The court established that leave is required before commencing proceedings against a liquidator, emphasizing protection against vexatious litigation and the integrity of the winding-up process.

GROUNDS OF JUDGMENTA. INTRODUCTION

[1]The sole issue in this appeal is whether leave of court is required for the commencement of proceedings against a court-appointed liquidator.

[2]The long-established position in this jurisdiction is that leave is obtained from the winding up court prior to such commencement. However, in two recent decisions, namely Kao Che Jen v N Chanthiran Nagappan 2015 MarsdenLR 216 (‘Kao Che Jen’) and the instant appeal, the Court of Appeal has departed from this long-established position. It is therefore incumbent upon this Court to clarify the relevant legal principles in this regard.

B. BACKGROUND FACTS

[3]The respondent, Kao Che Jen is a contributory and director (‘the Contributory’) of one STM Transformers Sdn Bhd (‘the Company’). On 9 May 2013, one Ong Jin Ek, another contributory of the Company, filed a petition to wind up the Company on just and equitable grounds pursuant to s. 218(1)(i) Companies Act 1965 (‘the 1965 Act’) . The Company was consequently wound up by the High Court in Kuching on 21 June 2013. The appellant, N.Chanthiran A/L Nagappan was appointed as the Company’s liquidator (‘the Liquidator’).

[4]Over the years, the Contributory has initiated a series of proceedings against the Liquidator seeking, among others, to remove the Liquidator and to compel him to produce the Company’s documents and accounts. Having been unsuccessful in all of those proceedings, the Contributory commenced another action against the Liquidator in the Kuching High Court, which has culminated in the present appeal. However, the Contributory did not obtain leave of court prior to commencing these proceedings and as stated earlier, this comprises the basis for the entire appeal.

C. THE HIGH COURT

[5]The present appeal arose from an application by the Contributory dated 6 April 2018, where the Contributory claimed that the Liquidator had failed to perform his duties and accordingly sought a court order to compel the Liquidator to do the following:

(a)To call a creditors’ meeting within 7 days of the court order;

(b)To invite all the Company’s creditors to submit their proofs of debt;

(c)To disclose the name of the Company’s trust account, the name of the bank that maintains the said account, any payments into the said account and the collection of debts from a list of purported debtors;

(d)To show the steps taken by the Liquidator in the liquidation process; and

(e)To disclose all the expenses incurred in the liquidation process and the purpose of the said expenses.

[6]The Liquidator raised a preliminary objection that the Contributory had failed to obtain leave of the winding up court to commence the action. In response, the Contributory contended that such leave was not required as the action was grounded on the Liquidator’s failure to discharge his duties and was not against the Liquidator personally.

[7]The Contributory’s argument did not find favour with the High Court judge, who allowed the Liquidator’s preliminary objection relying on the Court of Appeal decision in Chi Liung Holdings Sdn Bhd v Ng Pyak Yeow 1995 MarsdenLR 418 (‘Chi Liung Holdings’ ), which held that leave of court is required before an action can be commenced against a court-appointed liquidator. The High Court judge noted that the Court of Appeal in Chi Liung Holdings had referred to s. 236(3) of the 1965 Act . This provision is in pari materia with s. 486(2) of the Companies Act 2016 (‘the 2016 Act’), which provides as follows:

“486 Powers of liquidator in winding up by Court

…

(2) The exercise by the liquidator i