Maybank Trustees Berhad v Boustead Holdings

8/12/2019 Maybank Trustees Berhad v Boustead Holdings

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Malayan Law Journal Unreported/2009/Volume /Maybank Trustees Berad ! Boustead "old#ngsBerad $ %2009& MLJU 90' $ 29 (eptember 2009

%2009& MLJU 90'

Maybank Trustees Berhad v Boustead Holdings Berhad

COURT OF APPEAL PUTRA!A"A#AB$ULL HAM%$ EMBO&'( HA)A& LAH( )ULA%MA& $AU$( HHMRRA"UA& )%*%L &O +,-.%M#,/0,.--1.1 )e2te3ber .--1

Robert Lazar (Lai Wai Fong & Caryn Yu with him) (Nik Saghir & Ismail) or the a!!ellant

Fahri "zzat ("zzat & Izzat) or the res!on#ent

Abdull Ha3id E3bong( HMR

!U$'ME&T OF THE COURT

)n te "#g *ourt te de+endant ,now -espondent. ad appl#ed !#de nl 1' to str#ke out tepla#nt#++s ,now 3ppellant. plead#ng under 415 r19,1.,b.6 ,d. -ules o+ te "#g *ourt 1950,-"*. on te grounds tat #t was sandalous6 !e7at#ous and an abuse o+ te *ourts proess

Te 3ppellant !#de nl 186 s#multaneously appl#ed +or spe#+# per+ormane on a summary bas#spursuant to 051 o+ te -"*

Te bas#s o+ te 3ppellants la#m was a Trust eed dated 21:200; under w# te-espondent #ssued a < year redeemable on!ert#ble bonds to te Bondolder6 wo subsr#bedsome -M ;0 m#ll#on wort o+ bonds Te bonds were taken up by Malays#a =at#onal )nsuraneBd ,M=)B.6 and te r#gts are now be#ng en+ored by Mayban Trustees Bd ,te 3ppellant. )nt#s >udgment all lauses re+erred to are lauses +ound #n te Trust eed

Rede32tion

Tere are two ways #n w# te #ssued bonds may be redeemed6 !#? $

1i) Upon rea#ng te matur#ty date o+ < years +rom te #ssue date #e on 19520116

1ii) By e7er#s#ng te r#gt to opt#onal redempt#on be+ore te matur#ty date but a+ter 'years +rom te #ssue date

2i) Under te #nterpretat#on lause o+ te Trust eed6 te -edempt#on ate #s de+#ned

su $

1. @te date +#7ed +or redempt#on o+ su Bonds pursuant to te -edempt#on=ot#e g#!en by te )ssuer under *lause ;2 or ,##. te Matur#ty ate o+ suBonds6 #+ su Bonds ad not been pre!#ously redeemed6 on!erted6purased or anelled #n aordane w#t te terms ere#n pr#or to teMatur#ty ateA @

1

1iii) Te 4pt#onal -edempt#on Pr#e #s de+#ned su $


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@ te redempt#on sum payable by te )ssuer to redeem te Bonds +rom te Bondolders#n te e!ent te )ssuer e7er#ses te -edempt#on 4pt#on6 w# sall be at an areted!alue sub>et to te market pr#e o+ te e7#st#ng (are traded on te Bursa Malays#a

be#ng at least 1'0 o+ te *on!ers#on Pr#eA @

Te -espondent6 as #ssuer o+ te bonds6 may e7er#se #ts opt#on to redeem pursuant to *lause;2 Te manner by w# te -espondent an e7er#se t#s opt#on #s by way o+ g#!#ng te

3ppellant not less tan '0 days not#e pr#or to te -edempt#on ate

*lause ;2 o+ te Trust eed #s now reprodued +or easy re+erene $

@ ;2 -edempt#on 4pt#onC

1a) Te )ssuer may e7er#se te -edempt#on 4pt#on6 at anyt#me dur#ng te 4pt#onal-edempt#on Per#od by redeem#ng all ,but not part o+. te Bonds w# a!e not beenon!erted #n te aordane w#t *lause 83 or *ond#t#on ;3 o+ (edule 2 o+ t#s eed

at te 4pt#onal -edempt#on Pr#e ,our empas#s.

1b) Te )ssuer sall g#!e to te Bondolders a -edempt#on =ot#e not less tan t#rty ,'0.days pr#or to te -edempt#on ate #n te manner pro!#ded #n *ond#t#on 5 o+ (edule 2o+ t#s eed sub>et to te los#ng pr#e o+ te (ares as traded on Bursa Malays#a +orte onseut#!e t#rty ,'0. days be#ng at least 1'0 o+ te *on!ers#on Pr#e Te )ssuersall set out #n te -edempt#on =ot#e te date6 t#me6 plae and te 4pt#onal-edempt#on Pr#e o+ te Bonds to be redeemed

Under *lause ;2 ,b.A te -espondent #s obl#gated to g#!e a one$mont not#e to te Bondolderpr#or to te redempt#on date T#s '0 days #nter!al or w#ndow per#od #s to enable te 3ppellant tode#de weter to on!ert or to be pa#d te redempt#on pr#e Tus6 dur#ng t#s per#od te pos#t#ono+ te 3ppellant6 as te Bondolder6 #s +lu#d 3nd te +at tat a redempt#on not#e as been g#!en6does not e7t#ngu#s te 3ppellants r#gt to on!ert te bonds or not

Conversion

3i) *lause 83 g#!es te 3ppellant te r#gt to on!ert te bonds #nto +ully pa#d upsares at te on!ers#on pr#e6 w# as de+#ned #n *lause 1 was -M 198 persare Te on!ers#on date #s te date o+ te ree#pt o+ te *on!ers#on =ot#e byte -eg#strar o+ te -espondent

2ii) Upon allotment and #ssue o+ te sares te bonds so on!erted sall lapse andease to be !al#d ,see *lause 83 2.

&oti4es by both Parties

4i) 4n 110200< te -espondent #ssued a redempt#on not#e st#pulat#ng teredempt#on date as 111200


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4n 111200< te -espondent #nstead6 purported to make payment o+ te opt#onal -edempt#onPr#e6 w# te 3ppellant ob!#ously re>eted s#ne #t ad lodged a on!ers#on not#e earl#er

4n 811200< te -espondent #ssued a ert#+#ate o+ anellat#on o+ te bonds6 render#ng tem#ne++et#!e )n oter words6 te -espondent ose to #gnore te 3ppellants on!ers#on not#e

Te 3ppellant ten took out an appl#at#on +or summary >udgment6 and te -espondentresponded by apply#ng to str#ke out te la#m

Te learned >udge d#sm#ssed te 3ppellants appl#at#on +or summary >udgment and allowed te-espondents appl#at#on +or str#k#ng out te la#ms

Te trust o+ te -espondents ase was tat tere was no bas#s to grant spe#+# per+ormane tote 3ppellant as te bonds ad been earl#er redeemed and tus anelled )t was also arguedtat one te -espondent e7er#sed te#r r#gt to redeem6 te 3ppellants r#gt to on!ert tebonds #s e#ter suspended or e7t#ngu#sed

Learned ounsel +or te 3ppellant subm#tted tat te at o+ on!ers#on took plae on 1:10200udge answered t#s Duest#on #n +a!our o+ te -espondent by apply#ng tepr#or#ty dotr#ne )n #s >udgment6 te learned >udge made te +ollow#ng +#nd#ngs $

@3s te pla#nt#++ as te r#gt to on!ert and te de+endant te r#gt to redeem6 te d#spute an be Du#teeas#ly resol!ed by apply#ng te rule o+ pr#or#ty tat go!erns te orderly ondut o+ our da#ly l#!es $ a +ort#or##n ommer#al ontrat #n!ol!#ng large sums o+ money were de#s#ons need to be made w#t speed anderta#nty

Te rule #s Du#te well establ#sedC +#rst #n t#me +#rst #n r#gt

Te de+endant was @+#rst@ on te not#e and te not#e o!err#des te subseDuent not#e to on!ert g#!enby te pla#nt#++ Te de+endant was tere+ore te +#rst #n t#me and ene te +#rst #n r#gt @

)s te dotr#ne o+ pr#or#ty appl#ableE Fe t#nk not Te dotr#ne appl#ed by te learned tr#al >udgeere re+ers to te dotr#ne o+ ompet#ng eDu#t#es under te ma7#m @5ui 2rior est te32ore( 2otiorest 6ure@ ,#e pr#or#ty #s determ#ned by te order o+ te reat#on o+ #nterests. )t #s an eDu#table ruleappl#ed to determ#ne te rank#ng o+ ompet#ng #nterests )ts appl#at#on may be seen +rom someautor#t#es on land deal#ngs were a t#rd party #s #n!ol!ed #n mak#ng an o!erlapp#ng la#m on tesame #nterest result#ng #n on+l#t#ng eDu#t#es between two ompet#ng part#es 3n #nstane o+ suon+l#t ar#ses #n ases o+ land deal#ngs were two r#!al part#es la#m te#r eDu#ty under te samet#tle as appened #n te ases o+ $"LLI%R"' SI$"R %CR' %"L"NI"%%" C*+,,Y-FFICI"L ".'INIS,R",-R -F ,*+ +S,",+ -F "N INN,19'


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)n our !#ew6 te r#gts o+ te part#es #n t#s ase must be determ#ned on te onstrut#on o+ terele!ant lauses #n te Trust eed #tsel+6 #n part#ular tose e7press terms w# we ad ad!ertedto earl#er #n t#s >udgment Tese terms +orm te bas#s o+ te#r agreement as regards te bondsFe tus +#nd tat te eDu#table dotr#ne o+ pr#or#ty6 not to be appl#able T#s #s purely a ase o+

te part#es respet#!e r#gts and obl#gat#ons pursuant to te#r ontrat Du#ty6 #n our !#ew6 playsno part #n #nterpret#ng tose rele!ant lauses

)n our !#ew6 te g#!#ng o+ an early not#e +or redempt#on does not take #mmed#ate e++et but must6aord#ng to lause ;2 o+ te Trust eed6 be de+erred unt#l te lapse o+ a '0$day w#ndow per#odur#ng t#s w#ndow per#od6 te los#ng pr#e o+ te sares +or '0 onseut#!e days must be atleast 1'0 o+ te on!ers#on pr#e Te on!ers#on pr#e was -M 198 and so6 te 1'0 worksout to at least -M 28'

Te 3ppellant dur#ng t#s '0$day w#ndow per#od6 would ten be able to de#de weter to on!ertte bonds #nto ord#nary sares ,w# was wat #t d#d. pr#or to te e7p#ry o+ tat '0$day w#ndowper#od or to ree#!e te opt#onal -edempt#on Pr#e at te e7p#ry o+ tat per#od )n #ts not#e o+redempt#on te -espondent ad #n+ormed te 3ppellant tat te -edempt#on ate was +#7ed +or111200< #e two weeks a+ter te *on!ers#on ate

)t #s also our +#nd#ng tat te redempt#on not#e ad not a++eted or e7t#ngu#sed te r#gt o+ te3ppellant to on!ert te#r bonds under (edule 2 o+ te Trust eed )n +at under *l 83 1 te-espondent #s obl#ged w#t#n 10 market days upon ree#pt o+ te *on!ers#on =ot#e to allot and#ssue new ord#nary sares to te 3ppellant Gurtermore6 te Trust eed makes no ment#on o+ tee7t#ngu#sment o+ te 3ppellants r#gt to on!ert6 upon ree#!#ng te not#e to redeem*on!ers#on tus6 may take plae at any t#me6 e!en w#t#n te '0$day #nter!al per#od

(#ne te on!ers#on took plae on 1:10200< #e te date te 3ppellants not#e to on!ert wasree#!ed by te -eg#strar6 #t sould ten a!e been allotted and #ssued w#t te new ord#narysares w#t#n 10 market days Tus by 111200


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obl#gat#ons under te Trust eed6 w# #s onstrued #n aordane w#t s8' o+ te *ontrats3t6 19806 w# states $

@ were te order #n w# re#proal prom#ses are to be per+ormed #s e7pressly +#7ed by te ontrat6

tey sall be per+ormed #n tat order w# te nature o+ te transat#on reDu#res @

Te bus#ness e++#ay ere6 we t#nk6 #s tat #t makes more sense wy te r#gt to on!ert souldrema#n una++eted dur#ng te '0$day w#ndow per#od be+ore te redempt#on beomes e++et#!eTat t#s o#e +or a on!ers#on rema#ns open to te 3ppellant e!en dur#ng te w#ndow per#odan be seen #n t#s ommentary on @)n!estors 4pt#on@ +ound #n te se!ent d#t#on o+ te"andbook o+ G#7ed )nome (eur#t#es by Grank J Gabo??#6 w# says t#s $

@*on!ers#on 4pt#on

Fen a on!ert #s redeemed by te #ssuer6 #t loses te on!ers#on pr#!#lege on te last day o+ teredempt#on not#e per#od6 w# #s generally 18 to '0 alendar days +ollow#ng te redempt#on not#e6 w#t'0 days te norm Most o+ten redempt#on #s #ntended to +ore te on!ert #nto eDu#ty Gor t#s to our6te on!ert sould be #n$te$money wen te #n!estor turns #n te bond 3nd t#s ra#ses te Duest#on o+wen dur#ng te '0$day per#od sould te #n!estor tender te bond +or on!ers#on Gollow#ng te

redempt#on not#e6 #+ te stok pr#e +alls below te e++et#!e per sare redempt#on pr#e6 te #n!estor anoose to ree#!e te redempt#on pr#e Tus te redempt#on not#e tr#ggers a put6 w#t matur#ty eDual tote number o+ days #n te redempt#on not#e per#od6 dur#ng w# t#me te #n!estor as te r#gt to tenderte on!ert and ree#!e te redempt#on pr#e 3s #s well known6 all long pos#t#ons #n 3mer#an opt#onsa!e nonnegat#!e !alue *onseDuently6 under normal #rumstanes6 tey sould not be e7er#sedprematurely Te #n!estor sould wa#t to e7er#se e#ter opt#on unt#l te moment be+ore te e7p#rat#on o+te redempt#on per#od@

3s regards te estoppel by ondut o+ te 3ppellant6 we +#nd tat tere #s no mer#t #n t#ssubm#ss#on Fe are sat#s+#ed tat tere was ne#ter any #ntent#on on te part o+ te 3ppellant toagree to te redempt#on e7er#se6 nor to #n+luene or #ndue te -espondent to at #n anypart#ular manner

Learned ounsel +or te -espondent #n #s subm#ss#on ad re+erred to (#t# =#ta Huras a++#da!#t #n

reply +or te 3ppellant6 #n part#ular to para 21' Te wole o+ tat sa#d paragrap 21 #s nowreprodued to appre#ate te proper onte7t o+ tat reply #n te +ae o+ te -espondentsassert#on tat te 3ppellants r#gt to on!ers#on #s e7t#ngu#sed or suspended #n !#ew o+ (#t# =#taHuras agreement to te -edempt#on =ot#e

Paragrap 21 o+ te sa#d a++#da!#t states $

1. F#t re+erene to paragraps 5 to 52 o+ te e+endants 3++#da!#t6 ) d#sagree w#t te#n+erene drawn by te e+endant as set out tere#n )n reply6 ) state as +ollowsC

1. Under lause ;2* o+ te Trust eed6 on te -edempt#on ate6 #n t#s ase 1st=o!ember 200et to te market pr#e o+ te e7#st#ng sares traded on teBursa Malays#a be#ng at least 1'0 o+ te *on!ers#on Pr#e Te Trust eeddoes not pro!#de +or te metod to aserta#n te areted !alue re+erred to #nte Trust eed

1. )n te #rumstanes6 #t was neessary +or M=)B and te e+endant toaserta#n and agree on te areted !alue and onseDuently6 te 4pt#onal-edempt#on Pr#e (#ne te doumentat#on does not pro!#de a +ormula +oralulat#ng te Duantum6 #t was neessary +or me to ten d#suss w#t tee+endants representat#!e and alulate and to arr#!e at wat would be amutually aeptable 4pt#onal -edempt#on Pr#e Tat was all tat was done*erta#nly tere was no wa#!er o+ te r#gt o+ M=)B to on!ert te -* Bonds


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Maybank Trustees Berhad v Boustead Holdings

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