Zaki Azmi Chief Justice

Leave to appeal to the Federal Court was granted on the following question:

Whether the official receiver/liquidator can appoint an advocate and solicitor to bring an action or to defend an action solely by relying on s 236(2)(a)Companies Act 1965

From the question, it would seem that the main issue is the interpretation of s 236(1)(e)s 236(2)(a)Companies Act 1965

The dispute arose because Messrs Sidek Teoh Wong & Dennis (Messrs Sidek Teoh) was appointed without authority of the court or the committee of inspection. The appellant argues that the authority of the court or the committee of inspection is not necessary because they are relying on s 236(2)(a).

At the outset of the appeal we posed to the appellant’s counsel the question as to whether this court’s ruling based on the question would benefit the appellant in this case. This question was put to the appellant for two reasons. Firstly this issue was raised during an application by the appellant for mareva injunction against the defendant to restrain the defendant from transferring its assets to a third party. That mareva injunction was dismissed by the learned High Court judge. The suit was filed in 1999. On 28 September 2004, a winding up order was made against the plaintiff.

The application for mareva injunction was filed by Messrs Sidek Teoh purportedly on behalf of the official receiver and plaintiff in August 2007. The application for mareva injunction was dismissed on 12 June 2008. We only heard this appeal on 16 June 2009.

For myself, I suspected that the issue had become academic. However, the appellant, while admitting it may be academic, persisted and said that it would still be applicable to several other pending applications at the High Court.

The second reason why I thought that the appeal is academic is because our decision will be based on the findings of fact by the learned trial judge. The learned trial judge held that even if s 236 is to be decided in favour of the appellant, the appointment of Messrs Sidek Teoh as advocates was not made by the official receiver but by one Khaidzir who is neither a contributor nor a director at the time he appointed Messrs Sidek Teoh. He was merely an ex-director of the appellant company. Section 236 cannot apply because under that section the appointment must be by the liquidator who in this case, is the official receiver. This is quite obvious because from the two letters signed by the official receiver addressed to En Khaidzir, it is clear that the appointment of Messrs Sidek Teoh was not made by the official receiver. In one letter the official receiver used the words ‘kami tiada bantahan untuk tuan mewakili kes di atas’ and the other addressed to En Khaidzir ‘permohonan tuan untuk melantik Tetuan Sidek Teoh Wong & Dennis … adalah dibenarkan’.

This case could have just been disposed on that issue alone. However, before dismissing the application for a mareva injunction, the learned judge went at length to discuss s 236(1)(e) and s 236(2). And after a lengthy discussion quoting several High Court judgments, he concluded that an advocate can only be appointed under s 236(1)(e) with the authority of the court or a committee of inspection.

The learned judge during the course of his judgment cited Subterranean Natural Mineral Water Sdn Bhd v Kho Boon Kwang Selvam Holdings (Malaysia) Sdn Bhd v Toby Lam as the Receiver and Manager and Liquidator of Selvam Holdings (M) Sdn Bhd & Anor Official Receiver and Provisional Liquidator Maril-Rionebel (M) Sdn Bhd (formerly known as Kredin Sdn Bhd) v Anafartal Caddesi Sdn Bhd Kang Wah Construction Sdn Bhd v Chan Ai Min Property Sdn Bhd & Anor Bensa Sdn Bhd (in liquidation) v Malayan Banking Bhd & Anor Bensa. In the first set of judgments beginning with Selvam Holdings, the ruling was that s 236(1)(e) ‘does not apply to the appointment of an advocate and solicitor to defend a liquidator against a suit arising out of the performance of his duties as liquidator’. This is in