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COMPETITION LAW AND ANTITRUST
Undertaking given by enterprises to annul price fixing arrangement
Thirteen enterprises were investigated by the Malaysia Competition Commission for fixing the price of sand in the region of Kelantan. An undertaking was signed by these enterprises to rescind the price fixing arrangement and abstain from any other anti-competitive activities.
For further information regarding competition and antitrust law matters, please contact
Dato' Johari Razak
jorazak@shearndelamore.com
K Shanti Mogan
shanti@shearndelamore.com
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DISPUTE RESOLUTION
Dr Kok Choong Seng & Anor v Soo Cheng Lin & Another Appeal [2017] 1 LNS 1452
The Federal Court had the opportunity to examine whether the doctrine of non-delegable duty of care expounded in Woodland v Swimming Teachers Association and others [2014] AC 537 applies in Malaysia and, if yes, whether the doctrine can be applied to private hospitals to hold them liable for tortious conduct and clinical negligence of medical doctors.
The Federal Court held that the doctrine of non-delegable duty would be applied in Malaysia but reiterated the proviso in Woodland that such duties should only be imposed where it is fair, just and reasonable to do so based on the particular circumstances of the case.
Interestingly, the Federal Court found that the private hospital in this case (the “hospital”) merely provided the relevant facilities required for the admission and operation of the patient (the “plaintiff”) and, hence, the hospital had not assumed a positive duty to protect the plaintiff from injury. Therefore, the doctrine of non-delegable duty of care was not applicable to the hospital based on the facts.
The Federal Court also rejected the argument that the hospital was vicariously liable for the negligence of the doctor (the “tortfeasor”) on the ground that the tortfeasor was merely an independent contractor. The fact that the tortfeasor charged consultancy and operation fees for his patients and received no salary from the hospital supported the argument that he was merely an independent contractor.
CIMB Bank Bhd v Ambank (M) Bhd & Ors [2017] 9 CLJ 145
In this case, the Federal Court examined whether the chargee (“Ambank”) who acquired its interest from a forger (“Wong”) is entitled to protection under section 340(3) of the National Land Code 1965 (“NLC”).
As the Federal Court had previously decided in the case of Tan Ying Hong v Tan Sian San & Ors [2010] 2 CLJ 269 that the bona fide of the immediate purchaser will not offer a shield of indefeasibility, overruling an earlier Federal Court decision of Adorna Properties Sdn Bhd v Boonsom Boonyanit [2001] 2 CLJ 133.
In this case, the Chins were the original owners whom executed a charge over a piece of land (“property”) in favour of Southern Bank Berhad. The banking business of Southern Bank Berhad was vested with CIMB. Wong forged the discharge of CIMB’s charge and charged the property in favour of Ambank to finance the purchase of the property.
Delivering the majority judgment, Md Raus Sharif CJ held that Ambank was a subsequent purchaser as it derived the interest as chargee of the property from Wong and not directly from CIMB. In addition, CIMB’s charge was discharged before Wong was registered as the proprietor of the property. As a subsequent purchaser, Ambank was protected by the proviso of section 340(3) of the NLC.
Jeffrey Tan FCJ, however, dissented on the ground that Wong was never an immediate purchaser. A purchaser must necessarily mean a person or body in good faith and for valuable consideration acquires title to, or any interest in land (section 5 of the NLC). Since Wong was only a forger, he did not purchase the property in good faith and therefore did not come under the definition of “purchaser” under section 5 of the NLC. As a consequence, interest of Ambank was immediate and defeasible.
For further information regarding dispute resolution matters, please contact
Datin Jeyanthini Kannaperan
jeyanthini@shearndelamore.com
Robert Lazar
rlazar@shearndelamore.com
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INTELLECTUAL PROPERTY
La Kaffa International Co Ltd v Loob Holdings Sdn Bhd and another case [2017] MLJU 1243
Both La Kaffa International Co Ltd (“La Kaffa”) and Loob Holdings Sdn Bhd had entered into a Regional Exclusive Distribution Cooperation Agreement (“REDCA”) wherein La Kaffa agreed for Loob to be the Master Franchisee for the bubble-tea franchise (“Chatime Franchise”) in Malaysia.
Subsequently, both parties entered into a Regional Exclusive Representation Agreement (“RERA”) which superseded the REDCA. La Kaffa then terminated the RERA and, upon termination, Loob started its Tealive franchise business (“Tealive Franchise”).
La Kaffa then filed an application for an interim injunction to restrain Loob from, amongst others, carrying on a business which was identical or similar to the Chatime Franchise business. The High Court dismissed the injunction and held that damages were an adequate remedy for La Kaffa.
The High Court also held that the balance of convenience lay heavily against the granting of the interim restraining injunction because of the higher risk of injustice to Loob Holding and various third parties, namely Loob’s 161 Tealive stores and sub franchisees would have to shut down immediately and the livelihood of about 800 employees of Loob and 161 Tealive Franchisees will be joepardised.
Further, the High Court found that La Kaffa had acted inequitably for various reasons, including serving an award on Loob for being the “best international partner” after having served a Notice of Arbitration on Loob and by serving a termination notice on Loob by way of a subterfuge.
This decision demonstrates that, whilst the Malaysian Franchise Act 1998 contains a non-compete provision that prevents a franchisee from competing with the franchised business for two years after the end of the franchise relationship, the courts in deciding whether to grant an interim injunction to enforce such restrictive covenants may consider whether such an injunction may cause the franchisee and relevant third parties to suffer irreparable prejudice.
For further information regarding intellectual property law matters, please contact
Karen Abraham
karen@shearndelamore.com
Indran Shanmuganathan
indran@shearndelamore.com
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TAX & REVENUE
Income tax
The Income Tax (Exemption) (No 9) Order 2017 (“Exemption Order”) was gazetted on 24 October 2017 and is deemed to have come into operation on 6 September 2017.
By way of background, due to an amendment to section 15A of the Income Tax Act 1967 (“ITA”), income of a non-resident person derived from Malaysia in relation to services referred to section 4A(i) of the ITA and technical advice, assistance or services referred to in section 4A(ii) of the ITA which are performed outside Malaysia would also be subject to withholding tax with effect from 17 January 2017.
However, under the Exemption Order, such income would be exempt from tax with effect from 6 September 2017 so that only services which are performed in Malaysia would be subject to withholding tax.
The Inland Revenue Board of Malaysia (“IRB”) has issued an amendment to the following technical guideline on 25 September 2017:
- Garis Panduan Potongan Bagi Perbelanjaan Berhubung Dengan Yuran Kesetiausahaan Dan Yuran Pemfailan Cukai (available in Malay language only)
The IRB has also issued a new public ruling on Withholding Tax On Income Of A Non-Resident Public Entertainer (Public Ruling No 6/2017) on 12 October 2017.
Goods and Services Tax (“GST”)
The revised versions of the following Industry Guides have been published on the Royal Malaysian Customs Department’s GST website:
- Pawnbroking (revised as at 27 September 2017); and
- Travel Industry (revised as at 17 October 2017).
2018 BUDGET
The 2018 Budget was tabled in Parliament on 27 October 2017. More details on the same will be set out in the next issue of our Newsletter.
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