Introduction

This is an appeal by Kang Wah Construction Sdn. Bhd, which is in liquidation, against the decision of the Deputy Registrar who had on 5 August 1999 dismissed the application of the Plaintiff for attachment of the properties under s 19 of the Debtors Act. The learned Deputy Registrar dismissed the application solely on the ground that the firm of advocates, Messrs Teo Sebom, Tan Madhi, who appeared for the Plaintiff company under liquidation was appointed by the liquidator without the authority of the court or committee of inspection which is required by s 236(1)(e) of the Companies Act, 1965 (the Act). This objection was taken by the Defendants Chai Ai Min Property Sdn. Bhd. and Pacific Bank Berhad.

The Law

The first question that comes to mind is why should the Defendants be allowed to raise such a point? Buckley On The Companies Act, 13 edn, p.517 has this to say:-

The defendant to proceedings brought by the liquidator in the name of the company cannot take the objection that the sanction of the Court has not been obtained.

The case relied on as supporting that proposition of law is Dublin City Distillery v. Doherty [1914] A.C. 823 where, inter alia, the court considered s 151 of the Companies (Consolidation) Act, 1908 which enables a liquidator, in the case of a winding-up in Ireland, to bring or defend legal proceedings with the sanction of the court. The sanction was not obtained but the court held that the section does not confer on third parties any right to object to proceedings brought by a liquidator in the name of the company on the ground that no such sanction has been obtained. In that case a plaintiff lent to a company various sums of money secured by a second series of debenture and also purportedly secured by stocks of whisky. The company had earlier issued a first series of debenture under which Cox acted to appoint a liquidator in the winding-up of the company. The assets were not sufficient to satisfy all the debenture holders of the second series of debenture and thus prompting the plaintiff to claim a right over the stock of whisky in priority over the second debentures. The claim was resisted by the liquidator. The High Court and Court of Appeal found for the plaintiff. The liquidator appealed despite leave being refused by the court. The House of Lords reversed the decision and held, inter alia, that leave is not a necessary preliminary but that the liquidator can always appeal at the peril, if unsuccessful, of being deprived of his costs.

Though that case dealt with the sanction for an appeal the law is no less applicable concerning the initiation of an action since it involves the interpretation of a provision dealing with obtaining sanction. Therefore, though the authority to appoint an advocate was not obtained, it does not mean that the action is incompetent. I would also follow that decision to hold that the defendants being third parties in so far as the plaintiff company in liquidation is concerned cannot take the objection that the authority of the court or the committee of inspection has not been obtained.

That decision was notwithstanding the fact that under s 245 of the English Companies Act, 1948, the power to bring or defend any action or other legal proceeding in the name and on behalf of the company and to appoint a solicitor to assist him in the performance of his duties shall only be exercised with the sanction of either the court or the committee of inspection. Thus, in England, an action commenced by an advocate upon the instruction of a liquidator is not invalid as to justify it being struck out notwithstanding that the prior sanction of the court has not been obtained. Therefore, even less so in the case of an action commenced by an advocate instructed by a liquidator whose appointment was without the sanction of the court or the committee of inspection but which action can be commenced without the sanction of the court or the committee of inspection.

A fortiori in Mala