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2022 MarsdenLR 320
HIGH COURT MALAYA KUALA LUMPUR
KEEN SOLUTION SDN BHD – Appellant
Versus
LE APPLE BOUTIQUE HOTEL (KLCC) SDN BHD & ANOR – Respondent
[Companies (Winding-Up) No: WA-28NCC-611-09/2021]
The court held the winding-up of the Company just and equitable due to its operational cessation and financial insolvency, affirming the Petitioner’s right to appoint a liquidator despite historical issues.
Headnote:(A) Companies Act 2016 – Sections 465(1)(c) and (h) – Winding-up petition – The Petitioner sought to wind up the Company due to its financial insolvency and cessation of business operations since January 2019 – The relationship between the Petitioner and the 2nd Respondent as joint-venture partners deteriorated, leading to mutual distrust and allegations of mismanagement. (Paras 20, 32, 34, 36, 106)
(B) Liquidation – Appointment of liquidator – The court found that the Petitioner’s nominated liquidator met the requirements of the Companies Act, and the previous conduct of the liquidator did not disqualify him from the role. (Paras 85, 104)
Facts of the case: The winding-up petition was filed against the Company due to allegations of financial mismanagement and a significant breakdown in the relationship between the joint-venture partners, the Petitioner and the 2nd Respondent. (Paras 20-22, 32)
Findings of Court: The court determined that the Company had suspended its business for over two years, making winding-up just and equitable. (Paras 32-34)
Issues: The court addressed whether the Petitioner had valid grounds for the winding-up petition under the Companies Act and if the appointment of the nominated liquidator was appropriate. (Paras 20, 39)
Ratio Decidendi: The court held that the failure to operate the business and lack of management transparency justified the winding-up, while the liquidator’s historical issues did not negate his current qualifications. (Paras 34, 106)
Result: The petition to wind up the Company was granted, and Bala Krishnan was appointed as the liquidator. (Paras 108)
JUDGMENT
[Winding-Up Petition (Enclosure 1)]
Overview
[1] The 2nd Respondent is a contributory of the 1st Respondent ("the Company") in that it holds 55% of the fully paid-up shares in the Company. Both Respondents have appealed against my decision on 24 May 2022 to, inter alia, allow the Petition filed by the Petitioner to wind-up the Company and to appoint one Bala Krishnan a/l Ponniah ("Bala Krishnan") as the liquidator. This Judgment sets out the reasons for my decision.
Salient Background Facts
[2] Sometime in 2013, the Petitioner and the 2nd Respondent, a hotel operator, entered into a joint-venture to run and operate a hotel business, through the Company as the joint-venture vehicle. The Company was an existing company incorporated in October 2011, At the time, the Company's name was "Esquire Bayview Sdn Bhd", and the Petitioner and the 2nd Respondent fancified its name to "Le Apple Boutique Hotel (KLCC) Sdn Bhd" on 30 December 2013.
[3] Though the Petitioner neither adduced nor alleged any formal joint- venture agreement between it and the 2nd Respondent and the 2nd Respondent denied the existence of any joint-venture with the Petitioner, the documents do indicate a joint-venture between the them, with the Company as the joint-venture vehicle. I will come to that in due course in this Judgment.
[4] Under the terms of the joint-venture, the Petitioner and the 2nd Respondent would respectively hold 450,000 shares (45%) and 550,000 shares (55%) in the Company. By virtue of that shareholding, the 2nd Respondent would be entitled to nominate three directors to the Company's Board of Directors ("the 2nd Respondent's Representatives"), and the Petitioner, two ("the Petitioner's Representatives"). Their respective nominees were:
The Petitioner's Representatives
Thum May Yin ("Thum")
Chai Sook Tieng ("Chai")
The 2nd Respondent's Representatives
Data' Lee Ee Hoe ("Dato' Lee")
Dato' Sri Koh Yock Heng ("Dato' Sri Koh")
Saw Soo Ming ("Saw")
[5] On 18 October 2014, the Company entered into a Tenancy Agreement ("the Tenancy Agreement") with PGCG Assets Holdings Sdn Bhd ("the Landlord") for a tenancy of the Landlord's premises at No 160, Jalan Ampang, 50450 Kuala Lumpur ("the Premises"). The Company's common seal was affixed to the signing page of the Tenancy Agreement, witnessed by two of the 2nd Respondent's Representatives, Dato' Sri Koh and Saw.
[6] Though Recital (2) of the Tenancy Agreement mentions an earlier Lease Agreement dated 18 December 2013 for the Landlord to lease the Premises to the Company, Recital (2) does go on to state that "the parties have since agreed to terminate the Lease Agreement and enter into this Tenancy Agreement to supersede the Lease Agreement"
[7] Even though the terms of that superseded Lease Agreement are not relevant here, the Lease Agreement is in itself relevant to indicate that the joint-venture between the Petitioner and the 2nd Respondent had been activated as early as December 2013, through a lease of the Premises from then until 18 October 2014.
[8] Under the terms of the Tenancy Agreement, the initial tenancy was for just one year, from 1 December 2013 to 30 November 2014. However, in reality, the entire tenancy period could potentially be up to twenty-nine years. This is because, under clauses 7(b)(aa) to 7(b)(ccc) of the Tenancy Agreement, the tenancy period could be extended for twenty-eight renewal terms for a period of one year each time. The pre-condition for each renewal was that, not less than two months before the expiry of the then-tenancy period (ie by 30 September of that year), the Company would have to submit a renewal request each time to the Landlord. As long as there was no existing breach of the terms of the Tenancy Agreement at the time of such request, the Landlord was obliged to grant that one- year extension.
[9] The proviso to Clause 7(b) of the Tenancy Agreement provided for what would happen if the tenancy was not extended:
"Provided that in the event the Tenant shal
