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2022 MarsdenLR 405
COURT OF APPEAL PUTRAJAYA
LIPUTAN CANGGIH SDN BHD & ORS – Appellant
Versus
CHONG CHUAN LONG & ANOTHER APPEAL – Respondent
[Civil Appeal Nos: B-02(IM)-1180-09-2020 & B-02(IM)-1284-09-2020]
A non-creditor may invoke inherent jurisdiction for contempt proceedings against a liquidator after obtaining court leave, recognizing the liquidator's role as an officer of the court.
Headnote:(A) Companies Act 2016 – Section 486(2) – Liquidator’s role – Applicants sought leave from the Winding-Up Court to commence committal proceedings against the liquidator for contempt – High Court ruled applicants have locus standi but no probable success for action against liquidator. (Paras 6, 9, 10, 32, 41, 42)
(B) Natural Justice – Breach – Allegations of ex parte leave leading to a breach of natural justice were dismissed as sufficient opportunity for merit arguments were provided in subsequent hearings. (Paras 32, 34)
Facts of the case: Liputan Canggih Sdn Bhd and others applied to commence contempt proceedings against the liquidator of K & A Management Sdn Bhd following a wounding-up petition. The High Court initially granted leave but later set it aside, leading to these appeals.
Findings of Court: The Court dismissed one appeal regarding the lack of probable success and allowed another regarding locus standi, reinstating the prior ex parte order.
Issues: Main questions involved locus standi to apply for leave and whether there was a breach of natural justice. (Paras 9, 32)
Ratio Decidendi: The Court upheld the necessity for statutory compliance and inherent jurisdiction while emphasizing the importance of a fair procedure in contempt proceedings. (Paras 12, 20, 26)
Result: Appeal 1180 allowed; Appeal 1284 dismissed.
JUDGMENT
Introduction
[1] There are two appeals before us. Both originate from the same decision of the High Court sitting in its winding up jurisdiction (the Winding-Up Court). In Appeal B-02(IM)-1180-09-2020 (Appeal 1180), Liputan Canggih Sdn Bhd and six other parties are the appellants. They had applied to the Winding-Up Court for leave to commence contempt proceedings against the liquidator of K & A Management Sdn Bhd The liquidator of K & A Management is the respondent.
[2] In Appeal B-02(IM)-1284-09-2020 (Appeal 1284), K & A Management Sdn Bhd (K & A) and the liquidator are the appellants. They have appealed against the part of the decision of the Winding-Up Court dated 26 August 2020 that held that Liputan Canggih Sdn Bhd and the other parties have locus stand i to make the application in question.
Background Facts
[3] Liputan Canggih Sdn Bhd and six other parties are the plaintiffs in Civil Suit BA-22NCvC-534-10-2018 (Suit 534). It was filed in the High Court sitting in Shah Alam on 25 October 2018 against six defendants for civil fraud. One of the six defendants is K & A Management. On 7 December 2018, Mr Chong Chuan Long was appointed as the interim liquidator. On 18 January 2019, K & A Management was wound up due to its inability to pay its debts by Wondrous Orchard Sdn Bhd Mr Chong Chuan Long was appointed as liquidator on 18 January 2019. On 10 May 2019, the Winding-Up Court granted leave to the applicants to proceed against K & A Management.
[4] On 24 May 2019, the applicants filed a Notice of Application (Ex Parte) in Suit 534 to commit all the six defendants to prison for contempt of Court. The liquidator of K & A Management was included as an alleged contemnor in this Notice of Application. The High Court Judge who heard the application in Suit 534 granted leave against all the defendants except the liquidator. His Lordship was of the view that since the liquidator is an officer of the Court, prior leave must be obtained from the Winding-Up Court. The applicants then withdrew their ex parte application under O 52 against the liquidator with liberty to file afresh after leave is obtained from the Winding-Up Court.
[5] On 4 July 2019, the applicants filed an ex parte application at the Winding- Up Court under s 486(2) of the Companies Act 2016 and/or the High Court's inherent jurisdiction for leave to commence committal proceedings against the liquidator. The orders sought were:
(a) to make the applicants Intended Committal Application, ie an application in the SAHC Suit for leave to commit the Alleged Contemnor to prison and/or fine for contempt of Court; and
(b) if leave is given by the Honourable High Court in the SAHC Suit, to commence an application in the SAHC Suit to commit the Alleged Contemnor to prison and/or fine for contempt of Court.
[6] The applicants made the said application because the Judge in Suit 534 had refused the application under O 52 of the Rules of 2012 for leave to commit the liquidator to prison without the leave of the Winding-Up Court. On 12 July 2019, the learned High Court Judge at the Winding-Up Court granted the ex parte motion for leave. On 6 September 2019, the liquidator applied to set aside the ex parte leave order.
High Court Decision
[7] The learned High Court Judge set aside the ex parte order he had made earlier in which His Lordship granted leave to the applicants to commence contempt proceedings against the liquidator in Suit 534. In arriving at this decision, His Lordship made three findings that have given rise to the main issues in these appeals. They are as follows.
[8] Firstly, the learned High Court Judge held that the applicants have locus standi to bring an action against the liquidator of K & A Management although they are not creditors or contributories of the latter company. Secondly, the learned High Court Judge held that there is no probability of success for the action against the liquidator. Thirdly, the learned High Court Judge held that
