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2019 MarsdenLR 350
HIGH COURT SABAH & SARAWAK SIBU
KATHRYN MA WAI FONG – Appellant
Versus
OCARINA DEVELOPMENT SDN BHD – Respondent
[Companies (Winding-Up) No: SBW-28PW-19/9-2018]
A winding-up order can be stayed pending appeal if special circumstances exist, particularly if an ongoing business faces irreparable harm.
Headnote:Statute Analysis: Pursuant to s 465(1)(h) of the Companies Act 2016, a winding-up order was issued on the just and equitable ground. Facts of the Case: The Respondent contested the winding-up order via an appeal, emphasizing its ongoing profitability and the potential irreversible damage from liquidation.
Findings of Court:
The Court assessed the merits of granting a stay on the winding-up order, determining that special circumstances warranted the approval of the stay pending appeal.
Issues: The Court framed the key question regarding the sufficiency of circumstances justifying a stay against a winding-up order.
Ratio Decidendi: The prejudice against the Respondent's operational continuity and financial reputation constitutes a valid special circumstance, as per Court precedent related to cases summarily decided.
Result: The order to wind up the Respondent dated 30 August 2018 and all proceedings in relation thereto is stayed pending disposal of the appeal of the Respondent. The validation order is extended to the date of final disposal of the appeal.
| Table of Content |
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| 1. initial context of winding-up and appeals. (Para 1 , 2 , 3) |
| 2. financial implications and arguments for staying the order. (Para 4 , 5 , 6) |
[1] On 30 August 2018, the Respondent was ordered to be wound up on the "just and equitable" ground, pursuant to s 465(1)(h) of the Companies Act 2016 .
[2] The Respondent and its contributories have appealed against the winding-up order.
[3] The Respondent as well as its contributories have applied to stay the winding-up order and all proceedings in relation thereto, pending disposal of their respective appeals to the Court of Appeal.
[4] In support of its application for a stay, the Respondent averred that it is a profitable and an ongoing company which is actively involved in the logging business and, also an investment holding company with subsidiaries in the oil palm plantation business, whose reputation, goodwill and credit standing will be irreparably damaged if it were to be deprived of a stay. The Respondent is a corporate guarantor for a subsidiary, the credit facility of which may be recalled, in which event the Respondent's stake would be adversely affected. Its appeal, if successful, would be rendered nugatory. Specifically, as at the financial year ending 21 July 2016, the Respondent made a pre-tax profit of RM4,065,220.00, and as at the financial year ending 31 July 2017, it made a pre-tax profit of RM1,047,072.00.
[5] The Respondent further averred that it derives substantial income from its engagement by Sarawak Timber Industry Development Corporation ("STIDC") as the sole contractor under 2 timber licences which are subsisting but may be at risk of being terminated if the winding-up proceedings are not stayed.
[6] To a great extent, the arguments advanced by the contributories overlap with those of the Respondent. They also argued that substantial liquidation costs would be unnecessarily incurred if a stay is not granted pending the disposal of their appeals (especially since there is a cross-appeal by the Petitioner as to the appointment of the liquidator Wong Ching Yong), apart from pointing out that a stay would also be beneficial to the Petitioner if the Respondent is not wound-up but continues to be profitable.
