Tenaga Nasional Berhad v Frazer-Nash Research Ltd

Hearing dates: 25 & 26 October 2018

On 25 April 2018, His Honour Judge Graham Wood QC, sitting as a Judge of the High Court, ordered that judgments of the High Court of Malaya in favour of the Applicant, Tenaga Nasional Berhad (“Tenaga”), and against the Respondents, Frazer-Nash Research Limited (“Frazer-Nash”) and Kamkorp Limited (“Kamkorp”), be registered in the Queen's Bench Division pursuant to s.9 of the Administration of Justice Act 1920. The effect of such order is that the Malaysian judgments can be enforced in England & Wales as if they were judgments of the English High Court.

By an application made on 26 June 2018, the Respondents seek to set aside the judge's order. Mr Steven Barrett, who appears for the Respondents, argues that the registration of the Malaysian judgments should be set aside on three grounds:

2.1 First, that there is an appeal pending, alternatively that the Respondents are entitled and intend to appeal, to the Federal Court of Malaysia. Accordingly, he argues that registration of the foreign judgments is barred by s.9(2)(e) of the 1920 Act.

2.2 Secondly, that the Applicant's delay in bringing the application for registration amounts to an abuse of process, alternatively that I should in the exercise of the court's discretion refuse registration by reason of such delay.

2.3 Thirdly, that the Applicant was in breach of rule 74.4 of the Civil Procedure Rules 1998 by failing to exhibit a transcript of the judgment of the Court of Appeal of Malaysia.

There was originally a fourth argument that Judge Wood QC had been misled about the Malaysian law of limitation. This argument was not pursued orally, although it is still necessary to consider briefly the limitation issues in the exercise of the court's discretion under the 1920 Act.

Mr Richard Samuel appears for the Applicant, as he did before Judge Wood QC. He resists this application.

REGISTRATION OF JUDGMENTS UNDER THE 1920 ACT

Section 9(1) of the Administration of Justice Act 1920 provides:

“Where a judgment has been obtained in a superior court in any part of His Majesty's dominions outside the United Kingdom to which this Part of this Act extends, the judgment creditor may apply to the High Court of England …., at any time within twelve months after the date of the judgment, or such longer period as may be allowed by the court, to have the judgment registered in the court, and on any such application the court may, if in all the circumstances of the case they think it just and convenient that the judgment should be enforced in the United Kingdom, and subject to the provisions of this section, order the judgment to be registered accordingly.”

Although the Act conjures up images of Empire, it continues to apply today to the judgments of a number of independent Commonwealth nations including Malaysia. Section 9(2) sets out six absolute bars to registration. The subsection provides:

“No judgment shall be ordered to be registered under this section if—

a) the original court acted without jurisdiction; or

b) the judgment debtor, being a person who was neither carrying on business nor ordinarily resident within the jurisdiction of the original court, did not voluntarily appear or otherwise submit or agree to submit to the jurisdiction of that court; or

c) the judgment debtor being the defendant in the proceedings, was not duly served with the process of the original court and did not appear, notwithstanding that he was ordinarily resident or was carrying on business within the jurisdiction of that court or agreed to submit to the jurisdiction of that court; or

d) the judgment was obtained by fraud; or

e) the judgment debtor satisfies the registering court either that an appeal is pending, or that he is entitled and intends to appeal, against the judgment; or

f) the judgment was in respect of a cause of action which for reasons of public policy or for some other similar reason could not have been entertained by the registering court.”

Here, it is said that s.9(2)(e) is engaged. It will therefore be necessary to consider the true construction of that provision. Even if there is no bar to registration under s.9(2), the English court is under no obligation to register the foreign judgment but rather has a discretion as to whether it is appropriate in any individual case to do so. Section 9(1) identifies two considerations:

7.1 First, the English court must consider timing. The application can be made at any time within 12 months of the date of the foreign judgment or “such longer period as may be allowed by the court.”

7.2 Secondly, the court must consider whether it is “just and convenient” in all the circumstances of the case that the foreign judgment should be enforced in this jurisdiction.

BACKGROUND

The 2008 Malaysian judgments

Tenaga is the largest electricity utility company in Malaysia. Its headquarters are in Kuala Lumpur. Frazer-Nash and Kamkorp are companies incorporated in England and Wales. They share a registered office in Surrey.

In 1997, Tenaga and Frazer-Nash invested in a joint venture special purpose vehicle, Perusahaan Otomobil Elektric (M) Sdn Bhd (“POEM”), to exploit Frazer-Nash's proposal for the development, manufacture and sale of electric vehicles. The joint venture broke down and on 27 July 2000 the parties and others entered into three agreements:

9.1 A Share Sale Agreement under which Tenaga agreed to sell its shares in POEM to Frazer-Nash.

9.2 A Debt Restructuring Agreement under which Frazer-Nash restructured its debt to Tenaga.

9.3 A Deed of Guarantee and Indemnity under which both Respondents guaranteed various obligations under the Share Sale Agreement and the Debt Restructuring Agreement.

Tenaga alleged default of the Respondents' obligations under these agreements. Accordingly, on 26 July 2006, the Applicant commenced proceedings against POEM and both Respondents pursuant to the Debt Restructuring Agreement and the Deed of Guarantee and Indemnity. Further, on 2 November 2007, Tenaga commenced separate proceedings against both Respondents pursuant to the Share Sale Agreement and the Deed of Guarantee and Indemnity.

The first case came before the High Court of Malaya in Kuala Lumpur on 9 June 2008. The Respondents did not appear and judgment in default was entered against them. By the Malaysian judgments of June 2008, the Respondents were ordered to pay:

11.1 the sum of RM 15,580,000;

11.2 interest of RM 15,385,161 to 30 November 2004;

11.3 further interest on both the capital sum and the interest accrued to 30 November 2004 from that date at the rate of 13% per annum; and

11.4 costs of RM 225.

The second case came before the Kuala Lumpur court on 8 September 2008. Again, the Respondents failed to appear and judgment was entered in default. By the September judgments, the Respondents were ordered to pay:

12.1 the sum of RM 36 million;

12.2 interest on that sum from 1 December 2004 at the rate of 8% per annum; and

12.3 costs of RM 225.

It is common ground that these judgments have not been paid. At the date of the hearing before me, the Malaysian judgments are worth around £30 million:

13.1 While the capital sum owed under the June 2008 judgments equates to £2.8 million at current exchange rates, the interest payable on that sum is now more than £13.2 million, taking the total value of the June judgments to circa £16 million.

13.2 The capital sum owed under the September 2008 judgment equates to about £6.6 million. That is more than doubled by the effect of interest which now exceeds £7.4 million, taking the total value of the September judgments to circa £14 million.

The 2009 Settlement Agreement

On 19 September 2007, POEM was wound up by the Shah Alam High Court upon the petition of S. Kian Send Sdn Bhd (“SKS”). The petition debt was a relatively modest RM 300,000 (approximately £55,000).

On 22 May 2009, the parties entered into a Settlement Agreement. By the agreement, the Respondents acknowledged their debt for a sum in excess of RM 66 million. The parties agreed that in full and final settlement of the Respondents' liabilities, Frazer-Nash would pay off the debt owed to SKS, procure an order setting aside or rescinding the winding-up order and then effect a transfer of Tenaga's shareholding in POEM to Frazer-Nash.

By clause 3.4 of the Settlement Agreement, the parties further agreed that in the event of Frazer-Nash's default, Tenaga would be “at liberty to forthwith proceed with … execution of the judgments.”

Frazer-Nash defaulted. Instead of seeking simply to execute the 2008 judgments, Tenaga sought to intervene in the Malaysian winding-up proceedings. On 12 November 2010, the Shah Alam High Court dismissed Tenaga's application. Its appeal was dismissed by the Court of Appeal of Malaysia on 19 April 2013.

The 2012 English proceedings

Meanwhile, on 7 September 2012, Tenaga applied to the English High Court to register the June 2008 judgments. Master Cook granted the application on the papers on 10 September 2012. Registration was, however, set aside by Deputy Master Eyre at an inter partes hearing on 25 April 2013.

The Deputy Master criticised the Applicant for seeking to register the June judgments while pursuing an appeal in Malaysia that might have allowed it to bring the 2009 settlement into effect. Further, he held that there was no good reason to allow registration more than 4 years after the date...