A liquidator's prior sanction is mandatory for a company to maintain legal proceedings post-winding up; such sanction cannot be applied retrospectively to validate an invalid initial application.

[1] This is a motion taken by the respondent vide encl 8(a) namely to strike out the application for leave to appeal, by the applicant. It is basically a preliminary objection to the application for leave to appeal.

[2] The only issue raised by the respondent was that applicant filed the application for leave (encl 2(a)) without any leave from the Official Receiver(as liquidator of the applicant) and as such the applicant had no locus standi and consequently the leave application (encl 2(a)) was invalid and should be struck out.

Salient Facts

[3] The salient facts relevant to this application are as follows:

(a) The applicant was wound up on 4 February 2010. The Official Receiver was appointed as the liquidator of the applicant pursuant to the Winding-Up Order on 4 February 2010.

(b) The applicant applied for leave to appeal to this court on 23 May 2013. This was done without obtaining any sanction from the Official Receiver.

(c) On 19 August 2013 the applicant obtained sanction from the Official Receiver. As can be seen from the above chronology of events, the applicant obtained the sanction from the Official Receiver after the filing of the application for leave to appeal to this court.

The Issue Before This court

[4] The issue is whether the sanction by the Official Receiver dated 19 August 2013 have a retrospective effect, hence validating the application for leave which was filed prior to the issuance of the sanction.

Arguments Before This court

By The Respondent

[5] In support of its contention, the respondent submitted that this issue came for consideration of the court of Appeal in the recent case of Hup Lee Coachbuilders Holdings Sdn Bhd v. Cycle & Carriage Bintang Berhad, 2011 MarsdenLR 2391 , where at p 197 Ramly Ali JCA (as His Lordship then was) held:

"An action filed by the appellant without any leave from the official assignee (as liquidator) or the court or filed by the appellant without having any locus standi to do so in law is clearly illegal and invalid. There are no provisions of law to authorise that leave or sanction of the official assigneeis to have retrospective effect. The appellant lacks locus standi right from the time when the action was filed. Therefore the action was invalid and void ab initio. Subsequent leave or approval by the official assignee office which came more than two years later cannot legalise or validate an action which was invalid and void ab initio."

[6]Hup Lee Coachbuilders Holdings Sdn Bhd v. Cycle & Carriage Bintang Berhad went before the Federal court for leave. Leave was refused. The two issues raised by the appellant in that particular case were:

(a) whether leave of court was required pursuant to s 226(3) of the Companies Act 1965 for a wound up company to commence and/or continue with alegal proceeding; and

(b) whether sanction granted pursuant to s 236(2)(a) of the Companies Act 1965 to institute, continue or defend a legal proceeding had retrospective effect.

[7] On 19 September 2013 after hearing submission from both parties, this court dismissed with costs the application for leave to appeal.