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2022 MarsdenLR 2605
FEDERAL COURT PUTRAJAYA
TAN KIM CHUAN – Appellant
Versus
TAN KIM TIAN & ORS & ANOTHER APPEAL – Respondent
[Civil Appeal Nos: 02(i)-16-03-2021(W) & 02(i)-17-03-2021(W)]
The court ruled that a High Court's direction altering liquidators' agreed disposal method without just cause is erroneous, emphasizing the need to respect liquidators' discretionary powers in such cases.
Headnote:(A) Companies Act 2016 - Section 487(3) - Companies Act 1965 - Section 237(3) - Appeals addressed questions on appealability of High Court directions to liquidators regarding disposal of properties in liquidation - The court held that the High Court's decision to change agreed disposal methods without just cause was erroneous and interfered with liquidators' discretionary powers. (Paras 12, 15, 40, and 48)
(B) Liquidation Proceedings - The nature of liquidators' powers under the Companies Act requires courts to exercise caution and non-interference in their decisions unless unreasonable - The court emphasized the importance of maintaining the liquidators' discretion in managing company assets. (Paras 46 and 47)
Facts of the case: The case involved conflicting applications by Joint Liquidators and contributories concerning the best method for disposing of Properland's properties during liquidation, with disputes arising over First Right of Refusal versus open tender methods. (Paras 3-10)
Findings of Court: The learned judge had erred in adopting an alternative disposal method against the agreed First Right of Refusal, impacting the liquidation process and contributory interests negatively. (Paras 12, 40, and 48)
Issues: The main issues raised concerned the appealability of the High Court's directions and the authority of the joint liquidators to make decisions without undue court interference. (Paras 12 and 18)
Ratio Decidendi: The Court of Appeal recognized that a liquidator's decisions should not be interfered with unless shown to be unreasonable; the High Court's order did not align with the liquidators' authority to act according to established agreements. (Paras 15, 40, and 46)
Result: Appeals allowed; original High Court's decision dismissed.
JUDGMENT
Introduction
[1] The two related appeals raised questions of some significance arising out of the applications filed by the parties pursuant to s 487(3) of the Companies Act 2016 (Act 777); the provision is similar to s 237(3) of the Companies Act 1965 ( CA ).
[2] On 26 February 2021, this Court granted the appellant leave to appeal in respect to the following questions of law:
Question 1
In a situation where the High Court has given Joint Liquidators non-appealable directions (by way of advice in an administrative proceeding) under s 237(3) of the Companies Act 1965 [ Section 487 (3) of the Companies Act 2016 ] ("liquidators (sic) application"):
(i) Whether the decisions pertaining to contributories (sic) applications under s 236(3) of the Companies Act 1965 [ Section 486 (2) of the Companies Act 2016 ] in respect of the exercise or proposed exercise of Liquidators (sic) power by contributories ("contributories (sic) application") and/or by other parties, can be appealed against if dismissed?
(ii) Whether other parties (who are neither applicants nor parties in contributories (sic) application (sic) can appeal against the High Court Liquidator's directions (for the dismissal of a contributories (sic) application) to back door circumvent the Kuala Lumpur High Court directions and Federal Court Decision of Ooi Woon Chee?
Question 2
(i) Whether a petitioner and/or Judgment Creditor for a monetary debt that wound up the judgment debtor company based on a default judgment for a liquidated sum, can be given an equitable right by the Court of Appeal's original or appellate jurisdiction when the same had no prior contractual nor equitable rights for such a preferential right to be in existence or given.
(ii) Whether a contributory and/or creditor, can be given an equitable right by the Court of Appeal by its original or appellate jurisdiction when the same had no prior contractual nor equitable rights in existence for such rights to be given.
Question 3
Whether an order granted by the High Court pursuant to a contributories (sic) application (which mirrors the non-appealable directions of the High Court to the Liquidator pursuant to a liquidator's application) can be appealed against by another contributory?
Question 4
Where a contributories (sic) application does not seek any determination of substantive rights (only to company assets in liquidation by way of open tender):
(i) Whether such an order (not determining any substantive right granted by the High Court) is a decision and/or judgment or order within the scope of s 67(1) of the Courts of Judicature Act 1964 which is non-appealable?
Question 5
Whether the Court of Appeal's decision in Estate Of Lim Tuan & Ors v. Lim San Peen & Ors, (where Court directions to liquidators can be appealed by other parties if the rights of other parties are affected) circumvent the Federal Court decision in Ooi Woon Chee & Anor v. See Teow Chuan & Ors & Other Appeals, that Court directions to the Liquidator (by way of advice in an administrative proceeding) are non-appealable?
Question 6
Whether the Court of Appeal can exercise an original jurisdiction to set aside the decision of the High Court (in dismissing the Contributory's application) and substitute its own different direction when the High Court had already prior to that exercised its discretion and directed the Joint Liquidators to sell the Land by open tender, ie a fair open market transparent auction/bidding method in the best interest of that Company in liquidation to sell at the highest price.
Question 7
Whether if in a Joint Liquidators (sic) situation, where both the Joint Liquidators have separately applied to the High Court for directions to sell the land in question by different methods and the High Court has specifically directed and/or preferred one method (to realise properties by open tender to the highest bidder) over another method (to give a preference to a particular contributory), can the Court of Ap
