A winding up petition cannot be restrained by injunction when there is a valid judgment debt; the existence of a pending appeal does not alter the enforceability of that judgment.

Darryl Goon JC:

JUDGMENT

[1]The primary remedy sought in this Originating Summons was an injunction against the Defendant from presenting a winding up petition against the Plaintiff. Thus, this case concerns an application for what is now commonly referred to as a “Fortuna Injunction”.

Background facts

[2]Pursuant to a letter of award dated 24th August 2012, the Plaintiff was contracted to supply steam and demineralised water to the Defendant‟s plant in Kerteh, Terengganu, upon terms and conditions agreed to between the parties.

[3]The Plaintiff however maintained that the Defendant failed to make payment in respect of several of the Plaintiff‟s invoices. As a result, the Plaintiff commenced legal action against the Defendant for payment under those invoices amounting to a sum of RM1,008,552.05. The suit brought by the Plaintiff against the Defendant was Kuala Lumpur High Court Suit No. WA-22NCC-210-06/2017 (“Suit 210”).

[4]The Plaintiff‟s claim was disputed by the Defendant. In addition, the Defendant counterclaimed. It was maintained inter alia that the Plaintiff had overcharged the Defendant, the product supplied was not in accordance with specifications and that the Plaintiff had wrongfully terminated the letter of award.

[5]After a full trial, the Plaintiff‟s claim against the Defendant was dismissed. However, the Defendant‟s counterclaim was allowed. Judgment for a total sum inclusive of costs amounting to RM30,284,680.05 was entered in favour of the Defendant on 27th July 2018.

[6]Immediately after judgment was delivered against the Plaintiff by the learned judge, counsel for the Plaintiff orally applied for a stay of execution. The application was heard. It was however, dismissed by the learned judge on 27th July 2018 itself.

[7]Being dissatisfied, the Plaintiff appealed against the judgment. A notice of appeal dated 17th August 2018 was filed by the Plaintiff.

[8]Also on the 17th of August 2018 the Defendant, through its solicitors, wrote to demand payment from the Plaintiff under the judgment of 27th July 2018 and costs under a separate order of the Court dated 26th December 2017. The order of Court dated 26th December 2017 was an order allowing the Defendant‟s application for further and better particulars with costs of RM6,000.00 in the Defendant‟s favour. There was no response from the Plaintiff to this demand.

[9]On 29th August 2018, the Plaintiff filed another application for a stay of execution. This was its second application.

[10]On the 3rd of September 2018, the Defendant issued a notice under section 466(1)(a) of the Companies Act 2016Court dated 26th December 2017, be made within twenty-one days failing which the Plaintiff would be deemed unable to pay its debts and that proceedings may then be brought to wind up the Plaintiff.

[11]On 19th September 2018, the Plaintiff replied maintaining inter alia that it was appealing the judgment and making an application for a stay of execution. The Plaintiff maintained that, “…it is our client‟s contention that unless and until the appeal is disposed of by the court of appeal and/or the application for stay is heard, our client shall oppose any attempts by your client to file any action pursuant to Section 466 (1)(a) of the Companies Act 2016Court.

[12]It was in the face of the threat of a winding up petition that this Originating Summons was filed.

[13]In support of the injunction sought in this Originating Summons, the Plaintiff maintained that it has pending actions to recover a sum of RM250 million, in Suit No. WA-22NCC-318-08/2017/WA-22NVC-685-11/2016 (“Suit 318/685”), and a counterclaim for RM7,186,309.09, in Suit No. BA-22C-31-05/20