1. ) AFRIZAN TARMILI KHAIRUL AZHAR 2. ) MOHD AFRIZAN BIN HUSAIN Suruhanjaya Sekuriti Malaysia

WA-25-30-01/2022 Kand. 46 13/09/2022 09:17:39 Pihak-pihak: Bagi Pihak Pemohon - pemohon : Sukhwinder Singh A/L N Mahinder Singh Bagi Pihak Responden : Lambert Rasa-Ratnam , Chia Oh Sheng , Lim Jun Xian & Mohd Aerie Rashmond Rahman DALAM MAHKAMAH TINGGI MALAYA DI KUALA LUMPUR (BAHAGIAN RAYUAN DAN KUASA-KUASA KHAS) PERMOHONAN SEMAKAN KEHAKIMAN NO: WA-25-30-01/2022 Dalam perkara Bahagian IIIA Akta Suruhanjaya Sekuriti Malaysia 1993 termasuk dan tidak terhad kepada seksyen-seksyen 31 Z dan 31 ZB Akta Suruhanjaya Sekuriti Malaysia 1993; Dan Dalam perkara keputusan Lembaga Pemantau Audit Responden bertarikh 14.12.2021, antara lain, bahawa larangan mengaudit entity berkepentingan awam dan dana 1 S/N 5P5Q1y30O0q/EslTeBgN9Q **Note : Serial number will be used to verify the originality of this document via eFILING portal berjadual oleh Pemohon-Pemohon di bawah seksyen 31 Z Akta Suruhanjaya Sekuriti Malaysia 1993 adalah untuk 12 bulan bermula dari 10.12.2021; Dan Dalam perkara keputusan/ peninggalan Responden bertarikh 6.1.2022 bahawa keputusan Lembaga Pemantauan Audit bertarikh 14.12.2021 tidak boleh dirayu; Dan Dalam perkara Perkara-Perkara 5 dan 8 Perlembagaan Persekutuan Dan Dalam perkara Aturan 53 Kaedah- Kaedah Mahkamah 2012; Dan 2 S/N 5P5Q1y30O0q/EslTeBgN9Q **Note : Serial number will be used to verify the originality of this document via eFILING portal Dalam perkara Perenggan 1 Jadual kepada Akta Mahkamah Kehakiman 1964. ANTARA 1. AFRIZAN TARMILI KHAIRUL AZHAR (NO. PENDAFTARAN: AF1300) 2. MOHD AFRIZAN BIN HUSAIN (NO. K/P: 670821-03-5159) PEMOHON-PEMOHON DAN SURUHANJAYA SEKURITI MALAYSIA RESPONDEN JUDGMENT [1] The 1st applicant is a partnership firm made up of chartered accountants and auditors and registered with the Malaysian Institute of Accountants (“MIA”), Companies Commission of Malaysia (“SSM”) and the Audit Oversight Board (“AOB”) of the respondent. [2] The 2nd applicant is a partner in the 1st applicant firm. [3] The respondent is a body corporate established under the Securities Commission Malaysia Act 1993 (“SCMA”). The AOB was established under s 31C(1) of the SCMA. The AOB is to assist the respondent in exercising oversight over any person 3 S/N 5P5Q1y30O0q/EslTeBgN9Q **Note : Serial number will be used to verify the originality of this document via eFILING portal who prepares a report in relation to financial information, required to be submitted under the securities laws, guidelines issued by the respondent or the rules of a stock exchange, of a public interest entity (“PIE”) or schedule fund. [4] The factual matrix which leads to this application for judicial review is as follows. [5] On 28.8.2019, the AOB imposed enforcement action on the applicants (“the impugned decision”) in the form of a prohibition from auditing PIEs and schedule funds for 12 months. The AOB also imposed a total fine of RM631,000 against the applicants for alleged breaches of international auditing standards. [6] In the first letter, the applicants were said to have complied with the conditions of registration which require the 1st applicant firm to inter alia comply with the International Standard of Quality Control (“ISQC 1”). On this, the 1st applicant was imposed with the monetary penalty of RM455,000 pursuant to s 31Z(2) of the SCMA. [7] In the second letter, the applicants were alleged to have failed to comply with 1st applicant’s condition of registration which requires it to comply with recognised auditing, ethical and other assurance standards in Malaysia, namely the International Standard of Auditing (“ISA”) as adopted by the MIA. The monetary imposed against the applicant was RM88,000. 4 S/N 5P5Q1y30O0q/EslTeBgN9Q **Note : Serial number will be used to verify the originality of this document via eFILING portal [8] The 12-month audit prohibition was to take effect from 28.8.2019. [9] According to the applicants, the impugned decision resulted in them losing all their PIE and schedule fund clients and some non-PIE clients. The General Manager of Professional Conduct Australia had also initiated a Complaint against the 2nd applicant regarding his conduct as a member. [10] On 25.9.2019, the applicants filed their appeal to the respondent against the impugned decision under s 31ZB of the SCMA. [11] On 25.11.2019, the respondent dismissed the applicants’ appeal (“the respondent’s decision”) and affirmed the impugned decision. The First Judicial Review [12] On 16.12.2019, the applicants and two other partners of the 1st applicant commenced a judicial review application against the respondent at the Kuala Lumpur High Court No. WA-25-553- 12/2019 (“the 1st JR”) seeking an order of certiorari to quash the impugned decision by the AOB and the respondent’s decision. [13] The applicants also obtained an ex parte stay of all steps, acts and things done by the AOB and respondent in furtherance to the issuance of the 2019 Final Inspection Report until the inter partes hearing of the stay application. 5 S/N 5P5Q1y30O0q/EslTeBgN9Q **Note : Serial number will be used to verify the originality of this document via eFILING portal [14] The High Court granted an interim stay on the same terms on 22.1.2020 after the inter partes hearing. As a result of the stay order, the sanctions imposed on the applicants, including the 12 months’ prohibition from auditing PIEs and schedule funds, were suspended pending the disposal of the 1st JR. [15] On 10.8.2020, the High Court allowed the 1st JR application. Consequently, the impugned decision of the AOB and the respondent’s decision were quashed (“the 1st JR Order”). [16] Aggrieved, the respondent appealed to the Court of Appeal. [17] On 10.12.2021, the Court of Appeal allowed the respondent’s appeal and set aside the 1st JR Order (“COA’s Decision”). In the light of the COA’s decision, the sanctions imposed on the applicants, including the 12 months’ prohibition from auditing PIEs and schedule funds, were reinstated on 10.12.2021 Actions Taken by the parties after the COA’s Decision [18] Subsequent to the COA’s decision, the AOB formally notified the applicants by a letter dated 14.12.2021 that the sanctions would take effect from 10.12.2021. The letter (“the AOB’s Letter”) states inter alia: Given the COA’s Decision, the AOB writes to inform the Firm that the sanctions imposed in the 6 S/N 5P5Q1y30O0q/EslTeBgN9Q **Note : Serial number will be used to verify the originality of this document via eFILING portal AOB’s Decision shall take effect from 10 December 2021. [19] Dissatisfied with the AOB’s letter, the applicants appealed to the respondent under s 31ZB of the SCMA. The applicants claimed that the 12 months’ prohibition from auditing the financial statements of any PIE or schedule fund had lapsed on 25.11.2020. [20] In response, the respondent informed the applicants on 6.1.2022 (“the Respondent’s Letter”) that the AOB’s Letter is not a decision that is appealable under s 31ZB of the SCMA. The AOB’s Letter, according to the respondent, is an explanation of the legal consequences of the COA’s Decision on 10.12.2021. [21] In the meantime, on 31.12.2021, the applicants applied to the Court of Appeal for a stay of the COA’s decision, pending the determination of their application for leave to appeal at the Federal Court. [22] The application for leave was eventually filed by the applicants on 7.1.2022 (“the Leave Application”). [23] On 11.2.2022, the Court of Appeal granted a stay pending disposal of the Leave Application despite the opposition by the respondent. 7 S/N 5P5Q1y30O0q/EslTeBgN9Q **Note : Serial number will be used to verify the originality of this document via eFILING portal The Second Judicial Review [24] Before the stay application in the Court of Appeal was heard and disposed of, the applicants commenced this second judicial review proceedings (“the 2nd Judicial Review”) to quash the purported decisions and the respondent of the AOB in the AOB’s Letter and the Respondent’s Letter. [25] The applicants also seek a stay of all steps, acts and things done by AOB and the respondent in furtherance of the AOB’s Letter and the Commission’s Letter or their powers under Part IIIA of the SCMA. [26] The application is supported by the affidavit of the 2nd applicant in Encl 3 (“AIS-3”). [27] On 27.1.2022, this Court, in an ex parte application, granted leave to the applicants to commence the 2nd Judicial Review. This Court also granted an interim stay on the terms sought until the next case management date (“the ex parte Order”). The Application in Encl 12 [28] Upon being served with the sealed copy of the ex parte Order, the respondent has taken steps to file this application in Encl 12. [29] In this application in Encl 12, the respondent seeks inter alia: 8 S/N 5P5Q1y30O0q/EslTeBgN9Q **Note : Serial number will be used to verify the originality of this document via eFILING portal (a) That the ex parte Order is set aside or discharged in its entirety. (b) This 2nd Judicial Review be struck out without liberty to file afresh. (c) A declaration that the AOB’s and respondent’s letters are not decisions amenable to judicial review. [30] The application is supported by the affidavit of Ooi Thiam Poh in Encl 13. Encik Ooi is the executive officer of the AOB. [31] The application in Encl 12 is anchored mainly on the ground that there was a material non-disclosure on the part of applicants in AIS-3. In short, there was no full and frank disclosure on the part of the applicants, which makes the ex parte Order liable to be set aside. [32] My attention was then drawn to the judgment of the Supreme Court in Tuan Hj Sarip Hamid & Anor v Patco Malaysia Bhd [1995] 2 MLJ 442 SC. The case carries the proposition that as the application for leave is made ex parte, there is a clear duty of disclosure imposed by law on the applicant. The Supreme Court held that the breach of the duty of disclosure might result in the order of leave being set aside. [33] Pertinent to the respondent’s case is the 2nd applicant’s wrongful assertion that the 12 months’ prohibition imposed by the AOB 9 S/N 5P5Q1y30O0q/EslTeBgN9Q **Note : Serial number will be used to verify the originality of this document via eFILING portal pursuant to the impugned decision had lapsed on 25.11.2020 when it had not. The relevant parts of para 27 of AIS-3 state as follows: 27.2 The Respondent confirmed the sanctions. The Respondent’s Decision clearly states that the 12-month audit prohibition was to run from 25.11.2019. 27.3 The setting aside of the High Court’s decision by the Court of Appeal means that the Respondent’s Decision, as stated in the letter dated 25.11.2019, is deemed lawful. [34] The necessary implication from the aforesaid assertions is that the 12-month audit prohibition has lapsed and the AOB has no right, let alone the statutory authority, to change the commencement of the 12-month audit prohibition from 12.11.2019 to 10.12.2021, the day of the COA’s Order. This has been the applicants’ position all along. [35] With respect, I do not think that is the correct proposition of the law. [36] When the Court of Appeal allowed the respondent’s appeal in the 1st JR, it meant that the sanctions were lawfully made by the AOB. In short, by virtue of the COA’s Order, the sanctions were reinstated effective from 10.12.2021 by operation of law. The consequence of the COA’s Order is to defer the effective date of the sanctions since it was initially quashed by the High Court 10 S/N 5P5Q1y30O0q/EslTeBgN9Q **Note : Serial number will be used to verify the originality of this document via eFILING portal in the 1st JR. In R v Secretary of State for Education and Science, Ex p Avon County Council [1991] 1 QB 558 CA, Glidewell LJ held that: An order that a decision of a person or body whose decisions are open to challenge by judicial review shall not take effect until the challenge has finally been determined is, in my view, correctly described as a stay. [37] Let me put this in another way. The impugned decision was made by the AOB. The respondent affirmed it. By the 1st JR Order, both decisions were quashed. What is the effect of the quashing of both of the decisions? With respect, the attendant consequence of the 1st JR Order is as if the impugned decision and the respondent’s decision were never made. [38] The Court of Appeal in Pernas Oue (KL) Sdn Bhd Trading as Hotel Istana v Menteri Sumber Manusia Malaysia & Ors [2017] 1 CLJ 151 CA held that: The question which we need to ask ourselves was, what was the effect of the first High Court decision when it quashed the Minister's first decision? We were of the view that the first High Court decision had the effect of quashing the Minister's first decision as if it was never made. 11 S/N 5P5Q1y30O0q/EslTeBgN9Q **Note : Serial number will be used to verify the originality of this document via eFILING portal In short, the Court of Appeal was of the view that the decision is retrospectively invalidated and deprived of legal effect since its inception or ab initio. [39] What, then, is the effect of the COA’s Order? In reversing the 1st JR Order, the consequential effect of the COA’s Order effectively means that the decisions of the AOB and respondent on the sanctions against the applicants were restored. It could not have taken effect on 25.11.2019 since it would not give any meaning to the decisions. The effective date must have commenced on the date of the COA’s Order which was 10.12.2021. [40] I find support in the said proposition in the judgment of the Federal Court in Pancaran Prima Sdn Bhd v Iswarabena Sdn Bhd & anor appeal [2021] 1 MLJ 1 FC where Abdul Rahman Sebli FCJ observed as follows: By reversing the entire order of the High Court, the consequential effect of the Court of Appeal decision was that it also set aside the finding of the High Court that the termination of the subcontract was lawful, which effectively means that the finding of the arbitral tribunal that the subcontract had been unlawfully terminated was restored and is subsisting. [41] Based on the aforesaid line of authorities, it is clear to me that the 2nd applicant had erred when he asserted that the sanction had lapsed. It had not. On the contrary, it was restored and is 12 S/N 5P5Q1y30O0q/EslTeBgN9Q **Note : Serial number will be used to verify the originality of this document via eFILING portal subsisting. Any contrary proposition would amount to a misrepresentation of the law. [42] On this ground alone, the ex parte Order is no longer tenable. [43] However, on the assumption that I am wrong in the aforesaid conclusion, in the application for leave and ex parte interim stay in this 2nd JR, the 2nd applicant has failed to make a full and frank disclosure that the applicants had filed a Stay Application on the COA’s Order at the Court of Appeal. The applicants have also failed to disclose that the respondent had opposed the Stay Application before the Court of Appeal. [44] Save for a general denial in para 25 of his affidavit in reply in Encl 25 (“AIR-25”), the 2nd applicant does not deny the assertion made by Encik Ooi para 58 in AIS-13. [45] Since the ex parte Order also seeks an interim stay pending the determination of this 2nd JR, as can be seen in prayer (4), it is of utmost importance for the corresponding application for stay before the Court of Appeal to be disclosed. The failure is fatal to the ex parte application. In Tuan Hj Sarip, Edgar Joseph Jr SCJ, in delivering the judgment of the Supreme Court, held that: Moreover, as the application for leave is made ex parte, there is a clear duty of disclosure, imposed by law on the applicant, the breach of which may – depending upon the importance of the non- disclosure – result in the order for leave being set aside. (See, eg R v Governor of Pentonville 13 S/N 5P5Q1y30O0q/EslTeBgN9Q **Note : Serial number will be used to verify the originality of this document via eFILING portal Prison, ex p Herbage (No 2) [1987] QB 1077; [1987] 1 All ER 324; [1987] 2 WLR 226.) [46] Based on the said line of authorities, the ex parte Order cannot be sustained. The leave granted on 27.1.2022 is hereby set aside. [47] As a consequential order and in the absence of leave, this 2nd JR can no longer stand. [48] The application in Encl 12 is allowed to that extent. In view of my finding, I am not making any order on prayer No. 3 of Encl 12 since my decision is not based on merits but on the non- disclosure of material facts. [49] Costs is fixed at RM5,000 subject to allocatur. Tarikh: 13th September 2022. (WAN AHMAD FARID BIN WAN SALLEH) Hakim Mahkamah Tinggi Kuala Lumpur. 14 S/N 5P5Q1y30O0q/EslTeBgN9Q **Note : Serial number will be used to verify the originality of this document via eFILING portal