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2021 MarsdenLR 375
HIGH COURT MALAYA KUALA LUMPUR
RE: YANG ZHONG CAPITAL SDN BHD; EX-PARTE: YEOH WILLIAM (ENCL 1)
[Post Winding Up No: WA-28PW-111-04/2021]
A winding up order can be stayed if special circumstances exist, including non-disclosure of critical information affecting the rights of the parties involved.
Headnote:(A) Companies Act 2016 – Section 492 – Application for stay of winding up order – The applicant filed for a stay of the winding up order pending the company's appeal, asserting the winding up order was obtained through non-disclosure of facts and lacked good faith. The court emphasized the necessity of special circumstances for granting a stay and found that lack of communication and good faith warranted the stay. (Paras 1, 14, 36)
(B) Abuse of Process – The court noted that non-disclosure of ongoing proceedings led to an abuse of court process by the petitioner, affecting the company's rights to appeal. (Paras 29, 34)
Facts of the case: The applicant, a contributory, sought to intervene and stay winding up proceedings against the company, asserting the winding up order was secured without proper service to solicitors and with suppression of critical information during the appeal.
Findings of Court: The court recognized the special circumstances based on non-disclosure and lack of good faith in obtaining the winding up order, emphasizing the importance of fair play.
Issues: The main issues included whether the applicant’s rights were compromised due to non-disclosure of material facts and whether special circumstances justified the stay.
Ratio Decidendi: The court concluded that abuse of process occurred due to the petitioner's failure to disclose the winding-up order during ongoing appeal proceedings, necessitating a stay to uphold justice.
Result: Stay of the Winding Up Order granted pending appeal.
JUDGMENT
Enclosure 1
[1] In the application by way of Form of Summons (Application) before this Court, one Yeoh William (Applicant) the applicant who is a contributory in Yang Zhong Sdn Bhd (Company), had applied to this Court pursuant to s 492 of the Companies Act 2016 and/or the inherent jurisdiction of this Court to inter alia intervene in the winding up proceedings and for a stay of the winding up order dated 19 August 2020 till the date of disposal of the Company's appeal in Appeal No: W-04(IM)(NCVC)-238-08/2020 (Appeal).
[2] The grounds of which the Application is based are inter alia as follows:
(i) since June 2019, Fuji Xerox Asia Pacific Pte Ltd (Petitioner) and the Company has been engaged in proceedings at the Sessions Court vide Summons No: WA-A52NCVC-533-06/2019 (Civil Suit)
(ii) on 27 September 2019, the Sessions Court had allowed a summary judgment to be entered (Judgment) against the Company and for which the same was appealed to the High Court (High Court Appeal)
(iii) whilst the matter was pending the High Court Appeal, the Petitioner had, without knowledge of the Company, proceeded to initiate the winding up proceedings against the Company (Petition)
(iv) the Petition was brought by the solicitors for the Petitioner, Messrs Zaid Ibrahim & Co (Messrs ZICO) and although the Company was represented by Messrs Edwin Lim & Suren ((Company's Solicitors), in the Civil Suit, the said Petition was never served on the Company's Solicitors
(v) a copy of the Winding Up Order dated 19 August 2020 (Winding Up Order) was also not served on the Company's Solicitors
(vi) at all material times the Company was unaware of the Petition
(vii) upon the High Court Appeal being dismissed on 6 July 2020, the Company filed the Appeal against the said High Court order
(viii) during the entire Appeal process, the Petitioner had not informed the Court of Appeal of the Winding Up Order
(ix) the Company only became aware of the Winding Up Order when the Petitioner's written submissions dated 7 April 2021 for the Appeal were served on the Company's Solicitors on 12 April 2021 i.e 3 weeks before the date of hearing of the Appeal
(x) the Application herein was filed immediately upon notice of the Winding Up Order and upon obtaining all relevant details and documents after conducting a Court search at the Kuala Lumpur High Court
(xi) there are special circumstances for a stay to be given when
a) the Winding Up Order was obtained by the Petitioner through the non -disclosure or surpression of facts in the Petition, thus the Winding Up Court in granting the Winding up Order had done so while being misled
b) the Petition was never served on the Company's Solicitors although the Company was represented by lawyers; thus the Petitioner's action in instituting and continuing with the Petition was done in a back door fashion resulting in the Winding up Order being obtained mala fide
c) the petition is tainted with bad faith which was aimed to frustrate and deprive the Company from instituting the Appeal and thus the Petition is a serious abuse of Court process.
Applicant's Submissions
[3] The Applicant had submitted that the liquidator of the Company (Liquidator) had confirmed that there were no creditors who had filed their proof of debt, therefore the stay of the Winding Up Order will not cause any injustice to the interest of any creditors.
[4] The Applicant contends that a clear distinction must be drawn between the two different circumstances that the Application herein is not to seek a permanent stay of the Winding Up Order but it is only for the specific period pending the disposal of the Appeal and that the cause papers filed for the Appeal were in order and if it is not because of the recent disclosure of the Winding Up Order, the hearing of the Appeal would have proceeded on 11 May 2021.
[5] It is emphasised by the Applicant that the winding up proceedings was filed by the same lawyers for the Petitioner in the Appeal, being Messrs ZICO and
