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Issue #32/2026
06 August 2026
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CASE SPOTLIGHTS
HOW ZHENG HONG v. AIR ASIA BHD & ANOR [2026] 7 CLJ 517 (i) In a retrenchment exercise premised on financial distress, a subsidiary company cannot rely on the financial difficulties or consolidated accounts of its parent company to prove redundancy. As a parent and subsidiary are distinct legal entities, the employer must produce its own contemporaneous financial evidence to prove that it was individually suffering losses at the material time; (ii) While an employer may depart from the 'last in, first out' ('LIFO') principle in favour of a performance-based system, a mere assertion of performance-based selection is insufficient. Any such departure from the LIFO principle must be justified by reliable, cogent, and objectively transparent evidence. LABOUR LAW: Employment - Retrenchment - Redundancy - Financial distress - COVID-19 pandemic - Selection criteria - Departure from 'last in, first out' (LIFO) principle and application of best fit rule in retrenchment exercise - Whether financial distress established - Whether financial difficulties of parent company automatically attributable to subsidiary - Whether distinct legal entities - Whether contemporaneous financial reports produced to establish financial distress - Whether selection criteria reasonable and just - Whether alternative measures genuinely sought and conscientiously considered in good faith - Whether retrenchment carried out bona fide APPEAL UPDATES
LATEST CASESLegal Network Series
CLJ 2026 Volume 7 (Part 3) An independent non-executive director does not share an employer-employee relationship with a company, thereby rendering their fees, allowances, and consultancy rewards taxable as business income under s. 4(a) of the Income Tax Act 1967 rather than employment income under s. 4(b). In determining employment status, an EA Form is merely an administrative compliance tool and does not constitute determinative or prima facie evidence of a contract of service; courts must instead adjudicate based on the true substance and factual reality of the relationship. Where a taxpayer acts in good faith by securing professional independent tax advice, making full and frank disclosures without concealment, filing returns within statutory timeframes, and cooperating fully during audits, the Director General of Inland Revenue's (‘Revenue’) decades-long acceptance of that tax treatment strongly refutes any allegation of negligence. Consequently, the Revenue cannot utilise its discretionary penalty powers under s. 113(2) arbitrarily; such powers must be exercised judiciously. REVENUE LAW | STATUTORY INTERPRETATION
REVENUE LAW: Income tax - Assessment - Additional assessment - Appeal against - Taxpayer an independent non-executive director on boards of public listed companies - Directors' fees, allowances, and consultancy fees remitted to and declared as business income by management companies - Whether independent non-executive director an 'employee' - Whether receipts taxable as gains or profits from business under s. 4(a) or gains or profits from employment under s. 4(b) of Income Tax Act 1967 REVENUE LAW: Income tax - Evidence - Employment relationship - Determination of - Taxpayer's status as independent non-executive director - EA Form issued under s. 83(1A) of Income Tax Act 1967 - Whether standard administrative reporting document constituted conclusive or prima facie evidence of employment status for tax purposes - Letters from company secretaries confirming independent non-employee status - Rejection of letters by Special Commissioners of Income Tax on ground that they were signed by company secretary - Status, role, and authority of company secretary as corporate officer under s. 216 of Companies Act 2016 - Whether letters issued by company secretary on corporate status carry authority of Board of Directors - Whether administrative convenience could override substantive legal rights and obligations REVENUE LAW: Income tax - Additional assessment - Time-barred assessments - Notices of additional assessment raised for Years of Assessment ('YAs') 2002 to 2009 after expiry of statutory period - Whether Director General of Inland Revenue ('Revenue') invoked s. 91(3) of Income Tax Act 1967 - Taxpayer routing income through management companies based on professional tax advice and years of Revenue's previous acceptance - Whether taxpayer negligent - Burden of proof - Whether Revenue successfully discharged burden of proving negligence, fraud, or wilful default REVENUE LAW: Income tax - Penalty - Imposition of - Whether taxpayer acted in good faith - Whether there was failure to prove negligence on taxpayer's part - Whether underlying assessments for time-barred years invalid - Whether Revenue's power to impose penalty ought to be exercised judiciously - Whether penalty correctly and legally imposed - Income Tax Act 1967, s. 113(2) STATUTORY INTERPRETATION: Regulatory frameworks - Bursa Malaysia's listing requirements and Practice Note 13 issued pursuant to Capital Markets and Services Act 2007 - Whether binding on listed companies - Whether concept of independent director presupposes absence of employee status and management control - Whether listing requirements provide essential context for interpreting Income Tax Act 1967 in commercial setting
Collin Lawrence Sequerah JCA
(i) In an action for defamation, the defences of justification, qualified privilege, and fair comment will fail if internal corporate communications cross the line into hyperbolic, malicious personal attacks that convey factual guilt rather than honest opinion, especially when built on a retracted admission that lacks independent corroboration; (ii) The High Court lacks any common law, equitable, or statutory jurisdiction under the Defamation Act 1957 to compel a party to issue a public apology, as an apology is a matter of personal volition and enforcing it constitutes forced speech that improperly draws the Judiciary into regulating the sincerity, text, and tone of a statement; (iii) When evaluating multiple defamatory statements published within a compressed timeframe by the same directing minds, the court must reject an artificial, segmented approach to quantum in favour of a single global assessment of damages to prevent double-counting. This global award must remain strictly proportionate and reasonable, warranting a significant reduction if the publications are confined to internal corporate groups, affect a non-public figure, and result in no proven financial loss or degradation of social media engagement metrics. TORT | DAMAGES
TORT: Defamation - Libel - Impugned statements - Appellants published statements concerning respondent, former general agent for company - Whether statements carried defamatory meanings - Defence of justification - Whether must meet precise imputation complained of - Whether language describing respondent as 'manipulative leader' and 'wholly untrustworthy' legally justified - Defamation Act 1957 TORT: Defamation - Libel - Impugned statements - Appellants published statements concerning respondent, former general agent for company - Whether statements carried defamatory meanings - Defence of qualified privilege - Irrelevant personal attacks targeting respondent to undermine her reputation - Whether there was inference of malice from exaggerated statements - Whether disproportionate and inflammatory language took publication outside permitted privilege occasion - Defamation Act 1957 TORT: Defamation - Libel - Impugned statements - Appellants published statements concerning respondent, former general agent for company - Whether statements carried defamatory meanings - Defence of fair comment - Requirements of defence - Whether impugned statements recognisable as expressions of opinion or presented as assertions of fact - Internal communications made to selected company members regarding commercial and business matters - Whether matters of public interest - Finding of malice - Whether defence of fair comment undermined and rightly rejected - Defamation Act 1957 TORT: Defamation - Remedies - Apology - Order for publication of public apology - Whether there were inherent difficulties in granting such relief - Whether High Court has inherent or statutory power to compel individual or corporate entity to publish apology DAMAGES: Quantum of damages - Assessment of - Defamation - Seven impugned statements published sequentially with increasing severity - Whether to be treated as one continuous course of defamation - Whether assessment of damages should be global or segmented - Whether appellants' liability ought to be joint and several - Extent of publication - Whether confined to company's internal online groups - Whether publications caused substantial harm to individual's reputation - Whether there were financial losses - Whether original award exorbitant, disproportionate, and unfair - Whether there ought to be reduction of damages to fair, reasonable, and proportionate global sum
Mohamed Zaini Mazlan JCA
(i) Pursuant to s. 2(a) of the Public Authorities Protection Act 1948, an action against a person acting in the execution of a public duty must be commenced within 36 months from the act, neglect, or default complained of. Accordingly, claims for wrongful arrest and false imprisonment accrue from the date of the arrest or detention and are statute-barred if commenced outside the prescribed limitation period; (ii) An acquittal, even following a full trial, does not, without more, establish the tort of malicious prosecution. The determinative question is whether, at the time the prosecution is instituted, the arresting and investigating officers honestly believed, on reasonable and probable grounds, that the accused had committed the alleged offence. TORT | LIMITATION
TORT: Malicious prosecution - Claim against officers of Royal Malaysian Customs Department - Vessel with Indonesian crew arrested and detained after entering Langkawi waters - Physical inspection revealing, inter alia, discrepancies in cargo manifest, undeclared, goods and multiple maritime irregularities - Crew members charged under s. 135(1)(a) of Customs Act 1967 - Whether arresting and investigating officers acted with reasonable and probable cause - Whether prosecution actuated by malice LIMITATION: Accrual of cause of action - Malicious prosecution - Arrest and detention of vessel and crew by officers of Royal Malaysian Customs Department in April 2019 - Action for malicious prosecution commenced on 16 June 2023 - Whether commenced within 36 months - Whether statute-barred - Public Authorities Protection Act 1948, s. 2(a) DAMAGES: Special damages - Malicious prosecution - Loss of employment and legal costs not properly particularised - Quantification raised only at submission stage - Failure to plead damages - Absence of documentary proof - Whether failure fatal - Whether issue of damages moot and academic upon failure to establish malicious prosecution Johan Lee Kien How J
Mahkamah sivil tidak berbidang kuasa untuk mendengar dan menentukan permohonan semakan kehakiman terhadap fatwa yang dikeluarkan oleh Jawatankuasa Fatwa Negeri. Berdasarkan per. 121(1A) Perlembagaan Persekutuan, penentuan isu-isu berkaitan akidah Islam, tafsiran al-Quran dan amalan syariah adalah luar kompetensi mahkamah sivil dan terangkum dalam bidang kuasa eksklusif Mahkamah Syariah yang dianggotai oleh pakar yang berkelayakan khusus dalam bidang tersebut. UNDANG-UNDANG PERLEMBAGAAN | MAHKAMAH | UNDANG-UNDANG ISLAM
UNDANG-UNDANG PERLEMBAGAAN: Mahkamah - Bidang kuasa - Bidang kuasa mahkamah sivil - Permohonan kebenaran untuk semakan kehakiman - Cabaran terhadap fatwa Jawatankuasa Fatwa Negeri Perlis - Fatwa mengisytiharkan ajaran, aktiviti, dan model ekonomi bersifat batiniah, menyeleweng dan sesat - Penentuan isu akidah, syiar, dan doktrin Islam - Sama ada mahkamah sivil forum yang sesuai - Sama ada hal perkara bawah bidang kuasa eksklusif Mahkamah Syariah - Perlembagaan Persekutuan, per. 121(1A) MAHKAMAH: Mahkamah sivil - Bidang kuasa - Permohonan kebenaran untuk semakan kehakiman - Cabaran terhadap fatwa Jawatankuasa Fatwa Negeri Perlis - Fatwa mengisytiharkan ajaran, aktiviti, dan model ekonomi bersifat batiniah, menyeleweng dan sesat - Penentuan isu akidah, syiar, dan doktrin Islam - Sama ada mahkamah sivil forum yang sesuai - Sama ada hal perkara bawah bidang kuasa eksklusif Mahkamah Syariah - Perlembagaan Persekutuan, per. 121(1A) UNDANG-UNDANG ISLAM: Mahkamah Syariah - Bidang kuasa - Fatwa - Cabaran terhadap fatwa Jawatankuasa Fatwa Negeri Perlis - Fatwa mengisytiharkan ajaran, aktiviti, dan model ekonomi bersifat batiniah, menyeleweng dan sesat - Sama ada keputusan fatwa tertakluk bawah prerogatif diraja - Sama ada boleh dipertikai di mahkamah sivil - Enakmen Pentadbiran Agama Islam (Negeri Perlis) 2006, s. 48 Mohamad Abazafree Mohd Abbas H
When a foreign judgment from a reciprocating country is registered under the Reciprocal Enforcement of Foreign Judgments Act 1958 ('REJA'), the registering Malaysian court acts strictly as an enforcement mechanism and will not review the underlying merits or substantive legality of the dispute. Challenges to registration are strictly confined to the exhaustive statutory grounds enumerated under s. 5(1) of the REJA; re-litigating issues that belong to the original trial forum constitutes an impermissible challenge to a conclusive foreign judgment. CIVIL PROCEDURE
CIVIL PROCEDURE: Judgments and orders - Foreign judgment - Judgment obtained in Singapore High Court arising from credit agreement for casino chips - Application by judgment debtor to set aside registration - Challenge premised on public policy, illegality, forum shopping and abuse of court process - Principle of finality of foreign judgments - Whether registering court could look behind judgment to review merits or underlying legality of contract - Reciprocal Enforcement of Foreign Judgments Act 1958, s. 5(1)
Alice Loke Yee Ching J
The court's equitable jurisdiction to enforce an interlocutory undertaking as to damages is activated once an injunction is shown to have been wrongly granted, a process not dependent on a prior express order directing assessment. Appellate reversal of an injunction, particularly when coupled with dismissed Erinford applications, establishes that the injunction was improperly granted, thereby triggering the undertaking. Because an undertaking is a voluntarily assumed obligation given as the price for interim relief, its enforceability is tied to the fate of the injunction rather than the procedural trajectory of appeals, with enforcement constituting a fresh issue not barred by res judicata, functus officio, or estoppel by election. CIVIL PROCEDURE
CIVIL PROCEDURE: Injunction - Interlocutory injunction - Undertaking as to damages - Interim injunction set aside in its entirety and subsequent applications for Erinford injunction rejected by appellate courts - Application for directions - Defendant seeking directions to commence assessment of damages under O. 37 r. 1 of Rules of Court 2012 - Enforcement - Preconditions - Whether prior express court order directing assessment of damages mandatory precondition - Whether injunction conclusively shown to be wrongly or improperly granted - Whether appellate reversal definitive judicial determination activating undertaking - Whether defendant entitled to seek enforcement through assessment process - Whether application precluded by res judicata, functus officio, estoppel by election, or procedural irregularities CIVIL PROCEDURE: Preliminary objection - Application for directions - Defendant seeking directions to commence assessment of damages under O. 37 r. 1 of Rules of Court 2012 - Undertaking as to damages given by plaintiff during interim injunction - Interim injunction set aside in its entirety and subsequent applications for Erinford injunction rejected by appellate courts - Whether injunction conclusively shown to be wrongly or improperly granted - Whether appellate reversal definitive judicial determination activating undertaking - Whether defendant entitled to seek enforcement through assessment process - Whether application precluded by res judicata, functus officio, estoppel by election, or procedural irregularities - Whether preliminary objection ought to be dismissed
Nixon Kennedy Kumbong JC
(i) Where conduct occurring outside a State's territorial boundaries would violate a State's specific Enactment, s. 17 of the Offences Relating to Awards Act 2017 acts as a federal jurisdictional bridge. It does not extend the State law's territorial reach; instead, it converts that extra-territorial conduct into a parallel federal offence. Consequently, a local court where the conduct occurred possesses full territorial and subject-matter jurisdiction to try the matter; (ii) Under the principle of iura novit curia, ie, the court knows the law, a judge is independently obliged and entitled to examine the entire statutory landscape to determine its own jurisdiction when a preliminary objection is raised. The court is not restricted to the provisions cited by counsel because, while the parties master the facts, the court remains the master of the law. COURTS | CRIMINAL PROCEDURE | CONSTITUTIONAL LAW
COURTS: Jurisdiction - Sessions Court - Territorial and subject-matter jurisdiction - Offence under Pahang State Enactment committed outside territorial boundaries of State of Pahang - Offence occurred in Johor Bahru - Applicability of s. 17 of Offences Relating to Awards Act 2017 - Whether s. 17 extends territorial reach of State Enactment or creates parallel federal offence - Whether Sessions Court of Johor Bahru competent to hear and determine charge - Pahang Emblems, Titles or Awards (Prevention of Improper Use) Enactment 2017, s. 3(1)(d) CRIMINAL PROCEDURE: Charge - Defective charge - Offence under Pahang State Enactment committed outside territorial boundaries of State of Pahang - Omission of s. 17 of Offences Relating to Awards Act 2017 in charge - Whether omission fatal defect within meaning of s. 152(4) of Criminal Procedure Code - Whether s. 17 of Act essential element of offence required to be particularised - Whether accused had complete and precise notice of charge - Pahang Emblems, Titles or Awards (Prevention of Improper Use) Enactment 2017, s. 3(1)(d) CONSTITUTIONAL LAW: Courts - Jurisdiction - Court invoked statutory provision without express invitation from prosecution - Principle of iura novit curia - Duty of court to satisfy itself independently of its own jurisdiction - Whether procedurally improper - Whether court confined to statutory provisions advanced by counsel Atan Mustaffa Yussof Ahmad J
(i) A substantive commercial disagreement, such as a minority shareholder's inability to muster a 75% majority for constitutional amendments, does not constitute 'impracticability' under s. 37 of the Companies Act 2016, as it represents the normal operation of corporate democracy; (ii) A judicial finding that a shareholders' agreement is not binding on a company for lack of constitutional incorporation does not affect its underlying contractual validity inter se, as the agreement remains an enforceable contract between the signing parties unless a recognised contractual vitiating factor is proven; (iii) Discretionary declaratory relief under s. 41 of the Specific Relief Act 1950 will be denied if the declaration sought is broader than necessary to resolve the live dispute, or where its grant would amount to a roving determination upon contractual validity untested by pleaded contractual issues. COMPANY LAW | CIVIL PROCEDURE
COMPANY LAW: Shareholders' agreement - Incorporation into memorandum and articles of association - Impracticability threshold - Shareholder unable to muster 75% majority for constitutional amendment under s. 36 of Companies Act 2016 ('CA') - Whether inability to achieve statutory majority constitutes 'not practicable' or routine corporate democracy - Nature and scope of s. 37 of CA - Whether threshold of 'not practicable' within s. 37 made out COMPANY LAW: Corporate governance - Duomatic principle - Unanimous informal assent of shareholders - Applicability to commercial joint ventures between corporate entities - Distinction between commercial joint ventures and small, family-run, or quasi-partnership companies - Formal contractual mechanisms for meetings prescribed within shareholders' agreement - Whether signing of instrument operated as waiver of formalities - Whether reliance on Duomatic principle encountered obstacles COMPANY LAW: Shareholders' agreement - Validity and enforceability - Non-incorporation into company constitution - Counterclaim for declaration that agreement null and void - Prior judicial finding that agreement not binding on company - Whether lack of incorporation rendered underlying contract invalid inter se between contracting shareholders - Whether declaration of nullity added legal substance - Whether shareholders' agreement may remain valid and enforceable CIVIL PROCEDURE: Res judicata - Abuse of process - Whether plaintiff failed to seek statutory relief in prior suit - Initiating fresh proceedings under s. 37 after exhausting appellate processes - Whether claim could and should have been raised in prior suit - Whether originating summons barred under extended doctrine in Henderson v. Henderson
Where an insured vessel is totally destroyed by fire while undergoing maintenance at an established dry-docking facility, an insurer cannot sustain a repudiation of liability on grounds of wilful misconduct or want of due diligence without discharging a stringent burden of proof. An insurer remains bound to indemnify the insured for any loss where the dominant, effective, and operative cause is an accidental fire, which constitutes a covered peril. Even where the fire originates from the intervening negligence of third-party repairers during hot works and welding activities, such negligence cannot be imputed to the insured to defeat the claim. INSURANCE | WORDS & PHRASES
INSURANCE: Marine insurance - Policy - Hull and machinery policy - Indemnity - Total loss of vessel by fire - Repudiation of liability by insurer -Allegation of wilful misconduct - Fire originated in engine room during hot works and welding activities - Whether repairs carried out under sole control and supervision of shipyard personnel and not vessel crew - Whether fire concluded as accidental by expert evidence - Whether loss proximately caused by wilful misconduct of insured - Whether insurer discharged burden of proving wilful misconduct under s. 55(2)(a) of Marine Insurance Act 1906 - Whether loss fell within insured perils - Whether repudiation of claim sustainable - Whether insurer remained liable for loss proximately caused by insured peril - Whether insurer liable to indemnify insured INSURANCE: Marine insurance - Policy - Hull and machinery policy - Breach of warranties - Allegation of - Policy containing warranty that vessel be properly and reasonably maintained, equipped, kept-up, officered and manned - Allegation of want of due diligence by insured - Whether placing vessel at established, professional shipyard with permit-based safety systems constituted reasonable and sufficient due diligence - Coverage for loss caused by negligent acts of repairers not named as co-assured - Whether insurer established want of due diligence - Whether insurer remained liable for loss proximately caused by insured peril - Whether insurer liable to indemnify insured WORDS & PHRASES: Wilful misconduct - Marine Insurance Act 1906, s. 55(2)(a) - Meaning of - Whether requiring proof of intentional or reckless act with knowledge that loss would result - Burden of proof on insurer
Quay Chew Soon J
ARTICLESLNS Article(s)
LEGISLATION HIGHLIGHTSPrincipal Acts
Amending Acts
PU(A) \ PU(B)
Legislation Alert Updated
Revoked
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