Magistrate Jessica Ombou Kakayun

Bread & Kaya 27: 2020 Cyberlaw Cases: Cyberlaw in the Covid-19 Era

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 [2020] 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 [2020] 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 [2020] 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 [2020] 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 [2020] 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.

To regulate the remote communication technology proceedings, the Chief Justice issued Practice Direction 1 of 2021: Management of Civil Case Proceedings Conducted by Long-distance Communications Technology for all Courts in Malaysia (Pengendalian Prosiding Kes Sivil Melalui Teknologi Komunikasi Jarak Jauh Bagi Mahkamah Di Seluruh Malaysia). Pursuant to paragraph 5 of the said practice direction, the Court may take into account the following factors, among others, in deciding whether to conduct remote proceedings: the type and duration of proceeding, witnesses, health factors, and availability and quality of technology to be used.

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.

Online Hearing for Admission to the Bar

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 [2021] 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 [2020] 1 LNS 2108 is 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 [2020] 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 [2019] 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 [2020] 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 [2020] 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 [2021] 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-

[40] 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.

..

[49] 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 [2013] 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 [2018] 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 ([2019] 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 ([2020] 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 [2020] 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 [2021] 7 MLJ).

Cybercrime

In PP v. Mohamad Faezi bin Abd Latif [2020] 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):

No. Case Offence Sentence
1. 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
2. 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
3. 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
4. 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
5. 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
6. 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
7. 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
8. 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
9. 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. PP v. Mohamad Faezi bin Abd Latif (supra) 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 [2020] 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 [2021] 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 [2020] 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 closing

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 [2021] 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 [2020] 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.

Bread & Kaya: 2019 Malaysian Cyber Law Cases

– Launch of Lexscout.com for public to search unreported Court judgments & lawsuits
– Emergence of new businesses in digital economy sees new rules, regulations, Court cases
– 2014 fatwa directing MCMC to block certain sites, deemed not contravening law
– Movement Control Order to generate more cyber & IT related disputes in the Court

There had been a steady increase of cyber-defamation cases filed in our Courts in 2019. The number of cyber-related tort cases filed in the Kuala Lumpur High Court in 2019 increased to 70 over from over 60 cases in 2018.

The emergence of new types of business in our digital economy saw the grow of new types of rules and regulations, and Court cases.

We saw the first digital currency Court case in our Court which led to the Court recognising that digital currency is a form of an intangible asset.

Peer-to-peer (P2P) lending brought a new way of funding to businesses but like many other credit businesses, they had to resort to Court proceedings to recover their debts.

The Court also had to deal with an e-hailing company’s liability in a road accident involving its e-hailing vehicle. The Department of Industrial Relation had to deal with whether a Grab car driver is an employee and may file a claim with the Department of Industrial Relation contrary to Grab’s position that e-hailing drivers are independent contractors.

Burgielaw and I had also jointly developed Lexscout, a portal for the public to search unreported Court judgments and lawsuits. The judgement search allows users to search more than 14,000 legal case judgments of the Malaysia Subordinate Courts up to the Federal Court. Many of these judgements are not reported by local law journals. The lawsuit search function is first of its kind in Malaysia. Users can now search if a person or company has been involved in a lawsuit in Malaysia.

WhatsApp

Malaysia’s most popular instant messaging application has got some people in trouble with the law.

In Pegawai Pengurus Pilihanraya Dewan Undangan Negeri Bagi Pilihan Raya Dun N.27 Amino Agos Bin Suyub v Dr. Streram a/l Sinnasamy & 2 Lagi [2019] 1 LNS 589, the appellant, an election official of the State Legislative Assembly for By-Election of District of Rembau, Negeri Sembilan, was found guilty of contempt of Court in the High Court for coaching a witness through WhatsApp. The Court of Appeal however allowed the appeal on the ground that such act may not fall under contempt in the face of court per se if the court has not warned the particular person that he should not communicate with the witness. Further, the Court of Appeal found that there was a breach of natural justice when the witness was not called to testify in the contempt proceedings. The Court of Appeal ordered the contempt proceedings to be sent to the High Court for retrial.

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 [2019] 2 LNS 1050). For purpose of communicating with employees it was common practice by the employer at Maxis Retail Centres to create WhatsApp Groups among its employees for ease of communication, fast updates and responses for business operations. Two WhatsApp Groups were created for employees at Maxis Centre E-Curve, namely “Maxis e @ Curve” and “MSSC e @ Curve Home & EOMC”. The Head of Maxis Centre E-Curve (COW-2) stated that he had informed all employees (including the Claimant) stationed at Maxis Centre E-Curve that they had to inform him in advance if they wish to exit from the WhatsApp Group. It required his approval before they could exit the group.

The Claimant’s employment was terminated by her employer after she had exited from her employer’s WhatsApp groups twice without permission. She had also failed to submit her sales report, as required by her employer.

The Industrial Court held that Claimant was in breach of her terms of employment with the Company when she failed to follow the reasonable oral and written instructions of COW-2 i.e. to obtain approval prior to exiting the WhatsApp Group.

In the meantime, a man was jailed for sharing a video of his wife’s cousin taking a bath on his family WhatsApp group. In Pendakwa Raya v Nor Hanizam Bin Mohd Noor [2019] 1 LNS 944, the accused was charged under s. 509 of the Penal Code for outraging the modesty of wife’s cousin. The accused pleaded guilty and the Magistrate Court Judge sentenced him to two (2) months imprisonment. The Prosecution was not satisfied with the sentence and appealed to the High Court.

On appeal, the High Court has this to say, in Bahasa Malaysia, about invasion of privacy –

Keseriusan isu ini menjadi lebih memuncak di dalam zaman siber yang serba canggih di mana sesuatu berita atau imej sudah boleh dihebahkan kepada dunia dengan sekelip mata. Muat naik berita, imej dan video sudah menjadi sesuatu perkara yang sangat mudah dan selera masyarakat terhadap sesuatu berita, imej atau video sudah mencapai kepada suatu peringkat di mana nilai privasi, maruah dan keaiban sesorang dikompromi dan diketepikan dengan sewenang-wenangnya. Bahan lucah, berita palsu, fitnah, tohmahan dan sebagainya sudah menjadi suatu pengisian media yang dinantikan oleh sebahagian masyarakat dan ia mendatangkan masalah moral yang sangat serius di kalangan masyarakat sehingga menular di kalangan remaja.

In short, what the Court said was, “In this digital age, information and content can spread in the blink of an eye. The ease of uploading images and videos, too easily done, with society’s appetite for such reaching an unhealthy level where privacy and dignity are compromised and disregarded too easily. Fake news, slander and pornography have become media staples eagerly consumed by a segment of society resulting in serious moral problems in society and our youth.

The High Court Judge also held that the words “intrudes upon the privacy” under s. 509 of the Penal Code includes recording a person without permission and distributing the video.

The High Court enhanced the imprisonment period to six months from the date of conviction.

Peer-to-peer (P2P) Lending

Peer-to-peer lending, also abbreviated as P2P lending, is the practice of lending money to individuals or businesses through online services that match lenders with borrowers.

In Malaysia, the Securities Commission governs the operation of P2P financing. The Securities Commission only allows P2P operator to facilitate businesses or companies to raise funds from both retail and sophisticated investors through an online platform.

P2P operators are not permitted to facilitate individuals seeking personal financing. This is because the primary objective of introducing market-based financing is to help build small businesses which in turn help to spur and promote growth of the economy. Through the Securities Commission registered P2P platform, an investor may invest in an investment note or an Islamic investment note issued by businesses or companies for a specified tenure with the expectation of a predetermined financial return.

Since 2017, there have been 2,505 successful peer-to-peer (P2P) financing campaigns across 643 issuers, with a total of US$49.3 million (RM212.65 million) raised. Issuers raising funds on P2P financing platforms have maintained a campaign success rate of 99%. In 2018, a total of RM180.05 million was raised reflecting 452% growth from 2017. Among the successful fundraising campaigns, 91% raised RM200,000 and below. 22% of the successful issuers raised more than once. (Data from Securities Commission Annual Report 2018.)

Notwithstanding the above success, some issuers could not repay what they have raised. The operator of “Funding Societies”, Modalku Ventures Sdn Bhd, had to commence legal proceedings against a few companies to recover the facilities. Modalku is registered as a recognized market operator under s. 34 of the Capital Market and Services Act 2017 to operate a P2P platform.

In Modalku Ventures Sdn Bhd v Reliance Shipping & Travel Agencies (Sarawak) Sdn Bhd & Anor (Kuala Lumpur Sessions Court Suit No. WA-B52NCC-392-06/2019) raised a novel defence by claiming that P2P financing is illegal under the Moneylenders Act 1951.

The Plaintiff granted the 1st Defendant facilities of RM650,000 to be utilised as working capital of the 1st Defendant. The 2nd Defendant is a director and guarantor of the 1st Defendant. An investment note certified was issued by the 1st Defendant to the investors of the 1st Defendant.

The 1st Defendant defaulted in the loan and the Plaintiff sued for the outstanding amount. The Plaintiff sought for an order for summary judgment of the outstanding amount.

The Defendants argued that the Facility Agreement is illegal pursuant to the Moneylenders Act 1951 and Moneylenders (Amendment) Act 2003 because the Plaintiff is not licensed to carry out money lending activities.

In view that the Plaintiff is a registered market operator, the Sessions Court held that Moneylenders Act 1951 does not apply to the Plaintiff. S. 2A(1) read together with Item 10 of the First Schedule of the Moneylenders Act 1951 provides that the Moneylenders Act 1951 does not apply to any person licensed, registered or regulated under the Capital Markets and Services Act 2007.

Accordingly, the Sessions Court granted the summary judgment. Appeal to the High Court was dismissed in Civil Appeal No. WA-12ANCC-69-09/2019.

Similarly, in Modalku Ventures Sdn Bhd v Reliance Shipping & Travel Agencies (Sabah) Sdn Bhd & Anor (Kuala Lumpur Sessions Court Suit No. WA-B52NCC-393-06/2019), the Defendants, in resisting an application for summary judgment, argued that the Facility Agreement and security documents are illegal pursuant to the Moneylenders Act 1951 and Moneylenders (Amendment) Act 2003 because the Plaintiff is not licensed to carry out money lending activities and a contravention of s. 15A of the Moneylenders Act 1951 which provides that “no moneylending agreement in respect of money lent after the coming into force of this Act by an unlicensed moneylender shall be enforceable”.

The Plaintiff argued that s. 2A of the Moneylenders Act 1951 read together with Item 12 of the First Schedule of the Moneylenders Act 1951 provides that the Moneylenders Act 1951 does not apply to any person licensed, registered or regulated under the Capital Markets and Services Act 2007.

The Sessions Court agreed with the Plaintiff that the Moneylenders Act 1951 does not apply and therefore the Facilities Agreement and security documents are valid and enforceable.

E-hailing company’s liability in accidents

In Tea Chew Chin v Grabcar Sdn Bhd & Ors (Sessions Court Suit No. JA-A53KJ-610-10/2018), the Plaintiff was injured when the Grabcar driven by the 2nd Defendant and owned by the 3rd Defendant was involved in an accident. The Plaintiff claims that Grabcar was also responsible for his injuries as they have failed to provide a safe transportation platform. Grabcar on the other hand argued that they are not vicariously liable for the negligence of the driver or owner of any car that used the Grab application to participate in the Grab ride hailing service. Grab applied to strike out the case but the suit was later withdrawn.

A few months later, the insurer of the car owned by the 3rd Defendant sued the Plaintiff and all the other Defendants in the earlier suit (MPI Generali Insurans Berhad v Tea Chew Chin & 3 Ors (Johor Bahru High Court Suit No. JA-24NCvC-320-05/2019) and sought an order to declare that the insurance policy is invalid as the car was not used for private use. Grab again argued that it should not have been joined as a party to this action as they were merely providing the mobile application on the “Grab” platform for various car owners and drivers to operate ride hailing services, they had no connection whatsoever with the car and the insurance policy. The High Court dismissed the insurer’s action. However, no grounds of judgment is available.

Digital Currencies

In my article Bread & Kaya: Malaysia’s first digital currency court case, I wrote about Malaysia’s first digital currency court case. In Luno Pte Ltd & Anor v Robert Ong Thien Cheng (Sessions Court Civil Suit No. BA-B52NCVC-389-12/2017), the 1st Plaintiff mistakenly transferred 11.3 Bitcoins onto the Defendant’s e-Wallet which the Defendant refused to return. The Plaintiffs sued the Defendant for the return of the 11.3 Bitcoins under s. 73 Contracts Act 1950. The Defendant argued that, among others, Bitcoins are not a “thing” capable of being returned as envisaged under s. 73 Contracts Act 1950, cryptocurrency is illegal in Malaysia and therefore, the Plaintiffs are not entitled to recover the same. The Sessions Court allowed the Plaintiffs’ claim and the Defendant appealed to the High Court.

The High Court (Shah Alam High Court Civil Appeal No. 12BNCVC-91-10/2018) dismissed the appeal and held that, among others, cryptocurrency trading is not illegal in Malaysia, digital currency is a form of an intangible asset and digital currency is a “thing” that has to be returned if it is mistakenly delivered. The matter is now pending at the Court of Appeal

Discovery of the Identity of Facebook User

In the past, Court actions were filed overseas against online service providers such as Google to obtain information of certain online users. Such action can be done either through a pre-action discovery application or a Court subpoena. It can cost the aggrieved party substantial amount of legal fees as foreign counsels have to be engaged to conduct the matter in Court. Further, it is not guaranteed that the service provider will provide the information.

However, through Lexscout.com, I found a case which shows that pre-action discovery application against Facebook can be made in Malaysia instead of filing such application outside 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).

Filing a pre-action discovery application is one of the most efficient ways. The use of private investigators may also help and it is much more affordable and may be faster. However, it comes with a risk. The investigation by the private investigator may not be conclusive enough for the Court. This happened in the case of P.T. Tarakusuma Indah & Anor v The Qbee Motor Group Sdn Bhd [2019] 1 LNS 1619 where the Plaintiffs alleged that the Defendant was the person behind a certain Facebook page that had defamed them. The Plaintiff relied on the investigation report by a private investigator (PW2). The investigation report concluded that the administrator of the Facebook page “is someone employed or related‟ to the Defendant company or any other related companies such as QBEE Superbike Centre Sdn Bhd, Quian Long Auto Parts Sdn Bhd”.

The High Court dismissed the Plaintiffs’ action and held that they have failed to prove that the Defendant had published or distributed the impugned statements or had caused the impugned statements to be made or published or distributed in the Facebook page. The finding in the investigation report was vague and inconclusive and uncertain as to who the administrator for the Facebook page was. The Plaintiffs’ evidence on this point was purely based on assumption that it was the Defendant who made those impugned statements.

Legality of contracts made online

The High Court recognised that contract can be proven through WhatsApp conversation. In Lim Choon Hau v. Simpson Wong [2019] 1 LNS 217, HC, the High Court held that a WhatsApp conversion can be direct evidence of the Defendants receiving money as friendly loan from the 1st Plaintiff.

Thousands of contracts are made online every day. Many of us accept that such contracts are binding on the parties without having to meet each other physically or putting in a manuscript signature. Unfortunately, many do not read the contracts whenever they purchase the goods or services.

One of these online contracts is called browsewrap agreement. In a browsewrap agreement, the contract is located in another page. To view the contract, the user would need to click on the link to access the page. The defining feature of browsewrap agreements is that the user can continue to use the website or its services without visiting the page hosting the browsewrap agreement.

In Ragindran a/l Sivasamy v Airasia X Berhad (Penang Magistrate Court Civil Suit No. PD-A72-1-1/2019), the Magistrate Court dealt with the legality of an online contracts commonly known as a browsewrap agreement.

The Plaintiff had purchased his air ticket from the Defendant’s website to travel to Melbourne, Australia. The Plaintiff lost his luggage during his flight to Kuala Lumpur International Airport 2 (KLIA 2) and thereafter to Melbourne. The Defendant then offered compensation to the Plaintiff based on the tariff that had been set at USD20.00 per kilogramme. The Plaintiff however rejected the tariff and claimed for the sum of RM11,700 for the loss of, among others, his watch, glasses, winter wear, clothing and additional clothing that he had to purchase in Melbourne due to the loss of clothing.

The Defendant argued that the Plaintiff is bound by its terms and conditions incorporated into the Terms and Conditions of the Defendant’s international flight and are available on the Defendant’s website.

However, the Plaintiff claims that he is not bound to the Defendant’s terms and conditions as-

(a) the terms and conditions were not brought to his attention at the time of purchase of the tickets. Instead each purchaser is required to click on the words “Terms and Conditions” to see the complete terms and conditions of the flight;
(b) the terms and conditions were only applicable to his domestic flight to Kuala Lumpur but not his international flight to Melbourne;
(c) the Defendant had caused the loss of his luggage; and
(d) the total compensation offered by the Defendant is lower than what he had lost.

During the trial, one of the Defendant’s witnesses demonstrated in Court how to purchase tickets through the Defendant’s website. The said witness testified that there is a notice above the payment button stating “By clicking “Purchase”, you confirm that you understand and accept our Terms and Conditions of Carriage, which address cancellation, refund and rebooking, no show, baggage allowance and travel documents, and other policies. ”

The “Purchase” button is placed next to the notice. For the display of the detailed flight terms and conditions, a user simply has to click on the words “Terms and Conditions of Carriage ” in red in the notice and upon doing so, the website will direct the user to another page displaying the terms and conditions of flight.

The learned Magistrate held that it would be reasonable for the Defendant to expect that any person purchasing an airline ticket from the Defendant’s website would know of the terms and conditions of the flight.

The Magistrate found that the Defendant had put sufficient notice on its website for its users by putting a notice next to the Purchase button with a red hyperlink. It is the Plaintiff’s obligation to read the terms and conditions. A contract is formed as soon as the payment is made, and any terms and conditions of the flight would bind the parties as soon as the contract is made.

This matter is pending before the Penang High Court (Civil Appeal Suit No. PA-11B-37-09/2019).

Trade marks

After 43 years, the Trade Marks Act 1976 was repealed and replaced with the Trademarks Act 2019. The new law finally implemented the Madrid Protocol which allows a trade mark owner to file an international trademark application in 122 countries (subject to additional fee for every country) through the Intellectual Property Corp of Malaysia (MyIPO) beginning from 27 December 2019.

Prior to the repeal of the old law, the Court made a few important decisions in respect of online trade mark infringement.

In 30 Maple Sdn Bhd v. Siti Safiyyah Mohd Firdaus Chew [2019] 1 LNS 404, the Defendant was found to have infringed the Plaintiff’s registered trade marks for selling counterfeit dUCk products on her social media accounts such as Instagram, Instagram Stories, Facebook, etc. In addition, the Intellectual Property High Court found that the social media postings amount to advertising circulars or other advertisement representing as having the right either as the registered proprietor or user to use the trade mark. Therefore, the Defendant was in breach of s. 38(1)(b) of the Trade Marks Act 1976 (repealed and replaced by the Trademarks Act 2019) which prohibits the use of a registered trade mark on goods or in physical relation thereto or in an advertising circular, or other advertisement.

In Telekom Malaysia Berhad & Anor v CA Multimedia Sdn Bhd & Ors [2019] MLJU 1664, the Intellectual Property High Court found that certain Defendants had infringed and passed off the trade mark TMPOINT for using the domain name tmpoint.com and the mark TMPOINT on their website. The Defendants have attempted to differentiate between website and domain name. Though they may be technically different in function, the Court found that they operate in unison and hence ought to be treated as one for purposes of trade mark infringement.

What amounts to parody?

Prior to the fall of the Barisan Nasional Government in the 2018 General Election, several people were charged in Court for publishing content which were themed as anti-Government. One of them is Fahmi Reza, who is also known as kuasasiswa. He was charged under s. 233(1)(a) of the Communications and Multimedia Act 1998 in the Sessions Court for publishing a false notice purporting to be by the Malaysian Communications and Multimedia Commission featuring the logo of the Commission and an image of a clown resembling the then Prime Minister Najib Bin Razak on his Facebook page with an intent to annoy (Mohd Fahmi Reza Mohd Zarin lwn. PP [2019] 1 LNS 120). He was found guilty and sentenced to 1 month jail and fine of RM30,000.

On appeal, the accused argued that the notice is a parody and political satire to criticise the authorities for restricting freedom of expression and the Internet.

Justice Mohd Radzi Harun found that the notice is a fine and creative artistic work created by the accused to criticise the authorities, however it is false in nature and was created with an intention to annoy a person. His Lordship was of the view that there is no need for the Prosecution to prove that the accused annoyed the complainant but whether he intended to annoy him.

His Lordship also found that the notice cannot be considered as a parody because it does not fall within the definition of parody set out in the case of Sepakat Efektif Sdn Bhd v. Menteri Dalam Negeri & Anor and Another Appeal [2015] 2 CLJ 328 which provides-

“The pithy observation by Justice Albie Sachs of the Constitutional Court of South Africa in Laugh it Off Promotions CC v. South African Breweries International (Finance) Case [2005] 5 LRC 475, is quoted to indicate the proper approach courts should take when assessing parodies and satires:

“If parody does not prickle it does not work.”

Therefore, his Lordship held that the notice is an artistic work but due to its nature of annoying another, it therefore has no right to be displayed by the accused and is not protected by freedom of speech.

His Lordship however replaced the Sessions Court’s sentence with a fine of RM10,000 in lieu of 6 months imprisonment in view of, among others, media reports stating that the Minister of Communication and Multimedia is making amendments to s. 233 of the Communications and Multimedia Act 1998 to repeal elements which are considered as draconian.

Challenging website access blocking order

The Malaysian Communications and Multimedia Commission (MCMC) is known to block websites without notice. The power to block website is purportedly based on s. 263(2) of the Communications and Multimedia Act 1998. MCMC or any authorities may request MCMC to “request” internet service providers to disable access by end-users in Malaysia to online location for the purpose of “preventing the commission or attempted commission of an offence under any written law of Malaysia or otherwise in enforcing the laws of Malaysia, including, but not limited to, the protection of the public revenue and preservation of national security”.

Sometime in 2014, Fatwa Committee of the State of Selangor issued a fatwa declaring that SIS Forum deviates from the teaching of Islam and directed that the MCMC block any social websites which is against the teaching of Islam and “Hukum Syarak” (see SIS Forum (Malaysia) & Ors v. Jawatankuasa Fatwa Negeri Selangor & Ors [2018] 6 CLJ 748).

The Plaintiff challenged the fatwa and filed an action in the High Court praying for, among others, a declaration that the fatwa to the extent that it directs the MCMC to block social websites is contrary to s. 3(3) of the Communications and Multimedia Act 1998 which provides that nothing in the Act shall be construed as permitting the censorship of the Internet.

After some years, the High Court recently held that the fatwa only requested the Malaysian Communications and Multimedia Commission to block any website which contravene the teaching of Islam and Hukum Syarak. The fatwa does not create any law that can block any website. As such, the issue of contravention of s. 3(3) does not arise.

Furthermore, the fatwa itself is not an offence but the offences were the acts prohibited by ss. 12 and 13 of the Syariah Criminal Offences (Selangor) Enactment 1995. The fatwa merely states certain acts are within the Hukum Syarak or otherwise. The fatwa therefore cannot be said to create offences infringed the provision of s. 3(3).

Short Term Lodging – AirBnB Effect

Last year, I reported that the High Court in Verve Suites Mont’ Kiara Management Corporation v Innab Salil & 8 Ors (Kuala Lumpur High Originating Summons No: WA-22NCVC-461-09/2017) upheld the ban of short term lodging by the Management Corporation of Verve Suites Mont Kiara through its House Rules.

The matter went up to the Court of Appeal ([2019] MLJU 1496) and the Court of Appeal upheld the High Court’s decision. The Court of Appeal held, among others, that the Strata Management Act 2013 (SMA 2013) is to advance interest in communal living within a strata scheme. Therefore, it would defeat the spirit and purpose of the SMA 2013 for the proprietors such as the Defendants to use their residential units in the form of business enterprise such as short term rentals. The majority of the residents have voted against the same. The majorities’ wish has to be taken heed of, hence there could never be any violation of s. 70(5) when House Rules No. 3 was adopted.

Challenging Court’s decision in implementing electronic bidding

Last year, I reported that The Council of Auctioneers Malaysia challenged the 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). The High Court held that the issue of implementation of e-Lelong is justiciable as the decision to implement the e-Lelong system was made and translated with the issuance of Registrar’s Practice Direction No. 1 of 2018. This decision is made based on the Respondent’s public duty.

However, the High Court held that the implementation of the e-Lelong system is in accordance with law, in particular, O. 31A r. 7 of the Rules of Court 2012. Further, based on the literal interpretation of s. 259(1) and (2) of the National Land Code, the appointment of licensed auctioneer in a public auction is based on the discretion of Court and not a mandatory requirement to make such appointment in a public auction. Public auctioneers therefore cannot be said to have a right under the law to be appointed in a public auction.

In addition, the Registrar’s Practice Direction No. 1 of 2018 cannot be said to have infringed Article 5(1) of the Federal Constitution which provides that no person shall be deprived of his life or personal liberty save in accordance with law. The High Court held that the right of a person under Article 5 can be restricted by law. In any event, the applicant has no right in law in a public auction as the involvement of licensed auctioneers are based on the discretion of Court. The e-Lelong system is to increase the efficiency of public auction and to ensure transparency of the system. The Applicant had also failed to show any basis for the application of 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.

Therefore, the Applicant has failed to show that the e-Lelong system in the High Court is tainted with illegality, irrationality and procedural impropriety.

Anti-Fake News Act 2018

The Government finally repealed the Anti-Fake News Act 2018 via the Anti-Fake News (Repeal) Act 2020. Before the repeal of this law, Qnet (M) Sdn Bhd managed to obtain an Order for Removal of Publication Containing Fake News pursuant to s. 7 of the Anti-Fake News Act 2018 over certain publications on Facebook. The order was then served on Facebook Malaysia Sdn Bhd and Facebook Singapore Pte Ltd. However, Facebook took the position that the order ought to be served on Facebook, Inc, the company operating Facebook service for users in Malaysia. Qnet applied to commit Facebook Malaysia and its directors for contempt of Court but was not successful (Qnet (M) Sdn Bhd v Facebook Malaysia Sdn Bhd (Sessions Court Originating Summons No. WA-B54-37- 07/2018)). The matter is now pending at the High Court (Civil Appeal No. WA-12ANCvC-290-12/2018).

In closing

In 2020, we can expect more interesting developments in the cyberlaw and IT sphere.

– Earlier this year, it was reported that Artificial Intelligence (AI) was implemented by our Court to aid sentencing for crimes committed. It will only be used for two offences in Sabah and Sarawak courts – s.12(2) of the Dangerous Drugs Act 1952 for drug possession and Section 376 of the Penal Code for rape.

In the first case where AI was used, Magistrate Jessica Ombou Kakayun sentence Christopher Divineson Moinol to nine months’ jail after he pleaded guilty to a charge of possession of 0.16g of methamphetamine.

– In another case, the counsel of Denis P. Modili objected to the use of the AI to his charge of possession of 0.01g of methamphetamine. Counsel for the accused argued that the use of the AI will be a breach of Articles 5(1) and 8(1) of the Federal Constitution. He further argued that the court should confine to only materials presented in the court. The use of the AI is not in accordance with the law. Although the court can choose to ignore (the AI recommendation), it might influence the decision.

The learned Magistrate noted the defence’s objection and said she would proceed with AI use, which makes recommendations based on information derived from the court’s database between 2014 and 2019. The AI system proposed 10 months’ imprisonment and the accused was sentenced to 12 months’ jail, to run concurrently from his existing sentence of eight months from the date of arrest.

It is understood that an appeal was filed against the Magistrate’s decision over the sentencing and the use of the AI.

– Our Court however did not publish any information on this AI system. Based on reports, it is merely a system that recommends sentencing based on the decisions of other identical or similar cases. It is not an artificial intelligence per se but merely a software making a recommendation based on existing database. Lawyers have argued that such system should be accessible to them so that they can address any recommendation provided by the system. So far, there is no news of the Court allowing such access.

– With the outbreak of Covid-19 and the Movement Control Order, we can expect this to generate more cyber and IT related disputes in the Court. People are spending more time on the Internet and using more online services and implemented work from home policy. Interesting, the Prevention and Control of Infectious Diseases (Measures Within the Infected Local Areas) Regulations 2020, Prevention and Control of Infectious Diseases (Measures Within the Infected Local Areas) (No. 2) Regulations 2020 and Prevention and Control of Infectious Diseases (Measures Within the Infected Local Areas) (No. 3) Regulations 2020 declared e-commerce as one of the essential services that may operate during the Movement Control Order. Once the Movement Control Order is lifted, we can expect more and businesses adopting e-delivery of their businesses. This would result in development and licensing of more software which would definitely cause disputes, especially, involving the quality of the development and late delivery of software.

– Courts in the world are also commencing their virtual Court to ensure that the administrative of justice is not heavily disrupted by Covid-19. Our Courts have also adopted virtual and video conferencing hearings. Court documents will soon need to be crafted in a manner which suits online conferencing or allows a Judge to peruse it seamlessly, like reading a website. Interestingly, in Blackfriars Ltd, Re [2020] EWHC 845 (Ch), the High Court refused an adjournment based on the Covid-19 pandemic and directed that the trial proceed via video conferencing and electronic bundles.

First published on Digital News Asia on 14 April 2020 and 15 April 2020. This republished article has been amended to include further updates.

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