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2024 MarsdenLR 2711
HIGH COURT MALAYA KUALA LUMPUR
TAN AIK LING – Appellant
Versus
CT WORLD CONSTRUCTION SDN BHD – Respondent
[Companies (Winding-Up) Petition No: WA-28NCC-132-02/2023]
The court upheld the validity of a judgment entered post-winding-up by granting retrospective leave under the Companies Act, emphasizing the need to avoid re-litigation and protect creditor interests.
Headnote:(A) Companies Act 2016 - Sections 471(1) and 486(2) - Winding up proceedings - Validity of Judgment entered post winding up challenged - Court found the entry of Judgment violated s 471(1) - Leave granted nunc pro tunc under s 471(1) to validate Judgment as it was in interest of justice and did not prejudice creditors. (Paras 9, 54, 58, 62)
(B) Liquidation - Powers of liquidator - The liquidator holds exclusive power over legal proceedings in the name of the company post winding up - Leave under s 486(2) may be granted to allow third parties to conduct proceedings only when the liquidator refuses to do so. (Paras 20, 24, 41)
Facts of the case:
Seow & Kon, owners of a property, engaged CT World for construction work, later terminated the contract due to non-compliance and cost increases. After a Judgment was entered against CT World, a winding-up order was issued, leading to scrutiny of the Judgment's validity. (Paras 2-7)
Findings of Court:
The court found that the Judgment was valid as it was granted after a full trial, and it was in the interest of justice to regularize it despite the winding-up order. (Paras 56-63)
Issues: The court addressed whether the Judgment could be validated despite the winding-up order and the implications of the liquidator's powers over legal proceedings. (Paras 9, 54)
Ratio Decidendi: The court held that granting retrospective leave to validate the Judgment was appropriate, as it avoided unnecessary re-litigation and served the interests of justice without harming creditors. (Paras 58-62)
Result: Leave granted to validate the Judgment entered in the Sessions Suit.
JUDGMENT
Introduction
[1] These Grounds concern 2 interrelated Post Winding Up applications.
Background Facts
[2] Seow Siew Kian [NRIC No: 820803-05-5288] and Kon Yeon Guen [NRIC No.: 810715-14-6391] ("Seow & Kon") are the legal and beneficial owners of a house at Lot PT 86736, No.2 Jalan Jade Hills 11/3, Jade Hills, Pekan Kajang, Daerah Ulu Langat, Selangor Darul Ehsan ("the Premises").
[3] CT World Construction Berhad ("CT World") is a construction company and Grade 7 contractor registered with the Construction Industry Development Board.
[4] The background facts are as follows.
(a) In or about November 2019, Seow & Kon engaged CT World Construction for the construction and renovation of the Premises. Initially, Seow & Kon paid RM16,000.00 for architectural services and received from CT World, a preliminary quotation of RM450,000.00. However, the quotation was revised on several occasions, eventually rising to RM650,128.99 by July 2020.
(b) Seow and Kon terminated the contract alleging that CT World failed to obtain the necessary approvals from Majlis Perbandaran Kajang, coupled with significant cost increase.
(c) Although CT World agreed in principle to the termination, it issued a unilateral termination letter, which Seow & Kon did not accept.
[5] Subsequently, Seow and Kon commenced proceedings against CT World in the Petaling Jaya Sessions Court in Civil Suit No BBA52C-1-01 /2022 ("the Sessions Suit").
[6] On 20 November 2023, on the Petition of RHB Bank Bhd, CT World was wound up by an Order of the Insolvency Court ("the Winding Up Order") and the Official Receiver ("the OR") was appointed as liquidator. Tan Aik Ling ("Tan"), the sole shareholder of CT World, claims that he had no knowledge of the Winding Up Order.
[7] On 21 December 2023, judgment was entered by Seow & Kon in the Sessions Suit ("the Judgment"). The Judgment ordered, inter alia, that CT World pay Seow & Kon:
(a) a sum of RM136,039.55;
(b) a sum of RM8,000.00 being architect's fee;
(c) interest at the rate of 5% per annum on the judgment sum of RM136,039.55 and RM8,000.00;
(d) costs of RM8,325.00; and
And further, CT World's counterclaim against the plaintiffs was dismissed with costs of RM5,575.00.
[8] CT World filed a Notice of Appeal on 2 January 2024 ("the Notice of Appeal").
[9] What is important is that the Judgment was obtained by Seow & Kon after the Winding up Order was granted and as such, the entry of the Judgment violated s 471(1) of the Companies Act 2016 (" CA 2016"). The validity of the Judgment is in question. Similarly, as the Notice of Appeal was filed by CT World after Winding Up Order, its validity is also questionable given that it was not filed by the Liquidator, the OR.
[10] On 31 July 2024, Seow & Kon were informed by the Director General of Insolvency ("DGI") that an Order dated 30 July 2024 was granted on an application filed by Tan in Case No. WA-28PW-366-06/2024, terminating the Winding Up ("Termination Order"). The termination was moved under ss 493 and 494(2) and (3) of CA 2016.
The Cross Applications
[11] There are 2 cross post winding up applications before me.
[12] First, Tan filed WA-28PW-408-07/2024 ("PW408") under s 471(1) of CA 2016 for retrospective leave to regularise the filing of the Notice of Appeal and to proceed with the Appeal under s 486 ("the Leave NoA"). The Leave NoA is for orders, in effect, that:
(a) leave be granted retrospectively to CT World to file and proceed with the Appeal;
(b) the Notice of Appeal dated 2 January 2024 be deemed to have been filed regularly;
(c) M/s G. Sandhu, Kabina & Associates be allowed to represent and/or continue representing CT World in the Appeal; and
(d) the costs of Leave NoA be borne by Tan.
[13] In substance, although not expressly stated, Tan wants conduct of the Appeal. He prays that his solicitors represent CT World in the Appeal. The Leave NoA is supported by Tan's affidavit affirmed on 1 July 2024 ("Enclosure 2").
[14] Secondly, Seow & Kon filed WA-28PW-440-07/
