Allianz General Insurance Company (Malaysia) Berhad v Gham Poh Chai (WA-24NCC-614-12/2024)

1 CLUJ 947 (CA) per Ramly Ali JCA (as His Lordship then was), counsel submits that a judgment debt cannot be the subject of a bona fide dispute unless it has been stayed or set aside, which is not the case here. 15. Learned counsel further contends that the statutory demand constitutes a lawful and legitimate means of enforcing a judgment debt, and does not amount to an abuse of process. It is submitted that the requirement for BER documents was neither raised nor adjudicated upon during the Sessions Court proceedings, and thus forms no part of the judgment subsequently entered. In light of the applicant's continued failure to satisfy the judgment debt, the respondent maintains that the applicant is, on the face of the record, deemed unable to pay its debts within the meaning of Section 466 of CA2016. 16. In relation to Section 195 of FSA, learned counsel submits that the requirement for BNM’s prior written approval arises only at the stage of presenting a winding-up petition, and that this does not render the statutory notice itself invalid. 17. Counsel for the respondent further contends that the applicant’s assertions of reputational harm are immaterial in the context of an undisputed judgment debt. The application for a Fortuna injunction is therefore viewed as a strategic delay, aimed at thwarting the respondent’s exercise of its lawful statutory rights. COURT’S FINDINGS General Principles 18. The Fortuna injunction is derived from the Australian case of Fortuna Holdings Pte Ltd v The Deputy Commissioner of Taxation of the Commonwealth of Australia (supra) where it is essentially a prohibitory injunction catered to restrain the presentation of a winding up petition or prohibiting further steps in an existing winding-up petition with the aim of prevention of abuse of the process of court. 19. The Court of Appeal in Mobikom Sdn Bhd v Inmiss Communications Sdn Bhd [2007] 3 MLJ 316 (CA) per Gopal Sri Ram JCA (as His Lordship then was) approved the principles enunciated in Fortuna case. The applicable principles were then succinctly summarized in the case of Pacific & Orient Insurance Co Bhd v Muniammah Muniandy (supra), wherein an applicant seeking a Fortuna injunction will have to satisfy the following: a) First branch of the principle i) The intended petition has no chance of success, as a matter of law as well as a matter of fact; and ii) | The presentation of such petition (which has not chance of success) might produce irreparable damage to the company. b) Second branch of the principle i) Whether a petitioner proposing to present a petition has chosen to assert a disputed claim, by a procedure which might produce irreparable damage to the company, rather than by a suitable alternative procedure. 10 ISSUE 1: Whether the Intended Petition has no Chance of Success (i) Effect of BNM’s Claims Settlement Practices 20. The first ground advanced to show that the intended petition has no chance of success is the respondent’s alleged failure to comply with the applicant's request for documentation relating to the classification of the vehicle as Beyond Economic Repair (BER). In support, reliance is placed on the decision in Affin Bank Bhd v Datuk Ahmad Zahid Hamidi [2005] 1 CLJ 521 (HC), where the High Court affirmed that compliance with BNM guidelines is necessary before certain transactions may proceed. On this basis, the applicant contends that the respondent was not entitled to issue a statutory notice under Section 466(1)(a) of CA2016 until the requested documents were furnished. 21. It is argued that while the Sessions Court judgment fixed the quantum payable, it was silent as to the method of payment, which, according to the applicant, ought to be governed by the applicable BNM guidelines. In this regard, the applicant refers to the document marked as Exhibit LFW-8 in Enclosure 2, namely the Claims Settlement Practices guideline issued by BNM on 1 July 2024, bearing reference BNM/RH/PD 029-69. The applicant submits that payment of the judgment sum is conditional upon compliance with this guideline. 22. Upon examining the guideline, it is noted that it was issued pursuant to Sections 47(1), 123(1), and 143(2) of FSA, which empower BNM to prescribe standards of business conduct for licensed insurers and takaful operators. Its stated objective is to promote fair, timely, and transparent claims settlement practices. However, its scope is clearly directed at regulating the handling of claims during the ordinary course of insurance operations. 23. Acareful examination of the relevant clauses in the BNM Claims Settlement Practices shows that, while an insurer may require the claimant to furnish supporting documents before disbursing payment, this requirement presupposes that the claim is still under evaluation and has not yet been adjudicated. Once the matter has proceeded to court and culminated in a final judgment, the insurer’s discretion to accept or reject the claim ceases to operate. The original claim is effectively replaced by the judgment, which crystallises the insurer’s liability. Compliance with that judgment is no longer contingent upon outstanding documentation, and any attempt to impose such a condition post-judgment is contrary to the finality of the court’s decision. Therefore, | am of the considered view that the applicant’s reliance on BNM’s Claims Settlement Practices guideline to justify withholding payment of a judgment sum is, with respect, misconceived. 12 24. Further, the judgment in question was delivered on 12 July 2024, in a suit filed as early as 10 January 2023. It is clear that the guideline which was issued on 1 July 2024 did not form part of the evidential or legal framework during the Sessions Court proceedings, nor could it have been raised or considered by the trial court when determining liability. The applicant cannot now retroactively invoke a regulatory guideline issued after the close of pleadings and shortly before judgment to impose fresh conditions on its obligation to comply with the court’s order. Once judgment is entered, the duty to satisfy it arises from the judgment itself, not from subsequent administrative or regulatory instruments. (ii) Effect of Section 195 of FSA 25. The second issue raised in respect to the chance of success is the effect of Section 195 of FSA which bars presentment of a winding up petition without written consent from BNM. For ease of reference Section 195 states as follows:- “Winding up by High Court on application by persons other than Bank 195. (1) No application for the winding up of an institution or approved person may be presented to the High Court by any person without the prior written approval of the Bank. (2) Subject to subsection (1), where an application for the winding up of an institution or approved person is presented to the High Court by a person other than the Bank— 13 (a) that person shall deliver a copy of the application to the Bank at the same time as it is presented; and (b) the Bank shall be party to the winding up proceedings and shall be entitled to appear and be heard in all proceedings relating to the application and to call, examine and cross examine any witness. (3) Any person who contravenes subsection (1) or paragraph (2) (a) commits an offence and shall, on conviction, be liable to imprisonment for a term not exceeding five years or to a fine not exceeding ten million ringgit or to both.” [Emphasis added] 26. In support, the applicant relies on the High Court decision in Pacific & Orient Insurance Co Bhd v Mazlan bin Ahmad

MLJU 764 (HC). In that case, the court accepted the argument that issuing a statutory demand without first obtaining BNM’s written approval was impermissible under Section 195 of FSA. On that basis, a Fortuna injunction was granted to restrain the presentation of a petition. 27. With respect, | find that decision distinguishable. In Pacific & Orient Insurance Co Bhd v Mazlan bin Ahmad (supra), the applicant had, upon receiving the statutory notice, expressly alerted the respondent to the requirement for prior approval under Section 195. In response, the respondent made clear that it did not intend to obtain such approval and would proceed with the petition regardless. The facts therefore disclosed a direct and deliberate intention to bypass the statutory safeguard. 28. Incontrast, no such correspondence or clarification was sought in the present case. Upon receipt of the statutory notice, the applicant remained silent on the issue of Section 195. No inquiry was made as to whether the respondent intended to comply with the same. Instead, the applicant appears to have assumed, without basis, that the respondent would proceed unlawfully. This assumption, made without any effort to clarify the respondent’s position, now forms one of the basis of the applicant’s attempt to restrain the respondent's statutory rights. There is a certain irony in this approach. While the applicant invokes the regulatory safeguard of Section 195, its conduct as well as its late filing for injunctive relief suggests a more tactical aim to gain advantage from silence, rather than any genuine concern with statutory compliance. 29. Aclose reading of Section 195 confirms that it does not prohibit the issuance of a statutory demand under Section 466(1)(a) of CA2016. It only prohibits the “presentation” of the winding-up petition itself. Subsection (3) criminalises the act of the presentation of a winding-up petition without BNM’s approval but makes no mention of preliminary steps such as the issuance of a statutory demand. The distinction between a statutory demand (i.e. winding-up notice) and the presentment of the winding-up petition itself is significant: (a) A winding-up notice under s.465(1)(e) & s.466(1)(a) CA2016 is a preliminary step that demands payment of a 15 debt. It serves as evidence of a company’s inability to pay its debts, should it fail to respond within 21 days; (b) A winding-up petition, on the other hand, is the formal process of commencing winding-up proceedings before the High Court by way of a petition “presented at the office of the Registrar’ under rule 23 of the Companies (Winding-Up) Rules 1972. 30. In Pacific & Orient Insurance Co Bhd v Muniammah Muniandy (supra), the Court of Appeal affirmed that a judgment debt gives rise to a statutory demand unless there is a stay or set-aside. While that case did not deal with Section 195 of FSA, it supports the proposition that the demand itself is a distinct procedural step. 31. Accordingly, Section 195 does not prohibit the respondent from issuing the statutory notice in this case. What it prohibits is the presentation of a winding-up petition without first obtaining the prior written approval of BNM. Should the respondent proceed to file a petition without such approval, that step may then be challenged and, if warranted, injuncted and/or set aside. At this juncture, however, no petition has been filed or is shown to be imminent. Section 195 cannot therefore be invoked to invalidate the statutory notice or to restrain the respondent from exercising its statutory entitlement to serve the notice and seek BNM’s approval in due course for the presentation of the intended petition. 16 32. This conclusion is further reinforced by the recent Federal Court decision in V Medical Services M Sdn Bhd v Swissray Asia Healthcare Co Ltd (2025) 2 MLJ 744 (FC) per Nallini Pathmanathan FCJ. In that case, the Federal Court affirmed that a Fortuna injunction may only be granted where there is a bona fide dispute on substantial grounds. Although the case concerned the interplay between arbitration and insolvency, the principle remains applicable. The jurisdiction to wind up a company cannot be restrained merely because the debtor raises a technical or procedural objection that does not go to the existence of the debt. The judgment debt in the present case is final and undisputed. The applicant’s complaints regarding method of payment, regulatory compliance, or reputational harm do not constitute a genuine dispute over the debt. There is therefore no proper basis to grant injunctive relief. ISSUE 2: Whether Such Petition Might Produce Irreparable Damage to the Applicant 33. The applicant argues that the presentation of a winding up petition would cause irreparable harm to its reputation, particularly given its position as a reputable insurance company. However, it is trite that where a debt is not genuinely disputed, and especially where it has been confirmed by final judgment, the argument of irreparable harm cannot succeed. This position is clearly established in Pacific & Orient Insurance Co Bhd v Muniammah Muniandy (supra), where the Court of Appeal held that once a debt is confirmed by judgment, an application 17 for a Fortuna injunction must fail. The test for such an injunction requires two limbs to be satisfied: first, that the intended petition has no real prospect of success; and second, that it would cause irreparable harm. Where the first limb is not satisfied, the second becomes irrelevant. 34. Even if the second limb were to be considered, the applicant's complaint amounts to no more than a general fear of reputational damage. As observed by Abdul Hamid Mohamad JCA (as His Lordship then was) in Ming Ann Holdings Sdn Bhd v Danaharta Urus Sdn Bhd [2002] 3 MLJ 49 (CA), such concerns are insufficient. The so-called irreparable harm is speculative and does not alter the legal reality that a judgment debt remains unpaid. The Court of Appeal in that case described these fears as the usual apprehensions of losing business, goodwill, customers or suppliers. The answer to such fears is straightforward: settle the judgment debt. 35. Moreover, the applicant has not provided any concrete proof of solvency or shown that it is in a financial position to immediately satisfy the judgment. While it may be tempting to assume that an insurance company, by virtue of their size and declared assets, are financially sound, such assumptions carry little legal weight. The test for commercial solvency is not based on balance sheet strength or theoretical asset values, but on whether the company can meet its debts as they fall due. It is well settled that a company may appear robust on paper yet still be commercially insolvent if it withholds payment of a clear and 18 immediate liability. Where a final judgment has been entered, the obligation to pay is immediate, and attempts by insurers to delay compliance through procedural manoeuvring or regulatory technicalities cannot be condoned. 36. Inshort, the applicant cannot simultaneously claim to be solvent and willing to pay, while refusing to honour a final judgment. As observed in Kris Heavy Engineering & Construction Sdn Bhd v Lewis & Co [2017] MLJU 906 (HC) per Mohd Nazlan Mohd Ghazali J (as His Lordship then was), solvency is no defence where the company is nevertheless not ready, willing and able to satisfy the debt. If the applicant seeks to avoid the consequences of winding up, the proper course is to pay the amount adjudged as due. The court cannot permit a party to shield itself behind reputational concerns when the legal obligation to pay has been finally determined. 37. The present application bears the familiar hallmarks of a tactical response, invoking procedural devices not out of genuine legal necessity, but to defer payment and frustrate enforcement. The Fortuna injunction is thus characterised as a calculated manoeuvre to delay the respondent’s lawful exercise of statutory rights under the guise of preserving corporate reputation. 19 38. Accordingly, | find no basis to conclude that irreparable harm justifies the grant of an injunction in the present case. The debt is clear and undisputed. The supposed reputational injury, even if genuine, does not override the respondent's statutory right to pursue enforcement of a final judgment through the winding up process. DECISION 39. Having considered the evidence and submissions, | am not satisfied that the applicant has established any bona fide dispute in respect of the judgment sum. The debt is clear, final, and remains unsatisfied. The mere assertion of reputational harm or regulatory procedure cannot displace the respondent's statutory entitlement to enforce a judgment through winding-up proceedings. In light of these findings, the application for Fortuna injunction in Enclosure 1 is dismissed with costs of RM10,000.00. 40. Following the pronouncement of this Court’s decision dismissing the application in Enclosure 1, learned counsel for the applicant made an oral application for an Erinford injunction pending appeal. | find no real risk of injustice that would justify the grant of such relief. The applicant, being a licensed insurer, is already subject to a regulatory framework that affords it substantial protection. Under Section 195 of FSA, no winding- up petition may be presented against it without the prior written approval of BNM, which functions as a regulatory gatekeeper. 20 Should the regulator consider that compliance with internal documentation, including the BER requirement, remains necessary notwithstanding a final court judgment, it retains full discretion to withhold its approval. These safeguards are statutorily embedded and sufficiently robust. There is, therefore, no proper basis for this Court to grant an additional layer of judicial restraint through an Erinford injunction. The oral application is accordingly refused. Dated: 4'" August 2025 Yusrin Faidz Bin Yusoff Judicial Commissioner High Court of Malaya Kuala Lumpur 21 Counsel for the Thayakugan A/L Rajendram Applicant: (together with Sabrina Binti Mohamed Ameen & Leong Zheng Yang) Messrs. Othman Hashim & Co., 6" Floor, Wisma Kah Motor No. 566, Batu 3 1/2, Jalan Ipoh, 51200 Kuala Lumpur. Counsel for the Melissa Kaur Manakh A/P Ram Singh Respondent: Messrs. Melissa Ram 54, Jalan Tempinis, Lucky Garden, 59100 Bangsar, Kuala Lumpur. CASE REFERENCE: 1. Fortuna Holdings Pte Ltd v The Deputy Commissioner of Taxation of the Commonwealth of Australia [1978] VR 83 (SC). 2. Pacific & Orient Insurance Co Bhd v Mazlan Bin Ahmad [2015] MLJU 764 (HC). 3. Setia Fontaines Sdn Bhd v Pro Tech Enterprise Sdn Bhd [2023] 12 MLJ 324 (HC). 4. Pacific & Orient Insurance Co Bhd v Muniammah Muniandy

1 CLJ 947 (CA). 5. Mobikom Sdn Bhd v Inmiss Communications Sdn Bhd [2007] 3 MLJ 316 (CA). 22 6. — Affin Bank Bhd v Datuk Ahmad Zahid Hamidi [2005] 1 CLJ 521 (HC).. 7. Pacific & Orient Insurance Co Bhd v Mazlan bin Ahmad [2015] MLJU 764 (HC). 8. V Medical Services M Sdn Bhd v Swissray Asia Healthcare Co Ltd (2025) 2 MLJ 744 (FC). 9. Ming Ann Holdings Sdn Bhd v Danaharta Urus Sdn Bhd [2002] 3 MLJ 49 (CA). 10. Kris Heavy Engineering & Construction Sdn Bhd v Lewis & Co

MLJU 906 (HC). LEGISLATION REFERENCE: 1. $.47(1), $.123(1), s.143(2) & s.195 of the Financial Services Act 2013. 2. $.465(1)(e) & s.466(1)(a) of the Companies Act 2016. r.23 of the Companies (Winding-up) Rules 1972. BOOK / ARTICLE REFERENCE: 1. Bank Negara Malaysia. Claims Settlement Practices. 1 July 2024. (BNM/RH/PD 029-69). 23