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2010 MarsdenLR 1684
HIGH COURT MALAYA, KUALA LUMPUR
GOH SWEE OH & ORS – Appellant
Versus
HENG JI KENG & ANOR – Respondent
[Notice Of Motions Nos: D9(D6)-25-7-2007 & D3-28-168-2003]
Liquidators are entitled to remuneration and expenses without prior court approval, as long as their actions are necessary for the liquidation process, while shareholders can question such expenses within their statutory rights.
Headnote:(A) Companies Act 1965 - Sections 232(3)(c), 232(4), 232(5), 305, and 236(2) - Liquidation - Challenges to liquidator's remuneration and expenses - Shareholders' entitlement to question liquidator's payments under specified sections of the Act - Court's jurisdiction to ratify payments retrospectively clarified. (Paras 7-14)
(B) Powers and Duties of Liquidators - Liquidators entitled to be paid reasonable remuneration and expenses incurred during liquidation without prior court approval, provided actions are within their duties. (Paras 8, 12)
Facts of the case:
Three shareholders challenged liquidators' payments totaling RM93,937.95 for remuneration and disbursements, RM65,000 for legal costs, and RM34,818 for additional legal fees, arguing lack of approval and potential illegality in the payments made.
Findings of Court:
The court determined the payments were lawful and necessary, ratifying the liquidators' remuneration and costs.
Issues: The main issues were whether shareholders had the authority to challenge liquidator payments and if payments were justified.
Ratio Decidendi: The court found shareholders lacked standing under s. 232 to challenge remuneration but could invoke s. 305 for redress. Payments made were ratified as proper expenditures necessary for winding-up.
Result: Applications dismissed with costs; payments approved.
| Table of Content |
|---|
| 1. court proceedings related to liquidation (Para 1 , 2 , 3 , 4 , 5 , 6) |
| 2. shareholders' rights to challenge liquidator's remuneration (Para 7) |
| 3. liquidator's entitlement to remuneration without prior court approval (Para 8) |
| 4. validation of liquidator's remuneration based on duties performed (Para 9 , 10) |
| 5. direct payment of costs to parties involved in the wind-up (Para 11) |
| 6. approval of legal fees related to winding-up proceedings (Para 12 , 13) |
| 7. court's order validating liquidator's expenses (Para 14) |
[1] The hearing before me involved two separate diametrically opposed applications which arose from two separate proceedings filed in court but which were commonly related to the liquidation of the same company. The applications centered around common issues of law and of facts and hence it was by consent heard together for purposes of expediency.
[2] The company in liquidation was one Fokas Perkasa Sdn Bhd ordered to be wound up by the court on 11 March 2004 in KL High court Companies (Winding-Up) No: D3-28-168-2003 on the petition presented by one Serampai Istimewa Sdn Bhd. The official receiver had been initially appointed by court to be liquidator of the company. However on 21 July 2004 the court proceeded to appoint:
(i) Mr. Heng J, Leng (Mr. Heng) and
(ii) Mr. Michael Joseph Monteiro (Mr. Monteiro)
jointly and severally to replace the official receiver as liquidator of the said company.
[3] This particular proceedings, Notis Usul D6-25-7-2007, was an action brought by three shareholders/contributories of the said company against Mr. Heng and Mr. Monteiro for declarations that three items of payments made by them in their capacity as liquidator were not lawful and that they should be made personally accountable to repay those sums to the funds of the company under liquidation.
[4] On the other hand, encl. 59 in Companies (Winding-Up) No. D3-28-168-2003 was an application by Mr. Heng and Mr. Monteiro to ratify the three items of payments referred above and further, for approval of this court to make one other additional payment.
[5] Mr. Heng and Mr. Monteiro had subsequent to their appointment on 4 November 2009 obtained an order of court to accept their resignation as the liquidator of the company and for the official receiver to be (re) appointed in their place.
[6] The payments paid out from the funds of the company in liquidation, in contention as between the parties were:
(a) Mr. Heng and Mr. Monteiro's remuneration as liquidator in the sum of RM93,937.95 which had already been effected and paid out from available funds of the company.
(b) The cost of the winding-up petition awarded to the petitioner in the sum of RM65,000, which had been paid to one Mr. Lum Wai Num (Mr. Lum), a Director then of Serampai Istimewa Sdn Bhd (the petitioner).
(c) Legal costs incurred by the liquidator totalling a sum of RM66,420 paid to the following legal firms,
(i) Messrs. Lee Swee Seng & Co.,
(ii) Messrs. HL Teh & Associates, and
(iii) Messrs. Wan Ewe Chong & Khoo,
[6.1] The 'payment' which had yet to be effected but for which approval was being sought (in encl. 59) by Mr. Heng and Mr. Monteiro was:
(d) Cost and expenses in the sum of RM34,818 outstanding and due to another legal firm, Messrs. Lai & Associates.
[7] In respect of the issue pertaining to the remuneration of the liquidator counsel for Mr. Heng and Mr Monteiro raised the preliminary question as to the competency of the shareholder/contributories to bring proceedings in respect of this matter or to challenge the liquidator's remuneration. Counsel referred to the decision in Perumahan NCK Sdn Bhd v. Mega Sakti Sdn Bhd (No. 2), and highlighted that Mr. Heng and Mr. Monteiro's application was being brought pursuant to s. 232(3)(c) of the Companies Act 1965 , (the Act) . Section 232(3) of the Act reads:
232. ...
(3) A liquidator other than the Official Receiver shall be entitled to receive such salary or remuneration by way of percentage or otherwise as is deter
