4.12.2024: The Plaintiff filed an application to stay the execution of the Enforcement Order. B] THE PLAINTIFF'S SUBMISSIONS [13] The Plaintiff’s submissions can be summarised as follows: Page 6 of 18 [14] Abuse of Court Process: The Plaintiff contends that the Court of Appeal has granted the COA Erinford Order to preserve the status quo between the parties pending the disposal of the Fortuna Appeal. By withdrawing the HC 440 Petition and issuing the October Statutory Notice, the Defendant is attempting to circumvent the COA Erinford Order. The Plaintiff relies on the case of Celcom (Malaysia) Bhd v. Inmiss Communication Sdn. Bhd. [2003] 3 MLJ 178 to argue that the status quo to be preserved is the position of the parties immediately before the filing of the First Fortuna Application, which was when there was no winding up petition against the Plaintiff and the October Statutory Notice had not been issued. [15] Bona Fide Dispute: The Plaintiff contends that there is a bona fide dispute regarding the debt demanded in the October Statutory Notice on the following grounds: i) The Plaintiff has filed appeals against the Orders; ii) The Plaintiff has commenced arbitration proceedings against the Defendant and has substantial counterclaims and set-offs against the Defendant, which exceed the amount demanded in the October Statutory Notice. The Plaintiff claims that its counterclaims and set-offs amount to RM89,838,324.49, comprising: a) Liquidated damages: RM10,679,748.13. b) Debit notes: RM2,194,713.29. c) Rectification works: RM8,246,945.40. d) Direct payments to sub-contractors: RM49,722,131.05 e) Direct payments to NSCs and third parties: RM12,126,733.62. f) Fire doors replacement: RM6,868,053.00. [16] Irreparable Damage: The Plaintiff asserts that it is a solvent company and the presentation of a winding up petition would cause irreparable damage. According to a report from the Companies Commission of Malaysia dated 10.11.2024, the Plaintiff's non- Page 7 of 18 current assets and current assets for the financial year ending 31.12.2023 are RM8,997.00 and RM35,794,934.00 respectively, and its profit after tax is RM26,250,378.00. [17] Insufficient Threshold Amount (Costs): The Plaintiff argues that, aside from the RM59,466,532.48 awarded to the Defendant under the Corrected AD, the costs awarded under the Orders total only RM45,000.00, which is below the RM50,000.00 threshold prescribed by the Minister for the purposes of Section 466(1)(a) of the Companies Act 2016. C] THE DEFENDANT’S SUBMISSIONS [18] The Defendant’s submissions can be summarised as follows: [19] No Abuse of Court Process: The Defendant argues that the COA Erinford Order only restrains the Defendant from proceeding with the HC 440 Petition based on the Corrected AD, not from filing a new winding-up petition based on the HC Enforcement Order and other Orders. The Defendant contends that with the withdrawal of the HC 440 Petition, the situation has been reverted to the status quo. The legal bases for the February Statutory Notice (issued based on the Corrected AD) and the October Statutory Notice (issued based on the Orders) are different. The Defendant is now exercising its right under a Court order or judgment, and until a stay is obtained (which has not happened), the Defendant’s right under the Court order or judgment remains unaffected and fully exercisable. [20] No Bona Fide Dispute: The Defendant contends that the alleged disputes raised by the Plaintiff do not constitute bona fide disputes over the debt, both factually and legally, for the following reasons: i) The Corrected AD has been enforced as an order of the High Court through the Enforcement Order. According to the Court of Appeal in Bludream City Development Sdn Bhd v. Pembinaan Bina Bumi Sdn Bhd [2024] 4 MLJ 67, once an adjudication decision has been enforced as a judgment of the High Court, the debt ceases to be disputable. Page 8 of 18 ii) The mere fact that the Plaintiff has filed appeals against the Orders or commenced arbitration proceedings does not render the debt disputed. The Orders remain valid, enforceable and executable until they are set aside or stayed. iii) The Plaintiff’s cross-claims were considered and dismissed by the Adjudicator, and the High Court in the First Fortuna Application had already found that the Plaintiff failed to demonstrate that these constitute bona fide debt disputes. iv) The direct payment of RM24,745,937.37, which the Defendant had admitted, had been considered by the Adjudicator and was deducted from the total sum claimed by the Defendant in the Adjudication. [21] Irreparable Damage is Irrelevant: The Defendant argues that even if the filing of a winding-up petition may cause irreparable damage to the Plaintiff, that is a natural consequence of the Plaintiff not having the ability to pay the debt. Relying on Sme Majujaya Sdn Bhd v. Oon Brothers Electrical Trading Co Sdn Bhd [2018] MLJU 899, the Defendant contends that if the debt is undisputed, any concern of irreparable damage is irrelevant and entirely inconsequential. [22] Plaintiff’s Insolvency: The Defendant contends that the Plaintiff’s assertion of solvency is dubious at best and contradictory to the evidence. The Defendant highlights that: i) The Plaintiff's issued capital is only RM10; ii) The Plaintiff has 5 charges amounting to RM152,000,000.00; iii) The Plaintiff's revenue for the whole of 2023 was nil; iv) The Plaintiff only has cash and bank balance in the total sum of RM3,979,569.00, which is about 6.5% of the amount of the debt; v) The Plaintiff's net assets are only in the sum of RM2,011,101.00, which is about 3.3% of the amount of the debt. Page 9 of 18 The Defendant argues that based on the Plaintiff's financial statements and report, the Plaintiff does not have enough cash, assets and revenue to pay the debt. [23] Combining Costs is Permissible: Relying on SMM Resources Sdn Bhd v. MRCB Builders Sdn Bhd [2022] MLJU 940, the Defendant argues that it is entitled to combine the costs awarded under the Orders with the principal sum awarded under the Enforcement Order, which would then be sufficient to meet the threshold amount prescribed by the Minister. D] ANALYSIS AND FINIDNGS i) On the Issue of Abuse of Court Process [24] The Plaintiff’s contention that the Defendant’s issuance of the October Statutory Notice and potential filing of a winding up petition based on the Orders constitute an abuse of court process is without merit. [25] I must emphasise that the COA Erinford Order only restrains the Defendant from proceeding with the HC 440 Petition that had already been filed, it does not prevent the Defendant from filing a fresh petition. The relevant terms of the COA Erinford Order is reproduced below: “Satu perintah untuk menghalang Responden samada secara diri sendiri, ejen-ejennya, pegawai-pegawainya atau pengkhidmat-pengkhidmat, atau sesiapa daripada mereka ataupun melalui apa jua caranya, daripada mengambil langkah selanjutnya terhadap prosiding petisyen penggulungan bertarikh 14.5.2024 (“Petisyen Penggulungan”) dalam Mahkamah Tinggi Malaya di Kuala Lumpur, Syarikat Penggulungan No.: WA-28NCC-440- 05/2024, termasuk tetapi tidak terhad kepada penyampaian dan/atau pengiklanan petisyen sehingga pendengaran dan pelupusan rayuan di sini; dan” (own emphasis added) [26] The COA Erinford Order specifically restrains the Defendant from proceeding with the HC 440 Petition, which was based on the Corrected AD. It does not prohibit the Defendant from exercising Page 10 of 18 its rights under the Orders, which were granted after the issuance of the COA Erinford Order. [27] The Defendant was legally entitled to withdraw the original Winding Up Petition (HC 440 Petition), which it did on 24.10.2024. This withdrawal has effectively restored the status quo as it existed before the filing of the First Fortuna Application, which was when there was no winding up petition against the Plaintiff. [28] There is no prohibition against the Defendant issuing a fresh Statutory Demand under Section 466 of the Companies Act 2016. Again, the COA Erinford Order does not restrain the Defendant from filing a fresh winding up petition. [29] There is a material distinction between the February Statutory Notice and the October Statutory Notice. The former was based on the Corrected AD, while the latter is based on the Orders, including the Enforcement Order which enforces the Corrected AD as a judgment of the High Court. [30] Significantly, the status quo that the Plaintiff seeks to preserve has already changed with the enforcement of the Adjudication Decision. This distinction is legally significant, as recognised by the Court of Appeal in Bludream City Development Sdn Bhd v. Pembinaan Bina Bumi Sdn Bhd [2024] 4 MLJ 67, where it was held that once an adjudication decision has been enforced as a judgment of the High Court, the debt ceases to be disputable. [31] The Plaintiff never sought, either in the First Fortuna Application or in the applications leading to the COA Erinford Order, to restrain the Defendant from filing a winding up petition based on the Orders. The Plaintiff’s COA Erinford injunction application was limited to restraining the Defendant from presenting a winding up petition based on the Corrected AD. [32] Until and unless the Plaintiff obtains a stay of execution of the Orders, the Defendant is entitled to exercise its rights under the Orders, including the right to issue a statutory notice and present a winding up petition. [33] In the circumstances, I do not find that the issuance of the fresh Statutory Demand (the October Statutory Notice) constitutes an abuse of process, considering the legal distinctions noted above. Page 11 of 18 ii) On the Issue of Bona Fide Dispute [34] The Plaintiff contends that there are bona fide disputes regarding the debt demanded in the October Statutory Notice, based on its appeals against the Orders and its counterclaims and set-offs against the Defendant. [35] The crucial issue here is whether the debt is bona fide disputed on substantial grounds, as established in Tan Kok Tong v. Hoe Hong Trading Co Sdn Bhd [2007] 4 MLJ 355. After careful consideration, I find that the Plaintiff has failed to establish the existence of a bona fide dispute for the foregoing reasons: [36] First, the debt for which the demand is issued arises from a CIPAA adjudication decision that has already been enforced or registered by the Court. The Corrected AD has been enforced as an order of the High Court through the Enforcement Order. According to Bludream (supra), once an adjudication decision has been enforced as a judgment of the High Court, the debt ceases to be disputable unless and until the enforcement order is set aside or stayed. At paragraph 39 of the judgment, the Court of Appeal held: "[39] … However, if the dispute on the debt has been adjudicated which resulted in an adjudication decision obtained in favour of the unpaid party, the debt ceases to be disputable in an ensuing winding up proceeding. This is because the disputed debt has been independently adjudicated by a neutral third party. More pertinently, it should not be open to the non-paying party to again dispute the debt when the sanctity of the adjudication decision has been preserved by the subsequent court orders refusing to set aside and/or stay as well as allowing enforcement of the adjudication decision as a judgment pursuant to ss 16, 27 and 28 of the CIPAA respectively. Consequently, it is immaterial in the winding up court that the non-paying still disputes the adjudicated debt and has referred the dispute to arbitration or the court for final determination: see Barisan Performa Sdn Bhd v Hype Park City Sdn Bhd [2018] MLJU 10. … " (own emphasis added) [37] This position was also affirmed in Geoforce East Sdn Bhd v. Melati Evergreen Sdn Bhd [2021] MLJU 549, where the Court held that once an adjudication decision has been enforced as an order of the court, it cannot be a disputed debt for the purposes of winding up proceedings. Page 12 of 18 [38] Second, the mere fact that the Plaintiff has filed appeals against the Orders does not render the debt disputed. In SBSK Plantations Sdn Bhd v. Dynasty Rangers (M) Sdn Bhd [2002] 1 MLJ 326, the High Court held: "In the instant case, the summary judgment granted by the learned deputy registrar is a valid and enforceable judgment unless set aside or stayed pending appeal. The learned deputy registrar had considered the affidavit evidence of both parties before deciding that the defendant had established a prima facie claim against the plaintiff. Upon the defendant obtaining the judgment, the debt ceases to be a disputed debt. Thereafter, the question whether the debt is a bona fide disputed debt becomes a non-issue. This is so even though the plaintiff has filed an appeal against the judgment because the filing of an appeal does not have the effect of reverting the status of the judgment debt to its original status as a disputed debt before judgment was obtained." (own emphasis added) [39] This position was echoed in Pontian United Theatre Sdn Bhd v. Southern Finance Bhd (formerly known as United Merchant Finance Bhd) [2006] 2 MLJ 602, where Abdul Aziz Mohamad JCA (as he then was) stated: "[3] … A judgment for a sum establishes the debt, which then becomes due to the person to whom it is owed, who then becomes the creditor. The sum remains due even though the debtor's appeal against the judgment is pending, because an appeal does not operate as a stay of execution. …" (own emphasis added) [40] Third, the Plaintiff’s application for a stay of execution of the Enforcement Order was made belatedly, and as at the date of the hearing of this application, no stay had been granted. In Klass Corp (M) Sdn Bhd v. MKRS Management Sdn Bhd [2018] 9 MLJ 305, Mohd Nazlan J (as he then was) held: "[34] … There is the judgment debt which means there is no bona fide dispute, and there is no stay, which in effect reinforces the absence of a bona fide dispute. The existence of a bona fide disputes is affected by the presence of a stay. …" (own emphasis added) Page 13 of 18 [41] Fourth, regarding the Plaintiff’s counterclaims and set-offs, I note that these have already been considered by the Adjudicator in the Corrected AD. The Adjudicator allowed a set-off of RM24,745,937.38 for direct payments made by the Plaintiff to the Defendant’s sub-contractors but rejected the Plaintiff’s other claims for set-offs. I had previously determined in the First Fortuna Application that the Plaintiff’s counterclaims and set-offs did not constitute a bona fide dispute of the debt. The Plaintiff is now raising substantially similar counterclaims and set-offs in this Application, with minimal material differences. The principle of res judicata, specifically issue estoppel, applies to prevent these issues from being re-litigated (Hartecon JV Sdn Bhd v. Hartela Contractors Ltd [1997] 2 CLJ 104). In the absence of any significant change in circumstances or new evidence, my previous findings on these matters stand. [42] Fifth, as held in People Realty Sdn Bhd v. Red Rock Construction Sdn Bhd [2008] 1 CLJ 632, it is premature to consider cross-claims before the hearing of a winding up petition: "[10] … Only on the hearing of the petition the court would be able to consider the cross claim and determine whether it should exercise its discretion to order winding-up or not to order it. In the event the appellant is ordered to be wound up the cross claim can still be proceeded by the liquidator on behalf of the appellant under s. 236(2) of the Act (Crocuses & Daffodils (M) Sdn Bhd v. Development & Commercial Bank Ltd [1997] 3 CI J 485 CA at p 491). Thus, to consider the cross claim, which is a separate issue altogether, before the hearing of the petition is premature and therefore, it should not be considered at that stage. (See Chip Yew Brick Works Sdn Bhd v. Chang Heer Enterprise Sdn Bhd [1988] 2 CLJ 424; [1988] 1 CLJ (Rep) 5 SC)." (own emphasis added) [43] In view of the above, I find that the intended petition cannot be said to have no chance of success, both as a matter of law and fact, as held in Pacific & Orient Insurance Co Bhd v. Muniammah Muniandy [2011] 1 CLJ 947. Rather, there are substantial grounds to conclude that the Plaintiff has failed to establish the existence of a bona fide dispute regarding the debt demanded in the October Statutory Notice. Page 14 of 18 iii) On the Issue of Irreparable Damage [44] The Plaintiff contends that it is a solvent company and the presentation of a winding up petition would cause irreparable damage. [45] However, as held in Pacific & Orient Insurance (supra), irreparable damage is irrelevant if the debt is undisputed: "[29] This principle applies only to disputed debt. It does not apply to cases where the debt in question is undisputed. As long as the debt cannot be disputed, it is not consequence whether or not it will cause irreparable damage to the company, if presented. A valid and enforceable judgment of court as in the present case, (unless set aside or stayed) cannot be considered a disputed debt. The law is settled on this point. Therefore, an order for injunction as prayed for by the appellant in the present case, also cannot be granted under this principle." (own emphasis added) [46] This position was reiterated in Sme Majujaya Sdn Bhd v. Oon Brothers Electrical Trading Co Sdn Bhd [2018] MLJU 899, where Mohd Nazlan J (as he then was) held: "[60] The Plaintiff seemed to suggest that if the Fortuna injunction is not granted, the consequences would be injurious to the Plaintiff. Again, this contention is without merit. It is settled law that if the debt is undisputed, any concern of irreparable damage is irrelevant and entirely inconsequential." (own emphasis added) [47] As I have found that the Plaintiff has failed to establish the existence of a bona fide dispute regarding the debt, any concern of irreparable damage is irrelevant. [48] In any event, I am not convinced that the Plaintiff’s financial position is as robust as it claims. Page 15 of 18 [49] The Plaintiff’s issued capital is only RM10, it has 5 charges amounting to RM152,000,000.00, its revenue for the whole of 2023 was nil, it has cash and bank balance of only RM3,979,569.00 (about 6.5% of the debt), and its net assets are only RM2,011,101.00 (about 3.3% of the debt). These figures suggest that the Plaintiff may not have the ability to pay the debt. [50] Furthermore, as observed by Nadzarin Wok Nordin J in the Grounds of Judgment dated 26.7.2024 in dismissing the Stay Application (Stay Dismissal Order), the Plaintiff’s financial condition is rather precarious and may seriously affect the ability of the Defendant to recover the Adjudicated Sum. In his Grounds of Judgment, Justice Nadzarin held as follows: “[31] I have however observed that Agile’s financial condition is rather precarious in that it has only a revenue of RM311,452.00 for the entire year of 2022 and that its current liabilities were RM67,979,287.00 whilst its current assets amounted to only RM80,740,003.00. This may seriously have an effect on the ability of CCYR to recover the sums in the AD.” (own emphasis added) iv) On the Issue of Threshold Amount [51] The Plaintiff contends that the costs awarded under the Orders amount to only RM45,000.00, which is below the threshold amount of RM50,000.00 prescribed by the Minister for the purposes of Section 466(1)(a) of the Companies Act 2016. [52] However, as held in SMM Resources Sdn Bhd v. MRCB Builders Sdn Bhd [2022] MLJU 940, in companies winding up proceedings, there is no prohibition against combining two or more judgment or ordered sums. In that case, Lim Chong Fong J (as he then was) held: "In reconciling the opposing and conflicting submissions by the parties, it is my opinion that this is wholly dependent upon the words and phrases in the relevant statutory provisions. There is the prohibitory provision in bankruptcy proceedings of individuals to combine two or more judgment or ordered sums but not so in companies winding-up proceedings of incorporated bodies although both relate to insolvency." (own emphasis added) Page 16 of 18 [53] Therefore, the Defendant is entitled to combine the costs awarded under the Orders with the principal sum awarded under the HC Enforcement Order, which would then be sufficient to meet the threshold amount prescribed by the Minister. E] CONCLUSION [54] For the reasons stated above, I dismissed this Application with costs. Dated this 13th day of May, 2025 -SGD- (WAN MUHAMMAD AMIN BIN WAN YAHYA) Judge High Court of Malaya, Kuala Lumpur (Commercial Division (NCC 3)) COUNSEL FOR THE PLAINTIFF Foo Joon Liang (Carissa How Chen Huey and Wong Yan Zhang together with him) Messrs Gan Partnership Unit D-32-02, Menara SUEZCAP 1, KL Gateway, No. 2, Jalan Kerinchi, Gerbang Kerinchi Lestari, 59200 Kuala Lumpur Tel: 03-79317060 Emel: office@ganlaw.my Page 17 of 18 COUNSEL FOR THE DEFENDANT Choon Hon Leng (Khor Yongshi and Cheryl Leong See Teng together with him) Messrs Sanjay Mohan Unit 5.01, Level 5, WORK@Clearwater, Jalan Changkat Semantan, 50490 Kuala Lumpur Tel: 03-20922277 Emel: admin@sanjaymohan.com.my LEGISLATION / RULES CITED Construction Industry Payment and Adjudication Act 2012 Companies Act 2016 ▪ Section 466(1)(a)