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2020 MarsdenLR 1497
HIGH COURT MALAYA JOHOR BAHRU
WEALTHY GROWTH SDN BHD – Appellant
Versus
LEE SUI CHIN & ORS (ENCL 22) – Respondent
[Originating Summons No: JA-24NCC-33-12/2019]
An Erinford Injunction may be granted to maintain the status quo pending appeal, focusing on the balance of convenience and nugatoriness of the appeal, whilst preventing abuse of court processes.
Headnote:(A) Companies Act 2016 – Section 466 – Specific Relief Act 1950 – The Applicant sought an Erinford Injunction to restrain winding-up proceedings pending appeal against dismissal of a Fortuna Injunction – The Court emphasized consideration of nugatoriness and balance of convenience in such applications. (Paras 6-8)
(B)
Delay in Filing Application – Court found no inordinate delay in the Applicant's filing of the Application, occurring slightly over two weeks post-decision dismissal. (Paras 9-10)
(C)
Court's Jurisdiction – The Court clarified its jurisdiction to grant an Erinford Injunction pending an appeal against refusal of a Fortuna Injunction, countering objections based on a statutory rule for advertisement of petitions. (Paras 11-14)
(D)
Balance of Convenience – Court determined that potential harms to the Applicant from proceeding with winding-up outweighed any conceivable harm to the Respondents – The Court's decision aimed to preserve the status quo and avoid irreparable damage. (Paras 22-26) (E)
Result:
The Application was allowed with costs. (Para 27)
JUDGMENT
Introduction
[1] This is the Applicant's application ("this Application") in enclosure 22, for an Erinford Injunction against the Respondents, to restrain the latter from advertising the winding-up petition, pending the Applicant's appeal to the Court of Appeal, against the decision of this Court on 17 June 2020, in dismissing the Applicant's application for a Fortuna Injunction.
The Background Facts
[2] The Applicant is a Developer, and the Respondents are individual purchasers who had entered into individual Sales and Purchase Agreements for the purchase of individual properties developed by the Applicant in the development project known as D'Summit Residences@Johor Bahru ("the Properties"). However, in January 2018, the Respondents filed claims in the Tribunal for Homebuyer Claims ("the Tribunal") against the Applicant for failing to comply with the approved building plan in the Agreements. The Tribunal allowed the claims, as a result of which the Applicant filed an application for judicial review ("the Judicial Review application"), which was subsequently dismissed by the High Court on 11 November 2019. Dissatisfied, the Applicant filed an appeal to the Court of Appeal.
[3] The Respondents then issued statutory notices dated 4 December 2019, pursuant to s 466 (Definition of 'inability to pay debts') of the Companies Act 2016 ("the Statutory Notices"). As a result thereof, the Applicant filed an application for a Fortuna Injunction which was dismissed by this Court on 17 June 2020. On 3 July 2020, the Applicant filed an appeal against such dismissal.
[4] Meanwhile, on 22 June 2020, the Respondents proceeded to file a winding-up petition against the Applicant ("the winding-up proceedings"). The Applicant then attempted to make payment of a sum of MYR906,946.46, but was rejected by the Respondents via letter dated 26 June 2020. On 3 July 2020, the Applicant attempted again to settle payment, by sending a cheque in the amount of MYR956,398.40, to include interests, and costs. However, the Respondents agreed to accept payment on condition that the Applicant withdraw their appeals to the Court of Appeal.
[5] The Applicant proceeded to file this Application on 3 July 2020, which was allowed for the following reasons.
The Applicable Law
[6] Although an Erinford Injunction is derived from the case of Erinford Properties Ltd v. Cheshire County Council [1974] 2 All ER 448 ("the Erinford decision"), the starting point is O 29 of the Rules of 2012 ("Rules of ") which reads:
Order 29 - Interlocutory injunctions, interim preservation of property
Rule 1 Application for injunction
(1) An application for the grant of an injunction may be made by any party to a cause or matter before or after the trial of the cause or matter, whether or not a claim for the injunction was included in that party's originating process, counterclaim or third party notice, as the case may be.
[7] I am mindful that the main consideration in an application for an Erinford Injunction is the nugatoriness or otherwise of the appeal. However, it is pertinent to note that the courts in Malaysia have further extended these considerations to include the balance of convenience, and hence the discretion vested in the Court to consider the comparative effects of granting or refusing an Erinford Injunction, and maintaining the status quo pending the appeal.
[8] The High Court may have its reasons for refusing to grant a Fortuna Injunction, but that does not prevent it from granting an Erinford Injunction to preserve the status quo pending the appeal to the Court of Appeal against such refusal. Furthermore, O 29 r 1 of the Rules of , does not prohibit the Court from granting an Erinford Injunction if warranted by the circumstances.
Contentions, Evaluation, And Findings
Whether There Was Delay In Filing This Application
[9] The Respondents relied on Cocoa Processors Sdn Bhd v. United Malayan Banking Corporation Bhd & Ors (No 2), ; [1989] 1 CLJ Rep 436, to c
