Hong Leong Bank Bhd v Ten Jing Enterprise Sdn Bhd & Ors and another appeal [2025] 4 MLJ 725

Court  of Appeal (Putrajaya)

Civil Action against a Financial Institution 

1. On 3 January 2013, following investigations into an alleged scheme to evade customs duties, the Second Respondent (‘R2’), acting for the Third Respondent (‘R3’), issued a freezing order under s 44 of the Anti-Money Laundering and Anti-Terrorism Financing Act 2001 (‘AMLA’) to Hong Leong Bank Bhd (‘HLBB’), directing it to freeze funds in a current account held by TS Steel Sdn Bhd (‘TS Steel’). Subsequently, on 1 April 2013, the Public Prosecutor (‘PP’) issued a seizure order under AMLA prohibiting HLBB from dealing with or disposing of the frozen funds until the order was revoked or varied.
2. In March 2014, the PP applied for forfeiture of the seized monies without prosecution. Following a notice published in the Government Gazette, Ten Jing Enterprise Sdn Bhd (‘Ten Jing’) filed a third-party claim asserting bona fide entitlement to the seized funds. The High Court allowed the claim and ordered the release of RM1,270,262.15 to Ten Jing. This order was affirmed by the Court of Appeal on 10 October 2018, at which time the funds remained in TS Steel’s account with HLBB.
3. However, about a month later, after TS Steel was wound up, HLBB released the seized monies to the Insolvency Department (‘MDI’) without informing the parties. Ten Jing then commenced an action against HLBB, R2, R3 and the Fourth Respondent, Government of Malaysia (‘R4’), alleging negligence in causing the release of the seized monies to MDI in breach of the seizure order. HLBB denied liability, contending that it was unaware of the forfeiture proceedings and the third-party claim, and that it had merely acted in compliance with the winding-up order. HLBB further argued that the seizure order had lapsed pursuant to section 52A of the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (‘AMLATFAPUA’).
4. R2 and R3 denied any involvement in or knowledge of the release of the seized monies, maintaining that HLBB alone was responsible for releasing the funds while the seizure order was still operative. After a full trial, the High Court ordered HLBB to pay Ten Jing the sum of RM1,270,262.15, together with interest at 5% per annum from 10 October 2018 until full settlement, and costs of RM300,000 on a solicitor-client basis. The High Court dismissed Ten Jing’s claims against R2, R3 and R4, holding, inter alia, that section 52A of AMLATFAPUA was inapplicable and that the winding-up proceedings in respect of TS Steel were invalid insofar as the seized monies were concerned, as civil proceedings relating to such monies were prohibited while the seizure order remained in force.
5. HLBB appealed against the entirety of the High Court’s decision. Ten Jing, in turn, appealed against the dismissal of its claims against R2, R3 and R4, as well as the order on interest, arguing that interest ought to run from 14 May 2015, the date on which its third-party application was allowed.

1. Whether Section 52A of the AMLATFAPUA applies prospectively and the Seizure Order was still in force when HLBB released the said sum to the MDI.
2. Whether HLBB had breached the statutory duty and there was negligence by the R2 and R3.

1. The Court of Appeal held that section 52A of the AMLATFAPUA 2001 does not apply retrospectively, and therefore the Seizure Order issued in 2013 remained valid when HLBB released the funds to MDI. The Court emphasised that the amendment inserting section 52A only came into force on 1 September 2014, long after the issuance of both the Freezing Order and Seizure Order. There was no indication in the statute or the amending Act that Parliament intended retrospective operation. Applying section 52A backward in time would not only contradict its plain wording but also produce absurd and unfair outcomes, particularly because the Seizure Order would be deemed to have expired months before the amendment even took effect.
2. In reaching this conclusion, the Court relied on established principles of statutory interpretation. The general rule is that legislation is presumed to operate prospectively, unless Parliament clearly expresses an intention to the contrary. This presumption protects vested or substantive rights from being impaired by later legislation. Authorities such as Yew Bon Tew & Anor v Kenderaan Bas Mara [1983] 1 MLJ 1, Tenaga Nasional Berhad v Kamarstone Sdn Bhd [2014] 2 MLJ 749, and Ireka Engineering & Construction Sdn Bhd v PWC Corp Sdn Bhd [2020] 1 CLJ 193 reaffirm that statutes whether procedural or substantive cannot be applied retrospectively if doing so affects existing rights or obligations.
3. Applying these principles, the Court found that the 2013 Seizure Order remained operative under subsection 56(3) AMLATFAPUA, because forfeiture proceedings had been initiated within twelve months of its issuance. As a result, the Seizure Order stayed in force until revoked, and no such revocation ever occurred.
4. The Court further held that HLBB breached its statutory duty by releasing the money to MDI notwithstanding the ongoing Seizure Order and active forfeiture proceedings. HLBB had failed to safeguard the seized assets, did not inform the relevant authorities before releasing the funds, and lacked adequate internal procedures to ensure compliance with AMLATFAPUA. As the Seizure Order took precedence over the later winding-up order, consistent with subsections 53(3) and 54(3) AMLATFAPUA, HLBB’s reliance on the winding-up process was misplaced.
5. Accordingly, the Court of Appeal affirmed that HLBB remained legally bound to preserve the seized funds until the conclusion of forfeiture and third-party proceedings. Its premature release of the money constituted a clear statutory breach and negligence, making it liable for Ten Jing’s loss.

2. Whether HLBB breached the statutory duty and there was negligence by the R2 and R3

1. The Court of Appeal concluded that HLBB had breached its statutory duty under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLATFAPUA) when it released the seized funds to the Malaysian Department of Insolvency despite an active Seizure Order. Under the Act, financial institutions are mandated to hold and preserve seized property until the Court determines whether the Government is entitled to forfeit the assets or whether a bona fide third party has a legitimate claim. This statutory structure comprising the Freezing Order, Seizure Order and mechanisms under sections 50, 54, 55 and 56 demonstrates Parliament’s intention to protect both the Government’s forfeiture rights and the rights of an innocent third party.
2. The Court also held that this duty gives rise to a private right of action where its breach harms a person within the protected class. The Court relied on the principle that such a civil remedy is available when the law is designed to protect a limited group and the statute does not provide an alternative remedy consistent with the approach in Tey Kian Meng v Sierra Residences (M) Sdn Bhd & Anor [2024] CLJU 2631; [2024] AMEJ 2674.
3. On the evidence, the financial institution had no legal justification for releasing the funds. The Seizure Order, issued under section 50 AMLATFAPUA, had not expired. Section 52A, which imposes a twelve-month lifespan on seizure orders, did not apply to this case as it came into force only on 1 September 2014, long after both the Freezing Order and Seizure Order had already been issued. As explained earlier in the judgment, the Court applied the long-standing rule that legislation does not operate retrospectively unless Parliament expressly says so. This principle is affirmed in Yew Bon Tew & Anor v Kenderaan Bas Mara [1983] 1 MLJ 1, Tenaga Nasional Berhad v Kamarstone Sdn Bhd [2014] 2 MLJ 749, and Ireka Engineering & Construction Sdn Bhd v PWC Corporation Sdn Bhd [2020] 1 CLJ 193. Applying section 52A retroactively would undermine vested rights and produce irrational consequences.
4. Since forfeiture proceedings had commenced within twelve months of the original Seizure Order, the Court held that the order remained legally effective under subsection 56(3) AMLATFAPUA. As such, the money was still under seizure and could not lawfully be dealt with. subsections 53(3) and 54(3) further prohibit any action affecting seized property including steps under a winding-up process unless authorised by the Public Prosecutor. Accordingly, HLBB’s reliance on the subsequent winding-up of T.S. Steel was misplaced; the seized amount no longer formed part of the company’s estate and could not be distributed by the liquidator.
5. The Court of Appeal determined that HLBB failed to put in place adequate internal procedures to safeguard seized assets and did not alert the authorities before transferring the funds to MDI. Its failure to comply with mandatory statutory requirements constituted a breach that directly caused Ten Jing to lose the sum later confirmed to belong to it.
6. As Ten Jing had been declared a bona fide third party by the Court of Appeal on 10 October 2018, HLBB was held liable to compensate Ten Jing for the amount wrongfully released. The Court upheld the High Court’s award of costs on a solicitor-and-client basis, noting the extended litigation journey undertaken by Ten Jing since 2014 due solely to HLBB’s breach.
7. Conversely, the Court of Appeal found no negligence on the part of R2 and R3 and concurred with the decision of the learned JC that they had acted based on the information provided by HLBB and had no reason to believe that the seized funds had been prematurely released. Their confirmation of the account balance during forfeiture proceedings was based entirely on HLBB’s representation, and there was no evidence of carelessness or bad faith in their conduct.

Both appeals were dismissed, and the High Court’s decision was affirmed, with costs ordered accordingly.

The Court of Appeal confirmed that a person who is the rightful owner or bona fide third party can sue a financial institution for breaching its statutory duties under AMLATFAPUA. The Act is designed to protect not only the Government’s right to forfeit illegal proceeds, but also the rights of innocent third parties. Since there was no other remedy provided in the Act for this type of breach, the Plaintiff was entitled to bring a civil action.