Home Law Buzz Business Tealive is officially illegal?! Here’s what the court said.

Tealive is officially illegal?! Here’s what the court said.

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UPDATE 16/7/2018 (2.30pm): According to Loob Holdings, the Federal Court has granted its application for stay.

So all Tealive stores can remain open pending the hearing and decision of the Federal Court.

UPDATE 5/7/2018 (10.00pm): Loob Holdings is now applying to the Federal Court for stay of decision

Source: BFM Radio

According to this statement released by Loob Holdings, after being rejected by the Court of Appeal, their lawyers have applied to the Federal Court to maintain the status quo instead.

 

UPDATE 5/7/2018 (3.00pm): The Court of Appeal has DENIED Loob’s application for stay pending appeal!

In other words, Tealive is NOT ALLOWED to operate their businesses while waiting for the case to be heard in the Federal Court.

The judges (except one) agreed that the Court shouldn’t “lean in favour” of a party who has breached the franchise contract and went against franchise law. They even said that that Loob might have committed a criminal offence!

Their conclusion:

“it will be against the rule of law to disregard a statutory protection in favour of La Kaffa”

You can find the full decision on this stay application uploaded by our friends at BurgieLaw here.

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A little more than one year ago, La Kaffa International (folks who own the Chatime brand) revoked Loob Holding’s right to operate Chatime in Malaysia. In response to that, Loob Holdings launched Tealive and that totally pissed La Kaffa off. We covered the High Court decision on The CanLaw Report and you can read all about it here.

TL;DR – The two parties have engaged in multiple legal actions against each other over the past year on whether TEALIVE was legit. 

On 27 June 2018, the Court of Appeal released a 41-page judgment on the appeals filed by both sides on this case.

As usual, we read the whole thing so you didn’t have to!

Source: Court of Appeal, Malaysia.

Before we go into the key highlights of this judgment, here’s a fun fact.

#FunFact: When a case reaches the appellate courts (Court of Appeal and Federal Court) in Malaysia, the facts are no longer disputed. In other words, no questioning witnesses on stands or presenting evidence. No more plot twists! Their role is to decide whether the judges in the lower courts applied the law correctly or whether a particular law itself is correct. Kind of like a legal theory debate. Yeah, here’s where it gets super nerdy and probably why there are no appellate court soap operas on TV. 

So here’s the low down on this:

#1 This appeal is actually a combination of 2 suits

The first one was La Kaffa asking the courts to stop Loob Holdings from operating Tealive.

The second one was Loob Holdings asking the courts to stop La Kaffa from stopping them.

giphy.com

For obvious reasons, the Court of Appeal decided to combine these cases to be heard together. HA.

#2 La Kaffa wanted Loob Holdings to return all their stuff and stop running Tealive

Source: Court of Appeal, Malaysia.

The High Court decided in last year’s decision for Loob Holdings to only return all Chatime-related stuff to La Kaffa, but not to stop running Tealive. He gave reasons such as how it would affect livelihoods of employees and that he will leave the ultimate decision to the party’s ongoing arbitration in Singapore. You can read more about it here.

La Kaffa was not satisfied. So they appealed.

Source: Giphy.com

#3 To clear all doubts, the Court of Appeal said that they have powers to decide on an interim injunction even with the ongoing arbitration in Singapore

Source: Court of Appeal, Malaysia.
Source: Court of Appeal, Malaysia.

In other words, “the following decision is legit”.

#4 If you can ask Loob Holdings to return their stuff to La Kaffa, you should also be able to ask them to stop running Tealive

This gets a little more technical. But let’s break it down.

Ordering Loob Holdings to return their stuff = mandatory injunction.

Ordering Loob Holdings to stop running Tealive = prohibitory injunction.

One is active in nature, the other is passive in nature.

In law, the threshold to grant a mandatory injunction is much higher than a prohibitory injunction. Meaning, it’s easier to get the court to stop someone from doing something than to force someone to do something.

So by that logic, if the High Court is convinced enough to order Loob Holdings to return all their Chatime stuff to La Kaffa International, then they should be more than convinced to stop them from running Tealive.

Source: Court of Appeal, Malaysia.

#5 800 Loob Holdings employees losing their jobs is not a good reason to allow for Tealive to operate

Source: Court of Appeal, Malaysia.

La Kaffa’s lawyers argued that Loob Holdings has many other franchises and businesses under their wing, so the employment point does not really stand.

Fair enough.

#6 Loob Holdings basically just changed the name of the same business from Chatime to Tealive and that is WRONG

Source: Court of Appeal, Malaysia.

The franchise terms between the two and the Franchise Act 1998 does not allow Loob to set up Tealive immediately after having had the benefit of Chatime franchise business.

#7 With this judgment, Tealive is now prohibited from operating.

Source: Giphy.com

BUT Loob Holdings still have a final avenue of appeal at the Federal Court.

We were told that the Loob lawyers are now working overtime to apply for this decision to be stayed (aka put on hold) while they make this appeal.

The drama continues!

Let us know what you think in the comments below.