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2025 MarsdenLR 6325
HIGH COURT MALAYA PENANG
KHOR YONG YONG – Appellant
Versus
TAN KHENG GUAN & ORS – Respondent
[Post Winding Up Case No: PA-28PW-30-08/2023]
A liquidator is entitled to remuneration for work done during the liquidation process, even if the winding up order is subsequently set aside, based on principles of fairness and statutory provisions.
Headnote:(A) Companies Act 2016 - Sections 479(2) and 527 - Liquidator's remuneration in winding up proceedings - Remuneration is to be decided by agreement, creditor resolution, or by the Court, with prioritization for the costs of winding up - Remuneration established at RM54,873.51 based on fair and reasonable criteria - Solicitors' professional fees of RM10,000 approved as expenses. (Paras 10, 14, 44, 50)
(B) Liquidator’s duties - Liquidator, as an officer of the Court, must diligently perform duties despite challenges to winding up Order, and is entitled to remuneration even if the winding up is subsequently set aside. (Paras 28, 31)
(C) Disputes between shareholders - It is unjust to deny remuneration to the Liquidator due to disputes between shareholders, as the liquidation processes and legal responsibilities may involve significant efforts by the Liquidator. (Paras 34, 49)
Facts of the case:
A winding up Order was made for the company, leading to the appointment of the Liquidator, who performed his duties over eight months until the Order was set aside. Chu challenged the winding up Order, and the Liquidator sought remuneration for his time worked. (Paras 4, 6)
Findings of Court:
Liquidator entitled to RM54,873.51 as remuneration for work performed during the liquidation process, plus RM10,000 for solicitors’ fees, to be paid by the losing party in the ongoing shareholder dispute. (Para 50)
Issues: Whether the Liquidator should be compensated for his work during the appointed period, and who is liable for that payment. (Para 6)
Ratio Decidendi: The Court determined that the Liquidator, having been duly appointed, must be compensated for the services rendered, despite subsequent challenges to his appointment; remuneration is supported by statute and case law emphasizing fairness in liquidation processes. (Paras 30, 31)
Result: Liquidator's application for remuneration is granted, payment to be made by the losing party in the shareholder dispute.
Key Points: - Company Shigen Polycolor Sdn Bhd was wound up on 19 July 2022 with Khor Yong Yong appointed as Liquidator; order set aside on 24 March 2023 after eight months (!) (!) (!) (!) (!) . - Liquidator entitled to remuneration under s 479(2) Companies Act 2016, determined by Court where no agreement or creditors' resolution exists (!) (!) (!) (!) (!) . - S 527(1) prioritizes costs and expenses of winding up, including liquidator's remuneration, over other unsecured debts (!) (!) . - Liquidator performed duties including seeking documents, engaging solicitors, site visits, and dealing with parties despite challenges (!) (!) (!) (!) . - Court approves RM54,873.51 as fair and reasonable remuneration (RM53,280 fees + RM1,593.51 expenses) based on time-cost records (!) (!) . - Liquidator entitled to appoint solicitors under Twelfth Schedule Part I(k); their RM10,000 fees and disbursements approved as expenses (!) (!) (!) (!) (!) (!) . - Liquidator must diligently perform duties despite challenge to winding up order; entitled to remuneration for work during appointment period even if later set aside (!) (!) (!) . - Disputes between shareholders (Tan and Chu) do not justify denying liquidator's remuneration (!) (!) (!) (!) . - Losing party in underlying winding up petition (Petition 42) ordered to pay Liquidator RM54,873.51, solicitors RM10,000, and costs (!) (!) (!) .
What is the entitlement of a liquidator to remuneration under s 479(2) of the Companies Act 2016?
Should a liquidator be remunerated for work performed if the winding up order is subsequently set aside?
Who should pay the liquidator's remuneration and expenses in a shareholder dispute?
| Table of Content |
|---|
| 1. company winding up and liquidator's appointment (Para 1 , 2 , 5 , 7 , 8) |
| 2. legal entitlement of liquidator's remuneration (Para 9 , 10 , 12) |
| 3. judicial powers in determining remuneration (Para 16 , 17 , 18) |
| 4. liquidator's duties and expenses incurred (Para 20 , 21 , 22 , 23) |
| 5. opposing arguments on liquidator’s duties (Para 26 , 27 , 28 , 29) |
| 6. liability for liquidator’s fees and costs (Para 49 , 50) |
Prelusion
[1] The company: Shigen Polycolor Sdn Bhd (Company) was wound up. The Applicant: Mr Khor Yong Yong was appointed the Company's liquidator (Liquidator).
[2] The winding up Petition was presented by the 1st Respondent in this proceeding: Tan Kheng Guan (Tan). Tan made the 2nd Respondent in this proceeding: Chu Kok Khing (Chu), one of the respondents in the winding up Petition. The other respondent in the winding up Petition was the Company (a nominal respondent). The winding up Petition was part of the extended litigation (multiple legal proceedings) between Tan and Chu.
[3] The Liquidator set out to perform his work.
[4] Chu proceeded to apply to set aside the winding up Order. He succeeded. The winding up Order was set aside. The winding up was terminated. The Order appointing the Liquidator was also set aside. The Liquidator's work ceased.
[5] The Liquidator now applies to be remunerated for the period that he performed his work as the Company's liquidator, namely between the date of the winding up Order and the date that the winding up Order was set aside.
[6] Should the Liquidator be remunerated? If yes, who should pay his remuneration and expenses?
The Pertinent Chronology Of Proceedings
[7] The Company was wound up on 19 July 2022. The Liquidator started his work soon after.
[8] The winding up Order, and the Order appointing the Liquidator, were set aside on 24 March 2023 (eight months later).
Jurisdiction And Power To Order The Payment Of Remuneration And Expenses
[9] "Remuneration" means payment for work done and services rendered. In the context of a company's winding up and the ensuing liquidation process, the liquidator's remuneration necessarily means the payment for the work done and for services rendered, and the expenses incurred, as a result of performing the duties and obligations of a liquidator.
[10] Under statute law, s 479(2) of the Companies Act 2016 ( CA ), provides that a liquidator (other than the Official Receiver) is entitled to be remunerated. The remuneration is determined by any of these three ways:
(1) by an agreement between the liquidator and the committee of inspection; or
(2) if there is no agreement or no committee of inspection, by a resolution passed at a creditors' meeting in the prescribed manner; or
(3) if there is no agreement and there is no such resolution passed-by the Court.
[11] Subsection 479(2) of the CA is set out below for reference [With My Emphases Added]:
Section 479 . Remuneration of liquidators in winding up by Court
(2) A liquidator other than the Official Receiver shall be entitled to receive such salary or remuneration by way of percentage or otherwise as is determined by:
(a) an agreement between the liquidator and the committee of inspection, if any;
(b) where there is no agreement or where there is no committee of inspection, a resolution passed at a meeting of creditors by a majority of not less than three-fourths in value and one-half in number of the creditors present in person or by proxy and voting at the meeting and whose debts have been admitted to vote, which meeting shall be convened by the liquidator by a notice to each creditor to which notice shall be attached a statement of all receipts and expenditure by the liquidator and the amount of remuneration sought by him; or
(c) if the agreement or determination under paragraph (a) or (b) fails, the Court.
[12] The parties here agree that there was no agreement between the Liquidator and the committee of inspection (as there was no committee of inspection) for the Liquidator's remuneratio
