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2022 MarsdenLR 731
HIGH COURT MALAYA KUALA LUMPUR
SMALL MEDIUM ENTERPRISE DEVELOPMENT BANK MALAYSIA BERHAD – Appellant
Versus
PEKAN LEGASI SDN BHD & ORS – Respondent
[Suit No: WA-22M-1051-12/2019]
Once a company is wound-up, only the liquidator has the authority to bring or defend actions on its behalf, and any appeal without liquidator sanction is invalid.
Headnote:(A) Companies Act, 2016 – Section 486 – Powers of liquidator – Winding-up of company – The 1st Defendant's appeal was dismissed as invalid due to lack of locus standi post-winding-up; the liquidator alone can initiate actions – The liquidator's purported 'sanction' for appeal, dated 17 February 2022, was ruled invalid and could not be granted retrospective effect. (Paras 12, 46, 62, 90)
(B) Locus Standi – The court ruled that once a company is wound up, only a liquidator has the authority to bring or defend actions for the company; any appeal lodged by the company directly without a liquidator is devoid of legitimacy. (Paras 12, 18)
Facts of the case: The Plaintiff sought to recover loan amounts from the 1st Defendant, which was in winding-up proceedings. Default judgment was obtained and appeals were filed by the Defendants to set it aside, leading to legal complications following the winding-up order.
Findings of Court: The court found that the 1st Defendant lacked the necessary sanction from the liquidator to appeal, rendering the appeal invalid.
Issues: The primary issues included the validity of the appeal in light of the winding-up, the authority of the liquidator to delegate sanctions, and the potential retrospective effect of such sanctions.
Ratio Decidendi: The court concluded that the liquidator possesses the exclusive power to lodge appeals on behalf of a company in winding-up and cannot delegate this authority. Retrospective sanctions by the liquidator were deemed impermissible under current legislation.
Result: The 1st Defendant's appeal dismissed and the Plaintiff's application to strike it out was allowed.
JUDGMENT
[Enclosures 27 & 29]
Overview
[1] This Judgment will cover my decisions on two applications. By the first (encl 27), the Plaintiff applies to strike-out the Defendants' Appeal in encl 19 on the grounds that the 1st Defendant was wound-up at the time the appeal was lodged, and therefore the 1st Defendant had no locus standi to lodge that appeal with the 2nd and 3rd Defendants ("the Plaintiff's Application"). By the second (encl 29), the 1st Defendant seeks an order that the sanction in a letter dated 17 February 2022 issued by Jabatan Insolvensi Malaysia for and on behalf of the Official Receiver, Malaysia, the 1st Defendant's liquidator, be given retrospective effect so as to validate the 1st Defendant's appeal in the Defendants' Appeal in encl 19 ("the 1st Defendant's Application").
Salient Factual Background
[2] By this suit filed on 13 December 2019, the Plaintiff sought to recover the outstanding amounts under loan facilities it had granted to the 1st Defendant, which the 2nd and 3rd Defendants had jointly and severally guaranteed repayment of.
[3] On 9 January 2020, the Plaintiff obtained a judgment in default of appearance against all of the Defendants for the sums claimed ("the Default Judgment").
[4] A little over a year later, the Defendants jointly applied to set aside the Default Judgment ("the Defendants' Joint-Application"). The Senior Assistant Registrar dismissed the Defendants' Joint-Application on 15 April 2021 ("the Registrar's Decision").
[5] Pursuant to O 56 r 1 of the Rules of , 2012, on 28 April 2021 the Defendants jointly appealed to the Judge against the Registrar's Decision ("the Defendants' Joint-Appeal"). If notforthe complication that I will mention shortly, the next proceeding would have been for me to have heard and decided the Defendants' Joint-Appeal.
[6] The complication was that, on 24 January 2022, ie in between the Registrar's Decision and the Defendants' Joint-Appeal, the 1st Defendant was ordered wound-up on the Plaintiff's petition in Kuala Lumpur High Court Winding-Up Petition No: WA-28NCC-504-07/2020 ("the Winding-Up Order"). In the Winding-Up Order, the Official Receiver was appointed as liquidator of the 1st Defendant ("the Liquidator"). The Liquidator was not involved in the lodging of the Defendants' Joint-Appeal.
[7] By a letter dated 17 February 2022 ("the Liquidator's Letter"), on the 2nd Defendant's application as a contributory of the 1st Defendant, the Liquidator granted a "sanction" to the 2nd Defendant to commence and proceed with this action, and to appoint Messrs. Justin Faye & Partners to represent the 1st Defendant, subject to the terms and conditions in the Liquidator's Letter. Those conditions included providing an Akujanji Penjamin; depositing the sum of RM5,000.00 with the Liquidator; that the Liquidator would not be liable or be held liable for any failure, loss or costs imposed by any party or arising from the action; that the Penjamin would bear all the costs of bringing and continuing the action; and that a new sanction would have to be obtained for any appeal.
[8] Paragraph 3 of the Liquidator's Letter stated as follows:
"Sila ambil perhatian bahawa kebenaran penyelesai ("sanksi") ini berkuat kuasa pada tarikb surat ini dikeluarkan."
[9] In para 11 of his Affidavit in support of the 1st Defendant's Application (encl 30), the 2nd Defendant said that he provided the Akujanji Penjamin and provided the RM5,000.00 deposit / bond to the Liquidator.
[10] On 1 March 2022, the Plaintiff filed the Plaintiff's Application, and on 9 March 2022, the 1st Defendant filed the 1st Defendant's Application.
The Issues
[11] Based on parties' Affidavits and Written Submissions filed on the Plaintiff's Application and the 1st Defendant's Application, the issues I will have to decide are:
(1) Whether the 1st Defendant had locus standi to appeal against the Registrar's Decision;
(2) Whether the sanction issued by the Liquidator to the 2nd Defendant to proceed into the 1st Defe
