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2021 MarsdenLR 1120
HIGH COURT SABAH & SARAWAK SANDAKAN
CIMB BANK BERHAD – Appellant
Versus
BORNEO CERGAS SDN BHD & ORS (ENCL 483) – Respondent
[Suit No: S-22-07-2006]
The court reaffirmed that the 3rd Defendant remains liable despite the 1st Defendant's status, establishing that any claim must be adjudicated on its merits rather than procedural grounds.
Headnote:(A) Companies Act 2016 – Sections 555 and 609 – Application to strike out Plaintiff's claim – Delay in lodging Reinstatement Order not justified – The 3rd Defendant’s liability remains intact despite status of 1st Defendant. (Paras 8, 12, 23) (B) Pleading challenge – Court's discretion in striking out claims requires that it be exercised sparingly and only in exceptional cases where the claim is clearly untenable – Disputed factual matrix should be resolved at trial. (Paras 23, 24)
Facts of the case: The Plaintiff filed a claim against the Defendants, with issues arising regarding the status of the dissolved 1st Defendant and the evidential substantiation of the Reinstatement Order lodged with the Registrar. The 3rd Defendant claimed the Plaintiffs inaction led to a miscarriage of justice.
Findings of Court: The court added the Registrar of Companies as a party to clarify the reinstatement issue and dismissed the 3rd Defendant's application to strike out.
Issues: The key issues were whether the status of the 1st Defendant affects the claims against the 3rd Defendant and if the Plaintiff's claims are sustainable.
Ratio Decidendi: The court ruled that the 3rd Defendant remains liable under the Guarantee regardless of the 1st Defendant's status, prioritizing the joint and several liabilities established by the contract.
Result: Application dismissed with costs.
JUDGMENT
Introduction
[1] By Notice of Application dated 8 December 2020 under Enclosure 483 ("the application"), the 3rd Defendant applied to strike out the Plaintiff's claim under O 18 rule 19(1)(b) and (d) and O 92 rule 4 of the Rules of 2012 ("ROC 2012").
Historical Background
[2] This case has a rather convoluted history, as such it would be useful to set out the relevant chronology of events:-
The Parties' Contentions
The 3rd Defendant's
[3] The 3rd Defendant contended that despite the Order dated 14 December 2016 reinstating the 1st Defendant company("Reinstatement Order"), as at the date of the present application, the 1st Defendant's status remained as a "dissolved" company based on the search result with Companies Commission of Malaysia (CCM) dated 4 December 2020 (exhibit "V-8").
[4] It was next contended that the unexplained delay in lodging the Reinstatement Order showed that the Plaintiff has no interest in pursuing the action despite it being filed since 14 years ago.
[5] The 3rd Defendant also contended that the Plaintiff's inaction has caused the 3rd Defendant substantial miscarriage of justice as the 1st Defendant was no longer in existence.
The Plaintiff's
[6] The Plaintiff responded that the issue regarding the status of the 1st Defendant was irrelevant as the 3rd Defendant was still liable under the Memorandum of Continuing Guarantee and Indemnity dated 17 May 2003 ("the Guarantee").
[7] It was further contended that as at the date of the Plaintiff's affidavit ie on 30 December 2020, based on the CCM search dated 16 December 2020 (exhibit "Z-1"), the status of the 1st Defendant was stated as "existing".
This Court's Decision
Status Of The 1st Defendant
[8] At the outset, it will be noted that it is not disputable that at the time of filing of the present application, the Reinstatement Order had not yet been lodged with the Registrar of Companies ("Registrar") - see exhibit "V-8". However, the Reinstatement Order was already lodged by the time the Plaintiff filed its affidavit to oppose the application - see exhibit "Z-1".
[9] Despite it being an issue raised by the 3rd Defendant in this application, there was no attempt by the Plaintiff to explain why the Reinstatement Order was not lodged earlier and the circumstances under which it was subsequently lodged and accepted by the Registrar. The Plaintiff merely contended that the issue of whether the Registrar had rightly reinstated the 1st Defendant by accepting the lodgement of the Reinstatement Order was not properly before the Court as the former was not a party in the action.
[10] It is an understatement to say that this development has potentially added another dimension to the already long and convoluted history of the case. As this case is to be re-heard on its merits and given the circumstances, it goes without saying that the status of the 1st Defendant is a preliminary factor which must be settled before the case moves forward.
[11] Without delving into the merits of the issue of the correctness or otherwise of the Registrar's acceptance of the lodgement of the Reinstatement Order some 4 years after it was made, this Court took the view that in the absence of any explanation by the Plaintiff, the Registrar would be the best person to enlighten the Court on the matter.
[12] In so deciding, this Court had regards to the following provisions of the Companies Act 2016 :-
"555. (1) Any person who is aggrieved by the decision of the Registrar to strike off the company may, within seven years after the name of the company has been struck off, apply to the Court to reinstate the name of the company into the register.
(2) If the Court is satisfied that the company was at the time of the striking off, carrying on business or in operation or otherwise that it is just that the name of the company be reinstated in the register, the Court may order that:-
(a) the name of the company be reinstated; and
(b) give such directions and make such provisions as seem ju
