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2011 MarsdenLR 3172

COURT OF APPEAL PUTRAJAYA
CHEAH THEAM KHENG – Appellant
Versus
CITY CENTRE SDN BHD & OTHER APPEALS – Respondent
[Civil Appeals No W-02(IM)-124-2010 W-02(IM)-286-2010 & W-02(IM)- 287-2010]

Petitioner Advocates:V Manokaran,S Tilaga ,Respondent Advocate: Robert Low,CHL Ooi,Helen Lim

The liquidator must act with a committee of inspection as mandated by prior court orders; unilateral sales violate statutory and procedural requirements.

Headnote:(A) Companies Act 1965 - Sections 236(2) and 241(1) - Liquidator's authority to sell assets - The court found that the liquidator acted unilaterally in selling assets without a committee of inspection as mandated by prior court orders, and disregarded obligations owed to creditors. (Paras 56, 84, 118)

(B) Appeal - Standard of review - The appeals were allowed as the transactions were deemed to contravene established legal requirements, rendering the High Court's prior approval invalid. (Paras 119)

Facts of the case:
The liquidator sold lands belonging to City Centre Sdn Bhd without a committee of inspection, which was a requirement under earlier court orders, leading to disputes by creditors seeking enforcement of their rights. (Paras 8, 9, 29)

Findings of Court:
The liquidator's unilateral actions breached the mandate of the court order requiring a committee of inspection, transcending his statutory powers. The High Court's approval for the sale was overturned. (Paras 119)

Issues: The principal issues included whether the liquidator could sell without a committee of inspection and the validity of the High Court’s approval of the sale. (Paras 56, 84)

Ratio Decidendi: The court determined that the involvement of a committee of inspection was essential in the liquidator's decision-making process regarding sales, affirming creditors' rights and interests, and highlighting the importance of legal compliance. (Paras 84, 118)

Result: Appeals allowed; High Court's decision set aside with costs awarded to appellants.

Table of Content
1. overview of appeals (Para 1 , 2 , 3)
2. details about city centre and its creditors (Para 4 , 5 , 6 , 8 , 12 , 13 , 14)
3. background of city centre's liquidation (Para 10 , 11)
4. liquidator's actions in selling assets (Para 15 , 16 , 17 , 18 , 19 , 20 , 21 , 22)
5. application procedures for asset sale (Para 23 , 24 , 25 , 28)
6. court observations on liquidator’s compliance (Para 30 , 32 , 34)
7. court's displeasure with liquidator's conduct (Para 31)
8. concerns raised during proceedings (Para 35 , 36 , 40)
9. assessment of appellants' legal standing (Para 39 , 49 , 50 , 51)
10. creditors' claims and objections (Para 41 , 42 , 46 , 47)
11. liquidator's powers under company act (Para 53 , 54 , 55 , 57 , 58)
12. interpretation of statutory provisions (Para 59 , 60 , 61 , 62 , 66)
13. validity of agreements and partnerships (Para 64 , 68 , 69 , 70 , 71)
14. sale's relevance to creditors and stakeholders (Para 72 , 74 , 75)
15. court commentary on prior orders compliance (Para 79 , 81 , 84 , 86 , 90)
16. final remarks on appeal reasoning (Para 91 , 96 , 97 , 99 , 100)
17. decision and costs endorsement (Para 119)

[1] There were three appeals before us, namely:-

(a) Civil Appeal No W-02(IM)-124-2010

Cheah Theam Kheng v. City Centre Sdn Bhd (In Liquidation)

("the CTK's Appeal").

(b) Civil Appeal No W-02(IM)-286-2010

(1) Equiticorp Holdings Ltd (In Statutory Liquidation)

(2) Equiticorp Financial Services Ltd (In Statutory Liquidation) v. City Centre Sdn Bhd (In Liquidation)("the Equiticorp Appeal").

(c) Civil Appeal No W-02(IM)-287-2010

United Securities Sdn Bhd (In Liquidation) v. City Centre Sdn Bhd (In Liquidation)("United Securities Appeal").

[2] Since the issues raised in all the three appeals are common to one another, they were heard together before us.

[3] The three appeals arose from the order of the High Court vide Kuala Lumpur High Court Companies (Winding-Up) No: D6-28-9-2000 on 21 December 2009 wherein by that order the High Court approved the sale of the lands belonging to the Respondent, namely, City Centre Sdn Bhd (In Liquidation) ("City Centre") who acted by its liquidator by the name of Chuah Seong Phaik ("the liquidator") to North Plaza Sdn Bhd ("North Plaza") pursuant to a sale and purchase agreement dated 9 January 2007. The order of the High Court was made on the application by the liquidator in encl 71 for directions by way of a summons in chambers dated 10 January 2007 ("the liquidator's application").

Who are the appellants?

[4] Cheah Theam Keng ("CTK"), the appellant in the CTK's appeal, is a creditor and contributory of City Centre. CTK has filed a proof of debt in the liquidation of City Centre for a debt of RM27,023.04. CTK was also a director of City Centre prior to the liquidation of City Centre.

[5] Equiticorp Holdings Ltd (In Statutory Liquidation), the first appellant in the Equiticorp Appeal, is a creditor of City Centre for a debt of RM306,903.00. While Equiticorp Financial Services Ltd (In Statutory Liquidation), the second appellant in the Equiticorp Appeal, is not a creditor of City Centre and does not claim to be one. However, it claims to be a creditor of Cheah Theam Swee - the brother of CTK.

[6] United Securities Sdn Bhd (In Liquidation) ("United Securities"), the appellant in the United Securities Appeal, is a creditor of City Centre and has filed a proof of debt in the liquidation of City Centre for a debt of RM3,571,312.65. United Securities is also a contributory of City Centre. At all material times, United Securities was in receivership. And United Securities was wound up pursuant to an order of the High Court on 30 January 2007. The main shareholders of United Securities are CTK and his brother by the name of Cheah Theam Swee.

[7] At all material times prior to the winding-up of United Securities, CTK as a director of United Securities represented United Securities in the winding- up proceedings including United Securities opposition to the liquidator's application. And subsequent to United Se

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2011 MarsdenLR 3172

COURT OF APPEAL PUTRAJAYACHEAH THEAM KHENG – AppellantVersusCITY CENTRE SDN BHD & OTHER APPEALS – Respondent[Civil Appeals No W-02(IM)-124-2010 W-02(IM)-286-2010 & W-02(IM)- 287-2010]

The liquidator must act with a committee of inspection as mandated by prior court orders; unilateral sales violate statutory and procedural requirements.

Cases Referred (3)

COURT OF APPEAL PUTRAJAYA
CHEAH THEAM KHENG – Appellant
Versus
CITY CENTRE SDN BHD & OTHER APPEALS – Respondent
[Civil Appeals No W-02(IM)-124-2010 W-02(IM)-286-2010 & W-02(IM)- 287-2010]