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2010 MarsdenLR 610
HIGH COURT KUALA LUMPUR
WONG FOOK TOOI & ANOR – Appellant
Versus
PERWIRA INDRA SAKTI SDN BHD – Respondent
[Suit No: D-28-51-2006]
Court disallowed application for leave to pursue a claim against a company in liquidation, reaffirming that such claims should be resolved through proof of debt rather than litigation.
Headnote:(A) Companies Act 1965 - Section 226(3) - Application for leave to institute proceedings against respondent for breach of Sale and Purchase Agreement - The court dismissed the application, asserting that the applicant's claim could be resolved through proof of debt in the winding-up proceedings. (Paras 4-7)
(B) Winding Up - Purpose of statutory provision - Claims against a company in liquidation should not result in expensive litigation and should be settled through a summary procedure available during winding up, safeguarding creditor interests. (Paras 8-9)
(C) Nature of Claim - The court considered the nature of the applicant's claim, stating that if the claim were purely monetary, leave would generally be refused unless it could not be adequately addressed in winding-up proceedings. (Paras 10-11)
Facts of the case:
The applicant and respondent executed a Sale and Purchase Agreement for a shop house in 1997, with the respondent failing to deliver possession on time, leading to the applicant suing for damages. (Paras 2-3)
Findings of Court:
The court held that the matter could be sufficiently determined in the winding-up process, leading to the dismissal of the application. (Para 12)
Issues: Whether leave should be granted to pursue proceedings against a company in liquidation and the nature of the applicant's claim. (Paras 5-7)
Ratio Decidendi: The court ruled that the applicant's claim could be resolved through standard legal processes within winding-up, emphasizing that it should not create undue financial burden on the company and should protect creditor interests. (Paras 8-11)
Result: Application dismissed with costs.
Brief Facts
The Applicant and the Respondent entered into a Sale and Purchase on 7 September 1997 whereby the Applicant agreed to purchase a shop house premises known as Lot 351, Ground Floor Bandar Bukit Berunturig to be built on a piece of land held under HS (D) 10770, No. Lot 3244, Mukim Ulu Yam Darerah Ulu Selangor from the Respondent who was the Developer for the housing project. The Purchase Price was RM313,300.00. The time of completion under the aforesaid Agreement was 36 months from the date of satisfaction of the Conditions precedent set out in the Agreement. If the Developer fail to hand over vacant possession together with water and electricity supply ready for connection within the stipulated time the Developer shall pay to the Applicant liquidated damages at 12% per annum daily rest on the Purchase Price up to date of delivery.
The Applicant had paid to the Respondent the sum of RM31,300.00 which is 10% of the purchase price. The applicant have paid the Respondent a total sum of RM234,975.00. The balance sum payable to the Respondent is RM75,325.00.
Since the Respondent had failed to deliver vacant possession within the stipulated time as provided under the Sale and Purchase Agreement the Applicant had filed a suit in the Session Courts claiming the late delivery. Judgement was entered on 8.6.2006 against the Respondent for the sum of RM 66,435.00 with interest at 8% per annum from 1.9.2002 until the date of realization. The Respondent was wound up on 20 June 2006 pursuant to petition dated 17 January 2006.
Section 226 (3) of the Companies Act 1960 reads:
"When a winding up order has been made or a provisional liquidator has been appointed no action or proceeding shall be proceeded with or commenced against the company except:-
(a) by leave of the Court; and
(b) in accordance with such terms as the Court imposes."
In MOSBERT BERHAD (IN LIQUIDATION) v. STELLA D'CRUZ , it was held:
"... that the primary objects of winding up are the collection and distribution of the assets of the company pari passu amongst unsecured creditors after payment of preferential debts. And the purpose of the statutory provision is to ensure that all claims against the company in liquidation which can be determined by the cheap and summary procedure available in a winding up are not made the subject of expensive litigation. The provision is designed to prevent unnecessary multiplicity of suits which may result in dissipating the assets of the company."
The Supreme Court referred to the case of Re: Cuthbert Lead Smelting Co Ltd [1886] WN 84 where it was held that if the applicant could obtain all the relief in the winding up leave would be refused. However, leave will be granted to an applicant if the claim cannot be dealt with adequately in the winding up or if the remedy he seeks cannot be given to him in a winding up proceedings. In exercising its discretion the Court will have to consider the nature of the applicant's claim, the balance of convenience and the justice of the case. Leave should be granted if where it is unlikely that the applicant will have any advantage over the creditors and no prejudice will be caused to the creditors. In Re: Perdana Merchant Bankers Bhd ; 1997] 3 MLJ 435 Abduk Malik Ishak J:
"It is apparent that the question posed here is fundamentally one of expedience and convenience ...... The Court will also examine the amount and seriousness of the claim, the degree of complexity of the legal and factual issues involved, and the stage which the proceedings have reached before deciding that leave should be given ......"
The Respondent submitted that the Applicant is essentially asking the Court to compel the Respondent to complete the
