Malaysia: High Court considers validity of applications determined through remote hearings during the Movement Control Order

In SS Precast Sdn Bhd v Serba Dinamik Group Bhd & Ors (Civil Suit No. BA-22C-6-03), the High Court considered the validity of the remote hearing of three applications conducted through Skype during the enforcement of Malaysia’s Prevention and Control of Infectious Diseases (Measures Within Infected Local Areas) Regulations 2020 (“Movement Control Order”). The decision is particularly notable for finding, in obiter, that the court may validly exercise its discretion to conduct a remote hearing of an application or trial without unanimous party consent where it is in the interest of a party requesting a remote hearing.

Background

The plaintiff commenced a suit against 10 defendants. On 28 April 2020, the plaintiff entered a judgment in default of defence against the first to sixth defendants, which directed these six defendants to pay the plaintiff a sum of RM14,020,601.56 at a post-judgment interest rate of 8% per annum (“Default Judgment”). On 14 April 2020, the solicitors for the six defendants filed applications to set aside the Default Judgment (“Setting Aside Applications”). On 16 April 2020, the plaintiff filed an ex parte application to freeze the first defendant’s two bank accounts, and the fifth defendant’s bank account, premised on the Default Judgment (“Freezing Injunction Application”).

Upon receipt of the plaintiff’s Freezing Injunction Application, the High Court on the same day enquired the solicitors of the plaintiff and the six defendants on whether they agree to conduct the hearing of the Setting Aside Applications and Freezing Injunction Application remotely through a Skype video conference (“VC”) the next day and, if so agreed, to indicate a convenient time of the day for counsel for the parties to conduct the hearing through VC.

Counsel for the respective parties agreed for the VC to be held at 10am.

Three separate sessions – all of which were recorded by the court – were conducted throughout the day of the hearing. As a result of these sessions, the court:

• received the respective parties’ consent through counsel for the Setting Aside Applications to be heard and determined by way of VC, and directed the parties to prepare a consent order recording this agreement;
• abridged the minimum time period for service of applications, and procured a counsel’s undertaking to duly affirm the affidavits currently filed once the Movement Control Order is lifted; and
• allowed an oral application from counsel for the six defendants for an ad interim stay of execution of the Default Judgment (through the Freezing Injunction Application) pending determination of the Setting Aside Applications on the condition that RM500,000 (as opposed to RM7,000,000 requested by the plaintiff’s counsel) be paid into a stakeholder’s interest-bearing account.

Dissatisfied, on 20 April 2020, the plaintiff’s solicitors submitted to the court both a letter and police report made by the plaintiff’s senior manager which alleged, amongst others, that (i) the court had no power to hear the applications by VC, (ii) the plaintiff did not consent to conducting the hearing of the applications by VC, and (iii) the court could not consider the affidavits filed by the six defendants in support of the Setting Aside Applications by reason that these were not duly affirmed.

Decision of the High Court

The court dismissed the plaintiff’s objections.

First, the plaintiff did not deny its counsel’s authority to act for the plaintiff in the proceedings, and is therefore bound by the conduct of its counsel. The plaintiff’s solicitors and counsel, both by their conduct before and during the VC sessions, indicated express and implied consent to conduct the hearing remotely.

Second, Order 41 rule 9(1) of the Rules of Court 2012 provides discretion to the court to allow the use of the affidavits which are not duly affirmed. The court took judicial notice of the impact of the Movement Control Order on the parties’ ability to duly affirm affidavits before a Commissioner for Oaths. On that basis, the court allowed their use upon the plaintiff’s counsel’s undertaking that such affidavits would be duly affirmed upon expiry of the Movement Control Order.

Further, in light of the plaintiff’s counsel’s conduct in the proceedings, the plaintiff was estopped from denying the validity of the proceedings conducted by VC, and on the six defendants’ reliance on the affidavits which had not been affirmed.

Importantly, in obiter, the court noted that it has the power under Order 32 rules 10 and 11 of the Rules of Court 2012 to conduct hearings remotely even if only one party consents to it. These provisions read as follows:

 “Order 32 rule 10

The Registrar may refer to a Judge any matter which he thinks should properly be decided by a Judge, and the Judge may either dispose of the matter or refer it back to the Registrar, as the case may be, with such directions as he thinks fit.

Order 32 rule 11

(1) A notice of application or an appeal shall be heard in Chambers, subject to any express provision of these Rules, any written law, any direction of the Court or any practice direction for the time being issued by the Chief Judge.

…”

The High Court, held in obiter that consent of an opposing party to an application to determine a matter by a remote hearing is not a necessary precondition to proceed as such. The court’s reasoning is as follows:

• Article 5(1) of the Federal Constitution provides that no person shall be deprived of his or her life or personal liberty save in accordance with the law. Interpreting Article 5(1) of the Federal Constitution through the lens of the apex court’s decision in Sivarasa Rasiah v Badan Peguam Malaysia [2010] 3 CLJ 507, the court concluded that the right of access to civil justice through the courts is a fundamental right provided by the Federal Constitution.
• Premised on the assumption that the Rules of Court 2012 is a validly promulgated subsidiary legislation made under an Act of Parliament, it must follow that any discretion conferred to the court under the Rules of Court 2012 is valid if the exercise of discretion is justified under the aims of the Federal Constitution.
• Order 1A and Order 2 rule 1(2) of the Rules of Court 2012 provide that regard to the overriding interest of justice is the overriding objective of the court’s rules of civil procedure. These provisions read:

“Order 1A

In administering these Rules, the Court or a Judge shall have regard to the overriding interest of justice and not only to the technical non-compliance with these Rules.

Order 2 rule 1

…

(2) These Rules are a procedural code and subject to the overriding objective of enabling the Court to deal with cases justly. The parties are required to assist the Court to achieve this overriding objective.”

The judge then noted that even if the plaintiff had objected to the VC, he would have exercised his discretion to proceed with it. In view of a further extension of the MCO at the time, the court could not hold a physical hearing of the Setting Aside Applications. The fundamental right of the six defendants to access to civil justice would be achieved through the remote hearing of the Setting Aside Applications. It was therefore in the interest of justice to hear the Setting Aside Applications through a remote hearing. In this regard, the court considered that failure to hold a VC on the basis of one party’s lack of consent to it would cause injustice to an applicant, and render illusory that party’s fundamental right under Article 5(1) to have access to justice.

Comment

With the ease of restrictions under the Movement Control Order (which has since been replaced with a Conditional Movement Control Order from 4 May 2020 to 9 June 2020), physical hearings may now continue subject to health and safety regulations. Nevertheless, on 21 May 2020, the Office of the Chief Justice of the Federal Court of Malaysia provided a draft of its proposed amendments to the Rules of Court 2012, Rules of the Court of Appeal 1994, and Rules of the Federal Court 1995 to Malaysia’s Bar council for feedback. Amongst others, the suggested amendments propose that the court can direct a hearing or trial to proceed remotely, even where a party does not consent to it.

In the face of what appears to be current practice of Malaysian courts declining to proceed with a hearing remotely where one party objects to it, this decision stands as a precursor to the underlying power of Malaysian courts to direct that proceeding be conducted remotely, without the need for all litigants’ consent. It is interesting to note that the proposed codification of this inherent power mirrors the introduction and development of early neutral evaluation by judges in the English courts. In Seals and another v Williams [2015] EWHC 1829 (Ch), the court – on a joint proposal by the parties – allowed the conduct of a judge-led early neutral evaluation process as a mode of alternative dispute resolution for the early disposal of the dispute. This was followed by an amendment to the English CPR 3.1(2)(m) to include the power of the court to ‘take any other step or make any other order for the purpose of managing the case and furthering the overriding objective, including hearing an early neutral evaluation with the aim of helping the parties settle the case’. This culminated in a decision from the English Court of Appeal finding that party consent is an unnecessary condition to ordering early neutral evaluation under the CPR (discussed in detail here).

The clarification by the High Court here that party consent is not a necessary precondition to allowing remote hearings is a laudable development of the Malaysian courts’ general powers of managing litigation. This decision, and the draft amendments to the various rules of court, demonstrate a steady approach towards modernisation of the rules and litigation practice, and a broader movement towards access to civil justice as the overriding objective of Malaysia’s civil processes and procedure.

The proposed amendments to the various rules of court and their accompanying working papers are accessible here.

For further information, please contact Peter Godwin, Regional Head of Practice – Dispute Resolution, Asia and Managing Partner, Kuala Lumpur, Daniel Chua, Associate, or your usual Herbert Smith Freehills contact.

Disclaimer

Herbert Smith Freehills LLP is licensed to operate as a Qualified Foreign Law Firm in Malaysia. Where advice on Malaysian law is required, we will refer the matter to and work with licensed Malaysian law practices where necessary.