Winding-up petitions should only be filed when no alternative remedies are available; filing alongside ongoing proceedings constitutes an abuse of process.

(Enclosure 15: Application To Strike Out The Winding-Up Petition)

Introduction

[1] This is my decision on the application filed by Madam Tan Siew Moi and Mr Timothy Tan Quan Chien ("the applicants") to strike out the winding-up petition (Enclosure 1) filed by Mr Lim Chin Ong ("the petitioner") against Rekabina Development Sdn Bhd ("the company") under s 465(1)(h) of the Companies Act 2016 (" CA 2016") on the just and equitable ground.

[2] The Applicants seek to strike out the petition under O 18 r 19(1)(b) and (d) of the Rules of Court 2012, on the basis that the petition is frivolous, vexatious and amounts to an abuse of process of Court.

Background Facts

[3] The Petitioner, Lim Chin Ong, and Madam Tan Siew Moi are directors and shareholders of the company. The remaining shareholders are Tan Chin Peng, and Timothy Tan Quan Chien Quan Chien, the son of Madam Tan Siew Moi.

[4] On 12 June 2023, Timothy Tan Quan Chien filed a derivative action in Shah Alam High Court OS No BA-24NCC-64-06/2023 ("Suit 64") against the petitioner, Mr Lim Chin Ong, seeking leave to initiate proceedings in the name of the company for alleged breaches of fiduciary and statutory duties committed by the petitioner.

[5] On 8 August 2023, the petitioner applied in Suit 64 for the action to be converted into a writ, citing the existence of serious factual disputes and the need to test third-party evidence at trial.

[6] And on 4 September 2023, the petitioner commenced this winding- up petition under s 465(1)(h) CA 2016, alleging, inter alia, a breakdown in mutual trust and confidence among the shareholders and exclusion from management.

Issues

[7] The issues for determination are:

(i) Whether the petition discloses a reasonable cause of action;

(ii) Whether the petition is frivolous or vexatious;

(iii) Whether the petition amounts to an abuse of the process of the Court.

Analysis And Findings

Duplicity Of Proceedings And Abuse Of Process

[8] It is not disputed that Suit 64, the derivative action, predates the filing of this petition. It is also not disputed that the factual matters ventilated in Suit 64 overlap substantially with those raised by the petitioner in this winding-up petition.

[9] The key complaint in both proceedings concerns the petitioner's refusal to sign certain directors' resolutions, among other allegations of mismanagement and exclusion. These matters are squarely raised in Suit 64 as acts of alleged breach of duty.

[10] By filing this petition after the commencement of Suit 64 and raising identical factual matters, the petitioner is initiating parallel proceedings on substantially the same issues. This Court is not persuaded that the petition is brought independently in good faith for the genuine purpose of obtaining winding-up relief.

[11] More significantly, this Court accepts the applicants' submission that the filing of the petition, in the midst of an ongoing derivative action against the petitioner, is likely to frustrate or pre-empt the adjudication of the derivative action. If the company is wound up, the conduct of any derivative action would fall under the discretion of the liquidator. This has the real potential to render the derivative action academic.

[12] This Court also takes into account that the petitioner, in Suit 64, has applied to convert the action to a writ on the ground that there are serious disputes of fact. The same factual disputes now form the basis of this summary jurisdiction for winding-up, which is inconsistent and undermines the bona fide of the petition.

[13] The duplicity, timing, and evident intent to gain a procedural advantage ove