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2015 MarsdenLR 1285
COURT OF APPEAL PUTRAJAYA
KOH HUAT KWAN – Appellant
Versus
PEGAWAI PENERIMA SELAKU PELIKUIDASI BAGI POH MAH HOUSING DEVELOPMENT SDN BHD & ORS – Respondent
[Civil Appeal No: A-03(IM)-123-10-2014]
The validity of a lienholder's caveat is not affected by limitation statutes in the context of liquidations, and liquidators must act within their legally conferred powers.
Headnote:(A) Companies Act 1965 - Sections 236(2), 236(3), and 279 - Limitation Act 1953 - Section 21(1) - Validation of lienholder's caveat and disposal of assets during liquidation - The High Court upheld the validity of the lienholder's caveat, stated that time does not run against the Official Receiver, and concluded that there was no evidence of fraud or unreasonable conduct. (Paras 13, 18, 21, 24)
(B) The principle that time ceases to run upon a winding-up order - Time does not run against a creditor once liquidation begins, thus limiting the relevance of limitation pleas concerning the disposal of company assets. (Paras 21, 22)
Facts of the case:
The appellant's challenge to a consent order allowing a liquidator to extinguish a lienholder's caveat and sell land was dismissed, as the lienholder's rights remained valid and time limitations did not apply per the Companies Act.
Findings of Court:
The High Court found no misconduct by the liquidator and that the appeal lacked merit, affirming the legality of the asset disposal.
Issues: The critical issues involved the validity of the lienholder's caveat and the liquidator's discretion in executing the sale of assets.
Ratio Decidendi: The court reasoned that the liquidator acted within powers and the procedures provided for in the Companies Act, resulting in no grounds for appeal.
Result: Appeal dismissed with costs.
| Table of Content |
|---|
| 1. background of the consent order and property. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10) |
| 2. the high court's findings on the case. (Para 11 , 12 , 13) |
| 3. appellant's arguments against the consent order. (Para 14) |
| 4. legal interpretation of the statutory provisions. (Para 15 , 16 , 17 , 18 , 19 , 20) |
| 5. conclusion on the validity of the sale. (Para 21 , 22 , 23 , 24) |
Introduction
[1] This is an appeal by the appellant, Koh Huat Kwan, against the decision of the learned High Court Judge dismissing the appellant's application to set aside a consent order dated 26 June 2013 ("the consent order") entered into between Affin Bank Berhad ("the 3rd respondent") and the Official Receiver ("the 1st respondent") acting as the liquidator of Poh Mah Housing Development Sdn Bhd ("the 2nd respondent").
[2] Pursuant to the grant of financing facilities by the 3rd respondent to the 2nd respondent, the 2nd respondent deposited the original document of title to a piece of land held under GM5A, Lot No 2859, mukim Durian Sebatang, Tempat Ulu Sungai Serasid, daerah Hilir Perak, negeri Perak ("the land") with the 3rd respondent.
[3] On 6 December 1989, the 3rd respondent obtained judgment against the 2nd respondent for RM1,575,984.41.
[4] On 12 July 1995, the 3rd respondent lodged a lienholder's caveat over the land.
[5] The 2nd respondent was wound up pursuant to an order dated 26 May 1999 and the Official Receiver was appointed as the liquidator.
[6] On 29 April 2013, the 3rd respondent filed an application ("the 1st application") for an order that one Daleep Singh of Rimbun Capital Sdn Bhd be appointed in place of the 1st respondent.
[7] On 20 June 2013, the 3rd respondent filed another application to amend the 1st application by adding an alternative prayer whereby the 1st respondent has to execute the transfer form in favour of the prospective buyer of the land.
[8] On 26 June 2013, the consent order was recorded in terms of the alternative prayer whereby it was agreed that the 1st respondent will execute the transfer form in Form 14A in favour of the prospective buyer of the land, provided that the sale price of the land shall not be less than the prevailing market value of the land as valued by the Jabatan Perkhidmatan dan Penilaian Harta ("JPPH").
[9] On 10 July 2013, the JPPH issued a valuation report stating that the market value of the land as at 8 July 2013 is RM1 million ("the JPPH valuation report").
[10] On 27 November 2013, the 3rd respondent and the 4th respondent entered into a sale and purchase agreement ("the SPA") under which the 3rd respondent agreed to sell and the 4th respondent agreed to buy the land for RM1.2 million; pursuant to the consent order, the 1st respondent executed the transfer form in favour of the 4th respondent.
[11] On 13 December 2013, the appellant lodged a private caveat against the land. The private caveat was ordered to be removed by the High Court on 3 June 2014, on the application of the 3rd respondent.
[12] On 30 May 2014, the appellant filed an application for leave to intervene in the proceedings and to set aside the consent order.
Decision Of The High Court
[13] The findings of the learned High Court Judge may be summarised as follows:
i. It is not necessary to file a fresh action to set aside the consent order as the challenge is against the decision of the 1st respondent in agreeing to sign the transfer form as the appellant's application to challenge the exercise of the 1st respondent's powers is made under ss 236(3) and 279 of the Companies Act 1965 (" CA 1965");
ii. The 3rd respondent was entitled to register the lienholder's caveat after judgment was taken on the loan (see Mercantile Bank Ltd v. The Official Assignee of the Property of How Han Teh , [1969] 1 MLJ 196 ). The lienholder's caveat remains valid until withdrawn by the 3rd respondent or cancelled by the Registrar or by Court;
iii. The plea of limitation is not relevant against the 1st respondent. Time does not run aga
