Legal cauldron 1 of 2014

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Issue no. 1
of 2014
LEGAL CAULDRON Issue No 1 of 2014
MELAKA
No.54-1, Jalan TU 2,
Taman Tasik Utama,
75450 Ayer Keroh,
Melaka.
T: 06-234 7330
F: 06-234 4800
LEGAL CAULDRON
Jayadeep Hari & Jamil
Advocates and Solicitors
Our offices:
No KDN: PP 15706/02/2013(032198)
KUALA LUMPUR
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Block A, No 45, Medan Setia Satu,
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50490 Kuala Lumpur.
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www.jhj.com.my
“Forgive me Father, for I have shopped (Online)!”
An overview of Consumer Protec- tion (Electronic Trade Transactions) Regulations 2012
EDITOR:
Adeline Chin
DESIGN & LAYOUT:
Andrew Chee & Adeline Chin
CONTRIBUTORS:
Shobana Padmanathan
Eunice H.S. Ong
Adrian Low
Shahman Sangaran
Andrew Chee
The LAD Culture
A dark world of expected delays
Rogue Directors
Can an unauthorized act of a Direc- tor bind a company
Do you have the Moolah to purchase your Dream House?
In this Issue:
The Financial Services Act 2013 & the Islamic Financial Services Act 2013

Progress is constantly taking place, and the core contrib-uting
factor is the movement towards liberalisation and
globalisation nearly everywhere in the world. Almost 80% of
the countries globally subscribe to the concept of capitalism,
and the mere mention of the word “money” is enough to
capture the attention an unassuming stranger. This medium
of exchange known as money has come to dictate what we
do and how we live.
Julius Henry “Groucho” Marx truly hit the nail on its head
when he said: “While money can’t buy happiness, it certainly
lets you choose your own form of misery.” And what better
way to have an upper hand by making an informed decision.
The year 2013 had been a whirlwind, leaving as fast as it
arrived (well, it had officially left by the time you read this).
The legal fraternity was shaken up by the implementation of
the Legal Professions Act 2013, whilst those primarily in the
finance, banking, insurance and development industry found
themselves swirled into a pool of new laws and regulations,
e.g. the introduction of the Financial Services Act 2013 and
the rate revision for Real Property Gains Tax (“RPGT”),
electricity tariffs and etc. Renowned legal advisory and taxa-tion
firms scrambled to digest, summarize and comment on
the train of legislative changes made throughout the year at
bullet speed for the consumption of interested individuals as
well as the corporate sphere.
However, these chockfull of information would generally
serve a lay person no better than wine to a teetotaller if it is
not presented in an easily comprehensible and relevant con-text.
We believe that knowledge is when one is able to ex-tract
data and reiterate it in a way that even my 80-year-old
grandmother would (somewhat) understand.
The featured articles selected for our publication this Issue
revolved around the centrepiece of dollars and cents, which
is unmistakeably the lord of all sins and success at equal. We
thought it essential for our dear readers to be aware of the
three important legislations that came into effect in 2013,
namely the Consumer Protection (Electronic Trade Transactions)
Regulations 2012, the Financial Services Act 2013 and the Is-lamic
Financial Services Act 2013 as the spirit and content of
these legislations are closely knitted with your rights and
financial wellbeing.
Further, the local corporate scene had been going through
drastic changes (e.g. the high profile employment transitions
amongst top ranking officers in the telecommunications and
banking industry of late); coupled with the hype in both the
construction and property industry, complex legal concepts
such as liquidated ascertained damages and ostensible au-thority
explained would prove to be of more value than just
conversation starters. In tandem with all these progression,
the purchase of a property, be it for residential or invest-ment
purposes, may have occurred to many as a timely mile-stone
of achievement. We thought the brief and simple
write-up on property purchase frankly titled “Do you have
the moolah to purchase your dream house?” made a suitable
fit as a cherry on the cake for this Legal Cauldron, Issue 1 of
2014.
On behalf of the firm, I would like to convey our best wish-es
to all you dear readers, may the new year be filled with
good health and joy in every sense of the word. And we
hope you enjoy the read as much as we have enjoyed writ-ing
them!
Legal Cauldron 1 of 2014 | 2
Sincerely,
Adeline Chin
Knowledge Department
adeline@jhj.com.my
EDITOR’S NOTE

PHUKET TRIP Photo Article
PHUKET INTERNATION-AL
AIRPORT
A SNAPSHOT OF EVERYONE MODERN TIMES TUK -TUK NEVER SKIP THE
TOMYAM LUNCH. .
“ON THE ROAD AGAIN -
LIKE A BAND OF GYPSIES WE GO DOWN
THE HIGHWAY”
GAME IS ON.
“IN A GENTLE WAY, YOU CAN SHAKE THE
WORLD.’ - GHANDI
RAT-U-THIT 200 YEARS ROAD.
PATONG BEACH, HKT.
MONKEY BEACH & PHI PHI ISLAND.
PHOTOS CREDIT OF BARVINA • SHOBANA • SYAJA
COPYRIGHT © 2014 • JAYADEEP HARI & JAMIL • ALL RIGHTS RESERVED

Ladies and (some of you) gentlemen, have you ever wanted to buy an expensive item online from an ob- scure local website but was discouraged for fear of being cheated? I know because I’m an avid online shopper. Online shopping is convenient as it allows me to browse and buy dresses without leaving my desk, even as I write this article! But just like you, I too have apprehen- sions when coming across websites and blogs that are not well known, or do not have a physical retail store.
Statistics show that around 1.1 million Malaysians carry out online transactions at the time this article was written and this number is expected to double by the end of 2014. In fact, there were almost 20,000 online shopping companies and businesses registered with SSM last year alone. Unfortunately, the booming e-Commerce industry in Malaysia is moving in parallel with the rise in scam and fraud cases carried out by some unscrupulous individuals and syndicates.
The Consumer Protection Act 1999 was amended in 2007 to include electronic trading. However, despite the amendment, we still lack a comprehensive set of rules for the online business operators. There was a proposal in 2011 to amend the Electronic Commerce Act 2006 which was initially intended for the regulation
of the booming online marketplace, but the said proposal did not materialize. Despite all the available legal provisions afforded for consumer protection, such as the Electronic Commerce Act 2006, the Communica- tions and Multimedia Act 1998, the Contracts Act 1950, the Trade Descriptions Act 1972 and the Penal Code, consumer protection remains inadequate for consumers transacting with online business suppliers and online marketplace operators.
In July 2013, the Ministry of Domestic Trade, Co- operatives and Consumerism (“the Ministry”) have in- troduced the Consumer Protection (Electronic Trade Transactions) Regulations 2012 (“the Regu- lations”) as a response to the recent spike in online frauds being reported and heard in Consumer Claims Tribunal.
THE LAW
The new Regulations apply to (i) individual persons and businesses that supply goods and services through their own websites, blogs, social media network accounts and online marketplace, (the “Online Business Suppliers”) and (ii) websites where goods and services are market- ed by third parties for the purpose of trade such as Zalora, Groupon and eBay (the “Online Marketplace Operator”)
The Regulations made it mandatory for all Online Busi- ness Suppliers and Online Marketplace Operators (collectively known as “e-Traders”) to comply with certain requirements:
1. Provide full disclosure of information
E-Traders will now have to disclose, on the website where the business is conducted and on the online marketplace, the following information:
 The name of the person who operates the business
 The name of the business or company
 The registration number of the business or company
 The email address and telephone number and/or address of the business operator
 A description of the main characteristics of the goods and/or services
 The full price of the goods and/or services including transportation costs, taxes and any other costs
Featured Article
FF
Retail & Consumer Industry
About The Author:
SHOBANA PADMANATHAN graduated from the Multimedia University Malacca and had since joined JHJ as an associate, han- dling various civil matters.
shobana@jhj.com.my
orgive Me Father,
for I have shopped (ONLINE)!
An overview of
Consumer
Protection (Electronic Trade Transactions )
Regulations 2012
‘What if it was a scam? What if the order never arrives? What if the item does not match the advertised
description?’

 The method(s) of payment
 The terms and conditions
 The estimated time of delivery of the goods or services to the buyer
2. Rectify errors and acknowledge receipt of orders
E-Traders must provide the appropriate means to ena- ble the buyer to rectify all errors prior to the confirmation of orders made by the buyer. A good example of this would be by allowing instantaneous pop-up message to appear on your browser seeking your confirmation on the order placed when you proceed to checkout. Another example would be confirmation via an order note specifying the details of your order before pro- ceeding with payment (i.e. the most common means used in trades via social media network). Upon receiv- ing payment, the e-Trader must acknowledge receipt of the order without undue delay.
The order and acknowledgement of receipt would only be deemed to have been received when both the buyer and the e-Trader are able to access the order and the acknowledgment of receipt.
3. Maintenance of record
Online Marketplace Operators are now under an obliga- tion to keep and maintain a two-year worth record of the business suppliers’ names and contact details whose
goods and/or services were showcased or provided in the online marketplace.
This record maintenance system helps business suppliers to be readily identifiable should the consumer suffer any loss or fraud. It would also facilitate the ease of lodging a complaint against an alleged perpetrator.
EFFECT OF NON-COMPLIANCE
Failure of an e-Trader to comply with the Regulations would be deemed an offence. The disclosure of false and misleading information on the electronic platform is similarly a violation of law. Individual offenders will be liable to a fine up to RM50,000.00 or imprisonment up to 3 years or both. The punishment for a second offence is RM100,000.00 or imprisonment up to 5 years or both. Any company that disregards this law will be fined up to RM100,000.00 and RM200,000.00 for a subsequent offence.
REDRESS AVAILABLE TO AGGRIEVED CON- SUMERS
A civil remedy available is that an aggrieved consumer may also file a claim with the Tribunal for Consumer Complaints.
Apart from that, if a consumer has been cheated by an e-Trader or have knowledge that there is occurrence of non-compliance with the Regulation, the consumer may lodge a complaint to the Ministry, the Royal Malaysian Police Department for Commercial Crime Investigation or Cyber999 Help Centre.
CONCLUSION
These mandatory requirements have received mixed reactions from the SMEs (small and medium enterprises) as now there would be an increase in the start-up costs of a business. E-Traders will have to ensure that they have a set of customized terms and conditions for their business. Online Marketplace Operators will only allow e-Traders who provide all the necessary information to trade or market on their site.
Since the intent of this law is to ensure transparency, it is the author’s opinion that Online Business Suppliers and Online Marketplace Operators use this as an ad- vantage to create and expand business opportunities for themselves. After all, while the transparency of details, a system of good record maintenance, certainty of description and the presence of unequivocal terms and conditions to the full knowledge of both consumers and e-Traders will help minimize legal disputes and ensure better consumer protection. Creating and encouraging good business ethics will doubtlessly enhance customer satisfaction and confidence. All in all, this Regulation is in fact a good tool for serious e-Traders to succeed.
Featured Article
Retail & Consumer Industry
‘A civil remedy available is that an
aggrieved consumer may also file a claim with the Tribunal for Consumer Complaints.’

“Time is of the essence” is a term commonly used in many contracts to signify that time wasted is actually money thrown away. This cannot be any more true in a building and civil engineering contract, where the term “liquidated ascertained damages” (more affectionately known as LAD) is no stranger nor a friend to any contractor. You can actually even impose the LAD clause on your local contractor renovating your house (although in Malaysia this does not quite happen).
Before I go any further, let me firstly explain that LAD is in simple terms, compensation payable by the contractor to its employer for each day a project is delayed. And an employer here means the party who had engaged the contractor to undertake a particular project.
Lawyers and legal advisors will tell you that the inclusion of such a term in building contracts is a great thing and at the outset, it would make sense because everyone will know the exact sum to be paid and allow the contractor to alleg- edly expect or foresee the consequences of their delay.
Nonetheless, we can only imagine the dread in any contractor’s mind when LAD is imposed. But really, you would ask, as the employer, can I really impose LAD for sum desirous of an employer against the Contractor? And if really I can impose, when can I do so lawfully in Malaysia?
Nothing comes close in best explaining this point, except through a story. So, let me tell you a story of when this contractor, Cron Track Tar Sdn Bhd (“the Contractor”) who was engaged by Siamese Darby Bhd (“the Employer”) to undertake a project to build four retail units in Serem- ban:
 Phase I was to build the actual retail units;
 Phase II to undertake external works and 100 space car park; and
 Phase III was to complete the construction of an ex- tended car park of 250 spaces.
Clause 2.2 of the contract states that LAD clause imposed on the Contractor would be the sum of RM100,000.00 per week. And lo and behold, what happened as expected was that there was a 15 weeks delay on the delivery of the com- pleted project to the Employer, and this is after an exten- sion of time of 12 weeks given to the Contractor.
Here is where the problem starts. The Contractor now gets whacked with RM100,000.00 per week as LAD which totals up to a whopping RM300,000.00. Since this amounts to a breach on the part of the Contractor, can the Employer claim for this LAD of RM300,000.00?
Now before you answer the question, I must inform you that an LAD clause disguised as a penalty clause against the contractor will not be enforced in our courts. This is because if a clause is included for the intention to punish, then it is not fair to the Contractor. [see Selvakumar a/l Murugiah v Thiagarajah a/l Retnasamy [1995] 1 MLJ 817].
Pursuant to several local cases and section 75 of the Con- tracts Act 1950, the person claiming for LAD must still prove that they have suffered actual loss or that the Courts may assess a reasonable amount for compensation. There- fore, in Malaysia, if an Employer is claiming for actual losses
‘But really, you would ask, as the
employer, can I really impose LAD… against the Contractor?’
Featured Article
Building & Construction Industry
TheThe LADLAD CultureCultureCulture
A dark world of expected delays
About The Author:
EUNICE ONG graduated from the University of the West of England and is a member of the Honourable Society of Lincoln’s Inn (UK) and the Malaysian Bar.
‘An LAD clause disguised as a penalty clause against the contractor will not be enforced in our Courts.’
eunice@jhj.com.my

in an action for breach of contract, he must still prove the actual damages. In cases where the Courts find it difficult to assess such losses (i.e. when there is no known measure of damages employable) and yet the evidence clearly shows some real loss which can be expected, the courts must then give substantial damages in accordance to the Court’s discretion.
So again, you may ask, what are all this but some legal jar- gon blahs? To put this simply, what the Employer has to do to get their RM300,000.00 would be to show this sum is compensation for direct costs incurred, which means that as a result of the Contractor’s delay, the Employer had to in- cur losses. This could be by way of incurred interest by the
bank which the Employer had to bear as a result of the delay.
Or the Employer could show the possible loss of profits or revenue as a result of the delay, by producing an executed tenancy agreement between the Employer and a third party to rent the premises and as a result of the delay of the Con- tractor, that the Employer loses out on the rental.
Or The Employer could possibly show that as a result of the Contractor’s delay, that the Employer had to now pay LAD to the main contractor (e.g. maybe the retail company who had in the first engaged the Employer to construct the retail outlets). If the Employer is unable to produce any document or even proof to support any of the above, then the blanket imposition of LAD will not stand in our Courts and will not be enforced.
In conclusion, an Employer (in our case, would be The Em- ployer) can lawfully impose LAD if they have the documents to support such amounts claimed for in the contract. This means that for an LAD to be lawfully enforced, thought must be given when placing an amount in the LAD clause. And the importance of such thought being given to the inclusion of such a clause is clearly stated in the Federal Court case of Selvakumar, where monies paid as LAD which is lat- er found to be unlawful, must be refunded with interest imposed. So, although time money may be monies thrown away, we have to still show how monies have been thrown away.
Featured Article
Building & Construction Industry
Gaby Bakker
As the semester for my second academic year was drawing close to an end, I’ve decided to travel to Malaysia for my attachment before returning to complete my final year of law degree and my Master’s degree thereon.
The 4-month attachment period had been on every aspect, albeit the linguistic and cultural differences, a great one to say the least. JHJ’s structured 360˚Student Attachment Pro- gramme allowed me valuable insights into the four key de- partments in JHJ, namely Corporate, Conveyancing, Conflict Resolution and Knowledge. Being able to indulge in first- hand experience of the Malaysian legal practice provided the essential element of realism for my comparative study on distinct legal jurisdictions, which was part and parcel of my University’s assignment.
My goal upon embarking on this internship was to gain an understanding on the differences between the Malaysian legal system and the Dutch legal system. With both the legal systems readily varied in components: the former based on
Gaby is a law under- graduate from the
University of Applied Sciences in Amsterdam, the Netherlands and was a summer associate in JHJ from September to December 2013.
common law whilst the latter civil, the attachment pro- gramme gave me the opportunity to have a holistic overview.
JHJ lived up to their motto of “We Care”, and my colleagues have demonstrated just that as they relentlessly assisted me in my queries. I am thankful to JHJ for offering me such a great time and experience, it is definitely one that will be carved into my memories.
JHJ Summer Associate 2013

THE CONSEQUENCES
The supplier of the equipment will most likely insist on the
settlement of his payment and submit that the supply of the
equipment to the JV Co here is valid as (i) he dealt with the
company in good faith; (ii) the person whom he dealt with is
a director of the company and (iii) he has done his part by
delivering the equipment to the company.
Hence, the supplier will naturally argue for the application of
the doctrine of apparent authority to apply here. The doc-trine
of apparent authority basically enables an outsider (in
this case the equipment supplier) to enforce a contract en-tered
into by a company's agent (in this case - Mr X) who
appears to, but does not, have actual authority to bind the
JV Co.
THE LAW
In Malaysia, the application of the doctrine and law in rela-tion
to the above can be found in Section 20 of the Compa-nies
Act 1965, where it is provided that
“... no act or purported act of a company (including enter-ing
into of an agreement by the company and including
any act done on behalf of the company by an officer or
agent of the company under any purported authority
whether express or implied of the company) and no con-veyance
or transfer of property whether real or personal
to or by a company shall be invalid by reason only of the
fact that the company was without capacity or power to
do the act or to execute or take the conveyance or trans-fer
...”
In a nutshell, this primarily means that the validity of a trans-action
between a company and a third party will remain re-
Featured Article Corporate & Commercial Industry
About The Author:
ADRIAN LOW is a senior associ-ate
in the corporate department
with extensive experience in local
and international corporate and
commercial transactions.
adrianlow@jhj.com.my
ROGUE
DIRECTORS
Can an
unauthorized act
of a Director bind a
Company?
BACKGROUND
Imagine the following scenario – you have just executed a
joint venture agreement (“JVA”) and are now part of a joint
venture arrangement whereby you with your partners have
agreed to incorporate a special purpose joint venture com-pany
(“JV Co”) to carry out a building project. In the JVA,
you have also agreed for each of you and your partners to
have representations in the board of directors of the JV Co.
THE ULTRA VIRES TRANSACTION
Everything appears fine and well until one day, the JV Co
receives a written demand for payment purportedly due for
the purchase and delivery of a certain equipment worth
RM1,000,000.00. This equipment can be used for the pro-ject.
On investigation you subsequently discover that it was
one your partners who is also a director of the JV Co (lets
call him “Mr X”) who had proceeded to purchase this
equipment. You also discover that the purchase made by Mr
X here did not receive the approval of the board or the
shareholders of the JV Co. Further, you are informed that
the equipment can be acquired cheaply elsewhere and there
are many other similar equipment which have better func-tion
and built quality than the one purchased here.
THE ISSUE
Assuming that the said equipment has not been used and
you have the support of the rest of the board of directors
and shareholders of the JV Co, can you, under such circum-stances,
cause the JV Co to return the said equipment to
the equipment supplier and refuse payment for the same
since Mr X who purportedly bought it on behalf of the JV
Co had no authority to do so in the first place? All these
while knowing that the equipment supplier will not agree to
such proposition?
‘…outsiders dealing with a company
in good faith are entitled to assume
that acts within the company's
constitution and powers have been
properly performed…’

gardless whether the company had the necessary authority to do so if the lack of authority is the only contentious factor in such transaction.
According to the English case of Royal British Bank v. Tur- quand [1843-60] All ER Rep 435 which was accepted by the Malaysian Federal Court in Pekan Nenas Industries Sdn Bhd v. Chang Ching Chuen & Ors [1998] 1 Mil 465, outsiders dealing with a company in good faith are entitled to assume that acts within the company's constitution and powers have been properly performed, and these outsiders are not bound to inquire whether acts of internal management have been regular.
The reason and principle of the ostensible and apparent authority was explained by the Federal Court in the case of Chew Hock San & Ors v. Connaught Housing Development Sdn Bhd [1985] CLJ 64 (Rep); [1985] 1 CLJ 533; [1985] 1 MLJ 350. Delivering the decision of the Federal Court, Syed Agil Barakbah F.J., (as he then was) said that:
‘… The legal position of a company or a corporation is that being a fictitious person it can only do any act which includes making a representation through its agents or serv- ants. The capacity of such a company is limited by its memorandum and articles of association. In other words, it can act within the ambit of the powers or provisions expressly provided in the memorandum and articles of association. In the ordinary course of business, a third party when entering into a contract with a company normally relies on the authority of an agent of the company.
Now, the difference between an actual and an apparent or ostensible authority and the principles applicable thereto are adequately explained by Diplock L.J. in Freeman & Lockyer v. Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480, 502-504 from page 502 to page 504 as follows:
"It is necessary at the outset to distinguish between an "actual" authority of an agent on the one hand, and an "apparent" or "ostensible" authority on the other.”
Actual authority and apparent authority are quite independent of one another. Generally they co-exist and coincide, but either may exist without the other and their respective scopes may be different. As I shall endeavor to show, it is upon the apparent authority of the agent that the contractor normally relies in the ordinary course of business when entering into contracts.
An "actual" authority is a legal relationship between principal and agent created by a consensual agreement to which they alone are parties. Its scope is to be ascertained by applying ordinary principles of construction of contracts, including any proper implications from the express words used, the usages of the trade, or the course of business between the parties. To this agreement the contractor is a stranger,. he may be totally ignorant of the existence of any authority on the part of the agent. Nevertheless, if the agent does enter into a contract pursuant to the "actual" authority, it does create contractual rights and liabilities between the principal and the contractor…
An "apparent" or "ostensible" authority, on the other hand, is a legal relationship between the principal and the contractor created by a representation, made by the principal to the contractor, intended to be and in fact acted upon by the contractor, that the agent has authority to enter on behalf of the principal into a contract of a kind within the scope of the "apparent" authority, so as to render the principal liable to perform any obligations imposed upon him by such contract. To the relationship so created the agent is a stranger. He need not be (although he generally is) aware of the existence of the representation but he must not purport to make the agreement as principal himself. The representation, when acted upon by the contractor by entering into a contract with the agent, operates as an estoppel, preventing the principal from asserting that he is not bound by the contract. It is irrelevant whether the agent had actual authority to enter into the contract.
In ordinary business dealings the contractor at the time of entering into the contract can in the nature of things hardly ever rely on the "actual" authority of the agent. His information as to the authority must be derived either from the principal or from the agent or from both, for they alone know what the agent's actual authority is. All that the contractor can know is what they tell him, which may or may not be true. In the ultimate analysis he relies either upon the representation of the principal, that is, apparent authority, or upon the representation of the agent, that is, warranty of authority.’
However, the principle cannot be relied upon by the equipment supplier if the circumstances warrants the equipment supplier to enquire about the authority of the director in question. This approach can be seen in the case of United Asia (S) Pte Ltd. vs Metaltex Intl. Sdn Bhd and Ors. [2013] 1
Featured Article
Corporate & Commercial Industry
‘…outsiders are not bound to inquire whether acts of internal management have been regular. ‘
‘An "apparent" or "ostensible"
authority … is a legal relationship
between the principal and the
contractor created by a
representation…’

Featured Article Corporate & Commercial Industry
LNS 450 which referred to the decision of Morris v. Kanssen
[1946] AC 459, where Lord Simonds made it clear that an
outsider cannot invoke the benefit of the principle of osten-sible
and apparent authority if he is put upon inquiry. Here
is what his Lordship said on this point (at p.475):
‘…He cannot presume in his own favour that things are
rightly done if an inquiry that he ought to have made would
tell him that they were wrongly done…’
Hence, where it can be shown that Mr X had not acted in
the manner as he should in the usual course of business (e.g.
where no business card was exchanged or only aliases were
used to identify himself) then the equipment supplier cannot
wholly rely on Section 20 of the Companies Act 1965 or the
principle of ostensible or apparent authority to succeed in
his claim.
Further, the equipment supplier will also be prevented from
relying on the same doctrine if it can be shown that there
was an element of forgery involved in the director’s action
(i.e. where he purports to sign a document on behalf of a
company or affixes its seal to it with intent to defraud - this
is illustrated in the case Augusto Pospeo Romei and Anor vs
Singaravelu Ratnavelu and Ors, High Court (2011) 1 LNS 949)
or where acceptance of the equipment was evidenced by a
false company stamp or a company stamp not belonging to
the company as in the case of Naj Global Network Sdn Bhd vs
Universiti Malaya [2011] 8 CLJ 658.
CONCLUSION
Ultimately and barring any issue of fraud or dishonesty on
the part of the equipment supplier, the question here is
whether there was any representation made by Mr X that
lead the equipment supplier to believe that Mr X is an officer
of the company and that he is authorized to enter into the
transaction for the supply of the equipment. If so, then it all
likelihood the company will be bound by the transaction and
pay the RM1,000,000.00 and it would not matter if there
were cheaper or better equipment of the like elsewhere.
ACROSS
2. Islamic insurance concept
4. An initial period of new employment
7. Synonym of apparent, visible, or exhibited
9. An individual who purchases and uses
product and services
12. To surrender possession or occupancy
14. An order issued by the court directing a
person to do or refrain from certain action
16. What you get from parking on the yellow
line
17. Latin for “in fact” or “in reality”
18. To convey a property as loan security
19. Wrongful or criminal deception
DOWN
1. Generally to admit receipt of something
2. A civil wrong in French
3. Alternative word for “lawyer”
5. The conditional release of a prisoner be-fore
expiry of jail term
6. A court decision that is cited as an exam-ple
or analogy
8. Written evidence of debt issued by a com-pany
10. A specific law, expressed in writing
11. Basic asset for a business
13. An agreement between two or more per-sons
15. A judge’s office
8
3
6
15
ACROSS: 2. Takaful; 4. Probation; 7. Ostensible; 9. Consumer; 12. Vacate; 14. Injunction;
16. Summons; 17. Defacto; 18. Mortgage; 19. Fraud
DOWN: 1.Acknowledge; 2. Tort; 3. Counsel; 5. Parole; 6. Precedent; 8. Bond; 10. Statute;
11. Capital; 13. Contract; 15. Chambers

inFRAME 2013 Photo Article
FAMILY DAY & STATION
GAMES.
BURPS AND GIGGLES ALL THE WAY
WITH HOMECOOKED SPECIALTIES.
LAWYER CUM CHEF. PROUD SMILES FROM THE WINNING
TEAM
LICENSED TO ARGUE:
PUPILS BEING CALLED TO THE BAR.
HARI RAYA POTLUCK IN OFFICE.
"The best of all gifts around an y Christmas tree: the presence of a happy family all wrapped up
in each other." - Bill Vaughan a.k.a Burton Hillis
“GIVE A HOME A
LIBRARY”
CHRISTMAS KRINGLE 2013
PHOTOS CONTRIBUTED BY MEMBERS OF JHJ
MANISAH’S WEDDING
COPYRIGHT © 2014 • JAYADEEP HARI & JAMIL • ALL RIGHTS RESERVED

Owning one’s dream house can represent the ultimate dream for just about anyone. However, with soaring and escalating house prices, buying one’s dream house is not just a matter of saying “I want it” and then signing on the dotted line. One should always consider whether he/she is financially ready and the financial implications involved before buying a property.
Unless you have the financial muscle to buy a property with cash up front, you’ll first need to secure a loan from the banks. In deciding the rates on your home loan, banks will normally look at two things, your credit worthiness and the level of your income. If it’s your first property, banks will usually readily give you 80-90% of the required amount, so long as the installments come up to no more than one-third of your total income (after taking into account your commitment for your car loan, personal loan and etc.). If you have a relatively good credit score, the installment may even come up to half of your net income.
The Government also provides for a “My First Home” scheme. The scheme allows young working adults not more than 35 years old, to obtain 100% financing from banks to purchase their first home selling price ranging from RM100,000 (minimum) to RM400,000 (maximum). For individual applicants, their income must be up to RM5,000 per month and for joint applicants, their income must be up to RM10,000 per month (subject to individual borrower income not exceeding RM5,000 per month).
If you receive a home loan of 90%, you will need the remaining 10% from your savings as deposit to pay for the rest of the property's price. For example, if your dream house is RM400,000, you must have at least a minimum of RM40,000 to pay as deposit.
However, buying and financing your dream house takes more than just the deposit and the loan, it also involves miscellaneous fees and other charges.
One of them to look out for is the stamp duties. Stamp duty is levied on the document of transfer (i.e. the memorandum of transfer if the title has been issued, or the deed of assignment if the title has not been issued). The stamp duty is 1% for the first RM100,000, 2% on the next RM400,000, and 3% on the subsequent amount based on the Stamp Act 1949. So, your RM400,000 dream house would attract RM7,000 stamp duty.
Another thing to watch out for is the legal fees. Legal fees to draft and handle a Sale and Purchase Agreement and Loan Facility Agreement are regulated by the Solici- tors Remuneration Order.
For the Sale and Purchase Agreement, legal fees are cal- culated based on the value of the property. The legal fees is 1% for the first RM150,000, 0.7% for the next RM850,000, 0.6% for the next RM2,000,000, 0.5% for the next RM2,000,000, 0.4% for the next RM2,000,000 and where the consideration or adjudicated value of the property is in excess of RM7,500,000, it is negotiable on the excess but the legal fees shall not exceed 0.4% of such excess. Based on the above, your RM400,000 dream house will command legal fees of RM3,250.
Featured Article
Real Estate & Property Industry
About The Author:
SHAHMAN SANGARAN is a law graduate from the University of London (External) and read in the chambers of JHJ under the guid- ance of Mr Jayadeep Bhanudevan.
jhjkl@jhj.com.my
“My dream house has ten bedrooms, a four car garage and walk-in closets. My dream house has a swimming pool and even sports facilities like a basketball court and a tennis court. My dream house has a big garden full of flowers and trees.”
Do you have the
Moolah
to purchase your
Dream House?
‘If you have a relatively good credit score, the installment may even come up to half of your net income.’

Featured Article Real Estate & Property Industry
If you are buying your
dream house directly
from a developer, many
developers may offer
you “free legal ser-vices”
where the Sale
and Purchase Agree-ment
had already been
drafted out for you by the developer’s lawyers. Howev-er,
always bear in mind that they are acting in the best
interests of the developer who is paying their fees and
not you.
For the Loan Facility Agreement, legal fees are calculat-ed
similar to the legal fees for Sales and Purchase
Agreement but with one exception, it is based on the
loan amount and not the value of the property. There-fore,
your RM400,000 dream house with a home loan of
90% will command legal fees of RM2,970.
Usually the bank will also ask your lawyer to register a
charge in its favour. The legal fees for the registration of
the charge will be 10% of the legal fees for the Loan
Facility Agreement which will need to be borne by you.
Please take note however, that there is a minimum cap
of RM300. Therefore, for your RM400,000 dream
house, you must pay RM300 and not RM297. The banks
will usually also asks the lawyer to register a caveat in
its favour. The legal fee for the registration of the cave-at
is RM350.
After considering the deposit, the fees and the charges,
the next question to ask is whether you can afford the
monthly installments contained in the Loan Facility
Agreement. The current market rate is 4.2% to 4.4%
p.a. interest for a standard home loan. As such, you will
need to pay a minimum of RM1,760 per month over the
next 30 years in order to finance your RM400,000
dream house with a home loan of 90%. To quickly calcu-late
the monthly installments charged for a home loan
of any other values, you can use the online calculators
which can usually be found on the bank’s website.
Most financial books and magazines would advise to on-ly
use one-third of your total income to pay off your
home loan. In other words, following their advise, you
or your household should have an income of at least
RM5,280 per month to afford your RM400,000 dream
house. Always be mindful of the fact that interest rates may
increase in the coming years, so don’t calculate monthly
loan installments which are too high a proportion of your
monthly income.
In conclusion, a great deal of sense and thought must be
put before purchasing one’s dream house. Owning your
dream house is always nice but one should always con-sider
his/her financial positions first before making this
dream a reality.
American International Assurance Co Ltd v
Nadarajan a/l Subramaniam [2013] 5 MLJ 195
The correct estimation of income is essential in determining in-surance
coverage. The estimation of income may affect the insur-ance
company’s decision on whether to accept the coverage risk
and to determine the premium to be applied on the said insur-ance
policy.
Karn Woon Lin & Anor v Cheah Chor Bok
[2013] 4 MLRA 135
For a will to be valid, a testator must have testamentary capacity.
Mere bodily ill-health (i.e. brain cancer) or imperfect memory is
insufficient to vitiate testamentary capacity. Hence, the testator
being in a confused or depressed state when the will was drafted
does not invalidate a will.
Krishnaveni a/p Munusamy & Anor v Bawanes-wary
a/p R Chinniah & Ors [2013] 10 MLJ 106
Where a nomination under the Employees Provident Fund Act
1991 was made, it would not operate as a will. Hence, there
would be no valid claim under a 1st EPF nomination if a 2nd EPF
nomination was done thereafter, even if the 1st EPF nomination
was not expressly revoked.
Dato' Seri Kong Cho Ha (as Secretary General
and claiming for Malaysia Chinese Association
(MCA)) v Kajang Municipal Council (MPKJ)
[2013] 10 MLJ 56
Even if the land on which a building was erected belonged to the
state government, so long as the building was within the state
municipal council’s knowledge for a reasonable period of time
without any negative reaction from the state authority as land-lord,
a reasonable expectation to occupy is created.
Abdul Razak bin Datuk Abu Samah (claimed as
a widower to Fatimah @ Rohani bt Zainal, on
behalf of the deceased) v Raja Badrul Hisham
bin Raja Zezeman Shah & Ors [2013] 10 MLJ 34
A consulting doctor should counsel the patient on material infor-mation
such as inherent dangers and increased risk of complica-tions
or death arising from related anticipated complexities prior
to a pre-surgical or a surgical decision. The doctor also had a
duty to inform the patient’s next of kin regarding the nature of
surgery and its risks.

ernance is to be considered. Under the FSA, BNM’s oversight powers now extend to companies that own more than 50% of the shareholding or are in “de-facto” control of the financial institution.
This is arguably necessary for more effective governance if ever required to stem or pre-empt an impending crisis. We have learnt from recent experience that not having the necessary authority at law at a time when needed means that the government can only look forward to cleaning up after the fact; the question is how big a mess has already been made when the time has passed.
With powers given to BNM to remove directors and CEOs who have shown themselves unfit and improper to govern or lead any major financial institution, drastic events may be averted without catastrophic consequences.
Enhanced Directors’ Duties
Taking cue from the reforms carried out in the UK, the directors’ duties as contained in the FSA are almost a carbon copy of the equivalent chapter in the UK’s Com- panies Act 2006. Admittedly however, the UK reforms have done an excellent job of clearly setting out the duties of a directors, which will serve both the directors and shareholders to know, in respect of the former, what
Featured Article
The Parliament has enacted the Financial Services Act 2013 (“FSA”) and the Islamic Financial Services Act (“IFSA”) 2013 in March of this year which will have a major impact on financial institutions here; but arguably it will be a positive impact. In light of recent global eco- nomic crises, the new Acts are intended to address and prevent the lack of corporate governance that, most would agree, could have prevented the crises.
The coming into force of the FSA consolidates (and thereby repealing) the Banking and Financial Institutions Act 1989 (BAFIA), the Insurance Act 1996, the Exchange Control Act 1953 and the Payment Systems Act 2003. Similarly in the case of the IFSA, it consolidates and re- peals the Islamic Banking Act 1983 and Takaful Act 1984.
The consolidation is generally seen as a positive move providing more efficacious and prudent regulation, but both the FSA and IFSA are also expected to bridge the gaps left under previous legislations. Regardless, the FSA/ IFSA is expected to have significant impact in various industries:
Wider powers for Bank Negara Malaysia (BNM)
Previously, BNM only had supervisory powers over financial institutions but not over its holding companies; a fact that needs to be addressed if any sort of effective gov-
About The Author:
ANDREW CHEE graduated with honours from the University of London (External) and had since joined JHJ’s corporate team after being called to the Bar in 2012.
andrewchee@jhj.com.my
‘Under the FSA, BNM’s oversight
powers now extend to companies that own more than 50% of the shareholding…’
the Financial ActFinancial Services Act 2013
and the
Islamic ActIslamic Financial Services Act 2013

already holding composite licenses will be likely granted both single licenses provided they are held (and the business run by) separate entities although not expressly stated in the Acts. It is probable that the reasoning for “single licenses only” policy may be due to the fact it makes governance that much easier.
Enhanced Consumer Protection
Along with changes affecting the corporate structure and overall governance, the FSA/IFSA includes increased protection for consumers and policy holders for insurance and takaful certificates.
A misstatement of age henceforth shall not be grounds for any of these providers to void any coverage on such grounds alone. Instead, the new Acts require that the providers still pay out the coverage/compensation required but merely adjusted or varied to reflect the policy holder’s true age.
In group policies, a person insured in such a group who has paid his premium to the group policy owner shall be entitled to coverage even if the group policy owner has not paid the said premium to the insurer.
Where a consumer has made a careless or reckless misrepresentation, his policy may not necessarily be void based solely on such misrepresentation. The Acts provide that in such instances, the remedies available to the consumer would be the remedies available if there was no misrepresentation and the consumer had stated the truth. For example:
 if the insurer would not have entered or renewed the contract of insurance had the insurer been told the truth, it may void the contract but must refund all premiums paid thereunder; or
 if the insurer would have entered or renewed the contract on different terms, then the insurer shall pay out to the consumer any of his entitlement in accordance to those different terms.
The consumer is not remedy-less and entitled to nothing based on a technicality or an honest mistake. Deliberate and reckless misrepresentation however is a different story.
Featured Article
exactly are the boundaries and extent of their responsi- bilities and what rights a shareholder may have against an errant director in respect of the latter.
Whereas previously one would have to resort to the convoluted realm of common law and to examine a long history of decided cases and precedents to only have an inkling (without any assurance of certainty) of what the foregoing entails, now directors’ duties clearly include and are categorized as follows:
 the duty to act in good faith and in the best interest of the institution;
 the duty to exercise reasonable care, skill and dili- gence;
 the duty to exercise powers only for its intended purposes; and
 the duty to exercise sound and independent judg- ment (without fettering his discretion).
The Divestment and Separation of Business
Insurance and Takaful providers are now prohibited from using one single entity to carry out both:
 in the case of Takaful – family and general takaful business;
 in the case of Insurers – life insurance and general insurance.
This is a major area of impact for composite license holders as they are required to convert into a single insurance or takaful license only. Nevertheless all affected players are given a grace period of five (5) years (from the date of the coming into force of the Acts) to complete the same and divest one arm of their business.
However, it is anticipated and speculated that players
‘A misstatement of age henceforth shall not be grounds for any of these providers to void any coverage on such grounds alone.’

Kuala Lumpur . Petaling Jaya . Kota Bharu . Melaka
This is a publication produced by the JHJ Knowledge Department. For any inquiries, please do not hesitate to contact us: T: 03-2096 1478 | F: 03-2096 1480 | E: kd@jhj.com.my | W: www.jhj.com.my
Publisher: Messrs Jayadeep Hari & Jamil, Suite 2.03 (2nd Floor), Block A, Plaza Damansara, Bukit Damansara, 50490 KL.
Printers: Pressworks Enterprise, No 20, Jalan Usaha Satu 25/2A, 40400 Shah Alam.

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