Abdul Hamid Mohamad J:

This action commenced in 1989. There is a related action in Ipoh High Court involving the same subject matter, though a different defendant. The trial of the Ipoh High Court case, which I understand is very lengthy, has almost come to a close. Indeed, considering that the two cases involve the same facts concerning an incident in Ipoh, this case should have been transferred to Ipoh and heard together with the Ipoh case.

In this action claim is an insurance claim in the sum of RM32,249,000 "or alternatively" RM16,124,500 interest and costs arising from damage and loss by fire.

The defendant, inter alia, pleaded fraud.

By a summons in chambers, the defendant has applied for the plaintiff to provide security for costs in the sum of RM200,000 on the ground that the plaintiff has been wound up. The senior assistant registrar dismissed the application. I allowed it but fixed the amount at RM100,000. Hence this appeal.

Before me only one issue was argued. That is whether the defendant must obtain leave of court first before filing the application. This is in view of the provision of s. 226(3) of the Companies Act 1965. There was a similar application in the Ipoh case. Gill J had decided that leave must be obtained first. The appeal to the Court of Appeal is still pending. I have the advantage of reading Gill J's judgment. So, it was with great reluctance and respect that I decided otherwise. Indeed I hope that both appeals will be heard together.

Section 226(3) of the Companies Act 1965 provides:

226(1) ...

(2) ...

(3) When a winding up order has been made or a provisional liquidator has been appointed no action or proceeding shall be proceeded with or commenced against the company except:

(a) By leave of the Court; and

(b) in accordance with such terms as the Court imposes.

Gill J in coming to the conclusion that he did on the interpretation of that provision said:

In respect of the issue of leave pursuant to section 226(3) Companies Act 1965, it is my view that it is a statutory bar intended to protect the interest of the creditors of the company in liquidation, by preventing the company being subjected to actions, once it has gone into liquidation, without the Court first considering, whether such an action ought to be allowed.

I am unable to accept the contention of Mr. Porres that an application for security for costs is not a proceeding for the purpose of section 226(3) Companies Act 1965. To my mind, during the course of pre-trial proceedings, a party may need to make a number of applications to the Court. The type, and numerousness, of these applications depends on the circumstances of the case. These applications, regardless of their nature, come well within the province of proceedings. According to Stroud's Judicial Dictionary Fourth Edition - "proceedings" is said to denote steps in the action. Smalley v. Robey & Co [1962] 1 QB 577. "Action or proceedings" according to the Married Women's Property Act 1893 meant,

in the latter word "a proceeding in the nature of an action" (per Davey LJ, Hood-Barrs v. Cathcart [1894] 3 Ch. 371). Judging from Stroud's definition, to my mind the present application falls within the realm of "proceedings", as it is a step in an action.

Looking at the general ethos of section 226(3) Companies Act 1965,viz a viz protection of creditors of a company in liquidation, leave of the court should be asked for, and obtained before an application for security for costs is initiated, as the consequences of this application, if granted, does undoubtedly have an effect on the creditors of the company in liquidation.

It may be pertinent at this juncture to reproduce a caption of the Judgment of his Lordship Lord Blanesburgh in the Privy Council case of Lloyd-Owen v. Bull [1936] 4 DLR 433:

A judge in winding-up is the custodian of the interests of every class affected by the liquidation.

It is his duty even if it be in a voluntary liquidation that opportunity