Back
2020 MarsdenLR 2240
FEDERAL COURT KOTA KINABALU
NABORS DRILLING (LABUAN) CORPORATION – Appellant
Versus
LEMBAGA PERKHIDMATAN KEWANGAN LABUAN – Respondent
[Civil Appeal No: 01(i)-25-09/2019(S)]
Guidelines for leasing transactions are valid and enforceable under the Labuan Financial Services Authority Act, overruling the appellant's claims of inconsistency with the Labuan Companies Act.
Headnote:(A) Labuan Financial Services Authority Act 1996 – Section 4A, Labuan Companies Act 1990 – Section 7 – Guidelines on Establishment and Operations of Labuan Leasing Business – The appellant sought to challenge the legitimacy of the Guidelines requiring prior approval for leasing transactions, arguing that it contradicts the provisions of relevant Acts. The court upheld the Guidelines, stating they are consistent and have the force of law under the Act. (Paras 10-20)
Facts of the case:
The appeal arose from the regulatory authority's refusal to grant retrospective approval for leasing Rig 503, which the appellant executed without prior consent and requisite fee payment.
Findings of Court:
The court affirmed that the Guidelines were lawful and the appellant breached established protocols.
Issues
: The primary issue was whether the Guidelines contravened the Labuan Companies Act.
Ratio Decidendi:
The court concluded that specific legislative provisions superseded general provisions, affirming the authority's power to impose guidelines and fees.
Result:
Appeal dismissed with costs.
[1] The appellant in this appeal before us is a wholly owned subsidiary of Nabors Drilling International II Limited and registered under the Labuan Companies Act 1990 ("the Act"). The respondent, on the other hand is the central regulatory, supervisory and enforcement authority set up under the Labuan Financial Services Authority Act 1996 ("the Financial Services Authority Act") which is empowered under s 4 of the said Act to enforce not just that Act but as per its Schedule, seven others, including the Act and they are:
1. Labuan Business Activity Tax Act 1990 [Act 445];
2. Labuan Trusts Act 1996 [Act 554];
3. Labuan Foundations Act 2010 [Act 706];
4. Labuan Islamic Financial Services and Securities Act 2010 [Act 705];
5. Labuan Limited Partnerships and Limited Liability Partnerships Act 2010 [Act 707];
6. Labuan Financial Services and Securities Act 2010 [Act 704].
[2] On 17 June 2002, the respondent granted a licence to the appellant to undertake a leasing business in Labuan under s 92 of the Labuan Financial Services and Securities Act 2010 ("Financial Services and Securities Act") and also gave its approval to the appellant to deal with Pool International (M) Sdn Bhd. That licence was, on the appellants own application, terminated on 22 January 2010 by the respondent when the appellant ceased its leasing business activity in Labuan but which business was rejuvenated subsequently by the respondents grant of another licence to the appellant, upon the latters application, on 13 July 2011. Vide the same letter the appellant was granted an approval by the respondent to lease one unit of an offshore platform drilling rig, ie Rig 488 to NDIL Malaysia Sdn Bhd ("NDIL Malaysia") and payment of the requisite fees of RM60,000.00 as stipulated under the Labuan Financial Services and Securities Regulations 2010 ("the Regulations") was made by the appellant.
[3] The crux of this litigation woe lies not with the said leasing of Rig 488 but a subsequent one to the same company, that is Rig 503 which was done without the approval of the respondent and without payment of the requisite fees of RM20,000.00. RM20,000.00 is the stipulated fee under the Regulations for a subsequent transaction with a Malaysian resident, which NDIL Malaysia is. The appellants belated application for approval made in its letter dated 28 October 2013, but served on the respondent on 24 January 2014 was rejected by the respondent on 6 May 2014. Likewise its two appeals against that rejection made on its own and through its agent, Deloitte, respectively, after the appellant was ordered to pay a penalty of RM10,000 vide the respondents letter dated 27 June 2014 for the said business transgression.
[4] The appellant did not give up on its endeavor to get the approval from the respondent for the lease of Rig 503 and its third attempt actually bore fruit when the respondent acceded to its request on 9 April 2015 and granted the approval upon payment of RM20,000.00 but that approval was not made retrospective. The appellant accepted the decision and effected the payment. However, three months after the said approval, the appellant filed a judicial review application before the High Court for, inter alia, a certiorari to quash that decision of the respondent which the learned High Court Judge ("HCJ") (as His Lordship then was) dismissed and which decision was affirmed by the Court of Appeal on appeal. On 22 August 2019, the appellant was granted leave to appeal to this Court against the said decision on this one question of law:
"Is para 8.2 of the 2013 Guidelines on the Establishment and Operations of Labuan Leasing Business contrary to and ultra vires of s 7(6) of the Labuan Companies Act 1990 ?"
[5] In its judicial review application, the appellant had included as one of its prayers, a declaration that the abovementioned Guidelines do not have the force of law for they serve only to clarify the requirements under the Financial Services and Securities
