Ambank (M) Berhad & 1 Lagi V Perdana Industri Holdings Berhad & 1 Lagi

  

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MALAYSIA

 

IN THE HIGH COURT IN KUALA LUMPUR (COMMERCIAL DIVISION) ORIGINATING SUMMONS NO: D-24NCC-1-2009

 

In the matter of Modified Workout Proposal for Perdana Industri Holdings Berhad dated 23.8.2001;

 

And

 

In the matter of sections 44 and 48 of the Pengurusan Danaharta Nasional Berhad Act 1998;

 

And

 

In the matter of Consent Order dated 3.7.2008 between Perdana Industri Holdings Berhad and PIH Building Materials Supplies Sdn Bhd vide Kuala Lumpur High Court Originating Summons No: D7-24-182-2008;

 

And

 

In the matter of Order 7 and Order 15 rule 6, Rules of the High Court 1980.

 

BETWEEN

 

1. AMBANK (M) BERHAD (Company No.: 295576-U)

 

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2. PENGURUSAN DANAHARTA NASIONAL BERHAD

 

(Company No.: 464363-W) … PLAINTIFFS

 

AND

 

1. PERDANA INDUSTRI HOLDINGS BERHAD (Company No.: 91458-D)

 

2. PIH BUILDING MATERIALS SUPPLIES SDN BHD

 

(Company No.: 222201-M) … DEFENDANTS

 

BEFORE THE HONOURABLE JUDGE Y.A. DR. HAJI HAMID SULTAN BIN ABU BACKER

 

IN CHAMBERS

 

JUDGMENT

 

1. This is my judgment in respect of the plaintiff’s originating summons seeking inter alia for the following prayers:

 

“ (1) a declaration that the consent order entered into between the 1st defendant and the 2nd defendant in Kuala Lumpur High Court, Originating Summons No: D7-24-182-2008 on 3.7.2008 (“Consent Order”) which, inter alia, caused the 2nd defendant to be bound by the Modified Workout Proposal dated 23.8.2001 as an Unsecured Creditor had wrongfully and illegally amended, modified and/or varied the Modified Workout Proposal dated 23.8.2001 in contravention of Sections 44 and 46, Pengurusan Danaharta Nasional Berhad Act 1998 (“Act);

 

(2) a declaration that the Consent Order has wrongfully prejudiced the interest of the plaintiffs under the Modified Workout Proposal dated 23.8.2001 by reducing and/or diluting the plaintiffs’ entitlements, as Unsecured Creditors, to the Wah Seong Corporation Berhad shares (“WSC shares”) under the Modified Workout Proposal dated 23.8.2001;

 

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(3) a declaration that the Consent Order is null and void for illegality consequent to its contravention of the Act and hence, not enforceable by and/or against any parties under and/or named under the Consent Order in any manner whatsoever and howsoever;

 

(4) a declaration that the 2nd defendant is not a creditor identified and included under the Modified Workout Proposal dated 23.8.2001;

 

(5) a declaration that the 2nd defendant is not entitled in any manner whatsoever and howsoever received any of the WSC Shares under the Modified Workout Proposal dated 23.8.2001 as settlement of any judgment debt obtained by the 2nd defendant against the 1st defendant in Kuala Lumpur High Court, Suit No.:D1-22-435-2008;

 

(6) the 2nd defendant and/or its servants, agents, representatives, assignees or novatess be forthwith hereby restrained from receiving, demanding, enforcing and/or retaining any WSC Shares under the Modified Workout Proposal dated

 

23.8.2001 as settlement of any judgment debt obtained by the 2nd defendant against the 1st defendant in Kuala Lumpur High Court, Suit No.:D1-22-435-2008;

 

(7) in the alternative to prayer 96) herein, the 2nd defendant and/or its servants, agents, representatives, assignees or novatees be forthwith hereby ordered to return all WSC Shares received under the amodified Workout Proposal dated

 

23.8.2001 to BDO Capital Consultants Sdn Bhd;

 

(8) damages;

 

(9) costs on an indemnity basis to be paid by the defendants to the plaintiffs;. ’

 

The grounds of the application inter alia are stated as follows:

 

“(1) the Consent Order wrongfully varied the terms of the Modified Workout Proposal dated 23.8.2001 in contravention of the Act;

 

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(2) the Consent Order should be set aside as the High Court had neither jurisdiction nor power to make the Consent Order and the High Court was not appraised of the same when the Consent Order was made;

 

(3) the plaintiffs, as creditors under the Modified Workout Proposal dated

 

23.8.2001, are parties adversely affected and prejudiced by the effect of the Consent Order and hence, has locus standi to make this application..”

 

2. In essence the plaintiffs say the consent order modifies the Modified Workout Proposal, in that it introduces a new creditor. And asserts that the Modified Workout Proposal was only intended to deal with secured and unsecured creditors identified as at 30.6.1999 and contingent creditors as at 30.6.1999 and 30.9.1999.

 

3. In consequence the plaintiffs say that the consent order involves a compromise or arrangement and such terms in the consent order can only be proposed by Special Administrators, pursuant to sections 44(B) and 48 of the said Act. As a result the plaintiffs say that the consent order was illegal and complain that the provisions of the said Act was not brought to the attention of the learned judge when the consent order was entered.

 

4. The 2nd defendant complains that the Special Administrators did not undertake a proof of debt exercise as provided for in the Modified Workout Proposal and in consequence the 2nd defendant remained as an

 

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unknown creditor to the Special Administrators of the 1st defendant. In addition the 2nd defendant says the purpose of the Kuala Lumpur High Court Originating Summons No.:D7-24-182-2008 was not to modify the Workout Proposal but to confirm that the 2nd defendant was bound by the Modified Workout Proposal pursuant to section 46(4) of the said Act which the 2nd defendant agreed and consented to. The 2nd defendant also says that Creditors Agent BDO was present and had full knowledge of the said O.S. before it was filed and also all the relevant parties inclusive of the Creditors Agent as well as Special Administrators of the 1st defendant knew the terms of the prayers stated in said O.S. application.

 

Preliminaries

 

5. It is common knowledge that the Act confers two special powers. First is the ability to buy assets through statutory vesting. Second is the ability to appoint Special Administrators to manage the affairs of distressed companies. In the instant case we are concerned with the latter. Like any powers if it is not diligently exercised or not exercised to protect the interest at the earliest opportunity it may become inequitable to be enforced. It all depends on the facts of the case.

 

6. The object of the Act in relation to Special Administrators in my view relates to equitable distribution and nothing more. And that Act provides some guide to how it should be done and who should initiate it. The Act

 

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itself does not prohibit any creditors to make a claim although the creditor was not identified at the time the workout proposal is put in place and or at the time of the modified workout proposal as in the instant case.

 

7. In the instant case the plaintiffs came into the picture as early as 1998 and the modified working proposal was in place in 2001. The summary judgment by the 2nd defendant was entered on 1.7.2008. And the consent in O.S. No.: D7-24-182-2008 was entered on 3.7.2008.

 

8. In addition it is trite that courts ordinarily will not set aside a consent order.

 

9. The plaintiffs and defendants relied on the following cases namely: Danaharta Urus Sdn Bhd v Kekatong Sdn Bhd [2004] 1 CLJ 701; Pengurusan Danaharta Nasional Bhd v Tang Kwor Ham & Ors & Anor Appeal [2007] 4 CLJ 513; Badiaddin Mohd Mahidin & Anor v Arab Malaysian Finance Bhd [1998] 2 CLJ 75; Raju Jayaraman Kerpaya v Chung Khiaw Bank Bhd [1997] 3 CLJ 216; Arab Malaysian Merchant Bank Berhad v Dr Jamaluddin Dato ’ Mohd Jarjis [1991] 1 CLJ 9Rep) 19; Abdul Rahim Aki v Krubong Industrial Park (Melaka) Sdn Bhd [1995] 4 CLJ 551; Hong Leong Bank Bhd v Staghorn Sdn Bhd & Other Appeals [2008] 2 CLJ 121; Fung Beng Tiat v Marid Construction Co.

 

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[1997] 2 CLJ 1; Chee Poh Choy & Ors v Scotch Leasing Sdn Bhd [2001] 2 CLJ 321; Halim Securities Sdn Bhd v Tan Dato ’ Tan Kok Ping [2001] 1 LNS 85; Malayan United Finance Bhd v Noormurni Sdn Bhd & Anor [1988] 1 CLJ (Rep) 190, SC; Chun Nyook Lin v Pentadbir Tanah Alor Gajah & Anor [2003] 7 CLJ 374; Tradium Sdn Bhd v Zain Azahari Bin Zainal Abidin & Anor [1996] 2 CLJ 270; Hj Ahmad Roose Bin Hj Mohd Ali & 2 Ors v Pendaftar Besar Sekolah Kementerian Pendidikan Malaysia & Anor [2003] 1 LNS 451.

 

10. I have read the originating summons, affidavits and submission of the parties in detail. I do not wish to repeat the same. After careful consideration to the plaintiffs’ submission I take the view on the facts of this case the plaintiffs’ originating summons must be dismissed. My reasons inter alia are as follows:

 

(i) On the facts of the case it is clear that the plaintiffs knew about all the proceedings as well as the said summary judgment and consent order but did not diligently move to protect their interest.

 

(ii) In addition the plaintiffs did not file any application to intervene at the earliest opportunity before the court which made the consent order and this suit to set aside the consent order was filed after 14 months and no reasonable explanation was given for the delay.

 

(iii) In the instant case the 2nd defendant was successful in obtaining a summary judgment against the 1st defendant and thereby legally

 

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and lawfully established themselves as creditor of the 1st defendant. And they have also agreed by the consent order to be unsecured creditors. There is nothing illegal about the 2nd defendant’s conduct.

 

(iv) The 2nd defendant’s argument that the plaintiffs must be estopped from setting aside the consent order in light of their conduct has much merit. The learned authors of Halsbury’s Law of England, 4th edition, volume 1(2) at para 148 had this to say:

 

“When in the Course of any transaction in which he is employed on his principal’s behalf, an agent receives notice or acquires knowledge of any fact material to such transaction, under such circumstances that it is his duty to communicate it to the principal, the principal is precluded, as regards the persons who are parties to such transaction, from relying upon his own ignorance of that fact, and is taken to have received notice of it from the agent, at the time when he should have received notice it if the agent had performed his duty with due diligence. ”

 

In addition section 182 of Contracts Act 1950 states as follows:

 

“Any notice given to or information obtained by the agent, provided it be given or obtained in the course of the business transacted by him for the principal, shall, as between the principal and third parties, have the same legal consequence as if it had been given to or obtained by the principal. ”

 

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(v) The plaintiffs are relying heavily on the decision of Badiaddin Mohd Mahidin & Anor v Arab Malaysian Finance Bhd [1998] 2 CLJ 75 where it was stated that one High Court can set aside a final order regularly obtained from another High Court of concurrent jurisdiction if the order can be proved to be null and void on the ground of illegality or lack of jurisdiction. The facts of the case of Badiaddin are entirely different from this case. In the instant case evidence will show that the plaintiffs themselves did not exercise or protect their interest by asserting their powers diligently and at the right forum and at the appropriate stage. There is nothing illegal in the consent order as the plaintiffs make it out to be, more so when the learned judge of the High Court in dealing with the summary judgment had given some consideration to the issues raised relating to the said Act. The relevant part of the judgment reads as follows:

 

“….in my judgment the defendant has failed to raise any triable issues.

 

It is the contention of the defendant that it is a triable issue as to whether or not the plaintiff is barred from suing the defendant for the debt by reason of clause 3.2.1 of the Workout Proposal. In my judgment this is not a triable issue as the plaintiff is not a party to the Workout Proposal; nor is the plaintiff a subject matter of the Workout Proposal. It is also not explained in the defendant’s affidavits as to in what way that the Workout Proposal binds the plaintiff.

 

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It is also the contention of the defendant that it is a triable issue as to whether or not the plaintiff is barred from being suing the defendant for the debt by reason of section 46(4) of the Pengurusan Danaharta Nasional Berhad Act 1998. Again in my judgment this is not a triable issue. There is nothing in the defendant’s affidavit to state whether limb (a0 or limb (b) of section 46(4) has been complied with. Paragraph (6) of the defendant’s written submission at encl. A(9) states that “the majority in value of the secured creditors present in the meeting had voted to approve the Workout Proposal. ” However, this is merely a statement by the defendant’s counsel from the bar.

 

It is also the defendant’s argument that it is a triable issue as to whether or not the defendant is indebted to the plaintiff for the sum of RM15 million. In the light of the various documentary evidence adduced by the plaintiff and the rather mild rebuttal or denial by the defence, this argument by the defendant is devoid of any merit. Appeal dismissed with costs. ”

 

11. For reasons stated above the plaintiffs’ application is dismissed with costs. The plaintiffs to pay the 2nd defendant’s costs in the sum of RM 10,000.00 and the 1st defendant’s costs in the sum of RM 5,000.00.

 

I hereby order so.

 

(Y.A. DR. HAJI HAMID SULTAN BIN ABU BACKER)

 

Judge

 

High Court (Commercial Division)

 

KUALA LUMPUR

 

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Date: 27th January 2010

 

For the Plaintiffs: Andrew Chiew Ean Vooi (Chang Ee Leen with him);

 

M/s Lee Hishamuddin Allen & Gledhill For the Defendants:R. Thipajothi; M/s Kandiah Partnership

 

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