1. Ler Cheng Chye v Billion Shopping Centre Sdn Bhd (24-752-06/2015)

1.

LUM TUCK CHEONG … PLAINTIFFS BILLION SHOPPING CENTRE SDN BHD … DEFENDANT 2 GROUNDS OF JUDGMENT (Enclosure 1) A. INTRODUCTION [1] By their originating summons (Enclosure 1), the Plaintiffs sought from this Court inter alia for the following orders: i. A declaration that the Plaintiffs are entitled to be paid their remuneration on the terms contained in the Order dated 20.7.2011. ii. That the Plaintiffs’ remuneration as Interim Receivers from 23.8.2010 to 20.7.2011 be approved in the amount of RM926,809.00. iii. That all costs and expenses incurred by the Plaintiffs from July 2010 to July 2011 be approved in the sum of RM135,496.45. 3 iv. That the remuneration paid to the Plaintiffs totaling RM176,299.55 out of the assets of the Defendant towards payment of their remuneration as Interim Receivers and out of pocket expenses be approved. v. That the Defendant do pay the Plaintiffs the outstanding remuneration and costs and expenses of RM886,005.90 as fixed by this Honourable Court. vi. That the costs of this application on solicitor-client basis be paid by the Defendant. [2] Both the Plaintiffs were appointed as interim receivers of the Defendant pursuant to a High Court Order dated 18.8.2010 (the said Order). Having executed their duties and responsibilities under the said Order, the Plaintiffs through their letter dated 18.8.2011 to the Defendant’s Board of Directors had demanded payment of their remuneration and charges for interim receivership period between 23.8.2010 to 20.7.2011 be paid by the Defendant. The Defendant did not accede to the Plaintiffs’ demand and instead by its letter dated 4

14.9.2011, the Defendant’s Board of Directors had insisted that the Plaintiffs are to apply to the Court for approval of their remuneration and charges or have the same be validated by the Court. B. BACKGROUND FACTS [3] For easy understanding of the Plaintiffs’ application, it is only appropriate for this Court to set out the background facts which has led the Plaintiffs in filing Enclosure 1.

3.1 Both the Plaintiffs (Ler Cheng Chye & Lum Tuck Cheong) are accountants by profession having an address at C/O Ler Lum Advisory Services Sdn Bhd, B-3-11, Megan Avenue 11, No.12 Jalan Yap Kwan Seng, Kuala Lumpur.

3.2 The Defendant (Billion Shopping Centre Sdn Bhd) is a company incorporated under the Companies Act 1965 which operates Billion Shopping Centre in Kajang, Selangor and has investments in unquoted shares in 35 other subsidiary companies throughout Malaysia. 5

3.3 In 2006, an individual by the name of Chin Keat Seng had filed a petition under Section 181 (“181 Petition”) of the Companies Act 1965 in the Shah Alam High Court vide Petition No. 26-5- 2006 against the Defendant and six other individuals. Chin Keat Seng (Petitioner), at the material time was one of the Defendant’s directors and was also a shareholder. It must be noted that the Defendant here was the First Respondent in the 181 Petition.

3.4 Pending the hearing and disposal of the 181 Petition, the Petitioner had filed an interlocutory application for an Interim Receiver to be appointed to take control and manage all assets, money and/or proceeds of the Defendant and to operate and manage the Defendant’s bank accounts and/or cash balances.

3.5 The Petitioner’s application was granted by the High Court on 23.8.2010 (“the said Order”). The said Order also set out provisions for the appointed Interim Receiver’s remunerations, liabilities, payments, costs, charges and expenses relating to their tasks and duties during the receivership. The relevant 6 terms of the said Order in respect of such provisions can be found in items 1, 5 and 6 of the order which are as follows: “Item 1: Bahawa sehingga perbicaraan tindakan ini atau sehingga sebarang perintah selanjutnya, Ler Cheng Chye (No. K.P. 531103-10-5757) [Lesen Liquidator No. 871/04/11 (J/PH)] dan Lum Tuck Cheong (No. K.P. 581012-10-6389) [Lesen Liquidator No. 1005/05/11 (J/PH)] dilantik untuk mengendali dan mengurus semua aset, wang dan/atau hasil Responden Pertama dan diberi autoriti untuk mengoperasi dan mengendalikan akaun-akaun bank dan/atau baki-baki tunai Responden Pertama;” Item 5: Bahawa Pemegang Interim diberi indemniti terhadap semua liabiliti, upah, kos, caj dan bayaran yang dibuat secara berpatutan oleh Pemegang Interim semasa menggunakan kuasa dan menjalankan kewajipan yang dinyatakan, DAN BAHAWA bayaran tersebut dibuat dari aset Responden Pertama dan diberi keutamaan sebelum semua pemiutang. 7 Item 6: Bahawa upah Pemegang Interim dibuat dari aset Responden Pertama secara bulanan menurut bil yang dikeluarkan, dan dibayar berasaskan kos masa yang dihabiskan oleh Pemegang Interim dan/atau pekerjanya pada kadar jam biasanya;”

3.6 Subsequently, pursuant to the said Order the Plaintiffs were then appointed as Interim Receivers (IR) of the Defendant.

3.7 To ensure that the overdraft of the Defendant does not exceed its closing balance as at the date of appointment of the Plaintiffs and the return from investment in the form of dividends is received by the Defendant, the Plaintiffs had obtained an order from the Shah Alam High Court on the 17.2.2011 (“the High Court Order dated 17.2.2011”). The High Court Order dated 17.2.2011 gave direction to the Plaintiffs to maintain the Defendant’s overdraft as at 23.8.2010 and to appoint a Corporate Representative to the subsidiaries of the Defendant.

3.8 Five of the six individuals named as the Respondents in the 181 Petition namely; i. Chin Choon Min, ii. Lee Yoke Lam, iii. 8 Wong Chee Leong, iv. Lee Siew Hung and v. Mak Joon Cheong had filed an appeal in the Court of Appeal against the said Order.

3.9 On 20.7.2011, the Court of Appeal had allowed the appeal in part wherein in respect of the appointment of the Plaintiffs, the said Order was amended so that the Plaintiffs’ position instead of being IR was substituted to be Monitoring Accountants and this substitution is to take effect from the date of the Court of Appeal’s order (“Court of Appeal Order”).

3.10 The Court of Appeal Order reads inter-alia as follows: “1. Rayuan ini dibenarkan sebahagian seperti terma-terma dibawah:-

pelantikan penerima-penerima interim Encik Ler Cheng Chye (No. K/P: 531103-10-5757) Lesen Likuidator No. 871/04/11 (J/PH) dan Encik Lum Tuck Cheong (No. K/P: 581012-10-6389) Lesen Likuidator No. 1005/05/11 (J/PH) (“PI”) bukanlah suatu perkara yang diperlukan (not 9 necessary) untuk memelihara aset-aset Billion Shopping Centre Sdn Bhd (“BSCSB”) sementara menunggu pelupusan Petisyen No. 26-5-2006 (“Tindakan tersebut”).

…

PI dilantik sebagai Akauntan Pemantau BSCSB berkuatkuasa dari hari perintah ini.

Pengurusan BSCSB dikembalikan sepenuhnya kepada lembaga pengarah BSCSB.

Fi akauntan Pemantau hendaklah dibayar oleh pihak yang kalah dalam Tindakan tersebut.

…

Terma-terma dalam perintah Mahkamah Tinggi bertarikh 23.08.2010 dipinda selaras dengan terma perintah ini.

3.11 On the premise of Items 5 and 6 of the said Order, the Plaintiffs had demanded from the Defendant the outstanding 10 remuneration/ costs/ expenses/ charges due to them for the interim receivership period between 23.8.2010 to 20.7.2011.

3.12 Together with their letter of demand, the Plaintiffs had also enclosed a schedule (the schedule) containing full particulars of time spent and the basis of time cost for the various tasks and duties dated 21.4.2011 comprising of 197 pages.

3.13 In response to the Plaintiffs’ demand, the Defendant by its Board of Director’s letter dated 14.9.2011 to the Plaintiff had insisted that the Plaintiffs are to apply to the Court for approval of their remuneration and charges or have the same be validated by the Court. Hence, this Enclosure 1 was filed by the Plaintiffs. C. THE DEFENDANT’S OBJECTION [4] In contrary of their earlier stand that the Plaintiffs should obtain Court’s approval or validation of their remuneration and charges, the Plaintiffs’ application was strongly challenged by the Defendant. The 11 Defendant now contends that the Plaintiffs are not entitled to any payment of remuneration, expenses or charges. [5] In addition to the strenuous challenge, the Defendant is also counter claiming for declaratory relief and orders which was set out in paragraph 47 of its affidavit in opposition (Enclosure 14). D. THE DEFENDANT’S PRELIMINARY OBJECTION [6] At the commencement of the hearing of the Plaintiffs’ application, the learned counsel for the Defendant raised a preliminary objection that this Court did not have jurisdiction to hear the Plaintiffs’ application on the following grounds: i. the hearing of the Plaintiffs’ application would tantamount to this Court making a further order in respect of the interim receivership of the Plaintiffs, whereas in fact and in law, the Court of Appeal had on 20.7.2011 reversed the said Order appointing the IR of the Defendant and had substituted the IR’s position to monitoring accountants. 12 ii. in allegedly reversing the said Order, the Court of Appeal did not pronounce any order with regard to IR’s remuneration and charges. And thus it was the contention of the Defendant that when the Court of Appeal allegedly set aside the IR’s appointment, by implication the effect of the said order is also setting aside the High Court order allowing that the IR’s remuneration and charges be paid out of the assets Defendant. Hence, if this Court were to allow the Plaintiffs’ application, it would be akin to acting on a void order of the Court. [7] In other words, the Defendant is contending that this Court has no jurisdiction to make further orders in respect of the IR after the Court of Appeal allegedly reversed and set aside the High Court’s Order. [8] In support of these contentions, the counsel for the Defendant had referred to this Court the decision of an Australian Supreme Court of New South Wales in the case of Starr v Trafalgar Financial Corporation Ltd (No. 2) (1983) 1 ACLC 872; 1,056. The New South Wales Supreme Court has held inter alia: “The questions to be determined are whether the provisional liquidator of the defendant, appointed by me ex parte on 15 March last, but whose appointment was rescinded by me 13 on 21 March last, is entitled to be paid remuneration for the work he did as such provisional liquidator and, if so, which of the parties should bear the cost. …. For these reasons, I conclude that the appointment of Mr. Grant ceased on the date upon which the order was rescinded. Such being the case, can the Court order that Mr. Grant’s costs, expenses and remuneration be paid to him and, if so to whom may that order be directed? The joint judgment in Wilde’s case (at CLC p. 3, 119 ALJR p.285) contains the conclusion that “it is true that from the moment it is set aside the order can no longer provide the lawful justification for further action…” It was submitted for the Plaintiffs that, as the summons had been dismissed and the order appointing Mr. Grant rescinded, no power existed to order that he be paid his remuneration. I think the matter is to be considered more as one of substance than of one depending upon the order of events, but I agree with the submission that no further order of the court is appropriate or permissible. It seems to me that to order one of the parties to pay Mr. Grant’s remuneration would be to take “further action” on the rescinded order. What has been done has been validly done, but no further orders based upon the validity of that order would be justified.” [9] This Court did not find any merit in the contentions put forth by the counsel for the Defendant on the these reasons; firstly, paragraph 1(g) of the Court of Appeal‘s order dated 20.7.2011 clearly reads:- “Terma-terma dalam perintah Mahkamah Tinggi bertarikh 23.08.2010 dipinda selaras dengan terma-terma perintah ini.” 14 The English translation of the above order will be this: “The terms contained in the High Court Order are amended/ varied in accordance with the terms of this Order.” (Emphasis given) [10] The Court is of the view that with the clear wordings of the order, the order of the Court of Appeal cannot be read (as interpreted by the counsel for Defendant) that the Court of Appeal had set aside or reversed the order of the High Court. [11] This Court is in total agreement with the counsel for the Plaintiff that the Court of Appeal had actually amended the order of the High Court with regards to the appointment both the Plaintiffs. Instead of being IR to the Defendant, the Court of Appeal had substituted the Plaintiffs to the position of a Monitoring Accountants. [12] Hence, with the substitution of the Plaintiffs’ appointment to monitoring accountants, the Plaintiffs’ receivership ceases with effect from 20.7.2011. However, prior to 20.7.2011 (i.e. from the date of the High Court order until the Court of Appeal handed down its decision of substitution), the Plaintiffs’ appointment as IR must be rendered a valid appointment and during such period, having carried out their 15 duties as appointed, the Plaintiffs must not be deprived of their remuneration, expenses and charges. [13] This Court also agrees with the submission of the counsel for the Plaintiffs that the Court of Appeal did not have to specifically provide for the Interim Receivers’ remuneration prior to 20.7.2011 because the remuneration was already fixed by the High Court as per items

and (6) of the High Court Order. If the Court of Appeal is of the view that the Plaintiffs must not be remunerated within the period of appointment, the Court of Appeal would have already amended/varied the items (which the Court of Appeal never did). But on 20.7.2011, the Court of Appeal only amended items 1, 2 and 3 of the High Court Order by substituting items 1(a), (b), (c), (d), (e), (f) of the Court of Appeal Order. [14] Secondly, the decision of the Supreme Court of New South Wales in the case of Starr which was cited by the counsel for Defendant has no application in the present case simply because the facts in the case of Starr is vastly different from the present case and appropriately ought to be distinguished. 16 [15] It is pertinent to note that the learned counsel for the Defendants had somehow overlooked salient facts of the case of Starr which should have been put forth before this Court. In the case of Starr, the issue dealt with by the Court was far more grievous, as even the entire conduct of winding up was found to be wrongful. The Court in Starr had found that it lacked even the proper jurisdiction to even wind up the company. Of course naturally, if the winding up is already improper, the entire appointment of provisional liquidators is improper (and hence should rightfully be set aside). [16] But this is exactly NOT the facts and circumstances in the present case before this Court. In the present case, it is clear that at the time when the High Court allowed the petitioner’s application for interim receiver of the Defendant to be appointed pending the disposal of the 181 petition, as well as when the Court of Appeal amended the High Court’s order, it was not even at the juncture / stage to determine the propriety of the petitioner’s petition or winding up of the company. At that material time, the conduct of the 181 Petition in the present case is still on-going and there has yet been any determination on the liquidation. 17 [17] The Order appointing provisional liquidators in the case of Starr was clearly inappropriate owing to the improper winding up of the company. And it is the same impropriety that the Order appointing provisional liquidators in Starr was rescinded. This is exactly NOT the facts in the present case. [18] In the present case, there has yet to be any determination on the propriety of the petition that could or could not deem the appointment of the Plaintiffs as interim receivers to be inappropriate. [19] Furthermore, the present case is entirely different from the case of Starr, wherein the High Court’s order in the present case was NOT set aside or rescinded and was only amended. The Court’s hesitation in the case of Starr to order remuneration of the provisional liquidators was that the Court’s hand was tied from ordering remuneration under an Order which was already deemed improper and was rescinded on the grounds of improper winding up of a company. 18 [20] This is exactly not the case in the present case as the High Court’s order appointing the Plaintiffs as interim receivers was never rescinded or set aside. The Order was merely amended and in fact the amendment did not disturb at all the Plaintiffs’ rights to be remunerated for their works. Distinct and different from the case of Starr, the High Court Order in the present case remains in subsistence and remains enforceable albeit with some amendments (which does not affect the Plaintiffs’ rights for remuneration). [21] It is abundantly clear that any order for remuneration of the Plaintiffs’ work is exactly NOT “to take “further action” on the rescinded order” as the High Court Order in the present case was never at all material times rescinded. [22] Based on the above reasons, it is this Court’s judgment that the issue on jurisdiction raised by the Defendant must fail. C. OTHER OBJECTION BY THE DEFENDANT [23] It was contended on behalf of the Defendant that there is no provision in the Companies Act 1965 which mandates remuneration to be paid 19 to Interim Receivers. According to the counsel for the Defendant, unlike provisional liquidators whose remuneration is specifically provided for in section 232(2) of the Companies Act 1965, there is no similar provision that is applicable for interim receivers. [24] It was further contended by the counsel for the Defendant that the Plaintiffs were appointed as interim receiver vide a court order under Order 30 of the Rules of Court 2012 (ROC 2012) and since Order 30 did not provide for remuneration to the interim receiver, it is therefore contended that whether the interim receivers is entitled to their remuneration is entirely within the discretion of court. In exercising its discretion, it is incumbent on the Court to decide whether to allow the Plaintiffs of their remuneration and who shall be responsible to pay the said remuneration. [25] In the present case, it was further contended by the counsel for the Defendant that since the order of the High Court appointing the IR was the consequence of a 181 petition initiated by Chin Keat Seng and was strenuously objected by the Defendant (which was made one of the Respondent), thus the Defendant should not be made 20 liable to pay the remuneration and charges of the Plaintiffs. To this contention, the counsel for the Defendant had relied on a decision of the United Kingdom Supreme Court in the case of Barnes v Eastenders Cash & Carry plc and others v Crown Prosecution Service [2015] AC 1. [26] This Court finds the arguments forwarded by the counsel for the Defendant is clearly misconceived. [27] Order 30 rule 3 of the ROC 2012 clearly provides that: “A person appointed as a receiver shall be allowed such proper remuneration, if any, as may be fixed by the Court.” [28] In the present case, the High Court in appointing the Plaintiffs as the IR of the Defendant had also in clear terms set out items 5 and 6. Item 5 reads: Bahawa Pemegang Interim diberi indemniti terhadap semua liabiliti, upah, kos, caj dan bayaran yang dibuat secara berpatutan oleh Pemegang Interim semasa menggunakan kuasa dan menjalankan kewajipan yang dinyatakan, DAN BAHAWA bayaran tersebut dibuat dari aset Responden Pertama dan diberi keutamaan sebelum semua pemiutang. 21 While items 6 reads: Bahawa upah Pemegang Interim dibuat dari aset Responden Pertama secara bulanan menurut bil yang dikeluarkan, dan dibayar berasaskan kos masa yang dihabiskan oleh Pemegang Interim dan/atau pekerjanya pada kadar jam biasanya;” [29] The High Court judge in appointing the Plaintiffs as the IR of the Defendant had also pronounced items 5 and 6 in the order dated 23.8.2010. Additionally, items 5 and 6 remain unchanged and undisturbed by the Court of Appeal’s amendment to the Order. These orders were made pursuant to Order 30 rule 3 of the ROC 2012. Considering that even the Court of Appeal upheld items 5 and 6, this Court is obviously duty bound to comply with the spirit of the order. [30] In construing Order 30 rule 3 of the ROC 2012 with regards to the court’s power in fixing proper remuneration for court’s appointed receiver, this Court refers to the case of Lim Poh Choo v Absolute Ascend Sdn Bhd [2008] 7 CLJ 810 which was brought to this Court’s attention by the counsel for the Plaintiffs. In Lim Poh Choo, the High Court had considered the principles applicable to 22 appointment of a receiver with the object of preserving property pending determination of a cause or matter and stated in paragraph [18] pages 816/817 that:- [18] A receiver appointed by the court is an officer of the court put in to discharge certain duties prescribed by the order appointing him……………. A court appointed receiver is allowed such proper remuneration, if any as may be fixed by the court (see O.30 r.3 of RHC 1980). As such the court can stipulate the remuneration of the receiver at the time of appointment.” [31] The meaning of “proper remuneration” has recently been considered by the High Court of Singapore in the case Kao Chai-Chau Linda v Fong Wai Lyn Carolyn and others [2016] 1 SLR 21. In this case Justice Steven Chong had in paragraph 31 construed the provision of Order 30 r3(3) of the Singapore ROC and stated this: [31] Order 30 r3(3) of the ROC provides that “[a] person appointed receiver shall be allowed such proper remuneration, if any, as may be fixed by the court” [emphasis added]. The trouble, however, is that the expression “proper” is the statement of a 23 legal conclusion rather than an aid to analysis. It still begs the question: what is “proper”? In my judgment, “proper” remuneration is one which is fair, reasonable and proportionate reflection of the value of services rendered. [32] In this regard also, this Court is in total agreement with the submission by the counsel for the Plaintiffs that the Rules of Court confer a statutory right on the Court to fix the receivers’ remuneration while the procedure for payment is at the discretion of the Court, once the Court fixes such proper remuneration and the method of payment this confers a right to be paid. (See: Vestime Corp Sdn Bhd v YBLE Resources Sdn Bhd & Ors [2006] 3 MLJ 554 & Dato Mohamed Hashim Shamsuddin v Attorney-General, Hong Kong [1986] 2 MLJ 112) [33] In the case of Goh Swee Oh @ Khoo Swee Cheng & Ors v Heng Ji Keng & Anor [2012] 7 MLJ 102, Varghese George JC (as he then was) had this to say in respect of a provisional liquidator’s entitlement to remuneration. 24 [13] It was clear, as was pointed out further to me, that even where there was no committee of inspection in place (as was the case here), by r 142(3) of the Companies (Winding-Up) Rules 1974, a liquidator was always entitled to remuneration, which, unless ordered otherwise by the court, would follow the scale of fees and percentages for the time being payable to official receiver discharging duties as a liquidator. Here too there was no requirement that ‘prior approval’ had to be secured first. It could therefore only mean, firstly, that a private liquidator is entitled to be paid remuneration, and, secondly, that such entitlement or payment is not subject to any prior approval of the court before it is availed of by the liquidator. [34] Based on the above mentioned considerations, it is this Court’s judgment without any inkling of hesitation or any shade of doubt that where an order appointing an interim receivers is subsequently amended and substituted to monitoring accountants, the interim receivers who were appointed by court as an officer of the Court remains entitled to his just remuneration and expenses during the validity of the appointment until the substitution. This is especially so when there is clear order by the Court pronouncing the entitlement (which was upheld by the Court of Appeal) and such entitlement is payable by the Defendant. 25 [35] Hence the Plaintiffs’ application in prayer (1) of their Enclosure 1 namely; for a declaration that the Plaintiffs are entitled to be paid their remuneration on the terms contained in the order dated 23.8.2010 until their appointments as Interim Receivers was substituted by the Court of Appeal Order dated 20.7.2011 is hereby allowed and the Defendant’s counterclaim is dismissed. [36] Finally, at end of their oral submissions before this Court, both the counsels for the Plaintiff and the Defendant had agreed that in the event that this Court rules that the Plaintiffs is entitled to their remuneration and expenses, then the assessment of a fair, reasonable and justified remuneration/ expenses/ charges payable to the Plaintiffs shall be carried out by the Deputy Registrar. Issue of Costs [37] On the issue of costs, this Court hereby orders that the Defendant is to pay the Plaintiffs costs in the sum RM20,000.00. 26 t.t. …………………………………………….. (DATUK AZIMAH BINTI OMAR) Judge High Court Shah Alam Selangor Darul Ehsan Dated the 27th July, 2017 For the Plaintiff - Messrs Iza Ng Yeoh & Kit Izabella De Silve Chow Yee Wah For the Defendant - Messrs Wang Kuo Shing & Co Karen Lee Roger Peter Sean Tan