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JRI Resources Sdn Bhd v Kuwait Finance House (Malaysia) Berhad; President…
JRI Resources Sdn Bhd v Kuwait Finance House (Malaysia) Berhad; President of Association of Islamic Banking Institutions Malaysia & Anor [2019] 3 MLRA
Facts of the case
The original disputes between the parties are regarding four Ijarah Muntahiah Bitamlik Facilities (Ijarah Facilities) and a Murabahah Tawarruq Contract Financing facility. The guarantor for the repayment of this facilities are, Ismail Kamin, Zulhizzan Ishak and Norazam Ramli.(defendants)
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2 September 2013 : Respondent filed a civil action against the appellant (defendant) for the recovery of the unpaid amount.
2014 : Respondent filed an application for summary judgement.
3 October 2014 : High Court granted summary judgement for the outstanding amounting to RM118,261,126.26 as at 8 November 2014 including compensation fees.
Dissatisfied, the applicant appeal to Court of Appeal.
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15 September 2015 : COA, the applicant submitted that the failure of the respondent as the owner to carry out he major maintenance works cause the failure on behalf of the applicant to derive income.
The issue before the COA was the HC had erred in not seeking ruling on Shariah issue in relation to the Shariah Compliance of cl 2.8 of the Ijarah Facilities Agreement.
Ijarah facilities : Leasing of shipping vessels by the respondant (KFH) to the applicant (JRI). the vessels were purchased upon request of the applicant. The respondent funded the purchase and became the owner of the vessels. Then, vessels were leased to the applicant.
The applicant refused to accept the rulings of the SAC. Before the trial could proceed, the applicant filed an application to the FC to determine whether ss 56 and ss 57, by which the SAC gave its ruling was constitutionally valid.
Issues
Whether ss 56 and 57 of the Central Bank Malaysia Act 2009 had the legal effect of encroaching on the judicial power of the courts, hence, were unconstitutional having contravened Part IX of the Federal Constitution
Holding
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:check: The ruling of the SAC is final - it cannot be challenged by the parties with contrary expert evidence, nor reviewed by the HC, nor overturned on appeal
:check: The HC judge is required either to adopt the opinion of two assessors or elect to concur with one assessor.
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Rationale
1) Division of power into 3 branches is to ensure a proper mechanism of checks and balances, in order to avoid tyranny or arbitrary Govt.
2) Springer v Philippine Islands [1927]
Sutherland J: the separation and the consequent exclusive character of the powers conferred upon each of the three departments is basic and vital- not a merely a matter of Govt mechanism
3) The separation of powers is a necessary device to provide security against the gradual concentration of power and to control the abuse of Govt.
4) To divide and arrange the branches of power in such a manner that each may be a check on the other
5) Under this system if a given policy can be implemented only by a combination of legislative enactment, judicial application, and executive implementation, no man or group of men will be able to impose its unchecked will.
Concurrence and Dissent
Concurrence
Mohd Zawawi Salleh FCJ
- The ruling that was made binding by ss 57 of the act was not for s "determination" of a dispute between parties but for the ascertainment of the applicable Islamic Law.
- SAC do to have any characteristics of judicial power as laid down in the Semenyih Jaya Case
Azahar Mohamed FCJ :
- With regards to certain matter where one branch of government should not exrcise the function of the other, another matters may be capable of assignment by its discretion to more than one branch of government or to any administrative body. this present case does not fall in such situation.
- In this case, the ascertainment of Islamic laws in Islamic Finance matters was a function or power which was delegated by the legislative to the judicial branch and SAC.
- ss 56 and ss 57 did not violate the doctrine of separation of power.
Dissenting judgement
Richard Malanjum CJ :
- SAC ruling was not a general pronouncement but a determination that affects the rights and the liabilities of the parties in the dispute before the court. - In this case, HC could not be said to have retained judicial power by merely delivering its ruling to it. The effect of the SAC ruling would necessarily be reflected in the order of HC.
David Wong Dak Wah CJSS
- FC's basic structure includes judicial powers , such as judicial review, the principles of separation of powers, rule of law and protection of minorities.
- In his opinion, the enactment of ss 56 and ss 57 had usurped the trial judge's function in analyzing the conflicting opinion.
- ss 56 and ss57 had scuttled the rights of a litigant to a fair trial.
- the contention that the civil court may well not be well equipped with complex issues of Islamic Jurisprudence ignores the existence of civil courts which is to adjudicate disputes between parties.
- Both sections had violated the doctrine of separation power.
Comments
:warning: If a function is consistent with either judicial or other powers, the matter must be examined further.
:warning: Where there is a difficulty to distinguish between legislative and a judicial proceeding, the end accomplished may be deceive.
:warning:Parentis v Atlantic Coast Line Co [1908]
The nature of the final act determines the nature of the previous inquiry.
The principle is , the maintenance cost relating to the ownership of Ijarah's asset is the responsibility of the owner. The cost relating to the usufruct of the rental is the responsibility of the lessee (JRI). However the following things are allowed by the SAC
The owner and the lessee may negotiate and agree to decide which party that will bear the maintenance cost of the asset.
The owner of the asset can delegate to the lessee to bear the maintenance cost of the asset and the amount of that cost will be fully deducted in the transaction's sale and purchase of the asset at the end of the lease period, or
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