MOHD AFRIZAN BIN HUSAIN SURUHANJAYA SEKURITI MALAYSIA

DALAM MAHKAMAH TINGGI MALAYA KUALA LUMPUR DALAM WILAYAH PERSEKUTUAN KUALA LUMPUR . PERMOHONAN SEMAKAN KEHAKIMAN NO: WA-25-168-05/2020 Dalam perkara keputusan Lembaga Pemantauan Audit. Responden bertarikh 18.12.2019 dan dimaklumkan kepada Pemohon pada 6.1.2020; Dan Dalam perkara keputusan/peninggalan Lembaga Pemantauan Audit Responden _bertarikh 25.2.2020; Dan Dalam . perkara Bahagian IIIA Akita Suruhanjaya Sekuriti Malaysia 1993; Dan Dalam perkara Bahagian IV Akta Akauntan 1967; Dan Dalam perkara Artikel 5 dan 6 Perlembagaan Persekutuan; Dan Page 1 of 17 Dalam perkara Aturan 53 Kaedah-Kaedah Mahkamah 2012; Dan Dalam perkara -Perenggan 1° Jadual kepada Akta Mahkamah Kehakiman 1964. ANTARA MOHD AFRIZAN BIN HUSAIN (K/P No: 670821-03-5159) ... PEMOHON DAN | SURUHANJAYA SEKURITI MALAYSIA wee RESPONDEN Judgment (Enclosure 37) Introduction 1. This is an application by. the Applicant by way of Notice of Application (Enclosure 37) dated 27.8.2021 for a stay of execution of the High Court judgment delivered on 18.8.2021 dismissing the Applicant's judicial review application pending disposal of the Applicant's appeal to the Court of Appeal. Page 2 of 17 2. The Applicant had filed a. Judicial Review Application for the following reliefs:- 2.1 2.2 2.3 24 A declaration that the Respondent’s Audit Oversight Board’s decision on 18.12.2019 and communicated to the Applicant on 6.1.2020 that restricts or prevents the Applicant from being a partner tn firms which are not required to be registered with or recognized by the Respondent's Audit Oversight Board as auditors of public interest entities or scheduled funds is ultra vires, wrongful, nulland void; That the Applicant be given leave to apply for an Order of certiorari to bring up into the High Court, for the purpose of it being quashed the decision made by the Respondent's Audit Oversight Board on 18.12.2019 and communicated to the Applicant on 6.1.2020; . A declaration that the Respondent's Audit Oversight Board’s decision and omission by its letter to the Applicant dated 25.2.2020 that breaches of the “NEW CRITERIA FOR REGISTRATION WITH THE AUDIT OVERSIGHT BOARD” is actionable under Part IIIA of the Securities Commission Act 1993 is ultra vires, wrongful, null and void; A stay of all steps, acts and things done by the Respondent’s Audit Oversight Board further to the issuance of the “NEW CRITERIA FOR REGISTRATION WITH THE AUDIT OVERSIGHT BOARD” until the final determination of this Application; , Page 3 of 17 2.5 General damages to be assessed. 3. After considering the Application; the Affidavits, written submissions filed together with the oral submissions of parties, | allowed Enclosure 37. Background Facts 4. The background of the Application, based on the Applicant's Affidavit, the Applicant's and the Respondent's written submissions are largely undisputed and can be summarised as follows:- 5, | The Applicant is a partner in 3 audit firms, namely, Afrizan Tarmili Khairul Azhar (AFTAAS), Parker Randall and Afrizan & Associates. 6. |AFTAAS commenced its practice on 1.8.2000 and is registered with the Companies Commission of Malaysia (CCM) and the Malaysia Institute of Accountants (MIA) as AF1300: AFTAAS’ clients consist of, among others, public listed companies and scheduled funds. 7. Parker Randall commenced its practice on 17.12.2012 and is registered with the CCM and MIA as AF002067. Parker Randall’s clients consist of international companies. 8. Afrizan & Associates commenced its practice on 1.9.1999 and is registered with the CCM and MIA as AF1224. Afrizan & Associates’ clients consist of small and dormant companies. ° Page 4 of 17 10. 11. 12. 13. The Audit Oversight Board (AOB) was established under Part IIIA of the Securities Commission Malaysia Act 1993 (SCMA) to discharge the Respondent's function to exercise oversight over any person who audits PIEs and scheduled funds. On 16.8.2018, the AOB published a media release on 2.10.2018 _ entitled “NEW CRITERIA FOR REGISTRATION WITH THE AUDIT OVERSIGHT BOARD” (the New Criteria). The New Criteria which took effect on 16.8.2018, provides, inter alia: 11.1 A requirement that a person who applies for registration with the AOB to be an auditor be attached to only one audit firm, unless exempted by the AOB; and 11.2 Audit firms and individuals who were already registered with the AOB as of 16.38.2018 were given up to 1.1.2020 to ensure compliance with the requirements. Since Parker Randall and Afrizan & Associates do not audit PIEs or scheduled funds, the Applicant sought an exemption to remain as a partner in those 2 firms on 8.11.2019. The reasons forwarded by the Applicant for the exemption are, among others: 13.1 Parker Randall and Afrizan & Associates are registered audit firms in Malaysia in which all partners of Parker Randall and Afrizan & Associates are partners in AFTAAS. Page 5 of 17 14. 13.2 Under the Accountants Act 1967, accountants are allowed to practice in their own name. 13.3 AFTAAS, Parker Randall and Afrizan & Associates were established to cater for specific market segments as follows: 13.3.1 AFTAAS’ clients are public listed companies, government linked companies. and government agenciés (AFTAAS has been registered with the AOB since 2010); 13.3.2 Parker Randall’s clients are international companies (therefore, registration with the AOB is not required); and 13.3.3 Afrizan & Associates’ clients are small and dormant companies (therefore, registration with the AOB is not required). . The AOB replied by letter dated 18.12.2019 which was communicated to the Applicant on 6.1.2020, wherein the following conditions were imposed (Decision 1): 14.1 A letter of representation shall be provided to the AOB stating that AFTAAS and Parker Randall are governed by a common partnership agreement and have in place, common policies and procedures addressing, at minimum, audit methodology, risk management and quality control; Page 6 of 17 15. 46. 14.2 AFTAAS and Parker Randall must be registered with the AOB; 14.3 All registered partners of AFTAAS are also partners in Parker Randall and vice versa; and 14.4 The partners of AFTAAS who are registered with the AOB shall not be attached to any other audit firms apart from AFTAAS and Parker Randall. Aggrieved by Decision 1, the Applicant posed the following questions to the AOB on 13.1.2020. 15.1 Whether the New Criteria only applies to AOB registered accountants and firms since the Accountants Act 1967 does not prohibit accountants from being partners in multiple firms; 15.2 Whether the Applicant is restricted by the implementation of the New Criteria from being a partner in Parker Randall and ‘Afrizan & Associates since the clients of these firms are not PIEs or scheduled funds: and 15.3 Under which provision of the Jaw was the New Criteria was issued. The AOB replied. on 25.2.2020 but omitted to address the Applicant's questions. Instead, the AOB referred to Decision 1 and stated that failure to comply with Decision 1 will result in sanctions and punishments being imposed under Part IIIA of the SCMA (Decision 2). ‘Page 7 of 17 17. 18. 19. This Judicial Review Application was filed on 27.5.2020 to quash the OAB’s Decision 1 and 2 for the following reasons, among others: 17.1 The AOB does not have any power under the SCMA to impose the condition that Parker Randall be registered with the AOB; and 17.2 The Applicant has a legitimate expectation to continue the practice of his profession as a partner of Afrizan & Associates which he has been since registering with the AOB in 2010. On 18.8.2021 the Applicant's Judicial Review Application was dismissed with a cost of RM5,000.00 (the said Order). On 23.8.2021, the Applicant filed a Notice of Appeal against the said Order. The Law 20. 21. Section 73 of the Court of Judicature Act 1964 set out as follows:- “An appeal shall not operate as a stay of execution or of proceedings under the decision appealed from unless the court below or the Court-of Appeal so orders and no intermediate act or proceeding shall be invalidated except so far as the Court of Appeal may direct”. [See also Order 55 Rule 16(1) of the Rules of Court 2012] The Principles for a stay of execution are stated in the following cases: Page 8 of 17 Kosma Palm Oil Mill Sdn Bhd & Ors v. Koperasi Serbausaha Makmur Bhd [2004] 1 MLJ 257; [2003] 4 CLJ 1; [2003] 1 MLRA 536. The Federal Court held that: “The need to establish the existence of special circumstances to enable ‘the court to grant stay of execution has been well established in this country”. Ming Ann Holdings Sdn Bhd v. Danaharta Urus Sdn Bhd_ [2002] 3 MLJ 49; [2002] 3 CLJ 380; [2002] 1 MLRA 214; [2002] 3 AMR 2867. The Court of Appeal held that: The approach taken by most judges appears to be that a successful litigant should not be deprived of the fruits of a judgment obtained in his favour, unless there are special circumstances (or special grounds) that justify a stay of execution to be granted. The weight of authorities appears to me to say that the special circumstances must be special, not ordinary, common or usual circumstances and that go to the execution of the judgment and not to the validity or correctness of the judgment (or merits of the appeal). Many judges considered the question whether the appeal, if successful, is rendered nugatory under the head of special circumstances, (Sometimes, the phrase used is whether the appellant, if successful, can be restored to its former position). The general view appears to be that that is the more, if not the most, important factor of all. Of course, no one ever attempts to define special circumstances, for good reasons. It is also a common view that it depends on the facts of a particular case. Thus, ‘business realities’ Page 9 of 17 has been taken into consideration, | believe under this head. It is a common view that merits of the appeal (or correctness or validity of the judgment) is not special circumstance. Some judges do not use the term ‘special circumstance’. They straight away consider whether the appeal, if successful, would be rendered nugatory. Examples are Mohamed Mustafa and Gentali (M) Sdn Bhd v. Kawasaki Sunrock Sdn Bhd 91996) 3 MLJ 597 (CA) and the term was used ‘in the sense that the appellant is deprived of the fruits of his success. | think it does not matter whether the nugatory factor is considered under the head ‘special circumstances’ or not, so long as it is considered. (emphasis added) Institut Teknologi Federal Sdn Bhd v. IIUM Education Sdn Bhd [2005] 2 CLJ 734; [2005] 3 MLJ 221 Abdul Malik Ishak Jd (as he then was) held: “In considering whether to grant a stay of execution, the court is to apply the test of “special circumstances”. The ‘nugatoriness’ of an - appeal is a species of the ‘special circumstances’ test and nota ~ separate test by itself. So, if the Defendant was able to show thata refusal of the stay would render any further successful appeal nugatory, this would certainly constitute ‘special circumstance (see para 21). The key issue is in relation to the enforcement of any judgment and not in regard to the merits of the case (see para 24); Kosma Palm Oil Mill Sdn Bhd & Ors v Koperasi. Serbausaha Makmur Bhd [2004]'1 MLJ 257 followed. The court will consider the special circumstance approach: (1) in the event the stay was not granted, a successful appeal would be rendered nugatory: (2) in the event the stay was not granted, the substratum of the appeal would be destroyed; and (3) in the event the stay was not granted, the Defendant would suffer serious and irreparable damage (see para 22). (emphasis added) Page 10 of 17 (d) Leong Poh Shee v. Ng Kat Chong [1966] 1 MLJ 86, Raja Azlan Shah J (as His Highness then was) had this to say: Although the court has an unqualified discretion to grant a stay it has never been the practice to do so unless it is supported by an affidavit of special circumstances. The law on the points is well settled. | quote a passage from Halsbury’s Law of England, 3" Edition, volume 16 paragraph 51 at page 35:- . “The court has an absolute and unfettered discretion as to the granting, or refusing a stay, and as to the terms as upon which it will grant it, and will, as a rule, only grant it if there are special circumstances, which must be deposed to an affidavit unless the application is made at the hearing’. (emphasis added) 22. Premised on the above, the Applicant needs to show there are special circumstances to justify the granting of the stay of execution as applied in this Application. The decision of this Court 23. Having carefully considered the Applicant's submission as well as the Respondent’s and issues raised in the Application, | allowed the Applicant's Application (Enclosure 37) and my full grounds now follow. 24. | find that the Applicant had established that there are special . circumstances to warrant a stay of execution. Page 11 of 17 25. 26. 27. 28. | am of the view that if a stay is not granted the Applicant cannot continue his career as a partner of Afrizan & Associates and Parker Randall. The firm of Afrizan & Associates can no longer exist because if the Applicant is no longer a partner, then the firm can no longer use his name. Thus, the Applicant will be prejudiced as he will lose his right to livelihood as a partner of Afrizan & Associates. The firm of Afrizan & Associates will also be prejudiced as it will lose its credit, good name and reputation which it has built since 1999 and which cannot be restored in the event the appeal is successful. Further, | am of the view that the Applicant and Afrizan & Associates and its clients will suffer prejudice in the form of sanctions, litigation and disciplinary proceedings: 28.1 The financial reports of Afrizan & Associates’ clients that are due or falling due cannot be prepared as Afrizan & Associates can no longer exist; 28.2 This will expose the Applicant and Afrizan & Associates partners to legal proceedings and complaints of misconduct by such clients; and 28.3 Failure to expeditiously complete the financial statements for these clients will result in the directors of these companies being reprimanded, sanctioned and subjected to various other Page 12 of 17 punishments by authorities such as the Companies Commission of Malaysia and other statutory bodies. 29. Itis the Respondent's submission that deprivation of livelihood is not a special circumstance to warrant a stay of execution. This is , because the clients of Afrizaan & Associates can be “moved” to AFTAAS or Parker Randall. 30. On this issue, | agree with the Respondent’s submission that appointing another audit firm is no simple matter. The board of directors of Afrizan & Associates’s clients must hold general meetings and pass a resolution to appoint a new auditor after due diligence. However, the statutory financial statements must be prepared and lodged on time. 31. The Respondent also submitted that there is no basis in law to obtain a stay of execution to stay the dismissal of the judicial review application. To support its contention, the Respondent relied on the Court of Appeal case of CIMB Islamic Bank Bhd v. Wellcom Communications (NS) Sdn Bhd & Anor [2019] MLJU 148; [2019] 3 MLRA 206; [2019] 4 CLJ 1, where it was held that there cannot be a stay of a dismissal of an originating process. 32. Hamid Sultan JCA (as he then was) in delivering the judgment of the court held that the stay of the dismissal order was ‘rather unusual’ and ‘unprecedented’. This is because the stay had effectively brought the judicial management application back to life after being dismissed. This also gave the Respondents a second bite of the cherry as the statutory moratorium was in place again. Page 13 of 17 33. However, upon perusal of Wellcom (supra), | find that the fact of the case can be distinguished from the instant case. In Wellcom (supra) the Court of Appeal dismissed the stay to cure: mischief relating to sections 409 and 410 of the Companies Act 2016 in an application for judicial management under section 404 of -the Companies Act 2016. This is reflected in paragraphs 4, 8, 10 and 15 of the case. 34. However, in Harris Mohd Salleh v. the Returning Officer, Ismail bin Haji Majin & Ors And Another Petition (No. 2) [2001] 6 MLJ 610; [2001] 1 MLRH 755, the High Court held that a stay can be granted once an originating process is dismissed. 35. In Harris Mohd Salleh (supra), Richard Malanjum J (as he then was) held as follows:- “No doubt | heard the application of the applicant/second respondent in connection with the application for judicial review in which I refused leave. But in my view, that application was of different species. The nature and effect of that application were different from the present application. In the former, this court was in effect performing its original jurisdiction in the “sense that it was a matter by itself and not ancillary, interlocutory or arising from an existing cause or matier as in an application for stay. Further, there the relief sought for and if granted would have had the supervisory effect in nature upon the election court. In an application for stay, it is more of an interim preservation of subject matter of an appeal or suspension of execution of a judgment pending an appeal. In fact, a stay order is very much temporary in nature as it would generally expire upon disposal of a pending appeal it relates to. Moreover, in an application for leave in a judicial review matter, one of the paramount considerations is the issue of jurisdiction as itis a Page 14 of 17 principle of law that court of coordinate jurisdiction cannot supervise each other. That principle is not applicable in a stay application”. (emphasis added) 36. Therefore, based on the above, | am of the view that the Respondent's contention that a stay of execution would have the effect of keeping the judicial review application temporarily alive. pending the disposal of the Applicant’s appeal has no merit for the following reasons:- 36.1 As stated in Harris Mohd Salleh (supra), an application for stay is more of an interim preservation of the subject matter. of an appeal; and ' 36.2. An appeal is a continuation of proceedings in the High Court by way of rehearing. Therefore, the Judicial Review Application remains relevant: Lee Seng Kee v. Sukatho (Ong Thean Soo, (Third Party) [2008] 5 MLRH 220; [2008] 4 MLJ 716; [2008] 4 AMR 405. Conclusion 37. Based on the above reasons, | am of the considered opinion that the Applicant had established the existence of special circumstances in the Application. Page 15 of 17 38. Accordingly, | allow the Applicant’s Application in Enclosure 37. Dated: 05 January 2022 Ahmad Kamal bin Md. Shahid Judge High Court Kuala Lumpur Page 16 of 17 Counsels ‘For the Applicant: For the Respondent: En. Sukhwinder Singh Tetuan Sukhwinder Singh N. Mahinder, Peguambela dan Peguamcara, 6-3-2, Jalan Setia Prima U13/Q, Setia Alam, 40170 Shah Alam, Selangor. En. Lee Shih (Cik Joyce Lim Hwee Yin and En. Aerie Rahman with him) Tetuan Lim Chee Wee Partnership, Peguambela dan Peguamcara, 12-1, Lorong Dungun, Damansara Heights, ‘50490 Kuala Lumpur. [Ruj: LS/JL/Ina/1 187] Page 17 of 17