncontactable.
Similarly, in the Hong Kong case of Nico Constantijn Antonius Samara v Stive Jean Paul Dan  HKCFI 2718, the Hong Kong High Court granted a freezing injunction against a French cryptocurrency trader from disposing of his assets in Hong Kong in a dispute over Bitcoin trading on a trading platform. The Plaintiff in this case had money held by the French cryptocurrency trader in his Citibank account in Hong Kong.
In the Singapore case of B2C2 Ltd v Quoine Pte Ltd  SGHC(I) 11, the Singapore International Commercial Court held that the operator of a virtual currency exchange platform was liable for breach of contract and breach of trust in reversing trades made at an abnormal exchange rate. For the first time, the Singapore International Commercial Court applied the law of contract to virtual currencies, finding that virtual currencies have the hallmark characteristics of property and applying the law of unilateral mistake to a case involving algorithmic trading.
Digital currency dispute finally lands in our Court
In 2018, a cryptocurrency trader was sued by two cryptocurrency-exchange related providers for the return of Bitcoins mistakenly transferred to him.
This case is important to the digital currency industry because our Court has decided for the first time that:
– cryptocurrency trading is not illegal in Malaysia; – digital currency is a form of an intangible asset; and – digital currency is a “thing” that that has to be returned if it is mistakenly delivered.
The 1st Plaintiff conducts its business as an online wallet and exchange of digital currencies, also known as cryptocurrencies including Bitcoin, under the trade name of Luno.
Every registered customer of Luno will be allocated a Luno account known as ‘Luno Wallet’ whereby they are able to buy, sell, send, receive and store cryptocurrencies.
The 1st Plaintiff wholly owns the 2nd Plaintiff and the 2nd Plaintiff acts as the intermediary regional operating centre of the 1st Plaintiff which holds the bank account that accepts deposits from Luno customers in Malaysia.
After the customer deposits a sum to the account held by 2nd Plaintiff, the 1st Plaintiff will allocate the deposit to the customer’s respective Luno wallet for them to utilise to trade cryptocurrencies.
The Defendant is a registered user of Luno and has been allocated a Luno Wallet. On Oct 30, 2017, the Defendant deposited RM300,000.00 into the bank account held by the 2nd Plaintiff which was subsequently transferred into the said Luno Wallet and reflected therein accordingly.
At that juncture, the Defendant had a total of RM300,228.58 and 0.616814 Bitcoin in his said Luno Wallet. On Nov 1, 2017, the Defendant converted RM300,228.00 contained in the said Luno Wallet into 10.70163257 units of Bitcoins, leaving the total number of Bitcoins in his said Luno Wallet to be 11.31844657.
On the same day, the Defendant requested for 11.3 Bitcoins to be withdrawn from the said Luno Wallet to be to his Bitfinex e-wallet account and his request was duly carried out. The Defendant’s Bitfinex account is managed and operated by iFinex Inc. (BVI) (‘Bitfinex’), another third party cryptocurrency online trading platform unrelated to the Plaintiffs.
On Nov 1, 2017, the 1st Plaintiff mistakenly transferred an additional 11.3 Bitcoins onto the Defendant’s Bitfinex Account after having transferred the initial 11.3 Bitcoins on the same day.
The 1st Plaintiff notified the Defendant of the mistakenly transferred additional 11.3 Bitcoins on Nov 2, 2017 via email dated Nov 2, 2017. The 1st Plaintiff requested for 11.3 Bitcoins to be returned to the 1st Plaintiff as it was Bitcoins that were mistakenly transferred into the Defendant’s Bitfinex Account. The Defendant acknowledged and admitted that he is required to return the additional 11.3 Bitcoins that were mistakenly transferred to him. In this regard, the Defendant had offered to pay the 1st Plaintiff cash of RM300,000.00 at the end of November 2017, about one month after the mistaken transfer. However, this was not acceptable to the Plaintiffs as the value of Bitcoins fluctuates day-to-day.
The Defendant, although admitting to receiving the additional 11.3 Bitcoins and acknowledging the need to return them, has failed, refused and/or neglected to do so. The Plaintiffs initiated this action against the Defendant to recover the mistakenly transferred 11.3 Bitcoins by returning the said 11.3 Bitcoins and if the Defendant fails to do so, the sum of RM810,837.00 equivalent to 11.3 Bitcoins calculated based on the Luno exchange market price of RM71,756.00 per Bitcoin at the time of the filing of the action.
The Defendant argued that, among others, Bitcoins are not a “thing” capable of being returned as envisaged under s. 73 Contracts Act 1950, and that transfer was actually a mistake.
S. 73 provides: –
Liability of person to whom money is paid, or thing delivered, by mistake or under coercion A person to whom money has been paid, or anything delivered, by mistake or under coercion, must repay or return it.
The Defendant also alleged that all 22.6 Bitcoins in his Bitfinex account were converted into B2x CST futures on an “automated setting” allegedly prior to his knowledge of the mistakenly transferred additional 11.3 Bitcoins. Therefore, he would not be able to return the Bitcoins.
A counterclaim was filed by the Defendant on the ground that the 1st Plaintiff had ‘colluded’ with Bitfinex and/or ‘interfered’ Bitfinex’s decision in suspending the Defendant’s Bitfinex Account that in turn resulted in his alleged losses of B2x CST futures. He sued for 169,6267258 units of B2x CST futures or the sum of RM806,071.87 being the sum equivalent.
The learned Sessions Court Judge granted the Plaintiffs’ claim and ordered the return of the Bitcoins or its equivalent in Ringgit Malaysia as of the date of filing of the action. He held: –
The Defendant admitted that the mistakenly transferred 11.3 Bitcoins does not belong to him and thus, he is under a duty to return the same. There are also contemporaneous documents to show that the Defendant had agreed to return the mistakenly transferred 11.3 Bitcoins, albeit in the form of cash. In this regard, the Defendant had offered to pay the 1st Plaintiff the sum of RM300,000.00 and this is evident from his email dated Nov 2, 2017 to the Plaintiffs. In another email dated Nov 4, 2017, the Defendant stated that the price of Bitcoin was volatile and high and requested for more time for the Bitcoin to settle at a better rate for him to repay back the mistakenly transferred 11.3 Bitcoins. It is thus obvious to the Court that the reason why he refused to repay back the mistakenly transferred 11.3 Bitcoins was due to the very high rate and it was on that basis he had requested for the price to settle so that he can buy it at a lower rate.
The Defendant claimed that the offer to pay the sum of RM300,000.00 was out of ‘goodwill’ for the mistakenly utilising the mistakenly transferred 11.3 Bitcoins and therefore the Plaintiffs are estopped from claiming it. The Court found that estoppel does not apply herein as the Plaintiffs have never indicated that they are agreeable to the alleged ‘goodwill’ payment.
The Defendant contended that cryptocurrency is illegal in Malaysia and therefore, the Plaintiffs are not entitled to recover the same. The learned Sessions Court Judge dismissed his contention. He held that whilst cryptocurrency is not recognised as legal tender in Malaysia, this does not mean that the Plaintiffs’ operation is illegal. In fact, the 1st Plaintiff is registered as a reporting entity with Bank Negara Malaysia and this is supported by contemporaneous documents. The fact that the 1st Plaintiff is registered as a reporting entity to Bank Negara on cryptocurrency is in itself proof that the 1st Plaintiff’s operations are not illegal. If the 1st Plaintiff’s operations are deemed illegal by Bank Negara, reasonably the 1st Plaintiff would not be registered as a reporting entity. Further, the fact that the Bank Negara Malaysia put forth the initiative to have cryptocurrency exchanges registered as reporting institutions is indicative that the trading of cryptocurrencies is not illegal in Malaysia. Further, this recognises that cryptocurrencies carry value that may be exchanged with real money despite not being recognised as legal tender.
The Defendant argued that the said 11.3 Bitcoins do not belong to the Plaintiffs and therefore the Plaintiffs do not have any locus to commence this action to recover the 11.3 Bitcoins. The Court rejected this argument as the position of the Plaintiffs in “holding” the cryptocurrency (i.e. Bitcoins) is akin to that of the bank where customers deposit the monies. As such, if the bank had mistakenly transferred monies into another person’s account, this does not mean that the bank has no locus to initiate an action to recover the monies.
The Defendant contended that the Malaysian Court has no jurisdiction to hear the Plaintiffs’ claim. In this regard, the Defendant claims that the Plaintiffs’ claim is subject to Singapore law. The Court rejected this contention. The terms and conditions containing the jurisdiction clause in Singapore do not apply to the present case as the new terms and conditions only took effect after the incident. In this regard, the present case is governed by the old terms and conditions which does not contain any jurisdiction clause. Further, there is no basis in the Defendant’s contention as he has now submitted to the jurisdiction of the Malaysian Court by filing his counter claim against the Plaintiffs. In any event, the Court found that the purported terms and conditions that the Defendant is now seeking to rely on does not apply to him as it is expressly stated on Luno’s website that the new terms and conditions are to take effect after the incident.
The Court found that cryptocurrency although is not money in the legal sense, is a form of commodity as real money is used to purchase the cryptocurrency. Accordingly, cryptocurrency falls within the definition of “anything” under s. 73 of the Contracts Act 1950. There is value attached to Bitcoin in the same way as shares do. Bitcoin may not be currency or money per se, but it is a form of commodity, albeit in an intangible form. Accordingly, the Defendant is bound in law and/or equity to return the additional 11.3 Bitcoins to the Plaintiffs that never belonged to the Defendant.
The Defendant claimed that all 22.6 Bitcoins in his Bitfinex account were converted into 82x CST futures on an “automated setting”, allegedly prior to his knowledge of the mistakenly transferred additional 11.3 Bitcoins. The Court did not accept the Defendant’s allegation as it was not substantiated with any reliable evidence.
In view of the Defendant’s actual knowledge and awareness prior to converting 22.6 Bitcoins to B2x CST futures, the Defendant is bound by principles of natural justice and equity to return the mistakenly transferred 11.3 Bitcoins to the Plaintiffs. the Defendant cannot be allowed to be unjustly enriched at the expense of the 1st Plaintiff.
The Defendant is claiming an alleged bona fide change of position on the basis that the 11.3 Bitcoins are no longer available as the B2x CST futures purchased by him did not materialise and its value is now close to nil. However, the Court found that this altered position of the Defendant was self-induced and not bona fide due to the established fact that the Defendant conducted the transaction to convert all 22.6 Bitcoins to B2x CST futures despite realising that something was “amiss”. He cannot claim the defence of bona fide change of position as he utilised the additional 11.3 Bitcoins in his Bitfinex Account to purchase another type of cryptocurrency.
The Court found that when the Defendant became aware of his receipt of the additional 11.3 Bitcoins, the principles of equity comes into play whereby if his conscience would be affected upon learning of the mistake, the Defendant is then imposed a constructive trust by the laws of equity which he is then placed under a fiduciary as a constructive trustee.
The Defendant argued that the Plaintiffs are unable to “recover” the 11.3 Bitcoins due to the Risk Warning which is found on the Luno Exchange website which states that all transactions that occurs under the Luno Wallet of any user is irreversible. The Court found that the Defendant’s interpretation of the Risk Warning is misplaced. It is to be observed that the Risk Warning stating that the transactions is irreversible applies to those transactions between users and the 1st Plaintiff is still entitled and able to ask for the “return” of the 11.3 Bitcoins. The Defendant’s claimed that once monies have been mistakenly transferred to someone, the monies should be left with them and according to the Defendant pursuant to a “common position accepted in the cryptocurrency world”. The Court could not accept the argument as there was no evidence of this “common position accepted in the cryptocurrency world”. It is clear that the Defendant had agreed to return or repay back the mistakenly transferred 11.3 Bitcoins and this argument on “irreversibility” was only raised at this juncture to defeat the Plaintiffs’ claim. At the time when the Plaintiffs demanded the return of the mistakenly transferred 11.3 Bitcoins, the Defendant never raised any issue that the same cannot be returned due to the Risk Warning. the Defendant’s position is an afterthought and he is now estopped from reneging his earlier position.
In respect of the Defendant’s counter claim, the Court found that the Defendant has failed to lead any evidence to substantiate his allegation that the 1st Plaintiff had colluded with Bitfinex and/or interfered in Bitfinex’s decision in suspending the Defendant’s Bitfinex Account that in turn resulted in his alleged losses of B2x CST futures. The 1st Plaintiff have no control or authority over the conduct and management of Bitfinex and/or the Defendant’s Bitfinex Account. All the Plaintiff did was to notify Bitfinex on the mistaken transfer and requested Bitfinex to hold the funds belonging to the Defendant in his Bitfinex account in order to preserve status quo pending negotiations and their attempts to reclaim the 11.3 Bitcoins from the Defendant and nothing more.
While cryptocurrency is not ‘money’ (i.e.,: legal tender) as we know in the traditional sense, it has been recently defined as a form of ‘security’ by s. 3 of the Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019 which had defined digital currency as a form of “security”. It cannot be disputed that it is a form of ‘commodity’ as real money is used to purchase the cryptocurrency. In this regard, there is indeed value attached to the Bitcoin in the same way as value is attached to ‘shares’. The Contracts Act 1950 having been drafted some seven decades ago ought to be construed to reflect changes in modern technology and commerce. In view of the aforesaid, the High Court held that the term ‘anything’ in s. 73 is plainly wide enough to cover Bitcoins. The mistaken transfer of the 11.3 Bitcoins was a result of a technical glitch and not due to a mistake of fact or law.
In relation to the argument that Plaintiffs lack the locus standi to initiate an action for the recovery of the 11.3 Bitcoins, the learned High Court Judge held that up until the point the Bitcoins are assigned to a specified user, it is just a pool of Bitcoins that Luno has full custody and control of. Hence, it was incorrect to suggest that the Plaintiffs were not the legal and beneficial owners of the 11.3 Bitcoins.
The crux of this appeal turns on the correct interpretation of s. 73 of the Contracts Act, 1952 and the application of s. 73 to the instant facts. The terms are plainly wide enough to be invoked for the return the 11.3 Bitcoins wrongly or mistakenly transferred into the account of the Defendant.
The Plaintiffs’ cryptocurrency online exchange is not illegal and/or contrary to public policy. There was no material or evidence before the Court below that. Although cryptocurrency is not recognised as legal tender in our jurisdiction, the Plaintiffs’ whole operation is not illegal and cannot sustain the claim for restitution.
In respect of the counterclaim, the learned High Court Judge agreed with the Sessions Court Judge that the Defendant’s allegation had not been substantiated on the proven facts and evidence.
To put this case in simple words, this is a case where the Plaintiff had mistakenly transferred Bitcoins to the Defendant and the former wants the latter to return it. The Defendant on the other hand claimed that he is unable to do so as he no longer has it.
Unlike the usual tangible products, this is a case which deals with digital currency which has very volatile value.
The Plaintiff had also demanded that if the Defendant is unable to return the 11.3 Bitcoins, he had to pay the sum of RM810,837.00 equivalent to 11.3 Bitcoins calculated based on the Luno exchange market price of RM71,756.00 per Bitcoin at the time of the filing of the action.
The Court held that, among others, the Defendant had a duty to return the Bitcoins and there is no evidence that he no longer has those Bitcoins.
The matter is now pending appeal at the Court of Appeal.
– 2018 saw the first decision on the liability of online marketplace providers – Damages can be granted in the case of a software delivery delay
IN THIS last of a four-part series, I will focus on commercial cases in 2018.
Short-term lodging – the Airbnb Effect
An online marketplace for accommodation and hospitality such as Airbnb enables people to lease or rent short-term lodging including vacation and apartment rentals, homestays, hostel beds and hotel rooms.
Currently, there are no specific laws to govern the conduct of these online marketplace providers. However, joint management bodies and management corporations have taken action to stop apartment owners from operating short-term lodging by, among others, imposing rules to stop this practice.
In Salil Innab & Anor v Badan Pengurusan Bersama Seti Sky Residences & 5 Ors (Kuala Lumpur High Originating Summons No: WA-24NCVC-776-04/2018), the 1st Defendant, the Joint Management Body of Setia Sky Residences, took steps to stop the Plaintiffs’ services of short term rentals. The Plaintiffs, tenant and landlord of an apartment unit at a building, filed an action against the Joint Management Body to stop them from interfering or stopping any owners, tenants of any short term rental and/or any person representing the Plaintiffs from operating a short term rental at Setia Sky Residences.
The 1st Plaintiff is also a director of a company called Innab Trade Sdn Bhd. Through Innab Trade Sdn Bhd, the 1st Plaintiff had also rented other units in Setia Sky Residences for the purposes of sub-letting the same to members of the public.
The 1st Defendant contended that the business operated by the 1st Plaintiff, through Innab Trade Sdn Bhd, at Setia Sky Residences is in reality a hotel business and not merely the business of letting out short-term tenancies.
In so contending, the 1st Defendant made reference to how bookings for the short-term tenancies were made through the internet, how the units were described and marketed by using the name “KL Suites” and how they were portrayed in Innab Trade Sdn Bhd’s website, including the contention that these “KL Suites” could be booked through other websites. It is contended that all of these are similar to and in effect, the management of a hotel service.
The High Court granted an interlocutory injunction to stop the Defendants from interfering or stopping any owners, tenants of any short term rental and/or any person representing the Plaintiffs from operating a short term rental at Setia Sky Residences.
The High Court held that the 1st Plaintiff’s short-term tenants will be adversely affected and they are in reality victims of the conflict between the Plaintiffs and the Defendants. In addition, the continued interference with or obstruction of the 1st Plaintiff’s short-term tenants would also be likely to cause irreparable damage to the goodwill that the 1st Plaintiff would have built in his business.
However, the Court of Appeal allowed the Defendants’ appeal (Civil Appeal No. W-02(IM)(NCVC)-1811-09/2018) on the ground that the injunction order was too wide and damages is an adequate remedy.
In Verve Suites Mont’ Kiara Management Corporation v Innab Salil & 8 Ors(Kuala Lumpur High Originating Summons No: WA-22NCVC-461-09/2017), the Plaintiff, the Management Corporation of Verve Suites Mont Kiara, passed and adopted a resolution in an Extraordinary General Meeting to prohibit the use of residential units in the Verve Suites for business, including paid short-term rentals. The prohibition was then incorporated into the House Rule 3.
House Rule 3.0 states that any unit for short term rental is prohibited. House Rule 3.1(i) states any stay for which a booking was made through services/applications/websites etc, such as AirBnb, booking.com, agoda.com, klsuits.com and other similar services is considered as a short-term rental agreement.
The Defendants had allegedly caused their respective residential units in Verve Suites to be turned into a hotel room with large numbers of guests coming to check in and check out with a flurry of activities interfering with the security, quiet enjoyment and overall wellbeing of the residents in the Verve Suites.
The Plaintiff then initiated an action against the Defendants compelling them to abide by all times and not violate the House Rule and be restrained from advertising, contracting for, booking and/or allowing, dealing with the residential units to be used for business including paid short term rental and/or transient use for tourist, or hotels, among others.
The High Court held that the Plaintiff can enforce House Rule 3 and prohibited the Defendants from running the short-term rental business.
E-commerce – Suing online marketplace operators
We saw the first decision on the liability of online marketplace providers.
In Nexgen Biopharma Research & Innovation SARL v Celcom Planet Sdn Bhd (Kuala Lumpur High Court Suit No. WA-22IP-3-01/2018), the Intellectual Property High Court had to decide whether an online marketplace provider is liable for trademark infringement for the sale and advertisements of its Merchants’ products published on its website.
The brand owner was granted an order for summary judgement against the Defendant that operates an online marketplace by the name of “11Street” for infringing their trade mark “MFIII”. 11Street had published the MFIII trade marks and numerous sellers had posted unauthorised MFIII products for sale on 11Street. Besides, 11Street had also advertised the MFIII trade mark together with products bearing the MFIII trade marks on various third-party websites.
Similarly, in Jeunesse Global Sdn. Bhd. v Ecart Services Malaysia Sdn Bhd (Kuala Lumpur High Court Suit No. WA-22IP-16-02/2018), the Plaintiffs, who are in the direct selling business of skin care products and supplements, sued the operator of online marketplace operator, Lazada, for trade mark infringement, passing off, copyright and unlawful interference with their business, among others. The Plaintiffs discovered that Lazada had been selling products bearing the 1st Plaintiff’s registered trade marks and publishing the 1st Plaintiff’s copyright works. However, the parties settled the matter amicably and the matter was withdrawn.
Last year, I reported that a luxury watches brand owner sued a web hosting company for trademark infringement for hosting websites that sold counterfeit products (Officine Panerai AG v Shinjiru Technology Sdn Bhd (Kuala Lumpur High Court Suit No. WA-22IP-2-01/2018)). The interesting question in this case is whether a webhoster is liable for trade mark infringement for what their subscribers do. However, the parties also settled the matter amicably and the matter was withdrawn.
Contractual matters – Software delivery delay and online agreements
This is an important case for the software industry. Delay in delivering a software is a common occurrence in the industry and in the High Court case of Tex Cycle Technology (M) Berhad v Fact System (Malaysia) Sdn Bhd (Kuala Lumpur High Court Suit No. WA-22NCVC-379-06/2016) provides what a customer can do if there is such delay.
In this case, the Plaintiff sued the Defendant for failing to install a software which could cater for the implementation of Goods and Services Tax (GST) required by the Government within the date of enforcement of GST.
The Defendant had allegedly represented to the Plaintiff in meetings and exchanges of emails that the Defendant could meet the enforcement date of GST and also that two important service requirements of the contract entered into could be fulfilled.
The Plaintiff claimed that due to the Defendant’s failure, they had no alternative but to switch to manually entering the data and generating documents manually and, in the process, incurring significant costs and expenses.
The Plaintiff sued for the loss and damages and the refund of the sum of RM191,572 paid by the Plaintiff to the Defendant for the software. The High Court found in favour of the Plaintiff and ordered the refund of the money paid plus general damages of RM100,000.
On appeal (Civil Appeal No. W-02(NCvC)(W)-1297-06/2018), the Court of Appeal allowed the appeal in part and disallowed the general damages of RM100,000. The Court of Appeal held that the High Court Judge is plainly wrong in allowing RM100,000 as general damages as there were no evidential basis.
In Wong Wei Pin v Malayan Banking Berhad  6 AMR 933, the High Court dealt with an interesting point whether general terms and conditions published on a website can be incorporated into an agreement.
In this case, the Plaintiff had accumulated credit card points via business and commercial purposes which ran foul of the Defendant’s terms and conditions of the credit card which provides that the cardmember can only use the credit card for purposes of personal consumption only, i.e. non-business and non-commercial related consumption. The Plaintiff argued that the Defendant’s Product Disclosure Sheet (PDS) which did not explicitly state that the terms and conditions of the Credit Card can be found at www.maybank2u.com.
The learned Judge held that although the PDS did not set out that the general terms and conditions are set out at Maybank’s website, it is accordingly the obligation of the Plaintiff to ascertain what the general terms and conditions are as she will be bound by them in the usage of the Credit Card. Accordingly, the High Court held that the Plaintiff is bound by the terms and conditions found on the Defendant’s website, and even if the Plaintiff chose not to read them, she is bound by them by her usage of the card.
In 2019, we can expect more interesting developments in the cyberlaw and IT sphere –
The Council of Auctioneers Malaysia is challenging a decision by the High Court Registrar to implement electronic bidding or e-Lelong in all courts in West Malaysia (Majlis Pelelong Malaysia v. Pendaftar Mahkamah Tinggi Malaya (Kuala Lumpur Judicial Review Application No. WA-25-313-10/2018). Leave to challenge the High Court Registrar’s decision has been granted by the High Court. The High Court will now hear the substantive application in due course;
The Government will be taxing digital services beginning from Jan 1, 2020 at 6% per annum. Pursuant to the Service Tax (Amendment) Bill 2019, foreign registered persons providing digital services to consumers in the country will need to pay service tax;
The introduction of the new Legal Profession Act 2018 to replace the old Legal Profession Act 1976 will see the introduction of the legal technology provision. S. 35 seeks to regulate the provision of legal technology by legal technology service provider. Legal technology is defined as any technological product or service used or to be used, (1) in the provision of any service or any act which is within any function or responsibility of any advocate and solicitor, or (2) places at the disposal of any other person the services of an advocate and solicitor. The Bar Council is given the power to regulate legal technology; and
Across the causeway, Singapore has introduced the Protection from Online Falsehood and Manipulation Bill 10/2019. This new law seeks to, among others, criminalise false statements, control inauthentic behaviour and other misuses of online accounts and bots and regulate blocking orders. This new law also introduced a new way to punish persons who disseminates false statements i.e by cutting their income and starving them financially.
IN THIS third of a four-part series, I will discuss cyber-crime cases and other cyber offences.
Communications and Multimedia Act 1998
The establishment of Cyber Courts in the Kuala Lumpur Sessions Court saw the growth of judgements relating to the Communications and Multimedia Act 1998.
In Pendakwa Raya lwn Dato’ Mohd Zaid Bin Ibrahim(Kuala Lumpur Criminal Sessions Court Case No. 63-003-12/2015), the learned Sessions Court Judge gave a comprehensive judgement regarding a charge under s. 233(1)(a) of the Communications and Multimedia Act 1998.
The accused, a former Minister of Law, was charged for publishing a statement which is offensive in nature on his blog with an intent to annoy another person. The statement consists of a transcript of the accused’s speech given at a luncheon relating to the conduct of the then Prime Minister Najib Razak.
The learned Sessions Court Judge acquitted the accused at the prosecution stage based on the following grounds, among others:-
(1) In determining whether the article is offensive in nature, the article must be examined as a whole and not by looking in a few paragraphs or words. This is because the accused was charged for uploading the article and thus the entire article is considered as offensive in character. The prosecutor cannot pick and choose the relevant paragraphs or words favourable to them and conclude that the article is offensive in character.
(2) The learned Sessions Court Judge looked into the object of the Communications and Multimedia Act 1998 set out in s.3 of the said Act. One of the objectives of the Act is to promote a civil society where information-based services will provide the basis of continuing enhancements to quality of work and life. The learned Sessions Court Judge also considered that the said Act addressed the issue of censorship where nothing in the said Act shall be construed as permitting the censorship of the Internet.
(3) None of the Prosecution’s witnesses stated that they found that the entire article is offensive in character. Two (2) of the prosecution’s witnesses referred part of the article and not the whole article. In fact, the complainant’s police report against the accused had only stated that the article is seditious in nature which is different from offensive in character.
(4) Such article must be examined and not taken without further examination without critical thinking. This is one of the objectives that s. 3 of the said Act seeks to achieve. The attitude of receiving news blindly should be avoided and the new culture in accordance with the purpose and objective of the said Act ought to be promoted.
(5) In respect of the element “with intent” to annoy another person, the learned Sessions Court Judge held that that intent has to be proved and no evidence has been adduced to prove the same. As for the element “annoy another person”, the learned Sessions Court Judge found that the complainant did not feel annoyed when he read the article. The learned Sessions Court Judge held that annoyance or anger or dissatisfaction would appear spontaneously when the article is read. The learned Sessions Court Judge found that the article is intended for blog readers to garner support for what it is written for i.e. to give support to Prime Minister Dr Mahathir.
(6) The charge is defective as the prosecution failed to state clearly in the charges sheet who is the person intended to be annoyed by the accused when the article was uploaded. The charge sheet had only stated “with the intent to annoy another person”. The person in the charge sheet must be named clearly.
(7) The Prosecution should have also called the person intended to be annoyed by the article to testify whether the victim felt annoyed by the article. Without evidence from the victim, the Court is left wondering whether the victim felt annoyed by the article.
In Sivarasa Rasiah v Pendakwa Raya (Kuala Lumpur Criminal Sessions Court Case No. 63-001-04/2016 & 63-002-04/2016, Criminal Application No: 64-085-07/2016) and Premesh Chandran a/l Jeyachandran v Pendakwa Raya (Kuala Lumpur Criminal Sessions Court Case: WA-64-155-12/2017), the two accused were charged under s. 233(1) of the Communications and Multimedia Act 1998. They filed an application to refer a few constitutional issues to the High Court pursuant to s. 30 of the Courts of Judicature Act 1964 on the ground that s. 233(1) of the Communications and Multimedia Act 1998 is in contravention of Article 8 and 10(2)(a) of the Federal Constitution.
The Prosecution raised a preliminary objection against this application on the ground that s. 233(1) of the Communications and Multimedia Act 1998 is settled and not in contravention of the Federal Constitution. The same Sessions Court Judge dismissed the application on the ground that the case of Nor Hisham Osman v PP  MLJU 1429 has already determined that s. 233(1) of the Communications and Multimedia Act 1998 is reasonable and not unconstitutional.
Fortunately for the two accused, the charges were withdrawn against them after the change of Government after the 14th General Election.
Sedition – Sex bloggers on trial
In Lee May Ling v Public Prosecutor & Another Appeal  10 CLJ 742, the Appellant, also known as Vivian of the Alvivi duo, was found guilty by the Sessions Court for an offence under s. 4(1)(c) of the Sedition Act 1948 and sentenced to an imprisonment term of five (5) months and twenty (22) days.
Vivian and her co-accused, Alvin Tan, had published a picture of themselves with the words “Selamat Berbuka Puasa (dengan Bak Kut Teh. wangi,enak, meyelerakan!!!) with the Halal logo on the Facebook page “Alvin and Vivian-Alvivi”.
She appealed against her conviction and sentence. There was also a cross-appeal by the prosecution against the inadequacy of sentence meted out by the Sessions Court Judge.
The co-accused absconded through the trial and was absent until the conclusion of the trial.
The High Court dismissed the appeals. The learned Judge found that Vivian and Alvin Tan had a common intention to publish the picture, and that Vivian was a willing participant. Although no one saw Alvin or Vivian posting the picture, the learned Judge also made an inference from the evidence showing that the picture was kept in Alvin’s notebook and the Facebook page was registered in the name of Alvin and Vivian.
The High Court however substituted the sentence of five (5) months and twenty (22) days imprisonment with a fine in the sum of RM5,000 in default, imprisonment of six (6) months. The High Court in the same vein dismissed the prosecution’s appeal on the inadequacy of the sentence.
Official Secrets Act 1972 – Liability for receiving forwarded messages
Last year, I reported that one Subbarau @ Kamalanathan (Pendakwa Raya v Subbarau @ Kamalanathan(Court of Appeal Criminal Appeal No. N-06B-55-09/2016) was charged in the Sessions Court under s. 8(1)(c)(iii) of the Official Secrets Act 1972 (OSA 1972) for having possession in his Samsung mobile phone soft copies of 2014 UPSR examination papers.
In the same year, the Court released two more judgements relating to the possession of Ujian Penilaian Sekolah Rendah (UPSR) examination papers which they had received via forwarded messages on WhatsApp.
In Pendakwa Raya lwn Uma Mageswari A/P Periasamy @ Mayandy (Kuala Kangsar Sessions Court Criminal Case No. 61-1-11-2014) and Pendakwa Raya v Anparasu al Kadampiah (Kuala Kangsar Sessions Court Criminal Case No. 61-2-11-2014), the two school teachers were charged with possession of a few pages of examination papers for Ujian Penilaian Sekolah Rendah (UPSR) for Science 018 under s. 8(1)(c)(iii) of the Official Secrets Act 1972. Both were acquitted as the photographs of the examination papers were forwarded to them and stored automatically on their mobile phones, and they had no use for them, among others.
The prosecution of persons who possess information received via forwarded messages is a dangerous precedent. The law should make exception to those who had not knowingly received such information and chose not to delete those information thereafter.
Online and phone scams – Scammer or victim?
Online and phone scams have become common in Malaysia. The authorities had been tracking and arresting these scammers but many of them are based outside Malaysia. Instead, these scammers use the services of Malaysians, whether knowingly or not, to receive and dissipate money.
In Pendakwa Raya lwn Charles Sugumar a/l M. Karunnanithi (Kota Bharu Magistrate Court Kes Tangkap No: MKB (A) 83-43-02/2016), the accused was charged under s. s. 424 of the Penal Code for dishonestly concealing money of a scam victim in his bank account knowing that the said money does not belong to him. The victim had befriended a person by the name of Alfred Hammon from UK through Facebook. Alfred Hammon then made the victim transfer money to the accused’s bank account on the pretence that he needed the money to cash his cheque of three million dollars. Alfred Hammon promised that he will return the money together with interest. However, after transferring the money, the victim realised that she was scammed.
The accused claimed that he is not part of the scam and that when he was working as a tour driver, he was requested by his customer to receive money on the customer’s behalf. The accused claimed that he did it to give his customer the best service so that he can attract more customers. He said that he was informed by the customer that the customer’s friend had to transfer money to him so that the customer can continue his tour in Malaysia. The accused said that he did not make any remuneration or commission from that assistance.
The Magistrate acquitted the accused as the Magistrate found that, among others, the accused’s evidence is consistent and he is a credible witness. The Magistrate agreed that the accused was made a scapegoat by the customer who took advantage of his goodness and sincerity in giving the best service as a tour driver.
In Pendakwa Raya lwn Sabariah Binti Adam (Magistrate Court Criminal Trial No. 83RS – 206 – 08 / 2016), the accused was charged with two counts of knowingly concealing stolen property, an offence under s. 414 of the Penal Code. The victim was duped by a Facebook user by the name of Nasir to bank in her money into the accused’s bank account. The accused claimed that she was a victim of the same trumpery scheme and not the perpetrator. She has no control and custody over her bank account. The Court however drew inference that an account holder must be held responsible for all transaction initiated or authorised using her account number including transaction by another person whom the account holder has given permission to. The Court sentenced the accused twelve (12) months imprisonment for each charge.
However, inPendakwa Raya lwn Hasimah Binti Aziz (Kuala Lumpur Criminal Sessions Court Case No. WA-62CY-052-08/2017), the accused was charged under s. 4(1)(b) of the Computer Crimes Act 1997 for allowing access without authorisation to her Maybank bank account and thereafter assist a scam against the complainant.
The complainant was tricked into transferring money to the accused to pay for charges to release a present purportedly sent by a person she knew from Facebook. The investigating officer found that the accused had given her automatic teller machine (ATM) card to a person she knew from Facebook. That person claimed he could not open a bank account in Malaysia.
The Court held that based on the evidence produced, it is clear that the complainant and accused were online scam victims themselves. The accused was deceived into giving her account number, ATM card and PIN number. The complainant on the other had was deceived into paying courier charges, among others. If detailed investigation was made, the main character of the scam would be revealed. There was no attempt to obtain the CCTV recording of who had taken the money from the ATM machine. The bank officer had testified that CCTV recording are stored by the bank for three (3) months. If the CCTV recording was obtained, it would reveal who had used the ATM card.
Sexual grooming – A new offence
In Syed Naharuddin Bin Syed Hashim v Etiqa Takaful Berhad (Award No.: 3143/2018), the Claimant was dismissed after the Company received an anonymous email alleging that the Claimant had been operating as a sexual predator and targeting girls as young as thirteen-years-old.
The anonymous author also alleged that the Claimant, using the pseudonym, “KBoy”, carried out his meetings with girls. It was also alleged that the Claimant’s conversations had been recorded and featured in an undercover expose by the Star newspaper team of journalists know as STAR R.AGE Team. An investigation by the Company revealed that there were two video recordings featuring K-Boy which had been uploaded onto the STAR R.AGE online website and the videos had gone viral on YouTube. The Claimant admitted that he was the individual in the video.
The Industrial Court held that the actions of the Claimant can amount to a sexual communication under the Sexual Offences Against Children Act 2017. The facts of the case which are largely admitted to by the Claimant, are that he communicated with the intended “victim” in social media and then met up with the person (who informed him that she was a young girl of 15). The setting, the time and the locale were such that a person of his standing in society and representing an insurance company should have been wary of. Further, the conversations were explicitly related to sex and sexual exploits which a man of his age has no business to discuss with a young lady, notwithstanding her real age.
The Court found that the termination was with just cause or excuse and the Claimant’s case is therefore dismissed.
E-hailing services – Naughty GrabCar driver
In Pendakwa Raya lwn Muhamad Izuwan Bin Kamaruddin (Mahkamah Magistrate Ampang No Kes: 85-55-09/2017, 83JS-16-09/2017 dan 83-780-09/2017), a GrabCar driver was charged under ss. 323, 354 and 506 of the Penal Code for assaulting his passenger. He pleaded guilty and was sentenced to a total of 3 years and five (5) months.
In deciding the sentence, the learned Magistrate took into account of the negative effect on the e-hailing provider GrabCar which may cause difficulty to female passengers to trust a GrabCar driver. The learned Magistrate imposed a deterrence sentence to send a message to all drivers so that they will drive ethically and treat their passengers with respect and not take advantage of then.
On another note, the Commercial Vehicle Licensing Board (Amendment) Act 2017 and Land Public Transport (Amendment) Act 2017 came to force on 12 July 2018.
These new laws introduced the licensing of intermediation business. Intermediation business is defined as “business of facilitating arrangements, booking or transactions of e-hailing vehicle (pursuant to the new amendment to CVLBA) and for the provision of land public transport services (pursuant to the new amendment to LPTA). These amendments were introduced to regulate e-hailing services such as Grab and also e-hailing vehicles.
Part 4 which focuses on commercial cases will be published on May 10.
In cyber-defamation cases, the High Court has granted damages between RM50K to RM100K
Court assumes that you have published something if it originates from your email, Facebook, etc
IN THIS second, of a four-part series, I will talk about the rise of cyber-defamation. The number of cyber-related tort cases filed in the Kuala Lumpur High Court in 2018 increased to 60 over from over 50 cases. Most of these cases were related to cyber-defamation.
The Court dealt with numerous defamatory online postings that went viral. In these cases, the High Court has granted damages between RM50,000 to RM100,000.
In Datuk May Phng @ Cho Mai Sum & 2 Ors v Tan Pei Pei  4 AMR 784, HC, the High Court was tasked to assess the damages to be granted to the Plaintiff against the Defendant for publishing defamatory statements in an email to at least four recipients.
It was not disputed that the said email has been circulated among the public via the internet to as many people as possible and the Defendant invited the recipients to read and spread its contents as widely as possible.
The Court held that the said e-mail was not an ordinary email directed to one person, but the said e-mail was written in the context to address the public, to have the said e-mail widely circulated among the public. Therefore, the Court was of the view that the said e-mail had been widely circulated and/or presumed to be so.
The Defendant’s attempt to prove that the e-mail was sent only to the four individuals named therein or five individuals as a whole as contemplated by the Plaintiffs does not change the scenario or fact that such publication in the internet via email is deemed to be wide circulation because the Defendant intended the wide circulation of the said e-mail based on her statements in the said e-mail where the Defendant requested the public to circulate the said e-mail.
The Court held that it is practically impossible to prove exactly to whom the said e-mail had been circulated, there is a presumption by law that such circulation over the internet is presumed to be wide publication and the onus is on the Defendant to prove the limited publication as alleged.
The High Court granted RM80,000 as general damages.
In Mohamed Hafiz Mohamed Nordin v Eric Paulsen and Another Appeal(Court of Appeal Civil Appeal No. W-02(NCVC)(W)-1668-08/2017), the Plaintiff filed an action against the Defendant for defamation arising from an article published on the internet via the website of Portal Islam & Melayu at www.ismaweb.net which went viral on social media.
The Plaintiff is the executive director of ‘Lawyers for Liberty’, a human rights lawyers’ non-governmental organisation, and a well-known human rights lawyer and activist in Malaysia.
The Defendant is a member of the Pertubuhan Ikatan Muslimin Malaysia (Isma), a non-governmental organisation established in 1997. Isma’s main focus is Islamic propagation in the country.
The Plaintiff alleged that the Defendant had uttered a defamatory statement which was published in an article entitled “Jangan Biar Eric Paulsen bebas tanpa perbicaraan” on www.ismaweb.net.
The High Court found that the Plaintiff had failed to prove that the impugned statement was defamatory as he had failed to prove that his reputation has been adversely affected and tainted. The High Court also dismissed the Defendant’s defence of justification and fair comment.
On appeal, the Court of Appeal found that the impugned statement is derogatory, calculated to incite hatred and anger amongst the multi-religious groups and ethnicity in Malaysia.
The impugned statement not only described the Plaintiff as a fraudster, a liar who incites hatred of the Islamic religion, but also as a person funded and supported by foreign entities, such as the United States of America and the European Union.
In their natural and ordinary meaning, impugned statement meant and was understood to mean by reasonable and ordinary readers of the article that the Plaintiff is anti–Islam. Therefore, taking the bane and the antidote of the article published the defamatory statement had only one purpose, that is, to tarnish the plaintiff’s character and reputation.
The Court of Appeal granted damages of RM100,000.00.
In Mohd Khaidir Ahmad v. Mohd Iqbal Zainal Abidin  1 LNS 1150, the Court of Appeal upheld the High Court’s decision in finding the Defendant liable for defaming the Plaintiff on his Facebook page.
The Defendant had alleged that the Plaintiff, an Assistant District Officer of Temerloh, had abused his power and was corrupt, among others. One of the Facebook postings had an uploaded photograph of the Plaintiff, his son and car together with defamatory statements.
The Facebook postings attracted responses, negative ones at that, on his Facebook page. The allegation of abuse of power and corruption appeared to resonate with the netizens who posted their comments, generally agreeing with the same.
The Defendant denied that the words were defamatory of the Plaintiff, that they were fair comments and disclaimed responsibility for the negative comments by the netizens.
The Court of Appeal upheld the High Court’s decision in dismissing the Defendant’s defence and also upheld the damages of RM50,000 granted by the High Court. The Court of Appeal agreed with the High Court that the Defendant failed to prove that the Plaintiff had received bribes, and rejected the defence of qualified privilege as the postings were made without there being a duty to do so for they were done for his own interest, not that of the public.
Pre-action discovery – Finding out who defamed you
A pre-action discovery application is an action filed in Court against parties who are in possession of information of a wrongdoer. In usual cases, such an action is filed against a website operator, whose users had published defamatory comments, to divulge the identity of their user.
This is what had happened in the case of Kopitiam Asia Pacific Sdn Bhd v Modern Outlook Sdn Bhd MLJU 1450. The Plaintiff filed a pre-action discovery application against the three Defendants after it discovered a defamatory article relating to it on the websites connected to the Defendants. The Plaintiff stated that it intends to file an action for slander of goods against certain parties and required particulars of the said parties from the Defendants.
The 1st Defendant is a company dealing with activities related to payment and to up services via the internet portal industry. The 2nd Defendant is a company providing website registration services. The 3rd Defendant is the provider of the server where the website where the defamatory article was placed.
The 2nd Defendant did not object to the application subject to the information to be released being confined to only information in their possession and/or the release of the said information is within the ambit of law in particular the Personal Data Protection Act 2010.
The High Court granted the order against the 1st and 3rd Defendant as the Plaintiff had indeed stated the material facts pertaining to the intended proceedings which relates to a cause of action for slander of goods. They have also identified the persons against whom the order is sought and is likely to be a party in the subsequent proceedings in the High Court apart from specifying and describing the documents needed.
Other than a website operator, the High Court held that a domain name reseller can be compelled to divulge information of their customer.
In Nik Elin Zurina Binti Nik Abdul Rashid v Mesra.net Sdn Bhd (Kuala Lumpur High Court Suit No. WA-24NCvC-179-02/2018) (Unreported), the Plaintiff sought a pre-action discovery order against the Defendant, who was a reseller of Mynic Berhad, the sole administrator for web addresses that end with .my in Malaysia. The Defendant had assisted in the registration of the domain name Menara.my and the Plaintiff claims that Menara.my had defamed her through a few articles. The Plaintiff wanted the Defendant to divulge the identity of the owner, operator and registrant of the domain name.
The High Court allowed the Plaintiff’s application and ordered the Defendant to divulge the identity of the owner of the website.
Interlocutory injunction – Stopping a person immediately
An interlocutory injunction is an order restraining a person from doing an act pending the disposal of the matter in trial. A trial date is usually fixed a few months after a legal suit is filed. If a person wants a tortfeasor to stop publishing further defamatory statements immediately pending the disposal of the matter in trial, he can file such an application with the Court.
Any person who does not adhere to a Court order can be cited for contempt. In Maria Faridah Atienza v. Hadijah Mohamaed Mokhtar & Anor  3 CLJ 655, the High Court fined the 1st Defendant RM30,000 and sentenced the 1st Defendant to prison for two weeks after she had failed to pay the fine. The Defendant breached the Court’s injunctive order restraining her from making or publishing any statement against the Plaintiff. She had done so by publishing certain statements on her Instagram account.
In Dato’ Sri Mohd Najib Bin Tun Haji Abdul Razak v Tony Pua Kiam Wee(Kuala Lumpur High Court Suit No. WA-23CY-17-04/2017), the Plaintiff, the former Prime Minister of Malaysia, sued the Defendant, a member of Parliament of Malaysia, for defamation. The Defendant had allegedly uttered and published defamatory statements on a live video which was published as a post entitled “BN Govt abandons all Bills to give precedence to PAS RUU355 Private Member’s Bills” on his Facebook account.
The Facebook post went viral with 82,434 video views. The Defendant has 310,256 Facebook followers. The Plaintiff also filed an application was interlocutory injunction to stop the Defendant from uttering or publishing the defamatory statement.
The High Court granted the said application and held that the Defendant did not deny that he had published those alleged statements, and such statements are indeed defamatory.
[Edit: 29 April 2019 – Leave to appeal to the Federal Court (Civil Appeal No. 08(i)-107-03/2018(W)) has been granted for the following questions-
(i) Whether the test for an interim injunction in defamation proceedings laid down in The News Straits Times Press (M) Bhd v Airasia Bhd  1 MLJ 36 is good law given the freedom of expression guaranteed by Article 10(1)(a), Federal Constitution?
(ii) Whether in light of Article 10(1)(a), Federal Constitution, an application for an interim injunction in defamation proceedings to restrain the further publication of impugned statements must be dismissed where the defendant has:
(a) pleaded and particularized the defences of justification and fair comment on matters of public interest in his Defence; and/or
(b) stated, on oath, his belief as to the truth of the impugned statement, and his ability and willingness to justify the impugned statement?
(iii) Whether the fact that the Speaker of the House of Representatives had ex facie exercised powers under the Standing Orders of the Dewan Rakyat, precludes the entitlement of a plaintiff to establish at trial, the fact that the exercise of such powers was not bona fide, in private law proceedings that refer to such exercise of power?
(iv) Whether a court is entitled in private Jaw proceedings to treat the fact of the Attorney General not having commenced prosecution under Article 145(3), Federal Constitution and/or the explanation for such decision as exonerating the impugned conduct, and such as to allow the court to further conclude by way of judicial notice under section 56, Evidence Act 1950 that no wrongdoing was committed?
Presumption of publication – Court assumes that you’ve published it
In Thong King Chai v. Ho Khar Fun  1 LNS 374, the Plaintiff sued the Defendant for defaming him via email and a closed Facebook Group.
In determining whether the statements were published, the High Court applied the presumption of publication under s. 114A of the Evidence Act 1950. The High Court held that pursuant to s. 114A, the presumption of fact is that the email was published by the Defendant as it had originated from his email address. Similarly, there is also a presumption of fact that the Facebook posting was published by the Defendant through his Facebook account.
The High Court also applied the presumption of fact raising a prima facie inference that postcards and telegrams, in the ordinary course of events, have been published to third parties unless the Defendant proves otherwise (as held in the case of Matchplan (M) Sdn Bhd & Anor v. William D Sinrich & Anor  2 MLJ 424). Applying the decision in Matchplan to the internet age of publication by email and Facebook, the High Court found that the email and the Facebook posting were published to the persons named in the email’s address list and cc list and also to the persons who had access to the Facebook Group. The Defendant did not provide any evidence to rebut this presumption of fact.
However, the High Court dismissed the action on the ground that the statements were not capable of bearing defamatory meaning and are in fact not defamatory of the Plaintiff. Even if the statements are defamatory of the Plaintiff, the Defendant would be able to rely on the defence of justification and/or the defence of fair comment.
The Defendant disputed the authenticity of the screenshots which contained the alleged defamatory Facebook posting. However, the learned Judicial Commissioner refused to admit the screenshots as evidence as no evidence was led as to the maker of the contents of these screenshots and none were called to testify, no testimony as to how the screenshots were produced although there as admission that the documents were computer generated and no attempt to admit those screenshots under s. 90A of the Evidence Act 1950.
Part 3 which focuses on cyber-crime cases and other cyber offences will be published on May 3.
THE change of Government after the 14th General Election saw changes to our sphere of cyber and IT laws. The new Government withdrew numerous charges under s.233 of the Communications and Multimedia Act 1998, especially against those who had allegedly spoke against the previous Government.
There has also been an array of interesting cyber- and IT-related cases in our Courts.
An employee was dismissed from his job as his conduct could amount to sexual grooming under the Sexual Offences Against Children Act 2017. His action was recorded and featured in an undercover expose by the Star newspaper team of journalists know as The STAR R.AGE Team.
We saw the first decision on the liability of online service providers i.e whether they are liable for trademark infringement for the sale and advertisement of their Merchants’ products published on their website.
We also saw a greater adoption of the electronic service of Court documents. In 30 Maple Sdn Bhd v Noor Farah Kamilah Binti Che Ibrahim (Kuala Lumpur High Court Suit No: WA-22IP-50-12/2017), the Intellectual Property High Court granted an application to serve a Writ and Statement of Claim via email and WhatsApp messenger after it could not locate the Defendant at her last known address.
Traditionally, when a Defendant cannot be located, a Plaintiff would normally ask the Court to allow a notice relating to the lawsuit to be published in the newspaper, among others. The current Rules of Court 2012 does not expressly recognise the electronic service of Court documents notwithstanding that people are more mobile these days. Furthermore, the chance of being able to communicate with someone online is much higher than in person.
PKR communications director and Member of Parliament for Lembah Pantai, Fahmi Fadzil’s civil suit against the Malaysian Communications and Multimedia Commission and Nuemera (M) Sdn Bhd (Ahmad Fahmi Bin Mohamed Fadzil v Suruhanjaya Komunikasi dan Multimedia & Anor (Kuala Lumpur Sessions Court Suit No. WA-A52-2-02/2018)) for allegedly failing to protect his personal data which resulted in the leakage of his personal data together with the personal information of 46.2 million mobile subscribers has now been settled. This was one of Malaysians’ biggest data leaks. However, the terms of settlement were not disclosed.
Nevertheless, the lawsuit by Nuemera (M) Sdn Bhd against Malaysian Communications and Multimedia Commission (Nuemera (M) Sdn Bhd v Malaysian Communications and Multimedia Commission(Kuala Lumpur High Court Originating Summons No. WA-24NCC(ARB)-14-04/2018)) over its suspension of their services to the Commission due to the data leakage is pending before the Court of Appeal (Civil Appeal No. W-01(NCC)(A)-318-05/2018). The details of the lawsuit are unknown as the Court documents have been sealed by the Court.
I will summarise all these over four articles as part of my yearly tradition of what happened in the preceding year.
Anti-Fake News Act 2018 – Taking down fake news
The Anti-Fake News Act 2018 was quickly passed by the previous Government prior to the 14th General Election.
According to the explanatory note of the Anti-Fake News Bill 2018, the law was introduced to seek to deal with fake news by providing for certain offences and measures to curb the dissemination of fake news and to provide for related matters. As technology advances with time, the dissemination of fake news becomes a global concern and more serious in that it affects the public.
The Act seeks to safeguard the public against the proliferation of fake news whilst ensuring that the right to freedom of speech and expression under the Federal Constitution is respected. The provision on the power of the Court to make an order to remove any publication containing fake news serves as a measure to deal with the misuse of the publication medium, in particular social media platforms. With the Act, it is hoped that the public will be more responsible and cautious in sharing news and information.
S.4 of the Anti-Fake News Act 2018 makes it is an offence for any person who, by any means, maliciously creates, offers, publishes, prints, distributes, circulates or disseminates any fake news or publication containing fake news.
“Fake news” is defined as any news, information, data and reports, which is or are wholly or partly false, whether in the form of features, visuals or audio recordings or in any other form capable of suggesting words or ideas.
It was reported that one Salah Salem Saleh Sulaiman was charged and punished under s. 4(1) of the Anti-Fake News Act 2018, which carries a punishment of up to six years in prison and a fine of up to RM500,000, for maliciously publishing fake news in the form of a YouTube video under the user name Salah Sulaiman. He pleaded guilty and was sentenced to a week’s jail and fined RM10,000.
Online news portal, Malaysiakini.com, tried to challenge the constitutionality of the Act but failed in the High Court. In Mkini Dotcom Sdn Bhd v Kerajaan Malaysia & Anor (Kuala Lumpur Judicial Review Application No. WA-25-111-04/2018), Justice Azizah Nawawi held that the application should be dismissed as neither Malaysiakini nor its reporters had been charged under the law. She allowed the objection by the Government to refuse the leave application as the applicant is not adversely affected and the action is premature. Malaysiakini appealed to the Court of Appeal (Civil Appeal No. W-01(A)-399-06/2018) but the appeal was subsequently withdrawn.
As soon as Pakatan Harapan took over the Government, the Anti-Fake News (Repeal) Bill 2018 was introduced to repeal the Anti-Fake News Act 2018. The explanatory note of the Bill stated that fake news may be dealt with under existing laws such as the Penal Code, the Printing Presses and Publications Act 1984 and the Communications and Multimedia Act 1998. As such, the Act is no longer relevant. The House of Representatives passed the said Bill. However, the Senate rejected the Bill. As of the date of this article, the Anti-Fake News Act 2018 still stands.
Private Information – Leaked nudes
As video recording and photography become easily accessible, our Courts are now stating to deal with electronic files containing intimate and/or private materials.
In Datuk Wira S.M Faisal Bin SM Nasimuddin Kamal v Datin Wira Emilia Binti Hanafi & 4 Ors 7 CLJ 290, the 1st Defendant, the ex-wife of the Plaintiff, had taken into possession mobile phones and USB Flash Drives belonging to the Plaintiff. It was alleged that one of the flash drives contains files which featured intimate and/or private audio-visuals.
The Plaintiff sued the 1st Defendant and her other family members for the return of the devices. The High Court held that there had been no denial that the devices belonged to the Plaintiff. In view of the aforesaid, the High Court ordered the return of the devices.
In M v S (Joint Petitioners) (Sabah and Sarawak High Court), the High Court had to deal with the expungement of nude pictures allegedly of the wife. The husband and wife were fighting over the custody of their children. Custody was earlier granted to the husband and the wife applied to vary the custody order.
In opposing the application, the husband exhibited in his affidavit nude photographs of the wife taken from her computer and hand phone without her consent and stated she is a “wild woman” and an unfit mother. The wife applied to expunge several paragraphs and related nude pictures in the said affidavit under Order 41 Rule 6 of the Rules of Court 2012.
The High Court found that the wife did not release the pictures into the public domain. She had stored them privately in her hand phone and laptop computer. It is the husband who accessed them without her permission and gave access to others including law firm staff and court staff by exhibiting them in the affidavit in opposition without any sort of censoring whatever.
Thus, the exhibition of the said pictures of the wife in the affidavit in opposition was a gratuitous and malicious act to embarrass and humiliate her. The exhibition of the uncensored pictures in the husband’s affidavit was therefore scandalous and oppressive. Under these premises, the discretionary power vested in the court under Order 41 rule 6 of the Rules of Court 2012 should come to the aid of the wife.
The High Court also held that, in this day and age, private intimate photographs of a person stored in the computer or handphone should not suggest that person in question is immoral or an unfit parent.
Instant messaging – “WhatsApping” your children
In Lee Chui Si v Teh Yaw Poh (Sabah & Sarawak High Court Divorce Petition No. KCH-33JP-234/7-2017), the High Court found ways to soften the blow of a divorce by introducing the use of electronic messaging. The husband and wife fought over the custody of their children but two of their children do not wish to see their father.
Nevertheless, the learned Judge was of the view that a window of opportunity should be left open for the father to make amends to his two children. As such, in lieu of physical access, access to their father can be given by way of communicating with them via mobile phones (WhatsApp, phone calls, SMS or WeChat). In view of the present strained relationship between the two children and their father, the communication between them should be limited in the early stage and the Judge limited it to one phone call not exceeding ten minutes and two text messages a week. If the said two children respond and feel comfortable with communicating with their father, the number of phone calls and texting can be more than what the court has decreed.
Part 2 which focuses on cyber-defamation will be published on April 26
-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.
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.
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.
Postscript [30 August 2018]: Parties have come to an agreement in resolution of their disputes, in which the decision has also been made to stop all court or any other enforcement action against each other.
– Act is clearly against the very fundamental principal of “innocent until proven guilty”
– Need law to curb creation of fake news, especially if created to stoke racial or religious sentiments
Repeal of 114A of Evidence Act 1950
WHEN s. 114A was introduced in the Parliament in 2012, a protest was held by netizens to urge the Government to repeal s. 114A. The #stop114A campaign was held and Malaysia had it first Internet Blackout Day to protest this section.
S. 114A provides for three circumstances where an Internet user is deemed to be a publisher of a content unless proven otherwise by him or her. The relevant section, namely s. 114A(1), states that “A person whose name, photograph or pseudonym appears on any publication depicting himself as the owner, host , administrator, editor or sub-editor, or who in any manner facilitates to publish or re-publish the publication is presumed to have published or re-published the contents of the publication unless the contrary is proved”.
In simple words, if your name, photograph or pseudonym appears on any publication depicting yourself as the aforesaid persons, you are deemed to have published the content. So, for example, if someone creates a blog with your name, you are deemed to have published the articles there unless you prove otherwise. If you have a blog and someone posts a comment, you are deemed to have published it.
Subsection (2) provides a graver consequence. If a posting originates from your account with a network service provider, you are deemed to be the publisher unless the contrary is proved. In simple terms, if a posting originates from your TM Unifi account, you are deemed to be the publisher. In the following scenarios, you are deemed to be the publisher unless you prove the contrary:-
(1) You have a home network with a few house mates sharing one internet account. You are deemed to be the publisher even though one of your house mates posts something offensive online.
(2) You have wireless network at home but you did not secure your network. You are deemed to be the publisher even though someone “piggybacks” your network to post something offensive.
(3) You have a party at home and allows your friends to access your PC or wireless network. You are deemed to be the publisher even though it was a friend who posted something offensive.
(4) Someone use your phone or tablet to post something offensive. You are deemed to be the publisher.
As for subsection (3), you are presumed to have published a content if you have custody or control of any computer which the publication originates from. Here, you are deemed to be the publisher so long your computer was the device that had posted the content. If someone “tweetjacks” you or naughtily updates your Facebook with something offensive, you are deemed to be the publisher unless you prove otherwise.
Clearly, it is against our very fundamental principal of “innocent until proven guilty”.
Position of intermediaries (e.g. platform providers)
Currently, many platform providers are vulnerable to be sued or charged in Court for what their users do. For example, an online forum owner would be liable for publishing defamatory statements made by their users pursuant to s. 114A of the Evidence Act 1950. Online marketplace operators may also be sued because their users sold counterfeit products.
It would be ideal for the Government to induce new laws to protect such platform providers but also the punish errant platform providers. For example, a one-strike or three-strikes rule. Under such proposed one-strike rule, an aggrieved person may file a complaint against the platform provider to remove certain postings. If the platform providers remove such posting within a specific time, the platform provider should be absolved from liability. However, if it fails to do so, it will be liable for the acts of its users.
S. 43H of the Copyright Act 1987 is a good example on how to deal with intermediary’s liable in respect of copyright infringement.
Specific laws to govern blocking of websites or other electronic platforms.
All blocking orders should be made public and their detailed reasons to block websites. Currently, there is no public list other than one independently maintained by Sinar Project and reasons given are usually one-liners (e.g. in breach of s. 233 of the Communications and Multimedia Act 1998).
However, there could be specific websites which need not be reviewed due to national security issue, among others. As we all know, blocked websites can still be accessed via other means.
Blocking orders should also be made by the Courts rather than the arbitrary decision of the Minister. The current s. 263 of the Communications and Multimedia Act 1998 is used by the Ministry of Communications and Multimedia to direct internet service providers to block platforms in order to prevent the commission or attempted commission of an offence under any written law of Malaysia. In the past however, we have seen websites being blocked due to political reasons e.g. medium.com and bersih.org.
The Anti-Fake News Act 2018 and Sedition (Amendment) Act 2015 have provisions for websites to be blocked by way of application to the Court. All these blocking order sections and s. 263 of the Communications and Multimedia Act 1998 should be replaced with one single law to govern blocking of electronic platforms.
The law should also allow any person such as users of the platforms to challenge any blocking orders. When the previous Government decided to block medium.com, as far as I know, the site owners did not file any challenge in Court to unblock their website. Many netizens were denied access to informative and educational content from medium.com. There were no specific laws allowing them to challenge the block. They were also unsure if they could meet the threshold to file an action for judicial review.
Specific channels to allow litigants to obtain information about wrongdoers
In the present case, a person who wishes to obtain information about another person, for example another Facebook user who had defamed or harasses him, would need to go through a long and expensive process to obtain such information. Normally these wrongdoers will use platforms provided by foreign companies to attack another user.
It would be ideal if a straight forward process be made to such person to obtain such information. For example, filing a request to the Government for it to request the same from the platform providers.
SS. 211 and 233 of the Communications and Multimedia Act 1998
S. 233 of the Communications and Multimedia Act 1998 (which is similar to s. 211) has been used by the previous administration against dissent. The Bar Council has called for the repeal of Section 233(1)(a) of the Communications and Multimedia Act 1998 as it is a serious encroachment on the freedom of speech and expression guaranteed by Article 10(1)(a) of our Federal Constitution. I concur with the Bar Council on this.
However, I suggest that new laws be introduced to stop contents which can cause hatred and disturbance about certain individuals or organisations. We cannot have people sending fake messages which can cause a riot, for example.
Anti Fake News Act 2018
Many calls have been made to repeal the Anti Fake News Act 2018, which came into operation weeks before the 14th General Election. One person has been sentenced and many have been investigated for spreading fake news. Prime Minister Dr Mahathir Mohamad has confirmed that this Act will be repealed.
Notwithstanding such calls to repeal the law, I am of the view that there should be laws to curb the creation of fake news especially those created to stoke racial or religious sentiments. Note that s. 233 of the Communications and Multimedia Act 1998 requires a communication to target a certain person. Fake news may not necessary be targeting a certain person. It could target a race and a place, for example.
Revamp of the Admissibility of Electronic Evidence
Currently, almost every document printed by a computer is admissible under s. 90A of the Evidence Act 1950. This section should be examined to define clearly on what admissible and not admissible.
The Court’s electronic system should also be upgraded to allow the admissible of all forms of electronic media such as songs, videos and animated files. Currently, lawyers have to burn those evidence in a CD to be filed in Court. This defeats the open justice system where all Court proceedings are accessible to the public.
[Postscript] In addition, the Court’s file search system should also be updated. Currently it allows a user to conduct a file search for 30 minutes (per ticket) via its slow system. It loads page by page and one cannot download all the documents at one go. It should be revamped to allow a user to download the entire file with one single fee.
Laws to protect netizens
New laws should be introduced to criminalise cyberbullying, stalking and harassment. It is noted that this type of acts these days are not made directly against a person.
Government should also study the criminalisation of maintaining cybertroopers. Many organisations in the world including Governments use the services of cybertroopers to attack individuals. They would send threatening, harassing or annoying messages, posting private information of that individual and create fake content about that individual.
Lastly, what we need is meaningful and effectively consultation with the Government. The previous administration had basically shoved us with laws with little consultation. I remember when our #Stop114A team went to meet the then Deputy Minister of Law, V.K Liew, to hand in our petition to repeal s.114A, he said that the Bar Council needs professional advice. I trust that the new Government will make a wise choice in deciding the right people for the right job.
By Foong Cheng Leong | Mar 30, 2018 – Sending death threats using someone else’s mobile phone is not OK
– 2018 will mark interesting year for cyber related cases including Uber driver suing Uber
THE first statute in Malaysia to use the term “social media” is part of the law designed to protect children against sexual offences and not any computer crimes related or media related law.
At the same time a bank officer got into hot soup for using their superior’s email account and password. Let’s go through these cases now.
Sexual Offences Against Children Act 2017
The Sexual Offences Against Children Act 2017 was introduced to address the seriousness of sexual offences committed against children in Malaysia. The ultimate object of the proposed Act is to provide for better protection for children against sexual offences and to safeguard the interest and well-being of children and to provide effective deterrence.
One of the laws introduced is the law against child grooming. S. 12 of the Act states that child grooming is an offence punishable with imprisonment of no more than 5 years and liable for whipping. The Act specifically stated that the following amounts to child grooming :-
(a) A communicates with Z, a child via social media by pretending to be a teenager and develops a love relationship with Z with the intention of using Z in the making of child pornography. A never meets Z. A is guilty of an offence under this section .
(b) A communicates with Z, a child via e-mail and befriends Z with the intention that A’s friends C and B could rape Z. A never meets Z. A is guilty of an offence under this section.
This law is also the first statute in Malaysia to use the words “social media”.
Last year, we were anticipating the amendments of the Communications and Multimedia Act 1998. However, the amendments never came. Nevertheless, numerous people were investigated under s. 233 of the Communications and Multimedia Act 1998. Notably, in the case of Mohd Fahmi Redza Bin Mohd Zarin Lawan Pendakwa Raya dan Satu Lagi Kes (Kuala Lumpur Criminal Application No. 44-103-08/2016), the accused was charged under s. 233 of the Communications and Multimedia Act 1998 for publishing an offensive Instagram posting using the username kuasasiswa. The accused filed an application to strike out the charge on the grounds that:-
– s. 233 of the Communications and Multimedia Act 1998 is unconstitutional and/or ultra vires in view of Article 5(1), 8 and 10(1)(a) of the Federal Constitution
– the charge against him acts as and/or has the characteristic of a censorship and therefore in contravention of the objectives of the CMA according to s. 3(3) of the CMA; and
– the charge against the accused is defective as it does not have the details of the parties that were offended by his acts.
The Public Prosecutor applied to have the matter heard before the Federal Court in respect of the issues on the constitutionality of s. 233 of the CMA (in accordance with ss. 30 and 84 of the Courts of Judicature Act 1964. Upon hearing the parties, the High Court referred the matter to the Federal Court for the latter to decide on the following question:-
Whether Section 233(1)(a) of the Multimedia and Communication Act (Act 588) is Inconsistent with Article 5(1), 8 and 10(1)(a) of the Federal Constitution?
However, the Federal Court dismissed the application for non-compliance of the Courts of Judicature Act 1964 (Federal Court Criminal Application No. 06-04-04/2017(W)).
In Nik Adib Bin Nik Mat v Public Prosecutor (Rayuan Jenayah No 42S(A)-39-7/16), the accused was charged under s.233(1)(a) of the Communications and Multimedia Act 1998 for sending indecent and false photos of cabinet leaders titled “Pesta Bogel” on Facebook. He was also charged under s. 5(1)(a) of the Film Censorship Act 2002 for possession of 883 pieces of pornographic videos in his laptop. The Session Court sentenced him to the maximum sentence of 1 year imprisonment for the first offence and another 1 year imprisonment for the second offence.
On appeal, the High Court Judge stated that “cyber offences are serious offences especially the offence at hand, as those offensive materials could be easily disseminated to the public at large within seconds at a touch of a button” and agreed with the Sessions Court Judge that public interest is of paramount importance and should supersede the interest of the accused.
However, the learned High Court Judge was of the view that personal interest of the accused should not be disregarded at all and thus, allowed the appeal against the sentence. The learned High Court Judge took into account the grounds submitted by the accused and held that the misdirection of Session Court on imposing maximum sentence for the first offence warrants the appellate intervention and a special consideration ought to be given so that he can mend his ways and “turn over a new leaf”.
The High Court substituted the original sentence with 1 week imprisonment and a fine of RM3,000 in default 3 months imprisonment for the first charge and for the second charge, a fine of RM10,000 in default 1 ½ years imprisonment.
In Pendakwa Raya v Dato’ Dr Ahmad Ramzi Bin Ahmad Zubir (Rayuan Jenayah No. T-09-15-01/2014), the Respondent was charged with criminal defamation after he had sent text messages containing death threats to various individuals using another person’s (SP5) mobile phone number via an online platform registered in the name of a colleague of the Respondent (SP16). The said online platform allows users to broadcast SMS to numerous mobile numbers via the Internet. The Respondent had changed the sender’s mobile phone to SP5’s mobile number. The Respondent’s convicted by the Sessions Court but his conviction was overturned by the High Court.
On appeal, the Court of Appeal restored the conviction. In the grounds of judgment, the Court of Appeal discussed on the method used to determine whether the SMS was sent by the Respondent. The investigation had showed that the internet protocol address that was used to send the SMS was registered to the Respondent’s internet account. The MAC Address found was the same MAC Address of the Respondent’s router. According to the evidence provided by Cyber Security Malaysia, a MAC Address is a unique number provided by the Internet Service Provider and in order to connect to the Internet, it must be done through a router.
In Pendakwaraya v Charles Sugumar a/l M. Karunnanithi (Mahkamah Majistret Kota Bharu Kes Tangkap No: MKB (A) 83-43-02/2016), the accused was charged under s. s. 424 of the Penal Code for dishonestly concealing money of a scam victim in his bank account knowing that the said money does not belong to him. The victim had befriended a person by the name of Alfred Hammon from UK through Facebook. Alfred Hammon then made the victim transfer money to the accused’s bank account on the pretence that he needed the money to cash his cheque of US$3 million. Alfred Hammon promised that he will return the money together with interest. However, after transferring RM36,300 the victim realised that she was scammed.
The accused claimed that he is not part of the scam. The accused claimed that when he was working as a tour driver, he was requested by his customer to receive money on the customer’s behalf. The accused claimed that he did it to give his customer the best service so that he can attract more customers. He said that he was informed by the customer that the customer’s friend had to transfer money to him so that the customer can continue his tour in Malaysia. The accused said that he did not gain any remuneration or commission from that assistance.
The Magistrate acquitted the accused as the Magistrate found that, among others, the accused’s evidence is consistent and is a credible witness. The Magistrate agree that the accused was made a scapegoat by the customer who took advantage of his goodness and sincerity in giving the best service as a tour driver.
Computer Crimes Act
In Rose Hanida Binti Long lwn Pendakwa Raya (Kuala Lumpur High Court Criminal Appeal No. 42K–(115–124)-09/2016), the appellant was charged under the Computer Crimes Act 1997 (unauthorised access to computer material with intent to facilitate the commission of an offence involving fraud or dishonesty or which causes injury) and s. 420 of the Penal Code (for cheating) for making false claims to his employer, a bank, by using his superior’s account and password to without his superior’s knowledge. She was initially sentenced by the Sessions Court with 4 years of imprisonment and fine of RM260,000 in default of 15 months jail. She appealed the sentence but withdrew it later. Notwithstanding that it had been withdrawn, the High Court Judge exercised his revisionary powers and enhanced the sentence to 6 years and fine of RM260,000 in default of 15 months jail due to the seriousness of the offence.
In Kangaie Agilan Jammany lwn PP  1 LNS 1640, the accused was charged under s. 5(1) of the Computer Crimes Act 1997 for making modification of the contents of Air Asia’s flight booking system without authorisation. The accused had allegedly used the function “move flight function” in those unauthorised transactions to change, among others, the flight details and customers’ emails for the purpose of notification. The said function is a critical function to allow authorised staff to make changes so that no charges are made to customers.
The accused was given an ID ‘6954’ and password to access Air Asia flight booking system but he had limited access to it. Thus, one of the witnesses, SP4, had given his ID and password to the accused after the accused had requested for it on the ground that the latter is unable to access to the system using his own ID. SP4 did not know that the accused had misused his account. The accused had then used the said account to help his family members and friends to get cheaper flight tickets, among others. Air Asia alleged that it had lost about RM229,100.42 due to the accused’s actions.
In the system log, it was found that the accused had changed the flight schedule and also that there were a few customer email notifications which involved the agent code 6954 which had made the flight changes. Further, there was an incident whereby SP4 was asked by the accused to provide his new password after it had been changed.
The Sessions Court found the accused guilty and had applied the statutory presumption under s. 114A of the Evidence Act 1950 after the accused could not rebut the evidence that the agent code 6954 belongs and used by him.
Under 114A of the Evidence Act 1950, a person is deemed to be a publisher of a content if it originates from his or her website, registered networks or data processing device of an internet user unless he or she proves the contrary. In 2014, this new law sparked a massive online protest dubbed the Malaysia Internet Blackout Day or also the Stop114A.
On appeal, the High Court concurred with the Sessions Court Judge. The High Court Judge also held that s. 114A of the Evidence Act 1950 applies retrospectively notwithstanding that the offence was committed prior to the enforcement of s. 114A as the presumption did not alter the original subject matter and even includes the same subject matter that did not prejudice the accused before and after. In other words, without using such presumption, the Prosecution would still have to prove that the Accused was the person who used his ID and password to access the employer’s system had committed an offence to change the flight schedule without authorisation. On the contrary also by applying the presumption of the law, the Prosecution will still have to prove that the accused alone has a specific ID and password to access the system.
2018 will mark another interesting year for cyber related cases. In late 2017 and early 2018, the following cases have been filed:-
– A Uber driver sued Uber Malaysia Sdn Bhd for non payment of his fees. The interesting question in this case would be whether Uber Malaysia Sdn Bhd is liable to pay such fees or one of Uber’s foreign entities.
– In the Intellectual Property Court of Kuala Lumpur, a brand owner had filed a law suit for trade mark infringement against a web hosting company for hosting a website that sold counterfeit products. The interesting question in this case is whether a webhoster is liable for what their subscribers do.
– In the same Court, a brand owner had also filed a law suit for trade mark infringement against online marketplace operator for using the brand owner’s registered trade mark and allowing their users to sell unauthorised products. The interesting question in this case is whether an online marketplace operator is liable for what their users do on their platform and in particular case, for selling unauthorised products.
– The same Court also granted an application to serve a Writ and Statement of Claim via email and WhatsApp messenger after it could not locate the Defendant at her last known address. Traditionally, when a Defendant cannot be located, Plaintiff would normally ask the Court to allow a notice relating to the lawsuit to be published in the newspaper, among others. We will see more and more substituted service applications to be served electronically.
PKR communications director Fahmi Fadzil filed a civil suit against the Malaysian Communications and Multimedia Commission and Nuemera (M) Sdn Bhd for allegedly failed to protect his personal data which resulted in the leakages of his personal data together with personal information of 46.2 million mobile subscribers. This was one of Malaysians’ biggest data leak.
Finally, the recent introduction this month of the Anti-Fake News Bill 2018 is too important for me to leave till next year to comment!
The word “fake news” is defined as any news, information, data and reports, which is or are wholly or partly false, whether in the form of features, visuals or audio recordings or in any other form capable of suggesting words or ideas.
The law applies to fake news concerning Malaysia or the person affected by the commission of the offence is a Malaysian citizen. Any person who, by any means, knowingly creates, offers, publishes, prints, distributes, circulates or disseminates any fake news or publication containing fake news commits an offence and shall, on conviction, be liable to a fine not exceeding RM500,000 or to imprisonment for a term not exceeding 10 years or to both.
The Court may also order the accused to make an apology. Interestingly, the new law allows civil action to be initiated by a person affected by the fake news publication for an order for the removal of such publication. I will write further on this new law on a separate article. [Postscript: The Anti Fake News Act 2018 is now in force effective from 11 April 2018]
Foong Cheng Leong is an Advocate and Solicitor of the High Court of Malaya and also a registered Malaysian trade mark, industrial designs and patent agent.
He had served the Malaysian Bar and Kuala Lumpur Bar in the following capacities:-
1. Kuala Lumpur Bar Committee (2013 to 2020)
2. Chairperson of the Kuala Lumpur Information Technology (2012 to 2020)
3. Co-Chairperson of the Bar Council Ad-Hoc Committee on Personal Data Protection (2013 to 2016)
4. Co-Chairperson of the Bar Council Intellectual Property Committee (2019 to present)
5. Co-Chairperson of the Bar Council Information Technology and Cyberlaws Committee (2015 to 2017)
He is also the author of the following books-
1. Compendium of Malaysian Intellectual Property Cases consisting of the following two volumes
a. Vol 1- Trade Marks