Hooi Siew Yan v Chn Commodity Trade Centre Sdn Bhd (W-02(IM)-1914-09/2017)

ANTARA

ONE TREE CAPITAL MANAGEMENT PTE LTD … PERAYU-PERAYU

CHN COMMODITY TRADE CENTRE SDN BHD

BADAN PENGURUSAN BERSAMA KOMPLEKS

CHIN COMMODITY TRADE CENTER SDN BHD (PENERIMA-PENERIMA & PENGURUS-PENGURUS DILANTIK) …RESPONDEN-RESPONDEN [Di dalam Perkara Mengenai Mahkamah Tinggi Malaya Di Kuala Lumpur (Bahagian Dagang) Penggulungan Syarikat No.: 28NCC-812-09/2015 Permohonan Pasca-Penggulungan Syarikat No.: - WA-28PW-14-06/2017 Di dalam perkara Seksyen 218(1)(e) dan Seksyen 218(2)(a) Akta Syarikat 1965. Dan Didalam perkara CHN Commodity Trade Centre Sdn. Bhd (No. Syarikat : 926490-V) 2 Antara Badan Pengurusan Bersama Kompleks Pandan Safari Lagoon (No. Siri: 006-14) … Pempetisyen Dan CHN Commodity Trade Centre Sdn Bhd. (No. Syarikat: 926490-V) … Responden

Hooi Siew Yan (No. K/P: 570306-10-5871)

One Tree Capital Management Pte Ltd (No. Syarikat: 200414530G) … Pemohon-Pemohon] CORUM: ABDUL RAHMAN BIN SEBLI, JCA MARY LIM THIAM SUAN, JCA YEW JEN KIE, JCA

Vide the Notice of Appeal dated 18.9.2017, the Appellants appealed against the decision of the learned High Court Judge, given on 8.9.2017, for dismissing the Appellants’ application for removal of Tharma Iswara A/L S. Subramaniam (“Mr Tharma”), the court appointed liquidator of the 1st Respondent [“the Liquidator”].

The 1st Respondent, on the other hand, filed a cross-appeal against the decision of the learned High Court Judge in dismissing the 1st 3 Respondent’s preliminary objection, namely, in holding that no leave is required to file the application for removal of the Liquidator.

At the hearing on 14.1.2019, learned counsel for the 1st Respondent intimated to the Court that the 1st Respondent had withdrawn the cross-appeal. The cross-appeal was accordingly struck out with no costs, as agreed.

On 14.1.2019, we dismissed the appeal of the Appellants and these are our reasons for the dismissal.

The background facts leading to the present appeal as set out by the Appellants are as follows. a. In October 2013, the shareholders and the directors of the 1st Respondent, namely, Tan Chong Whatt (“TCW”) and Tan Chor Keng (“TCK”), requested Gerald Yeo, a shareholder and director of the 2nd Appellant, to invest and secure investors to fund the 1st Respondent’s acquisition of 168 units of Pandan Safari Lagoon Mall [“the Subject Property”]. b. In this connection, the 2nd Appellant and 13 investors including the 1st Appellant [“13 Investors”] advanced the 1st Respondent approximately RM67 million comprising of: a. RM50 million from the 13 Investors; and b. RM16.4 million from the 2nd Appellant. 4 c. On 28.2.2014, the 1st Respondent entered into a sale and purchase agreement with various parties to purchase the Subject Property at an aggregate sum of RM100 million. d. On 25.11.2014, United Overseas Bank (M) Bhd ["UOB”] granted the 1st Respondent a term loan of RM30 million to part finance the Purchase of the Subject Property secured against a Debenture over the Subject Property. e. On 4.12.2015, the 1st Respondent was compulsorily wound up on the petition of the 2nd Respondent for non-payment of maintenance charges for the Subject Property in the sum of RM1.39 million [“Winding Up Order”]. Mr Tharma was appointed as the liquidator for the 1st Respondent. f. On 19.9.2016, UOB demanded from the 1st Respondent the full payment of the outstanding sum of RM30,539,923.60 within ten days. g. On 23.11.2016, owing to the 1st Respondent’s default in repayment, UOB appointed Dato’ Heng Ji Keng and Andrew Heng as Receivers & Manager of the 1st Respondent [“R&Ms”]. h. On 14.3.2017, the Liquidator accepted an offer from Paradise Boulevard Sdn Bhd [“Paradise Boulevard’] to acquire the Subject Property for RM54 million. i. On 26.5.2017, the Liquidator applied to Court for directions for the sale of the Subject Property as UOB’s consent as the chargee bank was not obtained. 5 j. On 19.6.2017, the Appellants in their capacity as the majority contributories of the 1st Respondent filed an application ["Removal Application”] under section 232 (1) of the Companies Act 1965 [“the 1965 Act”] to remove the Liquidator, which was dismissed. Hence, the appeal. Memorandum of Appeal 6. Gleaning from the Memorandum of Appeal, the Appellants complained that the learned Judge had fallen into the following errors in deciding not to remove the Liquidator of the 1st Respondent: a. In taking into account irrelevant considerations; b. In failing to take into relevant consideration; c. In failing to apply correct principles and misdirected herself which had occasioned in miscarriage of justice; d. In failing to apply the correct test; e. In applying too lenient a standard required by the Liquidator of the 1st Respondent when the Learned Judge should have evaluated the conduct of the Liquidator by applying a much higher test as required by decided cases; f. In failing to draw proper inferences based on the totality of the evidence placed before the learned Judge. Submission of Appellants 7. It is clear from the written submissions as well as the oral submission of learned counsel for the Appellants that the appeal revolved around the following issues: 6 a. Rejection of Appellants as creditors and/or contributories of the 1st Respondent; b. Failure of the Liquidator to give notice to the Appellants of the creditors’ meeting; c. Failure to consider unlawful rejection of the Proof of Debt (“POD”); d. Unlawful sale of the Subject Property at an undervalue; e. Unlawful dealing with the Subject Property which is the charged property; f. Wrongful retention of rental proceeds; g. Lack of impartiality in determining the 1st Respondent’ creditors.

Rejection of the Appellants as creditors and contributories of the 1st Respondent

Learned counsel for the Appellants submitted that it is an integral part of the Liquidator’s duty to investigate the company affairs from inception. A Liquidator who fails to investigate the affairs of a company to the prejudice of an applicant is in neglect of his duty and can be removed.

Learned counsel for the Appellants submitted that if only the Liquidator had investigated the affairs of the 1st Respondent from its inception, he would have found that the 2nd Appellant and the 13 Investors including the 1st Appellant are creditors and contributories of the 1st Respondent. In addition, the 2nd Appellant is also the agent/representative of the 13 Investors.

It was submitted that the investigation if carried out would have revealed the following facts: 7 a. The 2nd Appellant and the 13 Investors had invested SGD12.2 million plus USD 4.94 million plus RM8 million [approximately RM67 million comprised RM59 million loan and RM8 million in equity] into the 1st Respondent. These monies together with the term loan granted by UOB were used to purchase the Subject Property. b. The remittance of the invested sum of money is reflected in the 1st Respondent’s MBB statements and the 1st Respondent’s UOB statements [describing the remittance of the 2nd Appellant as “inter-company loans” and “share subscription”] [Exhibit GY-10 annexed to paragraph 8 of Affidavit in Support affirmed by Gerald Yap [“AIS”] at pages 411 to 420 ROA referred]. The MBB statements are attached to the POD marked Exhibit GY1 annexed to the AIS. c. The Investment Agreement dated 28.11.2013 between the 2nd Respondent as agent/trustee for the 13 Investors and the 1st Respondent as Borrower evidenced that the 2nd Appellant and the 13 Investors are creditors of the 1st Respondent and that the 2nd Appellant represented the 13 Investors. d. The Investment Agreement was subsequently replaced by a shareholders’ Loan Agreement dated 30.6.2016 between the 2nd Appellant and the 1st Respondent. e. By Memorandum of Agreement [“MOA”] dated 26.7.2014 between the 2nd Appellant and the 1st Respondent’s other shareholder, the 2nd Appellant subscribed for RM8 million worth of 1st Respondent’s shares. It recorded that the 2nd Appellant had arranged RM40 million to part finance the purchase of the Subject Property which sum was 8 channelled through the 2nd Appellant as agent/trustee of the 13 Investors, that these funds are identified as shareholders’ loan repayable with interest, that the 2nd Appellant be paid RM3.5 million for its effort to raise funds i.e. the advances from the 13 Investors. f. By a subsequent Shareholder Loan Agreement dated 3.11.2014 between the 1st Respondent and the 2nd Appellant whereby the 2nd Appellant advanced further loans of SGD2.7 million to the 1st Respondent repayable with interest.

It was submitted that the Liquidator had failed to consider the substantial documentary evidence that the Appellants are creditors of the 1st Respondent.

It was submitted that the Liquidator’s refusal to recognise the Appellants as creditors is intended to exclude them from the liquidation.

It was submitted that the Liquidator is misconceived in alleging that the loans were illegal money transaction, that the loan had been converted to equities and that the loans were deposited directly by the 13 Investors and not by 2nd Appellant for the following reasons: a. The 1st Respondent’s Solicitors advised that the Foreign Exchange Administration Guidelines of Bank Negara Malaysia ["BNM”] permitted borrowing of RM1000 million from non-residents without BNM’s approval. Exhibit GY-57 annexed to AIO is referred. b. Neither UOB nor the 1st Respondent’s bank, MBB, queried the Appellants or the 1st Respondent on the remittance received by them. 9 c. The allegation that the advances had been converted to equity is baseless as the Investment Agreement, MOA, Shareholder Loan Agreement envisaged that the loan would be repaid with interest. Only RM8 million of the RM67 million loan was converted to equity.

Counsel for the Appellants submitted that the Liquidator’s conduct demonstrated an unsound mind and misconceived attitude. The Learned Judge failed to sufficiently evaluate the conduct of the Liquidator which was detrimental to the Appellants.

We are of the considered view that it is unfair for learned counsel for the Appellants to criticize the learned Judge for not considering the issues raised in the foregoing paragraphs for the reason that counsel for the Appellant did not canvass these issues either in their written or oral submissions before the learned Judge. Under the circumstance, the learned Judge did not have the opportunity to deliberate and to rule on them.

The Court of Appeal had an occasion to address a similar situation in the case of Public Bank Bhd v Harta Pertama Sdn Bhd & Ors [2002] 4 MLJ

At the appeal stage, the appellant's counsel sought, among others, to raise another point not addressed specifically in the memorandum of appeal. It was held: The other point counsel sought to raise was not addressed specifically in the memorandum of appeal and it was thus inappropriate for the Court of Appeal to express any views on the matter. This was particularly so when the point was not put to the trial judge at the conclusion of the case in the 10 manner it was put before the Court of Appeal. Any attempt by the Court of Appeal to intervene in this appellate stage would constitute a breach of the rules of natural justice especially when the trial judge had not been given an opportunity to express his views on the matter (see p 602C-E).

By reason that the Appellants did not ventilate the issue on the Liquidator’s failure to investigate the affairs of the 1st Respondent and the Liquidator’s rejection of the Appellants as creditors and contributories of the 1st Respondent, the Appellants cannot be permitted to put these issues before us at the appeal stage hoping for our intervention. Any intervention by us would tantamount to breach of the rule of natural justice as the learned Judge had not been given an opportunity to express her views on the matter.

(b)Failure to serve a proper Notice of Meeting of Contributories to the Appellants/unlawful rejection of the Proof of Debt

The Appellants submitted that the Liquidator is duty bound to notify all creditors of meeting in the liquidation process. However, the Liquidator had breached his duty be failing to effect proper service to the Appellants resulting in the Appellants not being able to participate in the creditors’ and/or contributories’ meeting held on 20.4.2016.

Counsel for the Appellants submitted that the Liquidator had obtained the details of the Appellants’ contact from UOB Vice President, Mr Lim Ping Shyong, hence they would have known from those details that the Appellants are Singaporeans and therefore have no ready access to Malaysian newspapers and Gazette. 11

It was submitted that pursuant to Rule 114 of the Companies [Winding Up] Rules 1972 [“Winding Up Rules”], a liquidator is required to serve notice of creditors’ and contributories’ meeting by post which the Liquidator had failed to so.

It was submitted that the Appellants did not know the establishment of the Committee of Inquiry [“COI”] until a year later when they received a letter dated 3.5.2017 from the Liquidator, seeking for any other higher offer from the Appellants on the proposed tender sale of the Subject Property.

It was submitted that the Appellants as the majority contributories of the 1st Respondent ought to have been made a member of the COI. The Appellant by a letter dated 16.5.2017 had suggested to the Liquidator to reconsider the formation of the COI but the Liquidator never responded to the above suggestion.

It was submitted that the Liquidator had, despite repeated requests by the Appellants, failed to inform the Appellants of the formation of COI despite them being the majority shareholders holding 80% of the shareholding in the 1st Respondent and the representation of the largest creditors i.e. the 13 Investors.

It was submitted that the Liquidator intentionally kept the Appellants from the 1st Respondent’s Creditors' Meetings thereby denying them of their legitimate expectation and lawful right to participate in the Creditors' Meetings and the COI, so that they could ensure the liquidation was conducted in the benefit of the creditors and/or contributories of the 1st Respondent. 12

It was submitted that if the Liquidator had any doubt about the Appellants’ locus and was unable to decide if the Appellants were creditors of the 1st Respondent, the Liquidator as an officer of Court who owns statutory and fiduciary duties to the 1st Respondent’s creditors, ought to have sought the Court’s direction on this important issue. The determination of this issue is important to the Appellant as the Appellants’ right to participate in the Creditors' Meetings and COI meeting and the acceptance of the POD would depend on this. However, the Liquidator failed to so in breach of his duties and of section 274 of the 1965 Act.

It was submitted that the learned Judge failed to appreciate that the conduct of the Liquidator was detrimental to the Appellants as creditors and that the Liquidator had acted in gross disregard to the rules governing liquidation and in breach of his fiduciary duty.

The Grounds of Judgment shows that the learned Judge had considered paragraph 84 of the AIS filed by the 2nd Respondent which substantially touched on the same matters as ventilated in the above submission.

The Judgment showed that the learned Judge has accepted the explanation of the Liquidator that based on the POD, he had found that the 2nd Appellant is not a creditor of the 1st Respondent, neither has he any authority as agent/trustee to file any POD on behalf of the other Investors as these purported Investors had commenced filing their own POD. 13

The learned Judge rightly stated that the decision whether to accept or reject a POD is entirely the discretion of a liquidator and a dissatisfied creditor has recourse by way of appeal to the court.

The learned Judge took cognisance that the Appellants had filed an appeal vide WA-28PW-68-08/2017 appealing against the decision of the Liquidator in rejecting their POD, and the appeal is now pending hearing.

Section 114 of the Winding Up Rules stipulates:

Summoning of meetings

The liquidator shall summon all meetings of creditors and contributories by giving not less than seven days' notice of the time and place thereof in the Gazette and in one or more local newspapers; and shall, not less than seven clear days before the day appointed for the meeting, send by post to every person appearing by the company's books to be a creditor of the company notice of the meetings of creditors, and to every person appearing by the company's books or otherwise to be a contributory of the company, notice of the meeting of contributories.

The notice to each creditor shall be sent to the address given in his proof, or if he has not proved to the address given in the statement of affairs of the company, or to such other address as may be known to the person summoning the meeting. The notice to 14 each contributory shall be sent to the address mentioned in the company's books as the address of the contributory, or to such other address as may be known to the person summoning the meeting. [Emphasis added]

It is abundantly clear from the above provision in Rule 114 that only creditors of the company are entitled to be served with notice.

Since the Liquidator had not accepted the Appellants as creditors of the 1st Respondent, the issue of the Liquidator failing to give proper notice to the Appellants of meeting in accordance with Rule 114 of the Winding Up Rules is a non-starter and insufficient to constitute a reasonable cause for removal.

Unlawful rejection of Proof of Debt 34. The Appellants complained that the 2nd Respondent had filed the POD which was duly acknowledged by the Liquidator on 6.1.2017. However, the Liquidator rejected the POD on the basis that it was not filed within the prescribed time.

Learned counsel for the Appellants submitted that the Liquidator does not have unfettered discretion to reject or accept POD. It was submitted that any delay in the submission of POD was caused by the Liquidator’s failure to discharge his statutory and fiduciary duties under Rule 91 of the Winding Up Rules.

It was submitted that pursuant to Rule 91 of the Winding Up Rules, the Liquidator shall give notice of the days fixed for the creditors of the 1st 15 Respondent to prove their debts or claims, and also notice in Form 57 or 58 of such day to every person who to the knowledge of the liquidator claims to be a creditor of the company or to every person mentioned in the statement of affairs as a creditor who has not proved his debt.

It was submitted that the Appellants are listed as the 1st Respondent’s creditor in the Statement of Affairs [Exhibit GY-48 of AIS referred]. Despite this, the Liquidator, in breach of his statutory duties, failed to provide the Appellants with notice in the prescribed form under section 91 of the Winding Up Rules of the date for submission of the POD. Thus, the Liquidator is not entitled to reject the POD on the basis of delay.

We observe that the learned Judge did not give any view on the rejection of the POD submitted by the Appellants. This is because counsel for the Appellants did not pursue this issue before the learned Judge by reason that there is an appeal challenging the decision of the Liquidator in rejecting the POD which appeal is still pending.

We take judicial notice that the Appellants had filed a stay application and during the hearing of the stay application, both the Respondents and the Appellants agreed to stay the appeal application against the rejection of the POD pending the disposal of the appeal herein.

In our considered view, the parties having agreed by consent to stay the hearing of the appeal application against the decision of rejecting the POD, the Appellants cannot be allowed to raise this issue of rejection of POD which suggest that the reason is more to do with the very issue being the subject of another pending appeal and that it should be addressed there (see para 30 & 38 above). 16

Unlawful sale of the Subject Property at an undervalue 41. The Appellants complained that the Liquidator had breached his statutory and fiduciary duties and had not acted in the best interest of the creditors and contributories of the 1st Respondent in selling the Subject Property at the price of RM54,000,000.00, which the Appellants alleged is at a gross undervalue.

The Appellants complained that in 2012, Messrs. Azmi & Co valued the Subject Property at RM220,000,000.00 million and subsequently in 2014, at RM240,000,000.00.

Prior to the granting of the term loan by UOB circa 5.11.2015, VPC Alliance (KL) Sdn Bhd valued the Subject Property at RM107,800,000.00. The second valuation carried out for the R&M on 9.6.2017 valued it at a forced sale value of RM87,570,000.00 given the condition of the Subject Property.

It was submitted that the above are the nearest credible valuations at the time of the sale of the Subject Property.

However, submitted learned counsel for the Appellants, the Liquidator instead relied on the value of RM28,620,000.00 by Solid Estate Consultant Sdn Bhd [“Solid Estate”] dated 13.9.2016 and RM51,960,000.00 by Nawawi Tie Leung Property Consultants Sdn Bhd [“Nawawi Tie”] dated 8.2.2017 in the sale of the Subject Property to Paradise Boulevard. 17

It was submitted that the valuations of Solid Estate and Nawawi Tie are questionable as they do not reflect the standard acceptable practice as no details on the methods and comparison were shown as to how the values were derived. As such they are unreliable and do not truly reflect the market value of the Subject Property.

It was submitted that the sale of the Subject Property below the market value has prejudiced the interest of the bona fide Investors and contributories of the 1st Respondent, including the Appellants.

The same argument was canvassed and ventilated before the High Court. In our view, the learned Judge correctly opined: Penilaian yang tinggi iaitu RM85,000,000.00 tidak bermakna sekiranya tiada pembeli. Berdasarkan keputusan Ramly Ali HMT (kini HMP) dalam Abric Project Management Sdn Bhd v Palshine Plaza Sdn Bhd & Anor [2007] 10 CLJ 7 yang merujuk kepada kes Mahkamah Rayuan dalam Malayan Banking Bh v Lim Poh Ho & Anor [1997] 2 CLJ 516 bahawa nilai komersial sebenar sesuatu hartanah itu adalah harga sebenar harta tersebut boleh diperolehi dipasaran terbuka.

It is to be noted that the valuation of RM220,000.000.00 by Messrs. Azmi & Co was for the whole Subject Property inclusive of the common areas and the roof top. 18

However, after acquiring the Subject Property which comprised of 93% of Pandan Safari Lagoon Mall, the 1st Respondent failed to pay for the maintenance and service charges since 2014 until present day.

For the above reasons, the 2nd Respondent could not carry out proper management and maintenance of the Subject Property, this resulted in a significant depreciation in the market value of the Subject Property as it is dilapidated, deteriorating and in uninhabitable condition with problems of severe and extensive leakages, water logged damage everywhere, flooding of the basement car park, no electricity supply and the shopping mall was operating in darkness and very few tenants occupying the mall.

The valuations given by the Azmi & Co, Solid Estate and Nawawi Tie are at best, estimated market value of the Subject Property. These valuations give an approximate indicator of the value of the property but do not necessarily translate into the actual price of the property that buyers are willing to pay for.

The 2nd Respondent who is supportive of the sale of the Subject Property submitted that when the Liquidator was able to secure a buyer to purchase the Subject Property, after a series of efforts carried out by the Liquidator to secure purchasers, the completion of the intended sale and purchase transaction not only would settle the debt owing to the 2nd Respondent, the 2nd Respondent would also use the payment to properly manage and maintain the Subject Property for the benefit of all the occupants of the Subject Property. 19

It is to be noted that the two Guarantors, that is, TCW and TCK [also the 4th and 5th Respondents] are mindful that the sale of the Subject Property will reduce their liability to UOB and they confirmed that they have no objections to the sale and responded to the Liquidator’s letter dated 3.5.2017.

The Liquidator has shown that he had since his appointment in 2015, tried to secure a prospective buyer in the best interests of both the secured and unsecured creditors. Prior to the bid of RM54,000,000.00, he had rejected an earlier bid to purchase the Subject Property for RM30,000,000.00 which was done by tender exercise, as the bid was too low and insufficient to settle the colossal sum of RM30539,923.60 owing to UOB.

The bid to purchase the Subject Property at RM54,000,000.00 was also done by tender exercise and it was the only firm offer available for the Liquidator to accept.

Although UOB and R&M claimed that they had a higher valuation on the Subject Property, they had no firm buyers by tender.

It is significant to note that the Liquidator had given notice vide letter dated 16.5.2017 to the 2nd Appellant of the firm offer to purchase the Subject Property at RM54,000,000.00. The 2nd Appellant was asked to secure any such higher offer and to revert on or before 3.5.2017. The 2nd Appellant did not respond.

Then, vide another letter dated 3.5.2017 addressed to the 2nd Appellant, the Liquidator referred to his earlier letter dated 16.5.2017 and mentioned 20 that the deadline of 3.5.2017 had lapsed and extended it to 10.5.2017. Again, the 2nd Appellant did not respond.

Likewise, the Liquidator had also given notice vide letter dated 16.5.2017 to the 1st Appellant of the firm offer to purchase the Subject Property at RM54,000,000.00. The 1st Appellant was asked to secure any such higher offer and to revert on or before 3.5.2017. The 1st Appellant did not respond.

Then, vide another letter dated 8.5.2017 addressed to the 1st Appellant, the Liquidator referred to his earlier letter dated 16.5.2017 and mentioned that the deadline of 3.5.2017 had lapsed and extended it to 10.5.2017. Again, the 1st Appellant did not respond.

Only on 16.5.2017, after the expiry of both the earlier deadlines and subsequent to the acceptance of the offer to purchase at RM54,000,000.00, did the 1st Appellant send a letter to the Liquidator, prohibiting the Liquidator from holding separate meetings of creditors and contributories to consider the sale of the Subject Property at RM54,000,000.00 and to adhere to the formalities of the COI.

By his response letter dated 16.5.2017, it is as clear as daylight that the Appellants had received the notices issued by the Liquidator. Yet they sat on the letter and refused to respond. If they were genuinely concerned that the Subject Property was going to be sold at a gross undervalue as they alleged, they ought to have responded or reacted much earlier to the notices served, the service of which are not in dispute. 21

The conduct of the Appellants aforesaid, and the deliberate failure to revert knowing well that the prospective buyer of firm offer will not wait indefinitely, displayed a blatant lack of regard and respect towards the Liquidator.

In the premise, the learned Judge has not fallen into error when she found that these two grounds do not meet the threshold to remove the Liquidator.

Unlawful dealing/possession of the Subject Property which is charged to UOB

The complaint under this head is that the Subject Property being an asset of the 1st Respondent that had been charged to UOB secured by a debenture is no longer an asset of the 1st Respondent unless it is first redeemed. As such, section 233 which empowers a liquidator to take into custody property to which the company is to be entitled has no application.

In support of the above contention, two cases are cited. a. The Federal Court case of K Balasubramaniam (Likuidator bagi Kosmopolitan Credit & Leasign Sdn Bhd) v MBF Finance Bhd & Ors [2005] 1 CLJ 793 where it was held that Receivers and Managers have the legal right to possession of these assets pursuant to the debenture even where a company has been wound up and a liquidator appointed. b. Court of Appeal’s case of Yayasan Bumiputera Sabah & Anor v Apoview Wood Products Sdn Bhd [2012] 7 CLJ 593, it was held that 22 it is beyond the liquidator’s statutory power to take control over charged assets to the exclusion of the secured creditor.

It was submitted for the Appellants that the Liquidator had abused his power by taking into his possession and dealing with the Subject Property to the exclusion of the R&M who were legally entitled to deal with the same. UOB and R&M had refused to give consent to the proposed sale of the Subject Property to Paradise Boulevard which resulted in the Liquidator filing an application seeking direction/validation from the court under section 237 of the 1965 Act [“section 237 Application”].

It was submitted that the Appellants and the R&M opposed the section 237 Application but it did not deter the Liquidator, even without obtaining the orders sought in the section 237 Application, to proceed to sell the Subject Property at a gross undervalue and in abuse of his power as liquidator.

It was submitted that in the face of express objection by the Appellants, UOB and R&M to the sale of the Subject Property to Paradise Boulevard, the Liquidator cannot rely on the COI sanction. It is clearly provided in section 237 of the 1965 Act that where there is dispute between the creditors/contributories and the COI, the former prevails over the latter.

We are of the considered view that the Appellants have no locus to submit for UOB and R&M on the alleged unlawful dealing with the Subject Property. Any complaint on this issue should have been raised by the UOB and/or R&M.

It is a fact that initially R&M objected to the sale of the Subject Property on the ground that the sale of the Subject Property was solely vested with 23 the secured creditor, UOB. Subsequently, the Liquidator convinced UOB that there was a ready and willing buyer in Paradise Boulevard to purchase the Subject Property at a price of RM54,000,000.00 and UOB’s colossal indebtedness of RM30,539,923.60 shall be settled in full.

We take judicial notice that UOB’s debt had been settled in full with the proceeds from the sale of the Subject Property, a Redemption Statement was issued and the R&M had filed a Cessation of Duty as their task had been deemed completed vide the settlement of the total indebtedness of the 1st Respondent to UOB.

The cessation of the R&M duty was premised upon the instructions of UOB and recorded in the Winding-Up Court.

The 1st Respondent then withdrew the section 237 Application since all matters relating to the sale had concluded with the sanction of the Winding Up Court.

Lack of impartiality in determining the 1st Respondent’s creditors

The Appellants complained that the Liquidator had not acted impartially because of his previous association with certain parties when dealing with the assets of the 1st Respondent in liquidation and in the face of competing interests.

The Appellants alleged that the Liquidator had admitted certain parties including Temasek Sria Hartanah, Ikon Corporate, Viceroy Properties and Ikon Hartanah as creditors of the 1st Respondent without proof that they are genuine creditor of the 1st Respondent, while rejecting the Appellants as creditors despite overwhelming evidence to that effect. 24

Further, alleged the Appellants, the Liquidator held that the 1st Respondent owned salaries and directors fee to certain parties including TCW, TCK, Lim Soi Mui and Thayaparan Kanapathipillai, while disregarding the MOA which clearly refers to Gerald Yeo as the director of the 1st Respondent.

We observed that the learned Judge had considered the allegations raised in the Appellants’ affidavit in support alleging that the Liquidator failed to disclosed the fact that he was the liquidator for the sellers of the units of the Subject Property who sold their units to the 1st Respondent. The learned Judge addressed the issue of impartiality and held at paragraph 27 of the Judgment: Namun deponent tidak mengemukakan dengan bukti kukuh konflik dan keuntungan tidak wajar tersebut berlaku …..dan adalah perkara sebelum perlantikan perlikuidasi….walau apapun dakwaan pemohon-pemohon terhadap transaksi penjualan hartanah tersebut, penjualan adalah berdasarkan perjanjian jual beli dan balasan sah…”

The learned Judge had summarised the issue of impartiality thus: a. All these sale and purchase agreements were executed prior to the appointment of the Liquidator as the liquidator of the 1st Respondent on 4.12.2015. 25 b. The Liquidator was not a party to any of these agreements. Thus, these agreements are of no relevance to the Removal Application and can be disregarded. c. All these agreements were executed on a willing seller and willing buyer basis with due consideration.

We fail to see any errors in the decision of the learned Judge.

We note that the learned Judge did not express any view on the directors, fees and salaries as this issue was never raised at the hearing before the Winding Up Court. Accordingly, the Appellants are not allowed to address this issue at the appeal stage. See, Public Bank Bhd case, supra.

Regards being had for all the reasons aforesaid, we find no merits in the appeal and dismiss it accordingly. Dated: 3rd April 2019 Sgd YEW JEN KIE Court of Appeal Judge Putrajaya For Appellants : Porres Royan (Roobini Stephanie With him) [Kumar Partnership] 26

Ranjan Chandran (Pamela Ephraim dan Nanthini Devi with him) for the 1st Respondent [Sheela Devi & Co.]

Shobah Veera for the 3rd Respondent [Hakem Arabi & Associates]

So Chien Hao for the 2nd Respondent [Ze Yi & Kee]