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2021 MarsdenLR 3005
HIGH COURT MALAYA JOHOR BAHRU
TWIN UNITRADE SDN BHD – Appellant
Versus
TSK HARDWARE SDN BHD – Respondent
[Originating Summons No: JA-28JM-1-01/2021]
A repeat application for a Judicial Management Order by a company already adjudicated is considered an abuse of process and subject to res judicata principles.
Headnote:(A) Companies Act 2016 – Section 404 and 405 – Judicial Management Order (JMO) – An Applicant company's request for a JMO was dismissed for lack of bona fide and similar grounds previously rejected by the Kuala Lumpur High Court when it failed to sufficiently disclose material facts and prove its inability to pay debts – The doctrine of res judicata also applied as the issues had been adjudicated before – Application to strike out the Applicant's summons was granted. (Paras 28, 30, 36, 42)
(B) Bona Fide Requirement – The court highlighted that for a JMO application, it must be made in good faith, failure of which is grounds for dismissal. (Para 30)
Facts of the case: The Applicant, a construction company, sought to be placed under JMO after a judgment was obtained against it for debt recovery by the Proposed Intervener, who had initially sued for an unpaid debt. (Paras 1-4)
Findings of Court: The court found the Applicant's application to be an abuse of process due to its lack of new substantive grounds compared to its previous KLHC application. (Paras 40-41)
Issues: Whether the Applicant's repeated application was valid, given that the same grounds had been already adjudicated – whether the principle of res judicata should apply. (Paras 29, 36)
Ratio Decidendi: The court held that res judicata applies as the same reliefs had already been determined by a competent court, and the lack of new facts indicated an attempt to circumvent previously settled matters. (Paras 36, 40)
Result: The application to strike out the Applicant's Originating Summons was granted with cost.
JUDGMENT
Brief Background
[1] The Applicant is a private company dealing with construction industries whereas the Proposed Intervener is a company having business in supplying construction materials.
[2] The Proposed Intervener had supplied, sold and delivered construction materials to the Applicant amounting to RM524,105.92.
[3] As a result of non-payment of this debt, on 11 December 2019, the Proposed Intervener filed a Civil Suit No: JA-B52NCC-227-12/2019 against the Applicant in the Johore Bahru Sessions Court to claim an amount of RM524,105.92 (the principal amount was RM350,929.71 with late payment interest of RM173,176.00 as at 16 October 2019).
[4] On 9 June 2020, the Sessions Court allowed a summary judgment be entered against the Applicant. The Applicant did not appeal against this judgment.
[5] On 7 July 2020, the Proposed Intervener commenced a garnishee proceedings for the purpose of enforcing the judgment by filing an ex-parte application in the Johore Bahru Sessions Court in which Affin Islamic Bank Berhad was named as the garnishee.
[6] On 9 July 2020, the Sessions Court allowed the Proposed Intervener's application for an order for the garnishee to show cause.
[7] On 14 July 2020, the garnishee (Affin Islamic Bank) was served with the sealed garnishee order.
[8] On 20 July 2020, the Proposed Intervener's solicitor received a facsimile letter from the Applicant that there was a Judicial Management Order ("JMO") dated 9 July 2020 granted by the Kuala Lumpur High Court ("KLHC") vide Originating Summons No: WA-28JM-14-05/2020. But the sealed copy of the JMO was not attached with the letter then.
[9] The sealed copy was received by the Proposed Intervener's solicitor on 22 July 2020.
[10] Due to this, on 29 July 2020, the Proposed Intervener withdrew the garnishee proceedings in the Johor Bahru Sessions Court.
Summons In Kuala Lumpur High Court
[11] On 22 May 2020, the Applicant filed an Originating Summons No WA-28JM-14-05/2020 in the KLHC for a judicial management application.
[12] Subsequently on 9 July 2020, the KLHC allowed a JMO be entered and the Applicant was placed under s 405 of the Companies Act 2016. At the same time, Dato' Dr Shanmughanathan a/l Vellanthurai ("Dato' Shanmughanathan") was appointed as its Judicial Manager ("JM").
[13] On 30 September 2020, the Proposed Intervener filed an application to intervene, stay the execution of the JMO and set aside the JMO.
[14] On 14 October 2020, Dato' Shanmughanathan filed an application for an order for an extension of time pursuant to s 414(5) of the CA for him to convene a meeting with the creditors pursuant to s 420 of the CA.
[15] On 8 December 2020, Dato' Shanmughanathan again filed an application for an order for an extension of time of the JMO for another 6 months.
[16] 3 days before the decision of the Proposed Intervener's application, one of the Applicant's creditors, Water Vitality Sdn Bhd filed an application to intervene, stay the execution of and set aside the JMO.
[17] On 30 December 2020 the KLHC, after hearing submissions from both the Proposed Intervener and the Applicant, allowed the Proposed Intervener's application and the JMO was set aside.
[18] As the JMO was set aside, Dato' Shanmughanathan's and Water Vitality Sdn Bhd's applications had been struck out accordingly on 30 December 2020.
[19] The proceedings and grounds of judgment of this can be found in Twin Untrade Sdn Bhd v. TSK Hardware Sdn Bhd .
[20] Nadzarin Wok Nordin JC who decided on this case stated as follows:
"[39] Based on my above findings that the Applicant had:
i. failed to make a full and frank disclosure of all material facts before this Court at the time of the JM Application.
ii. the finding by me that there was a surreptitious act of concealing the JM Application in the Civil Suit.
iii. shown that the averments by the Applicant and/or the JM with regards the Applicants creditors vide the purported Consent Judgments and CIPAA claims which were not exhibited before t
