Mohd Riezuan Bin JalilBasri Bin SamsudinAidil Fazli Bin Ahmad(All Trading Under Hitech Objective Enterprise[Ma 0097979-X]) … PlaintiffsAndBank Negara Malaysia … Defendant

  

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IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR (APPELLATE AND SPECIAL POWERS DIVISION) ORIGINATING SUMMONS NO: R3(2)-24-93-2007

 

In the matter of Sections 44 and/or Section 60 of the Anti-Money Laundering and Anti-Terrorism Financing Act 2001 and the Banking and Financial Institutions Act 1989

 

And

 

In the matter of Article 8 and Article 13 of the Federal Constitution, Sections 50 and 51 of the Specific Relief Act 1950 and related provisions

 

And

 

In the matter of Order 7, Order 15 Rule 16, Order 29 and Order 92(4) of the Rules of the High Court 1980

 

BETWEEN

 

MOHD RIEZUAN BIN JALIL BASRI BIN SAMSUDIN AIDIL FAZLI BIN AHMAD

 

(All trading under Hitech Objective Enterprise

 

[MA 0097979-X]) … PLAINTIFFS

 

AND

 

BANK NEGARA MALAYSIA

 

DEFENDANT

 

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GROUNDS OF DECISION

 

Procedural Introduction

 

There were two applications before the court in this case. One (Enclosure 49) was for several declaratory orders against Bank Negara Malaysia in the Originating Summons. The second (Enclosure 4) was for orders of injunction under an inter partes Summons in Chambers. Both were dismissed with costs.

 

Background Facts

 

The subject matter of the suit was in relation to action taken by BNM to freeze properties and assets belonging to the Defendants who were trading under the name of Hitech Objective Enterprise. The freezing of the assets was done under the Anti-Money Laundering and Anti-Terrorism Financing Act 2001 (AMLA). The Plaintiffs’ alleged the action taken by BNM was unlawful, mala fide, outside the scope of AMLA and was without reasonable grounds to suspect any offences had been committed under AMLA or even the Banking and Financial Institutions Act 1989 (BAFIA).

 

It was also argued for the Defendants that the offences alleged were not terrorism-related and therefore fell outside the scope and purpose of AMLA.

 

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For BNM, it was argued there were reasonable grounds to suspect offences of illegal deposit taking under section 25 of BAFIA had been committed by the Plaintiffs, and these were within the purview of AMLA, read in conjunction with BAFIA.

 

Evidence was adduced before this Court of numerous charges of illegal deposit taking having been preferred against the Defendants which were then before the Sessions Court, Malacca. The 1st and 2nd Plaintiffs had been charged with a total of 222 criminal charges under section 4(1) of AMLA, with 162 against the first Plaintiff and 62 against the 2nd Plaintiff. They were also each charged with an offence under section 25(1) of BAFIA.

 

The Plaintiffs, on the other hand, claimed they were engaged in a legitimate business of selling prepaid telephone cards and airtime to their subscribers, for which they had accepted subscriptions.

 

By way of background, there had been an earlier ex parte application (Enclosure 4) for an interlocutory injunction which was ordered in the Plaintiff’s favour, but subsequently stayed when BNM filed the setting aside applications in Enclosure 16. The Ex-Parte Injunction had lapsed after the expiry of the 21 days under the High Court Rules. BNM then withdrew the setting aside application. At the same time, the Plaintiffs’ application for an Ad-Interim Injunction failed. The injunction application which was before this present court was therefore in connection with the very same Enclosure 4, now to be heard inter partes.

 

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For clarity of exposition, it is best to consider the main application first.

 

The Originating Summons

 

As can be seen from the amended Originating Summons (Enclosure 49), the declaratory reliefs sought by the Plaintiffs were based on an argument that the actions taken by the Defendant were unlawful and null and void. The actions related to the orders in Schedule 1 and Schedule 2 made under section 44 of AMLA, and the subsequent orders made under section 50(1) and/or section 51(1) of the same Act. The orders in Schedule 1 and Schedule 2 related to the seizure of banking accounts belonging to the business and the Plaintiffs, vehicles, land, insurance policy, and items described by the Plaintiffs as their “tools of trade” (peralatan perniagaan) and personal items (barangan peribadi).

 

The summary grounds in support of the application (as amended) were listed in the amended Originating Summons as Grounds (a) to (k). The gist of the Plaintiffs’ application, however, was in the following paragraphs:

 

“a. Tindakan Defendan terhadap Plaintif-Plaintif adalah di luar skop dan kategori perlaksanaan di bawah Anti Money Laundering and Anti Terrorism Financing Act 2001. Pengikatan kontrak (contractual arrangements) antara Plaintif dan Pelanggan-

 

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Pelanggannya adalah merupakan urusniaga yang legitimate dan sah di sisi undang-undang.

 

b. Urusniaga penjualan dan pembelian kad bayar dahulu bagi telefon dan penghantaran bagi satu tempuh setiap bulan untuk beberapa bulan akan datang adalah merupakan urusniaga yang sah di sisi undang-undang dan seksyen 4(1) Anti Money Laundering and Anti Terrorism Financing Act 2001 [Act 613] (Akta Pencegahan Pengubahan Wang Haram dan Pencegahan Pembiayaan Keganasan 2001) adalah tidak berkenaan.

 

c. Transaksi yang melibatkan satu ikatan kontrak bagi penghantaran kad prabayar untuk satu tempuh masa adalah merupakan satu kontrak yang sah di sisi undang-undang dengan manafaat bagi menjamin perbekalan dan penghantaran kad prabayar berkenaan.

 

(i) Persoalan ditentukan atas konstruksi dan pentafsiran sebenar peruntukan-peruntukan Anti Money Laundering and Anti Terrorism Financing Act 2001 [Act 613] (Akta Pencegahan Pengubahan Wang Haram dan Pencegahan Pembiayaan Keganasan 2001) tindakan Defendan adalah melampaui bidang kuasa di bawah Seksyen 4(1) Akta tersebut serta peruntukan-peruntukan undang-undang seiringan dengannya.

 

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d. Ketiadaan serta tidak wujudnya alasan yang munasabah untuk mengesyakki satu kesalahan di bawah s.4(1) Anti Money Laundring and Anti Terrorism Financing Act 2001 [Act 613] (Akta Pencegahan Pengubahan Wang Haram dan Pencegahan Pembiayaan Keganasan 2001) dengan itu menjadikan tindakan tersebut adalah tidak dibuat dengan “good faith”.

 

f. Defendan telah secara salahnya mengguna pakai Akta bagi pembasmian pengganas kepada urusniaga kad prabayar telefon bimbit dengan mengambil stok perniagaan, peralatan urusniaga, barangan peribadi yang langsung tidak merupakan peralatan merbahaya mau pun digunakan bagi tujuan keganasan. Tindakan adalah satu penyalahgunaan kuasa diberikan di bawah statut.

 

When advancing the legal grounds, counsel for the Plaintiffs dwelt at length on Article 13 of the Federal Constitution on “Rights to Property”. The pertinent provision referred to was Article 13(1) reading:

 

“(1) No person shall be deprived of property save in accordance with law.”

 

Arguing from the Privy Council decision in Ong Ah Chuan v PP [1981] AC 648, as approved by our Federal Court in S Kulasingam &

 

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Another v Commissioners of Lands, Federal Territory & Others

 

[1982] CLJ (Rep) 314, counsel argued that on the facts of this present case there was a deprivation of property which was drastic and unlawful, and for which it would not be sufficient to argue that there was a supporting law to allow the seizure. “Law” in the context of the constitutional formula “save in accordance with law” must mean “a system of law which incorporates those fundamental rules of natural Justice that had formed part and parcel of the common law of England … at the commencement of the Constitution.”

 

This was a correct position to take, for “law” in the context of our constitutional provisions must refer to a law which incorporates notions of procedural fairness and rules of natural justice as these terms are normally understood in constitutional law.1 These constitutional requirements, however, require to be given contextual content. That contextual content, on the facts of this present case, was the scope, intent and effect of AMLA as well as BAFIA. In particular, AMLA was a specialised legislation passed in the public interest principally to prevent and control money laundering and terrorism financing. Its exact scope and effect had to be found within its four corners. In this connection, it was necessary to appreciate the wide scope of section 4(1) and section 44 of the Act.

 

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See however Arumugam Pillai v Government of Malaysia [1975] 2 MLJ 29, an older Federal Court authority:

 

“The result is that whenever a competent legislature enacts a law in the exercise of any of its legislative powers, destroying or otherwise depriving a man of his property, the latter is precluded from questioning its reasonableness by invoking Article 13(1), however arbitrary the law might be….”

 

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Section 4(1) defined the offence of “money laundering” in the following terms:

 

“(1) Any person who –

 

(a) Engages in, or attempt to engage in; or

 

(b) Abets the commission of, money

 

laundering, commits an offence and shall on conviction be liable to a fine not exceeding 5 million ringgit or to

 

imprisonment for a term not exceeding five years or both.”

 

“Money laundering” was expressly defined in section 3 of AMLA as:

 

“money laundering” means the act of a person who –

 

(a) Engages, directly or indirectly, in a transaction that involves proceeds of an unlawful activity;

 

(b) Acquires, receives, possesses, disguises,

 

transfers, converts, exchanges, carries, disposes, uses, removes from or brings into Malaysia proceeds of any unlawful activity; or

 

(c) Conceals, disguises or impedes the

 

establishment of the true nature, origin,

 

location, movement, disposition, title of, rights

 

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with respect to, or ownership of, proceeds of an unlawful activity, where –

 

(aa) as may be inferred from objective factual circumstance, the person knows or has reason to believe, that the property is proceeds from any unlawful activity; or

 

(bb) in respect of the conduct of a natural person, the person without reasonable excuse fails to take reasonable steps to ascertain whether or not the property is proceeds from any unlawful activity;…” (Emphasis added)

 

By definition, therefore, the offence of “money laundering” included engaging in a transaction involving “proceeds of an unlawful activity”. This was the activity alleged against the Plaintiffs. They were suspected of engaging in illegal deposit taking under BAFIA.

 

The orders being challenged were initially made under section 44, as noted earlier, and again it became necessary to appreciate the wide scope of section 44 on “Freezing of property”. This particular statutory provision reads:

 

“44. Freezing of Property

 

(1) Subject to section 50, where an enforcement agency, having the power to enforce the law under which a serious offence is committed, has reasonable

 

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grounds to suspect that an offence under subsection 4 (1) or a terrorism financing offence has been is being or is about to be committed by any person, it may issue an order freezing any property of that person or any terrorist property, as the case may be, whenever the property may be, or in his possession, under his control or due from any source to him.

 

By subsection (5), an order made under subsection (1) above “shall cease to have effect after 90 days from the date of the order, if the person against whom the order was made has not been charged with any offence under this Act or a terrorism financing offence, as the case may be.”

 

By subsection (6), an enforcement agency “shall not be liable for any damages or cost arising directly or indirectly from the making of an order under this section unless it can be proved that the order under subsection (1) was not made in good faith.”

 

The statutory provisions referred to the commission of a “serious offence” being the foundation upon which the freezing order could be made on reasonable grounds to suspect an offence under section 4(1) had been committed. It was evident there was an overlap, given the statutory formula, between BNM’s power under BAFIA and its power under section 44 of AMLA. Counsel for BNM, in the course of his submission, referred to the definition of “serious

 

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offence” in section 3 of AMLA, which referred inter alia to “any of the offences specified in the Second Schedule”. The Second Schedule included, in addition to the section 4(1) offence under AMLA, offences under the Anti Corruption Act 1997 and an offences under BAFIA. Out of the four offences under BAFIA, the section 25 offence of “receiving, taking or acceptance of deposits prohibited except under and in accordance with a valid licence granted under subsection 6(4)” is included. Thus, given the wide scope of section 4(1) and section 44(1) of AMLA, Defendant’s counsel was correct to conclude that it was lawful for the freezing order to have been made by BNM.

 

On the facts, I felt there could be no question that there existed reasonable grounds to suspect a serious offence or offences had been committed under section 25 of BAFIA (which meant as well offences under section 4(1), i.e. “money laundering” as defined), and theere being reasonable grounds, it could not be argued the statutory power was exercised otherwise than bona fide. It was established on the evidence, as noted earlier above, there had been 222 criminal charges preferred against the 1st and 2nd Plaintiffs under section 4(1) of AMLA, and 2 criminal charges under section 25 of BAFIA against them as well. Thus, from the point of view of judicial review of state (legislative) action as well as judicial review of administrative action (the actual action taken by the enforcement agency), there could not be said to have occurred any deprivation of property which was not “in accordance with law”. AMLA, being a specialised legislation enacted in the public interest to deal with serious offences of money laundering and terrorism financing, the very wide provisions on

 

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enforcement and the freezing of properties in the course of investigation have therefore clear constitutional justification. There had to be a balancing between property rights and the public interest in relation to investigation of these very serious offences, to the extent that the constitutional requirements of procedural justice must necessarily be regarded as fulfilled. Within the Act itself, as already noted above, an order from an enforcement agency (such as BNM) could last only for 90 days if the person against whom the order was made was not charged with an offence under the Act.

 

On the facts of this case, the earlier freezing orders issued by BNM had been superseded by the orders made by the public prosecutor under section 50(1) and 51(1) of AMLA. These were likewise very wide provisions granting power to the public prosecutor, and for the same policy reasons earlier noted, these latter provisions should also be regarded as constitutionally valid and in conformity with the dictates of Article 13(1) of the Federal Constitution. Section 50 referred to seizure of movable property in financial institutions, while section 51 referred to seizure of immovable property. To quote section 50(1):

 

“50. Seizure of movable property in financial institution

 

(1) Where the public prosecutor is satisfied on information given to him by an Investigating Officer that any movable property, including any monetary instrument or any accretion to it, which is the subject matter of an

 

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offence under subsection 4(1) or a terrorism financing offence or evidence in relation to the commission of such an offence or which is terrorist property, is in the possession, custody or control of a financial institution, he may, notwithstanding any other law or rule of law, after consultation with Bank Negara Malaysia, the Securities Commission or the Labuan Offshore Financial Services Authority, as the case may be, by order direct the financial institution not to part with, deal in, or otherwise dispose of such property or any part of it until the order is revoked or varied.”

 

Strictly speaking, it was not necessary to proceed further beyond these very wide provisions to justify BNM’s actions and to dismiss the Plaintiff’s application. Nevertheless, for completeness and for a proper appreciation of the statutory context, it would be useful to have cognizance of section 77 and 79 of AMLA, which I reproduce below:

 

“77. Indemnity.

 

No action, suit, prosecution or other proceeding shall lie be brought, instituted, or maintained in any court or before any other authority against –

 

(a) the competent authority of the relevant enforcement agencies;

 

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(b) any director or officer of the competent authority or the relevant enforcement agency, either personally or in his official capacity; or

 

(c) any person lawfully acting in compliance with any direction, instruction or order of a director or officer of the competent authority of the relevant enforcement agency, for or on account of, or in respect of, any act done or statement made or omitted to be done or made, or purporting to be done of made or omitted to be done or made, in pursuance of or in execution of, or intended pursuance of or execution of, this Act or any order in writing, direction, instruction or other thing issued under this Act if such act or statement was done or made, or was or omitted to be done or made, in good faith.”

 

79. Preservation of secrecy.

 

(1) Except for the purpose of the performance of his duties or the exercise of his functions under this Act or when lawfully required to do so by any court or under the provisions of any written law, no person shall disclose any information or matter which has been obtained by him in the performance of his duties in the exercise of his functions under this Act.

 

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(2) No person who has any information or matter which to his knowledge has been disclosed in contravention of subsection (1) shall disclose that information or matter to any other person.

 

(3) Any person who contravenes subsection (1) or (2) commits an offence and shall be liable on conviction to a fine not exceeding 1 million ringgit or to imprisonment for a term not exceeding one year or to both.”

 

Seen in the totality of the circumstances, the Plaintiff’s application by way of Originating Summons as amended was nothing more than an attempt to interfere with the proper course of investigation into the commission of some very serious offences under the two Acts. The Plaintiffs had not shown on the evidence how it could have been said BNM, and now the public prosecutor, had acted in bad faith. There were at the time of the hearing in excess of 200 criminal charges which had been preferred in the Malacca Sessions Court. It was in the public interest and the interests of the numerous depositors who placed money in the enterprise called Hitech Objective Enterprise, to have the enforcement agencies conduct their investigation without unnecessary application to court on somewhat flimsy constitutional grounds. To my mind, it was an abuse of the court’s process for the Plaintiffs to have instituted this action.

 

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Enclosure 4 (the Application for Injunction)

 

This Court’s decision on the main application (Enclosure 49) would necessarily conclude the application in Enclosure 4. Going by first principles relating to the grant of interlocutory injunctions, there were no serious questions to be tried and there the matter should have ended. It was not necessary to consider further whether the balance of convenience, or the justice of the case, lay in whose favour, or even whether damages would be an adequate remedy in the event the injunction was set aside. The applicable principles are simply too well-established to require extensive ventilation, given the circumstances of this case.2

 

Conclusion

 

Enclosure 49 and Enclosure 4 therefore stood dismissed with costs to be taxed, unless otherwise agreed, to be paid by the Plaintiffs to the Defendant.

 

Dated 16th December 2009

 

Sgd.

 

( MOHAMAD ARIFF BIN MD YUSOF ) JUDGE

 

HIGH COURT MALAYA KUALA LUMPUR

 

See Keet Gerald Francis Noel John v Mohd Noor bin Abdullah & Ors [1995] 1 MLJ 193:

 

“…if [the judge] finds, upon a consideration of all the relevant material before him, including submissions of counsel, that no serious question is disclosed, that is the end of the matter and the relief is refused.” (at page 207)

 

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COUNSELS

 

For the plaintiff:

 

Datuk Haji Mokhtar Bin Haji Ngah Messrs Mokhtar Ngah & Co.

 

For the defendant:

 

Tan Hock Chuan & Cains Tan Kok Ping Messrs Tan Hock Chuan & Co.

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