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2020 MarsdenLR 2437
HIGH COURT MALAYA KUALA LUMPUR
KL-KUALA SELANGOR EXPRESSWAY BHD – Appellant
Versus
PROLINTAS EXPRESSWAY SDN BHD – Respondent
[Originating Summons No: WA-24NCC-529-10/2019]
A bona fide disputed debt or valid cross-claim prevents a winding up petition, allowing for judicial examination of the substantive issues before any such petition can proceed.
Headnote:(A) Contracts - Co-ordination and Cost Sharing Agreement - Construction costs - The Plaintiff acknowledged indebtedness to the Defendant but disputed the debt on substantial grounds, leading to a winding up petition. The court addressed whether such a debt is time barred and whether a genuine cross-claim exists. (Paras 7-18)
(B) Limitation of Actions - Acknowledgment of Debt - The court examined whether the Plaintiff's statements amount to acknowledgment of the alleged debt, referencing 'Surrendra Overseas Ltd v. Government of Sri Lanka' to clarify acknowledgment criteria. (Paras 26-28)
(C) Equity - Winding Up - The presence of genuine cross-claims on substantial grounds prohibits winding up. Case law, including 'Re Bayoil SA' and 'Viking Consultants Pte Ltd v. Sykt Jaya Utara Construction', supports injunction against winding up petitions under dispute. (Paras 36-42)
Facts of the case: The Plaintiff applied for a Fortuna Injunction to prevent the Defendant from winding up proceedings based on a claimed debt arising from construction agreements, asserting disputed debts and cross-claims. The Plaintiff contended that the Defendant’s claim was time barred and referenced various correspondence acknowledging but disputing amounts owed. (Paras 23-25)
Findings of Court: The Defendant’s claim is genuinely disputed on substantial grounds, justifying the grant of the Fortuna Injunction against the application for winding up. (Paras 44)
Issues: The main legal questions include the acknowledgment of debt, whether the Defendant's claim is time barred, and the validity of cross-claims raised by the Plaintiff. (Paras 24-30)
Ratio Decidendi: The court held that a claim's acknowledgment must meet established legal standards, and genuine cross-claims effectively prevent the grant of a winding up order, emphasizing the need for judicial examination of substantive disputes. (Paras 30-36)
Result: The application for a Fortuna Injunction is granted.
JUDGMENT
[1] This is an application by the Plaintiff for a Fortuna Injunction. I have allowed the application. These are the full reasons for my decision.
Background Facts
[2] The Government of Malaysia, the Plaintiff and the Defendant had entered into a Co-ordination and Cost Sharing Agreement dated 18 July 2000 ("CSS Agreement"). Pursuant to the CCS Agreement, the Plaintiff were to construct inter alia, the following:
a) Kuang System Interchange ("KSI");
b) NSE Acces; and
c) Connecting Road.
[3] Because of the delay by the Plaintiff to commence the construction works, the Defendant, with the consent of the Government undertook to construct the NSE Access and the Connecting Road on behalf of the Plaintiff. Based on cl 5.6 and 5.7 of the CCS Agreement, the Plaintiff shall reimburse the Defendant in full for the construction costs incurred by the Defendant in relation to NSE Access and fifty per centum (50%) for the construction costs for the Connecting Road.
[4] Pursuant to the CCS Agreement as above, the Defendant had commenced and completed the construction of the NSE Access and Connecting Road and had subsequently sent the invoice to the Plaintiff for payment.
[5] The Defendant is also entitled for the interest on the required payment pursuant to cl 5.6 and 5.7 of the CCS Agreement at the rate of two per centum (2%) per annum above base lending rate ("BLR") as published by Malayan Banking Berhad until the actual date of settlement of the amount due.
[6] Based on cl 5.6.2 and 5.7.2 of the CCS Agreement, the Plaintiff shall pay the Defendant within thirty (30) days from the date of receipt of the joint certification referred to cl 5.6.1 and 5.7.2 of the CCS Agreement.
[7] The summary of cost sharing dated 15 February 2012 for the NSE Access and the Connecting Road had been certified by both parties through their consultants and has been issued by the Defendant to the Plaintiff. However, that sum has not been paid by the Plaintiff to the Defendant.
[8] In a letter dated 20 September 2011 the Plaintiff has stated as follows to the Defendant:
"Based on the various correspondences and discussions held with Prolintas (Defendant) on the above, we understand and acknowledge that KLSEB (Plaintiff) will have to pay Prolintas the amount of RM 48,294,600.00 for KLSEB's portion of the construction cost of the NSE Access and the Connecting Road."
[9] The Plaintiff went on to say as follows:
"On the other hand, KLSEB has submitted an Interim Payment Statement No 1 for claims as at 27 January 2011 totalling RM 60,712,432.18 as Prolintas Expressway Sdn Bhd's (Prolintas) portion for the construction of the KSI.
Moving forward, we would like to propose that Prolintas's claims to KLSEB be offset against KLSEB's claims to Prolintas, which will result in a net amount of RM 12,417,831.72 in favour of KLSEB."
[10] Pursuant to the above, the Defendant in principle had agreed to the above proposal and has taken steps to ascertain the actual cost of construction for the KSI for the purposes of offsetting the total amount with the Plaintiff's debt to the Defendant.
[11] The Plaintiff had then issued a letter dated 18 March 2013 claiming for the Defendant's portion for the construction cost for the KSI, but the amount was disputed y the Defendant who then appointed a consultant to evaluate the actual cost of construction for the KSI.
[12] The consultant that was appointed by the Defendant has evaluated the cost of construction for the KSI and found that the cost was only RM 85,664,698.23 based on his valuation by using the JKR Standard Form of Contract.
[13] However, the said valuation by the Defendant's consultant was disputed by the Plaintiff and the Plaintiff had explained its dispute in their letter dated 7 December 2015. In the said letter, the Plaintiff has again acknowledged their debt towards the Defendant for the cost of construction for the NSE Access and the Connecting Road to be for the amount of RM 48,294,600.46.
[14] However, in the same letter
