Hail to the Judge

On April 10 1995, a Malaysian lawyer was granted an ex parte order by the country’s High Court, compelling a company to register a block of shares owned by his client. The kind of thing that happens all the time. But this was no routine case. This was different. It ended with Malaysia’s supreme court criticizing the country’s appeal court in terms which were far from judicial.

The case in question was the Ayer Molek case. And it was the culmination of a series of court decisions in commercial cases which cases caused many of Malaysia’s leading lawyers to raise doubts about Malaysia’s legal system. Because of the cases, Malaysians from all walks of life have openly started to question the independence of their judiciary. The Ayer Molek case concerned court action brought to force the rectification of Ayer Molek’s share register after the purchase by Insas and Megapolitan, two related investment houses in 1994. It produced very sharp criticisms from the Court of Appeal about the conduct of one plaintiff lawyer, VK Lingham of VK Lingham & Co, accusing him of illicit manoeuvring to put the case before a high court judge of his choice.In the High Court on April 10, Lingham was granted an ex parte order designed to compel Ayer Molek to register the 30% block of shares bought by Insas and Megapolitan. Judge Azmel Mamoor, who sits in the Special Appellate Division of the High Court, made the order which directed Ayer Molek’s officers to register the shares within 48 hours or face imprisonment.Ayer Molek applied to have the order revoked on April 13. Azmel agreed to hear their request on April 27 but refused a request to stay the injunction pending that hearing. Ayer Molek reluctantly registered Insas’s and Megapolitan’s shares on April 14 and took the matter to the Court of Appeal four days later. Ayer Molek was seeking a declaration that the High Court had been unjust and asked the Court of Appeal to reverse the effects of a registration that had been made under duress.At the hearing, the Court of Appeal was “using its inherent power to stop further injustice from occurring”, gave Ayer Molek an order to stop Insas and Megapolitan exercising any rights over their shares. In its written judgment, it called the the High Court’s treatment of the case “an injustice perpetrated by a court of law.” The court of Appeal also strongly criticized Lingham for taking a commercial matter, the registration of shares, to a division of the High Court which should only deal with administrative law cases. It called him an “unethical lawyer” and said that his conduct would give “right-minded people the impression that some litigants are able to choose the judge before whom they wish to appear”.

Insas and Megapolitan appealed to the Federal Court, which held a hearing on August 1. The Federal Court overturned the Court of Appeal’s judgment and censured the lower court for its comments. Itt accused the Court of Appeal of itself “bringing the administration of justice into disrepute” by “departing from sobriety” and “going off on a frolic of its own”. The Federal Court said that, by discontinuing the High Court action, Ayer Molek could “be deemed to have conceded the ex parte order”. It expunged the sections of the Court of Appeal's judgment which criticized Lingham. On September 8, the share sales to Insas and Megapolitan, and PFA Nominees, were finally cancelled and police investigations into the whole affair ceased. All law suits were withdrawn a week later.

Something rotten
Although its’ comments were overturned by the Federal Court, the Court of Appeal’s comments brought the Ayer Molek case to the attention of the rest of Malaysia’s legal profession. One lawyer notes: “The Court of Appeal made it clear that it thought something funny had been going on in the High Court in that case. That was why they put in a Shakespeare quote about there being ‘something rotten in the State of Denmark’. It was a reference to the building the High Court is in, which is called Denmark House.” He would like to know how Lingham managed to “overcome two hurdles that are supposed to make it impossible for this misfiling to happen. First, you have to get the registry to admit the case in the wrong division. Then you have to persuade the judge himself to let it stay. The fact that the judge agreed to entertain this case really is a surprise”.Another lawyer says: “Lingham’s action was like filing a commercial matter in the family court. It should have made him look incredibly stupid. But, of course, it turned out that it went super well.”Yet another lawyer found the terms of the ex parte order that Lingham obtained highly irregular: “First, it is literally unheard of to be given a compulsion order which forces a company to register your shares except where you have tried everything else and it is your last resort. Here, Insas and Megapolitan, the two shareholders, who had not done anything at all about their shares for six months, suddenly were able to go to court and use this last resort compulsion procedure. What I do not understand is how they could get a judge to threaten Ayer Molek with contempt of court before Ayer Molek had actually refused to do anything.”Another says: “At Lingham’s request, this judge even added mandatory imprisonment to the ex parte order. And then he refused to hear Ayer Molek’s case for two weeks or to suspend the order, although such orders only have life-span of two weeks.”

Privileged scheduling

There are various aspects of the way that the Federal Court dealt with Ayer Molek that also concern Malaysia’s lawyers. “The case made it into the Federal Court at a startling speed,” says one. “I am appealing the same sort of order at the moment. I expect that to get it into the Federal Court will take at least six months. In Ayer Molek, it took Lingham four days.”That sort of privileged scheduling, is usually preserved for emergency situations: “In the textbooks, the example of an emergency situation they give is where a buildozer is already outside your home ready to start knocking it down. You should not be able to get an expedited appeal in a case about shares.”Other lawyers feel the tone of the Federal Court judgment, which was delivered by Chief Justice Eusoff, and especially its criticisms of the Court of Appeal, are too personal. One says that, in the Ayer Molek judgment, Eusoff makes several departures from his established style writing: “Eusoff certainly has an identifiable style to his judgments.Normally, and unlike here, he writes in a very staccato form, using short sentences and without making many references to other cases as authorities. He certainly doesn’t quote big chunks of text from other cases in the way that he did in this case. At least a quarter of this judgment was taken up with quotes from other cases. Normally it would be at most a couple of carefully chosen, very brief quotes, if a point needs to be made clear.”“The lawyer also points out that the judgment was written in the 11 days between August 12, when the judgment was delivered, and the hearing on August 1. “My own experience,” he says, “is that it takes the Federal Court at least 21 to 30 days to produce a judgment.”The Federal Court’s decision to expunge parts of the Court of Appeal’s judgment was fortuitous for Lingham: “The Bar Council was going to order Lingham to account for his behaviour in Ayer Molek, using the Court of Appeal’s comments about him as basis, if necessary, on which to discipline him. But then, on the basis of an Indian authority which Lingham had found, the Federal Court expunged the important sections of the Court of Appeal’s judgment, cutting the ground from under the Bar Council’s feet.”

More Concerns

In the aftermath of Ayer Molek, concerns about Lingham’s tactics have arisen again. This time in the dispute between the Malaysia Borneo Finance Holdings (MBFH) and the East Asiatic Company (EAC). Again, there were a number of procedural peculiarities which lead Param Cumuraswamy, United Nations Special Rapporteur on the Independence of Judges and Lawyers, to say that the case looks like “a very obvious, perhaps even glaring, example of judge-choosing”, although he stresses that he has not finished his investigation.This case concerned a claim for breach of contract for the sale of land that was bought from EAC on March 8 1995 by MBfH for M$115 million ($46 million), paid for by 72,424,058 MBfH shares. A second agreement prevented EAC from selling the shares before August 31, and he gave three MBfH subsidiaries the right to arrange any sale once one was allowed.On may 6 MBfH started an action in the Civil Division of the High Court, alleging EAC had broken its contract by not providing vacant possession of the land. Delays in the High Court meant the main trial could not be heard for at least six months, and so MBfH applied for a pre-trial injunction to stop EAC from selling the shares after August 31.A hearing on MBfH’s application took place in front of Judge Vohrah on June 21 and he later said that he would announce his decision on August 23.But, on August 11, the subsidiaries, represented by Lingham, also started court proceedings against EAC, aimed at stopping EAC from selling the shares after August 31. They issued an Originating Summons in Court No 5 of the Commercial Division of the High Court (Judge Malek), seeking a declaration that EAC’s shares were “encumbered by the dispute between MBfH and EAC”. The following day, the subsidiaries started a second, identical, set of proceedings against EAC in Court No 2 of the Commercial Division (Judge Low Hop Bing).On August 14, the Court No 2 proceedings were served on EAC. On the same day, the subsidiaries filed an ex parte notice of discontinuance of their Court No 5 proceedings.EAC responded by filing two identical consolidation applications in Vohrah’s and Low Hop’s courts, requesting that the subsidiaries’ action be added to the first action before Vohrah. At this point, Cheang and Ariff stepped down as MBfH’s lawyers, to be replaced by T H Su & Co.Low Hop Bing held a hearing on the consolidation application on August 18. He granted EAC’s request to adjourn the matter until after Vohrah’s August 23 decision. Vohrah also held a hearing on the consolidation request and asked Lingham why the first proceedings he had started (in Court No 5) has been discontinued. This was the first EAC knew of the discontinued proceedings. Lingham replied that the Court No 5 summons was withdrawn “because it had typing mistakes”.On August 23, Vohrah rejected MBfH’s injunction application and, the following day, asked in any party objected to his hearing both cases. Only Lingham did, insisting that the subsidiaries’ case should remain before Low Hop Bing. Vohrah then discharged himself from the main trial and instructed the parties to consult Judge Azmel Mamoor, Chief Judge of the High Court, on how they should proceed. Azmel said that they should talk to Chief Justice Eusoff. An hour after Vohrah’s hearing, Low Hop Bing threw out EAC’s consolidation request, announcing that the subsidiaries’ case would remain before him.After Eusoff informed the parties on August 25 that he could not see them until September 6, the dispute was settled. The shares were sold on August 30 for M$115 million.

Procedural gymnastics

A lawyer, who acted for EAC, says that the “procedural gymnastics” in which the subsidiaries engaged during that dispute “raise questions that cry for answers”. A lawyer close to Cheang & Ariff says that the firm stepped down because “it disagreed with what was being done by the legal team working for the subsidiaries”.

He points to the sequence of the two identical legal actions started in two different courts, one of which was then discontinued, as proof that the subsidiaries were trying to get their case before one particular judge, namely Judge Low Hop Bing: “Lingham told Judge Vohrah on August 19 that the action they had started in Court No 5, on August 11, had to be withdrawn on August 14 because of typing error. That simply cannot be right. If you compare the main document from Court No 5, which is supposed to have contained so many typing errors that it had to be withdrawn, with the main document put into Court No 2 (Low Hop Bing’s court), you will see that they are absolutely no differences between them. And they are only two inconsequential differences between the supporting affidavits.”“The irresistible inference,” Thomas says, “has to be that they wanted Low Hop Bing, and only Low Hop Bing, to hear their case. When everyone else involved agreed that all the actions should be brought together in Judge Vohrah’s court, it was Lingham who insisted the subsidiaries’ case should stay with Low Hop Bing”.

Those are excerpts in International Commercial Litigation magazine in its feature article entitled Malaysia justice on trial in its 11 November, 2005 issue. They are among the words complained of by Lingham as defamatory of him in his action against the magazine. On September 1, 2006, his suit was dismissed by High Court Judge, Dato’ Mohd Hishamudin B Yunus despite of non-appearance and submission to the court’s jurisdiction by the magazine.

In dismissing the suit, his Lordship found that Lingham’s pleading is defective as the article is a long article, the plaintiff, besides pleading the whole article, should have also, in addition, pleaded the particular words or phrases or sentences or paragraphs in the article which, when read in the context of the whole article, are defamatory to him. Instead, in the present case, the plaintiff merely pleaded the whole article.

In addition, Lingham failed to plead any legal innuendo. Thus he is relying on inferences to be made from certain words or sentences or paragraphs in the article. But he must plead the words or phrases or sentences or paragraphs on which he is inviting the Court to make the inferences suggested by him. It is not the duty of the Court on its own volition to speculate and to pick out a case for the plaintiff.

Second, the plaintiff alleges that the caricature in the cover illustration of the magazine supports his ‘habitual corruption’ allegation as the caricature, as understood by the plaintiff, depicts a Malaysian judge, a Malaysian flag and a shady individual in a rain coat. In his judgment, his Lordship found that such an interpretation or understanding of the caricature is baseless and far-fetched - if not absurd.

The third and more important ground in dismissing the suit, his Lordship held that premised on a common law principle established as early as 1775 that a person cannot bring an action based on his own wrong, the plaintiff is guilty of wrongdoings, namely, abusing and manipulating the process of court so as to cause injustice to the defendants before the High Court in the Ayer Molek case is clear from the judgment of the Court of Appeal in the case, which is the main subject of the article. The judgment of the Court of Appeal is referred to by the plaintiff in his evidence. It is, according ti the Judge, the plaintiff’s own wrongful conduct in the Ayer Molek’s case that led to the publication of the article. Despite Lingham's argument that the judgment of the Court of Appeal was no longer relevant as the material portions that contain the adverse remarks had been ‘expunged’ by the ‘judgment’ of the ‘Federal Court’ , Justice Hishamudin was not persuaded by the argument. In his judgment, he found that the so-called ‘Federal Court’ was not a legally constituted court under the law and the Constitution of this country. The panel of judges that participated in the proceeding cannot be called or recognized as the Federal Court at all. It was merely a panel of judges calling itself or rather purporting to be the ‘Federal Court’.His reasoning was anchored solely by the law of the land. Section 74 of the Courts of Judicature Act, 1964, provides that the minimum number of judges in a Federal Court panel has to be three legally competent judges. However, the panel of three judges of the so-called ‘Federal Court’ that sat in the Ayer Molek case to hear the stay and leave application comprised only two legally competent judges, namely, YAA Tun Hj.Mohd Eusoff Bin Chin (the then Chief Justice of the Federal Court) and YA Dato’ (Dr.) Zakaria Bin Mohd Yatim (then a Judge of the Court of Appeal): the third judge in the panel, namely, YA Dato’ Pajan Singh Gill was not legally competent to sit on a Federal Court panel as he was then only a High Court Judge. In addition, he held that according to Article 122 (2) of the Federal Constitution only a Judge of the Court of Appeal may be nominated by the Chief Justices to sit as a Judge of the Federal Court. The Chief Justice cannot nominate a High Court Judge to sit on the Federal Court.

In his conclusion, Justice Hishamudin says the inherent defect in the panel was two-fold. First, there were only two legally competent judges in the panel. Second, a legally incompetent judge had been invited to sit on the panel. The composition of the panel and the sitting was therefore a violation of section 74 of the Courts of Judicature Act and also a violation of Article 122 (2) of the Federal Constitution by the three Judges that I have named. The panel was therefore unlawful and unconstitutional. An unlawful and unconstitutional panel of judges cannot stay, criticize or expunge the judgment of a lawfully constituted Court of Appeal. The ‘order’ or ‘judgment’ of the panel is unlawful, invalid and is of no legal effect. And in this judgment I shall just ignore the purported ‘order’ or purported ‘judgment’ of the unlawful panel. Indeed, it would be fair to say that the panel was prima facie in contempt of the Court of Appeal (a lawfully constituted court) particularly considering that its so-called ‘judgment’ contains harsh and unwarranted criticism of the Judges of the Court of Appeal even to the extent of accusing the learned Judges of the Court of Appeal of being bias and taking sides. It would be fair to infer that the panel of senior judges headed by no less a personality as the then Chief Justice himself must be presumed to be aware of the provisions of section 74 of the Courts of Judicature Act and Article 122 (2) of the Federal Constitution.Therefore, the Judge held that the judgment of the Court of Appeal in the Ayer Molek case is still wholly intact and is still a valid and binding judgment and he is am entitled - indeed, is duty bound – to take cognizane of the judgment in deciding on the Lingham’s.

In August 1995, in its complaint against Lingham, the Bar Council noted that the panel of the Federal Court that heard the case was not composed in accordance with Article 122 (2) of the Federal Constitution. The Disciplinary Board dismissed the complaint of the Bar Council and the Bar Council appealed to the High Court, presided by three High Court Judges and held that since the entire complaint by the Bar Council was based on the criticisms of Dato’ V. Kanagalingam in the Court of Appeal judgment, which was ‘expunged’ by the ‘Federal Court’ the substratum and basis of the Bar Council’s complaint no longer existed. In this case cited, Hashim Yusoff J (as he then was) said:

"Tetapi peguam perayu masih cuba menongkat tindakan perayu dengan menghujahkan bahawa keputusan Mahkamah Persekutuan itu masih boleh disoalkan kerana korum Mahkamah Persekutuan berkenaan dikatakan tidak betul... Walau apa pun, sesuatu keputusan Mahkamah Perseketuan adalah mengikati dan menaklukki segala mahkamah yang tertakluk kepadanya termasuk Mahkamah Tinggi di bawah doktrin “Stare Decisis”. Bukan menjadi tugas kami untuk menyoal keesahan keputusan tersebut dan memang bukan tujuan kami untuk berbuat demikian."

Eleven years came and went, and not one judge challenged what the Bar Council said. On Sept 1, 2006, one judge finally answered the question that was posed 11 years ago. In delivering the judgment the Judge seems to fit snugly into the group where there is no in between. Your are either honest or a liar.

When he delivered the judgment, he knew that he was trampling on a judicial and political minefield. He also knew that by commenting on the make-up of the Federal Court panel in the controversial case, he could be opening himself up to ridicule and attack from his more senior brothers on the Bench. Yet he chose this path. Why? Because for some people, choices are easy. Right or wrong. Black or white. Yes or no.

As Malaysians we should celebrate the fact that we still have judges who treat the Constitution as a sacred document and who believe that the judiciary constitutes the life breath of the democratic way of life and the supremacy of law.

As they say : the judiciary should not only be independent, but must be seen to be independent