Chow Seck Kai V Allied Capital Sendirian Berhad

  

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IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR

 

(COMMERCIAL DIVISION)

 

COMPANIES WINDING-UP NO: D-28NCC-96-2009

 

In the matter of Section 218(1)(e) of

 

the Companies Act 1965

 

And

 

In the matter of ALLIED CAPITAL SENDIRIAN BERHAD (Company No: 058436-X) BETWEEN

 

CHOW SECK KAI (secretary of Raintree Club of Kuala Lumpur and suing on behalf of all

 

Members of Raintree Club of Kuala Lumpur ..PETITIONER

 

AND

 

ALLIED CAPITAL SENDIRIAN BERHAD

 

(Company No.: 058436-X) …RESPONDENT

 

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

 

IN OPEN COURT

 

JUDGMENT

 

This is my judgment in respect of the petitioner’s application to wind up the company pursuant to section 218(1) (e) of Companies Act 1965 (CA 1965) for failing to pay judgment sum of more than 15 million, interest, etc;.

 

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Preliminary objection

 

1. In the instant case 1st respondent’s affidavit has been served out of time in breach of Rule 30 of the Companies (Winding up) Rules. In consequence the petitioner objects to the affidavits of the respondent to be admitted and relies on the case Croucuses & Daffodils (M) Sdn Bhd v Development & Commercial Bank Bhd [1997] 3 CLJ 485. I have dealt with this area of jurisprudence in detail in the case of Dato ’ Ting Check Sii v Datuk Hj Mohammad Tufail Mahmud & Anor [2008] 7 CLJ 453. I do not wish to repeat the same save to deal with the preliminary objection in the later part of my judgment.

 

Brief facts

 

2. The sequence of dates and its reasons are important for arriving at a decision. The petitioner had obtained the said judgment on 6.2.95. The respondent obtained a stay pending appeal to the Court of Appeal. The appeal to Court of Appeal was dismissed on 19.9.96. However the Court of Appeal on the application of the respondent granted a stay pending application for leave to appeal to the Federal Court on 18.11.96. The application for leave was dismissed by the Federal Court and the petitioner issued a 218 notice against the respondent on 18.5.01. However the respondent filed a stay application as well as an injunction to restrain the petitioner from presenting a winding up petition. And the respondent had also filed a review application in the Federal Court. The

 

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review application in the Federal Court was dismissed on 28.11.07. In consequence, the High Court dismissed the respondent’s stay as well as the injunction application on 31.3.09. Following the dismissal the petitioner issued a fresh 218 notice on 8.5.09 thereafter had filed this petition on 5.10.09.

 

3. The respondent in opposing the petition inter alia says: (i) the judgment is not enforceable as it is now more than 12 years and barred by Limitation Act 1953 (LA 1953). And relies heavily on the Federal Court decision of Perwira Affin Bank Bhd v Lim Ah Hee @ Sim Ah Hee [2004] 3 MLJ 253 where (ii) petitioner had failed to obtain leave of the court after the lapse of 6 years as required by Order 45 rule 6 of RHC 1980 and (iii) petitioner had not shown the authority to present the winding up petition as required by the Societies Act 1966 (SA 1966) and CA 1965.

 

4. The learned counsel for the petitioner, dissatisfied with the respondent’s plea, emphatically submits as follows:

 

“10. The club humbly urge Yang Arif to in considering where the justice of the case lies to bear in mind that R has specifically filed an injunction application to restrain the Club from filing a winding-up petition against it. Prior 2001, the Respondent had applied for a stay of execution of the judgment when the matter was before the court of appeal and the Federal Court. After trying every trick in the book to delay proceedings from 2001 to the present date, the Club submits that it will be wantonly unjust and manifestly unfair to allow R to invoke the statute of

 

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limitation against the Club. To allow then to do so will with respect, tantamount to allowing R to giving the Club the finger! Judicial vigilance and the dynamic development of local equitable jurisprudence in the attainment of justice must unequivocally denounce such a stance by as deplorable and unacceptable. R must not be allowed to approbate and reprobate with impunity.

 

11. From the material facts placed before Yang Arif, that the Club could not reasonably be expected to proceed with a winding up petition against R when R’s application for an injunction to restrain the very filing of the petition is on foot. We implore Yang Arif to without hesitation find that on the point of limitation raised by R, estoppel bites ”.

 

Preliminaries

 

5. The respondent’s contention in relation to Societies Act has no merit as it has been raised in the previous suit by the respondent and did not succeed even at the appellate stage. Further section 9 (c) of SA 1966 states:

 

“a society may sue or be sued in the name of such one of its members as shall be declared to the Registrar and registered by him as the public officer of the society for that purpose, and, if no such person is registered, it shall be competent for any person having a claim or demand against the society to sue the society in the name of any office-bearer of the society; ”

 

The said Act only says, may sue or be sued, and it does not exclude the common law position in toto. In addition the Act itself does not impose a mandatory requirement as to who may sue or be sued. In addition, the Act does not require any form of authorization to be exhibited as argued

 

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by the respondent; more so when the respondent’s affidavit have become sterile, for breach of the winding up rules.

 

6. In the instant case the petitioner’s preliminary objection has merits and in consequence the opposing affidavits cannot be considered as the procedural requirement to condone that delay has not been satisfied by the respondent. If the affidavits are not considered, much of the arguments raised by the respondent must fail and this will include the defence of limitation which ordinarily is seen to be a procedural device which needs to be pleaded or at least raised in the affidavits for the respondent to succeed. In any event I have captured inter alia the arguments of the parties in deriving at the decision.

 

7. The petitioner and the respondent had relied on the following cases namely: Crocuses & Daffodils (M) Sdn Bhd v Development & Commercial Bank Bhd, (supra); Allied Capital Sdn Bhd v Mohamed Latiff Shah Mohd & Another Application [2001] 2 CLJ 253; O’Mara Constructions Pty Ltd v Avery [2006] FCAFC 55; Ridgeway Motors (Isleworth) Ltd v Alts Ltd [2005] 2 All ER 304; Lowsley and another v Forbes (t/a L E Design Services) [1998] 3 All ER 897; Re Lim Szu Ang, Ex P. Kewangan Utama Bhd [2005] 7 CLJ 23; W.T. Lamb & Sons v Rider [1948] 2 KB 331; National Westminster Bank PLC v Powney and others [1990] WLR 1084; Boustead Trading (1985) Sdn Bhd v Arab

 

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Malaysian Merchant Bank Berhad [1995] 4 CLJ 283; Malaysian Air Charter Co Sdn Bhd v Petronas Dagangan Sdn Bhd [2000] 4 MLJ 657; Pacific Centre Sdn Bhd v United Engineers (Malaysia) Bhd [1984] 2 MLJ 143; Weidaya Sdn Bhd v DND Bina Holdings Sdn Bhd [2007] 8 MLJ 13; Forbes-Smith v Forbes-Smith and Chadwick [1901] C.A 258; Kok Hoong v Leong Cheong Kweng Mines Ltd (1964) 30 MLJ 49 PC; Othman & Anor v Mek [1972] 2 MLJ 158 FC; Alfred Templeton v Low Yat Holdings Sdn Bhd [1989] 2 MLJ 202; Re Ali@ Abdul Aziz bin Hassan; ex p HSBC Bank Malaysia Bhd [2005] 5 MLJ 536; Semantan Estate (1952) Sdn Bhd v Collector of Land Revenue Wilayah Persekutuan [1987] 2 MLJ 346; Public Prosecutor v Hii Sii Chang [1998] 6 MLJ 249; Chin Sin Lan v Delta Finance Bhd [2004] 3 MLJ 178; United Malayan Banking Corp Bhd v Ernest Chong Yong Yon [2002] 2 MLJ 385; Puan Bee Hong & Anor v Pentadbir Tanah Daerah Wilayah Persekutuan Kuala Lumpur & Anor (Teo Keng Tuan Robert, Intervener) and another appeal [1994] 2 MLJ 601; Sugumar Balakrishnan v Pengarah Imigresen Negeri Sabah [1998] 3 MLJ 289; Credit Co (M) Bhd v Fong Tak Sin [1991] 1 MLJ 409; Yew Bon Tew & Anor v Kenderaan Bas Mara [1983] 1 MLJ 1; Re Haji Ahmad bin Lazim & Ors; ex p Bank Kerjasama Rakyat (M) Bhd [1990] 5 MLJ 478; Teh Eok Kee & Anor v Tan Chiah Hock & Anor [1995] 3 MLJ 613; Wong Lok Khiam v Dato Peter Lo Su Yin & Ors (No.3) [1972] MLJ 176; Malaysia Land Investment Co (Pte) Ltd v Sathask Realty Sdn Bhd

 

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[2001] 1 MLJ 451; Sarawak Building Supplies Sdn Bhd v Director of Forests & Ors [1991] 1 MLJ 211; United Investment and Finance Ltd. V Tee Chin Yong & Ors [1967] 1 MLJ 31; William Jacks & Co (M) Sdn Bhd v Chemquip (M) Sdn Bhd & Anor [1991] 2 MLJ 555; Re L.H.F. Wools Ltd [1970] 1 Ch. 27; Morgan Guaranty Trust Co of New York v Lian Seng Properties Sdn Bhd [1990] 1 MLJ 282; Ng Tai Tuan & Anor v Chng Gin Huat Pte Ltd [1991] 1 MLJ 338; Perwira Affin Bank Bhd v Lim Ah Hee@Sim Ah Hee, (supra); Wangsini Sdn Bhd (formerly known as Willway Industries Sdn Bhd) v Grand United Holdings Bhd [1998] 5 MLJ 345; Re Yap Kim Kee & Sons Sdn Bhd [1990] 2 MLJ 108; Re Perusahaan Jenwatt Sdn Bhd [1990] 2 MLJ 178; YPJE Consultancy Service Sdn Bhd v Heller Factoring (M) Sdn Bhd (formerly known as Matang Factoring Sdn Bhd) [1996] 2 MLJ 483; Re Tweeds Garages, Ltd [1962] All ER 121; Megat Najmuddin Bin Dato’ Seri (Dr) Megat Khas v Bank Bumiputra (M) Bhd [2002] 1 MLJ 385.

 

Petitioners Argument

 

8. In essence the petitioner says (i) meaning of “action upon a judgment” under section 6 (3) LA 1953 is defined in section 2 (6) as “reference to the date on which the judgment became enforceable” and this necessarily means all periods of stay and orders of adjournment by the court be taken out in computing time. If this is done, the petition in any case is not caught by section 6 (3). In any case, estoppels by conduct

 

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militates against respondent from raising this issue of limitation as respondent is the one that applied for the stay, postponements and injunction (ii) the Australian decision of O ’Mara Constructions Pty Ltd v Avery (supra) follows and contains a detailed discussion of the English cases of W.T. Lamb & Sons Ltd v Rider (supra) and Natwest Bank v Powney (supra) where the Court of Appeal held that an action upon a judgment does not include proceedings by way of execution. And relies on the following cases, namely:

 

(a) In Ridgeway Motors (Isleworth) Ltd v Altis Ltd (supra) where it was stated:

 

“The presentation of a winding up petition by a judgment creditor was not subject to the six-year limitation period applicable to bringing an action upon a judgment within s 24(1) of the 1980 Act. ‘An action upon a judgment’ had the special or technical meaning of a ‘fresh action’ brought upon a judgment in order to obtain a second judgment, which could be executed. Insolvency proceedings, whether personal or corporate, did not fall within the scope of that special meaning. A winding up petition was neither an action upon a judgment in the special sense of being designed to re-establish by legal proceedings the liability of a company to pay a judgment debt and obtain another judgment for it, nor a process of execution of the judgment on which the petition was based. It was sui generis, being in the nature of a wider legal proceeding available for the collective enforcement of the admitted or proved debts of the company for the benefit of the general body of creditors on a pari passu basis. It was

 

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not open to the court to interpret the expression ‘action upon a judgment’ in s 24(1) of the 1980 Act in the sense indicated by the extended definition of an ‘action’ in s 38(1) ”.

 

(b) In Lowsley and another v Forbes (t/a L E Design Services) (supra) where the House of Lords observed:

 

“On its true construction, the word ‘action’ in s 24(1) of the 1980 Act meant a fresh action, and did not include proceedings by way of execution. Accordingly, the section did not bar execution of a judgment after six years, but only barred the bringing of a fresh action on the judgment”.

 

(c) In Re Lim Szu Ang, Ex P. Kewangan Utama Bhd (supra):

 

“Commencement of a bankruptcy proceeding is not an enforcement of a judgment or order”.

 

Respondents Argument

 

9. The respondent relies on the case of Perwira Affin Bank (supra) to assert that the petitioner is time barred. The Federal Court inter alia had this to say:

 

“Of course, by merely looking at the word ‘action’ in s 6(3) it appears that the word ‘action’ does not include a bankruptcy proceeding. It is also clearly not a ‘suit ’, one of the words used in the definition of the word ‘action ’ in s 2. But, is it not a ‘proceeding in a court of law ’ ‘upon any judgment’ (I am reading the provisions in ss 2 and 6(3) together).

 

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I do not think that it can be argued that a bankruptcy proceeding is not proceeding in court. Neither can it be argued that it is not based upon a judgment. There has to be a judgment before a bankruptcy proceeding can be commenced. Then going by the definition of ‘action’ in s 2, it is an ‘action ’ and an action upon a judgment.

 

A question then may be asked: on the same reasoning, is an ‘execution’ not a ‘proceeding in court ’? Of course it is a proceeding in court but, I think, the distinction lies in the fact that execution is the continuation of the existing proceeding to enforce the judgment provided by the same rules of court, the RHC. On the other hand, bankruptcy proceedings are provided by separate law and rules, the focus being the judgment debtor, not the debt and the object is to appoint a receiver in the person of the Official Assignee over the assets of the debtor and to convert the status of the debtor into a bankrupt with certain disqualification and disabilities, the most important being the loss of control over his properties to the Official Assignee. The fact that it is based on a judgment does not necessarily make it a continuation of the existing proceeding. Section 6(3) itself is about ‘action upon a judgment ’. Though the existence or non-existence of a cause of action may or may not be a factor to be considered, if we say that for there to be action there must be a cause of action, then the existence of a judgment and the failure to satisfy the judgment debt itself is a cause of action. In any event, it is a remedy provided by law, whether it is to be considered as a cause of action or not, if relevant. Furthermore, a bankruptcy proceeding is by way ofpetition, just like divorce, winding-up or election, to name a few. Thus a bankruptcy proceeding bears the characteristics of a fresh proceeding unlike

 

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an execution proceeding.

 

On these grounds, I am inclined to the view that a bankruptcy proceeding, by definition of the word ‘action ’ in s 2 of the Act is an ‘action’ and it is caught by the provisions of s 6(3) ”.

 

And cited many other cases to justify the point without dealing with the issue of the now dominant jurisprudence relating to estoppels which the petitioner in this case had relied on.

 

10. I have read the petition and the relevant affidavits and submission of the parties in detail. I do not wish to repeat the same as parties have adequately dealt with it in their submission. I take the view that the petition must be allowed. My reasons inter alia are as follows:

 

(i) One of the arguments of the respondent was that the Notice of Demand was defective as it failed to quantify the amount. I do not see much merit as the Notice of Demand was based on judgment sum. In Weidaya Sdn Bhd v DND Bina Holdings Sdn Bhd (supra) I have stated as follows:

 

“The real issue which the winding up court will like to know is whether the company is able to pay the money notwithstanding the fact that there are irregularities in the statutory demand or compliance of the provisions of the Companies Act 1965”.

 

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(ii) Though the respondent relied on Perwira Affin Bank (supra) and many other cases on the issue of limitation, it must be observed that none of them dealt with the issue relating to estoppel. In the instant case and on the facts, the doctrine of estoppel must be considered in the right perspective, failing which it will lead not only to miscarriage of justice but also scandalize court proceedings and will stand to prove that delay by the courts defeated a substantive right of the petitioner. As in this case the petitioner cannot be faulted for any delay. And the delay if any was orchestrated by the respondent who did not produce any evidence to show that they had taken all steps to prosecute their appeals etc expeditiously. It is now well settled that the doctrine of estoppels will assist the petitioner to preserve its right notwithstanding the Limitation Act. Support for the proposition is found in a number of cases:

 

(a) The Federal Court in the case of Boustead Trading (1985) Sdn Bhd v Arab Malaysian Merchant Bank Berhad (supra) asserted that the doctrine of estoppels is a flexible principle by which justice is done according to the circumstances of the case. It is a doctrine of wide utility and has been resorted to in varying fact patterns to achieve justice. Indeed the circumstances in which the doctrine may operate are endless.

 

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(b) In Alfred Templeton v Low Yat Holdings Sdn Bhd (supra) Edgar Joseph Jr. J (as he then was) applied the doctrine in a broad and liberal fashion to prevent a defendant from relying upon the provisions of the Limitation Act 1952.

 

(c) In Amalgamated Investment & Property Co. Ltd ( In Liquidation) v Texas Commerce International Bank Ltd.[1982] QB 84 Lord Denning M.R. had this to say:

 

“The doctrine of estoppel is one of the most flexible and useful in the armoury of the law. But it has become overloaded with cases. That is why I have not gone through them all in this judgment. It has evolved during the last 150 years in a sequence of separate developments: proprietary estoppel, estoppel by representation of fact, estoppel by acquiescence, and promissory estoppel. At the same time it has been sought to be limited by a series of maxims: estoppel is only a rule of evidence, estoppel cannot give rise to a cause of action, estoppel cannot do away with the need for consideration, and so forth. All these can now be seen to merge into one general principle shorn of limitations. When the parties to a transaction proceed on the basis of an underlying assumption – either of fact or of law – whether due to misrepresentation or mistake makes no difference – on which they have conducted the dealings between them – neither of them will be allowed to go back on that assumption when it would be unfair or unjust to allow him to do so. If one of them does seek to go back on it, the

 

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courts will give the other such remedy as the equity of the case demands”.

 

(d) In Kok Hoong v Leong Cheong Kweng Mines Ltd (supra) the Privy Council stated:

 

“On the other hand, there are statutes which, declaring transactions to be unenforceable or void, are nevertheless not essentially prohibitory and so do not preclude estoppels. One example of these is the Statute of Frauds (see Humphries v Humphries [1910] 2 KB 531, in which it was no doubt considered that, following Leroux v Brown 12 CB 801, the statute ought to be treated as regulating procedure, not as striking at essential validity): another is the Stamp Act or Acts in their application to oral contracts of marine insurance, which, according to the decision in Barrow Mutual Ship Insurance Co v Ashburner 54 LJNSQB 377, are not prohibited so much as penalised.

 

It has been said that the question whether an estoppel is to be allowed or not depends on whether the enactment or rule of law relied upon is imposed in the public interest or ”on grounds of general public policy ” (see In re a Bankruptcy Notice, supra, at p. 97, per Atkin L.J.). But a principle as widely stated as this might prove to be rather an elusive guide, since there is no statute, at least public general statute, for which this claim might not be made. In their Lordships’ opinion a more direct test to apply in any case such as the present, where the laws of

 

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money lending or monetary security are involved, is to ask whether the law that confronts the estoppel can be seen to represent a social policy to which the court must give effect in the interests of the public generally or some section of the public, despite any rules of evidence as between themselves that the parties may have created by their conduct or otherwise

 

(e) In Othman & Anor v Mek [1972] 2 MLJ158 FC:

 

“Statutes of limitation which bar the enforcement of a right by action are rules of procedure only: see 24 Halsbury, 3rd Ed. page 181. A right which becomes unenforceable merely by reason of limitation does not ipso facto perish or vanish into thin air: see Holmes v Crowther [1970] 1 WLR 835 where it was held that, although under section 18(5) of the Limitation Act, 1939, arrears of mortgage interest outstanding for more than six years are irrecoverable by action, the mortgagors nevertheless were only entitled to the equitable remedy of redemption provided that they paid all arrears of mortgage interest, whether statute-barred or not. If, as in that case, equitable rights did not perish by reason of limitation, can this same defence be set up here to deny the rights of a beneficial owner to be granted his claim to the legal title? ”.

 

(f) What Edgar Joseph JR, J (as he then was) said about the above dicta in Kok Hoong v Leong Cheong Kweng Mines Ltd (supra) when he decided Alfred Templeton v Low Yat Holdings Sdn Bhd (supra) is noteworthy:

 

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“These words are widely drawn and suggests that the Limitation Act can give way to estoppels. Indeed there are dicta in Tuberville v west Ham Corporation [1950] 2 KB 208 which suggest that a defendant will not be heard to rely on a statute of limitation if his acts or statements during the currency of the period induced the plaintiff to delay proceedings ”.

 

After having given much consideration to the lengthy submission of the respondent which had been adequately replied by the petitioner I take the view the respondent’s submission has no merit on the facts of the case. As a general rule, the statute of limitation stands as a shield and not a sword and must be pleaded to obtain the statutory advantage [see Combe v Combe [1951] 1 All ER 767, [1951] 2 KB 215, CA]. And that shield most often paves way to the strong arms of equity. In essence, when the law fails equity may save. The instant case must stand as a classic example of the workings of equity in the right perspective.

 

11. For reasons stated above I allow the petition enclosure 1 prayers (a) and (b) with costs. I also direct the Official Receiver to take full control of the respondent’s assets according to law within the next 48 hours. And the Deputy Registrar is directed to issue the sealed copy of the order immediately. The respondent to pay a fixed costs of RM 30,000.00 to the petitioner.

 

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I hereby order so.

 

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

 

Judge

 

High Court (Commercial Division)

 

KUALA LUMPUR

 

Date: 23th February 2010

 

For the Petitioner: Liza Chan Sow Keng; M/s Liza Chan & Co.

 

For the Respondent: Vignesh Kumar Krishnasamy; M/s Balendran

 

Chong

 

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