The court ruled that a Liquidator's admission of a Proof of Debt can only be overturned if shown to be unreasonable, emphasizing the need for substantial evidence in such decisions.

Kamaludin Md Said JCA:

Introduction

[1] The appellant appeals against the decision of the High Court which allowed the respondent's Motion to reverse the decision of the appellant's Liquidator in admitting the proof of debt submitted by Lismore Trading Sdn Bhd.

Brief Facts

[2] The appellant is a company within WTK group of companies in the business of extraction and sale of logs. On 28 May 2018 the appellant was wound up by the Winding up Court ("Winding up Order") pursuant to a Winding up Petition filed by the Petitioner. Upon the Winding up Order, Mr Wong Ching Yong was appointed as the Liquidator. The Petitioner is the executrix of the estate of the late Datuk Wong Kie Nai ("WKN") and she holds 80,000 ordinary shares in the appellant.

[3] As one of the creditors and part of the WTK Group, Lismore Trading Co Ltd ("Lismore") had on 27 August 2018 lodged a Proof of Debt ("POD") for a sum of RM4,018,389.88 through M/s Huang & Company Advocates. The Liquidator admitted Lismore's POD through a Notice of Admission dated 1 November 2018. On 22 November 2018, the respondent filed encl 1 to oppose the admission of Lismore's POD by the Liquidator.

[4] After hearing the respondent's Motion and the appellant's replies and having considered the arguments, the learned High Court judge was inclined to agree with the respondent, hence, allowed the said Motion to reverse the decision of the appellant's Liquidator in admitting Lismore's POD.

The Appeal

[5] We heard oral submissions from Datuk Sri Gopal Sri Ram on behalf of the appellant and Mr Kelvin Seet Wan Nam for the respondent. Counsel is also relying on their written submissions.

[6] In essence, the appellant's case is that the High Court's decision should be reversed based on four reasons as follows:

(i) The High Court failed to judicially appreciate and/or to draw proper inferences from the documentary evidence produced before it;

(ii) The High Court failed to take into account relevant considerations which the appellant's Liquidator had taken in admitting Lismore's POD;

(iii) The High Court failed to judicially appreciate Madam Loh Leh Fong's evidence;

(iv) The respondent failed to meet the threshold test by failing to produce any contemporaneous evidence to the contrary in the High Court.

[7] There are several authorities referred to by the appellant and most importantly, the principle of law expounded by the Federal Court in Wong Sin Fan & Ors v. Ng Peak Yam @ Ng Pyak Yeow & Anor, 2013 MarsdenLR 620 , which set out the threshold test that the Court should be slow to interfere with any act or decision of the Liquidators in discharging their roles in company liquidation and will do so only if it is so unreasonable and absurd that no reasonable person would have acted in that way. The Court will not interfere with the decision simply because its opinion might differ from that of the Liquidator.

[8] In the present case, the Liquidator has taken into account relevant considerations before admitting Lismore's POD. Counsel for the appellant submitted that the Liquidator's conduct cannot be held as so unreasonable and absurd that no reasonable person would have acted in that way. In the circumstances, the learned High Court judge has committed a serious error of law and misdirected himself. This Court was urged to intervene to correct the decision and it was prayed that the appeal be allowed.

[9] The respondent argued that those reasons given by the appellant's counsel are without merit. The respondent says that the High Court's decision is correct by reason that from the Liquidator's purported examination of the POD it is palpable that the claim in the POD is questionable and doubtful. The POD submitted by Lismore is essentially a bare claim not substantiated with supporting documents and/or any sufficient documentary proof. The Liquidator has failed to take into account any of the above important considerations before admitting the POD. This failure makes his decision unsustainable. The bank sta