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HIGH COURT MALAYA KUALA LUMPUR
KNM GROUP BERHAD & ANOR – Appellant
Versus
ANN JOO METAL SDN BHD & ORS – Respondent
[Originating Summons No: WA-24NCC-643-11/2023]
The grounds to appeal include the following:
The court's decision that the second originating summons was an abuse of process and lacked genuine substantive changes may be challenged if there is evidence that the proceedings were conducted in good faith and with genuine intent to resolve the issues, rather than for improper purposes (!) (!) (!) (!) (!) .
The assertion that the proposed debt restructuring schemes are not feasible or viable could be contested if the appellant can demonstrate that the schemes were sufficiently substantiated or that the court's assessment was based on an incomplete or incorrect evaluation of the evidence (!) (!) .
The finding that there is no credible progress in monetizing assets or securing refinancing may be appealed if the appellant can show that efforts were ongoing and that the court's conclusion was prematurely made or lacked adequate consideration of all relevant circumstances (!) (!) (!) (!) (!) .
The court's reliance on financial insolvency and capital deficiency as indicators of inability to meet obligations could be challenged if there is evidence suggesting that these financial conditions are temporary or that alternative measures to address the issues exist but were not properly considered (!) (!) (!) .
The decision to set aside the scheme based on previous dismissals and the assessment of its viability may be contested if the appellant can establish that there were genuine efforts to improve the scheme or that the court's evaluation failed to consider relevant positive developments (!) (!) (!) (!) .
In summary, appeals may be grounded on procedural irregularities, misapprehension or misapplication of facts, or failure to consider relevant evidence that could demonstrate genuine efforts and the potential for successful restructuring.
JUDGMENT
(Enclosure 10)
[1] Prayers (3), (4) and (7) of encl 10 are allowed. The court finds that 3rd Respondent, IPL Middle East DMCC ("IPL") has established that:
a) The filing of this Applicants' Originating Summons dated 16 November 2023 ("2nd OS') by the Applicants amounts to an abuse of court process on the grounds of being barred by the principles of res judicata and issue estoppel.
b) There are no genuine changes to the restructuring scheme proposed by the Applicants in the 2nd OS compared to the schemes presented in the previous Originating Summons No WA-24NCC-1062-12/2022 ("1st OS") that was dismissed by Justice Liza Chan.
c) Any proposed scheme herein is bound to fail as the 2nd Applicant, KNM Process Systems Sdn Bhd ("KNM Process") will not achieve the support of the requisite statutory majority under s 366(3) of the Companies Act 2016 (" CA 2016").
d) The proposed scheme for restructuring the debts neither viable or feasible, given the evidence showing that the key assets relied upon for monetisation would likely be insufficient to meet the total scheme debts.
[2] My broad grounds are as below.
Abuse Of court Process On The Grounds Of Res Judicata And Issue Estoppel
[3] IPL applied vide encl 10 to strike out the 2nd OS on the grounds that it amounted to an abuse of court process and was barred by the principles of res judicata and issue estoppel.
[4] IPL submitted that the filing of the 2nd OS was a continuation of the Applicants' abusive conduct that began in the 1st OS. IPL contended that the Applicants were seeking to present practically the same scheme in the 2nd OS as the schemes that had already been rejected on their merits by Justice Liza Chan in the 1st OS. IPL argued this amounted to an attempt to relitigate issues that were barred by res judicata and issue estoppel.
[5] IPL relied on Asia Commercial Finance (M) Bhd v. Kawal Teliti Sdn Bhd, [1995] 3 MLJ 189 (FC) and Frankey Leong Pit Fui v. Foong Da Realty Sdn Bhd ; [2021] 4 MLJ 418 ( CA ) to submit that issue estoppel applies to bar the re-litigation of the determination of a specific issue previously decided, even in the absence of a final judgment on the cause of action. IPL argued the issues relating to the viability and feasibility of the schemes presented by the Applicants had already been determined by Justice Liza Chan in the 1st OS.
[6] The Applicants contended that res judicata and issue estoppel have no place at all in a scheme of arrangement as there is no lis or dispute between the Applicants and IPL. The Applicants submitted they were merely resorting to the statutory lifeline under ss 366 and 368 of the CA 2016 and were not disputing or questioning Justice Liza Chan's decision in the 1st OS. The Applicants argued the 2nd OS was a fresh application and the 1st OS which is spent had ceased to be their concern.
[7] Having considered the submissions of the parties and the relevant authorities, I am satisfied that the filing of the 2nd OS by the Applicants amounts to an abuse of court process as it is barred by the principle of issue estoppel.
[8] The Applicants have, by their own admission in the affidavit affirmed on 15 November 2023, acknowledged that the scheme now proposed in the 2nd OS "remains substantially similar" to the scheme proposed in the 1st OS, save for the purported rectification of some "technical defects" (see para 45 of encl 2). This is a clear acknowledgment that there are no material differences between the scheme in the 2nd OS and the scheme that was rejected in the 1st OS.
[9] Justice Liza Chan had, in Her Ladyship's broad grounds of decision dated 2 November 2023, made express findings that the scheme in the 1st OS was not feasible, was bound to fail, and was not bona fide (see Exhibit MS-27 of encl 22). Crucially, these findings were made after a thorough consideration of the merits of the proposed scheme, including:
a) The insufficiency of the financial disclosure provided by the Applicants, with cr
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