Krishnan Rajan v Bank Negara Malaysia [HCM]

www.ipsofactoJ.com/highcourt/index.htm [2003] Part 3 Case 11 [HCM]

ABDUL MALIK ISHAK J

20 DECEMBER 2002

LET ALL PARTIES concerned attend before the Judge in chambers on the hearing of an application on the part of the Plaintiff abovenamed for an order that the following question or issue raised by the pleadings in this action be tried as a preliminary issue before the trial of the other questions or issues in this action pursuant to Ord.33 r 2 of the Rules of the High Court 1980 and that until the determination of the preliminary issue all further proceedings in this action be stayed AND THAT such further or other directions be given for the trial of the said preliminary issue as may be necessary AND THAT the costs for this application be costs in the cause.

The above-mentioned question or issue is the following:

UPON the facts pleaded in paragraphs 17, 18, 19, 20 and 21 of the Statement of Claim namely,

17.	The First Defendant being a body established by statute and charge(d) under the Law with the smooth and fair and efficient functioning of the Banking system and industry through a sound financial structure for the country is under a statutory duty to ensure the proper and fair administration by any Bank under its jurisdiction with member or members of the public. It has, amongst its many business(es), a duty as described under Section 30 (1) (mmmm) of the Central Bank of Malaysia Act 1958 ('the said Act').
18.	Pursuant to the said Act the First Defendant issued a set of guidelines known as the Biro Maklumat Cek Operational Framework and Reporting Guidelines ('BMC Guidelines') but in breach of its duty under the said Act the said BMC Guidelines provides for a mandatory procedure to blacklist by the First Defendant on a global concept against a member of the public.
19.	The said BMC Guidelines are ultra vires the said Act and is made in excess of the powers of the First Defendant under the (said) Act.
20.	Further it is the contention of the Plaintiff that notwithstanding anything stated in any legislation any powers which the First Defendant may have and especially in relation to any powers that may be used to the detriment of the Plaintiff or any other member of the public when exercised has to be exercised judiciously and in accordance with the principles of natural justice.
21.	It is also the contention of the Plaintiff that such powers as blacklisting a member of the public should in any case be declared illegal as the same when exercised is highly draconian, onerous, inhuman and against all tenets of justice.

and paragraphs 21A and 21B of the Defence of the First Defendant, namely,

21A.	The First Defendant admits paragraph 17 of the Amended Statement of Claim.
21B.	The First Defendant admits that it issued the said BMC Guidelines as alleged in paragraph 18 of the Amended Statement of Claim but denies the rest of the paragraphs 18, 19, 20, 21 and 22 of the Amended Statement of Claim. The First Defendant will rely on the said Act and the Banking And Financial Institutions Act, 1989 (Act 372) for its position that the BMC Guidelines are lawful and valid.

WHETHER the 'Biro Maklumat Cek Operational Framework and Reporting Guidelines' issued by the First Defendant herein in February 1999 is ultra vires and unlawful under the provisions of Section 30(1) (mmmm) of the Central Bank of Malaysia Act 1958 or any other Laws of Malaysia.

The grounds of this application are that the trial of that preliminary issue will result in a substantial saving of time and expenditure with respect to the trial of the action and is more convenient for all parties concerned.

The Court may order any question or issue arising in a cause or matter, whether of fact or law or partly of fact and partly of law, and whether raised by the pleadings or otherwise, to be tried before, at or after the trial of the cause or matter, and may give directions as to the manner in which the question or issue shall be stated.

Thirdly, we are in full agreement with counsel with respect to the powers of the court under Ord.33 r 2 of the RSC. That rule expressly provides that the court may order any question or issue arising in a cause or matter, whether of fact or law or partly of fact and partly of law to be tried before at or after the trial of the cause or matter. It would be contrary to the express terms of that rule for a court to hold that it has no power to state a preliminary point even if it involves having to determine some issues of fact in order to determine the point of law. An action may involve many disputes on the facts as well as on the law, some more complex than others. It may be that the determination of a preliminary point in one way may make it unnecessary for other more complex issues of fact or law to be decided, thus resulting in a saving of time and expense of a protracted trial on those issues.

In Everett v Ribbands [1952] 2 QB 198, Romer LJ began his judgment by stating that the point of law before the court should have been set down as a preliminary point before the hearing as the action was a substantial one and estimated to last three days. Similarly in Palaniappa Chettiar v Sithambaram Chettiar [1981] 1 MLJ 186, the judge adopted the same approach. In that case, there was a dispute amongst the children of the deceased with regard to the validity of his will. PC, a named beneficiary, applied for probate in July 1969 in Malaysia. SC, a disinherited son, commenced an action in September 1969 in India against PC and other beneficiaries under the will in connection with the properties of the deceased in India as well as in Malaysia. The action was settled in June 1972 by a consent order under which SC was given a share in the deceased's estate. In 1976, PC brought another action to have the consent order declared null and void. The action was dismissed in June 1978. PC's appeal to the High Court of Madras was also dismissed. SC then applied in the Malaysian action for an order that a preliminary issue as to whether PC was estopped per rem judicatam from contending that the will was valid, or applying for probate, be tried. The judge allowed the application on the ground that if the point was res judicata, then it would not be necessary to try the other issues, i.e. the deceased's capacity to execute the will, his sanity and undue influence, thus avoiding the necessity of having to obtain evidence from India on those issues, which could be expensive and time-consuming. On appeal, the Federal Court refused to interfere with the judge's decision having regard to the background of the case.

Taking all the points made by counsel for the appellants, we may state as a general rule that the court will not exercise its power under Ord.33 r 2 to order a preliminary point of law to be tried, whether or not that point involves the prior determination of factual disputes affecting that point, unless the trial of that issue will result in a substantial saving of time and expenditure in respect of the trial of the action as a whole (including any counterclaim) .It is a matter of discretion for the court to exercise in the circumstances of each case, bearing in mind that 'Preliminary points of law too often are treacherous short cuts. Their price can be .... delay, anxiety and expense' (per Lord Scarman in Tilling v Whiteman [1979] 2 WLR 401; [1979] 1 All ER 737 at p 410).

In our view, Chua J applied the correct principle and took into account the relevant considerations in exercising his discretion in dismissing the appellants' application. We agreed with him that, having regard to the circumstances, this was not a proper case for an order for the trial of a preliminary issue. The appeal was accordingly dismissed with costs.

Ideally, the procedure for the defendant to adopt was to plead the issue in their statement of defence under Ord.18 r 11 of the RHC 1980. He could then follow up by an application under Ord.33 r 2 and if it appears to the court that the decision on the preliminary issue substantially disposes of the case or matter or renders the trial of the cause or matter unnecessary, the court may then act under Ord.33 r 5 to dismiss the plaintiff's' action (see Supreme Court Practice 1985 18/11/1 at p 276). Under Ord.33 r 2 however, the defendant need not plead the issue of law in his statement of defence and a formal application need not be made.

It is clear to me firstly, that the issue of law raised in this instance would not require the ascertainment of any facts beyond those that appear in the pleadings and secondly that a decision on the issue if favourable to the defence would render the trial unnecessary which could only lead to much savings and costs. I therefore fail to see why the defendant should not be allowed to proceed with their application.

As stated by Lord Denning M.R. in Carl-Zeiss-Stiftung v Herbert Smith [1968] 2 All LR 1002 at p 1004:

The true rule was stated by Romer LJ in Everett v Ribbands [1952] 2QB 198.

Where there is a point of law which, if decided in one way, is going to be decisive of the litigation, advantage ought to be taken of the facilities afforded by the rules of court to have it disposed of at the close of pleadings or very shortly afterwards.

I have always understood such to be the practice.

and the court certainly has the wide discretion to order the preliminary issue as framed to be tried even before the trial of the cause or matter. The preliminary issue as framed can conveniently be said to be 'partly of fact and partly of law' and it is not a fictitious question. All the interested parties are present and it would be ideal to adjudicate on the preliminary issue as framed. According to Bright v Tyndall [1876] 4 Ch D 189 and Sumner v William Hendeson [1963] 1 WLR 823, CA; [1963] 2 All ER 712, CA, the court will decline to hear fictitious questions where the events had not happened. It must be borne in mind that 'any question or issue' that calls for determination need not arise from the pleadings but it may surface through some other means and this is made possible by the existence of the phrase 'or otherwise' that appears in Ord.33 r 2 of the RHC. Fortunately, the preliminary issue as framed arose from the pleadings as well as through the documents that were referred to by the parties in the course of their arduous submissions. The preliminary issue as framed was not only bandied around by the parties during their submissions but it was also alluded to by James Foong J in his written judgment as adverted to earlier.

Reverting to the case of Bright v Tyndall, supra, Malins VC was confronted with a special case to interpret the will of Mr. Tyndall, a well known banker at Bristol who died leaving a very large fortune and six daughters who survived him and who were all alive at the material time. The property of Mr. Tyndall was to be distributed in this way: 'After the death of his daughters, the share of each daughter is given to the sons of the daughters who shall attain twenty-one, omitting the usual provision that the property shall vest in daughters who attain twenty-one or marry under that age'. A question was posed under a special case for his Lordship to decide: Whether in the event of a daughter having daughters who attain twenty-one, and do not marry before, do they take a vested interest? Malins VC declined to decide the question as he was of the view that it would be injurious to the parties to decide the question until the events actually happened which would give rise to the question. At p 197 of the report, Malins VC had this to say:

Now, the inconvenience of deciding such cases as this by anticipation is manifest. Suppose I were to come to the conclusion that no daughter that does not marry under twenty-one can take an interest, then I have taken away from the daughter, if such an event should arise, the chance of making the best she can of such a case when it does arise; and I have by anticipation made a declaration that she does not take an interest when there is no occasion for doing so whatever. The only reason suggested to me is that these young ladies when they marry ought to know whether the sons and daughters are to take, or whether only the daughters of a particular class are to take, viz, those who marry under twenty-one. I cannot regard that as a circumstance which renders it absolutely necessary that this question should now be decided. That the court will not) in all cases, decide such questions as a matter of course is most formally decided in Garlicky Lawson 10 Hare, pp xiv by Vice Chancellor Wood, the same learned judge who decided Bell v Cade 2 J & H 122.

and the headnote merits reproduction where it states that:

Upon a special case to obtain a decision whether persons not in esse would be entitled, under certain circumstances which might never arise, to a share in property, the court declined to decide the question, being of opinion that it would be injurious to the parties to have that decision until the events should happen which would give rise to the question.

Where the interests of the parties to a special case are not of such a nature as to give the court jurisdiction to decide the questions, the court will not feel itself bound to decide upon a fictitious interest created for the express purpose of obtaining a decision.

Factually speaking the facts in Bright v Tyndall, supra can readily be distinguished. There the special case was posed when the events had not occurred as yet. Here, on the other hand, the preliminary issue as framed arose from a set of facts where the events had occurred. There the Act of Sir George Turner contained the following provision:

Provided, also, that if, upon the hearing of such special case as aforesaid, the court shall be of opinion that the questions raised thereby, or any of them, cannot properly be decided upon such case, the said court may refuse to decide the same.

Here, Ord.33 r 2 of the RHC do not contain such a provision. However, Ord.33 r 5 of the RHC makes for an interesting reading; it states as follows:

If it appears to the Court that the decision of any question or issue arising in a cause or matter and tried separately from the cause or matter substantially disposes of the cause or matter or renders the trial of the cause or matter unnecessary, it may dismiss the cause or matter or make such other order or give such judgment therein as may be just.

In Sumner v William Henderson & Sons Ltd, supra, a special case was submitted by the parties and the court had to decide the following preliminary questions of law for its opinion:

(1)	whether the defendants as employers could be liable for any negligence of the skilled and competent persons who had supervised and carried out the specialized work involved in the construction of the building which required skill and knowledge not possessed by the defendants; and
(2)	whether they could be held liable for any negligence by a reputable manufacturer of the cable.

Sumner claimed damages under the Fatal Accidents Act 1846 to 1959, in respect of the death of his wife who was employed by the defendants as restaurant supervisor in the defendants' store. Fire broke out in that store and his wife was asphyxiated by smoke in the course other employment. The cause of the fire was not agreed upon by the parties. Phillimore J (see [1963] 1 All ER 408) determined the questions of law raised by the special case and he held that the defendants would be liable in law for any negligence of certain contractors and electrical engineers. The defendants appealed and the Court of Appeal (Sellers, Donovan and Russell LJJ) allowed the appeal and Sellers LJ delivering the judgment of the Court of Appeal had this to say (see pp 713-714 of the report):

In the present case no facts have been agreed and what the outcome of the evidence will be is most uncertain. It does not seem to us in the interests of either party that a hypothetical decision should be reached now. It might tie one or other of the parties to a decision which the facts might reveal as erroneous. Time is running out against possible claims against other parties) either directly by the plaintiff or as claims over for indemnity by the defendants, and we do not think that a decision now on the matters raised will satisfactorily relieve the parties from protecting themselves accordingly.

In our view the procedure by this special case was wrong; no judgment should have been given under it and it cannot properly be further pursued. We therefore, on this ground only, set aside the judgment given, so that the parties are free to argue the legal position on established facts, and we proceed no further with this appeal.

Now, the marked difference between the present case and that of Sumner would be this. Here Fulcrum had extended the loan under the facility agreement to the defendants and the defendants agreed that they must pay the loan. The preliminary issue as framed arose out of the submissions of the parties and it was agreed upon by Madam DR John who acted for the defendants and the same preliminary issue was alluded to by James Foong J in his written judgment. The fact of borrowing was an established fact and this was never denied by the defendants. Whereas in Sumner's case, the cause of the fire was hotly disputed by the parties and Sellers LJ was right in allowing the appeal by the defendants because the preliminary questions of law as framed would shackle the parties and prevent them from arguing 'the legal position on established facts'.

In Radstock Co-operative and Industrial Society Ltd v Norton-Radstock Urban District Council [1968] 1 Ch D 605, the Court of Appeal (Harman, Russell and Sachs LJJ) while deploring the method of adjudicating the case on a preliminary point upheld the decision of the trial judge and dismissed the appeal. Harman LJ, for instance, writing a separate judgment, at p 624 of the report, had this to say:

The defendants demurred to that claim, and an order was made on July 15, 1966, stated to be pursuant to RSC, Ord.33 r 3, directing the setting down of the following issue to be disposed of before the trial, namely:

Whether on the footing that all the allegations of fact contained in the statement of claim in this action (so far as not admitted in the defence) can be proved the plaintiffs can as a matter of law be entitled to damages or an injunction as claimed in their statement of claim.

Ungoed-Thomas J heard argument on this issue and came to the conclusion that the defendants were right, or, in other words, that the statement of claim showed no cause of action, and he dismissed the action under RSC, Ord.33 r 7. The plaintiffs appeal.

At this juncture, I should like to protest against this method of procedure. This is not a preliminary point at all. It deals with the whole subject-matter of the action, and without any evidence, and the court is left in a most unsatisfactory position and has to guess at many things which, on a hearing, would be properly proved in evidence. The procedure proper to this kind of situation is by way of motion to strike out the statement of claim as showing no cause of action. That is a well-known method of putting an end to actions, without substance, but it is also well known that the court will only strike out a statement of claim in plain cases where it is clear that the action cannot possibly succeed. That procedure would be entirely unsuitable to a case like the present, in which more than a score of authorities have been cited and argument has lasted over five days. Still, we are now confronted with a position in which both parties have acquiesced.

Finally, Harman LJ rounded it up by saying at p 628 of the report:

For all those reasons, while deploring the method by which the action has been conducted, I cannot but come to the conclusion that the statement of claim discloses no valid cause of action, and the case was, therefore, rightly dismissed by the judge as he had power to do under r 7 of Ord.33.

Here, the preliminary issue as framed would be tried in open court where the parties have the right to call witnesses. The full rigmarole of the trial will be conducted in adjudicating the preliminary issue as framed. Everything will be placed above board for the scrutiny of everyone. It would be pointless to have Ord.33 r 2 of the RHC as part and parcel of our procedure it we do not give effect to it. The rules committee saw it fit to incorporate this procedure in the RHC and this court must give effect to it. The preliminary issue as framed had a mixture of fact and law - all nicely framed to be adjudicated upon. This was my judgment and I so hold accordingly.

30.

Authorised business of Bank

(1)

The Bank may -

(mmmm)

establish a central bureau to collect, in such manner and to the extent as the Bank may think fit, information on and relating to rejection by a paying back of any cheque for reason of insufficient funds in the account of the drawer of the cheque, and to disclose any such information to any bank for the purpose only of assisting the bank to assess the eligibility of the drawer to maintain or open any current account with the bank;

Other banks, where the account holder also maintains a current account, shall upon receiving the BMC Offenders Blacklist, also take steps to close all relevant accounts within one month from the date of receipt of the blacklist.

Judicial notice refers to facts which a judge can be called upon to receive and to act upon either from his general knowledge of them, or from inquiries to be made by himself for his own information from sources to which it is proper for him to refer.

In Fisher v Bell [1961] 1 QB 394; [1960] 2 All ER 731 a shopkeeper was charged with offering a flick-knife for sale contrary to s 1(1) of the Restriction of Offensive Weapons Act 1959 according to which 'any person who manufactures, sells or offers for sale or hire or lends or hires to any other person any knife sometimes known as a flick-knife' is guilty of an offence. The defendant had placed a flick-knife in his shop window, but the Divisional Court held that he had not offered it for sale because Parliament must be taken to have legislated with reference to the general law of contract according to which the placing of goods in a shop window constitutes an invitation to treat and not an offer. Lord Parker, CJ, said:

At first sight it seems absurd that knives of this sort cannot be manufactured, sold, hired, lent or given, but apparently they can be displayed in shop windows; but even if this - and I am by no means saying that it is - is a casus omissus it is not for this court to supply the omission.

It is difficult to escape the conclusion that the draftsman inadvertently omitted some such words as 'exposes for sale' or 'has in his possession for the purpose of sale', and the Restriction of Offensive Weapons Act 1961 provides for the insertion in s 1(1) of the Act of 1959, after the words 'offers for sale or hire', the words 'or exposes or has in his possession for the purpose of sale and hire'. It is unlikely that any court of the 20th century would have read these words into the 1959 Act, but the draftsman's omission, if there was one, could have been remedied by a refusal to apply the technicalities of the law of contract to a criminal case for, in their non-technical sense, the words 'offers for sale' might well be thought to apply to a shopkeeper who places goods in his shop window.

We shall see that there is something to be said on both sides with regard to the merits of decisions such as Fisher v Bell. The important point for present purposes is that they are apt to produce a parliamentary reaction. This has been the baneful effect of the literal approach to statutory interpretation as contrasted with the approaches canvassed in Stradling v Morgan and Heydon's case, pp 8-9, supra.

To quote Lord Reid in Black-Clawson International, Ltd v Papierwerke Waldhof-Aschaffenburg AG [1975] 1 All ER 810, at p 815:

There is a presumption which can be stated in various ways. One is that in the absence of any clear indication to the contrary Parliament can be presumed not to have altered the common law farther than was necessary to remedy the 'mischief. Of course it may and quite often does go farther. But the principle is that if the enactment is ambiguous, that meaning which relates the scope of the act to the mischief should be taken rather than a different or wider meaning which the contemporary situation did not call for.

The presumption was one of Lord Reid's grounds for holding, contrary to the view of some other members of the House, in the Black-Clawson case that s 8 of the Foreign Judgments (Reciprocal Enforcement) Ace 1933 did not apply to judgments given in favour of a defendant simply dismissing a claim made by the plaintiff. In the earlier case of Maunsell v Olins [1975] AC 373, [1975] 1 All ER 16 Lord Reid had relied on this presumption in support of his conclusion that the word 'premises' ins 18(5) of the Rent Act 1968 did not extend to farm land. The provision under construction being, in his opinion, ambiguous, he was entitled to consider how it came to be where it was, and he traced it back to s 41 of the Housing Rents and Repairs Act 1954 the object of which was to get rid of the decision in Cow v Casey [1949] 1 KB 474; [1949] 1 All ER 197 which was not concerned with agricultural leases. The restriction of the scope of a statute to the immediate mischief it was designed to remedy was described by Lord Simon of Glaisdale in his dissenting speech as a misuse of the mischief rule, but Lord Reid was after all only speaking of a presumption to be called in aid in a case of ambiguity. The real difference between the majority and the dissentients in Maunsell v Olins was over the question whether there was an ambiguity.

In interpreting the provisions of a statute, one of the cardinal rules is to adhere as closely as possible to the literal meaning of the words. If an authority is required for this, it will be found in the case of Abbott v Middleton [1858] 7 HLC 114. Once the literal meaning has been established then, however unjust, arbitrary or inconvenient such meaning may be, it must receive its full effect - see Biffin v Yorke 5 Man & G 428. Nor is it the function of the court to scan the wisdom or policy of a statute - see May v The Great Western Railway Co 41 LJ QB 104 ....

In Foo Lake Ying v Television Broadcasts Ltd [1985] 2 MLJ 35, Abdoolcader SCJ said that:

The court however is not at liberty to treat words in a statute as mere tautology or surplusage unless they are wholly meaningless. On the presumption that Parliament does nothing in vain, the court must endeavour to give significance to every word of an enactment, and it is presumed that if a word or phrase appears in a statute, it was put there for a purpose and must not be disregarded ....

The distinction between motive and intention in respect of a legislative measure is that the former relates to the policy for the enactment of the legislation in chat way at that time for that purpose and the latter relates to the legal meaning of the enactment. The court is concerned with motive only to the extent that it may throw light on intention. It is the legal meaning of the enactment that in the end matters to the court, not the reason why it was passed ....

I assume that your Lordships will not now recede from anything that was determined in The Ashbury Railway Company v Riche (Law Rep 7 HL 653). It appears to me to be important that the doctrine of ultra vires, as it was explained in that case, should be maintained. But I agree with Lord Justice James that this doctrine ought to be reasonably, and not unreasonably, understood and applied, and that whatever may fairly be regarded as incidental to, or consequential upon, those things which the legislature has authorized, ought not (unless expressly prohibited) to be held, by judicial construction) to be ultra vires.

Preliminary points of law have been described as too often treacherous short cuts and their price can be delay, anxiety and expense: see Tilling v Whiteman [1979] 2 WLR 401 per Lord Wilberforce at p 403D-G and per Lord Scarman at p 410C-E.

We would interpolate to say that Ord.33 rule 2 is suitable if there is a point of law which, if decided in one way, is going to be decisive of litigation and the advantage should be taken of these facilities.