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2025 MarsdenLR 5846
Lai King Lung & Anor – Plaintiff
Versus
Merais Sdn Bhd – Defendant
Retrospective sanction granted by a liquidator without clear statutory authority is invalid, impacting the locus standi of the company in appeal proceedings.
Headnote:(A) Companies Act 2016 - Section 236 - Appeal - Retrospective sanction by Official Receiver - Appellant company was wound up and liquidator granted retrospective sanction to pursue appeal. Court held that such sanction was invalid as the liquidator lacked authority to grant retrospective sanction without statutory provision. (Paras 3, 36, 37)
(B) Locus Standi - The court ruled that without proper sanction, the plaintiff did not possess the locus standi to file the notice of appeal. (Paras 35, 36)
(C) Leave Nunc Pro Tunc - The need for a formal application for leave nunc pro tunc was emphasized as requisite for retrospective validation of the notice of appeal. (Paras 34, 37)
Facts of the case:
The plaintiff, after being wound up, sought to appeal a High Court ruling. The liquidator sanctioned the appeal retrospectively, which led to the dispute regarding its validity.
Findings of Court:
Validity of the retrospective sanction was denied, leading to the conclusion that the plaintiff had no legal grounds for appealing.
Issues: The court addressed the authority of liquidators to grant retrospective sanctions and the implications on a party's locus standi in appeal proceedings.
Ratio Decidendi: The court determined that the liquidator could not retroactively validate actions post-winding up without clear statutory authority, negating the plaintiff's standing.
Result: Appeal allowed, Court of Appeal order set aside.
| Table of Content |
|---|
| 1. overview of the case facts and procedural history (Para 1 , 2 , 3 , 4) |
| 2. court's analysis and response to questions presented (Para 5 , 6) |
| 3. defendants' arguments regarding retrospective sanction (Para 7 , 8 , 9 , 10) |
| 4. plaintiff's response on liquidator's power to grant sanction (Para 11 , 12 , 13 , 14 , 15) |
| 5. principles governing sanctions in bankruptcy and winding up (Para 17 , 18 , 19 , 20) |
| 6. clarification of requirements for obtaining leave or sanction (Para 21 , 22 , 23) |
| 7. discussion on locus standi post-winding up (Para 24 , 25 , 26) |
| 8. case law implications on retrospective sanctions (Para 27 , 28 , 29 , 30) |
| 9. analysis of legal precedent and its applicability (Para 31 , 32 , 33) |
| 10. conclusion on the validity of the filing and sanction (Para 34 , 35 , 36) |
| 11. final determination on question 1 (Para 37) |
| 12. court's final order and outcome (Para 38) |
Vernon Ong FCJJ:
GROUNDS OF JUDGMENTINTRODUCTION
[1]The facts giving rise to this appeal are relatively straightforward. In 2013, the plaintiff, a private limited company initiated a suit against the defendants at the High Court; the defendants filed a counterclaim against the plaintiff company. While the suit was ongoing, the plaintiff was wound up by an order of the winding-up court on 1.09.2015; the Official Receiver was appointed as the liquidator of the plaintiff company.
[2]On 18.1.2016, the liquidator gave sanction to the plaintiff’s contributory and its solicitors to proceed with the suit in the High Court against the defendants. On 28.11.2017, the High Court dismissed the claims by both parties.
[3]Acting on instructions of the contributory, the solicitors filed a Notice of Appeal on 22.12.2017. On even date, the solicitors acting on the instructions of the contributory, also applied to the liquidator for sanction to file the Notice of Appeal and to proceed with the appeal in the Court of Appeal. On 2.02.2018, the liquidator gave its sanction, which sanction was stated to take effect retrospectively from 21.12.2017.
[4]The defendants took issue with the validity of the retrospective sanction and filed a motion to strike out the plaintiff’s appeal at the Court of Appeal. It was contended that “retrospective sanction” cannot be validly given in law and that the Court of Appeal did not grant any leave nunc pro tunc. The Court of Appeal dismissed the defendants’ motion for striking out and the defendants obtained leave to appeal to the Federal Court on the following questions of law:
Question 1
Whether retrospective sanction from the Official Receiver/Liquidator of a wound-up Appellant/Applicant in Court by itself can sufficiently clothe the Appellant and/or their solicitors with locus standi to proceed with the Appeal/proceeding in question without leave nunc pro tunc obtained from the Court?
Question 2
If the answer to Question 1 is NO, whether the application for leave nun pro tunc to the Court must be made by way of a formal application pursuant to section 486(2) of the Companies Act 2016?
[5]After reading the written submissions and hearing of oral submissions of counsel for the defendants and plaintiff, we answered Question 1 in the negative. We declined to answer Question 2 as the issue contained therein did not arise within the factual matrix of this appeal. Consequently, we allowed the appeal with costs and set aside the order of the Court of Appeal. We now set out the reasons for our decision.
FINDINGS OF THE COURT OF APPEAL
[6]The key findings of the Court of Appeal for holding that the steps taken and the sanction secured by the plaintiff were proper and valid may be summarized as follows:
(i)The official receiver as the liquidator of the plaintiff company has the necessary authority to consider and grant a sanction which is effective on a date other than the date it was made;
(ii)Unlike s 68 of the Courts of Judicature Act 1964 (CJA 1964) where no appeal may be brought in certain matters unless there is leave from the Court of Appeal, s 483 and or 486 of the
