KUALA LUMPUR (March 8): The High Court had on Tuesday (March 8) dismissed an originating summons by Serba Dinamik Holdings Bhd for an injunction to be imposed on Ernst & Young Consulting Sdn Bhd (EY Consulting) to restrain it from sharing any findings or opinions of its special independent review (SIR) with Bursa Malaysia or other parties.
This comes after the beleaguered oil and gas group argued that the firm is not a qualified auditor.
Justice Datuk Ahmad Fairuz Zainol Abidin in his broad grounds in dismissing Serba Dinamik's application ruled that EY Consulting had taken steps to ensure the team performing the SIR included a qualified auditor, namely Muhammad Syahrizal Abd Rahim, a partner in E&Y PLT.
“Syarizal, a partner of E&Y PLT, was listed in EY Consulting’s proposal dated May 31, 2021, as one of the partners who would be working on the engagement.
“Syarizal is registered with the Audit Oversight Board (AOB). Serba Dinamik too was well aware that Syarizal was on EY Consulting’s team as early as March 30, 2021. Thus, while EY Consulting was not registered with the AOB, it took steps to ensure it had a registered auditor in its team,” the judge said.
He added that an auditor must be a real person and the firm (E&Y PLT) merely houses the auditor.
“As such, what is crucial is for Syarizal to be authorised by the Finance Minister, and registered with the AOB. As provided for under the terms of the letter of engagement, EY Consulting is entitled to contract with E&Y PLT to obtain the services of Syarizal,” he stated.
Justice Ahmad Fairuz said the court found that the appointment of EY Consulting was regularly made under paragraphs 2.23 and 2.24 of the Main Market Listing Requirement (MMLR).
“This is consistent with the ruling in the other suit (filed by Bursa Malaysia versus Serba Dinamik). Apart from that, EY Consulting also had a qualified auditor in its team. In the circumstances, there is no room for Serba Dinamik to argue that EY Consulting was not qualified to be a special auditor (SA). Either way the argument is taken, EY Consulting was qualified to be appointed as SA,” he elaborated.
Estoppel applies with decision in Bursa Malaysia versus Serba Dinamik
On settled principles of law, Justice Ahmad Fairuz said even if EY Consulting was not a party in Bursa Malaysia's other action against Serba Dinamik, the issue estoppel applies.
Estoppel is a legal principle that prevents someone from arguing something or asserting a right that contradicts what they previously said or agreed to by law.
On Feb 7, Judicial Commissioner Wan Muhammad Amin Wan Yahya in the origination summons by Bursa Malaysia against Serba Dinamik had directed the company to make a public announcement of the fact-finding update (FFU) by EY Consulting, which was appointed to conduct a SIR on the company's financial accounts for the 12-month period ended Dec 31, 2020, within two market days from the date of the order.
Wan Muhammad Amin also dismissed a stay application by Serba Dinamik on Feb 14, 2022, of his decision on Feb 8.
EY Consulting did not misrepresent itself, work is validly produced
Justice Ahmad Fairuz in his decision on Tuesday also said EY Consulting did not misrepresent itself to Serba Dinamik in its letter of engagement as the firm did not in any manner claim to be an auditor.
The judge said all that was stated in the opening paragraph of the letter was that EY Consulting was appointed to carry out the SIR.
“This is factually correct. This court rejects the emphasis placed by Serba Dinamik on paragraph 2.23 and 2.24 of MMLR in interpreting the first paragraph of the letter of engagement. The paragraph needs to be read in its entirety.
“The appointment of EY Consulting was also after negotiations were carried out. It was contractually agreed upon. This court finds no misrepresentation by EY Consulting as alleged by Serba Dinamik and it follows that the letter of engagement is valid. As such all work products of EY Consulting were also validly produced including the FFU which Serba seeks to prevent the dissemination of in this originating summons,” he said.
The judge added that EY Consulting's appointment does not raise any issue of conflict of interests with Bursa or the Securities Commission and there is no issue of no curtailment of its independence.
“Hence, the application for injunction is dismissed,” Justice Ahmad Fairuz ruled. He also ordered Serba Dinamik to pay RM20,000 costs to EY Consulting
In Tuesday's proceedings, EY Consulting was represented by Gopal Sreenevasan while Mak Lin Kum appeared for Serba Dinamik while Christopher Leong held a watching brief for Securities Commission Malaysia.
Serba Dinamik had on Nov 5 filed the originating summons to stop EY Consulting from releasing any findings. The firm had also filed a separate action against Bursa Malaysia to prevent it from releasing the findings.
However, Justice Ahmad Fairuz had on Feb 10 decided against Serba Dinamik's application to impose an injunction on Bursa Malaysia to prevent the company from being compelled by the regulator to release the FFU.